Pay raises and unions -- what does the law allow?

Question: Our newspaper is currently in labor negotiations with a union, and we are stuck on the wage issue. Is it lawful to grant pay raises to our non-union employees while forgoing them for the represented employees?

Answer: The U.S. Court of Appeals for the D.C. Circuit, in a June 30, 2017, decision, reversed a two-to-one decision of the National Labor Relations Board and held that the employer lawfully granted unrepresented employees a 3 percent wage increase while withholding the same from represented employees whose union was negotiating a first-time contract with the employer.

The D.C. Circuit was obviously influenced by NLRB Member Miscimarra's dissenting opinion. The D.C. Circuit noted that the board has long held:

"Absent an unlawful motive, an employer is privileged to give wage increases to his unorganized employees, at a time when his other employees are seeking to bargain collectively through a statutory representative. Likewise, an employer is under no obligation under the act to make such wage increases applicable to union members, in the face of collective bargaining negotiations on their behalf involving much higher stakes." [Emphasis added]

The court held that, in order for there to be a violation of Section 8(a)(3), discrimination under the circumstances of this case, the NLRB must find that the employer's action was motivated by anti-union animas, with an intent to prejudice the employees because of their decision to vote for union representation.

(This was the second trip to the D.C. Circuit for this employer. In the first trip to the D.C. Circuit, the court rejected the NLRB's decision that the employer violated Section 8(a)(5). The union had argued that the employer had a past practice of giving raises every year; the D.C. Circuit found that the board could not possibly have concluded that annual, across-the-board increases were an established condition of employment under these facts.)

The court found that there was no substantial evidence to support the board's decision. The court stated that the board erroneously relied upon four findings:

1. Statement No. 1 - The manager stated that the company "was going to give us a raise until we voted the union in." The court criticized the board's reliance on this statement, believing it was nothing more than an accurate statement of the same strategy the board held lawful in Shell Oil. The statement was "merely a realistic statement of the effects of the bargaining obligation which the [employer] incurred when the union was certified to represent the employees".

2. Statement No. 2 - A statement made by a supervisor that $56,000 previously budgeted for a raise was instead going to be used to pay the company's lawyers. The court noted that the statement was "made during ongoing bargaining and faults not the employees' decision to unionize but the employer's increased costs, an unavoidable reality affecting its resources."

Criticizing the board, the court stated, "Perhaps the Board thinks employees do not understand that collective bargaining has costs in addition to benefits, but pointing that out is not an appeal to desert the Union." The court further noted that management did not suggest that "represented employees could capture the wage increase if they abandoned the Union."

3. Statement No. 3 - Supervisors stated that giving the represented employees a 3 percent wage increase "when the Union was demanding a 20% raise immediately and 50% over three years, would have likely provoked a strike," which had been authorized. The second justification was management's claim that they "gave a three percent wage increase to the nonunion employees ... in order to stem the high quit rate among unrepresented supervisors and managers."

The court thought these justifications were "respectively a facially reasonable bargaining strategy and a rational business decision." The court also noted that the board "entirely failed to address why granting a three percent increase to represented employees would not have severely impaired the Employer's bargaining position." The employer also stated that they were "attempting to avoid a charge for 'not good faith bargaining.'"

4. Statement No. 4 - A statement made by a supervisor that "the Union would be gone in November" was made before any increase was approved for the unrepresented employees. The administrative law judge found that that statement "simply indicates that [the Supervisor] believed no contract would be negotiated." The board disagreed but did not explain its basis for doing so.

The court indicated that for that "statement to reflect the Company's antiunion animus when it later withheld the wage increase from represented employees, the Board would have to find that [the Supervisor] knew or foresaw in May that the Employer would refuse to increase the wages of represented employees in October."

Bottom line, the employer's withholding the increase from union-represented employees was for legitimate, non-discriminatory reasons: to preserve bargaining leverage; prevent a strike; and avoid an unfair labor practice charge.

Note: Nothing in this SNPA Legal Hotline Q&A should be relied upon as legal advice in any particular matter.

L. Michael Zinser is the founding partner of The Zinser Law Firm in Nashville, Tenn. The firm, which has a heavy concentration of clients in communications media, represents management in the area of labor and employment. Zinser can be reached at (615) 244-9700 or mzinser@zinserlaw.com.

SNPA's free Legal Hotline for members – (844) 804-2016 – is designed to assist newspapers with a broad range of legal issues. Hotline attorneys and CPAs will tackle questions about circulation, independent contractors, labor and employment law, taxes, finances and accounting, employment benefits, open records, libel and privacy, and other issues newspapers encounter.

The attorneys and CPAs who will take calls from SNPA member newspapers are the best in the business:  The Bussian Law Firm PLLC, Fisher & Phillips, Way, Ray, Shelton & Co., P.C. and The Zinser Law Firm.