Management Rights: A Pitfall When Negotiating Your First Contract

Over the past year, impressive numbers of workers, especially in the retail and service sectors, have begun the process of organizing a union. Workers at Starbucks, Chipotle, Trader Joe’s, Amazon, and other establishments have won union elections.

Many of these unions are now negotiating for their first contracts—always a difficult task. Employers can drag out the process for months or years. And employers may seek contract language that grievously weakens the union, now and for years to come.

Among the biggest pitfalls in first-contract negotiations are employer demands for language covering:

• Management rights
• Cardinal offenses
• Past practices
• No-strike agreements
• Zipper clauses
• Duration of benefits

This article focuses on management rights. Future articles will discuss other pitfalls.

First, a warning: Some members of the bargaining team may assume that if the union gives in to compromising language in the first contract, it will be able to revise the agreement the next time around.

But as veteran union leaders are painfully aware, once a union agrees to a contract provision that affords an employer expansive rights—for example, the exclusive right to enact work rules—getting it out is harder than Hades.

MANAGEMENT RIGHTS CLAUSES

Management rights clauses have found their way into almost all union contracts. But for years, they often consisted of a single sentence.

For example, an SEIU agreement with Boston University says: “Except to the extent expressly abridged by a specific provision of this Agreement, the University reserves and retains, solely and exclusively, all of its rights to manage the University and its activities and operations.”

Another common provision reads: “The employer retains the responsibility and authority of managing the company’s business.”

Unions can safely agree to such clauses, sometimes as exchanges for language guaranteeing union security or dues checkoff.

In recent years, however, many employers have attempted to expand management rights clauses. Their goal is to take away two important—one might even say existentially important—union rights.

First, employers want to take away the union’s statutory right to receive advance notice of any significant changes that might affect employees. Second, they want to take away the union’s legal right to bargain to agreement or impasse before the employer puts the change into effect.

This body of law is known as the rule against unilateral changes. It was approved by the U.S. Supreme Court in 1962 in a decision called NLRB v. Katz, and is one of the strongest benefits of forming a union.

Following Katz, employers began to demand management rights clauses that waived the union’s right to bargain over a wide array of mid-contract changes. Many proposals detailed a long list of subjects—for example, subcontracting, assigning duties, and adopting work rules—that the employer could carry out without notice or bargaining.

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It has now gotten to the point where a union that agrees to such a clause may actually be putting itself in a weaker position than if it refused to sign a contract at all. At least then, the employer would have to bargain to agreement or impasse before changing or adopting new terms or conditions of employment.

Management rights clauses became even more of a burden in 2019 when the Trump Labor Board issued its decision in MV Transportation. MV says employers can make unilateral changes in all areas that fall under the “compass or scope” of a management rights proviso, ending the longtime union-friendly “clear and unmistakable” standard.

RESPONDING TO A DEMAND

One response to an employer demand for an expansive management rights clause is to refuse it unless the employer narrows it down to a simple acknowledgment that the employer manages the enterprise.

A union bargainer might say: “Most of your language is totally unnecessary. Obviously, you have the right to manage the enterprise—and we are willing to will put that into the agreement. But we also have a right to have a properly functioning union.

“Your proposal takes away our voice on almost every possible change over the term of the agreement. If we agree to this, we will have fewer rights than we have now! The reason we formed this union is to have an input into the decisions that affect us.”

The union might also threaten to file a Labor Board charge asserting that the employer’s insistence on an expansive management rights clause is an unfair labor practice.

Support comes from the case Public Service Co. of Oklahoma, 334 NLRB 487 (2001) which held that insisting on proposals that grant an employer “unilateral control over virtually all significant terms and conditions of employment during the life of the contract” is evidence of bad faith bargaining.

Another union response might be a demand that a sentence such as the following be added to the management rights clause:

“Notwithstanding anything in the preceding clause, the employer agrees that it will give the union notice before adopting or changing any rule, policy, or practice having a significant impact upon one or more members of the bargaining unit. Moreover, if the union requests, the employer will bargain in good faith, to agreement or impasse, before carrying out the change.”

WHITHER THE BOARD?

In 2019, when the Labor Board issued MV Transportation, the Board consisted of three Republican members and one Democrat.

That ratio was upended by President Biden. There are now three Democratic members and two Republicans. One of the Democrats, now-Chairperson Lauren McFerran, had dissented in 2019, warning that the new standard would “frustrate the bargaining process, inject uncertainty into labor management relationships and ultimately increase the prospect for labor unrest.”

The Biden majority has begun (haltingly) to overturn Trump-era rulings. MV Transportation is a likely candidate for reversal. In that event, many expansive management rights clauses that unions agreed to may lose their legal foundations.

As a consequence, however, employers may try to make management rights clauses even more comprehensive. In any event, management rights language is sure to be a hot bargaining topic for many years to come.

Labor attorney Robert M. Schwartz is the author of No Contract, No Peace: A Legal Guide to Contract Campaigns, Strikes, and Lockouts.