Hunton Employment & Labor Perspectives

Employers with collective bargaining agreements and union relationships know they generally cannot make unilateral changes to terms and conditions of employment.  But in an unprecedented emergency like the coronavirus (COVID-19) outbreak we are all facing, union bargaining obligations may be relaxed, either based on the terms of a collective bargaining agreement, or under National Labor Relations Board law.  As employers are forced to make ever more difficult operational decisions in the face of this emerging threat, here are some issues unionized businesses should consider when contemplating major workplace changes.

Consider Contract Terms First

 It goes without saying that employers with collective bargaining agreements should first examine the language of their contracts to determine whether they provide for any increased flexibility in decision-making during emergencies, such as a public health emergency.  If the terms of a company’s CBA specifically allow for increased operational flexibility during emergency situations, then the CBA should govern, and the employer should proceed accordingly.

Force Majeure Provision in Your CBA?

 Many collective bargaining agreements contain force majeure provisions that relieve a party of the obligation to perform its contractual obligations based on extraordinary, uncontrollable circumstances.  The outbreak of COVID-19 may qualify as a circumstance covered by such a provision.  The application of a force majeure provision could also be affected by the level of community spread or prevalence of the virus outbreak in an employer’s region and on governmental directives and declarations.

If an employer intends to utilize a force majeure provision to make a unilateral change or otherwise stray from the terms of a CBA, it should provide notice to the union first, if practicable, or as reasonably soon after the change has been made as practicable.  Even when bargaining is not required, meeting with the union to discuss a solution to problems caused by COVID-19 may avoid a conflict over the changes, even if the employer is within its right to make them unilaterally.  Indeed, some employers have decided that while they are within their rights to invoke force majeure under their particular CBA, they would rather wait to do so until efforts at collaboration with their union(s) have been unsuccessful.

Finally, employers should note that force majeure provisions may also apply to unions.  The language of a given CBA may also excuse a union’s or its members’ failure to perform certain contract requirements during a force majeure situation.  Thus, if an employer intends to use a force majeure provision to make a unilateral change, it should be prepared for a similar response from the union (such as a refusal to work in unsafe conditions) if the provision provides an excuse from performance to both parties to the contract.

Government Orders Overriding Collective Bargaining Agreement

 Given the increasing level of government intervention related to the COVID-19 outbreak, it is also possible that certain government directives may override collective bargaining agreements.  For example, the House of Representatives recently passed a bill mandating additional paid sick and family leave for certain employees.  It is also possible that government orders may require the temporary closing or cessation of work at some businesses.  These kinds of orders may leave employers and unions with no choice but to make alterations to the workplace not contemplated in any CBA.

If a government order takes employment changes out of the hands of employers and unions, the parties may have an obligation to bargain over the effects of the order.  For example, if a mandatory leave law requires an employer to allow parents of children with closed schools to take paid leave, the employer will likely need to bargain with the union over how to maintain required staffing levels if it chooses to keep operations running.

National Labor Relations Board Law Exception to Bargaining Obligation for Extraordinary Events and Economic Exigencies

 National Labor Relations Board (“NLRB”) case law also provides an exception to an employer’s general duty to bargain for extraordinary events that cause “economic exigencies that compel prompt action.”  The extraordinary event and economic exigency exception, however, generally has been narrowly applied and may be applicable for only a short period and depending on the nature of the exigency.

According to the Board, the exception applies to “extraordinary events which are an unforeseen occurrence, having major economic effect requiring the company to take immediate action.”  The changes the company wishes to make under this exception must be “compelled” by the exigency, and not merely convenient ways to respond during the exigency.  Obviously, the COVID-19 outbreak is an unprecedented event in nation’s recent history and employers should be looking closely at whether its impact on their particular operation triggers this exception.

The NLRB’s General Counsel has not yet issued guidance regarding whether the COVID-19 outbreak indeed triggers an economic exigency (or under what circumstances it may).  But the response to the outbreak changes daily, so employers and their counsel should monitor NLRB activity, such as General Counsel Memoranda, for guidance on how to handle potential staffing and personnel issues arising out of the response to COVID-19.

For some businesses, the COVID-19 outbreak may well qualify as an economic exigency requiring immediate action.  But the analysis is fact-based and cannot be applied uniformly to all businesses.  Employers should be prepared to justify the economic exigency, demonstrate why urgent action is required, and demonstrate that any changes are implemented only for immediately required responses, and not to be continued later on, once the exigency has subsided. Again, government actions and declarations may influence whether an economic exigency requiring prompt action will be found to exist.

Even if an employer can invoke the economic exigency exception, it may not be relieved of its obligation to provide the union notice of the intended change and some opportunity to bargain (at least, over the effects).  While the bargaining obligation may be curtailed, particularly as to the amount of time the parties need to spend bargaining, it is generally not eliminated.  Thus, employers generally should provide the union notice of intended changes and seek to discuss them, even if those discussions must happen quickly and the employer must take decisive action.  If an employer must act immediately without notifying and/or discussing with the union, it should be prepared to communicate with the union after such changes as soon as practicable under the circumstances.

Conclusion

 The COVID-19 outbreak presents a virtually unprecedented situation for employers with unionized workforces.  Even though there may be exceptions to an employer’s duty to bargain in these extraordinary circumstances, management should be aware of their general duty to bargain over changes with the union.  If decisive action is necessary, then employers may have justification to abbreviate or bypass this bargaining process and make required changes immediately.  But continued communication with union representatives, and good faith efforts to reach cooperative solutions, will allow employers to present more effective defenses in the event of post-outbreak litigation or unfair labor practice allegations.

Of course, given the highly fact-intensive nature of changes during an emergency, to the extent possible, employers should consult with experienced labor counsel prior to implementing changes.