The National Labor Relations Board repeatedly has found that employers that unilaterally grant a wage increase prior to an impasse in collective bargaining, or absent extenuating circumstances, engage in an unfair labor practice. Thus, in an effort to avoid bargaining-related charges, employers typically seek to avoid making any changes to wages (or benefits) while bargaining is ongoing. However, in March 2015, the Board held that an employer’s withholding of a yearly wage increase for union-represented employees during negotiations was motivated by anti-union animus and was therefore unlawful, thereby squarely placing employers between the proverbial rock and hard place.

In Arc Bridges, the employer traditionally provided all employees a wage increase every July. Consistent with that practice, the company’s board authorized funding for a 3 percent wage increase for all employees in July 2007. However, in late 2006 and early 2007, two groups of employees had elected to be union-represented, and management was engaged in negotiations with the unions representing both units during the summer of 2007. Based on long-standing precedent, the company’s executive director determined that she could not give the now union-represented employees a wage increase without risking violating Section 8(a)(5) of the National Labor Relations Act, which covers unlawful bargaining actions. She also decided to defer giving the wage increase to non-represented employees.

In October 2007, as both units continued negotiating with company management, Arc Bridges gave all of its non-represented employees the 3 percent wage increase, retroactive to July. Union-represented employees did not receive the wage increase; instead Arc Bridges offered at first 1.5 percent and then 2 percent (retroactive) increases to the represented employees at the bargaining table. The union, however, challenged Arc Bridges’ withholding of the full increase, alleging that it was an established condition of employment that had to be provided to the union-represented employees, even while wage negotiations were ongoing.

The NLRB initially found for the union, but on appeal, the D.C. Circuit Court of Appeals reversed the Board. Instead of focusing on Section 8(a)(5) and the bargaining-related issues, the appeals court instead sent the case back to the NLRB to determine whether Arc Bridges’s withholding of the wage increase to union-represented employees was motivated by anti-union animus.

As a general premise, under certain circumstances, employers are permitted under the NLRA to treat represented and unrepresented employees differently during collective bargaining negotiations, as long as the differential treatment is not motivated by anti-union animus. On remand, the NLRB found that Arc Bridges’ withholding of the wage increase to union-represented employees, but not unrepresented employees, was motivated by anti-union animus based on four facts: (1) the company intended to give the represented employees a 3 percent wage increase until they voted for the union; (2) managers at Arc Bridges made statements that seemed to encourage employees to blame their lack of raises on the union; (3) the company’s stated legitimate business reasons for the decision were “implausible;” and (4) the timing of the retroactive wage increase seemed pegged to the end of one unit’s union certification year.

Focusing on the second and third issues, the NLRB found managers had told represented employees that the money budgeted for their raises was now being used to pay company attorneys. The NLRB also found that managers had encouraged employees to vote against the union. Finally, Arc Bridges had argued that it withheld the raises to avoid further upsetting union members (who hoped for more than 3 percent increases) and to encourage non-union managers and supervisors to stay at the company. The NLRB rejected those justifications, finding the first was undermined by the company’s offers of 1.5 percent and 2 percent raises in negotiations, and that the second was undermined by the fact that even unrepresented non-supervisors received the 3 percent wage increase.

The dissenting member of the NLRB’s three-member panel on remand complained that the majority’s decision leaves employers caught between choosing to violate Sections 8(a)(3) and 8(a)(5) – either the employer violates Section 8(a)(5) by unilaterally granting a wage increase, or violates Section 8(a)(3) for withholding that increase from union-represented employees. The majority’s response however suggested that Arc Bridges did not face such a Hobson’s choice. “Withholding the increase would not, on its own, establish an 8(a)(3) violation,” the two-member majority wrote. “Given the evidence of animus described above . . . we find the Respondent’s withholding of the October 12 wage increase from represented employees was unlawfully motivated.”

In light of the Board’s decision in Arc Bridges, employers should be particularly careful in differentiating between represented and unrepresented employees during collective bargaining negotiations. Offering the two groups different wages or benefits may be perfectly acceptable, but employers must be sure there is no evidence of anti-union animus in its decision-making process.