NLRB Decisions Reverse Precedent And Institute New Rules For Employers

NLRB Decisions Reverse Precedent And Institute New Rules For Employers


In December 2012, the National Labor Relations Board (“NLRB” or “the Board”) issued several decisions that departed from prior precedent and set hurdles for employers when dealing with unions. The following are summaries of three significant rulings that could affect almost every employer.

NLRB Reverses 50-Year Old Precedent: Employers Must Now Continue Deducting Union Dues Even After Expiration Of A Collective Bargaining Agreement

Section 8(a)(5) of the National Labor Relations Act (“the Act”) prohibits employers from making any unilateral changes to employees’ wages, hours, or other terms and conditions of employment without first notifying and bargaining with their designated unions about the changes. In other words, employers are required to maintain the status quo for their employees’ working conditions. In Bethlehem Steel, 136 NLRB 1500 (1962), the NLRB created an exception to this rule and held that employers were allowed to unilaterally cease deducting union dues from their employees’ wages, commonly referred to as “dues checkoff,” when the effective collective bargaining agreement (“CBA”) expired. The Board reasoned that dues checkoff arrangements were intertwined with union security agreements, as the former implemented the latter. According to the Board, both provisions were necessary for the acquisition and maintenance of union membership, and the unions’ entitlement to such benefits ceased when the CBAs that created them expired.

This was one of the rare occasions in which employers were legally permitted to discontinue their contractual obligations owed to the unions while negotiating the terms of a new CBA. Over the past 50 years, Bethlehem Steel’s holding was continually affirmed despite numerous challenges to its validity in both NLRB and Circuit court decisions. See Ortiz Funeral Home Corp., 250 NLRB 730, 731 fn. 6 (1980); Peerless Roofing Co., 247 NLRB 500, 505-506 (1980); Indiana & Michigan Elec. Co., 284 NLRB 53, 55 (1987); Tampa Sheet Metal Co., 288 NLRB 322, 326 fn. 15 (1988); Southwestern Steel & Supply, Inc. v. NLRB, 806 F.2d 1111, 1114 (D.C. Cir. 1986); Sullivan Bros. Printers, Inc. v. NLRB, 99 F.3d 1217, 1232 (1st Cir. 1996); Hacienda Hotel, Inc., 355 NLRB No. 154 (2010); Hargrove Electric  Co., 358 NLRB No. 147, slip op. at 1 fn. 1 (2012). 

Recently, on December 12, 2012, the NLRB reversed the longstanding precedent set by Bethlehem Steel. In WKYC-TV, Inc., 359 NLRB No. 30 (2012), the Board held that the unilateral cessation of dues checkoff contravened the Act’s policy of encouraging collective bargaining and protecting the “full freedom” of workers to select and support their bargaining representatives. The NLRB found that dues checkoff arrangements are related to employees’ “wages, hours, and other terms and conditions of employment” and determined that there was no rationale to exempt dues checkoff from the status quo doctrine. Furthermore, the NLRB noted that language in Section 302(c)(4) of the Act implicitly indicates that dues checkoff arrangements are expected to survive beyond the lives of the CBAs establishing them. According to the NLRB’s interpretation of that Section, employers must continue deducting union dues from employees’ wages unless the employees revoke their checkoff authorizations at contract expiration.

The NLRB also took issue with the rationale of Bethlehem Steel. The Board initially noted that the Bethlehem Steel holding failed to take into account Section 302(c)(4). Then, the Board criticized Bethlehem Steel’s holding by pointing out several differences between dues checkoff arrangements and union security agreements to show that the two were not intertwined. The NLRB first noted that parties routinely implement dues checkoff arrangements without union security agreements, particularly in “right to work” states. As such, the dues checkoff arrangements could exist without union security provisions. Second, the NLRB remarked that if Congress had intended to limit dues checkoff obligations to the life of a CBA, it would have included express language in the Act to this effect, as it had done for union security agreements. Third, the Board observed that union security agreements were compulsory in nature, while dues checkoff arrangements were voluntary because employees were free to select another method of payment to the union. Finally, the NLRB noted that it previously prohibited employers from honoring union security agreements after their CBAs expired, yet the Board has never restricted employers from voluntarily continuing dues checkoff upon expiration of the CBAs.

Despite the NLRB’s reversal and criticism of Bethlehem Steel, its order provided employers with some relief. The Board’s regional offices throughout the country had filed complaints against numerous employers who discontinued dues checkoff after their CBAs expired. These complaints sought retroactive application forcing employers to reimburse the unions for past dues owed. The Board held that retroactive application of its new ruling would be manifestly unjust, as the employers relied on Bethlehem Steel over the past 50 years in good faith, even if the validity of Bethlehem Steel has been called into question on several occasions. Furthermore, in a footnote, the NLRB pointed out that employers and unions may voluntarily agree that dues checkoff obligations terminate upon the expiration of a CBA provided that the CBA contains “clear and unmistakable” language to this effect.

WKYC-TV, Inc. is a change in the Board’s position and poses a significant burden on employers, who are now legally required to continue deducting and remitting union dues even after the relevant CBA’s expiration.

NLRB Rules Newly Organized Employers Must Bargain With Unions Regarding Discipline Even Before Agreeing To The TermsOf A Collective Bargaining Agreement

Also that week, the NLRB issued a decision, Alan Ritchey, Inc., 359 NLRB No. 40 (2012), that restricts the ability of newly organized employers to discipline employees prior to negotiating or agreeing to the terms of a CBA. Prior to this decision, the NLRB has never required newly organized employers to bargain with the union before disciplining employees. In Alan Ritchey, Inc., the Board determined that the employer violated the Act by disciplining employees in accordance with the employer’s progressive discipline policy despite the fact that the employer and union had not yet negotiated collectively bargained grievance and arbitration system provisions. The NLRB held that employers must notify and bargain with the union over whether discipline should be imposed and, if so, the type of discipline to be imposed.

The Board disclaimed that this duty to give notice and bargain will usually apply to discipline that has “an inevitable and immediate impact on employees’ tenure, status, or earnings, such as suspension, demotion, or discharge” and not lesser sanctions, such as verbal or written warnings. Further, the Board held that employers do not need to negotiate to impasse but must provide “sufficient advance notice to the union to provide for meaningful discussion concerning the grounds for imposing discipline in the particular case, as well as the grounds for the form of discipline chosen, to the extent that this choice involved an exercise of discretion.” Finally, the Board noted that in “exigent circumstances, as defined, the employer may act immediately, provided that, promptly afterward, it provides the union with notice and an opportunity to bargain about the disciplinary decision and its effects” to impasse or agreement. Exigent circumstances was defined as follows: “where an employer has a reasonable, good-faith belief that an employee’s continued presence on the job presents a serious, imminent danger to the employer’s business or personnel.” Whether sufficient exigent circumstances exist is determined on a case-by-case basis, however.

Once again, the Board determined that this new rule would be applied prospectively, and not retroactively.

NLRB Requires Employers To Produce Signed Witness Statements To Unions

In yet another departure from established precedent, in Stephens Media LLC, dba Hawaii Tribune-Herald, 359 NLRB No. 39 (2012), the Board ruled that employers must produce witness statements that are signed by employees during the course of a disciplinary investigation upon request by unions. This weakens the holding of Anheuser-Busch, 237 NLRB 982 (1978), where the Board previously determined that the duty to furnish information to unions does not include the production of witness statements.   The NLRB’s ruling in Stephens Media LLC held that, in the absence of any assurances of confidentiality from the employer, signed statements by employees did not constitute witness statements that were exempt from disclosure to unions. Furthermore, the Board held that such statements do not qualify as attorney work product if they were prepared in the course of the employer’s investigation and not in anticipation of litigation.

In the end, these three decisions represent a shift by the NLRB that promotes union representation and complicates matters for employers. There is still the possibility that these decisions may be appealed, but any potential relief to employers from these decisions would come in the distant future.

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