The Sixth Circuit Rejects the NLRB’s Improper Bargaining Order Rule

On March 6, in Brown-Forman Corp. v. NLRB, the U.S. Court of Appeals for the Sixth Circuit ruled that the National Labor Relations Board (NLRB) exceeded its authority when issuing the Cemex standard and thus it was improper to rely on it for future orders. The Cemex standard held that any finding of an unfair labor practice during a union’s campaign or after demanding recognition will, in effect, automatically result in a bargaining order requiring the employer to recognize and bargain with the union. These orders were issued no matter how minor the infraction.

Brown-Forman was alleged to have committed unfair labor practices by applying raises, modifying benefits, and giving employees gifts of bourbon to discourage unionization. Applying the Cemex standard, the NLRB ruled that Brown-Forman was required to recognize the union even though the election failed.

On appeal, the Sixth Circuit rejected the Cemex standard. In doing so, the Court signaled a willingness to return to the prior standard, under which the NLRB could issue a bargaining order only if “a fair election cannot [occur] under all the circumstances.” The result is a more constrained NLRB with far less authority to aggressively require employers to bargain with and recognize unions prior to a successful election.

This ruling applies directly only to states within the Sixth Circuit: Kentucky, Michigan, Ohio, and Tennessee. While the Cemex standard is still binding NLRB precedent outside the Sixth Circuit, the Brown-Forman Corp. ruling provides other courts a framework to change course. A reversal may also occur if the NLRB issues a new rule. Should the previous standard be reversed, most employer misconduct leading up to an election will be remedied by traditional methods, such as a rerun election.

The Sixth Circuit further focused its opinion on the NLRB’s improper use of authority by establishing a labor rule without going through the proper channels. In the context of the Supreme Court’s ruling in Loper Bright v. Raimondo, courts are more empowered to review the limits of agency authority. As a result, aggressive rules and decisions by the NLRB and other agencies will now be examined by courts with a closer eye than before.

It is important for employers to understand and stay informed of quickly shifting legal frameworks promulgated by the NLRB to ensure they are up to date with the current law. Steptoe & Johnson’s Labor Relations team can assist you in complying with the NLRB’s new rules and requirements while also assisting with National Labor Relations Act-related issues, including policy review; organizing campaigns and negotiations; and responding to or filing unfair labor practices, grievances, and arbitrations.