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Employer’s Grant of Extra Holiday to All Employees Except Those Represented by Union Not Unlawful, NLRB Rules

Employers with union-represented employees also always have non-union employees, whether working in the office or at another worksite.  Invariably, there are differences between the wages, benefits, and terms and conditions of employment of the two groups, a natural consequence of the bargaining process.  A common situation arises when an employer makes changes in the workplace, whether it is a change to a payroll practice or offering new benefits.  The question is whether the change applies to the union-represented workforce.  Without any other circumstances, the answer generally is “no,” the change does not apply automatically to the represented group of employees for the simple reason that the change must be bargained.

The NLRB recently faced a situation where a group of unions claimed that a benefit granted to the non-union employees should apply to the bargaining unit employees, and that the employer’s failure to do so was unlawful.

In Merck, Sharp & Dohme Corp., 367 NLRB No. 122 (May 7, 2019), the employer has 23,000 employees in the United States, approximately 2700 of whom are represented by various unions in different plants.  At the time of the events of the case, none of the collective bargaining agreements were under negotiation.

Employer Grants New Holiday to Non-Union Employees Only

The employer’s business results exceeded its expectations and the employer wanted to celebrate and acknowledge the good news with its employees.  Ultimately, the employer settled on the grant of a new paid holiday, “Appreciation Day” which would be the Friday before Labor Day Weekend, converting a three day weekend into a four day weekend.  The employer announced this new holiday and stated that Appreciation Day “did not apply to those in US who are covered by [a] collective bargaining agreement.”

The various unions representing the employees started to complain to the employer asking why Appreciation Day was not given to the bargaining unit employees.  Various employer officials responded with essentially two reasons:  First, the grant of such benefits cannot be made unilaterally “unless there is a provision” in the collective bargaining agreement.  Second, the employer had wanted to make changes to how it administers payroll and the 401K, changes it deemed to be “simple”, and the unions refused to discuss such changes telling the employer to “wait until contract negotiations.”

The unions filed unfair labor practice charges alleging that the employer was “retaliating” against the union in violation of Section 8(a)(3).

Administrative Law Judge Sees Animus

After trial, the Administrative Law Judge ruled that the employer violated the law because the employer’s rationale,–that it did not grant the holiday because the unions had refused to make other changes,– was retaliatory.  The Judge reasoned that the employer’s decision to exclude the union represented employees from Appreciation Day was motivated by union animus, finding “this motive represents straightforward punishment of union employees in retaliation for past protected activity under the Act.”  The Judge ordered the employer to make the union represented employees “whole” for the loss of the paid holiday.

The employer appealed.

NLRB Majority Reverses ALJ, Concludes Employer’s Reason Was Entirely Without Animus

A majority of the NLRB panel (Chairman Ring and Member Emanuel) reversed the ALJ’s ruling and dismissed the complaint.  The Board noted that it “has long recognized that an employer has a right to treat represented and unrepresented employees differently, so long as the different treatment is not discriminatorily motivated.”  The Board noted that in cases where the allegation is that the employer’s action is driven by an unlawful motivation, the General counsel bears an initial burden to show “(1) union or protected concerted activity, (2) employer knowledge of that activity, and (3) union animus on the part of the employer.”

Applying this framework the Board then analyzed the employer’s reason for not awarding Appreciation Day to represented employees. The Board noted employer was “not inclined” to approach the unions to bargain over this additional holiday because the unions “had, in the past, refused to agree to the [employer’s] midterm contract changes.”  The Board concluded that the Judge’s conclusion that this reason was “straightforward punishment” was incorrect because it “simply fails to take into consideration the everyday realities of the bargaining process.”  The Board expanded on the realities of the bargaining process:

‘Collective bargaining by its very nature is an ‘annealing process hammered out under the most severe and competing forces and counteracting pressures.'” . . .  The process, by its nature, may involve hard negotiation, posturing, brinkmanship, and horse trading over a long period of time.  Given this backdrop and the Board’s historical tolerance for such an ‘annealing process’ (so long as it does not cross the line into unlawful threats or bad faith), [the employer’s] articulation of [its] rationale was not an admission of unlawful retaliation  Consideration of prior bargaining positions and extant contractual benefits is not unusual in the course of a collective-bargaining relationship, nor is it evidence of an employer’s antiunion animus.

The Board found that the employer’s message was clear and lawful:  that if the unions were unwilling to discuss midterm changes to terms and conditions of employment, then they would have to “live with the limitations of their contractual benefits along with their advantages.”

Finally, the Board found that it was not animus for the employer to cite the fact that the law prohibited it from granting benefits unilaterally.

Dissent Sees Animus in Employer’s Actions

Member McFerran dissented, concluding that while “[n]othing in the Act required the Respondent to treat its union-represented and its unrepresented employees identically, but it was not free to treat them differently in order to punish represented employees for the statutorily protected actions of their Unions.”

Takeaways

This decision represents a very good articulation of the collective bargaining process, of how it rests on the relationship built by the parties and cannot be defined by a single event or action.  The Board majority viewed the context of the bargaining between the parties in its totality instead of focusing intently on one incident.  If the Dissent’s position were accepted then no party could every cite to the other party’s behavior without risking a finding of “animus.”  Labor relations is a complex business where actions cause reaction.  In this case, the unions steadfastly refused to bargain over changes during the term of the contract which was their right, of course, but that kind of inflexibility means the employer was less likely to approach the unions when the change was something positive.  Had the tables been turned, and the employer acted in an inflexible manner, the unions would likely have pointed to that behavior in refusing to agree to something in the future.  “Animus” is not defined by a party not liking the outcome.

© 2019 Proskauer Rose LLP.

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About this Author

Mark Theodore, Employment Attorney, Proskauer Rose
Partner

Mark Theodore is a partner in the Labor & Employment Law Department. He has devoted his practice almost exclusively to representing management in all aspects of traditional labor law matters throughout the U.S. 

Some highlights of his career include:

  • Successfully negotiated the first contract for a shipping agency during constant threat by union to shut down Port of Los Angeles

  • Successfully defended a major theme park when the NLRB sought bargaining order after the union...

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