A company reportedly shut down its business rather than go union. Wait, can it do that?!?


TL;DR: Yes.

But I’ll explain to you why it’s probably not illegal.

First, here’s what happened.

According to multiple published reports, including this one from Michaela Althouse at the Philly Voice, a chain of three coffee shops permanently closed Monday – one week after employees announced their intentions to unionize.

According to the article, the CEO emailed employees on Monday that “his coffee shops always have operated at a loss, and the decision to close was partly due to rising operational costs, reduced sales, and the expiration of a few leases. But he also cited workers’ decision to join [the local union].”

So, we have a CEO admitting that employee support to unionize motivated the decision to close down. Section 8(a)(1) of the National Labor Relations Act makes it an unfair labor practice for an employer to interfere with, restrain, or coerce employees in exercising rights under § 7 of the Act, which includes the right to form a union.

However, the U.S. Supreme Court has said that “[w]hatever may be the limits of § 8 (a)(1), some employer decisions are so peculiarly matters of management prerogative that they would never constitute violations of § 8(a)(1), whether or not they involved sound business judgment.” Further, “the Act does not compel a person to become or remain an employee. It does not compel one to become or remain an employer,” either. Therefore, the court concluded that an employer could close its entire business, even out of spite towards the union, and be immune from an unfair labor practice.

But, there is a but.

An employer with multiple locations cannot close one or more (but not all) if the closing is designed to chill unionism in any of the remaining plants of the single employer and if the employer may reasonably have foreseen that such closing will likely have that effect.

In this case, there were three coffee shops, and the employer closed them all. Seemingly, closing them does not violate the law. However, this CBS article notes that a realty company owns the coffee shops. Given that the realty company will continue to operate, there could be a sliver of hope to pursue an 8(a)(1) violation. However, it seems farfetched that closing the coffee shops was designed to chill the unionization of the realty company in general.

In the end, as between the coffee shop employees and their employer, nobody wins.

“Doing What’s Right – Not Just What’s Legal”
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