The National Labor Relations Board (“NLRB” or “Board”), in its recent decision in Graymont PA, Inc., 364 NLRB No. 37 (June 29, 2016), has fired the latest salvo in its long running dispute with the United States Court of Appeals for the District of Columbia Circuit concerning the issue of what legal standard should be applied when a union claims that an employer has made a unilateral change in terms and conditions of employment during the term of a collective bargaining agreement and the employer claims that the union waived its right to bargain over the topic in question in a management rights clause or a “complete agreement” clause.

In Graymont, the Board adhered to its “clear-and-unmistakable” waiver approach to analyzing claims under Section 8(a)(5) where the employer claims that the union waived its right to bargain over a particular matter during the term of a collective bargaining agreement (“CBA”). The three-member majority rejected  the employer’s argument that the  “contract coverage” standard applied by the D.C. Circuit and several other Courts of Appeal was the correct standard for assessing such claims.

This decision comes on the heels of an unpublished decision by the D.C. Circuit in which that court again rejected the Board’s “clear and unmistakable” waiver standard as being applicable to such disputes. In Heartland Plymouth Court MI LLC v. NLRB, No. 15-1034 (May 3, 2016), the D.C. Circuit laid out its disagreement with the NLRB concerning the so-called “contract coverage rule”:

As we have noted several times, there is a “fundamental and long-running disagreement” between this court and the Board as to the appropriate approach by which to determine “whether an employer has violated Section 8(a)(5) of the National Labor Relations Act when it refuses to bargain with its union over a subject allegedly contained in a collective bargaining agreement.” The Board insists such questions turn on whether the Union “clearly and unmistakably” waived its bargaining rights on the subject through the CBA, but we have repeatedly held “the proper inquiry is simply whether the subject that is the focus of the dispute is ‘covered by’ the agreement.” Under our precedent, if a subject is covered by the contract, then the employer generally has no ongoing obligation to bargain with its employees about that subject during the life of the agreement.

The dispute regarding the appropriate standard made all the difference in the Graymont decision. There, a Board majority held that the Union did not clearly and unmistakably waive its right to bargain over unilateral changes made by the Employer to its work rules, absenteeism policy, and progressive discipline schedule.

In Graymont the employer unilaterally implemented various changes to its work rules, absenteeism policy and progressive discipline schedule; believing it had the management right to do so under it CBA.  There the employer sought to rely  on a negotiated management rights clause under which it retained “the sole and exclusive rights to manage; to direct its employees; … to evaluate performance, … to discipline and discharge for just cause, to adopt and enforce rules and regulations and policies and procedures; [and] to set and establish standards of performance for employees.” The union initially filed a grievance, but then withdrew it and filed an unfair labor practice charge with the NLRB alleging that the employer had made unilateral changes and failed to bargain.

The Board applied its “clear and unmistakable” waiver standard, and found that the Union did not waive its rights to bargain when it entered into the CBA, because the Board concluded that the CBA’s management rights clause did not “specifically reference” the rules and policies changed – i.e., the work rules, absenteeism policy and progressive discipline policy.

The majority ruling is just the latest example of how the Board’s waiver analysis operates to deprive employers of the benefits of their negotiated agreements – particularly in management rights clauses – and force further bargaining over rights employers understandably believe they have already secured, often in return for other concessions, at the bargaining table. In bargaining with the Union, the employer in Graymont secured the clear right “to adopt and enforce rules and regulations and policies and procedures.” Yet the majority found this language insufficiently clear to constitute a “clear and unmistakable” waiver by the union of its right to bargain, during the term of the CBA, over such changes.

Dissenting, Member Miscimarra noted that “Management-rights language may be general and, at the same time, clear and unmistakable.” Thus, in agreeing to the broad language, “the Union clearly and unmistakably waived its right to bargain over the changes.” He also agreed that therefore the union “had already bargained and agreed that Graymont had the right to make these changes unilaterally.”

The NLRB’s Graymont decision once again demonstrates the uphill battle employers face in asserting their rights, even those secured in writing after bargaining. In effect, the Board’s waiver approach can ignore even clear language, and render rights secured at the bargaining table illusory.  We often encounter employers who believe they have negotiated a strong broad management rights clause only to feel they are victims to a bait-and-switch type attack from a union filing an unfair labor practice charge based on the employer exercising the very rights it thought it had secured.

Combined with the its recent disinclination to defer such matters to arbitration, where they belong, the Board’s decision highlights the danger of an employer acting unilaterally, even with what may appear to be clearly-established rights. Employers should bear this in mind when negotiating, and seek to make management rights clauses as specific as possible. Employers should also bear in mind the Board’s approach to such actions when contemplating unilateral moves, and plan accordingly.