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‘Leveling the playing field’ between union, nonunion workers good enough reason for hospital transfer policy

By Lisa Milam-Perez, J.D.

A hospital consortium did not unlawfully discriminate against union workers at one of its three hospitals by denying them preferential, internal hiring status for job vacancies at its two nonunion hospitals, the First Circuit held, vacating an NLRB finding to the contrary. The operative bargaining agreement gave hiring preference to union members for job openings at the unionized hospital. In an effort to “level the playing field” between union and nonunion workers, the employer unilaterally enacted a transfer policy giving similar hiring preference to nonunion workers (over union workers) for positions at the other two hospitals. The appeals court found that the employer articulated a substantial business justification for the policy, and that it passed must under the Great Dane Trailers test (Southcoast Hospitals Group, Inc. v. NLRB, January 23, 2017, Barbadoro, P.).

Transfer policy.The consortium was created in a merger of three hospitals. One of the hospitals was unionized, with about 215 union-represented workers in its 550-person workforce. The other two hospitals were nonunion; there were some 4,800 unrepresented employees at the other facilities. The consortium allows employees at one hospital to apply for open positions at the other hospitals, and gives them preferential hiring status as internal candidates when doing so. Internal applicants get first consideration for job postings if they are substantially as qualified as external candidates. This policy only applied to non-bargaining unit vacancies, though. Pursuant to a longstanding provision in successive CBAs, the union members at the unionized hospital were given preference over nonunion employees in transferring into open bargaining unit positions at the unionized hospital.

During contract negotiations, the employer wanted the union to give unrepresented employees equal preference to transfer into open bargaining unit positions at the unionized hospital. When the union balked, the employer unilaterally altered its transfer policy, revoking union members’ internal hiring preference for jobs at the other two hospitals. Under the revised policy, unionized employees are only given internal preferential hiring treatment at the other two hospitals if their CBA gives reciprocity to nonunion employees for open positions at the unionized site. Employees working under a CBA that does not provide such reciprocity are treated like external candidates.

Business justification. The employer said it implemented the policy after complaints from unnamed nonunion employees who were shut out of the bargaining unit positions. The employer could not name any specific aggrieved employees to support this contention. Nonetheless, the employer’s HR director said he had fielded similar complaints about a union hiring preference at his last employer, so he implemented the policy “as a matter of equity.” The goal of the policy, the employer explained, was to “level the playing field” between union and nonunion employees. If a nonunion employee won’t be given consideration for a union job unless no qualified union member applies, it was only fair that nonunion employees are afforded the same as to nonunion positions, the employer reasoned.

NLRB ruling. A divided NLRB panel found the transfer policy unlawfully discriminated against union members, in violation of NLRA Section 8(a)(3). As the majority saw it, the transfer policy went too far: instead of leveling the playing field, the policy tipped it disproportionately in favor of nonunion employees over their unionized employees. The number of jobs covered by the CBA’s hiring preference policy “pales in comparison” to the number covered by the hiring preference policy, the majority pointed out. In fact, the policy grants nonunion workers favored status at two hospital facilities, while the unionized employees enjoy preferential hiring status for vacancies at only one facility.

Do the math. Yet the appeals court concluded that it was “by no means clear” that union members were unfairly disadvantaged by this apparent disparity. To accurately gauge whether one group of workers is unduly disadvantaged, one had to determine the probability that an employee would land a transfer under either policy by considering the ratio of open positions to the number of workers covered by the policy. Here, the ratio of covered positions to covered employees was substantially the same under the employer’s transfer policy and the union hiring policy. Consequently, it couldn’t be said the union employee was at a disadvantage in securing a successful transfer.

The Board majority couldn’t quibble with the math (which Member Miscimarra had pointed out in dissent, below) but still it argued that the policy left union workers with a narrower “universe of job opportunities.” But even if true, that wouldn’t justify the Board’s finding that the employer’s transfer policy tilted the playing field too far in favor of nonunion workers. “The transfer policy discriminates against union employees just as the union hiring preference discriminates against nonunion employees,” the appeals court noted. The same logic applied to the Board’s argument that nonunion workers got dual-facility preference while union employees only got a single-facility preference. While nonunion workers get preference at two hospitals, they must also compete with workers from two hospitals, while the union workers, with preference at only one hospital, need compete only with workers from that hospital, the court observed.

Other factors favored union members. The Board also erred by failing to take into account number other elements of the employer’s hiring policies that gave union members a comparative advantage. For one, the transfer policy allows the hospital to select the best qualified candidate for vacant nonunion jobs even though qualified nonunion employees have also applied. Yet CBA’s union hiring preference compels the employer to hire the most senior, qualified union applicant for a vacant union position even if more qualified nonunion applicants applied. The employer also gives union members preferential consideration over nonemployees when filling nonunion jobs; yet there was little evidence that it gives nonunion employees a similar preference over outside applicants when filing union positions.

Finally, the appeals court pointed out, all the union had to do was surrender its hiring preference for union positions and its members would have the same right to be treated as internal applicants at the other hospitals.

NLRB can’t mandate different policy. In its brief on appeal, the Board asserted that if “an employer’s discriminatory action is not necessary to achieve its stated goal,” then it lacks a sufficient business justification for the policy under Great Danes Trailers. In this case, according to the Board, the employer could have achieved its stated goal through less restrictive means, such as by limiting its nonunion workers to only a single-facility hiring preference. But nothing in the record supported the contention that union workers were afforded less opportunity for transfer in the first place.

Moreover, as a policy matter, the NLRB “may not invalidate an employment policy that accomplishes a legitimate goal in a nondiscriminatory manner merely because the Board might see other ways to do it.” The employer adopted the transfer policy as a means of treating union and nonunion workers more even-handedly when filling open positions at its hospitals. The policy was reasonably adopted to achieve this goal, the appeals court said. The Board had no authority to reject the policy simply because the employer “might have achieved its goal through alternative means that were more beneficial to its union employees.”