atLaw
In a case before the United States Court of Appeals for the First Circuit, Hanify & King recently prevailed in overturning a decision by the National Labor Relations Board (“NLRB” or “Board”) that a company violated federal labor law when it implemented a marketplace wage plan after bargaining to impasse with the Teamsters Union.
After the expiration of a collective bargaining agreement between the employer and the Teamsters, the parties negotiated a “marketplace pay plan” which would permit the company to pay fluctuating wages based on market conditions so long as the wages exceeded a stated threshold. Unable to reach agreement on the compensation proposal and after bargaining to impasse, the company unilaterally implemented the marketplace wage plan. In response to the employer’s action, the Teamsters filed unfair labor practice charges before the NLRB.
Under well-accepted labor law principles, an employer may unilaterally implement a contract proposal concerning wages after bargaining to impasse with the union concerning the matter. In this case, however, the NLRB departed from the general rule and applied an exception that bars an employer from implementing a wage proposal where the employer retains discretion over the amount and frequency of wage increases. The Board held that the employer’s implementation of the marketplace pay plan violated the National Labor Relations Act by limiting the union’s role in negotiating future wage increases and vesting too much discretion with the company.
In its first opportunity to consider this exception to the implementation-after-impasse rule, the First Circuit Court of Appeals was critical of the NLRB’s application of the exception in this case, noting that “the Board owes the employer and a reviewing court something more of a reasoned explanation of where it draws the line and why the line has been crossed in this instance.” Accordingly, the Appeals Court found in the company’s favor and overturned the NLRB’s decision.
The case is Edward S. Quirk Co. v. NLRB and Teamsters Local Union 25, 241 F.3d 41 (1st Cir. February 2001). The company was represented by Terence P. McCourt and Laurie J. Hurtt of Hanify & King’s Labor and Employment Group.
