By Douglas Darch and Christina Taylor

Law360 (April 3, 2020, 3:55 PM EDT) --

Douglas Darch

Christina Taylor

Government-imposed stay-at-home orders, essential business designations, the Families First Coronavirus Response Act, and employers' duty to bargain under the National Labor Relations Act recently collided. To complicate matters, unions have proven very aggressive in their demands for information about employer's responses to COVID-19.

Many unions have demanded decision bargaining over layoffs, or changes in health and safety rules, claiming, in the case of layoffs, that the employer is furloughing employees, as if rebranding a layoff will trigger a bargaining obligation. Employers managing union-represented workforces with or without collective bargaining agreements will likely be able to thread the needle by carefully reviewing their agreements and their existing practices and by thorough, thoughtful and strategic planning.

Union Demands and the Obligation to Bargain

The NLRA famously requires employers to bargain collectively over wages, hours, and terms and conditions of employment. Bargaining under the NLRA requires the parties to bargain to an agreement or until an impasse is reached before an employer is free to make changes to employees' existing terms and conditions. The NLRA also provides that when a collective bargaining agreement is in place, neither party is obligated to bargain over changes in its terms.

The National Labor Relations Board's view of the duty to bargain over changes in working conditions implemented during the term of an agreement took a timely change for the better (at least from an employer's point of view) in September 2019. In MV Transportation Inc., the NLRB bowed to the inevitable and abandoned its clear and express waiver analysis when reviewing an employer's claim that it had the contractual right to take unilateral action, (i.e., without first bargaining with the union).

In its place, the NLRB adopted the judicially sanctioned and long-established contract coverage test. Under the contract coverage test announced in MV Transportation, an employer may lawfully unilaterally change wages, hours, and other terms and conditions of employment, if it has a sound arguable basis grounded in the collective bargaining agreement that it has the right to take unilateral action.

While the pundits may debate who acted and when in response to COVID-19, employers began to experience operational disruptions in January. The resulting slowdown triggered a reduction in hours and layoffs. These were followed by social distancing mandates, hand washing requirements, directions to send symptomatic employees home from work, and then layoffs.

Organized labor was not a passive observer. Many unions responded with demands for information. Others presented demands for bargaining. The more proactive unions submitted a ready-made COVID-19 memorandum of agreement containing many best practices and extensive paid leave obligations.

Complications With the FFCRA and Paid Sick Leave

The passage of the Families First Coronavirus Response Act, or FFCRA, only ratchets up the level of union demands for bargaining. Now that the FFCRA is law and must be implemented, employers are attempting to reconcile their obligations under the FFCRA with the NLRA duty to bargain. Complicating matters for employees and employers alike, the NLRB has long held that changes an employer must make to comply with a statutory mandate are not permitted until the employer satisfies its duty to bargain.

Employers who have little time to comply are likely to turn to their collective bargaining agreements for relief from the bargaining process. Collective bargaining agreements address changes in working conditions in one of three ways.

They either: permit unilateral action, prohibit unilateral action or are silent on the action. If the agreement permits the action under the sound arguable basis standard, the employer can proceed to act unilaterally without fear of violating the NLRA.

Notably, in a 2017 decision in Columbia College Chicago v. NLRB, the U.S. Court of Appeals for the Seventh Circuit held that an employer who was free to act unilaterally was not obligated to engage in so-called effects bargaining. The sound arguable basis for workforce reductions may be found in the management rights clause, the seniority provisions, and the layoff and recall provisions, among others.

The provision of paid leave may be more complicated. The childcare leave portion of the FFCRA was imposed by amending the Family and Medical Leave Act. Given the age of the FMLA, most collectively bargained agreements address the FMLA leave requirement in some fashion. Frequently the parties' agreement allows (or requires) employers to provide the benefits granted by the FMLA.

The two emergency sick leave provisions in the FFCRA may require a more rigorous analysis. With the advent and expansion of locally imposed sick leave requirements, many agreements permit employers to take action to comply with state and local laws. Other provisions may require the employer to comply with state and local laws, providing an opening for a sound arguable basis argument.

Workplace Health and Safety Regulations

Many employers are imposing workplace health and safety regulations patterned on the recommendations of the Centers for Disease Control and Prevention or imposed by local health officials. These include social distancing requirements, wearing masks, temperature checks, forced administrative suspensions, and return-to-work notes, among other measures designed to prevent the spread of COVID-19.

Unions have frequently demanded bargaining over these changes to health and safety and work rules. In many instances, the parties' agreements contain a historically benign health and safety provision requiring employers to comply with health and safety laws, to provide for the health and safety of employees, or to provide a safe workplace. Given the COVID-19 pandemic, employers may justifiably place a heavy reliance on these provisions as a basis for permitting unilateral actions to adopt measures to control the spread of COVID -19 in the workplace.

Express Prohibitions on Changes Without Bargaining Are Not Unavoidable

Employers may face language or provisions that expressly prevent the employer from taking action (in contrast to agreements which are silent), and are thus unable to make changes without the union's agreement under the normal definition of bargaining. Confronted by an intransigent union, employers may choose to take unilateral action to comply with COVID-19 guidance or the FFCRA, thereby violating their bargaining obligation.

If challenged, they may find an escape valve in a common and little-used provision that provides the parties agree to void any contract language which is illegal. Typically these clauses provide for the suspension of the illegal provision immediately and require bargaining to adopt a replacement clause.

Employers without a severance clause may be able to contend they have the right to assert a contract provision is null and void due to subsequently enacted legislation as part of the federal common law of contracts. In Kaiser Steel Corp. v. Mullins in 1982, the U.S. Supreme Court adopted and applied this common law to void a contract provision requiring the employer to contribute to the pension fund on the basis of activity prohibited by federal antitrust law.

Absence of an Agreement May Affect Bargaining Obligations

If no agreement is in effect, bargaining regarding the implementation of the FFCRA and health and safety rules and regulations will likely be required. But all may not be lost, the NLRB held in Dubuque Packing Company Inc., that an employer's bargaining obligation may be reduced if exigent circumstances preclude it from fulfilling the entirety of bargaining obligation.

 Employer Takeaways

Employers should review all of the provisions of the labor agreement to determine if it permits unilateral changes without further bargaining. Even if the labor agreement is ambiguous or outright prohibits unilateral changes without bargaining, after MV Transportation, employers now have some flexibility to act quickly and responsively on sound arguable basis grounds in response to the COVID-19 pandemic. However, consulting with the employees' union representatives may still prove beneficial in the long run, even when not required.

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Douglas Darch is a partner and Christina Taylor is an associate at Baker McKenzie.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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