Alerts

COVID-19 and the Emergency Exception to the Duty to Bargain

Alerts / April 6, 2020
The NLRB’s General Counsel Provides Guidance on the Duty to Bargain in Emergency Situations

Regardless of the industry, the COVID-19 pandemic is wreaking havoc on businesses across the country and requiring many employers to institute significant operational changes overnight. Employers are rapidly modifying hours, schedules, wages, operational procedures, health and safety, and workforce composition in response to the virus. For employers with a unionized workforce, responding to the demands of COVID-19 is complicated by a general duty to bargain with the union before implementing changes that affect represented employees.

Recognizing the issues COVID-19 has created, and the obligations of employers and unions in responding to the virus, the National Labor Relations Board (the NLRB) General Counsel released General Counsel Memorandum 20-04 (GC 20-04) summarizing the existing case law on an employer’s duty to bargain during emergency situations. Unlike many General Counsel Memorandums, GC 20-04 does not take a position or advise employers and unions on how the General Counsel plans to treat the subject, but rather provides an educational summary of existing case law. The General Counsel acknowledges in the memorandum that COVID-19 is an “unprecedented situation” and explains that it is issuing GC 20-04 to provide “useful information” for parties to consider.

The Duty to Bargain and the Exception in Emergency Circumstances

Generally, an employer has a duty to bargain with the union before making changes to represented employees’ terms and conditions of employment. However, as previously discussed, an employer may take unilateral action without bargaining with a union when exigent or emergent circumstances exist. Citing Bottom Line Enterprises, 302 NLRB 373, 374 (1991), GC 20-04 explains that an “exception to the duty to bargain exists where the employer can demonstrate that ‘economic exigencies compel[led] prompt action.’” The exception is applied narrowly and is limited to extraordinary and unforeseen events that have a major economic effect requiring prompt action. RBE Electronics of S.D., 320 NLRB 80 (1995).

Despite the NLRB construing the exception narrowly, the cases summarized by the General Counsel show that the NLRB has sanctioned unilateral action in the face of other emergencies. For example, in Port Printing & Specialties, 351 NLRB 1269 (2007), the employer unilaterally laid off employees, a mandatory subject of bargaining, due to emergency circumstances created by Hurricane Rita. The NLRB found that the exigent circumstances surrounding the approaching hurricane and the mandatory city evacuation privileged the employer’s unilateral action.

Likewise, in K-Mart Corp., 341 NLRB 702 (2004), the administrative law judge found that the employer’s layoff due to a 60% drop in business on the heels of the September 11, 2001 terrorist attacks constituted “extraordinary unforeseen events having a major economic effect that required the employer to take immediate action” sufficient to excuse bargaining.

However, an employer’s demise does not always permit unilateral action. In Hankins Lumber Co., 316 NLRB 837 (1995), for example, the NLRB determined that the employer violated Section 8(a)(5) of the National Labor Relations Act (the Act) when it unilaterally laid off employees at a lumber mill due to a log shortage, because the log shortage had been a chronic problem. The NLRB found that there was no “precipitate worsening” of the log shortage that required immediate action prior to bargaining with the union. The General Counsel noted the NLRB’s contrast of Hankins with Brooks-Scanlon, Inc., 247 NLRB 476 (1979), where the employer did not violate Section 8(a)(5) of the Act by unilaterally closing the sawmill because there were “economic factors so compelling that bargaining could not alter them” and the employer negotiated with the union over the effects of the closing.

Employers Must Still Bargain Over the Effects

The memo cautions that while unilateral action may be permissible, an employer still must bargain over the effects of its actions even in emergent situations. Tellingly, while the NLRB sanctioned the unilateral layoff in Port Printing (discussed above), the employer’s failure to bargain over the effects of the layoff was a violation of the Act. The memo also summarizes two cases in which the Board found an employer’s refusal to bargain over the effects of closing its business was unlawful, despite noting that the employer may not have been obligated to bargain over the decision to close due to terminated lines of credit.

Employers should also be wary of continuing exigent action after the exigency has passed. In Port Printing, the NLRB found that the employer violated Section 8(a)(5) of the Act when it used non-bargaining unit personnel to perform bargaining unit work after the exigency had dissipated.

Unilateral Action and Core Business Purpose

Despite the absence of any overt direction on the issue, the General Counsel’s summary of Virginia Mason Hospital, 357 NLRB 564 (2011) may provide a glimpse into the General Counsel’s views on unilateral action in response to COVID-19.

In Virginia Mason, the hospital unilaterally implemented a policy requiring union-represented nurses who did not receive a flu shot to either take antiviral medication or wear a protective mask. The administrative law judge (ALJ) found that the employer was relieved from bargaining over the policy under Peerless Publications 283 NLRB 334 (1987) because the policy (1) went directly to the hospital’s core purpose of protecting and curing patients, (2) was narrowly tailored to preventing the spread of the flu in the hospital and (3) was limited to registered nurses who refused to receive the flu shot. The NLRB reversed the ALJ, however, and limited Peerless Publications to the facts of that case because of the First Amendment considerations at issue.

Notable for employers is the General Counsel’s attention to NLRB member Hayes’ dissent rejecting the majority’s narrow interpretation of Peerless Publications. Hayes explained that the Peerless test set forth the broad, general terms of when an employer may unilaterally establish rules that are designed to protect the “core purpose” of the employer’s enterprise. In Hayes’ view, the hospital’s implementation of a flu-prevention policy was aimed at its core purpose of preventing the spread of the virus to other hospital patients.

Takeaways

COVID-19 poses an unprecedent set of circumstances to employers that may justify unilateral action. Employers considering unilateral action in response to COVID-19 issues should carefully evaluate whether the action falls into the type of extraordinary and unforeseen events that require prompt action. Whether an employer meets the emergency exception will depend on the facts specific to that employer and possibly that employer’s industry. Once the exigency ceases, normal bargaining obligations resume.

The memo also serves as a cautionary note to employers that the ability to take unilateral action does not absolve the employer from bargaining over the effects of the change. Employers still must bargain regarding the effects of the change, even if unilateral action is permissible at implementation.

Authorship Credit: Nancy Inesta, Michael Parente and Todd Dawson

Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you written information about our qualifications and experience.

Related Services

Related Emerging Issues