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NLRB Continues Its Clear and Unmistakable Waiver Standard for Duty to Bargain Cases

October 5, 2007

In a recent decision, the National Labor Relations Board (“NLRB”), rejecting the contrary position of two federal appeals courts, has adhered to its longstanding rule that a unionized employer may implement new work rules, differing wage rates, changed hours, or similar workplace changes, without bargaining with the union, only if the collective bargaining agreement reveals a “clear and unmistakable waiver” of the union’s right to bargain.  Provena Hospitals, 350 N.L.R.B. No. 64 (August 16, 2007). 

The Provena case illustrates the practical impact of the continuing conflict between the NLRB and these two federal courts.  In November 2000, faced with staffing shortages, the Provena Medical Center announced and implemented lump sum incentive payments of up to $500, in addition to the hourly overtime pay otherwise required, for each registered nurse who agreed to work extra shifts during the year-end holiday period.  Similar incentives had been paid earlier the same year and two years before without objection by the nurses’ union.  Although the collective bargaining agreement allowed for additional, “extraordinary pay” when extra overtime hours were required, it did not specifically address lump sum incentive payments. 

When the union objected to the hospital’s failure to bargain before granting the incentive payments,  the hospital responded that the management rights provision of the collective bargaining agreement authorized its action and that, in any event, the union had previously acquiesced in payment of the same incentives.

Additionally, after the holiday period had passed, the hospital notified the union that it was revising its policy on attendance and tardiness and the union demanded bargaining over the impending change.  The hospital declined to bargain, again asserting that the change was authorized by the management rights clause of the agreement and that the hospital had made similar changes unilaterally, without objection by the union, in past years.

The union subsequently filed unfair labor practice charges with the NLRB, alleging that the hospital had violated its duty to bargain under the National Labor Relations Act (“NLRA”).  A two-member majority of the NLRB panel ruled that the unilateral granting of the lump sum incentive payments to meet holiday staffing shortages was not authorized by the terms of the collective bargaining agreement and that the union had not waived its right to bargain over this additional compensation.   The NLRB rejected the hospital’s contention that it had the authority to act unilaterally pursuant to the portion of the management rights clause stating that “except as specifically limited by the express provisions of this Agreement, the [hospital] retains exclusively to itself the traditional rights (as historically existed prior to union organization) to operate and manage its business and to direct its employees….”  The NLRB reasoned that this management rights clause did not expressly address lump sum incentive payments and that the agreement therefore did not reveal a “clear and unmistakable waiver” by the union of its right to bargain regarding changes in employee compensation.   The panel also rejected the hospital’s suggestion that because the agreement permitted “extraordinary pay” and stated that the hospital could “establish and change the hours of work (including overtime work) and work schedules” and could “take any and all actions it determines appropriate, including the subcontracting of work, to maintain efficiency and appropriate patient care,” the contract adequately covered the subject of incentive pay for additional shifts of work.  The NLRB reasoned that, notwithstanding these contractual provisions, there was no evidence that incentive pay was consciously explored in the bargaining that led to the current agreement, or that the union had otherwise intentionally relinquished its rights to bargain over that subject.  In the absence of an explicit contractual disclaimer or clear evidence of intentional waiver by the union during bargaining, the hospital was not authorized to act unilaterally on incentive pay for additional staffing.   The NLRB decided, therefore, that the hospital had violated its duty to bargain regarding employee compensation.  

On the other hand, the NLRB panel agreed that changes to the attendance and tardiness policies were authorized by the collective bargaining agreement’s management rights clause and there was no unlawful refusal to bargain as to those unilateral changes in working conditions.  In support of this conclusion, the NLRB noted that the management rights clause explicitly reserved to the hospital the right to “change reporting practices and procedures and/or to introduce new or improved ones, to make and enforce rules of [employee] conduct,” and “to suspend, discipline and discharge employees.”  Those provisions relinquished the union’s right to bargain over changes in attendance requirements (“reporting practices and procedures”) and the disciplinary consequences for employees failing to adhere to such newly imposed rules.  The hospital therefore had no obligation to bargain further with the union concerning those new policies.

In a similar decision, a month later, the NLRB ruled that a management rights clause did not privilege the employer to restrict employees’ personal use of the company’s e-mail system by prohibiting non-business multi-addressee, “broadcast” messages.  California Newspapers Partnership, 350 N.L.R.B. No. 89 (September 10, 2007).  The collective bargaining agreement permitted the employer “… to make and enforce…rules governing the conduct of employees within the newspaper”; however, according to the NLRB, that was “insufficient to constitute a clear and unmistakable waiver of the Union’s right to bargain over the e-mail policy.”  The NLRB relied upon an earlier decision in which it had found that an employer’s adoption of a no-tobacco rule was not privileged by a management rights clause allowing the employer to make “reasonable rules for efficiency, cleanliness, safety, attendance, conduct, and working conditions,” without bargaining specifically with the workers’ union relating to on-site tobacco usage.  350 N.L.R.B. No. 89 at slip op.1, fn 3 (citing High-Tech Cable Corp., 309 N.L.R.B. 3, 4 (1992), enf’d, 25 F.3d 1044 (5th Cir. 1994)).  In sum, the NLRB holds that, absent negotiations specific to the contemplated rule, a general contractual reference to employee conduct rules does not waive the union’s right to bargain about a new rule before it is implemented.

Several federal appeals courts have previously endorsed the NLRB’s “clear and unmistakable waiver” rule.  On the other hand, two courts have applied a more relaxed “contract coverage” test to determine whether an employer is privileged to act unilaterally.  NLRB v. United States Postal Service, 8 F.3d 832 (D.C. Cir. 1993); and Chicago Tribune Co. v. NLRB, 974 F.2d 933 (7th Cir. 1992).  Under the standard applied by these courts, where there is a contract clause that is relevant to the dispute, even if it does not explicitly address the subject at issue, it may be concluded that the parties previously bargained over the subject matter and embodied the full extent of their understanding on it in their agreement.  A dissenting member of the NLRB in the Provena Hospital case applied this standard and concluded that the hospital acted lawfully with respect to its incentive pay plan as well as regarding the change in attendance policies.

The lesson for management in these decisions is that the NLRB continues to impose an exacting requirement of specificity in management rights clauses and any other term of a collective bargaining agreement before it will permit an employer to act unilaterally in changing union-represented workers’ compensation, hours of work or any other term or condition of employment.  Although two Courts of Appeals continue to allow more liberality when interpreting managements rights clauses, most courts will enforce the NLRB’s findings of a refusal to bargain absent a union’s clear and unmistakable waiver of the right to bargain over working conditions.  Consequently, an employer should proceed with caution when it seeks to rely upon a generally worded management rights provision as a basis for imposing changes in working conditions without bargaining with an incumbent union.