Second Circuit Rules CBA Did Not Waive Union's Right to Effects Bargaining Over Policy Change; Circuit Split on Waiver Analysis Emerges | Practical Law

Second Circuit Rules CBA Did Not Waive Union's Right to Effects Bargaining Over Policy Change; Circuit Split on Waiver Analysis Emerges | Practical Law

In Rochester Gas & Elec. Corp. v. NLRB, the US Court of Appeals for the Second Circuit held that a provision of a collective bargaining agreement allowing an employer to make changes in its employee work practices and control the use of company property did not clearly and unmistakably allow that employer to avoid effects bargaining with the union or waive the union's right to bargain about the effects of discontinuing a policy of permitting employees to take company vehicles home at night.

Second Circuit Rules CBA Did Not Waive Union's Right to Effects Bargaining Over Policy Change; Circuit Split on Waiver Analysis Emerges

by PLC Labor & Employment
Published on 18 Jan 2013 • USA (National/Federal)
In Rochester Gas & Elec. Corp. v. NLRB, the US Court of Appeals for the Second Circuit held that a provision of a collective bargaining agreement allowing an employer to make changes in its employee work practices and control the use of company property did not clearly and unmistakably allow that employer to avoid effects bargaining with the union or waive the union's right to bargain about the effects of discontinuing a policy of permitting employees to take company vehicles home at night.

Key Litigated Issues

In Rochester Gas & Elec. Corp. v. NLRB, the key litigated issue was whether a provision of the collective bargaining agreement (CBA) between Rochester Gas and the union validly waived the union's statutorily protected right to bargain over the effects of Rochester Gas' decision to discontinue a policy of permitting union members to take company vehicles home at night (Vehicle Policy Change).

Background

Rochester Gas is a utility company. The union represents 395 Rochester Gas employees, including employees in the Trouble Maintenance and Repair department. This department includes a low-voltage group responsible for equipment carrying up to 480 volts. At the time of the Vehicle Policy Change, the low-voltage group was composed of one inspector and seven technicians responsible for meter installations and replacements. From 1990 until January 1, 2006, the Rochester Gas vehicle policy permitted low-voltage employees to drive Rochester Gas vans to and from work, and keep them at home when off-duty. Rochester Gas paid for the vehicles, maintenance and gas, and withheld taxes from employee pay corresponding to the value of this benefit.
In November 2005, Rochester Gas announced the Vehicle Policy Change by notifying the union president that beginning on January 1, 2006, the low-voltage employees would be required to park their Rochester Gas vans in the company garage overnight. The union repeatedly demanded that Rochester Gas bargain over the Vehicle Policy Change. Rochester Gas refused, taking the view that the following provision of the CBA permitted it to make the Vehicle Policy Change without bargaining with the union over either the decision or its effects on union members:
[T]he Company shall have the exclusive right to issue, amend, and revise safety and/or work rules, customs, regulations, and practices, except as expressly modified or restricted by a specific provision of this Agreement.
On January 10, 2006, the union filed a grievance with Rochester Gas' Labor Relations Analyst, arguing that:
  • Wages, benefits, hours and working conditions are mandatory topics of collective bargaining.
  • The Vehicle Policy Change changed the terms and conditions of employment for its affected members.
By letters dated March and June, 2006, the union also requested the following information from Rochester Gas:
  • A list of bargaining unit jobs and personnel permitted to take company vehicles home at night.
  • Any company analysis of the cost of the prior policy.
  • A list of non-unit personnel permitted to store company vehicles at their homes.
  • An indication of whether the company had also changed its vehicle storage policy with respect to any non-unit personnel.
Rochester Gas only responded to the first of these four information requests. Consequently, the union withdrew its grievance to file unfair labor practice (ULP) charges under the NLRA. The NLRB's General Counsel (General Counsel), issued a ULP complaint against Rochester Gas, alleging that Rochester Gas had failed to bargain with the union over the effects of the Vehicle Policy Change.
After a February 2008 hearing, an NLRB Administrative Law Judge (ALJ) concluded that Rochester Gas had violated Sections 8(a)(1) and (5) of the NLRA by refusing to:
  • Bargain over the effects of the Vehicle Policy Change.
  • Provide requested information to the union.
By Decision and Order dated August 2010, the panel (Board) heading the NLRB's judicial functions affirmed the ALJ's decision and ordered a modified Transmarine remedy. That means that it granted a limited and conditional "make-whole" remedy requiring the employer to pay affected employees a sum for a short period while the parties negotiate the effects of the decision, as an incentive to reach an agreement. These cross-petitions followed. In this appeal, Rochester Gas asserted that the Board erred by holding that Rochester Gas unlawfully failed to:
  • Bargain over the effects of the Vehicle Policy Change.
  • Provide requested information to the union.
The union, in its petition, argued that the Board erred by:
  • Failing to address whether Rochester Gas violated Section 8(a)(5) of the NLRA by refusing to bargain over both the decision to promulgate the Vehicle Policy Change and the effects of that decision.
  • Ordering only a modified Transmarine remedy rather than a "make-whole" remedy.

Outcome

On January 17, 2013, the US Court of Appeals for the Second Circuit issued an opinion in Rochester Gas & Elec. Corp. v. NLRB, denying both cross-petitions for review and enforcing the NLRB's order in its entirety. The court held that:
  • Although the CBA allowed Rochester Gas to make changes in its employee work practices and to control the use of company property, it did not clearly and unmistakably:
    • allow Rochester Gas to forgo any negotiation with the union over the effects of the Vehicle Policy Change; or
    • waive the union's right to bargain over the effects of the Vehicle Policy Change.
  • The Board did not abuse its considerable discretion in granting the modified Transmarine remedy.
The Second Circuit explained that its test to determine whether a union has waived its right to bargain over the effects of a decision that would ordinarily be subject to mandatory bargaining involves a two-step inquiry asking:
  • Whether the right subject to collective bargaining is clearly and unmistakably covered by the contract.
  • If the subject was not covered by the CBA, whether the union has effected a clear and unmistakable waiver of its right to bargain.
If the alleged waiver is not clear and unmistakable, the Second Circuit will find that the union has not waived its right to bargain.
Applying its test, the Second Circuit concluded that the provisions of the CBA invoked by Rochester Gas are not specific enough to find that the union clearly and unmistakably waived its right to bargain over the effects of a change under those provisions.
The Second Circuit also rejected the contract coverage approach used by the DC Circuit, First Circuit and Seventh Circuit. The contract coverage approach defers the clear and unmistakable waiver standard when a ULP turns solely on the interpretation of a labor contract. In rejecting the contract coverage approach, the Second Circuit explained that this approach:
  • Is inconsistent with Supreme Court holdings and Second Circuit precedent.
  • Undermines national labor policy that disfavors waivers of protected statutory rights.
  • Could lead to the unwitting relinquishment of bargaining rights.
The court stated that their two-step test upholds long-standing precedent that relinquishment of statutory rights should be deliberate and obvious, allowing courts to interpret contracts anew. Following an analysis of the provisions of the CBA that Rochester Gas asserted gave them permission to make the Vehicle Policy Change without effects bargaining, the court stated that these provisions are not specific enough for it to determine that the union clearly and unmistakably waived its right to bargain over the effects of the decision.

Practical Implications

This decision highlights the developing Circuit court split regarding contract coverage and the unmistakable waiver test. Of the courts that have addressed the issue:
  • The Ninth Circuit (and the NLRB) apply a single step clear and unmistakable waiver analysis.
  • The DC, First and Seventh Circuits apply the contract coverage analysis.
  • The Second Circuit expressly declines to apply the contract coverage test but applies a two-step unmistakable waiver analysis.

Court Documents