Labor & Employment Law Daily Injunction barring DISH Network’s unilateral changes to wages during bargaining affirmed
Wednesday, May 23, 2018

Injunction barring DISH Network’s unilateral changes to wages during bargaining affirmed

By Ronald Miller, J.D.

Exceptional circumstances were present to grant injunctive relief to an NLRB regional director against DISH Network’s unilateral implementation of its “final offer” after declaring an impasse in negotiations with a union, agreed the Fifth Circuit. The regional director had sued the employer seeking an injunction against unilateral changes to employee wages during collective bargaining and affirming, the appeals court found that the district court made the requisite findings to meet the egregiousness test articulated in McKinney v. Creative Vision Resources, LLC (Kinard v. DISH Network Corp., May 18, 2018, Southwick, L.).

Wage compensation scheme. In 2009, DISH Network, a satellite television provider, chose two Dallas-Fort Worth area production facilities to serve as pilots for a new compensation program known as Quality Performance Compensation (QPC). The QPC program replaced the previous hourly wage compensation scheme. QPC provided a lower hourly rate supplemented by incentive pay based on certain performance metrics. At the time QPC was implemented, no DISH employees working as technicians or warehouse workers were represented by a union.

Following the introduction of QPC, employees at the two facilities certified the Communications Workers as their bargaining representative. The employees allegedly chose the union based on their dissatisfaction with QPC. At the time of union certification, QPC remained the status quo compensation scheme at the two facilities.

Reversal of positions. In July 2010, the parties began bargaining to establish an initial contract. Bargaining continued from July 2010 until November 2014, during which time DISH altered and introduced alternative methods of compensation at other facilities, but it left QPC in place at the unionized facilities. Following certification of the union and the initiation of bargaining, the introduction of improvements to equipment and procedures resulted in better employee performance under QPC incentive criteria: Wages increased substantially. Accordingly, the parties reversed their respective bargaining positions. The union now desired to keep QPC and DISH sought to eliminate it.

By March 2013, the parties reached oral agreement on numerous issues, including benefits and union recognition, leaving wages and a few other issues for continued negotiation. According to the regional director, in the following months, DISH repeatedly attempted to assert that negotiations had reached an impasse, ultimately calling for a pause in November 2013 to await the outcome of a union decertification election. The employees decided against decertification and bargaining resumed in July 2014.

Unilateral changes. In November 2014, DISH rejected a union proposal to keep QPC; it countered with a “final offer” that eliminated QPC and established lower hourly wage scales. Between November 2014 and April 2016, the parties continued to clash over the final offer. In January 2016, DISH announced that it would implement the final offer unless the union provided evidence that bargaining was not at impasse. On April 23, 2016, DISH implemented the wage changes associated with the final offer.

Under the terms of the final offer, union technicians witnessed a nearly 50 percent reduction in wages; the final offer also implemented a new healthcare policy. The union then filed an unfair labor practice charge with the NLRB. While the NLRB continues to adjudicate the unfair practices claim, the regional director filed for injunctive relief against DISH’s implementation of the final offer, which would require DISH to (1) restore all union employees to their pre-2016 wages and healthcare benefits, (2) offer interim reinstatement with prior wages and benefits to employees constructively discharged by the final offer, and (3) reinstate good faith bargaining. A district court granted the injunction with respect to wages and healthcare benefits only. The parties each filed an appeal.

Too far, or not far enough? On appeal, DISH argued that the district court went too far by granting the injunction reinstating QPC wages and healthcare benefits, while the NLRB urged that the district court did not go far enough by declining to enjoin future unilateral changes by DISH during the pending Board proceeding (the Board did not challenge the court’s refusal to reinstate constructively discharged employees nor the resumption of good faith bargaining).

Under the Fifth Circuit rule in Creative Vision, injunctive relief is equitably necessary when: (1) the employer’s alleged violations of the NLRA and the harm to the employees or union are concrete, egregious, or otherwise exceptional; and (2) those harms have not yet taken an adverse toll so that injunctive relief could meaningful preserve the status quo that existed before the wrongful acts occurred.

Egregiousness test. The district court held that DISH’s unilateral implementation of the final offer was exceptional and egregious. DISH argued the Fifth Circuit’s egregiousness test required the court to distinguish the labor practice at issue with other examples of fair or unfair labor practice case law and also that the district court erred by ignoring relevant facts, such as market wage levels.

But the appeals court found no requirement that a district court must find prior unfair labor practice cases, then contrast or compare the current case. Instead, the court should decide whether “the unfair labor practice, in the context of that particular case, had caused identifiable and substantial harms.” A district court reviewing a petition for § 10(j) injunctive relief should provide only relief that is necessary and must issue specific findings of fact that suggest harm requiring § 10(j) injunctive relief.

Here, the appeals court found that the district court made the requisite findings in determining egregiousness: (1) the 50 percent wage reduction was exceptional, (2) the new wage levels compensated certain union employees $5 less per hour than non-union employees, (3) union membership would continue to erode, and (4) loss of membership and morale presented a concrete possibility of union dissolution. Under an abuse of discretion standard, DISH did not demonstrate that the district court “based its decision upon considerations having little factual support.”

Market wage levels. With regard to the DISH’s market wage levels argument, the appeals court found this argument wrong factually, as the district court found the new wage levels were up to $5 lower per hour for union employees compared to non-union employees at neighboring branches. It rejected the employer’s argument that the wage disparity between union and non-union employees went to the “reasonable cause” prong of the § 10(j) analysis, not equitable necessity. The appeals court concluded that the district court did not err in recognizing the nearly 25 percent disparity between union wages and non-union wages, a basis that provided sufficient factual support to survive an abuse of discretion standard of review. The judgment of the district court was affirmed.

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