NLRB General Counsel Releases Playbook for NLRB Regions Addressing Deferral Issues Following Babcock & Wilcox Construction | Practical Law

NLRB General Counsel Releases Playbook for NLRB Regions Addressing Deferral Issues Following Babcock & Wilcox Construction | Practical Law

The General Counsel for the National Labor Relations Board (NLRB) issued an operations memorandum addressing when it is proper for the NLRB to defer to an arbitrator’s decision, a pending arbitration or a grievance settlement. The memorandum comes in the wake of the NLRB’s decision in Babcock & Wilcox Construction Co., Inc., which changed long-standing precedent concerning the standards for when the NLRB should defer prosecution of unfair labor practice (ULP) charges where the labor arbitration or grievance settlements arguably could resolve interrelated claims under the National Labor Relations Act (NLRA).

NLRB General Counsel Releases Playbook for NLRB Regions Addressing Deferral Issues Following Babcock & Wilcox Construction

by Practical Law Labor & Employment
Published on 17 Feb 2015 • USA (National/Federal)
The General Counsel for the National Labor Relations Board (NLRB) issued an operations memorandum addressing when it is proper for the NLRB to defer to an arbitrator’s decision, a pending arbitration or a grievance settlement. The memorandum comes in the wake of the NLRB’s decision in Babcock & Wilcox Construction Co., Inc., which changed long-standing precedent concerning the standards for when the NLRB should defer prosecution of unfair labor practice (ULP) charges where the labor arbitration or grievance settlements arguably could resolve interrelated claims under the National Labor Relations Act (NLRA).
On February 10, 2015, the NLRB's General Counsel issued a detailed memorandum addressing the NLRB's deferral to arbitration awards, the arbitral process and grievance settlements in cases under Section 8(a)(1) and (3) of the NLRA. This memorandum comes in the wake of the decision of the panel (Board) heading the NLRB's judicial functions in Babcock & Wilcox Construction Co., Inc., which changed long-standing precedent regarding the Board's standards for deferring unfair labor practice (ULP) cases to labor arbitration awards, pending labor arbitrations and pre-arbitration labor grievance settlements where the labor arbitration or grievance settlement arguably could resolve interrelated claims under the NLRA (361 N.L.R.B. slip. op. 132 (Dec. 15, 2014); Legal Update, NLRB Sets New Arbitration and Grievance Deferral Standards).
Babcock left certain issues concerning deferral undecided, particularly those the Board perceived were in the General Counsel’s casehandling and prosecutorial discretion. The General Counsel’s memorandum fills gaps from Babcock by:
  • Explaining what the General Counsel intends to do in certain circumstances.
  • Providing guidance to NLRB regional offices regarding what issues should be submitted to the NLRB's Division of Advice so that division can evaluate these issues further before the NLRB sets casehandling protocols across the agency.
The memorandum provides specific casehandling instructions to the NLRB regional offices for the following circumstances:
  • Deferring to an arbitral decision (postarbitral deferral).
  • Administratively placing a Section 8(a)(1) or (3) charge on deferral pending the outcome of the arbitral process (prearbitral deferral).
  • Deferring to grievance settlements.

Postarbitral Deferral

Under Babcock, the Board will defer to an arbitral decision in ULP cases under Section 8(a)(1) and (3) of the NLRA when:
  • The arbitration procedures appear to have been fair and regular.
  • The parties agreed to be bound by arbitration.
  • The party urging deferral demonstrates that:
    • the arbitrator was explicitly authorized to decide the ULP issue;
    • the arbitrator was presented with and considered the statutory issue, or was prevented from doing so by the party opposing deferral; and
    • Board law "reasonably permits" the arbitral award.
The latter three-pronged set of requirements is new under Babcock. The General Counsel's memorandum examines each of the above three prongs and provides specific casehandling instructions for each circumstance.

Explicit Authorization

The casehandling instructions require that regional offices seek guidance from the NLRB's Division of Advice when determining:
  • Whether the specific statutory right at issue was incorporated into the parties' collective bargaining agreement (CBA).
  • Whether the parties agreed to arbitrate the statutory issues in the particular case.

Statutory Issue Presented and Considered

The casehandling instructions provide that regional offices should submit to the NLRB's Division of Advice:
  • Any questions concerning whether the statutory issues was presented to and considered by the arbitrator.
  • Any case where a party argues that it was prevented from placing the statutory issue before the arbitrator, including situations where a union waited to file a ULP charge until after the arbitration.

Arbitral Award Reasonably Permitted by Board Law

The casehandling instructions provide that a region may, at its discretion, defer cases presenting remedial deficiencies whenever the relief granted by the arbitral award is of a scope that the region would have the authority to unilaterally accept in a settlement of the ULP charge.
Regional offices must submit to the NLRB's Division of Advice any case where:
  • The arbitral ruling on the statutory issue arguably fails to satisfy the "reasonably permitted" requirement, such as where an arbitrator places no weight on facts critical to the ULP or misconstrues Board law.
  • The region seeks to issue a ULP complaint because an arbitral remedy is insufficient, including cases where the region wishes to challenge an arbitral award as failing to provide a notice posting in light of that case's circumstances.

Prearbitral Deferral

For cases currently on administrative hold pending the outcome of arbitration (known as Collyer cases, based on the Board's decisions in Collyer Insulated Wire, 192 N.L.R.B. 837 (1971), and United Technologies Corp., 268 N.L.R.B. 557 (1984)), the casehandling instructions direct regional offices to:
  • Send letters to parties notifying them of the Babcock decision.
  • Attach the General Counsel’s memorandum.
  • Instruct the parties about the circumstances under which the new deferral standards may apply.
For future cases in which a party raises prearbitral deferral as a defense to a ULP charge brought under Section 8(a)(1) and (3), regional offices must:
  • Assess whether the statutory right at issue is incorporated in the applicable CBA.
  • Submit to the Division of Advice questions about whether a specific statutory right has been incorporated into the CBA and:
    • if so, the region should place the case on administrative deferral, provided all of the other Collyer requirements are met and there is arguable merit, then assess the case under Babcock once an arbitration award is issued; or
    • if not, the region should ask both parties if they will authorize the arbitrator to decide the ULP, get their written authorization to do so, place the case on administrative deferral provided all of the other Collyer requirements are met and there is arguable merit, and then assess the case under Babcock once an arbitration award is issued.
In cases where the specific statutory right is not incorporated into the CBA and one or both of the parties refuses to authorize the arbitrator to decide the ULP, then processing on the case will depend on whether the applicable CBA was executed before or after December 15, 2014, the date Babcock was decided.
For CBAs executed on or before December 15, 2014, regional offices must:
  • Place the case on administrative deferral, provided that the Collyer requirements are met and there is arguable merit.
  • Assess the case under the pre-Babcock Olin standard after an arbitration award is issued (unless the parties agreed to authorize arbitration subsequent to placement of the case on administrative deferral, in which case the region must keep the case on administrative deferral but apply Babcock following the issuance of an arbitration award) (see Olin Corp., 268 N.L.R.B. 573 (1984)).
For CBAs executed after December 15, 2014, regional offices must conduct a full investigation of the ULP charge's merits and either:
  • Issue a complaint.
  • Dismiss the charge.
If, after issuing a complaint, the region learns that the parties have subsequently agreed to authorize arbitration of the ULP, regional offices must place the case on administrative deferral and apply the Babcock standard once an arbitration award issues.

Deferral to Grievance Settlements

The Board's decision in Babcock also set out a new standard on deferral for grievance settlements. The standard is essentially the same as with arbitral decisions involving claims under Section 8(a)(1) and (3). Under Babcock, the Board will defer to a grievance settlement in Section 8(a)(1) and (3) cases when:
  • The parties intended to settle the ULP issue.
  • The parties addressed the ULP issue in the settlement agreement.
  • Board law "reasonably permits" the settlement agreement.
In addressing the third prong, the Board will examine the settlement agreements under factors set out in Independent Stave Co., Inc., 287 N.L.R.B. 740 (1987).
If the grievance settlement passes muster under Independent Stave, the casehandling instructions direct the region to accept a charging party's request for withdrawal of a charge in a case with arguable merit. The regional office must submit to the Division of Advice cases where:
  • The charging party does not withdraw the charge following settlement of the grievance.
  • An employee claiming discrimination objects to the withdrawal.
Regional offices that submit these types of cases must also submit recommendations regarding whether:
  • The parties intended that the settlement would resolve the ULP issue.
  • The settlement agreement addresses that issue.
  • The settlement agreement meets the requirements of Independent Stave.

Practical Implications

The General Counsel's memorandum provides answers to certain questions left open by the Babcock decision. It is likely that the Division of Advice will provide additional guidance for casehandling and ULP prosecution purposes through future NLRB advice memoranda.
In the meantime, the General Counsel's memorandum reinforces the NLRB's new standards on deferral following Babcock, which make it less likely that either the NLRB will defer ULP prosecutions or the Board will defer decisions on ULP cases to postarbitral decisions, pending arbitration and grievance settlements. Therefore, unless and until these deferral policies are revisited and reviewed, employers (who are usually the parties urging deferral) can continue to expect:
  • More dual-track arbitrations and ULP proceedings concerning the same facts and issues.
  • Unions not to agree to permit arbitrators to decide "statutory" issues (which would preserve the prospect of the Board deferring ULP cases to arbitration awards or settlements) without garnering employer concessions on other issues.
  • Reduced efficacy of grievance-arbitration procedures.
Update: On October 17, 2017, in Beneli v. NLRB, the US Court of Appeals for the Ninth Circuit considered whether the Board properly determined that a new standard for deferring to arbitral decisions (developed by the Board in the underlying case), should only be applied prospectively. The Ninth Circuit held that the Board properly applied this deferral standard prospectively. ( (9th Cir. Oct. 17, 2017).)