U.S. Court of Appeals for the D.C. Circuit Refuses to Enforce National Labor Relations Board Decision and Order Regarding Unilateral Changes

July 11, 2012

By: David E. Prager

On June 8, 2012, the U.S. Court of Appeals for the D.C. Circuit refused to enforce a decision and order of the National Labor Relations Board ("Board") on the ground that the Board had "departed, without giving a reasoned justification, from its precedent . . . ."  Prior to the Board's 2010 decision and order in E.I. Du Pont de Nemours v. NLRB, Board law had, for almost a decade, allowed an employer to make certain unilateral changes in terms and conditions of employment, both during the term of a collective bargaining agreement and after expiration of a collective bargaining agreement, provided that the changes are consistent with an established past practice.  However, in its 2010 Du Pont decision, the Board held that Du Pont's unilateral changes to its health plan constituted unfair labor practices in violation of the National Labor Relations Act ("Act"), despite the undisputed existence of a past practice permitting such changes.  The D.C. Circuit Court of Appeals rejected the Board's change of direction on this subject.

In the Du Pont case, the Board acknowledged that Du Pont had annually and consistently revised the terms of its health plan -- which applied both to union and non-union employees -- each year during an annual enrollment period, under the terms of the plan.  These changes typically included revised coverage terms, changed options, and increased premiums.  The management rights clause in the collective bargaining agreement with the union also encapsulated the employer's right to make these changes.

When Du Pont continued this annual practice of revising its health plan in 2004 following expiration of the collective bargaining agreement, the union filed an unfair labor practice charge, and the Board found that Du Pont had violated Sections 8(a)(5) and 8(a)(1) of the Act by making impermissible unilateral changes in the terms and conditions of employment.  The Board distinguished the employer's past practice of similar annual revisions to the health plan, noting that those prior occasions had occurred during the term of the collective bargaining agreement, not after the expiration of the collective bargaining agreement.  The Board also held that Du Pont could not rely on the expired management rights clause to justify the post-expiration unilateral changes.

In rejecting the Board's holding, the D.C. Circuit Court of Appeals observed that, under the Board's existing precedent, the undisputed existence of a past practice permitting similar changes served to immunize those changes from scrutiny under the Act, regardless of whether the changes were made during the term of a collective bargaining agreement or after the expiration of a collective bargaining agreement.  The Court also noted that this immunity did not turn on the existence of a management rights clause in an unexpired collective bargaining agreement.  The Court stated:

Under the Board's precedent, therefore, Du Pont's making annual changes to [its health plan] became a term and condition of employment the Company could lawfully continue during the annual enrollment period, irrespective of whether negotiations for successor contracts were then on-going.

The Court's refusal to enforce the Board's Du Pont decision signals some judicial impatience with the Board's deviation from existing precedent without providing a well-reasoned justification for the sudden change in policy.