They've Got You Covered: NLRB Makes it Easier for Employers to Make Unilateral Changes

An employer does not violate the National Labor Relations Act (the Act) if the collective bargaining agreement grants the employer the right to take certain actions unilaterally (i.e., without further bargaining with the un­ion). The question presented in this case concerned the standard the Board should apply to determine whether a collective bargaining agreement grants the employer that right.

For years, the Board applied the “clear and unmistakable waiver” standard, under which the employer would be found to have violated the Act unless a provision of the collective bargaining agreement “specifically refers to the type of employer decision” at issue “or mentions the kind of factual situation” the case presents. The Board noted that this is not the standard applied by courts (or arbitrators) when interpreting collective bargaining agreements. Indeed, several courts of appeals have expressly rejected the Board’s “clear and unmistakable waiver” standard and adopted instead a “covered by the contract” or “contract coverage” standard. These courts include the United States Court of Appeals for the District of Columbia Cir­cuit, which, by statute, has plenary jurisdiction to review Board decisions.

The Board majority decided to abandon the “clear and unmistakable waiver” standard and to adopt the “contract coverage” standard. Under contract coverage, the Board 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.” As an example, the Board stated that “if an agreement contains a provision that broadly grants the employer the right to implement new rules and policies and to revise existing ones, the employer would not violate Section 8(a)(5) and (1) by unilaterally implementing new attendance or safety rules or by revising existing disciplinary or off-duty-access policies.” According to the Board, in both instances, “the employer will have made changes within the compass or scope of a contract provision granting it the right to act without further bargaining. In other words, under contract coverage the Board will honor the parties’ agreement, and in each case, it will be governed by the plain terms of the agreement.”

But the Board cautioned that “if the agreement does not cover the employer’s disputed act, and that act has materially, substantially and significantly changed a term or condition of employment constituting a mandatory subject of bargaining, the employer will have violated Section 8(a)(5) and (1) unless it demonstrates that the union clearly and unmistakably waived its right to bargain over the change or that its unilateral action was privileged for some other reason. Thus, under the newly adopted contract coverage test, the Board will first review the plain language of the parties’ collective bargaining agreement, applying ordinary principles of contract interpretation, and then, if it is determined that the disputed act does not come within the compass or scope of a contract provision that grants the employer the right to act unilaterally, the analysis is one of waiver.

The Board also concluded that it is appropriate to apply the new standard retroactively. Thus, the Board will apply the contract coverage standard in all pending unilateral-change cases where the determination of whether the employer violated Section 8(a)(5) turns on whether contractual language granted the employer the right to make the change in dispute.

Takeaways

The MV Transportation case will give some employers the right to take unilateral action under collective bargaining agreements that they could not have taken previously. It also increases the importance of negotiating comprehensive and specific management rights clauses that give employers the prerogatives to operate their businesses as they see fit.