Employment Law Daily NLRB failed to resolve key issues in contract repudiation claim, so enforcement denied
Friday, February 12, 2016

NLRB failed to resolve key issues in contract repudiation claim, so enforcement denied

By Ronald Miller, J.D. The NLRB’s analysis of a contract repudiation charge was contrary to the NLRA and pre-hire collective bargaining agreements, as construed in prior judicial decisions and the Board’s own precedent, the Eighth Circuit found, denying enforcement of a Board order. By refusing to acknowledge issues regarding the single-employee unit exception to the no-unilateral-repudiation rule for Section 8(f) CBAs, and to present evidence addressing that issue, the General Counsel had failed to prove essential elements of a union’s repudiation complaint. And, in ruling that these issues were irrelevant and failing to resolve them, the Board issued an unlawful order (NLRB v. Seedorff Masonry, Inc., February 10, 2016, Loken, J.). Construction industry proviso. Based on established practice in the construction industry, Congress enacted NLRA Section 8(f) to modify the rule that an employer may not enter into a CBA with a union that does not represent a majority of employees in a bargaining unit. For many years, the Board held that a construction industry employer could unilaterally repudiate a Sec. 8(f) pre-hire agreement any time before the union attained majority status. However, the Board overturned this rule in John Deklewa & Sons, Inc. Under Deklewa, Sec. 8(f) agreements are “binding, enforceable, and not subject to unilateral repudiation” throughout their term. Thus, an employer’s unilateral repudiation of a Sec. 8(f) agreement before its expiration violates an employer’s duty to bargain. However, the Board has carved a “single-employee unit” exception to this rule, which is critical in this case. Under this exception, when a bargaining unit consists of no more than a single permanent employee at all material times, an employer has no statutory duty to bargain. Work dispute. The employer in this case seasonally employed a workforce of bricklayers and laborers. It had pre-hire CBAs with both the laborers’ union and bricklayers’ union. The employer also signed an individual agreement to be bound to a contract between an employer association and the operating engineers union. Contractually and historically (for the last 55 years, in fact), the employer had assigned the work of “mason tending” to members of the laborers’ union. The laborers and operating engineers are fierce rivals for mason-tending forklift work on construction projects, so it was hardly surprising that the operating engineers challenged this work assignment under its Sec. 8(f) CBA with the laborers’ union. Beginning in July 2011, the operating engineers filed a series of grievances claiming that the employer violated a Sec. 8(f) project labor agreement with it by assigning laborers to operate forklifts at a prison construction site, and also that the employer violated its agreement with the employer association. The employer complained to the laborers’ district council that the operating engineers were pressuring it to reassign certain maintenance of equipment work to its members. The employer later filed an unfair labor practice charge against the operating engineers regarding the work assignment disputes. However, an NLRB regional director dismissed the charge. Thereafter, the employer attempted to discuss a settlement with the operating engineers. Subsequently, the operating engineers filed this unfair labor practice charge alleging that the employer repudiated the parties’ CBA. Unfair labor practice charge. Based on a letter sent by the employer to the operating engineers in which the employer asserted that no CBA currently existed between the employer and the operating engineers, the operating engineers (despite a grievance pending before an arbitrator) filed Board charges alleging that the employer violated the NLRA by repudiating the CBA between it and the employer association to which the employer had agreed to be bound. A law judge found the employer violated Section 8(a)(5) of the Act by repudiating a valid pre-hire CBA. The employer claimed that its actions were a lawful response to a jurisdictional dispute between the laborers and operating engineers over whether the employer was properly assigning masonry work that fell within overlapping coverages of the two unions’ pre-hire agreements. The ALJ rejected that contention, and the NLRB affirmed the law judge’s analysis. Context matters. After receiving the letter, the operating engineers had various procedural options for resolving the jurisdictional dispute, the Eighth Circuit observed. It could inquire whether the employer agreed that the arbitrator would decide arbitrability, and the parties could schedule an arbitration hearing on the question. It could ask the arbitrator to schedule the hearing, leaving the employer the option to file a Section 301 suit to enjoin arbitration. It could file a Section 301 suit to compel arbitration. Or, the union and employer could petition the Board to reconsider the competing claims issue and conduct a Section 10(k) hearing. However, the union invoked none of these available remedies. Instead, it filed this Section 8(a)(5) repudiation charge, which effectively excluded the competing laborers’ union. In these circumstances, the Board could not decide the contract repudiation issue without considering the context of the employer’s letter, noted the appeals court. After first examining whether the operating engineers’ charge was timely, the court next examined the employer’s contention that it lawfully repudiated the employer association CBA because, as the Board recognizes, an employer may unilaterally repudiate a Sec. 8(f) CBA during its term if the union has not achieved majority status. Here, the Eighth Circuit joined the Seventh Circuit in recognizing the single-employee unit exception in the Sec. 8(f) context. Single-employee unit exception. The employer presented evidence that it had not employed a member of the local operating engineers union since 2003, and only employed one out-of-territory member of another local in 2009. The ALJ erred in ruling that the employer had failed to meet its burden of proof on this affirmative defense because it did not introduce payroll records supporting “conclusory testimony” from the company’s president. The single-employee unit exception is a defense that an employer must invoke, but it is based on the principle that the NLRA does not empower the Board to certify a one-man unit. Here, the ALJ’s ruling implicitly decided an issue which the Board has never addressed: When an employer has entered into Sec. 8(f) pre-hire CBAs that define overlapping work coverages, and the employer has validly assigned all the work to members of a rival union and claims the single-employee unit exception to its Section 8(a)(5) duty to bargain with the charging party union, does the bargaining unit to which the exception applies include the second union’s employees? The logical answer is “no,” the Eighth Circuit concluded. Consequently, the appeals court declined to enforce an order that had simply refused to address the issue.

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