The federal appellate court with jurisdiction in Pennsylvania recently affirmed a National Labor Relations Board ("NLRB") order holding that CPS Chemical Company violated the National Labor Relations Act when it refused to bargain with the Oil and Chemical Workers Union ("OCAW") after the independent union which had formerly represented CPS' employees merged with the large national union. In CPS Chemical Company, Inc. v. NLRB, the Third Circuit Court of Appeals engaged in a substantial discussion of the circumstances under which an employer may challenge a "merged" union as an entity that is different from the organization with which it has traditionally engaged in bargaining and representational activities on behalf of the employees (thus justifying a withdrawal of recognition).
The facts of this case were quite simple. CPS operates a chemical plant in Old Bridge, New Jersey, and has a small contingent of production employees. In 1984, an independent union (with no affiliation to any local, regional or national organization) became the exclusive collective bargaining representative of these employees. In 1995, during the term of a three year collective bargaining agreement, the union began discussing the possibility of affiliating with a larger union. In May of that year, the independent held a secret ballot election and all 22 union members voted in favor of affiliation. A resolution was adopted to change the name of the local and to transfer the assets of the independent to Local 8-397 of the OCAW.
The OCAW local was comprised of approximately 550 members employed by 18 different employers. As a matter of practice with the OCAW local, employees from each employer were considered to comprise separate "unit groups" and negotiations for unit groups were conducted separately, but with the assistance and participation of the local. The International must approve any contracts negotiated by the various unit groups, although it cannot require that a unit group accept a collective bargaining agreement that the unit does not wish to approve.
The following month, Local 8-397 advised CPS of the affiliation. CPS refused to recognize the affiliation and refused to bargain with the local. The local then filed an unfair labor practice charge. An administrative law judge ("ALJ") and the NLRB both found that the employer had violated federal labor law. The NLRB and CPS filed cross-petitions for enforcement and review.
The Fundamental Legal Principles
The underlying foundation of this case (as with all withdrawal of recognition cases) rests on Section 7 of the National Labor Relations Act, which states that: "Employees shall have the right to self-organization, to form, join or assist labor organizations, [and] to bargain collectively through representatives of their own choosing."
It is also axiomatic that a labor organization which acts as the "exclusive bargaining representative" of the unit must be so designated by a majority of the unit which it claims to represent. A labor organization enjoys a rebuttable presumption that it has the support of the majority of the unit employees after its first year of representation.
The federal courts and the NLRB have previously held that if an employer has reason to doubt the validity of this presumption of majority support, it may take one of three steps to test that support. The employer may:
- petition for an NLRB supervised election;
- conduct a poll of its employees to measure their support of the union; or
- withdraw recognition from the union and refuse to bargain.
To follow the second or third paths, the employer must have a "good faith reasonable doubt" regarding the union's continued majority support. Without this good faith reasonable doubt, the employer commits an unfair labor practice. In an unfair labor practice proceeding, it is the NLRB's burden to prove a labor law violation, but where there is acknowledged conduct (such as a refusal to bargain) it is the employer's burden to prove its affirmative defense (i.e., its "good faith reasonable doubt").
The Effect Of The Union's Change Of Bargaining Position
The leading case in the affiliation context is NLRB v. Financial Institution Employees, Local 1182 ["Sea-First"]. In Sea-First the U.S. Supreme Court held that a question concerning representation only arises if:
- "a new affiliation . . . substantially change[s] a certified union's relationship with the employees it represents"; and
- this change makes it "unclear whether a majority of employees continue to support the reorganized union."
The Court also indicated that the underlying policy of retaining "industrial stability" must be considered when evaluating these factors.
The effect of this approach is that the NLRB focuses on the relationship between the unit employees and their union. Thus, an employer's approach to these cases must be based on whether its employees' representative has changed in some material way and without the workers' knowing consent, not whether the employer is being called upon to bargain or deal with some substantially different entity than before.
The NLRB, in determining whether the post-affiliation labor organization continues to enjoy majority support, analyzes whether:
- the affiliation vote met minimal due process standards; and
- the affiliation substantially changed the nature of the preaffiliation union.
The NLRB has traditionally used a "totality of the circumstances" analysis to determine whether there has been a "substantial change."
The Third Circuit, in the CPS case, noted that its earlier holdings in cases dealing with this issue have been often criticized by other federal courts. For this reason, the Third Circuit decided to review and explain those earlier rulings.
Initially, the Third Circuit noted that in these previous decisions it had focused upon the effects of the affiliation upon the employer. The Third Circuit noted that the Supreme Court had "undermined" that analysis in Sea-First and, thus, the law had evolved since these decisions had been issued.
The court then reviewed its ruling in Sun Oil Co. v. NLRB, which focused on an "increase in the [relative] bargaining power" of the union as a result of the affiliation. The court held that the relative balance of the relationship might change the relationship between the parties, suggesting that relative bargaining power may have been a factor in the employer's decision to grant voluntary recognition. However, in CPS the court noted that "increased size, financial support and bargaining power" might very well be the ordinary and valid reasons for mergers and, after Sea-First, this is the domain and choice of the unit employees, not the employer.
The court then described "the key factors" which the NLRB considers in its evaluation of whether employees suffer a "lack of continuity" and a change of the identity of their bargaining representative which might adversely affect them. The court noted that the NLRB has approved an employer's refusal to bargain after an affiliation where there were changes in daily representation and contract administration matters, changes in process such that strikes could only be undertaken with the approval of the new international officers, and changes in process under which employees would no longer participate in the selection of "their leaders."
The court noted that these situations might continue to raise questions concerning representation in affiliation cases in the future. While the court found that these were not issues in CPS, they could be factors to consider in analyzing whether a withdrawal of recognition is lawful in other cases.
Current Withdrawal Of Recognition Criteria
It is certainly far from an everyday occurrence to withdraw recognition from a collective bargaining representative. In most circumstances, there is a contract in effect and the opportunity does not exist as a matter of law. Further, where the union is "defunct" or inactive, creating a problem where none exists is not always the wisest or most practical course of action.
However, the possibility of withdrawal is a more meaningful course of conduct than the fashion with which it is often considered. Employees are often dissatisfied with the union "representing" them. At times, an incumbent union is not merely a thorn in the side of management, but an entity with different objectives than its members. For example, a union's posture in negotiations may cause layoffs or a strike with no purpose other than to demonstrate that it is easier to treat them respectfully than to take them on in battle.
With situations such as these occurring all the time, the consideration of factors which may give rise to a legal basis for withdrawing recognition is a worthwhile exercise. Certainly, it is unlawful to instigate a decertification petition, but there are many ways to deal with everyday situations -- even those that are often overlooked.
Withdrawal Of Recognition In Any Situation
It should be noted that there are many factors traditionally considered in an employer's evaluation of a withdrawal of recognition which were not at issue in CPS. Thus, for instance, where there has been no union representation for a substantial period of time, an evaluation may demonstrate that the representative is legally "defunct" and a withdrawal of recognition under federal labor law would be upheld. Reactive attempts to combat this by affiliation may be too late to stave off an otherwise appropriate withdrawal of recognition.
Employees' voiced dissatisfaction with the incumbent union, supported by a lawful poll or appropriately worded petition, have also historically been justifiable reasons for withdrawal of recognition. There also may exist arguable public policy reasons to refuse to recognize a newly affiliated entity, such as historical patterns of discrimination, current bias or criminal activity. None of these issues were discussed by the court in CPS and, thus, the law has not changed the treatment of these issues merely because the context is affiliation rather than a new certification.
Conclusion
The issues surrounding the analysis of when an employer may withdraw recognition from the collective bargaining representative of its employees is a minefield. The law has changed over recent years and is still evolving. To make the task more difficult, at times the courts do not agree with the NLRB, and different circuit courts do not agree with each other. The significance of this is heightened for employers with facilities in multiple geographic locations, and even more so where different locals of the same union represent employees in those different geographic locations.
The cases will be handled in a fact specific fashion, and an employer's motivation will nearly always be challenged. However, this article describes some of the current issues to consider in evaluating whether to recognize a bargaining agent in the new affiliation context.
It is not uncommon for employers to recognize voluntarily independent unions as a preferred alternative to other representation; merger is now a risk assumed by any employer that recognizes a bargaining representative of its employees. The current point of legal certainty is that the focus for a withdrawal of recognition must be on the relationship of the employee/members to the new entity, not the effect on the employer.