United States: NLRB Majority Stuns Nation By Ruling Employer Has Management Right, Chairman Dissents

Last Updated: November 22 2016
Article by Mark Theodore

In another example of the inconsistency of the current state of Board law, a 2-1 majority of the NLRB ruled that an employer not only had a management right but it wasn't necessary that this right be expressly set forth in the parties' contract. This is certainly odd because the NLRB went out of its way during the Summer to declare a pretty specific management rights clause was insufficient. What makes the recent decision an even greater oddity is that the Board majority did not include Chairman Pearce, who dissented to the finding.

In Weavexx, LLC, 364 NLRB No. 141 (November 2, 2016) the Board was confronted with a situation where the parent of the employer was trying to standardize payroll practices across its subsidiaries by insisting on bi-weekly payroll. The employer, Weavexx, a manufacturer of felt used in paper products, had a unionized facility in Mississippi. Weavexx had paid its employees on a weekly basis since 2002. Heeding the call of the parent, the employer informed the employees that it would be moving to a bi-weekly payroll, changing the practice of payment from every Thursday to every other Friday. There is no dispute the employer did not give notice to the union nor did it offer to bargain over the change.

The union filed grievances over the change. The employer denied the grievances, citing its management rights clause, which stated:

The Employer retains all authority not specifically abridged, delegated or modified by the Agreement, including, but not limited to, the right to make and enforce work and safety rules, and the right to subcontract work so long as the Employer is motivated to do so because of economic reasons and not to displace regular employees. . .During the term of this agreement, the Company will not implement new work rules or policies relating to terms and conditions of employment without notice to the Union and the opportunity for the Union to raise concerns and to grieve any change it deems unreasonable.

The union pursued the grievances to arbitration but also filed charges with the NLRB alleging a refusal to bargain. The Regional Director deferred the charges pending the outcome of the arbitration.

The arbitrator denied the grievance. Although the arbitrator cited to the management rights clause, ultimately he decided that the change to a bi-weekly pay period was a proper use of "management discretion" and should not be seen as a violation of "a binding past practice." Upon reading the arbitrator's decision, the Regional Director revoked the deferral and sent the case to trial concluding that the arbitrator's decision was "repugnant to the Act."

After an unfair labor practice hearing, the Administrative Law Judge ruled that the arbitrator did not properly consider the issues and the employer violated its duty to bargain with the union by not bargaining over the pay practices in violation of Section 8(a)(5). The employer appealed.

In a 2-1 decision (Miscimarra and McFerran), reversed the ALJ's decision and found no violation of the Act. The Board majority, citing Spielberg Mfg. Co., 112 NLRB 1080, 1082 (1955) noted that the Board will defer to an arbitrator's award "when the proceedings appear to have been fair and regular, all parties have agreed to be bound, and the decision of the arbitrator is not clearly repugnant to the purposes and policies of the Act." The Board held that it had deferred to an arbitrator's decision "where a reasonable interpretation of the decision was the employer was privileged to implement unilateral changes based on the management-rights clause contained in the parties' collective bargaining agreement." The Board relied on its prior decision in Smurfit-Stone Container Corp., 344 NLRB 658, 659-661 (2005) where the Board held deferral to an arbitration award was appropriate because

(1) the [employer] argued to the arbitrator that the management-rights clause privileged it to unilaterally implement the new attendance control policy; (2) the arbitrator referred to the [employer's] argument; (3) the arbitrator prominently quoted the management-rights clause; and (4) the arbitrator immediately followed his quotation of the management-rights clause with the assertion that the [employer] had the right to make rules.

In running through these factors the Board majority noted the employer argued the management-rights clause privileged its action, and the arbitrator quoted the management rights clause in his decision. Finally, "the arbitrator ultimately concluded that the 'Company's use of managerial discretion was proper and should not be seen as a violation of a binding past practice.'"

The Board majority acknowledged that the arbitrator discussed the employer's "noncontractual inherent management prerogatives" but concluded that the "arbitrator's decision is not dependent on that theory but contains sufficient textual evidence to establish that it is susceptible to the interpretation that [the arbitrator] relied on the management-rights clause." The Board majority thus concluded the arbitrator's decision was not repugnant to the Act and dismissed the complaint.

Chairman Pearce dissented, writing that he would find the arbitrator's decision was "inappropriate" because:

The arbitrator failed to make any finding whatsoever on the key contractual issue of whether the management-rights clause in a collective-bargaining agreement privileged the [employer's] unilateral changes. To the contrary, the arbitrator explicitly framed his inquiry around past practice and, as found by the administrative law judge, concentrated his analysis on the extra-contractual considerations pertinent to that inquiry.

In other words, the Chairman asserted there was no evidence the text of the management-rights clause relied upon by the employer did not reference the changes to the payroll practices. Because the parties' agreed upon management rights did not authorize the change, the arbitrator's decision was not defensible.

It would be very difficult to square this decision with other recent decisions of the Board. This is especially so because the make-up of the Board majority included Member Miscimarra, who up until now pretty much exclusively found himself in the dissent.

Management-rights makes strange bedfellows. While it is pure speculation, it does appear that the Board majority was swayed by the fact that the parties had submitted the matter to binding arbitration and that the arbitrator had considered the central defense of the employer that it was privileged by management-rights to make the unilateral change. Still, the fact that the management-rights clause was silent on the issue of payroll practices certainly makes this decision hard to fit within the recent pattern of management-rights related cases.

NLRB Majority Stuns Nation By Ruling Employer Has Management Right, Chairman Dissents

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