Unionized Employers Must Bargain About Individual Discipline In Absence of a Negotiated Grievance Process: NLRB | Practical Law

Unionized Employers Must Bargain About Individual Discipline In Absence of a Negotiated Grievance Process: NLRB | Practical Law

In Total Security Management Illinois 1, LLC, the National Labor Relations Board (NLRB) held that discretionary discipline is a mandatory bargaining subject and employers may not unilaterally impose discipline on bargaining unit employees when their union has been certified but has not yet entered into a collective bargaining agreement (CBA) with the employer providing for a grievance process to address disciplinary disputes.

Unionized Employers Must Bargain About Individual Discipline In Absence of a Negotiated Grievance Process: NLRB

by Practical Law Labor & Employment
Law stated as of 23 Jun 2020 • USA (National/Federal)
In Total Security Management Illinois 1, LLC, the National Labor Relations Board (NLRB) held that discretionary discipline is a mandatory bargaining subject and employers may not unilaterally impose discipline on bargaining unit employees when their union has been certified but has not yet entered into a collective bargaining agreement (CBA) with the employer providing for a grievance process to address disciplinary disputes.
On August 26, 2016, in Total Security Management Illinois 1, LLC, a majority of the panel (Board) heading the NLRB's judicial functions held in a three to one decision that when a union has been certified but has not yet entered into a collective bargaining agreement (CBA) with the employer providing for a grievance process to address disciplinary disputes, an employer may not unilaterally impose discretionary discipline. Instead, the employer must provide the union with notice and an opportunity to bargain, unless the employer has a reasonable, good-faith belief that the employee’s continued presence on the job presents a serious, imminent danger to the employer's business or personnel. Failing to take these actions violates Section 8(a)(5) of the NLRA.
The decision echoed the Board's 2012 Noel Canning-invalidated decision, Alan Ritchey. The Board applied its ruling prospectively, holding that the employer in this case did not violate the NLRA by discharging bargaining unit employees without first giving their union notice and an opportunity to bargain about the discharges. (364 N.L.R.B. No. 106 (Aug. 26, 2016).)

Background

In 2012, the International Union Security Police Fire Professionals of America was certified to represent a bargaining unit that included Total Security Management's security guards. In 2013, with no CBA or agreed upon process governing discipline, Total Security discharged three security guards without providing the union with notice or an opportunity to bargain over the discharges.
The union filed an unfair labor practice (ULP) charge and the NLRB General Counsel issued a ULP complaint alleging that Total Security violated Section 8(a)(1) and 8(a)(5) by discharging the three security guards without prior notice to, or bargaining with, the union. The parties submitted a stipulation of facts to an NLRB administrative Law Judge (ALJ) in lieu of record testimony. They stipulated, among other things, that at the time the employees were discharged, Total Security did not have a "reasonable, good-faith belief" that the three discharged security guards' "continued presence on the job presented a serious, imminent threat" to Total Security's business or personnel.
The ALJ held that the employer's actions were unlawful, relying on the Board's 2012 decision, Alan Ritchey, Inc.. In that decision, the Board held that an employer violated the 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. (359 N.L.R.B. No. 40 (Dec. 14, 2012); Legal Update, Unionized Employers Must Bargain about Individual Discipline In Absence of a Collectively-bargained Grievance Process: NLRB.)
However, Alan Ritchey was ultimately invalidated because the Board then was composed of two persons whose appointments the Supreme Court held constitutionally infirm in NLRB v. Noel Canning (134 S.Ct. 2550 (2014); see Article, Expert Q&A on Noel Canning and Its Aftermath and Legal Update, Supreme Court Holds 2012 Recess Appointments to the NLRB Were Invalid, Effectively Invalidates 20-Months of NLRB Decisions).
Total Security excepted to the ALJ's decision, permitting the Board to again decide whether an employer's failure to provide notice and bargain with a union before disciplining employees violates the NLRA.

Outcome

A majority of the Board (Chairman Pearce and Members Hirozawa and McFerran):
  • Held that discretionary discipline is a mandatory bargaining subject and that employers:
    • may not unilaterally impose discipline on bargaining unit employees when the union and the employer have yet to agree on a grievance process governing disciplinary disputes; and
    • must provide the union with notice and an opportunity to bargain before imposing discipline on bargaining unit employees, unless the employer has a reasonable, good-faith belief that the employee's continued presence on the job presents a serious, imminent danger to the employer's business or personnel.
  • Applied its ruling prospectively, holding that Total Security did not unlawfully discharge the three security guards without first providing the union notice or an opportunity to bargain over the discharges.
The Board majority noted that:
  • Board precedents hold that:
  • In Fresno Bee, relied on by Total Security and by the dissent, the Board did not hold that an employer lacks a duty to bargain over discretionary discipline before imposing it. Rather, the Board "without comment" affirmed an ALJ's decision that erroneously concluded that an employer using discretion to impose discipline on individual employees made no unilateral change to employment terms and conditions because the employer "had not changed its disciplinary system." The ALJ's reasoning in Fresno Bee that an employer has no duty to bargain over discretionary disciplinary decisions because its disciplinary policy stayed the same was not responsive to the principle in "well-established Board precedent" that an employer has a duty to both:
    • maintain existing policies addressing employment terms and conditions; and
    • bargain when it applies those policies in a discretionary manner.
    (See 337 N.L.R.B. 1161 (2002).)
  • The US Supreme Court's decision in NLRB v. J. Weingarten affirming the Board's holding that an employee has a right under Section 7 of the NLRA to be represented by the union in investigatory interviews that the employee reasonably believes may lead to discipline did not preclude the Board from holding in this case that an employer has a duty to bargain before imposing discipline, because:
    • Weingarten applied only to investigatory interviews that may or may not lead to discipline;
    • an investigation in itself is not discipline and does not change, or result in a change to, an employee's terms and conditions of employment;
    • a bargaining obligation is not triggered when an employer conducts an investigation that may or may not lead to discipline; and
    • an employee, rather than a union, asserts (or can waive) the Weingarten right, while the employer's obligation to bargain before imposing discipline is a union-based right.
    (See 420 U.S. 251 (1975).)
  • An employee's Weingarten right and an employer's newfound obligation to bargain with the union before imposing discipline work in tandem. The employer must permit a union representative to be present at an investigatory interview if the employee requests the union's presence, but the employer has no duty to bargain with the union at the interview. Once the employer has "preliminarily decided" to impose "serious discipline," it must give the union notice "and an opportunity to bargain over the discretionary aspects of its decision" before it imposes discipline.
  • Requiring bargaining with the union over proposed discipline against an employee it represents will lead to a "more accurate understanding of the facts" and be "more even-handed" and "fairer" while not creating an unreasonable burden on employers. The employers' duty to bargain before imposing discipline:
    • only applies to discretionary aspects of disciplinary actions like suspension, termination, or demotion that would have "an inevitable and immediate impact" on an employee's tenure, status, or earnings;
    • does not apply to aspects of disciplinary decisions that are governed by "nondiscretionary elements" of the employer's existing policies and procedures;
    • does not require the employer to bargain to impasse or agreement, as the employer may impose the discipline if it fails to reach an agreement with the union and then continues bargaining to agreement or impasse;
    • is not triggered when the employer has a reasonable, good-faith belief that the employee's continued presence on the job presents a serious, imminent danger to the employer's business or personnel; and
    • does not involve examining whether the employer's generally established non-discretionary disciplinary practices are appropriate (like whether an employer's practice of suspending employees for absenteeism is appropriate) but only involves the discretionary particulars of how it disciplines a specific bargaining unit employee (like the length of the suspension for absenteeism).
  • Holding that an employer does not have an obligation to provide notice and bargain under these circumstances would "render the union (typically, newly certified or recognized) that represents the employees impotent."
  • If its ruling were applied to Total Security retroactively, it would have violated Section 8(a)(5) by failing to provide notice to the union and bargain with the union over the discharges of the three security guards. However, it would be inappropriate to apply this ruling retroactively because:
    • the discharges occurred after the Board overruled Fresno Bee in Alan Ritchey, but also after the US Court of Appeals for the District of Columbia had invalidated the appointments of two Board members who took part in the Alan Ritchey (Noel Canning v. NLRB, 705 F.3d 490 (D.C. Cir. 2013); and
    • its holding amounted to "changing the law"; retroactive application would create an injustice under the Board's precedents on whether retroactive or prospective application of a Board ruling is more appropriate (SNE Enterprises, 344 N.L.R.B. 673, 673 (2005)).
  • Section 10(c) of the NLRA did not preclude the Board from ordering "make-whole relief" including:
    • reinstatement; and
    • backpay running from the date of the unilateral discipline until the date the parties reach agreement or reached impasse.
    (See Goya Foods of Florida, 356 N.L.R.B. 1461, 1462 (2011).)
Member Miscimarra dissented strongly, asserting, among other things, that:
  • The majority was casting aside "many fundamental labor law principles" and taking "a wrecking ball to eight decades of NLRA case law."
  • The majority's decision violated NLRA:
    • Section 8(d)'s prohibition on the Board imposing substantive requirements on parties ostensibly to enforce Section 8(a)(5) bargaining requirements; and
    • Section 10(c)'s prohibition on the Board ordering backpay or reinstatement for employees suspended or discharged for "cause."
  • An employer does not have an obligation to bargain over discipline under Section 8(a)(5) when there has been no change to its existing discipline standards and process.
  • The majority created disciplinary-bargaining requirements that operate as a "heads-I win, tails-you-lose" obligation. Under this case, employers would violate the NLRA if they fail to honor the discipline bar—a moratorium on discipline—or fail to engage in pre-implementation discipline bargaining. However, employers with status quo obligations would also violate the NLRA if they deviate from any preexisting disciplinary rules or procedures.
  • The majority's decision flies in the face of Weingarten, which established that employers are not obligated to bargain over discipline.
  • Requiring employers to bargain with a union after the employer has decided (at least preliminarily) that an employee should be disciplined but before the discipline is imposed will create "mayhem" and contradicts "longstanding and well-reasoned principles" about disciplinary-related bargaining providing that:
  • The majority's new discipline-bargaining standard providing that the new requirements do not apply when the employer and union agree on a process to resolve disciplinary disputes contradicts Board precedent that an employer's obligations to bargain under Section 8(a)(5) are not removed unless there has been a "clear and unmistakable waiver" by the union of the employer's bargaining obligation (see Unit Drop Forge Division Eaton, Yale & Towne Inc., 171 N.L.R.B. 600, 601 (1968)).

Practical Implications

The Board's decision in Total Security Management essentially resuscitates the invalidated holdings of Alan Ritchey. As in Alan Ritchey, the Board created a complicated collective bargaining obligation that will not be easy for first level supervisors, who customarily make day-to-day disciplinary decisions, to implement. The Board again combines a patchwork of narrow holdings from Board precedents 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 re-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 in this case prospectively.
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.
  • 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.
Update: On February 14, 2017, the NLRB's General Counsel issued a memorandum to NLRB regional directors, officers-in-charge, and resident officers outlining case processing guidelines for cases that arise under the Board's decision in Total Security Management. To expedite the processing of these cases, the General Counsel concluded that Regional Offices should consolidate the compliance proceeding with the underlying ULP proceeding. The memorandum outlines the basic required actions for the Regional Office investigating and disposing of cases arising under Total Security.
Update: On June 23, 2020, the Board overruled Total Security Management, holding that, when a collective-bargaining relationship commences, employers have no statutory duty to bargain before disciplining employees consistent with an established disciplinary policy or practice (800 River Road Operating Company, LLC d/b/a Care One at New Milford, 369 N.L.R.B. No. 109 (June 23, 2020); for more information, see Legal Update, NLRB Holds That Employers Again Have No General Predisciplinary Duty to Bargain on Commencement of a Collective Bargaining Relationship).