Labor Relations Update

NLRB: Initial Burden of Union Animus Met Largely by Timing of Employer’s Discharge of Employee

It is an unfair labor practice for an employer to retaliate against (1) union supporters pursuant to Section 8(a)(3) of the National Labor Relations Act (the “Act”), and (2) employees for filing a complaint with the National Labor Relations Board, testifying in a Board proceeding, or otherwise utilizing the Board’s processes, under Section 8(a)(4).  Both require an analysis of the employer’s motivation.  But, does an employer violate both sections of the Act under the same factual pattern?

According to the Board, not necessarily.  On February 19, 2021, the Board, in BS&B Safety Systems, LLC, 370 NLRB No. 90 (2021), held that an employer violated Section 8(a)(3) of the Act by discharging an employee for engaging in union activities, but found that the employer did not violate Section 8(a)(4), even though the employee participated and cooperated in Board proceedings over a previously-filed unfair labor practice charge.

As to the allegation of whether the employer committed unlawful discrimination, the Board affirmed the ALJ’s finding of a Section 8(a)(3) violation based almost entirely on the timing of the discharge – i.e., that the employee was discharged shortly after engaging in protected activity.  With respect to the allegation of retaliation, the Board reasoned the General Counsel failed to meet its initial burden of showing that animus against the employee based on his utilization of the Board’s processes, as opposed to his union activities, was a motivating factor in the decision to terminate him.  Key to the holding was the reaffirmance that an unfair labor practice sounding in retaliation based on the motive of Board participation cannot be extrapolated from the evidence supporting an unfair labor practice of retaliation based union support, generally. In short, the two motives cannot be mixed.

Background

The employer manufactures pressure relief devices that are used in military and non-military applications in addition to packaging and shipping the finished products to customers. The Union filed unfair labor practice charges against the Employer, alleging that the Employer violated Sections 8(a)(3) and (4) of the Act, by terminating an employee, who was the local union president.  As the local union president, the employee was an active union supporter and vocal proponent of the union’s collective bargaining demands during a heated collective bargaining negotiation – e.g., the employee coordinated activities among the bargaining unit members, such as putting stickers on their personal belongings and cars, saying “Fair Contract Now.”

The parties had entered into a board settlement regarding prior allegations by the Union against the Employer, alleging the Employer had engaged in union animus.  The local president was involved in prosecuting the original unfair labor practice charge and participated in resolving the matter.  One of the disputed issues between the parties was the number of employees the employer allowed to take vacation at one time without bargaining with the union.  Even after the settlement, the vacation issue persisted between the parties.  The local president emailed the Employer regarding the vacation issues and added, “Kicking the can down the road is lazy management & does not address anything.”  Just three hours later, the local president was suspended for an alleged production error that allegedly occurred about two and a half weeks before.

In response to the charge, the Employer argued it would have discharged the employee because he committed “an historically severe production error” that warranted termination – regardless of his union activity. The ALJ and Board disagreed, concluding that the employer did not sufficiently explain why it permitted other employees to rework significant production errors in the past nor why this employee’s mistakes were more severe than the errors of employees whom it did not discipline at all. The ALJ and Board found the Employer’s argument was a pretext since other employees had not been discharged for similar errors.

Analysis: The Same Burden Shifting Test is Used for analyzing 8(a)(3) and 8(a)(4)Allegations

As noted above, the ALJ found that the Employer violated Sections 8(a)(3) and (4) of the Act by terminating the local union president. On appeal, the Board reversed the ALJ on the Section 8(a)(4) violation and dismissed the allegation.

The Section 8(a)(3) violation was found based on the timing of the discharge, shifting reasons for the termination, and pretext suggesting union animus was the real motive for discharge. It is instructive that the Board found the General Counsel met his initial burden largely on the timing of the discharge alone, finding that the employee engaged in union activity in his role as local union president, including continuously contacting the Employer regarding vacation issues, and that the Employer was indisputably aware of his union activity. Shortly after the employee wrote a message that management was “lazy,” he was discharged.  The Board concluded that because the Employer failed to conduct a meaningful investigation of the employee’s production error and disparately treated him by firing him for this conduct, when the Employer has not always terminated employees for similar errors, constituted pretext.

As to the Section 8(a)(4) charge, the Board found the General Counsel failed to meet his burden of establishing a prima facie case – again, based primarily on the timing of the discharge and the local president’s activity.  While the employee was a named discriminatee in the prior Board charge, attended the hearing as a subpoenaed witness, and communicated with the Employer about the settlement, the Board settlement was entered into six months prior to the employee’s termination, and there was not a close nexus between the employee’s utilization of the Board’s processes and the adverse employment action.  The Board refused to conflate the protected activity motives and extrapolate from that evidence, that the employee’s participation in Board activity many months before was a motivating factor in his termination.

Takeaways

This decision reaffirms the long-standing principle that both 8(a)(3) and (4) unfair labor practices utilize the Wright Line burden shifting test, which requires the NLRB General Counsel to make a prima facie showing that discriminatory animus was present in the motivation for the adverse action.  If the General Counsel meets this burden, the test requires the Employer to rebut the claim by demonstrating a legitimate business justification.  While the same adverse employment action, such as termination, could form the basis of both an 8(a)(3) and (4) charge, the Board’s holding importantly cautions against conflating the mixed motives for the same conduct.  In other words, the General Counsel must meet his burden under Wright Line by showing a clear nexus between the adverse employment action and the discriminatory animus for union support (to establish a 8(a)(3) violation) and for utilizing the Board’s processes (to succeed on a 8(a)(4) claim).

Employers should be aware that the timing between the adverse employment action and the underlying conduct allegedly giving rise to the employment action will be an important consideration in the ALJ and Board’s analysis.  Indeed, in many cases, timing will be dispositive on the outcome.

We have said this many times, but this is a decision that easily could have come out differently with a finding of a violation as to both allegations. The Board in this case closely examined the requirements for each allegation and made a conclusion.  While there may be little material difference between one or two violations for the same event, for those employers defending such allegations, this shows how a separate legal analysis should be rendered for each separate allegation.

BREAKING: President Biden Nominates Former Deputy General Counsel Jennifer Abruzzo for NLRB General Counsel

President Biden nominated Jennifer Abruzzo, Special Counsel for Strategic Initiatives for the Communications Workers of America, to be General Counsel of the National Labor Relations Board. Abruzzo was a Board veteran with more than two decades at the agency before becoming the union’s point person on NLRB issues. She was NLRB Deputy General Counsel and then Acting General Counsel before former General Counsel Peter Robb was confirmed by the Senate.

According to the White House announcement, “Abruzzo will work to enforce U.S. labor laws that safeguards the rights of workers to join together to improve their wages and working conditions and protect against unfair labor practices.”

The position of General Counsel comes with broad discretion to shape the policy of the agency in the coming months.  The General Counsel has power to issue complaints in cases where the agency wishes to pursue novel theories under the Act and to seek reversal of existing precedent.

This nomination comes after Biden fired NLRB General Counsel Robb, former President Donald Trump’s appointee, on his first day in office. Since then, career employee Peter Sung Ohr has been serving as Acting General Counsel. Given Republicans’ criticism of the abrupt firing of Robb, Abruzzo likely will face a confirmation battle in the Senate.

We will continue to monitor developments in the composition of the Board. Subscribe to Proskauer’s Law and the Workplace blog to stay current on the latest Biden administration developments impacting your business.

No “Finite Fellows” in the Bargaining Unit – the Board Weighs in on Temporary Workers

When it comes to fellowship—and collective bargaining—it looks like “fellows” aren’t treated the same as their permanent status co-workers.  In Phoenix News Times, LLC and The Newsguild–CWA, 370 NLRB No. 84 (Feb. 10, 2021), the National Labor Relations Board (the “Board” or “NLRB”) found that workers employed at a Phoenix newspaper in a fellowship program of finite duration were temporary workers who could not be included in a bargaining unit.

Phoenix News and the Fellows

The Employer Phoenix News Times (the “Employer” or “Phoenix News”) is a news organization.  The owner of the Employer maintains a fellowship program to which journalism students and/or recent graduates can apply, and selected candidates (the “Fellows”) are assigned to one of the organization’s six publications.  Phoenix News employs the Fellows through that program.

Fellows and permanent writers on staff (the “Staff Writers”) are similar in many respects:  they use the same procedures, undergo the same review and editing process, receive the same benefits, work in the same location, use the same break rooms, and attend the same weekly staff meetings.  Both Fellows and Staff Writers also report directly to the News Editor.

However, Fellows and Staff Writers are also quite different.  Importantly, unlike Staff Writers, Fellows typically are only employed for a six-month fellowship period.  While the fellowship can be extended if the Fellow shows promise and there is a “reasonable expectation” that a permanent Staff Writer position will soon become available, these extensions were rare.  Of the 27 Fellows who worked for the owner of Phoenix News since 2013, only five had their fellowships extended for brief, finite periods of time.  Further, of the nine Fellows who completed fellowships at Phoenix News, fewer than half went on to work at Phoenix News in permanent positions.

The union filed a petition to represent a unit of Phoenix News employees, including the Fellows.  In response, Phoenix News contended that the Fellows are temporary employees who could not be properly included in the bargaining unit.

The Regional Director’s Decision

The Regional Director issued a Decision and Direction of Election, finding that the Fellows could be appropriately included in the unit.  According to the Regional Director, the Fellows should be included in the unit because they “share a community of interest with the other petitioned-for employees,” and also “have a vested interest in the terms and conditions of Staff Writers’ employment.”  In reaching his decision, the Regional Director relied on Boston Medical Center Corp., 330 NLRB 152 (1999) and similar cases, and analogized the Fellows to apprentices or medical residents who are frequently included in bargaining units.

The Board Reverses, Concludes Fellows are Temporary Employees Who are Not Appropriately Included in the Bargaining Unit

Phoenix News filed a request for review.  The Board reversed the Regional Director’s determination, finding that—as a general rule—“temporary employees” are not included in bargaining units.  The Board concluded the circumstances did not negate this general rule.  The Board focused extensively on the fact that the Fellows have a “finite” tenure with a “readily ascertainable” end date.  For example, the Board distinguished the medical residents in Boston Medical from the Fellows at issue here on the grounds that the medical residents’ tenures typically lasted a number of years, whereas the Fellows have a finite “apprenticeship period” of only 6 months.

The Board further noted that the circumstances here did not implicate any of the well-established exceptions to the general rule against including temporary employees in bargaining units.  For example, the Fellows are not akin to seasonal or recurring employees who have a reasonable expectation of year-to-year employment.  Further, if Fellows are employed beyond their six-month tenure at Phoenix News, they generally only remain on payroll for short, finite periods of time.

In sum, the Board found that the Fellows were nothing more than temporary employees who could not be properly included in the bargaining unit.  Accordingly, the Board reversed and remanded the case to the Regional Director for action consistent with the Board’s decision.

Important Takeaways

This case offers a good illustration of a tension that has existed in NLRB doctrines since the passage of the NLRA:  which employees truly comprise an appropriate bargaining unit?  A broader interpretation of the community of interest test can result in a bargaining unit with more employees.  A narrower interpretation can result in some employees—like the Fellows here—who are disenfranchised from the process and will not participate in any vote or subsequent bargaining in the event of a union victory.  This decision is one of those that likely would have a different outcome with different Board members.

The Board’s decision in Phoenix News Times makes clear that regardless of whether temporary employees have terms and conditions of employment similar to that of their full-time co-workers, the finite nature of their employment is a key factor—at least for now—in determining whether those employees can participate alongside their permanent counterparts in a bargaining unit.

NLRB Acting General Counsel Strikes Again, Directs Agency to Withdraw Complaints Attacking Neutrality Agreements

As we recently reported, National Labor Relations Board Acting General Counsel Peter Sung Ohr recently gave us a peek behind the curtain at his prosecutorial priorities as General Counsel when he rolled back a number of General Counsel Memoranda issued by his predecessor, Peter Robb.  Consistent with that roll back, Ohr recently directed the agency to withdraw complaints attacking union neutrality agreements, which were issued at Robb’s direction in an attempt to overturn Board precedent.

In September 2020, former-General Counsel Peter Robb issued a Guidance Memorandum seeking to apply closer scrutiny to neutrality agreements.  (Our blog post discussing Robb’s September 2020 memorandum is here).  In his memorandum, Robb sought to overturn the Board’s decision in Dana Corp., 356 NLRB 256 (2010), which held that neutrality agreements typically do not interfere with employee free choice and thus do not violate the National Labor Relations Act.  Although Robb’s memorandum did not create new law, it put the wheels in motion to overturn Board precedent.  Indeed, a number of complaints attacking neutrality agreements were issued at Robb’s direction and, up until Ohr’s recent roll back, were scheduled to be heard in the coming weeks.

However, on Friday January 29, 2021, Ohr put a stop to Robb’s test of the lawfulness of neutrality agreements and directed the agency to withdraw the complaints issued at Robb’s yearning.  Although Ohr issued this directive only a few days ago, complaints already have been withdrawn and hearings cancelled.  For example, on February 1, 2021, Seattle Regional Director Ronald Hooks issued an order withdrawing a complaint aimed at attacking neutrality agreements.  Citing Dana Corp., Hooks noted that Ohr “does not wish to continue the prosecution of this matter given that the Consolidated Complaint does not state a violation of current law.”

* * *

We expect the Board to be busy over the next several weeks, as Ohr’s recent Guidance Memorandum indicates that the Board will be issuing new policies in the near future.  We will, of course, continue to keep you apprised of pertinent updates as Ohr settles into his new position as Acting General Counsel.

NLRB Acting General Counsel Rolls Back Guidance from Prior Administration

On February 1, National Labor Relations Board (“NLRB”) Acting General Counsel Peter Sung Ohr rescinded a slew of General Counsel Memos issued by his predecessor, Peter Robb. On February 2, Ohr continued his actions by rolling back two Operations Management memos that were also issued during Robb’s term.

Ohr’s actions come one week after he was appointed to the post by President Biden following the unprecedented firings of Robb and NLRB Deputy General Counsel Alice Stock. According to Ohr, the rescinded memoranda are either no longer necessary or are inconsistent with the NLRA’s policy of promoting collective bargaining, self-organization, and freedom of association.

The impact of this action is limited, as it does not change existing Board precedent; however, it is instructive as to Ohr’s prosecutorial priorities as General Counsel (assuming he is appointed beyond the acting role and is confirmed by the Senate). Another variable here is that the very authority of the Acting General Counsel is cast in doubt due to the pending challenges to President Biden’s dismissal of Robb and Stock (discussed here).

Some of the memos that were rescinded are summarized below, including any specific rationale Acting General Counsel Ohr provided for doing so.

  • General Counsel Memo 18-04 (Handbook Rules Post-Boeing), which provides guidance regarding the placement of various types of employment rules into three categories set forth in the Board’s decision in The Boeing Company. According to Ohr, this Memo is being rescinded because it is no longer necessary given the number of Board cases interpreting Boeing that have been decided since the case was issued.
  • General Counsel Memo 20-13 (Employer Assistance in Union Organizing), which requires Regions to urge the Board to adopt the “more than ministerial aid” standard in charges involving union neutrality agreements in order to harmonize this with other areas of Board law, clarify ambiguity, and better protect employee free choice.
  • General Counsel Memo 20-08 (Changes to Investigative Practices), which sets forth new guidelines for how Regions conduct unfair labor practice investigations – specifically, how Regions secure the testimony of former supervisors and agents, as well as how to handle audio recordings. According to Ohr, this guidance is being rescinded because portions are inconsistent with prior practices. Ohr’s memo advises regions to “continue not to accept recordings that violate the Federal Wiretap Act and to appraise individuals who proffer recorded evidence when it may violate state law.”
  • General Counsel Memo 18-06, (Responding to Motions to Intervene by Decertification Petitioners and Employees) which instructs Regions to no longer oppose timely motions to intervene filed at or during unfair labor practice hearings by: (1) employees who have filed decertification petitions with a regional office and where the ULP proceedings may impact the validity of their petitions; and (2) employees who have circulated a document relied upon by an employer to withdraw recognition from a labor organization.
  • General Counsel Memo 19-03 (Deferral Under Dubo Manufacturing Company), which instructs Regions to defer under Dubo Manufacturing Company and to not apply Babcock & Wilcox Construction Co.
  • Operations-Management Memo 19-05 (Respondents’ Failure to Cooperate with ULP Investigations in Subsequently issued Complaints), providing that where: (1) a charged party’s lack of cooperation in a dispute is significant; and (2) the Regional Director has concluded that a complaint could issue based on the available evidence, the Director is free to issue said complaint and may include a footnote indicating the lack of cooperation in lieu of issuing an investigative subpoena. Going forward, Regional Directors may continue to use investigative subpoenas but should not note a charged party’s cooperation or lack thereof on the complaint.
  • Operations-Management Memo 20-06 (Outreach, Speaking Engagements, and Recruiting Activities), which created certain approval requirements for field staff members to engage in certain activities. Going forward, Acting General Counsel Ohr has indicated that Regional directors or their designees will make determinations as to which staff members will perform each of these functions.

Ohr has also rescinded General Counsel Memos 19-01 (clarifying that in cases where a union asserts a mere negligence defense in a duty of fair representation charge based on its having lost, misplaced or otherwise forgotten about a grievance, the union must show the existence of established, reasonable procedures in place to track grievances, without which, the defense should ordinarily fail); 19-04 (explaining the Board’s positions concerning a union’s duty to: (1) properly notify represented employees of their General Motors right to be non-union members and Beck right to be objectors; and (2) clearly and unambiguously notify employees when they may revoke their dues authorization checkoffs); 19-05 (clarifying that Memo 19-01 did not alter the analysis concerning a union’s decision whether or not to pursue a grievance); 19-06 (providing guidance regarding case handling procedures in Beck chargeability cases and the proper allocation of secondary expenses flowing from a union’s lobbying activities); and 20-09 (directing Regions to urge the Board to reverse Alamo Steel and adopt an “arguable merit” standard).

The Ohr policy memos indicate that new policies will be issued by the Board in the near future, including a memo addressing the need for more vigorous outreach, particularly to non-traditional labor communities. As always, we will continue to monitor developments related to the Board and provide updates as they develop.

* * *

Subscribe to Proskauer’s Law and the Workplace blog to stay current on the latest Biden administration developments impacting your business.

 

NLRB Sees First Challenge to the Authority of Acting NLRB General Counsel’s to Process Unfair Labor Practice Cases after Recent Shakeup

In the first known of its kind objection to an ongoing NLRB proceeding, an employer has urged the NLRB to dismiss an unfair labor charge against it, arguing that the agency is unable to prosecute the matter, in light of President Biden’s unprecedented firing of then-General Counsel Peter Robb and Deputy GC Alice Stock, and appointment of Peter Sung as Acting General Counsel.  (Discussed in our earlier blog postings here, here and here.)

In short, the Company argues that President Biden unlawfully terminated Robb, and, therefore, the Acting GC has no legal authority to prosecute labor law violations.  The Company argued that the General Counsel “is tantamount to a member of the Board,” and thus may only be removed for certain reasons as set forth in Section 3(a) of the NLRA – i.e., “upon notice and hearing, for neglect of duty or malfeasance in office, but for no other cause.”   Additionally, due to the term appointment and confirmation by the Senate of the General Counsel, the Company argued that the position does not serve at the pleasure of the President and “shows the existence of a for cause termination requirement.”

The Company also cited as evidence the prior quagmire the Board faced between 2011 and 2013, when the then-Acting General Counsel Lafe Solomon conducted his duties while awaiting confirmation that never came amidst political gridlock.  The Supreme Court ruled in 2017 (for very different reasons) that Solomon improperly served as NLRB General Counsel during that time, which cast a significant shadow over the hundreds of cases Solomon and the Regions handled.

Similarly, if successful, the outcome of this argument would be that through November 2021 (the remainder of Robb’s term had he not been fired), any action by the office of the General Counsel will be ultra vires.  In other words, the office of the General Counsel will have no lawful authority to issue complaints and prosecute unfair labor practices.  Then after the term would have expired, the office of the General Counsel will only have authority when a new General Counsel is nominated and confirmed.  The Company requested that the Board dismiss the charge for inability to prosecute or, alternatively, stay the unfair labor practice trial until Robb is reinstated or, as the Company argued, “the taint of his unlawful removal is eliminated.”

Interestingly, the motion will be decided by the existing Republican-majority board, which creates an added layer of uncertainty as to how the Board may decide the motion.

We will, of course, keep you posted on this and other similar developments.

After Unprecedented Firings of General Counsel and Deputy General Counsel, President Biden Names Peter Sung Ohr Acting General Counsel of the NLRB

President Biden named Peter Sung Ohr as Acting General Counsel of the National Labor Relations Board today. Ohr is a career employee of the NLRB, having served as a Field Attorney, Deputy Assistant General Counsel in the NLRB’s Division of Operations-Management, and as Regional Director of the Board’s Chicago Regional Office.

Biden’s action comes after firing NLRB General Counsel Robb and naming Member Lauren McFerran, the lone Democratic member of the Board, as the Chairman, on his first day in office, and firing NLRB Deputy General Counsel Alice Stock on his second day in office.

As always, we will continue to monitor developments in the composition of the Board. Subscribe to Proskauer’s Law and the Workplace blog to stay current on the latest Biden administration developments impacting your business.

BREAKING: President Biden Continues NLRB Shake-Up By Firing Acting NLRB GC

One day after a standoff between President Biden and NLRB General Counsel Peter Robb resulted in his unprecedented termination, President Biden fired the NLRB’s second-ranked attorney, NLRB Deputy General Counsel Alice Stock, according to a Bloomberg report.  Stock would have served as Acting NLRB General Counsel after Robb’s termination on January 20th.  As of this posting, it is not clear who will be appointed to serve as Acting General Counsel.  The Senate must confirm any appointee by President Biden to serve as the NLRB General Counsel.

The first couple of days of the Biden Administration have been extremely active as it relates to the NLRB, and we will continue to keep you posted! Subscribe to Proskauer’s Law and the Workplace blog to stay current on the latest Biden administration developments impacting your business.

Breaking: On First Day in Office, President Biden Shakes Up NLRB By Firing GC and Appointing New Chair

*** UPDATE: 

On his first day in office, President Biden fired NLRB General Counsel Peter Robb, according to a report by Bloomberg News. This marks the first time in the history of the NLRB that a President has terminated the agency’s General Counsel before the expiration of their term. As we reported earlier below, President Biden requested Robb’s resignation earlier in the day, and he declined.

President Biden capped off his first day by naming Member Lauren McFerran, the lone Democratic member of the Board, as the Chairman, replacing previous Chairman John Ring. We expect President Biden to fill the fifth seat of the Board in the near future. President Biden will have the opportunity to appoint a third Democratic member after Member Emanuel’s term expires this August.

We will continue to keep you posted. Subscribe to Proskauer’s Law and the Workplace blog to stay current on the latest Biden administration developments impacting your business.***

 

*** UPDATE:

NLRB General Counsel Peter Robb has declined to resign from him position, despite President Biden’s request he do so. According to a Law360 Report, the General Counsel stated that his removal would undermine the General Counsel’s office’s independence. President Biden reportedly gave Robb until 5:00 PM to resign, or else be fired.

It is not clear whether Robb remained in his position at the time of this posting. We will continue to monitor for updates. ***

 

Within hours of being sworn-in as President, President Biden’s administration asked Peter Robb, the General Counsel of the NLRB, to resign from his position, according to a Bloomberg Law report. Robb was sworn in as General Counsel on November 17, 2017 for a four year term. The Biden administration asked Robb to end his tenure about ten months early.

While President Biden cannot appoint a majority of Democratic members to the NLRB until after Member Emanuel’s term expires in August of this year, the potential replacement of the NLRB General Counsel is significant, as the GC wields prosecutorial discretion over which cases presented to the NLRB’s Regional Offices advance or not. The GC also decides which cases to submit to the Division of Advice, the manner in which unfair labor practice charges are investigated and whether injunctive relief is sought.

We will continue to monitor developments in the composition of the Board, including the likely upcoming Senate confirmation of Peter Robb’s replacement.

NLRB Finds Employer Acted Lawfully by Paying Statutory Minimum Christmas Bonus, Rejecting Unilateral Change and CBA Modification Claims

On January 14, 2021, the NLRB issued a decision in Asociacion de Empleados del Estado Libre Asociado de Puerto Rico, 370 NLRB No. 71. The decision involved the issue of whether a term of employment contained in a collective bargaining agreement continues after the expiration of the contract. This issue has been vexing for employers and unions for years.

The case centered around a Puerto Rico Law, Law No. 148, that requires certain employers to pay their employees Christmas bonuses of up to $600 annually between November 15 and December 15. The law does not apply, however, “in cases where the … employees receive an annual bonus by collective agreement.”

The employer here was a Puerto Rican corporation subject to Law No. 148. The CBA at issue ran from July 2013 through June 2017. Like all of the parties’ prior CBAs, the CBA provided for a Christmas bonus. The language at issue provided: “[The Respondent] will grant the Christmas Bonus as provided in [Law No. 148] with the following modification”. The CBA then provided for bonus payments according to differing formulas in 2013, 2014, 2015, and 2016. For context, the 2016 modification provided for a bonus of 8.65% of an employee’s salary up to a maximum of $40,000.

The issue arose when, in December 2017, during a period when no agreement was in effect, the union requested the employer pay Christmas bonuses according to the amount most recently provided for by the then-expired CBA. The employer refused, paying only $600, as required by Law No. 148. The next year, an extension agreement was in effect. The union made the same request, and the employer again refused, paying each employee a $600 bonus.

The NLRB considered the employer’s 2017 actions (when the contract was expired) and 2018 actions (which occurred during an extension) separately. It considered whether, in December 2017, the employer’s $600 bonus violated Section 8(a)(5) of the NLRA by unilaterally changing employees’ terms and conditions of employment. The Board also considered whether, in December 2018, the Respondent’s $600 bonus violated Section 8(a)(5) within the meaning of Section 8(d) by modifying the CBA. The Board answered both questions in the negative, finding the Respondent acted lawfully by paying $600 bonuses.

Unilateral Change Allegation

To address the unilateral change allegation, the NLRB relied on the CBA’s plain language. The NLRB found the CBA’s reference to the “Christmas Bonus as provided in [Law No. 148]” meant the statutory bonus amount constituted the baseline contractual bonus amount. The greater bonuses explicitly provided for in each of 2013, 2014, 2015, and 2016 were simply contractually provided-for modifications of the statutory amount. Therefore, when the 2013 – 2017 agreement expired without a successor CBA, the status quo reverted to the baseline contractual $600.

The NLRB found the parties’ intent supported this conclusion: their including language providing for modifications in each of the 4 specified years was “inconsistent with an intention that employees would continue to receive greater-than statutory bonus amounts in years other than those four…” The language evinced an intent that in case of hiatus or extension, the Respondent would provide $600 “but under the contract and not by operation of law.”

The NLRB dismissed the judge’s reasoning, which relied on the parties’ past practice of paying a bonus based on contractually provided for formulas, not the statutorily required amount. The NLRB reasoned instead that the employer’s historical practice of paying more than the statutory amount was always pursuant to the CBA, and the employer’s “history of adhering to successive contracts” did not create a past practice. Even if it did, the NLRB stated, the employer followed that practice by adhering to the post-expiration status quo in 2017.

Contract Modification Allegation

The NLRB then considered whether the employer’s $600 bonus paid in December 2018 was lawful. The Board first noted the standard for finding a violation of 8(a)(5) within the meaning of 8(d): if the employer “has a sound arguable basis for its interpretation of [the] contract…” then they have not violated the Act. This standard is met where the interpretation is at least colorable.

Here, the Board found there was only one reasonable interpretation of the contract: that the contractual baseline amount was $600, and the bonus amount was modified in only the 4 years articulated in the contract. Therefore, in December 2018, the bonus amount required by the contract was the statutorily required $600, and the employer necessarily had a sound arguable basis for interpreting the contract in this way.

Dissent

NLRB Member McFerran dissented from the Board’s decision, finding that the Board’s reliance on the contractual language was misplaced. McFerran noted that, until December 2017, employees had never received only the statutory minimum. Further, while the CBA established a Christmas bonus scale through 2016, “[it] did not address what would happen thereafter.” McFerran stated absent a successor agreement, the status quo was “defined by the 2016 bonus level, the last level specified in the expired contract and reflected in the last Christmas bonus that the Employer actually paid before its federal-law duty to maintain the status quo was triggered.”

McFerran pointed out that providing only the statutory minimum was contrary to the parties’ experience, expectations, and prior CBA’s; surely if the parties had intended to provide only the statutory amount – an “extraordinary result” – then the parties would have clearly so stated. McFerran took issue with the NLRB’s finding that the employer maintained the status quo by providing only the statutory amount, because such payment was never the practice. McFerran criticized the NLRB’s decision as being “completely divorced from the realities of the parties’ experience” which is an important consideration in the unilateral change analysis.

Takeaways

Here, the NLRB credited the CBA’s plain language in finding that bonuses above the statutory minimum were paid pursuant to a CBA which provided for the statutory minimum as the baseline contractual amount and thus, the status quo.

Currently, the starting place for the analysis of what happens post-expiration of a collective bargaining agreement starts and ends with the language of the contract. This narrow interpretation is likely to be changed in the coming years with the change in the make-up of the Board. Out of an abundance of caution, employers should consider how the language of the contract would be interpreted in the event the contract expires and a successor agreement is not immediately put into place.

LexBlog