This week, the National Labor Relations Board finally came to its senses and adopted the contract coverage test for cases alleging an employer had unlawfully, unilaterally changed employees’ terms and conditions of employment. MV Transportation, Inc. 368 NLRB No. 66 (2019). This week’s decision is likely to change the forum unions select for the enforcement of their labor agreements. Ironically, the decision may compel employers to consider additional bargaining rather than litigation before an arbitrator given there is little opportunity to appeal an adverse arbitration award.

The NLRB’s new test applies when an employer claims contract language permits it to make changes to employees’ terms and conditions of employment unilaterally, i.e. without further bargaining. The NLRB stated that when it applies the new standard, it will first analyze the plain meaning of the parties’ labor agreement using ordinary contract principles. If the employer’s conduct falls within the compass or scope of the contract language, the allegation of an unlawful change will be dismissed. The NLRB will no longer require that the agreement specifically mention, refer to, or address the particular decision or change at issue. The contract coverage standard will also apply retroactively to all pending cases.

The NLRB’s decision appears to have been informed by a D.C. Circuit opinion sanctioning the NLRB for attempting to adhere to a clear and unmistakable waiver standard rather than adopting and applying the contract coverage standard. The NLRB majority acknowledged that its newly adopted test was inevitable as the D.C. Circuit Court of Appeals has used the contract coverage test for twenty-five plus years. The D.C. Circuit adopted the test in an oft-cited opinion authored by then Chief Judge Harry T. Edwards: Dept of Navy v. FLRA, 962 F.2d 48 (DC Cir. 1992). Since the D.C. Circuit has jurisdiction to review any or all NLRB decisions, continuing to apply a test the court rejected was illogical. Indeed, continued adherence to its clear and unmistakable waiver standard produced lengthy but purposeless litigation which culminated in a loss by the NLRB.

Key Takeaways for Employers

Employers should re-think their strategy of automatically requesting the NLRB defer unfair labor practice charges to arbitration whenever they are charged with making a unilateral change. Employers will be able to assert procedural defenses to grievances without fear the NLRB will enter the dispute to give the union a second bite of the apple. Additionally, employers should review all of the provisions of the labor agreement to determine if it permits unilateral changes without further bargaining. The NLRB’s decision may streamline the management and efficiency of union represented workforces, as employers now have the flexibility to act quickly and responsively.