Seyfarth Synopsis: In Weavexx, LLC the Board deferred to an arbitrator’s finding that the employer had the right to change its payday and pay cycle without first bargaining. The bigger question is how much longer will such charges be deferred pending arbitration, and the extent to which the Board will defer to an arbitrator’s award.

The Board in a 2-1 decision reversed an ALJ and deferred to an arbitrator’s finding that an employer did not violate its collective bargaining agreement by unilaterally changing its employees’ payday and pay cycle. Weavexx, LLC, 364 NLRB No. 141 (Nov. 2, 2016) (here). In Weavexx the employer argued that its management rights clause gave it the ability to make the unilateral changes, and the arbitrator ultimately found that the “Company’s use of managerial discretion was proper and should not be seen as a violation of a binding past practice.”

So how did this “bread and butter” contract case get to the Board? The arbitrator apparently did a very poor job of making it clear that he applied the contract to find the employer had the right to make the change. The arbitrator framed the arbitration issue as whether the employer’s change violated a binding past practice. While the arbitrator set forth the employer’s contract argument, and listed the management rights provision as one of the contract sections at issue, apparently in his analysis the arbitrator really only expressly addressed an employer’s “noncontractual inherent management prerogatives” and past practice instead of addressing how the management rights clause authorized the employer’s actions.

This, along with some confusion as to whether the arbitrator addressed both the pay cycle and payday change, was enough for the Regional Director and the ALJ to determine that deferral was not warranted under Speilberg Mfg. and Olin Corp. because the evidence failed to reflect that facts relevant to resolving the ULP were presented, considered or decided by the arbitrator. Dissenting Chairman Pearce agreed, and focused more on arbitrator’s failure “to make any finding whatsoever” on the key issue of whether the management rights clause or other contract language authorized the employer’s unilateral actions. The Board majority worked around the arbitrator’s failing by finding that there was enough evidence within the decision to determine that he did rely upon the management rights clause, and that the arbitrator adequately considered the ULP given that the contractual issue and evidence were factually parallel to the ULP.

There are three takeaways from this decision. First, in any arbitration involving a deferred charge it is important to argue, address and get the arbitrator to rule on the issues and contract language, such as the management rights clause, at issue in the ULP. Common law reserved management rights claims will not cut it. Second, while in this case there was no agreed issue and the arbitrator just worked from the union’s position, how the issue is crafted is important. Third, note the Regional Director, an ALJ and the Board Chairman opposed deferring to the award. The Board and its Regions are scrutinizing deferral over contract disputes much more closely than in the past. Not only will this make deferral more difficult, at some point the Board may opt to revise its deferral standards similar to what it did for deferring Section 8(a)(3) matters in Babcock & Wilcox Construction Co., 361 NLRB No. 132 (2014). Deferral may be an endangered species.