Employers Between a Rock and a Hard Place: Another Puzzling “Status Quo” Case Decided On Other Grounds

The National Labor Relations Board (Board) recently decided a case previously remanded back to it by the District of Columbia Circuit Court of Appeals. The Board’s decision in Arc Bridges, Inc., 362 NLRB No. 56, March 31, 2015, circumvents a now common problem for employers by relying on individual facts of union animus, but the underlying problem presented in Arc Bridges still lingers.

Background

On September 29, 2010, the Board found that Arc Bridges, Inc. had violated the National Labor Relations Act when it provided a wage increase to its nonunion employees but failed to provide the same increase to a newly organized group of employees in the midst of bargaining. The NLRB did not rely on a finding of union animus in its original decision not to extend the benefit, nor did it decide if there was any unlawful motive in denying the benefit. Instead, the Board held that the wage increase was an “established condition of employment” and should have been given to the newly organized employees.

Arc Bridges appealed the decision to the D.C. Circuit, which rejected the Board’s finding. It held that Arc Bridges’s practice of annual wage increases was not an established condition of employment and set aside the Board’s order. The court sent the case back to the Board to determine if there was sufficient evidence of animus under the Wright Line doctrine to sustain a violation of Sections 8(a)(3) and 8(a)(1) of the National Labor Relations Act. Earlier this month, the Board, in a 2-to-1 decision, found that union animus was the cause of the company’s decision not to extend the pay increase to the newly unionized workers.

The Board’s ruling on the facts is troubling, but the real dilemma remains: In what circumstances must employers provide raises or incorporate changes to other benefits unilaterally, during ongoing collective bargaining negotiations?

The Issue and the Board’s Solution

The issue, which has become a complex minefield in negotiations, relates to the Board’s previous decision in The Finley Hospital, 359 NLRB No. 9 (September 28, 2012). In that decision, the Board found that the employer had violated the Act when it did not provide normally scheduled wage increases included in a previous, but now expired contract. The “dynamic status quo” relied upon by the Board in Finley Hospital created substantial confusion regarding an employer’s potential obligation to provide previously negotiated wages and benefits after the expiration of a collective bargaining agreement.

Prior to Finley Hospital, the Board typically interpreted the “status quo” doctrine to mean that current wages and benefits stayed the same during negotiations for a new contract. No unilateral increases or decreases in wages and benefits were permitted. If an employer had unilaterally modified the current benefits during negotiations, the union could have filed a charge under Section 8(a)(5) of the Act. In the original Arc Bridges case, the Board concluded that the wage increase granted to unrepresented employees in October of 2007 was an existing benefit  (because they had provided it in years past to all employees) and Arc Bridges’s failure to provide it to represented employees before they negotiated their first contract “was inherently destructive” of their Section 7 rights.

On remand, the Board used evidence in the record to make the tenuous conclusion that the company withheld the wage increase because of union animus. The evidence took the form of supervisor statements that the employer had set aside money for raises for the bargaining unit, but now it was “going to the lawyers” for bargaining. The majority also noted the raise, usually given in July, was withheld until October. It used that fact to conclude that the timing of the raise was designed to weaken union support, because the union’s one-year recognition period ended in November.

The Board’s decision, coupled with the Finley Hospital problem, places employers in an untenable position. If an employer unilaterally makes a change to the bargaining unit’s working conditions, and it is not an “established condition of employment,” it will be liable under Section 8(a)(5) of the NLRA. If the employer does not change the new bargaining unit’s terms and conditions, in an attempt to preserve the status quo, it runs the risk of violating Section 8(a)(3) of the Act. The Board attempted to assuage this fear by stating

Withholding the increase would not, on its own, establish an 8(a)(3) violation. As explained above, an employer may treat represented and unrepresented employees differently during the course of collective-bargaining negotiations without violating Section 8(a)(3), provided that the disparate treatment is not unlawfully motivated.

This statement by the Board should not assuage an employer’s fears. Given the fact the Board can and does use lawful employer communications about its desire to remain union free as evidence of union animus, it won’t take much more than a stray comment by a supervisor or the suspicious timing of a benefit change for the Board to find an 8(a)(3) violation in cases in which the employer decides not to unilaterally change the terms and conditions of employment.

Matthew J. Kelley is an associate in the Indianapolis office of Ogletree Deakins.