• Appeals Court Upholds Pre-Recognition Agreement Between Union and Employer
  • November 7, 2012 | Authors: Roger S. Kaplan; Philip B. Rosen; James M. Stone; Harold R. Weinrich
  • Law Firms: Jackson Lewis LLP - Melville Office ; Jackson Lewis LLP - New York Office ; Jackson Lewis LLP - Cleveland Office ; Jackson Lewis LLP - Reston Office
  • Even before recognition is extended, an employer and a union may enter into a letter of agreement (LOA) including general terms that are subject to further negotiation, a federal appeals has held, in agreement with the National Labor Relations Board, even though the LOA may become binding should arbitration become necessary. Montague v. NLRB, No. 11-1256 (6th Cir. Aug. 23, 2012). The pre-recognition framework agreement between Dana Corporation and United Auto Workers that was before the Court included provisions related to health care benefits and future collective-bargaining agreements. Affirming the majority decision of the National Labor Relations Board, the Court held the LOA did not violate the National Labor Relations Act. (The Sixth Circuit on October 22 approved its August 23 decision for publication.)

    Background

    The LOA entered into between Dana and UAW included provisions intended to manage the relationship between the parties if a majority of the employees at Dana’s St. Johns, Michigan, facility selected the UAW as their exclusive collective-bargaining representative. Dana agreed to be neutral in the event of an organizing campaign, allow employees to meet on company property, provide the UAW access to employees during the workday, and provide UAW with the personal information of employees targeted for unionization. UAW agreed that certain principles be included in future collective bargaining agreements between the parties, including the importance of attendance to productivity and quality and mandatory overtime when necessary.

    The LOA provided that if the parties did not reach agreement on any of the terms within six months, they would submit unresolved issues to arbitration. Further, they agreed to a no-strike-no-lockout commitment until at least the first formal collective bargaining agreement.

    The employees eventually rejected the UAW and the LOA expired.

    Reasonable

    A 2-1 majority of the NLRB held the LOA did not impermissibly restrict employee free choice and is within well-establish precedent. The Board stated that it is permissible for an employer and a union to create a “framework” for future collective bargaining if the union can show it was the choice of a majority of the employees in the bargaining unit. Because the “ultimate object of the National Labor Relations Act, as the Supreme Court has repeatedly stated, is ‘industrial peace,’” the Board did not want to put “new obstacles” in the way of voluntary recognition of a union (e.g., recognition of a union’s majority status based on authorization cards rather than election).

    Board Member Brian Hayes dissented. He rejected the majority’s description of the LOA as merely a “framework” for future bargaining. He found instead that the LOA included “substantive terms and conditions of employment” that “had to be included in any prospective future collective-bargaining agreement[s] covering these employees.”

    The federal appeals court upheld the majority decision. The Court said the Board can make industrial policy as long as it is doing so within the confines of the statutory language. Further, 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.”

    The Court said the NLRB reasonably held the LOA:

    • did not include explicit recognition of a union that was found to be unlawful in the U.S. Supreme Court’s ILGWU v. NLRB, 366 U.S. 731 (1961) (“Bernhard-Altmann”),
    • was not a form of oral recognition the Board held was an unlawful form of pre-recognition bargaining in Majestic Weaving Co., 147 NLRB 859 (1964), enf. denied, 355 F.2d 854 (2d Cir. 1966), and
    • was not a full collective bargaining agreement requiring substantial negotiations or post-recognition before it could become the employees’ terms and conditions of employment.

    Accordingly, the Court upheld the NLRB decision that the LOA did not violate the NLRA.