Proposals for Local CBA Would Change Master CBA Midterm; Impasse and Lockout Were Unlawful: NLRB | Practical Law

Proposals for Local CBA Would Change Master CBA Midterm; Impasse and Lockout Were Unlawful: NLRB | Practical Law

In Kellogg Company, the National Labor Relations Board (NLRB) held that Kellogg violated the National Labor Relations Act (NLRA) by insisting to impasse on its proposals when bargaining on a successor supplemental collective bargaining agreement (CBA) and locking out employees in support of those proposals, where those proposals would effectively modify employment terms in the master CBA covering employees at three additional facilities. The NLRB viewed Kellogg's proposals as midterm modifications of Kellogg's master CBA with the union and therefore permissive subjects of bargaining over which Kellogg could not lawfully insist to impasse or lock out the employees.

Proposals for Local CBA Would Change Master CBA Midterm; Impasse and Lockout Were Unlawful: NLRB

by Practical Law Labor & Employment
Published on 19 May 2015 • USA (National/Federal)
In Kellogg Company, the National Labor Relations Board (NLRB) held that Kellogg violated the National Labor Relations Act (NLRA) by insisting to impasse on its proposals when bargaining on a successor supplemental collective bargaining agreement (CBA) and locking out employees in support of those proposals, where those proposals would effectively modify employment terms in the master CBA covering employees at three additional facilities. The NLRB viewed Kellogg's proposals as midterm modifications of Kellogg's master CBA with the union and therefore permissive subjects of bargaining over which Kellogg could not lawfully insist to impasse or lock out the employees.
On May 7, 2015, in Kellogg Company, the panel (Board) heading the NLRB's judicial functions held that Kellogg unlawfully insisted to impasse on its proposals when bargaining on a successor supplemental collective bargaining agreement (CBA) and locking out employees in support of those proposals, where those proposals would effectively modify employment terms in the master CBA between Kellogg and the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union at three additional facilities. The NLRB viewed Kellogg's proposals as midterm modifications of Kellogg's master CBA with the international union and therefore permissive subjects of bargaining over which Kellogg could not lawfully insist to impasse or lockout the employees. (362 N.L.R.B. slip op. 86 (May 7, 2015).)

Background

Kellogg Company maintained ready-to-eat cereal plants in four locations including Memphis, Tennessee. Kellogg's employment relationship with employees at these locations was governed by:
  • A master CBA (due to expire in October 2015) between Kellogg and:
    • the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union; and
    • local unions of that international union.
  • Supplemental CBAs between Kellogg and each of the four local unions representing employees at the respective four plants. The Memphis supplemental CBA with Local Union 252-G (252-G Supplement) had expired in October, 2013.
The master CBA:
  • Provided for uniform wages, benefits and overtime premiums for regular employees at each of the four locations.
  • Expressly prohibited Kellogg from negotiating provisions in the supplemental CBA's that contradicted the master CBA.
The 252-G Supplement allowed Kellogg to hire "casual employees" to relieve regular employees from extended work schedules in certain situations. In September 2013, shortly before the 252-G Supplement expired, Kellogg proposed changes for the successor 252-G Supplement that were intended to expand the use of casual employees and effectively meant that all new hires in Memphis going forward would be casual employees. Specifically, Kellogg proposed to:
  • Redefine the term "casual employee" to mean "any employee hired by Kellogg to perform production or any other bargaining unit work."
  • Not have any limits on Kellogg's right to hire and use casual employees.
  • Grant casual employees the same seniority, job bidding, and grievance rights that regular employees enjoyed.
  • Maintain a lower wage rate for casual employees and exclude casual employees from health insurance and other benefits.
  • Exclude casual employees from the daily overtime and Sunday double-time premium pay provisions of the Master CBA.
Negotiations on these proposals continued through mid-October 2013. With the parties at impasse, Kellogg delivered its "Last/Best Offer" and informed Local 252-G that it would lock employees out if the union refused to accept its proposals. When the union rejected the proposals in writing the day after the 252-G Supplement expired, Kellogg declared an impasse and locked out all of the bargaining unit employees who worked at the Memphis facility.
The union filed unfair labor practice (ULP) charges against Kellogg for:
  • Bargaining to impasse.
  • Threatening to lock out and locking out employees.
An NLRB administrative law judge (ALJ) ruled that Kellogg's proposals:
  • Concerned only the renegotiation of the supplemental CBA, not the master CBA, and therefore were mandatory subjects of bargaining over which Kellogg could lawfully declare an impasse and lock out the employees.
  • Would not modify the master CBA's application to regular employees.
The union and the NLRB General Counsel excepted to the ALJ's decision.

Outcome

A majority of the Board (Chairman Pearce and Member Hirozawa) noted that:
  • A proposal to modify a CBA midterm is a non-mandatory subject of bargaining which a party cannot insist on as a condition for reaching agreement on mandatory subjects (Smurfit-Stone Container Enters., 357 N.L.R.B. slip op. 144 (Dec. 22, 2011)).
  • Insisting to impasse on a nonmandatory subject of bargaining violates Section 8(a)(5) and (1) of the NLRA (Chesapeake Plywood, Inc., 294 N.L.R.B. 201 (1989)).
  • Locking out employees to compel them to accept midterm contract modifications violates Section 8(a)(5) and (1) of the NLRA (Rangaire Co., 309 N.L.R.B. 1043 (1992)).
  • Locking out employees to avoid the duty to bargain or to compel acceptance of an unlawful bargaining position violates Section 8(a)(3) and (1) of the NLRA (Royal Motor Sales, 329 N.L.R.B. 760 (1999)).
The Board majority found that:
  • Implementing Kellogg's proposals would result in Kellogg:
    • ceasing to have to hire regular employees at the Memphis facility and instead replacing regular employees with lower-paid casual employees; and
    • instituting across-the-board cuts to the wages and benefits provided to regular employees under the master CBA.
  • The parties intended for the master CBA to provide for Kellogg's core workforce to consist of regular employees who would receive the negotiated master CBA's:
    • wages;
    • benefits; and
    • overtime and premium pay.
  • Kellogg's proposals for the successor 252-G Supplement, if implemented, would effectively change the master CBA's wage rates and benefits for newly-hired employees.
  • Kellogg was trying to circumvent and override the terms of the master CBA to achieve across-the-board wage reductions.
The Board majority held that Kellogg:
  • Violated Section 8(a)(5) and (1) of the NLRA by:
    • insisting to impasse on proposals that were midterm modifications to the master CBA and were therefore permissive subjects of bargaining; and
    • threatening to lock out employees if the union did not accede to its unlawful bargaining proposals.
  • Violated Section 8(a)(3) and (1) by locking out employees, as employees would reasonably view the lockout as retaliation for the union trying to engage in good-faith collective bargaining.
Member Johnson issued a concurring opinion, noting that Kellogg's proposal would progressively eliminate regular employees from Memphis (through hiring of only casual employees in the future and potentially laying off and rehiring regular employees as casual employees), mooting the master CBA's negotiated terms for regular employees. Member Johnson agreed with the majority that Kellogg's proposals were effectively midterm modifications of the master CBA, rendering meaningless various master CBA provisions on regular employees and that Kellogg's actions violated the NLRA.
Member Johnson disagreed with the majority on several other key points, noting that:
  • The master CBA was never intended to address nonregular, including casual, employees, as that was left to the supplemental agreements.
  • Kellogg's proposals to change the terms for casual employees in Memphis did not contravene the master CBA and Kellogg's attempt to bargain on this issue was consistent with the parties' practice in all four facilities.
  • The majority was improperly imposing its own subjective analysis of the impact Kellogg's proposals would have on the Memphis workforce instead of upholding the master/local agreement model the parties intended to govern their relationship (H.K. Porter Co. v. NLRB, 397 U.S. 99, 103-0 (1970)).

Practical Implications

The Board's decision in Kellogg can serve as a cautionary tale for parties engaging in bargaining on local agreements that supplement national/master agreements. Ordinarily, the master or national agreement precedes the local supplemental agreement. In negotiations on a local or supplemental agreement, employers should avoid:
  • Insisting on proposals that expressly contradict (or could reasonably be interpreted to contradict or nullify) the master agreement, except where the master agreement expressly authorizes local contradictions.
  • Making proposals that are subject to being interpreted as modifying or nullifying the master agreement in the middle of its term.
  • Insisting to impasse or imposing a lockout to support proposals for the supplemental agreement that could reasonably be interpreted as insisting on midterm modifications or nullification to the master agreement.
To see a summary of a sample Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) CBA and compare it with other unions' CBAs, visit the What's Market Collective Bargaining Agreements Database.