NLRB Rules in Favor of Employer in Plant Closure Dispute

By Dean Kpere-Daibo - McMahon Berger, P.C.

August 24, 2018

In Dura-Line Corporation, 366 NLRB No. 126 (2018), the National Labor Relations Board (“NLRB”) considered whether the employer’s closure of its Middlesboro, Kentucky facility, which produced standard conduit and two types of pipes, violated Sections 8(a)(3) and (1) of the National Labor Relations Act (“the Act”). The NLRB also considered whether the employer violated the Act by requiring an employee to sign a confidentiality/nondisclosure agreement to protect the confidentiality of the plant closure. The NLRB held the employer did not violate the Act when it closed its Kentucky plant and relocated the operations to Clinton, Tennessee. In addition, the NLRB held the employer’s promulgation of its confidentiality/non-disclosure agreement to control the flow of information regarding the plant closure and relocation did not violate the Act.

In 2014, a multinational publicly traded chemical company purchased the employer. At that time, the employer proposed to close its Middlesboro plant and transfer production to a new plant run by its new parent company. In its proposal, the employer described its market position, identified significant limitations of its Middlesboro plant, explained how a new facility could improve production, and provided supporting financial data and earnings projections. Among the planned plant improvements, the new facility would include five “high output” lines that would increase production, and the new plant would run 24/7 where the Middlesboro plant could not.

Subsequently, in February of 2014, the roof of the Middleboro plant collapsed. As a result, in September of 2014, the employer notified the union of the closure and invited bargaining over the effects of the decision to close the Middlesboro plant. After the parties engaged in bargaining over the effects of the decision, the Middlesboro plant closed and the employer relocated to its Clinton, Tennessee facility.

Subsequently, the union filed an unfair labor practice charge with the NLRB alleging the employer closed the plant to discriminate against the employees for engaging in union activity. The NLRA protects employees who engage in conduct that is both: (1) concerted; and (2) engaged in for the purpose of mutual aid or protection. Section 8(a)(3) of the Act makes it an unfair labor practice for an employer to discriminate with respect to hiring or tenure of employment or any term or condition of employment, or to encourage or discourage membership in a union or union activity. An administrative law judge agreed with the union and found the employer violated the Act by closing the Middlesboro facility and relocating production because of employees’ union activity.

The NLRB disagreed, however, holding the employer established it would have closed the outdated Middlesboro plant and relocated production for compelling economic reasons regardless of the union’s presence and its relatively low-level union activities. Further, the NLRB held the employer established its need for a modernized facility that could accommodate its production requirements and permit significant expansion of the employer’s operations. Such changes were critical to the employer’s business, and it established that it could not accomplish the same goals at its Middlesboro facility. Further, as a result of the relocation, the employer’s production doubled and projected gross earnings increased by 9.6 million. The NLRB held the employer’s relocation was to expand its business, not escape the presence of the Union.

Lastly, the NLRB held the employer’s promulgation of its confidentiality/non-disclosure agreement did not violate the Act, finding the employer had a legitimate concern as to when it would announce the relocation and closure of its facility. The NLRB pointed to the fact that the employer also required its managers to sign confidentiality agreements to support its decision.

This decision is a further example of an ongoing shift in ideology at the NLRB. In recent years, the NLRB issued decisions that negatively impacted an employer’s ability to curtail its operations in the manner that best suited its business. This shift opens the possibility for employers to make critical business decisions but not run afoul of the Act. Employers still must be cautious, however, as this case demonstrates that a well-documented proposal regarding a business decision and open communication with the employees and the union are key to not violating the Act.

The St. Louis labor & employment attorneys at McMahon Berger have been representing employers across the country in labor and employment matters for over sixty years and are available to discuss these issues and others. As always, the foregoing is for informational purposes only and does not constitute legal advice regarding any particular situation as every situation must be evaluated on its own facts. The choice of a lawyer is an important decision and should not be based solely on advertisements.