Chipotle Permanently Closed A Store In The Middle Of A Union Campaign. Is It Legal?
Chipotle United, the union trying to unionize workers at Chipotle's now-closed store calls it "union busting 101"...but the facts may undermine its case.
QUICK FACTS:
In June, workers at a Chipotle store in Augusta, Maine went on strike over staffing issues
The following week, the workers formed Chipotle United and filed for an election through the National Labor Relations Board.
Despite the fact that the NLRB has not yet scheduled an election, on Tuesday, July 19, Chipotle announced that it was permanently closing the Augusta store due to inability to adequately staff the store.
Employees and an attorney representing Chipotle United have labeled the closure "union busting 101."
Chipotle says the closure was due to staffing issues and the store has been closed since June 17
On Tuesday, the union filed unfair labor practices charges with the NLRB, claiming the closure was in retaliation for the workers’ push to unionize.
The outcome as to whether Chipotle acted lawfully, or unlawfully, may hinge on the facts, as well as two Supreme Court cases.
BACKGROUND & DISCUSSION:
Background.
In mid-June, workers at a Chipotle store in August, Maine walked off the job stating, according to the Kennebec Journal, they were “concerned a lack of adequate staff and training is putting them and their customers at risk.”
They said workers there are routinely expected to complete preparation tasks that require six people with only two, and to open the site with three or four people when at least seven workers should be present.
Although employees had not yet filed a petition with the National Labor Relations Board to hold an election, by striking, they were clearly engaging in what the NLRB would likely consider “protected concerted activity.”
Although the timing is incidental, about a week later, the employees filed a petition with the NLRB under the auspices of Chipotle United.
Earlier this week, nearly a month after employees walked off the job and before the the NLRB could schedule an election, Chipotle announced the permanent closure of its Augusta store, noting that the store had been closed since June 17th—paying its existing employees while closed—as it still had inadequate staff to run the store.
via Bloomberg:
Chipotle said the Augusta closure was due to difficulty finding adequate staffing in the “remote” location. The store had been closed to the public since June 17, while the company continued to pay employees and search for additional workers, according to Laurie Schalow, Chipotle’s chief corporate affairs officer.
“Closing the Chipotle restaurant in Augusta, Maine, has nothing to do with union activity,” Schalow said in a statement. “Our operational management reviewed this situation as it would any other restaurant with these unique staffing challenges. Chipotle respects our employees’ rights to organize under the National Labor Relations Act.”
Schalow said the employees would receive severance pay as well as help finding new jobs. [Emphasis added.]
The response to the closure has been loud, almost-universally condemning and one sided: Chipotle closed its Augusta store to thwart the union.
In response to Chipotle’s closure announcement, the union filed an unfair labor practice charge with the NLRB on Tuesday.
Discussion.
"The bona fides of the ‘why’ are going to be strictly scrutinized here, because the optics are terrible,” noted Jonathon Hyman, a labor and employment attorney with Wickens Herzer Panza.
In evaluating whether Chipotle was right or wrong to close the Augusta store, Chipotle may be relying on a couple of United States Supreme Court decisions.
The first is a 1965 case called Darlington Mills, in which the Court ruled:
It is not an unfair labor practice for an employer to close his entire business, even if the closing is due to anti-union animus. [Emphasis added.]
However, in the same decision, the Court ruled:
Closing part of a business is an unfair labor practice under § 8(a)(3) of the Act if the purpose is to discourage unionism in any of the employer's remaining plants and if the employer may reasonably have foreseen such effect. [Emphasis added.]
Another Supreme Court case that the union actually mentions in its unfair labor practice charge at the NLRB is First National Maintenance Corp v. NLRB (1981).
In the text of the case (which may be what the union is relying on), the Court states:
Moreover, the union's legitimate interest in fair dealing is protected by 8 (a) (3), which prohibits partial closings motivated by antiunion animus, when done to gain an unfair advantage. Textile Workers v. Darlington Co., 380 U.S. 263 (1965). Under 8 (a) (3) the Board may inquire into the motivations behind a partial closing. An employer may not simply shut down part of its business and mask its desire to weaken and circumvent the union by labeling its decision "purely economic." [Emphasis added.]
However, the Court also concluded that:
We conclude that the harm likely to be done to an employer's need to operate freely in deciding whether to shut down part of its business purely for economic reasons outweighs the incremental benefit that might be gained through the union's participation in making the decision, and we hold that the decision itself is not part of 8 (d)'s "terms and conditions," see n. 12, supra, over which Congress has mandated bargaining. [Emphasis added.]
“Is there a legitimate business reason to justify and support the closure other than the union drive?” Jon Hyman notes. “Are there other stores with similar issues in similar markets that have not been closed and if not why not? Given the options before this NLRB, Chipotle is going to have to have all of its ducks line up for this case to go its way (at least at the Board)."
This is, ultimately, what the NLRB and, potentially, the courts may have to determine.
“Is there a legitimate business reason to justify and support the closure other than the union drive?” Jon Hyman notes. “Are there other stores with similar issues in similar markets that have not been closed and if not why not? Given the options before this NLRB, Chipotle is going to have to have all of its ducks line up for this case to go its way (at least at the Board)."
An additional consideration before the NLRB might be, if the Chipotle store had been idled and Chipotle had been paying employees while the store was idled, it was presumably losing money. Therefore, how long should an employer lose money at a location before it is free to make a business decision to shutter the location?
“Given the options before this NLRB,” Hyman concludes, “Chipotle is going to have to have all of its ducks line up for this case to go its way (at least at the Board)."
For further discussion, listen to Jon Hyman and Michael VanDervort discuss the Chipotle closure, as well as Starbucks closing several stores on DriveThruHR.