NLRB Seeks to Give Unions Easy Access to Corporate Finances

The law requires companies to open their financial records to the union representing their employees when the company says it cannot afford something during contract negotiations. This is called “pleading poverty.”

The NLRB General Counsel wants companies to turn over to unions their general financial information even if the company never puts its ability to afford the unions’ demands at issue.

This includes financial statements, tax returns, and records of compensation paid to managerial and supervisory personnel, among other records.

In the case PacifiCorp, during negotiations, the employer offered a wage increase that was roughly 3% smaller than what the union proposed. The company explained that demand declined during the pandemic and anything more would “have an effect on its ability to provide competitive power prices due to regulations relating to rate payers.”

In response, the union demanded the following financial records:

• All documents used in consideration of the employer’s “never changing” 1.5% wage increase, including but not limited to any financial records or calculations, budgets, sales records or sales projections that were considered in the making of this decision.
• All documents that substantiate the employer’s claim that it is unable to offer more than an increase of 1.5% for 2021 and 2.0% for 2022 or that it is unable to meet the union’s demand of a minimum increase of 2.5% average general increase over the next two years.
• All relevant documents describing the degree to which the company received any financial support, grant, concession, or financial relief from the federal government or from any individual state.
• A copy of the operating budget and annual compensation provided by the company to all non-union staff including supervisory and management staff.

The company – as most would – refused to provide that information. The General Counsel determined the company unlawfully refused to provide specific financial information to support its bargaining position.

The NLRB General Counsel seeks to use this case to change labor law.

If successful, employers will need to provide financial documents whenever raising profitability or competitiveness as a reason why it cannot meet the union’s financial demands.

I expect to see more of these cases over the next few months as layoffs continue across the country and unions want to test the length the General Counsel will go to force companies to share their confidential financial information.

Companies that say things like the following examples may be forced to open their finances to the union:

• We’ve had to cut positions. Offering more money (or paid time off) is not something we want to do now.
• We need to remain competitive. To do so means we need to allocate some resources away from wages.
• Agreeing to such a large wage increase would decrease our competitiveness in the market.
• Inflation is up. Costs of goods are up. Supply chain is running behind. Increasing wages to the level the union wants would put yet another layer of burden on the company.

Companies may be in a catch-22. If they explain why they don’t want to meet the union’s financial demands, they risk having the union audit their finances. If they simply say, “no, we don’t want to” they risk bad faith bargaining for not explaining their position to the union and trying to work towards a compromise.

This reminds me of the very first bargaining session I ever did on my own. I forget what the union’s request was – 20 years will do that to you – but I remember my response. I said, “there’s only so much money in the pot to go around.”

Back then, that was not “pleading poverty” although the union alleged that it was. I have never said anything like that since, and certainly won’t now!

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Matt Austin is a nationwide management labor lawyer. Labor laws govern virtually all private-sector employees regardless of union membership. Proactive management of labor relations is critical to maintaining flexibility and increasing profit.

Matt also runs Austin Legal’s HR Legal Compliance Program that, for a small monthly fee, ensures HR decisions are protected by the attorney-client privilege.

Matt’s experience is deeply rooted in helping manage many aspects of his clients’ businesses. To effectively manage labor relations, he must also manage budgets, forecasts, new growth areas, and projected market corrections. High emotional intelligence is also critical to negotiating union contracts and to properly advise HR Legal Compliance members through the nuances of the law, its application to their companies, and how it will be received by employees.

You can reach Matt via email at Matt@MattAustinLaborLaw.com.