July 2009 

For employers who have bargained with a union, ratification may be a familiar concept especially if the employer has been at odds with a union over how the ratification vote was administered. A union may or may not present a final contract proposal to its members for ratification prior to accepting and effectuating the agreement - it depends on the language in the collective bargaining agreement or the union's constitution. An employer that has faced a bargaining challenge regarding ratifying an agreement will be interested in a recent case issued by the Seventh Circuit Court of Appeals (Appeals Court with Illinois Jurisdiction), New Process Steel, L.P. v. National Labor Relations Board (May 1, 2009) where the employer challenged a union's ratification vote based on its own definition of the word "ratified."

New Process Steel is an interesting case for two reasons. First, the employer challenged the National Labor Relations Board's authority to decide the case on the premise that two Board members do not constitute a quorum. For quite some time the NLRB has lacked a full complement of five Board members and as a result the current two-member panel has issued decisions. New Process did not believe the statutory language in the National Labor Relations Act allowed two Board members to constitute a quorum. Second, the employer challenged a union's internal chosen method of ratification on a creative theory despite well-established law that holds employers generally have no such right. The Court's decision confirms the meaning of quorum and also provides insight into the meaning of ratification. This decision suggests future methods of dealing with an employer's desire to have a say in a union's chosen method of ratifying a collective bargaining agreement.

Negotiations between New Process Steel and the International Machinists and Aerospace Workers (IAM) lasted for almost a year. During the last bargaining session the parties reached a final agreement. The IAM accepted the agreement as proposed and agreed to sign it, however, New Process refused to sign until the contract was ratified. The IAM asked to hold a vote that very same day and New Process told the IAM to do it on their own time. The parties did not discuss what form the ratification would take, however documents exchanged during bargaining inferred that New Process wanted ratification prior to effectuating a contract.

The union later conducted a vote according to its internal established practice. The practice was that if employees did not vote to accept the contract, they would then vote on whether to strike. If the strike resolution did not pass, the union would accept the last contract proposal. When employees voted they rejected the contract and the strike resolution did not pass. Shortly thereafter the union accepted the last contract proposal and the parties executed the agreement. A few days later New Process repudiated the agreement on the basis that the agreement had not been ratified by a majority vote. The following day, employees filed a decertification petition and the company withdrew recognition.

The union filed unfair labor practice charges with the National Labor Relations Board (NLRB) challenging the company's withdrawal based on the theory that there was no agreement because the contract was not ratified in a manner consistent with the company's definition of the word ratification. An administrative law judge (ALJ) for the NLRB agreed with the union that the parties had an agreement and as a result the agreement blocked the decertification petition filed thereafter. New Process challenged this finding to the five-member panel in Washington, D.C. Currently only two Board members sit on the panel. The two-member Board agreed with the ALJ. New Process then appealed the decision to the Seventh Circuit Court of Appeals (Appeals Court with Illinois Jurisdiction). The Court held that the Board had quorum with two Board members, thus they had the authority to make a finding. The Court also agreed that prior NLRB decisions dictate that an employer does not have the right to challenge the methods a union chooses to employ for its internal union matters. Ratification is one of those matters.

The only exception to this rule is when parties have agreed on a method and process for ratification. If there is an express agreement, the employer can rightly insist that the method be followed before recognizing a collective bargaining agreement. This agreement, to be safe, should be memorialized in the collective bargaining agreement or in some kind of written document. Board cases have held that the Board will look to the four corners of a written document to decide whether an express agreement exists that establishes ratification as a condition precedent to effectuating an agreement.

The Court essentially agreed that New Process could not refuse to recognize the contract because the union did not follow the company's definition of ratification. The Court held that in the absence of an express agreement the ratification procedure was a matter within the union's control.

The lesson to learn is that employers should not assume that because ratification is discussed it means a majority vote is required to ratify the contract. To be safe, verify what the union's ratification process is and if you are not satisfied with the method, attempt to negotiate a different method and memorialize that agreement in writing.

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