NLRB Changes Course Again, Invalidates 50 Years of Precedent on Expired Collective Bargaining Agreements
December 20, 2012
Yesterday, the National Labor Relations Board announced a major reversal of policy, invalidating 50 years of precedent on an employer’s obligation to honor dues checkoff arrangements after the expiration of a collective bargaining agreement. This decision is the NLRB’s second major decision in the past three months overturning long-held understandings about employer obligations after the expiration of an agreement.
As our clients know, collective bargaining agreements differ from other business agreements in several important ways. One of the major differences is the continuing obligation employers have after a collective bargaining agreement expires. Unlike most business agreements, employers have a duty, under the National Labor Relations Act, to maintain almost all of the terms of a collective bargaining agreement, even after it expires, while the parties bargain over a successor agreement. Historically, the NLRB has ruled that a few provisions do expire. For example, a “union security” provision is only viable during the term of an agreement. Similarly, “no strike” and arbitration provisions do not survive an agreement’s expiration. Recently, the Board’s Democratic majority has begun rolling back these exceptions.
In late September, the NLRB ruled that parties could agree to limit a contractual provision to the term of the agreement, but only if the language constitutes a “clear and unmistakable waiver” that the provision would extinguish upon expiration. In that decision, Finley Hospital, the NLRB found that a hospital’s discontinuation of 3% wage increases after the expiration of a one-year agreement violated the Act because “the term and condition of annual pay increases in specified amounts, and the [employer’s] duty to continue to pay such increases pending negotiation of an agreement, was established by the parties’ collective bargaining agreement.” Despite being only a one-year agreement, and notwithstanding three different recitations in the agreement that the pay increase applied only during the one-year term, the NLRB held that the agreement’s language did not constitute a clear and unmistakable waiver of bargaining, and the hospital had a statutory (rather than contractual) obligation to continue providing the raises.
In WKYC-TV, Inc., released yesterday, the NLRB attacked another longstanding exception by overturning its 1962 decision in Bethlehem Steel where the Board had ruled that a “dues checkoff” provision expires with an agreement. A dues checkoff provision is an agreement by an employer to automatically deduct union dues from the paychecks of employees and pay the dues directly to the union. For nearly 50 years, NLRB decisions have described this procedure as an “administrative convenience” for employees and unions, rather than a term or condition of employment. In WKYC-TV, Inc., the majority reversed this precedent, holding that an employer must continue to withhold and submit dues to the union even after an agreement expires, unless the employer either first bargains to impasse with the union, or can otherwise demonstrate that the union clearly and unmistakably waived its right to bargain over the continuation of a dues checkoff provision. In a nod to dissenting Member Hayes, and in light of employers’ reliance on this rule for half a century, the NLRB majority applied the change prospectively, and not to pending cases.
The Board’s latest decision removes yet another effective negotiation tool for employers involved in successor agreement negotiations. As Member Hayes observed, discontinuing dues checkoff has “long been recognized as a legitimate economic weapon” during collective bargaining. Removing parties’ ability to “wield such weapons” during negotiations “significantly alter[s] the playing field that labor and management have come to know and rely on.” Employers currently involved in successor bargaining, or facing the impending expiration of a collective bargaining agreement, should contact us to discuss the implications of the NLRB’s recent decisions on negotiating strategies.