On December 10, 2024, the National Labor Relations Board issued a decision reinstating its prior standard for determining whether a union has contractually waived its right to bargain over changes to terms and conditions of employment. In Endurance Environmental Solutions, LLC, 373 NLRB No. 141 (2024), the current Democratic-majority Board reversed the “contract coverage” standard adopted by the Trump-era Board in 2019 and reinstated a “clear and unmistakable waiver” standard, ultimately making it more difficult for unionized employers to rely on contractual provisions when making unilateral changes to terms and conditions of employment moving forward.

Background

Under the National Labor Relations Act (“the Act”), unionized employers generally cannot make unilateral changes to mandatory subjects of bargaining – wages, hours, and other terms and conditions of employment – without first providing the union notice and an opportunity to bargain about the change. There are very limited exceptions to this decisional bargaining obligation, including in situations in which the employer can demonstrate that the union contractually waived its right to bargain over the decision.

Historically, the Board has flip-flopped on what standard applies when determining whether a union has contractually waived its right to bargain. Before 2019, the Board applied the “clear and unmistakable waiver” standard, which required that an employer show the union gave a "clear and unmistakable waiver" of its right to bargain over a decision as part of the collective bargaining agreement. Then, in MV Transportation, 368 NLRB No. 66 (2019), the Trump-era Board dispensed with the “clear and unmistakable waiver” standard and replaced it with the “contract coverage” standard. Under this standard, ordinary principles of contract interpretation would apply to determine whether the decision fell within “the compass or scope” of contract language granting the employer the right to act unilaterally.  Importantly, under the “contract coverage standard,” the Board would not require the collective bargaining agreement specifically to mention, refer to or address the decision at issue.  Notably, the contract coverage standard is applied by the D.C. Circuit, along with the First, Second, and Seventh Circuits.

Endurance Environmental Solutions Decision

In Endurance Environmental Solutions, LLC, the employer, a waste transportation company, made a unilateral decision to install cameras in its fleet of trucks to monitor employees, relying primarily upon language in the management rights clause of the collective bargaining agreement that reserved the right to “implement changes in equipment.” Teamsters Local No. 11 filed an unfair labor practice charge against the employer based on its refusal to bargain with the union over the decision and its effects on unit employees.

The administrative law judge, in applying MV Transportation’s “contract coverage” standard, concluded that the employer did not violate the Act because the decision to install the cameras was “within the compass or scope” of the management rights clause of the collective bargaining agreement, which reserved the right to “implement changes in equipment.” In a 3-1 decision, the Board, however, disagreed, refusing to apply the “contract coverage” standard and reinstating the “clear and unmistakable waiver” standard instead. The Board wrote that, unlike the “contract coverage” standard, which “undermines” the Act’s “central policy of promoting industrial stability,” the “clear and unmistakable waiver” standard better accomplishes the statutory mandate of promoting industrial peace by “encouraging the practice and procedure of collective bargaining.” The Board also claimed the standard “better achieves consistency with Supreme Court and Board precedent,” adding the test is applied by the majority of the federal appellate courts.   

In applying the “clear and unmistakable waiver” standard, the Board found that the employer’s contractual right to “implement changes in equipment” was not a clear and unmistakable waiver because neither the collective bargaining agreement nor extrinsic evidence explicitly referenced the use of video or audio monitoring or surveillance of employees or the use of video or audio recordings as a basis for disciplining employees. Accordingly, the Board held the employer violated the Act by failing to provide the union with notice and opportunity to bargain over the decision.

Under Endurance Environmental Solutions, LLC, employers will once again have the heightened burden of showing under the “clear and unmistakable waiver” standard that the parties “unequivocally and specifically express[ed] their mutual intention to permit unilateral employer action with respect to a particular employment term.” In evaluating whether an employer has met this standard, the Board will review not only “the precise wording of the relevant contract provisions,” but also extrinsic evidence such as bargaining history, provided such evidence shows the specific issue was “fully discussed and consciously explored” during bargaining and that “the union consciously yielded or clearly and unmistakably waived its interest in the matter.” The Board specifically warned that “[m]anagement rights clauses that are couched in general terms and make no reference to any particular subject area will not be construed as waivers of the statutory right to bargain over a specific subject.” Further, the Board stated that even where an employer meets the difficult showing that a union waived the right to bargain over the decision to alter unit employees’ terms and conditions of employment, the employer still has a duty to bargain over the effects of that decision unless the employer proves otherwise. The Board acknowledged that the D.C. and Seventh Circuits disagree with the Board on this point. 

In his dissent, Board Member Kaplan admonished the majority’s opinion, finding the majority failed to cite to any “intervening development” that would justify overruling MV Transportation and concluding that the “clear and unmistakable waiver” standard improperly creates an “irrebuttable presumption” against unilateral action, thereby “undermining the Act’s fundamental policy of encouraging collective bargaining as a means of reducing industrial strife.” Member Kaplan argued that the contract coverage standard best effectuates the policies of the Act, is most consistent with long-standing Supreme Court precedent, and most properly recognizes management-rights provisions as a standard industrial practice serving the interests of employers, employees, and unions. Finally, Member Kaplan cautioned that abandonment of the “contract coverage” standard could render Board decisions unenforceable in the circuits that have rejected the “clear and unmistakable waiver” standard and lead to forum shopping.

Practical Implications

The Board’s return to the more onerous “clear and unmistakable waiver” standard will make it much more difficult for employers to make unilateral changes to terms and conditions of employment. When it comes to mandatory subjects of bargaining, employers should carefully review their collective bargaining agreements to confirm the presence of clear and specific language waiving the union’s right to bargain over the exact decision at issue prior to making any unilateral changes. Where a collective bargaining agreement does not include explicit language that waives the union’s right to bargain over a specific issue, employers should proceed with caution.  This decision also underscores the importance of seeking a robust management rights clause during collective bargaining negotiations, particularly in first contract negotiations, and keeping a clear record of negotiations, as bargaining history may be evidence of the union’s waiver. 

While the Board’s decision in Endurance Environmental Solutions, LLC may present new hurdles for employers, it may be fleeting. The incoming Trump administration will likely act swiftly in shaking up the composition of the current Board, which in turn may reverse many of its Biden-era decisions, and particularly those that rolled back Trump-era decisions. Indeed, the Senate recently rejected renomination of the current NLRB Chair Lauren McFerran to another term, meaning her term ended on December 16, 2024. The Trump administration will now have two vacancies to fill on the five-member Board, making it likely that we will see a Republican-majority Board in the near future. We will continue to monitor critical developments in this area.