Magazine article Management Review

NLRB Puts Relocation on the Bargaining Table

Magazine article Management Review

NLRB Puts Relocation on the Bargaining Table

Article excerpt

NLRB PUTS RELOCATION ON THE BARGAINING TABLE

The National Labor Relations Board has voted unanimously to force employers to negotiate with union representatives whenever companies decide to relocate their operations. Employers, however, can avoid negotiations by meeting new NLRB-designated tests.

Under the testing criteria, many firms will have difficulty transitioning from older, unproductive plants with a highly paid workforce to new modernized facilities in other parts of the country where they can take advantage of lower labor costs, according to labor-management experts.

According to the new NLRB-designated standards, an employer must start mandatory bargaining sessions with the employees' union if the company is considering relocation, unless management can prove to the union and the NLRB that labor costs at the current location are not a factor in the move.

However, if the company cannot disprove the role of labor costs, management must be able to show that the company would save more money through relocation than from any concessions the union might agree to under its current contract. This test proves especially significant for companies with aging facilities or plants requiring extensive capital expenditures to meet state or federal environmental standards.

"This decision is a significant victory for organized labor and a loss for companies that need all the flexibility possible to respond to changing markets and cut costs to stay competitive," says Jerry Jason, a Washington labor lawyer. "Now a company will have to go through prolonged talks with its union, and possibly even longer NLRB proceedings, to prove that it's not moving simply to lower labor costs before it can seriously contemplate relocating production facilities."

"This is a crazy decision," says S. Rayburn Watkins, president of the Louisville, Ky.-based National Labor-Management Foundation. "All it does is put another barrier in front of a company's effort to keep its doors open rather than be priced out of a company's effort to keep its doors open rather than be priced out of business by its unions."

The NLRB ruling states, "An employer would have no bargaining obligation if it showed that, although labor costs were a consideration in the decision to relocate . …

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