On August 25, 2023, the National Labor Relations Board (NLRB) flipped typical election procedures on their head by issuing a new standard for circumstances where an employer has refused a union's demand for recognition. A decision with far-reaching implications, Cemex requires that an employer file an "RM election petition" within two weeks of receiving a demand for recognition. 372 NLRB No. 130 (Aug. 25, 2023). If it does not, and the union is able to prove it had majority status, the refusal to recognize the union is a per se violation of National Labor Relations Act.
Applying its holding with immediate and retroactive effect, the Board turned a rarely used election procedure into a fast alternative for unionization with pitfalls for employers along the way. As one of the most significant NLRB decisions of the year, all employers need to understand how Cemex could affect their business.
Brief History of Joy Silk, from Which Cemex Is Loosely Modeled
The controversy over an employer's obligation to recognize and bargain with a union outside the Board's election and certification process dates back more than 70 years to a case called Joy Silk, 85 NLRB 1263 (1949). In Joy Silk,the Board held that if a union demanded recognition from an employer to represent an appropriate unit of employees, the employer could only insist on a Board election if it had a "good faith" reason to doubt that the union had majority support. In other words, an employer violated the Act if it refused to recognize a union and insisted on an election unless it could prove that it had a good faith doubt over the union's majority status.
Predictably, the Joy Silk standard led to wide inconsistencies in the Board's application of the law because whether the refusal to bargain was lawful turned on an employer's intent. This standard also deprived employees of the right to exercise their freedom of choice in an anonymous, protected election process and deprived employers of the ability to explain their point of view on unionization to their employees before unionization was a done deal.
Ultimately, the Joy Silk standard failed. The Board modified and chipped away at Joy Silk and then formally overturned it in Linden Lumber Division, 190 NLRB 718 (1971). In Linden Lumber, the Board held that an employer may lawfully insist on a Board-administered secret-ballot election when faced with a demand for recognition. The Supreme Court of the United States ultimately upheld that holding. And so, in the 50 years that followed, the Board permitted employers to insist on a Board-conducted election as a precondition to an enforceable statutory bargaining obligation.
Up until the Cemex case, application of Linden Lumber meant that, in most instances, unions sought representative status by requesting an election through an "RC election petition." In the RC election petition, a union would describe the unit that it was seeking to represent. The Board would then process the petition and give the employer an opportunity to respond. Ultimately, if appropriate, the Board would conduct a secret-ballot election that gave employees the opportunity to exercise their free choice anonymously (i.e., without a union organizer or colleague standing over them pressuring them to sign a union authorization card). For years, the Board considered such elections the gold standard in assessing whether the union in fact had majority support among an appropriate unit of employees.
New Standard Established in Cemex
All this is set to change with the Board's decision in Cemex, unless reversed by a federal circuit court or the Supreme Court, because the Board has established a new election protocol for circumstances where a union has demanded recognition.
By way of background, in Cemex, a union lost a secret ballot election by a relatively small margin of votes. The union alleged the employer had engaged in numerous unfair labor practices that affected the outcome of the election. It established that prior to filing the petition, it had amassed authorization cards from about 57 percent of the employees. The union asked the Board to issue a Gissel bargaining order, a remedy whereby the Board sets aside the election results and orders an employer to bargain with the union based on pre-election proof of majority status. Gissel bargaining orders are relatively rare, issued only in response to egregious unfair labor practices that the Board determines prevents a fair reelection from being held. Accordingly, while the administrative law judge (ALJ) did find that the employer violated the Act in ways that likely affected the election results, the ALJ issued an order for a rerun election, as opposed to a bargaining order.
In Cemex, the Board overturned the ALJ's remedial order for a rerun election and instead ordered the employer to bargain with the union. Even though the election took place back in 2019 and there had been significant employee turnover, the Board found that the union's proof of majority status prior to the election was sufficient to order the employer to bargain with the union four years later. The Board further commented that, in general, rerun elections are insufficient remedies for election-related employer misconduct. Thus, bargaining orders are now the Board's preferred remedy unless there are "significant mitigating circumstances."
The Board then went a giant leap further and overturned Linden Lumber. Even though the circumstances in Cemex did not involve a demand for recognition independent from the union's RC election petition, the Board used Cemex as an opportunity to modify the hypothetical. The Board explained that the threat of a Gissel bargaining order does not sufficiently disincentivize misconduct because it is a post-election remedy applied as an alternative to a rerun. In the Board's opinion, current procedures involve too much delay. (For more information about the Board's new "quickie election" rules, see our previous Alert.)
Moving forward, while unions may still choose to file an RC election petition for a secret-ballot election, there will be a new process that unions are more likely to utilize to establish representative status: demanding recognition and forcing the employer to react. In Cemex, the Board held if a union demands recognition of an appropriate unit of employees, an employer violates the Act if it refuses to recognize the union unless the employer promptly files an RM election petition.
Notably, this only applies if the union in fact has majority support of an appropriate unit of employees. However, an employer has no way of knowing that is the case unless it requests or agrees to review the union's proof (typically signed authorization cards). The trap here is that the Board has long held that an employer can violate the Act if it refuses to bargain with a union where the employer has "independent knowledge" of the union's majority status. Thus, an employer must continue to avoid looking at any petitions or cards that the union presents, lest it waive its right to seek an RM election.
Now the stakes are even higher, because if a union demands recognition, an employer must quickly file an RM petition within two weeks of the demand. If the employer refuses to recognize the union but fails to file an RM petition, it will have waived its right to insist on a secret-ballot election. Further, assuming the union has proof of its representative status, the employer's refusal to recognize the union will be a per se violation of the Act.
Contributing more to this election quagmire, the Board further held that with any election petition, if an employer commits an unfair labor practice that requires setting aside the election, the Board will dismiss the petition and issue a remedial bargaining order. This will be automatic, because under Cemex, which has precedential value, "an election necessarily fails to reflect the uncoerced choice of a majority of employees" if an employer has committed an unfair labor practice that invalidates an election result.
As the Biden Board moves further into its tenure, the types of actions that constitute unlawful election misconduct continue to expand, and typically with retroactive effect. For example, in Cemex, the Board found that instructing an employee not to talk to union organizers on "company time" was an unlawfully promulgated rule. (For more information about the Board's new standard for assessing work rules, see our previous Alert.) The Board also found that deploying additional security guards in the weeks prior to the election was unlawful intimidation, and that explaining to employees that supervisors may not be able to provide help with certain job duties and skills development if the union won the election was an unlawful threat.
Overall, employers should take heed that what constitutes an unfair labor practice is a moving target and subject to interpretation and modification. Moreover, unions now have a significant incentive to file objections and unfair labor practice changes in relation to an employer's election campaign because if the Board finds merit to the allegations, it may order the employer to bargain, perhaps without an election ever taking place.
What Will the New Procedures Look Like?
Through its decision in Cemex, the Board is promoting the use of RM petitions. This type of election petition is filed by an employer. Typically, employers utilize the RM petition procedure if it believes a union has lost majority support and the employer has a good faith doubt as to the union's representative status. If the employer can establish such good faith doubt, the Board may proceed by conducting a secret-ballot election to test whether the union has maintained representative status. However, RM petitions have a dual purpose in that an employer may file one if a union has demanded recognition without filing its own election petition and the employer wants the Board to conduct an election.
Given this new holding, there will likely be an influx of unions demanding recognition without filing an RC petition, placing the onus on the employer to file an RM petition to preserve its rights. To start, the employer will need to file the RM petition within two weeks of the demand for recognition. The Board will assess the petition, schedule a hearing and then serve it on the union so that it may present its positions, such as to the appropriateness of the proposed unit. Once the union provides its positions, the employer has an opportunity to respond. During this period, the Board usually tries to broker an election agreement, or else the matter goes to a hearing to determine whether and how the election should be conducted.
All this is set to change December 26, 2023, when the Board's new election rules are scheduled to go into effect. The day before the Board issued the decision in Cemex, it announced finalization of a new set of election rules that will substantially shorten the election process. Among other changes, the Board will require that regional directors schedule the election for "the earliest date practicable." These modifications to the election procedures will apply to RM election petitions, which means employers will have limited time to plan and campaign if a union comes knocking.
What This Means for Employers
With one case, the Board has set aside more than 50 years of precedent and significantly changed the rules of the game in favor of unions. Though it did not quite bring back Joy Silk as many speculators feared, the Board made it a whole lot easier for unions to organize employees by shifting the onus to employers to file the petition for an election in the first place, and making bargaining orders the norm rather than the exception to remedy unfair labor practices in the second place.
It is difficult to predict how unions will take advantage of this new recognition mechanism. As the Board commented in Cemex, unions may still prefer to utilize RC election petitions because Board-run elections provide certified results and certain legal protections. For example, a union that becomes the certified representative of employees enjoys a one-year nonrebuttable presumption of majority status. However, because employers will likely file an RM election petition anyway, unions may prefer to take the gamble. After all, a union could always later seek formal certification.
Despite this new procedure, employers should still instruct and train managers not to review cards or petitions presented to them to establish union representation. Doing so can waive an employer's right to insist on an election. Similarly, employers should avoid agreeing to recognize a union for two reasons: (i) bargaining with a union that does not in fact have majority support is itself an unfair labor practice, and (ii) recognition based on authorization cards deprives employees of the right to vote their peace in a secret ballot election after having heard the employer's side of the story. Instead, if a union demands recognition, the employer should document the date, clearly decline and then promptly prepare to file an RM election petition. Employers should familiarize themselves with RM election petition procedures and the new election rules slated to go into effect late December so that they are ready to act quickly if needed.
Finally, as always, employers need to be up to date on what the Board considers lawful and unlawful campaign conduct. The Board has raised the stakes by declaring that bargaining orders are preferred over rerun elections. An employer can run a campaign that is 99 percent lawful, but if it missteps in a way that the Board finds invalidated the result (particularly in elections with close margins), all the effort put into the campaign could be for naught. Properly training supervisors and managers and keeping a pulse on employee sentiments is essential.
For More Information
If you have any questions about this Alert, please contact Eve I. Klein, Elizabeth Mincer, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.