September 23, 2019

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Bargaining from Scratch is Alright. Sometimes

In Hendrickson USA, LLC. v. National Labor Relations Board, a divided Sixth Circuit panel revisited one of the oft-litigated phrases in labor law: “bargaining from scratch.”  The majority—applying a series of Supreme Court, Sixth Circuit, and NLRB decision on the subject—determined the NLRB lacked support when it ruled the phrase, as used here, was an unlawful threat rather than lawful speech.

The dispute arose when an employer responded to the formation of a union organizing committee by sending a letter to all plant employees advocating against unionization. The letter described the disadvantages that could follow unionization and stated that “contract negotiations would begin ‘from scratch.’” An employee complained to the NLRB, which determined the letter represented an unlawful threat of a more onerous work environment and lower wages and benefits.

A divided Sixth Circuit panel reversed.  According to Judge McKeague’s majority opinion (joined by Judge Cook), the phase “bargain from scratch” can be coercive, but is not per se unlawful:

In general, the phrase is lawful when the company makes clear that it is warning employees about the natural give and take of the bargaining process, in order to counter the idea that unionization will automatically increase compensation. On the other hand, the phrase is coercive when it indicates that the employer will retaliate against employees by adopting a “regressive bargaining posture” during negotiations or by “unilaterally discontinu[ing] existing benefits prior to negotiations,” so that employees receive only what the union can induce the company to restore.

It all depends on the context. Because the Hendrickson letter did not “essentially promise” that employees would end up with less, it was not a threat. And the NLRB’s contrary determination was not supported by substantial evidence.

Judge Helene White dissented. Her opinion stressed the deference due the “NLRB’s judgment and expertise.” Because it was unclear whether a reasonable employee might perceive the letter as having a coercive impact, the NLRB’s ruling should have been affirmed.

© Copyright 2019 Squire Patton Boggs (US) LLP

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About this Author

Benjamin Beaton Litigation Attorney Squire Patton Boggs Law Firm
Partner

Benjamin Beaton is a litigator who handles complex appeals, trial proceedings and regulatory disputes. He has authored more than a dozen briefs at the US Supreme Court, where he previously served as a law clerk, and drafted dozens more in the federal courts of appeal and state supreme courts. In trial proceedings across the country, Ben has tried cases, briefed and argued dispositive motions, defended and examined high-profile witnesses and negotiated settlements. Outside the courtroom, Ben has drawn on his governmental experience to counsel a Fortune 100 CEO appearing before a US Senate...

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Lauren S. Kuley, Squire Patton Boggs, Labor Lawyer,
Associate

Prior to joining Squire Patton Boggs, Lauren was a law clerk to The Honorable Judge Karen Nelson Moore of the US Court of Appeals for the Sixth Circuit.

After clerking, Lauren served as the Simon Karas Fellow in the Ohio Attorney General’s Office. In that position, she assisted the Ohio Solicitor General in representing the state on appeal, writing appellate briefs and evaluating possible appeals. She also argued before the Ohio Supreme Court and the US Court of Appeals for the Sixth Circuit, winning unanimous decisions for the state in both cases. 

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