6th circuit limits NLRB’s ability to compel union bargaining

The 6th Circuit Court of Appeals has become the first federal appeals court to reject the National Labor Relations Board’s (NLRB’s) use of its Cemex framework to impose bargaining orders. A recent ruling from the Court limits the Board’s ability to require an employer to recognize and bargain with a union without the union winning an election.

The split court held, 2-1, that the NLRB overstepped its powers in its Cemex decision, which requires employers who violate labor laws during union-organizing drives to bargain with unions even when the workers vote against joining.

Case background

Brown-Forman Corporation v. NLRB grew out of an organizing campaign at Brown-Forman’s Woodford Reserve distillery in Kentucky. After learning about the unionization effort, the company announced several workplace changes:

• A $4-per-hour wage bump for all employees,
• Adjustments to progression and merit increases,
• Modifications of time-off rules, and
• Handing out bottles of bourbon shortly before the vote.

Employees rejected unionization by a wide 45-14 margin, but the union challenged the results. An administrative law judge determined that Brown-Forman committed unfair labor practices and interfered with its employees’ efforts to unionize. The Board agreed the timing of the benefits improperly influenced the vote and, relying on Cemex, ordered Brown-Forman to recognize and bargain with the union instead of holding a new election.

The NLRB may issue a bargaining order under either a Gissel or Cemex standard to remedy a tainted organizing election. Unlike a Gissel bargaining order, which remedies extreme employer misconduct (such that conducting a fair election is impossible), a Cemex bargaining order can result from any failure by an employer to properly respond to a union’s showing of majority support. For example, failing to file for a secret ballot election within 14 days or committing any unfair labor practice during the election – even a minor one.

Court ruling

The 6th Circuit upheld the NLRB’s finding that the employer interfered with employees’ free choice, but it drew a sharp line on the remedy. The Court ruled that the Board created the Cemex standard through an improper shortcut – using a single case to launch a sweeping, forward-looking policy change without going through the rulemaking process. The court stressed that the Board can address policy through case decisions, but it cannot create broad, hard-and-fast rules that don’t grow out of the facts of the case before it. Because the Board issued the bargaining order solely under Cemex, the court refused to enforce it and sent the matter back to the Board to apply the longstanding Gissel standard or hold a new election.

The dissenting judge held that the Cemex standard is consistent with the Board’s authority to remedy violations of the National Labor Relations Act and advance its policies.

Although the ruling applies only in the 6th Circuit – Kentucky, Michigan, Ohio and Tennessee – other circuits may follow suit. Employers should exercise caution during organizing activity. Wage increases, benefit changes or other “good news” announcements during organizing campaigns still carry real risk and may result in unfair labor practice finding.