The National Labor Relations Board (NLRB) issued companion decisions last month that significantly limit an employer’s ability to change the working conditions of their unionized staff without bargaining with the union.
Wendt Corporation
In Wendt Corporation, 372 NLRB No. 135 (2023), the Board reaffirmed the Supreme Court decision in NLRB v. Katz, 369 U.S. 736 (1962). Under Wendt and Katz, employers are prohibited from unilateral action informed by a large measure of discretion, even where the action is consistent with a longstanding past practice. Wendt overruled Raytheon Network Concentric Systems, 365 NLRB No. 161 (2017), which permitted employers to make unilateral changes involving discretion where the change did “not materially vary in kind or degree from what has been customary in the past.”
The Wendt Board declared that a past practice is longstanding if it occurs “with such regularity and frequency that employees could reasonably expect the practice to continue or reoccur on a regular and consistent basis.” It further explained that the past practice defense is only available where the employer’s unilateral change is fixed by an established formula based on nondiscretionary standards and guidelines.
The Wendt majority also reaffirmed that an employer may not rely on its past practice of making unilateral changes before employees were represented by a union to justify unilateral changes after the employees become represented. Further, the Board held that the employer was not privileged to lay off employees without bargaining because it had only laid off employees in five of the prior 17 years. The Board concluded that this was “highly episodic rather than frequent and regular,” thus not establishing a consistent past practice. Significantly, the Wendt Board opined that unless an event recurs annually or more frequently, it is unlikely that an employer will be able to establish a regular and frequent practice under Katz.
Tecnocap, LLC
In Tecnocap, LLC, 372 NLRB No. 136, decided on the same day as Wendt, the Board overruled a different aspect of Raytheon, holding that an employer may not continue to make discretionary changes to employment terms after a contractual provision authorizing the changes (i.e., a management rights clause) has expired. Specifically, the Tecnocap Board held that the employer, a manufacturing company, violated labor law by failing to bargain with the union when it unilaterally increased employees’ work hours based on an expired management rights clause in a prior agreement.
The Board held that the employer could not rely on the expired management rights clause, which gave it the right to unilaterally alter schedules to meet production needs, to justify its unilateral action while it was bargaining for a successor agreement. Further, the Board found that the employer’s decision to require longer hours was discretionary and lacked criteria for determining when production requirements necessitated longer shifts, therefore triggering its bargaining obligations under Katz and Wendt.
Employer Takeaways
Wendt and Tecnocap are just two of many NLRB decisions issued in the last month that favor unions. Employers should recognize the NLRB’s growing hostility to employer decisions that may not align with union and employee workplace rights.
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.
[View source.]
