Order Restored, No Responsibility to Discount Earlier than Employee Disciplined

On June 23, 2020, the National Labor Relations Board (“NLRB”) decided that newly represented workers could be disciplined under the existing disciplinary policy, even if no negotiations had taken place. 800 River Road Operating Company, Inc., 369 NLRB No. 109 (2020). For the first eighty years of the National Labor Relation Act, this was the law of the country. A surprising decision four years ago in Total Security Management Illinois, 364 NLRB No. 106 (2016), changed this rule to require an employer to negotiate with the newly certified representative (union) of its employees before applying “serious” discipline can be. With the decision on 800 River Road, the employer’s obligation to negotiate was reduced to this historic and long-standing status. A discipline that is compatible with an existing disciplinary policy is permitted even if the employer has not negotiated the discipline with the employee representative. The 800 River Road decision puts a premium on well-crafted employee handbooks and disciplinary guidelines, as well as a solid record-keeping policy to provide evidence of employer’s enforcement evidence.

The decision is only the latest in the long-standing debate about the correct interpretation and application of the one-sided doctrine of change formulated by the Supreme Court in NLRB v. Katz, 363 US 736 (1962). In the Katz case, the Court ruled that at the beginning of a negotiation relationship, employers “are obliged not to make any substantial changes [mandatory] Duration or condition of … employment … without notice [of the change] and the union is given the opportunity to negotiate. “(Document op.3). Immediately after this widespread general participation, employers discontinued the annual wage increases as part of the existing remuneration policy. The NLRB reacted by creating the “Dynamic Status Quo” guideline. The dynamic exception to the status quo from the Katz rule applies when an employer’s practice or the policy itself becomes a term or a condition of employment.

With the dynamic status quo, a lot of litigation and frustrations have arisen. Compare The Finley Hospital, 362 NLRB 915 (2015), disputed, 827 F.3d 720 (8th Cir 2016) (status quo required wage increases after contract expiration) with Pg Publ’g Co., 368 NLRB No. 41 (2019) ( Status quo did not remove any contractual obligation to increase the wage rate). Even more frustrating was the uncertainty the rule brought with it, as determining whether an employer’s policy was itself the duration or condition of employment depended on whether the employer exercised “discretion” under the policy. In connection with unilateral wage increases during union organizing campaigns, the Sixth Circle was so frustrated with the NLRB’s vacillation that it eventually refused to enforce the NLRB’s decisions. See e.g. B. NLRB v Newton Corp., 705 F.2d 873 (6th Cir. 1983) (Refusal to enforce the Board of Directors order when there was insufficient evidence in unfair labor proceedings to uphold the finding that the employer made a unilateral wage increase ).

The 800 River Road decision also removes the “discretionary” verses of the fixed political dichotomy (a dichotomy that earlier NLRB bodies had adopted in the larger context), at least when it comes to staff discipline. Instead, the NLRB at 800 River Road has determined that discipline under an existing policy is not unlawful if the employer’s exercise of discretion is consistent with the manner in which its discretion has been exercised in the past. It remains to be seen whether the NLRB will now take the logical step and extend this rule to other dynamic status quo analyzes.

Employers can breathe a sigh of relief, but they shouldn’t become complacent. A well-designed disciplinary policy is a prerequisite for avoiding negotiation before discipline can be applied. Non-unionized employers would be well advised to review and update their disciplinary guidelines due to changes in technology, intellectual property, privacy, remote working, and social distancing. Likewise, employers should review record-keeping policies to ensure that adequate disciplinary files are maintained in order to establish a policy-enforcement practice.

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