In a case handled by Hogan & Hartson LLP, the National Labor Relations Board (the NLRB or Board), with two members vigorously dissenting, has issued a decision which the Board itself characterized as marking “a significant departure from preexisting law” in the area of voluntary recognition of labor unions and the Board’s recognition-bar doctrine. Dana Corporation, 351 NLRB No. 28 (decided September 29, 2007).

The consolidated cases involve two employers, Dana Corporation and the Metaldyne Corporation which had signed so-called neutrality and card check agreements with the International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW). The companies recognized the UAW on the basis of a showing that a majority of employees wanted UAW representation through card checks conducted by a neutral party. Soon thereafter, employees at both companies filed decertification petitions with the NLRB. The Metaldyne petition was supported by over 50% of the unit employees; the Dana petition was supported by over 35% of unit employees. In both instances, the Region dismissed the petition based upon the so-called “recognition-bar doctrine,” a doctrine that had been in effect for almost 40 years. The Board granted review of the Regions’ decisions and numerous parties, as wide ranging as the National Association of Manufacturers advocating a change in the law, to General Motors, opposing a change, filed as amici. Both Republican and Democratic members of Congress joined in the briefing.

The recognition-bar doctrine was first announced by the Board in 1966. Pursuant to the doctrine, decertification petitions are barred for a “reasonable period of time” following the employer’s voluntary recognition of a union. The doctrine is intended to provide a period of stability during the initial stages of the employer’s and union’s new relationship. The parties are given a reasonable period of time to bargain and negotiate a collective bargaining agreement. The theory is that negotiations cannot succeed, and the policies of the National Labor Relations Act effectuated, unless the parties can rely on the union’s representative status for a reasonable period. Of course, in cases of Board certification through an NLRB conducted election, the time for bargaining is statutorily fixed—one year. Under current Board law, when there is voluntary recognition, a reasonable period is not fixed in time but is measured by what has transpired in bargaining

In its Dana decision, the Board significantly modified the recognition-bar doctrine by holding that no election bar would be imposed following card-check recognition unless: (1) employees in the unit receive notice (posted in conspicuous places at the workplace) of the union recognition, and of their right, within 45 days of the notice, to file a decertification petition or to support the filing of a petition by a rival union; and (2) 45 days pass from the posting date of the notice without the filing of a valid petition. The Board directed the General Counsel to draft the notice that must be posted by the employer at its premises. The employer or union must also “promptly” inform the Board’s Regional Office of the grant of voluntary recognition. If the petition filed within the 45 day period is supported by 30% or more of unit employees, it will be processed by the Board. Moreover, that 30% showing of interest may include a petition signed by employees both before and after recognition.

The Board further stated that the 45 day period for filing petitions will not be affected by the employer and union executing a collective bargaining agreement during this time, and therefore also modified the contract bar doctrine, under which a union representation cannot be challenged for up to three years following execution of a collective bargaining agreement. Finally, because of its “marked departure” from existing law, the Board held that the new rules would only be applied prospectively to voluntary union recognition entered into after September 29, 2007, and accordingly, affirmed the dismissal of the petitions filed in the case.

In explaining the reason for the new rules, the Board majority held that voluntary recognition requires additional protection for employee choice, for “both the Board and courts have long recognized that the freedom of choice guaranteed employees by Section 7 is better realized by a secret [Board-certified] election than a card-check.” In support of its assertion, the Board articulated a number of deficiencies in card check arrangements. The Board noted that they “are public actions, susceptible to group pressure” and are not “held under the watchful eye of a neutral Board agent and observers from the parties.” Further, the Board stated that “union card-solicitation campaigns have been accompanied by misinformation or a lack of information about employees’ representational options;” and, card signing occurs “over a protracted period of time” as opposed to Board conducted elections which present “a clear picture of employees voted preference at a single moment.” For these reasons, the Board majority concluded, employees should have a sufficient period of time following a card check or other voluntary recognition process to decide to challenge a union’s recognition and marshall the support necessary for such a challenge.

The Board’s revisions of its recognition-bar doctrine did not change other existing law concerning voluntary recognition of a union. First, contrary to the urging of the petitioners in the case, the Board did not abolish the bar on decertification until the parties have a reasonable period of time to bargain, instead making the modification described. Second, the employer’s obligation to bargain with a union “attaches immediately” upon grant of recognition. The Board further stated that the 45 day period for filing decertification petitions will not relieve the employer of its duty to bargain and to execute a collective bargaining agreement if, during that time, it reaches agreement with the newly recognized union, even if a petition is filed. As a practical matter, however, employers may be reluctant to reach agreements that may become a nullity if the union is decertified. Unions will have even more difficult decisions. They will have to consider whether a quick agreement helps to ensure that employees do not decide to attempt to decertify, or whether expectations unfulfilled in the collective bargaining agreement will increase the likelihood of a decertification effort. The uncertainty engendered by this 45 day waiting period will be even greater when a decertification petition is filed and the parties must await the result of the processing of the petition and a Board conducted election – possibly ending in objections.

While substantially altering the recognition-bar doctrine, the Board’s decision leaves several issues unresolved that are likely to spur litigation. First, and most important, is what constitutes a “reasonable time” following the 45 day window during which the recognition-bar doctrine applies. In a footnote, the Board majority explicitly declined to address this issue. However, the Board’s Chairman favors a limit of six months, and all three participants in the Board majority expressed dissatisfaction with the decision in MGM Grand Hotel, 329 NLRB 464 (1986), a decision that insulated a recognized union from challenge to its majority status for more than 356 days following its recognition. In sum, expect a change in the law on what constitutes a “reasonable time” soon. Further, the Board will have to grapple with the inevitable technical violations of the new rules.

The decision also illustrates that the law regarding neutrality and card check agreements is still unsettled. For example, there is another significant case pending before the Board dealing with the issue of whether the Dana/UAW neutrality agreement that was the subject of this case constituted unlawful union recognition in violation of Section 8(a)(2) of the Act. And, the Board’s General Counsel requires that all cases involving neutrality agreements be reviewed at the Advice Division in Washington.

Following the Dana Corp. decision, employers face more complicated considerations before entering into neutrality and card check agreements or deciding to voluntarily recognize a union with purported majority status. There are now notice requirements, a period of uncertainty, and a possibility that during this 45 day period a petition will be filed that results in Board intervention and additional time, expense, and possible employee discontent. In addition, employers who voluntarily recognize unions and quickly enter into collective bargaining agreements must be aware that the status of these agreements will be in doubt until the newly established window period has elapsed or, if a timely petition is filed, for the additional weeks or months it will take for an election to be held and any objections dealt with.

There will be times when employers will want or need to enter into neutrality or card check agreements. But, given the complex legal environment, employers must proceed carefully, both in drafting and entering into such agreements, or face legal or labor relations issues, or both.