In National Labor Relations Board v. Metro Man IV, LLC, Case No. 07-CA-264407 (6^th Cir. Aug. 29, 2024), the U.S. Court of Appeals for the Sixth Circuit partly upheld and partly reversed a National Labor Relations Board decision regarding an employer’s obligation to bargain about hazard pay and temporary workers during a state of emergency.

The court held that a Michigan nursing home did not need to bargain with the union over its decision to implement hazard pay during the emergency circumstances surrounding the COVID-19 pandemic. It held further that the employer did not have to bargain over the effects of the hazard pay decision, given the nursing home had already rescinded the pay raise by the time the union became aware of it. Likewise, once the emergency passed, the employer was not obligated to bargain with the union over its decision to rescind hazard pay or the effects of that decision. However, the employer did have a duty to bargain about the effects of its hiring temporary certified nursing assistants to alleviate critical understaffing due to the pandemic, although the emergency excused it from any obligation to bargain over the decision itself.

Factual and Procedural Background

Metro Man IV, LLC operated a 108-bed nursing home in Michigan that was affected by the COVID-19 pandemic in March 2020. The nursing home’s licensed practical nurses and support staff, including certified nursing assistants, were represented by SEIU Healthcare Michigan (the “union”). Approximately 75% of the nursing home’s unionized staff, including licensed practical nurses and certified nursing assistants, stopped coming to work due to the pandemic, leaving the facility critically understaffed. To address this staffing crisis, the nursing home implemented changes that included a $2-per-hour pay increase effective for as long as the nursing home was treating COVID-19 patients and the hiring of non-unit nursing aides on a temporary basis. The nursing home did not notify the union of these changes or bargain over them.

By June 11, 2020, the nursing home had ceased treating COVID-19 patients. It rescinded the $2-per-hour pay increase effective June 16, 2020. By November 2, 2020, the nursing home had discharged its last part-time non-union aide.

The union did not learn of the nursing home’s COVID-19-related changes until the parties were bargaining over other pandemic-related proposals in August 2020. When it did, it filed an unfair labor practice charge with the Board (See Case No. 07-CA-264407). The NLRB’s general counsel issued a complaint alleging that the employer violated §§ 8(a)(1) and (5) of the National Labor Relations Act by failing to bargain with the union before implementing the hazard pay and hiring temporary, non-unit employees. An administrative law judge (ALJ) found that the employer’s failure to bargain with the union violated the Act. Ruling on exceptions to the ALJ’s decision, the Board affirmed the decision on the merits, amending some of the ALJ’s conclusions of law and recommended remedy. The Board agreed with the ALJ that that the exigent circumstances of COVID-19 excused the facility from its initial bargaining obligations, but held that the nursing home violated the Act when it failed to notify the union of the changes and offer an opportunity to bargain over the effects of such decisions.  The Board petitioned the Sixth Circuit for enforcement of its ruling and the nursing home opposed this.

Sixth Circuit Decision

Neither party disputed the Board’s determination that the COVID-19 pandemic provided exigent circumstances that excused the nursing home from initially having to bargain with the union before implementing hazard pay and hiring temporary help. The parties disputed the scope of the nursing home’s bargaining obligations after the emergent need for immediate decision-making had passed. Specifically, the Board argued that the nursing home was obligated to provide the union with timely notice and an opportunity to bargain after its initial unilateral actions responding to the crisis. The nursing home conceded that it had an obligation to bargain with the union over the effects of its decisions, but maintained that the exigent circumstances entirely excused it from decisional bargaining, including with respect to rescission of hazard pay and discontinuation of temporary hiring.

The Sixth Circuit agreed with the nursing home that because the COVID-19 pandemic was an unforeseen occurrence that had a major economic effect on the nursing home’s operations, it was entitled to take immediate action and make unilateral changes to its operations without first bargaining with the union over those decisions. More specifically—as the Board previously held—the nursing home’s staffing crisis “created an extraordinary and unforeseen imminent threat to resident lives that compelled immediate action.” Indeed, the nursing home’s decision to increase wages “directly addressed this emergency by incentivizing the continued attendance or return to work of its skilled nursing staff” and the decision to hire temporary aides “similarly directly responded to the staffing emergency.” Accordingly, the exigent circumstances of the COVID-19 pandemic entirely excused Metro Man’s decisional bargaining obligations on the topics of hazard pay and temporary hiring of non-unit aides.

As for whether the nursing home was obligated to bargain over the removal of the hazard pay, the Sixth Circuit ruled that there was no such obligation. The court held that the decision to institute hazard pay and its later decision to rescind it were one and the same, given the hazard pay was always intended to be – and was communicated as – a temporary measure. Accordingly, just as there was no obligation to bargain over implementation of the pay increase, there was no obligation to bargain over its revocation. Moreover, because the pay increase was rescinded by the time the union became aware of it, bargaining over the effects of the expired raise could not be conducted in a meaningful manner. Therefore, the Sixth Circuit held that Metro Man did not violate the Act by failing to bargain over the effects of the implementation and subsequent revocation of the temporary hazard pay.

The court reached a different conclusion regarding the nursing home’s hiring of non-unit nurse aides to address COVID-related short staffing. While the nursing home was absolved of any decisional bargaining obligation regarding this issue, the court held that the nursing home still needed to bargain over the effects of that decision. The nursing home never directly notified the union of its decision to hire non-unit employees on a temporary basis and, while it bargained with the union over other topics related to COVID-19 staffing, it did not directly negotiate the effects of the staffing changes it implemented. Therefore, the nursing home was found to have violated the Act by failing to bargain over the effects of hiring temporary workers from outside the unit. As the Board had held, even where an employer is excused of its “initial failure to bargain in response to exigencies,” the employer is still required to “provide notice and an opportunity bargain over the effects of such unliteral changes . . . as well as over any subsequent related unilateral changes” once “the need for immediate decision making has passed.” In other words, exigent circumstances only “briefly” excuse an employer’s initial decisional bargaining obligations and “[u]nilateral actions taken in response to an emergency create a situation ripe for bargaining as soon as circumstances permit.”

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The Sixth Circuit’s decision provides helpful guidance to employers about bargaining obligations during public health emergencies like the COVID-19 pandemic. The decision highlights an employer’s potential right to make unilateral decisions without bargaining to address unforeseen circumstances that have major effects on the economics of their operations. However, this right to act unilaterally in making changes is not without limits. The obligation to bargain over the effects of such decisions generally remains, and failure to provide the union with notice and an opportunity to bargain over their effects will result in unfair labor practice findings except where the change has already expired.

Practical Considerations and Lessons Learned

• Exigent circumstances like COVID-19 or other public health emergencies may excuse an employer’s decisional bargaining obligations with respect to unilateral changes to wages, hours, and other terms and conditions of employment that are necessitated by exigent or emergency circumstances.
• Employers have a continuing obligation to bargain over the effects of unilateral changes, however. Employers should be proactive and consider notifying unions about unilateral changes made to address exigent circumstances so that the parties can meaningfully bargain over the effects of those changes.

We will continue to monitor critical developments as challenges to the Board’s decisions related to exigent circumstances continue to be considered in federal courts.