Insights for the Labor Relations Professional

Read

Court Overturns NLRB Decision Regarding Failure to Provide Information During Bargaining

By Nelson Cary

During labor negotiations, an employer is obligated to provide certain information to the union. When that information implicates the employer’s financial performance, some employers are reluctant to disclose the information. A recent decision from the United States Court of Appeals for the Second Circuit helps define when an employer must provide that information, and does so in a narrow fashion.

The employer in SDBC Holdings, Inc. operated a bakery plant where a union represented employees. During negotiations for a new CBA, the employer highlighted for the union falling sales, rising expenses, and operating losses. The union asked to review financial statements that would support the employer’s assertion of operating losses. 

In response to this request, the employer brought its most recent financial statement to the negotiations, showed it to the union, and advised the union that the bargaining committee could inspect and take notes on the statement all day at the location where the negotiations were occurring. The employer declined, however, to provide a photocopy of the financial statement to the union. The employer also rejected a confidentiality agreement the union offered, expressing concerns about the difficulty of enforcing such agreements. 

In subsequent bargaining sessions, the employer again brought the financial statement, repeatedly inviting the union to examine it and take notes. The employer also informed the union that the statement was available at the employer’s attorney’s office where the union’s attorney or accountant could examine and take notes on it. The union’s spokesperson at the negotiations agreed to this arrangement. Later, however, the union reversed its position and demanded a photocopy. 

On these facts, the NLRB found a violation. The NLRB reasoned that the employer had asserted an inability to pay wages to the employees, rather than an unwillingness to pay wages. Under established law, therefore, the employer was obligated to provide the information. The NLRB further held that the employer’s failure to provide a photocopy of the document to the union was unlawful. One NLRB member dissented from these conclusions.

The Court found that the employer’s position was not that it was unable to pay the union’s wage demands, but rather that it was not willing to do so. The Court emphasized the need to look at the entire context of the negotiations, and in that context the employer had expressed willingness to invest money in equipment, expend significant sums extricating itself from a union pension plan, and sustain operating losses as an “investment” in the plant in order to return it to greater profitability. When viewed in the context of these statements, the Court concluded that the employer did not plead an inability to pay.  Thus, it was not obligated to provide its financial statement.

Moreover, the Court found that the NLRB was wrong when it concluded that the access to the financial statements was insufficient. The NLRB did not adequately take into account all of the evidence that demonstrated the multiple venues the employer made available for the union to examine the financial statement and take notes.

One of the judges on the Court wrote a concurring opinion. In it, he provided a roadmap for the NLRB to explain that “an employer claims an ‘inability to pay’ for particular labor costs, …when the employer asserts in the course of bargaining that its operations are unprofitable given those costs.” 

Labor professionals can takeaway three key points from the case:

  • A further explanation of the distinction between an inability to pay and an unwillingness to pay bargaining position. 
  • An important reminder that information sharing during negotiations will often be required, but need not necessarily occur in precisely the format or fashion in which the union has requested. 
  • The possibility of an expanded employer obligation to provide information, should the NLRB adopt the concurring opinion’s formulation of the duty to provide information.

Subscribe

Insights for the Labor Relations Professional