## Facts

- McClatchy Newspapers, Inc. published the *Sacramento Bee* and *Modesto Bee* and bargained with the Northern California Newspaper Guild, Local 52, representing certain employees at both papers.
- At the *Sacramento Bee*, the expired collective bargaining agreement used wage scales plus discretionary merit raises; once employees reached the top of a scale, increases were based on merit determined by the company.
- Merit determinations under the expired agreement were within management’s discretion and were not subject to grievance or arbitration; the union could comment on evaluations, but comments were not binding.
- In successor bargaining, McClatchy proposed moving to a fully discretionary merit-based pay system; the union sought to reduce or eliminate discretionary merit in favor of wage scales.
- The parties bargained in good faith and reached impasse on wages and the merit pay structure.
- After impasse, McClatchy implemented its final offer and unilaterally granted merit increases without adopting objective, reviewable standards governing the timing or amount of raises.
- The union filed unfair labor practice charges alleging unlawful unilateral change in wages under NLRA § 8(a)(5) and § 8(d).
- At the *Modesto Bee*, a similar bargaining dispute arose; after impasse, McClatchy implemented a largely discretionary merit plan, prompting additional unfair labor practice charges.
- In the Modesto matter, the Board also found an independent § 8(a)(1) violation based on threats of discharge for protected concerted activity.
- The NLRB adopted an exception to the general post-impasse implementation rule, concluding that implementing a merit plan without “definable objective procedures and criteria” unlawfully removes wages from collective bargaining.

## Issues

1. Whether the NLRB lawfully held that an employer commits an unfair labor practice by implementing, after a valid impasse, a discretionary merit pay system lacking “definable objective procedures and criteria.”
2. Whether substantial evidence supported the Board’s finding that McClatchy threatened employees in violation of NLRA § 8(a)(1) at the *Modesto Bee*, and whether the related order should be enforced.

## Decision

- The D.C. Circuit upheld the Board’s rule that post-impasse implementation of a merit pay plan lacking “definable objective procedures and criteria” may violate § 8(a)(5) because it undermines collective bargaining over wages.
- The court enforced the Board’s order in full as to the *Sacramento Bee*.
- The court enforced the Board’s order as to the unlawful post-impasse merit pay implementation at the *Modesto Bee*.
- The court only partially enforced the Board’s Modesto order, declining to enforce portions not adequately supported by the record or exceeding what the evidence justified.

## Legal Principles

- After a genuine bargaining impasse, an employer generally may implement terms reasonably encompassed within its pre-impasse proposals, but that doctrine is subject to limits consistent with the NLRA’s policy favoring meaningful collective bargaining.
- The NLRB may treat post-impasse implementation of a wage-setting scheme as unlawful when the scheme “decollectivizes” bargaining by vesting the employer with essentially unreviewable discretion over wages.
- A post-impasse merit pay plan must include “definable objective procedures and criteria” to preserve the union’s ability to bargain over, assess, and police wage determinations.
- Courts defer to reasonable Board interpretations reconciling the Act’s duty-to-bargain requirements with the impasse-implementation doctrine.

## Conclusion

The D.C. Circuit sustained the NLRB’s narrow exception to post-impasse implementation by holding that an employer may not, after impasse, impose a discretionary merit pay system lacking objective criteria because it effectively removes wages from collective bargaining; the court enforced the Sacramento order and enforced the Modesto order only in part.


McClatchy Newspapers, Inc. v. NLRB, 131 F.3d 1026 (D.C. Cir. 1997)