NLRB Limits Employers' Right To Make Unilateral Changes Based On Past Practice

• Published date: 13 September 2023
• Subject Matter: Employment and HR, Redundancy/Layoff, Employee Rights/ Labour Relations
• Law Firm: Littler Mendelson
• Author: Mr Adam-Paul Tuzzo, Jason Stanevich and Lauren E. DiGiovine

In two recent decisions the National Labor Relations Board overruled precedent that had allowed unionized employers to lawfully change terms and condition of employment if the changes were consistent with past practice or an expired management rights clause.

Contrary to Raytheon Network Centric Systems, 365 No. 161 (2017), the Board held in Wendt Corp., 372 NLRB No. 132 (2023) that employers may no longer lawfully make unilateral changes to terms and conditions of employment by showing that they are similar in "kind and degree" to changes the employer had a practice of making previously.In the same decision the Board also held that an employer may not defend an unfair labor practice charge alleging that a unilateral change violated Section 8(a)(5) of the National Labor Relations Act (NLRA) by citing a past practice of making such changes before the union was certified. In a separate decision, Tecnocap LLC, 372 NLRB No. 136 (2023), the Board held that discretionary changes made pursuant to the terms of an expired management rights clause are unlawful.

The Board Sways Over What it Considers a "Change" to Employment Conditions

Sixty years ago, the Supreme Court in NLRB v. Katz, 369 U.S. 736 (1962) held that an employer must refrain from making unilateral changes to employment conditions unless the union first receives notice and opportunity to bargain about the change. While Katz remains settled law, National Labor Relations Board continues to sway over what constitutes a "change" to employment conditions.

For decades following Katz, employers were allowed to rely upon practices arising under management rights clauses to continue making similar post-contract expiration changes to employment conditions without violating Section 8(a)(5) of the NLRA. The reasoning, sound in nature, was that making such decisions was a continuation of the status quo rather than a "change" in employment conditions.

In 2016, the Board in E.I. du Pont de Nemours, 364 NLRB 1648, 1648 (2016) upended decades of precedent by holding that "discretionary unilateral changes made pursuant to a past practice developed under an expired management rights clause are unlawful." The decision effectively erased practices that had been part of the parties' bargaining relationship, finding that nearly any discretionary action by the employer constitutes an illegal "change," even when nearly identical to actions the employer had been taking before the contract expired.

A year later, in Raytheon...