Labor & Employment Law Daily Hospital employer unlawfully discontinued anniversary step increases after CBA expired
Tuesday, May 22, 2018

Hospital employer unlawfully discontinued anniversary step increases after CBA expired

By Brandi O. Brown, J.D.

An employer acted unlawfully when it unilaterally discontinued anniversary step increases due to bargaining unit employees after the expiration of a collective bargaining agreement, ruled the D.C. Circuit. The court granted the NLRB’s application for enforcement of its order requiring the employer to resume the step increases and make affected employees whole. The court also agreed that the employer violated its duty to provide relevant information during negotiations with the union. The employer’s petition for review of the NLRB order was denied (Prime Healthcare Services – Encino LLC, dba Encino Hospital Medical Center v. NLRB, May 18, 2018, Edwards, H.).

CBAs expired. In 2008, when the employer acquired two hospitals in California, it also adopted the collective bargaining agreements that were in force at that time, one with a unit of registered nurses (”121RN”) and two with units of service and technical employees (”UHW”). The agreements were effective 2007 through March of 2011. In the months leading up to expiration of the agreements, the employer negotiated with 121RN and UHW over new agreements. However, the contracts expired without the parties having reached any new agreements.

Employer stops anniversary increases. The expired CBAs included separate provisions regarding annual hospital-wide wage increases and recurring step increases based on 12-month date-of-hire anniversary periods. After the CBAs expired the annual hospital-wide wage increases expired, but the employer initially agreed that unit employees would continue to receive the anniversary step increases. However, by late 2011 it had changed its mind, concluding that the increases did not survive expiration of the contract. To support its decision, the employer argued that the anniversary step increase provision referenced the expired annual increase provision, which had expired, and thus the anniversary provision had expired as well. It stopped paying the step increases.

Another issue that arose during contract negotiations was the employer’s refusal to provide certain information requested by 121RN (and later UHW) related to health care benefits. The employer balked, demanding further information about why the requested information was needed. Although bargaining over health care issues continued, the unions filed unfair labor practices with the NLRB.

NLRB decision. The Board’s Acting General Counsel investigated and issued a consolidated complaint against the employer, alleging it had violated Section 8(a)(5) and (1) of the NLRA by discontinuing step increases and by failing to provide relevant, necessary information that had been requested by the unions. An ALJ issued a recommended order and decision finding that the employer had violated the NLRA and the Board adopted those findings and conclusions. It directed the employer to provide the requested information and to resume granting step increases and make eligible employees whole. The employer petitioned for review and the Board filed a cross-application for enforcement. The unions intervened. Thereafter, however, the UHW and the hospitals reached a settlement with the Board.

Anniversary increases should have continued. Based on the record, the court agreed with the Board that the employer breached its duty to bargain when it unilaterally ended the anniversary step increases. Under the unilateral change doctrine, the court explained, an employer is not allowed to change a term or condition of employment unless a new agreement has been reached with the bargaining agent or they have bargained to impasse. The employer did not dispute that the step increase provision was a mandatory subject of bargaining and an established term of employment under the agreement and it did not claim the parties had reached an impasse. Rather, it argued that the provision terminated with the expiration of the agreement because it was tied to another provision—the annual increase provision—that had terminated with expiration of the agreement based on its expressed terms. Absent such terms, the employer must maintain the “status quo” in order to avoid violating the unilateral change doctrine.

However, the appeals court remained unconvinced. The anniversary step increase provision did not, by its terms, provide for cessation at the agreement’s expiration and, without such “explicit language” it remained part of the status quo. The provision provided “no date certain” for those increases to end. By contrast, it was “clear from the terms of the annual increase provision” that those increases were due only in the years indicated within the contract. Without language in the agreement providing otherwise, therefore, the anniversary step increases were part of the status quo and should have continued after expiration of the contract. The language tying the provision to the annual increase provision “has no bearing on whether the anniversary step increases also expired.” Rather, the reference indicated “only” that the step increases would be provided in addition to the annual increases and that they were subject to the total annual increase cap.

Refusal to provide info. With regard to the information requested by 121RN, which the Board had ordered the employer to provide, the court found the Board’s decision to be consistent with established precedent and supported by substantial evidence. The employer’s biggest concern with respect to the information sought by the two union representatives was that the information was sought for illegitimate purposes. The employer feared that UHW, which had made similar requests, had been working with the competitor to try to squeeze it out of the California health care market and based on those concerns argued that 121RN had a duty to provide further explanation to justify the relevance of the requested information. However, the court saw no reason to question the Board’s conclusion that the “mere similarity” between the information requested by the two unions was not sufficient to rebut the presumption that the information sought was relevant to bargaining.

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