- in Canada
Originally appeared in Labor Law Newsletter - January 2002
The Board recently outlined its position with respect to the duty of an employer to produce financial information, upon union request, when the employer claims during bargaining negotiations that it is not able to meet union demands for wage increases.
In Lakeland Bus Lines, Inc., 335 NLRB No. 29 (August 27, 1999), the president of the company sent a letter to employees when the employer and union were not able to reach agreement on a compensation package. The letter stated, in relevant part:
We are trying to bring the bottom line back into the black . . . We are asking for help from our LAKELAND FAMILY so we may retain your jobs and get back in the black in the short term . . . I ask you to give the enclosed Final Offer your serious consideration and vote YES to ratify it. The future of Lakeland depends on it.
The union then requested that the employer allow its accountant to review the employer’s books and records. The employer refused, stating it did not claim its financial position precluded agreement to the union proposals. The General Counsel alleged that the employer violated Sections 8(a)(5) and (1) of the Act by refusing to provide the union with access to the requested financial information. However, the ALJ found no violation because the employer was not claiming inability to pay.
In a 3-to-1 decision, Board Members Liebman, Truesdale, and Walsh reversed the ALJ decision. The Board relied substantially on its prior decision in Shell Co., 313 NLRB 133 (1993), where it held that an employer’s duty to disclose relevant financial information is triggered by claims that its present circumstances were "bad" and a "matter of survival," that it was "losing business," and "faced serious regulatory and cost problems." The Board concluded in Lakeland Bus that the message contained in the employer’s letter to employees was not distinguishable from that found to trigger the employer’s obligation to disclose financial information in Shell Co. Specifically, the Board reasoned that the employer’s letter conveyed a sense of immediacy that it could not afford to pay more than its final offer, that it was not profitable, that its loss of revenue was permanent and that its proposals were premised on its immediate need to make up for the permanent loss.
This case highlights the needs for employer caution when making fiscal objections to union contract proposals. Employers should be careful to avoid inferring inability to meet union wage demands based on a weak financial position at risk of having to produce financial records to the union.
Copyright 2001 © Vedder, Price, Kaufman & Kammholz. The Labor Law Newsletter is intended to keep our clients and interested parties generally informed on labor law issues and developments. It is not a substitute for professional advice.