The NLRB continues to churn out decisions post-Labor Day.  On September 4, in a 2-1 decision,  (Chairman Ring and Member Kaplan, with Member McFerran dissenting), the NLRB found that  E.I. DuPont De Nemours did not violate the NLRA by unilaterally implementing changes to its company-wide retiree medical and dental plans based on the unions’ waiver of the right to bargain over such changes.

Although not reversing precedent, the Board signaled its inclination to reconsider what a collective bargaining agreement must contain to meet the “clear and unmistakable” waiver standard when an employer seeks to modify or terminate an existing benefit plan, suggesting in a footnote that a CBA need only make a brief, general reference to a benefit plan that includes a “reservation-of-rights” clause, rather than an express reference to that clause or to plan documents of which it is a part.

Key Facts

DuPont has company-wide medical and dental plans that apply to active members of the bargaining unit and retirees.  Three facilities were involved in the case:  Richmond, Nashville and Louisville, where employees are represented by different locals of the International Brotherhood of the DuPont Workers.  Each unit has had its own collective bargaining agreement and separate bargaining histories with DuPont, but at all those locations the unions have agreed to participate in the company-wide plans.

The benefit plans contained a reservation-of-rights provision, which provided that the employer retained the right to modify or terminate the benefit plan at its discretion.  The CBAs contained an “Industrial Relations Plans and Practices” article that listed the applicable company-wide benefit plans, and recognized the employer’s right to make changes to or terminate the plans, subject to any restrictions set forth in the article and applicable benefit plan documents.

In 2013, the employer ceased providing Medicare-eligible retirees (MERs) medical and dental coverage through the plans, and instead provided them with funds to purchase secondary medical and dental health benefits through a health reimbursement agreement.  This change would apply to current bargaining unit members when they become MERs.  The local unions were provided advance notice of the changes and objected; DuPont unilaterally implemented those changes pursuant to its reservation-of-rights authority.

Board Majority’s Decision Finding Waiver of the Right to Bargain

The Board reversed the ALJ and found that an “amalgam” of factors established a clear and unmistakable waiver of DuPont’s bargaining obligation:

  • Contractual Language: The parties’ collective bargaining agreements incorporated reservation-of-rights language from the benefit plan documents, enabling DuPont to terminate or modify the plans at its discretion; the CBAs further acknowledged that participation was “subject to the provisions of such Plans.”
  • Bargaining History: The parties’ bargaining history also supported a waiver finding because during negotiations, the unions expressly agreed to participate in the plans subject to DuPont’s reservation of rights to modify or terminate.
  • Past Practice: Although a union’s acquiescence standing alone cannot operate as a waiver, the majority found that waiver can be inferred from past practice, even a single instance.  Here, over several decades DuPont had implemented numerous changes to the plans unilaterally, without union objection.

These factors, taken together, supported the conclusion that the unions waived the right to bargain over the changes implemented to DuPont’s company-wide plans for retirees.

Member McFerran’s Dissent

Member McFerran dissented, reasoning that there was no evidence of contractual waiver pursuant to the reservation-of-rights clauses in the CBAs.  Moreover, bargaining history and past practice cannot compensate for the absence of contractual language evidencing a union’s clear and unmistakable waiver. The dissent cautioned that the majority’s endorsement of the notion that an “amalgam” of factors could establish waiver in a particular case, would undermine the “clear and unmistakable waiver standard.”

Takeaways:  Language Necessary to Establish Waiver and More Changes on the Horizon

As noted, this case did not reverse precedent, but is noteworthy nonetheless for what it instructs regarding modification/termination of benefit plans, and the contractual language required to demonstrate waiver and the right to act unilaterally.

In brief, the current state of the law is such that for a contractual waiver over an employer’s right to unilaterally modify or terminate the terms of a benefit plan, the CBA must:

  • Specifically include reservation-of-rights language; or
  • Specifically reference plan documents or summary plan descriptions that contain reservation-of-rights; or
  • Provide that participation in the plan is subject to the terms of the plan (which contains the reservation-of-rights language).

The real significance of this decision is the Board’s foreshadowing of future action.  The Board recognized the current, not uncommon tension between the Board and the D.C. Circuit Court of Appeals regarding the quantum of proof required to establish that a benefit plan, including reservation of rights language, has been effectively incorporated by reference in a CBA.

The Board has held that a CBA must expressly incorporate the reservation of rights clause  by reference or expressly incorporate the summary plan description that contains such language.  On the other hand, the D.C. Circuit has held that “brief, general references” to a benefit plan in a CBA is sufficient to incorporate by reference all provisions of the plan, including reservation-of-rights language.  See, e.g., Amoco Chemical Co., 328 NLRB 1220 (1990), enf. denied 217 F.3d 869 (D.C. Cir. 2000).  While the facts of this case did not require the Board to grapple with this issue and overturn precedent (because, according to the majority, the agreements specifically incorporated by reference the plan documents), the fact that the Board noted it “would be willing to reconsider” its precedent on this issue, clearly signals a willingness to move in the direction of  the D.C. Circuit on this issue once the right case comes along.

So, stay tuned!

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Photo of Peter D. Conrad Peter D. Conrad

Peter D. Conrad began his legal career as a trial attorney and hearing officer at the National Labor Relations Board.

He has represented employers in numerous industries (including health care, higher education, financial services, trucking, pharmaceutical, petrochemical, telecommunications, legal services, publishing, retail, broadcasting…

Peter D. Conrad began his legal career as a trial attorney and hearing officer at the National Labor Relations Board.

He has represented employers in numerous industries (including health care, higher education, financial services, trucking, pharmaceutical, petrochemical, telecommunications, legal services, publishing, retail, broadcasting, entertainment, hotel and professional sports) in the full range of unfair labor practice and election proceedings before the NLRB. In the nearly 30 years that Peter has handled matters at the NLRB, he has confronted virtually every issue that a labor lawyer practicing in this area could expect to see, from the straightforward discharge for union activity, to the most complex secondary boycott, successorship and refusal-to-bargain situations, representing some of the firm’s most prestigious clients.

The remainder of Peter’s time was devoted to the related areas of union avoidance and corporate campaigns (defending employers against organizational activity in its many forms), as well as arbitration, negotiation, and litigation under collective bargaining agreements. Although primarily engaged in a more traditional labor relations practice, Peter also represents companies in employment discrimination cases (before state and federal administrative agencies and in the courts), workers’ compensation and unemployment insurance proceedings, and general client counseling in all areas of labor relations and employment law.

The clients that Peter represented on a regular basis include T-Mobile USA, United Parcel Service, Consolidated Edison Company of New York, Barneys New York, Delaware North Companies, Castle Oil Corporation, and Otis Elevator Company, to name a few.

As a member of the interdepartmental Sports Law Group, Peter also has done work over the years for the National Basketball Association, the National Hockey League, Major League Baseball and the Major Indoor Soccer League, primarily in matters pending at the NLRB, including the 1995 attempted decertification of the National Basketball Players’ Association and the much more recent season-long lockout by the NHL in 2004/2005.

Peter has been a member of the faculty of the Practising Law Institute since 1987, speaking on the labor and employment law aspects of “Acquiring or Selling the Privately Held Company.”

Photo of Joshua Fox Joshua Fox

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several…

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several Major League Baseball Clubs in all aspects of the salary arbitration process, including the Miami Marlins, Boston Red Sox, Los Angeles Dodgers, Kansas City Royals, San Francisco Giants, Tampa Bay Rays and Toronto Blue Jays. In particular, Josh successfully represented the Miami Marlins in their case against All-Star Catcher J.T. Realmuto, which was a significant club victory in salary arbitration. Josh also represents Major League Baseball and its clubs in ongoing litigation brought by current and former minor league players who allege minimum wage and overtime violations. Josh participated on the team that successfully defended Major League Baseball in a wage-and-hour lawsuit brought by a former volunteer for the 2013 All-Star FanFest, who alleged minimum wage violations under federal and state law. The lawsuit was dismissed by the federal district court, and was affirmed by the U.S. Court of Appeals for the Second Circuit.

Josh also has extensive experience representing professional sports leagues and teams in grievance arbitration proceedings, including playing a vital role in all aspects of the grievance challenging the suspension for use of performance-enhancing drugs of then-New York Yankees third baseman Alex Rodriguez. Josh also has counseled NHL Clubs and served on the trial teams for grievances alleging violations of the collective bargaining agreement, including cases involving use of performance-enhancing substances, domestic violence issues, and supplementary discipline for on-ice conduct. He has played a key role in representing professional sports leagues in all aspects of their collective bargaining negotiations with players and officials, including the Major League Baseball, National Hockey League, the National Football League, Major League Soccer, the Professional Referee Organization, and the National Basketball Association,.

In addition, Josh has extensive experience representing clients in the performing arts industry, including the New York City Ballet, New York City Opera, Big Apple Circus, among many others, in collective bargaining negotiations with performers and musicians, the administration of their collective bargaining agreements, and in grievance arbitrations.

Josh also represents a diverse range of clients, including real estate developers and contractors, pipe line contractors, hospitals, hotels, manufacturers and public employers, in collective bargaining, counseling on general employment matters and proceedings before the National Labor Relations Board, New York State Public Employment Relations Board and arbitrators.

Josh has also recently served as an adjunct professor at Cornell University’s School of Industrial Labor Relations for the past two years, teaching a course regarding Major League Baseball salary arbitration.

Prior to joining Proskauer, Josh worked for a year and a half at the National Hockey League, where he was involved in all labor and employment matters, including preparations for collective bargaining, grievance arbitration, contract drafting and reviewing and employment counseling. Josh also interned in the labor relations department of Major League Baseball and at Region 2 of the National Labor Relations Board. He was a member of the Brooklyn Law Review and the Appellate Moot Court Honor Society and served as president of the Brooklyn Entertainment and Sports Law Society.