The General Counsel’s office of the NLRB has issued a memorandum – Guideline Memorandum Concerning Deferral to Arbitral Awards and Grievance Settlements in Section 8(a)(1) and (3) Cases – that urges the Board to adopt a new approach to its arbitration deferral policy. Under the current deferral policy, as established by Collyer Insulated Wire, 192 NLRB 83 (1971) and United Technologies Corp., 268 NLRB 557 (1984), the agency defers making a final determination on certain unfair labor practice (ULP) charges when a grievance involving the same issue(s) can be processed under the grievance/arbitration provisions of the parties’ collective bargaining agreement. The purpose of doing so, according to the Board, is to encourage collectively-bargained dispute resolution.

The GC’s memo, however, claims that the current deferral process does not sufficiently safeguard employees’ Section 7 rights under the National Labor Relations Act. The memo explains that Supreme Court cases dealing with non-labor employment rights have required a showing that the arbitrator was explicitly authorized to decide the underlying statutory issue and applied the appropriate statutory standard, before giving effect to the award. The GC claims that in contrast, the Board’s standards for accepting an arbitrator’s decision as a final resolution of an NLRA dispute are “overly deferential.” In Olin Corp., 268 NLRB 573 (1984), the Board ruled that an arbitration award is to be considered a final resolution of the matter so long as the contract and statutory issues were “factually parallel” and the arbitrator was “presented generally with the facts relevant to resolving the unfair labor practice.”

Because the GC claims employees’ Section 8(a)(1) and 8(a)(3) rights are not sufficiently protected under this scheme, the regional offices are instructed not to “defer to an arbitral resolution unless it is shown that the statutory rights have adequately been considered by the arbitrator.” To that end, the new approach will require that the party requesting deferral demonstrate that: (1) the CBA had the statutory right incorporated in it or the parties presented the statutory issue to the arbitrator; and (2) the arbitrator correctly enunciated the applicable statutory principles and applied them in deciding the issue. If this showing is made, the Board will defer to the arbitration award unless the award itself is “clearly repugnant to the Act.” An award would be considered clearly repugnant if it is “palpably wrong,” i.e., the arbitrator’s decision or award “is not susceptible to an interpretation consistent with the Act.” This new framework will be applied by the regional offices to Section 8(a)(1) and 8(a)(3) discipline and discharge cases, as well as all other cases involving Section 8(a)(1) conduct that is subject to challenge under a contractual grievance provision.

The GC also recommends that the Board change its standards for deferral to pre-arbitral grievance settlements. Specifically, the GC urges the NLRB to adopt a rule that gives no effect to a grievance settlement “unless the evidence demonstrates that the parties intended to settle the unfair labor practice charge as well as the grievance.” In addition, the GC memorandum issues new instructions for processing cases before they are deferred to arbitration. Specifically, NLRB regions are directed to take affidavits from the charging party and from all witnesses within the charging party’s control before the decision is made to defer the case to arbitration. The rationale for doing so is that “substantial time may pass while the arbitration process proceeds when a case is deferred,” and therefore an “investigation of the alleged unfair labor practices at the end of the process is more difficult.”

The GC’s memo does not change the current state of the law, but it does put all parties on notice that the NLRB’s regional offices will be looking for opportunities to present this issue to the Board for ruling. Practically speaking, this means that NLRB regional offices will be scrutinizing arbitration awards more closely to assure that the statutory issue was presented to the arbitrator and that the arbitrator considered and decided that issue in accordance with statutory principles. It will no longer be sufficient to show that the arbitrator was presented generally with the same facts that would have been considered by the Board. Conceivably, if an arbitrator finds “just cause” in a discharge case but does so without referring to the issue of anti-union motivation, or without applying the “shifting of burdens” analysis applicable in NLRB proceedings under Wright Line, the General Counsel could issue a complaint and urge the NLRB to refuse to defer to the award. Moreover, an employer who settles a grievance without obtaining an express release of statutory claims could discover the grievant later seeking the proverbial second bite at the apple when the grievant files an unfair labor practice charge with the Board.

Photo credit: Alex Nikada