Applying Labor Board’s Cemex Framework Turns on Timing of Events

Timing has emerged as a key element in how agency judges apply the National Labor Relations Board’s recent landmark ruling designed to discourage illegal conduct before union elections.

Two NLRB administrative law judges so far have issued decisions invoking the framework from the board’s ruling in Cemex Construction Materials Pacific LLC, providing some early clues on how it will operate and impact federal labor law rights for both employers and workers.

One administrative law judge ordered a cannabis company to recognize and bargain with a union because the company fired key organizers after a majority of employees at a Massachusetts store signed a letter and presented management with a demand for recognition.

But a different agency judge declined to issue such an order against a Las Vegas warehouse that fired its workers before they signed union authorization cards and requested recognition. Instead, the judge ordered the company to hire back the workers and said what happens next depends on its “subsequent conduct and/or the election results.”

“It’s all about the timing,” said Rebecca Leaf, a former NLRB attorney who represents employers at Miles & Stockbridge PC.

The NLRB triggered a potentially seismic shift in labor-management relations with its Cemex decision in August.

Cemex requires employers to recognize a new union or promptly file for an election when the union asks for recognition based on majority support from workers. Failure to seek an election within two weeks of the recognition demand will result in an order to recognize and bargain with the union, absent unforeseen circumstances.

If an employer violates federal labor law in a way that previously would have mandated voiding the results of the vote, then the NLRB will order the employer to recognize and bargain with the union.

Thus far, the Cemex framework is playing out in cases that were already underway when the board adopted its new recognition regime. For example, NLRB prosecutors recently requested a Cemex bargaining order against Starbucks Corp. in a case that began more than a year ago.

The early impact on newly initiated cases can be seen in the 28 union election petitions that employers have filed since Cemex was decided.

But when it comes to bargaining orders for employer violations in the lead-up to elections, the timing requirements are clear.

“The sequence is the union first presents evidence of majority support or offers to present, then the employer commits a ULP downstream that would have required a rerun election,” said Robert Nagle, co-chair of management-side firm Fox Rothschild LLP’s labor-management relations practice.

Retroactivity

Timing issues aren’t limited to the order of the parties’ actions and their resulting consequences. Retroactivity also is arising as judges apply the Cemex framework.

For instance, the ALJ decision mandating that cannabis company I.N.S.A. Inc. recognize and bargain with a United Food and Commercial Workers Union affiliate was retroactive to January, creating a duty to bargain over changes to job terms for the eight months before the ALJ handed down his decision.

I.N.S.A. can appeal that ruling to the NLRB.

Retroactive bargaining orders, in concert with labor law’s limitations on unionized employers’ ability to alter job terms, could spell trouble for some businesses.

Companies can be held liable for unilateral changes made during periods when they were obligated to bargain, even if that duty comes via a retroactive order, said Anne Marie Lofaso, a former NLRB lawyer who teaches labor law at West Virginia University.

“Employers choose not to recognize unions with majority support knowing that there’s a risk,” Lofaso said. “And if they didn’t know, ignorance of the law is no excuse. Employers should understand that.”

Companies with an obligation to bargain for a first contract face even more constraints on their ability to take unilateral action. In particular, employers can’t rely on past practices of unilateral changes before workers were unionized to justify unilateral changes after they’ve selected a bargaining representative, the NLRB said in its August decision in Wendt Corp.

Back to the Future

Retroactive bargaining orders aren’t a novel consequence of Cemex, and in fact have been around for decades.

The board previously issued such orders to remedy an employer’s labor law violations that undermined a union’s majority status and ruined the chances for a fair election, which the US Supreme Court recognized in its 1969 decision in NLRB v. Gissel Packing Co.

For example, the NLRB in 1977 imposed a bargaining order on a coal company that was retroactive to the date of the first in a series of unfair labor practices in the case—more than two years before the ruling. The board reasoned that it couldn’t restore the status quo from before the company’s “course of unlawful conduct” unless the order was retroactive to that time.

But retroactive bargaining orders will be the byproduct of more frequent decisions applying Cemex, rather than any particularly unusual aspects of the cases themselves, said Alexander Robertson of Pyle Rome Ehrenberg PC, who represents the UFCW affiliate in the case involving I.N.S.A.

“Employers who insist on an election and commit ULPs invalidating the election run the risk that adverse changes will be reversed as unlawful unilateral changes,” said Robertson, a former NLRB lawyer.

I.N.S.A.’s attorney, Jonathan Keselenko of Foley Hoag LLP, didn’t respond to requests for comment.

Union Petitions

The I.N.S.A. decision confirms that Cemex bargaining orders also can be retroactive in cases involving election petitions filed by unions, said Seth Goldstein, an attorney at Julien Mirer Singla & Goldstein PLLC who represents unions.

That means that filing for elections remains a viable option for unions if their demands for recognition are rejected, instead of waiting for an employer to file and potentially getting a bargaining order if it doesn’t, he said.

Unions ultimately want Cemex to provide accountability for employers’ labor law violations in the lead up to elections, not a backdoor to unionization without a vote, Goldstein said.

In addition, unions get the first crack at defining the bargaining unit if they file the election petitions, said David Pryzbylski, an attorney at the management-side firm Barnes & Thornburg LLP.

“If unions want more control over the process, we might still see a fair amount of representation cases filed by unions,” he said.