NLRB will limit ability of unionized business to relocate

Richard Griffin, the new general counsel of the National Labor Relations Board, wants to give unions a veto over a unionized employer’s decision to relocate. If Griffin has his way, and he most assuredly will, some unionized businesses will be pinned in place at the discretion of their unions, and their decisions to relocate all or part of their business for greater efficiency and lower production costs will be delayed indefinitely or thwarted altogether.    

The change Griffin is contemplating is unnecessary and inconsistent with the law and the dynamics of our free enterprise system. This terribly misguided act will upset the balance mandated by the Supreme Court and should send a chill up the spine of unionized companies contemplating relocating an operation.

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Griffin’s intent was disclosed in a memorandum he sent the agency’s regional directors ordering them not to act on cases presenting an issue “of concern” to him – and there were many – without receiving guidance from his office.  Griffin’s guidance will be to order employers to be prosecuted not on the basis of what the law is but on the law as Griffin would like it to be.          

Under current law, it is perfectly lawful for a unionized employer to relocate some or all of its facilities and eliminate bargaining unit work if the move is motivated by economic gain—not by a desire to retaliate against its employees for their union activities and support.  A desire to escape the consequences of unionization, particularly high labor costs, is considered under law to be an independent innocent motivation, not an unlawful one. Big Labor loathes this law; Griffin intends to help unions nullify it.  

Under long-standing Board law, a unionized employer is not required to bargain with the union over a relocation decision that is motivated by labor cost savings if the employer determines that bargaining would be futile—that the union could not offer labor cost savings that could change its decision.  Unions can contest the employer’s decision, but they have no right to participate in it or otherwise delay it absent a court order enjoining it.      

Griffin intends to change this law by making bargaining mandatory.  He will argue, as did a former Board member whose views he cites, that mandatory bargaining is a modest change in the law that fulfills the Act’s central purpose of promoting collective bargaining.  Why deprive the union of the opportunity to explore or influence an employer’s relocation decision when labor costs, an area over which the union exercises some authority, are a motivating factor?

The question begets its answer: because the goal of collective bargaining is labor peace.  The Board promotes collective bargaining not in the abstract but only when the subject of the proposed-for discussion is “amenable to resolution through the bargaining process.”  Requiring bargaining with the union over a work relocation decision that will eliminate the union when one party to the bargaining process—the party that has done the math—knows that it will be futile, invites delay and conflict, not labor peace.  One would have to be living on another planet not to know that the union will be tempted to abuse the bargaining process with endless requests for information and even take the opportunity to foment workplace discord to convince the employer to remain in place or simply to exact a price for its move.        

Decades ago, the Supreme Court made it very clear that the Board must respect “management’s [need] to be free from the constraints of the bargaining process to the extent essential for the running of a profitable business.”  It admonished the Board:  

"[B]argaining over management decisions that have a substantial impact on the continued availability of employment should be required only if the benefit, for labor-management relations and the collective-bargaining process, outweighs the burden placed on the conduct of business."

Current Board law involving work relocations achieves the proper balance and protects unions from unfounded claims of bargaining futility.  If the union contests the employer’s failure to bargain, the employer must show that the unioncould not have made concessions that could have changed the employer’s decision.  A 2002 study conducted by Northern Illinois University of more than 100 contested work relocations that occurred from 1992 through 2002 concluded that this test “overwhelmingly” favors a union outcome.    

Employers are further deterred from avoiding a bargaining obligation by the severity of the remedies the Board can impose if it finds against the employer: back-pay from the date of termination until the date the displaced employees find substantially equivalent work; reinstatement at the employer’s new location with reimbursement of moving and other relocation expenses; and an order requiring the employer to move back.

Current law was thoughtfully constructed decades ago by a unanimous Board composed of Democratic as well as Republican members.  It protects the interests of workers and their unions while allowing employers the freedom necessary to compete and prosper.  Griffin’s decision to seek a change in this area law and construct a Berlin Wall of bargaining obligations around a unionized business will hasten their demise and harm the economy.  It will undoubtedly be approved by the Board’s majority, however, all committed members of the labor movement, whose passionate desire to hold the line on the loss of union jobs in the private sector matches Griffin’s.  

Such an unwarranted change in the law is in the short-term interest of Big Labor but  ignores the interests of the nation as a whole.  It is the price we pay when control of a small but important federal agency is turned over to political appointees who are unable to fairly balance the interests of those it is charged with regulating and protecting.  

Schaumber is a former NLRB chairman, appointed by President George W. Bush.

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