Improving Benefits May Violate the NLRA.

No good deed goes unpunished, so the saying goes, and improving benefits for employees in the context of a union organizing campaign can land the employer in exceedingly hot water, as shown in a recent case from the National Labor Relations Board.

In NP Red Rock LLC dba Red Rock Casino Resort Spa, the employer won a union election but was then charged with multiple violations of the National Labor Relations Act, including coercive conduct intended to discourage employees from voting for the union. Among the charges was the contention that the employer made promises, announcements or grants of benefits during the organizing campaign.

The NLRA provides that the grant of benefits during an organizing campaign can be unlawful, depending on the motive. If the reason is to dissuade employees from joining the union, it is unlawful. The Board will infer improper motive when an employer grants benefits without showing a legitimate business reason. And “[t]o rebut this inference, the employer has the burden to show that it would have taken the same action, at the same time, even if there had been no union activity.” And in this case, the Board determined that the company could not make that showing. The Board focused on the fact that the employer knew of the unionization efforts, and that union issues were central in the discussion of hiring someone to improve its human resources policies. Moreover, the employer was actively opposing the union campaign, while the benefits it ultimately offered were “unprecedented” and formulated following review of the union’s contracts at other, unionized properties. There were also communications by and among leadership that documented the purpose of counteracting the union’s campaign. Finally, the timing of the announcement – a mere week before the election, was problematic.

In this case, the punishment was severe – the Board ordered the employer to engage in bargaining with the union, even though the union had lost the election. This is known as a Cemex order, arising from a groundbreaking decision that we discussed in our August 28, 2023 E-lert. Thus, employers who are facing a union campaign must be extremely careful – and work with experienced labor counsel – about what benefits changes it will make during that period and the timing of any such announcement.