Employer Must Continue Fringe Benefit Plan Payments While Bargaining

A New York meat processing company unilaterally stopped contributing to a fringe benefit fund (Fund) after the collective bargaining agreement (CBA) requiring the contributions expired, but before bargaining reached an impasse. The employer notified the union that it intended to cease contributions to the Fund, and to replace it with another benefit program. But the Fund, which had merged with two other funds controlled by the union, notified the employer of its duty to continue contributions even after the CBA expired. During negotiations for a new CBA, a union auditor demanded that the employer disclose tax documents. The employer objected. After a year had passed, the employer announced a bargaining impasse, and it ceased Fund contributions. The union denied an impasse and filed an unfair labor practice charge with the National Labor Relations Board (NLRB). On appeal, the United States Court of Appeals for the Second Circuit rejected the employer’s position that the union auditor’s request of tax records constituted an economic business emergency, as the employer had claimed. The court also denied the employer’s argument that the fringe benefit payments constituted improper payments to union representatives in violation of the Labor Relations Management Act. Employers must carefully consider any decision to cease contributions to benefit plans, even after the expiration of a CBA.

Cibao Meat Prods. Inc. v. NLRB, No. 07-1192-ag (2d Cir., Nov. 4, 2008)