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Labor Board Adopts ‘Contract Coverage’ Standard in Unilateral Change Cases, Overturns Precedent

The National Labor Relations Board (NLRB) has made it easier for employers to defend against unfair labor practice charges alleging a unilateral change in violation of the National Labor Relations Act (NLRA).

As suggested by Chairman John Ring and Member Marvin Kaplan in E.I. du Pont de Nemours & Co., 368 NLRB No. 48 (Sept. 4, 2019) (see our blog post, NLRB Members Intend to Revisit Applicability of ‘Contract Coverage’ Standard in Unilateral Change Cases), the Board has adopted the “contract coverage” standard in “unilateral change” cases in which the employer defends its actions by claiming it was privileged to make the change pursuant to a provision of the parties’ collective bargaining agreement (CBA). MV Transportation, Inc.368 NLRB No. 66 (Sept. 10, 2019). Chairman Ring and Members Kaplan and William Emanuel joined the majority opinion. Member Lauren McFerran dissented in relevant part.

The Duty to Bargain and Unilateral Change

Under the NLRA, employers have a duty to bargain in good faith with the union that represents its employees about mandatory subjects of bargaining (e.g., wages, hours, and other terms and conditions of employment). An employer’s unilateral change to a mandatory subject of bargaining without first offering to bargain is a violation of the NLRA, unless the employer has a valid defense. One valid defense is that the union waived its right to bargain over the term or condition at issue.

Previous Standard — Provena

The NLRB’s primary standard for analyzing defenses to unilateral change allegations since 2007 was the “clear and unmistakable waiver” criterion. Provena St. Joseph Medical Center, 350 NLRB 808 (2007).

Showing the existence of a clear and unmistakable waiver has been challenging for employers. Under Provena, employers had a substantial uphill battle to show, through contract language, bargaining history, past practice, or a combination that they and the union representing their employees “unequivocally and specifically express[ed] their mutual intention to permit unilateral employer action with respect to a particular employment term.” The NLRB has been hesitant to imply waivers not expressed in the CBA.

New Standard

Under the contract coverage standard, rather than requiring a specific and unequivocal expression of a “mutual intention to permit unilateral employer action,” the NLRB will evaluate whether the contract covers the employer’s change by “applying ordinary principles of contract interpretation.” Recognizing that a CBA cannot address every possible hypothetical issue, the Board will not require the contract language to specifically “mention, refer to or address the [challenged] employer decision.” Instead, it “will find that the agreement covers the challenged unilateral act if the act falls within the compass or scope of contract language that grants the employer the right to act unilaterally.”

This standard is different from that which former-chairman Robert Battista appeared to champion in his Provena dissent, in which he argued in favor of a contract coverage test. Battista appeared to contemplate a process where unilateral change allegations would be litigated through the grievance and arbitration procedure. The standard adopted in MV Transportation leaves it to the Board to interpret the CBA and decide whether it covers the employer’s alleged unilateral action.

The Board’s Reasoning

The NLRB gave several reasons for adopting the new standard.

It noted that the clear and unmistakable waiver standard undermined several of the goals of the NLRA — contractual stability, the collective bargaining process, and the grievance-arbitration process.

The contract coverage standard is more consistent with the goals of the NLRA, the NLRB noted, by encouraging employers and unions to engage in collective bargaining in a comprehensive and practical manner, ending the NLRB’s practice of sitting in judgment on contract terms, establishing a common standard between the NLRB and the courts, and discouraging forum shopping by adhering to the same standard that arbitrators apply.

In addition, the NLRB acknowledged the “futility” of adhering to the clear and unmistakable waiver standard in the U.S. Court of Appeals for the D.C. Circuit, which has sanctioned the NLRB for applying that standard. It also noted that, in addition to the D.C. Circuit, the First, Second, and Seventh Circuits have adopted the contract coverage standard or similar principles.

The clear and unmistakable waiver standard is not completely dead, however. If an agreement does not cover the employer’s action, the NLRB will apply the test to determine whether some combination of contract language, bargaining history, or past practices establishes that the union waived its right to bargain over the change.

***

The new standard is more employer-friendly than the previous test. However, the new standard means that employers will have to be even more diligent at the bargaining table and in drafting contract language to ensure that when the NLRB “appl[ies] ordinary principles of contract interpretation,” it “will find that the agreement covers the challenged unilateral act … [and] grant[] the employer the right to act unilaterally.”

Jackson Lewis P.C. © 2019

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About this Author

Jonathan J. Spitz, Jackson Lewis Law Firm, Labor Employment Attorney, Atlanta
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Jonathan J. Spitz is a Principal in the Atlanta, Georgia, office of Jackson Lewis P.C. He is Co-Leader of the firm’s Labor and Preventive Practices Group.

Mr. Spitz lectures extensively, conducts management training, and advises clients with respect to legislative and regulatory initiatives, corporate strategies, business ethics, social media issues and the changing regulatory landscape. He understands the practical and operational needs of corporate America, helping design pragmatic strategies to minimize risk and maximize performance. He has represented...

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Philip B. Rosen Jackson Lewis  Preventive Practices Lawyer & Collective Bargaining Attorney
Principal

Philip B. Rosen is a Principal in the New York City, New York, office of Jackson Lewis P.C. He is a member of the firm's Board of Directors and co-leads the firm's Labor and Preventive Practices Group. He joined the firm in 1979 and served as Managing Partner of the New York City office from 1989 to 2009.

Mr. Rosen lectures extensively, conducts management training, and advises clients with respect to legislative and regulatory initiatives, corporate strategies, business ethics, social media, reorganizations and reductions-in-force, purchase/sale transactions, sexual harassment and other workplace conduct rules, compliance with the Americans With Disabilities Act, wrongful discharge and other workplace litigation, corporate campaigns and union organizing matters, collective bargaining, arbitration and National Labor Relations Board proceedings. He has been quoted by the press on many labor matters, including the National Labor Relations Board’s recent initiatives on protected concerted activity and the proposed Notice Posting requirements.

Mr. Rosen has extensive experience advising clients developing integrated corporate-wide labor relations strategies - whether the organization is union-free, partially unionized or entirely unionized. He has led teams conducting multi-facility labor-related legal assessments where clients are seeking to develop creative, strategic legal approaches which anticipate major issues and achieve a company’s labor relations goals. Mr. Rosen also has advised clients being confronted with corporate campaigns and requests for neutrality agreements. He has represented organizations seeking to maximize management rights through their development of pro-active employee relations approaches to remain union-free. He also has advised unionized organizations on lawful negotiating strategies – in situations ranging from “hard bargaining” to recapture management rights to more “cooperative” negotiations – in all cases, providing legal advice designed to assist clients in achieving their primary goals.

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Howard Bloom, Jackson Lewis, labor union attorney, unfair practice investigations lawyer, employment legal counsel, bargaining law
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Howard M. Bloom is a Principal in the Boston, Massachusetts, office of Jackson Lewis P.C. He has practiced labor and employment law representing exclusively employers for more than 36 years.

Mr. Bloom counsels clients in a variety of industries on labor law issues. He trains and advises executives, managers and supervisors on union awareness and positive employee relations, and assists employers in connection with union card-signing efforts, traditional union representation and corporate campaigns, and union decertification...

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Kevin M. Sibbernsen, Jackson Lewis, Employment lawyer
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Kevin M. Sibbernsen is a Principal in the Boston, Massachusetts, office of Jackson Lewis P.C. Mr. Sibbernsen routinely advises clients regarding compliance with state and federal labor and employment laws, including those related to wage and hour issues, employee discipline and discharge, disability management and leave of absence issues, as well as reductions in force.

Mr. Sibbernsen also regularly advises clients regarding traditional labor law issues, including employer rights and obligations under collective bargaining agreements and the National Labor...

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