By: Ronald J. Kramer, Esq.

In Alan Ritchey, Inc, 359 NLRB No. 40 (2012), a decision dated December 14, 2012, but just published, the NLRB decided that newly organized employers cannot discipline employees without first notifying the union and bargaining over the decision.  Despite fifteen pages of hemming and hawing, explanations of vague, undefined exceptions where an employer could in theory discipline an employee without first bargaining over the decision, and promises of labor peace, the fact is any employer that dares discipline an employee without first bargaining, possibly even to impasse, will be facing charges and years of Board litigation.

In Alan Ritchey, the Board, in a 3-0 all Democratic appointee decision (Member Hayes was recused), held that “like other terms and conditions of employment, discretionary discipline is a mandatory subject of bargaining and that employers may not impose certain types of discipline unilaterally” during negotiations for a first collective bargaining agreement.  In this case, the employer had issued various discipline to employees pursuant to a long-standing, five-step progressive disciplinary policy that, as do almost all model employer policies, provided the employer with some discretion to modify the level of discipline.  The employer readily admitted the policy gave it discretion both to decide whether to impose discipline and what form of discipline to impose.  The employer had discipline numerous employees for actions such as absenteeism, insubordination, threatening behavior, and the failure to meet efficiency standards, without first notifying and offering to bargain with the employees’ newly organized union.  The union filed an unfair labor practice charge over the employer’s alleged unilateral actions which, after a long and winding road, ended up before this Board.

Since the passage of the National Labor Relations Act, the NLRB has never required newly organized employers to bargain with the union before disciplining employees.  The Board cited no decision where it had ever before found an employer had a duty to bargain before disciplining employees.  Instead, in the only case on point that it referenced, Fresno Bee, 337 NLRB 1161 (2002), the Board affirmed an ALJ’s decision that an employer had no pre-imposition duty to bargain over discretionary discipline.  There the ALJ found that the fact an  employer’s disciplinary system allowed for some discretion, and not every conceivable disciplinary event was specified did not vitiate the system as a past practice and policy for which bargaining was not required.  The Board, however, found that decision to be wrongly decided because the ALJ’s underlying rationale was “demonstrably incorrect” given she could not explain why discipline should be treated as fundamentally different from other employer unilateral changes in terms and conditions of employment.

The NLRB basically relied on NLRB v. Katz, 369 U.S. 736 (1962), and its progeny regarding an employer’s duty to bargain in good faith before making any unilateral “discretionary” changes to represented employees terms and conditions of employment.  The Board determined that where an employer’s disciplinary system is fixed as to the broad standards for determining whether a violation has occurred, but discretionary as to whether or what type of discipline will be imposed in particular circumstances, “an employer must maintain the fixed aspects of the discipline system and bargain with the union over the discretionary aspects (if any), e.g., whether to impose discipline in individual cases and, if so, the type of discipline to impose.”  After the employer has decided to impose certain types of discipline, it must provide the union with notice and an opportunity to bargain over the discretionary aspects of its decision before proceeding to implement the decision. 

After coming to this decision, the Board then set forth a series of rules regarding this new duty to bargain, apparently in an attempt to claim employers would still be able to take the necessary disciplinary action and yet still provide notice and an opportunity to bargain.  Most of the rules, however, are vague and undefined.

First, the Board differentiated between lesser sanctions, such as oral and written warnings, and discipline that has “an inevitable and immediate impact on employees’ tenure, status, or earnings, such as suspension, demotion, or discharge.” The new duty to bargain is triggered before a suspension, demotion, discharge, or analogous sanction is imposed, but after imposition for lesser sanctions, such as oral or written warnings.  The Board thus expects that “most warnings, corrective actions, counselings, and the like will not require pre-imposition bar-gaining, assuming they do not automatically result in additional discipline, based on an employer’s progressive disciplinary system, that itself would require such bargaining.”  The Board does not explain however, if only “most” warnings and such will not require advance bargaining, under what circumstances such lesser discipline would require advance bargaining.

Second, despite finding that an employer now has a duty to bargain over disciplinary action prior to a first contract, where the pre-imposition duty to bargain exists, the Board held that the employer “need not bargain to agreement or impasse, if it does so afterward.”  The Board then tried to clarify exactly how much advance notice and bargaining an employer must engage in prior to implementing a decision prior to impasse.  The Board claimed that the new bargaining duty to bargain entails “sufficient advance notice to the union to provide for meaningful discussion concerning the grounds for imposing discipline in the particular case, as well as the grounds for the form of discipline chosen, to the extent that this choice involved an exercise of discretion.”  This also includes the duty to respond to information requests, although the Board claims requests must be limited to “information relevant to the subject of bargaining:  the discretionary aspects of the employer’s disciplinary policy.”  The Board’s goal is for the union to be able “to effectively represent employees by (for example) providing exculpatory or mitigating information to the employer, pointing out disparate treatment, or suggesting alternative courses of action.”

If the parties have not reached agreement at some point, even if they are not at impasse, the employer is permitted to implement its decision and continue with its duty to bargain to impasse after implementation.  Moreover, the Board held that the employer has no duty to bargain over “those aspects of its disciplinary decision that are consistent with past practice or policy.”

Thus, while an employer need not negotiate to impasse, there is no bright line rule for when exactly it might impose the discipline pre-impasse.  How many days must an employer “bargain” before imposing discipline?  Or is it really simply notice and an opportunity to be heard?  If the Union asks for years of prior disciplinary records to compare how discretion in similar disciplinary situations is exercised, must the employer comply?  Will such a request similarly delay the imposition of its decision pre-impasse?  Can the union request a full written explanation for the discipline before it is even issued?  Given disciplinary policies usually provide for some discretion, at what point, if any, might a past practice trump the written statement of discretion when it comes to the level of discipline imposed so an employer need not bargain?

Third, the Board further declared that, in “exigent circumstances, as defined, the employer may act immediately, provided that, promptly afterward, it provides the union with notice and an opportunity to bargain about the disciplinary decision and its effects” to impasse or agreement.  The Board has defined exigent circumstances as follows:  “where an employer has a reasonable, good-faith belief that an employee’s continued presence on the job presents a serious, imminent danger to the employer’s business or personnel.”  The Board declared that “[t]he scope of such exigent circumstances is best defined going forward, case-by-case, but it would surely encompass situations where (for example) the employer reasonably and in good faith believes that an employee has engaged in unlawful conduct, poses a significant risk of exposing the employer to legal liability for his conduct, or threatens safety, health, or security in or outside the workplace.” 

Thus, according to the Board, its holding “does not prevent an employer from quickly removing an employee from the workplace, limiting the employee’s access to coworkers (consistent with its legal obligations) or equipment, or taking other necessary actions to address exigent circumstances when they exist.”  Given the Board is going to define exigent circumstances going forward, an employer seeking to impose discipline outside of the Board’s specific examples without first bargaining faces the risk of charges.  Even under the Board’s examples, we can see situations where the Board may claim exigent circumstances do not exist.  Is the Board really going to prevent an employer from firing a cook who “stole” a leftover pie from a catering event?  What about an employee who forgets to wear his safety helmet?  Frankly, employers have had the ability to claim and have claimed exigent circumstances for years as a defense to charges they have made unilateral changes without bargaining, and it almost never is accepted.  The test historically has been very difficult to meet —  and it will no doubt be the employer’s burden of proof here.

Finally, the Board declared that an employer need not await until an overall impasse in bargaining the collective bargaining agreement before imposing discipline, so long as it exercises its discretion “within existing standards.”  The Board held that, so long as the employer continues to apply existing standards and procedures for discipline, “the employer’s duty is simply to bargain over the discretionary aspect of the discipline, in accord with today’s decision.  After fulfilling its pre-imposition duties as described above, the employer may act, but must continue to bargain concerning its action, including the possibility of rescinding it, until reaching agreement or impasse.”  This is an important qualification, for if an employer would need to wait until it completed negotiations over an entire first contract, an employee might never be disciplined.  Nevertheless, it leaves open the question of whether and under what circumstances and employer will be considered to have “existing standards” under which it can exercise its discretion.  Granted, even before Alan Ritchey, an employer could not unilaterally impose new performance or conduct standards, but what if an employer wants to discharge an employee for obvious poor performance or for clear misconduct but lacks set guidelines or a past practice?

With these new rules, however, the Board believes that the “narrow scope of the bargaining obligation and the limited nature of the duty to bargain will not impede an employer’s ability to effectively manage its workforce.”  Indeed:

Our expectation is that, when bounded by past practice and policy, bargaining over the limited topics that implicate employer discretion will yield expeditious results, and that it will, in fact, be the norm that parties will reach agreement before the necessity of testing the limits of the pre-imposition bargaining period.  If our expectation proves inaccurate, any infringement on the employer’s ability to effectuate its desired discipline will be limited (as we have made clear), because we impose no duty to bargain to impasse prior to imposing discipline.

The Board did not leave employers only with coal, however.  The Board declared that its new bargaining rule will only apply prospectively, not retroactively.  Thus, employers in first contract negotiations who have already disciplined employees can all breathe a sigh of relief.

If the NLRB’s recent record is any indication, this case may be overturned on appeal, or Congress may act (which seems unlikely).  But if not, it is going to take a while before employers will be able to get their hands around this decision, and decades of litigation before employers have any clear guidance on what they can or cannot do and when.

Until then, there may be limited alternatives to avoiding stepping into this black hole of uncertainty.  The Board’s only answer to that is its recommendation that employers who want a “safe harbor” negotiate with the union an interim grievance procedure, no doubt providing for just cause discipline and final and binding arbitration, so the employer can act first and then address the discipline through that process.  That would work, but would mean the employer gave up a significant bargaining chip without getting anything in return. 

Employers can try to remove all discretion from their disciplinary policies, but that is not necessarily a best practice, and it would not negate the employer’s obligation to bargain over whether the employee engaged in the misconduct alleged.  An employer could suspend an employee with pay pending discipline, and then bargain over what to do with him or her.  That would at least remove the employee from the worksite, but the employer would still be paying him or her.

One also wonders where this decision may lead.  Left unaddressed in the decision is whether an employer will be obligated to bargain over discipline when negotiating over an expired contract.  One would assume no, but with this decision, this Board, and the Board’s recent attempts to claim that an employer cannot make any unilateral changes between contracts unless it can demonstrate a past practice of doing so when the parties previously were between contracts, employers may not want to bet on it.  Moreover, if any past practice or policy that contains even one iota of employer discretion is subject to bargaining, what other employer policies  — scheduling, vacation picks, holiday observances, work assignments — might not be subject to challenges of unilateral change during first contract negotiations?

Maybe the Mayans got it right after all.  For it certainly is a brave new world