6th Circuit Rules Employer’s Statements on Consequences of Unionization Lawful

By: Cary Schwimmer

Section 7 of the National Labor Relations Act (NLRA) guarantees employees the right to form, join or assist labor unions and to collectively bargain through unions. NLRA Section 8(a) makes it an unfair labor practice for an employer “to interfere with, restrain, or coerce employees in the exercise of rights guaranteed in” Section 7.

In Hendrickson USA, LLC v. National Labor Relations Board, Case No. 18-1144/1315 (August 1, 2019), the 6th Circuit U.S. Court of Appeals, refused to enforce a National Labor Relations Board (NLRB) ruling against an employer whose employees were attempting to unionize the company’s Kentucky manufacturing plant. The court rejected the NLRB’s position that the employer, Hendrickson USA, violated Section 8(a) by issuing a plant-wide letter cautioning employees that if the plant were unionized, contract negotiations would begin “from scratch.” Hendrickson USA also showed employees a PowerPoint stating that in a union shop “the culture will definitely change,” “relationships suffer” and “flexibility is replaced by inefficiency.”

The court noted that NLRA Section 8(c) provides that it is not an unfair labor practice for an employer to express any “views, argument, or opinion” as long as the expression “contains no threat of reprisal or force or promise of benefit.” Citing U.S. Supreme Court and court of appeals precedent, the 6th Circuit pointed out that both the employer and employees may express themselves in a labor dispute on the merits of the disagreement to influence its outcome. However, to be protected, an employer’s prediction of adverse consequences of unionization “must be carefully phrased on the basis of objective fact.”

While the court previously found that it was unlawful for an employer to tell employees that in union bargaining wages and benefits “start at zero,” rather than their current levels, the court explained that the statement was made in light of an “atmosphere of anti-union animus,” which involved other unfair labor practices such as terminating pro-union employees and threatening to close the plant.

Absent those types of circumstances, the court held that it is lawful for an employer to adopt a hard bargaining posture if a union is elected or to inform employees that it will do so, and that communicating an intent to “start from zero” or “from scratch” is a “permissible prediction of a hard bargaining posture.” Such statements are lawful if the employer makes it clear that it is warning employees about the “natural give and take of the bargaining process,” and not threatening to retaliate against employees for electing a union by engaging in “punitively intransigent” bargaining or unilaterally discontinuing benefits prior to negotiations.

The court held that Hendrickson’s letter was lawful. While the letter emphasized the inherent risks of contract negotiations, it did not “essentially promise” that employees would end up with less. The letter made it clear that its statement was meant to counter any ideas that union representation would automatically lead to an increase in wages and benefits, which purpose is explicitly allowed by NLRB precedent.

The question was whether the statements in Hendrickson’s PowerPoint presentation were “projections of consequences beyond its control or threats to retaliate against employees for authorizing union representation.” The court rejected the NLRB’s position that Hendrickson’s statements certainly indicated that in the event a union was elected, Hendrickson would no longer respond to employee concerns and that employees would “lose control over every aspect their work lives.” Rather, the court held, the PowerPoint lawfully elaborated and summarized the company’s position “on the ineffectiveness of third-party representation” and were “protected predictions of the consequences of unionization.”

Practice Tips:

Whether employees are considering unionization or other active efforts to unionize, everything the employer says or does about the consequences of unionization may carefully be scrutinized by a union or the NLRB for evidence of unlawful intent. While the 6th Circuit’s decision found the employer’s letter and PowerPoint to be lawful, any surrounding evidence of employer actions or statements motivated by anti-union animus or suggested retaliation against employees should they vote in a union, could certainly have resulted in an opposite ruling.

It is critical for employers to have their labor and employment counsel review and approve any and all written or oral statements to employees about unions. This includes everything from providing general education to employees on the company’s position and communications to employees when there are indications of union activity, to communications to employees during an active unionization campaign.  

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