By Ronald Miller, J.D. Finding that Kellogg’s bargaining proposals for a local collective bargaining agreement (Memphis Agreement) did not constitute an unlawful mid-term modification of a Master Agreement in violation of the NLRA, the Sixth Circuit granted Kellogg’s petition for review of an NLRB order. The appeals court agreed with Kellogg that the Board could not rely on an effective modification theory to find that Kellogg’s proposals would modify the Master Agreement. Rather, under the Board’s precedent in Milwaukee Spring it was required to identity an express term that was directly, not effectively, modified by the employer’s proposal (Kellogg Co. v. NLRB, August 19, 2016, Gibbons, J.). The relationship between Kellogg and the union was governed by two separate agreements: the Master Agreement and the supplemental Memphis Agreement. The Master Agreement was effective from September 30, 2012 through October 3, 2015, while the Memphis Agreement was in effect from October 22, 2010 until October 20, 2013. The Master Agreement applied to four of Kellogg’s plants, including the Memphis, Tennessee, plant while the Memphis Agreement was specific to the Memphis location. The Master Agreement explicitly covered "only those matters specifically included [t]herein." Further, issues covered in the Master Agreement were not subject to negotiation "in an effort to secure changes in or to secure a new Supplemental Agreement" and issues covered in the supplemental agreements were not subject to negotiation "in an effort to secure changes in or a new version of [the Master] Agreement." Casual employees. The Master Agreement did not distinguish between regular and non-regular employees. However, the Memphis Agreement distinguished between regular and casual employees. Under the Memphis Agreement, except in limited circumstances, casual employees would only be "used after overtime has been offered to regular employees" and generally could not be used when regular employees were on layoff. The number of casual employees was also capped at 30 percent of the total number of regular employees. Aside from some "fringe benefits," such as lunch, and breaks, casual employees were otherwise not subject to the terms and conditions of the Master Agreement or Memphis Agreement. Proposed modifications. On September 17, 2013, Kellogg and the Bakery Workers union began negotiations for a successor to the Memphis Agreement that was to expire soon. The negotiations came to a standstill over Kellogg’s proposed modifications to the casual program. Under Kellogg’s proposal, the casual program would no longer serve simply to provide scheduling relief to regular employees, but would "include any employees hired by Kellogg to perform production or any other bargaining unit work covered by" the Memphis Agreement. Moreover, casual employees would no longer "be limited in the scope of their work, duties, tasks, hours, or in any other terms or conditions of employment" and could "be employed on an indefinite basis," giving Kellogg unrestricted "rights to hire, use, manage, or direct Casual employees." Casual employees would also be granted new rights, such as seniority rights, access to a grievance procedure, participation in the job bidding process, and priority in the event that Kellogg established an alternative crewing schedule. The union steadfastly refused to negotiate with Kellogg concerning these proposals. It insisted that Kellogg was attempting to bargain for amendments to the Master Agreement, rather than the Memphis Agreement. After the parties reached impasse, Kellogg locked out approximately 200 bargaining-unit employees. Board ruling. The union filed a complaint with the NLRB. Noting that the Master Agreement covered little about casual employees, but that the Memphis Agreement determined the scope and operations of the casual employee program, an administrative law judge found that the proposals were not mid-term modifications of the Master Agreement, but rather mandatory subjects of bargaining. Because the parties reached a bona fide impasse, the ALJ concluded that Kellogg was entitled to impose a lockout. However, the Board reversed the ALJ decision. The Board found that the proposal to modify the Master Agreement mid-term was non-mandatory, and could not be insisted upon as a condition for reaching an agreement for mandatory subjects. It further observed that a lockout is permissible only if undertaken in support of a legitimate bargaining position. As a result, the Board concluded, Kellogg’s attempt to compel acceptance of a mid-term modification of the Master Agreement by threatening to lockout, then locking out its employees was unlawful. Kellogg petitioned this court for review and the Board filed a cross-application for enforcement of its order. Mid-term modification. As an initial matter, the Sixth Circuit observed that parties do not have a duty to bargain over mid-term modifications of a CBA—a contract that has yet to expire. Insistence on such a subject of bargaining violates the NLRA. So does locking out employees for refusing to negotiate a mid-term modification. The Board argued that Kellogg’s proposal "would modify the unexpired Master Agreement’s [express] provisions regarding wages, benefits, overtime, and premium pay" and would further "erase the Master Agreement’s distinction between ‘regular’ and ‘nonregular’/‘casual’ employees." However, the appeals court pointed out that the Master Agreement has no "system" of regular and casual employees. Rather, it was the Memphis Agreement that defined casual employees and set forth the terms of the casual program. As a consequence, the court determined that as the Master Agreement did not distinguish between regular and casual employees aside from the limited purpose of wages, the Board was incorrect that Kellogg’s proposal erased the Master Agreement’s distinction between the two, as there was no such distinction to erase. The provisions pertaining to regular employees in the Master Agreement were untouched by the proposal. Specific contract term. The court next turned to consider the viability of the Board’s argument that Kellogg’s proposal effectively modified the Master Agreement. For its part, Kellogg argued that the Board’s decision conflicted with its precedent in Milwaukee Spring. Here, the appeals court found that many of the cases relied on by the Board included an express term that directly modified the employer’s proposal. The court concluded that the Board’s position was inconsistent with Milwaukee Spring for several reasons. First, there was no specific term in the Master Agreement modified by Kellogg’s proposal. Moreover, Milwaukee Spring and the cases interpreting it disclaimed any effective modification theory. Consequently, because Kellogg’s proposal was not a mid-term modification of the Master Agreement, its insistence upon its terms to the point of impasse, and subsequent lockout, did not violate the NLRA.
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