Secretariat researchers examined all 89 U.S. federal appeals court decisions in cases involving plant closings and threats of plant closing published between 1986 and 1993.⁵⁴ Among them, 70 cases arose in the context of a new union organizing effort at an unorganized workplace, and 19 cases involved unions with an established bargaining relationship. Significantly, 14 of these 19 cases involved a successor employer or an "alter ego" employer; that is, the same employer claimed to be a successor not bound by a collective bargaining agreement. This suggests that changes in corporate ownership may pose a risk of closing-related, anti-union conduct.

Of the 89 cases, 4 involved a complete plant closing in retaliation for union organizing or union activity. Among the 89 cases, 28 involved some form of partial closing (mass layoffs, subcontracting, shift elimination, failure to rehire union workers after a temporary closing, etc.). Also, 43 cases involved threats to totally close a plant, while 14 involved threats of some other form of systemic (as opposed to individual) job elimination—57 "threat" cases overall.

Appeals Court Findings

The courts of appeals upheld determinations by the National Labor Relations Board (NLRB or the Board) that employers unlawfully closed plants in all four cases of complete closings.⁵⁵ In three of those four, the courts upheld a Board order to reopen the facility and rehire the workers.

In the partial closing cases, courts found employers liable for unlawful actions in 26 of the 28 cases. In 22 of those cases, the courts upheld NLRB orders to restore the work and reinstate the affected workers.

Employers were found liable for unlawful plant closing threats in 41 of the 43 reported cases, and in 13 of the 14 cases involving partial closing threats.⁵⁶

With regard to plant closing issues, the number of appeals court reversals of NLRB decisions is extraordinarily low. In 32 cases in which the Board found an unlawful closing (full or partial), the courts overruled the Board only three times (9.1 percent). In 57 cases in which the NLRB found an unlawful threat, the decision was reversed only once (1.5 percent). This rate compares to an overall reversal rate of 14.2 percent for all unfair labor practice cases that went to the federal courts in the period studied.⁵⁷

Appeals Court Remedies

The courts nearly always upheld traditional NLRB remedies in unfair labor practice cases: (1) to cease and desist from the unlawful conduct, (2) to post a notice in the workplace promising not to repeat such conduct, and (3) to reinstate and/or to award back pay to affected workers. In one case, the court upheld a Board order for the company president to personally read the notice to assembled workers in the workplace.

Additionally, many of the cases reviewed by the researchers resulted in extraordinary remedies. In more than half the cases, the NLRB had ordered some form of extraordinary relief beyond the normal cease-and-desist order, notice-posting, and reinstatement remedies. In one full closing case and 17 of the threat cases that arose in a union organizing campaign before an election could be held, the courts upheld Board orders that the employer must recognize and bargain with the union because the employer’s extensive unfair labor practices made a fair election impossible. The courts reversed such orders by the NLRB in four cases.

In 29 cases, the NLRB had issued a bargaining order (these include the 18 cases mentioned above, and 11 cases that resulted in orders to resume bargaining with an existing union). In 12 cases, the Board set aside an election and/or ordered a new election. In seven cases, the NLRB ordered substantial structural relief that went beyond rehiring or reinstating employees, requiring the reopening of a facility or the relocating of equipment that had been moved back to the original site where the closing took place. It is noteworthy that the courts of appeals reversed these broad remedial orders more often than they reversed findings that the employer committed an unfair labor practice. Bargaining orders were reversed on four occasions, new election orders once, and structural relief twice.⁵⁸

This review of federal court decisions shows that plant closing cases have arisen with increasing frequency in recent years. Of the 89 decisions examined, 28 were issued in the 4 years before 1990. As Table 5 shows, more than twice as many (61) have been issued since 1990.

These annual figures reveal an overall increase in plant closing case decisions during the period under study. The decline in 1992 is counterbalanced by the large increase in 1993, suggesting that viewing the progression in 2-year increments may be more accurate. This view yields successive increments of 7, 21, 29, and 32 decisions issued. However, the volume of reported decisions and the limited time examined are not enough to conclude that the rate of cases involving the phenomena of plant closings and threats of plant closing that come before the federal appeals courts is dramatically increasing. (See tables in Appendix B for detailed data from federal courts cases.)

Administrative Findings

NLRB Case Review

The Secretariat examined 319 NLRB decisions between 1990 and 1995 involving plant closings and threats of plant closing.⁵⁹ Of these decisions, 27 dealt with actual closings (either straightforward closings, or closings with reopenings); 82 addressed partial closings (refusals to hire or rehire union employees, subcontracting of union work, closing of a unit or department of the plant, major layoffs and transfers, and so on); and 210 decisions related to threats of closing.

Complaints numbered 275 in the context of a new organizing campaign in a non-union shop, while situations involving incumbent unions in established bargaining relationships arose on 44 occasions.

The NLRB found a violation by the employer in 283 of the 319 cases (89 percent). The Board found no violation in 29 cases and remanded the rest for further findings. The standard remedy, consisting of a cease-and-desist order and an order to post a notice, was delivered in virtually every case. Four additional remedies were frequently awarded: employers were ordered to bargain with the union on 83 occasions, new elections were ordered and/or election results were set aside in 42 cases, employers were ordered to make employees whole in 42 cases, and employers were ordered to reinstate groups of employees on 40 occasions.

Extraordinary remedies were also granted on a number of occasions. Employers were ordered to reinstate a department and/or reinstate subcontracted work in 14 cases, to restore the status quo in eight cases, and to reopen a facility in six cases. The opening and counting of ballots was ordered in four cases, and automatic certification was granted twice. A relocation order was made once, as was an order for the employer to pay the union the costs of the case. (See tables in Appendix C for detailed data from NLRB cases.)

Case Handling in NLRB Regional Offices

The foregoing review of NLRB decisions in plant closing cases reflects just a fraction of administrative treatment under U.S. labor law of plant closing effects on the right to organize. Unfair labor practice cases are filed in one of the NLRB’s 33 regional offices around the country. Before such charges reach the level of a Board decision, they may be disposed of by withdrawal, dismissal, settlements, or a decision by an Administrative Law Judge (ALJ).

Only 2 percent of unfair labor practice charges against employers filed with the NLRB reach the stage of a hearing before an ALJ. One-fourth of these cases are settled after the hearing. The rest go forward to a decision by the NLRB. The earlier decision to dismiss the charge or issue a complaint rests with the Regional Director acting on behalf of the independent General Counsel, and the decision after trial is made by the independent ALJ. The Board hears the case as an appeal from the ALJ decision.⁶⁰

There is no systematic record keeping or electronic access to NLRB cases that are treated below the level of full, published Board decisions. Faced with the impossibility of reviewing tens of thousands of case records in the Board’s 33 regional offices, the Secretariat examined records covering a 4-year period (1992–1995) in two regional offices suggested by the NLRB as fairly reflective of Board experience nationally: Region 16 in Fort Worth, Texas, and Region 30 in Milwaukee, Wisconsin. These two selections also permit a comparison of experience in a "Sunbelt" area with low union density and a "Frostbelt" area with long-established unions.⁶¹

Of 24 unfair labor practice cases involving charges of plant closings or threats of plant closing that were received in the Fort Worth regional office in the 4-year review period, 9 were withdrawn or dismissed before a complaint was issued.⁶² Of those that remained, 6 cases were settled before a complaint was issued.⁶³ Complaints were issued in 9 cases (finding "merit" in the charge, but not concluding whether a violation took place). Of these, 6 were settled after the complaint was issued. Trials before an ALJ were held in 3 cases.

In the Milwaukee regional office, 43 charges were filed involving plant closings or threats of closing. Of these, 27 were withdrawn or dismissed before a complaint was issued. Of those that remained, 8 cases were settled before a complaint was issued. A complaint was issued in 7 cases, of which 3 were withdrawn or settled after the complaint. The other 4 were set for trial. (See Table 6 for statistics on plant closing cases in NLRB regional offices, 1992–1995.)

These findings suggest that for every case involving plant closing or threat of plant closing that reached the stage of a trial before an ALJ, some 10 unfair labor practice cases were initiated at the regional level. Complaints were issued in almost 25 percent of the cases filed. This was twice the rate of complaint issuance for all other unfair labor practice charges against employers (see Table 1).

In the sample studied, 10 percent of all plant closing and plant closing threat cases filed, as well as over 40 percent of those in which a complaint was issued, advanced to trial before an ALJ. This is 10 times the rate of enforcement in other cases of unfair labor practice charges against employers.⁶⁴ While the sample of 2 regional offices out of 33 may not be sufficient to reach firm conclusions, these findings indicate that the NLRB is more likely to take such cases very seriously and to aggressively pursue cases involving plant closing and threats of plant closing to a litigated conclusion, prevailing in nearly 90 percent of such cases.

Considering Tables 6 and 2 together with the incidence of cases decided by the NLRB, the following overall pattern emerges: of an average of 5,000 union election petitions filed per year, some 500–600 or 1 in 10, result in unfair labor practice charges that alleging plant closing or threats and that are filed with regional offices of the NLRB. Of these cases, 50–60 result in published Board decisions.

Survey Findings

To obtain information not available from published decisions or from NLRB case records, the Secretariat arranged for extensive, original survey research into plant closings and threats of plant closing in union organizing campaigns.⁶⁵ Researchers surveyed union representatives to examine why they decide to initiate, discontinue, or proceed with an organizing campaign, or to file or not file unfair labor practice charges in connection with their campaigns.

The survey covered the reported experience of U.S. union representatives in 525 organizing campaigns. Survey questionnaires were sent to union representatives who undertook to organize employees in workplaces with 50 or more employees in the potential bargaining unit over a 3-year period from January 1, 1993. to December 31, 1995.⁶⁶ In 149 of the campaigns, unions withdrew their petition for an election before an election took place. In 376 campaigns, the unions proceeded to an election. This is the largest comprehensive database on union organizing campaigns to date.

Key findings of the survey include the following:

• Plant closing threats were reported to have occurred in half of the sampled union organizing campaigns during the period studied.
• Threats were reported to have occurred frequently in industries more susceptible to plant closings such as manufacturing, trucking, and warehousing. In those sectors, the reported incidence of plant closing threats in organizing campaigns surveyed was 62 percent, compared with 36 percent in relatively immobile industries such as construction, health care, hotels, retail stores, and other services.
• Where plant closing threats were reported, such threats were the most significant identified factor in a union’s decision to withdraw its election petition. Threats of closing were cited by 53 percent of respondents as the main reason they withdrew petitions, followed by those reporting other threats and discharges (47 percent) and employer promises of improvements (38 percent).
• In surveyed campaigns where elections took place, the overall union win rate when the employer reportedly threatened plant closing was 33 percent, compared with 47 percent in elections where no plant closing threats were reported to have been made. The union election win rate in the total sample studied, including elections where threats were reported to have been made and elections with no threats reported, was 41 percent.
• The union election success rate in companies that reportedly have Canadian locations (34 percent union success) or that reportedly trade with Canada (33 percent), as well as in companies with sites in Mexico or that trade with Mexico (both 31 percent), was lower than the overall election win rate of 41 percent in the sample.
• While no threats to move to Canada were reported by respondents, threats to move to Mexico were cited in 15.5 percent of manufacturing sector campaigns in which threats were reported to have occurred.

Note on Survey Results

In discussing survey results, the use of the term "threats" has to be clarified. Union representatives responding to the survey might characterize as threats employer statements that, if they were tested in litigation, might be found to be lawful. The use of the term "threat" in the survey and in this section does not imply any legal conclusion as to whether what survey respondents characterized as a threat was lawful or unlawful, unless it is clearly specified with reference to a final decision of an ALJ, the NLRB, or a federal appeals court. Only a fraction of potentially unlawful closings or threats ever reach the stage of a final, litigated conclusion.

Whether or not threats reported by respondents were lawful or unlawful is not determinable here. However, respondents’ perceptions are relevant to determining how plant closings or threats of closing affect the right to organize. The design of the questionnaire guarded against self-serving answers by union respondents, as is borne out by the richness and variety of the data. Half of the respondents, for example, reported no closings or threats in their campaigns.

Union respondents reported that they filed unfair labor practice charges in only one-third of the reported cases of threats and that a complaint was issued (indicating a preliminary finding of merit to the charge) in half of the cases filed. Unions and employers both have myriad reasons for not filing unfair labor practice charges or for settling cases without a final decision by an adjudicator. Those reasons cannot be connected to the lawfulness or unlawfulness of the alleged unfair labor practice. Settlements routinely contain a "non-admission" of liability clause that cannot be taken as conclusive whether a violation did or did not occur.

Similarly, the finding in the survey that plant closing threats reportedly occurred in half of the organizing campaigns in the sample cannot be seen as conclusive evidence that employers make unlawful threats in half of all union organizing campaigns. Union representatives reported what they perceived as threats, whether they were lawful or unlawful, in half of the campaigns in the sample, and accordingly took action to withdraw their petition or proceed to an election, with the results indicated.

Examples of Plant Closing Cases in the United States

A Lawful Prediction

At an Illinois restaurant where workers launched an organizing drive, the employer guaranteed that if the union came in he would be out of business within a year. In a tape-recorded speech in a captive audience meeting, the owner stated "If the union exists at [the company], [the company] will fail. The cancer will eat us up and we will fall by the wayside.…. I am not making a threat. I am stating a fact.… I only know from my mind, from my pocketbook, how I stand on this."

This statement was found by a U.S. Court of Appeals to be a lawful prediction that did not interfere with, restrain, or coerce employees.⁶⁷

A Pre-Election Closing

A Georgia cardboard box manufacturer threatened to close the plant if the union won the election. In a tape-recorded speech on file with the NLRB Region 12 office in Jacksonville, Florida, the company president stated: "There are people here who don’t care whether [the company] survives or doesn’t survive … why kill this plant for the rest of the people who really care. … There’s plenty of small towns in Georgia for companies like ours … and Alabama and Florida and North and South Carolina and Missouri and Texas and New Mexico.…

Worker Question: "So if we vote for the union, are you going to close the plant down?"

President: "I’m not going to fall into this trap. There are a lot of people who would love me to say something like you just said. I won’t do it. . . " Whether this company stays open or doesn’t stay open, that will depend on economics.…

The company closed the plant 4 days before the NLRB representation election. The NLRB regional office issued a complaint that the company unlawfully threatened to close and then closed the plant because employees supported the union. The threats and the closing were among 66 separate unfair labor practice counts that also included individual discharges, mass layoffs, interrogation, surveillance, promise of benefits, other threats of reprisal, and other acts of interference, restraint, and coercion.

The company and the union settled the case after the trial took place. The company agreed to reopen the plant, rehire the workers with back pay, and recognize and bargain with the union.⁶⁸

Effective Enforcement

At a Michigan auto parts manufacturer, the NLRB set aside an election where it found that the employer "created and reinforced an overall atmosphere of fear among the employees that a union victory could result not only in loss of work and customers, but in plant closure itself." Among the company’s tactics was reference to a nearby plant that closed and moved to Mexico. The NLRB ruled that these threats were illegal, and ordered a new election. In a new election ordered by the Board, the union prevailed and was certified as the bargaining representative.⁶⁹

Threatening to Move to Mexico (1)

An automotive parts manufacturer in Michigan responded to an organizing drive by the United Auto Workers (UAW) with a speech by the division president stating "We are fortunate to have a growing operation in Mexico where we are able to produce when we become non-competitive here.… We are now trying to develop our plants to enable us to move product from one plant to another.… We cannot survive here if we continue to lose product … even to our own plant in Mexico.… [In other locations] we have moved the work and closed the plant especially where light assembly or manual work was being done.… Don’t let it happen here."

Before the election the company displayed large "MEXICO TRANSFER JOB" signs on equipment placed on flatbed trailers in the employee parking lot. The union lost the representation election. In a decision issued July 17, 1996, the ALJ who heard the case ruled that the company’s conduct was coercive, and ordered a new election.⁷⁰

Threatening to Move to Mexico (2)

At an Illinois auto parts plant, a supervisor’s comment to workers that "I hope you guys are ready to pack up and move to Mexico" did not violate the National Labor Relations Act, the U.S. Court of Appeals for the 7th Circuit ruled. The court decision reversed the NLRB’s determination that the statement was an unlawful threat. The court ruled that the statement was a "joke," not a threat.⁷¹

The Effects of Delay

A manufacturer of window coverings in New Jersey responded to an organizing campaign by the United Electrical, Radio, and Machine Workers (UE) by laying off the entire second shift, which was more than 40 percent of the workforce. The ALJ ruled that the layoff had legitimate business motivation. The NLRB reversed the ALJ decision. The Board found that this partial closing was motivated by anti-union animus. The federal court of appeals upheld the NLRB ruling, and workers were reinstated with back pay. However, during the more than 3 years’ duration of the legal proceedings, the union’s organizing impetus was dissipated. The workers never succeeded in forming a union.⁷²

Sham Closing

A Texas foundry where employees were represented by the United Steelworkers Union closed its doors and ceased doing business under one corporate name, then reopened 3 days later under another name and hired new, non-union workers. The union filed an unfair labor practice charge and pursued it to a successful conclusion, including a Board order to rehire affected union members. The company then declared bankruptcy. Enforcement of the NLRB’s order awaits a decision of the bankruptcy court.⁷³

Converting Employees to "Independent Contractor" Status

A unionized Massachusetts wire and cable installation company converted employees to independent contractor status and cut off all salaries and fringe benefits under the collective bargaining agreement. Employees who protested were fired. The NLRB ordered the employer to reinstate the discharged employees and recognize and bargain with the union.⁷⁴

Converting Employees to "Temporary Manpower" Status

When workers at a Wisconsin plant launched an organizing campaign, management responded with a mass layoff of first-shift employees and a transfer of all employees from the employer’s payroll to the payroll of a temporary manpower agency, telling workers that the transfer to temporary status was made "to scare them off the union." The NLRB found that the mass layoff was an unlawful act of discrimination and the transfer to temporary manpower status was an unlawful act of coercion. The Board ordered the company to cease discriminatory layoffs, restore employees to employment status with the company, and to recognize and bargain with the union. The union later obtained a collective bargaining agreement.⁷⁵

A Threat to Withhold Investment

The plant manager of a large multinational company (with extensive operations in Mexico) told workers in a West Virginia union-organizing campaign "The company that supplies the investment dollars for our growth [is] watching what happens here.… We must learn to work together.… I’m afraid if we can’t do that—we won’t have a business here ten years from now.… If you choose [the union], we could be heading in the wrong direction.…" A company supervisor told a worker that if the union got in "they would close the plant . . . within 2 weeks."

The NLRB found these statements to be unlawful, coercive threats of plant closing. In the same case, the NLRB also found the company guilty of unlawfully threatening loss of benefits, loss of wage increases, temporary layoffs, and other reprisals if the workers chose union representation. The Board set aside the election results (the union had lost the election) and ordered a new election.⁷⁶

Canada

In a 10-year period from 1986 to 1995, 36 cases involving issues of anti-union closings and threats were decided by all of Canada’s labor boards, labor commissioners, and labor tribunals combined.⁷⁷

The plant closing and threats of plant closing cases arose in seven jurisdictions:

Manitoba, Newfoundland, Nova Scotia, and Prince Edward Island showed no plant closing cases.⁷⁸

Notably, cases involving total or partial closing (25) exceed the number of cases involving a threat (11).⁷⁹ Moreover, all the Canadian cases (with the exception of one Quebec case)⁸⁰ were decided by the administrative labor authority of the relevant jurisdiction. None was decided by a court acting on an appeal from an administrative decision. This confirms that the civil courts rarely review or overturn a labor board or commissioner decision in Canada.

Of the 36 Canadian cases, 21 involved new union organizing or a first collective bargaining agreement and 15 arose in the context of an established bargaining relationship. In 15 of the 21 organizing/new union cases, the labor tribunals upheld unfair labor practice complaints involving plant closings or threats of plant closing. In 6 cases, the boards found no violation. In the 15 established union cases, the boards found violations 7 times, and no violation 8 times. That is, employers were found to be liable for unlawful conduct in 60 percent of the cases decided by an adjudicator.⁸¹

Remedies

The remedies most frequently awarded by labor relations boards were (1) reinstatement and/or compensation for employees,⁸² and (2) cease-and-desist orders and/or declarations of breach of statute. Orders to post board decisions in the workplace or to mail them to employees were also made, though somewhat less frequently.

In addition to these normal remedies, many of the cases resulted in extraordinary remedies. Automatic certification was ordered in three cases involving extensive unfair labor practices by employers, and an order to resume negotiations was made once. Boards compelled employers to reimburse unions for the costs incurred in organizing on one occasion, and twice required employers to provide unions with access to employees for organizing purposes.

In contrast to the stronger remedy sometimes applied by the U.S. NLRB and the courts, no Canadian labor board has ordered an employer to permanently resume operations or reopen a plant.⁸³ Rather, the normal board response in a plant closing context was to provide monetary compensation to the employees and the union. On two occasions, however, boards did make orders involving an explicit return of work to the bargaining unit. First, a board ordered temporary resumption of operations for a period of 8 months, following an otherwise legitimate closing that had been advanced 8 months to punish a union.⁸⁴ Second, when an employer moved work from one operation to another, locking out its unionized employees, a board ordered that the work be returned to the unionized subsidiary.

A cautionary note needs to be introduced here regarding comparisons of U.S. and Canadian findings. Although both systems apply the concept of unfair labor practices to deal with alleged plant closings or threats of plant closing, differences in legal definitions and administration, in the pace of new union organizing activity, and in the size of the labor force (Canada’s is 10 times smaller) make strict comparisons difficult.

However, recognizing that comparisons between the two systems are inevitable, perhaps the most appropriate comparison using findings in this report may be the number of cases decided by labor boards per year relative to the number of union election petitions (in the United States) or union certification applications (in Canada) filed per year. In the United States, some 50-–0 cases involving plant closings or threats of closing are decided each year by the NLRB. These cases arise in a context where 5,000 union election petitions are filed and 3,200 elections are held. In Canada, 3–4 cases are decided by the labor boards each year in a context where more than 2,600 certification applications are filed in the country’s four major jurisdictions with most of the workforce, in the federal labor board, and in British Columbia, Ontario, and Quebec. (See Appendix D for detailed data from Canadian labor board cases.)

Administrative Findings

No data are available in public libraries or through electronic searches for decisions related to plant closings of Mexico’s federal and state Conciliation and Arbitration Boards (CABs).⁹¹ Decisions are maintained in CAB office files throughout the country and are available to parties involved in the case. Accordingly, Secretariat researchers examined, by hand, thousands of case files for the years 1991 through 1995 at the Federal CAB and at Local CABs of the states of Chihuahua and Nuevo Leon.⁹² This review allowed researchers to obtain a quantitative sample of the avenues of recourse and of the procedures established by the Federal Labor Law (FLL) to deal with plant closings.

One such avenue is the "collective conflict of an economic nature," which is the procedure contained in Articles 900–919 of the FLL that employers are normally expected to follow before closing a plant.⁹³ Another avenue is "voluntary termination" whereby the employment relationship is terminated by mutual consent, which is embodied in a collective agreement to close the plant with specified severance pay and related benefits for workers.⁹⁴ Researchers also reviewed and reported on Supreme Court jurisprudence regarding such cases.

The Secretariat also reviewed data from the Mexican Social Security Institute (IMSS) for 1994 and 1995 as to the number of workers and firms dropped from the rolls, indicating the number of plant closings and their effects on workers.

For the period between January, 1991 and May, 1996, Table 7 shows figures that emerged from the review of data from the Federal CAB and the state CABs of Chihuahua and Nuevo Leon:

The Local CAB of Chihuahua handled only one plant closing case under collective conflict procedures in 1994, and one in 1995. The CAB of Nuevo Leon had no such cases.

Although these are just three among over 100 Federal and Local CABs, the results still indicate a negligible volume of plant closing cases under the "collective conflict of an economic nature" proceedings provided in Articles 892–899 and 900–919 of the FLL for such matters.

However, these cases occurred in a context of widespread plant closings. In 1994, the IMSS noted 3,214 workplaces dropped from the rolls. In 1995, 5,794 workplace reductions took place, affecting more than half a million workers covered by Social Security.⁹⁵ With so many plant closings taking place, the obvious question is why almost no "collective conflict" cases occurred. After all, this is the procedure in which unions could challenge a closing on grounds that it was motivated by anti-unionism, rather than by one of the permissible reasons for closing.

The answer appears to be found in data obtained by the Secretariat from the Federal CAB on the number of collective agreements made between workers and employers under voluntary, mutual consent provisions for termination of the employment relationship under Article 53 or Article 401 of the FLL. These agreements are submitted to the CAB for its review and approval. This information reveals that this voluntary termination avenue is used extensively for resolution of plant closing issues, rather than the collective conflict procedure.

Table 8 indicates the volume of voluntary termination cases in federal private sector jurisdiction, 1991–1995.

Table 8. Mexican Federal CAB Approval of Collective Agreements for Termination, 1991–1995^a

a See "Estadisticas Laborales, 2do Semestre 1994," STPS, Subsecretario "B" at 92.

Analysis

Certain findings can be considered on the basis of the foregoing information:

1. Clear evidence demonstrates that the procedures created by the FLL for plant closings are not being used in the manner intended. In 5 years, only five cases arose in the CABs visited by Secretariat researchers, and those were ultimately resolved by an agreement between the parties rather than by a CAB order. Given the frequency of plant closings as derived from the Social Security Institute, the sample of CAB files reviewed by the Secretariat showed a massive difference between the total number of plant closings and the number of closings that proceed under the collective conflict provisions of the FLL.

2. The FLL procedures for plant closings contained in Articles 892–899 and 900–919 are long, burdensome, and technical. In contrast, the faster, more flexible procedures available under Article 53 or Article 401 for voluntary termination of the employment relationship permit workers and unions to negotiate directly with employers over favorable severance terms in plant closing cases. The preference for this avenue is confirmed in the number of collective agreements on termination of the employment relationship approved by the Federal CAB, more than 1,100 in the sample studied. Moreover, even when employers initiate collective conflict proceedings, workers can immediately suspend those proceedings by exercising their right to strike and seeking to negotiate a voluntary termination of the employment relationship. As yet another alternative, workers can file individual claims for indemnizaci\n under the unjustifiable discharge provisions of the law.

3. Significantly, the amount of severance pay available to workers under the collective procedures is less than that available under other procedures. Using the collective conflict mechanism, severance pay is 3 months’ salary plus 12 days’ pay per year of service. Under other procedures the 12 days’ pay becomes 20 days’ pay per year of service. This creates a powerful incentive for workers to avoid the collective conflict avenue in favor of the voluntary termination or unjustifiable discharge mechanisms, or to declare a strike and negotiate a strike settlement with the employer. Most notably, the voluntary, mutual consent mechanism permits workers to claim full salary from the date of closing to the date of a CAB order, in addition to their severance pay. All of these are lawful procedures before the same CAB that otherwise would hear the case under the collective conflict procedures.

4. Workers can usually obtain their severance pay more rapidly under the voluntary termination mechanism than under collective conflict procedures. Employers are usually more eager to reach a severance pay agreement than to let liability continue to mount under the collective conflict provisions of the labor law, which require lengthy hearings and expert testimony, and permit various appeals. Such agreements reached directly between the parties involved in the plant closing are submitted to the relevant CAB for validation, thus avoiding the need for costly, burdensome litigation and satisfying all parties’ preference for a more rapid, practical resolution of the plant closing matter. The Secretariat’s finding of 1,111 cases of voluntary collective termination of the employment relationship in the Federal CAB alone, which approved those termination agreements, confirms that this is a preferred avenue for reaching the same purpose of the rarely used collective conflict procedures, that of protecting workers’ interests in plant closings.⁹⁶