NLRB Finds Business Closure Illegal But Backs Off Order To Reopen

• Jurisdiction: United States,Federal
• Law Firm: Littler Mendelson
• Subject Matter: Employment and HR, Unfair/ Wrongful Dismissal, Employee Rights/ Labour Relations
• Author: Mr Jason Stanevich and Emily A. Zaklukiewicz
• Published date: 15 February 2023

In RAV Truck & Trailer Repairs, Inc., 372 NLRB No. 25 (Dec. 14, 2022), the National Labor Relations Board (NLRB) issued a supplemental decision in a case that will have implications for employers seeking to close shop, especially those operating in multiple locations.

In March 2020, the NLRB adopted an administrative law judge's holding that RAV Truck & Trailer Repairs, Inc. ("RAV Truck") had violated Sections 8(a)(1) and (3) of the National Labor Relations Act (the "Act") by laying off and discharging two employees who had signed union authorization cards, and by closing down its facility in May 2018 with a purpose of chilling union activity of its employees and of employees at its other facility, Concrete Express of NY, LLC ("Concrete Express").² Concrete Express shared space with RAV Truck and was a joint employer. The NLRB relied upon unfair labor practices found against Concrete Express in a corresponding case as evidence of RAV Truck's purported anti-union motive. The NLRB ordered RAV to reopen and restore its business operations as they existed in 2018, to reinstate the two employees, and to bargain with the union.

On appeal, the D.C. Circuit agreed with the NLRB that RAV Truck committed unfair labor practices by discharging and laying off the employees who had signed union authorization cards, but sent the case back to the NLRB for further consideration of how closing the facility violated the Act, particularly with regard to the "chilling effect" that the closure had on Concrete Express employees.² The appellate court noted that in Textile Workers v. Darlington, 380 U.S. 263 (1965), the Supreme Court held that an employer has the right to terminate its entire business even if the closing is motivated by anti-union animus. At the same time, the decision held that a partial closing could be an unfair labor practice if it was intended to chill unionism at a remaining location, and the employer could reasonably foresee that the closing would have this effect. The D.C. Circuit noted that in RAV Truck the Board's reasoning did not fully address under the Darlington standard whether there had been any chilling effect at the second facility. The appellate court also remanded the Board's order that RAV Truck reopen and restore the business operation that existed in May 2018, noting that the NLRB had not explained how such a remedy even remained possible.

On December 14, 2022, in a supplemental decision issued by a three-member panel including two...