121 Lab.Cas. P 10,167
NATIONAL LABOR RELATIONS BOARD, Petitioner,
and
Nоrthern California Newspaper Guild, Local 52, The Newspaper
Guild, AFL-CIO, CLC, Intervenor,
v.
McCLATCHY NEWSPAPERS, INC. PUBLISHER OF THE SACRAMENTO BEE,
Respondent.
No. 90-1602.
United States Court of Appeals,
District of Columbia Circuit.
Argued Feb. 3, 1992.
Decided May 15, 1992.
As Amended June 17, 1992.
Rehearing and Rehearing En Banc
Denied July 23, 1992.
Linda Dreeben, Supervisory Atty., N.L.R.B., with whom Jerry M. Hunter, Gen. Counsel, and Aileen A. Armstrong, Deputy Associate Gen. Counsel, Washington, D.C., were on the brief, for petitioner.
Allen W. Teagle, with whom John Skonberg, San Francisco, Cal., was on the brief, for respondent.
James B. Coppess, with whom David Jonathan Cohen, Washington, D.C., and Marsha Berzon, San Francisco, Cal., were on the brief, for intervenor.
Before EDWARDS, SILBERMAN & HENDERSON, Circuit Judges.
Separate statements filed by Circuit Judge HARRY T. EDWARDS, Circuit Judge SILBERMAN and Circuit Judge KAREN LeCRAFT HENDERSON.
ORDER
PER CURIAM.
The National Labor Relations Board ("Board") petitions for enforcement of its decision in McClatchy Newspapers, Inc., 299 N.L.R.B. No. 156 (1990). A majority of the panel holds that the Board's justification for its finding that "the Respondent's failure to bargain with the Union about the timing and amount of merit increases constitutes a violation of Section 8(a)(5) and (1) of the [National Labor Relations] Act," id. at 7, does not constitute reasoned decisionmaking under past Board and court interpretations of the Act. Judge Silberman believes that the Board's explanation is inadequate under those precedents. We therefore deny the petition for enforcement. Judge Edwards and Judge Silberman agree that the case must be remanded to the Board for further consideration.
Set out below are statements of Judge Edwards and Judge Silberman, who separately concur in this order. Also set out below is a statement of Judge Henderson, who concurs in the denial of the petition for enforcement but dissents from the decision to remand the case to the Board.
So Ordered.
HARRY T. EDWARDS, Circuit Judge:
The National Labor Relations Board ("NLRB" or "Board") petitions for enforcement of an order finding that McClatchy Newspapers, Inc. ("Newspaper" or the "employer") violated sections 8(a)(1) and (5) of the National Labor Relations Act ("NLRA" or the "Act"), 29 U.S.C. § 158(a)(1), (5) (1988). In negotiations with the union representing a unit of its employees, McClatchy proposed a merit pay system that was designed to give the employer virtually complete, unilateral control of all employee salaries. Employer and union representatives bargained in good faith to impasse over the proposal; following impasse, the Newspaper implemented the proposal and awarded merit pay increases to selected employees. The Board found this to be a violation of the duty to bargain over individual wages.
The precise issue to be resolved in this case is whether, after bargaining in good faith to impasse, an employer may unilaterally implement a merit pay proposal and, pursuant thereto, change individual employees' wage rates without further notice to or bargaining with the union. While seemingly narrow in scope, this is a deceptively difficult question, reaching to the heart of labor law. And, although this particular question only recently has been raised, it occupies a space between several well-established doctrines of labor law. First, proposals covering wages (including systems of merit pay) are mandatory subjects of bargaining, with respect to which the parties must bargain in good faith in an effort to reach agreement. Second, even when a party is guilty of bad-faith bargaining, the Board may not compel either side to accede to a particular proposal. Third, following good-faith negotiations, the impasse rule applies and a party generally may take unilateral action with respect to a mandatory subject of bargaining over which impasse has been reached. Fourth, the Supreme Court has held that unilateral action may not be taken with respect to nonmandatory subjects of bargaining; furthermore, the Court has ruled that there are certain limited, categorical exceptions (covering the statutory right to strike, extension of arbitration beyond the term of an agreement, union security, and withdrawal from multiemployer bargaining) which are beyond the scope of the impasse rule.
In this case, the Board ignored the impasse rule; but, in finding the employer guilty of a refusal to bargain, the Board neither claimed to rely on any explicit statutorily-protected right, nor did it purport to hold that merit pay warranted status as a categorical exception to the impаsse rule. Rather, the Board, in a wholly unconvincing opinion, rested on a badly misguided theory of "waiver," holding that the Newspaper was guilty of an unfair labor practice because it had acted without securing a necessary waiver of the union's right to bargain with regard to each individual employee's merit increase.
On the present record, I agree that we cannot enforce the Board's order. The result reached by the Board is arguably defensible; but it rests on a completely inadequate theory and fails to recognize the settled legal doctrines which bound this case.
BACKGROUND
The essential facts in this case are undisputed and can be found in the NLRB's decision below, McClatchy Newspapers, Inc., 299 N.L.R.B. No. 156 (1990), reprinted in Joint Appendix ("J.A.") 311. The following brief summary is offered merely to put the case in focus.
McClatchy Newspapers, Inc. is the publisher of the Sacramento Bee, the largest daily and Sunday paper in Sacramento, California. Northern California Newspaper Guild, Local 52 (the "Guild"), represents several hundred editorial, advertising and telephone switchboard employees at the Bee. The parties have had a collective bargaining relationship for nearly 50 years, McClatchy Newspapers, CA No. 21429, at 2 (ALJ decision), J.A. 324 ("ALJ Decision "), and their most recent collective bargaining agreement, in effect from April 14, 1984, to April 13, 1986, provided for minimum salaries and step increases for each of several job classifications. The agreement also included a merit pay system for employees who had reached the top step of their classification and had worked at the Bee for more than one year. Although the Guild had the right to comment on the merit review and appeals process, the Newspaper retained ultimate discretion over the timing and amount of individual merit pay increases.1 Additionally, while an employee could request union representation in an appeal over a merit pay decision, the Newspaper's judgments on merit increases were not subject to the collective bargaining agreement's grievanсe and arbitration provisions.
On February 13, 1986, two months before the extant collective bargaining agreement was to expire, the parties began negotiations with an eye toward a new contract. The initial wage proposals were diametrically opposed: the Guild requested a 25% wage increase, elimination of the merit pay system, and integration of cost-of-living adjustments into the step structure; the Newspaper proposed eliminating the guaranteed minimums and the step structure and sought to use merit increases exclusively, without notice to or participation by the Guild.
The parties quickly agreed that they should begin with noneconomic issues and return to economic issues later. After approximately 20 meetings, on November 11, 1986, the parties again took up the wage proposals. The Newspaper and Guild positions remained far apart, and in December the parties invited a federal mediator to participate in the stalemated negotiations. The parties continued to bargain in good faith in the presence of the mediator in January and February, but no agreement could be reached. At the February meeting, the Newspaper made a "last, best and final offer" that would have set guaranteed minimum wages at the current levels and would have "grandfathered" existing employees at the top step of the old wage structure. The Guild previously had rejected this proposal because only 10% of unit employees would be guaranteed salary increases, leaving substantially all salary adjustments within the employer's merit pay plan. As under the old merit pay program, the Guild would not have the right to comment on individual employees before their merit reviews were completed. Employees also could not grieve or arbitrate disagreements with the Newspaper's judgments on merit increases.
The union rejected the proposal and recommended to its membership that it vote against the Newspaper's offer. The membership did so. At the parties' last meeting on March 5, 1987, the Guild "made counterproposals, including a return tо the combined negotiated wage and merit arrangement in the expired contract." McClatchy Newspapers, 299 N.L.R.B. No. 156, at 3, J.A. 313. The Newspaper countered with a proposal concerning unit exclusions. The parties reached a deadlock and negotiations were terminated. The next day, the Newspaper posted its merit plan and other terms and conditions consistent with its final offer. "Subsequently, the [Newspaper] granted merit pay increases to some unit employees without prior discussion with the Union." Id.
After individual merit increases were implemented without union consent, the Guild filed an unfair labor practice charge with the NLRB. The charge initially was dismissed, but the NLRB's National Appeals Office ordered it reinstated. Thereafter, an Administrative Law Judge found for the Guild and the Newspaper appealed to the Board. The Board also found for the Guild, but on substantially different grounds than the ALJ. The Board first concluded that the Newspaper, despite bargaining hard for discretion over wages, was not guilty of bad-faith negotiations. "[T]he evidence in this case is most consistent with the finding that the parties had engaged in in-depth, good-faith negotiations, and shared a contemporaneous understanding that they had reached an impasse in bargaining on the crucial issue of negotiated wages versus merit pay." Id. at 4, J.A. 314. The Board also held that "merit pay is a mandatory bargaining subject on which a party may lawfully insist to impasse." Id. at 5, J.A. 315.
Relying on its decision in Colorado-Ute Electric Association, 295 N.L.R.B. No. 67 (1989), enforcement denied,
Courts of appeals review the Board's factual determinations for "substantial evidence." N.L.R.A. § 10(e), 29 U.S.C. § 160(e) (1988). Our review of the Board's judgment on questions of law is also well established:
Of course, the judgment of the Board is subject to judicial review; but if its construction of the statute is reasonably defensible, it should not be rejected merely because the courts might prefer another view of the statute. NLRB v. Iron Workers,
Ford Motor Co. v. NLRB,
On these facts, and with this standard of review in mind, I now turn to the issues presented.
ANALYSIS
I. Introduction
Because this case potentially implicates fundamental issues of labor law, and because it occupies a place between major labor doctrines, I believe the issues should be addressed comprehensively. I also do so because the Board's decision is totally lacking in its consideration of settled law. While this law arguably does not command a result opposite the Board's, it strongly implies one, and the Board has not yet adequately justified its reasoning.
Under the NLRA, the parties to a recognized or certified bargaining relationship have a duty to bargain over "mandatory" subjects--those aspects of the employment relationship falling within the statutory phrase "wages, hours, and terms and conditions of employment." In addition to mandatory subjects, the parties may mutually agree to bargain over and reach agreement on "permissive subjects," i.e., those matters which, although not within the compass of wages, hours or conditions of employment, are lawful subjects of bargaining. Merit pay proposals have long been considered mandatory subjects of bargaining, as indeed a plain reading of the term "wages" would indicate.
With regard to mandatory subjects, a union and an employer have a duty to bargain in good faith. Employers may not make unilateral changes in mandatory subjects of bargaining until they have satisfied their duty to negotiate. Nonetheless, because neither side is bound to reach an agreement, and the statutory scheme assumes that economic weapons will at times be used by both sides, the parties may bargain to impasse over mandatory subjects--including proposals that seek to win unilateral discretion for one side over a mandatory subject. Generally, once the parties reach a good-faith impasse, the duty to bargain is at least temporarily suspended, and the parties, typically the employer, may enact any change in a mandatory subject reasonably contained within its final proposal.
Here, the Board, despite the foregoing, held that McClatchy violated its duty to bargain when it unilaterally granted merit increases to some employees after reaching a good-faith impasse over a discretionary merit pay proposal. In so finding, the Board followed its decision in Colorado-Ute Electric Association, 295 N.L.R.B. No. 67 (1989), which the Tenth Circuit recently declined to enforce, Colorado-Ute Elec. Ass'n v. NLRB,
The articulated waiver rationale fails to justify the Board's result. Generally, the "waiver" cases to which the Board alludes address a substantially different facet of the employer/union relationship than the one here at issue; they most often arise during the pendency of a collective bargaining agreement and focus on whether a union has given its assent (or waived objections) to unilateral employer action. In these so-called "waiver" cases, the employer typically acts on a claim of contractual authority, or pursuant to asserted reserved rights, under the parties' existing collective bargaining agreement; thus, in such cases, the employer usually does not bargain before taking the specific action. By contrast, the Board here found that McClatchy bargained in good faith with the union over the merit pay proposal and that the parties had reached impasse. Furthermore, suggestions in the "waiver" cases that the employer may never take unilateral action without the union's consent do not apply here; that result derives from the effect of "zipper clauses" found within collective bargaining agreements. These clauses integrate all mandatory subjects of bargaining into the agreement and, when they are present, neither side can take unilateral action on a mandatory subject absent express or implied authority under the agreement, and neither side can force bargaining over any topic.
The Board's decision as presently justified is neither rational nor consistent with the Act. Nonetheless, I agree that we must remand this case for further proceedings because the Board might be able to justify the result reached in this case pursuant to an alternative legal and theoretical framework, i.e., a framework that admits of coherent treatment of established legal doctrine or that legitimately explains a departure therefrom.
For example, the Board might be able to classify the unilateral merit pay proposal here--where the employer retains the exclusive right to bargain with individual employees--as a permissive subject of bargaining. Or, the Board might follow up on its counsel's suggestion that, somehow, "merit pay is different," thus justifying treatment (like arbitration) as a categorical exception to the impasse rule. Or, the Board might attempt to justify a new category of subjects placed somewhere between "mandatory" and "permissive." The category might include those proposals by which one side seeks unfettered unilateral discretion over a mandatory subject of bargaining. The parties would be permitted to go to impasse over the proposal but would not be permitted to implement case-specific examples of the discretionary policy without at least prior notice to the other side.
It is unclear whether the Board will be able to justify the result in this case on any of the foregoing theories (or on any other theories not mentioned). As the Tenth Circuit noted in denying enforcement in Colorado-Ute, there is good reason to be skeptical of the Board's decisions in these cases: the Board's so-called waiver theory is a farcical misapplication of the law, and the Board thus far has failed to sort certain long-standing and heretofore predominant labor law doctrines that run counter to its position. Nonetheless, the Board's position is not unfathomable; to date, it is merely unjustified and only arguably unjustifiable. Therefore, it is appropriate that we withhold final judgment until after the Board has taken the opportunity to explore whether it can find a coherent niche within the fabric of established labor law for the result here urged. In this opinion, my mission will be to highlight the numerous analytical problems that will face the Board on remand.
II. The Duty To Bargain and the Right To Implement upon Impasse
Section 8(a)(5) of the NLRA makes it an unfair labor practice for an employer "to refuse to bargain collectively with the representatives of his employees." 29 U.S.C. § 158(a)(5) (1988). Section 8(d) defines collective bargaining as
the performance of the mutual obligation of the employer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment, or the negotiation of an agreement, or any question arising thereunder, and the execution of a written contract incorporating such agreement reached if requested by either party, but such obligation does not compel either party to agree to a proposal or require the making of a concession.
29 U.S.C. § 158(d) (1988).2
A. Mandatory Subjects of Bargaining
As evidenced by the plain language of section 8(d), the duty to bargain arises with regard to "wages, hours, and other terms and conditions of employment." "The duty is limited to those subjects, and within that area neither party is legally obligated to yield. As to other matters, however, each party is free to bargain or not to bargain, and to agree or not to agree." NLRB v. Wooster Div. of Borg-Warner Corp.,
1. Mandatory Subjects in General and the Concern Over Direct Dealing.
Mandatory subjects generally are those which "regulate[ ] the labor relations between the employer and the employees." Borg-Warner,
At the outset, it should be noted that a mandatory subject of bargaining does not lose status as such if one party seeks to gain complete control over the subject pursuant to collective bargaining. Thus, it is now well settled that proposals by which one side would retain discretion over a mandatory subject are also mandаtory subjects. In NLRB v. American Nat'l Ins. Co.,
Whether a contract should contain a clause fixing standards for such matters as work scheduling or should provide for more flexible treatment is an issue for determination across the bargaining table, not by the Board.... Accordingly, we reject the Board's holding that bargaining for the management functions clause proposed by respondent was, per se, an unfair labor practice.
Id. at 409,
This of course suggests that if merit pay is a mandatory subject of bargaining, then an employer may through collective bargaining attempt to gain discretionary control over its implementation. The issue raised in this case thus seems easy until one considers certain arguably countervailing legal doctrines under the NLRA.
A problem arises when an employer's proposal seems, on its face, to address "wages, hours, [or] other terms and conditions of employment," but the proposal includes direct dealing between the employer and individual employees or it otherwise seeks to evade lawfully prescribed arrangements in a recognized or certified bargaining relationship. In such situations, the proposal may constitute only a permissive subject. For example, in Borg-Warner, the employer insisted to impasse over proposals that would have required a secret employee vote on the employer's bargaining offer prior to a strike and that would have recognized an uncertified local affiliate as the employees' exclusive representative, instead of the International Union which the Board had certified. The Court found both to be permissive subjects: the first "enable[d] the employer, in effect, to deal with its employees rather than with their statutory representative,"
Recent cases echo these two concerns. Toledo Typographical Union No. 63 v. NLRB,
Direct dealing between the employer and its employees cuts to the heart of collective bargaining and substantially weakens the union's role as collective representative of the workers. "The collective bargaining system as encouraged by Congress and administered by the NLRB of necessity subordinates the interests of an individual employee to the collective interests of all employees in a bargaining unit." Vaca v. Sipes,
[Individual contracts] are a fruitful way of interfering with organization and choice of representatives; increased compensation, if individually deserved, is often earned at the cost of breaking down some other standard thought to be for the welfare of the group, and always creates the suspicion of being paid at the long range expense of the group as a whole. Such discriminations not infrequently amount to unfair labor practices. The workman is free, if he values his own bargaining position more than that of the group, to vote against representation; but the majority rules, and if it collectivizes the employmеnt bargain, individual advantages or favors will generally in practice go in as a contribution to the collective result.
Id. at 338-39,
Evading the union's representative role--the second Borg-Warner concern--is illustrated by the courts' recurring attempts to distinguish between proposals "concern[ing] a change in work jurisdiction or a change in the scope of the bargaining unit." Local 666, Int'l Alliance of Theatrical Stage Employees v. NLRB,
Thus, in light of the foregoing case law, it might be argued that the American National Insurance and Borg-Warner lines of authority are somewhat in tension, at least with respect to the proper treatment to be accorded a merit pay proposal of the sort here in issue. Nonetheless, at least to date, there has been little confusion in the case law over the definition of merit pay as a mandatory subject of bargaining.
2. Merit Pay is a Mandatory Subject of Bargaining
As the parties here concede, the Board and the courts long have held that "the obligation of the employer to bargain collectively with representatives of its employees with respect to wages, hours and working conditions, includes the duty to bargain with such representatives concerning individual merit wage increases." NLRB v. J.H. Allison & Co.,
Additionally, it is largely undisputed that proposals for employer discretion over merit pay are mandatory subjects. In Cincinnati Newspaper Guild, Local 9 v. NLRB,
Although the [employer] certainly sought a greater role for itself, and a lesser role for the Union, with respect to employee compensation and the resolution of day-to-day disputes, the Employer did not propose to strip the Union of its collective bargaining function. The [employer] was willing to negotiate with the Guild on the content of the merit pay plan, and to let the Guild represent any employee who wanted to challenge his proposed wage increase through the grievance procedure. These concessions would have preserved the Guild's role as the collective bargaining agent of its members, which is what distinguishes this case from Toledo Blade.
Id. at 290; see also Struthers Wells Corp. v. NLRB,
The merit pay proposal here shares many of the same features of the Cincinnati Newspaper Guild proposal. Although McClatchy was not constrained in its discretion to grant or deny merit pay, it "agree[d] to consider the Guild's comments, suggestions and recommendations about the merit evaluation and appeal processes." Posted Conditions of Employment, § 5.0(c), J.A. 287. Additionally, McClatchy agreed that "[i]f the employee requests, the Guild may participate with the employee in the appeal process." Id. § 5.0(e), J.A. 287. McClatchy's proposal thus was a mandatory subject of bargaining, and the Board does not suggest otherwise in its decision in this case.
B. The Duty To Bargain in Good Faith
Because merit pay is a mandatory subject of bargaining, the parties were required to meet and in good faith try to reach an agreement. Neither side could take unilateral action with respect to the subject while bargaining continued. The employer and union were under no obligation to reach an agreement, however, and the Board was powerless to compel one.
1. Bargaining "in Good Faith" and the Unilateral Change Doctrine
"[P]erformance of the duty to bargain requires more than a willingness to enter upon a sterile discussion of union-management differences.... [Rather], an employer [must] 'negotiate in good faith with his employees' representative; to match their proposals, if unacceptable, with counter-proposals; and to make every reasonable effort to reach an agreement.' " NLRB v. American Nat'l Ins. Co.,
Generally, an employer commits a violation of the duty to bargain in good faith when it makes a unilateral change in a mandatory subject of bargaining during the course (or in the absence) of negotiations. Thus, where the employer granted merit pay increases during the course of negotiations, the Supreme Court held "that an employer's unilateral change in conditions of employment under negotiation is ... a violation of § 8(a)(5), for it is a circumvention of the duty to negotiate which frustrates the objectives of § 8(a)(5) much as does a flat refusal." NLRB v. Katz,
A unilateral change not only violates the plain requirement that the parties bargain over "wages, hours, and other terms and conditions," but also injures the process of collective bargaining itself. "Such unilateral action minimizes the influence of organized bargaining. It interferes with the right of self-organization by emphasizing to the employees that there is no necessity for a collective bargaining agent." May Dep't Stores Co. v. NLRB,
When taken during negotiations or upon subjects on which the union wishes to bargain it weakens the union by showing the employees that it is useless to try to negotiate. If the employer unilaterally raises wages or makes some other concession, his conduct effectively tells the employees that without collective bargaining they can secure advantages as great as, or possibly greater than, those the union can secure.
Cox, supra, at 1423. The unilateral change doctrine is thus applicable whether or not there is other evidence of bad faith bargaining.
Unilateral action by an employer without prior discussion with the union does amount to a refusal to negotiate about the affected conditions of employment under negotiation, and must of necessity obstruct bargaining, contrary to the congressional policy. It will often disclose an unwillingness to agree with the union. It will rarely be justified by any reason of substance. It follows that the Board may hold such unilateral action to be an unfair labor practice in violation of § 8(a)(5), without also finding the employer guilty of over-all subjective bad faith.
Katz,
The unilateral change doctrine is the basis for the related "past practices doctrine." Under the past practices rule, an employer and union who are bargaining without a collective bargaining agreement in effect generally must maintain the status quo with regard to mandatory subjects of bargaining. However, where the employer has had unilateral discretion over a mandatory subject, the employer cannot continue to exercise that discretion without prior notice to the union. For example, an employer may not continue granting discretionary merit pay raises, even if the review process has become customary and itself must be continued.An employer with a past history of a merit increase program neither may discontinue that program ... nor may he any longer continue to unilaterally exercise his discretion with respect to such increases, once an exclusive bargaining agent is selected. What is required is a maintenance of preexisting practices, i.e., the general outline of the program, however the implementation of that program (to the extent that discretion has existed in determining the amounts or timing of the increases), becomes a matter as to which the bargaining agent is entitled to be consulted.
Oneita Knitting Mills,
2. The Limit on the Duty To Bargain: Parties are not
Required To Agree
As section 8(d) plainly states, the duty to bargain "does not compel either party to agree to a proposal or require the making of a concession." 29 U.S.C. § 158(d) (1988). Congress added this language to the NLRA by the Taft-Hartley Act in "an attempt ... to prevent the Board from controlling the settling of the terms of collective bargaining agreements." NLRB v. Insurance Agents' Int'l Union,
The NLRA was designed only to encourage meaningful discussion between employers and employee representatives. "The basic theme of the Act was that through collective bargaining the passions, arguments, and struggles of prior years would be channeled into constructive, open discussions leading, it was hoped, to mutual agreement." H.K. Porter Co. v. NLRB,
In H.K. Porter Co., the Board found that the employer bargained in bad faith and it ordered, as relief, that the company agree to a union dues check-off proposal, which was one of the major contentions between the parties. The Supreme Court found that, even though there was no apparent good reason for the employer's rejection of the dues check-off proposal, the Board's attempted exercise of remedial authority fell outside the Board's powers under the Act.
[T]he Act ... does not contemplate that unions will always be secure and able to achieve agreement even when their economic position is weak, or that strikes and lockouts will never result from a bargaining impasse. It cannot be said that the Act forbids an employer or a union to rely ultimately on its economic strength to try to secure what it cannot obtain through bargaining.
It is this balance between the duty to bargain and the power not to agree that caused the Court in American National Insurance Co. to conclude, as noted above, that proposals to retain discretion over mandatory subjects are themselves mandatory subjects. See
C. The Impasse Doctrine
Because the NLRA compels negotiation, but not agreement, the parties occasionally will reach an impasse in negotiations. Typically, when a good-faith impasse is reached, the duty to bargain further is temporarily satisfied and suspended, and either side is free to make unilateral changes in mandatory subjects that are reasonably comprehended within their proposals at the bargaining table. A party may insist to impasse on any mandatory subject, including proposals to retain discretion over a mandatory subject. Therefore, under established labor law, McClatchy would have the right to insist to impasse on its merit pay proposal and to implement it after reaching an impasse in good faith.
This court has defined impasse as "the deadlock reached by bargaining parties 'after good-faith negotiations have exhausted the prospects of concluding an agreement.' " Teamsters Local Union No. 175 v. NLRB,
Whether a bargaining impasse exists is a matter of judgment. The bargaining history, the good faith of the parties in negotiations, the length of the negotiations, the importance of the issue or issues as to which there is disagreement, the contemporaneous understanding of the parties as to the state of the negotiations are all relevant factors to be considered in deciding whether an impasse in bargaining existed.
A good-faith impasse in negotiations temporarily suspends the duty to bargain. The parties, however, are not permanently relieved of the duty to deal with each other. In Charles D. Bonanno Linen Service, Inc. v. NLRB,
Id. at 412; see also Hi-Way Billboards, Inc.,
As indicated above, see note 4 supra, the unilateral change doctrine generally applies only to changes made before fulfilling the duty to bargain--in other words, before the parties bargain to impasse. "[A]n employer commits an unfair labor practice if, without bargaining to impasse, it effects a unilateral change in an existing term or condition of employment." Litton Fin. Printing Div. v. NLRB, --- U.S. ----,
Thus, an employer may unilaterally implement its proposals upon impasse in negotiations. "After bargaining to impasse, that is, after good-faith negotiations have exhausted the prospects of concluding an agreement, an employer does not violate the Act by making unilateral changes that are reasonably comprehended within his pre-impasse proposals." American Fed'n of Television & Radio Artists v. NLRB,
Although these doctrines do not conclusively hold that an employer may insist to impasse over a discretionary wage proposal, the foregoing strongly suggests that McClatchy would have the right to implement its merit pay proposal upon impasse. Merit pay is a mandatory subject of bargaining. Employers may insist to impasse over mandatory subjects, even over those proposals which would garner them discretion over mandatory subjects. "[A]n employer's adamant insistence on promanagement terms does not alone demonstrate bad faith, and ... neither side is required to agree to a proposal or make concessions." NLRB v. Cauthorne,
III. The Board's Limit on McClatchy's Ability To Implement its Merit Pay Program
In its opinion, the Board suggested two possible rationales for departing from the established analytical framework and holding that McClatchy violated section 8(a)(5). Neither supports the Board's result. First, the Board suggested that the individual merit pay increases granted by McClatchy were not "encompassed" within its bargaining proposal. But it makes no sense to say that an employer does not act within a proposal that would allow it unilaterally to determine each employee's merit raise when it unilaterally grants such a raise to a single employee. Second, the Board held that McClatchy sought a de facto "waiver" of the union's right to bargain over employees' wages and, failing to secure one, unjustly acted in derogation of that right. The waiver cases, however, are clearly inapposite where, as here, no collective bargaining agreement is currently in effect, the employer makes a permissible proposal on a mandatory subject and the parties bargain to impasse over that proposal.
A. Are Individual Wage Raises Comprehended Within a General, Discretionary Proposal?
The Board reasoned that McClatchy's proposal gave the Union nо opportunity to bargain over the mandatory subjects of timing and individual amounts of merit pay. "[McClatchy's proposal] set no criteria for the amounts or timing of merit increases, and failed to provide for union participation either in the initial determination of merit increases granted to particular employees or afterwards through the contractual grievance procedure." McClatchy Newspapers, 299 N.L.R.B. No. 156, at 6, J.A. 316; see also id. at 7, J.A. 317 ("the Respondent had a lawful right after impasse unilaterally to consider employees for merit increases; however, as announced in Colorado-Ute, ..., it still had a duty to bargain with the Union about the timing and amounts of the merit increases prior to granting any such increases").
The Board's reasoning is far from persuasive. First, as the Tenth Circuit said, "Precedent does not support the Board's position that the Union's right to bargain can be vindicated only by discussing the economic terms of particular merit increases, rather than a general proposal that the employer be permitted to exercise discretion with respect to merit wage programs." Colorado-Ute,
Second, the Board cannot plausibly contend that an individual's merit raise is not comprehended within the employer's proposal to have discretion over all employees' raises. "A company that has so exhausted bargaining that it may make a unilateral change is not to be put under a universal requirement of a duty to bargain about timing or other specific aspects of a change that is within the ambit of proposals already made and rejected." American Fed'n of Television & Radio Artists,
B. The Board's "Waiver" Theory
The Board also contends that permitting the employer to enact its merit pay proposal works a de facto "waiver" of the union's right to bargain over merit pay.The Union did not agree to the Respondent's merit pay proposal and, in fact, expressed its opposition to it for the very reason that it would completely exclude the Union's participation in determining merit pay increases. The Respondent was unable during negotiations to secure the Union's waiver of its right to bargain over the timing and amounts of merit pay increases. Nor does the parties' bargaining history establish a waiver. Consequently, the Respondent was free to insist to impasse that the Union agree to waive its statutory rights, but was not privileged to proceed with implementation after impasse as though it had successfully secured the Union's waiver.
299 N.L.R.B. No. 156, at 6-7, J.A. 316-17 (footnote omitted); see also id. at 6, J.A. 316 ("Thus [according to the Board], the proposal, by providing for unlimited management discretion over the determination of timing and amounts of merit increases, was in reality seeking the Union's waiver of its statutory right to be consulted over those matters under Section 8(a)(5) and (1) of the Act.").6
Established waiver doctrine, however, is directed to a substantially different problem. In waiver cases, the employer takes some unilateral action with respect to a mandatory subject and claims that the union had already agreed to the employer's right to take that action. For example, in the leading waiver case, Metropolitan Edison Co. v. NLRB,
The factual circumstances of this case could not be more different. Here, McClatchy offered the Guild the opportunity to bargain over its wage plan, and the Board found that the parties negotiated in good faith to impasse over the proposal. The Newspaper does not claim that the union agreed to waive its right to negotiate over the merit pay proposal or over individual merit pay raises. Rather, the Newspaper claims that, by negotiating to impasse, it satisfied its duty to bargain and therefore could proceed with its proposal under the impasse rule.
The Board, however, asserts that the waiver cases establish that "[i]n the absence of such a waiver, the employer's obligation--as in other situations involving statutory rights--is to comply with the statute." Brief of the NLRB at 25-26. In the Colorado-Ute decision, the Board directly states that a bargaining impasse is "no substitute for consent"--the employer cannot take the action unless the union agrees. See 295 N.L.R.B. No. 67, at 8. But the Board is comparing apples and oranges. In none of the cases the Board cites did the employer attempt to bargain about the change before enacting it. See NLRB v. Challenge-Cook Bros.,
Thus, the words from some of the "waiver" cases, saying that union consent is necessary before the employer may take action, are irrelevant in cases that implicate the impasse rule. For example, where the parties have a presently effective, integrated collective bargaining agreement that includes a "zipper" clause, the parties may take only those actions specifically detailed in the collective bargaining agreement. "During the term of a contract ... the scope of the duty to bargain over a particular mandatory subject depends upon whether that subject is 'contained in' the contract." International Union, UAW v. NLRB,
Thus, it is well understood that section 8(d) prohibits an employer from altering contractual terms concerning mandatory subjects of bargaining during the life of a collective bargaining agreement without the consent of the union.
A mandatory subject of bargaining may be brought into the "contained in" category, and therefore within the provisions of section 8(d), either through explicit reference, such as a wage provision, or through a general waiver of the duty to bargain, such as a zipper clause. Generally speaking, a zipper clause has the effect of incorporating all possible topics of bargaining--both those actually discussed and those neither discussed nor contemplated during bargaining--into the contract. As a result, with the inclusion of a zipper clause, section 8(d)'s "contained in" requirements are brought into play with regard to all mandatory subjects of bargaining; neither party may require the other to bargain over any mandatory subject, nor unilaterally implement a change in the status quo concerning a mandatory subject, even after bargaining to impasse.
Id. at 180 (footnotes omitted). Thus, consent is necessary only because section 8(d) prevents any nonconsensual changes in mandatory subjects "contained in" the contract and the zipper clause integrates all mandatory subjects into the contract.
Similarly, in "waiver" cases where the statutory right involves a specific protected union activity, consent will be necessary. For example, in Local Union 1395, IBEW v. NLRB,
In the proceeding below, Local 1395 introduced evidence that when the contract was negotiated the parties had asserted different interpretations of the no-strike clause and that neither party had acquiesced in the other's view. The ALJ concluded that the parties had agreed to disagree over whether sympathy strikes were covered by the clause. If accepted, this factual finding would be controlling: absent mutual consent on the issue, there could be no binding contractual commitment, and, a fortiori, no clear and unmistakable waiver of the right to honor picket lines.
Id. at 1036 (citation omitted). This result is explained by the shape of the right at issue. Section 7 protects workers' right to respect lawful picket lines and the employer may not violate that right without a waiver. Section 8(a)(5), by contrast, protects only the workers' right to have the employer bargain with the union over wages. As the Court held in American National Insurance Co., the section does not give the workers the right to have a definite, standard-based wage system as opposed to a discretionary employer-conducted system. Rather, the workers must bargain for that right, including using their economic weapons. Thus, as noted above, once the employer has bargained to impasse over its proposal, it has satisfied the statute.
In sum, the waiver rationale fails. McClatchy satisfied its duty to bargain over the wage system for unit employees and the union has no right to insist upon a proposal for definite terms. Thus, from the perspective of general impasse doctrine, the Board's reasoning fails. The merit pay proposal was a subject over which the employer could insist to impasse; and employers generally may unilaterally implement those proposals offered and rejected.
IV. Alternate Paths to the Board's Result?
Although we believe it has failed adequately to justify its result in this case, the Board considers the issues in this case to be fundamental. I cannot disagree. However, "[b]ecause the Board misconstrued the bounds of the law, its opinion stands on a faulty legal premise and without adequate rationale ... [thus,] we remand this case ... so that the Board may reconsider" its decision. Prill v. NLRB,
A. Merit Pay Proposals as Permissive Subjects
In his decision, the ALJ expressed concern that McClatchy's proposal constituted impermissible direct dealing. ALJ Decision at 8, J.A. 330. As noted previously, the specter of direct dealing between employers and employees often prompts the Board to declare a particular proposal a permissive subject. See section II.A.1 supra. Employers may offer these proposals, but may not insist on them to impasse. Although the Board in this case did not rely on this rationale, certain aspects of the Newspaper's proposal arguably suggest direct dealing and, therefore, the proposal might be permissive.
Of course, it is settled law of the circuit that discretionary merit pay proposals are not per se permissive subjects. See section II.A.2 supra. Nonetheless, McClatchy's final proposal also permitted employees to deal directly with the newspaper. See Posted Conditions of Employment, § 3.9, J.A. 286 ("Nothing in this Agreement shall prevent employees from bargaining individually for salary increases in excess of the minimums established herein."). Additionally, the Union here can represent an employee in his appeal of a merit pay raise only if the employee requests. Id. § 5.0(e), J.A. 287. Direct dealing with the employee requires the union's consent; as the Court held in J.I. Case, all employees are bound by the majority's decision to bargain collectively.
Whether or not these aspects of McClatchy's proposal create direct dealing in fact would be a matter for the Board in the first instance.8 But, were the Board to find a given merit pay proposal to implicate direct dealing to the extent necessary to make it a permissive subject, then the employer would not be free to insist on it to impasse. Of course, the Board must, in the first instance, consider this and related questions, see note 8 supra, on remand.
B. Merit Pay as a "Different" Issue
At oral argument, counsel for the Board suggested that merit pay was unique in some way that justified the Board's result in this case. While the notion that "wages" may be the heart of all the terms of employment has intuitive appеal, I confess that I am not certain of the scope of this potential argument. Still, the Board is the primary force for balancing the sometimes conflicting policies behind the NLRA. The Board, in exercise of its charge to further the collective bargaining process, may be able to demonstrate that unilateral employer discretion over wages uniquely injures peaceful bargaining and labor relations.
C. Modification of the Impasse Rule
Finally, the Board may wish to consider fashioning a limited exception to the impasse rule. In effect, the Board might create a new category of bargaining subjects which would include those proposals by which the employer seeks to grab discretion. Consistent with American National Insurance Co., the employer could go to impasse over these proposals--denying the union a contract unless it acquiesced--but the employer could not implement specific examples of the proposal (for example, grant individual merit pay raises) without further notice to the union.
The right to implement upon impasse (i.e., the impasse rule) is not a right guaranteed by statute, but rather grows out of the particular scheme of industrial relations created by the National Labor Relations Act. As described previously, the Act encourages collective bargaining while preserving most of the economic weapons each side has to force the other to agree. The unilateral change rule recognized in Katz, from which the impasse rule derives, protects the employees' collective bargaining right while simultaneously reserving to employers the right to manage their enterprises so long as they bargain in good faith with the employees' representative.
Nonetheless, although the impasse rule in general balances these competing impulses, it need not apply to every category of cases. For example, in Charles D. Bonanno Linen Service, the Court upheld the Board's determination that an impasse in negotiations would not justify a single employer's withdrawal from a multiemployer bargaining unit, even if that employer were the target of a whip-saw strike by the union. The Court deferred to the Board's view that permitting withdrawal, absent extraordinary circumstances, would damage the process of multiemployer collective bargaining.
Of course, the ground rules for multiemployer bargaining have not come into being overnight. They have evolved and are still evolving, as the Board, employing its expertise in the light of experience, has sought to balance the "conflicting legitimate interests" in pursuit of the "national policy of promoting labor peace through strengthened collective bargaining." [NLRB v. Truck Drivers,
Similarly, in its recent decision in Litton Financial Printing Div. v. NLRB, --- U.S. ----,
The Board has identified some terms and conditions of employment ... which do not survive expiration of an agreement for the purposes of this statutory policy. For instance, it is the Board's view that union security and dues check-off provisions are excluded from the unilateral change doctrine because of statutory provisions which permit these obligations only when specified by the express terms of a collective bargaining agreement. Also, in recognition of the statutory right to strike, no-strike clauses are excluded from the unilateral change doctrine, except to the extent other dispute resolution methods survive expiration of the agreement.
Id.
Of course, neither Bonanno nor Litton directly determines the issue in this case. McClatchy was not involved in multiemployer bargaining as in Bonanno, and the Litton exceptions do not provide a rule which can be stretched to this case. As the Court in Litton noted, union security is, by statute, a matter of consent. See 29 U.S.C. § 158(a)(3) (1988) (employer may not discriminate against union nonmembers unless there is an agreement with the union); 29 U.S.C. § 186(c)(4) (1988) (dues check-off does not survive expiration of collective bargaining agreement);
Although these exceptions are not dispositive, Bonanno and Litton combine to establish three powerful points. First, the Board's attempted analogy to no-strike clauses in its Colorado-Ute decision will not hold water. See note 6 supra. As the Litton Court noted, the right to strike is protected by statute, whereas the employer merely has a duty to bargain over the wage structure; the NLRA includes no rights to a defined wage structure. As stated above, a proposal for unconstrained discretion necessarily includes all specific merit pay increases. This logical truth exposes the fallacy of the Board's attempt to compare the merit pay proposal to a no-strike clause.
Second, although the result reached by the Board in this case finds no adequate justification in the Board's decision, this is not to say that the result cannot be justified. Litton itself suggests that the impasse doctrine is not without exceptions.9 Thus, the Board may be able to find an exception to deal with the present situation.
Third, and most importantly, Bonanno and Litton reiterate the primacy of the Board in resolving the conflicting policies of the NLRA. As noted above, the employer's right to implement a proposal upon impasse grows directly out of the tension between the duty to bargain and the Act's assumption that economic strength may determine the terms of the parties' agreement. Surely it is within the Board's competence to determine in the first instance whether implementing a proposal for unilateral discretion with respect to certain subjects weighs too heavily against the collective bargaining value in the Act.
Although a unilateral, discretionary merit pay scheme does not constitute impermissible "direct dealing" per se, thereby making it a permissive subject of bargaining, such a system may pose a substantial threat to the union's role as the employees' representative. Thus, the Court in May Department Stores Co. considered unilateral action on wages to be the equivalent of direct dealing. "Employer action to bring about changes in wage scales without consultation and negotiation with the certified representative of its employees cannot, we think, logically or realistically, be distinguished from bargaining with individuals or minorities."
Additionally, when the employer grants individualized merit pay increases, it disturbs the "collectivized" nature of collective bargaining over wages. See J.I. Case Co.,
The Board must consider whether any of the foregoing or other factors warrant an exception to the impasse rule for discretionary merit pay. McClatchy argues that the Board may not deny it the ability to grant individual wage increases because to do so would deny it an economic weapon in violation of the Insurance Agents' line of cases. See Colorado-Ute,
If the Board persists on its present course, the most difficult problem that it will face will be to distinguish merit pay from numerous other economic proposals with respect to which an employer may take unilateral action following impasse. At least two members of this panel have some real doubts whether this can be done.11 In any event, the Board will have an opportunity to test its thinking--which thus far has been quite lacking--when this case is reconsidered on rеmand.
SILBERMAN, Circuit Judge:
When an employer and a union, after bargaining in good faith, reach an impasse in their negotiations, the employer is generally entitled to implement unilaterally its final proposals on mandatory subjects of bargaining. See NLRB v. Katz,
In the typical case of post-impasse implementation, the employer institutes a set of wage scales and other fixed conditions of employment that it had previously offered to the union. See, e.g., NLRB v. Pinkston-Hollar Constr. Servs., Inc.,
The Board, to be sure, did not hold that the newspaper's proposal was bad faith or "surface bargaining," see, e.g., Cincinnati Newspaper Guild, Local 9 v. NLRB,
Of course, if the union had agreed to this proposal--as unlikely as that might be--the employer would bе entitled to the virtually unlimited discretion that it seeks. Even if the union resists, it is doubtful an employer's insistence on the clause could be thought illegal. American National Insurance holds that an employer's demand for discretion over a particular subject of bargaining does not make that proposal per se unlawful. See American Nat'l Ins. Co.,
The Tenth Circuit, reviewing the Board's new theory, rejected it. In Colorado-Ute Electric Association v. NLRB,
In my view, the answer is not obvious. The language of the National Labor Relations Act--particularly sections 8(a)(5) and 8(d) setting forth the employer's obligation to bargain collectively--may well be sufficiently general to permit the Board to ground an acceptable rationale on the statute's terms. See Chevron U.S.A. Inc. v. NRDC, Inc.,
Although the Supreme Court has held that conventional merit pay proposals are mandatory subjects of bargaining, see Katz,
As we have observed, other contract-dependent provisions, such as union-shop, dues-checkoff, and no-strike provisions, all either involve a "statutorily guaranteed right" or are "statutorily dependent upon an existing collective bargaining agreement." Southwestern Steel & Supply Inc. v. NLRB,
The real problem in this case is that the Board has not adequately explained its position. In its order, the Board did not discuss Litton, Katz, or Southwestern. It made no effort to reconcile its novel theory that certain proposals involving mandatory subjects of bargaining may not be implemented after impasse with the arguably contrary strains in the law that led the Tenth Circuit to disapprove the theory in Colorado-Ute. It gave no indication of the way in which its policy would work in practice or what types of management discretion would be included within the policy's boundaries. We have no way of knowing, for example, whether employers would be barred from implementing after impasse all clauses reserving some discretion to management, including those pertaining to non-wage terms of employment or traditional management rights, or whether the Board's policy would instead be limited to contract terms that are deemed to be in some sense at the core of the collective bargaining right. Nor did the Board satisfy its obligation to address its own contrary precedents approving unilateral post-impasse implementation of merit pay plans, so that the court and the public could be certain that the Board charted its new course deliberately. See, e.g., Hyatt Hotels Corp., 296 N.L.R.B. No. 37 (1989), enf'd on other grounds,
Instead, the Board's order said only that McClatchy's merit pay proposal, "by providing for unlimited management discretion over the determination of timing and amounts of merit increases, was in reality seeking the Union's waiver of its statutory right to be consulted over those matters" and concluded, relying on its prior determination in Colorado-Ute, that unilateral implementation was impermissible, because McClatchy "still had a duty to bargain with the Union about the timing and amounts of the merit increases prior to granting any such increases." McClatchy Newspapers, Inc., 299 N.L.R.B. No. 156, slip op. at 6, 7 (1990). This explanation is inadequate to support such a major change in the law, especially one that is in some tension with other important doctrines. The Board's policy, in order to be entitled to judicial deference, must be explained and justified further. Accordingly, I agree that this case is appropriately remanded to the NLRB for further consideration.
KAREN LeCRAFT HENDERSON, Circuit Judge, concurring in part and dissenting in part:
I agree with Judge Silberman's characterization of the Board's rationale as "inadequate to support such a major change in the law," Silberman Opinion at 1178, and even more with Judge Edwards' determination that the Board's order "rests on a completely inadequate theory and fails to recognize the settled legal doctrines which bound this case," Edwards Opinion at 1154. I therefore join my colleagues in denying the petition for enforcement. Nevertheless I dissent from their decision to remand. In my view, it follows ineluctably from the "settled legal doctrines" Judge Edwards invokes that the Board's merit pay decision "infringes on the employer's right to bargain for and implement an admittedly lawful wage proposal." Colorado-Ute Elec. Ass'n, Inc. v. NLRB,
It is beyond dispute that an employer commits an unfair labor practice if it unilaterally changes a mandatory subject of bargaining without first bargaining to impasse. Litton Fin. Printing Div. v. NLRB, --- U.S. ----,
Given the clear precedent supporting the lawfulness of McClatchy's conduct, I find it more than merely "difficult to comprehend the Board's judgment in this case," as did Judge Edwards, Edwards Opinion at 45, I find it impossible. For this reason, I would refuse to enforce the Board's unsupported (and unsupportable) decision and, I hope, lay this issue to rest. "There is no necessity to treat the case like a yo-yo," Murray v. Buchanan,
Notes
The merit pay program could not be used to decrease wages
Section 8(a)(1) makes it an unfair labor practice "to interfere with, restrain, or coerce employees in the exercise of the right[ ]" to organize and act collectively. 29 U.S.C. § 158(a)(1) (1988); see also 29 U.S.C. § 157 (1988) (employees' rights to organize and to act collectively)
In Toledo Blade, the court distinguished between a provision which would have allowed the employer to deal directly with individual employees over retirement benefits (held to be permissive) and the management rights proposal upheld in American National Insurance, noting that in the latter case "[t]he employer's subsequent decisions would be made unilaterally; they would not entail its negotiating with its employees."
As noted infra, the Board's finding in this case is not in conformity with the Katz line of authority; that is so because, in this case, the employer was found to have bargained in good faith to a point of impasse, and the disputed unilateral action was taken only after impasse (and not during the course of negotiations)
See also Teamsters Local Union No. 639 v. NLRB,
In Colorado-Ute, the Bоard illustrated its argument with the following hypothetical:
Consider, as a typical example, a case where an employer proposes in negotiations for a new contract that wages should be reduced from $7 an hour to $6 an hour. The union proposes that wages be increased to $8 an hour. The parties insist on their respective positions until they reach a good-faith impasse in negotiations. Having reached a point where further bargaining would be fruitless, Section 8(a)(5) does not require the employer thereafter to pay its employees $8 an hour as the union demanded, or to abandon its proposal and leave wages at $7 an hour. The employer is free to implement its proposal and pay employees $6 an hour.
In the example above, the employees have no statutory right to be paid $8.00 or $7.00 an hour rather than $6.00 an hour, thus the Act does not require that the employer obtain the union's consent before paying $6.00 an hour. The Act only requires that the employer propose the wage rate and bargain with the union in good faith before implementation. Where an employer proposal seeks the union's waiver of statutory rights, however, impasse is no substitute for consent. An employer may insist to impasse as a condition of agreement that the union agree to a no-strike clause. Shell Oil Co.,
N.L.R.B. No. 67, at 9
The Board's argument premised on the no-strike example is a non sequitur. Under the National Labor Relations Act, employees have an absolute statutory right to strike, absent some contractual waiver of that right. There is no comparable statutory right to be paid pursuant to a "fixed-rate" as opposed to a "merit" pay system. The Board's no-strike example is further flawed on its own terms: although an employer may not unilaterally impose a no-strike commitment, an employer may act unilaterally to hire permanent replacements for employees who engage in economic strikes.
In Cincinnati Newspaper Guild, where the court found no direct dealing, it appears the union had the right to represent the employees in all appeals. See
The Board, at this point, may not be able to rely on this theory here, if the Guild waived it or the General Counsel failed to argue it. In this court, the Guild did not advance it, relying instead as it must on the Board's erroneous waiver theory. See Brief for Intervenor, Northern California Newspaper Guild, Local 52, at 15 n. 6 ("Toledo Blade held that for all these reasons, a proposal for direct dealing between an employer and employees is not a mandatory subject of bargaining at all. For purposes of this case, the union is not so contending, but is maintaining, instead, that at the very least the direct dealing aspects of the merit pay program here underscore that that proposal involves a substantial waiver of statutory rights.") (citation omitted)
Although the Seventh Circuit may be right that Litton does not settle the issue whether a union may compel an employer to arbitrate a dispute arising under a proposal the employer unilaterally implemented following impasse, where the final proposal contains an arbitration provision, see Chicago Typographical Union No. 16 v. Chicago Sun-Times, Inc.,
See NLRB v. Crompton-Highland Mills, Inc.,
Judge Silberman's separate opinion seems to suggest that, in order to reach its preferred result in this case, the Board could limit the definition of "wages" under section 8(d) to cover only specific (i.e., nondiscretionary) wage proposals. As I understand it, under Judge Silberman's approach, an employer would not satisfy the duty to bargain over "wages" absent good faith negotiations over a definite (or standard-based) wage proposal. The problem with this proposal is that it is clearly foreclosed by NLRB v. American National Insurance Co.,
[i]gnoring the nature of the Union's demand in this case, the Board takes the position that employers subject to the Act must agree to include in any labor agreement provisions establishing fixed standards for work schedules or any other condition of employment.... Whether a contract should contain a clause fixing standards for such matters as work scheduling or should provide for more flexible treatment of such matters is an issue for determination across the bargaining table, not by the Board.... Any fears the Board may entertain that use of management functions clauses will lead to evasion of an employer's duty to bargain collectively as to "rates of pay, wages, hours and conditions of employment" do not justify condemning all bargaining for management functions clauses covering any "condition of employment" as per se violations of the Act.
For the past forty years, the labor law jurisprudence of this country has been absolutely clear in indicating that the NLRA does not require an employer to offer to the union (or to an individual employee through the union) definite wage terms. See also Cincinnati Newspaper Guild, Local 9 v. NLRB,
In my view, given that, based on American National Insurance Co., the employer has the right not to agree to a standard-based scheme for employee wages, the question becomes what action the employer can take after fulfilling the duty to bargain and exercising the right not to agree. In general, the impasse-doctrine suggests that the employer is free to act--the NLRA no longer acts as a constraint. Nonetheless, as I have suggested, the concern over "direct dealing" still limits an employer and this may provide a theoretical base upon which the Board could rest to develop restrictions on unilateral action taken after impasse.
In this case, McClatchy's final offer proposed that all salary increases would be the result of discretionary merit reviews of individual employee performance. Although the proposal bore a surface similarity to traditional merit pay plans, which permit the employer to grant merit increases on top of normal wage scales, see, e.g., Katz,
It is true, as Judge Edwards notes, see Opinion of Judge Edwards аt 1166-67, that we have previously stated that an employer who has bargained to impasse may make a unilateral change without being under "a duty to bargain about timing or other specific aspects of a change that is within the ambit of proposals already made and rejected." AFTRA,
Determining when an employer's proposal retains so much discretion that a post-impasse "implementation" is so indefinite that further bargaining at the point of specific application is required also involves line drawing. But there is presumably less tension inherent in that analytic process than there would be if the question were whether or not a proposal is entirely illegal
American National Insurance, which dealt with a classic management rights clause rather than what might be thought the more sensitive issue of wages, does not even address the problem of "implementing" a discretionary provision post-impasse
There are also potential problems with this reasoning, depending upon the precise nature of the Board's theory. If, for example, the Board concludes (as perhaps it must) that an employer may implement unilaterally an individual merit pay increase after bargaining to impasse with the union over it, then merit pay would not be contract-dependent in the strict Litton sense