COVID-19 Pandemic Did Not Constitute Economic Exigency Excusing Employer's Duty to Bargain Over Discharges, Subcontracting: NLRB | Practical Law

COVID-19 Pandemic Did Not Constitute Economic Exigency Excusing Employer's Duty to Bargain Over Discharges, Subcontracting: NLRB | Practical Law

In Arbah Hotel Corp., the National Labor Relations Board (NLRB) held that the COVID-19 pandemic did not qualify as an economic exigency that excused the employer's duty to bargain over its discharge of bargaining unit employees and subcontracting of bargaining unit work.

COVID-19 Pandemic Did Not Constitute Economic Exigency Excusing Employer's Duty to Bargain Over Discharges, Subcontracting: NLRB

by Practical Law Labor & Employment
Published on 18 Aug 2022 • USA (National/Federal)
In Arbah Hotel Corp., the National Labor Relations Board (NLRB) held that the COVID-19 pandemic did not qualify as an economic exigency that excused the employer's duty to bargain over its discharge of bargaining unit employees and subcontracting of bargaining unit work.
On August 15, 2022, in Arbah Hotel Corp., the panel (Board) heading the NLRB's judicial functions concluded that the hotelier employer violated Section 8(a)(5) of the NLRA when it unilaterally terminated the entire bargaining unit and then proceeded to subcontract bargaining unit work, rejecting the employer's defense that the COVID-19 pandemic constituted an economic exigency that excused its duty to provide the union with notice and an opportunity to bargain under the Board's decision in Bottom Line Enterprises (302 N.L.R.B. 373, 374 (1991), enforced sub nom Master Window Cleaning, Inc. v. NLRB, 15 F.3d 1087 (9th Cir. 1994)). The Board emphasized the timing of the employer's actions in February 2020, noting that although the COVID-19 pandemic clearly had a severe impact on the hotel industry in 2020:
  • The employer failed to show that immediate action was necessary in February, as the hotel's room occupancy and revenues had remained relatively stable up until (and during) this period.
  • The employer had ample time and opportunity to notify and bargain with the union over its decision, given that:
    • the parties met for a bargaining session two weeks before the discharges and the employer never mentioned its plan to replace the bargaining unit with subcontractors due to anticipated pandemic-related financial hardship or otherwise; and
    • the replacement workers provided by the staffing agency did not arrive for nine days, during which period the employer still failed to notify the union.
  • The US government did not declare a state of emergency until March 13, 2020, more than three weeks after the employer entered the subcontracting agreement.
The Board also concluded that the employer unlawfully:
  • Disparaged and undermined the union.
  • Discharged bargaining unit employees because of their union-represented status.
  • Implicitly withdrew recognition from the union.
(371 N.L.R.B. No. 126 (Aug. 15, 2022).)
Arbah Hotel marks the first case in which the Board has considered the COVID-19 pandemic in the context of the "economic exigencies" exception outlined in Bottom Line Enterprises. It illustrates the type of case that the General Counsel elected to prosecute, as well as how the Board analyzes arguments that the COVID-19 emergency ought to excuse an employer from bargaining.