Last week we issued two alerts (here and here) covering the winds of change blowing at the NLRB. The strong winds continued on Friday, December 15 as the Board overruled two more decisions: one addressing an employer’s duty to bargain; the other addressing the proper analysis for determining appropriate voting units in union elections.
Past Practice, Changes, and the Duty to Bargain
For years, unionized employers have generally operated under an established labor law principle that allowed them to make unilateral changes to, for example, a health insurance plan, as long as the changes were consistent with past practice. Although a unionized employer is prohibited from unilaterally changing terms and conditions of employment unless it first provides a union with notice and the opportunity to bargain over the change, unilateral employer action is permitted where the change is part of a past practice and simply continues or maintains the status quo.
In 2016, the Board disposed of decades of labor law precedent in E.I. Du Pont de Nemours. There, the Board held that any employer discretionary action amounted to a change that had to be bargained with the union, even if the employer’s action simply continued a past practice. Du Pont did not survive long, however, and late last week, the Board overruled it in Raytheon Network Centric Systems.
In Raytheon, the company and the union were parties to a collective bargaining agreement that allowed the company to make changes to its health benefit plans. For 12 years, the company had exercised its right to make changes during the term of the parties’ agreement. After the parties’ agreement expired and before a new agreement had been negotiated, the company made unilateral changes to its health insurance plan consistent with its past practice. An NLRB administrative law judge found against the company based on Du Pont. On appeal, the three Republicans on the Board overruled Du Pont and determined based on pre-Du Pont precedent that the company was privileged to make the changes it did because it had made similar changes over the prior 12 years.
Although a welcome decision for employers, the Board emphasized that its decision did not excuse employers from the duty to bargain over mandatory subjects of bargaining. As the Board explained:
Even though employers, under Katz, have the right to take unilateral actions where it can be seen that those actions are not a substantial departure from past practice, employers still have an obligation to bargain upon request with respect to all mandatory bargaining subjects—including actions the employer has the right to take unilaterally—whenever the union requests such bargaining.
In the context of the Raytheon case, while the company was privileged to unilaterally change the health insurance plan consistent with its 12-year practice, it would be required to bargain with the union if, for example, the union proposed language to be included in the new collective bargaining agreement that would freeze health insurance benefits for the term of the agreement
Community of Interest and the Appropriate Bargaining Unit
In its controversial 2011 Specialty Healthcare decision, the NLRB revised the test it applies to determine whether a union’s petitioned-for unit is appropriate. In Specialty Healthcare, the NLRB explained that where the employees in a union-proposed voting unit are readily identifiable as a group and share a “community of interest” (common terms and conditions of employment), an employer who seeks a larger unit must demonstrate that the excluded employees share an “overwhelming” community of interest with the employees sought by the union. The Specialty Healthcare standard aids a union’s effort to cherry-pick smaller, “micro” units and, as we have previously reported (in April 2013, July 2014, and November 2015), employers have struggled to meet the “overwhelming” community of interest standard.
In PCC Structurals, Inc, the NLRB ditched the “overwhelming” community of interest standard and returned to its traditional test for determining an appropriate bargaining unit. The Board noted that throughout its history, its unit analysis looked at whether the employees in a petitioned-for unit shared a community of interest sufficiently distinct from excluded employees to justify the exclusion. In making this determination, the NLRB has traditionally applied a multi-factor test that requires the Board to assess the following:
Whether the employees are organized into a separate department; have distinct skills and training; have distinct job functions and perform distinct work, including inquiry into the amount and type of job overlap between classifications; are functionally integrated with the Employer’s other employees; have frequent contact with other employees; interchange with other employees; have distinct terms and conditions of employment; and are separately supervised.
This traditional test did not place on employers the almost-always insurmountable burden to establish an “overwhelming” community of interest between included and excluded employees and the Board got rid of it in PCC Structurals. According to the Board, Specialty Healthcare’s “overwhelming” community of interest standard improperly detracted from its statutory responsibility to make unit appropriateness determinations. We expect that PCC Structurals will provide employers with a more-balanced opportunity to challenge union efforts to carve up a workplace into the “micro” units fostered by Specialty Healthcare.
Over the past few weeks, we’ve seen lightning quick and dramatic changes at the NLRB.