NLRB Creates Exception to Rule on Implementing Changes Decided Before Election Where Section 8(f) Prehire CBA Existed | Practical Law

NLRB Creates Exception to Rule on Implementing Changes Decided Before Election Where Section 8(f) Prehire CBA Existed | Practical Law

In The Ardit Company, the National Labor Relations Board (NLRB) held that an employer violated the National Labor Relations Act (NLRA) by unilaterally implementing new terms and conditions of employment, laying off unit employees, and failing to respond to information requests.

NLRB Creates Exception to Rule on Implementing Changes Decided Before Election Where Section 8(f) Prehire CBA Existed

by Practical Law Labor & Employment
Published on 02 Nov 2016 • USA (National/Federal)
In The Ardit Company, the National Labor Relations Board (NLRB) held that an employer violated the National Labor Relations Act (NLRA) by unilaterally implementing new terms and conditions of employment, laying off unit employees, and failing to respond to information requests.
On October 27, 2016, in The Ardit Company, a 2-1 majority of a three-member panel (Board) heading the NLRB's judicial functions (Member Miscimarra dissented in part) held that an employer violated Sections 8(a)(5) and (1) of the NLRA by refusing to bargain with a union by unilaterally implementing new terms and conditions of employment. laying off unit employees, and failing to respond to information requests (364 N.L.R.B. No. 130 (Oct. 27, 2016)).

Background

Ardit, a commercial flooring installer in central Ohio, negotiated and administered a Section 8(f) collective-bargaining agreement (CBA) with the union covering Ardit's tile, marble, and terrazzo installers and helpers, effective through August 31, 2012.
In May 2011, Ardit notified the union that it would be terminating the 8(f) CBA when it expired.
In November 2011, Ardit advised employees and provided information packets about new terms and conditions of employment it would implement when the CBA expired, including:
  • Changing employees' wages and health insurance.
  • Ceasing contributions to the union's pension plan.
  • Implementing flexible spending accounts, profit sharing, and a 401(k) plan.
On June 26, 2012, the union filed a representation petition seeking an election in a unit of Ardit's tile, marble, and terrazzo workers. A Section 9(a) election was held on August 10, 2012. The Regional Director overruled Ardit's objections and certified the union as the unit employees' 9(a) representative on May 13, 2013.
Ardit refused to bargain with the union.
On December 12, 2013, the Board granted the General Counsel's Motion for Summary Judgment and found that the refusal to bargain violated Section 8(a)(5) of the NLRA.
The 8(f) CBA expired on August 31, 2012, after the 9(a) election. In September 2012, Ardit:
  • Unilaterally implemented its changes to unit employees' terms and conditions of employment.
  • Posted a notice informing unit employees that the changes were made in accordance with its previously announced intention of doing so on expiration of the 8(f) CBA.
Two days later, the union sent Ardit a letter requesting that Ardit abide by the preexisting terms and conditions of employment pending the certification of the results of the election. Ardit did not reply.
In early 2013, Ardit unilaterally laid off nine unit employees. Further, during the term of its 8(f) agreement with the union, Ardit had laid off employees without notifying the union or affording it an opportunity to bargain.
In May 2013, the union made, and renewed, an information request after the certification of representative was issued. At the time of the motion to transfer this proceeding to the Board Ardit had not responded to either request.

Outcome

The Board held that Ardit violated Sections 8(a)(5) and (1) of the NLRA by refusing to bargain with the union by:
  • Unilaterally implementing new terms and conditions of employment.
  • Unilaterally laying off unit employees.
  • Failing to respond to the union's information requests.
The Board noted that:
  • The primary question it must consider is whether Ardit, although under a statutory duty to bargain with the union at all relevant times, was nevertheless free to unilaterally alter its employees' terms and conditions of employment because it had prospectively announced that the changes would be made at a point when Ardit wrongly anticipated its bargaining obligation would be over.
  • Well-established principles define the legal landscape surrounding this question.
  • During a collective bargaining relationship with a union (whether based on Section 8(f) or Section 9(a) of the NLRA), an employer may not change employees' terms and conditions of employment without giving the union:
    • notice; and
    • an opportunity to bargain.
    (Conditioned Air Systems, 360 NLRB No. 97, slip op. at 1 fn. 3 (2014).)
  • A Section 8(f) relationship is terminable on the expiration of the parties' CBA; a 9(a) relationship is not (John Deklewa & Sons, 282 N.L.R.B. 1375, 1386-1387 (1987), enf'd. sub nom; Iron Workers Local 3 v. NLRB, 843 F.2d 770 (3d Cir. 1988), cert. denied 488 U.S. 889 (1988)).
  • On contract expiration, a Section 8(f) employer (but not a Section 9(a) employer) may:
    • unilaterally change existing terms and conditions of employment without bargaining; and
    • refuse to meet or bargain with the union altogether.
    (Deklewa, 282 N.L.R.B. at 1386-87; MSR Industrial Services, 363 N.L.R.B. No. 1, slip op. at 2 (2015)).
  • Once a union wins a representation election and establishes Section 9(a) status, the employer is no longer permitted to make unilateral changes (even if it was permitted before) even while objections to the election remain pending (Mike O'Connor Chevrolet, 209 N.L.R.B. 701 (1974), enf. denied on other grounds, 512 F.2d 684 (8th Cir. 1975).
The Board found that:
  • Before the expiration of the parties' Section 8(f) CBA, Ardit's employees elected the union to be their representative under Section 9(a). Therefore, at all material times and with no interruption, Ardit was obliged to bargain with the union, first under Section 8(f) and then under Section 9(a).
  • Disregarding the Section 9(a) election result, Ardit unlawfully proceeded to act unilaterally the day after the parties' Section 8(f) CBA expired.
  • Preventing employers from acting unilaterally during the seamless transition from a Section 8(f) to a Section 9(a) relationship ensures that the parties' negotiations for a new CBA will begin with a stable collective-bargaining relationship.
  • Employees party to a Section 8(f) CBA should understand that:
    • they can preserve their existing terms and conditions of employment by pursuing a Section 9(a) Board election; and
    • an employer's prospectively announced changes could be blocked by a future union election victory.
  • An employer that ignores the change in a union's status (from a Section 8(f) to a Section 9(a) relationship):
    • undermines the union from the perspective of the employees because the union must win back previously negotiated terms and conditions of employment; and
    • permits the inconsistent result that the employees' enhancement of their existing union's status (to Section 9(a)) was insufficient to prevent the employer from making a change it could not make while the union enjoyed a lesser status (Section 8(f)).
  • Under limited circumstances, as noted by the dissent, Board precedent permits an employer to implement a change it had firmly decided on before an election, even if in the interim its previously unrepresented employees have elected a union. This precedent preserves a nonunion employer's unconditional right to make firm decisions regarding its work force without the risk of future unionization negating those decisions (Camvac International, 288 N.L.R.B. 816, 818-819 (1988)).
  • This precedent is inapplicable to Ardit because, due to the intervening union election victory, Ardit was at all material times subject to the statutory duty to bargain with the union. Ardit's expectation that it would be able to unilaterally make decisions on expiration of its Section 8(f) CBA makes no difference.
  • The dissent's fear that similarly situated employers have no legal path forward to avoid committing an unfair labor practice (that is, failing to implement previously announced changes is unlawful, but implementing them unilaterally is also in violation of the NLRA), is ungrounded. Those employers can either:
    • fulfill their statutory duty to bargain in good faith and obtain union consent to the changes; or
    • bargain in good faith to agreement or an overall lawful impasse on terms of a CBA.
Member Miscimarra dissented from the majority's findings that Ardit violated Section 8(a)(5) by unilaterally changing employees’ terms and conditions of employment on September 1, 2012, and by unilaterally laying off unit employees in early 2013. He would find that Ardit did not violate Section 8(a)(5) when it:
  • Implemented previously announced terms and conditions of employment.
  • Maintained the status quo regarding layoffs in the absence of available work.

Practical Implications

This decision creates a new standard for when:
  • The parties have a prehire CBA pursuant to Section8(f).
  • A union is elected under Section 9(a) before expiration of the Section 8(f) CBA.
According to the majority, if bargaining with the newly elected union has not yet resulted in an agreement, the employer violates the NLRA if its implements employment terms it previously announced before the election based on the employer's expectation that it would be able to unilaterally make decisions on expiration of the Section 8(f) CBA.