General Counsel Memorandum 20-04, released on March 27, 2020, provides guidance on an employer’s duty to bargain under the National Labor Relations Act (Act) in emergency situations, where there is otherwise an absence of contract language permitting unilateral action.
The General Counsel recognized that amid the COVID-19 pandemic, many unionized employers are dealing with unprecedented demands that require prompt action. The guidance signals the Board’s prior support for employers who take unilateral action when necessary to respond to emergencies. The memorandum divides guidance into two categories: 1) the duty to bargain during public emergencies such as hurricanes, ice storms, and 9/11, and 2) the duty to bargain during emergency situations particular to an individual employer, such as lack of product or financial credit.
For the most part, the cases indicate leniency toward unilateral action during times of true emergency. In Bottom Line Enterprises, 302 NLRB 373 (1991), the Board explained that an exception to the duty to bargain exists where the employer can demonstrate that “economic exigencies compel prompt action.” The Board has held that the Bottom Line exception is limited to “extraordinary events which are an unforeseen occurrence, having a major economic effect requiring the company to take immediate action.” Port Printing & Specialties, 351 NLRB 1269, 1270 (2007). For example, in Port Printing, the Board held that an impending hurricane and mandatory citywide evacuation were uniquely exigent circumstances permitting the employer to lay off employees without bargaining with the union. However, the employer was still required to bargain with the union over the effects of the layoff after the hurricane. Likewise, in K-Mart Corp., 341 NLRB 702 (2004), the Board held the employer’s layoff of employees after 9/11 was permitted by Bottom Line because the economic fallout from 9/11, which plunged the employer into bankruptcy, was “extraordinary” and “unforeseen” and required the employer to take immediate action.
Where a current collective bargaining agreement is silent as to emergency situations, the Board has given employers the green light to act unilaterally. For example, in Gannet Rochester Newspapers, 319 NLRB 215 (1995), the Board held that the employer did not violate the Act when it unilaterally required unionized employees to take personal days or go uncompensated for missed work during an ice storm. There, the employer was a party to two different collective bargaining agreements—one current and one expired—and both were silent as to absences due to weather emergencies. The Board held that there was no duty to bargain under the unexpired contract that contained a zipper clause, but that there was a duty to bargain under the expired contract.
The GC Memorandum also cites cases wherein the employer was required to bargain despite a weather or financial emergency. See, e.g., Dynatron/Bondo Corp., 324 NLRB 572 (1997) (employer was not privileged to implement a new compensation policy during a two-day power outage caused by a hurricane), enforcement denied in relevant part, 176 F.3d 1310 (11th Cir. 1999); Hankins Lumber Co., 316 NLRB 837 (1995) (lumber mill violated the Act by unilaterally laying off employees due to a log shortage, where the log shortage had been a chronic problem and there was no “precipitate worsening” of the problem that required immediate action prior to bargaining).
A Subtle Hint at Broadening the Right to Take Unilateral Action?
The Board’s General Counsel hinted that he may be inclined to excuse an employer’s duty to bargain over mandatory subjects when an employer establishes that its action involves the “core purpose” of its business and is “narrowly tailored” to achieve a legitimate essential interest. This standard, articulated in Peerless Publications, 283 NLRB 334 (1987), has been limited by the Board to the narrow factual situation in that case (a newspaper publisher’s unilateral implementation of a code of ethics that implicated First Amendment rights). In GC 20-04, the General Counsel focused on Member Hayes’ dissent in Virginia Mason Hospital, 357 NLRB 564 (2011), where Hayes advocated for Peerless to be applied when an employer in any industry makes a unilateral decision to protect the “core purpose of its enterprise.”
Union Waiver and Other Contract Clauses
Employers should remember that they do not have a duty to bargain where a collective bargaining agreement sanctions unilateral action. Employers should examine their collective bargaining agreements for waiver language—usually contained in a management rights clause—which allow employers to take unilateral action. Last year, in MV Transportation, Inc., the Board abandoned its long-standing “clear and unmistakable waiver” standard and adopted the “contract coverage” standard, making it easier for employers to demonstrate that contract language allows unilateral action.
Some agreements also have emergency clauses—often referred to as “force majeure” provisions—that explicitly suspend the terms of an agreement during emergencies like Acts of God, weather disasters, etc. Though a fact-specific inquiry, employers may be able to invoke these provisions to take unilateral action during an emergency.
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