In a 3-1 ruling issued on September 10, 2019, the National Labor Relations Board (the “Board”) established a new standard for evaluating unilateral changes by unionized employers. In M.V. Transportation, Inc., the Board abandoned the “clear and unmistakable waiver” standard and adopted the more employer-friendly “contract coverage” standard.

Unilateral changes are often challenged under the National Labor Relations Act (“Act”) because employers were historically permitted to make unilateral changes to working conditions only if the relevant labor agreement contained a “clear and unmistakable waiver” of the union’s right to bargain over that specific change. In many Board cases, even broad management rights clauses were deemed insufficient to authorize unilateral changes. Under the new and more relaxed “contract coverage” standard, an employer’s unilateral change will not violate the Act if it “falls within the compass or scope of contractual language that grants the employer the right to act unilaterally.” Pursuant to the new standard, employers with management rights language in their labor contracts will have greater rights to make unilateral changes without bargaining with the labor union that represents their employees.

In M.V. Transportation, the Board considered whether the employer violated the Act by making unilateral changes to employment policies without first bargaining with the union. The employer’s unilateral implementation of a new policy that could result in employee discipline, for example, was deemed lawful by the Board because the labor contract granted the employer the general right to make work assignments and to issue discipline. The Board noted that management rights language in collective bargaining agreements was often rendered meaningless under the “clear and unmistakable waiver” standard, and concluded that if the terms of a collective bargaining agreement are to be enforced as written that standard must be abandoned.

Employers should expect that management rights language will play a more significant role in labor relations and will be a more prominent issue at the bargaining table. Employers should review their collective bargaining agreements to assess their rights under the new “contract coverage” standard and to consider future bargaining proposals on management rights. Finally, employers should keep in mind that, due to the inherently political nature of the Board, the contract coverage standard may not survive a change in the White House.

This alert does not purport to be a substitute for advice of counsel on specific matters.

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