The COVID-19 pandemic presents unique challenges for employers whose employees are represented by labor unions. Under the National Labor Relations Act (NLRA), unionized employers must negotiate with a collective bargaining representative concerning certain “mandatory” subjects — including wages, work hours, furloughs and layoffs — before changing these terms of employment. The duty to bargain, however, may be suspended when exigent circumstances compel an employer to take prompt action.
On March 27, 2020, National Labor Relations Board (NLRB) General Counsel Peter Robb issued Memorandum GC-20-04 to provide guidance on employers’ obligation to bargain during emergency situations such as the current pandemic. The memorandum, titled “Case Summaries Pertaining to the Duty to Bargain in Emergency Situations,” acknowledges that COVID-19 presents “an unprecedented situation” but does not specifically address employers’ bargaining obligations during the current pandemic. Instead, the memorandum discusses nine previous NLRB decisions “in which the Board considered the duty to bargain during emergencies,” which may be relevant to employers considering what actions to take.
The memorandum divides the cases it discusses into two categories: (1) cases concerning the duty to bargain during public emergency situations and (2) cases concerning the duty to bargain during emergency situations particular to an individual employer.
The public emergency cases involve employers taking unilateral action following natural disasters such as hurricanes and following the events of Sept. 11, 2001. These cases provide that an exception to the duty to bargain exists where the employer can demonstrate that “economic exigencies compel[ed] prompt action.” This exception, however, is limited to “extraordinary events which are an unforeseen occurrence, having a major economic effect requiring the company to take immediate action.”
For example, the memo cites a case called Port Printing & Specialties, in which the employer laid off several workers in response to a mandatory evacuation order in anticipation of Hurricane Rita without affording the union notice or opportunity to bargain. In the weeks after the hurricane, the employer worked to repair the damage to its facility and to complete customer orders using some bargaining unit members, some non-union employees and a supervisor. Approximately a month after the hurricane, the employer sent bargaining unit members a letter permanently confirming their layoffs. The NLRB held that an impending hurricane and a mandatory evacuation order were uniquely exigent circumstances that justified the initial layoff without bargaining with the union. The NLRB also concluded, however, that the employer violated the National Labor Relations Act by failing to bargain over the effects of the layoff and by failing to bargain over the use of non-union employees to perform bargaining unit work after the hurricane. As the NLRB explained, when the employer unilaterally made these decisions, the exigency caused by the hurricane had passed, such that the exception no longer applied.
These same principles apply when the emergency situation is particular to an individual employer. For example, in a 2000 decision, Cyclone Fence, Inc., the NLRB held that an employer, which was in bankruptcy, violated the NLRA by unilaterally closing one of its facilities, terminating all employees who worked there and refusing to pay their wages and fringe benefits after discovering that its lender had terminated its line of credit. The NLRB reasoned that while the “emergency situation” the employer faced might have excused its failure to bargain with respect to closing operations, it did not excuse the failure to bargain over the closing’s effects. In 1979, the NLRB had similarly held that an employer’s unexpected loss of its credit line justified its decision to abruptly close operations without bargaining but did not excuse its failure to bargain with the union over the closing’s effects.
Although the cases discussed in Memorandum GC-20-04 are fact-specific, they still provide guidance to unionized employers considering unilateral action in response to the COVID-19 pandemic. The NLRB historically has applied the “economic exigency” exception only narrowly and only in situations where unforeseen events caused a major economic impact on the employer’s business. Given the NLRB’s statement that COVID-19 is an “unprecedented situation,” this pandemic may present such a situation. Nevertheless, each employer’s obligation will depend on its particular circumstances and the impact of COVID-19 on the employer’s business. Additionally, even if the exception applies, the cases discussed in the memorandum make it clear that the employer still must provide notice and opportunity to bargain over the effects of the employer’s decisions.
For information on Memorandum GC-20-04 or additional guidance on the effect of COVID-19 on employers’ bargaining obligations, please contact the authors, any of the McGuireWoods COVID-19 Response Team, or your McGuireWoods labor and employment contact.