`United States Government
`National Labor Relations Board
`OFFICE OF THE GENERAL COUNSEL
`Advice Memorandum
`
`
`
`DATE: September 1, 2015
`
` TO:
`
` FROM:
`
`Karen P. Fernbach, Regional Director
`Region 2
`Barry J. Kearney, Associate General Counsel
`Division of Advice
` SUBJECT: Kirkstall Road Enterprises, Inc.
`Case 02-CA-141495
`
`530-6033-7000
`530-6033-7084
`530-6067-4001-3700
`530-6067-4001-8500
`530-6067-4011-0100
`530-6067-4033-9500
`530-8052
`
`
`The Region submitted this case for advice as to whether the provisions of the
`
`Affordable Care Act (“ACA”)1 created an economic exigency under Bottom Line
`Enterprises2 and RBE Electronics of S.D.3 such that Kirkstall Road Enterprises, Inc.
`(“the Employer”) could unilaterally implement an ACA-compliant health care plan for
`bargaining unit employees represented by Writers Guild of America, East (“the
`Union”) during initial contract bargaining absent overall impasse.
`
` We agree with the Region that the Employer violated Section 8(a)(5) by
`unilaterally implementing a health care plan where the ACA did not create an
`economic exigency, and the Employer neither provided the Union adequate notice and
`an opportunity to bargain nor bargained to a bona fide impasse. First, we agree with
`the Region that the portion of the ACA dealing with Employer-sponsored health plans
`does not “require” the Employer to provide health insurance to its employees, and
`instead gives the Employer the choice either to provide some type of ACA-compliant
`
`
`1 Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119
`(2010).
`2 302 NLRB 373 (1991), enforced, 15 F.3d 1087 (9th Cir. 1994) (unpublished decision).
`3 320 NLRB 80 (1995).
`
`

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`Case 02-CA-141495
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`plan or be subject to an “assessable payment.”4 Because the ACA provides the
`Employer with discretion on how to comply, including whether to offer health
`insurance, and if so, what type of plan to offer, it did not relieve the Employer of all
`bargaining over implementation of an ACA-compliant plan.5
`
`Second, we agree with the Region that the parties were not at overall impasse, as
`
`is generally required by Bottom Line Enterprises.6 Indeed, both parties agree that
`they were not at overall impasse when the Employer unilaterally implemented the EP
`Cares plan on November 17, 2014.7
`
`Third, we agree with the Region that, under RBE Electronics of S.D., the
`
`Employer cannot rely on the ACA to support a claim of economic exigency under
`either the “extraordinary events” exception that would allow the Employer to forgo
`bargaining altogether, or the lesser economic exigency exception that would permit
`implementation after bargaining to impasse over the issue of health insurance.8
`
`4 I.R.C. § 4980H (2013); Final Rule on Shared Responsibility for Employers Regarding
`Health Coverage, 79 Fed. Reg. 8544 (Feb. 12, 2014) (codified at 26 C.F.R. pts. 1, 54,
`and 301).
`5 See Trojan Yacht, 319 NLRB 741, 743 (1995) (making necessary changes to
`employer’s pension plan to conform with new IRS requirements did not excuse
`employer from providing union with notice and opportunity to bargain over several
`available options to implement needed changes); Standard Candy Co., 147 NLRB
`1070, 1073 (1964) (finding no violation for increasing wages for employees previously
`below minimum wage to comply with FLSA, but finding violation for unilateral wage
`increase for remaining employees for the sole purpose of maintaining wage
`differentials).
`6 302 NLRB at 374 (when parties are engaged in negotiations, an employer’s
`obligation to refrain from unilateral changes extends beyond the mere duty to give
`notice and an opportunity to bargain; it encompasses “a duty to refrain from
`implementation at all, unless and until an overall impasse has been reached for the
`agreement as a whole”). The Board also noted two “limited exceptions to this general
`rule:” (1) when a union engages in tactics to avoid or delay bargaining; and (2) when
`economic exigencies compel prompt action. Id. There are no allegations that the
`Union engaged in any dilatory tactics.
`7 All dates refer to 2014 unless otherwise noted.
`8 320 NLRB at 81-82 (employers are allowed to forgo bargaining in the face of
`“extraordinary events which are ‘an unforeseen occurrence, having a major economic
`effect [requiring] the company to take immediate action,’” but remain obligated to
`provide a union with adequate notice and an opportunity to bargain to impasse [over
`
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`Case 02-CA-141495
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`Under the “extraordinary events” exception, the Employer failed to provide any
`evidence to support a claim that complying with the ACA created either a “dire
`financial emergency” or that the event was “an unforeseen occurrence.”9 Regarding
`the latter point, the parties had been discussing health care since bargaining began in
`2012, the Employer specifically proposed an ACA-compliant plan at the September 2
`bargaining session, and, at the October 16 meeting, the Employer informed the Union
`that open enrollment was scheduled for November 17. Further, ACA compliance
`could not have been unforeseen where at the October 16 meeting, in response to the
`Union’s query, the Employer stated that it would offer the proposed plan only to non-
`bargaining unit employees if the parties had not reached an agreement by the date of
`open enrollment.
`
` Moreover, under the lesser economic exigency exception, the ACA did not
`“compel” the Employer to take “prompt action” because the ACA did not require the
`Employer to provide health insurance.10 Even assuming the Employer’s need for
`prompt action, it will not be able to avail itself of RBE Electronics’ lesser exigency
`exception to justify its conduct because we conclude, in agreement with the Region,
`that the Employer did not give the Union adequate notice and opportunity to bargain
`or bargain to impasse over health insurance. Regarding notice and opportunity to
`bargain, the Employer consistently failed to provide the Union with complete plan
`details for even the most basic aspects of the EP Cares plan, such as plan deductibles.
`That occurred despite the Union’s regular requests for additional plan information at
`each of the bargaining sessions leading up to implementation. Indeed, the Employer
`did not provide the Union with the full details of the EP Cares plan until three weeks
`after implementation. Further, it was not until a phone call between the Employer’s
`attorney and the Union’s Executive Director on November 14, i.e., three days before
`implementation, that the Employer informed the Union that, despite its earlier
`assertion, it had changed its position and now believed that the ACA compelled it to
`implement the proposed health care plan on both unit and non-unit employees on
`November 17. That did not leave the parties with adequate time to engage in
`meaningful bargaining. We also agree with the Region that the parties were not at
`impasse on the health care issue. Contrary to the Employer’s assertion that the sole
`remaining issue was the amount of the Employer’s monthly contribution, the evidence
`shows that the parties had not even reached agreement on a plan where the Employer
`maintains that the Union stated at the November 12 bargaining session that it would
`
`the single issue] in the face of an “economic exigency compelling prompt action short
`of the type relieving the employer of its obligation to bargain entirely”) (citations
`omitted).
`9 Id. at 81.
`10 See Id. at 82.
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`Case 02-CA-141495
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`not agree on health insurance until an overall contract was reached.11 The parties
`also had bargained over the terms of a different plan in 2013, and their lack of
`agreement over the terms of the EP Cares plan in late 2014 could have resulted in
`consideration of additional health plans. Moreover, the parties could not have been at
`impasse over the terms of a health care plan where the Employer had not provided
`the Union with the full details of the proposed plan before it was implemented. This
`same evidence also establishes that the parties did not have a “contemporaneous
`understanding” that health plan negotiations could go no further because the Union
`had insufficient health care plan information to arrive at such an understanding.12
`
`Based on the foregoing analysis, we conclude that the Employer violated
`
`Section 8(a)(5) by unilaterally implementing the EP Cares health care plans on
`November 17.
`
`
`
`
`
`/s/
`B.J.K.
`
`H: ADV.02-CA-141495.Response.KirkstallRoadEnterprises
`
`doc
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`11 Although the Union denies stating at the November 12 session that it required
`reaching overall agreement before agreeing on health insurance, it stated to the
`Region during the charge investigation that it did not want the Employer to
`unilaterally offer the EP Cares plan to the bargaining unit employees prior to
`agreement on the full contract because that plan, as proposed, was not acceptable. In
`any event, the Employer’s assertion about the status of negotiations on November 12
`constitutes an admission-against-interest that demonstrates the Employer was aware
`that the parties had not even reached agreement on the health care plan itself.
`12 RBE Electronics, 320 NLRB at 82. See Essex Valley Visiting Nurses Assn., 343
`NLRB 817, 840-41 (2004) (genuine impasse exists when parties are warranted in
`assuming that further bargaining would be futile or when there is “no realistic
`possibility that continuation of discussion at that time would have been fruitful”);
`CJC Holdings, 320 NLRB 1041, 1045 (1996) (valid impasse requires
`“contemporaneous understanding” by the parties that the state of negotiations could
`go no further), enforced 110 F.3d 794 (5th Cir. 1997); Ford Store San Leandro, 349
`NLRB 116, 121 (2007) (impasse requires deadlock and it is not established simply by
`showing that employer had lost patience in bargaining with union).
`
`(b) (6), (b) (7)(
`
`