Unionized Employers: ‘Contract Coverage’ Just Changed Everything

What Is Different Now

With a new decision called MV Transportation, Inc., the National Labor Relations Board (NLRB) has adopted a new standard for judging one of the most common and powerful types of allegations unions make against employers: that the employer failed to bargain with the union before changing its policies or practices in ways that impacted employees. For decades, unionized employers have tried (and usually failed) to defend against these “unilateral change” allegations by showing that the union had “clearly and unmistakably” waived its right to bargain about the change. In practice, the standard for proving that defense was almost impossible to meet. But MV Transportation gives employers a new, much more viable defense. Now, if the employer can show that its most recent collective bargaining agreement with the union already “covered” the issue, the employer is not required to give the union another opportunity to bargain about the issue before it follows through with the change.

Likely Impacts of the Decision

The new decision has the potential to revolutionize the interactions between employers and the unions that represent their employees. Most obviously, unions have now lost the legal framework that gave them significant opportunities and leverage to influence – and, in many cases, prevent or even unwind – an employer’s changes to policies or practices.

But beyond that, this decision recalibrates the complex interests on both sides of the bargaining table. In the past, if an employer wanted to retain the flexibility to adjust its policies and practices, the employer had to convince the union to clearly and unmistakably waive the right to bargain over those changes. To do that, the employer had to anticipate every hypothetical change it might want to make and obtain detailed concessions from the union. Now, an employer can achieve the same result with more general language that covers the topic. A one-sentence clause reserving rights to the employer can provide significant flexibility down the road.

Unions, for their part, may now seek to avoid even mentioning certain subjects in the collective bargaining agreement. The potential result? Shorter agreements that reserve the union’s right to bargain about issues on which the agreement is silent. The lone dissenting NLRB member to this decision makes an even more dire prediction in the decision: that unions might avoid entering into collective bargaining agreements in the first place. If there has never been a contract, there can be no “contract coverage.”

It will take years to see how this new decision changes the dynamic among employers, unions and employees. But even at this early stage, unionized employers should readjust the way they evaluate potential changes to policies and practices. And any unionized employer developing a strategy for upcoming collective bargaining negotiations should take a close look at how the new decision changes the interests on both sides of the table.