NLRB Modifies Arbitration Deferral Standard

Yesterday, the NLRB issued a decision in Babcock & Wilcox, which changed its approach to arbitration deferral. Under the Board's previous "Olin" standard, it would defer to an arbitration decision if the contractual issue decided by the arbitrator is factuall parellel to the unfair labor proactice before the Board, the arbitrator was generally presented with the facts relevant to the ULP, and the award was not clearly repugnant to the NLRA. In reversing this standard, the Board argued that it did not adequately protect employees' NLRA rights because it allowed deferral when it was not clear that an arbitrator decided the statutory issue.

Under the new Babcock & Wilcox standard, the NLRB will defer to an arbitration award when the party arguing for deferral shows that the statutory issues were presented to the arbitrator, the arbitrator addressed the statutory issue or was prevented from doing so by the party opposing deferral, and NLRB law reasoanbly permits the award. Like the D.R. Horton case, this is another recent example where the Board has stressed the importance of NLRA rights in the face of pressure to favor arbitration.

Conflicts with arbitration usually fall arbitration's way before the Supreme Court, so expect a significant challenge to this new standard. That said, adjusting when to defer to arbitration is less of a direct challenge and more withing the Board's discretion, so this decision could well survive. Stay tuned.

Hat Tip: Patrick Kavanagh -JH