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Vedder Thinking | Articles NLRB Launches an Attack to Narrow Management Rights Clauses in Collective Bargaining Agreements


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Although much of the recent activity at the National Labor Relations Board (NLRB) has been directed toward making it easier for employees to organize unions, a recent decision has a profound effect on unionized employers. In this recent case, management rights clauses were in the NLRB's crosshairs. The practical effect is to make it harder for employers to act unilaterally, such as implementing new work rules, without first bargaining with a union that represents its employees. This is the case even if the management rights clause contains language that appears to give the employer the right to take the action it wants. The NLRB's decision also burdens employers to respond quickly to union information requests even if no responsive information exists, and continued its recent streak of refusing to defer issues to collectively bargained grievance and arbitration procedures.

On June 29, 2016, the full NLRB, by a 3-1 vote, issued its decision in Graymont PA, Inc., 364 N.L.R.B. No. 37. The employer was charged with violating Section 8(a)(5) of the National Labor Relations Act (the Act) by issuing new disciplinary policies, including a new attendance policy, during the term of its collective bargaining agreement (CBA) and allegedly refusing to provide information requested by the union. The Board (1) found no clear and unmistakable waiver in the management rights clause of the union's right to bargain over the new attendance policy and other new rules; (2) concluded the employer violated the National Labor Relations Act by refusing to respond to an information request, even though it did not have any responsive information; and (3) refused to defer the case to arbitration. This case was a change from prior decisions on the same issues and demonstrates the NLRB’s doctrinal shift on these issues.

As to the management right to issue a new attendance policy, the CBA gave the employer the following rights, but the NLRB found that this clause was not a clear and unmistakable waiver of the right to bargain over new disciplinary policies:

"[The employer has] 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…" (Emphasis added.)

In concluding that this language was not sufficient to permit the employer to implement an attendance policy and other rules without bargaining, the NLRB reasoned that the parties never expressly discussed that the management rights clause would apply to attendance policies. The NLRB further claimed that the rights to "adopt and enforce rules and regulations and policies and procedures" and "set and establish standards of performance" were not sufficiently clear on their face because they did not expressly include the right to "discipline."

The NLRB further held that the employer waived the right to even argue that the "standards of performance" language was relevant. That is because the employer did not expressly refer to that language, only to the right to adopt and enforce rules and regulations, in a letter to the union defending its right to issue the attendance policy.

As to the information request, the Board reversed a long line of cases and found that an employer violates the Act by refusing to respond or delaying its response to an information request even if it has no responsive information.

Finally, the Board declined to defer the case to arbitration as the employer requested. It did so because the employer violated the Act by refusing to respond to the information request, even though the employer had no responsive information.

One member of the NLRB penned a vociferous dissent. He remarked that the language in the management rights clause was similar to several past cases where the NLRB found that a union waived its right to bargain over the implementation of work rules, including attendance policies. Based on that finding, he then concluded that the alleged refusal to provide information did not constitute a violation of the National Labor Relations Act.

There are several lessons from the NLRB's decision in Graymont: (1) with the current NLRB, no management rights clause is so strong that it can safely be relied on without investigating bargaining history; (2) do not fail or refuse to respond to an information request, even if there is no responsive information or you otherwise believe there is no obligation to respond; (3) be very careful in drafting grievance responses and other correspondence to the union to include every possible argument that you have under the contract; and (4) work with counsel to ensure that you have taken every step to defer the charge allegations to arbitration, to take the issue out of the NLRB's hands and put it in the hands of an arbitrator. 

If you would like to discuss or have questions regarding the issues raised in this article, please contact Kenneth F. Sparks at +1 (312) 609 7877, Mark L. Stolzenburg at +1 (312) 609 7512 or the Vedder Price attorney with whom you have worked.

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Kenneth F. Sparks