First National Maintenance Corp. v. NLRB

Supreme Court of the United States · 1981 · Labor Law

Labor Lawcollective bargainingmandatory subjects of bargainingpartial business closingNLRASection 8(d)Section 8(a)(5)mandatory bargaining

Facts

First National Maintenance provided maintenance services to Greenpark Care Center under a contract and employed about 35 workers there. After learning that the Greenpark operation was losing money and after unsuccessfully seeking a higher management fee from Greenpark, the company gave notice that it would terminate the contract and then discharged the Greenpark employees when it ceased operations there. The union had recently been certified as the employees' bargaining representative and requested bargaining, but the company refused to bargain over the decision, stating that the termination was purely a matter of money and final. The company did not intend to replace the discharged employees or move the operation elsewhere, and there was no claim of antiunion animus.

Issue

Whether an employer's duty to bargain in good faith over 'wages, hours, and other terms and conditions of employment' requires it to bargain with the union over its decision to close part of its business for purely economic reasons. More specifically, did First National Maintenance have to bargain over its decision to terminate the Greenpark contract itself, as distinct from bargaining over the effects of that decision on employees?

Rule

Bargaining over management decisions that substantially affect the continued availability of employment is required only if the benefit to labor-management relations and the collective-bargaining process outweighs the burden placed on the conduct of the business. Under that standard, an economically motivated decision to shut down part of a business that turns on the profitability of the enterprise and reflects a change in the scope and direction of the business is not itself a mandatory subject of bargaining under § 8(d), although the employer must bargain meaningfully over the effects of the decision.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Lakeshore Building Services, a janitorial contractor in Cleveland, staffs each client site separately and does not transfer employees among buildings. After one downtown office tower refuses to raise the contractor’s fixed management fee, Lakeshore decides to stop servicing that tower, discharge the 22 employees assigned there, and not replace them or move the operation elsewhere; the union demands bargaining over the shutdown decision itself.

Under the NLRA as interpreted by the Supreme Court’s majority rule, is Lakeshore required to bargain over the decision itself?

Explanation. The majority held that an economically motivated decision to close part of a business is not a mandatory subject of bargaining when the decision focuses on profitability and a change in the scope and direction of the enterprise rather than on the employment relationship itself. The direct effect on jobs does not automatically make the decision bargainable. But the employer still must bargain meaningfully over the effects of the closing.