Not A Clean Break: Cautionary Tale For Employers Looking To Close Plants

• Published date: 01 September 2023
• Subject Matter: Corporate/Commercial Law, Employment and HR, Corporate and Company Law, Employee Rights/ Labour Relations
• Law Firm: Proskauer Rose LLP
• Author: Mr Joshua Fox, Mark Theodore and David Gobel

In a very active end of summer for labor law, the National Labor Relations Board ("Board") ruled in a 2-1 decision, in Quickway Transportation, Inc., 372 NLRB No. 127, that a company's closure of a terminal where its drivers were unionized violated the National Labor Relations Act ("NLRA"). The Board found that the company violated Sections 8(a)(3) and (5) of the NLRA for firing unionized truck drivers in order to chill unionism at other locations' even though the company did not actually know about any other ongoing unionization efforts at its other locations'and failing to bargain with the union over the decision or the effects of the decision.

Factual Background

In Quickway, drivers at a company's Louisville terminal voted to unionize in the summer of 2020. The lead-up to the election and its results were contentious. Management objected to the results of the election, but these objections were overruled by the Board, and management eventually agreed to bargain with the union.

However, after the first bargaining session, the company feared the financial ramifications of failing to reach a deal in bargaining and incurring a strike. In response, the company withdrew from an existing contract with an external distributor that made up over 95% of the drivers' business at the terminal, then fired all the drivers at the terminal, and subleased the building to a third-party for the term of the lease.

Plant Closure Violated the NLRA under the Darlington Factors

The union filed an unfair labor practice charge, alleging a number of violations, including that the plant closure violated Sections 8(a)(3), (a)(5) and 8(a)(1) of the NLRA.

The standard set by the Supreme Court decision in Textile Workers Union of America v. Darlington Mfg. Co., 380 U.S. 263 (1965), applied to the facts of the case. Under Darlington, a partial-closure of a business violates Section 8(a)(3) "if [it was] motivated by a purpose to chill unionism in any of the remaining plants of the single employer and if the employer may reasonably have foreseen that such closing would likely have that effect."

To establish a violation of the Act, the NLRB General Counsel must demonstrate that (i) the employer closed the plant for anti-union reasons, (ii) the employer had interests in other businesses, (iii) the decision was motivated by a desire to chill unionism at other locations, and (iv) the chilling effect at other locations was reasonably foreseeable.

The ALJ found that the plant closure did not...