The National Labor Relations Board (“NLRB”) filed a complaint against the Boeing Company in April based on Boeing’s decision to open a second assembly line to build its Dreamliner airplanes in a non union plant in South Carolina instead of expanding its current assembly line in a union plant in Washington State (see NLRB v. Boeing).  This is a novel issue with roots in classic labor law.

The labor law, the “runaway shop” doctrine, says that it is unlawful for an employer to relocate to a non union facility solely to avoid its employees’ decision to unionize.   The question everyone is talking about is whether the NLRB is overreaching or if Boeing violated the doctrine.

In a typical “runaway shop” case, the employer moves the work presently being performed in its union facility to a non union facility without giving the union an opportunity to bargain about labor costs.  The union plant is usually shut down (or some of its operations are eliminated) and employees at the union facility lose their jobs.

Boeing actually bargained with the union in Washington before deciding to open the second assembly line in South Carolina.  The employees in its union plant in Washington are not losing their jobs.

Boeing admits that one of the factors in its expansion decision was that there would be fewer work stoppages in South Carolina.  South Carolina, like Florida, is a right-to-work state (meaning that workers cannot be forced to join a union).  The union in Boeing’s Seattle, Washington plant has gone on strike five times since 1977, including a 58-day strike in 2008, which Boeing says cost it approximately $1.8 billion in losses.

The NLRB argues that the reason for Boeing’s expansion to South Carolina is illegal because it discourages the union workers from exercising their right to future strikes.  The NLRB seeks to shut down Boeing’s plant in South Carolina and move the second assembly line to Washington.  Boeing has already spent $750 million to build the new plant in South Carolina, which has so far created approximately 2,000 new jobs in the state.

Currently, the lawsuit is pending before an administrative law judge who will make a recommendation to the NLRB.  The next step is a hearing before the NLRB and then a path through the federal court system, which may include a trip to the United States Supreme Court.

The precedent that the NLRB is attempting to establish would have serious implications for businesses making decisions to expand production to right-to-work states for lower labor costs.  For a good overview of the case and the ensuing political debate, check out NPR’s On Point with Tom Ashbrook, Boeing and the National Labor Relations Board.