First Central Bank Of River City

Relevant Facts

Prior to 1929, business executives were seen as leaders and union members were considered dangerous radicals. However, this changed when Americans saw that these businesses could not provide for them in economically turbulent times, such as the depression, and they started to favor unions. In River City, the International Metalworkers Union (IMU) began dealing with many of the firms and institutions in the area since 1930. Because of this heavy influence in the city of 210,000 people, the city was beginning to be considered a “union town”. IMU had represented workers at one of the town’s smaller banks, organizing the maintenance workers. IMU had initiated significant pay hikes and increased benefits.

First Central Bank of River City, founded in 1892, was the largest and oldest financial institution in the River City area. The relevant facts in this case centers on communications concerning union activity by the First Central Bank's employees, the bank's management, and the International Metalworkers Union (IMU). A guard at the main office discovered that membership cards had been distributed to the various teller stations, the bookkeeping department, the switchboard and in the ladies lounge. On one occasion, membership cards had been distributed to various locations within the bank. On two separate occasions, bank employees had been directly involved in initiating union activity. Meetings were setup with small groups of employees as a question and answer session. The first written communication to employees from management was sent soon thereafter. Employees reported to their supervisors that they had received a letter from the IMU addressed to their homes.

Harold Newell, Vice President of Branch Operations reported to Steve Johnson, Vice President of Human Resources that a number of the branch office employees had informed him that three assistant auditors were engaging in union organizing activities in the branch offices while ostensibly instructing employees on the use of a new computer. According to Newell's informants, the auditors spent only about 15 minutes explaining the new computer procedures and the remainder of the two-hour session talking about the advantages of having a union. At the end of the meetings they had passed out union membership cards. At the meeting with management, the assistants admitted that they favored a union and had been trying to get other employees to join. The bank’s labor attorney, Philip Smith opinioned that the assistant auditors were part of management and, therefore, that union activity by them was not protected under the National Labor Relations Act (NLRA).

Benefits under First Central’s pension were not as good as those provided to the auto plant workers (an IMU shop) in River City, but they were equal to or better than the smaller bank’s plans. Because the bank’s largest stockholder was opposed to paid health programs, it had been repeatedly denied. The lack of a company paid insurance program and the low salary scale had led many employees to seek out options under unionization. First Central felt, however, that its excellent working conditions, its job security, and its liberal profit-sharing program more than made up for its somewhat low salary scale. They believed that the employees were content, and held the opinion that working for First Central was a prestigious position. This negated the need for union support, in the mind of management.

Lastly, the bank filed with the IRS a request to institute a hospital medical plan to be paid entirely by the bank. The bank produced witnesses and correspondence to show that work on the hospital medical plan had been undertaken before the bank was aware that the union was attempting to organize its employees.

Legal Issues

1. Was First Central guilty of employer interference, restraint, or coercion directed against union or collective activity?

2. Was the bank showing domination of unions?

3. Did the bank discriminate against employees who take part in union or ...

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Legal Issues

1. Was First Central guilty of employer interference, restraint, or coercion directed against union or collective activity?

2. Was the bank showing domination of unions?

3. Did the bank discriminate against employees who take part in union or collective activities?

4. Did the bank retaliate for filing unfair labor practice charges or cooperating with the NLRB?

5. Was First Central’s refusal to bargain in good faith with union representatives appropriate?

Relevant Facts and Legal Principles

First Central Bank did not perform unfair labor practices involving its employees and the International Metalworkers Union. The bank utilized its rights under the First Amendment and was not in violation under the NLRA. The one instance that I questioned concerns a statement made by management related to pension and profit sharing plans. Management indicated that the plans were subject to negotiation if the employees voted for the union. Since the pension and profit sharing plans are voluntary by the bank and thus the bank has control, the statement suggests coercion. However, no threat of reprisal or force or promise of benefit was evident. Furthermore, I conclude that the International Metalworkers Union did not perform any unfair labor practices and did not violate rules under the NLRA.

Overall, it appears First Central acted within their legal bounds. They were advised by their attorney to discharge the three auditors and Esther Jones, for recruiting on company time. It was a wise decision not to do so, for this would have been interfering with unionization, on some levels. However, it is also within their bounds to demand that company time be utilized for the tasks for which the employee was hired. Management was advised by legal counsel not to promise the employees anything as a reward for not being unionized, and not to make threats if they were unionized. It seemed questionable that the bank stressed a forced strike during the question-and-answer session with Johnson. It appeared to subtly threaten the employees with possible loss wages due to a strike.

Johnson did tell employees that if the union was voted in, it could not be voted out if members were dissatisfied. This is an untrue statement. The NLRA handles these cases, and his information was inaccurate. Whether it was intentionally so or not, his intent was most likely to create some fear and discomfort with the employees.

A letter from the President of First Central, Jack Kramer (Exhibit 4) to the employees made a note about losing the pension and profit sharing plans if the bank chose not to carry them for economic reasons. This seemed like a veiled threat to sway them away from unionizing.

Threats, warnings, and orders to refrain from protected activities are forms of interference and coercion, as well as disciplinary actions, such as suspensions, discharges, transfers, and demotions. Failures to supply information, unilateral changes, refusals to hold grievance meetings and direct dealings also violate work laws. In Exhibit 6, Section 2 (11), it talks about unions, if certified or recognized, are the exclusive representatives of bargaining unit members. It prohibits the adjustment of employee grievances unless a union representative is given an opportunity to be present, and establishes procedures to vote on union representation.

The bank's employees communicated union involvement during working hours. Co-workers may contact fellow workers during free time, before or after work, or during breaks and meals. Off-work-site solicitations may be made anytime and by anyone. Employers may restrict the distribution of pro-union literature and union authorization cards to non-working areas, such as exits, parking lots, cafeterias, and rest rooms. The First Amendment to the U.S. Constitution permits both employees and employers to exercise fee speech by electioneering during union organization.

The bank's management met with its employees as an information and education campaign. In addition, the bank sent written communication to its employees related to unionization. An employer's free speech right to communicate with employees is firmly established and cannot be infringed by a union or by the NLRB.

The bank's letter to employees dated 6/7/86 (Exhibit 4) stated in part that if the employees voted in favor of a union, the pension and profit sharing plans were subject to negotiation. This action taken by the bank can be viewed, as a warning to refrain from protected activities as forms of interference and coercion that violate NLRA laws.

The union wrote several letters to the bank's employees. A union usually begins a campaign to organize a particular group of employees by having union representatives from the national headquarters of a local union chapter visit employees. They may distribute literature to build support for unionization. Union representatives may ask employees about their dissatisfaction with the employer and then attempt to build on any negative sentiments. Unions are usually forced to electioneer on or near the employer's property. However, the presence of non-employees on the employer's land is trespassing that violates the employer's property rights.

Lastly, an employer's free speech right to communicate his/her views to his/her employees is firmly established and cannot be infringed by a union or the NLRB. An employer is free to communicate to his employees any of his general views about unionism or any of his specific views about a particular union, so long as the communications do not contain a threat of reprisal or force or promise of benefit. Employers may even make a prediction as to the precise effects they believe unionization will have on the company. In such a case, however, the prediction must be carefully phrased on the basis of objective fact to convey an employer's belief as to demonstrably probable consequences beyond his control or to convey a management decision already arrived as to close the bank in case of unionization.

Ethical Issues

One bank employee provided the union with a computer printout of employee names & addresses.
Bank employees used the company's facilities and during working hours to promote union activity.
On two occasions the bank had the opportunity to discharge two employees based on violation of company policy.
Assistant auditors had engaged in union organizing activities on company property and time.
Three employees at the bank's main office were observed handing out union membership cards to other employees during working hours.
Following the filing of hospital medical plan with the IRS, announcements were only sent to department heads, supervisors, and branch managers. No letter was sent directly to the employees, but their supervisors informed them about it.

Ethical Duties

First Central Bank appears to have had total disregard for human resource management. They didn’t have a full-time personnel manager before Johnson was appointed. He had no prior training or experience, which strengthens the support that employee resource management was not of key concern to the bank. Most of the employees knew little about the bank’s wage and benefits policy. They had no employee handbook, which would educate their employees about important benefits to working for the bank.

The employees almost seemed to be more knowledgeable about wages and benefits from other companies in the area. They were well aware that collective bargaining had led to significant pay increases for teachers and professors of the local community college. They were aware of the pay differential between the bank and the auto plant. While the bank kept trying to tout the profit-sharing plan as the key benefit that leveled the playing field, the employees had other concerns. Medical insurance had not been subsidized or paid for previously, and the timing of the insurance offering seemed reactionary to the union.

In my opinion, this helped employees to see the union as being a beneficial influencer. Just by the threat of unionizing, positive changes were being brought about. It appeared that the bank was completely out of touch with what the employees wanted. They were stunned when they learned of the interest in the union by the employees. Its momentum bewildered them, because they had been previously unaware of the dissatisfaction within the company. This left them very vulnerable to the threat of unionizing.

One of the unfortunate things for the bank was that they were not well versed in union activities. They were not educated about the laws and regulations, and hence they made some questionable statements that were later proven to be incorrect.

I would like to think, if I were in that situation, that I would have seen the employees’ interest in the union as more of a wake-up call for me as opposed to something to thwart. The employees’ were sending a clear signal that things needed to change, and the bank was working so hard to be defensive against the union that they didn’t see it as a signal for growth. By listening to the employees and learning from their complaints, they could develop strength of loyalty in the company that would be incredibly binding.

Issues to Relevant Facts & Ethical Issues

The employee responsible for providing the printout of employee names and addresses could have requested permission from First Central Bank. The printout was the property of the bank subject to confidentiality of information and privacy. Company owned or issued property should not be used or applied in order to obtain personal benefit or to harm another person. This ethics policy prohibits employee theft, fraud, embezzlement or misappropriation of property belonging to the company.

Ethical Issues suggestions:

The bank should limit union organizing activity to break hours, before and after work and off the premises of its employer. The employees have a responsibility to its employer.

The bank should develop an employee handbook or pamphlet explaining the various benefit plans. Employees have the right to know the benefit plans its employer has available.
Policies should exist regarding internal communication to its employees.
Written communication and oral communication should be distributed equally to all employees.
Employees should be treated fairly when considered for all activities.

The bank should establish compliance policies. The policies would require ethical and legal behavior by anyone working for or on behalf of the bank.

First Central Bank was the oldest commercial bank in the River City community and was looked at as a prestigious place to work. Jobs at First Central were valued because of their security and employees were never laid off or discharged for poor work. In other words, the bank was committed to its employees and to the community. Therefore, an enhancement to the benefit package showed the character it was known for.

First Central Bank had the courage to install a fully paid hospital and major medical plan for all of its employees in spite of their fear of unionization.

Conclusion
Managers of the First Central Bank should have recognized that they have been behind the times in not offering partial employer based hospital-medical care. A large stockowner, Fred Jackson, had staked his decision not to offer this care, and the other stockowners didn’t have the power to lobby otherwise. However, now that Jackson moved on, employer assisted healthcare should be implemented. The employees expect to have this care, and it is important for them to get it, so that one more element of employee dissatisfaction is removed.

In the remaining 30 days prior to the election, First Central Bank needs to pay very close attention to the needs of their employees. They need to have open, honest forums that discuss the morale of the employees, without threat of retribution by management. Management, in order to stave off being unionized, needs to show that they will be the strong force working for the people. Simply educating them on the negative aspects of the union won’t diminish the employees’ needs to be valued and heard. Up until now, the management has been unaware of the changes in morale in the company, and has done nothing to allay the concerns. In fact, when concerns were brought up they were dismissed in exchange for the bottom line.

First Central is going to have to rush to play “catch up” to offer good reason to not be unionized. They need to show a strong commitment to changing the way management has dealt with the employees. A trained human resource officer needs to be hired to handle the concerns of the company. Anonymous surveys need to be distributed and analyzed by management, and taken seriously.

This case is not just about medical benefits or pay raises, although they are part of being a union. What seems most paramount to me about First Central employees is that they’ve felt disregarded and ignored by management, and this was a chance to be heard. Much of that was already accomplished in just having the threat of the union, but management cannot see this as just a defensive maneuver. Plans should be outlined for the employees about how management is going to be dramatically changed going forward. This should be completely outside of the bounds of whether or not they are unionized; or else they might have legal ramifications. This needs to be put into place with or without the unionization.

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05/09/07 -First Central Bank of River City