Hunton Employment & Labor Perspectives

The Board’s recent decision in Merck, Sharp, & Dohme Corp., 367 NLRB No. 122 (May 7, 2019)  highlights the differences that can arise as a result of the collective bargaining process in the terms and conditions of employment for employers with a divided workforce of non-union and union-represented employees.

In Merck, the Board majority reversed the Administrative Law Judge’s ruling that the employer had violated Section 8(a)(3) and (1) by offering a new, one-time paid holiday, “Appreciation Day” to all of its non-union employees to the exclusion of its union-represented employees.

Here are some factual background and key points of the NLRB’s decision in Merck:

Merck is an international pharmaceutical company with a small percentage of its employees in the United States represented in 9 bargaining units.  After a profitable quarter, the employer decided to grant a one-time paid day off to show its appreciation for its employees.  All employees – except for union represented employees – were granted this new holiday.  The employer’s proffered rationale for excluding its represented employees was that “(1) it was not inclined to approach the Unions to bargain over granting this additional benefit because the Unions had, in the past, refused to agree to the Respondent’s requested midterm contract changes, and (2) unilaterally granting the benefit would violate the Act.”

The Administrative Law Judge had found that the employer’s exclusion of its unionized employees was unlawfully motivated and represented “straightforward punishment of union employees in retaliation for past protected activity under the Act.”

Reversing the Administrative Law Judge’s opinion, the Board iterated that it “has long recognized that an employer has a right to treat represented and unrepresented employees differently, so long as the different treatment is not discriminatorily motivated.”

In assessing whether the employer’s decision to exclude represented employees from the new holiday was unlawful, the Board applied the Wright Line framework, noting that the General counsel bears an initial burden to show “(1) union or protected concerted activity, (2) employer knowledge of that activity, and (3) union animus on the part of the employer.”

Under this analysis, the Board concluded that the General Counsel had failed to meets its initial burden under Wright Line to establish that the employer violate the Act.

The Board found that the employer’s first justification for excluding the unionized employees was “devoid” of animus, but rather reflected the “everyday realities of the bargaining process” and if the unions were “unwilling to entertain proposed midterm modifications and insisted on adhering to the terms of the contracts . . . the unions were going to have to live with the limitations of their contractual benefits along with their advantages.”

The Board likewise found neither animus nor pretext in the employer’s assertion that granting the new holiday would constitute a unilateral change that would violate the Act, noting that the parties’ collective bargaining agreement contained provisions regarding paid holidays.

Thus, the Board concluded that the employer’s decision to exclude represented employees the paid holiday was simply a reflection of the “‘competing forces and counteracting pressures’ that were a part of the historical collective bargaining relationship.”

The Board’s decision underscores the employer’s right to treat non-union and union employees differently so long as the differential treatment was a result of a fair, collective bargaining process and not based on union animus or retaliation for engaging in protected concerted activities.