If an employment practice exists that an employer finds unfavorable, it will usually do its best at the bargaining table to give notice to the employee group that the practice is no longer in effect. Sometimes this is referred to as repudiation. The union then has the opportunity to bargain for new language to either reflect the previous practice, or create a new process for dealing with an employment issue. If the union is not able to secure new language, the employer is able to handle the issue as it sees fit under its management rights.
In UFCW and Lunds Food Holdings, Inc., up until 2017, the employer would make weekly retirement contributions on behalf of employees. In addition, while not included in the agreement, the employer followed a practice of making contributions for all hours of accrued vacation time paid out at the time of an employee’s separation from employment.
The parties negotiated new language into their agreement pertaining to retirement contributions, following a determination that their defined benefit plan was underfunded. The parties moved to a new 401k plan, where the employer would contribute money into the fund on the employee’s behalf on an hourly basis. The parties did not have any discussions or agree to any language regarding whether there would be any contribution for accrued vacation payouts upon an employee’s retirement. However, for the next two years, the employer continued to make retirement contributions for all accrued and paid out vacation benefits. The employer discovered that the retirement contribution practice was still ongoing, and ended the practice upon transitioning to a new payroll system in 2019.
Three years later, the grievant retired with 650 hours of accrued but unused vacation, and noticed he did not receive a retirement contribution for those hours. It was the employer’s position that retirement payout for vacation hours was capped at 40 hours, citing contract language that limited contributions to a maximum of 40 hours per week. The union grieved, arguing past practice.
After finding that the grievance was timely, Arbitrator Befort addressed the merits of the parties’ arguments. First, the arbitrator found that the “newly” negotiated language on 401(k) contributions was clear, in that it limited contributions to 40 paid hours per week.
Regarding the past practice, the arbitrator found that the 2017 change in contract language “effectively ended any previously existing past practice.” Even though the employer continued the practice for the next two years, the employer provided evidence that the practice was continued in error, and stopped once it was discovered in 2019. This, according to the arbitrator, showed that the employer “did not acquiesce or mutually agree with continuing” the practice. As such, a continuing practice did not exist.
Surprisingly, nothing was said about the three years between when the employer ended the practice, and when the events leading to the grievance occurred. One could have argued that not only did the employer not agree with the practice, but that the union, through its inaction, agreed that the practice did not exist.
Even so, it is important for employers to be mindful of past practices, and take the proper steps to end them, or defend their decisions in an arbitration. For those who attended the most recent MPELRA conference, you were given an excellent primer on the important parts of past practice, and should use those in your management of collective bargaining agreements. If you, or your organization are in need of assistance in either eliminating past practices, or defending your management rights, contact Wiley Reber Law, for legal advice that works.