THE “COVERED-BY” DEFENSE MUTATES

Those of you who have to deal with the “covered-by” defense to a bargaining demand should take a look at the most recent private sector decision.    It creates a third version of the doctrine that you will have to deal with soon no matter what side of the bargaining table you occupy. The U.S Second Circuit Court of Appeals just decided a case known as IBEW and Rochester Gas & Electric v. NLRB.  The NLRB argued that there is no such thing as a “covered-by” defense in the private sector and several judicial circuits have agreed with that.  Other courts, particularly when it comes to federal sector cases, have ruled that there is such a defense and the employer can win with it if it shows that either the express wording of the contract demonstrates the parties already bargained over the matter or the union’s current demand was inseparably part of the bargaining conversation and deal on the topic. That is a miserably ambiguous standard to apply whether you are management or the union and leads to lots of damages for management when it guesses wrong. Check out “Dubester Criticizes Covered-by Defense,” for a better explanation of the current state of the covered-by law.

Now the second circuit court has decided that both the NLRB and the other circuit courts have it wrong and outlined a new test. Here it is in the court’s own words.

Where, as here, the Board’s determination regarding waiver is based upon an interpretation of a contract, we begin by making a threshold, de novo determination of whether a matter is “covered” by the contract—meaning that the parties have already bargained over the matter and set out their agreement in the contract. Only if we conclude as a matter of law that the matter was not covered by the contract can we consider whether the Board’s finding regarding waiver was supported by substantial evidence.⁶

Put another way, we use a two-step framework to decide whether there has been a valid waiver of the right to bargain over a particular decision or its effects. At the first step, we ask whether the issue is clearly and unmistakably resolved (or “covered”) by the contract. If so, the question of waiver is inapposite because the union has already clearly and unmistakably exercised its statutory right to bargain and has resolved the matter to its satisfaction. . . . If we determine that the applicable CBA does not clearly and unmistakably cover the decision or effects at issue, we proceed to the second step, at which we ask whether the union has clearly and unmistakably waived its right to bargain. As noted above, such a waiver “may be found in an express provision in the parties’ collective bargaining agreement, or by the conduct of the parties, including their past practices and bargaining history, or by a combination of the two.” United Techs. Corp., 884 F.2d at 1575. Whether a party has effectively waived its statutory right to bargain is therefore a mixed question of law and fact

The good news for federal sector unions is that this should be a tougher test to meet for management than the current one foisted upon us by judge Harry Edwards and the D.C Circuit.  Management must make its case that the matter is covered by a contract with “clear and unmistakable evidence.”  That is a very high hurdle.

Who knows where we go next?  A yet to be nominated third member of the FLRA will decide whether to side with Pope or Dubester, and then we will have to see whether the D.C Circuit agrees.  Given all the confusion, we may even see a Supreme Court decision on covered-by soon.

Another welcomed aspect of the second circuit’s decision was its assertion that the covered-by defense may mean management does not have to bargain over the substance of the decision, but still be obligated to bargain over the “effects” or what we in the fed sector typically call “impact and implementation” or “appropriate arrangements.”  Clear and unmistakable evidence must exist showing both topics were already negotiated.  Again, in the court’s own words–

Although an intent to permit the Company to change its policy regarding vehicles without the need to bargain over the effects of such a decision may be a plausible reading of the contract, it is not a clear and unmistakable exercise of the Union’s bargaining power regarding those effects. Thus, although the CBA reserves to Rochester Gas the right to make the decision to implement the Vehicle Policy Change,¹² we conclude that it does not clearly and unmistakably “cover” the disputed issue. That is, the CBA does not clearly and unmistakably set out whether (and how) Rochester Gas must account for the effect that the Vehicle Policy Change has on the employee benefits relating to the vehicles. Therefore, at step one of our analysis, we conclude that the Union did not already exercise its statutory right to bargain over the effects of the Vehicle Policy Change.

If you missed our following posting about covered-by, now would be a good time to check it out. “Octomom and the Covered-by Defense,“