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NLRB Can Order Bargaining with Fractured Unit to Remedy Effects Bargaining Violation: DC Circuit
Practical Law Legal Update 2-618-0013 (Approx. 7 pages)
NLRB Can Order Bargaining with Fractured Unit to Remedy Effects Bargaining Violation: DC Circuit
by Practical Law Labor & Employment
| Published on 18 Aug 2015 • USA (National/Federal) |
In Dodge of Naperville, Inc. v. NLRB, the US Court of Appeals for the District of Columbia Circuit held that where union-represented mechanics were transferred from a closing facility and absorbed into a larger pool of non-union mechanics at another facility without any effects bargaining, there were no compelling circumstances permitting the employer to disregard the historic bargaining unit and withdrew recognition of its union.
On August 4, 2015, in Dodge of Naperville, Inc. v. NLRB, the US Court of Appeals for the District of Columbia Circuit held that an employer failed to establish compelling circumstances that would justify disregarding a historic bargaining unit and unlawfully withdrew recognition of the union when it did so immediately after relocating unionized employees to a non-union-represented facility, before any effects bargaining (No. 12-1032, (D.C. Cir. Aug. 4, 2015)).
Background
Burke Automotive Group, Inc. owned two dealerships, Naperville Jeep Dodge, in Lisle, Illinois and a subsidiary, Dodge of Naperville, in Naperville, Illinois. At the Naperville dealership, Burke employed six mechanics represented by the International Association of Machinists (Machinists). Burke:
- Closed the Naperville dealership.
- Informed the six mechanics they must continue working at the non-unionized Lisle dealership, where hours were not guaranteed and net income would therefore be lower.
- Refused to:
- bargain with the union over the effects of the move; or
- recognize the union in any way.
The NLRB:
- Held that Burke violated the NLRA when it withdrew recognition from the union after failing to bargain over the effects of transferring the mechanics.
- Required Burke to continue:
- collective bargaining agreement terms; and
- bargaining about new terms and conditions of employment for the unionized workers at the new facility.
Burke appealed to the DC Circuit, contending that it was required to withdraw recognition of the union because the relocated employees had been absorbed into a larger unit of nonunion employees at the new dealership and no longer comprised an appropriate unit for bargaining.
Outcome
The DC Circuit held that Burke:
- Failed to establish compelling circumstances that would justify disregarding the historic Naperville bargaining unit.
- Unlawfully withdrew recognition of the union immediately after relocating the six unionized employees, before engaging in any effects bargaining.
The DC Circuit:
- Noted that:
- an employer is generally free to make decisions about business scope and direction, including whether to shut down or relocate (First Nat'l Maint. Corp. v. NLRB, 452 U.S. 666, 686-88 (1981));
- an employer must bargain over the effects of a decision on affecting the union-represented employees' employment terms and conditions (First Nat'l Maint. Corp. at 681-82; United Food & Commercial Workers Local 540 v. NLRB, 519 F.3d 490, 495-96 (D.C. Cir. 2008));
- when an employer transfers employees from one facility to another, it must generally bargain about those employees' initial wages, benefits, seniority rights and working conditions at the new location (Dodge of Naperville, at *3; Holly Farms Corp. v. NLRB, 48 F.3d 1360, 1368 (4th Cir. 1995); Comar, Inc., 349 N.L.R.B. 342, 354 (2007) (Comar II));
- when an employer shuts down a facility and lays off employees, effects bargaining encompasses different issues, such as severance pay, seniority, pensions, health insurance, job security and preferential rehiring (Friedman's Exp. Inc., 315 N.L.R.B. 971, 971-72 (1994)); and
- effects bargaining obligations persist even if the bargaining unit is rendered inappropriate for other purposes (see Comar II, 349 N.L.R.B. at 354; Food & Commercial Workers Local 540, 519 F.3d at 496).
- Found that Burke was required to:
- bargain about the former Naperville dealership employees' initial wages, benefits, schedules and other terms and conditions at the Lisle dealership; and
- consider any proposals raised by the union on these topics (First Nat'l Maint. Corp., 452 U.S. at 678-79 n. 17).
The DC Circuit held that the NLRB's conclusions that the historic Naperville bargaining unit remained an appropriate unit for other collective bargaining purposes and that the employer unlawfully withdrew recognition from the union were not arbitrary. The court:
- Noted that:
- the NLRA gives the NLRB broad discretion to determine an unit appropriate for the purposes of collective bargaining (Serramonte Oldsmobile, Inc., 86 F.3d 227, 236 (D.C. Cir. 1996));
- a small group of employees within a larger group may comprise an appropriate bargaining unit if there is a distinct "community of interest" among employees (United Food & Commercial Workers Local 540, 519 F.3d at 494);
- a community of interest may be based on factors such as employees' wages, hours and other working conditions; commonality of supervision; degree of skill and common functions; frequency of contact and interchange with other employees; and functional integration (Sundor Brands, Inc. v. NLRB, 168 F.3d 515, 518 (D.C. Cir. 1999));
- traditional community of interest factors may carry less weight where there is significant bargaining history surrounding a bargaining unit or the employer has made impermissible changes to those employment terms and conditions; and
- a historical bargaining unit remains appropriate absent a showing of compelling circumstances (Southern Power Co. v. NLRB, 664 F.3d 946, 951 (D.C. Cir. 2012)).
- Found that:
- the Naperville mechanics could have bargained for wages, hours and other working conditions that were different from those of the Lisle mechanics had the employer engaged in appropriate effects bargaining; and
- given the uncertainty about what the relocated mechanics' terms and conditions could have been had effects bargaining occurred, it would be unfair to permit Burke to benefit from the uncertainty it created by refusing to bargain.
The DC Circuit also held that Burke's argument that the Board was operating with only two valid members at the time that the decision was issued, and that the Board consequently lacked the requisite quorum, has no merit (see D.R. Horton, Inc. v. NLRB, 737 F.3d 344, 352-53 (5th Cir. 2013) and NLRB v. Noel Canning, 134 S.Ct. 2550, 2560-61 (2014)).
Practical Implications
The employer was subject to a host of bargaining and other remedial orders beyond the effects bargaining order based on hypothetical results of that effects bargaining. Had the employer engaged in effects bargaining, there might have been evidence from that bargaining showing there were compelling circumstances for disregarding the historical bargaining unit as it dissolved into a larger group of nonunion employees performing the same work. The employer's collective bargaining obligation could have ended once it completed good faith effects bargaining.
Employers should recognize that the NLRB's current analysis imposes an array of speculative remedial relief to undo employer actions and recompense employees and unions for employers' preceding failures to engage in effects bargaining.
To see and compare summaries of sample Machinists CBAs and other unions' CBAs, visit the What's Market Collective Bargaining Agreements Database.