25 September 2019

NLRB Recognizes Employer Contractual Rights, Relaxes Standard for Unilateral Changes

In MV Transportation, Inc., 368 NLRB No. 66 (Sept. 10, 2019), unionized employers won a tremendous victory before the NLRB, giving unionized employers with collective bargaining agreements significantly more flexibility to exercise their contractual rights and to make operational changes impacting unionized employees during a labor contract without bargaining.  In short, contractual rights that employers negotiated and reserved in their labor agreements can now be exercised more fully.

In examining whether an employer has the right to make unilateral managerial or operational changes impacting employment terms for unionized workers during a labor contract, the Board had long applied the burdensome—and highly-criticized—“clear and unmistakable” waiver analysis.  That changed yesterday when the Board adopted the more logical and judicially-sanctioned “contract coverage” standard.

Under this new standard, the Board will no longer require an employer to point to detailed, specific contract language addressing the precise issue to justify a midterm change taken by an employer.  Instead, the Board will do what any court would do: examine the plain meaning in the contract “to determine whether action taken by an employer was within the compass or scope of contractual language granting the employer the right to act unilaterally.”  If so, the employer will be privileged to take that action during the term of the collective bargaining agreement.  A waiver analysis will only apply if the action is not covered by the contract’s terms.

For example, if a collective bargaining agreement contains management rights language and reserves for the employer the right to implement new rules and policies or to revise existing ones, the employer would not violate the NLRA by, for example, unilaterally implementing a new attendance policy—even if it did so without negotiating the change with the union.  Any change permitted by the contract language must be fairly covered by the contract provisions and cannot conflict with any specific terms.

This decision could be game-changing for employers looking to make operational changes during a labor agreement.  The extent of an employer’s expanded rights under this new decision will be a function of the specific language in each contract.  Accordingly, we recommend that all of our unionized employer assess their existing contract language and determine how best your organization may take advantage of its contractual rights under this favorable change in federal labor law.