The National Labor Relations Board has restored the right of unionized employers to implement changes that are consistent with past practice (as long as the change does not materially vary in kind or degree from past changes), even if that practice developed under a management rights clause in a collective bargaining agreement that has expired, and whether or not the changes are discretionary. Raytheon Network Centric Systems, 365 NLRB No. 161 (Dec. 15, 2017).

The NLRB overruled E.I. du Pont de Nemours, 364 NLRB No. 17 (2016), which had significantly restricted the right of employers to unilaterally implement changes — even where a past practice existed – if the practice arose under a management rights clause in an expired collective bargaining agreement. The Board also held that every action constitutes a change, regardless of whether the employer has a practice of making similar changes in the past, if the employer’s actions involve any discretion.

In this case, Raytheon and the union had a long history of entering into labor agreements that allowed the company to make unilateral changes to its health plan. The union never objected or requested to bargain about such changes the company made every January between 2001 and 2011. In 2012, however, when the labor agreement expired during negotiations for a successor agreement, a significant topic was whether the next agreement would continue to permit the company to unilaterally make changes to the health plan. The parties did not reach an agreement, and in January 2013, the company made discretionary changes to the health plan as it had done every year from 2001 to 2011. The union filed a charge with the NLRB, claiming Raytheon had violated its duty to bargain.

An NLRB administrative law judge ruled against Raytheon, finding the unilateral changes violated the company’s obligation to maintain the “status quo” while a contract was not in effect.

Reviewing longstanding Supreme Court precedent, the Republican-dominated Board explained that an established past practice can become part of the “status quo,” even if the practice grew out of the exercise of a contractual right during the term of a labor agreement. It held that a given action constitutes a change that must be bargained about only if the action materially differs “in kind or degree” from those the employer has made in the past. The Board also held that this principle applies even where the changes may involve discretion.

Finally, the Board made it clear that, while the employer may be able to make an action without bargaining, it still has a duty to bargain upon request by the union over the general subject matter at issue. For example, Raytheon could not refuse to bargain over health insurance in its entirety. However, it was not precluded from making changes consistent with past practice while bargaining.

Raytheon ensures that unionized employers retain the ability to run their businesses by making the same kinds of decisions they always have made, even when a labor contract is not in effect. How broadly the decision will be applied remains to be seen. Employers should view the decision as a potential shield to protect continued normal business operations.