United States: Novel Theory Related To Violation Of Bargaining "Ground Rules" Fails (Fortunately)

When an employer and a union sit down to bargain they often agree to ground rules for how negotiations are to be conducted. A common ground rule, for example, is for the parties to agree to address "non-economic" items before addressing economic proposals. Other ground rules include things like confidentiality of negotiations (becoming increasingly rare as unions want to take their case to the public), who at the table has authority to bind the parties, and whether the contract must be ratified by the employees or the International union before becoming effective. Ground rules establish structure to the process.

Can a breach of the ground rules be an independent violation of the duty to bargain? Recently, the NLRB attempted to prove that an employer's alleged breach of a ground rule constituted an unfair labor practice. Fortunately, this effort was rejected. Anyone who has been at a bargaining table understands that, with minor exceptions, everything in bargaining must remain fluid,–including adherence to the rules. Parties need to remain flexible in order to reach agreement, which means, of course, that sometimes one has to stretch, if not, deviate from the rules.

In Southcoast Hospitals Group, Inc., 365 NLRB No. 100 (June 28, 2017), the Board was confronted with a contentious round of bargaining that ultimately ended up with the employer declaring impasse and implementing its final offer. A unanimous Board agreed that the impasse did not exist and the employer's implementation was unlawful.

What is interesting about the case, however, is the government's assertion of the allegation concerning the breach of a bargaining ground rule, and the Administrative Law Judge's analysis concluding no such violation occurred.

Background: The Prior Collective Bargaining Agreement

The collective bargaining agreement covered nurses working at a hospital. The agreement provided for step wage increases. Thus, there was an entry pay level for a nurse which was increased every few months through pay steps as the nurse continued working. Step increases are distinguished from across-the-board pay increases, which are usually a percentage increase added to the base pay rates one time per year.

The Parties Agree To Put All Proposals On The Table By A Date Certain

At the beginning of negotiations, the employer and the union established some ground rules. One such ground rule stated:

Neither party will submit new proposals, as opposed to counterproposals, after the fourth meeting, December 17, 2014. All proposals must be reduced to writing. For purposes of this ground rule, the first meeting is the meeting held on November 25, 2014.

This kind of rule is sometimes deemed necessary to get all of the issues that are important to the parties out on the table by a date certain so the parties understand the entire universe of issues under consideration. It also helps to ensure that there are no surprises which could change the calculus of reaching an agreement.

Financial Issues Are The Main Focus Of Bargaining

The parties began bargaining. A major stumbling block to reaching an agreement was the financial issues. The employer, citing hard economic times, resisted increasing the financial cost of the contract. For its part, the union sought additional wages and benefits including, across-the-board wage increases for each year of the contract. The employer was "unwavering" in its response that there would be no such wage increases. The employer continually rejected wage proposals. Because the employer did not want to increase pay it made no financial proposals.

The Employer's Package Proposal

After several bargaining sessions spanning over five months, and well after the deadline in the ground rules for making new proposals, the employer made a proposal which contained 12 numbered paragraphs. The document included signature lines for the parties at the bottom. Paragraph 11 stated there would be no step increases for a one year period. According to the union representative, this proposal number 11 caught the union by surprise because the union "was the only one who had put in financial proposals and none of them dealt with step raises."

Negotiations Break Down -Charges Filed

The parties could not reach an agreement and the employer declared impasse. Ultimately, the employer implemented its proposal. The employer's conduct at the table was the subject of many allegations.

NLRB Alleges The Employer's Proposal To Freeze Step Violated The Act Because It Was A Breach Of The Parties' Ground Rules

As part of its complaint over the bargaining, the NLRB General Counsel asserted the introduction of the "step freeze" proposal independently violated the Act because it violated the parties' ground rules.

The Administrative Law Judge disagreed. The ALJ noted that failure to "adhere to agreed-to ground rules in negotiations may serve as an indicia of unlawful bad-faith bargaining." Harow Servo Controls, 250 NLRB 958, 959 (1980). The ALJ stated that the NLRB "considers the overall circumstances" of the bargaining because the "Board is committed to 'providing parties with the flexibility to enter into and deviate from new bargaining formats without the risk of being found to have violated their obligation to bargain in good faith' because this 'facilitates effective bargaining and encourages productive experimentation.'" Detroit Newspapers, 326 NLRB 700, 704, fn.11 (1998).

The employer argued that the proposal to freeze the steps was a counterproposal, which was exempt from the ground rules. The employer also argued that the proposal was not "new" in that it had been orally proposed across the table during one of the bargaining sessions (even though the same ground rule provided proposals had to be in writing). The General Counsel and union argued that it the employer's proposal could not be a "counterproposal" because the union's proposal was for across the board wage increases while the employer's proposal addressed step increases.

The ALJ brushed aside all these arguments noting they were "somewhat beside the point" and instead zeroed in on the real mechanics of bargaining:

Even if the General Counsel and Union believe that the [employer's] contentions carry a whiff of the disingenuousness, it is at least colorable to say that the proposal to freeze step pay was offered as a 'counterproposal'–in response–to the Union's across-the-wage hourly wage proposal. . .There is no precise definition of the term. All one can say that [is] with enough inspiration, nearly any proposal made after an earlier one can be termed a counterproposal.

The ALJ then dismissed the allegation.

Board Punts Issue

The General Counsel and union appealed the dismissal. The Board did not address the allegation noting that any remedy it would order would be "subsumed within the remedy for the unlawful implementation allegation."

Summary

This allegation represents an attempt by the Board to increase its authority and oversight over parties and over bargaining. Fortunately, the attempt was unsuccessful. Had a violation been found, then negotiations for employers and unions would have become less imaginative and more burdensome. The parties might be reluctant to enter into any ground rules for fear of having them cited against them later. Or, perhaps worse, the ground rules would become more detailed and legalistic, which would only prolong getting to the real issues of bargaining.

The General Counsel seemed to be taking the position that a counter-proposal must match a proposal from the opposing party. Thus, if the union's proposal was about wage increases, then any counter must also be about wage increases and not step increases. Were the government to prevail on such a notion, then it would require parties to act in a manner that is too rigid. In labor negotiations, a party making a counter-proposal may not be willing to move at all on the issue that is the subject of the main proposal but will counter with something different to show its willingness to move in another area as a sign of its intent to reach an agreement.

The case is interesting because it caused the ALJ in his analysis to articulate the realities of bargaining. It was clear the ALJ did not believe the employer's rationale but was unwilling to call the proposal a violation of the law, let alone a breach of the ground rules. The ALJ's analysis provides a good basis for understanding the interplay between ground rules and actual bargaining. Parties that agree to ground rules almost always use them to advance their position. Thus, the "inspiration" noted by the ALJ is what drives negotiation, and what makes it an inherently fascinating process. Thus, for example, parties often cast non-economic proposals as economic based on an imaginative description because doing so helps move the pieces around to get an agreement. Attempting to apply rigidity to the process through an allegation such as this would only dampen imagination, and might make reaching an agreement more difficult.

As the saying goes, sometimes rules are meant to be broken. This seems to be such a case.

Novel Theory Related To Violation Of Bargaining "Ground Rules" Fails (Fortunately)

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