Union Denied Access to How Employer Spent Trump Tax Break Money

In late 2017, Congress reduced the corporate tax rate. In January 2018, an Employer informed its non-union employees that “the new corporate tax rate will produce a financial benefit . . . and the Company wants to extend that benefit to our employees via a one-time bonus and an increase in the 401K match.”  The Employer’s announcement stated that it was not granting the bonus and increased benefit match to union-represented employees whose contracts were under negotiation.

The union made a written information request to the Employer. The request stated the purpose was to prepare for bargaining and “to ensure the tax cut raises wages and stops the offshoring of jobs.”  The request further sought information including:

  • The estimated gains to the corporation;
  • The total compensation for executives for the year before and the current year after the tax break;
  • The amount spent by the employer on lobbying or public relations campaign in support of the tax break; and
  • The accounting of the total amount of profits held overseas.

The general standard of law is that when the requested information “concerns bargaining union employees or their terms and conditions of employment” it is relevant to bargaining and must be produced “unless the employer rebuts this presumption.”

The Union stated there were two purposes for why it needed the information in order to conduct bargaining. First was to ensure, through bargaining, that the employer’s tax break benefit went to increasing pay of the employees and to returning jobs to the United States. The second purpose was to aid the Union in its bargaining about bonuses and 401K contributions. Thankfully for Employers, the NLRB Division of Advice concluded that “Neither articulated purpose entitles the union to the information it requested.”

Advice noted “The union has failed to identify any provision in a tax break law obligating the employer to spend its tax savings towards the union’s preferred objectives or granting a union a role in enforcing such a requirement.” Advice noted that how an employer chose to spend any savings it garnered from the tax cut was an entrepreneurial decision which is not a mandatory subject of bargaining. Advice further stated that the union failed to show how information was “reasonably necessary” to engage in meaningful bargaining over bonuses and 401K matches.

Matt Austin owns Austin Legal, LLC, a boutique law firm based in Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. You can reach Matt by calling him at (614) 843-3041 or emailing him at Matt@MattAustinLaborLaw.com.