The U.S. legal framework regarding the effects of plant closings on freedom of association and the right of workers to organize encompasses two central issues in labor law jurisprudence: (1) motivation for closing a plant, and (2) the difference between a lawful expression of any views, argument, or opinion, and an unlawful threat of reprisal.

The key issue in a plant closing, except where an employer goes completely out of business (see 1 below), is whether the closing is motivated by anti-union considerations, often called "anti-union animus" in legal proceedings, or by unbiased economic considerations. An anti-union plant closing is unlawful and may be remedied by an order to reopen the facility and rehire the workers. An economic closing is lawful, although there may be related legal obligations such as advance notice requirements, accrued benefits, health insurance continuation, or contractually required severance pay.

In threat cases in which an employer makes statements about the possibility of the plant closing if workers unionize, the issue is whether such statements amount to a threat of reprisal against workers’ organizing efforts, or are simply an expression of views, argument, or opinion that do not contain a threat of reprisal. A threat of reprisal is an unfair labor practice, whereas expressions of any views, argument, or opinion are allowed under the law.

Decisions of the National Labor Relations Board (NLRB or the Board) and federal courts have established the following basic principles in cases involving plant closings or threats of plant closing in connection with workers’ organizing efforts:

1. An employer may not close a plant to avoid dealing with a union, to retaliate against workers for forming a union, or to discourage union organizing at another facility of the employer. Such an unfair labor practice may be remedied by an order to reopen the plant and rehire the employees. However, an employer may lawfully decide to go completely out of business and cease operating altogether, even for an anti-union motivation. ¹⁵

2. An employer may close a plant for legitimate economic considerations if the closing is not motivated by anti-union considerations.

3. An employer may not threaten to close a plant in reprisal for union activity.

4. An employer may express any views, argument, or opinion about plant closings or other possible consequences of unionization, as long as such expression contains no threat of reprisal or force, or promise of benefit.

The cases that arise in U.S. labor law posing issues of plant closings or threats of plant closing in connection with the workers’ right to organize are among the most difficult and complex in labor jurisprudence. There is no "rule" for such cases, because proving motivation (anti-union versus economic), or proving whether certain statements amount to an unlawful threat or a lawful expression of views, argument, or opinion, is always a matter of interpretation of the evidence.

Each case depends on a unique set of facts and circumstances that are brought out in a trial before an Administrative Law Judge (ALJ) of the NLRB. The judge’s decision may then be appealed to the NLRB in Washington, D.C., and the Board’s decision may be appealed to 1 of 12 federal circuit courts of appeals, whose own decisions may be appealed to the U.S. Supreme Court.

Common Law Rights of Ownership

As a general principle, the common law places no restrictions on an owner’s power to dispose of means of production through sale, lease, transfer, relocation, shutdown, or other form of alienability because of such a transaction’s effects on workers. Until passage of the National Labor Relations Act of 1935 (NLRA or "Wagner Act," after the name of its author in the U.S. Senate) and its upholding by the U.S. Supreme Court in 1937, U.S. employers enjoyed unfettered power to close a plant in response to unionization drives by their employees, or to threaten plant closings if their employees chose union representation.

Notwithstanding this, much of U.S. heavy industry was unionized in the 1930s and 1940s through mass organizing drives and "sit down" strikes. An actual closing was not so easy at large-scale industrial plants representing huge investments, which characterized the period of the early 20th century. Many of these plants in the steel, auto, electrical, rubber, aircraft, and other mass production industries were relatively new, vertically integrated, and highly productive, so employers could not easily "walk away" from them, or credibly threaten to close them, if workers unionized.¹⁶

The NLRA

The NLRA changed the law regarding plant closings and threats of plant closing related to workers’ organizing efforts. The Wagner Act affirmed workers’ freedom of association, defined certain anti-union conduct as an "unfair labor practice," and prohibited such conduct.

Section 7 of the NLRA extended to most private sector employees "the 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."

The Wagner Act also created a means to protect these rights by defining unfair labor practices in Sections 8(a)(1) and 8(a)(3) of the NLRA. An unfair labor practice violates the law and is subject to the remedies provided by the Act.

An anti-union plant closing, or a threat to close a plant in reprisal for workers’ organizing activity, violates Section 8(a)(1) of the NLRA, which makes it an unfair labor practice to "interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7." The Act empowers the NLRB to issue "cease-and-desist" orders and other remedial steps to prevent 8(a)(1) violations.

The Act provides for reinstatement and back pay (or other "make-whole" remedies) for workers who are discharged or otherwise discriminated against for such activity. For workers affected by a plant closing, the remedy may include an order to reopen the plant and re-employ the workers. The Act also empowers the Labor Board to set aside an election and order a new election if plant closing threats destroyed "laboratory conditions" for employee free choice of representation, whether or not an unfair labor practice charge is filed.

The Employer Free Speech Clause of the Taft-Hartley Act

While the Wagner Act of 1935 has been described as "Labor’s Magna Carta," the 1947 Labor Management Relations Act (LMRA or "Taft-Hartley Act," after its legislative sponsors) reflected management interests. Opposed by U.S. unions as an anti-labor law while supported by management as a restoration of balance in the law, the LMRA added a new clause, Section 8(c), known as the "employer free speech" provision. It states that

The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic or visual form, shall not constitute or be evidence of an unfair labor practice under any of the provisions of this Act, if such expression contains no threat of reprisal or force or promise of benefit.

Section 8(c) codified a trend in court rulings that established the employer’s right to communicate its views on unionization to employees. In the decades since then, the NLRB and the courts have introduced complicated and often shifting rules about how strongly, directly, or aggressively employers may speak out against unionization, including through such devices as "captive audience meetings" where workers are required to hear management speeches against union organization. Under these rules, employers are allowed to discuss with employees the possible consequences of unionization, including plant closings, as long as the employer’s statements do not contain a "threat of reprisal or force or promise of benefit."

Critics have long argued that management’s ability to discuss plant closings, however apparently neutral the discussion may be, inherently amounts to a threat of reprisal given the employer’s acknowledged power to close a facility. Defenders of 8(c) argue that management cannot be denied its free speech rights to convey its opposition to unionization and to objectively discuss issues, including plant closings, as long as the discussion does not amount to a threat. Since this is a matter of interpretation of management statements, the NLRB and the courts closely scrutinize such statements in the overall context of company actions in an organizing campaign. The result is that the Board or the courts might find the same words permissible in one case and an unlawful threat in another case. Each case rises and falls on its own unique facts and circumstances as to whether employer statements stop short of a threat, or cross the line and become a threat.

Significantly, the Taft-Hartley Act did not diminish Section 7 rights or change the Wagner Act’s definitions of unfair labor practices by employers. Sections 8(a)(1) and (3) of the Act remained intact. The statute preserved the unlawfulness of threats to close a plant to discourage union activity, and of the actual closing of a plant in reprisal for union activity.

Plant Closings: The Wright Line Test

In plant closing cases, the issue of motivation is paramount. Did the employer close for legitimate economic reasons or for unlawful anti-union reasons? This issue is even more difficult in "mixed motive" cases where both considerations are present.

The NLRB and the courts apply the same test to plant closing cases that they apply to unfair labor practice cases whereby they allege the discriminatory discharge of an individual employee for attempting to form a union. The employer usually responds that the employee was terminated for legitimate reasons such as absenteeism, misconduct, poor performance, and so on. Such cases can be either a "pretext" case, alleging that the employer’s excuse is completely false and fabricated, or a "mixed motive" case, where there is some evidence of employee wrongdoing as well as evidence of anti-union motivation of the employer.

The test for such cases was elaborated in the NLRB’s Wright Line decision.¹⁷ Under this ruling, the NLRB General Counsel first has the burden of proving that the employee’s union activity was a motivating factor in the employer’s action. If the General Counsel establishes a case of apparent anti-union motivation, the burden of proof shifts to the employer to demonstrate that the discharge was for legitimate, job-related causes. If the employer fails to prove any legitimate cause, it is a pretext case, and the employee is reinstated regardless of the degree of unlawful anti-union motivation. If the employer succeeds in proving some level of legitimate, business-related motivation, it is a mixed motive case. The employer must prove that the employee would have been terminated even in the absence of an anti-union motivation.

Plant closing cases usually pose the issue even more starkly. An employer can nearly always present some legitimate business reason for closing a plant, which is a much weightier action than discharging an individual employee. Thus, these cases usually present the mixed motive posture. The General Counsel first has the burden of showing that anti-union motivation is an element in the decision to close. Evidence could include such matters as the timing of the closing in relation to the union organizing effort, or statements by managers and supervisors suggesting that the closing is related to the unionization. The burden then shifts to the employer to show that the decision to close would have been made anyway, and to provide evidence of business, accounting, marketing, or other economic considerations motivating the decision.

Threats of Plant Closing: The Gissel Balancing Test

In the landmark Gissel case,¹⁸ the U.S. Supreme Court established the standards for balancing an employer’s right to express any views, argument, or opinion on plant closings with the employees’ right to organize. The court stated that balancing those rights "must take into account the economic dependence of the employees on their employers" and the "necessary tendency" of employees to perceive implied threats in statements "that might be more readily dismissed by a more disinterested ear."

An employer may make a prediction as to the precise effect he believes unionization will have, but such a prediction must be carefully phrased on the basis of objective fact involving demonstrably probable consequences beyond his control. If there is any implication that the employer may take action for reasons unrelated to economic necessity, the statement is an unlawful threat.

Remedies

The NLRB normally views an order to reopen the plant and rehire the workers as the proper remedy for an anti-union plant closing, unless the employer can demonstrate that reopening would endanger its continued viability. In this case, remedies are usually limited to back pay. The Board may order the employer to offer employment to affected workers at other facilities of the employer and to pay workers’ the costs of moving to a new location. It should be recalled, however, that such remedies apply only when the employer relocates work or maintains operations elsewhere. Under the Darlington doctrine, there is no remedy when an employer goes entirely out of business for anti-union motivations.

NLRB decisions are routinely appealed to the federal courts. While generally the courts maintain a doctrine of "deference" to the Board’s specialized expertise in labor relations matters, federal courts may reverse or modify Board decisions. In plant closing cases, some federal courts make the test one of "undue burden" on the employer rather than the viability of the enterprise. Under this standard, NLRB orders to reopen a plant are sometimes overturned by the federal court reviewing the Board’s decision.

The remedy for plant closing threats is different from the remedy for a closing. The normal remedy for plant closing threats is a "cease-and-desist" order. The NLRB orders the employer (1) to cease and desist from threatening to close the plant, and (2) to repudiate the earlier threats by posting a notice at the workplace promising not to repeat the threat. In some cases the Board orders the employer to repudiate the threat in the same manner that the threat was made—in a letter to employees’ homes, for example, or in a meeting with employees.

Critics argue that the mere posting of a notice or other promise not to repeat the threat is an empty remedy. They maintain that the effect of the threat remains, despite the employer’s new statements to the contrary as ordered by the NLRB, because of the employer’s inherent power to carry out the threat. This argument is not accepted in U.S. labor law jurisprudence. However, U.S. law does provide that in extraordinary cases where plant closing threats are part of a pattern of massive unfair labor practices that would destroy a union’s majority support and make a fair election impossible, the NLRB is empowered to issue an order to the employer to recognize and bargain with the union, either without an election or even if the union lost the election. This is also based on the Gissel ruling of the U.S. Supreme Court.

Plant Closings and Threats at an Already-Unionized Plant

The discussion up to now has focused on the effects of plant closings or threats of plant closing on workers attempting to form a new union. Another line of labor jurisprudence involves cases affecting workers who have already formed a union and established a bargaining relationship with the employer through one or more collective bargaining agreements.¹⁹

The same basic issues of anti-union motivation versus economic justification, and prediction versus threat of reprisal, arise in cases where already-unionized plants are closed or where threats of plant closing are made in the course of collective bargaining. Normally in such cases, however, closings or threats are seen as reflecting an employer’s desire to achieve cost reductions. A viable unfair labor practice case exists only if the employer demonstrates, by some action susceptible to proof, an anti-union motivation or a desire to discourage union organizing at other facilities.

Employers normally have available managers, planners, consultants, and accountants who can provide documentary evidence of the claimed business justification. Workers and unions can only claim to "know" that the closing or the threat is motivated by anti-unionism, while having great difficulty proving it.

This poses the central, unresolved problem of plant closings and their effects on workers’ right to organize under U.S. labor law: how can the right be sufficiently protected when the law subordinates it to a plausible economic motive for closing? Since union organization and collective bargaining are normally seen by managers as imposing additional costs, there is almost always in management’s view an element of economic rationality or business justification in avoiding or eliminating a union.²⁰ This rationale applies equally to a closing where a new union organizing campaign is under way, where a union has won bargaining rights and is seeking a first contract, or to the closing of an already-unionized plant.

1. Investigation of the Charge

Acting under the authority of the General Counsel, the NLRB Regional Director first conducts an investigation of the unfair labor practice charge. The investigation includes taking sworn statements. It also allows opportunity for union or employer counsel to submit position papers and to argue on behalf of their client for the issuance of a complaint or dismissal of the charge.

2. Complaint or Dismissal

The Regional Director issues a complaint upon a finding that the charge is "meritorious"—that is, if the findings of a preliminary investigation support the facts alleged in the charge, and the facts alleged, if true, would constitute an unfair labor practice. If not, the charge is dismissed. No appeal is allowed to the NLRB or to the courts of a decision by the General Counsel to dismiss an unfair labor practice charge.

3. ALJ Hearing

If the parties do not settle a complaint, the case goes forward to a trial of the facts before an ALJ. The ALJ hears the examination and cross-examination of witnesses and rules on the admissibility of evidence and testimony. The General Counsel (that is, an NLRB staff attorney representing the General Counsel) prosecutes a case before the ALJ, with assistance of counsel for the charging party. The ALJs evaluate witnesses' credibility, examine documents and other exhibits for their probative weight, and make findings of fact and findings of law. They issue a written decision in the case determining whether the charged party has committed an unfair labor practice, and explaining the reasons for such a determination. (See Table 1 for statistics on NLRB unfair labor practice proceedings through these stages 1990B1995).

ALJ decisions may be appealed to the NLRB for a review of the record in the case, which includes the transcript of the trial before the ALJ and all documentary evidence. The Board can affirm or reverse, in whole or in part, the ALJ decision. In complex or novel cases, the NLRB might hear oral arguments by parties to the case. The Board issues a written decision in the case either adopting the ALJ decision without further comment, or offering its own reasoning for deciding how to treat the case. In contrast to Canadian and Mexican law, U.S. NLRB decisions are not self-enforcing. A party may refuse to abide by the Board’s ruling, forcing the NLRB to initiate new legal proceedings to have its order enforced by the courts.

5. Appeal to the Federal Courts

The NLRB’s decision may then be appealed to a federal court of appeals in 1 of 12 judicial circuits, divided geographically among several states. The courts of appeals maintain a general policy of deference to the administrative expertise of the NLRB, but at the same time the courts will consider the substance of a case and may overrule the Board on the merits. Some circuit courts are more deferential to the NLRB. Others are more forceful in reviewing the substance of Board decisions and overturning them when the court disagrees.

Decisions by the federal circuit courts of appeals may be appealed to the U.S. Supreme Court. Only a small percentage of cases are accepted for review by the Supreme Court. As a result, despite the general rule of uniform federal law governing labor relations in the United States, conflicting doctrines on certain aspects of the law may prevail in different judicial circuits.

Table 1. U.S. NLRB Handling of Unfair Labor Practice Charges Against Employers, 1990–1995a FY Charges Filed Under § 8(a) Charges Withdrawn Dismissed Complaints Issued Informal/ Formal Settlement Hearing Held Post- Hearing Settlement 1990 24,075 (26,265) 7,294 (28%) 7,251 (28%) 3,182 (12%) 7,891 (30%) 523 (2%) 124 (.5%) 1991 23,005 (25,661) 7,433 (29%) 6,470 (25%) 3,225 (13%) 7,881 (31%) 559 (2%) 93 (.4%) 1992 23,119 (25,652) 7,541 (29%) 6,778 (26%) 3,013 (12%) 7,689 (30%) 536 (2%) 95 (.4%) 1993 24,500 (26,270) 7,467 (28%) 6,887 (26%) 3,069 (12%) 8,354 (32%) 362 (1.4%) 131 (.5%) 1994 26,058 (26,592) 7,705 (29%) 6,877 (26%) 3,162 (12%) 8,304 (31%) 422 (1.6%) 122 (.5%) 1995 26,244 (27,123) 8,175 (30%) 6,213 (23%) 3,271 (12%) 8,870 (33%) 465 (1.7%) 129 (.5%) Average 24,500 (26,262) 7,603 (29%) 6,746 (26%) 3,154 (12%) 8,165 (31%) 478 (1.8%) 116 (.4%)

^a Numbers in parentheses under Charges Filed are the number of dispositions of unfair labor practice charges against employers during the year. The percentages supplied here in parentheses refer to these dispositions. The number of dispositions is higher than the number of charges filed in a given year because some are dispositions of charges filed in prior years. This trend reflects the progress of the NLRB in taking care of the backlog of cases from earlier years.

Plant closings and threats of plant closing in the context of Canadian labor organizing give rise to unfair labor practice complaints.²¹ A complaint normally alleges that an employer has interfered in the formation or selection of a trade union or the representation of employees by a union, or that the employer has disciplined or discriminated against employees for exercising their rights to organize or bargain collectively under the legislation, or both.²²

As in U.S. labor law, some Canadian statutes contain an employer "free speech clause." The Ontario Act states that "nothing in this section shall be deemed to deprive an employer of the employer’s freedom to express views so long as the employer does not use coercion, intimidation, threats, promises, or undue influence." Whether statements about plant closing are coercive or not depends on the overall context of employer conduct, but Canadian jurisdictions generally limit the scope of what employers may lawfully say in light of potential coercion inherent in the employer’s position of authority over employees.²³

Closings or threats of closing may result in charges that an employer has breached its duty to bargain in good faith with the union, or has engaged in an unlawful lockout. In Newfoundland and Saskatchewan, a union may bring a complaint that an employer has closed, relocated, or threatened to close a plant or business during a labor-management dispute, conduct which is expressly prohibited by statute.²⁴

Several principles are applied consistently and uniformly across jurisdictional lines. In unfair labor practice cases, the presence of anti-union animus is the prime determinant. Canadian tribunals and courts generally prohibit an employer from acting even in part on the basis of anti-union motives, regardless of the existence of a valid business justification for its actions. The predominant motive approach was specifically rejected by the Ontario Labour Relations Board (OLRB) in its oft-cited decision in Westinghouse.²⁵ There, the OLRB held that, despite the existence of several valid business reasons for moving operations, the employer acted in part based on anti-union motives and thus committed an unfair labor practice.

In plant closing cases, evidence of economic considerations and business justifications are critical in applying the mixed motive test. A majority of Canadian jurisdictions place the burden of proof on employers to show that the closing was not motivated by anti-union animus.²⁶ In practice, the presence or absence of anti-union motive will often have to be determined without direct evidence and will depend upon inferences drawn from the timing of decisions and other contextual factors.

The most difficult unfair labor practice cases tend to arise when employers claim they are acting solely on the grounds of economic considerations, part of which are the economic costs of collective bargaining. The employers’ argument is twofold: (1) they are not attempting to forestall the exercise of union rights; rather they are reacting to the economic consequences of collective bargaining; and (2) labor legislation must not prevent them from responding to the marketplace. Unions maintain, conversely, that statutory rights to bargain will be meaningless if, on the basis of increased costs, employers can simply move elsewhere when a union is certified.

Canadian labor law contains the same tension noted previously, in connection with U.S. law, of protecting workers’ right to organize in a context in which economic motivations justify plant closings. For example, the OLRB distinguished the Westinghouse case, where the employer explicitly made non-union operation as the goal to be achieved, from another case where "there was no evidence that the fact that the employees … were represented by a trade union played any part in the employer’s decision … a decision to save money and thereby increase profits is not equivalent to anti-union animus simply because the money saved would otherwise have been paid as wages to employees in the bargaining unit."²⁷

A later Ontario board decision involving the same employer cautioned that its earlier decision did not stand for the proposition that "so long as an employer can point to cost savings in justifying the business decision he has made, it cannot be found he has breached the Act."²⁸ Instead, labor boards have attempted to resolve these difficult cases through the use of the mixed motive approach, the drawing of inferences and presumptions, and the use of a flexible approach to remedies in cases where there is evidence of legitimate business justifications. Cases tend to be decided against an employer when it has taken precipitous action in the context of an organizing drive, failed to resort to collective bargaining to resolve economic difficulties with employees, or reacted to the process of collective bargaining as opposed to its actual economic impact.

In general, Canadian labor boards make no distinction between full and partial closures in finding that an unfair labor practice has been committed. Except in Quebec, and then in just one reported case, Canadian adjudicators have generally rejected the view that an employer has a fundamental right to completely close down operations, even if motivated by anti-union animus.²⁹ An unfair labor practice may also be found when an employer, during negotiations for a new collective agreement, fails to disclose an impending decision, or the high probability of a decision, to close, relocate, or contract out operations even for purely economic motives.³⁰

Labor boards are generally given fairly broad remedial powers, not only to make cease-and-desist orders but also to require one of the parties to rectify violations. Statutes often contain explicit powers to order reinstatement or award damages. However, no Canadian labor board has actually ordered an employer to resume operations at a closed facility. Many have expressed concern about the practicality of such an order, although at the same time several decisions have suggested that they have the jurisdiction to order reopening.

However, labor boards have ordered an entire bargaining unit to be reinstated where employers unlawfully contracted out the work of that unit. In another case, where a legitimate closing was moved up by 8 months as a result of anti-union animus, the board ordered the employer to either maintain operations for 8 months and reinstate the employees, or pay employees their wages and benefits as if they were employed throughout that period.³¹

Generally, labor boards have sought to formulate alternatives such as providing affected employees with transfer rights at other locations or compensating employees and unions as fully as possible in the circumstances.³² While courts do not usually disturb labor board rulings, the Supreme Court of Canada has made it clear that labor boards’ innovative remedies must be reasonably related to an employer’s breach of the statute and must meet constitutional criteria. For example, it overturned a CLRB order that an employer pay its savings from closing a unionized facility into a trust fund to promote the objectives of the statute on the grounds that such an order is not within a labor board’s jurisdiction. The Court also suggested that the federal board’s practice of requiring an employer to sign and send to its employees a board-dictated pledge of future compliance may violate the employer’s freedom of expression under the Canadian Charter of Rights and Freedoms.³³

As a result of the structure of Canadian federalism, Canada has 11 labor relations regimes: one federal and 1 in each of the 10 provinces. The Canada Labour Code, administered by the Canada Labour Relations Board (CLRB) and the Federal Mediation and Conciliation Service, governs labor relations in the federal jurisdiction, which covers approximately 10 percent of the nation’s workforce. The acts and authorities for the provinces are

Alberta Labour Relations Code / Alberta Labour Relations Board
British Columbia Labour Relations Code / British Columbia Labour Relations Board
Manitoba Labour Relations Act / Manitoba Labour Board
New Brunswick Industrial Relations Act / New Brunswick Labour and Employment Board
Newfoundland Labour Relations Act / Newfoundland Labour Relations Board
Nova Scotia Trade Union Act / Nova Scotia Labour Relations Board
Ontario Labour Relations Act, 1995 / Ontario Labour Relations Board
Prince Edward Island Labour Act / Prince Edward Island Labour Relations Board
Saskatchewan Trade Union Act / Saskatchewan Labour Relations Board
Quebec Labour Code / Office of the General Commissioner of Labour (Labour Ministry)

Unfair labor practice law enforcement is complaint driven. Details of procedures differ from province to province, but most jurisdictions empower their labor boards (or commissioners in Quebec) to investigate a complaint, receive evidence and hear arguments of the parties, and issue a decision. Note that there is no equivalent in Canada to the independent General Counsel of the NLRB, who decides (through the Regional Director) if a charge has merit, then issues a complaint and takes over the prosecution of the case on behalf of the charging party. In Canada the complaining worker or union, and the complained-against employer, represent themselves through counsel before the board or commissioner.

Provincial Example: Ontario

The Ontario Labour Relations Board (OLRB) is an independent enforcement agency composed of a chairperson, an alternate chairperson, 27 vice chairs, and 34 board members—17 each of employer and employee representatives. Many of the vice chairs and board members serve part-time, maintaining separate employment.

The OLRB employs 20 labor relations officers as its full-time staff. The Board normally operates in three-member ad hoc panels to hear cases based on investigations carried out by the staff. The chair appoints one representative from each of the employer and employee members of the OLRB, as well as a vice chair to preside over the panel.

Upon receiving a complaint, the OLRB will normally appoint a permanent staff officer to investigate it and report to the Board. In practice, officers are trained to encourage the parties to settle the matter without need for further legal proceedings. Of unfair labor practice complaints in Ontario, 80 percent are resolved without a hearing, compared with 98 percent for the U.S. NLRB.

Although a greater percentage of Canadian cases go forward to a hearing, they are handled in a streamlined fashion. Instead of having multiple stages of investigation, hearings, and appeals, the case is handled in a single proceeding. The OLRB hears the case and issues a final decision. Unfair labor practice procedures before the OLRB are usually concluded relatively rapidly.³⁴

Although the OLRB can reconsider its own decisions, its rulings are final and binding, and are immediately enforceable by the civil courts, backed by contempt-of-court power. There is no right of appeal, but there is a limited right to judicial review in the Ontario Court (General Division) on grounds of natural justice, jurisdictional error, and constitutional matters. Courts have exercised caution in reviewing decisions of the OLRB on the grounds that the Board is a specialized tribunal charged with balancing competing interests. For example, in 1994–1995, the Ontario Court dealt with just five applications for judicial review among hundreds of OLRB decisions. All five appeals were dismissed.

Ontario Board Statistics

During fiscal year 1993–1994, the OLRB received 4,525 cases and carried over 894 from the previous year for a total caseload of 5,419. Compare this figure to 711 cases received by the federal CLRB for an indication of the relative importance of provincial jurisdiction in labor matters. The OLRB processed 1,297 unfair labor practice cases alleging contravention of the Act. Of those, 856 were disposed of, proceedings were adjourned indefinitely in 160 cases, and 281 unfair labor practice cases were pending at the end of the fiscal year.

From the date of initial filing, 80 percent of all dispositions were accomplished in 3 months or less. A median of 26 days was taken to proceed from filing to disposition for the 3,287 cases completed in the year. Certification applications were processed in a median of 24 days, while unfair labor practice cases took 33 days. In all categories of cases, the processing time was shorter than the year before.

The experience of the CLRB contrasts sharply with the OLRB case-handling experience. The average time taken to process a CLRB case without a hearing in 1994–1995 was 168 days, or 5-1/2 months. The average for a CLRB unfair labor practice case with a hearing was 447 days, with averages of about 4 months to prepare a report, 3 months waiting for a scheduled hearing, and 6 months to write the decision.³⁵

The Quebec Commissioners and the Labour Court

While the Quebec statute is like other Canadian laws in its definition and prohibition of unfair labor practices, labor law enforcement is structured differently in Quebec. Quebec does not have a separate board empowered to adjudicate cases and issue remedies largely free of judicial review. Quebec’s enforcement is carried out by a specialized branch of the Ministry of Labour: the Office of the General Commissioner of Labour. The commissioners’ decisions are subject to review by the Labour Court, part of the judicial branch.

The General Commissioner of Labour

An individual Labour Commissioner investigates an unfair labor practice charge after a complaint is filed. The Commissioner receives evidence and makes determinations on lawful or unlawful conduct. The Commissioner is empowered to order an employer to cease and desist from unlawful conduct and to reinstate with full back pay or otherwise make whole an employee who suffered discrimination for union activity.

The Labour Court

The Court hears appeals from final decisions of a Labour Commissioner, and is empowered to affirm, reverse, or modify the commissioner’s decision. The Court’s decision is final, and there is no appeal. The Labour Court has original jurisdiction in penal cases involving criminal liability for labor law violations, a powerful but rarely used remedy.

The Labour Court is a judicial entity, not an administrative one. The Court is composed of judges chosen among those of the Quebec Court after consultation with the General Counsel of the Quebec Bar and the Consultative Labour and Employment Council, a labor-management advisory body created by law. Their number is not fixed, but must be "sufficient to rapidly dispose of matters submitted to the Court."

As in all Canadian jurisdictions, decisions of the Labour Commissioners or the Labour Court are self-enforcing upon deposit of the decision in Superior Court, with the same obligatory effect as a decision of the Superior Court itself. The decision may then be carried out as with any decision by a common law court under the Quebec Code of Civil Procedure, enforceable in a contempt of court proceeding upon non-compliance with the order, backed by incarceration and fines.

Mexico

Mexico’s legal framework regarding plant closings and freedom of association is substantially different from that of the United States and Canada.³⁶ Mexico does not use the unfair labor practice (ULP) concept. Instead, rather than defining prohibited acts, Mexican labor law sets forth affirmative requirements for employment-related decisions.

The Federal Labor Law (FLL) requires companies to secure permission from the relevant Conciliation and Arbitration Board (CAB) before closing a plant. There are over 100 such boards in federal and state jurisdictions for various regions and industrial sectors. Whether in federal or state jurisdiction and regardless of geographic or sectoral reach, all CABs enforce the same provisions of the FLL.

A temporary plant closing creates a "collective suspension" of the employment relationship under FLL Article 427, and a permanent closing creates a "collective termination" of the employment relationship under Article 433. In short, an employer must obtain the labor board’s approval before closing a plant, rather than having a union file a complaint with the labor board after a closing.

In another key difference, the FLL does not consider threats in general or plant closing threats in particular as unlawful acts. The law only addresses cases where an employee threatens the employer, which can result in a justified discharge under FLL Article 47 (II). However, Mexican law does address the effects of a plant closing threat if the threat is carried out, as when an employer threatens to close the plant if workers form a union and then, without a permissible legal cause, closes the plant. The issue in such proceedings is whether the employer closed for one of the permissible causes specified in the FLL. The employer would seek to prove that the closing was motivated by legitimate economic cause specified in the law, through testimony of financial analysts, expert witnesses, examination of books and records, and so forth. Anti-union motivation is not a permissible cause. However, the burden always rests with the employer to show legitimate cause. Evidence of anti-union motivation is not relevant in a plant closing case, so threats are not an issue.

Failing proof of a permissible cause, employees are considered to have been unjustifiably discharged. The employer must then, under the Constitution, reinstate or pay severance pay to affected workers. In any event, as will be seen, the specified procedure for plant closing is rarely invoked.

Job Stability and Discharge

A key concept in Mexican labor law, without which a plant closing situation cannot be understood, is that of job stability and discharge. Job stability is understood in Mexico as a right of the worker to keep his or her job either for a time specified in a contract or, without such specification, indefinitely. The employer may not discharge a worker arbitrarily, but must prove a specific cause defined in the law.

This job stability is recognized as a constitutional right in Article 123, Part A, Paragraph XXII, which states, "The employer who discharges a worker without just cause, or for having joined an association or a union, or for having participated in a lawful strike, shall be obligated, at the worker’s choice, to fulfill the employment contract or to indemnify the worker with an amount of three months’ salary.…" Parallel to the remedy of reinstatement or indemnification, FLL Article 48 gives the unjustly discharged worker the right to lost salary for the period between the discharge and the reinstatement or indemnification.

The principle of job security gives rise to two basic protections: first, that the employment contract can only be terminated for cause; second, that additional rights and benefits accrue with time on the job and increasing seniority. Job security can be absolute, preventing any discharge before a labor tribunal has found cause for discharge and granted a dissolution of the employment relationship or contract. In practice, however, job security is treated as relative, providing security but not necessarily permanence. Section XXII of the Constitution states that "The Law shall determine those cases in which the employer shall be relieved of the obligation to fulfill the employment contract through payment of an indemnizacion.…"

Thus, Article 49 of the FLL allows the employer to refuse reinstatement and pay indemnification to discharged workers with less than 1 year of service, or who come into direct contact with the employer, or to confidential, domestic, or casual workers. Article 50 sets forth a formula for indemnification payment, generally 3 months’ pay with additional seniority-based payments (usually 12–20 days’ pay per year of service) as well as payment of lost salary for the period between the unjust discharge and the payment of the indemnification. Individual discharge cases are heard by the relevant federal or state CABs, where the burden of proof in discharge cases always rests with the employer to show just cause for the discharge.

Workers frequently accept severance pay in liquidation of their claim for reinstatement. According to data from the Office of the Federal Labor Ombudsman (the free legal service for workers claiming unjustified discharge), only 1 worker among 154 who won a claim for unjustified discharge in 1995 opted for reinstatement.³⁷ In a case study of two state CABs, researchers examined 75 cases of individual claims of unjustified dismissal. None of the workers who prevailed in those cases opted for reinstatement.³⁸

Plant Closing Labor Law

The FLL has been fashioned to deal with two types of plant closings: temporary and permanent.

Temporary Plant Closings

Articles 427–432 of the FLL cover temporary plant closings under the title "collective suspension of the employment relationship." In seeking "balance between the factors of production," Article 123 of the Constitution, in its Section XIX, counterpoises the workers’ right to strike with the employer’s right to cease production "when excess production makes it necessary to suspend operations to maintain prices within limits that meet costs, with prior approval of the CAB." Article 427 of the FLL extends this principle by setting forth extensive procedures for intervention by the CAB, rather than permitting a unilateral decision by the employer on a temporary or permanent closing.

The following are permissible reasons for a temporary plant closing under Article 427:

Under Article 428 of the FLL, a temporary closing of an enterprise or establishment may be total or partial. Under Article 431, if the CAB permits the temporary closing, the union may request every 6 months a reverification of the causes that precipitated the closing. If cause is not found, the Board will order reopening of the workplace within 30 days. Under Article 432, workers have 30 days after the reopening to report back to work, and they must be given their previously held positions.

Permanent Plant Closings

Articles 433–439 of the FLL cover permanent plant closings under the title "collective termination of the employment relationship." Article 434 of Mexico’s FLL sets forth specific causes that must be proven, and decided by the CAB, before an employer may permanently close an enterprise or establishment. The permissible reasons for a permanent plant closing are the following:

In conformity with Mexicn law, an enterprise cannot close without following other legal requirements besides the FLL, such as advance notice to the tax authorities. If an employer closes a plant and converts its assets to personal use, the employer will be declared in fraudulent bankruptcy, which carries a 5–10 year prison sentence, and will be fined up to 10 percent of the value of the assets. This penal sanction protects the interests of all parties, including workers, tax authorities, social security, creditors, and so on.

In sum, Mexican law protects workers facing a plant closing while recognizing that in certain circumstances closings will be allowed, always with the following two conditions:

1. Workers must receive reasonable severance pay depending on the circumstances and within the parameters of the law (in plant closings, normally 3 months’ pay plus 12 days’ pay for each year of service), but such severance pay can be higher if so stipulated in the collective bargaining agreement.

2. A plant closing must be approved by a CAB.

Procedures for Temporary and Permanent Plant Closings

The FLL contains different procedures for different types of cases. In temporary plant closing cases, issues of force majeure or unforeseen circumstances, and lack of raw materials or payments by the State, are handled through a "special proceeding" before the CAB contained in Articles 892B899 of the FLL. Issues of excess production or failure to meet the costs of production are treated in another procedure for an "economic conflict of a collective nature," which has its own, highly detailed and specific procedural requirements, including reports from expert witnesses on the company’s financial status (FLL Articles 900–919).

In permanent closing cases, there are likewise two different proceedings for obtaining the necessary authorization to close a plant, depending on the cause of the closing. For questions of force majeure or unforeseen circumstances, such as an earthquake that destroys the workplace, the employer must advise the CAB to invoke a special proceeding under Articles 892–899 of the FLL to approve or disapprove of the closing. When the cause involves failure to meet the cost of production, the employer must initiate a collective conflict of an economic nature before the CAB under Articles 900–919 of the FLL.

Rather than engaging in this complex procedural process, many companies and unions act under Article 53 of the FLL, which permits termination of the employment relationship "by mutual consent of the parties," or under Article 401, which permits termination of a collective contract "by mutual consent." This procedure provides for more rapid, flexible resolution of issues in the plant closing, mainly involving the amount of severance pay and other benefits to affected workers. Under this procedure, which also is overseen by the relevant CAB in a conciliation capacity, the parties reach a voluntary collective agreement on the plant closing.

In addition to this proceeding, at any time workers may exercise their right to strike, which has the effect of halting all proceedings under the collective conflict provisions of the FLL. The matter then shifts to the bargaining table where the parties may reach a settlement, with the intervention of the CAB in a conciliation and mediation role rather than an adjudicatory role. In practice, these alternatives to the "special proceeding" or "economic conflict" procedures are more widely used.

Jurisprudence

Like all systems with origins in Roman and continental European law, Mexican law is a code-based system rather than a common law system. Court decisions are subordinated to the Constitution, laws, and regulations established under the law. Article 17 of the FLL specifies that the Constitution, the FLL and its regulations, international treaties ratified by the Senate, and general principles of law precede jurisprudence, custom, and equity in applying the labor law. In Mexico the legislative authority creates the law. Judges and tribunals resolve only cases that come before them, and their decisions affect only the parties to the cases they decide. They do not establish precedent for other cases with similar facts, unlike in U.S. or Canadian law.

The Mexican Supreme Court has elaborated the following points of jurisprudence regarding plant closings:³⁹

1. Definition of Plant Closing

In light of the nature of juridical relations contemplated in labor legislation, it is understood that a plant closing exists when activities for which the service of employees was required has ceased, independently of whether other activities of a different character continue to fulfill the obligations determined by mercantile law.

2. Requirements for Plant Closings

The total closing of an enterprise, which carries with it the termination of contracts of employment, is an economic fact. The FLL does not authorize owners to close an enterprise of their own free will, but considers that the opening of a workplace carries with it the obligation of the owner to remain in business indefinitely, and that the owner may terminate or close it only by fulfilling requirements set forth in the law, and that any failure to fulfill such requirements would make the cessation of operations and the closing of the workplace illegal.

3. Procedure to Follow for Plant Closings

The procedure to follow in the labor field for the temporary or permanent closing of an enterprise is that established in the FLL as an economic conflict to be litigated before the CAB, and which has the nature of public order by which the labor tribunals must issue a justified decision in which both parties, workers and employers, have the opportunity to avail themselves of due process of justice.

4. Termination of Employment Contracts and Plant Closings

The fact that the law allows for such termination of employment contracts for various individual or collective causes does not mean that employers decide the matter on their own, since they cannot halt operations or close a facility, whatever the motivation, except by filing a petition regarding the closing before the CAB, which must then hear the views of the workers so that related dispositions of the FLL are observed.

5. Unjustified Discharges and Plant Closings

The illegal closing of an enterprise undertaken without the intervention of the labor tribunals must be considered as an unjustified discharge because employers are not permitted to simply close without notice on their own volition. Such an action is harmful to workers and undermines the national economy and the general interest of society in preserving sources of employment and increasing the benefits of collective social activity.

The total closing of an enterprise can only take place when there exists a cause that is justified and precisely foreseen in the FLL, and the procedure also preordained in the law for matters of an economic nature is followed (requiring approval by the CAB before closing). When these two requirements have not been complied with, the closing of the enterprise and the separation of the workers amount to unjustified discharge, and the discharged workers are then entitled to their constitutionally guaranteed severance pay under Section XXII of Article 123.

Plant Closing Procedures Under Mexican Law

For temporary closing cases involving force majeure, lack of raw materials, and the like, employers must follow "special proceedings" under Articles 892–899 of the FLL. For cases involving failure to meet costs or lack of funds, procedures under Articles 900–919 for a "collective conflict of an economic nature" are used. For permanent closing cases, there are also two procedural routes under the FLL: "special proceedings" for closings caused by unforeseen circumstances, force majeure, bankruptcy, or exhaustion of raw materials, and "collective conflict of an economic nature" proceedings for a clear and obvious inability to meet costs.

Special Proceeding (Articles 892–899)

The special proceeding begins with a demand from the employer to the CAB for permission to close the plant, citing the reasons for the closing. The CAB must arrange a hearing with at least 10 days’ notice, and within 15 working days, for the employer and the union to appear before it with evidence, witnesses from the workplace, and testimony from expert witnesses. Every attempt is made to fully air the evidence in the hearing so that it is a final rather than a preliminary hearing. Further hearings may be scheduled as needed. After receiving and weighing evidence, the CAB issues an order, or laudo, approving or disapproving of the closing.

Collective Conflict of an Economic Nature (Articles 900–919)

Throughout the procedure for a collective conflict of an economic nature, the CAB is obligated to pursue conciliation by agreement of the parties, even as litigation ensues. This procedure is initiated by a written petition from the employer seeking permission to close the plant, with documents demonstrating the economic condition of the company and the necessity of the relief sought. The petition must also contain a list of employees, a statement from an independent expert attesting to the economic situation of the company, and other evidence crediting the claims of the company.

The CAB convenes a hearing for the company and the union within 5 days, and appoints a team of expert witnesses independent of the expert witnesses of the parties. The CAB’s expert witnesses undertake the research and studies considered necessary, and may demand of the parties reports and information as needed. The independent experts may also seek information from the public authorities and from independent researchers, union organizations, management associations, and industry groups. They may also visit the workplace and examine books and records, and interview workers and managers. The CAB may undertake its own investigatory action as it deems convenient. At any time this long, complicated process may be immediately halted if the union exercises its right to strike, except in the case of a solidarity strike (Articles 448, 450 fracc. VI, and 902 of the FLL).

The Amparo Proceeding as a Guarantee of Due Process in Collective Conflicts

The FLL provides that CAB decisions are final and binding in labor proceedings, including those for special proceedings and collective conflict of an economic nature. Decisions may not be appealed, and the CAB may not revise its own decision. However, either of the parties involved in a case before the CAB has recourse to the amparo (shelter) appeal under Article 103 of the Constitution and the federal Law of Amparo.

The right of amparo is a cornerstone of civil law in Mexico and in all Latin American countries as a check on administrative authority. Under constitutional and statutory rights of amparo, a private party injured by the decision or actions of a CAB may seek review in the civil courts alleging that the CAB has engaged in a violation of fundamental rights or due process of law. An amparo appeal must be filed within 15 days of the decision under the Law of Amparo, Article 21. An action for amparo can be brought to district court judges, and their decisions may then be appealed to federal circuit courts of appeals and to the Supreme Court. The amparo courts may review the decision and the proceedings of an administrative authority, and they are empowered to overturn the CAB where they find a violation of fundamental rights or due process. The findings of the amparo court are applicable only to the parties in the case before the court; they do not become precedents for other cases.

In practice, such amparo appeals are the most often used recourse in Mexican labor law. The court may issue an injunction in case of irreparable harm or burdensome remedy, or to restore the status quo ante while the case is considered. The amparo ruling has the objective of restoring the aggrieved party to the enjoyment of the rights that were violated, and obligates the responsible administrative authority to carry out the ruling, subject to sanctions if it fails to do so.

Collective Termination of the Employment Relationship

In Mexico, it is not lawful for an employer unilaterally to close a plant. The employer must follow the procedures spelled out in the FLL or, alternatively, obtain a collective agreement to terminate the employment relationship. Articles 433–434 of the FLL permit a collective termination of the employment relationship