Labor Relations Update

NLRB Advice Memorandum: Firing Employees Because of Discussions Related to Tip-Pooling Violates Section 8(a)(1)

In an Advice Memorandum released Thursday, the NLRB’s Division of Advice concluded that employees who discussed an employer’s tip-pooling practices engaged in protected concerted activity, such that discharging the employees for this activity violated Section 8(a)(1) of the NLRA.

Employees working at a steakhouse in New York City often complained about the restaurant’s tip-pooling system. Under the system, management counted and divided tips among employees regardless of the employees’ shift.

The Advice Memorandum noted some employees “objected to the non-transparency and unfairness of the Employer’s tip compensation system” during various pre-shift and staff meetings. In response, the Employer repeatedly warned employees “to not complain or talk to each other about the tip issue, and that doing so could endanger their jobs.” The Employer repeatedly told employees that continuing to talk about the tip-pooling system would result in adverse consequences, including job losses. The four charging employees were eventually discharged pursuant to the Employer’s progressive disciplinary policy, for stated reasons including alleged insubordination and common infractions that were inconsistently disciplined.

The Advice Memorandum concluded that “employee discussions and complaints about employers’ tip policies are ‘undeniably’ protected by Section 7.” The Memorandum compared the issue here to the Board’s recent decision in Alstate Maintenance, which we previously discussed here. Alstate involved a statement made by a skycap working for a contractor at JFK International Airport. A supervisor told the skycap and three of the skycap’s co-workers that an airline had requested skycap assistance handling a soccer team’s equipment. In front of the other skycaps, the charging party employee stated that they had done a similar job earlier and did not receive a tip for it. When the soccer team arrived and the skycaps walked away, the employee told a manager that the skycaps did not want to complete the job because of the anticipated small tip.

The Board in Alstate found that the skycap’s first statement was not intended to induce group action about a workplace concern; rather, it amounted only to a mere gripe. In this case, however, the charging party employees “acted concertedly by repeatedly bringing employees’ concerns” regarding tip-pooling to management.

Also unlike the steakhouse here, the Alstate employer had no control over the customer’s tip practice, so the skycap’s statement was not for the purpose of mutual aid or protection. The steakhouse employees’ conduct was protected concerted activity as the Employer controlled the tip-pooling policy.

The Advice Memorandum also concluded there was “a nexus between the Charging Parties’ protected activity and the Employer’s discharge decisions.” The Advice Memorandum pointed to various aspects of the record that showed animus towards the employees’ complaints was a motivating factor for the discharges, such as the Employer’s targeting the employees for discussing the tip-pooling practice, and the Employer’s telling employees that it intended to “clear out” employees talking about tips. The Advice Memorandum concluded the Employer’s stated reasons for discharging the charging party employees were pre-textual. The Advice Memorandum directed that complaint issue in the case.

Takeaways

This is a classic case where an employer’s direct threats to quell protected activity of its employees resulted in a complaint being issued. In that regard it is unremarkable; it is fairly easy for the agency to draw a straight line between an explicit threat to terminate over group discussion (which is a separate violation of the Act) and the discharge itself. So why was the case sent to Advice?  The likely reason is the Alstate decision by the Board appeared to be similar and the Region wanted guidance as to how to proceed. In the end the Advice Memorandum and the Alstate Board Decision are consistent applications of the law. The General Counsel publishes Advice Memoranda from time to time as a guide to the public about its current thinking, and it helps to clarify the difference between a gripe about a particular type of customer, and the employer’s policy of taking tips slated for a particular employee and sharing these monies with all employees.

It is also important to note that many state and local laws prohibit punishment for discussion of compensation. Also, tip-pooling has been the subject of many a class action lawsuit alleging that the practice deprives the recipient of monies given to the person.

NLRB: Members Of Trade Group Are Not “Employees” Covered By The NLRA

On September 11, 2020, a three-member National Labor Relations Board panel unanimously ruled that a trade group representing sign language interpreters did not violate Section 8(a)(1) of the Act by removing its members’ posts on its closed Facebook page.  The posts, made by individual members of the trade group, discussed the interpreters’ work conditions and supported unionization.  According to the Board, because the interpreters were not the organization’s employees and thus, not covered by the Act, the trade group could lawfully remove the posts.

In Registry of Interpreters for the Deaf, Inc. and Pacific Media Workers Guild, Local 39521, Case No. 20– CA–164088, the charged party–Registry–is a national professional association of interpreters for deaf individuals.  The trade association maintained an antitrust policy and a civility policy in connection with its members’ use of its private Facebook page.  The antitrust policy prohibited members from using its Facebook page and other online forums as a platform to set prices, fees and other terms for their services.  The civility policy restricted members from using the Facebook page for solicitation.  It further required members to show “mutual respect” and gave the trade association discretion to remove posts it found to be in violation of either policy.  In October 2015, the trade association removed several Facebook posts by members discussing their work conditions and expressing support for unionizing, because they violated the trade association’s policies.

An unfair labor practice charge was filed by a union, which resulted in a complaint being issued.  The parties stipulated to the facts which were not in dispute.

Relying on a 2011 Board decision, New York, New York LLC, 356 NLRB 907 (2011), which this Board overruled last year in Bexar County Performing Arts Center Foundation d/b/a Tobin Center for the Performing Arts, 368 NLRB No. 46 (2019) (which we previously covered here), the ALJ held that the trade association’s members were akin to employees of a contractor who performs work on another employer’s premises and were therefore employees covered by the Act.

In reversing the ALJ, the Board found that none of trade association’s members were employees. The trade association did not control, even indirectly, the members’ wages, hours or working conditions.  Nor did the trade association compensate its (approximately 16,000) members.  None of the members performed work for the trade association (either on the trade association’s physical property or in its electronic forums), or for a contractor of the trade association.  Further, the members did not perform work integral to trade association’s business, nor was the registry’s business as a trade association dependent upon the services of its members.  The members whose posts were removed did not identify as trade association’s employees.  Furthermore, only a fraction of the trade association members were employees of any employer.  The Board explained that “[t]hose facts are particularly significant: if the [trade association] does not, even indirectly, control the employee members’ wages, hours, or working conditions, it cannot be found to restrict or interfere with the employee members’ rights as employees.”

The Board did not analyze whether Registry’s policies were lawful under Boeing Co., 365 NLRB No. 154 (2017), choosing instead to dismiss the charge based on the threshold issue of whether the members were statutory employees.

Takeaways

This is an interesting case where the outlines of the coverage of the NLRA. On the surface it appears individuals attempted to discuss the merits of unionization on an online forum, and the posts were removed.  Had such an action been conducted by an employer removing the employee’s posts, there is little doubt such conduct would violate the Act.  In this case, the forum used by the interpreters, and the charging party union, was a closed Facebook page of a trade association.  It seems clear the real target of the union’s organizing efforts was the various employers employing interpreters for various tasks.

The stipulated facts contain the following, which was not cited by either the ALJ or the Board probably because it was a legal conclusion:  “[T]he individual interpreter-members are not employees of [trade association] within the meaning of Section 2(3) of the Act and are not on a long-term or continuous contracted status with the [trade association]”  Section 2(3) of the Act broadly defines the term “employee” to “include any employee, and shall not be limited to the employees of a particular employer. . .”  Ultimately, in Board case law, employee status typically comes down to economic control of the individual.  Here, the trade association’s lack of control over any of the terms and conditions of its members’ work was crucial to the Board finding that they were not employees for purposes of the Act. As such, the interpreters did not have a Section 7 right to post about unions or terms and conditions of employment.   This ruling provides additional clarity in determining whether individuals who do not have an employment relationship with an employer are nevertheless covered by the Act.

NLRB Issues Several Advice Memoranda Providing Guidance on COVID-Related and Other Workplace Issues

On September 15, 2020, the National Labor Relations Board (the “NLRB” or “Board”) Division of Advice (“Advice”), published four Advice Memoranda addressing an array of issues ranging from COVID-19-related unilateral actions to non-work political advocacy and the legality of confidentiality provisions in separation agreements.  The Memoranda were drafted by Advice last month, and join the panoply of other recent guidance released by Advice on July 15 and August 13.

Advice Memoranda are only binding on the parties subject to the instant dispute, but they are publicly released to give the public an idea of how the agency might handle similar issues, and thus are instructive to employers, unions and employees considering their rights and obligations under the National Labor Relations Act (the “NLRA” or “Act”).

Unilateral Changes Pursuant to Management-Rights Clause and Effects on Bargaining Obligations in light of COVID-19

In Comcast Cable, Advice considered whether a contractual management-rights clause permitted Comcast to unilaterally require employees engage in “home-garaging”, or the keeping of company trucks in their home garages.  The Board analyzed this under the “contract-coverage” doctrine set forth in MV Transportation, 368 NLRB No. 66 (2019).  After examining the management-rights clause in the contract—which authorized the employer “to make and enforce new work rules,” including “operational rules and procedures…and safety rules and procedures” as well as other strong language evidencing Comcast’s managerial discretion in its business operations—Advice concluded that Comcast had contractual authority to implement the policy to protect workers.

While Advice acknowledged Comcast had the contractual right to implement the decision regarding home-garaging, Advice also found that the parties reached a bona-fide impasse over the “effects” of the policy, citing the parties’ numerous conversations about the policy between, and where the parties exchanged numerous good-faith proposals regarding the scope and length of the policy.  While Comcast refused to establish home-garaging as a permanent feature, it nevertheless sought potential compromises and continued to solicit counteroffers, demonstrating the employer’s proposal was not delivered as fait accompli.

Interestingly, the Region asked Advice whether it should issue Complaint to urge the Board to expand the “exigent economic circumstances” exception of the duty to bargain because Comcast argued the pandemic required it to implement the home-garaging policy for health and safety (but not economic) reasons.  Because Comcast bargained to impasse over the “effects” of the home garaging policy, Advice opted not to address the “exigent-economic-circumstances” issue.

Unilateral Implementation of COVID-19 Safety and Benefits Policies

In another COVID-related Advice memo, Mercy Health Partners, the employer, a hospital network, made numerous changes to its policies and benefits without first notifying the Union and providing an opportunity to bargain.  The hospital network altered its policies related to the use of personal protective equipment (“PPE”), hospital visitors, COVID-related paid leave and time away from work, delegation of ICU nurse duties to others, travel reimbursement (to encourage social distancing), event reporting processing for COVID-related events, and assignments/safety protocols for immunocompromised or pregnant staff.

Advice concluded that the employer did not violate Sections 8(a)(5), 8(a)(1) or 8(a)(3) of the NLRA because the unilateral changes were (i) legally mandated by state executive orders, or (ii) reasonably related to the COVID-19 emergency.  Advice also found that the employer satisfied its obligation to bargain post-implementation by negotiating or communicating its position on each item over which the Union requested to bargain.  Further, the parties continued to meet on a weekly basis to negotiate pandemic-related “effects” on the hospital network’s employees.

Additionally, Advice found that the policy changes regarding the use of PPE was not discriminatory or retaliatory because the policy applied even-handedly to unit and non-unit employees alike.  Advice agreed with the Region’s recommendation to dismiss the charges.

Non-Work Related Political Activity

In UFCW 1994 MCGEO, an employee who worked as a union representative for a labor organization representing uniformed police officers was discharged “for working on police transparency and accountability legislation . . . in [their] capacity as a state legislator.”  The employee’s advocacy for police reform occurred while the employee was acting as a Maryland State delegate and “testifying before a local county council and otherwise.”  Advice concluded that the employer did not violate Section 8(a)(1) of the Act when it discharged the employee, as the employee’s advocacy was not at all related to their employment for the employer; nor did that advocacy have any connection to an employment concern of any employee.  Rather, the employee “acted in the interest of the community at large and in furtherance of [their] own political agenda” when they advocated for police reform.  Given that the Act “does not protect employee political advocacy that has no nexus to a specifically identified employment concern,” Advice recommended that the Region dismiss the unfair labor practice charge related to this activity.

Separation Agreements Prohibiting Workers from Discussing Wages

In Modernize Inc., Advice evaluated the legality of a separation agreement that included language prohibiting the employee from discussing terms and conditions of employment.  As background, in July 2019, an employee was discussing compensation with a co-worker, encouraging the co-worker to seek a raise, the employee was told by management numerous times to stop discussing compensation with other employees.  The employer ultimately terminated the employee for “continuing to disclose private conversations”, and the parties entered into a separation agreement that included a general release from all legal claims in exchange for three weeks’ pay.  The separation agreement contained a confidentiality provision, which required the employee to keep the agreement’s terms confidential, except for consultations with an attorney or family member.  It also contained a non-participation provision, which prohibited the employee from voluntarily participating in any judicial or adversarial proceeding relating to his or her employment or termination.

Without addressing whether the employee’s discharge was lawful, Advice concluded that the separation agreement – including its confidentiality and non-participation provisions – was lawful.  Citing Shamrock Foods Company, 366 NLRB No. 117 (2018), Advice reasoned that the Board has upheld similar confidentiality provisions as lawful and that when read in its entirety, the non-participation provision was lawful because it did not restrict the employee’s ability to participate in Board investigations or proceedings either individually or on behalf of a co-worker.

Advice also recommended that the Region honor the release of claims contained in the separation agreement, including to the NLRA claims raised against the employer.  Applying the four-factor test set forth in Independent Stave Co., 287 NLRB 740 (1987), Advice reasoned that: (i) there was nothing to suggest that the employee did not intend to enter into the separation agreement and, as such, all parties agreed to be bound; (ii) the settlement at issue was reasonable given “serious weaknesses in the Region’s theory of the case,” as the Board has recently questioned precedent holding that employers violate the Act by forbidding workers from discussing wages; (iii) there was no “undue pressure” on the employee to execute the agreement, as the employee was highly compensated, was given ten days to consider the agreement, and was encouraged to consult with an attorney; and (iv) the employer’s potential violations of the Act were not tied to an “unlawful scheme.”

We will continue to monitor Advice’s guidance to the labor and management community, as well as Board cases on these important timely topics.

No Reasonable Expectation of Recall? No Election: Board Cancels Union Election at Casino Closed During COVID-19

The National Labor Relations Board recently cancelled a union election at a Las Vegas casino that suspended its operations and laid off employees amid the COVID-19 pandemic. In NP Texas LLC d/b/a Texas Station Gambling Hall and Hotel and Local Joint Executive Board of Las Vegas, 370 NLRB No. 11 (2020), the Board found that the Regional Director erred in scheduling the election given that the laid-off employees had no “reasonable expectation of recall” and thus were ineligible to vote.

Texas Station Casino and the COVID-19 Pandemic

On March 18, 2020, the Governor of Nevada issued an emergency declaration directing that all casinos cease operations until April 16. In accordance with the Governor’s order, Station Casinos informed its employees that it would be temporarily closing its properties, including Texas Station Gambling Hall and Hotel (the “Texas Station Casino”). Although some supervisors at the Texas Station Casino informed their subordinates in early March that they would likely be recalled in April or May, the Governor twice extended its emergency order and all casinos remained closed.

On April 29, the Governor ordered gaming operations to remain closed through May 15, and until the Nevada Gaming Control Board determined that operations could safely resume. On May 1, Station Casinos sent a letter to all of its employees outlining a reopening plan at its “Phase One” properties. According to the letter, all “Phase Two” properties, including the Texas Station Casino, would remain closed. The letter further stated that while there would be staff reductions, Station Casinos was hopeful that it would be able to “rehire many of our valued team members when we emerge on the other side of the crisis.”

Each team member separately received a communication with respect to his or her employment status. The petitioned-for employees received termination letters, which indicated that their employment would be terminated because the Texas Station Casino “made the difficult decision to temporarily close.”

Over the next several weeks, the Governor issued additional emergency directives and the Texas Station Casino remained closed. However, the Texas Station Casino displayed a marquee which read, “STAY SAFE, WE’LL BE BACK!”, and its website displayed a pop-up window indicating that while the casino was “temporarily closed,” it “looked forward to opening soon.”

On May 28, 2020, the union filed a petition to represent a unit of employees at the employer. On July 2, the Regional Director directed a mail-ballot election, reasoning that although the petitioned-for employees were laid off, they had a reasonable expectation of recall. Among other things, the Regional Director cited the Texas Station Casino’s public statements (i.e., the marquee and representations of various supervisors in early March) to support his position.

The Board’s Decision

In an August 31 decision, the Board disagreed with the Regional Director’s reliance on “vague and hopeful” statements by Station Casinos and dismissed the petition. According to the Board, the employer had not indicated when (if ever) it would resume operations or recall employees, and laid-off employees could not reasonably rely on the representations of supervisors dating back to early March. Further, because the employer did not have any “past practice” relating to layoffs of employees amid a pandemic, it could not easily predict when it would be able to resume operations and recall employees.

Given that none of the petitioned-for employees had a reasonable expectation of recall, the Board determined that there were no eligible voters who could vote in an election held in the foreseeable future. The Board therefore dismissed the petition, but indicated that the Petitioner could refile if and when the Texas Station Casino resumes operations.

Implications

The Board’s decision here illustrates the Board’s attempt to navigate the unique circumstances presented by the COVID-19 pandemic. Board precedent is clear that workers who are temporarily laid off from their employment have a right to form a union and may even vote in an election. However, the Board’s decision in NP Texas LLC makes plain that workers affected by the COVID-19 pandemic, an uncertain and continuously evolving situation, need more than “vague and hopeful” statements by their employer in order to have a reasonable expectation of recall.

We will continue to keep you posted on the Board’s decisions related to the COVID-19 pandemic.

 

NLRB Division of Advice Dishes Some Guidance With Respect to COVID-Related ULP Charges

The pandemic has thrown a number of obstacles at employers and employees as everyone attempts to navigate a novel situation.  On August 13, 2020, the National Labor Relations Board (“NLRB”) Division of Advice (“Advice”), the agency’s internal think-tank, published five Advice Memoranda dismissing unfair labor practice charges against employers in connection with issues concerning the COVID-19 pandemic.  The Memoranda were all drafted by Advice within the past two months, expanding upon the guidance previously released on July 15.

Each Memoranda addresses a different COVID-related complaint concerning a variety of topics, such as employers’ responses to employees voicing concerns about workplace safety, allegations the employer engaged in discriminatory layoffs, and obligations to engage in midterm bargaining over COVID-related issues and provide information.

While some might characterize Advice’s dismissal of cases as giving employers more latitude, the results in the various Memoranda are consistent with existing Board case law.  Although not binding on disputes amongst other parties, the Memoranda are intended to give the public some idea of how the agency would handle similar types of issues and—although these cases are fact-dependent—the Memoranda are instructive when employers are considering their obligations under the National Labor Relations Act (“NLRA” or “Act”) during these turbulent and uncertain times.

Alleged Discriminatory Layoffs and Employer Response to Section 7 Activity during COVID-19: 

  • In Hornell Gardens, employees in a health care facility took various actions in response to the COVID-19 pandemic. One employee refused to share gowns, noting personal disgust and fear for that individual and his family’s safety. Another employee refused to work a scheduled shift due to concerns about COVID-19 exposure. Because of these actions, the employer threatened (in a statement in an online newsletter) to report the employees to the New York licensing authority for quitting without notice. Advice concluded that the employees’ conduct was not protected by Section 7 of the Act because the employees never spoke to management about their concerns nor did they contemplate or engage in group action, a requirement for the conduct to be deemed “protected, concerted activity” under Section 7 of the Act.  Advice also found that the employer’s statement about reporting the employees for abandoning their posts was not an unlawful “blackball” threat against future employment, but rather was a legitimate warning given the strict licensing requirements for patient care in the industry.
  • In Marek Brothers Drywall, Advice concluded that an employee of a Texas-based concrete company engaged in protected, concerted activity when the employee made comments relating to the lack of available resources to wash and sanitize as a precaution against COVID-19. Nonetheless, the record was insufficient to demonstrate employer knowledge or animus as it related to the employer’s decision to layoff the employee. Accordingly, Advice determined that dismissal did not violate Section 8(a)(1) of the Act.

Midterm Bargaining related to Union’s Proposals for Paid Sick Leave and Hazard Pay:

  • In Memphis Ready Mix, Advice concluded that the Employer did not violate Section 8(a)(5) of the Act by refusing to bargain over the Union’s midterm proposals regarding paid sick leave and hazard pay that were raised in light of COVID-19. In this case, the CBA (which remained in effect until at least September 30, 2020, and if not terminated, then year-to-year thereafter) already addressed leaves of absences and wages, and included a standard zipper clause, which Advice deemed “dispositive” because the clause provided that matters not covered by the CBA shall not be “subject to further collective bargaining” during the term of the agreement.

Duty to Furnish Information: 

  • In Crowne Plaza O’Hare, in connection with the employer’s shutdown of its hotel and initiation of staff layoffs, Advice concluded that the hotel did not violate the Act when it declined to provide information requested by the union concerning funding the employer sought under the CARES Act and other financial information, as well as documents between the company and clients to support the layoff decision. While the employer provided the union with partial responses (including charts showing the decrease in the hotel’s occupancy level), Advice concluded that the employer was not obligated to provide the detailed financial information the union sought because the employer did not cite to insufficient funds or lack of assets as the reason for the layoffs.  Rather, the hotel was temporarily closed due to COVID-19 “due to loss of business,” which was undisputed, and is an entrepreneurial decision for which no decisional bargaining obligation attaches.  Although employers are generally required to bargain over the “effects” of a decision such as this, when the layoffs are an “inevitable consequence” of the closure, then effects bargaining will not be fruitful and is not required.  Even if the employer had an effects bargaining obligation, the information requests were not relevant because the employer did not claim lack of assets resulted in the layoffs and closure.  The union’s failure to demonstrate relevance warranted dismissal of the charge.
  • In ABM Business, the union sought information relating to COVID-19 layoffs in connection with a pending grievance, such as communications between the company and clients supporting the decision to layoff and the company’s document retention policy. Advice dismissed the charge because the requests did not relate to employees’ terms and conditions of employment, and the union failed to articulate how the information was relevant.  Advice concluded that the union’s failure to provide a sufficient explanation as to why it needed the information and engage in the interactive process with the employer over the requests resulted in a complaint not being warranted.  Advice also found no merit to the charge that the employer failed to timely respond to the request for documents and information relied upon to make the layoff decisions.  The employer responded, and the union failed to engage with the employer about what was missing.

Takeaways

Advice’s recent Memoranda are instructive in evaluating how a Region may handle an unfair labor practice charge arising from labor-management relations during COVID-19.  Although the cases are fact-specific and highly-dependent on the text of the operative collective bargaining agreements, the Memoranda reinforce several principles.

First, employers and unions must refer to the governing CBA terms, when one is in effect, to evaluate the parties’ bargaining obligations—even during a pandemic.  Voluntary negotiations to address unforeseen consequences in a CBA as a result of the pandemic are of course permissible, and sometimes encouraged, but if agreement cannot be reached, then the parties are left with the existing bargain as codified in the CBA to deal with the present circumstances, and neither the employer nor the union is required to bargain over those subjects.

Second, each instance of employee concern expressed about workplace safety needs to be evaluated in context to determine whether the conduct is protected by Section 7 of the Act.  For instance, where the employee is not at all engaged in a group-effort, but instead is focused on the employee’s individual concerns, while other employment laws may come into play, the NLRA likely will not because the conduct is not “concerted activity.”  In addition, employees who abandon their post do so at their own peril, even due to safety concerns during a pandemic; existing CBA no-strike clauses and licensure requirements in the patient care field should be considered.

Finally, as always, concomitant with the duty to bargain is the duty to furnish information but as we have detailed many times, not every request creates an obligation to provide it under the Act.  Even when the employer has the right to make a decision unilaterally, as may be the case with layoffs if they are covered by a CBA or the result of a business shut down, the employer is typically required to engage in effects bargaining, which also entails the duty to respond to information requests.  When a request concerns financial information and information outside of bargaining unit employees’ terms and conditions of employment, however, the onus is on the requesting party to demonstrate relevance, unless relevance is “apparent” from the requests.  Advice’s determination that funding requests through outside loan sources, such as the CARES Act, and detailed financial information, are not relevant when the employer shut down its operation and laid off union staff due to lack of business because the employer did not trigger the relevance of the information sought by claiming “inability to pay.”

We will continue to monitor Advice’s guidance to the labor and management community, as well as Board cases on these important timely topics.

Overruling District Court, Second Circuit Affirms Individual Employees Are Bound By Arbitration Award Prosecuted By Their Union

On July 29, 2020, the United States Court of Appeals for the Second Circuit (the “Second Circuit”) handed down what amounts to a significant win for the collectively-bargained dispute-resolution process set forth in the agreement between ABM Industry Groups, LLC (“ABM”) and its Union, the International Union of Operating Engineers, Local 30 (“Local 30” or the “Union”)—and similar ones in agreements throughout the country.  In a per curiam decision, the Court reinforced a Union’s authority as an agent for its members to administer the collective bargaining agreement (“CBA”), prosecute grievances and settle cases, which bind the Union’s members despite the fact that the individual employees are not signatory to the CBAs under which they are working.

Factual Background

The appeal stems from ABM’s contract to provide building maintenance and janitorial services for a commercial office building in Tarrytown, New York.   ABM’s contractors at the site were represented by Local 30.  ABM and Local 30 were parties to a CBA in effect through the end of 2017.  In March 2017, a new owner purchased the Tarrytown property and notified ABM that it would not retain the Local 30-represented workers.  ABM paid those workers termination pay and accrued leave pursuant to the CBA.  However, without ABM’s knowledge, the new owner then rehired some of the Local 30 workers.

Local 30 later filed a grievance claiming that ABM had not paid full accrued vacation pay to two of the rehired employees.  When ABM discovered these employees had been rehired, it demanded the return of termination and accrued leave pay it had previously provided them.  Local 30 countered that ABM actually owed the employees money and the matter proceeded to arbitration.  On October 12, 2018, the arbitrator concluded that the two rehired employees were not entitled to termination pay and directed them to repay ABM as a remedy.

ABM subsequently sought to enforce the arbitrator’s award by moving to confirm the award in the Southern District of New York.  The district court declined to do so, vacating in part the arbitrator’s award, arguing that the two rehired employees were not signatories to the underlying CBA between ABM and Local 30, and thus had no basis to be bound by the agreement.  ABM appealed to the Second Circuit.

Second Circuit Reverses the Lower Court and Confirms the Arbitration Award

The district court held “that a union can[not] bind its members to make payments ordered by an arbitrator under an arbitration agreement to which they were not signatories, following a process in which they did not participate.”  The Second Circuit disagreed fundamentally with this conclusion, finding that under agency principles and federal labor law precedent both employees were bound by the arbitration award—after all, the employees’ Union was signatory to the CBA, the employees initiated the grievance through the Union, and the Union followed the grievance procedure set forth in the CBA to the letter.  Thus, the arbitrator did not exceed her authority in ordering the remedy she saw fit.

Takeaways

The Second Circuit reinforced an axiomatic principle in labor relations that under most CBAs, the Union—as the sole collective bargaining representative for the covered employees—is typically vested with the exclusive authority to commence a grievance against the employer on behalf of its members.  When the Union does so, the employees represented by the Union are bound by the resulting arbitration award.  A ruling to the contrary would have upended decades of jurisprudence and created unenviable volatility in labor-management relations, ostensibly entitling individual grievants a second bite at the apple in federal court.

This decision reinforces the important role unions play in representing their members in the grievance-arbitration process, one where—as the Second Circuit noted—individual employees have little recourse to move to challenge once final, unless the employee can show the union violated its duty to fairly represent the employees and/or if the employee can otherwise demonstrate fraud, deceit or that the grievance was a “sham.”  The absence of any such assertions by the employees in this case proved fatal to their challenge, underscoring the deference courts give to labor arbitrators in adjudicating private disputes and rendering awards, and unions in representing their members during the grievance process.

Senate Confirms Pair of Appointees to National Labor Relations Board

In a package deal, the U.S. Senate confirmed the appointments of two members to the National Labor Relations Board (“Board” or “NLRB”).  Lauren McFerran, who previously served as a member of the NLRB for five years until her term expired on December 16, 2019, will rejoin the current Board as its only Democrat.  Current Republican Board member, and former Chair, Marvin Kaplan was appointed to a new term.  His term was set to expire on August 10, 2020.  His new appointment will now expire in August 2025.

Member McFerran, who was renominated by President Trump shortly after her term expired in December 2019, will occupy one of the two open Democrat seats and bring the total number of Board members up to four.  Traditionally, three Board seats are held by members of the President’s party and two are reserved for the minority party.  There is currently no other Democratic nominee pending for the remaining open seat.

Even with these most recent appointments, Republicans still comprise the majority of the Board.  The two other Republic Board members, William J. Emanuel and chairman John F. Ring, were appointed by President Trump in 2017 and 2018, respectively.  Their terms will expire in 2021 and 2022, respectively.  Thus, it is likely that the Board will have a Republican majority until at least the end of 2021 regardless of who is in the White House.

Member McFerran has written a number of dissents to controversial decisions and regulatory initiatives made by the Board’s Republican majority, including such important topics as assessing joint employment, the standard to evaluate whether an employer’s unilateral change violates the NLRA, and worker misclassification.  We anticipate this trend will continue for the foreseeable future.

While the most recent appointments will ensure that the Board has enough members to continue to operate, the outcome of the upcoming presidential election will certainly have an impact on the composition of the Board in the years to come.

National Labor Relations Board Announces Another Proposed Rule Regarding Representation Elections

On Tuesday, July 28, 2020 the National Labor Relations Board (NLRB or “the Board”) published a Notice of Proposed Rulemaking in the National Federal Register. With its latest foray into rulemaking, the Board is looking to make two amendments to the current rules governing representation elections held under the National Labor Relations Act.  Both these amendments are subject to public comment for sixty days following the published notice.

This is the third set of amendments the NLRB has made to the election rules in the past twelve months.  In December 2019, the Board issued a proposed rule that would make sweeping changes to election rules and processes by eliminating many of the quickie election rules issued in 2015.  As you may have seen, a federal judge blocked implementation of some of those rules, holding they failed to comply with the APA by circumventing the notice-and-comment procedure.  The Board has since appealed that order, and implemented the rules that were unaffected by the order.  The Board also announced changes to the Board’s blocking charge policy, timing and notice requirements attendant to voluntary recognition, and 9(a) recognition in the construction industry in April.  Implementation of those rules was delayed until July 31 due to COVID-19.

The first amendment announced on July 28 seeks to eliminate the Board’s requirement that employers provide available personal email addresses and home and cell phone numbers of all eligible voters to the Regional Director.  The Board believes that the current requirement does not protect employees’ privacy interests, and eliminating this rule would better advance these important privacy interests.

The second amendment seeks to provide absentee ballots to employees currently on military leave.  In light of congressional policies that protect service members’ employment rights and provide them with the opportunity to vote in federal elections, the Board believes it should seek to accommodate service members during representation elections.  Additionally, the Board believes it can do so without impeding the resolution of these elections.

These two most recent proposed changes to NLRB representation election rules will not only protect employee privacy, but will also bolster enfranchisement for workers who are out of the workplace on military leave when an election occurs.  We will certainly track the progress of this most recent round of proposed rules and will keep you posted of any significant updates.

NLRB Upends Context-Specific Tests for Profane Conduct, Folding Such Discipline Into Traditional Motivation Tests For Evaluating Lawfulness

In another long-anticipated decision, on July 21, 2020, in General Motors LLC, 369 NLRB No. 127 (2020), the Board replaced three context-specific rules for determining whether certain abusive conduct committed by employees is protected under Section 7 of the National Labor Relations Act (the “Act”) with the Wright Line standard that is traditionally used to assess whether an employer’s conduct is discriminatory under the Act.

Applying the Wright Line standard, which evaluates whether an employee’s conduct would have been punished absent his/her Section 7 activity, to the facts of the case, the Board held that the employer did not violate the Act when it suspended an employee who engaged in “profane or racially offensive conduct towards management.”

According to the Board, the Wright Line standard is appropriate here because it “promises more reliable, less arbitrary, and more equitable treatment of abusive conduct.”  In practice, we expect that this standard will provide more leeway for employers to discipline problematic employees who engage in offensive behavior without fear of the remedies of back pay and/or reinstatement under the Act.

Factual Background:  Employee’s Profane and Offensive (and Insubordinate and Threatening) Conduct Resulted in Three Separate Disciplinary Actions

An employee (Charging Party), a member of a union committee in a union-represented workforce, was suspended on three separate occasions for engaging in the following conduct:

  • On April 11, 2017, during the course of a conversation with his manager regarding overtime coverage, the employee yelled that he did not “give a fuck about your cross-training,” “we’re not going to do any fuckin’ cross training if you’re going to be acting that way,” and that his manager could “shove it up [his] fuckin’ ass.” The employee was suspended for three days.
  • On April 25, 2017, during a meeting with two other union committee members and a dozen managers, the employee “became very loud and pointed his finger while speaking.” One of the employee’s managers told him he was speaking too loudly, to which the employee responded by “lower[ing] his voice and mockingly act[ing] a caricature of a slave.  Referring to [the manager], [the employee] said, ‘Yes, Master, Your Master Anthony,’ ‘Yes, sir, Master Anthony,’ ‘Is that what you want me to do, Master Anthony?,’ and also stated that [the manager] wanted him ‘to be a good Black man.’”  The employee was then suspended for two weeks.
  • Finally, on October 6, 2017, during a manpower meeting with another union committee member and four managers, the employee “kept repeating the same questions. When [one of the managers] said they were going to move on, [the employee] said he would ‘mess [the manager] up.’  [The manager] asked if that was a threat, and [the employee] replied [the manager] could take it how he wanted.  Later in the meeting, [the employee] began playing loud music from his phone that contained profane, racially charged, and sexually offensive lyrics.  The music went on for 10 to 30 minutes.  When [the manager] left the room once or twice, [the employee] turned off the music, only to turn it back on when [the manager] returned.”  The employee was suspended for 30 days.

Previous Standard:  Context-Specific Approach to Abusive Conduct by Employees

Prior to this decision, the Board has held that “an employer violates the Act by disciplining an employee based on abusive conduct ‘that is part of the res gestae’ of Section 7 activity, unless evidence shows that the abusive conduct was severe enough to lose the employee the Act’s protection.”

The Board determined whether abusive conduct was severe enough to lose the protection of the Act by applying one of the following tests, depending upon the context of the activity at issue:

  1. The Atlantic Steel test, which is used when abusive conduct occurs in the course of otherwise-protected workplace conversations with management. The ALJ applied this test to the conduct here, which considers: (1) the place of the discussion; (2) the subject matter of the discussion; (3) the nature of the employee’s outburst; and (4) whether the outburst was, in any way, provoked by an employer’s unfair labor practice.
  2. The totality of the circumstances test, which is used when abusive conduct takes place on social media or in workplace discussions among coworkers.
  3. The Clear Pine Moldings test, which is used when the abusive conduct takes place on the picket line. Under this test, an employee loses the Act’s protection where “the misconduct is such that, under the circumstances existing, it may reasonably tend to coerce or intimidate employees in the exercises of rights protected under the Act.”

The Board Ditches Context-Specific Tests In Favor of the Wright Line Standard in All Circumstances

In deciding to apply the Wright Line standard, the Board identified the following shortcomings with each of the three context-specific tests, while also noting as a general matter that setting context-specific standards is “in tension with anti-discrimination laws”:

  1. The Atlantic Steel test is results-oriented and has produced “inconsistent outcomes” due to the fact that “[t]he Board has not assigned specific weight to any of the factors generally, and it has chosen in specific cases to give certain factors more or less weight without adequately explaining why.”
  2. The totality of the circumstances test “is unmoored from any specific factors” and, as such, creates “the same, if not more, inconsistency and unpredictability as has been found in the cases applying Atlantic Steel.”
  3. Under the Clear Pine Moldings standard, picket-line misconduct loses the protection of the Act “only where it involves an overt or implied threat or where there is a reasonable likelihood of an imminent physical confrontation.” This has led to the Board finding “appallingly abusive picket-line misconduct to retain protection, including racially and sexually offensive language.”

The Wright Line standard is a burden-shifting framework, whereby first, the NLRB General Counsel must show by a preponderance of the evidence that the employee’s protected activity was a motivating factor in the employee’s decision to take the challenged action; if not, then the employer wins.  If so, then the employer must show by a preponderance of the evidence that it would have taken the same adverse action regardless of the employee’s protected conduct.  Such burden often can be met if the employer can show, for example, that it consistently disciplines employees for similar behavior.

The Board made clear in this decision that “[a]busive speech and conduct (e.g., profane ad hominem attack or racial slur) is not protected by the Act and is differentiable from speech or conduct that is protected by Section 7 (e.g., articulating a concerted grievance or patrolling a picket line).”

As is typical in precedent-shifting decisions, the Board further held that application of Wright Line will retroactively apply to “all pending cases in which the Board would have determined, under one of its setting-specific standards, whether abusive conduct in connection with Section 7 activity had lost an employee or employees the Act’s protection.”

Takeaways

Atlantic Steel created an exemption for outbursts that otherwise would have been unacceptable just because they were bound up in protected activity.  As we have noted here, the application of the Atlantic Steel test has resulted in some strange results.  Application of the Wright Line standard, rather than the context-specific analyses reasonably should make it easier for employers to understand the risk of disciplining employees for offensive and profane conduct in the workplace when such conduct is intertwined with protected activity.  Wright Line is very similar if not identical to the same standard used to evaluate discrimination claims under Title VII.  At the very least, it should provide more predictability for employers to potential liability under the Act, without undue weight placed on the context of the circumstances and what NLRA “test” must apply.  Indeed, as the Board noted, the decision seeks to harmonize employers’ obligations under anti-discrimination laws and under the Act.

NLRB Division of Advice Releases Deluge of Advice Memoranda Discussing COVID-Related ULP Charges, Confidentiality Rules, Information Requests, and Other Topics

On July 15, 2020, the National Labor Relations Board’s (“NLRB”) Division of Advice published 16 Advice Memoranda addressing myriad questions posed by various Regional Offices.

While a majority of the Memoranda were drafted within the past month, a few were originally issued months or years ago. Advice is the agency’s internal think tank and the vast majority of Memoranda drafted by its attorneys are kept confidential as litigation-related documents.  Advice may instruct a Region to issue complaint in a case, seek settlement or dismiss the charges.

Each recently released memo is tied to a specific unfair labor practice (“ULP”) charge being evaluated by a Regional Office, meaning that Advice’s conclusions are binding only as to the parties involved in each case. The agency periodically releases Advice Memoranda to give the public some idea of how it might handle similar cases.

While many federal labor law topics are covered in the newly-released Memoranda, a number of them, unsurprisingly, address the issue du jour affecting everyone: the intersection of the NLRA with health, safety and economic issues stemming from the COVID-19 pandemic.  The determinations by the Division of Advice reflect greater latitude provided to employers in their response to the crisis of the COVID-19 pandemic, permitting employers to act unilaterally without first bargaining to agreement or impasse with the union.  This latitude is consistent with the guidance issued by the NLRB General Counsel detailing the decades old case law addressing the bargaining obligation during times of crisis. The Memoranda also reinforce the flexibility employers are entitled to under the recently-instituted “contract coverage” standard for unilateral change cases.

We discuss below the conclusions by the Division of Advice regarding COVID and health and safety-related ULP charges, as well as unilateral implementation issues in light of the “contract coverage” standard.

COVID and Health/Safety-Related Issues

  • Unilateral Change: In Mercy Health General Campus, Advice concluded that an acute-care hospital was permitted under the Act to unilaterally expand its work-from-home policy that applied only to non-union employees and revise its attendance policy to temporarily pause attendance-related penalties.  Significantly, it is the NLRB General Counsel’s view that the employer was permitted to act unilaterally during the emergency “so long as its actions are reasonably related to the emergency situation.” Then, the employer must comply with any statutory and/or contractual decisional and/or effects bargaining obligations that exist, meaning the employer could act unilaterally to respond to a crisis but then had to comply with its bargaining obligations.
  • Alleged Discriminatory Conduct re: WFH Policy: In Larry Peel Co., an employee was terminated after being denied a work-from-home request.  The employee alleged that the employer violated the Act because the employee texted with the Company’s controller about health and safety issues.  Advice found the ULP charge lacked merit because the controller was a supervisor or manager, and thus the conduct was not protected.  In any event, the employer was unaware of the texts and the work-from-home request was individual in nature—not protected, concerted activity.
  • Union Access to Workplace: In RS Electric Corp., the CBA provided that the union had the right to access the job sites “at any reasonable time.”  The employer decided to require one-hour advance notice of the union’s intent to access the premises to allow for safety precautions, and the union demanded immediate, unrestricted access to the worksite.  Advice concluded that under MV Transportation, which adopted the “contract coverage” standard, the employer was privileged to request one-hour notice, and that the Board would not choose between “two ‘equally plausible’ interpretations of a contract.”
  • Duty to Bargain re: Layoffs: In Children School Services, Advice concluded that the employer, a government contractor providing nursing services within the public school system, was permitted under the CBA’s layoff provision and management-rights clause to unilaterally lay off employees in response to COVID-related school closures.  In addition, the contract’s broad zipper clause permitted the employer to offer temporary work assignments in lieu of layoffs and did not oblige the employer to bargain over the effects of the layoffs or temporary work assignments.
  • Non-COVID Health and Safety Issues: In 7 Gates Mediterranean Grill, Advice found that an employee’s comment on a WhatsApp chat to co-workers that the individual suffered food poisoning due to a co-worker’s failure to wear protective gloves was not protected, concerted activity because (i) the message did not refer to any employer policy or other working conditions, or seek to initiate group action; and (ii) merely referring to health and safety did not make the comment “inherently concerted.” Advice also found that an employer’s comment in its position statement to the Region that “discussing work matters with non-employees (even previous employees) is not acceptable in any work environment” is not an unlawful blanket prohibition of Section 7 activity because (i) there was no evidence the employer communicated this statement to the charging party, and (ii) even if it did, such a statement—standing alone—would not constitute a rule subject to the Boeing

Unilateral Implementation Issues

  • The Employer, in SAPA/HYDRO Extrusion, was privileged under the CBA’s management-rights clause (permitting the employer to create “reasonable plant rules and regulations of conduct” not contrary to the contract) to unilaterally enforce a previously dormant handbook policy requiring employees to use vacation time and FMLA leave concurrently.
  • In DeNovo Legal LLC d/b/a Epiq Document Review, Advice concluded that an employer’s confidentiality rule, which broadly defined confidential information as including “personnel information,” when read in context clearly addressed proprietary or internal company information related to sensitive customer and employee data—not employee information relevant for Section 7 activities. Advice also found that a catch-all provision in the employer’s conflict-of-interest policy that prohibited employees from “engaging in any conduct which is not in the best interest of [the employer]”, was lawful given the surrounding context where the provision in question was preceded by an enumerated list of “potentially compromising situations.”
  • In Smiths Frozen Foods, Inc., Advice addressed an employer’s unilateral addition of language to its drug and alcohol policy, which required immediate termination for off-duty use of any substance that results in a positive drug test. Applying the “contract coverage” test from MV Transportation, Advice concluded that the employer’s action fell within the scope of the parties’ collective bargaining agreement, which allows employer amendment or revision of its drug and alcohol policy without bargaining.
  • In another case involving a unilateral change by an employer, American Medical Response, Advice determined that the employer’s unilateral change to its outside employment policy, disallowing dual-employment, and discharge of an employee pursuant to that policy was permitted under Section 8(a)(5) of the Act. There was no evidence of a past practice allowing dual-employment, so the employer’s actions were lawful because the employer did not alter its practices concerning whether and when to authorize outside work for non-competitors.

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While the Advice Memoranda are a good indicator for how and whether the NLRB General Counsel and the Regions might decide to prosecute COVID-related bargaining ULP charges and other workplace issues, we will continue to keep an eye out for Board decisions regarding these issues, which will provide more concrete guidance during this unprecedented time.

 

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