Defer No More: NLRB Overturns Longstanding Deferral Standards

Authored by David P. Frenzia

Dec 23, 2014

As the year comes to a close and full of union-friendly holiday spirit, the National Labor Relations Board (“Board”) has been issuing decisions by the dozen. On Dec. 15, 2014, a divided Board overturned decades-old precedent addressing the standards for deferral of certain unfair labor practice charges to the binding arbitration procedures contained in a parties’ collective bargaining agreement (“CBA”).

Given the potential overlap existing in many situations, it is not uncommon for employees or unions to not only file a grievance under the grievance and arbitration process outlined in a CBA, but also to file an unfair labor practice charge. Under longstanding precedent, once the arbitrator ruled in the case, the Board would defer to the arbitrator’s award where the contractual issue was “factually parallel” to the unfair labor practice issue, the arbitrator was presented generally with the facts relevant to resolving the unfair labor practice issue, and the arbitrator’s award was not “clearly repugnant” to the National Labor Relations Act. In most cases, the arbitrator’s award met this test and the unfair labor practice charge was dismissed or withdrawn.

In Babcock & Wilcox Construction Co., 361 NLRB No. 132 (2014), the Board overruled long-standing precedent and announced a new arbitration deferral standard that will inevitably result in duplicative litigation for employers. In addition to shifting the burden of proof to the party seeking deferral, the Board will defer only when all of the following conditions are met: (1) the arbitrator is explicitly authorized to decide the unfair labor practice issue, either because the specific statutory right at issue was incorporated into the parties’ CBA or the parties expressly authorized the arbitrator to decide the statutory right in the particular case before the arbitrator; (2) the arbitrator was presented with and considered the statutory issue, or was prevented from doing so by the party opposing deferral; and (3) existing Board law “reasonably permits” the award. Although the Board contends that an arbitrator need not reach the same result the Board would reach, the arbitrator’s award must still be that which a decision maker reasonably applying Board law could reach.

This new standard modifies not only post-arbitral deferral policies, but also pre-arbitral deferrals and settlement agreement reviews. The Board’s new standard will be applied prospectively. The decision will not apply to parties whose current CBAs lack language that authorizes an arbitrator to decide unfair labor practice issues until those agreements expire or the parties have agreed to present particular statutory issues to an arbitrator.

The new deferral standard incentivizes unions to file both an unfair labor practice charge and a grievance if the issue is cognizable in either forum. This strategy can, in effect, give unions “two bites” at the proverbial “apple.” In order to avoid litigating in two forums, an employer must now show that the arbitrator is explicitly authorized to decide the unfair labor practice issue and that any award issued by the arbitrator satisfies the Board’s new test for deferral. It is not inconceivable that an arbitrator could deny the grievance, siding with the employer, only to have the Board come to the opposite conclusion. As Member Miscimarra pointed out in his dissent, the new deferral standards “effectively guarantee that . . . arbitration will not be final and binding. The outcome will be more work for the Board, at the expense of speed, predictability, and certainty for the parties, and the virtual elimination of finality given the long litigation treadmill that is associated with the Board and court litigation of unfair labor practice claims.”

The Babcock & Wilcox decision is critically important to any employer engaged in, or about to engage in, negotiations for a new CBA. In order to reduce the risk of litigating the same issue in two forums, the employer must propose and obtain suitable language in bargaining. The attorneys are the Lowenbaum Partnership are available to assist you in this process.

If you have any questions about Labor Relations or any other Employment Law matter, please do not hesitate to contact David P. Frenzia, R. Michael Lowenbaum, Corey L. Franklin, D. Michael Linihan, Robert S. Seigel, Whitney P. Cooney, Jamie M. Westbrook, or Ashley A. Diaz.

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