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Union Waived Right to Bargain Over Pension Plan Changes: NLRB
Practical Law Legal Update 7-517-1205 (Approx. 4 pages)
Union Waived Right to Bargain Over Pension Plan Changes: NLRB
by PLC Labor & Employment
| Published on 10 Jan 2012 • USA (National/Federal) |
In a decision dated December 30, 2011, the National Labor Relations Board (NLRB) decided in Omaha World-Herald that a union, under the terms of its collective bargaining agreement (CBA) with the company, waived its right to object to the employer's changes to its pension plan. Separately, the NLRB found that union had not waived its right to bargain over subsequent changes to the employer's 401(k) plan after the expiration of the CBA.
Key Litigated Issues
The NLRB issued a decision in Omaha World-Herald, affirming in part and reversing in part the decision of an NLRB administrative law judge (ALJ). The key issue in the case was whether the company violated the NLRA when it unilaterally froze benefits in its pension plan and ceased matching contributions to employee 401(k) plan accounts.
Background
The employer, a daily newspaper with certain of its employees represented by a union, maintained a pension plan which allowed participating employees to accrue benefits on a monthly basis. The employer also allowed certain employees to participate in a 401(k) plan for which the employer would make matching contributions.
Under a 1996 collective bargaining agreement (CBA), bargaining unit employees were permitted to participate in the employer's pension plan, although changes to the plan were exempted from the parties' grievance and arbitration procedure. The CBA also provided that the employer would, if requested, "advise the [u]nion of proposed changes and meet to discuss and explain changes" to the plan. Renewed with minor changes in 2004, the CBA was scheduled to expire on February 5, 2009.
In 2005, the employer unilaterally made changes to the pension plan, terminating participation for all employees under age 50 and for certain older employees. The union did not object to these changes. In 2008, the employer announced to the union that it planned to freeze accrual in the pension plan, and claimed that the CBA gave it the right to unilaterally amend the plan. The union objected, arguing that any changes needed to be agreed on through the bargaining process. Despite the union's objections, the employer imposed the accrual freeze on January 1, 2009.
In March 2009, shortly after the CBA expired, and while negotiations for a new agreement were under way, the employer informed the union that it intended to suspend its 401(k) matching program. Bargaining remained ongoing when the change took effect on April 1, 2009.
The ALJ concluded that the employer's unilateral changes to both the pension plan and the 401(k) plan violated the NLRA. The employer appealed the ALJ's decision by filing exceptions to a five-member panel (Board) heading the NLRB's judicial functions.
Outcome
A three member panel of the Board reviewed the ALJ's decision, with:
- A majority (Members Becker and Hayes) of the Board reversing the ALJ's decision about the changes to the pension plan.
- A different majority (Chairman Pearce and Member Becker) affirming the ALJ's decision about the changes to the 401(k) plan.
The Pension Plan
Reversing the ALJ, the Board concluded that the union had clearly and unmistakably waived its right to bargain over changes to the pension plan during the term of the CBA as evidenced by the CBA's language. In particular the Board noted that the CBA:
- Refers to bargaining unit employees' participation in the pension plan, for which the plan documents contain an express reservation of the employer's unilateral right to amend the plan.
- Excludes changes to the retirement plan from the parties' grievance and arbitration procedure.
- States that the employer will "advise" the union of changes, and will meet to "discuss" changes if requested, but does not require "bargaining," although that term was used elsewhere in the agreement.
In addition, the Board noted that, consistent with a finding of waiver, the union had not objected to the employer's 2005 unilateral changes during the term of the contract. The Board observed that although none of the listed factors alone was sufficient, in conjunction, and in light of the union's failure to object to previous changes, the weight of the evidence supported a finding of waiver.
Member Pearce dissented, finding that the listed factors, even in combination, were insufficient to satisfy the "clear and unmistakable" standard required to find the existence of waiver.
The 401(k) Plan
A separate Board majority affirmed the ALJ's finding that the union had not waived its right to bargain about the employer's suspension of its 401(k) matching program. The Board observed that the change to the plan had occurred after the expiration of the CBA, and noted that, absent contrary evidence, the waiver of a union's right to bargain does not survive the contract that contains it.
Member Hayes dissented, arguing that language in the plan documents reserving the company's right to make unilateral changes was sufficient to show waiver. In response, the Board stated that a reservation of rights clause, when incorporated by reference in a CBA, generally expires with the contract.
Practical Implications
The decision indicates for employers the importance of including clear contractual language in both CBAs and plan documents if the employer wishes to retain the right to unilaterally alter the terms of retirement plans with respect to unionized employees.
The decision confirms that the Board may consider CBA language requiring an employer to "advise" and "discuss" changes to the material terms and conditions of employment, rather than "bargain" about them, a waiver of the union's statutory right to bargain about the changes.
Employers should also be aware that, in light of the decision, waiver contained within the terms of a CBA likely will not, in the absence of other evidence, outlive the expiration of the agreement. Accordingly benefit plan changes made following the expiration of an agreement, but before a new agreement is adopted, may not be protected by prior waiver provisions.