Duty to Bargain in Good Faith Requires Employer Produce Information About Customers and Pricing Where It Claims “Competitive Disadvantage”

In a recent decision, KLB Industries, Inc., Case No. 11-1280 (C.A. D.C., Dec. 4, 2012), the DC Circuit found the employer’s refusal to provide information violated its duty to bargain in good faith and tainted the subsequent lockout.  The employer had a duty to provide information verifying its claims—in this case, information the employer would have rather not produced.

During  negotiations for a new collective bargaining agreement, the parties came to the table with diametrically opposite views on wages.  The employer demanded a 20% reduction in employee wages due to expressed concerns about competition from international markets and retaining customers.  The union, on the other hand, asked for wage increases during the term of the contract.

The union sent a request for a wealth of information about the employer’s customers, prices, market studies, and price quotes from suppliers, among other things.  The union’s letter stated that, “’[d]uring the course of the[] negotiations, [the employer] has continually asserted that they must improve the competitive position of the ... facility,’” and the information was necessary “generally to verify [the employer’s] competitiveness claim and ... specifically to ‘compare the prices of competitors.’”

The employer refused to provide the majority of the information, and, shortly thereafter, locked out unit employees and cancelled their health care plan, making them ineligible for COBRA benefits.

In finding the employer had to turn over the information requested, the Court stated, “where, as here, an employer raises a competitiveness claim as its central justification for wage concessions, a union is entitled to information verifying that claim.” The Court also supported the Union’s claim that cutting off COBRA benefits during the lock out was unlawful.

By Lisl Duncan

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