Type: Law Bulletins
Date: 10/10/2019

A Deal is a Deal: NLRB Expands Employers' Ability to Exercise Rights Under a Contract

In a major decision, the National Labor Relations Board (Board) overruled longstanding Board law and made it much easier for employers to rely on their collective bargaining agreements to make changes without having to bargain with their unions. This decision, MV Transportation, Inc., 368 NLRB No. 66 (Sept. 10, 2019), will be of interest to employers whose labor contracts contain strong management rights clauses.

Employers and unions are generally required to bargain in good faith over wages, hours, and terms and conditions of employment. Once the parties reach a contract, the contract governs issues it addresses and no further bargaining is needed. But no matter how carefully the parties negotiate, unanticipated circumstances inevitably arise after the contract is finished. Employers also sometimes want to change rules, work schedules, and policies during the term of a contract. Rather than require the parties to bargain constantly, some union contracts contain management rights clauses or other provisions granting the employer the right to take certain actions unilaterally. So what happens when the parties disagree about whether the agreement actually grants the employer the right to act unilaterally?

For decades, the Board applied a very high “clear and unmistakable waiver” standard to resolve such disagreements. Under this standard, employers had to show – with extremely specific contract language – that the union waived its right to bargain over a particular subject.

The Board’s decision in Graymont PA, Inc., 364 NLRB No. 37 (2016) demonstrated the very heavy burden the “clear and unmistakable waiver” standard placed on employers. In Graymont, the collective bargaining agreement granted the employer the right to manage and discipline employees and to “adopt and enforce rules and regulations and policies and procedures.” The Board found the employer’s unilateral adoption of a new attendance policy and progressive discipline schedule unlawful. The Board ruled the contract did not contain a clear and unmistakable waiver because it did not specifically mention: (1) “work rules” (although it did mention “rules”); (2) “attendance policies” (although it did mention “policies”); or (3) progressive discipline (even though it did mention discipline and performance standards).

Several federal appellate courts (including the D.C. Circuit) rejected the “clear and unmistakable” waiver standard and instead adopted a “contract coverage” standard. These courts reasoned that when parties have already bargained and agreed to a contract provision that covers the subject in dispute, whether the union waived its right to bargain is irrelevant because the union has already exercised its right to bargain.

In MV Transportation, the Board adopted the “contract coverage” standard and overruled prior Board decisions requiring a “clear and unmistakable waiver.” Under the “contract coverage” standard, the Board will determine whether the employer’s unilateral action was within the compass or scope of contractual language (such as a management rights clause) granting the employer the right to act unilaterally. The Board will not require “that the agreement specifically mention, refer to, or address the employer decision at issue.” If the contract does not cover the subject at issue, then the employer must show that the union waived its right to bargain under the “clear and unmistakable” waiver standard or establish some other defense.

This decision is significant for employers, particularly employers with strong management rights clauses in their contracts. The Board’s “clear and unmistakable waiver” standard led to outcomes like Graymont and required employers to foresee numerous scenarios requiring unilateral action and address “clearly and unmistakably” in the contract. Under the “contract coverage” standard, employers can instead generally address topics where unilateral action is necessary.

An employer contemplating unilateral action should consult with counsel and carefully consider all aspects of the situation before implementation. Taft’s Employment and Labor Relations attorneys are ready to help employers navigate these complex legal issues. Feel free to call us with any questions about how this decision may impact your business.

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