NLRB Finds Employer Acted Lawfully By Paying Statutory Minimum Christmas Bonus, Rejecting Unilateral Change And CBA Modification Claims

• Published date: 21 January 2021
• Subject Matter: Employment and HR, Contract of Employment, Employee Rights/ Labour Relations
• Law Firm: Proskauer Rose LLP
• Author: Mr Mark Theodore, Joshua S. Fox and Heylee Bernstein

On January 14, 2021, the NLRB issued a decision in Asociacion de Empleados del Estado Libre Asociado de Puerto Rico, 370 NLRB No. 71. The decision involved the issue of whether a term of employment contained in a collective bargaining agreement continues after the expiration of the contract. This issue has been vexing for employers and unions for years.

The case centered around a Puerto Rico Law, Law No. 148, that requires certain employers to pay their employees Christmas bonuses of up to $600 annually between November 15 and December 15. The law does not apply, however, "in cases where the . employees receive an annual bonus by collective agreement."

The employer here was a Puerto Rican corporation subject to Law No. 148. The CBA at issue ran from July 2013 through June 2017. Like all of the parties' prior CBAs, the CBA provided for a Christmas bonus. The language at issue provided: "[The Respondent] will grant the Christmas Bonus as provided in [Law No. 148] with the following modification". The CBA then provided for bonus payments according to differing formulas in 2013, 2014, 2015, and 2016. For context, the 2016 modification provided for a bonus of 8.65% of an employee's salary up to a maximum of $40,000.

The issue arose when, in December 2017, during a period when no agreement was in effect, the union requested the employer pay Christmas bonuses according to the amount most recently provided for by the then-expired CBA. The employer refused, paying only $600, as required by Law No. 148. The next year, an extension agreement was in effect. The union made the same request, and the employer again refused, paying each employee a $600 bonus.

The NLRB considered the employer's 2017 actions (when the contract was expired) and 2018 actions (which occurred during an extension) separately. It considered whether, in December 2017, the employer's $600 bonus violated Section 8(a)(5) of the NLRA by unilaterally changing employees' terms and conditions of employment. The Board also considered whether, in December 2018, the Respondent's $600 bonus violated Section 8(a)(5) within the meaning of Section 8(d) by modifying the CBA. The Board answered both questions in the negative, finding the Respondent acted lawfully by paying $600 bonuses.

Unilateral Change Allegation

To address the unilateral change allegation, the NLRB relied on the CBA's plain language. The NLRB found the CBA's reference to the "Christmas Bonus as provided in [Law No. 148]" meant the statutory...