An employer could not consolidate two of its product-testing labs at different locations on its worksite into one lab without first negotiating with a labor union, the 1st U.S. Circuit Court of Appeals has ruled.

The National Labor Relations Board found that the employer failed to provide the union with an adequate opportunity to bargain the effects of the work transfer decision as required by the National Labor Relations Act.

The 1st Circuit agreed.

“This labor case comes from the intersection of an employer’s desire to become more competitive by reducing costs and achieving greater efficiencies by consolidating two lab operations into one, and its obligations under national labor law to bargain with the union representing the affected employees,” Chief Judge Sandra L. Lynch wrote for the panel. “We conclude that there is substantial evidence to support the Board’s findings that [the union] had not waived its right to bargain and that [the employer] had failed to provide an adequate opportunity to bargain the effects.”

The 49-page decision is National Labor Relations Board v. Solutia, Inc..

Hugh F. Murray III of Hartford, Conn., argued the appeal on behalf of the employer, and Randall Vehar of Ohio for the union. The NLRB was represented on appeal by Zachary R. Henige of the District of Columbia.

Two labs into one

In July 2008, the employer, Solutia, began to consider consolidating lab work on all products produced at the site into one location, the Saflex Control Lab, or SCL. The employer anticipated that consolidating the lab work would allow it to reduce staffing levels and thus labor costs by $249,000 a year.

On March 4, 2009, Solutia management presented the consolidation plan to representatives of United Food and Commercial Workers International Union Local 414C. Joseph Coppola, Solutia’s human resources director, testified that Solutia had already determined it did not have to bargain the decision to consolidate with Local 414C.

On May 27, 2009, Coppola met with Local 414C representatives and stated that it was Solutia’s position that it did not have to bargain that decision. Coppola informed the representatives that the transfer would result in the elimination of four Local 414C unit positions.

On June 16, 2009, Solutia provided formal written notice to Local 414C that four positions would be eliminated on Aug. 2, 2009. The lab consolidation began on Aug. 3 and was completed within two weeks.

Local 414C filed an unfair labor practice charge with NLRB’s regional office. An administrative law judge found that the employer did not violate its collective bargaining agreement but did violate the National Labor Relations Act by refusing to provide an opportunity to bargain over a mandatory subject of bargaining.

As remedies, the administrative law judge ordered the employer to offer full reinstatement to current or former employees who had been reassigned or had retired as a result of the consolidation, and to “make whole” any such employees who had lost earnings or benefits as a result.

A three-member panel of the NLRB issued its decision and order adopting the administrative law judge’s decision.

No waiver

On appeal, the employer contended that the union waived its right to bargain the work transfer decision because the union did not request decision bargaining.

Specifically, the employer argued that Local 414C insisted, from the time it learned about the proposed consolidation, that the work transfer would violate the CBA, and thus the union did not even attempt to bargain the decision.

“The authorities relied on by both Solutia and the Board do not address a situation in which one reason for a union’s purported failure to request decision bargaining is the union’s clearly communicated position that the decision is prohibited regardless of bargaining,” Lynch said.

“[T]here is ample evidence to support the Board’s conclusion that Local 414C did not need to request decision bargaining because the decision was presented as a ‘fait accompli,’” Lynch wrote. “This evidence supports the conclusion that any request to bargain the decision would have been futile.”

The employer further maintained that a “management rights” clause in its collective bargaining agreement with Local 414C waived the union’s right to bargain the decision. The 1st Circuit was not convinced.

“In sum, neither the language of the clause nor the bargaining history support the conclusion that the employer and the Union had already bargained to give the company unilateral control over the mandatory subject of allocation of work to different units within the plant,” Lynch said. “Solutia has failed to make out a contractual defense to its violation of the statutory duty to bargain the work transfer decision.”

Lack of opportunity

The employer also claimed that the NLRB’s determination that the employer failed to provide the union with an adequate opportunity to bargain the effects of the work transfer decision was unsupported by substantial evidence.

“Solutia agrees that it had an obligation under the Act to bargain the effects, but it denies that it failed to offer an opportunity to do so,” Lynch said. “This is a closer question.”

The court found, however, that there was substantial evidence to support the conclusion that the employer failed to provide the union with a meaningful opportunity to bargain the effects.

The court went on to reject the employer’s contention that the effects of the work transfer decision were largely determined by the CBA, and so no additional effects bargaining was necessary.

“This is essentially a ‘contract coverage’ defense,” Lynch said. “But because Solutia’s unilateral movement of Local 414C unit work across the geographic boundary was not authorized by the management rights provision, the general provisions of the CBA regarding the job bidding process could not have constituted ex ante bargaining over the effects of this type of decision.”