When employers must disclose financial information to unions
Barger & Wolen LLP
Peter J. Felsenfeld
July 23 2012
An employer that claims it cannot afford a union’s bargaining demands must provide the union upon request with financial records to back that claim.
Whether such disclosure is required often hinges on the difficult question of whether the employer represents that it “cannot”(unable to) or “will not”(refuses to) meet the union’s demands. In the former case, failure to disclose could constitute a violation of the National Labor Relations Act (“NLRA”).
This principle was articulated in the recent National Labor Relations Board (“NLRB”) decision entitled Marine Terminals Corp.– East d/b/a/ Ports America and South Atlantic & Gulf Coast District Int’l Longshorman’s Ass’n, Case 10-RC-080061 (July 16, 2012). The employer there, Ports America, is a Plainview, New York corporation that provides retail food services to community colleges.
Ports America and the union representing its workers had entered into a series of collective bargaining agreements, the most recent of which was effective from February 1, 2007, to January 31, 2010. In November 2009, the parties began negotiating a new agreement.
According to the facts contained in the NLRB opinion, the union’s proposal sought increases in wages and contributions to the union’s health and benefit fund and its retirement fund. Ports America’s owner Isaac (Butch) Yamali responded that he could not afford the current contract, let alone any increases. Yamali further represented that his ability to stay in business would depend on the outcome of ongoing negotiations with his community college client.
Three meetings between Yamali and the union resulted in an impasse, after which the union requested that Ports America hand over its annual federal and state tax returns, audited income statements and copies of all W-2/W-3 forms for a five-year period.
Yamali never responded to the information request and never provided the information.
The union submitted a grievance to the NLRB, which found that Yamali committed an unfair labor practice by withholding the documents. In so holding, a three-judge panel cited a 1956 Supreme Court case for the proposition that where an employer claims an inability to pay,“the union is entitled to request and review the employer’s financial records to assess and substantiate the employer’s representations about its financial condition.” NLRB v. Truitt Mfg. Co., 351 U.S. 149 (1956).
While recognizing that there are no “magic words” signaling the difference between “cannot” and “will not” pay, the panel held that Yamali’s assertions clearly conveyed an inability to pay. Accordingly, the panel ordered Yamali to furnish the information that the union sought.
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