Wednesday, June 8, 2022

Can you legally close a facility in response to unionization?

Almost two months to the day that workers at the College Ave. Starbucks location in Ithaca, New York, voted to unionize, the coffee conglomerate announced its intent to close the store on June 10. Employees claim that the closure was in retaliation for unionization and a post-vote wildcat strike over an overflowed grease trap.

In a tweet, Starbucks stated that the decision to close that store was not "easy" and that it was based on "many factors." The store's workers allege in an NLRB unfair labor practice charge that the only "factor" is illegal retaliation.

Do the employees have an argument? Can a company close a facility in response to unionization? Not surprisingly, it depends.

Under federal labor law, there is big distinction between a full closure and a partial closure. 

Under long established precedent, an employer is free to shutter its entire operation for any reason, even anti-union animus, retaliation, or vindictiveness. Indeed, according to the U.S. Supreme Court, it would be "startling" if an employer chose to put itself completely out of business instead of dealing with a union. 

A partial closing — such as Starbucks closing a unionized store — is a different animal. A partial closing can constitute an unfair labor practice if it's done for the purpose of discouraging or inhibiting unionization at other facilities. If a multi-facility employer closes one unionized facility to make a statement to all of its employees in other facilities not to unionize, the NLRB will likely find that the closure is based on anti-union animus and is unlawful.

If the closing the lawful in either scenario, the employer's only obligation is to bargain with the union over the effects of the closure on the unionized employees.

Which brings us back to Starbucks. The timing of Starbucks' decision to close the College Ave. store is certainly suspect, and the NLRB will certainly view this closure through the lens of the retailer's other alleged anti-union activities, including its alleged firing of union leaders and its rolling out of improved benefits for non-union employees. Yet, the two other Ithaca stores that voted to unionize the same day as College Ave. remain open, as do the approximately 120 (and growing) other unionized stores around the country. 

In other words, it could be that Starbucks closed College Ave. as an escalation of its anti-union activities to warn all of the other stores nationwide that have elections pending or to warn the thousands of employees still considering whether to sign union cards. Or, it could be that there actually exist legitimate "factors" that led Starbucks to shutter that one store. Time, and litigation, will tell. I'm reserving judgment until we get to analyze why Starbucks chose to close that store and we can examine the bona fides of that decision.