United States: Appeals Court Upholds Board Finding Of Failure To Bargain Over Job Relocation

The D.C. Circuit recently enforced the National Labor Relations Board's January 3, 2012 order holding that an automotive dealership had violated Sections 8(a)(5) and 8(a)(1) of the National Labor Relations Act by failing to bargain with the union about the effects of the relocation of a group of mechanics.  Dodge of Naperville, Inc. and Burke Automotive Group, Inc., 357 NLRB No. 183 (D.C. Cir. Aug. 4, 2015). The ruling highlights the risks employers face by failing to engage in effects bargaining where required and by unlawfully withdrawing recognition from a union even if such withdrawal is simply "premature."

The dispute involved two car dealerships owned by one company, a unionized facility located in Naperville, Illinois, and a larger non-union facility in Lisle, Illinois. On June 20, 2009, the company closed the Naperville dealership and moved those operations to the Lisle location after the car manufacturer informed the company that it could not keep both franchises. The company then informed the six mechanics employed in Naperville that they could immediately transfer to a non-union position at the Lisle dealership without any union benefits. The company notified the mechanics that if they did not accept employment at Lisle, they would be viewed as having quit and stopped honoring the Naperville collective bargaining agreement.

At the Lisle facility, the former Naperville mechanics worked alongside other Lisle mechanics under common supervision. They were also paid the same as the Lisle mechanics, at a rate lower than the Naperville mechanics had earned under their union contract. The union contacted the company and requested the opportunity to bargain over the effects of the move. The company refused, explaining that the union no longer represented a majority of the mechanics in the bargaining unit.

The union filed charges alleging the company violated Sections 8(a)(5) and 8(a)(1) of the NLRA by failing to bargain with the union about the effects of the relocation on the Naperville mechanics. The administrative law judge (ALJ) found merit to those allegations and held that the company had unlawfully withdrawn recognition of the union as the exclusive representative of the mechanics of the Naperville bargaining unit, unlawfully repudiated the collective bargaining agreement, unilaterally changed terms and conditions of employment, and constructively discharged the Naperville mechanics who resigned. The Board affirmed the ALJ's decision.

In reviewing the Board's decision, the D.C. Circuit first noted that, while an employer is "free to make decisions about the scope and direction of its enterprise, including whether to shut down or relocate part of the business," the employer must bargain with the union over the effects of that decision on the employees represented by the union. The scope of an employer's duty to bargain over such effects, the court explained, depends on the nature of the change imposed, and mandatory subjects of effects bargaining often include "initial wages, benefits, seniority rights, and working conditions at the new location."

The D.C. Circuit also noted that Board law establishes that the duty to engage in effects bargaining "persists even if the employer's management decision renders the historic unit inappropriate for other purposes." Thus, an employer cannot avoid effects bargaining by waiting until after the change is complete and then arguing that the bargaining unit no longer exists. Accordingly, the D.C. Circuit held that the company was required to engage in effects bargaining concerning the Naperville mechanics.

The court then turned to the "more difficult question" – whether the Naperville unit became an "inappropriate unit for other collective bargaining purposes once those employees were moved to Lisle." An employer may lawfully withdraw recognition if the union no longer enjoys support from a majority of employees in the relevant unit, and the company argued that the Naperville unit lost its distinct identity when it began working side-by-side with the non-union Lisle mechanics in a single, merged group.   

Under Board law, an employer is not obligated to continue to recognize a union as the bargaining representative of one group of its employees when that represented group is merged with an unrepresented group in such a manner that the original represented group is no longer identifiable. The test is whether the represented unit retains a distinct community of interest after the merger so as to remain appropriate for bargaining, and if that distinct community of interest remains, the Board likely will permit that standalone unit to continue as it had before. Here, the Board acknowledged that the merged group of mechanics in Lisle worked under the same terms and conditions of employment and that this would normally prohibit a finding of two identifiable units. However, because these terms and conditions were put into place for the former Naperville employees without the required effects bargaining and were unlawful, the changes should be disregarded. The Board reasoned that the employer's failure to engage in effects bargaining "ma[de] it impossible to assess what the terms and conditions of the Naperville employees would have been after relocation, had the Respondent not acted unlawfully." The D.C. Circuit acknowledged that while there is uncertainty about what the relocation would have looked like had effects bargaining taken place, the Board found that it would be unfair to permit the company to benefit from the uncertainty created by its unlawful refusal to bargain, and "we cannot say this was error." The D.C. Circuit thus upheld the Board's conclusion that the company "unlawfully withdrew recognition of the Union when it did so immediately upon the relocation, prior to any effects bargaining."

Employer Takeaways

While employers remain free to make unilateral decisions about the scope and direction of their business regardless of whether they are unionized, those decisions usually include an effects bargaining obligation if the decision impacts the terms and conditions of employment of bargaining unit employees. Failure to engage in effects bargaining before or during a change in operations may result in broad Board orders requiring the employer to engage in effects bargaining months or years later, after NLRB resolution of unfair labor practice proceedings, and to make whole bargaining unit members for any losses they incurred during the interim period.  Effects bargaining under these circumstances can create operational difficulties and is usually very costly. Thus, employers should be certain they are complying with their bargaining obligations in connection with any business transition or change that affects bargaining unit employees.

Additionally, employers who are merging a smaller unionized operation into a larger non-union operation should not assume that they can unilaterally withdraw recognition from the union. If the union employees are not fully integrated into the larger non-union operation, then the employer may still have an obligation to recognize and bargain with the union as it did before, because the union employees still share a distinct community of interest separate from other employees.  

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.