By Amanda A. Sonneborn

On December 4, 2012, in KLB Indust. Inc. v. NLRB, the D.C. Circuit Court of Appeals upheld a National Labor Relations Board ruling that an employer violated the National Labor Relations Act by failing to provide information to the union concerning the employer’s customers and pricing after telling the union that competition required the employer to seek wage reductions.  The Court found that the union was entitled to seek proof of the alleged competitive pressures that the employer used to justify its request for wage cuts.

Specifically, during bargaining for a new contract, the employer told the union that it needed to secure significant wage cuts from the employees due to pressure from overseas manufacturers.  In response to the employer’s claim, the union requested information regarding the company’s customers, as well as price quotes, market studies, and projected savings from the proposed wage reduction.  The employer refused to provide much of the information requested by the union.  The union then filed an unfair labor practice charge, alleging that the union’s failure to provide the information violated the Act.

An ALJ and the NLRB agreed with the union’s position, finding that the employer violated the Act by failing to provide the information the union requested.  The employer appealed that decision to the D.C. Circuit, which, by a 2-1 vote, upheld the Board’s conclusion.  In reaching this conclusion, the Court majority noted that the information sought by the Union was relevant because the employer relied on an alleged competitive disadvantage when it explained its need for wage cuts.  The Court noted that the accuracy of the employer’s claims could be proven by an examination of the documents the union sought, and therefore, the union was entitled to the information.  A dissenting judge disagreed with the Court’s decision, based on the notion that the employer’s statements about its need for wage reductions were general in nature and not sufficient to justify the request.

This case illustrates the careful consideration employers must give to statements made during bargaining, as even general comments may provide justification for intrusive information requests by unions.