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3-1 NLRB finds benefit changes comparable with past practice of unilateral actions lawful

By Ronald Miller, J.D.

On remand from the D.C. Circuit, a four-member panel of the NLRB, in a 3-1 decision, dismissed consolidated cases, after finding that an employer did not violate Section 8(a)(5) and (1) by implementing annual unilateral changes to unit employees’ benefits after expiration of collective bargaining agreement that contained a reservation of rights provision permitting widespread and varied unilateral changes. The Board held that its recent decision in Raytheon Network Centric Systems, controlled here and required dismissal. Under Raytheon actions do not constitute a change if they are similar in kind and degree with an established past practice consisting of comparable unilateral actions. Member McFerran filed a separate dissenting opinion (E.I. Du Pont De Nemours, Louisville Works, October 11, 2018).

Past practice. For many years preceding the changes at issue here, during the terms of successive CBAs, the employer announced Beneflex Plan changes in the fall and implemented them on January 1 of the new year without objection from the union representing unit employees at two employer facilities in Louisville, Kentucky and Edge Moor, Delaware. However, annual post-contract-expiration unilateral changes made in 2004 at the Louisville facility and in 2005 at both facilities gave rise to refusal to bargain complaints.

On August 27, 2010, the Board issued separate decisions finding that the employer violated Section 8(a)(5) by unilaterally changing the terms unit employees’ Beneflex benefit plan. In each case, the Board concluded that the unilateral changes were impermissible because the reservation of rights provision waiving the union’s right to demand bargaining did not survive contract expiration. The D.C. Circuit granted the employer’s petition for review and remanded the case to the Board. The appeals court concluded that the Board had departed without reasoned justification from Board precedent in finding the unilateral changes to Beneflex unlawful. The court interpreted that precedent as defining the issue as one of past practice, not “whether a contractual waiver of the right to bargain survives the expiration of the contract.”

Post-expiration changes. Accepting the court’s remand, the Board issued a new decision in which the majority affirmed the prior findings of violations. In so doing, the Board returned to the rule followed by Beverly 2001 and Register-Guard: that unilateral, post-expiration discretionary changes are unlawful, notwithstanding an expired management rights clause or an ostensible past practice of discretionary change developed under that clause. The employer again petitioned the D.C. Circuit for review.

While the case was pending before the appeals court, the Board reconsidered the rationale of DuPont 2016 in Raytheon. The Board majority expressly overruled the majority’s holding in DuPont 2016 and the precedent upon which it relied, and returned to the rule of law from the Courier-Journal cases, Capitol Ford and Beverly 2006 that employers do not have to bargain over changes to employment terms as long as those changes are consistent with past practice.

Applying Raytheon, the Board now held that the employer’s 2004 and 2005 changes to unit employees’ Beneflex Plan benefits were consistent with a long-standing past practice of annual changes established over several years of the parties’ collective bargaining relationship. The changes did not materially vary in kind or degree from the changes made in prior years. Therefore, the employer by making unilateral changes to Beneflex after the expiration of the CBAs maintained the status quo expressed in the company’s past practice, so that the changes were lawful. Accordingly, the employer did not violate the Act by making the changes without providing the union with advance notice and the opportunity for bargaining.

Dissent. In a dissenting opinion, Member McFerran observed that the Board’s recent Raytheon decision overruled the Board’s immediate prior decision in this case, even though the case was awaiting oral argument in the D.C. Circuit, and the Board no longer had jurisdiction over it. Moreover, the Raytheon Board took this step without providing any prior notice and opportunity to be heard to the DuPont parties. She argued that not only was Raytheon wrongfully decided, but that the majority also violated administrative due process in overruling the Board’s earlier DuPont decision. The unions were entitled to know that the Raytheon Board contemplated overruling DuPont 2016 (and stripping the unions of their victory in that case), she argued. Accordingly, McFerran would adhere to the Board DuPont 2016 decision and find that the employer violated Section 8(a)(5).