Goose, Gander & NLRB: The Board’s One-Way Union Preference Holding Rejected By Federal Appellate Court

As the title suggests, the National Labor Relations Board recently pursued an outcome that was unfair to business.

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(“I’m shocked, shocked to find that gambling is going on in here!”) Fortunately, the First Circuit Court of Appeals rejected the NLRB’s arguments.

This is really a simple case. People recognize basic fairness when they see it. Consider these epigrams.

What is good for the goose is good for the gander.” (English playwright John Heywood, 1562)

In case of dissension, never dare to judge till you’ve heard the other side.” (Greek playwright Euripides, circa 430 B.C.)

“You cut, I choose.” (Said by my sister Kathy to me or vice versa on numerous occasions back in the day)

In the same way, a basic lack of fairness also is easy to spot.

Heads I win; tails you lose.” (The earliest known user of this phrase was Congress, naturally, in 1802)

Unseen, in the background, Fate was quietly slipping the lead into the boxing-glove.” (Very Good, Jeeves!, by P.G. Wodehouse, 1930)

“I’d rather owe it to you than cheat you out of it.” (A favorite response of my mom to the occasionally unreasonable requests of her kids)

The decision of the First Circuit Court of Appeals in Southcoast Hospitals Group v NLRB inspired this focus on fairness. Southcoast formed in 1996 when three hospitals merged. The smallest of those hospitals (Tobey Hospital) had a partially unionized workforce; currently the collective bargaining agreement covers approximately 215 of 550 positions. The other two hospitals have non-union workforces (2700 and 2100 employees).

The CBA in place at Tobey at all relevant times has included a hiring preference for union members. A bargaining unit position vacancy must be filled with a union-member applicant “unless all union applicants are unqualified for the position.” Only in that case could a non-union applicant be considered for an open bargaining unit position.

In 1999 Southcoast adopted a policy for filling vacancies in non-union positions. Under the policy a non-bargaining unit position vacancy must be filled with a non-union applicant provided that non-union applicant’s “qualifications substantially equal the qualifications of” any union applicant. In other words, while the policy creates a non-union preference, it still allows for the best qualified to be selected, even if that person is a union member. Southcoast viewed the policy as a matter of equity; “if the union excludes nonunion employees from the first round of consideration for union positions at Tobey, then ‘it should work the same way in the other direction.’”

The “best qualified” distinction notwithstanding, the union eventually complained. It filed an unfair labor practice charge with the NLRB’s Regional Director, who found the charge had merit and filed a complaint with the Board alleging that the policy “illegally discriminates against union members in violation of section 8(a)(3) and (1)” of the National Labor Relations Act. The matter went to hearing and the ALJ sustained the charge. A three-member panel of the Board eventually affirmed the ALJ’s holding on the grounds that Southcoast’s non-union preference policy did not serve its legitimate and substantial business interests. Southcoast took an appeal to the First Circuit.

On appeal, Southcoast argued that the Board acted arbitrarily and without substantial evidence when it rejected Southcoast’s non-union preference policy. Southcoast argued that the policy serves its legitimate and substantial interest in helping to level the playing field between union and nonunion workers. “Because a nonunion employee cannot be considered for a union position unless no qualified union member applies for the position, Southcoast argues, it is only fair to grant nonunion employees a similar hiring preference when filling nonunion positions.”

Analyzing the evidence, the First Circuit rejected the Board’s determination that the policy went beyond leveling the playing field and instead disproportionately favored non-union employees over union employees. Although Southcoast’s policy gave non-union employees a preference for more positions (roughly 5135 non-union positions versus 215 union positions), the appellate court (adopted a position raised by the Board dissenter and) found that the Board had ignored the number of employees who enjoyed each preference.

“Because the ratio of covered positions to covered employees is substantially the same under both [Southcoast’s non-union preference policy] and the union hiring policy, one cannot say that a nonunion employee is necessarily more likely than a union employee to obtain a successful transfer simply because [the non-union preference] covers more positions.”

Because the record supported Southcoast’s contention that its effort to level the playing field serviced a legitimate and substantial business interest without giving non-union workers any greater opportunities than union workers, the First Circuit vacated the Board’s decision. It reminded the Board that the Board’s role is not to “second guess business decisions.” Where an employment policy “accomplishes a legitimate goal in a nondiscriminatory manner” the Board may not reject it “merely because the Board might see other ways to do it.”

Recall that the Board decision rejected by the First Circuit was a split decision. Philip Miscimarra was the dissenting Board member whose reasoning was embraced by the appellate court. Yesterday President Trump appointed Mr. Miscimarra to be the NLRB’s acting chair.