D.C. Circuit Unties Employer's Hands After Contract Expiration
The yearly revisions to employers’ medical plans before open enrollment is a common practice that rarely generates thoughts beyond controlling costs. For the unionized employer with a non-union medical plan, the process is more nuanced. This is especially true when the collective bargaining agreement has expired and the parties have not reached a new agreement. In E.I. Du Pont de Nemours and Company v. NLRB, 2012 U.S. App. LEXIS 11604 (D.C. Cir. June 8, 2012), the employer was in just such a position and moved forward with changes to its medical plan post-contract expiration. In fact, the employer had made changes to its medical plan each year prior to open enrollment without bargaining and without objection from the union. The contract provided for unionized employees to participate in the plan “subject to the terms and conditions” of the plan. The plan itself contained a reservation of rights clause allowing for the changes in price or level of the plan coverage prior to annual enrollment.
As expected, the union filed an 8(a)(1) and 8(a)(5) charge, claiming the employer made a unilateral charge to the medical plan during ongoing negotiations with the union. Equally as expected, the National Labor Relations Board held the employer violated the Act.
The D.C. Circuit, however, held the Board departed from its precedent of allowing changes in working conditions made after contract expiration when the changes were grounded in past practice. In its findings, the court rejected the Board’s argument that the past practice was only during the term of the contract and there was no past practice of changes post-contract expiration. The court also rejected the Board’s argument that the past practice arose pursuant to the management rights clause, explaining that the lawfulness of the change does not depend on the survival of a contractual waiver but on whether the change is grounded in a past practice. Quoting the Board’s own words in previous cases, the court found the “past practice is not dependent on the continued existence of the [expired] collective bargaining agreement.”
While the court’s remand of the case back to the Board may be a victory for this employer, the Board is not bound by the court’s decision in any other cases. As a result, employers will continue to face questions regarding post-contract expiration changes to health and welfare plans and should anticipate the current Board’s analysis of such changes.