Precedent Overturned NLRB Revamps ‘Past Practice’ Unilateral Change Doctrine

By Joy Waltemath and  Lisa Milam-Perez, J.D. — On remand from the D.C. Circuit, a divided four-member NLRB held that DuPont violated Section 8(a)(5) of the Act when it made unilateral changes to bargaining unit employees’ benefit plans after expiration of a collective bargaining agreement. Reaffirming its prior stance that the precedent overturnedemployer’s unilateral changes were unlawful, the majority, more importantly, issued a doctrinal edict that “discretionary unilateral changes ostensibly made pursuant to a past practice developed under an expired management rights clause are unlawful.” The vote meant precedent overturned several Bush-era NLRB decisions along the way, explaining they were “ill-advised and unexplained departures” from well-established principles as to what constitutes a past practice that must be maintained, as status quo, in the absence of a new CBA. Member Miscimarra dissented (E.I. Du Pont de Nemours, Louisville Works, August 26, 2016).

Benefit plan changes.

DuPont offered its employees a companywide benefits package, the Beneflex Flexible Benefits Plan. The plan documents stated that the employer reserved the “sole right to change or discontinue this plan.” Its reservation-of-rights clause also stated that DuPont would only make changes to the plan during the annual enrollment period. From 1996 on, DuPont consistently made plan changes during the enrollment period, and those changes applied equally to union and nonunion employees.

Workers at DuPont’s Louisville, Kentucky and Edgemoor, Delaware facilities had long been represented by a union. Under the union contract, bargaining unit members participated in the Beneflex plan, subject to the plan documents. During the course of those CBAs, DuPont made its annual unilateral changes to the plans without objection from the union. However, after the CBAs expired, and the parties were negotiating a successor contract, the union resisted DuPont’s plan changes, filing unfair labor practice charges contending that DuPont was required to bargain over the changes. DuPont countered that it wasn’t required to bargain, citing its past practice of making annual changes while the CBA was in effect.

Prior holding

In two separate decisions in these now-consolidated cases, the NLRB found that DuPont violated the Act by making unilateral changes to unit members’ benefits plan during negotiations for a new CBA, rejecting the employer’s past practice defense. The reasoning: the “past practice” was based on changes implemented pursuant to a management rights clause; once the contract expired, the management rights clause was no longer in effect, and could no longer justify unilateral changes. DuPont had drawn the Board’s attention to its own decisions in its 2004 Courier-Journal cases, in which the Board had sanctioned a “past practice” defense to unilateral benefits changes made post-contract expiration, but the Board distinguished those rulings, noting that in those cases, the past practice had been to make unilateral changes both during the contract period and during hiatuses between contracts. Not so here.

Refusing to enforce the Board’s order, the D.C. Circuit rejected this factual distinction and found the NLRB had unjustifiably departed from its own precedent (citing additional cases in addition to Courier-Journal). The appeals court directed the Board, on remand, to confirm its precedent or explain its return to rules followed prior to these decisions. The Board chose the second option.

Precedent overturned

Consequently, in addition to Courier-Journal, the NLRB overturned its holdings in Capitol Ford (2004) and Beverly Health & Rehabilitation Services (2006), and returned to the rule followed in Beverly 2001 and Register-Guard. According to the majority, the overturned cases were irreconcilable with established Board law, which consistently has held that management-rights clauses do not extend beyond a CBA’s expiration (absent evidence that the parties intended the contrary). This is because, as Beverly 2001 and Register Guard made clear, in agreeing to a management-rights clause waiving its right to challenge an employer’s unilateral changes, the union does so only for the life of the contract. For good measure, the Board cited the Supreme Court’s “seminal” 1962 decision in NLRB v. Katz in support of the notion that, while terms and conditions of employment can be said to “survive contract expiration,” it is only to protect the ongoing bargaining duty—and “not by any lingering force of the contract.”

Moreover, the “past practice” rationale for permitting unilateral changes post-expiration, as embodied in Courier-Journal, cannot be reconciled with traditional past practice doctrine, according to the majority. “In the decades since Katz,” the Board explained, “the Board has narrowly interpreted when a past practice was sufficiently fixed as to timing and criteria—thereby limiting employer discretion—as to deem further changes to be a permissible continuation of the dynamic status quo.” In Courier-Journal, the Board asserted that the employer’s ability to make unilateral changes was sufficiently limited in this vein because any changes for bargaining unit employees had to be the same as for nonunion employees. But that wasn’t much of a restraint, the Board observed here, since employers are free to change—or even eliminate completely—benefits for nonunion employees. As such, there were no “fixed criteria limiting that discretion.” Because the Courier-Journal majority could not hang its hat on the “past practice” rationale then, the only possible source of authority for allowing post-expiration unilateral changes would be the union’s waiver and acquiescence, the current majority argued. But again, waiver cannot extend past the expiration of the contract, so reliance on this notion was misplaced, the majority reasoned.

Also problematic, in the majority’s view, was that Courier-Journal had created an illogical dichotomy under which an employer had more latitude to make discretionary, unilateral changes while bargaining for a successor contract than when negotiating an initial agreement. Accordingly, the Board overturned it, along with its holding that when an employer treats unit and nonunit employees alike while making broad discretionary changes, this is a sufficient “fixed criteria” to establish a past practice status quo. And, applying these principles to the case at hand, the Board stood firm in its holding that DuPont violated the Act.

Dissent

In a lengthy dissent, Member Miscimarra took issue with what, in his view, was the majority’s redefinition of the term “change,” for purposes of a unilateral change—a definition that was irreconcilable with Katz and which “defies common sense.” His construction of the term was a simpler one: changes are “actions that materially differ from what has occurred in the past.” Under this framework, in unilaterally altering its benefits plan in congruity with its nonunion employees, DuPont was perfectly in keeping with its past practice throughout the parties’ longstanding bargaining relationship—whether there was an operative CBA in effect or no. “Under Katz, an employer must provide notice and the opportunity for bargaining before making a ‘change’ in employment matters, and bargaining is not required when no ‘change’ has occurred. Where, as here, the employer takes actions that are not materially different from what has been done in the past, no ‘change’ has occurred and the employer’s unilateral actions do not violate Section 8(a)(5) of the Act,” Miscimarra argued, quite simply.

As a practical matter, too, the majority’s approach is inherently unworkable, serves no rational policy basis, and would disrupt the collective bargaining process, according to Miscimarra. He warned of the “meticulous scrutiny into myriad details” that must now inevitably follow in such cases under the majority’s approach: inquiries into when a unilateral change occurred and to what extent a change coincided with periods when a CBA was in effect or was in a hiatus period, what contract terms were in place in any prior CBAs regarding “past practice,” what came first—the CBAs or the practice—and the like.

As for the case at hand, Miscimarra found it “ironic that my colleagues have insisted on completely overhauling the Act’s treatment of bargaining obligations in the instant case,” since it could have been resolved on DuPont’s apparent refusal to bargain when the union requested it. “Such a refusal would clearly constitute a violation of Section 8(a)(5), not because it is a unilateral ‘change’ under Katz, but rather because it violates an employer’s separate duty to bargain upon request regarding any mandatory subject, and this separate duty is completely unaffected by any past practice.” Miscimarra might have been inclined to find support in the record for a refusal-to-bargain violation. “Unfortunately, perhaps in the Board’s zeal to use this case to substantially reformulate what constitutes an unlawful unilateral ‘change’ within the meaning of Katz, this case was litigated solely on this basis.”

Source: Employment Law Daily Newsfeed

List your business in the premium web directory for free This website is listed under Human Resources Directory

Leave a Reply