On December 10, 2024, the National Labor Relations Board ("NLRB" or "Board") issued a decision in Endurance Environmental Solutions, LLC, 373 NLRB No. 141 (2024) reinstating its prior standard for determining whether a union has contractually waived its right to bargain over changes to terms and conditions of employment. In Endurance Environmental Solutions, the current majority Board reversed the "contract coverage" standard adopted by the Trump-era Board in 2019 and reinstated a "clear and unmistakable waiver" standard, ultimately making it more difficult for employers to rely on contractual provisions when making unilateral changes to terms and conditions of employment for unionized employees.
Background
Under the National Labor Relations Act ("the Act"), employers generally cannot make unilateral changes to mandatory subjects of bargaining such as wages, hours, and other terms and conditions of employment, without providing the union notice and an opportunity to bargain over the change. However, in limited circumstances, an employer can demonstrate that the union contractually waived its right to bargain over the decision.
The NLRB has vacillated between which standards to apply depending on which political party controls the majority of the Board. Before 2019, the NLRB applied the "clear and unmistakable waiver" standard, which required that an employer show the union gave a "clear and unmistakable waiver" of its right to bargain over a particular decision as part of the collective bargaining agreement. Then in MV Transportation, 368 NLRB No. 66 (2019), the Trump-era Board replaced the "clear and unmistakable waiver" standard with the "contract coverage" standard. Under this standard, ordinary principles of contract interpretation are applied to determine if a decision fell within "the compass or scope" of the contractual provisions granting the employer the right to act unilaterally. Under the "contract coverage standard," the NLRB would not require the collective bargaining agreement to specifically mention, refer to, or address the decision at issue. Instead, the employer only had to show that the change was covered by the existing contract language. The MV Transportation decision was then reversed by Endurance Environmental Solutions, LLC.
Return to "Clear and Unmistakable Waiver" Standard
In Endurance Environmental Solutions, LLC, the employer, a waste transportation company, made a unilateral decision to install cameras in its fleet of trucks to monitor employees, relying upon language in the management rights clause of the collective bargaining agreement that reserved the right to "implement changes in equipment." The union filed an unfair labor practice charge against the employer based on its refusal to bargain over the decision and its effects on employees.
The administrative law judge, in applying MV Transportation's "contract coverage" standard, concluded that the employer did not violate the Act because the decision to install the cameras was "within the compass or scope" of the management rights clause of the collective bargaining agreement, which reserved the right to "implement changes in equipment." In a 3-1 decision, the NLRB disagreed and did not rely on the "contract coverage" standard. The NLRB instead reinstated the "clear and unmistakable waiver" standard. The NLRB criticized the "contract coverage" standard, as "undermin[ing]" the Act's "central policy of promoting industrial stability." The NLRB found that the "clear and unmistakable waiver" standard better accomplishes the statutory purpose of promoting industrial peace by encouraging collective bargaining. The NLRB also argued that the "clear and unmistakable waiver standard" was more consistent with the Supreme Court and NLRB precedent as well as the precedent of the majority of federal appellate courts (including the Ninth Circuit).
In applying the "clear and unmistakable waiver" standard, the NLRB found that the employer's contractual right to "implement changes in equipment" was not a clear and unmistakable waiver because neither the collective bargaining agreement nor extrinsic evidence explicitly referenced the use of video or audio monitoring or surveillance of employees or the use of video or audio recordings as a basis for disciplining employees. Accordingly, the NLRB held the employer violated the Act by failing to provide the union with notice and opportunity to bargain over the decision.
Under the reinstated "clear and unmistakable waiver" standard, employers will have the heightened burden of showing that the parties "unequivocally and specifically express[ed] their mutual intention to permit unilateral employer action with respect to a particular employment term." The NLRB will review "the precise wording of the relevant contract provisions," as well as extrinsic evidence such as bargaining history to determine if an employer meets its burden. By reviewing extrinsic evidence, the NLRB can determine if an issue was "fully discussed and consciously explored" during bargaining and that "the union consciously yielded or clearly and unmistakably waived its interest in the matter." The NLRB warned that "[m]anagement rights clauses that are couched in general terms and make no reference to any particular subject area will not be construed as waivers of the statutory right to bargain over a specific subject." Further, the NLRB stated that even where an employer meets the showing that a union waived the right to bargain over the decision to change employees' terms and conditions of employment, the employer still has a duty to bargain over the effects or impact of that decision unless the employer proves otherwise.
Moving Forward
The NLRB's return to the onerous "clear and unmistakable waiver" standard will make it more difficult for employers to rely on contractual language in order to make unilateral changes to terms and conditions of employment for unionized employees. As a part of an employer's consideration in making changes to employees' working conditions, employers should carefully review their collective bargaining agreements to confirm the presence of clear and specific language waiving the union's right to bargain over the exact decision at issue prior to making any unilateral changes. If a collective bargaining agreement does not include explicit language that waives the union's right to bargain over a specific issue, employers should proceed with caution. Even when such language exists, employers should ensure that it is bargaining over the effects of the change. This decision also highlights the importance of seeking a clear and robust management rights clause during collective bargaining and keeping a clear record of negotiations, as bargaining history may be evidence of the union's waiver.
While the NLRB's decision in Endurance Environmental Solutions, LLC presents new challenges for employers, the decision may quickly be replaced. The Senate recently did not renominate the current NLRB Chair to another term, meaning her term ended on December 16, 2024. The Trump administration will now have two vacancies to fill on the five-member Board, making it likely that we will see a shift in the NLRB's majority in the coming administration.
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