Question: National Labor Relations Board v. Beverly Enterprises, Inc. 174 F.3d 12 (1st Cir. 1999)

Employer unilaterally instituted a wage decrease and a $5 fee for lost time cards. The union believed management should have negotiated these issues with them. The court agreed.

Bownes, J.

Beverly operates a nursing home in Plymouth, Massachusetts. Historically, Beverly had given its employees annual wage increases on the anniversaries of their respective starting dates with the company. On March 23, 1993, the NLRB certified the Hospital Workers Union, Local 767, Service Employees International Union (theunion), as the exclusive bargaining representative of all full-time and part-time service and maintenance employees at Beverly's Plymouth facility. Beginning in June 1993, the union and the company engaged in contract negotiations. The parties disagreed as to the amount of wage increases the employees would receive. In October 1994, the union told the company that it would be difficult to persuade its unit members to accept an annual increase of less than 4 percent. At the parties' final negotiating session, on December 13, 1995, Beverly responded to the union's earlier proposal of 4 percent by proposing a 2 percent annual wage increase. The union expressed shock at the newly lowered offer and did not immediately make a counteroffer. The parties went on to discuss an unrelated dispute and tempers flared.

The union spokesperson stated that he needed to check with his attorney on the bargaining unit issue. While these negotiations were taking place, Beverly continued to provide its employees with wage increases on their employment anniversaries, and continued to award a maximum wage increase of 4 percent to the overwhelming majority of them. This practice changed in 1996, however. That year, the company gave to approximately 90 percent of the company's unit employees a maximum wage increase of 3 percent. Beverly did not provide notice to the union that it would lower the maximum wage increase from 4 percent to 3 percent, nor did Beverly bargain with the union over the issue. Instead, Beverly unilaterally announced the change to the union in a letter, dated March 14, 1996. The letter described the imposition of the 3 percent maximum wage increase as a "compromise" between the parties' negotiating positions. In approximately January 1996, Beverly changed its system of keeping track of its employees' work time.

It replaced its system of paper timecards with a system using plastic timecards that contained a magnetic strip. Included in its new system was a new policy requiring unit employees to pay a five-dollar fee for lost timecards. In making these changes, Beverly neither gave notice to nor bargained with the union. As of the date of the NLRB hearing on April 15, 1997, the company had collected the five-dollar lost-timecard fee on at least seventeen occasions. Between January and June 1996, the union contacted Beverly on several occasions and requested that it remedy its unilateral changes and that the parties resume bargaining. An employer's duty to bargain with its employees' chosen representatives is an essential element of our national labor policy. The object of the NLRA was to insure that employers and their employees could work together to establish mutually satisfactory conditions of employment. The basic theme of the Act was that through collective bargaining the passions, arguments, and struggles of prior years would be channeled into constructive, open discussions leading, it was hoped, to mutual agreement.

The duty to bargain is part and parcel of that policy's preference for resolving labor disputes peacefully, through good faith collective bargaining, rather than by means of industrial strife which has a destructive effect on the economy. Because of these policy considerations, Section 8(a)(5) of the NLRA, as amplified by Section 8(d), requires an employer to bargain collectively with its employees' representatives over "wages, hours, and other terms and conditions of employment." Section 8(a)(5) makes it an unfair labor practice for an employer "to refuse to bargain collectively with the representatives of [its] employees." That section is also violated if an employer unilaterally changes any term or condition of employment without affording the union representing its employees a meaningful opportunity to negotiate "in fact." In addition, "it is generally unlawful for an employer to withdraw recognition of the union as a means of refusing to bargain." A pay system in which the employer does not exercise discretion in the timing or the amount of the wage increase awarded is a mandatory subject of bargaining. This means, with respect to the anniversary wage increases, that an employer cannot unilaterally change the status quo, as Beverly did here, without bargaining with the union.

Even during negotiations, an employer must maintain the "dynamic status quo" pertaining to employees' wages. Therefore, by unilaterally changing the amount of a fixed wage increase without bargaining with the certified representative of its employees, an employer violates Section 8(a)(5) of the Act. It is important to our national labor policy that companies not act unilaterally on subjects of mandatory bargaining; doing so defeats the whole purpose of that policy's preference for peaceful negotiation of disputes rather than industrial strife. The second unfair labor practice found by the Board was Beverly's unilateral imposition of a five-dollar charge for lost timecards. The company does not dispute that it implemented a new policy requiring all employees to pay a five-dollar charge for lost timecards, nor that it undertook this new policy without notice to or bargaining with the union. Beverly characterizes the change as a mere "change to time-clock procedure," and argues that it therefore does not rise to the level of a change in terms and conditions of employment. But Beverly mischaracterizes the issue: the union did not argue that Beverly had to bargain with the union about a purely mechanical change to its "time-clock procedure."

The company's charging of a fee to employees for lost timecards-not the procedure that management required workers to follow to record their time-constituted a change in a term or condition of employment, and therefore Beverly's unilateral change in such terms or conditions without first pursuing collective bargaining violated the NLRA. The imposition of a replacement fee qualifies as a "material, substantial, and significant" change in the terms and conditions of employment. Beverly argues that the five-dollar charge simply reflected Beverly's passing along its cost to replace a card. But how Beverly derived its five-dollar fee is not the issue. It may be perfectly fair, but the problem is that the fee constitutes a change in the terms and conditions of employment and Beverly must bargain with the union over such issues, not unilaterally impose them unless impasse is reached. The only legitimate question Beverly raises is whether the size of the replacement fee is so small that Beverly could impose it without having to negotiate with the union at all. Our national labor policy prefers employers and employees to bargain collectively over terms and conditions of employment, rather than to take unilateral action that can lead to industrial strife. Under that labor policy, the presumption is in favor of a duty to bargain, and against an exception to that duty on the ground that the unilateral action is allegedly de minimis. The Board's order is ENFORCED.

1. Do you understand why the court said the issue of the new time card system must be negotiated? Explain.

2. Why do you think the employer decided to grant the employees a raise that was smaller than the one the employer usually gave?

3. Do you agree with the employer that the 3 percent raise was a "compromise" wage?