11 September 2019

NLRB Makes It Easier for Unionized Employers to Implement Operational Changes Mid-Contract Without Bargaining

Yesterday, September, 10, unionized employers won a significant victory before the NLRB.  Following the Board’s September 10 decision in MV Transportation, Inc., all unionized employers with collective bargaining agreements will enjoy more operational flexibility and can have a greater degree of confidence in their ability to exercise their management rights (and other contractual rights) to make workplace changes impacting unionized employees without bargaining with the union.

This opportunity comes as a result of the NLRB’s decision to change the legal standard for an employer’s right to make unilateral managerial or operational changes during a labor contract that impact unionized employees.  The Board had traditionally applied a burdensome analysis that required an employer to demonstrate that the union “clearly and unmistakably” waived its right to bargain over the particular management action at issue.  This was an extremely high bar for employers to clear, and it resulted in numerous cases where employers believed in good faith that they had negotiated the right to make certain operational changes, only to have the NLRB tell them that the language in the labor agreement was not quite specific enough or did not line up quite precisely enough with the challenged action to meet the “clear and unmistakable” standard.

That standard changed yesterday when the NLRB adopted the more logical and judicially-sanctioned “contract coverage” standard.  Under this standard, the Board will examine the plain language in the contract and apply ordinary principles of contract interpretation in determining whether the contract grants the employer the right to make the operational or managerial change at issue.  If the contract “covers” the particular action, the employer will be privileged to take that action during the term of the labor contract without bargaining.  A waiver analysis will only apply if the action is simply not addressed by the contract.

For example, if a labor contract contains management rights language that 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.

This increased flexibility is not without limit—any unilateral change an employer wishes to make must still be fairly covered by the contract and cannot conflict with any other specific terms of the contract.  However, this decision provides a much greater degree of security and predictability for employers who wish to exercise their negotiated management rights under their labor contracts.  We recommend that unionized employers review and assess their existing contract language and determine how best their organizations may take advantage of this favorable change in federal labor law.  There may be real opportunities for unionized employers to make meaningful, financially beneficial changes under their contracts on matters involving workplace policies, procedures, scheduling, assignments, and work allocation.

If you have any questions about how this decision may impact your organization, please contact the authors or your Miller Johnson Employment and Labor attorney.