In yet another end-of-2019 decision overruling significant NLRA precedent, the Board reverted to the less stringent Spielberg / Olin standard for determining whether to defer to arbitration decisions in the context of Section 8(a)(1) and (3) unfair labor practice cases.  See United Parcel Service, Inc., 369 NLRB 1 (2019). The Board issued this decision unanimously, in the first significant decision with only three Republican members after Member McFerran‘s term ended on December 16th.

Factual Background

A package driver was discharged for allegedly violating the employer’s delivery procedures.  The driver filed two grievances under the parties’ collective bargaining agreement, which also alleged that he was discharged in violation of 8(a)(3) of the Act.  The grievance panel denied the grievances.

The driver filed unfair labor practice charges over the same issues as addressed in the grievances.  After trial, an Administrative Law Judge found the discharge violated the Act.  The ALJ applied the 2014 Babcock standard for evaluating the case in light of the grievances.

The NLRB reversed and in so doing, overruled Babcock and reinstated the Spielberg / Olin standard, restoring the standard that had been in place prior to 2014.

Babcock Standard

In 2014, the Board, in Babcock & Wilcox Construction Co., 361 NLRB 1127 (2014), stated it would not defer to arbitral decisions unless “(1) the arbitrator was explicitly authorized to decide the unfair labor practice issue; (2) the arbitrator was presented with and considered the statutory issue, or was prevented from doing so by the party opposing deferral; and (3) Board law reasonably permits the award.” The burden of proof under this standard rested with the party urging deferral.

Babcock also established a standard for pre-arbitral deferral to grievance arbitration proceedings and to pre-arbitral grievance settlements in unfair labor practice cases alleging discharge or discipline in violation of NLRA § 8(a)(1) and (3):  the Board would not defer to grievance arbitration proceedings in these cases unless the parties in a collective-bargaining relationship have “explicitly authorized an arbitrator to decide the unfair labor practice issue, and that it would not defer to grievance settlement agreements that did not comport with the new requirements for postarbitral deferral.”

Almost no grievance procedure provides such explicit authorization, so the Babcock standard resulted in employers having to defend the employment action twice, under the grievance procedure and in unfair labor practice proceedings.

Overruling Babcock

In its unanimous decision, the Board explained that deferral to collectively-bargained grievance-arbitration procedures is meant to balance the Board’s exclusive Section 10(a) authority to prevent unfair labor practices with the NLRA’s purpose to “reduce industrial strife by ‘encouraging practices fundamental to the friendly adjustment of industrial disputes’ and ‘encouraging the practice and procedure of collective bargaining.’” The Board noted it prefers – when feasible – to let “parties resolve employment disputes through negotiated mechanisms of their own choosing without resort to the Board’s processes.”

Spielberg/Olin Standard Reinstated

The Board‘s order has two significant components on arbitration deferral.  First, the Board reinstated pre-arbitral deferral standards that existed prior to Babcock, and second, the Board reverted to the Spielberg/Olin standard for deferring to post-arbitral decisions in unfair labor practice cases alleging discharge or discipline in violation of NLRA Sections 8(a)(1) and (3).

Now, the Board will defer to an arbitration decision and award if: “(1) the arbitration proceedings were fair and regular, (2) the parties agreed to be bound, (3) the contractual issue was factually parallel to the unfair labor practice issue, (4) the arbitrator was presented generally with the facts relevant to resolving the unfair labor practice, and (5) the decision was not clearly repugnant to the purposes and policies of the Act.” The burden is once again on the party arguing against deferral.

The key difference is that the arbitrator need not expressly consider the unfair labor practice, as long as the contractual issue and ULP are factually parallel. Applying the post-arbitral deferral standard to the facts of this case, the Board reversed the ALJ and dismissed the case.  The Board also noted that it would apply this standard retroactively to all other pending cases, at whatever stage.

Implications

This decision makes it far more likely that the Board will defer to the parties’ grievance arbitration process when faced with parallel unfair labor practice claims.  This outcome aligns with long-standing Supreme Court precedent trumpeting arbitration, and encourages the collective bargaining parties to resort to negotiated dispute resolution machinery to resolve their disputes that potentially overlap with unfair labor practices.  It also preserves the parties’ and the Board’s resources by potentially avoiding multiple litigations over the same facts and circumstances.

As noted above, this is the first significant decision after Member McFerran – the lone Democratic member of the Board — left the NLRB at the end of her term on December 16, 2019.  Neither McFerran nor the other prior Democratic member, former Chairman Mark Gaston Pearce, has been replaced by President Trump, and the Board is now comprised of 3 Republican members.  Traditionally, under such circumstances without a minority voice on the Board, the NLRB has declined to overturn precedent.  But the UPS decision appears to depart from this precedent and signals that the Board may continue to stay busy into 2020 by overturning precedent.

Photo of Joshua Fox Joshua Fox

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several…

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several Major League Baseball Clubs in all aspects of the salary arbitration process, including the Miami Marlins, Boston Red Sox, Los Angeles Dodgers, Kansas City Royals, San Francisco Giants, Tampa Bay Rays and Toronto Blue Jays. In particular, Josh successfully represented the Miami Marlins in their case against All-Star Catcher J.T. Realmuto, which was a significant club victory in salary arbitration. Josh also represents Major League Baseball and its clubs in ongoing litigation brought by current and former minor league players who allege minimum wage and overtime violations. Josh participated on the team that successfully defended Major League Baseball in a wage-and-hour lawsuit brought by a former volunteer for the 2013 All-Star FanFest, who alleged minimum wage violations under federal and state law. The lawsuit was dismissed by the federal district court, and was affirmed by the U.S. Court of Appeals for the Second Circuit.

Josh also has extensive experience representing professional sports leagues and teams in grievance arbitration proceedings, including playing a vital role in all aspects of the grievance challenging the suspension for use of performance-enhancing drugs of then-New York Yankees third baseman Alex Rodriguez. Josh also has counseled NHL Clubs and served on the trial teams for grievances alleging violations of the collective bargaining agreement, including cases involving use of performance-enhancing substances, domestic violence issues, and supplementary discipline for on-ice conduct. He has played a key role in representing professional sports leagues in all aspects of their collective bargaining negotiations with players and officials, including the Major League Baseball, National Hockey League, the National Football League, Major League Soccer, the Professional Referee Organization, and the National Basketball Association,.

In addition, Josh has extensive experience representing clients in the performing arts industry, including the New York City Ballet, New York City Opera, Big Apple Circus, among many others, in collective bargaining negotiations with performers and musicians, the administration of their collective bargaining agreements, and in grievance arbitrations.

Josh also represents a diverse range of clients, including real estate developers and contractors, pipe line contractors, hospitals, hotels, manufacturers and public employers, in collective bargaining, counseling on general employment matters and proceedings before the National Labor Relations Board, New York State Public Employment Relations Board and arbitrators.

Josh has also recently served as an adjunct professor at Cornell University’s School of Industrial Labor Relations for the past two years, teaching a course regarding Major League Baseball salary arbitration.

Prior to joining Proskauer, Josh worked for a year and a half at the National Hockey League, where he was involved in all labor and employment matters, including preparations for collective bargaining, grievance arbitration, contract drafting and reviewing and employment counseling. Josh also interned in the labor relations department of Major League Baseball and at Region 2 of the National Labor Relations Board. He was a member of the Brooklyn Law Review and the Appellate Moot Court Honor Society and served as president of the Brooklyn Entertainment and Sports Law Society.

Photo of Mark Theodore Mark Theodore

Mark Theodore is a partner in the Labor & Employment Law Department. He has devoted his practice almost exclusively to representing management in all aspects of traditional labor law matters throughout the U.S. He is Co-Chair of Proskauer’s Labor-Management and Collective Bargaining Practice…

Mark Theodore is a partner in the Labor & Employment Law Department. He has devoted his practice almost exclusively to representing management in all aspects of traditional labor law matters throughout the U.S. He is Co-Chair of Proskauer’s Labor-Management and Collective Bargaining Practice Group.

Some recent highlights of his career include:

  • Successfully defended client against allegations that it had terminated a union supporter and isolated another. T-Mobile USA, Inc., 365 NLRB No. 15 (2017).
  • Successfully appealed NLRB findings that certain of client’s written policies violated the National Labor Relations Actions Act.  T-Mobile USA, Inc., 363 NLRB No. 171 (2016), enf’d in part, rev’d in part 865 F.3d 265 (5th Cir. 2017).
  • Represented major utility in NLRB proceedings related to organizing of planners.  Secured utility-wide bargaining unit. Bargained on behalf of grocery chain.  After negotiations reached an impasse, guided the company through lawful implementation of five year collective bargaining agreement.
  • Coordinated employer response in numerous strike situations including a work stoppage across 14 western states of the client’s operations.

Mark has extensive experience representing employers in all matters before the NLRB, including representation petitions, jurisdictional disputes and the handling of unfair labor practice charges from the date they are filed through trial and appeal. Mark has acted as lead negotiator for dozens of major companies in a variety of industries, including national, multi-unit, multi-location, multi-employer and multi-union bargaining. Mark has handled lockout and strike situations, coordinating the clients efforts.

In addition, Mark has handled hundreds of arbitrations involving virtually every area of dispute, including contract interest arbitration, contract interpretation, just cause termination/discipline, benefits, pay rates, and hours of work.