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Kellogg ordered to end lockout over its bid to use more “casual” workers

Cereal maker Kellogg has been enjoined from forcing an impasse in bargaining over nonmandatory bargaining issues and locking out employees at its Memphis plant. In this instance, a federal district court in Tennessee granted an NLRB regional director’s request for an injunction and determined that it was just and proper to end the lockout and prohibit Kellogg from forcing impasse over terms in the parties’ master agreement. Moreover, it concluded that the posting and monitoring requirements would help ensure that the Board’s remedial powers were not undermined by a failure to adhere to the requirements of the order (McKinney v Kellogg Co, July 30, 2014, Mays, S, Jr). Kellogg and the Bakery Workers union are parties to a master labor agreement covering four Kellogg plants, effective until October 2015. An additional supplemental agreement applying only to Kellogg’s Memphis plant expired in October 2013. When the parties failed to agree on a new supplemental agreement before the existing agreement expired, Kellogg locked out the employees. In bargaining on the supplemental agreement, Kellogg told the union that the Memphis plant needed to cut costs significantly to remain competitive within the company’s manufacturing network. To curb costs, Kellogg wanted to change the “concept” of “casual employees” and greatly expand their role at the Memphis plant. Casual employees. The master agreement provided that casual employees must make $6.00 an hour less than regular employees, but it did not define the scope of their employment or provide for benefits. The supplemental agreement provided that casual employees were employed “to provide regular employees with relief from extended work schedules.” There was no provision altering casual employees’ pay or providing them benefits. Among other restrictions, casual employees were limited to 30 percent of the total number of regular employees. Kellogg proposed that there be no cap on casuals and no limits on their work within the Memphis plant. The “only distinction going forward between a regular and a casual employee” would be their wages and benefits. The union balked at Kellogg’s proposed concept for casuals, and the parties were unable to make progress thereafter. Kellogg conceded that under its proposal, a regular employee could be laid off for business reasons and brought back as a casual employee. Subsequently, Kellogg provided the union with its “last/best offer,” informing the union that it would lock out the employees if the union did not agree within a week. Kellogg’s offer was consistent with its demand for changes in the restrictions on casual employees. According to the regional director, Kellogg’s last/best offer would alter the master agreement. Historically, the parties bargained for changes to wages and benefits for new hires as part of the master agreement. After the union rejected Kellogg’s last/best offer, the employer made good on its threat and locked out the employees, causing them to lose their pay and insurance benefits. The regional director requested a temporary injunction under Sec. 10(j) pending the NLRB’s resolution of the underlying unfair labor practice proceedings. Bargaining to impasse. The parties agreed that forcing impasse over terms settled in the master agreement would violate the Act; however, they disagreed about whether Kellogg’s proposals for a new supplemental agreement would alter the master agreement. Here, Kellogg argued that because the master agreement did not define a casual employee, it was free to negotiate changes to the casual employee program without violating the master agreement. However, the regional director argued that Kellogg’s insistence on changes to the terms of casual employment would alter the terms of employment of new regular employees, a modification of the master agreement. Parties are not required to bargain over nonmandatory subjects. “A party who insists upon a nonmandatory subject to impasse or as a precondition to bargaining violates Section 8(a)(5) of the Act.” Imposing a lockout over nonmandatory terms is unlawfully coercive and “discriminate[s] against the employees for their participation in protected collective bargaining activity.” Good-faith bargaining. Here, the court concluded that there was reasonable cause to believe that Kellogg engaged in unfair labor practices. The regional director’s legal theory was that Kellogg’s proposed terms on casual employees were contrary to and would modify terms in the master agreement. Thus, Kellogg’s terms would be an unlawful basis on which to force impasse and impose a lockout. Significant evidence supported the regional director’s theory. The master agreement governed the wages of new regular employees and set their pay schedule, and the totality of Kellogg’s proposal would have resulted in changes to those wage rates. Kellogg’s proposal would have made casuals the same as regulars except for casuals’ pay and benefits, and would have removed any limit on the company’s ability to hire them. Under Kellogg’s proposal, it could lay off regular employees and bring them back as casuals. Moreover, it would never have to hire another regular employee. Thus, Kellogg effectively demanded changes to the wage rates of new or rehired regular employees. Because those rates were set in the master agreement, good-faith bargaining did not allow the employer to use creative semantics to force midterm changes in the wages of new and rehired regular employees in violation of the master agreement. The wage rates of new regular employees were not mandatory terms of bargaining, and Kellogg forced impasse and locked out its employees because of the union’s failure to negotiate and agree to Kellogg’s proposed modifications of those wage rates. Thus, there was a reasonable cause to believe that Kellogg had engaged in unfair labor practices. Just and proper element. The court next turned to the “just and proper” standard for issuing injunctive relief under Sec. 10(j). The court had to determine whether it was in the public interest to grant the injunction, so as to effectuate the policies of the NLRA or to fulfill the remedial function of the Board. An injunction is just and proper when it preserves the remedial power of the Board by returning the parties to the status that existed “before the charged unfair labor practices took place[.]” Here, the regional director requested an order directing Kellogg to cease: refusing to bargain in good faith by insisting to impasse on nonmandatory bargaining proposals; locking out bargaining unit employees; threatening to lock out the bargaining unit employees so as to frustrate its employees’ bargaining rights; and interfering with its employees’ Sec. 7 rights. Observing that the lockout had been ongoing for nine months and deprived employees of their pay and health insurance, and that the administrative process may continue for some time to come, the court concluded that to allow the lockout to continue would place significant hardship on employees. That would undermine the remedial powers of the Board. On the other hand, an injunction ends the lockout and compels Kellogg to negotiate in good faith, and would return the parties to their status prior to the lockout. As a result, the court determined that it was just and proper to grant the regional director’s requested relief.
By Ronald Miller, J.D.