NLRB Advice Memoranda, Grove Bay Hospitality Group, National Labor Relations Board, (Oct 22, 2022)

The Region submitted this case for advice on whether the Employer violated §8(a)(5) of the Act by refusing to provide sales information for the prior year [1] 1) where ​     ​ tied its position on labor costs to a specific percentage of sales at the bargaining table, and/or 2) where the Employer pays some tipped employees at a “subminimum” wage rate and the Union asserts it needs that information so it can verify the employees are properly compensated.

The bargaining unit consists of hourly workers, some of whom are paid a legal subminimum rate, plus tips. During economic reopener negotiations on October 26, 2021, in response to the Union committee's request regarding how the Employer currently calculated wages, ​     ​ stated that ​     ​ “would be proposing wages based on revenue and that ​     ​ business model to base labor costs on sales.” When a Union representative asked ​     ​ what the Employer's percentages of labor costs of projected revenue is, ​     ​ responded: “13.5% without taxes.”

At the same session, the parties discussed the Employer's 2.5% deduction of tipped employees' credit card tips. The Employer claimed that this deduction is to repay the Employer for the fees credit card companies charge the Employer for use of their credit cards — proportionate to cover only the percentage of the fee attributable to tips. The Employer's initial economic proposal maintained the deduction of these fees.

On October 27, 2021, the Union made a request for information, asking for, among other items: 1) “all actual sales, broken down by month, dating back to September 1 of 2020 through October 31, 2021”; and 2) “all actual credit card fees billed to the Employer dating back to September 1 of 2020 through October 31, 2021.”

By November 9, 2021, the Employer had provided a number of documents responsive to requests not at issue but countered in an email that because it was not claiming an inability to pay it would not provide the sales information. In the same email, the Employer told the Union that it was removing the deductions for credit card fees from its economic proposal, thereby mooting the provision of this information for bargaining.

On November 11, 2021, the Union responded that it needed the credit card tip-deduction information for “contract administration and wage-and-hour enforcement as well as for bargaining.” The Union filed this charge the following day. Throughout November 2021, the Employer provided a number of spreadsheets concerning the deductions and tips, showing the amount deducted to be about 2.5% of the tips collected for each employee. On November 30, 2021, the Union stated that it wanted the “information of credit card fees actually charged by the credit card company.” On December 9, 2021, the Employer provided a spreadsheet with the fees charged by the credit card company for each of its venues by month for the requested period. The Union clarified that it wanted the “actual proof/bills/fees” from the credit card companies.

On January 14, 2022, the Employer provided copies of the bills from the credit card companies with fees visible, but the gross sales were redacted. On January 24, 2022, the Union requested an unredacted version of the invoices. The Employer responded that it had provided all information responsive to the Union's original request and then, in response to its supplemental request, supplied “the actual credit card vendor invoices showing the amount of fees paid.” The Employer concluded that it had “no other records or information responsive to the Union's requests.”

We initially conclude that the Employer by expressing its preference to allocate “13.5%” of its revenues toward employee compensation was not claiming in inability to pay requiring it to “open its books,” See, Arlington Metals Corp., 368 NLRB No. 74 (2019) (However, as we note below, we do find this an appropriate case in which to argue that Arlington Metals be overruled) Nonetheless, the Employer's failure to provide this financial information does violate Section 8(a)(5) and (1) under Caldwell Mfg. Co. 346 NLRB 1159, 1159-60 (employer's claim that it needed to make facility viable and more competitive required it to provide union with competitor data, labor costs, and other relevant information). See also National Extrusion & Mfg. Co., 357 NLRB 127, 128 (2011) (although employer did not assert an inability to pay, it “violated the Act by failing to supply the [u]nion with … requested information relevant to the [employer's] claim of uncompetitiveness”), enforced sub nom., KLB Industries, Inc. v. NLRB, 700 F.3d 551 (D.C. Cir. 2012).

Here, the Employer's stated basis for its wage proposal is that such a proposal will amount to “13.5%” of its revenues, making the provision of its sales data relevant, and the Employer's failure to provide the Union with unredacted invoices from the credit card companies, that excluded its revenues, violates Section 8(a)(5) and (1) of the Act. Such information “will help the Union better understand the Respondent's business model and allow it to develop wage counterproposals accordingly.” PSAV Presentation Services, 367 NLRB No. 103, slip op. at 5 (2019). [2]

Further, the Employer's unlawful refusal to provide this financial information, noted above, is closely related to an “inability to pay” assertion and while no claim of inability to pay was made here, the Region should nevertheless use this case as a vehicle to urge the Board to overrule Arlington Metals Corp., 368 NLRB No. 74 (Board finds that statements an employer made during negotiations about its financial status did not require it to disclose requested financial information because those statements conveyed only its competitive disadvantage rather than an inability to pay). The Region should follow the arguments set forth in ​     ​

With regard to the alleged failure of the Employer to turn over this financial information in response to the Union's need to verify that subminimum wage tipped employees are properly compensated, we conclude that the Union was provided sufficient information for that purpose in November by the provision a number of spreadsheets concerning the deductions and tips, showing the amount deducted to be about 2.5% of the tips collected for each employee. The Union raised no objection to the credibility of this documentary evidence. In any case, adding this allegation would add nothing to the remedy since the order will effectively require the Employer to disclose the redacted revenue figures, and the Union can, of course, use them to verify the wages of these subminimum wage tipped employees.

This email closes this matter in Advice.

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Division of Advice