The last few months have seen very little in the way of NLRB decisions. The recent Supreme Court decision where the recess appointments to the NLRB were invalidated, likely will further slow down the process of issuing decisions.
Still, the NLRB has had a full complement of members for almost a year, and the agency manages to push out some decisions.
The Board recently overturned a decertification election where the union lost in a close vote of 69 for and 70 against the union, with 3 challenged ballots. based on a novel interpretation of some language in the employer’s handbook. In UniFirst Corporation, 361 NLRB No. 1 (July 15, 2014) the employees petitioned to decertify their union. During the campaign leading up to the vote, representatives of the employer pointed out to the employees how the unrepresented employees were able to participate in the employer’s 401(k) program. The employer made statements to the effect of, “trust him, vote no and take their union dues and put them into the” existing 401(k).
The Board found statements like these to be an implied promise to grant a benefit “because the evidence shows that the Employer specifically linked the receipt of the 401(k) and profit-sharing plans to voting against the Union in the upcoming decertification election.”
But was such a statement an implied promise? It would seem to depend on whether all unrepresented employees were automatically eligible to participate in the existing 401(k); if so, the employees would be allowed to participate if they ended representation. There would be no promise because the employer was merely pointing out a fact.
The Board majority reasoned the employer’s statements were a promise, and therefore objectionable, based on an interesting interpretation of the employer’s handbook. The Board majority stated:
Here, neither the Employer’s handbook…., nor any other evidence shows that….the Employer was required under its plans to automatically cover employees if they decertified the Union. Indeed, the handbook’s statement reserving to the Employer the discretion to modify or terminate the retirement plans weighs against a finding that the benefits were automatic.
Thus, the Board uses the handbook in two ways that likely were not contemplated by the employer. First, it reasoned that the absence of language that an employer was “required” to “automatically cover” employees necessarily means that it would have to take some additional action to grant the benefit if employees chose to decertify. The Board found it objectionable that the language in the handbook was not explicit enough even though the handbook explained the eligibility requirements. Second, the Board interpreted the existing reservation of rights language in a manner that is new. Thus, the Board interprets that language as actually saying that the employer was offering to do something new for employees if they ended union representation. This interpretation is entirely hypothetical and contrary to practice.
Every handbook states that its contents can be changed. Such statements are common and necessary. The operative inquiry should have focused on the reality (whether the unrepresented employees all were eligible to participate in the 401(k)), and the plan document itself, which would explain eligibility requirements. Most 401(k) documents explicitly state, for instance, that employees who are represented by a union are not eligible to participate; therefore, ending representation would have given rise to eligibility. This means means no additional “grant” of the benefit by the employer would have had to occur, it would have been automatic. The employees’ actions in voting out the union would have made them eligible, not anything the employer would have had to do. Moreover, it is doubtful that the reservation of rights in a handbook could be translated into discretion to change the 401(k) plan document, which has its own requirements for modification.
Member Johnson, in a dissenting opinion, recognized the distinction, noting, “[h]ere, as found by the hearing officer, the Employer informed employees–in the give and take of voluntary employee meetings–about benefit plans it offered to unrepresented employees.” Member Johnson concluded the evidence in the record did not support the objection to the election:
I conclude that the Employer simply informed employees of the ‘historical facts’ regarding benefits that were available to unrepresented employees. Indeed, contrary to my colleagues, I believe that the employee handbook in the record unequivocally shows that employees would automatically be eligible for these benefits, by the terms of the Retirement Savings plan, subject only to length of service requirements applicable to all nonunit employees. The fact that the Employer has the authority to modify or terminate retirement benefits for all covered employees is irrelevant. Such a reservation of rights is commonplace in employee benefit plans. There is no evidence whatsoever that the Employer has or would choose to exercise discretion to change eligibility requirements, change vesting rights, or deny coverage to any subgroup of nonunit employees.
Of course, as we have pointed out in previous posts, there are many obstacles to allowing a group of employees to simply vote out its union representative, so the case is not at all surprising. It is another example of the Board’s tendency to focus on a few words in a policy and apply meaning without regard to context or intent.