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Unilateral Layoffs From Virus May Be OK, Top NLRB Lawyer Says

March 30, 2020, 6:44 PM

Employers rocked by the Covid-19 pandemic may be able to sidestep their normal duty to bargain with unions over layoffs and other workplace changes, the National Labor Relations Board’s top lawyer said.

The NLRB has permitted a limited exception for unforeseen, extraordinary events that have major economic effects requiring employers to take immediate action, General Counsel Peter Robb wrote in a March 27 memorandum.

Robb’s legal advice comes during an unparalleled surge in jobless claims as companies have shed workers in response to business slowdowns and closures related to the novel coronavirus outbreak. New weekly unemployment claims spiked to almost 3.3 million in last week’s Labor Department report, easily eclipsing the previous weekly record of 695,000 claims.

“Regardless of the reason for any given response to the spread of the virus, many parties are considering the impact on the duty to bargain,” Robb said in his memo. “Although we are in an unprecedented situation, I wish to make the public aware of several cases in which the Board considered the duty to bargain during emergencies.”

In his memo, Robb reviewed four cases dealing with the duty to bargain during public crises, as well as five matters touching on particular companies’ economic emergencies or supply shortages.

Looking at Bottom Line

The NLRB allowed a commercial printer in Louisiana to lay off several workers without giving the union notice or an opportunity to bargain when the company closed in response to a Hurricane Rita evacuation order in 2005. But Port Printing & Specialties violated labor law by subsequently failing to negotiate over the effects of the layoffs after the hurricane or the use of non-union workers to perform union work, the board said in its 2007 decision.

The layoffs were permitted under the NLRB’s 1991 ruling in Bottom Line Enterprises, which recognized an exception from the duty to bargain for extraordinary events causing economic pressures that force prompt action, the board said. The exigency due to the hurricane had passed, however, when the company continued acting without bargaining, according to the ruling.

The Bottom Line precedent similarly permitted K-Mart Corp. to initiate layoffs without bargaining after plummeting sales put it in bankruptcy after the terrorist attacks on Sept. 11, 2001, an administrative law judge ruled in 2004.

A lumber company could lawfully close a sawmill in its Oregon facility without bargaining due to a log shortage, the NLRB said in a 1979 ruling. Even though Brooks-Scanlon Inc. decided to shutter the operation two months before doing so, factors such as the actions of conservation groups and the needs of other lumber companies in the area created “economic factors so compelling that bargaining could not alter them,” the board said.

But the NLRB said Hankins Lumber Co. unlawfully laid off workers at its mill in Alabama due to a log shortage. The case was different than the situation in the Brooks-Scanlon ruling, including that Hankins initially offered to bargain over the layoffs before moving forward unilaterally, the board said in its 1985 decision.

To contact the reporter on this story: Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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