NLRB makes major changes to arbitration deferral policy

On December 15, 2014, the National Labor Relations Board (NLRB) issued a decision in the case of Babcock & Wilcox Construction Co., Inc. and Coletta Kim Beneli, 361 NLRB No. 132, which has important implications for union members who are targets of employer retaliation for their union activity. The specific question was when is it appropriate for the NLRB to defer to the outcome of a contractual grievance procedure instead of determining for itself whether an unfair labor practice has been committed.

The target of the alleged unfair labor practice in this case, Kim Beneli, was a forklift operator at Babcock & Wilcox Construction, which provided construction and maintenance work at an Arizona coal plant operated by another company. Beneli also served as a steward in her Operating Engineers local. During her time as steward, she reported multiple hiring hall and other contract violations to the union and her employer. Just prior to her termination, she was reprimanded for discussing the violations with a third party associated with the company operating the coal plant. That afternoon, Beneli was given a three day suspension, ostensibly for minor safety violations like eating a pastry during a meeting and making an error filling out a form. When she angrily objected, allegedly using a profanity, Babcock and Wilcox immediately changed the suspension to a termination, citing “inappropriate conduct.”

The union filed a grievance on Beneli’s behalf, arguing that the termination was a violation of the just cause provision in the collective bargaining agreement (CBA), as well as a violation of the National Labor Relations Act because it was in retaliation for her activities as a union steward. When the grievance was presented to a five member arbitration panel pursuant to the CBA, the panel determined that the grievance lacked merit, without addressing whether a labor law violation had occurred.

In the meantime, Beneli and the union had filed an unfair labor practice charge against Babcock and Wilcox, which was pursued by the NLRB’s regional office. Following NLRB precedents that made deferral to arbitration almost impossible to avoid in cases like this, however, the Administrative Law Judge hearing the case deferred to the grievance committee’s decision and refused to determine for himself whether Beneli had been the victim of an unfair labor practice.
Some of the leading NLRB precedents had been on the books since the employer-friendly days of an NLRB whose majority was appointed by President Ronald Reagan in the 1980’s. The current NLRB General Counsel, appointed by President Obama, decided to use Beneli’s case as an opportunity to persuade the current Board to overrule some of those precedents and adopt a more balanced approach that would permit deferral only in more limited circumstances, and only when the party seeking deferral – typically the employer – can persuade the Board that those circumstances have in fact been satisfied.

The NLRB invited amicus briefs from anyone interested in the issue, and in addition to those filed by a variety of unions, including the AFL-CIO, and management organizations, including the U.S. Chamber of Commerce, was one filed on behalf of the Association for Union Democracy by AUD Director Michael J. Goldberg. The AUD’s brief argued in support of the General Counsel’s view that the party seeking deferral should have the burden of proving that deferral is warranted, but it also went further, arguing that the Board should adopt a policy against deferral whenever there is evidence that the victim of employer retaliation is an outspoken critic, or political opponent, of the union officers who handled the grievance. The AUD argued that this change was necessary to protect against the dangers to union democracy that flow from the fact that the union officials who process the grievances on behalf of the members may be the very same officials (or their close allies) who are the targets of the dissident members’ criticism, and possibly their attempts to defeat them in union officer elections. In such situations, it is fairly common for the interests of the union – or at least the union officials handling the grievance – to be more closely aligned with the interests of the employer than they are with those of the member. After all, dissident complaints about a union’s leadership often focus on the alleged failures of union representatives to negotiate better contracts, or to effectively enforce the contracts they have. In these situations, the dissident is a thorn in the sides of both the union and management.

In its decision, the NLRB did not go so far as to adopt the AUD’s proposed standard, but in footnote 10, the Board did acknowledge the AUD’s concerns and suggested that they “can be effectively addressed when the Board is considering whether arbitral proceedings have been fair and regular.” The Board thus left the door open for targets of employer retaliation who are also dissidents in their unions to argue that the circumstances of their particular cases can justify nondeferral by the NLRB even where other criteria for deferral are seemingly satisfied.

Although the AUD does not believe that the decision goes far enough in protecting rank-and-file unionists, this decision is an important and necessary step forward in ensuring that the NLRB upholds federal labor law and does not defer cases in which a clear violation occurred. While NLRB deferral to arbitration awards sometimes makes sense, under the deferral standards in place for the last thirty years or so, the Board went too far in “outsourcing” the enforcement of federal labor law to private arbitrators in a manner generally favored by employers, who don’t want to see workers they have fired have a second chance to get their jobs back after they have lost their grievance. As the Board explained in its December 14th decision, the old standard “create[d] excessive risk that the Board [would] defer when an arbitrator ha[d] not adequately considered the statutory issue, or when it [was] impossible to tell whether he or she ha[d] done so.”

Under the NLRB’s new approach, the burden is on the proponent of deferral to demonstrate that the parties actually presented the statutory issue to the arbitrator, that the arbitrator actually considered the statutory issue (or was prevented from doing so by the party opposing deferral), and that Board law reasonably permits the award. There is still too much wiggle room in the NLRB’s deferral policies, and there is no guarantee that in the future, an NLRB dominated by the appointees of a Republican president will not return to the excessively pro-deferral standards of the past. But for now, the protections of the National Labor Relations Act are a little more concrete than they have been for quite a long time.

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