NLRB Acting General Counsel Issues Memoranda of Importance to Unionized Employers

by Labor & Employment Group

(402) 341-3070

Lafe E. Solomon, the Acting General Counsel of the National Labor Relations Board (“NLRB”) has issued two memoranda that could greatly affect unionized employers. One expands the duty to supply information during collective bargaining, and the other deals with whether and under what circumstances the NLRB will defer an unfair labor practice charge to the grievance and arbitration provisions of a collective bargaining agreement.

1.      Requests for Information – must more be produced?

During business downturns, it is not uncommon for a unionized employer to resist union demands for increased benefits, or even seek concessions from the union during collective bargaining. During these negotiations, employers, of necessity, must give some explanation to the union for rejecting calls for wage/benefit improvements or why it is seeking concessions. Historically, where an employer has used words which suggest that the employer cannot afford the demands by the union, then the NLRB and the courts have held the employer may have placed its “ability to pay” into question. When inability to pay, the so-called “plea of poverty” has been asserted, the union has the right to request financial information so it can assess the legitimacy of the employer’s claim, and the employer must furnish it.

An employer, which did not wish to disclose financial information, must choose its words very carefully. In Nielsen Lithograph and Co., the NLRB held an employer’s obligation to provide general financial information to verify a claim of an inability to pay did not apply to an employer’s claim that maintaining existing employee benefits was necessary to avoid placing the employer at a competitive disadvantage in the future. Despite the Nielsen decision, the question of whether an employer has placed its ability to pay into question by virtue of the words it has utilized during negotiations has still drawn a good deal of attention. For example, in Stella D’Oro Biscuit Co., the NLRB found an inability to pay claim despite the employer’s clear indication during negotiations that its parent entity possessed ample funds to pay the union’s demands, but would be unwilling to do so without labor-cost concessions.

The General Counsel, in his memorandum, acknowledges that it is difficult to establish a clear bright line test for claims of financial inability to pay, and that the inquiry still remains fact intensive. As examples, he noted situations in which the NLRB has required an employer, who had not claimed financial inability to pay, to provide further information to support its bargaining position. Those examples included:

•      An employer which claimed concessions were necessary to make the facility a “viable operation to locate contemplated new products” and stated a need to be competitive;

•      An employer which made claims concerning the problems with comparative production costs data for its plants as compared to competitors;

•      An employer which said it was not competitive with other companies since its wage and benefit structure adversely impacted its ability to get and receive job bids.

It thus appears that employers who make claims or demands during bargaining need to be prepared to affirmatively respond to specific information requests to substantiate those claims, including information on competitors, or productivity comparisons to other operations of that same employer.

2.      Deferral to Arbitration.

The second General Counsel memorandum concerns deferral to arbitration awards and grievance settlements which the AGC acknowledges is a new position in safeguarding employee’s individual statutory rights in certain situations. The General Counsel contends that in non-National Labor Relations Act (“NLRA”) cases, the Supreme Court would uphold an arbitration award only if the arbitrator was authorized to decide the underlying statutory issues. According to the General Counsel, that has not been the case with respect to the NLRB’s deferral to arbitration. Rather, the General Counsel contends that under Olin Corp., the NLRB would defer to an arbitration award so long as the contract and statutory issues were “factually parallel and the arbitrator was presented generally with the facts relevant to resolving the unfair labor practice.” The GC now believes the Olin standards were too deferential and did not adequately consider the employee’s substantive NLRA rights.

It needs to be emphasized the General Counsel’s current concern appears to apply only to deferral of discipline cases, which might constitute violations of Section 8(a)(1) or (3) of the NLRA. He notes that in bargaining cases, the current deferential Olin standards are adequate since the statutory rights are more closely related to the contract interpretation issues.

However, with respect to Sections 8(a)(1) and 8(a)(3) statutory rights cases, the General Counsel recommends the Board no longer defer an unfair labor practice charge to an arbitration solution unless it has been shown that the employees statutory rights have been adequately considered by the arbitrator.

What this means is that, where the discipline of an employee has resulted in the filing of a grievance, which was subsequently submitted to arbitration, and also a timely unfair labor practice charge, the NLRB will effectively be the final arbiter, for it appears the General Counsel will not defer to an arbitration award until after the NLRB has conducted an investigation and determined whether the arbitrator in fact considered the statutory rights and issues in Sections 8(a)(1) and (3) cases.

The General Counsel goes on to say that the same standard will be applied to pre-arbitration grievance settlements. Specifically, the NLRB will give no effect to a grievance settlement unless the evidence demonstrates that the parties intended to settle the unfair labor practice charge as well as the grievance. If so, then the settlement will be evaluated under the NLRB’s current standards for assessing non-Board settlement agreements.

Even if the case is deferred to arbitration by the Region, the NLRB will still maintain an open file and review the “award” once issued and determine whether the party urging deferral has met its burden of demonstrating that the statutory issue was in fact presented to the arbitrator; the arbitrator correctly enunciated the applicable statutory principles and applied them in deciding the matter; and that the award is not clearly “repugnant to the act” which apparently means the NLRB doesn’t disagree with the conclusion.

This new standard being advocated by the Acting General Counsel suggests that employers ought to carefully consider whether to seek deferral in discipline cases which may involve Section 8(a)(1) and/or (3) claims since an arbitration award may not end the matter as the employer would hope.

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