By Ted Olsen
The federal labor laws give employers the right to operate with replacement employees during a strike. At the end of the labor dispute, employers typically reinstate the strikers, either because they are ordered to do so by the National Labor Relations Board or the courts, or because they voluntarily agree to do so. In either event, the reinstatement of the strikers normally means the displacement of the replacement workers. (See NFL Strike, version 1987.)
When an employer releases a large group of replacement workers in such a situation, must the employer give the workers 60 days' advance notice under the WARN Act, 28 U.S.C. § 2101(a)(3)? The Eighth Circuit Court of Appeals, the second federal appeals court to consider the issue, has ruled that the WARN Act is not applicable. Sanders v. Kohler Co., No. 10-1848 (8th Cir. June 8, 2011).
In Kohler, when 247 workers went on strike, the company hired 123 replacement employees. When the company and the United Auto Workers union negotiated a new collective bargaining agreement, Kohler agreed to reinstate the strikers. It returned 103 of the original 247 striking workers to their former positions. The company fired all the replacement workers.
The outcome in Kohler was not surprising, but the reasoning was. The Court focused its analysis on the terms "reduction in force" and "an employment loss," used in the WARN Act's definition of "mass layoff": "a reduction in force which . . . results in an employment loss at the single site of employment during any 30-day period for . . . at least 33 percent of the employees (excluding any part-time employees); and . . . at least 50 employees (excluding any part-time employees). . . ." 29 U.S.C. § 2101(a)(3) (emphasis added.) The Court ruled that, in this situation, a "reduction in force" means "a net loss in the underlying productivity of a business." The Court then reasoned that the "net loss" here was 20 replacements - those in positions not eliminated because of the strikers' return. (There was no "employment loss" as to the positions held by the 103 replacements who were bumped upon the return of the strikers.) Because the net loss number did not meet the numerical threshold required for WARN Act notice, the Act did not apply to any of the replacements. This reasoning was similar to that set forth in a similar case, Oil, Chemical & Atomic Workers Int'l Union v. RMI Titanium Co., 199 F.3d 881, 885-86 (6th Cir. 2000).
The Court ruled that the express language of WARN dictated this outcome, not the replacements' allegations that management made express and implied representations that a strike settlement would not impact their continued employment.
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©2011 Sherman & Howard L.L.C. July 11, 2011