Executive Summary: In a 3-1 decision, the National Labor Relations Board (NLRB or the Board) reversed long-held Board precedent regarding when unionized employers may unilaterally change a term or condition of employment without violating the National Labor Relations Act (NLRA or the Act). In doing so, the Board abandoned the “clear and unmistakable waiver” standard and instead applied the “contract coverage” standard. See M.V. Transportation, Case 28-CA-173726 (Sept. 10, 2019). In reaching this decision, the Board explicitly overruled its 2007 decision in Provena St. Joseph Medical Center, the last time the NLRB reaffirmed its adherence to the “clear and unmistakable waiver” standard.

Background

It is well-established that an employer does not violate the Act if the collective bargaining agreement (CBA) does, in fact, grant the employer the right to take certain actions without further bargaining with the union. However, the question is what standard the Board should apply to determine whether a CBA grants the employer that right. For years, the Board had applied the “clear and unmistakable waiver” standard. To escape liability for unilateral changes under this standard, unionized employers had to prove that a provision of the CBA “specifically refers to the type of employer decision at issue or mentions the kind of factual situation the case represents.” By utilizing this standard, however, the Board was largely in the minority, as several federal circuit courts applied the newly adopted “contract coverage” standard. Indeed, the D.C. Circuit recently sanctioned the Board for continuing to apply the “clear and unmistakable waiver” standard, as the court has applied the contract coverage standard for more than 25 years.

The Board majority noted that continuing to use a standard that is unenforceable in the D.C. Circuit (the forum in which parties frequently challenge an NLRB ruling) “has become an exercise in futility.” The Board further stated that its decision to adhere to the new standard is an effort to be “more consistent with the purposes of the [National Labor Relations] Act,” and to channel disputes into the methods agreed upon by the parties, “as Congress intended,” by no longer incentivizing parties from circumventing the grievance arbitration process.

The Board’s Decision in M.V. Transportation

This matter involved a Las Vegas transit company that attempted to revise the work policies in a union CBA. The union that represented its workers agreed to some changes, but rejected others. The CBA explicitly called for the employer to “obtain input from the Union prior to implementation of policy, rules, and regulations.” After some revisions, the employer unilaterally implemented the changes, but the union alleged the company violated the NLRA by unlawfully unilaterally implementing the changes in violation of the “clear and unmistakable waiver” standard utilized by the NLRB. The employer, in turn, argued that the “clear and unmistakable waiver” standard was the incorrect standard, and asked the Board to analyze the case under the “contract coverage” standard.

Under the “contract coverage” standard, the Board examines the plain language of the collective bargaining agreement and decides whether the unilateral action was “within the compass or scope of contractual language granting the employer the right to act unilaterally.” If the contractual language does not cover the disputed act, the employer will be found to have violated the NLRA. If, on the other hand, the disputed act is within the “plain language” of the contract, the NLRB will determine that no violation occurred.

Applying the “contract coverage” standard to M.V. Transportation’s unilateral policy changes, the Board detailed each applicable provision in the CBA to determine whether the plain language of those provisions granted the employer the right to act unilaterally to change terms or conditions of employment. In each instance, the NLRB found the unilateral changes were within the compass or scope of language in the CBA, and ultimately upheld the employer’s actions as lawful.

Bottom Line:

The Board’s decision in M.V. Transportation is the latest in a series of employer-friendly decisions from the Board’s majority. However, this shift in standard does not provide employers with complete freedom to unilaterally change terms and conditions of employment. Accordingly, employers should analyze existing contract language and any understand any limitations or allowances made within to ensure any future unilateral actions are encompassed by the plain language of those contracts.