Aggressive vs. Bad Faith Bargaining: Where is the Line?

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The National Labor Relations Board, by a vote of 2-1, recently reversed an administrative law judge (ALJ) in finding that a hospital did not violate the National Labor Relations Act (the Act) by failing and refusing to bargain in good faith with the union.  District Hospital Partners, L.P., 370 NLRB No. 118 (Apr. 30, 2021).  The decision is notable in that it demonstrates the Board’s current tolerance for aggressive, but good-faith, bargaining by an employer. The dissent by current Board Chair Lauren McFerran, however, likely demonstrates the direction in which the Board may go given President Biden’s control over future Board nominees.

Background

1199 SEIU (union) had, for more than 20 years, represented a 150-member bargaining unit of employees who worked at the hospital at issue.  The parties’ most recent collective bargaining agreement (CBA) was set to expire on December 19, 2016; the parties held their first bargaining sessions on November 21 and 22, 2016.  The parties participated in 30 bargaining sessions until their last two sessions on October 10 and 11, 2018.  Although they reached tentative agreements on several provisions, they were unable to reach a complete agreement.

On October 25, 2018, the hospital received a disaffection petition signed by a majority of the employees in the bargaining unit.  The following morning the hospital e-mailed the union to inform it that, because the hospital had received evidence showing that the union had lost the support of the majority of the bargaining unit employees, it was withdrawing recognition of the union immediately.  The hospital also canceled all future bargaining unit sessions.  In response the union filed an unfair labor practice charge claiming that the hospital had engaged in bad-faith bargaining and thus could not lawfully withdraw recognition.

Majority Opinion

The ALJ found that the hospital violated Sections 8(a)(5) and (1) of the Act by engaging in surface bargaining based on the following four bargaining proposals that the hospital presented to the union during the course of their two years of negotiations:  1) its Grievance and Mediation proposal in tandem with its No Strikes and No Lockouts and Management Rights proposals; 2) its revision to its Discipline proposal to make disputes over discharges no longer subject to binding arbitration; 3) its Union Security proposal deleting the union security provision in the parties' expired CBA; and 4) its Wage proposal, which allegedly gave the hospital unfettered discretion over employees' pay in that all pay decisions would be part of a merit-based structure.  Accordingly, the ALJ found that the hospital had bargained in bad faith and unlawfully withdrew recognition in response to the petition.  The Board reversed the ALJ’s decision.

Initially, the Board found that not one of the proposals was unlawful in and of itself.  The Board also noted that negotiations dragged on for months without counterproposals from the union on several issues and therefore, to the extent the hospital did not change its position on these issues, “it was not being intransigent; it merely refrained from bargaining against itself.”  Moreover, the Board found that there was no evidence in the record to show that the hospital was unwilling to bargain over its proposals, as it considered the union’s counterproposals, never flatly refused to bargain over its proposals and made significant concessions throughout negotiations, including withdrawing its No Strikes and No Lockouts proposal entirely.  Notably, the Board found that the union refused to test the hospital’s willingness to bargain over some of its proposals, summarily rejecting many of them without any counterproposals or discussion of alternative language.

The Board held that, although the hospital stood firm on some of its positions that differed significantly from some terms in the expired CBA, its “unwillingness to make concessions on these matters was not inconsistent with the duty to bargain in good faith.”  The Board highlighted the fact that the hospital’s initial proposals did not show an intent to frustrate the reaching of an agreement because they were not presented as final offers, and the hospital remained willing to negotiate them.  The Board summed up its position on the hospital’s bargaining conduct as follows:

[I]t is not bad-faith bargaining to begin negotiations by presenting a “wish list” “throw-in-the-kitchen-sink” kind of proposal that one frequently sees in a party's first proposal. . . .  It is not bad-faith bargaining to advance a specific proposal that would leave the union with fewer rights than it would have without a contract, since every management-rights proposal does exactly that, and management-rights proposals are lawful under Supreme Court precedent dating back nearly 70 years. . . .  It is not bad-faith bargaining for an employer to decline to bargain against itself when its negotiating partner fails to test its willingness to modify its positions by offering counterproposals. . . .  And it is not bad-faith bargaining to stand firm on proposals that are even predictably onerous to a union where, as here, the employer “reasonably believes . . . that [it] has sufficient bargaining strength to force the other party to agree.”

In light of the Board’s finding that the hospital did not engage in surface bargaining, the Board also reversed the ALJ’s decision that the hospital violated the Act in withdrawing recognition from and refusing to bargain further with the union after receiving evidence that the union had lost a support of a majority of the unit employees.

Dissenting Opinion

Chairman McFerran dissented strongly from the majority opinion, finding that the hospital engaged in bad-faith bargaining because its demonstrated purpose was to frustrate the possibility of arriving at an agreement.  Chairman McFerran took issue with several of the hospital’s proposals, including its proposal that she felt gave management “near-unfettered discretion over wage increases,” as well as its proposal to eliminate the CBA’s longstanding union security and dues checkoff clause, the proposed management rights clause and what she deemed the hospital’s regressive bargaining over whether disputes regarding employee discharges would be resolved through arbitration.  In fact, Chairman McFerran referred to the hospital’s proposals as a “poison-pill combination” and ultimately concluded that the hospital’s conduct “was not just bad-faith bargaining, it was egregious bad-faith bargaining.” 

Takeaways

In bargaining a contract, an employer must walk a fine line between lawfully holding firm on its positions and demonstrating an intent to frustrate the possibility of reaching an agreement.  The following guidelines, as made clear in the Board decision, may assist the employer:

  • Remain open to negotiating its initial proposals
  • Consider the union’s counterproposals
  • Remain ready, willing and able to discuss the rationale for its positions
  • Be willing to offer concessions

It is unclear if the Board majority’s view in this case will prevail in the coming years, of course, as the Biden administration will have an opportunity to nominate new members to the Board, such as recently-nominated Gwynne Wilcox, a prominent union-side attorney.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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