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On August 30, 2023, the National Labor Relations Board (NLRB) released two decisions that will make it more difficult for employers to implement past practices during a break in bargaining or at an impasse, opening the door for unions to hold employers hostage by dragging out collective bargaining.

Quick Hits

  • Management rights clauses that do not explicitly state they survive contract expiration will not survive contract expiration and cannot be relied upon by an employer to establish a past practice.
  • A past practice must be “regular and consistent,” meaning the past practice defense is limited to situations where the employer’s unilateral change is fixed by an established formula based on nondiscretionary standards and guidelines.
  • Employers desiring to take lawful unilateral action during contract negotiations must meet a heavy burden to show through detailed and data-driven history that they made the same changes consistently in the past.

In Wendt Corporation, the Board overruled a 2017 decision, Raytheon Network Centric Systems, which had established a commonsense understanding of past practice that enabled employers to implement past terms and conditions of employment without bargaining following the expiration of a collective bargaining agreement (CBA) or during negotiations for a union’s first contract, so long as the changes were similar in kind and degree to the changes made previously. The Board in Raytheon explained a modification that is a “regular and consistent past pattern of change is not a change in working conditions at all.”

In the second case, Tecnocap LLC, the Board overruled another part of Raytheon, and held an employer’s past practice developed under a collectively bargained management rights clause does not authorize an employer to continue that past practice following the expiration of the agreement.

Wendt Decision

In Wendt, the employer laid off ten employees temporarily during negotiations for a first CBA. To support its decision, the employer pointed to its “past practice” of layoffs during economic downturns. The NLRB analyzed Wendt’s prior layoffs and determined this layoff was “different in kind and degree” than previous layoffs, and thus not a “past practice.” In other words, the Board found the employer’s layoff was unlawful under Raytheon.

But rather than stop there, the Board overruled Raytheon, claiming it was inconsistent with the 1962 Supreme Court of the United States decision in National Labor Relations Board v. Katz. In that case, the Supreme Court held an employer violated its duty to bargain when it unilaterally imposed policies on matters that are mandatory subjects of bargaining (i.e., wages, hours, and other terms and conditions of employment) without first consulting with the union.

“[A]n employer may not defend a unilateral change in terms and condition of employment that would otherwise violate Section 8(a)(5) by citing a past practice of such changes before its employees were represented by a union and thus before the employer had a statutory duty to bargain with the union,” the Board stated. The Board majority also claimed prior precedent had not taken into account how unilateral action could harm the bargaining process.

The Board declared, “Permitting such expanded unilateral conduct encourages piecemeal, fragmented bargaining, which is disfavored under the NLRA, because it reduces flexibility in negotiations and narrows the range of possible compromises that characterize the give-and-take of meaningful overall bargaining for an agreement.”

Tecnocap Decision

The Tecnocap case involved an employer that unilaterally implemented twelve-hour and eleven-hour work shifts (eight-hour shifts were normal) while bargaining for a new CBA. The union opposed the change and the employer refused to bargain over it, claiming a past practice of similar shift adjustments. The employer did not provide evidence as to when production requirements necessitated a twelve-hour or eleven-hour work shift. The newly expired contract contained a management rights clause that provided the employer with discretion to run its business, but the clause did not say it survived contract expiration. The employer argued the schedule change was unavoidable and necessary to accommodate the workload and relied on the management rights clause as an explanation for its actions post-expiration.

The Board stated Raytheon contradicted Katz to the extent a past practice allowed unilateral conduct “involv[ing] substantial employer discretion.” Citing the Wendt case, the Board stated the “willingness to treat discretionary past practices as privileging unilateral action to be flawed policy that … warranted reversal of Raytheon.”

Next Steps

The NLRB has greatly restricted employers in their business operations while a contract is pending. These cases highlight the importance of offering the union the opportunity to bargain over business decisions unless the employer can provide detailed evidence of consistent—nearly annual or more—changes of the same nature. These decisions continue the Board’s recent trend of decisions favoring unions and limiting employer actions.

Ogletree Deakins’ Traditional Labor Relations Practice Group will continue to monitor developments and will provide updates on the Traditional Labor Relations blog.

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The attorneys in Ogletree Deakins’ Traditional Labor Practice Group have vast experience in complex and sophisticated traditional labor law matters. This includes experience advising and representing employers of all sizes and across virtually all industries in connection with union representation campaigns, collective bargaining negotiations, strike preparations, labor arbitrations, and National Labor Relations Board proceedings.

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