Question: Local 825, Int'l Union of Operating Engineers v. National Labor Relations Board 829 F.2d 458 (3d Cir. 1987)

Management engaged in a lockout and hired temporary employees to fill in during the lockout period. The union charged that the hiring of temporary employees was an unfair labor practice. The court disagreed.

Mansmann, J.

Harter Equipment, Inc. (Harter), is a New Jersey corporation engaged in the sale, distribution and service of construction and lawn maintenance equipment. The union represents a unit of the company's employees, including parts and service department mechanics, "parts men"; a truck driver and a painter. Negotiations to renew the contract began on October, 1981. From the beginning, the company made it clear that it needed substantial cost concessions because it was operating at a loss. On the day the contract expired (December 1, 1981), the company submitted a "final" proposal providing, among other things, for certain wage reductions and a union security clause. The union rejected the proposal but indicated that the employees desired to continue working without a contract. Harter then refused to permit the employees to punch in or work. On December 4, the employees began picketing the company with signs stating they had been locked out. Harter and the union continued to negotiate on the union security issue.

However, after the withdrawal of proposals made by the union which had been accepted by the company, Harter decided to hire temporary replacements to complete service work already in the shop. After temporary employees were hired, the parties continued to bargain but no final contract was consummated. The company continued to hire temporary replacements and the union continued to picket until April 1, 1982, when the unfair labor practice charge was filed by the union. The National Labor Relations Board held that absent specific proof of anti-union animus, an employer does not violate § 8(a)(3) by hiring temporary replacements in order to engage in business operations during an otherwise lawful lockout, including a lockout initiated for the sole purpose of bringing economic pressure to bear in support of a legitimate bargaining position. This petition for review followed. The Board's findings of fact are conclusive if supported by substantial evidence on the record considered as a whole, which we find it is. We turn now to an examination of whether the use of temporary replacements by Harter is inherently destructive of employee rights.

The Court has defined conduct which is inherently destructive of employee rights as conduct which carries with it unavoidable consequences which the employer not only foresaw but which he must have intended. In that respect, the conduct would bear its own indicia of intent. We bear in mind that § 8(a)(3) proscribes action impinging on the employees' rights to bargain collectively, strike, or engage in union activities. In this case, the Company made it clearly known from the beginning of the negotiating sessions that while it desired an amicable renegotiation of its contract, it could not afford major wage concessions because of its declining economic fortunes. Indeed, many of the proposals suggested to the union contained less favorable terms than had been incorporated in the agreement due to expire. It was the company's intention to return the regular employees to work when the negotiations were completed, even though the advertisements for the temporary help did not state that the positions were temporary. We cannot find that such use of temporary employees was inherently destructive of the employees' right to bargain collectively, strike, or engage in union activities. The use of the replacements during the lockout was a tactic chosen by the employer obviously to put pressure upon the union. Such pressure, however, affects the realities of the union's bargaining positions rather than any right as such to bargain collectively, strike or engage in other concerted activity.

As the Supreme Court has noted for example, in respect to a strike, vis-à-vis lockouts, the union has no right to determine exclusively the timing and duration of all work stoppages. The pressure Harter brought to bear in this case also was not destructive of the employees' rights due to the use of temporary employees. The court has previously noted three considerations in evaluating whether the use of temporary replacements had an inherently destructive or comparatively slight effect on employee rights. The court considered the duration of temporary employment and whether a definite date of termination had been communicated to the union and employees, and found that a definite date of duration for the temporary hires had been communicated. Second, the court noted that the option of returning to work was available to the employees upon their acceptance of the employer's terms, and third, the employer had agreed to continue in effect the unionsecurity clause from the old contract. In this case, although the advertisements for the replacement workers did not state that the positions were temporary, it was indeed the company's intention to return the regular employees to work at the conclusion of the dispute. In regard to the second factor, the union could have returned its members to work on terms less profitable than desired. As for the union-security clause, the company had agreed to the latest of a series of union proposed security clauses, only to have it withdrawn by the union. Thus, the company in effect had agreed to such a clause.

Under these circumstances, we do not believe that the company's conduct was inherently destructive of employee rights. The "balance of power" between the union and the company may have tilted toward the company through the use of this type of pressure tactic, but as the Board noted, replacing the employees with temporary workers had no greater adverse effect on the right to bargain collectively than did the concededly lawful lockout. Given this finding, "if the adverse effect of the discriminatory conduct on employee rights is ‘comparatively slight' an anti-union motivation must be proved to sustain the charge if the employer has come forward with evidence of legitimate and substantial business justifications for the conduct." Thus, the "slight" impact on employee rights (to organize, etc.) which the conduct at issue arguably had, is negated if the employer has established a legitimate and substantial business justification for his conduct.
Here, that standard has been met. The Company was in financial straits and the union was aware of its financial problems. Moreover, no temporary replacements were hired until six weeks after the commencement of the lockout, during which period no unit work was performed. We find that a legitimate business justification existed in this case and that no violation of § 8(a)(1) or § 8(a)(3) occurred. DENY the union's petition for review.

1. Do you agree with the court that this was legitimate pressure on the union?

2. What is the significance, to you, of the employer waiting six weeks before bringing in temporary replacements?

3. Is there an inherent imbalance between the relative positions of labor and management making a lockout more pressure-laden than a strike?