In Cofire Paving Corp., the NLRB considered whether an employer properly maintained the status quo pending representation negotiations when its employees elected a new union and the employer could no longer contribute to the old union's welfare, pension and annuity plans on the employee's behalf. A key litigated issue was whether the employer violated the NLRA by failing to contribute to another pension or annuity plan in the interim, or by contributing to its own welfare plan on the employees' behalf instead.

Employees at the Cofire Paving Corporation's Flushing, New York asphalt plant were represented by Local 1175, Laborers International Union of North America, AFL-CIO for many years. Cofire and Local 1175 were parties to a series of multiemployer collective bargaining agreements (CBAs) requiring Cofire to contribute to Local 1175's welfare, pension and annuity plans on its employees' behalf. The last CBA expired on June 30, 2005. Cofire ceased contributing to Local 1175's benefit plans when the CBA expired. Following an election in 2005, on August 8, 2005, Local 175, United Plant & Production Workers Union was certified as the exclusive collective bargaining representative for Cofire's employees, replacing Local 1175.

Cofire's president, Ross Holland, refused to sign Local 175's proposed memorandum of understanding stating the terms and conditions of the expired Local 1175 CBA would remain in effect until a new CBA was reached because he did not believe Cofire could legally contribute to the benefit funds sponsored by Local 175, which were not yet operational. Holland also felt it was not economically feasible for Cofire to continue to operate the plant under the Local 1175 CBA because Cofire was not in a good financial condition, and had been assessed withdrawal liability of $250,000 under the Multiemployer Pension Plan Amendments Act of 1980 for withdrawing from the Local 1175 plan.

To ensure the represented employees had health insurance while a negotiations were pending, Holland suggested they enroll in Cofire's plan for its nonunion employees. Although Local 175 suggested Cofire contribute to Local 175's welfare fund at the same rate it had been paying into the Local 1175 fund, $3.77 per hour, Holland did not believe this amount was sufficient to provide the coverage Local 175 promised. Holland also wanted the union-represented employees to decide on health coverage as soon as possible, to ensure they could qualify for retroactive coverage. The employees ultimately accepted the offer under protest. Although Cofire's plan was more expensive than the Local 1175 plan, it did not provide vision or dental coverage and prescription drug copayments were more costly.

Ultimately, although Cofire notified the employees that the plant would have to close until an agreement was reached because it was not economically feasible to keep the plant open, the parties were unable to agree on a CBA.

After the NLRB's General Counsel filed a complaint alleging Cofire committed various unfair labor practices (ULPs), an NLRB administrative law judge (ALJ) found Cofire violated the NLRA by failing to maintain existing terms and conditions of employment while negotiating with Local 175 for a CBA. The counsel for the NLRB's General Counsel asserted that Cofire was required to secure a substantially equivalent pension and annuity plan for the employees. The ALJ found, alternatively, that Cofire was required to pay the pension and annuity contributions directly to the unit employees as wages because Cofire could no longer contribute to the Local 1175 plans. However, since paying welfare contributions directly to the unit employees would have required one employee whose wife was diagnosed with cancer during negotiations to try to buy individual health insurance while having a preexisting condition, the ALJ found Cofire had lawfully enrolled the unit employees in its own health insurance plan. The ALJ emphasized that Cofire's plan, although different, provided comprehensive family medical and hospital insurance and Cofire's payments were substantially higher under the new plan than under Local 1175's old plan.

Cofire filed exceptions with the four-member panel (Board) heading the NLRB's judicial functions and the General Counsel filed cross-exceptions.

On September 28, 2012, the Board issued a decision upholding the ALJ's decision that Cofire committed a ULP regarding the pension and annuity benefits on a different, not previously litigated theory, and ordered a remedy that was different from the ALJ's.

Although the Board had not previously addressed whether or how an employer confronted with an intervening certification must maintain the status quo for the predecessor union's benefit plans, the Board relied on precedent involving similar policy considerations to find that such an employer:

In this case, Cofire properly bargained over securing alternative health benefits but failed to:

According to the Board, Cofire was required to continue to calculate the pension and annuity plans according to the formulas established by the old CBA with Local 1175 and set those contributions aside for the benefit of the employees until Cofire and Local 175 reached a new agreement. By failing to do so, Cofire enriched itself at the expense of its employees by retaining contributions it would otherwise have paid into pension and annuity funds.

The Board found that Cofire properly permitted represented employees to participate in its welfare plan, since the employees accepted the insurance plan, even if they did accept under protest.

Member Hayes dissented, arguing that since Cofire was precluded from continuing to contribute to the Local 1175 funds, it was impossible for Cofire to maintain the status quo. Although he joined the majority's opinion finding Cofire did not violate the NLRA by failing to pay pension and annuity contributions directly to the unit employees, Hayes found that by requiring Cofire to actively calculate and set aside contributions on the employees' behalf, the majority exceeded the issues raised and actually litigated in the case. Member Hayes also found that Cofire's payment of withdrawal liability resulted from the employees choosing to withdraw from Local 1175 and elect Local 175, and should therefore be used to set off any remedy the Board was ordering regarding the pension and annuity plan contributions.

In Cofire Paving Corp., the Board found, as a matter of first impression, that when an employer is unable to contribute to former benefit funds and the employer and the union have not yet agreed on new funds, the employer must calculate and set aside contributions for the represented employees' benefit in the interim. In light of the Board's decision, employers should be aware that when faced with similar circumstances, the Board may impose an affirmative obligation on them to set aside contributions for the employees' benefit based on formulas from the old CBA, even if that CBA was with the employee's former union.