PAST PRACTICE NOT ALWAYS BINDING ON EMPLOYERS

The relevant past practice of the parties can always be used in labor arbitration to help the arbitrator interpret ambiguous language in the collective bargaining agreement. However, unions often try to go much further and use “past practice” as the binding equivalent of express contract language, either to override unfavorable contract provisions or to add new terms not found in the contract. Fortunately for employers, there are significant limits to the binding effect of past practice.

As a threshold matter, the existence and scope of the practice must be clearly shown. “In the absence of a written agreement, ‘past practice,’ to be binding on both Parties, must be: (1) unequivocal; (2) clearly enunciated and acted upon; and (3) readily ascertainable over a reasonable period of time as a fixed, and established practice accepted by both Parties.” Celanese Corp. of America, 24 LA 168, 172 (Justin, 1954). A showing of occasional conduct by the employer, or even frequent conduct by lower-level employer representatives, will not suffice to establish a “past practice,” much less demonstrate that the employer should be bound by it. See, e.g., Weyerhauser Co., 105 LA 273,276 (Nathan, 1995) (frequency required); Sperry Rand Corp., 54 LA 48, 52 (Volz, 1971) (leniency by individual supervisors not sufficient).

Furthermore, not every past practice is binding. Where a practice was adopted by management unilaterally, in the exercise of management discretion, that practice may normally be changed by management at its discretion. As arbitrator Harry Shulman explained in his widely-followed opinion, many management practices are “mere happenstance” and develop without conscious design or deliberation. “[T]hey may be choices by Management . . . as to the convenient methods at the time[, with] no thought of obligation or commitment for the future. Such practices are merely present ways, not prescribed ways, of doing things.” See Ford Motor Co., 19 LA 237, 241-242 (Shulman, 1952). For a past practice to be binding, it must be supported by the mutual agreement of the parties and not merely the unilateral action of the employer for its own convenience. See, e.g., Wyandotte Chem. Corp., 39 LA 65, 66-67 (Mittenthal, 1962).

Finally, even where a past practice is well established and supported by mutual agreement, attempts to bind the employer with that practice might be prohibited by other provisions of the contract. For example, the “management rights clause” may reserve to the employer certain prerogatives of management “except as expressly provided otherwise in this Agreement” (or similar words), thus precluding any attempt to curtail those prerogatives by use of a practice that exists outside the written agreement. See, e.g., Sealy Mattress Co., 121 LA 883 (Paolucci, 2005). Similarly, reliance on a past practice that predates the term of the contract may be contrary to the “zipper clause,” which will typically state that the written contract represents the complete agreement of the parties regarding the subjects addressed therein. See, e.g., Bassick Co., 26 LA 627, 630 (Kheel, 1956); Phoenix Mgmt., 123 LA 1515 (Jennings, 2007). Use of past practice may also be barred by a common contract provision prohibiting the arbitrator from “adding to, subtracting from, or otherwise modifying the provisions of this Agreement.” See, e.g., Cuyahoga Comm. Coll., 109 LA 268 (Klein, 1997).

In this holiday season, employers who are often maligned as “Scrooges” by their labor unions may at least draw some comfort from knowing that they will not always be haunted by the Ghost of Practice Past.