NLRB Again Throws Out Decades of Precedent and Recasts its Standards Regarding Deferral to the Arbitration Process

In recent weeks, we have commented on two recent moves by the National Labor Relations Board that have reversed long standing precedent and dramatically changed the labor law landscape: 1) a decision by the Board to open employer email systems to union organizing in some circumstances, and 2) a rewrite of its election procedures to allow “quickie” elections, effective April 14, 2015.

Now, the Board has issued yet another decision that changes long standing precedent. For over 30 years, the Board has deferred action on a labor practice charge where there was a pending grievance raising generally the same factual issues. The theory was that the employer and the union had agreed to arbitration concerning those facts under their collective bargaining agreement, and the Board favored letting the parties work the issues out through arbitration. The Board would only then pursue the related unfair labor practice charge if it thought the arbitration decision or arbitration settlement was “repugnant” to the National Labor Relations Act. The practical effect of this deferral approach was that an employer very rarely had to fight the battle on two separate fronts at the same time, and if the matter got resolved in arbitration, that was the end of it.

Now, in Babcock & Wilcox Construction Company, in yet another 3-2 vote divided on party lines, the Board has announced it will no longer follow its long-standing deferral approach. Instead, it announced new standards that will mean the Board will hold off investigating fewer unfair labor practice charges even while a grievance on the same general subject is pending, and it will ultimately defer to fewer arbitration settlements and arbitration awards (e.g., it has replaced the “repugnant” standard with a “reasonableness” standard).

Here is an example as to how this might play out. An employer fires an employee for insubordination. The union files a grievance. The employee files an unfair labor practice charge, claiming he was exercising his “protected speech” rights when he yelled at his supervisor. Under the Board’s new deferral approach, it likely will not hold off on its investigation of the ULP charge. If the arbitrator decides there was good cause for the termination without specifically addressing the “protected speech” issue, the Board likely will not defer to that award – instead it will likely reach its own conclusion on the merits of the unfair labor practice charge. And, even if the arbitrator specifically decides the employee did not engage in protected speech under the National Labor Relations Act, or that the protected speech did not play a role in the termination, the Board may still not defer to the arbitrator’s award if it thinks the award was not “reasonable.”

All of this is bad news for unionized employers. As a practical matter, employers will now often have to fight the battle on two fronts at the same time – in arbitration, and with the Board – as unions are likely to attempt to make maximum use of this advantage the Board has now given them. Employers are going to need to consider asking arbitrators to specifically decide issues under both the labor agreement and the National Labor Relations Act. And, they are going to need to specifically include waivers of NLRA issues in their grievance settlements.  And even then, they are going to have to hope that the Board does not overrule the parties and/or an arbitrator in a particular matter in order to impose its own brand of justice.