United States: NLRB Majority, Management Rights Clause Must Be Specific To Enable Employer To Make Unilateral Changes

Collective bargaining agreements, do not, and cannot cover every issue that will arise during their term. Matters concerning terms and conditions of employment that are not addressed in the labor contract have to be negotiated before changes can be made. Sometimes, however, the parties agree that management can make changes to certain terms and conditions of employment unilaterally during the term of the agreement through a management-rights clause. In such cases, the union waives the right to bargain over certain issues. The presence of a management-rights clause, particularly one that is detailed, is a function of leverage in bargaining, and of the history between the parties. Management-rights clauses serve an important role in labor relations as they set forth the issues the parties have agreed to leave to management's discretion. Or, at least that used to be the case.

In a recent decision, the NLRB appears to have heightened the standard for evaluating whether a union has waived the right to bargain over certain terms and conditions of employment in a management rights clause by requiring a new level of specificity in the contractual language before an employer can make unilateral changes. In Graymont PA, Inc., 364 NLRB No. 37 (June 29, 2016), a three member majority, with one member dissenting (the NLRB currently has only four members), decided that an employer violated the Act by not giving the union an adequate opportunity to bargain before it changed its existing policies.

The facts are similar to those that play out frequently in labor relations. The employer and union were parties to a collective bargaining agreement containing a broad management rights clause which, among other things, provided that the employer"[R]etains the sole and exclusive rights to manage; to direct its employees; to evaluate performance, . . to discipline and discharge for just cause, to adopt and enforce rules and regulations and policies and procedures; [and] to set and establish standards of performance for employees. . . ."

The employer decided to make changes to the existing work rules, absenteeism policy and progressive discipline policy, and before doing so informed the union. The union requested a meeting and also requested information related to the changes. The employer agreed to a meeting at which it informed the union in writing that the employer had no obligation to bargain over the revised rules, referencing the language concerning the employer's "sole and exclusive" right to "adopt and enforce" rules and regulations and policies. The employer's letter also stated that because it had no obligation to bargain over the changes it had no duty to provide the information requested by the union. During the meeting the union officials expressed concerns about the policy changes, a few of which resulted in the employer making revisions. There were no further meetings between the parties prior to the employer's implementation of the changed policies. Although the union filed a grievance over the matter, it ultimately withdrew it and filed charges with the NLRB.

An Administrative Law Judge found the employer violated the law by its implementation of the policies. The Administrative Law Judge dismissed the allegation regarding refusal to provide information because the complaint alleged only that the employer refused to provide information and the employer claimed it did not possess responsive information.

On appeal, the NLRB affirmed the violation of the duty to bargain over the changes and also found a violation with respect to the employer's delay in providing a response to the information request.

Board Majority Ruling On Management Rights

In finding a failure to bargain over the rule changes, the Board reviewed the law concerning waiver. The Board noted the longstanding "clear and unmistakable waiver" standard applied, under which the parties must "unequivocally and specifically express their mutual intention to permit unilateral action with respect to a particular employment term, notwithstanding the statutory duty to bargain that would otherwise apply." (quoting its prior decision in Provena St. Joseph Medical Center, 350 NLRB 808, 811 (2011)). The Board also noted that its precedent required the matter "at issue to have been fully discussed and consciously explored during negotiations and the union to have consciously yielded or clearly and unmistakably waived its interest in the matter." Johnson-Bateman Co., 295 NLRB 180, 185 (1989).

Applying these principles, the Board found a violation because "none of the contractual management rights provisionsspecifically reference work rules, absenteeism, or progressive discipline." The Board also noted that the employer's letter to the union "made no mention of this [the management rights] provision." The Board distinguished the language before it with language it previously found constituted a waiver of bargaining in United Technologies Corp., 287 NLRB 198, 198 (1987) enf'd 884 F.2d 1569 (2d Cir. 1989). In United Technologies, the employer unilaterally changed its progressive discipline policy. In finding no violation of the Act, the Board found the following language of the management rights clause was specific enough to privilege the employer to make the changes to the discipline system, where management had "the sole right and responsibility to direct the operations of the company and in this connection....to select, hire, and demote employees, including their right to make and apply rules and regulations for production, discipline and safety..." In contrast, the Board in Graymont found the language at issue was deficient because it did not specify "discipline" or "absentee" provisions in connection with its right to adopt and enforce rules.

NLRB Member Miscimarra dissented, writing that he would find no violation, and that the majority had unnecessarily parsed the language:

Management-rights language may be general and, at the same time, clear and unmistakable. Here, the parties agreed that Graymont reserved the right, without exception, 'to adopt and enforce rules and regulations and policies and procedure.' No reasonable person reading this language could conclude that Graymont's right of unilateral action extended to rules, regulations policies and procedures concerning some matters but not others.

Timeliness of a Response to Information Request Can Constitute Violation Even If Not Alleged In Complaint

The Board also found the employer violated the Act by failing to timely respond to the information request, even though it apparently had no relevant information to provide, and even though the delay in responding to the request was not an allegation in the complaint. In Graymont, the employer informed the union (and the NLRB) in its answer to the complaint that it did not possess any information. Graymont asserted because the complaint did not allege that the Act was violated by the delay in providing information or a response there could be no violation. In finding no violation the Administrative Law Judge relied Raley's Supermarkets and Drug Centers, 349 NLRB 26 (2007), where an allegation of delay in responding to an information request was dismissed because the complaint contained no such allegation. The Board concluded that Raley's was "wrongly decided" and specifically reversed its holding. The Board concluded that the allegations of delay and refusal to provide information are so closely related that the employer was put on notice that such a violation could be found even if it was not pled in the complaint.

* * * *

This decision demonstrates the difficulty, and uncertainty, faced by employers in asserting rights, especially in an absolutist fashion. Undoubtedly the employer believed it was asserting a right it had secured in bargaining, something for which it perhaps had made concessions. The employer even referenced the exact language upon which it was relying, only to be criticized by the Board for not specifically citing the provision. Under the Board's formulation, because in the management-rights language there was no topic identified specifically tied to allowing the employer to "adopt and enforce rules and regulations and policies and procedures," such language effectively was rendered meaningless.

The fact the union did not pursue arbitration is interesting, too; the union consciously decided to remove the dispute from the agreed upon grievance process. Finally, it is arguable that the parties did in fact bargain over the issue because the employer met with the union and made revisions to the rule changes based on the union's concerns before implementing the new rules.

As to the information request issue, the current NLRB has taken the position that all requests for information need to be responded to in a timely fashion, even if the request does not seek information the employer is required to provide.

It seems clear that management-rights language will have to be more specific to withstand the scrutiny of the NLRB. When in doubt, employers should meet with the union to fully discuss matters before making changes. Employers also should always timely respond to all information requests even if there is nothing to provide or if the request seeks information the employer believes it is not obligated to furnish to the union.

NLRB Majority, Management Rights Clause Must Be Specific To Enable Employer To Make Unilateral Changes

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