By Nelson Cary and Thomas Loeb
Yesterday, in a stark reversal of its precedent, the NLRB discarded the “clear and unmistakable waiver” standard. Its replacement? An employer-friendly “contract coverage” standard to determine whether a unionized employer has improperly changed a policy or practice regarding a mandatory bargaining subject.
In MV Transportation, Inc., 368 N.L.R.B. No. 66 (2019), the NLRB upheld an employer’s unilateral changes to its policies on a number of issues. These included changes to policies addressing light duty work assignments, safety issues, and adherence to work schedules. The NLRB found that provisions in the management rights clause of the applicable collective bargaining agreement (“CBA”) allowed the employer to make these changes without bargaining with the union.
The NLRB stated that it will apply the “contract coverage” standard when an employer makes a unilateral policy change based on a claim that language in the CBA allowed the employer to make the change. When an employer defends a unilateral change on that basis, the NLRB will first apply ordinary principles of contract interpretation to the plain meaning of the CBA to determine whether the scope of the applicable CBA provision(s) permits the change. The CBA need not specifically mention the policy or issue that the employer has chosen unilaterally to change.
If the plain language of the contract does not permit the employer’s unilateral policy change, however, the standard will be different. In that case, the NLRB will examine the parties’ bargaining history and past practices regarding the issue. It will continue to ask whether the union clearly and unmistakably waived its right to bargain over the change at issue.
In transitioning to the “contract coverage” standard, the NLRB outlined a litany of issues with the “clear and unmistakable waiver” test. The majority argued that the old test undermined contractual stability by requiring parties to bargain perpetually over individual issues post-implementation of the CBA. It also undermined public policy in favor of grievance arbitration by incentivizing unions to bring claims to the NLRB instead of submit them to arbitration (where the “clear and unmistakable” test is not applied) and could result in conflicting contract interpretation standards between the NLRB and the courts. Indeed, the D.C. Circuit has followed for decades the “contract coverage” standard, refusing to enforce NLRB decisions applying the “clear and unmistakable waiver” standard.
Dissenting, Member McFerran (D) started with a familiar refrain. The majority overturned decades (in this case) of NLRB precedent without notice or public participation. Member McFerran went on to argue, among other things, that the U.S. Supreme Court has endorsed the clear and unmistakable waiver standard and has granted the NLRB the primary responsibility for developing and applying national labor policy. Member McFerran also asserted that the new standard undermines the parties’ duty to bargain during the term of a CBA.
For labor professionals in unionized environments, this decision is very important development. The “clear and unmistakable” standard was, in many cases, an exercise in futility for an employer. Having negotiated broad management rights provisions in a CBA, employers were understandably upset to learn that the NLRB may not give effect to those provisions. The NLRB’s decision yesterday breathes new life into these provisions.
Of course, there is always a caveat. The decision suggests to unions that want restrictions on management’s freedom to act with respect to a particular term or condition of employment to press more forcefully for that language during negotiations. Thus, the decision may well affect the dynamic at the bargaining table.
Finally, it is important to note what the case does not decide. If the employer’s unilateral change arguably modifies a term of the CBA, the contract coverage standard does not apply. In that case, the NLRB will continue to apply its existing standard, as the majority did in this case.