By: Kenneth R. Dolin, Esq.

The National Labor Relations Board recently invited interested parties to file briefs in Babcock & Wilcox Construction Inc., Case 28-CA-022625, to determine whether the Board should continue, modify, or abandon the Olin/Spielberg standard for deferral to arbitration awards.

Under the existing standard, the Board defers to an arbitration award when (1) the arbitration proceedings are fair and regular; (2) all parties agree to be bound; and (3) the arbitral decision is not repugnant to the purposes and policies of the Act. Spielberg Mfg. Co., 112 NLRB 1080 (1955). Further, the arbitral forum must have considered the unfair labor practice issue. The Board deems the unfair labor practice issue adequately considered if (1) the contractual issue is factually parallel to the unfair labor practice issue, and (2) the arbitrator was presented generally with the facts relevant to resolving the unfair labor practice issue. Olin Corp., 268 NLRB 573 (1984). The burden of proof rests with the party opposing deferral.

The NLRB General Counsel has asked the Board to adopt a different standard in accordance with the Guideline Memorandum issued three years ago. Under his proposal, the party urging deferral would bear the burden of demonstrating that (1) the collective-bargaining agreement incorporates the statutory right, or the statutory issue was presented to the arbitrator, and (2) the arbitrator correctly enunciated the applicable statutory principles and applied them in deciding the issue. If the party urging deferral makes that showing, the Board would defer unless the award was clearly repugnant to the Act.

The Board is inviting all interested parties to file briefs. The briefs must be filed with the Board in Washington, D.C. on or before March 25.

The Obama Board is expected to change its framework for post-arbitral deferral because it will likely find Olin’s standard for deferral inadequately protects employees’ statutory rights in Section 8(a)(1) and Section 8(a)(3) cases. Thus, the Board is likely to revise its post-arbitral standard in Section 8(a)(1) and Section 8(a)(3) statutory rights cases to ensure actual arbitral consideration of the rights afforded by the NLRA and will not tolerate substantive outcomes from arbitrators that differ significantly from those that the Board itself would reach if it considered the matter de novo.

In this regard, the Board also will likely change Olin’s allocation of the burden of proof for deferral, placing such burden on the party urging deferral to ensure that the statutory issues have been considered by the arbitrator, as well as to encourage parties seeking deferral to establish an evidentiary record that will give the Board a sounder basis for reviewing arbitral awards and deciding whether to defer. If the party urging deferral makes the showing set forth above, the Board is expected to enunciate a standard where it will defer unless the result is “palpably wrong,” i.e., the arbitrator’s award is not susceptible to an interpretation consistent with the Act.

Requiring that statutory issues be considered as a condition for deferral to an arbitral award would also likely result in the Board reviewing the standards for deferral for pre-arbitral grievance settlements as well. Thus, it is likely that the Board will adopt a rule that gives no effect to a grievance settlement unless the evidence demonstrates that the parties intended to settle the unfair labor practice charge as well as the grievance. If the evidence does so indicate, the Board will likely review the non-Board settlement under the standards of Independent Stave Co., Inc., 287 NLRB 740, 743 (1987): (1) whether parties have agreed to be bound and the General Counsel’s position; (2) whether the settlement is reasonable in light of the alleged violations, risks of litigation, and status of litigation; (3) whether there has been any fraud, coercion or duress; and (4) whether the respondent has a history of violations or of breaching previous settlement agreements.

If the Board adopts a more thorough post-arbitral review of deferral cases, it is likely that charges alleging Section 8(a)(1) and Section 8(a)(3) violations will be investigated more thoroughly before an “arguable merit” determination in considering Collyer deferral is made. This may actually result in more evidence taken from the Charging Party, including affidavits, before an “arguable merit” determination is made.

The appellate courts have generally approved of the Board’s approach on post-award deferral and the standards articulated in Olin. The Obama Board’s anticipated tightening of the standard for post-arbitral deferral will certainly be contrary to the national policy strongly favoring the statutory arbitration of disputes, and will likely result in courts of appeal more closely scrutinizing refusals by the Board to defer to arbitration. It also may encourage parties to circumvent their grievance procedure by filing unfair labor practice charges whenever they believe they had a better chance of a favorable resolution before the Board.

As to the “palpably wrong” criteria, it remains to be seen whether the Board will at least defer to a pre-arbitral settlement or post-arbitration award whenever the statutory right implicated is within the category of “waivable” rights — e.g., economic issues, the right to strike, and matters of selective discipline — provided that the proceedings are fair and regular and the union has not breached its duty of fair representation. It is quite possible, though, that the Obama Board may only give deference to a settlement or award when it approves of the result of a settlement but intervene whenever it does not approve. As Judge Harry Edwards observed more than 20 years ago in the context of NLRB deferral, “a cynical observer might be inclined to view this approach as a veritable recipe for arbitrary action.”  Plumbers & Pipe Fitters Local 520 v. NLRB, (UE&C-Cataglia, Inc.), 955 F.2d 744, 756-57 (D.C. Cir. 1992).