United States: More Good News From The Board: NLRB Scraps The Clear And Unmistakable Waiver Standard For The Contract Coverage Test When Deciding Unilateral Change Cases

Last Updated: September 16 2019
Article by Keahn N. Morris, John S. Bolesta and James R. Hays

A flurry of critical cases have issued out of the NLRB over the past two weeks. The latest is the Board's decision in MV Transportation, 368 NLRB No. 66 (2019), and the Board's decision provides critical cover to employers seeking to make changes to working conditions without first bargaining with an incumbent union. By way of background, the NLRA requires employers and unions to bargain in good faith with respect to wages, hours and working conditions (mandatory bargaining subjects). The end product of that bargaining process is the parties' collective bargaining agreement (CBA), which serves as the physical embodiment of the parties' bargained-for deal and contains the language on which the parties have agreed. It is that language that determines each parties' rights, duties and obligations under the CBA and, now, under the Act. While it is well established that an employer does not violate the Act if the collective-bargaining agreement does, in fact, grant the employer the right to take certain actions unilaterally (i.e., without further bargaining with the union), unanticipated issues and controversies often arise over whether an employer's conduct is permitted under the CBA or not. Indeed, despite the most careful drafting, there will be times when a CBA's language, though perhaps arguably applicable to the given situation, will not be directly on point and/or require interpretation to determine the parties' rights and obligations under the CBA. The question presented in MV Transportation concerns the standard the Board should apply to determine whether a collective-bargaining agreement grants the employer that right.

The Board in MV Transportation announced that it would no longer apply the "clear and unmistakable waiver" standard when evaluating the lawfulness of an employer's unilateral change in working conditions and that it would decide such cases in the future by means of the "contract coverage" test. The Board's members have been split on this issue for quite some time. Indeed, the last time the full Board addressed this issue was in 2007 when the Board issued Provena Hospitals d/b/a Provena St. Joseph Medical Center, 350 NLRB 808, when a divided Board reaffirmed the Agency's use of the "clear and unmistakable waiver" standard over the dissent of then Chairman Battista. The Board's new decision in MV Transportation overrules Provena and adopts the "contract coverage" standard. The Board's shift in standards has significant implications for unions and employers alike.

Previously, when applying the clear and unmistakable waiver standard to a controversy, the Board would ask and answer the question, "Does the CBA contain a provision that specifically addresses and governs this controversy?" If the answer to that interrogatory was "No," then the Board typically concluded that the contract did not govern the controversy and the Union had not clearly and unmistakably waived its statutory right to bargain over the employer's conduct, rendering that conduct an unfair labor practice because it was a unilateral change in working conditions implemented without prior bargaining with the union.

However, applying the newly-announced MV Transportation contract coverage test to the controversy, an entirely different result obtains. Now, the Board embarks on a completely different inquiry, asking the following question: "Viewing the alleged change in the context of the terms of the parties' CBA, is that purported change within the 'compass' or 'scope' of the contract's provisions that grant the employer the authority to act unilaterally?" If the answer to that question is "yes," then the employer's so-called change may give rise to a contract dispute requiring an interpretation of the language of the CBA by an arbitrator, but it will not be considered a unilateral change requiring pre-implementation bargaining because the parties have already bargained over the issue and because the dispute is "covered" and, thus, governed by the parties' existing CBA.

The current Board opted this change for a whole host of reasons. It concluded the "clear and unmistakable" waiver standard did not effectuate the underlying policies of the NLRA because it 1.) resulted in the Board having to sit in needless judgment of the parties' contract terms by selectively applying exacting scrutiny to only those CBA provisions that vested in the employer a right to act unilaterally and not giving effect to the entire agreement; 2.) undermined contractual stability and altered the deal struck by the parties in collective bargaining; and 3.) undermined the grievance and arbitration process. It also observed that the "clear and unmistakable" waiver standard created the risk of conflicting interpretations between the Board and the courts, noting that the Board cases relying on the standard had often been denied enforcement by the courts of appeal reviewing the Board's decisions, as several appellate courts have opted instead to apply the "contract coverage" test.

In contrast to the "clear and unmistakable" waiver standard, the "contract coverage" test supports the practice and procedure of collective bargaining by encouraging employers and unions to engage in an effort to foresee potential issues and resolve them through collective bargaining with the aim of reaching a final agreement. In the Board's view, collective bargaining is a means to an end, not an end in itself, and the "clear and unmistakable" waiver standard results in perpetual bargaining at the expense of contractual stability and repose. Further, it ends the Board's practice of selectively scrutinizing limited portions of a CBA and sitting in judgment of the parties' terms by refusing to give them effect unless those terms satisfied what essentially was an impossible-to-meet specificity test. Finally, in the Board's view, going to the "contract coverage" standard would discourage forum shopping since the Board would be applying the same standard that arbitrators apply to unilateral change disputes, there would no longer be an incentive to bypass grievance arbitration and such disputes will instead be channeled into the dispute resolution method agreed upon by the parties as Congress intended when it passed the Act.

TAKEAWAYS:

  1. Though a union's waiver may later become an issue, should an employer's actions flunk the "contract coverage" test, an employer covered by a CBA need not prove in the first instance that its CBA contains specific language authorizing its unilateral action without prior bargaining. It will be enough for the employer to show that its conduct is within the compass, coverage or contemplation of the parties' CBA language, meaning that the parties' have already bargained over the issue and that the change which is the subject of a dispute is a question of contract interpretation to be decided by an arbitrator, but not a unilateral change in working conditions or a ULP within the meaning of the Act.
  2. Where a CBA contains such enabling "contract coverage" language, an employer need no longer bargain with its union before implementing change.
  3. Employers with CBA's should carefully inventory their labor contracts to identify language that will enable them to take unilateral action, paying particular attention to their management rights clauses, their discipline and discharge provisions and grievance and arbitration procedures. Where such enabling language is missing from their CBA's, employers should make the inclusion of such language a high priority for their next labor negotiation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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