In a 3-1 decision, the National Labor Relations Board (Board) in Johnson Controls, Inc., 368 NLRB No. 20 (July 3, 2019), adopted a new standard that applies to an employer’s anticipatory withdrawal of union recognition, and set forth a new framework for determining whether a union has reacquired majority status.  The Board’s new model settles majority status disputes through a secret-ballot election when the employer and the union both have evidence supporting their positions.

The Board’s new standard overrules prior precedent that permitted a union to defeat an employer’s announced intent to withdraw recognition in an unfair labor practice proceeding by presenting evidence that the union reacquired majority status in the period between the employer’s anticipatory notice of withdrawal and actual withdrawal.  Instead, under the new standard, evidence of a union’s actual loss of majority support, if received by an employer within 90 days prior to contract expiration, conclusively rebuts a union’s presumptive continuing majority status when the contract expires.  However, a union may attempt to reestablish majority status by filing a petition for a Board election within 45 days from the date an employer gives anticipatory notice of withdrawal of recognition.

Prior Process for Withdrawing Recognition

Under Section 9(a) of the National Labor Relations Act (Act), employers must recognize and bargain in good faith with unions that have been certified as the exclusive bargaining representative for an appropriate unit of employees.  Such unions enjoy a presumption of majority status for one year following the Board’s certification (the “certification bar”) and, should a contract be reached, have a conclusive presumption of majority status during the term of the collective bargaining agreement, up to three years (the “contract bar”). 

Under long-standing precedent, an employer that received evidence—within a reasonable period of time before its existing collective bargaining agreement expired—that the union no longer enjoyed majority support, may notify the union that it intends to withdraw recognition from the union when the CBA expires.  This is known as anticipatory withdrawal.  Although the employer must continue to comply with the existing contract until its expiration, it may suspend bargaining or refuse to bargain for a successor agreement.

Under the Board’s decision in Levitz Furniture Co. of the Pacific, 333 NLRB 717 (2001), however, when the contract expired, an employer that made a lawful anticipatory withdrawal of recognition still acted at its peril by withdrawing recognition.  If the union challenged the withdrawal through an unfair labor practice charge alleging that the employer violated Section 8(a)(5) of the Act by withdrawing recognition and/or refusing to bargain, the employer had to prove the union lacked majority support when recognition was actually withdrawn.  The union could present evidence it reacquired majority status in the period of time between the anticipatory withdrawal and actual withdrawal of recognition.  Thus, the standard had been a “last in time” rule, as the union’s evidence controlled the outcome even if the employer was correct that the union lacked majority status when the employer made the anticipatory withdrawal of recognition.

The remedy for improper withdrawal of recognition when the union had regained majority status before actual withdrawal usually included an affirmative bargaining order, which precluded any challenge to the union’s majority status for a reasonable period of time.  In addition, if the parties then agreed on a new CBA, the union’s majority status would again be protected by the contract bar doctrine for up to another three years. 

Withdrawal of Recognition in Johnson Controls and ALJ Decision

In Johnson Controls, the employer and the union were parties to a collective bargaining agreement running from May 7, 2012 through May 7, 2015.  Negotiations for a successor contract began on April 21, 2015. On April 21, however, the employer received a “Union Decertification Petition” signed by 83 of the 160 bargaining unit employees.  That same day, the employer notified the union of the petition, and announced that it would no longer recognize the union as the employees’ bargaining representative when the contract expired on May 7—an anticipatory withdrawal of recognition.  The employer also informed the union it was cancelling the remaining bargaining sessions. 

The union objected and demanded that the employer continue bargaining.  In addition, the union collected new signed authorization cards and informed the employer it had “credible evidence” that it retained majority support.  The employer nevertheless withdrew recognition from the union on May 8.  Shortly afterwards, the employer announced several improvements to the employees’ terms and conditions of employment, including a 3% wage increase and a match to the employees’ 401(k) retirement contributions. 

On August 28, a group of employees filed a petition for decertification, but the union filed an unfair labor practice charge, blocking that effort.

At the ALJ trial, it became clear that six employees who had signed the April 21 decertification petition later also signed union authorization cards circulated by the union between April 27 and May 7.  However, four of the six “dual signers” testified that they did not want the union to represent them on May 8, which was the actual day the employer had withdrawn recognition from the union.  As such, the ALJ concluded that the union did not have majority support when the employer withdrew recognition on May 8.  The ALJ found that the withdrawal of recognition was lawful and dismissed the complaint, and the Union appealed to the Board.

New Standard for Anticipatory Withdrawal

In Johnson Controls, the Board shone a light on the myriad problems caused by the Levitz framework.  Under Levitz, even when an employer has made a lawful anticipatory withdrawal of recognition, it still acts “at its peril” by withdrawing recognition upon the contract’s expiration because the union could defeat the withdrawal by providing evidence that, after anticipatory withdrawal and before withdrawal in fact, it reacquired majority status.  Thus, an employer could “unexpectedly find itself on the losing end of an 8(a)(5) charge.” The remedy for this violation typically includes an affirmative bargaining order, preventing any challenge to the union’s majority status, generally for six months to one year.

The Board also noted the often contentious and confusing times employees face under Levitz when asked to express whether they prefer union representation.  Under Levitz, the Board deemed determinative the employees’ most recently made expression of union representation, i.e., the last in time rule.  This framework “creates an opportunity, if not an actual incentive, for incumbent unions to take advantage of the ‘last in time’ rule to extend the bar against challenges to its representative status for years to come, to the detriment of employees’ Section 7 rights to choose a different bargaining representative or to refrain from union representation altogether.”   Moreover, as seen in several recent cases, because unions were not required to provide evidence of reacquired majority status to employers prior to contract expiration, employers could violate the Act unknowingly, by withdrawing recognition where a union has covertly reestablished majority support.   

To remedy these concerns, the Board in Johnson Controls announced a new framework in the anticipatory withdrawal context to address questions about employees’ representational preference—a Board-conducted, secret-ballot election, which is the preferred method of deciding such questions.  The Board explained that its new mechanism properly safeguards employee free choice about representation, and effectively promotes labor relations stability by ensuring fewer disruptions to the bargaining relationship.

Consequently, the Board modified the “anticipatory withdrawal of recognition” doctrine in two material aspects.  First, the anticipatory withdrawal must be made no more than 90 days before the expiration of the collective bargaining agreement.  Second, if the union wishes to attempt to re-establish its majority status following an anticipatory withdrawal of recognition, it must file an election petition within 45 days from the date the employer announces its anticipatory withdrawal.  If the union does not timely file an election petition, at contract expiration the employer may safely rely on its evidence of the union’s loss of majority support.  If the union files a timely election petition, the employer may still withdraw recognition at expiration of the contract, since a secret-ballot election will be held to determine whether the union has reestablished majority status.  An employer, however, is not required to withdraw recognition at contract expiration.

Impact of the New Standard on Unilateral Changes

Generally, an employer violates Section 8(a)(5) of the Act by making unilateral changes to mandatory subjects of bargaining, such as employee wages and retirement benefits, while the union enjoys majority status.  Although in Johnson Controls the union did not challenge the employer’s new benefits, the Board provided direction about the impact of its new standard on employers’ post-withdrawal unilateral changes.  Even under the new standard, unilateral changes still “entail substantial risk.”  The Board reviewed four scenarios:

1.  Unilateral change in gap period between contract termination and union election:  An employer that makes unilateral changes in unit employees’ terms and conditions of employment during this intervening period would not violate Section 8(a)(5), since the employees’ showing of disaffection will have rebutted the union’s post-contract presumption of continuing majority status.  However, after the union files the election petition, such unilateral changes could constitute a conferral of a benefit on employees that destroys pre-election “laboratory conditions” by reasonably interfering with employee free choice (e.g., a wage increase appearing as a bribe to employees to vote against the union), and the Board could direct a second election.           

2.  Union loses the election and raises no challenges or objections:  If the union loses the election and does not either challenge an outcome-determinative number of ballots or file objections to the election, the employer may make unilateral changes.

3.  Union loses the election and challenges an outcome-determinative number of ballots and/or files objections:  In this scenario, the employer makes post-election unilateral changes at its peril.  If successful union ballot challenges swing the outcome of the election, the union’s representative status would be established as of the date of the election, and the employer’s unilateral changes after that date would violate Section 8(a)(5).  Alternatively, if the union were to prevail on its objections, the Board would direct a second election, and the employer’s unilateral changes prior to that election could furnish grounds for the union—if it loses the second election—to file objections yet again and obtain a third election.

4.  Union wins the election and the employer challenges an outcome-determinative number of ballots and/or files objections:  Again, the employer makes post-election unilateral changes at its peril since it might not be successful in its challenges and/or objections.  Even if the employer succeeds in securing a second election, as explained above, its unilateral improvements to employees’ terms and conditions of employment during the pre-election critical period could be fodder for the union to obtain yet a third election.

In short, while an employer may now safely withdraw recognition after the contract expires following a lawful anticipatory withdrawal, making unilateral changes before post-election proceedings have run their course poses considerable risks of not only violating Section 8(a)(5), with its usual remedies, but also of self-sabotaging a rerun election.

Conclusion  

The new framework in Johnson Controls provides more clarity to the employer community about how to respond to employees’ desires to oust union representation near the expiration of a contact. Though the circumstances in which Johnson Controls applies are relatively narrow, the Board has advanced employee free choice by requiring unions to demonstrate their majority status through a secret-ballot election, instead of allowing them to file ULP charges that may delay giving effect to employees’ wishes for years to come.