Employment Law Daily Divided NLRB abandons ‘clear and unmistakable waiver,’ adopts ‘contract coverage’ standard
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Friday, September 13, 2019

Divided NLRB abandons ‘clear and unmistakable waiver,’ adopts ‘contract coverage’ standard

By Ronald Miller, J.D. and Lisa Milam, J.D.

In the latest significant reversal of Obama-era precedent, a divided NLRB abandoned its long-applied “clear and unmistakable waiver” standard for determining whether an employer can make unilateral changes.

Concluding that the contract coverage standard is more consistent with the purposes of the NLRA than the clear and unmistakable waiver standard, a divided NLRB, in a 3-1 decision, abandoned the clear and unmistakable waiver standard in favor of the contract coverage standard. Under contract language, the Board will examine the plain language of the collective bargaining agreement to determine whether action taken by an employer was within the compass or scope of contractual language granting the employer the right to act unilaterally. If the agreement does not cover the employer’s disputed act, and that act has materially, substantially, and significantly changed a term or condition of employment constituting a mandatory subject of bargaining, the employer will have violated Section 8(a)(5) and (1) unless it demonstrates that the union clearly and unmistakably waived its right to bargain over the change, or that its unilateral action was privileged for some other reason. Member McFerran filed a separate opinion concurring in part and dissenting in part (MV Transportation, Inc., September 10, 2019).

Revised work policies. The employer operates a fixed route transit system in Las Vegas. Since May 23, 2014, it has recognized the union as the bargaining representative of a unit of its employees. The parties negotiated a CBA effective January 15, 2015 through August 31, 2018. On February 19, 2016, the employer sent the union a letter announcing its intent to implement new and revised work policies and asked for the union’s input prior to implementation. The union accepted some policies, rejected some, and proposed revisions to others. The employer agreed to some of the union’s proposed revisions and rejections. That same day, it presented the new and revised policies to its employees. On March 26, 2016, the employer unilaterally implemented the new and revised policies.

The union filed charges alleging that the employer violated Section 8(a)(5) and (1) by implementing five policies affecting unit employees’ terms and conditions of employment without first bargaining to impasse. It further alleged that the employer acted unlawfully when it implemented five other policies related to unit employees’ terms and conditions of employment and, in so doing, modified the CBA without the union’s consent.

Unilateral changes. It is well established that an employer does not violate the NLRA if the CBA does, in fact, grant it the right to take certain actions unilaterally. The question presented in this case concerned the standard the Board should apply to determine whether a CBA grants the employer that right.

An employer violates Section 8(a)(5) and (1) if it makes a material, substantial, and significant change regarding a mandatory subject of bargaining without first providing the union notice and a meaningful opportunity to bargain about the change to impasse, absent a valid defense. One such valid defense is that the union waived its right to bargain. The Board has traditionally applied the clear and unmistakable waiver standard, which it reaffirmed in 2007 in Provena St. Joseph Medical Center. Waiver may be based on express contractual language, the parties’ past practice, or a combination thereof.

“Clear and unmistakable waiver” standard. Under the “clear and unmistakable waiver” standard, an employer will be found to have violated the Act unless a provision of the CBA “specifically refers to the type of employer decision” at issue “or mentions the kind of factual situation” the case presents. The Board would find that an employer’s unilateral change violated the Act unless a contractual provision unequivocally and specifically referred to the type of employer action at issue.

Interpreting and applying Section 8(d), the Supreme Court has held that the “Board may not, either directly or indirectly, compel concessions or otherwise sit in judgment upon the substantive terms of collective bargaining agreements.” But that is just what the Board does when it applies the clear and unmistakable waiver standard, explained the current Board. Application of that standard typically results in a refusal to give effect to the plain terms of a CBA, so that the Board effectively writes out of the contract, language the parties agreed to put into it. Thus, concluding that the “clear and unmistakable waiver standard undermines contractual stability, the Board decided to abandon that standard in favor of the “contract coverage” standard.

Contract coverage. Several courts of appeal have expressly rejected the clear and unmistakable waiver standard and adopted instead a “covered by the contract” or “contract coverage” standard. Importantly, one of these courts includes the D.C. Circuit, which, by statute, has plenary jurisdiction to review Board decisions. The D.C. Circuit has repeatedly criticized the clear and unmistakable waiver standard, and will find that an employer’s unilateral change in a term or condition of employment is covered by the contract if the change is “within the compass” or “scope” of a contract provision that grants the employer the right to act unilaterally. Thus, the D.C. Circuit applies “ordinary principles of contract law” and gives full effect to the plain meaning of such provision.

Under the “contract coverage” or “covered by the contract” standard, the Board will examine the plain language of the parties’ collective bargaining agreement to determine whether the change made by the employer was within the compass or scope of contractual language granting the employer the right to act unilaterally. If it was, the Board will honor the plain terms of the parties’ agreement and the employer will not have violated the Act by making the change without bargaining.

However, if the agreement does not cover the employer’s disputed action, the employer will have violated the Act unless it demonstrates that the union waived its right to bargain over the change or that it was privileged to act unilaterally for some other reason, the Board explained.

Retroactive application. Finally, the Board found it appropriate to apply the contract coverage test retroactively. The Board will apply a new rule to the parties in the case in which the new rule is announced and in other cases pending at the time so long as retroactivity does not work a manifest injustice. After consideration of whether retroactive application would work a manifest injustice, the reliance of the parties on preexisting law, the effect of retroactivity on accomplishment of the purposes of the Act, and any particular injustice arising from retroactive application, the Board found that application of the new standard would not result in any manifest injustice.

Dissent. In a now familiar role, Member McFerran filed an opinion dissenting from that portion of the majority’s decision that adopted the contract coverage standard, retroactive application of the new standard, and its finding that certain unilateral acts of the employer were lawful under Section 8(a)(5) and (1). Member McFerran argued that the Board’s new standard gives employers wide berth to make unilateral changes in represented employees’ terms and conditions of employment without first bargaining with their union. Further, according to McFerran, not one of the reasons advanced by the majority for abandoning the waiver standard has substance. Moreover, she argued that the majority compounded its error by deciding to apply the new “contract coverage” standard retroactively.

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