The National Labor Relations Board (“NLRB” or “Board”) adopted the “contract coverage” standard to determine whether an employer’s unilateral action is permitted by a collective bargaining agreement (“CBA”). In doing so, the Board overturned the “clear and unmistakable waiver” standard. The contract coverage standard makes it easier for employers to defend against an unfair labor practice charge alleging a unilateral change. MV Transportation, Inc., 368 NLRB No. 66 (September 10, 2019).
Unilateral Change
Under the National Labor Relations Act (“NLRA”), an employer has a duty to bargain in good faith with the union representing its employees about terms and conditions of employment. If an employer makes a unilateral change to a term or condition without providing the union an opportunity to bargain about the change, it 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.
Old “Clear and Unmistakable Waiver” Standard
The Board traditionally applied the “clear and unmistakable waiver” standard when an employer argued that language in a CBA authorized it to make a unilateral change to a mandatory subject of bargaining. This standard required employers to point to language in the CBA that was “sufficiently specific” to demonstrate the parties “unequivocally and specifically” agreed to the unilateral change.
The Board, noting that this standard “in practice, is impossible to meet,” recognized multiple courts of appeal had rejected the “clear and unmistakable wavier” standard in favor of the “contract coverage” standard.[1] Thus, the Board abandoned the “clear unmistakable waiver” standard and adopted the “contract coverage” standard.
“Contract Coverage” Standard
Under the “contract coverage” standard, the Board “will not require that the agreement specifically mention, refer to or address the employer decision at issue.” Rather, the Board, applying ordinary principles of contract interpretation, will examine the plain language of the CBA to determine whether the action taken by an employer was “within the compass or scope of contractual language granting the employer the right to act unilaterally.” If it was, the employer did not violate the NLRA. If the CBA does not cover the employer’s challenged action, the Board will then apply its traditional waiver analysis to determine whether some combination of contractual language, bargaining history, and past practice establishes that the union clearly and unmistakably waived its right to bargain regarding a challenged unilateral change.[2]
Dissent
Once again, the lone democratic member of the Board dissented from the decision, pointing out that the majority decision overruled decades-old precedent without public participation, as the majority has done in a series of cases recently. According to the dissent, “the majority makes it easier for employers to unilaterally change employees’ terms and conditions of employment—wages, hours, benefits, job duties, safety practices, disciplinary rules, and more—in a manner that will frustrate the bargaining process, inject uncertainty into labor-management relationships, and ultimately increase the prospect for labor unrest.”
Practical Implications
While the Board has given employers another win, the adoption of the “contract coverage” standard may lead to more comprehensive (and challenging) collective bargaining, as unions will likely become more diligent when bargaining and reviewing contract language. Although employers will have a better chance of defending unilateral actions under this newly-adopted standard, employers should not necessarily push for overly broad management rights provisions. Employers should always be mindful that the standard could change if challenged in court or reviewed by the Board under a future administration. As such, it is important to consult with knowledgeable legal counsel or labor professionals to prepare for negotiations and before making any unilateral changes.
[1] The Ninth Circuit, of which Hawaii is a part, has used the “clear and unmistakable waiver” standard. The Board points out, however, that the court in that case “merely deferred to the Board’s continued adherence to the waiver standard, noting that neither party had suggested it should adopt contract coverage.”
[2] Thus, the “clear and unmistakable waiver” standard has not been completely abandoned. See E.I. DuPont de Nemours and Co. (discussed in a previous news digest article), for an example of the “clear and unmistakable waiver” standard used when the CBA did not cover the challenged unilateral action.