Employer’s Failure to Bargain with Union Proves Costly

Mathew Moldawer
Mathew Moldawer

The National Labor Relations Board (NLRB) has ordered a hospital in Puerto Rico to rehire and provide back pay to eleven maintenance employees who it deemed were illegally terminated.  The September 30, 2023 decision from the three-member panel found that the employer, Metro Health, Inc. d/b/a Hospital Metropolitano Rio Piedras violated Sections 8(a)(5) and (1) by its decision to subcontract the services performed by the Environmental Control Department (ECD) and layoff those same employees.

Under Section 8(a)(5) of the Act, it is an unfair labor practice for an employer “to refuse to bargain collectively with the representatives of its employees.”  An employer who violates Section 8(a)(5) also violates Section 8(a)(1). 

The hospital was party to a collective bargaining agreement (CBA) with the union, Unidad Laboral de Enfermeras(os) y Empleados de la Salud.  Within the CBA, there were several provisions outlining management rights – the right of the hospital to administer and manage its business and labor force; to keep the union apprised of changes impacting the work conditions of the bargaining unit; that the hospital will not lay off employees without justified cause; and a zipper clause.

The Board found the hospital had plans to contract out the work of the ECD as early as March 2021.  However, the union was not informed of that decision until May 2021. When the hospital informed the union of its plan, they stated the change was due not to labor costs but rather motivated by staffing and performance issues. Despite the union’s pleas to not implement the change until bargaining had taken place, the hospital signed the contract to obtain janitorial services in June 2021. Nevertheless, the hospital stated that while it was too late to bargain over the subcontracting of the services, the hospital would be willing to effects bargain. Yet, all the employees of the ECD were laid off at the end of June 2021.

The Administrative Law Judge held the hospital violated Section 8(a)(5) by failing to negotiate over the replacement of the employees with contract employees.  First, the ALJ held that the replacement of employees in the existing bargaining unit with those of a contractor to do the same work under similar conditions of employment was a statutory subject of collective bargaining under Section 8(d), and the hospital’s argument that it had no obligation to bargain was incorrect. Second, the ALJ found the hospital’s argument that their decision was based on deficient performance was contrary to the evidence as the employees in the ECD had excellent performance appraisals.  The argument that the hospital had a “business necessity” was likewise dispensed of due to the lack of any evidence.

Finally, the ALJ found the hospital’s argument that the union waived their right under the CBA failed.  In reviewing whether a waiver through the CBA was present, “the Board examines the plain language of the collective-bargaining agreement to determine whether action taken by an employer was within the compass or scope of contractual language granting the employer the right to act unilaterally” and “If the agreement does not cover the employer’s disputed act, and that act has materially, substantially, and significantly changed a term or condition of employment constituting a mandatory subject of bargaining, the employer will have violated Section 8(a)(5) and (1).”  MV Transportation, Inc., 368 NLRB No. 66, slip op. at *2 (2019). However, the subjects need not be explicitly mentioned in the clauses to constitute a waiver.

The management rights provisions within the collective bargaining agreement fell short of this standard according to the ALJ. The Board agreed with the ALJ’s conclusion.

This case is yet another reminder for employers.  First, employers should make note of their management rights within their CBA.  It is important for employers to know what is, and what is not subject to bargaining.  Second, employers should not rely simply on “business necessity” to circumvent bargaining. If an employer raises business necessity, it should be supported by evidence that the move is unrelated to labor costs or animus.  As you can see with this case, fabricating that the ECD was performing poorly was quickly snuffed out by evidence to the contrary.  Such mistakes may be avoided through consultation with an experienced labor attorney, such as those at Kollman & Saucier.

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