In Embarq Corp., a key litigated issue was whether the respondent, Embarq Corporation, violated the NLRA by refusing to bargain with the International Brotherhood of Electrical Workers Local Union #396 (IBEW) over its decision to eliminate a work classification and consequently discharge nine retail cashiers.

The IBEW had been recognized as the exclusive collective bargaining representative of the clerical-unit employees of Embarq and its predecessors since November 1954. The collective bargaining agreement (CBA) for the clerical-unit employees was effective from April 2009 through March 2012. The management rights clause in the parties' CBA reserved Embarq's rights to, among other things, classify, reassign, lay off and discharge employees. A reductions in force provision provided for two weeks advance notice of any non-emergency layoffs.

The IBEW and Embarq were still in negotiations regarding the CBA in August 2009 when Embarq informed the IBEW at a bargaining session that Embarq was moving in the direction of eliminating the retail cashier positions, but there was not yet a timetable. An IBEW spokesperson indicated the union would request bargaining about the decision and effects of whatever change was contemplated.

On the following day, Embarq requested that the IBEW keep the matter confidential.

On September 15, the IBEW and Embarq agreed on the terms of the CBA. Embarq informed the IBEW that Embarq was going to eliminate the retail cashier positions and that the only issue was when.

The IBEW requested that Embarq make its official announcement to the affected employees before the ratification vote on the CBA. Embarq agreed to make the announcement several weeks prior to the effective date of the layoff rather than the contractually required two week notification period.

Embarq sent a letter formally notifying the IBEW of the layoff of all retail cashiers. The IBEW forwarded a notice of its intent to bargain about both the decision and the effects regarding the layoffs of the retail cashiers. The IBEW also requested information necessary and relevant to effectively bargain about the decision and effects regarding the reduction in force.

The IBEW filed an unfair labor practice (ULP) charge and a counsel for the NLRB's General Counsel issued a complaint against Embarq alleging, primarily, that it failed to bargain about both the decision and effects of eliminating a bargaining unit job classification and conducting layoffs. An NLRB administrative law judge (ALJ) held that Embarq committed ULPs by:

On September 14, 2012, a three-member panel (Board) heading the NLRB's judicial functions issued a decision in Embarq Corp.. In the 2-1 decision (Member Hayes dissented in part), the Board majority affirmed the findings of the ALJ, that Embarq had a duty to bargain over its decision to eliminate the retail cashier classification.

Absent contractual authority or other waiver by a union, where an employer discharges unit employees and transfers their work to other unit employees in order to reduce labor costs, and the work remains essentially the same, the action is a mandatory subject of bargaining. In this case, the Board held:

The Board unanimously denied the General Counsel's cross-exception to the ALJ's dismissal of the complaint allegation that Embarq unlawfully refused to bargain over the decision's effects because:

The Board also agreed that Embarq violated Section 8(a)(1) of the NLRA several months after the elimination of the cashiers, when it photographed some of its employees while they were participating in an informational picket line on a public sidewalk outside one of its stores. The Board held Embarq had no legitimate interest in filming the picket line.

Member Hayes dissented in part, stating that:

This decision clarifies that notwithstanding a management rights clause reserving the right to classify, reassign, layoff and discharge employees, an employer can violate the NLRA by unilaterally eliminating a classification of employees. The decision of the Board majority highlights how difficult it is for employers to prove that a union clearly and unmistakably waived bargaining about mandatory subjects. As Member Hayes suggested in his dissenting opinion, the Board presently requires an employer to prove that it bargained for the exact factual scenario in which it exercised rights reserved to it in a management rights clause. Here, the Board majority required the employer to prove that the union waived its right to bargain about the employer taking a combination of unilateral actions that the union agreed were reserved to management on individual bases in the management rights clause.

In light of the current Board analysis, employers that anticipate making substantial changes to their businesses, like Embarq did here, may be better off negotiating to impasse and implementing their final offer than negotiating a CBA and relying on the terms of its management rights clause for making unilateral decisions.

Member Hayes joins four former Board Members in advocating that the Board use the "contract coverage" test rather than the "clear and unmistakable" waiver analysis to evaluate whether an employer failed to bargain about business decisions affecting labor relations. Member Hayes's dissent suggests that if he is part of a differently comprised Board, he would support changing the Board's approach to match those of three Circuit Courts of Appeals, including the DC Circuit, where employers located in any jurisdiction can appeal a Board decision.