Employer Violated NLRA By Unilaterally Discontinuing Annual Pay Raises after CBA Expired: NLRB | Practical Law

Employer Violated NLRA By Unilaterally Discontinuing Annual Pay Raises after CBA Expired: NLRB | Practical Law

In The Finley Hospital, the National Labor Relations Board (NLRB) held that an employer violated Section 8(a)(5) and (1) of the National Labor Relations Act (NLRA) by unilaterally discontinuing annual pay raises provided for in a collective bargaining agreement (CBA) following the CBA's expiration. The NLRB adopted much of the reasoning and conclusions from a decision that was vacated in light of the US Supreme Court's decision in Noel Canning. The NLRB found that the CBA lacked language amounting to a clear and unmistakable waiver of the union's right (and the employer's obligation) to have the status quo maintained and, therefore, the employer was not permitted to make unilateral, post-expiration changes to the CBA.

Employer Violated NLRA By Unilaterally Discontinuing Annual Pay Raises after CBA Expired: NLRB

by Practical Law Labor & Employment
Law stated as of 27 Jun 2016 • USA (National/Federal)
In The Finley Hospital, the National Labor Relations Board (NLRB) held that an employer violated Section 8(a)(5) and (1) of the National Labor Relations Act (NLRA) by unilaterally discontinuing annual pay raises provided for in a collective bargaining agreement (CBA) following the CBA's expiration. The NLRB adopted much of the reasoning and conclusions from a decision that was vacated in light of the US Supreme Court's decision in Noel Canning. The NLRB found that the CBA lacked language amounting to a clear and unmistakable waiver of the union's right (and the employer's obligation) to have the status quo maintained and, therefore, the employer was not permitted to make unilateral, post-expiration changes to the CBA.
On June 3, 2015, in The Finley Hospital, a majority of the panel (Board) heading the NLRB's judicial functions held that an employer violated Section 8(a)(5) and (1) of the NLRA by unilaterally discontinuing annual pay raises provided for in a CBA following the CBA's expiration. The Board issued a decision and order in which it adopted much of the reasoning and conclusions of an earlier invalid Board panel (359 N.L.R.B. No. 9 (Sept. 28, 2012); see also Legal Update, Employer Must Maintain Status Quo by Continuing One-time Pay Raises After Collective Bargaining Agreement Ends: NLRB). The September 28, 2012 decision and order was invalid because the Board was then composed of two persons whose appointments the Supreme Court held constitutionally infirm in NLRB v. Noel Canning (134 S.Ct. 2550 (2014)). For more information on Noel Canning, see Article, Expert Q&A on Noel Canning and Its Aftermath and Legal Update, Supreme Court Holds 2012 Recess Appointments to the NLRB Were Invalid, Effectively Invalidates 20-Months of NLRB Decisions.
The Board determined that the CBA lacked language amounting to a clear and unmistakable waiver of the union's right and the employer's duty to have the status quo maintained. Therefore, the employer was not permitted to make unilateral, post-expiration changes to the CBA.
The Board also held that the employer violated the NLRA by:
  • Refusing to provide or delaying its provision of information to the union about nurses who called off from work due to work-related illnesses.
  • Failing to bargain a reasonable accommodation of the union's request for information about co-workers and family members who allegedly witnessed misconduct by a discharged nurse.
(362 N.L.R.B. No. 102 (June 3, 2015).)

Employer's Unilateral Discontinuance of Annual Pay Raises

Finley Hospital's (Finley) CBA that expired on June, 20, 2006 included the following provision:
"Article 20.3 Base Rate Increases During Term of Agreement. For the duration of this Agreement, the Hospital will adjust the pay of Nurses on his/her anniversary date. Such pay increases for Nurses not on probation, during the term of this Agreement[,] will be three (3) percent. If a Nurse’s base rate is at the top of the range for his/her position, and the Nurse is not on probation, such Nurse will receive a lump sum payment of three (3) percent of his/her current base rate . . ."
After the CBA expired, Finley informed the union that there would be no raise until a new CBA was signed. The union filed a charge with the NLRB. An administrative law judge (ALJ) ruled that Finley's failure to continue the pay raises after the CBA expired violated Section 8(a)(1) and (5) of the NLRA. Finley excepted to the ALJ's decision.
A majority of the Board (Chairman Pearce and Member McFerran) noted that:
The Board majority found that:
  • Article 20.3 of the CBA contained language indicating that the pay increases were in effect while the CBA was in effect.
  • Although Article 20.3 limited the effective period of Finley's contractual obligation to provide pay increases, the language in that provision did not:
    • address Finley's post-expiration conduct;
    • permit unilateral employer action following the CBA's expiration; and
    • constitute a clear and unmistakable waiver by the union of Finley's statutory obligation to provide the pay increases.
  • Board precedent involving unilateral post-expiration changes by an employer supported the conclusion that even absent a contractual obligation to maintain the status quo, Finley had a statutory obligation to maintain the status quo (AlliedSignal Aerospace, 330 N.L.R.B. 1216 (2000)).
The Board majority held that the CBA lacked language amounting to a clear and unmistakable waiver of the union's right and Finley's duty to maintain the status quo. Therefore, Finley violated Section 8(a)(5) and (1) of the NLRA by making unilateral, post-expiration changes to the CBA.
Member Johnson dissented on this issue (just as Member Hayes did in the invalidated Board decision in this case), noting that:
  • The majority erroneously framed the key issue as involving whether the union waived its rights to bargain about new wage increases after the CBA expired, when the proper issue involved identifying the status quo for wages that Finley was required to maintain while a new CBA was negotiated.
  • The majority's approach underlined the need for contract language to have a determinate meaning. The phrase "during the term of this agreement" in Article 20.3 reflected an agreement for Finley to provide a single wage rate increase on each nurse's anniversary date during the contract year. Once the increase was made, Finley had neither a contractual nor a statutory duty to make further increases following expiration of the CBA.
  • The majority's approach would:
    • result in employment terms and conditions no longer having time limitations; and
    • require employers to bargain for ironclad language stating that no increases would occur beyond a CBA's term, a term to which unions would either not agree or from which unions would extract employer concessions.

Employer's Failure to Provide Information About Unit Operations Councils and Nurses Calling Off Of Work

Before negotiations for the 2005 CBA began, Finley instituted department-level unit operations councils (UOCs) for staff to discuss day-to-day operations. Minutes of the UOCs were posted on bulletin boards or were made available to nurses in binders. In 2006, the union asked Finley for information on:
  • The UOCs.
  • Instances in which nurses had taken off work for work-related illness or exposures.
  • Replacements hired to cover for shifts those nurses missed.
Finley refused to provide information about the UOCs and calloffs by nurses, claiming it was irrelevant to the parties' successor CBA negotiations or to enforce the 2005 CBA. Eight months later, after learning from an NLRB attorney that the union sought the information on nurse absences because of a mumps outbreak in early 2006, Finley provided the union with its 2006 OSHA log, stating the union's earlier request had not explained why it needed the information. The union filed a charge with the NLRB. An ALJ found that Finley violated Section 8(a)(5) and (1) of the NLRA by refusing to provide the information.
The Board majority (Chairman Pearce and Member McFerran) agreed with the ALJ, holding that Finley violated Section 8(a)(5) and (1) by refusing to provide or delaying in its provision of information to the union about nurses who called off from work due to work-related illnesses. The Board majority found that:
Member Johnson dissented, noting that:
  • The union failed to explain that its information request concerned the mumps outbreak.
  • The basis for the union's information request was not apparent.
  • Finley was appropriately seeking clarification of the union's request, and Finley was not responsible for the delay in providing information (Dupont Dow Elastomers, LLC, 332 N.L.R.B. 1071 (2000)).
  • The majority was basing the status quo on something the parties never did instead of being based on something to which the parties agreed.

Employer's Failures to Reasonably Accommodate the Union's Request for Information On Discharged Nurse

On June 22, 2005, Finley discharged a unit nurse, Gina Gross, for disruptive behavior and misconduct based on complaints from Gross' co-workers and from family members of patients under Gross' care. On July 7, the union asked for information to help it prepare a potential grievance of Gross' termination, including the names and contact information on the complaining co-workers and patients' family members. The union filed its grievance five days later. The hospital provided redacted versions of the co-workers' complaints on July 13 but refused to name the complainants for confidentiality reasons. The hospital noted that if the grievance went to a hearing, however, it would need to reveal the names so they could be questioned as witnesses. After the union filed an unfair labor practice charge (ULP), the hospital offered to provide the names of the co-workers who had complained about Gross' actions towards other patients, but not the names of either the co-workers who had complained about Gross' actions towards themselves or the family members. An ALJ found that the hospital failed to bargain a reasonable accommodation of the union's request for information about the nurse's co-workers, but had offered the union a reasonable accommodation of its need for the names and contact information of family members who had complained about Gross.
The Board majority (Chairman Pearce and Member McFerran) held that Finley violated Section 8(a)(5) and (1) of the NLRA by failing to bargain a reasonable accommodation of the union's request for information about co-workers and family members who allegedly witnessed Gross' misconduct. The majority found that:
Member Johnson dissented, noting that:
  • Finley indeed offered to accommodate the union's request for the names of Gross' co-workers.
  • Finley made a reasonable and timely offer to accommodate the union's request.

Practical Implications

The Board's decision in Finley Hospital could provide a strong negotiating weapon to unions, as language in a CBA appearing to limit pay raises or similar benefits to the life of the CBA may be construed to last beyond the CBA's expiration. As Member Johnson's dissent illustrates, to avoid this result, employers may choose to seek definitive language that pay raises and similar benefits will not be extended after the CBA expires. However, from a bargaining perspective, an employer's insistence on determinate language that no pay increases will occur beyond a CBA's term may not be agreed to by unions or could be used by unions to extract other employer concessions.

UPDATE

In Finley Hospital. v. NLRB, the US Court of Appeals for the Eighth Circuit granted the Hospital's petition for review and set aside the portion of the Board's order regarding the Hospital's discontinuance of annual pay raises, holding that:
  • The CBA did not establish a status quo of, and therefore a statutory right to, annual 3% raises. Therefore the Eighth Circuit did not address whether the union waived its alleged statutory right to post-expiration raises.
  • Because the Hospital did not violate 29 U.S.C. § 158(a)(5) by discontinuing annual pay raises, the Hospital also did not violate 29 U.S.C. § 158(a)(1) by informing employees that it would no longer give annual pay raises after the expiration of the CBA.
    ( (8th Cir. June 27, 2016).)