Employer Lockouts: Defensive or Offensive?

Employer Lockouts

The lockout is an employer action that is designed to stop unions from economically harming a business when there are union contract negotiation disputes, and the current contract expires as a result. A lockout is a temporary, employer-initiated work stoppage in which employees are prohibited from returning to work when a contract expires and there’s no replacement contract. Union Proof discussed the court decisions that initially made lockouts legal, and gave an overview of how a lockout works, in a prior blog titled, Learning From a Lockout. In this blog, we dive deeper into the mechanics of the defensive and offensive lockout and provide additional examples of real world lockout events.

Power to the Employer

Employer lockouts return power to businesses struggling to deal with difficult union representatives by enabling employers to put pressure on the union to accept reasonable contract terms. The court decisions legalizing lockouts created two types of lockouts: defensive and offensive. Understanding the difference is the first step in assuring adherence to the laws.

Before 1965, only the defensive lockout existed. In a defensive lockout, employers can only lock out employees in defense of their organization’s economic stability. The defensive lockout is an employer response to union actions like sabotage, strike threats, strikes or work slowdowns. Since then, three types of lockouts have emerged from various NLRB and court decisions, though only two categories – defensive and offensive – exist.

The economic or defensive lockout is when an employer institutes a lockout to prevent economic losses due to a threatened union strike. The second type of lockout is due to a Supreme Court decision in NLRB vs. Brown Food Store (380 U.S. 278, 1965). The decision lets employers replace union workers with temporary employees when there is a multi-employer bargaining unit, and the union strikes one employer bargaining unit in order to put pressure on the whole unit. It’s called a whipsaw strike.

Since then the NLRB made decisions like the 1986 Harter Equipment, Inc vs. George M. Zatrinski with the Local 825, International Union of Operating Engineers (Case 22-RD-754). In a 3-to-1 decision, the NLRB said employers can hire temporary workers when there is a union contract impasse. In this case, the union had offered to extend the old contract for six months. The company made a “final offer” that the union rejected and a lockout ensued. This is an offensive lockout.

In the offensive lockout (bargaining lockout) an employer locks out employees to pressure the union during a collective bargaining negotiation process for a new contract. In offensive lockouts, employers do not have to wait for a strike or strike threat to lockout out employees. They can lockout employees whenever there is no union contract in effect, instead of timing it to minimize damage to the employer which was a prior requirement. As an employer, you can make a final offer when contract negotiations seem to be deadlocked and further negotiations are futile.

Employer “Can Do”

You can only declare a lockout when a union contract expires, or you have proof the union is running an “inside campaign,” or the union offers to have employees end a strike and return to work. During a lockout, the employer can only hire temporary employees and must allow union workers to return to their jobs after the lockout ends. If the union goes on strike, but eventually offers to let employees return to work under the terms of a contract that has expired, you can declare a lockout to force agreement to a final contract offer. The catch is the lockout must include all union employees and all permanent striker replacements. The employer can then only hire temporary employees.

It’s important to understand that lockouts aren’t a license for unfair labor practices. The lockout is intended to serve one purpose: force the union to agree to a reasonable, legitimate bargaining position. Unfair labor practices are illegal at any time, including during and after the lockout. Unfair labor practices include activities like intentionally withholding information the union has a right to access, hiring replacement employees on a permanent basis during the lockout, negotiating with individual employees, and anything else that intentionally targets union jobs. You must also agree to bargain in good faith per the NLRA Section 8(d) & 8(a)(5). It’s in the union’s interest to fairly negotiate during the lockout because all union employees can return to their jobs when the lockout ends. When a union strikes, the employer can hire permanent replacements.

Unions will make a lot of accusations, of course. Unions may accuse the employer of purposely making contract negotiations difficult so the contract expires which leads to a lockout. Unions will claim that employers are forcing a lockout because they want to shut down a plant or shift production, and the lockout makes it easier and cheaper. The union may simply call the employer a bully who doesn’t care about working people. The primary union strategy to gain support is to work on emotions.

Timing is Everything

There have been many lockouts. The L.I.U.-Brooklyn lockout discussed in the first blog demonstrated the non-union community support lockouts can garner. The solution was that the university administration allowed the faculty to return when both parties agreed to extend the expired contract. In 2014, the Kellogg Company locked out hundreds of employees at its Memphis, TN factory over failed wage negotiations with the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) International Union. The lockout lasted 9-months before a court ordered its end, saying Kellogg used “creative semantics” to reclassify new or rehired employees in violation of the agreement. In 2016, a federal appeals court then ruled the 2013 lockout was legal, overturning the NLRB order that sided with employees. One takeaway from this example is that lockouts can last months and take years to finally settle. A pro-employer decision means the locked out employees are not likely to collect lost wages and benefits for the lockout period.

The suggestion of a lockout gives employers an edge over unions. American Crystal Sugar locked out employees from July 2011 to May 2013 when it was unable to reach an agreement with the BCTGM International Union. A 22-month lockout is a long time period, during which unemployment benefits run out. In May 2017, the same union agreed to a 5-year contract as the company’s “best and final” offer to avoid another lockout.

Not all lockouts end in the employer’s favor. In 2016, a 7-month lockout at Allegheny Technologies involved the United Steelworkers Union, 2,200 employees, and 12 plants. In this case, the union considered itself the winner after employees agreed to a new 4-year contract. The NLRB had stated the company did not bargain for a new contract in good faith, making the lockout illegal. The employer had to agree to the contract because there would be a NLRB judicial hearing, and the NLRB had already made its position clear. If Allegheny had been found guilty at a hearing, the company would have had to pay out millions in lost wages.

Damaging to Employer-Employee Relations

The long-term issue with lockouts is similar to the issue with strikes. Severe damage is done to employer-employee relations. Union workers that do return to work will probably resent the employer and the temporary replacement workers hired during the lockout. In 2017, only 7 major work stoppages (strikes and lockouts) took place. However, unions know that you have the right to call a lockout at any time if your company’s union contract expires. That’s a powerful motivation for negotiating a new contract.

After a lockout, you must begin the process of restoring employee relations. Though a new contract will eventually be signed, a lockout falls within the crisis category. A good strategy is to take advantage of a crisis to engage employees with the end goal of employees deciding they are interested in decertifying the union. Ideally, employers maintain union free workplaces through positive employee relations. Nothing in life or business is permanent, and that includes unions.

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