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Hospital unlawfully withheld union nurses’ bargained-for longevity pay hikes

By Lisa Milam-Perez, J.D.

An acute-care hospital unlawfully stopped awarding longevity-based pay hikes to its unionized nurses after their collective bargaining agreement expired, the D.C. Circuit held. Denying the hospital’s petition for review and granting the NLRB’s cross-petition for enforcement of its order finding the employer violated the NLRA by unilaterally ceasing the payments, the appeals court rejected the hospital’s assertions that it was not obligated to continue paying those increases under the contract language or based on the parties’ past practice. The court also rejected the hospital’s Noel Canning-based defense that the regional director lacked authority to issue the underlying complaint in this case (Wilkes-Barre Hospital Co., LLC dba Wilkes-Barre General Hospital v. NLRB, May 19, 2017, Sentelle, D.).

Two kinds of pay hikes. The parties’ 2009 CBA established two distinct types of wage increases: annual across-the-board raises and longevity-based increases. The across-the-board raises granted a percentage pay increase to every nurse’s base minimum hourly rate, and were awarded three specific times over the life of the agreement. The longevity-based increases were paid to individual nurses who rose from one of seven contractually established experience levels to the next. Unlike the across-the-board raises, the longevity increases were tied to an individual nurse’s anniversary date—paid on “January 27th of the year following the employee’s anniversary date”—not to the term of the contract. After the 2009 contract expired, the hospital stopped paying either wage increase. The union filed an unfair labor practice charge over the hospital’s failure to pay the across-the-board increases (the Board dismissed the charge) but it was silent about the discontinued longevity increases.

In 2011, the parties reached a deal on a successor contract. The longevity increases were included in the 2011 contract, and when that contract expired in 2014, the hospital again ceased paying the longevity increases without giving the union notice of its intent to do so, or an opportunity to bargain. It drew a charge from the union, which contended the hospital violated the Act when it unilaterally stopped awarding the longevity-based pay increases in 2014. (The union did not challenge the hospital’s failure to pay the across-the-board raises.)

Status quo. The hospital had a statutory obligation under the NLRA to maintain the status quo of its nurses’ terms and conditions after expiration of the contract. But what was the status quo? The hospital insisted the longevity-based increases were intrinsically and exclusively tied to the across-the-board raises, which were expressly limited to the term of the CBA, and thus could not define the post-expiration status quo. Nurses were granted a single pay increase—a combined across-the-board raise and longevity increase—during the life of the agreement, on each of three specific dates, it argued. As such, the status quo was the cessation of all wage increases.

But the law judge rejected the notion that the longevity-based increases operated in tandem with the across-the-board raises; adopting the law judge’s findings, the Board also found the longevity increases were “distinct rights” that did not “go hand-in-hand” with the across-the-board hikes. The longevity increases could easily be awarded after the contract expiration without reference to the across-the-board terms, the Board held.

Looking to the substantive terms of the 2011 CBA, the D.C. Circuit agreed. It rejected the hospital’s attempt to define the status quo by essentially “taking a snapshot of each individual nurse’s pay rate at the moment the 2011 CBA expired.” The post-expiration status quo is defined by the terms of the expired contract, the appeals court explained, not by each individual employee’s circumstances at the time of expiration.

Bargaining duty. The longevity-based wage increase provision was a mandatory subject of bargaining and an established contract term that survived expiration of the contract. Because the longevity increases represented the status quo post-expiration of the CBA, the hospital was obligated to continue paying them until it reached a new contract or it bargained to impasse over the provision. Because it failed to do so, and never notified the union of its intent to stop paying the increases, the hospital violated its bargaining duty under Section 8(a)(5) by unilaterally ending the longevity increases.

Durational clause didn’t apply. The hospital also cited a durational clause in the contract which, it asserted, left no room for doubt that the longevity-based increases did not survive expiration of the 2011 contract. However, the durational clause spoke only to the nurses’ contractual rights, the appeals court concluded, not to their statutory rights under the Act. Therefore, the provision establishing longevity-based increases remained in effect after expiration of the CBA.

No “past practice.” The hospital also argued that past practice allowed it to cease the longevity-based increases after the operative CBA expired. Specifically, it pointed to the union’s failure to challenge its nonpayment of the longevity increases in 2011 after the 2009 CBA expired. “But a union’s one-time failure to challenge an employer’s unilateral change does not qualify as an established practice.”

No “contract coverage.” The hospital sought to invoke the “contract coverage doctrine” as well, to no avail. It contended that in their 2011 CBA, the parties agreed the payment of all wage increases would cease upon expiration. Considering whether the longevity increase subject was “within the compass” of the terms of the contract, the court observed that the 2011 CBA did not “specifically” limit the applicability of the longevity-based increases to the agreement’s term. However, the appeals court has expressly rejected the Board’s “specifically mention” requirement, as parties to CBA negotiations couldn’t possibly “anticipate every hypothetical grievance and purport to address it in their contract.” Still, after reviewing the terms of the contract at issue here, the court found the decision to cease longevity increases post-expiration was not covered by the 2011 CBA.

No waiver. Nor did the 2011 CBA clearly and unmistakably waive the union’s statutory rights to bargain over the longevity increases. The hospital couldn’t point to any specific language in the contract to support this defense. Its assertion that the contract didn’t affirmatively specify that an ongoing statutory obligation existed failed to account for the fact that, under the unilateral change doctrine, wage rates established in a CBA remain in effect “even after an employer is released from any contractual obligations.” And silence is not enough to establish waiver.

Noel Canning defense fails. The hospital’s final, failed argument was that the regional director was not authorized to issue the underlying complaint against it because he was appointed by an unconstitutionally constituted Board (as the Supreme Court held in its 2014 decision in NLRB v. Noel Canning). As the law judge rightly noted, though, the regional director’s appointment was later ratified by a validly constituted Board, remedying any latent defect from the improper quorum, and the appeals court rebuffed the notion that the Board, in doing so, had improperly sought to “insulate” itself from its previous invalid actions.

Although a tougher question, the D.C. Circuit also found it proper for the regional director to affirm and ratify his own previously invalidated actions, despite having acted as both principal and agent in this regard. “Human nature” rendered it impossible to be disinterested in reviewing the propriety of one’s own past actions, the hospital urged. But several other circuits have found ratification to be effective even when undertaken by the same actor. And there was no evidence the regional director failed to render a “detached and considered” judgment in this case, so the appeals court saw no reason not to take his ratification at face value. Moreover, no purpose would be served in forcing the regional director to reissue the complaint anew, except to grant the employer “the benefit of delay.” And it was the Board’s general counsel who had final say over the issuance of complaints anyhow—and the regional director acted at his behest.