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Legal rules concerning collective bargaining are not only complicated, but can lead to some strange results. One of the rules is that an employer in collective bargaining is often precluded in supporting its wage and benefits offers with economic arguments, because such economic arguments could “open the door” to the right of the union to request a lot of sensitive and confidential information from the employer. A recent example of this occurred during 2012 in KLB Industries, Inc v. N.L.R.B., 194 LRRM 2737 (CA DC 2012), where, a company’s economic position during collective bargaining “centered around competitiveness.” The company told the union that it was facing increased competition from Asian manufacturers, rising production costs, and decreased productivity. The company also expressed concern about retaining customers. Based on these economic arguments, the company initially demanded substantial concessions from the Union. In contrast, the Union sought a significant wage and benefit increases.

At the end of the previous labor agreement, the company notified the Union that it would terminate the agreement, and that same day the company made its last and final offer, which included a wage reduction. The Union counted with an offer for moderate wage increases. The next day, the Union sent the company a letter requesting the following information:

 (1) a list of all current customers;

(2) a copy of all price quotes that the company had provided over the past five years and indication of which of

    those quotes had been awarded;

(3) a list of all projects outsourced over the past five years;

(4) a list of all customers that had ceased purchasing from the company;

 (5) a complete list of prices for the company’s products;

 (6)  market studies concerning the company’s products; and

(7) a complete calculation of the company’s projected savings from its concessionary wage proposal.

The Union explained that it needed this information because the company had continually asserted that it must improve the competitive position of the facility.

The company responded to the information request, by refusing to hand over the information because its “desire to remain competitive . . . is no different from the desire of any business conducting operations similar . . . ” The company nevertheless disclosed estimated annual wage savings, one of the types of information the Union sought, without providing the underlying calculations. The company thereafter announced a lockout of Union employees and subsequently hired replacement workers.

These issues ultimately came before the NLRB, who concluded that because the company had invoked competitive pressures as its key rational in seeking wage concessions, the Union was entitled to the requested information that verified those assertions. The Board also found that the subsequent lockout and cancellation of health insurance was also unlawful. The information withholding made the lockout unlawful notwithstanding the company’s otherwise good faith bargaining.

Editor’s Note - This writer is often faced with similar issues in collective bargaining. Sometimes the writer jokes that the NLRB does not allow the employer to be honest and go into reasons during collective bargaining, which is not far from the truth. The only thing that the employer can be confident in arguing without getting into these type issues, is that the employer believes its proposal is fair and reasonable. It should be noted that the facts of the KLB Industries case created some critical issues that are fairly unique, in that the company was seeking substantial pay and benefit reductions, and ultimately locked out its employees and hired replacement workers. Most negotiations do not involve these type fact patterns that can create a “legal war.”

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