The NLRB Changes the Rules: The CEMEX Decision

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CEMEX CONSTRUCTION MATERIALS PACIFIC, LLC

In August of this year, the National Labor Relations Board (“NLRB”) issued a seminal decision in Cemex Construction Materials Pacific, LLC, 372 NLRB No. 130 (2023), in which the Board reversed its long-standing precedent established in Linden Lumber Division, Sumner & Co., 190 NLRB 718 (1971) and adopted a new standard governing an employer’s obligations when presented with a union demand for recognition as the employees’ representative for purposes of collective bargaining.  The Linden Lumber standard, which had been the prevailing law for more than 50 years, provided that an employer could simply refuse to accept evidence of a majority support of a union, and upon doing so, no further action was required by the employer.  Moreover, the employer’s refusal to recognize the union would not violate the National Labor Relations Act (“NLRA”), and if an election were to occur, the union had to initiate the filing of a petition for a Board-supervised election. 

However, that 50 years of precedent went out the window in Cemex.  Under the new standard, the NLRB held that if an employer is confronted with a demand for recognition, the employer has two options:  (1) agree to recognize the union as the bargaining representative; or (2) refuse to recognize the union, in which case the employer must promptly (within two weeks of the union’s demand for recognition) file a RM petition to test the union’s majority support and/or challenge the appropriateness of the bargaining unit (assuming that the union has not already filed a petition).  The NLRB also held that if the employer fails to timely file the RM petition, the failure to do so will be considered a violation of the NLRA and could result in the issuance of a bargaining order.

Further, the NLRB held that if an employer commits unfair labor practices during the “critical period,” i.e. the time from the date of demand for recognition to the run-up to an election, the NLRB can dismiss the RM petition and issue an order requiring the employer to bargain with the union. 

Finally, in adding icing to its newly-baked cake, the NLRB applied the standard retroactively to the facts of the Cemex case, which resulted in overturning the election won by the employer and ordering the employer to bargain with the union. 

To no one’s surprise, on November 13, 2023, the NLRB entered an order denying the employer’s motion for reconsideration of the Cemex decision (Cemex Construction Materials Pacific, LLC, 372 NLRB No. 157 (2023)). 

NLRB GENERAL COUNSEL MEMO 

Following the Cemex decision, on November 2, 2023, the NLRB’s General Counsel, Jennifer Abruzzo, released a guidance memo, which, according to Ms. Abruzzo, is intended to “assist all in comporting with the goals of the Board’s Cemex decision to eliminate delays in effectuating employees’ expressed free choice of bargaining representative.”  Here are the key points from that memo:

• The new standard will be retroactively applied to all pending cases in whatever stage “as doing so would not work a manifest injustice.”
• The new standard applies when an employer is confronted with a verbal or written demand for recognition, and the demand does not need to be made on any particular officer or registered agent of any employer “so long as it is on a person ‘acting as an agent of an employer.’”
• When a demand for recognition is made, an employer can ask for evidence of majority support, but a union is not obligated to show it.
• If the employer neither recognizes the union upon demand, nor files an RM petition within two weeks of that demand, and there is no other petition for a Board-conducted election being processed by the Region, the union may file a charge against the employer. The employer will be permitted to challenge the basis for its bargaining obligation during the investigation of the unfair labor practice case. However, if majority support in an appropriate unit is demonstrated, the General Counsel will issue a complaint, absent settlement, and, if the Board agrees, it will find that the employer violated the Act by failing and refusing to recognize and bargain with the union as the employees’ designated collective-bargaining representative and will issue a remedial bargaining order directing the employer to bargain with the union.
• An election will be set aside based on an employer’s critical period violations, unless the violations are so minimal or isolated that it is virtually impossible to conclude that the misconduct could have affected the election results. In determining whether the violations warrant setting aside an election, the Board will consider 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. 

PLAYING BY THE NEW SET OF RULES

Although the rules have changed, employers still have an opportunity to adjust to this new environment before a union comes knocking.  Employers can PREPare for this new environment by taking the following steps:

• P - Prepare: Employers should assess their vulnerability to union organizing efforts and address issues identified as a result of an assessment – don’t wait for signs of organizing activity!
• R – Respond: Now, more than ever, managers and supervisors must be responsive to employee issues and concerns, and they cannot ignore issues that may be simmering in the workplace.
• E -- Educate: To reduce the risk of committing unfair labor practices, employers must conduct training for managers and supervisors on what to do when a demand for recognition is made and what can and cannot be said or done in discussing unions with employees.  Remember -- the Cemex standard for establishing a violation is extremely low, and so, it is imperative that employers educate their managers and supervisors.
• P -- Prompt: If, despite the above steps, a demand for recognition is made, employers can still (and should) refuse to recognize the union as the employees’ representative, but employers must move quickly and file a petition to avoid the issuance of a bargaining order.

The NLRB will be aggressive in applying this new standard.  In fact, the NLRB has created a guidance page on its website devoted to the Cemex decision (NLRB General Counsel Resources on the Board’s Cemex Representation Framework | National Labor Relations Board).  As such, employers must be vigilant to identify and address potential issues that may arise related to organizing activity and be prepared to move quickly to file an election petition if faced with a demand for recognition.