Labor Board Adopts Common Sense “Contract Coverage” Standard to Evaluate Lawfulness of Employer Unilateral Actions Under Collective Bargaining Agreements

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Private sector unionized employers will now have more certainty in making unilateral work rule and policy modifications as a result of the National Labor Relations Board’s (“Board”) decision in MV Transportation, Inc., 368 NLRB No. 66 (Sept. 10, 2019). In MV, the Board decided it would no longer evaluate whether an employer’s unilateral action is permitted by a collective bargaining agreement (“CBA”) based on the presence of a “clear and unmistakable” waiver by the union. Instead, the Board will now evaluate an employer’s right to unilaterally act under a CBA pursuant to normal contract interpretation principals just like most courts and arbitrators have done for years. The Board’s decision not only promotes more uniform CBA interpretations among the main dispute resolution forums, but also increased enforceability of CBA management rights clauses and increased labor peace during the term of a CBA. However, MV did not specifically address “effects bargaining” and the decision will likely lead to more contentious and protracted union contract bargaining.

Background

In MV, the union filed a “failure to bargain” charge claiming the company unilaterally implemented a number of revised work policies without first bargaining over the decision to implement them. Most notably, the transportation company:

  1. revised its attendance policy by eliminating the 6-month lookback period used for discipline and increasing the level of discipline for third and fourth violations; and
  2. implemented a new security sweep policy requiring employees perform certain security checks and subjecting employees to more stringent progressive discipline for violating the policy.

The parties’ CBA explicitly gave the company the exclusive right to assign employees, to discipline employees and to issue, amend, and revise reasonable rules and policies related to the right to discipline. The union argued the CBA did not contain a “clear and unmistakable” waiver of their right to bargain over the revised and newly-implemented work policies. The Board majority decided, however, to overturn its “clear and unmistakable” precedential standard and instead adopt the “contract coverage” (or “covered by the contract”) standard.

Board Explains How the Contract Coverage Standard Will Be Applied

Under the “contract coverage” (or “covered by the contract”) standard, “the NLRB will examine the plain language of the collective-bargaining agreement to determine whether action taken by an employer was within the compass or scope of contractual language granting the employer the right to act unilaterally.” The Board further elaborated that it “will give effect to the plain meaning of the relevant contractual language, applying ordinary principles of contract interpretation.” In other words, the Board (and other members of the NLRB) will review a CBA like any other contract and no longer “require that the agreement specifically mention, refer to or address the employer decision at issue.”

The Board was careful to note however that an employer’s authority under the management rights clause is subordinate to the restrictions embodied within the specific CBA provisions. The Board provided the following example to make this point: “[I]f an agreement contained a matrix of progressive discipline for safety violations that must be followed, the general contractual right to revise existing policies would not privilege the employer to dispense with progressive discipline for safety violations.”

Impact Moving Forward and Unanswered Questions

The Board’s decision will likely reduce union tendencies to bypass arbitration and go straight to the NLRB with unilateral-change complaints. This is because the old waiver standard meant the employer was presumed to not have been authorized to make the unilateral change (i.e., employers always bore the burden of proving they were authorized to unilaterally act). At the same time, unions are now more likely to vigorously pursue grievances and seek to arbitrate unilateral-change allegations. Yet, the resulting trade-off seems to strongly favor employers since: (a) the grievance and arbitration process is less burdensome in terms of time and money, as well as more informal and efficient; (b) interpretations of the CBA will now be more uniform as the three main dispute resolution forums (NLRB, arbitrator, and federal court) will all apply nearly identical “contract coverage” standards; and (c) employers will now have more certainty in making unilateral work rule and policy modifications.

Looking more long term, employers should expect unions will be more likely to aggressively pursue highly-specified contract provisions in successor contract negotiations, as well as oppose broadly-worded or lengthy management rights clauses. As a result, employers should expect to spend more time bargaining over successor agreements and, for some, operating without an agreement in place for extended periods of time.

Finally, the Board did not address how its decision impacts an employer’s duty to bargain over the effects of an otherwise authorized unilateral employer action (i.e., “effect bargaining”). As such, private sector unionized employers are strongly encouraged to consult with their labor counsel before responding to union demands for effects bargaining (not to mention before unilaterally implementing new or revised work policies).

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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