Employers’ Actions Highly Scrutinized During Labor Campaigns with Significant Repercussions
Last year, President Biden remarked that he “intend[s] to be the most pro-union president leading the most pro-union administration in American history.” Based on the labor developments this year, he is making good on the promise. Headed by President Biden’s political appointee, Jenifer Abruzzo, the National Labor Relations Board (“NLRB”) has been vigorously enforcing the National Labor Relations Act (“Act”). A strategic enforcement effort of the NLRB has been to crack down on union avoidance measures. Employers facing organizational campaigns are wise to take note of the actions recently found to be unlawful in cases involving Tesla, Starbucks, and Amazon.
The National Labor Relations Act
After years of industrial strife and unrest, the Act was signed into law by President Franklin D. Roosevelt in 1935. The Act provides that it is the policy of the United States to encourage the practice of collective bargaining and entitles employees to the right to form, join, or assist labor unions for the purposes of collective bargaining.
On March 31, 2023, the Fifth Circuit Court of Appeals affirmed a NLRB order finding that 10 actions taken by Tesla, including then-CEO Elon Musk, violated the Act. This case illustrates the fine line companies must take in making statements opposing union organizing. Among the actions found unlawful was a tweet from Musk that read:
“Nothing stopping Tesla team at our car plant from voting union. Could do so tmrw if they wanted. But why pay union dues and give up stock options for nothing? Our safety record is 2X better than when plant was UAW & everybody already gets healthcare.”
The NLRB found, and the Fifth Circuit affirmed, that Musk’s statement was an unlawful threat or coercive statement under the Act based on his reference to losing stock options. As remedies, Tesla was ordered to reinstate with back pay labor organizers that it terminated back in 2017 and to post a notice to be read in the presence of Musk, NLRB agents, and employees telling employees all of the ways in which Tesla has been found to have violated the Act.
On March 1, 2023, an NLRB Administrative Law Judge issued a decision finding that Starbucks violated the Act. In his over 200-page decision, Judge Rosas found that Starbucks committed 46 violations of the Act. In one of the more sweeping remedies ordered in recent history, Judge Rosas ordered Starbucks to, among other things, reopen a closed facility in Buffalo, New York; reinstate terminated labor organizers or applicants of the union’s choice if they are unavailable; post a notice electronically, including on all forms of social media and at all U.S. stores, with an explanation of employees’ rights; bargain with the union; and have Starbucks executives Howard Schultz and Denise Nelson read the notice to employees or be present during a reading by a NLRB agent to the employees in the Buffalo-area stores.
Earlier, on February 23, 2023, the U.S. District Court for the Eastern District of Michigan issued an injunction requiring Starbucks to reinstate an employee Starbucks argued it terminated for cause. Starbucks was also required to post and read the Court’s Order at the Ann Arbor store where the termination occurred.
On January 30, 2023, an NLRB Administrative Law Judge found that Amazon violated the Act at its Staten Island location. It did so by enforcing its non-solicitation policy and stating that Amazon would have to withhold wage increases and improved benefits it had earlier promised if employees elected to be represented and it were forced to bargain with that union. A notice posting like those in the above-referenced cases was ordered.
Considerations for Employers
From these handful of examples, it is clear that employers’ actions during labor organizing campaigns are being highly scrutinized. Coinciding with this aggressive enforcement, union organizing activity has increased. These cases illustrate the difficulties employers face in responding to union organizing events. Every word, enforcement of policy, and termination can have high stakes in this atmosphere of strategic enforcement and sweeping remedies. If you may be facing a labor organizing campaign and need assistance navigating the process before it is too late, contact one of Honigman’s Labor & Employment Attorneys.