To Defer or Not to Defer? That is the Question

April 8, 2020

It’s time to dust off the National Labor Relations Board (NRLB) cases in effect before the Obama era. Labor attorneys have learned over the years not to throw out the “old” law, knowing full well it will once again come full circle. The NRLB did exactly that in a recent decision when it overruled the “current” deferral standards and returned to the long-standing prior deferral standards.

Some Background

Grievance and arbitration provisions are the hallmarks of most collective bargaining agreements (CBAs) and have been described as the quid pro quo for a no-strike provision. Essentially, the parties to the CBA have agreed on a resolution process for disputes arising under the agreement.

Because many disputes between labor and management are resolved through arbitration, the process has been looked to and used as a method of resolving disputes that are also the subject of unfair labor practice charges. The charges would be resolved through deferral either before the issue had been arbitrated (prearbitral deferral) or after the matter had been arbitrated (postarbitral deferral).

Case History

In United Parcel Service, employee Robert Atkinson had participated in a campaign designed to persuade the union to renegotiate a more favorable CBA. When the campaign was unsuccessful, he ran for a local union office in an ill-fated effort to unseat a long-time Teamster business representative.

Atkinson was subsequently fired by UPS for violating certain package delivery procedures. He filed two grievances concerning his discharge alleging it violated Section 8(a)(3) of the National Labor Relations Act (NLRA). A joint grievance panel considered the two grievances and upheld his termination.

Atkinson had also filed unfair labor practice charges with the NLRB alleging his termination violated the NLRA. At the hearing before an administrative law judge (ALJ), UPS argued the Board should defer to the joint grievance panel’s decision upholding the discharge. The ALJ refused to do so, relying on the then-current “deferral standard,” and found his firing violated the Act.

On appeal, UPS and the general counsel argued the NLRB should return to the previous deferral standard because it struck a better balance between the national policy favoring arbitration and employee rights under the Act. Atkinson argued the current deferral standard should be retained.

NLRB’s Response

In addressing the deferral issue, the NLRB reiterated that the debate over deferral involved balancing its authority to prevent unfair labor practices and Section 1 of the NLRA, which encourages practices fundamental to the friendly adjustments of industrial disputes. It went through an extensive review of the long-standing previous deferral standards and the “sweeping changes” made to them in 2014.

The NLRB noted that under the current standard, the burden of proof had been shifted to the party arguing for deferral. To meet the burden of proof, the party urging deferral was required to demonstrate:

  • The arbitrator was explicitly authorized to decide the unfair labor practice issue;
  • The arbitrator was presented with and considered the statutory issue or was prevented from doing so by the party opposing deferral; and
  • Board law reasonably permitted the award.

Although the current deferral standard primarily dealt with the postarbitral standard, the NLRB noted it also made restrictive changes in prearbitral deferral standards, holding it wouldn’t be appropriate to defer litigation of Section 8(a)(3) and unfair labor practice charges to contractual agreements’ arbitration procedures unless the arbitrator was explicitly authorized to decide the unfair labor practice issue.

In criticizing the current deferral standard, the NLRB noted the standard represented a policy choice based on the then-majority’s different view of the relative weight to be assigned to the protection of employee individual statutory rights and the encouragement of grievance arbitration in a collective bargaining relationship. After spending literally pages of its decision criticizing the current deferral standard, the Board overruled it and reinstated the previous deferral standards.
Under the reinstated standards, the NLRB will defer to an arbitration award if:

  • The arbitration proceedings were fair and regular;
  • The parties agreed to be bound;
  • The contractual issue was factually parallel to the unfair labor practice issue;
  • The arbitrator was presented generally with the facts relevant to resolving the unfair labor practice; and
  • The decision wasn’t clearly repugnant to the purposes and policies of the NLRA.

The NLRB also pointed out that this return to the prior deferral standard shifts the burden back to the party arguing against deferral to demonstrate defects in the arbitral process or award.
Finally, the NLRB addressed the issue of whether its decision should be applied prospectively or retroactively.

In light of the fact it was returning to a long-established precedent it had applied in numerous cases—and the parties were familiar with and had long relied on—it concluded the decision should be applied retroactively in all pending cases, including this one.

Bottom Line

This is yet one more situation in which the current NLRB is returning to standards and analyses that had been reversed during the Obama era. The Board will be much more likely to defer to arbitration decisions both in the prearbitration and postarbitration context than it was under the standard it overruled. One of the many benefits of this decision is that a party to a CBA that is also the charged party in an unfair labor practice proceeding is much less likely to have to fight a war on two fronts, with the risk of experiencing mixed results. Instead, it will receive the benefit of what it had bargained for—a mutually acceptable dispute resolution process. This return to the previous deferral standards is a welcomed result.

This article, slightly modified to note recent updates, was featured in the April issue of the Great Lakes Employment Law Letter and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.