Unionized Employers Must Bargain about Individual Discipline In Absence of a Collectively-bargained Grievance Process: NLRB | Practical Law

Unionized Employers Must Bargain about Individual Discipline In Absence of a Collectively-bargained Grievance Process: NLRB | Practical Law

In Alan Ritchey, Inc., the National Labor Relations Board (NLRB) held that an employer violated the National Labor Relations Act (NLRA) by applying pre-existing disciplinary rules, for which some discretion was required, on bargaining unit employees without giving notice and an opportunity to bargain about each disciplinary action. The employer and union had no collective bargaining agreement (CBA) or an interim grievance procedure at the time of the disciplinary actions.

Unionized Employers Must Bargain about Individual Discipline In Absence of a Collectively-bargained Grievance Process: NLRB

by PLC Labor & Employment
Published on 07 Jan 2013 • USA (National/Federal)
In Alan Ritchey, Inc., the National Labor Relations Board (NLRB) held that an employer violated the National Labor Relations Act (NLRA) by applying pre-existing disciplinary rules, for which some discretion was required, on bargaining unit employees without giving notice and an opportunity to bargain about each disciplinary action. The employer and union had no collective bargaining agreement (CBA) or an interim grievance procedure at the time of the disciplinary actions.

Key Litigated Issues

In Alan Ritchey, Inc., the key litigated issue that the NLRB considered was whether an employer, when there was no operating collective bargaining agreement (CBA) with the union that represented its employees, violates the NLRA by imposing discipline on bargaining unit employees consistent with its existing disciplinary procedures but requiring a small degree of discretion.

Background

Employees of Alan Ritchey, Inc. voted to be represented by a union in an NLRB election. After the election, while the union and the employer had not agreed to a CBA, the employer continued to apply its five-step progressive discipline system, consisting of:
  • Counseling.
  • Verbal warnings.
  • Written warnings.
  • Suspensions.
  • Terminations.
The employer imposed discipline against particular bargaining unit employees for:
  • Absenteeism.
  • Insubordination.
  • Threatening behavior.
  • Failure to meet efficiency standards.
There was no dispute that the employer implemented and enforced consistently its progressive discipline system since before the union election, with the exception that the union alleged it inconsistently enforced the discipline system as to efficiency standards.
For absenteeism and efficiency standards, the employer maintained standards suggesting discipline for certain levels of poor attendance or performance, but managers had discretion regarding when to begin disciplining employees for not meeting those standards. The employer's employee handbook identified insubordination and threatening violence as misconduct for which disciplinary action including termination may be taken.
After the employer imposed discipline for these forms of misconduct, the union protested the discipline and filed unfair labor practice (ULP) charges alleging that before taking disciplinary action against bargaining unit employees, the employer was obligated to provide notice and an opportunity to bargain. The NLRB's General Counsel issued a complaint alleging that the employer had an obligation to engage in collective bargaining about disciplinary decisions before imposing discipline on the bargaining unit employees and to bargain about the effects of the discipline.
An NLRB administrative law judge (ALJ) found that the employer had a bargaining obligation before imposing this discipline, relying on Washoe Medical Center, Inc. The ALJ held that:
  • The employer’s exercise of some discretion in meting out discipline imposed a duty on the employer to engage in predisciplinary bargaining, once the union has demanded it.
  • The employer violated Section 8(a)(5) of the NLRA when it refused to bargain about the disciplinary decisions.
The employer filed exceptions to the panel heading the NLRB's judicial functions (Board) to appeal the ALJ's decision. On September 25, 2009, a two-member panel of the Board issued a decision, reversing the ALJ's decision and dismissing this complaint allegation against the employer. The Board relied on McClatchy Newspapers, Inc. (Fresno Bee) where the Board had affirmed an ALJ's conclusion that the employer had no duty to bargain before imposing the discipline in circumstances nearly identical to this case. In Fresno Bee, as in Alan Ritchey:
  • The NLRB's General Counsel alleged an unlawful failure to engage in predisciplinary bargaining.
  • The employer’s disciplinary policies remained unchanged, but the employer exercised some discretion in applying those policies.
  • The union demanded predisciplinary bargaining (unlike in Washoe Medical Center).
The two-member panel:
  • Did not reach the question of whether the Supreme Court's decision that an employer had to bargain about continuing a practice of merit pay increases similarly required employers to bargain about day-to-day operational decisions such as the imposition of discipline for employee misconduct.
  • Noted that it did not address the employer's alleged failure to engage in post-discipline bargaining about the effects of discipline because:
    • the ALJ made no findings on that allegation; and
    • the General Counsel failed to preserve that issue for the Board's consideration because it did not except to the ALJ's failure to rule on that allegation.
  • Severed the issue of whether the employer unlawfully unilaterally changed its standards for enforcing its efficiency standards and remanded that issue to the ALJ.
The union petitioned the Court of Appeals for the Ninth Circuit to review the Board's decision on the issues not remanded to the ALJ. However, all of the decisions by the two-member panel Board were invalidated by the Supreme Court's decision in New Process Steel. Accordingly, the Ninth Circuit remanded this case back to the Board for a new decision.
The ALJ issued a supplemental decision finding that the employer did not unilaterally change its enforcement of efficiency standards. No party filed exceptions to that decision.

Outcome

In a decision dated December 14, 2012, a three-member panel of the Board (Member Hayes recused himself from participating in the case) issued a decision in Alan Ritchey, Inc., upholding the ALJ's conclusion that the employer had an obligation to bargain with the union before imposing discipline on the bargaining unit employees. However, the Board, recognizing that it had never found employers had that type of obligation before:
  • Reframed the issue to decide whether an employer has a duty to bargain before unilaterally disciplining individual employees, when the employer does not alter broad, preexisting standards of conduct but exercises discretion over whether and how to discipline individuals.
  • Simultaneously:
    • overruled extant Board precedent, Fresno Bee; and
    • found that there was no extant Board precedent.
  • Dismissed these complaint allegations against the employer.
  • Decided to impose the newly created collective bargaining obligation prospectively.
The Board:
  • Created a collective bargaining obligation for day-to-day individual disciplinary actions relying on separate precedent that independently held that:
    • disciplinary rules, practices and systems are mandatory subjects of bargaining (NK Parker Transp.);
    • unilateral changes to the terms and conditions of employment affecting only one employee may be ULPs (Carpenters Local 1031,); and
    • an employer, obligated to maintain the status quo while it does not have a CBA with the union that represents its employees, must bargain about the discretionary components of past practices it is obliged to continue (Oneita Knitting Mills).
  • Distinguished precedent holding that an employer:
    • may be obligated to make unilateral changes to the terms and conditions of employment if making these changes is part of the status quo (Se. Michigan Gas Co.);
    • need not bargain about prospective discipline during a Weingarten investigative interview that may lead to employee discipline for misconduct.
  • Found that the employer should be obligated to bargain about decisions that are part of any discretionary component of its progressive discipline system, such as:
    • when to terminate employees that commit misconduct that its policies note may subject them to termination; and
    • when to begin disciplining employees for failing to meet efficiency standards.
  • Acknowledged, as the two-member Board had, that the issue of the employer's obligations to bargain about the effects of its disciplinary decisions was not preserved and would not be considered.
  • Instructed that the NLRB's General Counsel can establish that an employer unlawfully fails to bargain about disciplinary actions when there was no operating CBA by proving only that the employer exercised some discretion in the decision to discipline and not that the employer's imposition of discipline was a change from the employers past policies and procedures.
  • Affirmed the ALJ's:
    • dismissal of the allegation that the employer unilaterally changed its disciplinary practices regarding employees' failures to meet efficiency standards; and
    • conclusions that the employer committed separate ULPs.
  • Supported its conclusions by surmising that the new collective bargaining obligations:
    • may delay employer action or change employer decisions but will lead to fairer and better result; and
    • dispel appearances that unions are impotent and the Board's election processes are ineffectual based on situations in which employers maintain the status quo, carry on "business as usual" and do not reach agreement with newly certified unions.

Application of the Board's Newly Created Bargaining Obligation

Under the Board's new analysis, when there is no operating CBA, employers must generally:
  • Maintain existing policies that govern bargaining unit employees' terms and conditions of employment (as usual).
  • Give notice and opportunity to bargain with unions about components of existing policies that govern bargaining unit employees' terms and conditions of employment that give employers discretion in how to apply the policies.
With respect to disciplining individual bargaining unit employees, after an employer decides to impose a certain type of discipline on an individual employee, it must give a union notice of its decision and an opportunity to bargain about the discretionary aspects of that decision before imposing the discipline. The types of discipline for which pre-implementation decision bargaining are required are:
  • Discharges.
  • Suspensions.
  • Demotions.
  • Other forms of discipline that may automatically lead to additional discipline under the employer's disciplinary system, such as:
    • oral warnings; or
    • written warnings.
An employer must bargain to agreement or impasse about its decision before imposing the discipline. However, an employer need not reach an overall impasse in collective bargaining for an entire CBA before imposing the discipline.
An employer may not be obligated to bargain about its decision to impose discipline before imposing the discipline in limited circumstances, specifically where either:
  • There are "exigent circumstances," which will be defined on a case-by-case basis by the Board going forward, but include situations in which an employer has a reasonable and good faith belief that an employee has:
    • engaged in unlawful conduct;
    • posed a significant risk of exposing the employer to legal liability for his conduct;
    • threatened safety, health or security in or outside the workplace.
  • The discipline consists of oral or written warnings that do not automatically result in additional discipline under the employer's progressive discipline system.
However, if an employer does not bargain to agreement or impasse about its decision to discipline before imposing discipline in these two types of circumstances, it must bargain to agreement or impasse about its decision after imposing the discipline.
As an example of what bargaining about a discipline decision may include, the Board noted that an employer that had an established practice of disciplining employees for certain misconduct would:
  • Not be obligated to bargain about whether that misconduct is generally appropriate grounds for discipline.
  • Be obligated to bargain about whether:
    • the employee actually committed the misconduct;
    • the misconduct merited discipline under the established practice; and
    • the length of a suspension, if under the employer's established practice the length of a suspension for the misconduct were discretionary.
The Board advised that employers who impose discipline immediately because of "exigent circumstances" would also be obligated to bargain about the "effects" of the discipline even though the Board acknowledged that it was not presented with, and would not rule on, the issue of whether employers have an obligation to bargain about the effects of discipline when there was no operating CBA.
The Board also noted that an employer would not be required to bargain about discretionary components of discipline practices before or after imposing the discipline when either:
  • The employer negotiated with the union for an interim grievance procedure that would "permit the employer to act first followed by a grievance and, potentially, arbitration, as is typical in most complete collective-bargaining agreements." The Board declared this a "safe harbor" regarding an employer's duty to bargain before imposing discipline.
  • The discipline does not have a "material, substantial, and significant impact" on terms and conditions of employment. (The Board did not offer examples of these types of disciplinary actions, but they likely include counseling).

Practical Implications

In Alan Ritchey, the Board creates a complicated collective bargaining obligation that will not be easy for first level supervisors, who customarily make day-to-day disciplinary decisions, to follow. This obligation never existed before and was expressly denied by an earlier Board panel. The Board combined a patchwork of narrow holdings from past Board precedent to create a broad obligation to bargain about individual day-to-day operations decisions that are enmeshed with existing obligations on employers to maintain the status quo while bargaining for a CBA.
Although the decision concerns discipline by an employer with a newly certified unit, it is likely that the Board will in future decisions extend and adapt the analysis and new bargaining obligations to:
  • Require bargaining about other individual day-to-day operational decisions that affect only an individual employee's terms and conditions of employment such as application of prior discretionary decisions about granting or ordering overtime.
  • Require bargaining in other situations where there is a union and a bargaining unit but no operating CBA, such as when:
    • parties are negotiating after a CBA expires; or
    • a successor employer through a merger or acquisition, who historically would be permitted to unilaterally set the initial terms and conditions of employment for its union-represented inherited employees, is negotiating for a first CBA with the union.
Future Board cases will need to clarify whether employers that are obligated to bargain about their disciplinary decisions must also bargain about the effects of those decisions. The Board, sua sponte, concluded that post-discipline effects bargaining may be required when exigent circumstances prompt an employer to immediately discipline and remove an employee from the workplace, but disclaimed its jurisdiction to rule on potential effects bargaining obligations elsewhere in the opinion.
It is not clear whether the prospectively applied collective bargaining obligation invented in this case will be reviewed by a federal circuit court of appeals in the near future because:
  • The employer is not likely to appeal the Board's conclusion that it did not violate the NLRA.
  • The General Counsel as a matter of policy does not appeal Board decisions.
  • The union may have lost the immediate matter but will benefit from the survival of the Board's conclusions going forward.
In light of this decision, employers may consider the Board's suggestion of a "safe-harbor" from running afoul of the bargaining obligations created in this case by negotiating for an interim grievance procedure, perhaps culminating in arbitration. However, employers should evaluate their collective bargaining strategy with an understanding that grievance procedures culminating in arbitration:
  • Are two of the most coveted terms for unions in CBAs.
  • Are often used by unions:
    • as economic weapons to force employers to incur costly administration and trial costs unless or until the employer concedes in negotiations about other CBA terms; and
    • to prove to their membership that they are representing bargaining unit employees' interests against management, which is very important when employees might consider decertifying otherwise ineffective unions.
Employers that do not have union-represented workers, but are concerned about the implications of this decision if their employees were to select union representation in the future might consider implementing non-discretionary discipline policies and practices setting certain discipline for certain misconduct. Employers that are reluctant to fix disciplinary terms might still consider setting out a non-exclusive list of offenses that will lead to terminations, so that if a union organizes their employees, at least the employers will not be obligated to negotiate about terminating and removing employees for what they believe are the worst forms of employee misconduct.

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