United States: Cementing A Path Forward: NLRB Denies Employer's Motion For Reconsideration Of Cemex, While General Counsel Provides Guidance On New Organizing-Friendly Standard

Earlier this week, by denying the employer's motion to reconsider in Cemex Construction Materials Pacific LLC, 372 NLRB No. 157 (2023), the National Labor Relations Board not only validated the applicability of its new Cemex standard, but also foreshadowed an intense appellate review process expected in the federal Circuit Courts of Appeal. This follows after the NLRB General Counsel issued guidance regarding Cemex in a memorandum earlier this month explaining key issues, such as how unions can demand recognition and bargaining, how unfair labor practices might trigger a Cemex bargaining order, and procedural considerations for labor and management handling cases under this new standard.

As noted in our previous alert, the new Cemex standard ushered in sweeping changes to union organizing at large. Under Cemex, if a union demands recognition from an employer because it claims that it has obtained majority support within a bargaining unit, the employermustpursue one of two options: (1) recognize and bargain with the union or (2) file an RM petition seeking an NLRB election. If the employer and union proceed to an NLRB election and the employer commits even one unfair labor practice ("ULP") prior to the election, the Board may issue an order requiring the employer to recognize and bargain with the union rather than require a new election. The Board might also issue a bargaining order to an employer who neither recognizes the union nor files a petition for an election, unless the employer can demonstrate that the union did not have majority support at the time of the demand for recognition. This new standard has applied retroactively since the original decision issued on August 25, 2023.

Cemex filed a motion for reconsideration, which the NLRB denied on November 13, 2023. Eschewing the opportunity to rehash any arguments previously raised in the original proceeding in a single footnote at its outset, the opinion previews the legal defense that the Board plans to undertake on behalf of its new standard, which is certain to be challenged in the Circuit Courts of Appeal. Of note, the Board rejected arguments that the new standard violated administrative procedure under the "major questions doctrine" or by using adjudication rather than rulemaking to announce the standard, as well as the notion that retroactive application of the new standard was manifestly unjust. Additionally, as Member Kaplan noted saliently in dissent, though the Board explained why its new Cemex bargaining order standard was consistent with precedent, Cemex has potentially shaky legal underpinnings since the Board "adopted a standard that squarely conflicts with not one, but two Supreme Court Decisions: NLRB v. Gissel Packing Co., 395 U.S. 575 (1969), and Linden Lumber Division, Summer & Co. v. NLRB, 419 U.S. 301 (1974)."

Relatedly, General Counsel Jennifer Abruzzo issued recent guidance instructing the Regions on how to interpret and apply Cemex. See G.C. Memo 24-01 (Nov. 2, 2023). Mostly nestled in the footnotes of this memo, the critical takeaways encompass three main areas:

Bargaining Demands:

• The union's demand can be in any form—verbal or written.
• A demand is deemed received by the employer if given to any "representative or agent," which the GC has defined as broadly as possible: anyone acting on behalf of the employer. Therefore, for all practical purposes, any low-level supervisor who receives a valid demand will qualify.
• Though not conveyed directly to the employer, a union's filing of an RC petition would count as a bargaining demand if the union checks a certain box on the NLRB form and notes in the comments that the petition serves as its demand.

ULPs Setting Aside an Election:

• Critically, the GC makes clear that even a minor 8(a)(1) or 8(a)(3) ULP during the "critical period" can trigger a bargaining order.
• The critical period begins on the date of the demand and lasts through the date of the election. In a footnote, the GC clarified that ULPs which occur after a valid demand is made, but before any petition is filed, could result in a Region setting aside an election and issuing a bargaining order.
• For non-hallmark charges (i.e., ULP allegations not involving discrimination against protected activity), the GC notes that the Region will examine a host of factors in deciding whether to potentially set aside the election, including the number and severity of violations, the degree to which the violation was disseminated throughout the unit, the unit's size, the temporal proximity between the violation and an election, and the scope and number of unit employees impacted.
• As a reminder, having certain handbook or other workplace policies could qualify as a predicate 8(a)(1) charge under Stericycle, Inc., 372 NLRB No. 113 (August 2, 2023) (related blog post can be viewed here), which could now be grounds for the NLRB setting aside the election and issuing a Cemex bargaining order.

Procedural Clarity:

• When faced with a valid demand, an employer has two weeks to either recognize the union or file an RM petition. Once those two weeks lapse after a demand, an employer is vulnerable to the union's filing of an 8(a)(5) ULP seeking a bargaining order.
• In clarifying footnotes, the GC directed the Regions to consider employer's claims of unforeseen circumstances to meet that two-week deadline on a case-by-case basis and noted that while employers may ask to view evidence of majority status (such as a card check procedure by a neutral third party), doing so would not toll the two-week deadline to file an RM petition.
• Although an employer that files an RM petition in order to test the sufficiency of the union's claim of majority status can object to the union's proposed unit definition using the NLRB's form, the Region will continue to presume that the union's requested unit is appropriate, and the employer has its normal burden to show the inappropriateness of the union's proposed unit.
• In a footnote, the GC seems to suggest that an employer need not file an RM petition if a union files an RC petition. However, according to the memo, if the union withdraws its RC petition before an election but is still claiming majority status, the employer may "promptly" file an RM petition to challenge that claim.

Despite these updates, open questions linger about this controversial new Cemex standard, and perhaps the most notable of these is how the Circuit Courts of Appeal (and potentially the United States Supreme Court) will address it.

In the meantime, while we wait for some of those answers, employers should emphasize training of all supervisors, including low-level ones, about the implications of this new standard, since they may well be the ones receiving a bargaining demand. Furthermore, because any ULP can result in a bargaining order and function to set aside an election, employers must review their policies and practices to ensure compliance. Finally, given that the Board has already streamlined the procedures for elections, it may be too late to build your playbook once a demand is received, which means that appropriate, advance preparation is key.

Employers with questions or concerns navigating this new standard should reach out to Seyfarth's team of experienced labor attorneys to help guide them through these issues.

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