NLRB Revisits and Reverses What ‘Change’ Means

March 9, 2018

Labor professionals have had a difficult time keeping up with the most recent interpretation of the law when it comes to the National Labor Relations Act (NLRA). It’s clear that the National Labor Relations Board (NLRB) is in the process of revisiting its position on a number of significant issues that control the destiny of unionized employers and labor organizations. In a recent decision, the NLRB decided to overrule previous cases that have prevented an employer from continuing past practices it has engaged in over the years without first providing the union notice and an opportunity to bargain.

What Constitutes ‘Change’?

First, a brief refresher. The NLRA requires an employer to bargain over changes in wages, hours, and other terms and conditions of employment before making changes. Generally, that requires notice to the union and an opportunity to bargain over the proposed change. The difficulty has arisen with the issue of what constitutes “change.” At first blush, that seems like an elementary question, but like many other issues in the world of labor relations, the answer isn’t as clear as you might expect.

Most labor practitioners are familiar with the term “status quo.” Essentially, if an employer is maintaining the status quo, there’s no change for which it’s required to provide notice and an opportunity to bargain. Further confusing things is the concept of “dynamic status quo,” which recognizes that the status quo isn’t simply a snapshot in time but can include change pursuant to a long-standing practice. More simply put, change that continues year after year isn’t really a change; rather, it’s the status quo.

NLRB Flip-Flops on What Constitutes ‘Change’

A couple of years ago, the NLRB retreated from its approach of allowing employers to continue making long-standing changes when it decided to split hairs and consider when the “change” is actually made. The NLRB determined that unilateral post-contract-expiration discretionary changes by an employer were unlawful, notwithstanding an expired management rights clause or a past practice of discretionary change developed under that clause. In Raytheon Network Centric Systems, the NLRB recently reversed those previous decisions and returned to the rule that an employer has no duty to bargain over “changes” made pursuant to an established past practice.

Raytheon’s collective bargaining agreement (CBA) contained language that made coverage under the Raytheon Plan (a comprehensive nationwide benefits plan that included healthcare coverage, dental coverage, and vision coverage) available to bargaining unit employees on the same basis it was available to employees who weren’t part of the bargaining unit. The contract language also provided that bargaining unit employees’ contributions to Raytheon Medical (the healthcare portion of the Raytheon Plan) wouldn’t exceed the rates paid by salaried employees at the facility.

Pursuant to that CBA language, every year for many years, the bargaining unit employees were covered by the Raytheon Plan on the same basis as the nonunion employees. Each fall, Raytheon would communicate with the bargaining unit employees, describing their options for medical benefits for the next year. The company would then make the changes in January of the following year. The changes included increases in premiums as well as changes in plan design.

When bargaining for a successor to the CBA, the union proposed to remove the language on which the past practice of offering medical benefits was predicated. While the parties were bargaining, the CBA expired. In the fall of the year after the contract expired, the union asked Raytheon to exclude the bargaining unit employees from the upcoming open enrollment. The employer refused. As it had done in the past, it sent out the open enrollment materials, and at the first of the year, the bargaining unit employees received the same changes in premiums and plan design as the nonunion employees.

The union filed an unfair labor practice charge alleging that Raytheon’s action constituted a unilateral change to a mandatory subject of bargaining. The employer argued that it wasn’t a change; rather, it was the dynamic status quo and was consistent with what it had been doing for the past 10 years. Based on the then-current state of the law, an administrative law judge (ALJ) ruled in favor of the union. Raytheon appealed the case to the NLRB, and given the change in the Board’s makeup, the issue was revisited.

NLRB’s Holding in Raytheon

In carefully analyzing the development of the law with regard to past practice and the dynamic status quo, the NLRB noted that an employer must provide the union notice and the opportunity to bargain only before it implements a change. The Board went on to say that it isn’t a change when an employer acts consistently with what it has done before. When evaluating whether a particular action constitutes a change, it doesn’t matter whether or what type of CBA may exist (or may have existed).

That’s in stark contrast to the NLRB’s previous position, which was basically that the status quo was whatever the employees’ concrete terms and conditions of employment were at the time the contract expired. The NLRB held that regardless of the circumstances under which the past practice developed (i.e., whether or not it developed under a CBA containing a management rights clause), an employer’s past practice constitutes a term and condition of employment, which permits it to take unilateral actions that don’t materially vary in kind or degree from what has been customary in the past.

Based on that holding, employers no longer have to carefully scrutinize the circumstances under which an established past practice occurred. There’s no need to decide whether the practice occurred pursuant to language in a CBA and, if so, whether the CBA was in effect at the time the past practice occurred. The employer is allowed to continue the past practice without it constituting a change in the terms or conditions of employment as long as the recurring change doesn’t vary in kind or degree from what has been customary in the past.

However, the NLRB didn’t absolve employers of the obligation to bargain over the issue. Therefore, even though an employer can continue to make the “change” pursuant to its established past practices, it’s still required to bargain over the subject. To the extent that it is negotiating a successor CBA with the union, the employer is required to bargain over the language in the contract that gave it the right to make the change in the first place.

The NLRB found that Raytheon’s modifications to the Raytheon Plan and the announcement of those modifications were lawful. Therefore, it reversed the ALJ’s findings and dismissed the complaint. Raytheon Network Centric Systems, 365 NLRB No. 161 (2017).

Bottom Line

The Raytheon decision will allow employers to do what they had previously been allowed to do. Specifically, you may maintain the dynamic status quo. Although you may exercise some discretion in making some changes, you are permitted to make the changes as long as they aren’t materially different in nature or degree from what you’ve done in the past. To the extent that you have an obligation to bargain (e.g., during negotiations of a successor CBA), you must still bargain over the language giving rise to the change, but not over the change itself, because after all, it isn’t really a “change.”

This article, slightly modified to note recent updates, was featured in the February 2018 issue of the Wisconsin Employment Law Letter, which is co-edited by Axley Brynelson Attorneys Saul Glazer and Michael Modl and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.