NLRB Looking to Revisit When Employers Must Disclose Financial Information

Earlier this week the National Labor Relations Board issued a decision in Coupled Products, LLC, 359 NLRB No. 152 (July 10, 2013), finding that the employer did not commit an unfair labor practice by refusing to open its financial books to the union. However, the Board did note that it is open to expanding employers’ obligation to disclose financial information to the union.

In Coupled Products, the employer denied the union’s request to audit the employer’s financial books during negotiations in which the employer demanded steep reductions in wages and benefits. The union alleged that the employer claimed an inability to pay and thus violated the National Labor Relations Act when it failed to allow the union to audit the employer’s financial records. The administrative law judge found no violation because the employer did not claim an inability to pay, but rather claimed a competitive disadvantage from paying more for labor and benefits than other manufacturers in the area.

The Board agreed:

The Acting General Counsel and the Union except to what they characterize as the judge’s focus on "magic words," claiming that he did not adequately consider the context of the events leading up to negotiations, including the Respondent’s midterm threat to move bargaining unit work to Mexico to save labor costs. We certainly agree that no "magic words" are required to establish a claim of inability to pay: the employer’s statements and actions need only be specific enough to convey that claim. Atlanta Hilton & Tower, 271 NLRB 1600, 1602 (1984). We do not agree that the judge violated that principle here….

However, the Board offered this unsolicited commented in a footnote:

No party has asked us to overrule the Board’s inability-to-pay decisions, and we need not revisit that body of law here given the nature of the Respondent’s bargaining claims and the Union’s generalized information request. Nevertheless, the present case illustrates that the Board’s post-Truitt analytical distinction between inability-to-pay cases and less-than-inability-to-pay cases often leads parties to become occupied with "magic words," distracting them from genuine dialogue and information sharing that can lead to productive collective bargaining. In an appropriate case, we would consider how the Board has distinguished between "inability to pay" and "competitive disadvantage" claims in post-Nielson cases and whether these distinctions best serve the central purpose of the Act: to promote good-faith bargaining.

As a result, it is virtually certain that the General Counsel and unions in similar cases will ask the Board to overrule the inability-to-pay decisions and revisit the issue. Consequently, employers may soon find themselves with an obligation to disclose financial information under broader circumstances during collective bargaining, presuming that any such decision is valid post Noel Canning.