Collective Bargaining Impasse: Powerful but Risky Employer Tactic

Stalemate, deadlock, point of no return, fruitless, futile, and no room for movement — All of these words have been used in one context or another to describe, not define, what is known in federal labor relations as an “impasse” in collective bargaining. But none of these words — or any definition of impasse — appears in the National Labor Relations Act (NLRA). Rather, understandings of impasse are derived from National Labor Relations Board (NLRB) opinions in cases where a union has filed charges claiming an employer has failed to bargain in good faith by declaring impasse and implementing its last, best, and final offer (LBF). 

The NLRB first set forth five factors to consider in determining whether true impasse has been reached in its 1967 decision of Taft Broadcasting Co.: 

• Bargaining history.
• Good faith of the parties in negotiations.
• Length of negotiations.
• Importance of the issues over which there is disagreement.
• Contemporaneous understanding of the parties as to whether further bargaining would be futile. 

Under Taft, whether impasse exists is a matter of judgment based on the totality of the circumstances. But the party declaring impasse — and it typically will be the employer — must prove it exists. If the board finds that impasse was not reached, it will order the employer to return to the bargaining table and restore the status quo.

Subject to Review

The board’s decisions are reviewable in federal appeals courts. Two recent decisions further illustrate the fact-based nature of an impasse finding, the difficulty of proving true impasse, and the extent to which courts defer to the board’s rulings under the traditional substantial evidence standard of review. 

This year in Southwest Florida Symphony Orchestra and Chorus Association Inc. v. NLRB, the 11th U.S. Circuit Court of Appeals upheld a 2024 NLRB decision finding that an employer had prematurely declared an impasse and unlawfully implemented its final offer.

The decision turned on evidence of a phone call in which the union’s lead negotiator expressed willingness to meet again and to survey members as to reasons for the failed ratification vote. That — and recent movement on positions taken by both parties before the employer declared impasse — was enough to reasonably infer the possibility of future progress.

But courts will not defer to board decisions that defy reason. Last year in Troy Grove. v. NLRB, the District of Columbia Circuit held that the board’s decision that there was no impasse was “irrational.”

The court focused on evidence that the employer and union had met at least 26 times over five years. Two years in, the employer had presented its last best offer; the union called a strike that lasted three years. Nevertheless, the administrative law judge’s opinion, upheld by the board, disregarded that bargaining history.

The appellate courts are doing their job, which is to make sure the board’s decisions are consistent, said Ryan Sears, an attorney with Ogletree Deakins in Washington, D.C. The rulings do not challenge the board’s articulation of its impasse standard; they examine how the board applies that standard. 

“There is no major shift. The board is not changing its standard, and the courts are not looking to rewrite the standard,” Sears said. Nevertheless, the political composition of the board can influence board decision-making, he said. 

Notably, the NLRB’s 2022 ruling in Thryv Inc., that approved significant consequential damages — not just backpay and reinstatement — is relevant in impasse cases. Thryv Inc. may be overturned under a Republican-dominated board, or eventually subject to U.S. Supreme Court review due to a split among the circuits as to its validity.

Toolkit: Preparing for the Possibility of Union Organizing

Risks and Benefits

Declaring impasse and unilaterally changing terms of employment after engaging in good-faith bargaining is a legitimate tactic with benefits and risks to the employer, said Sears, who previously worked as an NLRB field attorney. Impasse suspends the employer’s obligation to engage in costly and time-consuming bargaining until such time as it appears fruitful to do so. 

The employer’s option to implement desired changes — or even the threat of doing so — without union agreement is a powerful tool. “The union doesn’t have that option,” Sears said. It would have to engage in a strike or other economic action to exert pressure on the employer.

But potential benefits may not outweigh the risks. “It’s really tricky for the employer,” Sears said. “There are no magic words.” If the union disagrees that impasse has been reached the employer may have to live with years of uncertainty during litigation, while costs and potential make whole remedies mount. 

“If you get it wrong, you will have to reverse everything you have done, potentially involving a significant monetary remedy after a long litigation,” Sears said.

Why Bother?

Given the board’s chancy decision-making and the prospect of significant monetary liability, what might induce an employer to take the risk of declaring impasse and implementing desired changes? 

“The number one reason employers successfully choose to declare an impasse — either in initial bargaining or for a successor contract — and move forward with changes despite no union agreement, is some imminent operational change that is impaired by a stall in collective bargaining,” Sears said. “If the company is hemorrhaging money and needs to make changes to be an effective steward of the business, it can make sense.” Such a situation might involve pressure to switch retirement plans, a cost-saving decision to contract out a portion of the employer’s business, or efficiency-related changes needed to remain competitive. “Other than that, it generally does not benefit company to implement its LBF.”

If an employer does make the difficult decision to implement its LBF, the timing is best linked to the exigent circumstances that triggered it, Sears said. While some employers hesitate to give written notice of their intentions, Sears considers it prudent to give the union a final opportunity to make changes that will break the putative impasse. “Leave no stone unturned,” he said.

Putting that all in perspective, explicitly declaring impasse and unilaterally implementing changes is relatively rare, Sears said. “I have been involved in over 100 collective bargaining negotiations,” he said. “The topic has come up in only a handful of circumstances. … More often, bargaining either resumes after a hiatus and changes in position or it simply stalls indefinitely.”

Take Your Best Shot

The NLRA requires a process of good-faith negotiations. Prematurely declaring impasse violates that process. To undermine any allegation of surface bargaining, document all aspects of negotiations with copious notes and records that:

• Provide rationales for the employer’s positions.
• Demonstrate agreement on many topics.
• Illustrate the narrowing of issues on which there is disagreement.
• Capture differing views on how issues should be resolved.
• Show a long passage of time.

“The collective bargaining process envisions impasse as a potential legal outcome, not a take-it-or-leave-it position,” Sears said.

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Legislative Action

Layered onto all of this is pending legislation that would require binding arbitration of a first contract between an employer and a union if they fail to reach agreement in a prescribed time limit, essentially eliminating impasse as an employer bargaining tool.

The Faster Labor Contracts Act (FLCA) (H.R. 5408) was passed by the U.S. House of Representatives by a vote of 230 to193. The bill requires the parties to begin bargaining within 10 days after receiving a request from a newly certified or recognized representative. If they don’t reach agreement within 90 days, either party may request mediation by the Federal Mediation and Conciliation Service (FMCS). If conciliation fails to secure an agreement within 30 days, the FMCS must refer the dispute to a three-person arbitration panel, which is to render a decision that would be binding for two years unless amended by mutual consent.

Unlike voluntary interest arbitration in which the arbitrator considers competing proposals by both parties, an FLCA arbitration would consider a list of factors that may or may not be relevant to a particular employer’s circumstances. 

Under the FLCA, a union would have no fear of the employer implementing an LBF, or a delay in negotiations. “The act creates a perverse incentive to not agree to employer proposals, and the arbitrators’ decision is likely to be more employee-friendly,” Sears said. 

Although the bill has some Republican support in both the House and the Senate, many believe that Republican Senate leadership will not move the bill forward to a vote, Sears said. Even if there is a vote, the bill probably would not pass a 60-vote filibuster, he predicted.

Margaret M. Clark, J.D., SHRM-SCP, is a freelance writer in Arlington, Va.