If “Industrial Democracy” Wasn’t Already Dead, Trump’s NLRB Just Killed It
by Brandon Magner
There is nothing particularly new about the National Labor Relations Board failing the workers it was created to protect. The Board famously oscillates between defender and destroyer of labor rights depending on which party’s candidate inherits the White House, often reversing case law which the previous administration’s Board appointees enacted just years prior. Trump’s Board members have proven no strangers to this phenomenon, having swiftly repealed many of the Obama era’s pro-union decisions ever since constituting a majority of the Board.
But none of the Trump Board’s machinations will likely prove as harmful to federal labor law as a recent decision regarding which standard of contract interpretation should apply to an employer’s unilateral change to a term or condition of employment. M.V. Transportation, Inc. is a case that on its surface appears to be a matter of esoteric legalese, but it takes aim at the very heart of the National Labor Relations Act and its waning promise of industrial democracy.
Sections 8(a)(5) and 8(d) of the NLRA require an employer to bargain with the union representing its employees with respect to “mandatory” subjects of bargaining, which are those relating to “wages, hours, and other terms or conditions of employment.” Generally, the Board will find that an employer commits an unfair labor practice if it unilaterally changes one of these terms or conditions without first bargaining to impasse with the union. The duty to bargain over mandatory subjects continues during the life of the collective bargaining agreement unless the duty is waived by the union.
This duty to bargain gives effect to the very purpose of the NLRA, which declares in its opening Section that it exists to “encourag[e] the practice and procedure of collective bargaining[.]” It is through these means by which workers may convert their workplace from the dictatorial experience of at-will employment and unfettered employer discretion into something at least resembling a democratic arena of deliberative parties.
In light of this clear statutory presumption in favor of collective bargaining, M.V. Transportation should not have been a difficult case. The employer sent a letter to the union stating its intent to implement a sweeping list of new and revised policies, procedures, and work rules—many of which constituted mandatory subjects of bargaining—and explaining that the letter was merely for the union to review and provide input. The union responded by accepting some of these terms and conditions, rejecting most, and offering input as solicited. Three days later, the employer sent a letter rejecting the union’s positions as to the most substantive changes and posted a bulletin-board memo to all bargaining-unit employees announcing the updated (read: newly written or unilaterally revised) terms and conditions of their employment. These terms and conditions were implemented less than a month later without any further input from the union.
When finally challenged as to its authority to undertake this coup, the employer asserted that the “management rights” clause in the parties’ collective bargaining agreement empowered it to operate the business in any way it saw fit except where limited elsewhere in the contract. Most collective bargaining agreements contain one of these catch-all management rights clauses, and most of these clauses contain incredibly broad declarations of retained employer sovereignty as to any terms and conditions which the union did not successfully bargain for (or think to bargain for) elsewhere in the contract, such as power over hiring, the size of the workforce, the allocation of work, what is to be produced, the location of the business, the subcontracting of work, and often more. Thus, as the employer’s argument goes, the employer possesses the ability to implement any additions or changes to the contract without bargaining unless the union can point to some other clause which expressly prevents the employer from doing so.
The administrative agency officially tasked with enforcing federal labor law has rejected this sort of escape act for almost the entirety of its existence. When presented with a unilateral change in a term or condition of employment under an active collective bargaining agreement, the Board has held since at least 1949 that such a change violates Section 8(a)(5) of the NLRA unless the employer demonstrates that the union has clearly and unmistakably waived its right to bargain over the employer action at issue. Waiver can be demonstrated through one of several means: by a contractual provision which unequivocally and specifically refers to said issue; by the bargaining history of the parties; or by an established past practice in the workplace.
This “clear and unmistakable waiver” standard (the “waiver standard” for short) enjoyed relatively uncontroversial status for decades as a faithful application of the statutory duty to bargain and the general governmental encouragement of collective bargaining over core working conditions. It was upheld by a majority of the federal courts of appeals and even cited approvingly by the Supreme Court on more than one occasion.
It was not until 1993 that a court rejected the waiver standard and substituted it with a replacement. In reviewing the Board’s findings of an employer’s failure to bargain, the District of Columbia Circuit opined that the waiver standard routinely failed to honor the written terms of the agreement, particularly the general catch-all language found in most management rights clauses. Instead of presuming a violation and looking for language which authorized the unilateral change, the Board should instead adopt “ordinary principles of contract law” to give “full effect to the plain meaning” of such provisions. If a union agreed to a CBA which contained a clause that reserves management’s right to operate the business in any way not limited elsewhere in the contract, no matter how vaguely worded that clause may be, then the union should be held to its end of the bargain because the unilateral chance was “covered” within the “compass or scope” of the contract. Under this reading, waiver analysis does not matter because the union already exercised its right to bargain by endorsing the employer’s blank-check mentality.
This “contract coverage” standard has been adhered to ever since by the D.C. Circuit and endorsed by a minority of its sister courts. It is easy to see the appeal of this method to the predominantly elite lawyers who stock the federal benches. By nature, these lawyers prefer to drain the context out of written provisions and search for the “plain meaning” of texts that are often anything but clear. It also did not hurt that the original D.C. Circuit opinion was written by Judge Harry T. Edwards, a well-respected labor lawyer and law professor in his time before being appointed to the bench by Jimmy Carter. (Less mentioned is the fact that Edwards was a former management-side attorney for the notorious union-busting law firm Seyfarth Shaw.)
The importance of which standard is applied to labor contract analysis is perfectly highlighted by a 1996 Board decision dealing with the high-stakes world of plant relocations. In that case, an Ohio employer relocated its plant from Dayton to Columbus without bargaining to impasse with the union. The employer claimed it could do so based upon the following management rights clause in the CBA:
Subject to the provisions of this Agreement, the Union hereby recognizes that the management of the plants and direction of the working forces, including the right to direct, plan, control plant operations, establish and change work schedules, the right to hire, transfer, suspend or discharge employees for cause, layoff employees because of lack of work or for other legitimate reasons, the right to introduce new or improved methods or facilities or to manage the properties, is exclusively vested in the company. To decide location of its plant, and to relocate the same; to permanently discontinue the conduct of its business and operations.
In rejecting the employer’s argument, the Board majority held that the italicized language did not constitute a waiver of the employer’s duty to bargain to impasse with the union because the clause relating to relocation was open to at two least plausible interpretations:
[E]ither the omission of relocation from the list of rights the contract vests solely in the [Employer] was an error, or the parties intended that the new sentence beginning after the enumeration of rights introduced a new idea and that the rights named are to be treated differently than those listed before, i.e., they are not exclusively reserved to the [Employer].
The clause’s ambiguous wording thus could not qualify as a “clear and unmistakable” waiver. But the dissenting Board Member would have applied the “contract coverage” standard and dismissed the unfair labor practice charge altogether. Even if the wording was not entirely clear, he wrote, the management rights clause suggested that the parties intended the decision to relocate to be a management right. It therefore came within the scope of the contract.
Despite the D.C. Circuit’s criticism and some internal dissention, the Board continued to adhere to the waiver standard until September 10, 2019, when the three Board Members appointed by Donald Trump voted in M.V. Transportation to jettison 70 years of precedent in favor of the “contract coverage” standard. The Republican majority adopted Judge Edwards’ opinion wholesale and halfheartedly argued that their hands were tied by a simple fact of litigation strategy. As the home circuit of the Board, the D.C. Circuit has plenary jurisdiction to review Board rulings, which means that losing parties may appeal the Board’s decision to the D.C. Circuit in addition to the circuit in which the unfair labor practice actually occurred.
Admittedly, the D.C. Circuit’s refusal to enforce longstanding Board policy has complicated the Board’s mission, but the Trump appointees’ acquiescence on this issue is essentially a surrender of the Board’s expertise in crafting federal labor law to the federal judiciary. After all, the Board can always attempt to convince different judicial panels to adopt its preferred standard, or even plead their case to the Supreme Court to resolve the dispute for good.
Those options should hardly sound appetizing to labor advocates given the overwhelming corporate background of lawyers Trump is appointing to the federal bench, but abandoning a 70-year-old standard in favor of a standard which encourages employers to bypass bargaining altogether makes little sense unless one’s entire goal is to weaken unions’ bargaining power. At one point, the Republican majority accused the waiver standard of being so difficult for employers to satisfy that it basically serves as a government-endorsed, pro-union policy. The lone Democratic appointee remaining on the Board these days, Lauren McFerran, demolished this sort of hackery in two lines of her dissent: “The majority insists that the waiver standard is ‘one-sided’ and favors union. What the standard favors is collective bargaining.”
As bad as M.V. Transportation will be for unions, it is merely one-half of the gut-punch. Another recent ruling from the Trump Board, Raytheon Network Centric Systems, held that a past practice continues as a term and condition of employment after the expiration of a collective bargaining agreement, even if that past practice developed pursuant to unilateral action authorized (ostensibly) by a management rights clause. Clever employers, aided by clever legal counsel, are thus free to invoke the general language of a management rights clause and change employees’ terms and conditions of employment at will during the life of the contract and after it has expired. In this respect, the NLRA’s safeguards of collective bargaining are effectively rendered illusory.
In dire times like these, it feels perverse to blame the labor movement for developments which have taken place mostly in court rooms and through the exchange of legal briefs, but the possibility of turbo-charged management rights clauses have existed since unions first agreed to their inclusion in collective bargaining agreements. The Board attempted to ban such general-language provisions as unduly restrictive of the employer’s statutory duty to bargain, but the Supreme Court quickly reversed these efforts on the basis that the Board should not “sit in judgment upon the substantive terms” of labor agreements. But as we have learned throughout history, workers’ freedom to agree to employers’ overtures is often synonymous with the freedom to consent to a slow and painful death.
So what can be done? Board Member McFerran, hardly a fringe radical, floated the idea in her dissent that unions may actually be better off without collective bargaining agreements in our new M.V. Transportation/Raytheon frontier. The duty to bargain would still apply under Sections 8(a)(5) and 8(d) even without a contract in place, so the union can demand that the employer bargain to impasse over all mandatory subjects of bargaining before implementing any unilateral changes, creating a pattern of perpetual bargaining. Of course, this would create risks too numerous to count for the stability of any bargaining unit, not least among them the lack of a union security clause to rely upon as a last line of defense against employer encroachment. But as labor law slants ever more in management’s favor, it is worth asking what exactly unions are getting out of their long-standing peace treaty with capital.
The truth is that while labor law reform remains critical to the future solvency of American unionism, nurturing the growing sense of class consciousness among today’s workers is more important than any single tweak to our labor code. While we should be excited that Democratic presidential candidates are advocating comprehensive revisions, additions, and even wholesale re-writes to the NLRA for the first time in decades, conditioning workers against the very idea of a management rights clause—that despite being legally required to maintain a bargaining relationship with its workers, an employer can nonetheless maintain unchallenged authority over many of the most critical functions of the business—is the only way to defeat their proliferation and prevent them from reappearing.
In short, workers must get what they bargained for: better wages, better job security, and an ongoing say in the status of their terms and conditions of employment. After all, that is the very essence of industrial democracy.
Brandon Magner is a union-side labor lawyer practicing in Indianapolis, Indiana. The views expressed are his own.