The National Labor Relations Act requires an employer that wants to terminate or modify an existing union contract to provide at least 30 days’ notice to the Federal Mediation and Conciliation Service (FMCS) and all the relevant state mediation agencies before terminating or modifying the contract.  The possible consequences of failing to fully comply with the notice requirement has been underscored by a recent Labor Board decision. American Water Works Service Company, Inc., 361 NLRB No. 3 (2014).

In this case, the employer participated in  a National Benefits Agreement with several unions covering employees in four states.  More than one year before the contract termination date of July 31, 2010, the employer called a union representative to meet “to get the ball rolling” on early negotiations.  The first meeting occurred on June 17, 2009, followed by a meeting in December and a series of subsequent meetings in the spring and summer of 2010.  The parties failed to reach an agreement and the employer implemented its final offer effective January 1, 2011.

It is the responsibility of the “initiating party” to give the required notices to the FMCS and state agencies.  If the employer is the initiating party, it cannot lawfully implement the terms of its offer unless it has given these notices.

Here, contrary to the employer’s argument, the Labor Board found the employer was the initiating party because it “took the lead” in contacting the union.  As the initiating party, the employer satisfied its obligation to notify the FMCS — the Board found the employer’s oral notice was sufficient.  However, the NLRB decided the employer failed to notify the mediation and conciliation agencies in the states in which the employees covered by the negotiations worked.  Therefore, it ruled the employer violated the NLRA when it implemented its final offer without also having given the required notice to all four state agencies.

The Board also noted Section 8(d)(1) of the NLRA requires the initiating party to serve upon the other parties a written notice of proposed contract modification 60 days prior to the expiration of the agreement.  The NLRB decided that while the employer had not complied with that provision, that finding did not affect the outcome of the case.

For failing to comply with the notice requirement, the employer was ordered to restore the status quo and to make all of the employees whole for a period of three-and-one-half years, to the date the employer implemented its final offer.

The lessons:

1.  Employers that go on record first as seeking a change in the collective bargaining agreement, even informally, should assume they have the responsibility of providing 8(d) mediation notices.

2.  Employers that have that responsibility should notify all state agencies in states which the collective bargaining agreement, as well as FMCS.

3. Notify all of the mediation agencies in writing.  Although an oral notification will suffice, it is better practice to notify in writing so you can easily prove that you gave the required notification.  Inability to prove you gave notification could result in liability for substantial back pay.