12.10.2012

Employer Required to Give UAW Documentation to Support its Competitive Disadvantage Claim

On December 4, 2012, the United States Court of Appeals for the District of Columbia enforced a National Labor Relations Board (NLRB) order requiring an Ohio manufacturer to give the United Auto Workers (UAW) information about customers, market studies, and pricing to support the company’s claim that competitive pressures required that it seek substantial wage concessions from its employees. (KLB Indus. Inc. v. NLRB, D.C. Cir. Nos. 11-1280, 11-1322). Finding that the union had appropriately tailored its request to documents relevant to the claim of competitive disadvantage asserted by the employer during contract negotiations with the union, the Court determined that the NLRB properly found that the employer’s refusal to comply with this request and its subsequent lockout of employees were unfair labor practices.

The employer, KLB Industries, manufactures aluminum extrusions at its facility in Bellefontaine, Ohio. When it came time to negotiate its collective bargaining agreement with the UAW, the company initially demanded a 20 percent reduction in wages based upon its claim that it was facing increased competition from Asian manufacturers, rising production costs, and decreased productivity. Following negotiations, the company eventually advanced a last and final offer, which included an 8 percent wage reduction in the first year of the contract, followed by 2 percent reductions for the second and third year. In response, the union sent the employer a written request for information, including a list of the company’s current customers and customers it had lost, data on price quotes, outsourcing, market studies, and projected savings from the company’s wage proposals.

The company refused to provide the requested information because its “desire to remain competitive in both global and domestic markets is no different from the desire of any business conducting [similar] operations.” Although the company did provide the union with an estimated annual wage savings (one of the requested items of information), it failed to include its underlying calculations or predictions. The company then locked out its union-represented employees and hired replacements.

The union filed unfair labor practice charges, and an NLRB administrative law judge found that the employer’s failure to provide the requested information violated Sections 8(a)(1) and (5) of the National Labor Relations Act, 29 U.S.C. §§158(a)(1) & (5). The NLRB upheld the administrative law judge’s rulings, and the company petitioned for Court review.

Enforcing the NLRB’s order requiring that the requested information be produced to the union, the Court stated that where the employer raises a competitiveness claim as its central justification for wage concessions, the union is entitled to information verifying that claim. The Court further concluded that the union’s information request was sufficiently narrow because it was targeted to the competitiveness claim relied upon by the company and did not ask the company to open its books and provide generalized financial data concerning profits and management expenses. Thus, the D.C. Circuit denied the employer’s petition for review and enforced the NLRB’s unfair labor practice order.




Contact: Emily Wilcheck
419.254.5260

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