Labor Relations Issues When Operational Changes Occur

If You Want To Avoid Potentially Unwanted Labor Issues When Relocating Plants, You Would Be Well Advised To Consult Labor Counsel.

By Terry L. Potter

The realities of the crushed stone business make it imperative that companies are able to relocate plants and employees to meet the customer demands. However, how those operational changes are put in place can often result in some undesired results in terms of labor relations.

One of those undesired results is the application of a labor contract to a new operation, rather than operating without a union contract or having the opportunity to bargain over location specific terms. This is referred to as an “accretion” in labor law.

For an accretion to occur, there must be sufficient continuity of operations to justify applying the existing union contract, considering factors such as whether operations are “substantially the same” and whether transferred employees from the old facility constitute a substantial percentage of the new plant’s employee complement (usually at least 40 percent).

Good Example

A good example of accretion and its application to our industry is a recent case that came out of Region 19 (Washington, Oregon, Alaska, northern Idaho and eastern Montana) of the National Labor Relations Board (NLRB): CPM Development Corp. d/b/a Central Pre-Mix Concrete Co., Case 19-RC-178412, July 25, 2016.

Central Pre-Mix Concrte Co. mines sand and gravel as well as produces ready mixed concrete at multiple locations in the state of Washington. Historically, the Teamster union represented the employees for the bulk of the operations, with the Operating Engineers union representing a minority of employees.

The company began production at a new facility in Yakima, Wash., in the first half of 2016 and transferred employees and equipment to the site. The Operating Engineers union sought to represent the employees at the new location by filing a petition with the NLRB. But the Teamster union sought to block that effort, alleging that their contract should be applied to the new operation since it was simply a relocation of previous equipment and employees.

The Teamster union argued that the contract’s recognition clause was broad enough to arguably include the new operation. Apparently Central Pre-Mix Concrte supported the Operating Engineers union as the Teamsters filed unfair labor charges against the company for its support of the Operating Engineers.

The NLRB held a hearing over the matter and found that, contrary to the positions of the Operating Engineers union and the company, the Teamsters’ contract applied as the “new operation” was in reality a partial relocation of the work performed by the Teamsters and a substantial percentage of the employees were transferred from the location where the Teamsters had a union contract. Accordingly, the contract was automatically applied to the new location. In other words, the “new” facility was considered an accretion. Needless to say, this was not what the company desired. More importantly, it emphasizes the need to plan out changes in operations to obtain the outcome desired.

What Should Have Occurred

So what should have occurred to avoid an accretion finding? Most importantly, employees from a union facility should not have been transferred to the new location, or if necessary, less than 40 percent of the employees should have been transferred from either location with union contracts if the object is to be union free at the new location or from the undesired union if a change in representation is desired. This is critical to awarding an accretion.

Even if the operations are substantially similar at the new location, the 40 percent rule has to be met. Even if you have to sub-contract some of the work to avoid the 40 percent rule, in the long run it will probably be in your best interest to do so, until you hire new employees. At least you will have some leverage if you do decide to negotiate with a union regarding the employees at the work site.

In addition, while the recognition clause may not be determinative of how the new location will ultimately be organized, it definitely will influence any decision regarding whether an accretion has occurred. For that reason, it pays to be careful in your drafting of recognition clauses in your collective bargaining agreements. They should be site specific rather than being geographically broad in scope.

The bottom line is that if you want to avoid potentially unwanted labor issues when relocating plants, you would be well advised to consult labor counsel to ensure that you can achieve the result you want.

Terry L. Potter is a partner in the St. Louis office of Husch Blackwell. A former field attorney with the National Labor Relations Board (NLRB), he views labor and employment cases from an insider’s perspective. He represents employers in collective bargaining, arbitrations and union avoidance techniques in a myriad of factual settings before the NLRB, National Mediation Board (NMB) and various state public labor relations boards. He can be reached at 314-345-6438 or [email protected]

Next Month

Industry has long known that the process for obtaining a Clean Water Act (CWA) Section 404 permit to discharge dredged or fill material into the “waters of the United States” can be, to say the least, both painful and expensive with no guarantee that a permit will ever be issued. However, the U.S. Supreme Court’s recent decision in U.S. Army Corps of Engineers v. Hawkes Co., Inc. should come as welcome news.

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