The National Labor Relations Board restored its longstanding precedent involving an employer’s duty to bargain over discipline in a newly certified bargaining unit, ruling that employers have no obligation to negotiate with newly formed unions over disciplining workers before the initial collective bargaining agreement is finalized. The June 23 decision in 800 River Road Operating Company, LLC d/b/a CareOne at New Milford marked a return to 80 years of established NLRB precedent.

With Fisher Phillips attorneys representing CareOne at New Milford, the NLRB overturned Total Security Management Illinois 1, LLC, a controversial decision from the Obama era. In its 3-0 decision, the NLRB made clear employers have no statutory obligation to bargain before imposing discretionary discipline. In doing so, it relieved employers of a great deal of uncertainty surrounding their ability to impose “serious discipline” — including suspension, demotion, or discharge — under their existing disciplinary policies.

Background: Total Security And The Duty To Bargain

In its 1962 seminal decision, NLRB v. Katz, the U.S. Supreme Court ruled the National Labor Relations Act (NLRA) prohibited an employer from making unilateral changes to employees’ terms and conditions of employment following the commencement of a bargaining relationship. Should an employer decide to make any such material changes to the “status quo,” it must first give the union notice and the opportunity to bargain. However, the NLRB has long recognized this status quo is “dynamic” and that an employer does not violate the Act when it takes actions consistent with its regular past practice.

In 2016, the NLRB created additional, separate bargaining obligations for employers seeking to discipline employees before the parties negotiate a first contract. In the controversial Total Security case, the NLRB ruled an employer must provide the Union with notice and the opportunity to bargain prior to imposing “serious discipline” except in very limited circumstances. The NLRB claimed this was consistent with Katz and its progeny, as discipline required an exercise of the employers’ discretion. Yet, as Board Member Phillip Miscimarra noted in his dissent at the time, an employer does not disrupt the dynamic status quo — and violate Section 8(a)(5) of the Act — by simply carrying out disciplinary actions under its existing disciplinary standards and procedures.

The Board Reverts To Historic Standard

The case at issue involved employees at a rehabilitation and nursing facility in New Milford, New Jersey. In late 2016 and early 2017, CareOne at New Milford disciplined four bargaining unit employees, terminating one and suspending three others. These employees were not covered by a collective bargaining agreement, as the parties had not yet bargained a first contract. 

The union filed an unfair labor practice charge alleging, among other things, failure to bargain before issuing serious discipline in violation of Section 8(a)(5). Applying the Total Security standard, an Administrative Law Judge found the employer’s conduct violated the NLRA. CareOne at New Milford sought the NLRB’s review of the judge’s decision.

A team of Fisher Phillips labor attorneys argued Total Security was wrongly decided and should be overturned, citing Member Miscimarra’s earlier dissent. They further maintained its additional bargaining obligations were contrary to longstanding Board precedent and the well-established legal principles which govern the Act.

The NLRB agreed, overruling Total Security after finding it both conflicted with precedent and “misconstru[ed] the general unilateral change doctrine” enumerated in Katz. As it explained, to maintain the status quo, “an employer must continue to make decisions materially consistent with its established policy or practice, including its use of discretion, after the certification or recognition of a union.” For disciplinary decisions, the NLRB concluded, “the correct analysis under Katz must focus on whether an employer’s individual disciplinary action is similar in kind and degree to what the employer did in the past within the structure of established policy or practice.” 

Applying this standard, the NLRB found CareOne at New Milford was not required to provide the union with notice and an opportunity to bargain prior to disciplining the four employees. It also gave its decision retroactive application to all pending cases involving the Total Security standard.

What Does This Mean For Employers?

For employers with newly organized bargaining units, this return to normalcy is a welcome relief. Bargaining a first contract can be a long process, taking many months or — in some cases — years. Now, an employer is free to impose discipline consistent with its existing disciplinary policy before reaching this critical first contract. 

The timing of this decision is also fortuitous, as the ongoing COVID-19 pandemic may result in an increase in organizing activity and, as a result, more newly organized bargaining units. Both unionized and non-union employers are already seeing an increase in protected concerted activity during this time. Non-unionized employers should therefore be mindful of this decision, as it will impact them should they be the target of a successful organizing campaign.