Recent NLRB Decision Requires Union Access to Parts of Asset Purchase Agreement
Friday, October 28, 2022

In a recent decision, the National Labor Relations Board (NLRB) determined that a hospital violated its duty to bargain when it failed to provide the union representing some of its workers with certain documents related to the sale of its parent organization.  Specifically, in Crozer Chester Med. Ctr., 371 NLRB No. 129 (2022), the NLRB ordered the hospital to produce portions of an asset purchase agreement (APA) in response to the union’s request for information related to the transaction because the NLRB found these documents “potentially” relevant to the union’s role as bargaining representative of the unit.

Section 8(a)(5) of the National Labor Relations Act (NLRA) makes it an unfair labor practice for an employer to refuse to bargain with the representatives of its employees (a labor union), and this duty includes an obligation to provide information that is needed by the union for the proper performance of its duties.  Further, information maintained by an employer about represented employees is presumptively relevant, and an employer must provide that information unless the employer can rebut the presumption.  Relevance is based on a lower, “discovery-type” standard, meaning that “even potential or probable relevance is sufficient to give rise to an employer’s obligation to provide requested information.”

In this case, after the sale was announced, the union requested a copy of the APA, including all schedules and attachments, to assist with bargaining regarding the impact of the sale on employees.  The hospital refused, saying that the information sought was confidential and proprietary.  The NLRB initially found that the hospital must produce the entire APA, including schedules and attachments, but after an appeal, limited the disclosure requirement to “schedules and attachments . . . that appear to contain presumptively relevant information or that the Union established as at least potentially relevant.”  (The union had obtained the APA, but not all schedules and attachments, after the employer produced it in a separate court proceeding.)

Specifically, the NLRB held that the hospital was required to produce the parts of the agreement where the information appeared to relate to the unit employees’ wages, conditions of employment, benefits, and potential layoffs, as it found them to be presumptively relevant.  The schedules and attachments the NLRB found to be presumptively relevant included those related to pre-paid lease expenses, lease/security deposits, utility deposits, all medical staff fund balances, material written contracts and commitments, the Worker Adjustment and Retraining Notification Act (WARN Act), closed hospital departments, and benefits.  Notably, the NLRB stated that it found some of the schedules and attachments to be presumptively relevant “from their titles.” 

The NLRB directed the employer to produce other portions of the agreement that potentially affected unit employees’ terms and conditions of employment, as it found these portions to be sufficiently established as relevant.  The hospital was not required, however, to produce other, irrelevant portions of the agreement, such as those related to the hospital’s financial statements, intellectual property, and severance liabilities for executives.

This decision is likely to serve as a guide for employers faced with responding to union requests seeking information on APAs and related documents.  Employers may wish to speak with competent legal counsel to determine what information is required to be disclosed and how to otherwise respond to union information requests with respect to future transactions.

 

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