the National Labor Relations Board found that [the newspaper] committed an unfair labor practice by unilaterally implementing a discretionary merit pay proposal, even though [the newspaper] had bargained to impasse over the proposal with the union.
When the 1986 agreement expired, [the newspaper] and the union each proposed a new wage system. From the outset, their proposals were diametrically opposed: [the newspaper] wanted to move to a system based entirely on its determination of merit; the union wanted to eliminate the merit system altogether.
The parties bargained in good faith, but ultimately deadlocked over wage terms for the new agreement. Following impasse, [the newspaper] asserted that it was implementing its final offer and began granting increases to employees without consulting the union.
The union filed an unfair labor practice charge against [the newspaper], alleging that implementing "merit" increases without the union's consent violated [the newspaper]'s duty to bargain with the union over wages.
The General Counsel argued that because [the newspaper] had a statutory obligation to bargain over "wages, hours, and terms of employment," granting individual raises without consulting the union violated the National Labor Relations Act. [the newspaper] maintained that it had satisfied that duty by bargaining to impasse over the discretionary pay proposal. Once it had exhausted the bargaining process by reaching impasse, [the newspaper] asserted, it was privileged to implement its "last, best, and final offer" over the union's objection.
the Board rejected [the newspaper]'s defense. In the Board's view, this case was less about impasse than statutory waiver: an employer who proposes unlimited management discretion over wages is really proposing that the union waive its statutory right to be consulted about wage changes. That is fine, the Board reasoned--if the union agrees. But impasse, by definition a lack of agreement, could not substitute for consent. Without a waiver, nothing relieved [the newspaper] of its obligation to bargain with the union before changing any employee's pay; unilaterally granting merit increases, therefore, was an unfair labor practice.