Hospital didn't violate status quo by discontinuing nurses' pay raises after CBA expired
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Wednesday, June 29, 2016

Hospital didn't violate status quo by discontinuing nurses' pay raises after CBA expired

By Ronald Miller, J.D. A hospital lawfully discontinued annual pay raises for nurses after the expiration of a collective bargaining agreement, ruled the Eighth Circuit in a 2-1 decision, after the NLRB failed to show that the CBA established a status quo of annual three percent pay increases. In this instance, the appeals court pointed out that the Board’s finding of a status quo of annual raises was based on a single pay raise delineated in the CBA that contained a specific term limit. While courts have struggled with deciding how long is long enough to establish a new status quo, in this instance, the appeals court concluded that a one-time pay increase was clearly insufficient. Also, because the hospital did not violate Section 8(a)(5) of the NLRA by discontinuing the pay raises, it also did not violate the Act by informing employees that it would no longer give annual pay raises after expiration of the CBA. Judge Murphy filed a separate dissenting opinion (The Finley Hospital v. NLRB, June 27, 2016, Beam, A.). Cessation of raises. On June 20, 2005, the hospital entered into a one-year collective bargaining agreement with the union. The terms of the CBA indicated that for the duration of the agreement, the hospital would adjust the pay of nurses on his/her anniversary date. Pursuant to the CBA, the hospital gave a single raise to each of its nurses on his or her anniversary date during the one-year term. Negotiations for a new agreement began on March 28, 2006, but a new agreement had not been reached when the CBA expired on June 20, 2006. The hospital sent a letter to all union employees stating that it would not provide raises to nurses whose anniversary date fell after the date of contract expiration until the parties reached a new agreement. On June 29, 2006, the hospital submitted a proposal that would provide a three percent increase in wages. Thereafter, the union voted to strike on July 6, 7, and 8. In response, the hospital told the union it would not make wage increases in the new CBA retroactive to June 21, 2006. The union filed a complaint arguing that the hospital’s refusal to give automatic three percent raises after the expiration of the CBA amounted to a refusal to bargain in violation. NLRB ruling. The NLRB agreed with an administrative law judge that the hospital acted unlawfully by declining to give nurses additional raises after the CBA expired. It found that the one-year CBA created a status quo of annual pay raises and the hospital had an obligation under the NLRA to continue annual pay raises until a new CBA was reached or the parties bargained to an impasse. On appeal, the hospital argued that the one-year-long CBA did not establish a status quo of annual, compounded raises after the agreement expired. Alternatively, the hospital argued that the union waived its statutory right to post-expiration raises. Status quo not established. Here, the appeals court agreed with the hospital that the Board erred in holding that the one-year CBA with the union established a status quo of annual, compounded raises that must be continued after the agreement’s expiration. The unilateral change doctrine states that an employer’s unilateral change in conditions of employment under negotiation is a violation of Section 8(a)(5), for it is a circumvention of the duty to negotiate. The only exception is if the pay raises are "in line with the company’s long-standing practice of granting raises, which would then make the practice "a mere continuation of the status quo." All parties agreed that because the CBA had expired, the hospital no longer had any contractual obligations. Thus, the critical inquiry was whether there existed an established practice or status quo that created a statutory obligation of compounded, annual raises. Rather than discussing exactly how the language of the CBA established a status quo of annual pay raises, the Board simply assumed that because the agreement authorized a one-time three percent pay raise, annual three percent raises automatically became part of the status quo that must be maintained during negotiations. Single pay increase provided. The CBA provision providing for pay raises stated that it applies only "for the duration of this Agreement." The generally prevailing meaning of that phrase is that each nurse gets one three percent raise on one date during the year that the CBA is in effect. Thus, the plain language of the CBA did not provide for periodic wage increases or annual raises; rather, it set forth a straight forward, single pay increase on a particular day during the one-year contract. As such, the language of the CBA did not provide for compounded, annual raises. Accordingly, the new salary at the time the CBA expired, not the alleged practice of three percent annual pay raises, was the status quo that must be maintained throughout negotiations. Dissent. In a dissenting opinion, Judge Murphy argued that the majority had not applied the governing law to this case. He observed that under the NLRA employers are prohibited from refusing "to bargain collectively with" the employees’ representatives, and must maintain the "status quo" after a CBA expires until either a new agreement or an impasse is reached. Murphy argued that the majority’s analysis confused the union’s prima facie with the hospital’s affirmative defense of waiver. Here, he argued that the union proved its prima facie case since the nurse pay raise provision was a mandatory subject of bargaining, and an express term of the CBA. Since the hospital failed to pay nurse raises after the expiration of the CBA, but before an impasse or a new agreement, the union proved its prima facie case. The duration clauses in the pay raise provision were only relevant to the hospital’s affirmative defense of waiver, urged the dissent.

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