By Nicholas R. Clements.

In Dover Hospitality Services, Inc., 358 NLRB No. 84 (July 12, 2012), the NLRB upheld a decision by ALJ Steven Fish that serves as a reminder to employers that they need to be careful about what they say at the bargaining table when it comes to the cost of unions’ proposals.  Dover and UFCW Local 1102 were negotiating for a successor collective bargaining agreement when the Union presented a proposal that would have substantially increased labor costs for the company.  In response, Dover allegedly stated that it could not afford the current collective bargainaining agreement, let alone any cost increases in a new one.  Eight months after Dover made that alleged statement, the Union requested certain financial information from Dover to verify the claim.  Dover refused to provide the information, and the Union filed an unfair labor practice charge alleging that Dover had violated Section 8(a)(5) of the NLRA.

ALJ  Fish considered the longstanding distinction between an employer’s claim that it “cannot” pay and that it “will not” pay: “[A] mere unwillingness to pay does not trigger an employer’s obligation to provide financial information” to a union, whereas a claim of “cannot” pay does.  In determining that Dover violated Section 8(a)(5) of the NLRA by not providing the requested information, ALJ Fish evaluated Dover’s statements “in the context of the particular circumstances of the case,” noting that sometimes there is ambiguity in the back-and-forth of negotiations and that a union needs to show “some sort of proof of accuracy” regarding an employer’s alleged statements.  He ultimately concluded that the Union proved Dover stated it could not afford the current collective bargaining agreement, let alone a new one and found such statements to be “as close to magic words as you can get” in showing a claim of inability to pay.  He consequently deemed the requested information “necessary to verify [Dover’s] claims made during negotiations of unaffordability,” ordered Dover to produce that information, and found Dover violated Section 8(a)(5) of the NLRA.

Dover and other recent NLRB decisions discussed on this blog show that this NLRB is serious about requiring employers to open up their books when they give the impression of an inability to pay.  Employers should be very careful about what they say at the bargaining table unless they are prepared to provide the union with their financial information.