Second Circuit Approves National Labor Relations Board Contract Coverage Test | Holland & Knight LLP


In International Brotherhood of Electrical Workers, Local 43 v. National Council for Industrial Relations, the United States Second Circuit Court of Appeals became the first court to explicitly approve the National Labor Relations Board’s (NLRB) adoption of the “contract coverage test” to assess when a party to a collective agreement waived its right to negotiate on a subject no doubt covered by the agreement. As a rule, neither party to a collective agreement has an obligation to negotiate during the term of the agreement on a subject covered by the agreement. The NLRB’s contract coverage test is expected to provide employers with greater flexibility in dealing with situations that are not specifically addressed by a collective agreement, even though the subject may have been addressed generally.

A closer look at the contract coverage test

For 70 years, the NLRB has used a “clear and unmistakable waiver” test (waiver test) to decide whether a party has waived its right to negotiate on a subject arguably covered by its collective agreement. Although it was finally approved more than three decades after its initial adoption in 1949 by the United States Supreme Court, the waiver test has since come under increasing attack in appellate courts. Finally, in 2019, the NLRB abandoned the waiver test in favor of the “contract coverage test” in MV transport.

Generally, the test for waiver required a finding that the negotiations on the specific subject matter in dispute had clearly been waived. This required that the language at issue be “sufficiently specific” to establish a waiver, which the United States Court of Appeals for the District of Columbia Circuit criticized as “unobservable” in practice and went so far. ” sanction the NLRB for continuing to request execution of its waiver test after the DC circuit rejected it. Under the waiver test, even though the parties might have addressed a subject in their collective agreement without restricting an employer’s actions in that matter, the NLRB required a finding that the agreement specifically and unequivocally authorized the employer to take unilateral action on such a matter before finding that a union had abandoned negotiations on the matter.

In contrast, in describing its newly adopted contract coverage test, the NLRB said it

determine whether the parties’ collective agreement covers the contested unilateral amendment. . . . [and] give effect to the ordinary meaning of the relevant contractual language, applying the ordinary principles of contract interpretation; and the Commission will find that the agreement covers the contested unilateral act if the act falls within the compass or scope of the wording of the contract which grants the employer the right to act unilaterally. In applying this standard, the Council will be aware that “a collective agreement establishes principles governing a myriad of factual models” and that “the parties to the negotiation [cannot] anticipate all hypothetical grievances and. . . indicate it in their contract. Therefore, we will not require that the agreement specifically mention, reference or address the decision of the employer in question.

The practical result of the contract coverage test will be to give effect to broad reservations of management rights and other contractual provisions in the absence of any explicit restriction in the agreement on an employer’s ability to take action. unilateral with regard to a subject which is covered by the collective agreement. Thus, while the waiver test required finding explicit and unambiguous language authorizing an employer to take unilateral action before it was found that a union had waived its right to negotiate on the contested action, the Contract coverage test requires that the objection to a unilateral change by the employer be based on specific restrictions imposed on the employer in the contract in question. It is only when the contested action does not fall within the scope of a contractual provision authorizing unilateral action by the employer that the NLRB continues to use the waiver test.

The contract coverage test gives employers greater flexibility to deal with circumstances that were unforeseen at the time the collective agreement was negotiated. As long as the parties have negotiated on a subject and the issue can be said to fall within the “compass or scope” of the agreement without any restriction for the employer to act unilaterally, the employer will be able to guarantee that such circumstances will be dealt with in a timely manner. This does not necessarily mean that employers will deal with such circumstances unilaterally even though they may have the right to do so under the coverage criterion of the contract. Relieved of the burden of having “an almost supernatural foreknowledge … of having foreseen … what … problems would arise” after negotiating a collective agreement, as the DC Circuit criticized the waiver test, an employer is free to request the opinion of the union to deal with such circumstances, knowing that ultimately it can act unilaterally in the absence of agreement. Knowledge of such a reality could motivate a more serious attempt on the part of the unions to reach a compromise to deal with such circumstances.


The question remains whether this favorable development for employers, resulting from the old NLRB, will survive under the current NLRB. An encouraging fact that should militate against a reversion to the previous waiver test is the fact that the DC circuit sanctioned the NLRB for continuously requesting the execution of its corrective orders based on the waiver test, as well as the rejection of the test. waiver through several other channels. , especially since the Second Circuit has recognized that the NLRB’s adoption of the contract coverage test is supported by a thorough and carefully reasoned opinion.

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