Certainty or flexibility: Including personnel policies in union contracts can backfire

When a company has a union contract, it must be careful not to make changes in its operations covered by the contract without first negotiating with the union. Contracts generally have a management rights clause that reserves to the company the right to manage its business, including the right to subcontract work and determine the methods and procedures to be used. The discretion is limited, however, by the contract's terms. A recent decision from the U. S. Court of Appeals for the 8th Circuit (whose rulings apply to all Arkansas employers) illustrates the loss of flexibility that can occur when personnel policies are included as contract terms.

Facts

Exide is a battery recycler and manufacturer with a plant in Fort Smith, Arkansas. It has a collective bargaining agreement (CBA) with IBEW Local No. 700, which includes an arbitration clause.

Without first bargaining, Exide notified employees it would no longer process Family and Medical Leave Act (FMLA) leave requests through its onsite HR departments. Instead, the requests would be processed through an offsite third-party administrator, Unum. The union filed a grievance, which resulted in arbitration.

Arbitrator’s analysis

Exide relied on Article II of the CBA, "Management Rights," which reserved its "inherent right . . . to conduct its business in all particulars except as expressly modified by [the CBA] and any written supplements to the [CBA]." Article II continued: