Woodford Reserve Distillery Ordered to Bargain with Union Despite Winning a Representation Election

Kollman & Saucier
Kollman & Saucier

In August 2022, the Teamsters Union notified Woodford Reserve Distillery that its employees were organizing. Managers then held meetings with employees to speak about the organizing campaign. By the first week of October 2022, the employer believed that 50-60 percent of the employees had signed union authorization cards, primarily motivated by a desire for increased wages. By October 11, the Company decided to announce a $4 per hour across-the-board wage increase. The Company also changed existing policies, in a way favorable to employees, about who was eligible for annual merit wage increases and when employees could use vacation.

Also on October 11, 2022, the Union mailed the National Labor Relations Board (“NLRB” or “Board”) a petition for a representation election. The NLRB docketed the petition on October 14, and scheduled an election for November 17, 2022. The Union also informed the Company that it had majority support, which it did according to the number of union authorization cards signed, and requested recognition as the representative of company employees.

The wage increases appeared in employee paychecks a week before the election. That same week the Company gave each employee a $30 bottle of bourbon for exceeding a previously unannounced production goal.

The Union lost the election.

The NLRB’s General Counsel and the Union contended the wage increases, policy changes, and bourbon give-away all violated the National Labor Relations Act (the “Act”). Woodford contended that each of its actions was for a legitimate business reason, unrelated to the organizing campaign or the pending election.

Section 8(a)(1) of the Act makes it an unfair labor practice for an employer to interfere with, restrain, or coerce employees in the exercise of their right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.

Section 8(a)(3) of the Act makes it an unfair labor practice for an employer to discriminate, in hiring or tenure of employment or any term or condition of employment, to encourage or discourage membership in any labor organization.

The Supreme Court recognized long ago that providing increased wages or making changes to existing policy when faced with a union organizing campaign or representation election can violate Section 8(a)(1) or Section 8(a)(3) if the employer’s purpose is to affect or influence an employee’s freedom of choice for or against unionization. The Court wrote, “[t]he danger inherent in well-timed increases … is the suggestion of a fist inside the velvet glove. Employees are not likely to miss the inference that the source of benefits now conferred is also the source from which future benefits must flow and which may dry up if it is not obliged.” NLRB v. Exchange Parts Co., 375 U.S. 405, 409 (1964).

The employer’s motivation is at issue in these cases. When wage increases or improvements in employment terms or conditions occur after an employer knows of an organizing campaign, the NLRB will infer a motive to discourage union support. The employer can rebut that inference by proving the change was part of a previously established policy or plan, meaning the change was decided upon before knowledge of union activity, or that the employer’s action was prompted by a legitimate business purpose.

Woodford was unable to convince the presiding Administrative Law Judge (“ALJ”) of its legitimate business purpose defense. So, what is the remedy? The Board can issue an order requiring the employer to bargain with a union.

In Cemex Construction Materials Pacific, LLC, 372 NLRB No. 130 (2023), the Board adopted a new standard for determining whether a bargaining order is appropriate. Under this standard, intended to disincentivize employers from committing unfair labor practices before and after the filing of an election petition, a remedial bargaining order will issue when: (1) the employer refuses the union’s request to bargain; (2) at a time when the union had in fact been designated as representative by a majority of employees; (3) in an appropriate unit; and then (4) the employer commits unfair labor practices requiring the election to be set aside.

The ALJ held that all four factors were met. Regarding the alleged unfair labor practices committed by Woodford, the Board wrote, “granting wage increases and other benefits in response to an organizing campaign has long been held to be a significant, or “hallmark,” violation warranting a bargaining order.” (citations omitted). The Board noted, “[t]he increase and policy changes had the desired effect because interest in the campaign plummeted immediately after they were announced.”  Union support went from about 60 percent to 24 percent.

As a result, the ALJ set aside the representation election and ordered Woodford to bargain with the Teamsters.

Brown-Forman Corporation d/b/a Woodford Reserve Distillery, Case No. 09-CA-307806 (4/8/2024)

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