[authors: Daniel V. Johns, Mary Cate Gordon]

The U.S. Court of Appeals for the District of Columbia Circuit recently upheld a controversial National Labor Relations Board ruling that required an employer to provide a union with sensitive information about customers and pricing. The union sought the information to support the employer’s claim that it must reduce employee wages due to competitive pressures. The ruling demonstrates that employers must be careful when explaining proposed contract provisions.

KLB Industries, Inc. v. NLRB involved the bargaining of a new contract. The employer sought to reduce wages 10 percent over two years in a final contract offer, claiming that the wage reductions were necessary to address competitive market pressures. The next day, the union made a written request for information that sought a list of current customers, price quotes, market information, outsourcing data, and savings that would result from a wage cut. The employer refused to turn over the information, citing a desire to remain competitive. After a lockout, the union filed an unfair labor charge that the NLRB eventually upheld.

In a 2-1 vote, the D.C. Circuit found that because the union tailored its information request to the employer’s competitive pressures claim, a denial of that request would constitute an unfair labor practice. In doing so, the D.C. Circuit affirmed the NLRB’s application of a “liberal discovery-type standard” when reviewing a union request for proof of an employer’s assertion of competitive pressure.

The dissenting judge disagreed, stating that because the employer made only generalized statements, it triggered no duty to produce information. Nevertheless, the majority opinion shows that even seemingly general statements can create a duty to produce sensitive information under the NLRB’s “liberal discovery-type standard.”

The KLB Industries case represents yet another example of how broadly the current NLRB views the duty of employers to provide information to unions both during contract negotiations and when otherwise monitoring the collective bargaining agreement on behalf of the employees they represent.

Ballard Spahr’s Labor and Employment Group routinely assists employers in the decision-making process when responding to union requests for information. If you have questions or concerns regarding NLRB compliance in this context, please contact Daniel V. Johns at 215.864.8107 or johns@ballardspahr.com, Mary Cate Gordon at 856.761.3464 or gordonmc@ballardspahr.com, or the lawyer in Ballard Spahr's Labor and Employment Group with whom you work.