By: Jamie Rich, Lisa Nichols, and Joe Vento

On August 25, 2023, the National Labor Relations Board (NLRB or Board) issued its much-anticipated Cemex decision, which has broad implications for union organizing. It handed unions a win with a partial return to the Joy Silk standard. Now, if a union demands recognition from an employer because it claims that it has obtained union authorization cards demonstrating majority support within a bargaining unit, the employer must pursue one of two options: (1) it can recognize and bargain with the union or (2) it can file a petition (a so-called RM Petition) seeking an NLRB election. If the employer and union proceed to an NLRB election and the employer commits unfair labor practices prior to the election, that would normally require a rerun of the election. Under the new Cemex standard, if an employer engages in even one unfair labor practice after a petition for election is filed, the Board may instead refuse to hold an election and issue an order requiring the employer to recognize and bargain with the union. An employer may also be subject to a bargaining order if it neither recognizes the union nor files a petition for an election.

Unions have long advocated for card check recognition requirements via proposed legislation such as the Employee Free Choice Act and the PRO Act. These efforts have repeatedly failed. But recently, in GC Memo 21-04, NLRB General Counsel Jennifer Abruzzo indicated that she would seek to overturn decades of settled United States Supreme Court and NLRB precedent regarding the voluntary nature of card check recognition. In the GC Memo, she asked the Regional Offices reporting to her to submit cases to the Division of Advice, so that she could pursue certain cases that might allow the Board to overturn existing precedent and change the law. The General Counsel found that opportunity in Cemex.

The Background on Cemex

Cemex stemmed from an organizing drive among certain ready-mix drivers employed in Southern California and Las Vegas, Nevada. Around 2018, the International Brotherhood of Teamsters (Union) began organizing a unit of 350 ready-mix drivers and trainers at 24 Cemex facilities. The union filed a petition for election with the NLRB in December 2018, after gathering 207 authorization cards. The employer’s reaction to the union’s organizing drive was described as “quick” and “aggressive.” The ALJ found that the employer: (1) employed approximately five independent consultants to assist with the employer’s campaign; (2) met with small groups and individuals daily for approximately six months; (3) presented PowerPoint displays and answered questions at several small-group meetings; (4) presented employees with two video messages urging employees to reject the union; (5) distributed stickers, flyers, pamphlets, and letters encouraging employees to reject the union; and (6) monitored the Union’s social media and posted “antiunion” messages on its own social media.

In March 2019, the employees voted against the union by a margin of 179 to 166. The union objected to the election, arguing that the employer engaged in extensive unlawful and coercive conduct which required setting aside the election. On review of the union’s objections, the ALJ found the employer had engaged in numerous unfair labor practices, such as threatening employees that they could be fired or written up for having union stickers on their hard hats; telling employees that they could be discharged or have their hours reduced if they choose to unionize; stating that the company would “close their doors and take all their trucks to another site” if the union won the election; and discharging an employee because of her union activity, among others.

The ALJ ordered a rerun of the election, along with additional remedial actions “designed to dissipate as much as possible the lingering atmosphere of fear created by its unlawful conduct and to insure that if the question of union representation is placed before employees in the future they will be able to voice a free choice.”

The Board’s Announcement of a New Standard for Card Check Recognition

On appeal, the General Counsel argued that a bargaining order (an order imposing union recognition and directing the employer to begin collective bargaining negotiations) was the appropriate remedy for the employer’s violations, not a rerun of the election. Specifically, the General Counsel asked the Board to overturn Linden Lumber, which held that an employer does not violate the National Labor Relations Act solely by insisting on an NLRB election and refusing to accept other evidence of majority status. The General Counsel also asked the Board to return to the Joy Silk standard, which held an employer violates the Act by refusing to bargain with a union with majority support upon request, absent a showing of good faith doubt about the union’s majority status. In response, Cemex argued that even if the Board were to return to the decades-old Joy Silk standard, that standard could not be applied to its situation because the union had never presented evidence of a card majority.

The Board announced the following standard in Cemex:

An employer violates [the Act] by refusing to recognize, upon request, a union that has been designated as [a] representative by the majority of employees in an appropriate unit unless the employer promptly files a petition … to test the union’s majority status or the appropriateness of the unit, assuming that the union has not already filed a petition. […] However, if the employer commits an unfair labor practice that requires setting aside the election, the petition (whether filed by the employer or the union) will be dismissed, and the employer will be subject to a remedial bargaining order.

The decision is clear that neither the employer nor the General Counsel will need to apply or prove the “good faith doubt” standard found in Joy Silk. Instead, the employer is free to seek an NLRB election to test the union’s majority status. The decision also points out that an employer who simply refuses to bargain without filing a petition for an election may still demonstrate that it does not have a bargaining obligation in a later-filed unfair labor practice case. However, the employer acts “at its peril” when it takes this approach.

The decision also clarifies that a bargaining order is not “the first and only option” when an employer commits an unfair labor practice during the critical period prior to an election. Instead, the applicable standard requires consideration of all relevant factors, including the number of violations, their severity, the extent of dissemination, the size of the unit, the closeness of the election (if one is held), the proximity of the misconduct to the election date, and the number of unit employees affected. But notably, the Board acknowledged dissenting Member Kaplan’s point as accurate that an employer’s “generally applicable handbook confidentiality policy” could serve as the requisite unfair labor practice to warrant a bargaining order under certain circumstances.   

If the employer commits unfair labor practices that invalidate the election, the Board will, instead, rely on the prior designation of a representative by the majority of employees by nonelection means and issue an order requiring the employer to recognize and bargain with the union from the date the union demanded recognition from the employer. The Board emphasized that the employer’s right to the NLRB election machinery “will only be honored if, and as long as, the employer does not frustrate the election process by its unlawful conduct.

After announcing and clarifying its new standard, the Board issued an order requiring Cemex to recognize and bargain with the union. It held that Cemex refused the union’s request to bargain at a time when the union had in fact been designated representative by a majority of employees in a concededly appropriate unit, and then committed unfair labor practices requiring the election to be set aside. In response to the employer’s argument that the union had not demanded recognition, the Board explained that the union met this requirement when it filed a petition for an election.

The Board Declined to Revisit Mandatory Meetings and Tricast Precedent

Cemex also presented an opportunity to review two other legal issues found in GC Memo 21-04: (1) whether so-called “captive audience” meetings which require workers to listen to arguments against unionization are coercive, and (2) whether there should be new restrictions on certain employer speech. The Board was unwilling to use Cemex to overturn precedent on those issues.

The Board first declined the General Counsel’s request that it overrule Babcock & Wilcox, which addressed the lawfulness of employer-mandated campaign meetings. It found that the record did not establish that all or most employees were required to attend the employer’s small-group meetings on threat of discipline.

The Board then declined to overrule Tri-Cast and its related precedent, and reversed the judge’s finding that the employer violated the Act when it told drivers that unionization would change their relationship with management, that once they were under a collective-bargaining agreement they would have to go through the union instead of going directly to management, that they would lose their ability to deal directly with their supervisors, and that they were putting their relationship with management at risk. However, the Board noted that Chair McFerran and Members Wilcox and Prouty are willing to reexamine Tri-Cast and related precedent in the future with an appropriate case.

What This Means For Unions

Many unions have updated their organizing playbooks, and are already sending employers a letter demanding card check recognition prior to filing a petition for election with the NLRB. This is sure to become standard practice following Cemex. In a statement issued by the NLRB, Chair McFerran said, “The Cemex decision reaffirms that elections are not the only appropriate path for seeking union representation, while also ensuring that, when elections take place, they occur in a fair election environment.” She went on to explain that, “Under Cemex, an employer is free to use the board’s election procedure, but is never free to abuse it — it’s as simple as that.”

What This Means For Employers

Union demands for recognition based on authorization cards will now present a minefield for employers. Under the Cemex standard, if an employer refuses card check recognition, files a petition, and proceeds to an election, and is later found responsible for unfair labor practices occurring before the election, it may be subject to a bargaining order instead of a rerun of the election. And an employer will be subject to a bargaining order if it neither recognizes the union nor files a petition for an election. As such, when employers receive a recognition demand from a union, they should proceed with extreme caution.

Unfortunately, Cemex is retroactive, which means the new standard will be applied to any pending case where an employer refused to bargain upon a request for voluntary recognition, engaged in unfair labor practices during the critical period, and won the election, if the union can prove it had majority support at the time it requested recognition. The outcome in those cases may shed light on the types of unfair labor practices that do (or do not) result in a bargaining order.

Unions will be more likely to aggressively file unfair labor practice charges during organizing drives because of the new Cemex framework. Employers should take particular note of the Cemex Board majority’s acknowledgment that unlawful employee handbook policies can serve as the basis for a bargaining order in the right circumstances. This is particularly concerning in light of the Board’s recent decision in Stericycle, Inc., 372 NLRB No. 113 (August 2, 2023) (our blog post on that decision can be viewed here), where the Board held that a facially-neutral work rule is presumptively unlawful if a “reasonable” employee predisposed to engaging in protected concerted activity could interpret the rule to have a “coercive meaning.”

Notably, it remains to be seen whether the new Cemex standard will survive appeal. In a partial dissent, Member Kaplan argued that the United States Supreme Court’s decision in Linden Lumber precludes judicial enforcement of bargaining orders issued under the new standard. Member Kaplan expressed concern that the new standard will “result in lengthy litigation over an alleged violation that will never survive judicial review.”

If you have questions about the impacts of this decision, or if your company is facing an organizing drive, do not hesitate to contact our team of experienced labor attorneys to help guide you through these issues.