Successor to Guard Service Could Change Pay Terms

Daily Labor Report® is the objective resource the nation’s foremost labor and employment professionals read and rely on, providing reliable, analytical coverage of top labor and employment...

By Lawrence E. Dubé

Aug. 19 — A Washington guard service that took over a government contract from a unionized firm lawfully changed several pay practices before it was required to bargain with a labor union, a divided National Labor Relations Board panel held Aug. 18.

Paragon Systems Inc. became a successor after it hired former MVM guards as a majority of its staff. However, NLRB Members Philip A. Miscimarra and Harry I. Johnson said Paragon was free to set the initial terms and conditions of employment, and it did so when it reduced “guard mount” pay for employees.

Dissenting, Member Lauren McFerran said Paragon never alerted workers to its new pay plan, leaving them “unfairly surprised by unannounced changes to their working conditions.”

New Guard Service Reduced Pay Item

The Federal Contract Guards of America (FCGOA) International Union represented MVM employees who provided security at Immigration and Customs Enforcement facilities until Paragon won the government contract and began operations Oct. 1, 2013.

Paragon permitted MVM's employees to apply for work with the new company, which hired MVM workers as a majority of its new staff. Paragon agreed to recognize FCGOA and to bargain with the union, but the parties disputed a change Paragon made in “guard mount” pay.

MVM paid the employees for 30 minutes of such time—20 minutes of “gear-up” time for obtaining weapons, ammunition and instructions at the beginning of a shift and a 10-minute “gear-down” period at the end of each shift for turning in the equipment.

When Paragon began operations at the ICE sites, it only allowed employees 10 total minutes of paid guard mount time, divided between the start and end of each employee's shift.

NLRA Successorship Principles Apply

The union and the NLRB's general counsel alleged that once Paragon became MVM's successor, it had an obligation to bargain and refrain from making unilateral changes, but the board said that general obligation did not establish the company had violated the National Labor Relations Act.

Citing NLRB v. Burns International Security Services Inc., 406 U.S. 272 (1972), and Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 125 LRRM 2441 (1987), the board said a successor employer may set initial terms without first negotiating with a union unless the successor has made it “perfectly clear” that it plans to retain all of the employees in a bargaining unit.

After the successor employer has established the initial terms, the board said, it must bargain with the predecessor's union and cannot unilaterally change employment terms.

Board Finds New Employer Acted Lawfully

The general counsel argued Paragon didn't sufficiently advise employees of the change in guard mount pay, but an administrative law judge and the board disagreed.

The company announced before taking over the ICE guard work that it had the right to establish wages, benefits and working conditions, and job applicants signed forms warning they would have to conform to Paragon policies, the board observed.

Additionally, Miscimarra and Johnson wrote, Paragon specifically informed prospective employees that “shift schedules” would be set “in accordance with the operational needs of the contract.”

“Taken together,” the board said, “these statements made clear to MVM's employees that the Respondent was not adopting MVM's practice regarding paid guard mount time.”

Finding the change in pay was a permissible exercise of Paragon's right to set initial employment terms, the board dismissed the unfair labor practice complaint.

Dissent Sees Lack of Clear Notice to Applicants

Dissenting, McFerran said nothing in the Paragon form addressed paid guard mount time. Paragon provided detailed information about many wages and benefits its new employees would receive but remained silent about guard mount time, the dissent said.

That contrast, McFerran wrote, reasonably conveyed to employees that changes in the gear-up and gear-down benefits “were not in the offing.”

Finding Paragon's references to schedule changes did not alert employees to the new guard mount pay levels, McFerran concluded “the previously established 30 minutes of paid guard mount time continued as part of the employees' terms and conditions of employment, and could no longer be changed unilaterally by the Respondent.”

To contact the reporter on this story: Lawrence E. Dubé in Washington at ldube@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Text of the opinion is available at http://www.bloomberglaw.com/public/document/NLRB_Board_Decision_Paragon_Systems_Inc_362_NLRB_No_166_2015_BL_2 .