Raytheon Network Centric Systems, 25-CA- 092145

CourtNational Labor Relations Board
Writing for the CourtPhilip A. Miscimarra, Chairman
PartiesRaytheon Network Centric Systems[1] and United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union, AFL-CIO.
Decision Date15 December 2017
Docket Number25-CA- 092145

Raytheon Network Centric Systems[1] and United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union, AFL-CIO.

No. 25-CA- 092145

United States of America, National Labor Relations Board

December 15, 2017


By Chairman Miscimarra and Members Pearce, McFerran, Kaplan, and Emanuel

DECISION AND ORDER

Philip A. Miscimarra, Chairman

In NLRB v. Katz, 369 U.S. 736 (1962), the Supreme Court held that unionized employers must refrain from making a unilateral change in employment terms, unless the union first receives notice and the opportunity to bargain over the change.

In the instant case, the Respondent is alleged to have violated Section 8(a)(5) of the National Labor Relations Act (NLRA or Act) in 2013, following expiration of its collective-bargaining agreement (CBA), when it unilaterally modified employee medical benefits and related costs consistent with what it had done in the past. [2] Relying primarily on the Board's decision in E.I. du Pont de Nemours, Louisville Works, 355 NLRB 1084 (2010) (DuPont I), enf. denied and remanded 682 F.3d 65 (D.C. Cir. 2012), the judge found that the Respondent violated Section 8(a)(5) of the Act. The judge rejected the Respondent's defense that its 2013 adjustments were a lawful continuation of the status quo, even though the Respondent had made similar modifications to healthcare costs and benefits at the same time every year from 2001 through 2012.

Subsequent to the judge's decision, the Board decided E.I. du Pont de Nemours, 364 NLRB No. 113 (2016) (DuPont). [3] In DuPont, which issued without any prior invitation for the filing of amicus briefs, the Board majority dramatically altered what constitutes a “change” requiring notice to the union and the opportunity for bargaining prior to implementation. The majority in DuPont held that, even if an employer continues to do precisely what it had done many times previously-for years or even decades-taking the same actions constitutes a “change, ” which must be preceded by notice to the union and the opportunity for bargaining, if a CBA permitted the employer's past actions and the CBA is no longer in effect. The DuPont majority also stated, as part of its holding, that bargaining would always be required, in the absence of a CBA, in every case where the employer's actions involved some type of “discretion.”

Then-Member Miscimarra criticized the Board majority's decision in DuPont as follows:

When evaluating whether new actions constitute a “change, ” my colleagues do not just compare the new actions to the past actions. Instead, they look at whether other things have changed-specifically, whether a collective-bargaining agreement . . . previously existed, whether the prior CBAs contained language conferring a management right to take the actions in question, and whether a new CBA exists containing the same contract language. If not, the employer's new actions constitute a “change” even though they are identical to what the employer did before.

In effect, my colleagues . . . [hold that] whenever a CBA expires, past practices are erased and everything subsequently done by the employer constitutes a “change” that requires notice and the opportunity for bargaining before it can be implemented. [4]

We conclude that the Board majority's decision in DuPont is fundamentally flawed, and for the reasons expressed more fully below, we overrule it today. DuPont is inconsistent with Section 8(a)(5), it distorts the long-understood, commonsense understanding of what constitutes a “change, ” and it contradicts well-established Board and court precedent. In addition, we believe DuPont cannot be reconciled with the Board's responsibility to foster stable bargaining relationships. We further conclude that it is appropriate to apply our decision retroactively, including in the instant case.

Accordingly, we find that the Respondent's modifications in unit employee healthcare benefits in 2013 were a continuation of its past practice of making similar changes at the same time every year from 2001 through 2012. Therefore, the Respondent did not make any “change” when it made the challenged modifications, and accordingly it lawfully implemented these modifications without giving the Union prior notice and opportunity to bargain. Because the 2013 modifications were lawful, we also find that the Respondent's 2012 announcement of those modifications was lawful. For these reasons, we reverse the judge's unfair labor practice findings and dismiss the complaint. [5]

Background

Since 1997, the Respondent has operated a facility in Fort Wayne, Indiana, where it designs, manufactures, tests, integrates, and installs electronic systems, radars, missile systems, and related equipment for the Federal government and other customers. [6] The Union represents a unit of approximately 35 production and maintenance employees employed at the Fort Wayne facility. The Respondent and the Union (and its predecessor union) have been parties to CBAs for more than 20 years. [7] The parties' most recent CBA ran from May 3, 2009 until April 29, 2012. The Union does not represent any of the Respondent's employees other than those in the Fort Wayne production-and-maintenance bargaining unit.

In 1998, after it had merged with Hughes Aircraft, the Respondent decided to create a uniform, nationwide system of benefits for its employees. On January 1, 1999, the Respondent implemented a comprehensive nationwide “cafeteria-style” benefits plan called the Raytheon Unified Benefits Program (Raytheon Plan). The Raytheon Plan includes healthcare coverage with various options, dental coverage, vision coverage and other benefits, such as an investment plan. Raytheon Medical is a self-insured healthcare option within the Raytheon Plan.

Beginning January 1, 1999, the Respondent made coverage under the Raytheon Plan available to salaried and hourly nonunion employees at the Fort Wayne facility. During annual enrollment periods each fall, employees choose the level of coverage they want. As discussed below, the terms of the Raytheon Plan allow the Respondent to alter costs and benefits for covered employees.

After the Respondent implemented the Raytheon Plan in 1999, its employees in the Fort Wayne bargaining unit continued for a time to receive healthcare coverage under separate plans provided for in the then-current CBA. During negotiations for a successor CBA, however, the Respondent and the Union agreed to make coverage under the Raytheon Plan (including the various medical options under the Raytheon Plan) available to the unit employees effective January 1, 2001. The parties also agreed that the unit employees' contributions for Raytheon Medical would not exceed the rates paid by salaried employees at the facility. The Respondent would pay the majority of the premiums for Raytheon Medical, and employees would be responsible for the balance.

Beginning in January 2001, pursuant to the parties' 2000-2005 CBA, the unit employees received coverage under the Raytheon Plan. Coverage under the Raytheon Plan was also provided under the parties' 2005-2009 CBA and 2009-2012 CBA. Accordingly, every year from 2001 to 2012, and pursuant to the then-current CBA and Raytheon Plan documents referenced therein, the unit employees at the Fort Wayne facility were covered by the Raytheon Plan on the same basis as the Respondent's nonunit employees.

Raytheon Plan documents provide that “the Company reserves the absolute right to amend the plan and any or all Benefit Programs incorporated [therein] from time to time, including, but not limited to, the right to reduce or eliminate benefits, ” and the parties' CBAs referred to and incorporated this right. Thus, the 2000-2005 CBA, 2005-2009 CBA, and 2009-2012 CBA all included provisions stating that the Respondent “reserves the right to amend or terminate said Group Benefit Plans, ” and that “[a]ll benefits . . . are subject in every respect to the terms of the applicable Plan documents under which payment is claimed.” Thus, under the terms of the Raytheon Plan and the successive CBAs, the Respondent had the right to alter costs incurred by and/or benefits received by bargaining-unit members under the Raytheon Plan.

During the fall of each year from 2000 to 2011, the Respondent mailed a document entitled “Your Raytheon Benefits” to participating employees. [8] The document described the available medical and benefit options. The document also described any upcoming modifications to employees' benefits, premiums, deductibles, and copayments that would be effective at the beginning of the next year. The Respondent then made such changes in January of every year from 2001 to 2012. The changes have included, without exception, increases in premiums for health insurance. There have also been various other changes, including changes to available benefits, medical options, deductibles, and copayments.

The Union did not object to any of the changes between 2001 and 2012 or seek to bargain over any of them. There is no dispute that the modifications were authorized by the several CBAs and Raytheon Plan documents referenced therein. At no time since 2001 has there been any hiatus period between CBAs that overlapped with an open enrollment period.

The 2009-2012 CBA was set to expire on April 29, 2012. In February 2012, the Union informed the Respondent that it wanted to open negotiations and schedule bargaining sessions for a successor contract. On April 24, 2012, the Respondent and the Union began negotiations. Over the course of the next 5 months, the parties met 10 times in an effort to reach an agreement. The Union submitted proposals to change contract provisions granting the Respondent the right to make annual changes to unit employees' health insurance. One such proposal was to strike the “pass through” language in the expiring contract [9] and...

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