Employers may have less to worry about when making changes to benefits during contract negotiations after a federal Court of Appeals decision in E.I. Du Pont de Nemours & Co. v. NLRB, No. 10-1300 (D.C. Cir. June 8, 2012). The D.C. Circuit refused to enforce the National Labor Relations Board’s (NLRB) finding that Du Pont Co. had committed an unfair labor practice when it changed its health care plan during negotiations for a new collective bargaining agreement after the old agreement had expired. Although Du Pont had routinely made changes to its benefits package prior to an annual enrollment period, the NLRB found that when Du Pont made these annual changes during bargaining for a new contact, the changes were improper unilateral changes and constituted an unfair labor practice.
Reviewing this decision, the D.C. Circuit found that the NLRB “failed to give a reasoned justification for departing from its precedent.” The Court pointed to the NLRB’s decision in Courier-Journal, 342 N.L.R.B. 1093 (2004), which found in part that an increase in health insurance premiums during contract negotiations was not a unilateral change when the employer had an established past practice of making such a benefits change. The D.C. Circuit was not persuaded by the NLRB’s attempt to distinguish the facts of Courier-Journal from the current Du Pont case and remanded the case back to the NLRB for a decision that conforms to its prior precedents.
This decision is good news for employers on several fronts. First, it confirms that when an employer has an established past practice of making annual benefit changes and such a change is made after a contract has expired, it may be viewed as the status quo and not a unilateral change. But employers must still be careful that all changes made during negotiations after a contract has expired, including annual benefit changes, are supported by an established past practice. While this decision is not binding in other circuits, it gives employers strong authority for this position.
Second, the D.C. Circuit's decision demonstrates that courts will not allow the NLRB to simply depart from its past precedent without explanation. This could prove critical, as recent NLRB decisions, such as Specialty Healthcare, 357 NLRB No. 83 (2011), are challenged in court by employer groups who also argue that such decisions are a departure from past NLRB precedent.