In MV Transportation, Inc., 368 NLRB No. 66, the National Labor Relations Board (the “Board”) recently adopted a standard that eases the path for unionized employers to make unilateral changes to terms and conditions of employment. Under this relaxed standard, employers do not violate the National Labor Relations Act (the “Act”) if they make unilateral changes to terms and conditions of employment that are reasonably within the compass or scope of rights reserved to management by the parties' collective bargaining agreement.
Prior to the MV Transportation decision, the Board took the position that an employer violated the Act if it made unilateral changes to terms and conditions of employment without first bargaining to impasse, unless the employer could establish that the union had “clearly and unmistakably waived” its right to bargain over the change in question. Under the “clear and unmistakable waiver” standard, an employer could only make unilateral changes if the contract language was sufficiently specific regarding the union’s waiver of its right to bargain over a particular term or condition of employment.
In contrast, several courts, including the D.C. Circuit which has jurisdiction over Board decisions, had adopted a more lenient “covered by the contract” standard for determining whether a unilateral change by a company violated the Act. Under the “covered by contract” standard, an employer may implement a unilateral change to terms and conditions of employment if it is reasonably “within the compass or scope” of the plain language of the parties' collective bargaining agreement. Thus, unlike the clear and unmistakable waiver standard, a contract coverage analysis does not require that the parties’ agreement specifically mention, refer to, or address the changes at issue.
In 2016, the Amalgamated Transit Union (the “Union”) filed an unfair labor practice charge against MV Transportation, Inc. (the "Company"), after the Company unilaterally implemented and revised several workplace policies which the Union contended violated the Act. In its defense, the Company maintained that its unilateral changes should not be analyzed under the “clear and unmistakable waiver” standard proposed by the Union, but instead by the “covered by contract” standard. The Company thus argued that its unilateral actions were lawful because they were generally authorized by the contract’s broad management rights provision, which among other things allowed it to “adopt and enforce reasonable work rules," and "to issue, amend and revise policies, [and] rules and regulations….”
The Board’s Decision
After recognizing the disagreement among courts and the Board regarding the appropriate standard for cases involving unilateral changes of terms and conditions of employment, the Board announced that it was rejecting the “clear and unmistakable waiver” it previously applied in favor of the “covered by contract” standard. It explained that the “clear and unmistakable waiver” standard fails to effectuate the policies of the Act and is virtually impossible for employers to meet. Further, the standard inappropriately results in employers and unions engaging in perpetual bargaining and creates disagreement between the Board, courts and arbitrators which apply different standards. In addition to aligning the Board with the courts and discouraging forum shopping, the Board noted that the “covered by contract” standard also is more closely aligned with: (i) encouraging the parties to resolve issues through bargaining and giving effect to all terms of a contract; (ii) the authority granted to the Board by the Act; and (iii) the traditional tenets of contract law, which require the Board to give effect to an agreement’s written terms.
The Board specified that where an employer makes a unilateral, material, substantial and significant change to a term and condition of employment, the decision of whether it has violated the Act will be determined by the rights that are reserved to the employer by the contract. If the unilateral action does not fall within the compass or scope of a contract provision granting the employer the right to act without further bargaining, the employer can only implement the change unilaterally if it can meet the "clear and unmistakable waiver" standard or its action is privileged for some other reason. If the answer to either of those questions is “yes,” the employer’s unilateral change does not violate the Act.
While the Board was careful to state that it was not rubber-stamping an employer’s ability to take unilateral action, MV Transportation nonetheless highlights the importance of well-crafted language that gives the employer flexibility to make desired changes to terms and conditions of employment without having to engage in bargaining. As a practical matter, such language is most likely to be found in a management rights clause. Thus, employers should carefully review the contract at issue, including in particular any management rights provision, before implementing unilateral changes to ensure that the proposed changes fall within the employer's scope of authority.
If the contract does not have a strong management rights clause, the company should ensure that bargaining a stronger, more expansive clause is high on its list of items for bargaining. Because it is possible that the Board will at some point revert to its prior position, or that MV Transportation will be challenged, employers should still seek during bargaining to obtain language in such clauses that provides the ability to argue waiver under either standard.