Seyfarth Synopsis: A recent federal appeals court decision makes it even more difficult for an employer to withdraw recognition from a union that has lost majority support. Employers need to be aware of the possibility of union "gamesmanship" when deciding how to proceed.
An employer that withdraws recognition from a union as the exclusive bargaining agent of its employees does so, as the Board and Courts say, "at its peril." It's a risky move, one that requires objective evidence that a union has actually lost the majority support among the employees it represents. And the employer must be correct about the actual loss of majority support or it will face an unfair labor practice charge for refusing to bargain with a union. Consider it a form of strict liability in the labor-relations context. But what if the employer has objective evidence that a union has lost majority support, and then the union regains the majority support before the employer withdraws recognition? Also, if an employer is found to have violated the law under those circumstances, what is the remedy when the union deliberately did not disclose to the employer it had regained majority status?
In Scomas of Sausalito v. NLRB (March 7, 2017), the D.C. Circuit considered these two questions. The Court upheld the unfair labor practice charge against the employer that withdrew recognition without knowing that the union had regained majority status. The Court observed that the employees had suffered from "an extended period of Union neglect." Thus, the union had not sought to bargain with the employer for over a year, and held no meetings and provided no information to its members for more than a year, but continued to collect dues from them all the while. Perhaps not surprisingly, a majority of employees notified the employer in writing that they no longer wanted the union to represent them. Two days after being confronted with this news, a union representative notified the employer that the union wanted to negotiate a new collective bargaining agreement, and worked behind the scenes to persuade six employees to revoke their signatures on the decertification notice that had been given to the employer. Yet the union never told the employer that these signatures had been revoked, or that (in light of the size of the bargaining unit) this meant the union had in fact not lost majority support. The Court decried the union's "gamesmanship" in not informing the employer, but held that under the Board's Levitz Furniture test (which the Court had approved of in an earlier case), the employer assumed the risk that it was wrong in evaluating majority support. Because the employer was wrong, it could not lawfully withdraw recognition.
In answer to the second question, however, the Court reversed the Board's decision that a "bargaining order" was the appropriate remedy. Bargaining orders are reserved for flagrant, deliberate unfair labor practices. In the Court's view, the employer was not acting in bad faith when it withdrew recognition from the union. The evidence showed that the employer did not act in haste. Rather, it took steps to ensure that the signatures on the petition delivered to it matched those on the employees' payroll records. Moreover, the signatures that remained on the petition after the revocation comprised 42 percent of the bargaining unit. That exceeds the 30 percent threshold for directing an election, whether filed by a union, an employer, or an employee. The disaffected employees also had filed a decertification election petition with the Board, but withdrew it after their employer withdrew recognition from the union. Under the circumstances, the Court rejected the Board's argument that an election was not an appropriate alternative remedy.
Takeaway for Employers:
Under the Board's current test (which may or may not be reconsidered by a new Republican-majority Board), an employer may withdraw recognition from the union only when there is an actual loss of majority support for the union; as a practical matter, the employer must be absolutely certain that more than half of the employees in the bargaining unit no longer want the union to represent them. Even then, the union may be able to undermine the employer's basis for withdrawal and place the employer's decision in jeopardy. When faced with an apparent loss of majority support for a union, an employer should seriously consider choosing the safer option of filing an RM petition (a management election petition) with the NLRB to allow the employees an opportunity to vote on whether to oust the union in a formal election overseen by the Board. [Good-faith uncertainty of majority status could, in some circumstances and under the Board's current standard, support an internal poll of employees as to their support for the union, but polling requires fastidious attention to procedural safeguards and is fraught with legal risk as well.]
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