Appellate Court ‘Labors’ Over Collective Bargaining, Right to Work Rulings

Two recent cases addressed issues faced by employers with unionized workers – when an employer has to bargain with the union and a lengthy union security clause. Both cases have an interesting twist, so don’t tune out just because you do not have a union in your workplace.

In Ohio Edison Co v National Labor Relations Board (“NLRB”), the federal U.S. Court of Appeals for the Sixth Circuit (which hears appeals arising in Michigan, Ohio, Kentucky and Tennessee) refused to enforce an NLRB order, finding it was not supported by substantial evidence.

Apparently, back in the early 1970s, the employer had established an employee-recognition program that awarded gifts to employees when they reached the first and fifth year of employment. Right now my clients are all whispering to themselves (as I have trained them to say…) “no good deed goes unpunished.” Initially, the gifts were charm bracelets and tie tacks, but later employees were permitted to choose items such as clocks and fishing rods from a catalog with a value of up to $75 for a fifteen year anniversary. During the nearly 40 years this program existed, the union and employer never bargained over the benefit.

When stock prices fell in 2012, the company decided to implement several cost-cutting measures including reducing the cap for the 401(k) company match, lowering the retiree life insurance benefit, and implementing a cap on education reimbursement. And, you guessed it; the company announced that employees would only receive awards every 10 years, instead of every five, in the employee recognition program.

The Director of Labor Relations called 23 union locals, reading from a script, to inform them of the changes. When the president of Local 272, International Brotherhood of Electrical Workers, was informed of the changes he responded “Oh no you don’t!” and that now he would have to file a charge with the NLRB and pay a visit to the company’s headquarters in Akron.

The union filed an unfair labor practice six weeks later (without first going to Akron) claiming the company violated its duty to bargain in good faith with the union. For an undisclosed reason, the case became only about the service awards. The administrative law judge found that the statements by the union president amounted to a request to bargain and found that the service awards program was a mandatory subject of bargaining. A divided NLRB affirmed and sought enforcement of the award in the appellate court. The company filed a cross appeal.

The appellate court recognized that a request to bargain does not have to use any specific words or be in any specific form as long as an employer would clearly understand that a demand has been made. The union must do more than protest the proposed change – it must request bargaining. A protest only voices disapproval, whereas a request to bargain seeks “change by signaling a willingness to offer something in return.”

Considering all the circumstances, the appellate court found it clear that the union expressed its disapproval, but any request to bargain was, at best, ambiguous. Even the threat to come to Akron was no more than a protest, possibly a complaint to someone higher in the company. Given the insignificant amount of money at stake with the awards and the fact that the parties had never bargained over the program in nearly 40 years it is doubtful that the union’s statements clearly conveyed the desire to negotiate over the awards program in particular.

Finally, the filing of an unfair labor practice charge is not a substitute for a request to bargain. A charge is simply another protest. Therefore, the court declined to enforce the NLRB’s order. Think about the attorneys’ fees that could have been saved if the employer never initiated the awards program.

The second case was just approved for publication –a rare act these days by the Michigan Court of Appeals – so it is wise to pay attention.  At issue in Taylor School District and Taylor Federation of Teachers v Rhatigan, was a 10-year union security clause that would remain in effect until July 1, 2023, while the remainder of the collective bargaining agreement (“CBA”) would expire in 2017.

Why was the union security clause negotiated for a ten year term? Because Michigan law was amended in 2012 to give employees the right to refrain from joining or assisting unions or paying any dues to a union and making it unlawful for employers and unions to interfere with those rights (often referred to as right-to-work law, MCL 423.14 and MCL 423.209). The amendments became effective March 28, 2013.

So, recognizing that it would soon be an employee’s right to opt out of the union, the union pushed for a union security clause that would require all of the employees holding union positions to either join the union or pay a service fee “in an amount determined by the union” for the next 10 years! While agreeing that the union security clause and the collective bargaining agreement  did not have to be of the same duration, the Michigan Employment Relations Commission found the 10-year term excessive and unreasonable.  The union security clause would deprive employees of their rights and “nullify a state law for the next ten years.”

The appellate court agreed. It found that the school district caused the employees to suffer an adverse employment action in regards to their wages as a result of being forced to pay union dues. It also found the union to have violated its duty of fair representation by negotiating this term to sustain itself financially while, at nearly the same time, agreeing to a 10 percent reduction in wages and benefits of the teachers. So much for a union putting its members first!

While these two cases only involve employers having employees represented by unions, some of the rights granted under labor laws apply equally in non-union settings (for example “concerted activity” rights affect confidentiality and social media policies). Don’t assume that because you are union free you can totally ignore labor laws.  When a question arises concerning your workforce, contact an experienced employment/labor attorney. 

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