A recent decision by the U.S. Court of Appeals for the 7th Circuit provides insight into the sometimes confusing world of when an employer can make decisions unilaterally, and when management must bargain with a union before making a change in employees’ working conditions. In Columbia College Chicago v. NLRB, Nos. 16-2080 & 16-2026 (7th Cir. 2017), the U. S. Court of Appeals reversed a ruling by the National Labor Relations Board (NLRB) that Columbia College Chicago unlawfully refused to bargain over its unilateral decision to make credit-hour changes to its performing arts curriculum.

Columbia is a private, independent college that specializes in communication, media and the arts. The Part-Time Faculty Association (PTFA) represents more than 1,200 part-time faculty members at the college. At all relevant times, Columbia and PTFA were parties to a Collective Bargaining Agreement (CBA).

The CBA contained a management rights clause that permitted Columbia to make decisions regarding educational, fiscal and employment policies without negotiating with PTFA. Under the CBA, Columbia determined part-time faculty compensation based in part upon the number of credit hours for the course. Columbia was required to notify the affected instructor, but not PTFA, if any significant changes, including credit hours, were made to a course. The CBA also contained a “zipper clause,” which stated the parties had full opportunity to make proposals and the CBA contains all understandings and agreements between the parties.

Amidst contentious bargaining for a new contract, Columbia unilaterally decided to reduce the credit hours for ten courses. Columbia notified the affected instructors, but not PTFA. PTFA’s Unfair Labor Practice (ULP) charge alleged Columbia unlawfully refused to bargain over the effects of the credit hours reduction.

In March 2013, an NLRB Administrative Law Judge (ALJ) found that Columbia failed to engage in effects bargaining, among other violations related to the protracted negotiations. Columbia appealed to the NLRB, and a divided panel upheld the ALJ’s findings.

Columbia appealed to the 7th Circuit Court of Appeals in Chicago. The Court applied the “contract coverage” test it had previously adopted, which the U.S. Court of Appeals for the D.C. Circuit has also adopted. Applying that test, the Court gave effect to the management rights clause, and held that Columbia lawfully refused to bargain over the effects of its decision to reduce credit hours because that matter was “covered by the contract.” The Court stated that because the effects of the bargaining decision were the inevitable consequences of the bargaining decision, the consequences were also “covered by the contract,” and Columbia was not obligated to engage in separate effects bargaining. Although Columbia would have been obligated to bargain over the effects of the decision if the parties’ CBA or bargaining history demonstrated intent to treat effects bargaining separately from bargaining over the decision itself,” the Court found no evidence of such intent.

The NLRB, and other Courts of Appeal that have addressed this issue apply a standard that presumes an obligation to bargain exists unless the CBA demonstrates a “clear and unmistakable waiver” by the Union of its right to bargain. Whether an Appeals Court would have reached a different decision under that standard is unclear; the breadth and specificity of Columbia’s management rights clause would provide a strong argument that the outcome would be the same.

Lessons Learned

A well-crafted management rights clause in a CBA can be a critical asset to an employer—it permits management to make decisions without having to bargain with the union over the decision itself as well as the effects of that decision. Unionized employers should review their management rights clauses and assess whether they permit unilateral action under either the “contract coverage” test or the “clear and unmistakable” waiver standard.