NLRB Rebuffs Union on Retiree Benefit Cut; Power Company Arguably Had Contract Right

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By Lawrence E. Dubé

May 29 — A utility company did not violate federal labor law when it unilaterally terminated a retiree health benefit during the term of a collective bargaining agreement, the National Labor Relations Board held May 28.

An NLRB administrative law judge held that American Electric Power committed an unfair labor practice by eliminating retiree medical benefits for new employees. The ALJ reasoned that International Brotherhood of Electrical Workers locals had a right to notice and bargaining before the utility made the change, but the board reversed and dismissed a complaint against the company.

Board Members Philip A. Miscimarra, Kent Y. Hirozawa and Lauren McFerran said the power company had a “sound arguable basis” for contending its action was permitted by its IBEW contract. The NLRB's general counsel disagreed, but the board said, “[W]e do not pass on which contract interpretation is the better view.”

IBEW Members Participate in Company Benefits

According to the decision, AEP operates in 11 states with more than 18,000 employees, including about 3,500 represented by IBEW locals.

In 2009, IBEW System Council U-9, consisting of 10 locals, negotiated a master contract with AEP. That contract, and a successor agreement, provided that the IBEW-represented employees “shall be permitted to participate” in a number of AEP benefit plans, including health, life and dental insurance, as well as several retirement-related plans.

The board said all of the company's union-represented workers and nonunion employees receive the same systemwide benefits.

AEP “has made various changes to its benefit plans over the years,” the board members said, and they noted that when the company changed employee life insurance benefits for all workers in 2011, the union did not object or demand bargaining.

Dispute Over Eliminating Retirement Benefit

However, the union protested after the company announced in November 2012 that it would eliminate retiree medical coverage entirely for employees hired on or after Jan. 1, 2014.

The union demanded bargaining, but AEP called its action “the most recent in a long line of changes” that were authorized by the “participation clause” in the collective bargaining agreement, and it refused to bargain

The IBEW system council and locals filed an NLRB charge, and the agency's general counsel issued a complaint. An ALJ found the company violated the NLRA and ordered it to restore the disputed medical coverage benefit, but the board reversed.

Limited NLRB Role in Contract Interpretation

Miscimarra, Hirozawa and McFerran said the ALJ examined the evidence to determine whether the union had clearly and unmistakably waived a right to bargain about the benefit change. Finding the union had never made such a waiver, the board said, the ALJ “summarily concluded” the company had no sound arguable basis for its interpretation of the contract.

Section 8(a)(5) of the NLRA requires an employer to bargain in good faith with an incumbent union and avoid unilateral changes, and Section 8(d) of the act precludes unilateral midterm modification of a collective bargaining agreement.

However, the board members said, “[w]here, as here, the dispute is solely one of contract interpretation and there is no evidence of animus, bad faith, or an intent to undermine the Union, the Board does not seek to determine which of two equally plausible contract interpretations is correct.”

Power Company's Position Was ‘Reasonable.'

The board said the participation clause in AEP's collective bargaining agreement “arguably suggests that unit employees participate only for so long as the plans are offered and on whatever terms they are offered.” The employer's past practice was consistent with its claim, they added.

Citing Bath Iron Works Corp., 345 N.L.R.B. 499, 178 LRRM 1183 (2005), Miscimarra, Hirozawa and McFerran said “because the Respondent has presented a reasonable interpretation of the applicable contract language, the General Counsel has failed to prove that the Respondent modified the contract with the Union, within the meaning of Section 8(d) of the Act, in violation of Section 8(a)(5) and (1),” and they dismissed the unfair labor practice complaint.

To contact the reporter on this story: Lawrence E. Dubé in Washington at

To contact the editor responsible for this story: Susan J. McGolrick at

Text of the opinion is available at


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