Legally Mandated Benefit Plan Changes Still Require Bargaining

A unanimous panel of the National Labor Relations Board (NLRB), including Chairman Philip A. Miscimarra, held that Affordable Care Act (ACA) mandates do not relieve an employer of its duty to bargain with a union representing its employees regarding certain health insurance benefit plan changes.

In Western Cab Company, 365 NLRB No. 78 (2017), a union was in the process of negotiating an initial collective bargaining agreement when the employer, without prior notice to the union, began notifying employees that they would be eligible for health insurance after 60 days of employment instead of the prior requirement of one year of employment. The union filed unfair labor practice charges regarding this and other alleged violations of the National Labor Relations Act of 1935 (NLRA) by the employer. The employer argued that its unilateral change was privileged because the ACA mandated coverage of the newly hired employees.

The NLRB applied the “well-established” doctrine that, when an employer is compelled to make changes in terms and conditions of employment in order to comply with the mandates of a statute, it must provide the collective bargaining representative notice and an opportunity to bargain over the discretionary aspects of such changes. Here, while the ACA requires eligibility for health insurance within 90 days of employment, the employer had discretion whether to provide eligibility after 90 days, 60 days or immediately on hiring, as well as how to notify and enroll newly hired employees. Consequently, the employer had discretion on the waiting period, as well as the notification and enrollment procedures. In the absence of any showing that the employer had engaged in changes of a similar kind or degree in the past, the Board found that the employer violated the NLRA by failing to provide the union notice and an opportunity to bargain. In the absence of a union request that the employer rescind the changes (and uncertainty whether and how the employer could restore the status quo ante), the NLRB ordered the employer to bargain with the union on the issues upon request and to make whole any employee who had been negatively affected by the refusal to bargain.

If the current administration is successful in reversing the employment and health insurance legislation of the prior administration, it is likely that employers whose employees are represented will need to bargain with their union prior to implementing changes to comply with or take advantage of such reversals. Although in this case the employer’s unilateral change favored the employees, the bargaining obligation applies regardless of whether the change positively or negatively impacts the represented employees.