Risk of Cemex Bargaining Order Raises Stakes for Employers that Commit Serious Unfair Labor Practices During Union Campaigns

Expressing palpable frustration with an employer that committed many unfair labor practice charges after a union filed an election petition, and acknowledging the lack of serious disincentives to engage in unlawful behavior opposing a union campaign, on August 25, 2023, the NLRB issued a new set of rules that will apply immediately to many employers and unions locked in a unionizing campaign. The major change is that the Board has determined that it has the power to impose a bargaining order on an employer that engages in serious unfair labor practice charges during an organizing campaign despite the union’s losing a Board-supervised election and without entertaining the remedy of a re-run election. Here the Board announces that it is replacing the Gissel bargaining order standard because of the speculative nature of determining the likelihood that a future fair election can be held. Cemex Construction Materials Pacific (Aug. 25, 2023).

The case against Cemex arose in the context of the Teamsters’ filing a representation (RC) petition in 2018 and the union’s demand for recognition. Cemex declined to voluntarily recognize the Teamsters so the union filed an RC petition. Cemex retained a labor relations consultant to communicate its campaign message to employees; oddly, the Board commented several times on the compensation Cemex paid its consultant. The election resulted in victory for Cemex, by a margin of just 13 votes out of 345 votes cast. The union filed unfair labor practice charges, and the Board spent six pages of its opinion describing the unfair labor practices the employer committed in the lead up to the election, finding that Cemex violated the Act at least 20 times during this period. The Board majority was not satisfied with the ordinary remedy of a rerun election, despite Cemex’s arguments that the passage of time and employee turnover diluted the union’s claims to majority support and that the union had not won an election. However, the Board’s decision was heavily influenced by the union’s showing that 57% of the employees signed union authorization cards in 2018.

On these facts, the Board laid out how it will process unfair labor practice charges filed during an organizing campaign. First, the Board made clear that it will defer heavily to signed authorization cards to establish a union’s majority support, subject to an employer’s rights to attack the veracity and integrity of the card signatures and challenge the appropriateness of the unit.

Next, the Board decreed that when a union demands recognition based on majority status, the employer has four options each of which carries legal consequences:

1. Voluntary Recognition: If the employer satisfies itself that the union commands majority support, the employer may opt to recognize the union.
2. File an Employer RM Petition: If the employer declines to recognize the Union voluntarily, alternatively it may now opt proactively to file an RM petition to test the union’s majority status, and to do so, the employer need not allege a good faith doubt about the union’s majority support. This option will result in a Board-supervised election that will determine whether the union has majority status even if the union never files an RC Petition.
3. Respond to and Oppose Union’s RC Petition: If, upon the employer’s declining to recognize the union voluntarily, the union files and does not withdraw an RC petition, the employer retains the right to question the union’s claim of majority status during processing of the RC petition. The Board further clarified that even if the union first files an RC petition, as Cemex found out, the Board may impose a bargaining order in an RC case regardless of the election vote result if the Board finds that the Employer committed unfair labor practices that precluded a fair election.
4. Refusal to Bargain: Finally, if the union does not file an RC petition, and the employer declines to recognize the union voluntarily, and if the employer does not promptly file an RM petition, if the union files a ULP refusal-to-bargain charge under these circumstances, the Board cautioned that if the employer loses the ULP case and the union is found to have majority support, then the employer’s liability will date back to the time the union demanded recognition and bargaining, the consequence being that the employer’s bargaining obligation matures then, and a refusal to bargain and any subsequent unilateral changes made by the employer will be determined unlawful. A key consideration for an employer that selects this option is that the Board will determine whether the employer had an obligation to bargain based on the union’s ability to present cards signed by a majority of employees in the bargaining unit. If the union establishes majority status through signed cards, the Board will issue a bargaining order despite the union’s never prevailing in an election! This is a massive change to the status quo by the Board.

The Board distilled the new rules as follows: The employer is not required to file an RM petition in response to a union’s demand for recognition, but if it chooses not to file the RM petition and not to recognize the union, it takes the risk that the Board will find that the employer had a duty to recognize and bargain with the union. But the Board points out that the employer continues to have the right to challenge the union’s majority status in the ULP proceeding.

Finally, the Board clarified that not every unfair labor practice will warrant a Cemex bargaining order but warned that a single violation of the Act in the lead-up to an election can result in a bargaining order if it “interferes with employee free choice and undermines the reliability of an election as an indication of employees’ true preferences.”

This case is an example of bad facts make bad law. In his dissent, Board member Kaplan suggests, quite reasonably, that certain of the statements in the majority decision are obiter dicta - - that is, not binding holdings, since the statements are not directly related to the facts presented in the case. The Board majority disagreed vehemently with Kaplan’s position and insisted that it has the authority to “change national labor policy through adjudication by adopting alternative permissible interpretations of the Act,” and held that Cemex will be applied retroactively.

We expect the Board’s decision to be challenged on appeal. In the meantime, a prudent employer will take a fresh look at the new risks associated with an aggressive union-free campaign given the Board’s positive view of union authorization cards and its negative view of re-run elections. Faced with a union demand for recognition, an employer’s next steps will have graver consequences than before. The traditional response of advising a union demanding recognition that a Board-supervised secret ballot election is preferred no longer works under Cemex.

For any questions as to how this new development affects your business, please contact any of our Firm’s labor law Partners -- Patrick W. McGovern, Esq. via email here, Douglas E. Solomon, Esq. via email here, Jennifer Roselle, Esq. via email here, or Leonard S. Spinelli, Esq. via email here at , or call 973.533.0777.