The Sixth Circuit recently issued a decision in Brown-Forman Corp. v. NLRB that rejected the National Labor Relations Board’s (“Board”) Cemex framework for issuing remedial bargaining orders. In a 2023 decision, the NLRB adopted the Cemex framework which expanded the Board’s authority to issue bargaining orders and upended 50 years of Supreme Court precedent. The Sixth Circuit’s decision marks the first appellate rejection of the Cemex framework and is important for employers to note.
The decision means that employers in Ohio, Michigan, Kentucky and Tennessee now have new grounds to challenge bargaining orders issued under that framework.
Legal Background
At issue in Brown‑Forman, is the scope of the Board’s authority to issue a bargaining order, which requires an employer to negotiate directly with a union as a remedy for the employer interfering with an election. In 1969, the Supreme Court held the Board could issue remedial bargaining orders only if:
(1) there is a showing that the union had a majority of employees’ support at one point and
(2) the employer’s misconduct made the prospect of a future fair election unlikely.
NLRB v. Gissel Packing Co., 395 U.S. 575 (1969). The Gissel standard recognized that elections are the preferred method of ascertaining whether a union has majority support. It empowered the Board to issue a bargaining order only when other remedies (such as a rerun election) were insufficient to protect employees’ choice to unionize. The Supreme Court’s Gissel decision served as the Board’s bargaining-order standard for more than 50 years.
In 2023, the Board departed from this established framework in Cemex Constr. Materials Pac., LLC, 372 NLRB 130, announcing that it would “no longer look to Gissel” when deciding whether to issue a bargaining order. Specifically, the Board held that proving “the unlikelihood of holding a future fair election” was no longer a prerequisite to the Board’s issuance of bargaining orders. In other words, the Board expanded its authority to issue bargaining orders even if a fair rerun election was possible. Practically speaking, under Cemex, unfair labor practices that interfered with an election could result in a bargaining order.
The Sixth Circuit’s decision in Brown-Forman
Brown-Forman arose out of a union organizing campaign at the Kentucky facilities of distiller Brown-Forman. Brown-Forman gave employees raises and free bourbon shortly before the election. The union lost the election and claimed the company engaged in unfair labor practices. The Board agreed and, relying exclusively on Cemex, imposed a bargaining order requiring Brown‑Forman to recognize and bargain with the union without considering whether a fair rerun election was possible.
On appeal, the Sixth Circuit upheld the Board’s finding that Brown-Forman had unlawfully interfered with the election, reasoning that the company’s offering of such benefits shortly before the election was designed to coerce employees and discourage union membership.
However, the Sixth Circuit rejected the Board’s implementation of a bargaining order. The Court held that, when adopting Cemex, the Board engaged in improper rulemaking through adjudication. Because the Board based its decision to impose a bargaining order against Brown-Forman exclusively on Cemex, and because Cemex “was an improper exercise of the Board’s adjudicatory authority,” the Sixth Circuit held it “cannot enforce” the Board’s bargaining order against Brown-Forman.
The case was remanded to the Board for further proceedings consistent with the Court’s opinion. The Board’s analysis of Brown-Forman on remand may indicate whether the Board will attempt to enforce Cemex in other jurisdictions or whether it plans to revisit Cemex altogether.
Takeaway
Brown-Forman serves as a reminder to employers. The Board still has authority to issue bargaining orders to remedy unfair labor practices (even though the Sixth Circuit rejected the Board’s articulated standard for issuing them). And Brown-Forman affirms that making changes to employees’ terms of employment (including by providing raises and benefits) during an organizing campaign may constitute unfair labor practices. Accordingly, employers should scrutinize the timing of raises and other benefits to ensure they are not perceived as interfering with an organizing campaign.
If you have any questions, contact your Dinsmore labor and employment attorney.