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Changing Course: "Contract coverage" is the New Standard for Unilateral Action

The National Labor Relations Board (NLRB) departed from precedent last week when it addressed whether an employer’s unilateral action under a collective bargaining agreement was lawful.

The case in question – M.V. Transportation, Inc. and Amalgamated Transit Union Local #1637, AFL–CIO, CLC., Case 28– CA–173726 – concerned what standard the Board should apply to determine whether a collective bargaining agreement grants an employer the right to take certain unilateral actions, without further bargaining with the union. Under prior case law, the Board had applied the “clear and unmistakable waiver” standard, under which the employer would be found to have violated the Act unless a provision of the collective bargaining agreement specifically refers to the type of employer decision at issue, or mentions the kind of factual situation that the case presents.

In M.V. Transportation, the Board noted that several appeals courts have rejected the “clear and unmistakable waiver” standard in favor of a “contract coverage” standard, including, importantly, the United States Court of Appeals for the District of Columbia Circuit, which, by statute, has full jurisdiction to review NLRB decisions.  Under the “contract coverage” standard, the decision-maker must examine the plain language of the collective bargaining agreement to determine whether the action taken by an employer was within the "compass or scope of contractual language granting the employer the right to act unilaterally. The Board cited the example of a collective bargaining agreement that broadly grants the employer the right to implement new rules and policies and to revise existing ones, noting that under such circumstances, an employer would not violate the law by unilaterally implementing new attendance or safety rules or by revising existing disciplinary or off-duty-access policies.

While the Board did choose to adopt the “contract coverage” standard, it did not totally abandon the “waiver” concept. It warned that if an agreement does not clearly cover the employer’s disputed act, and that act has materially, substantially and significantly changed a term or condition of employment constituting a mandatory subject of bargaining, the employer will have violated the law unless it demonstrates that the union clearly and unmistakably waived its right to bargain over the change, or that its unilateral action was privileged for some other reason.

In a move that is becoming more common in NLRB cases, the Board also decided to apply the new standard retroactively in all pending unilateral change cases where the determination of whether the employer violated the law turned on whether contractual language granted the employer the right to make the change in question.

Under the new standard, employers should take care in collective bargaining to make sure that the plain language of the collective bargaining agreement supports any unilateral action that the employer wants to reserve the right to take. The language should be clearly written and explicit in its grant of authority, and its meaning should be clear when applying ordinary principles of contract interpretation. By doing that, the employer can assure that its unilateral action does not violate the law or the agreement.             

Copyright © 2020 Godfrey & Kahn S.C.National Law Review, Volume IX, Number 266


About this Author

Jon Anderson Labor & Employment Attorney
Chair, Labor & Employment Practice Group

Jon Anderson is the Madison office managing partner and a shareholder in the Labor & Employment Practice Group, a team he led for over ten years. He represents management in all aspects of human resource, labor, and employment law matters. In addition, Jon is a member of the firm’s Health Care Practice Group, representing health care institutions and hospital systems in their employment and collective bargaining matters. Jon also has a robust practice representing business cooperatives.

Jon brings years of experience and a practical no-nonsense approach to advising employers in...