By: Kenneth Dolin and Elliot Fink
As expected, on December 10, in Endurance Environmental Solutions LLC, 373 NLRB No. 141 (2024), the Democratic majority on the National Labor Relations Board (“NLRB” or “Board”) overruled MV Transportation, 368 NLRB No. 66 (2019) and its more even-handed and practical “contract coverage test” and returned to the prior Board waiver standard in the context of employer’s defenses to claims of unlawful unilateral mid-term changes. This waiver standard will once-again diminish the parties’ intent in agreeing upon contract language as well as diminish the language of the collective bargaining agreement (“CBA”) itself. While it applied this waiver standard retroactively to the parties in this dispute the majority deferred the question of whether its updated standard would apply to other pending cases for “future determination.”
Reversing the Administrative Law Judge’s recommended dismissal of the unilateral change allegations against the employer, the Board’s decision centered on a refuse truck operator’s unilateral decision to install security cameras and surveillance devices in its trucks across its nationwide fleet. Although, as the dissent pointed out, these cameras were not actually installed for the handful of unit employees at issue, the employer planned to install these new items without providing advance notice or opportunity to bargain to the union representing employees at one Kentucky location; the ALJ had found that language in the management rights article of the operative CBA allowing “changes in equipment” meant that the Union had waived its right to bargain over this change. Viewing this case as an example of how the previous “contract coverage test” gives employers too much latitude in unilaterally changing mandatory subjects of bargaining of represented employees, the Board majority reinstated the prior “clear and unmistakable waiver” test for determining whether an employer unilaterally changed a mandatory subject of bargaining during the term of the CBA in violation of the Act.
In returning to its pre-2019 standard, the Board will now once again require that any employer relying on the language of its CBA to make decisions about its unionized employees regarding mandatory subjects of bargaining without union input and delay must meet the extremely difficult burden of demonstrating that “such a waiver was explicitly stated, clear, and unmistakable.” 373 NLRB 141, slip. op. at 8. In other words, if the employer cannot prove that the parties unequivocally and expressly intended to permit unilateral action with respect to the particular employment term at issue, whether by bargaining history, the parties’ past practice, the express language of the CBA or some combination, waiver will not be found, even if there is CBA language that arguably privileges the employer to take such action. As noted by the dissent, the decision in particular targets broadly-worded management rights language.
Under this waiver standard, unions will invariably prevail because some ambiguity will almost certainly be identified in the CBA language sufficient to preclude a finding of clear and unmistakable waiver.[1] As the MV Transportation majority noted, this waiver standard has many drawbacks, including undermining contractual stability (by encouraging perpetual bargaining both during the term of the CBA and thereafter) and its associated grievance-arbitration dispute resolution machinery (by encouraging unions to bypass the very grievance-arbitration procedure that it had agreed to use and instead immediately file a unilateral change claim at the Board where it will be the beneficiary of a more favorable standard). Returning to the waiver standard will result in the Board impermissibly sitting in judgment on the terms of parties’ CBAs (despite the many Supreme Court pronouncements that arbitrators and the courts should be the primary authorities for interpreting CBAs), and making post-hoc alterations to the bargain reached by the parties in the form of that CBA (by giving less weight to the parties’ actual intent when they had agreed to the CBA language at issue).
Of critical importance, Endurance Environmental again renders the Board’s test squarely at odds with the standard used by the D.C. Circuit; this is especially significant because every employer on the losing end of a Board decision can petition for review in the D.C. Circuit. Moreover, the D.C. Circuit has had a long running dispute with the Board and has repeatedly criticized the Board for its “obstinacy” and “bad faith” when it continued to defend the clear and unmistakable waiver standard before that court. Indeed, the D.C. Circuit finally sanctioned the Board by ordering it to reimburse the employer for its costs and attorneys’ fees in opposing the Board’s use of the clear and unmistakable waiver standard shortly before the Board overturned its waiver standard. See Heartland Plymouth Court v. NLRB, 838 F.3d 16, 19, 20, 27 (2016).
Furthermore, the newly reinstated clear and unmistakable waiver standard is also at odds with the First and Seventh Circuit’s full and Second Circuit’s partial adoption of the “contract coverage test,” which the Board in Endurance Environmental nevertheless continues to maintain is both unsupported by the text of the Act and Supreme Court precedent.
Ultimately, it is somewhat unclear whether the Circuit Courts of Appeals’ prior dissonance will continue in future reviews of the Board’s reinstated waiver standard, and in particular, the D.C. Circuit’s plenary jurisdiction to review Board decisions will likely play an active role in that process. Nonetheless, employers should be aware that as before, Endurance Environmental now makes it more likely that unions will not only bring unilateral change charges when they are not given notice and a chance to discuss material changes to wages, hours, or other terms and conditions for their represented employees, but also that unions will be more likely to prevail on those claims (at least before the Board) because the Board will only consider whether a clear and unmistakable waiver exists and will not consider the parties’ actual intent to determine whether the CBA covers the employer’s alleged unilateral actions.
In practice, this decision makes it more important for employers to seek counsel before taking unilateral actions during the term of the CBA that might impact a mandatory bargaining subject. An employer should consider simply providing adequate notice and bargaining opportunities to the affected union sufficient to reach agreement or an impasse before making any change where the employer cannot prove waiver under the reinstated standard. Following this decision, it becomes more important for an employer contemplating a mid-term change of a mandatory subject of bargaining to assess the viability of bargaining to agreement or impasse.
In the particular situation where midterm bargaining is not viable, the likelihood of prevailing by defending the employer’s actions in the Circuit Courts of Appeal under a contract coverage theory, as opposed to foregoing the change, as well as the practical risks, benefits and costs of taking such a position, should be considered.
Finally, during subsequent CBA negotiations, employers should consider the practicality of seeking more explicit CBA language covering specific contemplated management actions in addition to general language to avoid the need for subsequent bargaining over known operational priorities. In this regard, it seems likely that if an employer seeks such modifications and fails to achieve them in bargaining, it will negatively impact a future argument that the employer is entitled under the CBA to make the change.
If you have further questions, please reach out to the authors or any member of Seyfarth’s labor team for specific advice on this or other bargaining or labor management-relations issues.
[1] In contrast to this artificial waiver standard that almost always tilts in a union’s favor, the Board and Courts of Appeals have rejected an employer’s contract coverage defense where they interpreted the CBA provision not to privilege the employer’s unilateral action. See e.g,, DuPont Specialty Prod. USA, LLC, 369 NLRB No. 117 (2020) (finding 8(a)(5) violation by employer’s unilateral contracting out of emergency response team even after review under contract coverage standard); Regal Cinemas v. NLRB, 317 F.3d 300, 306-307 (D.C. Cir. 2003).