Labor Relations Law Blog

One of the principal criticisms aimed at the National Labor Relations Board in recent years is its penchant for ordering businesses to restore facilities or operations which it has decided to relocate elsewhere.  In the recent case of Gunderson Rail Service, LLC decided June 23, 2016, the NLRB did just that, by ordering a Tucson, Arizona employer to restore its operations there on the grounds that it failed to bargain over the relocation decision with the union representing its employees.

The employer in that case was engaged in the business of repairing and servicing railcars for railroads.  It decided to close its Tucson facility after its largest customer, TTX, decided to shift its rail car work to the employer’s facilities elsewhere.  Concluding that it had “no options,” the company proceeded to close the plant and to offer its employees jobs in four other states to which they could relocate.

The Board found this action to be unlawful for several reasons.  First, because the decision was found to have turned on “labor costs,” the agency found that it was susceptible to bargaining with the union and that some result other than plant closure could have been negotiated.  In this respect, it found that the company continued to have enough work to support 17 full-time employees even without the TTX business, thereby raising the question as to whether some kind of agreement could have been arrived at with the union to enable it to continue in business as a smaller operation.  The Board also found it to be relevant that the shutdown was not the result of a “basic change in the nature of the employer’s business,” because the employer continued to do the same kind of work both before and after the shutdown.  The company was therefore ordered to bargain with the union upon request and to “rescind any or all unilateral changes to the terms and conditions of employment of [bargaining] unit employees, including closing the Tucson facility.”

This case highlights the continuing importance the NLRB places on negotiating with a union before taking major actions of this nature.  Note that the company could still have closed the Tucson facility in this instance, but that it was illegal to do so without first bargaining with the union over the decision and effects of that action.  The case highlights the importance of engaging competent labor counsel to guide a company through these extreme risks.