AN EMPLOYER HAS TO GIVE A UNION NOTICE OF A SHUTDOWN THAT IT WILL NOT NEGOTIATE A NEW AGREEMENT
August 4, 2025
The following case is a current case at the NLRB at the office of H. Sanford Rudnick & Assoicates which is as follows:
1. When an employer with a collective bargaining agreement (CBA) shuts down and lays off all employees, the obligation to provide notice to the union regarding non-renewal of the union contract depends on specific legal and contractual requirements. Here’s a concise analysis based on U.S. labor law, primarily under the National Labor Relations Act (NLRA):
2. CBA Termination or Non-Renewal Notice:
3.Under Section 8(d) of the NLRA, employers are generally required to provide notice to the union at least 60 days before the expiration of a CBA if they intend to terminate or modify the agreement. This applies even if the employer is ceasing operations, unless the shutdown eliminates the bargaining unit entirely.
4.However, if the employer is permanently closing the business and dissolving the bargaining unit (i.e., no successors or ongoing operations), the obligation to provide notice of non-renewal may be moot, as the CBA effectively terminates with the closure. Courts and the National Labor Relations Board (NLRB) have held that when an employer goes out of business, the duty to bargain over the CBA’s renewal or effects may not apply if there is no ongoing employer-employee relationship.
5.Effects Bargaining:
6.Even if notice of non-renewal is not required, the employer may still have a duty to bargain with the union over the effects of the closure, such as severance, accrued benefits, or other terms impacting laid-off employees. This obligation persists unless the union waives its rights or the employer can demonstrate an economic exigency (e.g., sudden, unavoidable closure).
7.The NLRB case First National Maintenance Corp. v. NLRB (1981) clarifies that employers must bargain over the effects of a decision to close, even if the decision itself is not subject to bargaining.
8. WARN Act Considerations:
9.Under the Worker Adjustment and Retraining Notification (WARN) Act, employers with 100 or more employees must provide 60 days’ notice of a plant closing or mass layoff to employees, their union (if applicable), and certain government entities. This is separate from CBA non-renewal notice but may overlap with union notification requirements.
10. Some CBAs include specific notice provisions for layoffs or closures, which could require additional notifications beyond federal law.
11. Contractual Provisions:
12.The CBA itself may contain clauses specifying notice requirements for termination, non-renewal, or plant closure. Even if the business shuts down, these contractual obligations may still apply unless the closure legally terminates the agreement. Reviewing the CBA’s language is critical.
13. Practical Considerations:
14.If the employer is ceasing all operations and liquidating, the union may not pursue non-renewal notice issues, as the practical impact is negligible. However, failure to provide notice could lead to unfair labor practice charges or claims for back pay or benefits if the union argues that employees were harmed.
15.If the employer is selling assets or transferring operations to a successor, the successor may inherit CBA obligations, depending on the sale structure and NLRB precedent (e.g., Burns International Security Services (1972)).
16.Conclusion: If the employer is permanently shutting down, laying off all employees, and dissolving the bargaining unit, they likely do not need to provide notice of non-renewal of the CBA, as the agreement terminates with the closure. However, they may still need to:
- Bargain over the effects of the closure.
- Comply with WARN Act notice requirements (if applicable).
- Adhere to any specific notice provisions in the CBA.
17. If your firm need any assistance relating to the above NLRB on an Employer shut and giving the union notice that is will not negotiatiate or any other labor relations issues please contact, Sanford Rudnick JD at 1-800-326-3046 or www.theunionexpert.com
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