NLRB Limits Applicability of Management Rights Clauses

December 12, 2024

Earlier this week, the National Labor Relations Board overturned yet another precedent that affects how employers can run their businesses. The Board overturned the 2019 ruling in MV Transportation, Inc., 368 NLRB No. 66 (2019), which gave employers greater ability to make unilateral changes to their workplace, so long as their actions were covered by their respective collective-bargaining agreement.

The Old Standard

Under the overturned standard, the plain language of a collective-bargaining agreement dictated whether an employer could make specific unilateral changes to terms and conditions of employment. As such, employers had been able to rely on collectively bargained “management rights” provisions. These provisions gave employers wide latitude to make specific changes to the workplace (in situations considered “within management’s right”) without having to bargain with the union. 

The New Standard

In overturning MV Transportation, the Board returned to a prior standard requiring a “clear and unmistakable waiver” from the union, without which an employer cannot make unilateral workplace changes and instead must bargain with the union. 

Where We Stand Now

Management rights clauses allow employers to efficiently run their businesses because they save the time, worry, and expense of bargaining over every single potential issue as it arises. Unions likely will take the position that the realm of management decisions that could affect a term or condition of employment is endless, meaning employers now will need to worry about potential 8(a)(5) failure to bargain charges when making decisions that were traditionally within management’s right. While the Board suggests its ruling simply promotes the Act’s goal of fostering bargaining relationships, it ignores the practical realities of both collective bargaining and running a business.

Because of this decision, both employers and unions likely will see an increase in costs as a result of having to bargain for specific, clear and unmistakable waivers throughout the collective-bargaining agreement. Employers will also likely see an uptick of 8(a)(5) failure to bargain charges based on decisions that normally would have been covered by their management rights clauses.

If you have questions over your rights as an employer or how this decision may affect your ability to operate your business, please contact Gaetano Urgo at gurgo@dcamplaw.com or by phone at (312) 995-7128.