[author: Mark Theodore]

The process of collective bargaining is filled with nuance and sublety. Unlike other business negotiations, there is often a dance that takes place as the parties attempt to reach an agreement. Given the Act’s mandate that the parties “meet and confer” at “reasonable times” to try to reach an agreement, it is legally impossible to go in with a “bottom line;” rather, the parties must make a good faith effort to reach a compromise.

Collective bargaining is different from other business arrangements in another crucial respect. Many business contracts expire and have no continuing obligation. Once a collective bargaining agreement expires, however, almost all provisions remain in effect while the parties bargain over a successor agreement. That is, the terms and conditions of employment of the bargaining unit employees are kept in place by force of law as opposed to the contract.  A few items automatically expire with the contract. For example, the “union security” provision is only viable with the existence of an agreement due to statutory requirements. Although it is subject to some ongoing debate, the “dues checkoff,” or dues deduction provision, also does not (currently) survive.  Likewise, the “no strike” and “arbitration” provisions do not survive expiration of the agreement. That these provisions do not survive the contract expiration is generally well known. Are there others? What if the parties limit the provision to the existence of an agreement?

In yet another divided decision, the NLRB ruled that the parties could so limit a provision to the term of the agreement but only if the language constitutes a “clear and unmistakable waiver” that the provision would extinguish upon expiration. In The Finley Hospital, 359 NLRB No. 9 (September 28, 2012), the Board ruled that the employer hospital violated the Act by failing to continue to grant 3% wage increases to individual nurses upon expiration of the collective bargaining agreeement. At issue was the following language:

Base Rate Increases During Term of Agreement. For the duration of this Agreement, the Hospital will adjust the pay of Nurses on his/her anniversary date. Such pay increases for Nurses not on probation, during the term of this Agreement[,] will be three (3) percent. . .

 When the parties’ one year collective bargaining agreement expired, the employer announced that no increases would be given until the parties reached a successor agreeement.

A two member Board majority found the discontinuation of increases post-expiration was a unilateral change because “the term and condition of annual pay increases in specified amounts, and the [employer's] duty to continue to pay such increases pending negotiation of an agreement, was established by the parties’ collective bargaining agreement.” The Board held that the language, despite stating three times that it applied during the “term” of the agreement only, was insufficient to negate the statutory obligation to continue the term or condition of employment because it did not constitute a clear and unmistakable waiver of bargaining. Specifically, the Board held that the language in the agreement must “specifically address the employer’s postexpiration conduct” in order to constitute a waiver.

This is a curious standard, to be sure, especially considering the Board majority’s explanation of the law in this area. In a footnote, the Board discussed how case law concerning the history of dues checkoff provisions not surviving expiration as, “The Board has long held that dues checkoff represents an exception to the general rule that an employer may not make unilateral changes in terms and conditions of employment following expiration of a collective bargaining agreeement.” The Board cited Bethlehem Steel Company (Shipbuilding Division), 136 NLRB 1500 (1962), the first case to address the issue. In that case, though, the decision was based solely on the language of the agreement. The Board there stated:

The Union’s right to such checkoffs in its favor, like its right to the imposition of union security, was created by the contracts and became a contractual right which continued to exist so long as the contracts remained in force. The very language of the contracts links Respondent’s checkoff obligation to the Union with the duration of the contracts. Thus, they read: ‘. . .the Company will, beginning the month in which this Agreement is signed and so long as this Agreement shall remain in effect, deduct from the pay of such Employee each month. . . his periodic Union dues for that month.” Consequently, when the contracts terminated, the Respondent was free of its checkoff obligations to the Union.

There appears to be no real difference between the language in that case and that of the hospital employer’s pay provision; both provisions limit the item to the term of the agreement. Of course, the issue of dues checkoff provisions is freighted with political significance, with courts of appeals ruling that discontinuation of dues payments postexpiration is nothing more than a lawful econmic weapon, but it is curious that such a case would be cited at all when its ruling was so clearly the opposite of that in the current case. Moreover, the Board’s recognition that dues checkoff is an “exception” seems to ignore the fact that the General Counsel has attempted to overturn this exception in the last few years.

Member Hayes dissented, noting that in his view the employer’s obligation was to maintain current wage levels, not grant wage increases indefinitely. In his view, the Board majority’s waiver analysis missed the point:

Indeed, to the extent that a waiver issue is present in this case, my colleagues focus on the wrong party. Their analysis effectively waives the Respondent’s right to bargain about postexpiration changes in the status quo. Until the parties reach a new agreement, or impasse, the Respondent will have to give annual wage increases never contemplated when the parties concluded their last negotiations. In my view, this result could only flow from clear and unmistakable contract language manifesting the parties’ agreement to extend this particular term of employment beyond the contract termination date. As previously stated, the contract here does the opposite, expressly confirming the limitation fo the agreed-upon wage increase to the contract’s term.

Most collective bargaining agreements specifically tie wage increases to a particular date, thereby avoiding this kind of an issue. Still, the fact this was a one year agreement signifies the parties sought to put in place wage increases for that one year period only, and the Board majority’s ruling to the contrary overrides this intent. The lesson here is that the more clear the language, the less likely there will be disputes like this which seem to shift all the burden to the employer. Of course, that is one of the nuances of collective bargaining, where sometimes the language is left deliberately vague so that the parties can preserve their respective positions. Except in this case, of course.