Employer that Failed to Identify Limits on Bargaining Agent's Authority is Bound to CBA: NLRB | Practical Law

Employer that Failed to Identify Limits on Bargaining Agent's Authority is Bound to CBA: NLRB | Practical Law

The National Labor Relations Board (NLRB) recently held in A.W. Farrell & Son, Inc. that an employer that did not give clear and timely notice of the limits on its bargaining agent's authority is bound to the negotiated collective bargaining agreement (CBA) that its principal rejected.

Employer that Failed to Identify Limits on Bargaining Agent's Authority is Bound to CBA: NLRB

by Practical Law Labor & Employment
Published on 16 Jul 2013USA (National/Federal)
The National Labor Relations Board (NLRB) recently held in A.W. Farrell & Son, Inc. that an employer that did not give clear and timely notice of the limits on its bargaining agent's authority is bound to the negotiated collective bargaining agreement (CBA) that its principal rejected.
On July 11, 2013, the panel (Board) in charge of the NLRB's judicial functions issued an opinion in A.W. Farrell & Son, Inc., ruling that the employer:
  • Did not inform the union that any negotiated collective bargaining agreement (CBA) was subject to review and approval by the employer's principal.
  • Was bound to the terms of a negotiated CBA that its principal rejected.
The Board:
  • Overruled an NLRB administrative law judge's (ALJ) rulings that:
    • the employer joined with four other employers whose employees were represented by the same union as a matter of convenience to jointly negotiate similar CBAs. There was an understanding that each employer would have a representative at the bargaining table, one of those representatives would be the spokesperson for the employer group and each employer could decide for itself whether to execute any agreement resulting from the joint bargaining;
    • the employers and the union did not reach a final agreement when the union's membership ratified the employer group's "last best offer" on all but one of the remaining disputed CBA terms;
    • the employer's bargaining agent informed the union and the joint bargaining employer group spokesperson that the principal of his company needed to approve any agreement before a negotiated CBA became a final agreement;
    • the union and the joint bargaining employer group negotiated a tentative agreement after they resolved the remaining dispute about proposed language concerning employer contributions to one of the union's trust funds several weeks after the union adopted in drafts (and the union's membership ratified) the employers' last best offer on other disputed CBA terms;
    • the employer established a custom and practice in all prior collective bargaining negotiations with the union (there were two) of making any CBA negotiated by its bargaining agent tentative and subject to approval by the employer's principal. This also gave the union clear notice that the proposed CBA (with the union trust fund issue resolved) was not a final agreement until approved by the employer's principal; and
    • the employer did not commit an unfair labor practice when its principal rejected the tentative agreement.
  • Found that:
    • the employers in the joint bargaining group intended to bargain for separate but essentially identical CBAs. The Board made no finding about understandings of the rights of the employers to individually accept or reject the negotiated CBA or what differences existed between each CBA;
    • a final agreement was reached when the union's membership ratified all but one of the proposals in the employer group's last best offers on the remaining disputed CBA terms. The Board found the agreement was final even before the union e-mailed the employers' bargaining representatives one day after the ratification vote to inform them that it had accepted and its membership ratified most of the employer group's offer. The Board offered no findings or conclusions about the bargaining that continued after the ratification vote and resolved the issue about employer contributions to one of the union's trust funds;
    • the employer agent's actions and statements during bargaining may have suggested that the employer's principal needed to sign the final agreement, but did not clearly give notice that any agreement was subject to the principal's approval;
    • an e-mail from the employer's representative's to the employer group's spokesperson between the ratification vote and the eventual agreement resolving the dispute about employer contributions to one of the union's trust funds did not sufficiently state that he lacked authority to bind the employer. The e-mail, which stated that no other employer in the bargaining group could speak for the employer and the employer's principal needed to review and sign any proposed agreement that the union printed based on the employers' offer and resolution of the outstanding issue, was immaterial because it was not sent to the union and came after the agreement was final (through the ratification vote);
    • Past practice did not give the union clear notice that the employer's principal needed to review any tentative agreement before it could become a final agreement. At most, the union could infer that the principal would need to sign the final agreement.
  • Held that the employer:
    • failed to give the union clear and timely notice that its bargaining representative lacked authority to negotiate a binding agreement with the union; and
    • unlawfully repudiated a final and binding agreement with the union reached when the union accepted and its membership ratified the employer group's last best offer on all but one proposal.
The decision confirms that employers, especially those that engage in joint bargaining, should clarify before and during bargaining:
  • Who has authority to:
    • negotiate for an employer; and
    • bind the employer to a negotiated agreement.
  • Whether there are any conditions subsequent for any agreement reached, such as final review and approval by corporate officers.
Given the Board's interpretations of when an agreement becomes final, employers might benefit from noting in their collective bargaining proposals that if the union agrees to its proposals:
  • The offers on each of the CBA terms is conditioned on the union's acceptance of all of the employer's proposals.
  • The union's acceptance of all of the employer's proposals forms a tentative agreement subject to approval by the employer's principal.
Court documents: