NLRB General Counsel Issues Memorandum Addressing New Arbitral Deference Standard
The National Labor Relations Board’s General Counsel recently issued a memorandum providing guidance regarding the amount of deference the Board should afford arbitrations and settlements resolving unfair labor practice (ULP) allegations under sections 8(a)(1) and 8(a)(3) of the National Labor Relations Act (NLRA). These sections prohibit interference with employees’ rights to engage in protected concerted activities (8(a)(1)) and discrimination against employees for union affiliation (8(a)(3)). The General Counsel’s memorandum was issued to provide guidance in light of the NLRB’s recent decision in Babcock & Wilcox Constr. Co. — a decision that altered decades’ old law by giving the Board greater discretion (1) to initially decide these types of ULP allegations, which had previously been subject to arbitration in the first instance, and (2) to review arbitration decisions concerning such ULP charges. Companies that are negotiating collective bargaining agreements or have such agreements in place and that prefer to arbitrate ULP claims rather than litigate them before the NLRB, should carefully review the General’s Counsel’s memorandum—as should companies settling ULP allegations, as the memorandum deals with settlements as well.
Babcock & Wilcox
For decades, the Board typically placed ULP charges under 8(a)(1) and 8(a)(3) on deferral pending the outcome of arbitration and would defer to the arbitration decision where (1) the parties agreed to arbitrate the dispute, (2) the arbitral proceedings were “fair and regular,” (3) the contractual issue giving rise to the grievance was factually parallel to the alleged ULP, (4) the arbitrator generally received facts relevant to the alleged ULP, and (5) the arbitrator’s decision was not “clearly repugnant” to the NLRA. The burden of proof rested with the party challenging the arbitration.
Under the new standard announced in Babcock & Wilcox, the NLRB still will consider whether the parties agreed to be bound by the arbitration process and whether the proceedings were fair and regular, but it only will defer to the arbitration process and the arbitration decision where (1) the parties explicitly authorized the arbitrator to decide the alleged ULP at issue, (2) the arbitrator considered the alleged ULP (unless the party challenging arbitration prevented the arbitrator from doing so), and (3) Board law “reasonably permits” the arbitral award. The burden of proof rests with the party seeking deferral to the arbitration under the new standard.
The practical implication of Babcock & Wilcox is that the decision now gives the current union-friendly Board greater autonomy to pursue ULP charges and challenge arbitration decisions favorable to management.
General Counsel Memorandum
Below are key points from the General Counsel’s memorandum, which will guide the NLRB’s regional offices in handling of cases implicating Babcock & Wilcox.
- Absent the parties’ explicit authorization to have an arbitrator decide the alleged ULP, the Board can never defer to arbitration. Parties to a CBA can explicitly authorize an arbitrator to decide the alleged ULP by either (a) incorporating language into the agreement that specifically incorporates the statutory right implicated by the alleged ULP or (b) agreeing to arbitrate the statutory right in the particular case.
- For an arbitrator to have considered the alleged ULP, s/he must identify the alleged ULP and generally explain why the facts do or do not support the allegation, e.g., explain why s/he concluded that anti-union animus did or did not motivate the employer’s actions based upon the evidence. Additionally, even where the party challenging arbitration prevented the arbitrator from considering the alleged ULP (e.g., by withholding evidence), it can still void the arbitrator’s decision unless the decision is “reasonably permitted in light of the evidence that was before the arbitrator.”
- The award must be a reasonable application of NLRB law, and, in making this determination, the Board will give “some deference” to the arbitrator’s factual findings.
- Where the parties do not explicitly authorize the arbitrator to decide the ULP allegation and the parties executed the applicable agreement after December 15, 2014—the day the NLRB issued the decision in Babcock & Wilcox—the Board no longer will defer the ULP claim to arbitration as it previously did. For arbitration hearings occurring on or before December 15, the old standard applies. For grievances arising from CBAs executed (or automatically renewed) after December 15, the new standard applies. And, for arbitration hearings occurring after December 15 pursuant to grievances arising from CBAs executed on or before December 15, the old standard applies where the parties did/do not explicitly authorize the arbitrator to decide the alleged ULP, and the new standard applies where they did/do so authorize the arbitrator.
- The Board will apply the Babcock & Wilcox standard to settlements of certain unfair labor practice charges, that is, the NLRB will defer to the settlements where (1) the parties intended to settle the ULP allegation, (2) the parties address the ULP in the settlement agreement, and (3) Board law “reasonably permits” the settlement. In deciding whether NLRB law reasonably permits the settlement, the Board should consider whether (a) all parties agreed to the settlement, (b) the settlement is reasonable in light of the ULP charge, risks of litigation, and stage of the litigation, (c) the settlement is free from coercion, duress, and fraud, and (d) the accused has a history of ULPs or of breaching settlement agreements resolving ULP claims. For settlement agreements executed on or before December 15, the old standard applies. For grievances arising from CBAs executed (or automatically renewed) after December 15, the new standard applies. And, for settlement agreements executed after December 15 pursuant to grievances arising from CBAs executed on or before December 15, the old standard applies where the parties did/do not explicitly authorize the arbitrator to decide the alleged ULP, and the new standard applies where they did/do so authorize the arbitrator.
- The Board’s regional offices should submit cases raising questions about these points to the NLRB’s Division of Advice.
For answers to any questions regarding this blog or with regard to the General Counsel’s memorandum generally, please feel free to contact an attorney in the Gibbons Employment & Labor Law Department.