What are Runaway Shops?

Plant shutdowns and relocations for the sole purpose of avoiding unionization are called “runaway shops” by unions. As you can imagine, the National Labor Relations Board has developed specific remedies to penalize companies that engage in this tactic.

The Board has ordered a runaway employer to offer its employees either: 1) payment of moving expenses to the new location, or 2) biweekly payment of transportation costs to and from the new location. And employees got to decide which option to take.

In fact, one company I know despised unions so much that it switched its entire business from manufacturing to jobbing and laid off all its employees because they were not qualified to perform the new work at the company. In that case, the NLRB ruled that if the company ever resumed manufacturing, it was required to reinstate the laid off workers.

Unfortunately, when the closing of a facility is discriminatorily motivated or due to anti-union animus, a violation of the Act has occurred and the NLRB may order restoration of the operations. This is seen when an employer shuts down, moves away (sometimes several states away), and starts running the same company at the new location with new employees. Those companies have been ordered to return to the state they left, re-hire laid off workers, and resume operations as usual – even if operating at a significant loss.

Whenever a company shuts down a unionized operation – whether a full facility or just a part that has unionized workers in it – the company must engage in effects bargaining. Effects bargaining generally covers how the shutdown effects the organized workers. Unions seek lump sum payments, continued health care, job offers and relocation assistance to the new facility, etc. But, just like bargaining for a new contract, neither side can force the other to propose or accept effects bargaining terms.

Matt Austin is a Columbus, Ohio lawyer who owns Austin Legal, LLC, a boutique law firm with offices in central and northeast Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. Austin Legal’s Concierge Legal Services program is relied upon by companies to remain compliant and competitive. If you have employees, you need Concierge Legal Services. You can call Matt at (614) 285-5342 or email him at Austin@LaborEmploymentOSHA.com.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s