In Universal Health Services, Inc., 370 N.L.R.B. No. 118 (April 30, 2021), the Board dismissed a complaint alleging that an employer’s bargaining proposals seeking significant concessions violated the duty to bargain in good faith. Notably, the Board found that even when faced with extreme proposals, a union must still “test” the employer’s willingness to make concessions, and must itself contribute to bargaining by offering counterproposals.

Factual Background

In anticipation of the expiration of their prior CBA in December 2016, an employer and a union began negotiations over a successor agreement. The employer warned that it sought to rectify “numerous deficiencies” in the prior agreement and alter many of its provisions. The employer opened negotiations with a set of four employer-friendly proposals: (1) its Grievance and Mediation proposal, along with its No Strikes, No Lockouts, and Management Rights proposals; (2) its Discipline proposal making disputes over discharges no longer subject to binding arbitration; (3) its Union Security proposal removing the union security provision in the parties’ expired CBA; and (4) its Wage proposal, which gave it substantial discretion over pay.

During the course of negotiation, the union’s counsel was fond of using profanity and colorful language to demonstrate his contempt for the employer’s positions. He labeled one proposal as “a nothing burger” and called another “an absolute waste of everyone’s time.” He told the employer’s representatives to “kiss my a–” and to “get the f— out of here.” The union counsel responded to employer proposals with one-word denials such as “reject” or “no”, and often failed to offer written counterproposals. In contrast, the employer made significant concessions in response to ongoing discussions, such as by lessening the length of time disciplinary actions would remain in employees’ files or offering to work with the union to place employees within its proposed pay ranges. At one session, the employer noted that the union had failed to counter 15 of its proposals, while the employer had responded to all but two from the union.

More than 18 months after the employer presented its initial proposals, the union made counterproposals containing significant revisions to what had already been agreed upon by the parties. Nonetheless, the employer discussed the counterproposals, and continued to express its willingness to negotiate. In October 2018, the employer received a petition signed by a majority of employees in the bargaining unit, which it considered clear and unequivocal proof that the union had lost the support of a majority of unit employees. The employer withdrew recognition from the union, and began to unilaterally implement its proposals.

The union filed unfair labor practice charges. An Administrative Law Judge determined that the employer engaged in bad faith bargaining in violation of Section 8(a)(5). The employer appealed to the Board.

Analysis

A Board majority (Members Ring and Emanuel) reversed the ALJ and dismissed the complaint. The Board began its discussion by observing that while Section 8(d) of the NLRA requires parties to negotiate in good faith, this obligation “does not compel either party to agree to a proposal or require the making of a concession.” Thus, the Board must ultimately determine, under the totality of the circumstances, whether “the employer is engaging in hard but lawful bargaining” or is instead “unlawfully endeavoring to frustrate the possibility of arriving at any agreement.”

Where it is alleged that an employer violated its duty to bargain in good faith on the basis of its bargaining proposals, the Board will not evaluate whether specific proposals are “acceptable” or “unacceptable”, but must consider whether the employer seeks to “frustrate agreement” on the basis of objective factors. More significantly, the Board will not find an employer failed to bargain in good faith “if the union assumes that the employer’s initial proposals reflect unalterable positions without testing the employer’s willingness to engage in the give and take of collective bargaining.”

The Board pointed out that the employer had informed the union that one of the disputed issues, a union security clause, was ultimately included in a CBA with another union after a “back and forth” process.

The Board emphasized that the employer did not insist on its proposals as all-or-nothing. Instead, the employer “advanced its proposals as entry points for discussions, repeatedly invited the Union to offer counterproposals, never refused to entertain counters on the rare occasions the Union offered them, and ultimately withdrew its no-strike proposal”, as well as other concessions. The Board found that under these facts, the employer did not seek to frustrate any possible agreement.

The Board noted that the employer did not violate its duty to bargain by seeking significant concessions in its initial proposals, and observed that it had “substantial leverage” because a long time had passed since the employees had received raises. The Board found that the employer was not required to bargain against itself in response to the union’s absent counterproposals, and that it was not bad-faith bargaining to present a “wish list” or “kitchen sink” proposal in its initial position. As a result, the Board reversed the lower court and dismissed the union’s complaint, holding that due to the above considerations, as well as the lack of any evidence of improper conduct away from the bargaining table, the employer did not engage in bad faith bargaining.

Chairman McFerran Dissents

In her dissent, Chairman McFerran noted there was no disagreement over the basic legal principles but that “[w]e differ, and differ sharply, on how to apply the law to the facts presented.” Specifically, the Chairman noted that the Board recently ruled that the employer’s conduct in a similar case, discussed here, violated the Act, and that “an employer can make a mockery of the duty to bargain by adhering to proposals which clearly demonstrate an intent not to reach an agreement” with a union.

Takeaways

This case demonstrates how the conduct of the parties can greatly impact a determination of whether the bargaining constituted bad faith. The majority here noted that the employer made some hard bargaining proposals which might seem distasteful on first blush. The fact that the union failed to respond materially other than to reject the proposals without making a counter-proposal left the employer with a difficult choice: modify its own proposal or simply hold onto the proposal until a meaningful response was received. However, employers should note that while it is permissible to take an “extreme” position initially, employers must still engage in meaningful discussions and seriously consider a union’s counterproposals during subsequent bargaining. The outcome of the “give and take” between employer and union ultimately rests on the strength of the parties’ positions. This is a case that undoubtedly would be decided differently under a different Board. At least for now, an employer does not violate its duty to bargain by sticking to its guns, so long as its actions remain reasonable.