This National Labor Relations Board (NLRB) decision addresses an unfair labor practice charge filed by the International Association of Machinists and Aerospace Workers, AFL-CIO (the Union) against Solution One Industries, Inc. (the Respondent). The charge alleged that the Respondent violated Section 8(a)(1) and (5) of the National Labor Relations Act (the Act) by failing to bargain collectively and in good faith. Specifically, the Union contended that the Respondent unlawfully modified the collective-bargaining agreement (CBA) by refusing to settle five grievances according to the terms of Article 9.1.1(a) of the CBA. This refusal stemmed from the Respondent's failure to provide timely written answers to these grievances as required by Article 9.2 of the agreement.

The parties waived a hearing before an Administrative Law Judge (ALJ) and agreed to submit the case to the Board based on a stipulated record. The Board, in its decision, adopted the stipulated facts and the parties' contentions.

The General Counsel argued that the Respondent violated Section 8(d) of the Act by unilaterally modifying the CBA's grievance procedure. The CBA stipulated that if the Company did not answer a grievance within the specified time limits, the grievance would be considered settled on the basis of the Union's written request (Article 9.1.1(a)). The CBA also outlined a Step 3 grievance procedure requiring the Respondent to answer grievances in writing within five regular working days after a discussion meeting, with exceptions to these timelines to be adjusted on a case-by-case basis at the request of either party, provided such extensions were made in writing and acknowledged by the other party (Article 9.2 and Article 9.1.1(b)).

The Union filed five grievances in early 2022. Following a Step 3 meeting on March 3, 2022, where the grievances were discussed, the Respondent failed to provide written answers within the five-day deadline, which the General Counsel calculated as March 10, 2022. Consequently, the Union asserted that the grievances were automatically settled in its favor per Article 9.1.1(a). The Respondent, however, claimed it had a "sound arguable basis" for its interpretation that it was not required to consider the grievances settled. It argued that Article 9.2 allowed for oral, unilateral extensions of time to respond, citing statements made by its representatives during the March 3 meeting indicating a need for more time to gather information. The Respondent also contended that a March 14 email from its Operations Manager constituted a sufficient written answer.

The Board reviewed the Respondent's defense under the "sound arguable basis" test. This test dictates that an employer does not commit an unlawful midterm modification if it has a reasonable and colorable interpretation of the contract that permits its actions. The Board found that the Respondent lacked a sound arguable basis for its interpretation.

The Board's legal analysis focused on the explicit language of the CBA. Article 9.1.1(b) clearly stated that "Such extension of time limits must be made in writing and acknowledged by signature or initial by the other party." The Board found that Article 9.2, which the Respondent cited for its oral extension argument, did not supersede or modify this requirement for written extensions. The Board emphasized that Article 9.2 simply addressed that exceptions to timelines could be adjusted on a case-by-case basis at either party's request, but it did not specify the process for such an adjustment, which was governed by Article 9.1.1(b). Furthermore, the Board noted that there was no evidence of a past practice supporting the Respondent's interpretation.

The Board also rejected the Respondent's claim that its March 14 email constituted a timely or sufficient written answer. The email was sent after the March 10 deadline and did not purport to deny, sustain, or resolve any of the grievances. Instead, it merely stated that additional time would be needed to gather information. The Board also referenced prior proceedings in Solution One Industries, Inc., 372 NLRB No. 141 (2023), which involved the same parties and a similar issue of the Respondent's failure to adhere to written extension requirements, finding that the March 14 email did not constitute a Step 3 answer based on past practice evidence from those proceedings.

Finally, the Board addressed the Respondent's argument that its actions constituted a mere breach of contract, not an unfair labor practice. The Board distinguished this situation from a simple contract violation, citing Transportation Services of St. John, Inc., 369 NLRB No. 15 (2020), where the Board found an unlawful midterm modification even when involving only a single grievance. The Board concluded that the Respondent's conduct demonstrated a general position that written extensions were not required and that Article 9.1.1(a) did not mandate grievances be considered settled after the deadline if an oral extension was announced. This broad interpretation and its application to multiple grievances, coupled with the lack of a sound arguable basis, constituted a midterm modification of a mandatory subject of bargaining, thus violating Section 8(a)(5) and (1) of the Act.

The Board ordered the Respondent to cease and desist from unlawfully modifying the grievance-arbitration procedure and to take affirmative action, including considering the five grievances settled according to the Union's written terms.

Significant Cases Cited

• Wisconsin Bell, Inc., 346 NLRB 62 (2005): This case established that a respondent waives an affirmative defense if it fails to raise the issue at a hearing or in its brief to the judge.
• Bath Iron Works Corp., 345 NLRB 499 (2005), affd. sub nom. Bath Marine Draftsmen’s Assn. v. NLRB, 475 F.3d 14 (1st Cir. 2007): This case established the "sound arguable basis" test for analyzing allegations of unlawful midterm contract modifications, where an employer's interpretation of a contract is deemed lawful if it has a reasonable and colorable basis.
• Transportation Services of St. John, Inc., 369 NLRB No. 15 (2020): This case affirmed that an employer's unilateral modification of a contract provision regarding a mandatory subject of bargaining, even if limited to a single grievance, can constitute an unlawful midterm modification under Section 8(a)(5).
• Stericycle, Inc., 372 NLRB No. 131 (2023): This case reiterated the "sound arguable basis" test, holding that an employer's action is lawful if its interpretation of a contractual provision is at least colorable.
• Oak Cliff-Golman Baking Co., 207 NLRB 1063 (1973), enfd. mem. 505 F.2d 1302 (5th Cir. 1974), cert. denied 423 U.S. 826 (1975): This foundational case established that employers are prohibited from modifying terms and conditions of employment established by a collective-bargaining agreement during its term without the union's consent.

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