Last week the Sixth Circuit issued its decision in Montague v. NLRB, Case No. 11-1256 (6th Cir. Aug. 23, 2012), upholding the National Labor Relations Board's decision in Dana Corporation, 356 NLRB No. 49 (2010), finding that a pre-recognition framework agreement between Dana Corporation and the United Auto Workers did not violate the National Labor Relations Act. The specific issue before the court was:
whether--before employees officially recognize a union--a union and an employer may enter into a letter of agreement setting forth general terms, including provisions related to health care benefits and future collective-bargaining agreements, that are subject to further negotiation but may become binding if arbitration is necessary.
The Letter of Agreement (LOA) entered into between Dana and the UAW included various provisions intended to manage the relationship between the parties if the majority of employees at a certain facility selected the UAW as their exclusive collective-bargaining representative. Specifically, Dana agreed to be neutral in the event of an organizing campaign, allow employees to meet on company property, provide the union access to employees during the workday, and provide the UAW with personal information about the employees targeted for unionization. In exchange, the union agreed to certain principles that were to be included in future collective bargaining agreements between the parties. For example, the LOA specified that any collective bargaining agreement must include healthcare costs reflective of the competitive reality of the supplier industry and products involved, minimum classifications, team-based approaches, importance of attendance to productivity and quality, flexible compensation, mandatory overtime when necessary, and other provisions.
The LOA further provided that if the parties did not reach agreement on any of the terms within six months, they would submit the unresolved issues to arbitration. The parties also agreed to a no strike/no lockout commitment until at least the first formal collective bargaining agreement.
Ultimately, the employees at the targeted facility rejected the UAW, and the LOA expired.
The NLRB's Decision
The NLRB found 2-1 that the LOA did not grant recognition to a minority union or present a tentative contract with a union that had not yet achieved majority status--either of which would have been unlawful under well-established precedent. Rather, the Board stated that it permissible for the employer and the union to create a framework for future collective bargaining if the union is able to provide proof of majority status. As noted by the court,
The Board found support for its conclusion in the policy underlying the NLRA. "The ultimate object of the National Labor Relations Act, as the Supreme Court has repeatedly stated, is 'industrial peace.'" [...] The Board expressed its reluctance to put "new obstacles" in the way of voluntary recognition of a union (e.g., recognition of a union's majority status by authorization cards rather than by election), and further noted that "in practice, an employer's willingness to voluntarily recognize a union may turn on the employer's ability to predict the consequences of doing so."
Rejecting a categorical rule against pre-recognition framework agreements, the Board went on to conclude that the LOA, itself, was lawful under the NLRA because the LOA had no immediate effect on employees' terms and conditions of employment, and even its potential future effect was both limited and contingent on substantial future negotiations.
However, one Board member dissented, arguing that the LOA included "substantive contract provisions" and that there were "no meaningful factual or legal distinctions" between the LOA and an agreement found unlawful in an earlier Board decision. The dissent also rejected the majority's policy rationale,
arguing that even if employers and unions benefited from negotiations, "the legality of negotiating such terms must turn on the statutory rights of employees, not on the commercial interests of unions and employers."
The Sixth Circuit's Ruling
Two individual employees petitioned for review of the NLRB's decision with the Sixth Circuit, which upheld the Board's decision while making clear that it did not find one position--i.e., the majority's or the minority's--more persuasive than the other:
The thoughtful majority and dissenting opinions of the Board members in this case show that reasonable minds could differ as to how the NLRA should be interpreted to further the underlying purposes of the NLRA in the context of employer negotiations with unions that do not have majority status. We must deny the petition for review, not because we find one position more persuasive than the other, but because Congress has given the Board the power to make industrial policy as long as it is doing so within the confines of the statutory language. [...] The Board "need not show that its construction is the best way to read the statute; rather, courts must respect the Board's judgment so long as its reading is a reasonable one." [...] Indeed the balancing of "conflicting legitimate interests" in pursuit of "the national policy of promoting labor peace through strengthened collective bargaining" is "precisely the kind of judgment that...should be left to the Board."
The court held that the Board's two findings--i.e., 1) that the LOA provides that the employer would not recognize the union prior to the union receiving a majority vote of the employees and 2) that the LOA was not a full collective-bargaining agreement but rather required substantial negotiations post-recognition--to be reasonable.
As the entity entrusted with maintaining "industrial peace," however, the Board was within its discretion to allow some substantive terms to be determined between the employer and union prior to recognition, as long as that agreement did not ultimately impact employees' choice regarding union representation.
We are not suggesting that there was any hesitation by the Sixth Circuit to deny the petition for review, but if there was, the court's opinion suggests that the fact that the employees ultimately rejected the UAW despite the LOA might have tipped the scales in favor of upholding the NLRB's decision:
Again, if employees felt hindered by this provision, they could reject any union that would make this concession on their behalf--and they ultimately did by not selecting UAW as their exclusive bargaining representative.