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Employer Win: National Labor Relations Board Adopts Contract Coverage Standard for Determining Whether an Employer May Take Unilateral Action

On September 10, 2019, the National Labor Relations Board (the “Board”) adopted the “contract coverage” standard for determining whether a unionized employer’s unilateral change in a term or condition of employment is a violation of the National Labor Relations Act (the “Act”). See MV Transportation, Inc., 368 NLRB No. 66 (2019). This decision overruled 70 years of Board precedent, which required collective bargaining agreements to clearly and specifically show the union waived its right to bargain over a changed employment term. The employer in this landmark case was represented by Ryley Carlock & Applewhite Shareholder, Kerry Martin.

Under the contract coverage standard, where an employer is defending against a unilateral-change allegation by asserting that contractual language privileged it to make the disputed change, the Board will assess the merits of this defense by first undertaking a limited review of whether the parties’ collective bargaining agreement covers the disputed unilateral change. The Board stated that it will give effect to the “plain meaning of the relevant contractual language, applying ordinary principles of contract interpretation;” and, if the alleged disputed change “falls within the compass or scope of the contractual language,” the Board will find the employer had the right to act unilaterally. Id. at *11. Therefore, the Board will no longer require that the agreement “specifically mention, refer to or address the employer decision at issue.” Id. Where the Board finds that this limited review of the parties’ contractual language does not cover a disputed unilateral change, the Board will next consider whether the union clearly and unmistakably waived its right to bargain over the change. Under this more expansive analysis, the Board will consider the parties’ bargaining history, past practice, and relevant contractual language to determine whether the union waived its right to bargain regarding the disputed change. Thus, the clear and unmistakable waiver test is still relevant as a potential second-line defense to employers’ unilateral action.

In MV Transportation, the Board emphasized that its decision does not remove any meaningful limits on unilateral employer action. Instead, the Board reasoned that the contract coverage test “rightly gives effect to the limits—or absence of limits—upon which the parties have themselves agreed.” Id. at *10.  Indeed, a number of circuit courts applying the contract coverage standard have rejected employers’ defenses on this basis because the literal and plain language of the agreements at issue did not support the employers’ unilateral changes. The Board also clarified that the contract coverage standard will apply retroactively to all pending cases before the Board in whatever stage.

The Board’s adoption of the contract coverage standard is likely to prompt companies to propose broad and generalized management-rights provisions, as opposed to specific and detailed management-rights provisions that were favored under prior Board law. Unions will undoubtedly push back against contract proposals that essentially waive the employer’s duty to bargain over changes to terms and conditions of employment during the term of a collective bargaining agreement.

The Amalgamated Transit Union Local 1637 has filed a Petition for Review of the Board’s decision in MV Transportation with the Ninth Circuit Court of Appeals. Additionally, due to the fact that Board members are appointed by the President and the tendency of Board decisions to reflect the partisan views of the executive, how long this standard endures may depend on the outcome of the 2020 Presidential election. One thing is for certain, this decision puts the spotlight on the terms negotiated by parties in their collective bargaining agreements.

Copyright © 2020 Ryley Carlock & Applewhite. A Professional Association. All Rights Reserved.

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About this Author

Kerry Martin Employment Attorney Ryley Carlock
Shareholder

Kerry maintains a thriving traditional labor practice built over his 18-year legal career. He represents employers with regional, national and global operations in industries including transportation, trucking, mining, industrial, manufacturing, construction and hospitality. In addition, Kerry practices in the areas of employment, appellate and administrative law.

Labor & Employment Practice. Kerry represents clients in all aspects of traditional labor relations. He also counsels and defends employers facing claims of discrimination and harassment, as well as...

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Associate

As a member of the Labor and Employment practice, Holly assists with a variety of employment and labor relations issues, including research and drafting documents. She also participates in the firm’s Sports Law group, which gives her an opportunity to combine her legal work and her athletic background to assist in representing athletes and coaches.

Holly was awarded the Dean’s Recruitment Award and Sun Angel Funk Scholarship to attend Sandra Day O’Connor College of Law at Arizona State University. Holly graduated among the top 10 students in her class. While there, she earned A+ grades (or CALI Excellence for the Future Awards) in Legal Method & Writing, Evidence, Constitutional Law II, FDA Regulation, The Moral Leader, and Family Law. She served on the Arizona State Law Journal and was named Editor of the Year in 2017. Holly externed with Honorable James A. Teilborg of the United States District Court for the District of Arizona and participated in the Blackstone Legal Fellowship.

Holly received her Bachelor of Arts degree in Communication, summa cum laude, from Arizona State University, where she was a co-captain of the ASU Sun Devil Women’s Soccer Team. In 2004, Holly was the only Sun Devil athlete to be named an Academic All-American. The year prior she was named the Sparky Female Scholar Athlete of the Year, awarded to Arizona State University’s most outstanding NCAA Division I Athlete. Before transferring to Arizona State University, Holly was a member of the 2001 Division I National Championship Women’s Soccer Team at Santa Clara University.

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