NLRB Announces Stricter Standards for Deferring to Arbitration Awards
When aggrieved employees bring Unfair Labor Practice (“ULP”) charges before the the National Labor Relations Board (the “Board”), the allegations in a given charge may often duplicate grievances that have already been arbitrated, or could be arbitrated, under a collective bargaining agreement (“CBA”). In such circumstances, the Board will often decline to process a ULP charge and instead defer to the grievance and arbitration processes provided by an employer and union’s CBA. On December 15, 2014, the Board issued a much-anticipated ruling in Babcock & Wilcox Construction Co., Inc., narrowing the standards under which the Board will defer to an arbitration award issued under a collective bargaining agreement (“CBA”). More recently, on February 10, 2015, the Board’s Office of the General Counsel issued a memorandum providing additional guidance on how it will apply the Board’s decision. Babcock has important implications for both employers and unions who seek to ensure that arbitration decisions are binding and to prevent unsuccessful parties from re-litigating the same disputes before the Board. The Board’s decision also limits the circumstances in which it will defer to settlement agreements instead of processing a ULP, and those in which it will delay processing a ULP charge to first allow arbitration to take place and potentially resolve an employee’s complaint. It is important to note that Babcock only applies to ULP charges alleging violations of Sections 8(a)(1) and 8(a)(3) of the National Labor Relations Act (“NLRA”) (including, for example, charges alleging retaliation or discrimination based on an employee’s union affiliation or protected activities); the Board’s decision in Babcock does not apply to charges under Section 8(a)(5) of the NLRA (which generally allege an unlawful failure to bargain with the union). While Babcock will have significant implications for employers as they negotiate new CBAs, the decision only applies to a limited number of current CBAs. For most unionized employers, the decision raises a few, important preliminary questions:
Will the Board Still Defer to Arbitration Awards Instead of Processing a Duplicative ULP Charge?
Yes, but under more limited circumstances. Previously, the Board would generally defer to arbitration awards when the parties agreed to be bound by arbitration, arbitration procedures appeared to have been fair and regular, the issue presented at arbitration was factually parallel to the issue raised by the ULP charge, and the award was “not repugnant” to the NLRA. Following Babcock, the Board will continue to apply most of these prior criteria, but will also require: that the arbitrator be expressly authorized (either in the parties’ CBA or another agreement) to decide the statutory issue presented by the ULP; that the arbitrator be presented with and consider the statutory issue (or be prevented from doing so); and that Board law “reasonably permit” the arbitration award. Given the Board’s decision, many employers and unions will find it advantageous to craft CBA language to incorporate statutory rights provided by the NLRA and authorize arbitrators to decide such issues, potentially avoiding duplicative arbitrations and ULP charges. Further, participants in arbitration proceedings will need to ensure that potential statutory issues are adequately addressed at arbitration to prevent an unsuccessful party from re-litigating their claims before the Board.
How Can I Ensure that the Board will Delay Processing a ULP to Allow My CBA’s Arbitration Procedures to Take Place?
When negotiating a new CBA (and where appropriate based on an employer’s needs and circumstances), employers and unions should work with counsel to craft language incorporating the statutory rights provided by the NLRA and authorizing arbitrators to decide statutory claims. Before Babcock, the Board would routinely defer to the dispute resolution mechanism provided by a CBA and allow arbitration to take place when the violation alleged by a ULP was also covered by the applicable grievance procedure, and other criteria – including but not limited to the existence of a long and productive bargaining relationship, the employer’s willingness to arbitrate the dispute, and likelihood of an expeditious resolution – were also satisfied. In Babcock, the Board stated that it will generally continue to apply the preexisting standard, but will also only defer to grievance and arbitration procedures or decisions when the CBA or another agreement expressly authorizes arbitrators to decide the statutory issues raised by a ULP charge. Of course, there’s no way to guarantee that the Board will wait for arbitration procedures to take place prior to processing a ULP, and the Board’s response will generally depend on the precise allegations in a given charge.
If I Settle a Grievance or Dispute with a Union Before Arbitration, will the Board Still Defer to the Settlement Instead of Processing the ULP?
It depends. Under the modified standard announced in Babcock, to defer to a settlement agreement instead of processing a ULP charge, the Board must first determine that the parties intended to settle the statutory claims raised in a ULP Charge, that the settlement agreement addresses these claims, and that Board law “reasonably permits” the agreement. If the Board finds that any of these factors are absent, it will not defer to the settlement and instead process the ULP independently. As such, employers should be cognizant of the Board’s more onerous standard for deferral to settlement agreements when resolving grievances prior to arbitration. Other factors, such as the Board’s policy disfavoring confidentiality agreements, will continue to be important considerations for any employer seeking to resolve grievances through pre-arbitration settlement agreements.
Does the Board’s Decision Apply to my Current Collective Bargaining Agreement?
The Board is applying its decision in Babcock prospectively. As such, the answer to this question will turn on whether the CBA incorporates the statutory rights provided by the NLRA, and the date the agreement became effective. Generally, if the applicable CBA incorporates rights provided by the NLRA, any potential ULP charges will be subject to Babcock. If the CBA does not incorporate the statutory rights provided by the NLRA, a dispute will – in most circumstances – be subject to Babcock when: 1) the parties negotiate a new CBA (following the Board’s December 15, 2014 decision), or the CBA automatically renews; 2) the employer enters a valid agreement with a union to process statutory claims through the grievance and arbitration procedures; or 3) if the employer and union agree to process a specific statutory claim through the grievance and arbitration process on an ad hoc basis, then Babcock will be applied with respect to that claim. Of course, a more precise answer will always depend on the facts in a given case.
Although Babcock’s requirements are relatively straightforward, both unions and employers who seek to avoid litigating duplicative claims before the Board and at arbitration may want to reexamine their current grievance and arbitration agreements and practices in light of the decision and the recently-issued guidance. Employers are encouraged to consult with counsel in crafting new CBA language and pre-arbitration settlement agreements, and to develop arbitration strategies to ensure that the Board’s new deferral standards are satisfied.