Labor Relations Update

Scabby the Rat Has Been Legitimized by the NLRB

A split Board concluded this week that a union did not engage in unlawful secondary activity under the NLRA when it stationed a 12-foot-tall inflatable rat—known all too well by employers as “Scabby the Rat”—and two 8-foot banners on the worksite of a neutral employer for the purpose of forcing the neutral employer to cease doing business with the primary employer with whom the union had a labor dispute. International Union of Operating Engineers, Local Union No. 150 (Lippert Components, Inc.), 371 NLRB No. 8 (July 21, 2021).

The Board’s decision lays to rest former General Counsel Peter Robb’s attempt to bring renewed scrutiny to the use of the inflatable rat and other forms of “bannering” against neutral employers as a form of secondary activity that Congress intended to prohibit under Section 8(b)(4) of the Act.

ALJ’s Finding of No Unlawful Secondary Activity

As we previously reported here, the underlying unfair labor practice charge was heard by an Administrative Law Judge (ALJ) in 2019. At issue in the unfair labor practice complaint was whether the union violated the Act when it set up an inflatable rat and two 8-foot banners, manned by two union representatives, at the entrance of a trade show that targeted a neutral employer that did business with the primary employer with whom the union had an ongoing labor dispute.

The ALJ applied Board precedent, developed just a decade earlier, in Eliason & Knuth of Arizona and Brandon Regional Medical Center, which found, respectively, that the use of stationary banners or an inflatable rat at the site of a neutral employer without more did not “threaten, coerce, or restrain” the neutral employer in violation of Section 8(b)(4) of the Act. Constrained by this precedent, the ALJ dismissed the complaint, finding that the union’s stationary display did not amount to unlawful picketing or coercive non-picketing conduct under the NLRA.

Request for Board Review and Legal Analysis

Following the ALJ’s decision, the Office of the General Counsel of the NLRB requested, in October 2020, that the Board overrule its prior decisions on such conduct, arguing that Board precedent unnecessarily narrowed the definition of picketing and coercive conduct falling within the scope of Section 8(b)(4)’s prohibition. The Board subsequently invited the parties and interested amici to submit briefs on the question of whether the Board should overrule Eliason & Knuth and Brandon Regional Medical Center and, thereby, reverse its position on the use of inflatable rats and stationary banners.

After reviewing the ALJ’s decision and the 30 briefs submitted in the case by the parties and by amici, a majority of the Board affirmed the ALJ’s decision and dismissed the Section 8(b)(4) complaint. The majority opinions agreed that the doctrine of constitutional avoidance required dismissal of the complaint. Thus, even where the Act could be interpreted such that banners and inflatable rats constitute the type of coercive secondary conduct prohibited by the Act, the question is whether the Act must be read in this way when it raises serious First Amendment issues.

The majority concluded that where the conduct at issue was clearly expressive activity intended to persuade the neutral employer’s customers, the possible infringement on the union’s First Amendment rights precluded the Board from finding that the banners and inflatable rat violated the Act. Moreover, the Board held that neither the union’s display nor the large, imposing presence of Scabby the Rat mandated a finding of intimidation or coercion within the meaning of Section 8(b)(4).

Takeaways

For the foreseeable future, the Board’s decision has blessed unions’ use of Scabby and banners as a lawful application of secondary pressure on neutral employers. In his dissent, Member Emanuel warned that unions would exploit the “gaping secondary hole” left by the majority’s failure to recognize the wide range of coercive union secondary conduct. Whether this ominous warning will bear out remains to be seen. With the upcoming changes to the composition of the NLRB—President Biden’s two Board appointees are well into the confirmation process and could give Democrats control of the Board by the end of August—it is likely that unions will resort to using Scabby more often.

BREAKING: Jennifer Abruzzo is Sworn In as General Counsel of the NLRB

After being nominated by President Biden on February 17, 2021, Jennifer Abruzzo was sworn in as General Counsel of the NLRB yesterday by Chairman Lauren McFerran. Abruzzo will serve a four-year term as General Counsel, spearheading the agency’s investigation and prosecution of unfair labor practice cases and supervising the NLRB field offices in the processing of cases. As the NLRB noted in its official press release, this is the first time in the NLRB’s history that women have occupied both the Chairman and General Counsel positions.

Peter Sung Ohr, who has served as Acting General Counsel since President Biden terminated former General Counsel Robb in January 2021, will remain in the Office of the General Counsel, serving as a Deputy General Counsel.

Jennifer Abruzzo most recently served as Special Counsel for Strategic Initiatives for the Communications Workers of America (CWA). Prior to this role, Abruzzo spent over two decades working for the NLRB in various capacities, with her most recent position being Deputy General Counsel and then Acting General Counsel before former General Counsel Peter Robb was confirmed by the Senate. After her swearing in, Abruzzo said she was “thrilled to rejoin the Agency” and looks forward to working with her colleagues to “promote better enforcement of labor and employment laws.” General Counsel Abruzzo also took the opportunity to express her belief that “vigorous enforcement of the Act will help level the playing field for workers and their freely chosen representatives”.

General Counsel Abruzzo’s opening remarks likely signal what lies ahead for employers.  Viewing this development in conjunction with the pending nominations of two union side attorneys to fill vacant seats on the NLRB, one can certainly see that the winds of change at the NLRB are certainly blowing.  Stay tuned.

District Court Approves of President Biden’s Firing of Former NLRB General Counsel, But is This the Final Word?

As we reported here and here, there are several challenges to the authority of the Acting General Counsel of the National Labor Relations Board, Peter Sung Ohr, given President Biden’s unprecedented move of terminating the sitting General Counsel, Peter Robb, in January 2021.

One recent challenge to the Acting General Counsel’s authority was brought before the District Court of New Jersey in response to the Board’s petition for an injunction under Section 10(j) of the National Labor Relations Act in a pending unfair labor practice proceeding. Goonan v. Amerinox Processing, Inc., 21-CV-11773 (D.N.J. July 14, 2021).

While the court ruled that the President had the authority to terminate the General Counsel without cause and designate an Acting General Counsel in the interim, the decision is unlikely to be the proper vehicle for a final determination of the issue.

Background

The employer in Goonan was charged with a number of ULPs surrounding the union’s claim that the employer unlawfully terminated several employees because of their support for the union during an ongoing organizing campaign. The General Counsel issued a complaint alleging that the terminations violated the Act. The case went before an ALJ, and the ALJ found that the employer committed a number of unfair labor practices in violation of the Act.

While the complaint was pending before the ALJ, the Board, through its Regional Director, filed the instant petition for an injunction under Section 10(j) of the Act, seeking an order from the district court enjoining the employer from committing unfair labor practices. In its opposition to the 10(j) petition, the employer challenged the Board’s authority to seek an injunction, arguing the Acting General Counsel, who filed the petition on behalf of the Regional Director, did not have any legal authority to prosecute the underlying unfair labor practice charge. According to the employer, the President’s termination of former General Counsel Robb was not in accord with the NLRA and, further, the President’s designation of Peter Sung Ohr did not comply with the Appointments Clause of the U.S. Constitution and was therefore invalid.

Legal Analysis

The court only briefly addressed the employer’s argument that the petition was invalid because the Acting General Counsel lacked legal authority, finding overall that the validity of the Acting General Counsel did not impact whether the Board could petition the court for an injunction.

On the issue of the President’s ability to terminate the General Counsel without cause, the court concluded that the text of the Act as drafted by Congress provided the President with this power. Section 3 of the Act provides that persons appointed to the Board “may be removed by the President, upon notice and hearing, for neglect of duty or malfeasance in office, but for no other cause.” However, Congress did not include a similar restriction on the President’s ability to terminate the General Counsel. Therefore, the court determined that the plain language of the Act allows the President to “relieve the General Counsel of his or her duties without the process required for Board members.” The Act also explicitly permits the President to designate an Acting General Counsel when a vacancy occurs, without any limitation with respect to how that vacancy came into existence. As such, the court rejected the employer’s argument that the President’s failure to comply with the Appointments Clause invalidated the authority of the Acting General Counsel.

After briefly discussing the President’s authority to terminate a sitting General Counsel, the court concluded that it ultimately had jurisdiction to hear and adjudicate the matter because a petition for an injunction under Section 10(j) is brought by the Board and not the General Counsel. The question before the court, therefore, was whether to grant the Board temporary relief.

Takeaways

The district court’s decision is the first of its kind to assess and rule on the legality of President Biden’s unprecedented decision to terminate the sitting General Counsel upon taking office. However, since the issue of the legitimacy of the Acting General Counsel was not squarely before the court, this decision is unlikely to become the vehicle for further review of Peter Robb’s removal and the subsequent appointment of Peter Sung Ohr as interim General Counsel. However, the court’s analysis may offer a preview of how other federal courts could come out on the issue. As always, we will keep you informed on any new developments.

Access Denied: Supreme Court Finds California Regulation Permitting Union Access to Employer Property Constitutes An Unconstitutional Taking

In a 6–3 decision, the U.S. Supreme Court held on June 23, 2021 that a California regulation granting labor organizers the “right to take access” to agricultural employers’ private property to solicit union support violated the Takings Clause of the U.S. Constitution. See Cedar Point Nursery et al. v. Hassid et al., USSC Case No. 20–107 (June 23, 2021).

Background

Decades ago, California’s Agricultural Labor Relations Board (“ALRB”) promulgated a regulation that requires agricultural employers to give labor organizers access to their private property for as much as three hours per day, 120 days per year for purposes of organizing. In 2016, two agricultural employers sued the ALRB in federal court in California, seeking to prohibit the agency from enforcing the regulation because the regulation constituted a physical appropriation of private property in violation of the Constitution’s Taking Clause, which precludes the government from taking private property “without just compensation.”

The district court, however, rejected this argument, holding that because the regulation did not “allow the public to access [the Employers’] property in a permanent and continuous manner for whatever reason,” it did not amount to an unconstitutional physical taking. On appeal, a split Ninth Circuit panel affirmed the district court’s decision, noting that the regulation neither allowed the public to “unpredictably traverse” the employers’ private property “24 hours a day, 365 days a year,” nor “completely deprive[d]” the employers of all economically beneficial use of their property. After the Ninth Circuit denied their petition for re-hearing en banc, the employers appealed to the Supreme Court, which granted certiorari.

Holding

The Supreme Court reversed the Ninth Circuit, reasoning that because the right to exclude third parties from private property “is ‘one of the most treasured’ rights of property ownership,” the California regulation requiring agricultural employers to allow union organizers private-property access constituted a clear physical appropriation. In such cases, because the physical appropriation of private property is so clear, the Court “use[s] a simple, per se rule: The government must pay for what it takes.” The Court then distinguished PruneYard Shopping Center v. Robins—a 1980 case in which the Court rejected the argument that state protection of leafletting in a privately owned shopping center represented an unconstitutional taking—explaining that, unlike the agricultural employers’ private property, the shopping center in Pruneyard “was open to the public, welcoming some 25,000 patrons a day.” See 447 U.S. 74. Notably, the Court also implied that the narrow exception enjoyed by unions under current federal labor law—which allows non-employee organizers a right of access to employers’ private property when employees are otherwise “beyond the reach of reasonable union efforts to communicate with them”—could similarly prove to be an unconstitutional taking, if challenged.

Potential Impact of the Decision

For the parties, the main question left open by the Supreme Court’s decision is, what is the appropriate remedy for the unconstitutional taking here?  In other words, should the property owners be granted injunctive relief, as they requested, and/or should the property owners be compensated for the access granted to organizers? And if so, how much?  The Court remanded the case to the federal district court to handle this question.

This case is interesting for management- and union-side labor lawyers alike because the regulation at issue provided for a union’s right to access employer property, directly impacting the traditional labor-management relationship. What is particularly unique about this case is that state and local labor laws are usually challenged on preemption grounds (i.e., the aggrieved party argues the state or local regulation is preempted because such conduct is arguably protected or prohibited by federal labor law). Here, however, the law did not face a preemption challenge—likely because agricultural employers fall outside the NLRA’s scope. Depending on the facts, the potential avenue for redress under the Takings Clause could encourage parties to challenge similar state or local regulations that grant third parties access to private property.

Only time will tell, but on balance, this decision’s potential effect on labor-management relations seems limited for at least four reasons:

  • First, while California agricultural employers are no longer required to grant labor organizers access to their private property (unless the state provides “just compensation”), this change applies only to employers in just one industry in just one state—nothing more.
  • Second, according to the Wall Street Journal, even though California has about 16,000 agricultural employers, union organizers have recently invoked their right to access in just a few dozen instances each year.
  • Third, if the State of California opts to keep mandating private-property access for union organizers by providing agricultural employers with “just compensation,” there is no guarantee a windfall will result for agricultural employers, particularly if “just compensation” is determined to be nominal.
  • Finally, even the Court’s suggestion that the “highly contingent” right-of-access current federal labor law affords non-employee union organizers (when employees are beyond “reasonable” communication efforts) could similarly represent an unconstitutional taking seems unlikely to prove consequential. Indeed, because this right of access is limited to extreme situations when employees live or work on highly remote, employer-owned properties (such as logging camps or fish canneries), fact patterns that could enable such a challenge, as a practical matter, would seem few and far between. And even if such a fact pattern did arise—ultimately enabling a successful challenge to the exception—because the exception is so limited, it would naturally impact very few workplaces.

Hands Off My Ballot: NLRB Finds that Solicitation of Mail-Ballots is Objectionable Conduct That May Warrant Setting Aside an Election

Since the onset of the COVID-19 pandemic, mail-ballot elections—rather than manual, in-person elections, have been mandatory for most NLRB representation elections. The NLRB’s recent ruling, on June 9, 2021, in Professional Transportation Inc., 370 NLRB 132 (2021), provided important guidance regarding when solicitation in the context of such elections constitutes objectionable conduct, such that it can set aside an election. Solicitation typically comes in the form of when the employer or union offers to collect a voter’s ballot and mail it to the Region.  In this case, the Board held that solicitation constitutes objectionable conduct, but importantly, such conduct is a basis for setting aside an election only where the evidence shows that the solicitation affected a determinative number of voters.

Background

In April 2020, the Union filed a representation petition. The election was conducted by mail, and ballots were mailed to employees. Following the election, the Employer objected on the grounds that Union representatives contacted eligible voters and offered to collect and mail their ballots.

Acknowledging that Board precedent does not resolve whether mail-ballot solicitation is objectionable conduct, the Regional Director held that the Employer’s offer of proof did not warrant a hearing as a matter of law and failed to establish a prima facie case of objectionable conduct.

The Employer requested review of the Regional Director’s decision, and the Board granted the request.

Analysis

The Board affirmed the Regional Director’s decision overruling the Employer’s objections, but found that solicitation of mail ballots does constitute objectionable conduct and may warrant setting aside an election in certain circumstances. The Board’s decision comes in the wake of Fessler & Bowman Inc., 341 NLRB 932 (2004), in which the Board unanimously held that it is objectionable conduct for a party to handle employees’ mail ballots. Citing  Fessler, the Board emphasized its obligation to protect the integrity and neutrality of elections and to ensure that elections are conducted under as close to “laboratory conditions” as possible.

Recognizing that mail-ballot elections may be “more vulnerable to the destruction of laboratory conditions than are manual elections,” the Board described the ways in which mail-ballot solicitation constitutes objectionable conduct.

First, the Board explained that a party’s offering to collect ballots contradicts voting instructions stating that parties other than the voter may not handle or collect ballots.

Second, the Board noted that ballot solicitation suggests to employees that a party other than the Board is involved in running the election, thus undermining the Board’s responsibility in controlling the election process. In light of these considerations, the Board concluded that even where ballot solicitation does not result in actual ballot tampering or loss of ballot secrecy, it nevertheless undermines the integrity of the election and constitutes objectionable conduct.

Significantly, however, the Board found that ballot solicitation does not necessarily require that an election be set aside. Rather, an election must be set aside only where the evidence shows that the ballot solicitation affected a determinative number of voters.

In determining whether solicitation warrants setting an election aside, the Board found it relevant to consider evidence of:

  • the number of unit employees whose ballots were solicited;
  • the number of unit employees who were aware of ballot solicitation; and
  • whether a party engaged in a pattern or practice of solicitation.

The Board further explained that the test regarding whether solicitation occurred is objective—that is, the inquiry is whether a party’s conduct could reasonably be interpreted as ballot solicitation. Importantly, the Board also noted that merely asking an employee if they have received their ballot, or offering an employee assistance with understanding the election process, is not ballot solicitation.

Dissenting in part, Member Emanuel favored establishing a bright-line rule that elections should be set aside whenever a party is shown to have solicited ballots, irrespective of the number of voters affected. Additionally, Chairman McFerran expressed concerns that parties could easily manipulate dissemination of information about solicitation in order to set aside an election; accordingly, she would only consider the number of employees who were made aware of solicitation by a solicited employee.

Application

As is typical, the Board held that its decision applies retroactively to the instant case and to all pending cases. In the instant case, the Board concluded that the Employer’s offer of proof was sufficient to show that the Union solicited employee ballots. However, it found that there was insufficient evidence to set aside the election because the misconduct was limited to at most two voters, which could not have affected the election’s outcome, given that the Union prevailed by at least ten votes.

Takeaways

As mail-ballot elections continue to become the norm  across the country, this case expands the opportunities for parties to raise challenges. Chairperson McFerran declined to endorse the view that mail-ballot elections are inherently more vulnerable than manual-ballot elections, and she opined that it is “time for the Board to reevaluate its historic preference for manual elections and to consider expanding and normalizing other ways to conduct elections on a permanent basis.”

Once the Board shifts with new appointees, there is a chance that mail, telephone, and even electronic voting may become more normalized. Such procedures may illuminate new vulnerabilities in the election process, and although it remains unclear what other behaviors may be objectionable conduct that warrants setting an aside an election, it is likely that the Board will continue to seek ways to safeguard the integrity of elections.

BREAKING: President Biden Nominates Union-Side Attorney Gwynne Wilcox to Fill NLRB Seat

On Wednesday, May 26, 2021, President Biden nominated Gwynne Wilcox to fill the last remaining vacancy on the National Labor Relations Board (“Board”).  If confirmed by the Senate, Wilcox would be the second Democrat on the Board, joining Board Chair Lauren McFerran (who had been a member of the Board since 2014, and was appointed chair on January 20, 2021).  Wilcox is a senior partner at the Union-side labor and employment firm of Levy Ratner PC and serves as associate general counsel for the largest Local of the Service Employees International Union (“SEIU”).  Wilcox is the first African-American woman ever appointed to the Board.

It is unclear how long the confirmation process will take.  Even if Wilcox is confirmed by the Senate, the Board will continue to have a majority of Republican members until William Emanuel’s term expires in August 2021.  President Biden is then expected to nominate another Democratic candidate to fill Member Emanuel’s vacancy, and if the nominee is confirmed, the Board will tilt to a 3-2 majority of Democrats.  As we have discussed previously, once that occurs, the Board is expected to reverse a number of decisions issued during the Trump Administration.

We will continue to follow Wilcox’s nomination and potential confirmation.  Stay tuned!

NLRB Majority: Employer May Continue “No Recording” Rule, Even After Unlawfully Applying it to Single Employee

In AT&T Mobility LLC , 370 NLRB No. 121 (2021), the NLRB majority (Members Ring and Emanuel) held that the Employer could lawfully maintain a workplace policy prohibiting its workers from recording conversations with their co-workers, managers or third-parties, even though its application in one particular circumstance was found unlawful.  Notwithstanding the fact that the rule had been applied unlawfully, the Board majority concluded that the policy itself was lawful under Boeing Co., 365 NLRB No. 154 (2017), and overruled in part its decision in Lutheran Heritage Village Livonia, 343 NLRB 646 (2004), finding that an instance of unlawful application of a facially neutral rule does not automatically warrant a finding that the rule can no longer be lawfully maintained.

Importantly, however, Chairman McFerran disagreed in her dissent, foreshadowing how a newly-constituted Board may decide the case differently and/or abandon the Boeing framework.

Background

An employee at a retail location, who was also a union shop steward, recorded a termination meeting between the Company’s representatives and a fellow bargaining unit-member, who had requested the employee’s presence at the meeting.  Upon learning that the shop steward recorded the meeting, his manager made him delete the recording on his work phone and threatened him with some unspecified adverse action.

The Board’s Holding 

Applying the Boeing framework, and the cases discussed in Boeing and since, the majority reiterated that an Employer’s no-recording policy constitutes a lawful “Category 1(b)” rule, meaning that the “potential adverse impact on protected rights” was “outweighed” by the employer’s business justification.  As a result, such types of rules are always lawful under Boeing. 

However, the Board also found that Employer unlawfully applied the policy when it threatened the employee, who was engaged in protected activity at the time the recording was made, for violating the policy.  The Board then consulted its decision in Lutheran Heritage, 343 NLRB 646 (2004), wherein the Board applied a three-part framework for determining whether an employer violates Section 8(a)(1) of the Act by maintaining a neutral work rule if employees reasonably construe the rule to prohibit protected activity.  The Board held that a policy could be rendered unlawful, and subject to being rescinded as part of a remedy if the policy had been “applied to restrict the exercise of Section 7 rights.”  Instead of following Lutheran Heritage and ordering the Company to rescind the policy, the Board overruled Lutheran Heritage in part, and held that an employer could still maintain a workplace rule that was “applied to restrict” an employee’s rights.  In reaching its conclusion, the Board wrote: “A blanket prohibition on the continued maintenance of such rules, simply because of a single instance of unlawful application — even if that single instance is carried out by a misguided low- or mid-level supervisor whose action does not reflect corporate policy — fails to give proper weight” to the employer’s legitimate interests in maintaining the rule.  The Board also noted that in other instances, the Board has ruled that otherwise lawful rules could remain in place, even if they restricted the exercise of an employee’s rights in certain circumstances.  The Board declined to require the Employer to disavow its no-recording policy.

Member McFerran’s Dissent

The dissenting member of the panel, Board Chairman Lauren McFerran, took direct aim at the Board’s ruling in Boeing, arguing that it permitted employers to maintain rules that “reasonably tend to chill employees in the exercise of their rights under the Act, while failing to require that employers narrowly tailor their rules to serve demonstrated, legitimate interests.”   In McFerran’s view, Boeing’s “primary aim” is to “preserve employer prerogatives, not to protect employee rights.”  While McFerran agreed that the policy was “applied to restrict” the employee’s union activity in this case, she found that employer’s no-recording policy was overbroad and should have been struck down.

 Takeaways

The decision most certainly gives insight into some of the changes the Board may take in the coming months as its composition shifts.  Currently, the Board may be less likely to penalize employers who maintain workplace rules that are neutral on their face with respect to protected activity, but are unlawfully restrictive or overbroad, as applied to certain circumstances.  The Board continued to uphold the framework established in Boeing, and continued its evisceration of Lutheran Heritage, by finding that neutral policies should not be struck down when they have been applied to a single instance in an unlawful manner.  Chairman McFerran’s dissent provides a window into future rulings of the Board.  McFerran clearly targeted Boeing with her scathing commentary that the category-based framework for the evaluation of employer handbook rules and policies was designed to benefit employers, not employees.  Reading the tea leaves, Boeing may certainly find itself on the “chopping block” in the coming months.

Guidance: Can Employers of Unionized Workers Require the COVID Vaccine?

The Coronavirus pandemic has spawned a lot of questions—and a lot of headaches—for employers, who within the past year have needed to adapt to rapidly changing health, regulatory, and technological landscapes. With the long-awaited arrival of a vaccine comes even more questions for employers: Can I require my employees to get vaccinated? Can I require employees who don’t get the vaccine to follow other safety precautions? For employers with unionized employees, there are additional considerations under the NLRA. Employers have bargaining obligations to their unionized workforces, so whether employers can require employees to be vaccinated, where/when/how vaccines will be administered, and whether discipline can be imposed on those who refuse a vaccine will depend on the terms of the collective bargaining agreement and/or require additional bargaining with the employees’ union.

We have developed several materials to help employers navigate the potential bargaining obligations with respect to mandatory vaccination policies. Visit our website to view an infographic of the decision-making process employers should engage in when considering a mandatory vaccine policy for unionized employees. Our website also offers a list of frequently asked questions (“FAQ”), answering common questions from clients and employers based on the state of NLRB case law today.

As always, we will continue to monitor the latest updates and trends concerning Coronavirus and the workplace. Check back here, or sign up for the email newsletter, to stay up-to-date!

NLRB: Employer’s “Hard-Bargaining” Proposals—By Themselves—Did Not Violate Duty to Bargain in Good Faith

In Universal Health Services, Inc., 370 N.L.R.B. No. 118 (April 30, 2021), the Board dismissed a complaint alleging that an employer’s bargaining proposals seeking significant concessions violated the duty to bargain in good faith.  Notably, the Board found that even when faced with extreme proposals, a union must still “test” the employer’s willingness to make concessions, and must itself contribute to bargaining by offering counterproposals.

Factual Background

In anticipation of the expiration of their prior CBA in December 2016, an employer and a union began negotiations over a successor agreement.  The employer warned that it sought to rectify “numerous deficiencies” in the prior agreement and alter many of its provisions.  The employer opened negotiations with a set of four employer-friendly proposals: (1) its Grievance and Mediation proposal, along with its No Strikes, No Lockouts, and Management Rights proposals; (2) its Discipline proposal making disputes over discharges no longer subject to binding arbitration; (3) its Union Security proposal removing the union security provision in the parties’ expired CBA; and (4) its Wage proposal, which gave it substantial discretion over pay.

During the course of negotiation, the union’s counsel was fond of using profanity and colorful language to demonstrate his contempt for the employer’s positions.  He labeled one proposal as “a nothing burger” and called another “an absolute waste of everyone’s time.” He told the employer’s representatives to “kiss my a–” and to “get the f— out of here.”  The union counsel responded to employer proposals with one-word denials such as “reject” or “no”, and often failed to offer written counterproposals.  In contrast, the employer made significant concessions in response to ongoing discussions, such as by lessening the length of time disciplinary actions would remain in employees’ files or offering to work with the union to place employees within its proposed pay ranges.  At one session, the employer noted that the union had failed to counter 15 of its proposals, while the employer had responded to all but two from the union.

More than 18 months after the employer presented its initial proposals, the union made counterproposals containing significant revisions to what had already been agreed upon by the parties.  Nonetheless, the employer discussed the counterproposals, and continued to express its willingness to negotiate.  In October 2018, the employer received a petition signed by a majority of employees in the bargaining unit, which it considered clear and unequivocal proof that the union had lost the support of a majority of unit employees.  The employer withdrew recognition from the union, and began to unilaterally implement its proposals.

The union filed unfair labor practice charges.  An Administrative Law Judge determined that the employer engaged in bad faith bargaining in violation of Section 8(a)(5).  The employer appealed to the Board.

Analysis

A Board majority (Members Ring and Emanuel) reversed the ALJ and dismissed the complaint.  The Board began its discussion by observing that while Section 8(d) of the NLRA requires parties to negotiate in good faith, this obligation “does not compel either party to agree to a proposal or require the making of a concession.”  Thus, the Board must ultimately determine, under the totality of the circumstances, whether “the employer is engaging in hard but lawful bargaining” or is instead “unlawfully endeavoring to frustrate the possibility of arriving at any agreement.”

Where it is alleged that an employer violated its duty to bargain in good faith on the basis of its bargaining proposals, the Board will not evaluate whether specific proposals are “acceptable” or “unacceptable”, but must consider whether the employer seeks to “frustrate agreement” on the basis of objective factors.  More significantly, the Board will not find an employer failed to bargain in good faith “if the union assumes that the employer’s initial proposals reflect unalterable positions without testing the employer’s willingness to engage in the give and take of collective bargaining.”

The Board pointed out that the employer had informed the union that one of the disputed issues, a union security clause, was ultimately included in a CBA with another union after a “back and forth” process.

The Board emphasized that the employer did not insist on its proposals as all-or-nothing.  Instead, the employer “advanced its proposals as entry points for discussions, repeatedly invited the Union to offer counterproposals, never refused to entertain counters on the rare occasions the Union offered them, and ultimately withdrew its no-strike proposal”, as well as other concessions.  The Board found that under these facts, the employer did not seek to frustrate any possible agreement.

The Board noted that the employer did not violate its duty to bargain by seeking significant concessions in its initial proposals, and observed that it had “substantial leverage” because a long time had passed since the employees had received raises.  The Board found that the employer was not required to bargain against itself in response to the union’s absent counterproposals, and that it was not bad-faith bargaining to present a “wish list” or “kitchen sink” proposal in its initial position.  As a result, the Board reversed the lower court and dismissed the union’s complaint, holding that due to the above considerations, as well as the lack of any evidence of improper conduct away from the bargaining table, the employer did not engage in bad faith bargaining.

Chairman McFerran Dissents

In her dissent, Chairman McFerran noted there was no disagreement over the basic legal principles but that “[w]e differ, and differ sharply, on how to apply the law to the facts presented.”  Specifically, the Chairman noted that the Board recently ruled that the employer’s conduct in a similar case, discussed here, violated the Act, and that “an employer can make a mockery of the duty to bargain by adhering to proposals which clearly demonstrate an intent not to reach an agreement” with a union.

Takeaways

This case demonstrates how the conduct of the parties can greatly impact a determination of whether the bargaining constituted bad faith.  The majority here noted that the employer made some hard bargaining proposals which might seem distasteful on first blush.  The fact that the union failed to respond materially other than to reject the proposals without making a counter-proposal left the employer with a difficult choice:  modify its own proposal or simply hold onto the proposal until a meaningful response was received.  However, employers should note that while it is permissible to take an “extreme” position initially, employers must still engage in meaningful discussions and seriously consider a union’s counterproposals during subsequent bargaining.  The outcome of the “give and take” between employer and union ultimately rests on the strength of the parties’ positions.  This is a case that undoubtedly would be decided differently under a different Board.  At least for now, an employer does not violate its duty to bargain by sticking to its guns, so long as its actions remain reasonable.

Ninth Circuit Overturns Board Decision Finding Unlawful Secondary Picketing, Citing Insufficient Evidence of an Intent to Coerce a Neutral Employer

Last week, the United States Court of Appeals for the Ninth Circuit overturned a decision by the NLRB dismissing a complaint against two joint employers alleging unlawful termination in retaliation for picketing activity. The Court, reversing the Board, found that the employees’ picket was not unlawful secondary activity and therefore did not lose the protection of the Act. Service Employees International Union Local 87 v. NLRB, Case No. 19-70334 (Apr. 28, 2021).

Background

The case involved a ULP charge filed by the union on behalf of terminated employees against their primary employers, a building services company and a janitorial services subcontractor. A property management company hired the building services company to provide janitorial services to one of the buildings it managed. The building services company subcontracted the work to the janitorial services subcontractor who directly employed the employees to perform the janitorial work.

In response to issues concerning wages and other working conditions, the employees, with the assistance of the union, organized two pickets in front of the building for which the employees provided janitorial services. At the conclusion of the pickets, several employees were fired by the janitorial services subcontractor, and the building services company terminated its contract with the property management company and, consequently, with the subcontractor. The union filed a ULP charge against the primary employers, alleging unlawful termination in retaliation for protected activity under the Act. However, the NLRB credited the employers’ affirmative defense and found that the employees lost the protection of the Act by engaging in secondary activity in violation of Section 8(b)(4)(ii)(B) of the Act. The Board held that the employees’ picketing constituted secondary activity intended to pressure a neutral party, the property management company, to “cease doing business” with the primary employers.

Analysis

Under the Act, conduct that coerces, threatens, or restrains a neutral employer with the objective of pressuring the neutral employer to “cease doing business” with the primary employer, or the employer with whom employees have a labor dispute, constitutes unlawful, secondary activity. Conduct is found to have this requisite secondary objective when it seeks to force the neutral employer to terminate its business relationship with the primary employer or to pressure the primary employer into changing its labor policies. The Board found that the General Counsel and the union failed to establish that the picketing clearly disclosed that the dispute was with the primary employers, the building services company and the subcontractor, creating a rebuttable presumption that the picketing was unlawful secondary activity. The Board further held that the picketing had an impermissible secondary objective.

On appeal, the Court concluded that the Board’s finding of unlawful picketing activity was not supported by sufficient evidence but rather was based on the “thinnest of reeds”.  Contrary to the Board, the Court found that the picketing employees clearly indicated that their dispute was with their primary employer, stating that the single sentence in a leaflet isolated by the Board in its analysis did not obfuscate the plain language of the picketers’ signs and materials that called on the building services company by name.

The Court also disagreed with the Board’s finding that there was independent evidence that the employees’ picketing had a secondary purpose, namely to pressure the property management company to “cease doing business with” the primary employer. The Court held that the Board placed too much weight on statements made by employees to the property manager during the picketing, noting that none of the picketing employees’ signs or leaflets mentioned the property management company and there was no evidence in the record showing that the employees requested the property management company to intervene or threatened action against the neutral employer. As such, the Court held that the Board erred in concluding that the employees’ picketing violated Section 8(b)(4)(ii)(B) of the Act.

Takeaway

The Court’s holding suggests that the evidentiary standard for finding an impermissible secondary objective is fairly significant. While the Board’s interpretation of the Act, including the meaning of unlawful secondary activity under Section 8(b)(4)(ii)(B), is owed deference from reviewing courts, the Ninth Circuit’s decision in this case indicates that federal courts can and do intervene where the Board’s decision, in the court’s opinion, is not supported by sufficient evidence. Depending on whether other circuit court of appeals follow the Ninth Circuit’s precedent, this decision may increase the evidentiary burden that entities must carry to show that otherwise concerted activity is secondary in nature, thus losing its protection under the Act.

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