Last week, the National Labor Relations Board (NLRB) overruled a landmark case that gave unionized employers broad latitude to make discretionary changes to employment terms and conditions during a contractual hiatus or negotiations for a first contract.

Under Raytheon Network Centric Systems, 365 NLRB No. 161 (2017), such changes were lawful if they were similar in kind and degree to the employer’s past practice. But on August 26 in Wendt Corporation, 372 NLRB No. 135 (2023), the Board held that allowing employers to justify such changes as a “past practice” is inconsistent with decades-old precedent and to the NLRA’s policy favoring collective bargaining.

Thus, the Board announced a new standard. The past-practice defense applies only if the employer proves that its challenged action (1) is consistent with a practice that occurred with such regularity and frequency that employees could reasonably expect the practice to continue or reoccur on a regular and consistent basis; and (2) is not informed by a large measure of discretion. That, according to Wendt, is a heavy burden of proof that the Board will narrowly construe.

Wendt also reaffirms a principle that was not at issue in Raytheon: An employer may never defend a unilateral change based on a past practice developed before the affected employees chose a collective bargaining representative.

For nearly 50 years, the Board consistently has held that an employer’s preunion past practice of making unilateral changes cannot privilege the employer to continue to make such changes after employees have chosen a union to represent them in collective bargaining with the employer. . . .

Permitting the employer to act unilaterally in those circumstances is antithetical to Section 8(a)(5), which imposes on employers the duty to bargain with the representatives of their employees, and to the policies of the Act, which aims to ‘encourage the practice and procedure of collective bargaining’. . . .

In a second decision issued on the same day as Wendt, Tecnocap, LLC, 372 NLRB No. 136 (2023), the Board overruled an aspect of Raytheon that Wendt did not address. It held, contrary to Raytheon, that an employer may never justify unilateral changes based on a past practice developed under an expired management-rights, or other contract clause, that authorizes the employer to act unilaterally. The Board explained that the former rule harmed collective-bargaining by forcing unions to bargain to regain employment terms lost to post-expiration unilateral changes and discouraging unions from agreeing to management-rights clauses in the first place.

Wendt and Tecnocap apply retroactively to all pending cases.

Board Chair Lauren McFerran celebrated the Board’s rulings. “By protecting employees who have chosen a union representative from being subject to discretionary unilateral changes in their terms and conditions of employment without bargaining, the policy we announce today better promotes the collective-bargaining process that lies at the core of the National Labor Relations Act.” For employers, however, they are unwelcome developments.