National Labor Relations Board v. John T. Jones Construction Co.

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 08-3318
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National Labor Relations Board, *
*
Petitioner, *
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v. *
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John T. Jones Construction Co., Inc., *
* On Application for Enforcement and
* Cross-Petition for Review of an Order
Respondent, * of the National Labor Relations Board.
*
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Carpenters District Council of Kansas *
City & Vicinity Local No. 311 and 978, *
*
Intervenor. *
*
*
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Submitted: April 14, 2009
Filed: August 14, 2009
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Before RILEY, BENTON, and SHEPHERD, Circuit Judges.
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BENTON, Circuit Judge.
The National Labor Relations Board requests this court enforce its
Supplemental Decision and Order awarding back pay to four employees of John T.
Jones Construction Company, Inc. See John T. Jones Constr. Co., 352 N.L.R.B.
1063 (2008). The Company cross-petitions for review of the back pay calculation.
Having jurisdiction under 29 U.S.C. § 160(e) and (f), this court denies the cross-
petition and enforces the Order.
In the unfair-labor-practice proceeding, the Board found that the Company
unlawfully discharged the four employees due to their union affiliation. The
Company was ordered to reinstate them, and pay for lost earnings. See 29 U.S.C. §
160(c). The parties did not agree on the amount of back pay, leading the Regional
Director to issue a Compliance Specification. Calculating the back pay, the Board
used the wages and hours of comparable employees. The calculation took into
account the prevailing hourly wage rate (including wages paid by the Company in lieu
of benefits). The Board subtracted the four employees’ interim earnings to determine
the net owed.
The purpose of back pay is to make whole the employee harmed by an unfair
labor practice. See Woodline Motor Freight, Inc. v. NLRB, 972 F.2d 222, 224 (8th
Cir. 1992), quoting NLRB v. Brown & Root, Inc., 311 F.2d 447, 452 (8th Cir. 1963).
The employee is entitled to his or her normal earnings during the period of
discrimination, less what she or he actually earned in other employment during that
time. Id.
“The remedial power of the Board to award back pay is a broad discretionary
one, subject to limited judicial review.” Woodline, 972 F.2d at 225, quoting
Fibreboard Paper Prods. Corp. v. NLRB, 379 U.S. 203, 216 (1964). Once the Board
awards back pay, a court “may ordinarily go no further than to be satisfied that the
method selected cannot be declared to be arbitrary or unreasonable in the
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circumstances involved.” Woodline, 972 F.2d at 225, quoting NLRB v. Ozark
Hardwood Co., 282 F.2d 1, 7 (8th Cir. 1960).
I.
The Company contends that the Board unreasonably failed to offset, against the
gross back pay owed by the Company, fringe-benefit contributions by interim
employers. The Company argues that the additional compensation it pays in lieu of
benefits is equivalent to the interim fringe-benefit contributions. If interim fringe
benefits are not added to interim earnings, the Company says that the four employees
will receive a windfall. See Local 60, United Bhd. of Carpenters & Joiners of Am.,
AFL-CIO v. NLRB, 365 U.S. 651, 655 (1961), quoting Consol. Edison Co. of New
York v. NLRB, 305 U.S. 197, 236 (1938) (explaining the power of the Board to
command affirmative action is “remedial, not punitive”).
The Board’s Order relies on a factually analogous case. There, a circuit court
of appeals upheld the Board when it did not offset (against gross back pay) fringe-
benefit contributions by interim employers. As in this case, the employer there paid
wages in lieu of benefits. Tualatin Elec., Inc., 331 N.L.R.B. 36, 42-43 (2000),
enforced 253 F.3d 714 (D.C. Cir. 2001). The Company, invoking the Board
Chairman’s partial dissent in this case, contends that Tualatin Electric is not
persuasive because it does not cite any cases, and the circuit court did not mention the
issue.
The Company relies on a Title VII discrimination case for the proposition:
“Fringe benefits should likewise be deducted as interim earnings.” Catlett v. Missouri
State Highway Comm’n, 627 F. Supp. 1015, 1018 (W.D. Mo. 1985). Title VII
precedent is not persuasive in this unfair-labor-practice case. More relevant is the
NLRB Casehandling Manual, which provides: “A medical insurance plan or
contributions to a retirement fund are not normally treated as interim earnings and
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offset against gross back pay.” NLRB Casehandling Manual (Part Three)
Compliance Proceedings § 10552.4 (last revised 2007). In view of the deferential
standard of review afforded Board orders, the general distinction between cash and
non-cash compensation is not arbitrary or unreasonable, because cash is immediately
available. See Woodline, 972 F.2d at 225, quoting Brown & Root, 311 F.2d at 452
(“[T]he Board may use as close approximations as possible [of back pay], and may
adopt formulas reasonably designed to produce such approximations.”).
The Manual does recognize an offset for “equivalent” fringe benefits, but in
effect requires them to be “identical.” See NLRB Casehandling Manual, § 10552.4.
(“Health insurance and retirement contributions earned through interim employment
may, however, be offset against equivalent benefits that are components of gross
backpay.”); § 10544.3 (equivalent retirement benefits do not include any profit-
sharing plans or a different union’s pension fund, but are limited to same union’s
pension fund). The Manual does recognize that immediately available fringe benefits
should be offset. See § 10552.5 (“The reasonable value of other forms of
compensation, such as employer-provided housing, cars, or meal allowances, should
be treated as interim earnings and offset against gross backpay.”).
This Court need not address uncommon fringe benefits, or the limits of the
“identical” rule. The burden is on the Company to show that the Board’s method was
arbitrary or unreasonable in this case. The Company failed to show that the interim
fringe benefits had immediate cash value of such significance to the employees that
the Board was arbitrary or unreasonable in excluding the value of the interim fringe
benefits, in determining net back pay. See Woodline, 972 F.2d at 224-25, quoting
Brown & Root, 311 F.2d at 454 (explaining after the Board demonstrates the gross
amount of back pay, “the burden is upon the employer to establish facts which would
negative the existence of liability to a given employee or which would mitigate that
liability.”). cf. United Enviro Sys., Inc., 323 N.L.R.B. 83, 84 (1997) (deducting from
net back pay: (1) payment from interim employer’s profit-sharing plan that employee,
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at end of interim employment, received in cash; and (2) distributions from interim
employer’s pension plan that employee, at end of interim employment, had option to
receive in cash or roll over to 401(k) plan).
II.
The Company asserts that the Board, in calculating the earnings of comparable
employees, erred in including overtime. In setting back pay, the Board may include
overtime hours worked by comparable employees. See Performance Friction Corp.,
335 N.L.R.B. 1117, 1117 n.3 (2001). The Company contends that there would have
been no overtime if it had not wrongly discharged the employees. The Company,
however, did not meet its burden of showing that the Board was arbitrary or
unreasonable in including overtime hours worked by the comparable employees. See
8th Cir. R. 47B.
III.
As for three employees, the Company argues that the Board erred in selecting
comparable employees because they worked at higher-paying classifications during
the back pay period. However, the Company failed to prove that the awards were
arbitrary or unreasonable. In fact, one comparable employee worked in a different pay
classification only four percent of the time. The Board also presented substantial
evidence that two former employees would have been routinely promoted if not
wrongly discharged. See Woodline, 972 F.2d at 225, quoting NLRB v. Westin Hotel,
758 F.2d 1126, 1130 (6th Cir. 1985) (The Board’s conclusions “will be overturned on
appeal only if the record, considered in its entirety, does not disclose substantial
evidence to support the Board’s findings.”). The Company failed to meet its burden
on this issue. See 8th Cir. R. 47B.
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IV.
The Company contends the back pay for one former employee should be four
weeks (instead of 42 weeks) because, as a union “salt,” he would have quit his job
within four weeks (which he did after reinstatement). The Board correctly found that
this employee, even if he was a salt, would have remained employed for the back pay
period (which ended before the representation election). The Board’s order is
supported by substantial evidence on the record, and further analysis is without
precedential value. See 8th Cir. R. 47B.
V.
According to the Company, the Board should have ended one employee’s
make-whole period when he moved from Springfield to St. Louis. The Company
asserts that by moving, the former employee was no longer seeking “substantially
equivalent alternate employment.” See Arlington Hotel Co. v. NLRB, 876 F.2d 678,
680 (8th Cir. 1989). The facts refute the Company’s assertion. The employee
mitigated his losses by securing equivalent construction work within a week of
moving to St. Louis (which he continued until the back pay period ended when he
began law school). Therefore, the Board’s calculation of the end date is not
unreasonable. See 8th Cir. R. 47B.
VI.
The cross-petition for review is denied, and the Supplemental Decision and
Order of the Board is enforced.
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