Labor Relations Update

SCOTUS Denies Review and Leaves Seattle’s “Play-or Pay” Ordinance Intact

On November 21, 2022, the Supreme Court declined to review whether federal law preempts a Seattle Ordinance mandating that large hotels offer their employees health insurance coverage or increased pay.  This left the Ninth Circuit’s ruling, which found that the particular ordinance was not preempted, as the last word on the issue (at least for now).

Background Regarding the Seattle Ordinance

The Seattle Ordinance mandates that covered employers in the hotel sector make minimum monthly healthcare expenditures on behalf of their covered employees.  Employers can satisfy the Ordinance in one of three ways:

  1. by making the minimum monthly payments to a third party, such as an insurance carrier;
  2. by including covered employees in a self-funded healthcare plan offering average per-capita monthly expenditures for the covered employees that match or exceed the mandated minimums; or
  3. by making direct monthly payments to their covered employees that match or exceed the mandated minimums.

The Ninth Circuit’s Decision

In March 2021, the Ninth Circuit held that the Seattle Ordinance was not preempted by ERISA.  In so ruling, the Court reasoned that a local ordinance mandating that employers in the hotel industry offer workers certain minimum monetary payments for healthcare expenditures is not tantamount to a state or local law mandating the creation of an ERISA-covered benefit plan because an employer “may fully discharge its expenditure obligations by making the required level of employee health care expenditures, whether those expenditures are made in whole or in part to an ERISA plan, or in whole or in part to [a third party].”

Petitioner’s Arguments in Support of SCOTUS Review

The ERISA Industry Committee (“ERIC”), a trade association representing large employers who sponsor ERISA-covered plans, petitioned the Supreme Court to review the Ninth Circuit’s decision, urging that review was necessary to preserve “ERISA’s national uniformity” and to settle a circuit split between, on the one hand, the Ninth Circuit, which found that the Seattle Ordinance was not preempted by ERISA and, on the other hand, the First and Fourth Circuits, which found that similar local ordinances in Massachusetts and Maryland, respectively, were preempted by ERISA.

ERIC argued that the Seattle Ordinance makes “reference to” ERISA-covered plans and thus is preempted by ERISA.  ERIC explained that, even though the Seattle Ordinance had an “or pay” option, most covered employers—especially the large hotel employers targeted by the Ordinance —already “have pre-existing ERISA plans,” and, therefore, complying with the Seattle Ordinance will invariably necessitate amendments to employers’ existing ERISA plans.  As ERIC explained, that was precisely the reason the First and Fourth Circuits concluded that similar laws were preempted by ERISA:

  • In Retail Industry Leaders Ass’n v. Fielder, 475 F.3d 180 (2007), the Fourth Circuit held that a Maryland law that required a single employer (Wal-Mart) to spend 8% of total wages on state health insurance costs or else pay an equivalent shortfall to the state was preempted by ERISA, finding that despite the “or pay” option, the law offered employer no rational choice but to alter their ERISA plans in order to avoid paying a penalty.
  • Similarly, in Merit Construction Alliance v. City of Quincy, 759 F.3d 122 (2014), the First Circuit found a local ordinance preempted by ERISA, where it regulated apprenticeship programs, because “employers could comply only by using an existing ERISA apprentice plan or establishing a separate plan” —in this case, unlike with respect to the Seattle Ordinance, the law did not provide an “or pay” option.

ERIC further cautioned that, in the absence of preemption, state or local laws like the Seattle Ordinance will “impose burdensome, locality-specific obligations on employers” akin to “the pre-ERISA state of affairs” in which the nation lacked a uniform plan administration regulatory scheme.

Solicitor General’s Arguments Against Certiorari

At the invitation of the Supreme Court, the Solicitor General submitted a brief on behalf of the United States, requesting that the Court deny ERIC’s request for review.  The Solicitor argued that the Ordinance did not make an impermissible reference to, or have an impermissible connection with ERISA plans because “the Ordinance itself establishes specific expenditure amounts that apply to all covered employers and employees, regardless of whether the employer has an ERISA plan or the employee participates in it.”  Additionally, the Solicitor argued that the “or pay” option permits employers to comply without establishing an ERISA plan, and does not “single out ERISA plans or sponsors for differential treatment.”

The Solicitor also disagreed with ERIC’s assertion of a Circuit split “because the laws involved in the cases on which petitioner relies differed in material respects from the one in this case.” Namely, the Solicitor argued that First and Fourth Circuit cases are distinguishable because the regulations at issue in those cases did not provide meaningful non-ERISA alternatives for compliance—whereas here, employers could comply by making payments directly to employees.

Takeaways

In declining to review the Ninth Circuit’s decision, the Supreme Court leaves unanswered concerns raised by ERIC about plan uniformity and administration in the face of so called “play-or-pay” laws like Seattle’s Ordinance.  In the absence of future judicial intervention or federal legislation, and as ERIC explained in its petition to the Supreme Court, these state and local laws are likely to have a significant economic impact on employers providing benefits.

Not Just Starbucks—Federal Judge Grants 10(j) Injunction against Amazon Based on Employee Termination

As we previously discussed in June 2022, the National Labor Relations Board (“NLRB” or the “Board”) pursued a 10(j) injunction against a Starbucks in Buffalo, New York after it fired workers for allegedly engaging in union organizing activities—an action taken based on an initiative articulated by NLRB General Counsel Jennifer Abruzzo (see more information on this initiative here). Since then, Starbucks has faced numerous petitions for injunctive relief from the NLRB in regions across the country. Well, it looks like Starbucks is not the only high-profile company experiencing pressure from the GC in the form of 10(j) petitions for their conduct—Amazon has just found itself in the situation.

On November 18, 2022, Judge Diane Gujarati of the Eastern District of New York (“EDNY”) partially granted a temporary injunction pursuant to Section 10(j) of the National Labor Relations Act (“NLRA” or “Act”) against Amazon after it fired one of its workers for allegedly engaging in union-related activities in violation of Section 8(a)(3) of the NLRA. Amazon fired a warehouse worker in its Staten Island facility in April 2020 based on an alleged verbal altercation between him and another co-worker. The Amazon employee filed an unfair labor practice charge on June 17, 2020 in Region 29, claiming that he was fired as a result of his organizing activity.

The Regional Director found merit in the charge and issued a complaint against Amazon. In April 2022, Administrative Law Judge Benjamin Green held that Amazon’s firing was a “discriminatory discharge” in vi0lation of the Act, and ordered Amazon to reinstate him. Amazon appealed the decision and the case was transferred to the Board.

On July 8, 2022, the Regional Director for Region 29 petitioned for a 10(j) injunction in the EDNY against Amazon seeking to force Amazon to, among other things:

  • cease and desist from activity that violates the Act;
  • read such cease and desist order to employees;
  • reinstate the warehouse employee to his position; and
  • expunge the adverse employment action from the individual’s employment records.

In her November 18th decision, Judge Gujarati held that the evidence “amply support[ed]” the Board’s position that the employee was discharged in violation of the Act and, therefore, granted part of the Board’s 10(j) petition requiring Amazon to cease and desist from activity that violates the Act. Judge Gujarati also ordered that Amazon post the order within its Staten Island warehouse and read the order aloud during a facility meeting with the “widest possible employee attendance.” However, Judge Gujarati denied the remaining portions of the Board’s petition requesting that Amazon perform remedial actions related to the worker’s employment, including reinstating him. The Board argued that the worker’s termination not only discouraged employees from engaging in protected activity, but also discouraged them from garnering support for the union and, therefore, reinstatement and an expungement of the employee’s record was necessary. Judge Gujarati disagreed to implement the requested injunction as to these issues, finding that the Board did not present evidence that the termination continued to have any “appreciable effect” on the union’s efforts or on employee willingness to engage in protected concerted activity.

While a 10(j) injunction is generally referred to by the Board and the courts as an “extraordinary remedy,” the current NLRB General Counsel has favored the use of this remedy on numerous occasions over the past couple of years, and she has indicated as much in her public memoranda.  The Board’s recent successful use of 10(j) injunctive relief against companies like Starbucks and Amazon for alleged unfair labor practices during the midst of union organizing campaigns appears to indicate that this may continue in the future.  This could have potentially significant ramifications for employers who could be routinely hauled into federal court for alleged labor law violations and be subjected to potential penalties of contempt of court for failing to comply with federal court orders if the companies engage in future violations.

As always, we will continue to keep you apprised of any updates in this developing area.

NLRB Announces Proposed Rule to Rescind 2020 Amendments to Representation Election Procedures

As foreshadowed by the National Labor Relations Board’s (the “Board”) Spring 2022 rulemaking agenda (discussed in our prior post here), Chair Lauren McFerran, Member Gwynne A. Wilcox, and Member David M. Prouty published a Notice of Proposed Rulemaking (“NPRM”) on Friday, November 4, 2022, proposing to rescind a final rule that the Board issued in April 2020 (“the 2020 Rule”), codified at 29 C.F.R. 103.20–22.

The 2020 Rule modified representation elections in three main ways (discussed in our prior post here): (1) replacing the so-called blocking-charge policy with a vote-and-impound procedure, (2) reinstating Dana Corp. challenges to voluntary recognition, and (3) requiring “positive evidence” of majority support for voluntary recognition in the construction industry.

The changes proposed to these three important representation issues are discussed in greater detail below.  Now that the NPRM has been formally issued, the public has 60 days—i.e., until January 3, 2023—to submit comments before the NPRM is implemented.

Proposal #1: Reinstate The Blocking-Charge Policy

The Board proposes to reinstate the blocking-charge policy, as most recently reflected in a 2014 rule, which would enable a party to block an election indefinitely by filing an unfair labor practice (“ULP”) charge. In practice, this policy often allows an incumbent union to use a ULP charge to delay a decertification election.

By comparison, under the 2020 Rule, elections proceed as scheduled—even if a ULP is pending— and the votes are counted unless the charge challenges the circumstances around (or showing of interest supporting) the petition or alleges the employer dominated the union to disestablish a bargaining relationship—in such cases, the votes are impounded (i.e., not counted).

Proposal #2: Reinstate The Immediate Voluntary-Recognition Bar As It Existed Under Lamons Gasket

The Board next proposes to return to voluntary-recognition bar law and jurisprudence, as it existed under Lamons Gasket, Co., 357 NLRB 739 (2011), a decision in which the Board overruled Dana Corp., 351 NLRB 434 (2007), and established that an employer’s voluntary recognition of a union immediately barred the filing of an election petition for between 6 months to one year after the parties’ first bargaining session.

The still-operative 2020 Rule reinstated Dana Corp. challenges to voluntary recognition, under which employees receive 45 days to petition for a Board-conducted, secret-ballot election after their employer gives notice of voluntarily recognizing a union under NLRA Section 9(a).

Proposal #3: Rescind Requirement Of Unions In Construction Industry To Show Affirmative Evidence Of Majority Support To Convert 8(f) To 9(a) Relationship

 The Board proposes to rescind the 2020 Rule’s requirements for establishing a voluntary-recognition bargaining relationship in the construction industry—and return to the Board’s application of the voluntary-recognition and contract bars in the construction industry, per Staunton Fuel & Material, 335 NLRB 717 (2001) and Casale Industries, 311 NLRB 951 (1993).

In the construction industry, NLRA Section 8(f) allows employers and unions to form a collective bargaining relationship through what are often called “pre-hire” agreements, even absent the support of a majority of employees.  8(f) relationships last as long as the term of the contract, unless the parties agree to extend.  All other employer/union relationships, which are formed pursuant to NLRA Section 9(a), last indefinitely, even after the CBA term expires, unless the union no longer maintains majority support of the workforce.

Under Staunton Fuel, a union could convert a Section 8(f) agreement with a construction industry employer to a “full” Section 9(a) agreement through contract language alone—e.g., that the agreement was subject to Section 9(a) and/or that the union has majority support of the employees.  Accordingly, before the 2020 Rule took effect, many construction-industry unions insisted on including such language to maintain their foothold in the relationship. And until the 2020 Rule overruled Casale Industries, the Board would not entertain a claim challenging a construction-industry union’s majority-support if an election petition had not been filed within 6 months of the employer’s voluntary recognition under 9(a).

As always, we will keep you updated on any further developments.

NLRB General Counsel Abruzzo Issues Memo on Employer Surveillance in the Modern Workplace

On October 31, 2022, NLRB General Counsel Jennifer Abruzzo (“GC Abruzzo”) issued a memorandum in which she pushed for zealous enforcement and Board adoption of a “new framework” to protect employees from intrusive or abusive forms of electronic monitoring and automated management that interfere with protected Section 7 activity.  GC Abruzzo asserted: it is “the Board’s responsibility to adapt the Act to changing patterns of industrial life” in the face of omnipresent employer surveillance and algorithmic productivity technology.

Throughout the memorandum, GC Abruzzo stated that “[c]lose, constant surveillance and management through electronic means” represent severe threats to employees’ basic ability to exercise their rights to self-organization.  Specifically, she described the rise of complex surveillance — cameras, GPS wearables, or other similar productivity tracking technology, and how employers may use the technology to limit the confidentiality of employee actions.  Furthermore, algorithm-based (or so-called AI) systems may present new issues including discriminatory impact on employees.

According to GC Abruzzo, employee conduct should be zealously protected under current Board and Supreme Court precedent — both (1) the ability for employees to engage in protected Section 7 activity; and (2) the ability for employees to maintain the confidentiality of their activities from an employer’s surveillance (or perceived surveillance).

In her memo, the GC suggested the Board presume a violation of Section 8(a)(1) in cases where an employer’s surveillance and/or management practices, taken collectively, tend to interfere with Section 7 rights.  Under the GC’s framework, an employer defending against a presumptive violation must demonstrate that the practices at issue are narrowly tailored to address a legitimate business need.  Moreover, GC Abruzzo urged the Board to balance the employer’s business need against employees’ Section 7 rights.  Therefore, the Board could still find a violation despite the employer narrowly tailoring its practices to a legitimate business need, depending on the Board’s ultimate determination on the weight of employees’ Section 7 rights.

Further, under GC Abruzzo’s framework, even if the Board concludes that the employer’s use of technology does not violate the Act, the Board should still require the employer to disclose to employees the technologies it uses to monitor and manage them, its reasons for doing so, and how the information obtained is used (subject to certain exceptions, on a case-by-case basis).

Lastly, GC Abruzzo noted that several federal agencies have investigated employer monitoring and productivity tracking technology, and that any NLRB action  would be in concert with other agencies, including the Federal Trade Commission (“FTC”), the Consumer Financial Protection Bureau (“CFPB”), the Department of Justice (“DOJ”), the Equal Employment Opportunity Commission (“EEOC”), and the Department of Labor (“DOL”).  In fact, the NLRB General Counsel’s Office just recently signed interagency cooperation agreements with the FTC, DOJ, and DOL, intended to facilitate information sharing and coordinated enforcement between and among the agencies.

While many employers utilize some technological security and monitoring protocols, given the new memo, employers should examine how such technology is used and whether it is sufficiently tailored to minimize its impact on employee rights including Section 7 rights. Employers can preliminarily audit their practices by reviewing the following questions:

  • Does your business have a need for such technology?
  • Is the technology being used in a punitive way?
  • What are the underlying parameters of the technology’s decision-making — is it discriminatory?
  • What data is being collected? Is data being collected from employees’ off-the-clock behavior?
  • Are employees informed/aware of the technology?

This is certainly an area of the law that will see further development.  We will keep you apprised on any updates.

Latest NLRB General Counsel Memorandum Directs Regions to Attempt to Settle 10(j) Injunctions Before Going to Court

National Labor Relations Board (“NLRB”) General Counsel (“GC”) Jennifer Abruzzo stated over a year ago that 10(j) injunctions in NLRB charges were “one of the most important tools available to effectively enforce the [National Labor Relations] Act.”  GC Memorandum 21-05.  Today, the GC has issued another memorandum on the topic of 10(j) injunctions, GC Memorandum 23-01, directing that “Regions should routinely attempt to obtain full interim relief by the charged party’s written agreement to resolve the 10(j) portion of the case,” assuming that the parties are unable in the first instance to settle the case as a whole.  If such efforts fail, the Region would then pursue a 10(j) injunction in federal court.  The GC is careful to note, however, that the Region may determine that such settlement talks would be futile and instead proceed directly to litigation.

10(j) Injunctions

As a reminder, Section 10(j) of the National Labor Relations Act authorizes the NLRB to seek an injunction to remedy an alleged unfair labor practice while the merits of the underlying case are being litigated.  An injunction may order, for example, that an employer reinstate an employee who was discharged during a union organizing effort.  The NLRB lists fifteen categories of labor disputes wherein 10(j) injunctions may be appropriate, including conduct during bargaining, alleged interference with organizing campaigns, and a successor’s refusal to recognize and bargain.  Most recently, the GC announced that Regions are encouraged to seek injunctive relief where workers have alleged that employers made unlawful threats or were otherwise coercive during organizing campaigns (even if no actual action had been taken).

Takeaways

The impact on employers of the GC’s new directive is unknown.  It is possible the directive may actually discourage active settlement discussions prior to filing for an injunction.  Directing Regions to seek settlement for “full interim” relief appears to be contrary to the normal cadence of litigation: if you compromise now, defendant, I will not file the litigation.  Of course, how this all works will only be understood once the directive has been in place for some time.  While the General Counsel ended the Memorandum stating she hopes the new directive “will result in an increase in settlements to obtain crucial interim remedies, will reduce the need for district court litigation, and will conserve the resources of the Agency and all parties,” this remains to be seen.  As always, employers finding themselves in these situations are encouraged to reach out to counsel for guidance.

Divided NLRB Rules (Again) that Dues Deductions Survive Contract Expiration

For more than five decades, employers could cease deduction of dues at the expiration of a collective bargaining agreement as a legitimate economic weapon.  It was only recently that, as part of the constant shifting of precedent at the Board, the decades-old rule has been disturbed.

On September 30, 2022, the National Labor Relations Board issued the most recent iteration of the rule.  In a 3-2 decision (split along party lines) Valley Hospital Medical Center, Inc. [Valley Medical Center II], 371 NLRB No. 160, the Board once again held that employers may not unilaterally cease dues checkoff arrangements after the expiration of a collective bargaining agreement.  Specifically, Democrat Board members Chairman Lauren McFerran and Members Gwynne Wilcox and David Prouty determined that the employer must continue deducting dues until either a new contract or valid impasse is reached because such deduction “should be treated as part of the status quo that cannot be changed unilaterally after contract expiration.”  The Boar+d applied the new rule retroactively and concluded that the employer should pay the union dues that were not collected after it ceased dues deduction.

Valley Medical Center II marks the third change to dues deduction post-contract survival in less than a decade.  First, the 2015 Board overruled fifty years of precedent by holding that ending dues deductions post expiration was unlawful in Lincoln Lutheran of Racine, 362 NLRB 1655 (2015).  Shortly thereafter, in Valley Medical Center, Inc. [Valley Medical Center I], 368 NLRB No. 139 (2019), when the administration changed, the Board reversed Lincoln Lutheran and (again) allowed employers to end dues deductions after contract expiration.

The Board’s decision in Valley Hospital Medical Center II comes after years of appeals in federal court, including a remand by the Ninth Circuit that roundly criticized the Board’s decision in Valley Medical Center I for its “inadequate” reasoning, with the court stating that the Board “was required to grapple explicitly with the[] apparently contrary precedents [of the dues checkoff rule] . . . but failed to do so.”  Local J. Exec. Bd. of Las Vegas v. NLRB, 840 F. App’x 134 (9th Cir. 2020).

Members John Ring and Marvin Kaplan dissented, citing the long-held Board precedent established by Bethlehem Steel, 136 NLRB 1500 (1962), allowing for employers to unilaterally cease dues deductions post-contract expiration.  The dissent argued that the dues checkoff issue is “unique” and “a special status separate from other terms and conditions of employment” because both the duty to deduct dues necessarily arises from a contract, and the statutory framework of the Taft-Hartley amendments of 1947 and the Labor Management Relations Act restrict employers’ payment of monies to unions.  Therefore, the dissenters concluded that “the termination of dues-checkoff provisions . . . has been a legitimate economic weapon.”

It is doubtful this represents a major change.  Most employers do not automatically cease dues deduction at the expiration of an agreement.  Moreover, the issue can be solved—no matter what Board case law says—by simply inserting language in the check-off provision stating that it survives only as long as the agreement.

Supreme Court Set to Decide Whether NLRA Preempts State Law Claims for Property Damage Caused During Strikes

The U.S. Supreme Court’s upcoming term will include review of whether the National Labor Relations Act (the “Act”) preempts state court lawsuits for property damage caused during strikes, which could have significant implications for employers and unions.

Factual Background

The case – Glacier Northwest Inc. v. International Brotherhood of Teamsters Local Union No. 174 – began over five years ago when the Union in Washington State representing the Employer’s truck drivers went on strike.  The Union timed their strike to coincide with the scheduled delivery of ready-mix concrete, and at least 16 drivers left trucks that were full of mixed concrete, forcing the Employer to rush to empty the trucks before it hardened and caused damage.  The Employer was able to do so, but incurred considerable additional expenses and, because it dumped the concrete in order to avoid truck damage, lost its product.

Employer Brings State Law Suit for Property Damage

After the incident, the Employer sued the Union under Washington State law for intentional destruction of property.  The Union argued that the suit was preempted by the Supreme Court’s decision in San Diego Building Trades Council v. Garmon, 359 U.S. 236 (1959) (“Garmon”).  In Garmon, the Supreme Court held that, although the Act does not expressly preempt state law, it impliedly preempts claims based on conduct that is “arguably or actually protected by or prohibited by the Act.”  The Supreme Court held in Garmon that conduct is “arguably protected” when it is not “plainly contrary” to the Act or has not been rejected by the courts or the National Labor Relations Board (the “Board”).

State Court Holdings

The Washington State trial court dismissed the Employer’s suit for property damage because strikes are protected by the Act.  The Washington Court of Appeals reversed, holding that intentional destruction of property during a strike was not activity protected by the Act, and thus, not preempted under Garmon.

Finally, the Washington Supreme Court reversed again, holding that the Act impliedly preempts the state law tort claim because the intentional destruction of property that occurred incidental to a work stoppage was at least arguably protected, and the Board would be better-suited to make an ultimate determination on this legal issue.

Question Before the Supreme Court

The Supreme Court will now determine whether the National Labor Relations Act bars state law tort claims against a union for intentionally destroying an employer’s property in the course of a labor dispute.

Under Garmon, the Act does not preempt suits regarding unlawful conduct that is plainly contrary to the NLRA, and the Employer argues that the strike at issue here was plainly unprotected because of the intentional destruction of property.  In other words, the conduct is not even arguably protected by the Act such that the Act would preempt – it was, rather, plainly unprotected conduct, and thus, the proper subject of a lawsuit.  The Employer also cited the “local feeling” exception to Garmon, which creates an exception to preemption where the States may have a greater interest in acting, such as in the case of property damage or violence.

The Union argued in opposition to the Employer’s certiorari petition that the Employer merely challenged the Washington Supreme Court’s conclusion that the conduct was arguably protected by the Act, and not its reasoning.  Moreover, whether or not the conduct was protected should be decided by the Board, which is better-suited to decide the matter.

Takeaway

Employers should gain much greater clarity into whether they can seek relief from such conduct via a damages lawsuit.  If the Court finds that such conduct is not preempted and may be litigated in state court, such a ruling could go far in protecting employers’ interests in contentious labor disputes and potentially shift the balance of power towards employers during these disputes.

Board Updates Considerations For When Regional Directors May Order Mail-Ballot Elections

A significant change to the manner in which representation elections have been conducted during the COVID-19 pandemic is the increased frequency of mail-ballot elections – whereas, previously, such elections were extremely rare.  As circumstances regarding the pandemic have improved, there has been a greater shift to returning to in-person vote casting.

The decision to conduct a mail-ballot election is up to the Regional Director in the jurisdiction where the election petition was filed, subject to review by the National Labor Relations Board (“NLRB” or “Board”) for abuse of discretion.  In Aspirus Keweenaw, 370 NLRB No. 45 (2020), the NLRB established six factors for the Regional Director to consider in deciding whether to order a mail-ballot election – the presence of any one factor would justify, though not require, the direction of a mail-ballot election.

On September 29, 2022, a 3-2 majority of the Board, in Starbucks Corporation, Case 19–RC–295849, modified one of the six factors (factor 2) to now provide that when the relevant county is determined by the Center for Disease Control and Prevention (“CDC”) to have a COVID-19 Community Level of “High,” then Regional Director could order a mail-ballot election.  The Board’s holding will be applied prospectively (not retroactively, as is typically the case) and will not impact any Decisions and Directions of Elections that have been issued prior to September 29, 2022.  Members Kaplan and Ring dissented from the majority opinion.

The Six Factors in Aspirus Keweenaw

In Aspirus Keweenaw, the Board provided Regional Directors six factors for the Regional Director to consider when deciding whether to order a mail-ballot election, or to direct an in-person manual election.  If one of the six factors is present, then the Regional Director may order a mail-ballot election, but is not required to do so.

The six Aspirus factors are as follows:

  1. The Agency office tasked with conducting the election is operating under “mandatory telework” status.
  2. Either the 14-day trend in the number of new confirmed cases of COVID-19 in the county where the facility is located is increasing, or the 14-day testing positivity rate in the county where the facility is located is 5 percent or higher.
  3. The proposed manual election site cannot be established in a way that avoids violating mandatory state or local health orders relating to maximum gathering size.
  4. The employer fails or refuses to commit to abide by GC Memo 20-10, which contains recommended manual election protocols.
  5. There is a current COVID-19 outbreak at the facility or the employer refuses to disclose and certify its current status.
  6. Other similarly compelling circumstances.

 

Starbucks Holding Modifies Factor 2 to Align with CDC Community Levels

In Starbucks, the Regional Director ordered a mail-ballot election based exclusively on the second Aspirus factor, noting that the positivity rate in the county where the election was to take place was above 5 percent during the relevant 14-day period.

The Employer asserted that the Regional Director abused his discretion by directing the mail-ballot election and argued that the six factors enunciated by the Board in Aspirus are outdated and should be revisited. The employer specifically argued that the five percent positivity rate requirement does not accurately capture the community risk of contracting COVID-19.

The Board rejected the Employer’s assertion that the Regional Director abused his discretion and also declined to revisit all six Aspirus factors. However, the Board acknowledged that changes in the current landscape of the COVID-19 pandemic warranted modifying factor 2, by changing its criteria from the 14-day new confirmed cases and positivity rate metric to “whenever the relevant [CDC] Community Level is ‘high.’”

The CDC tracks COVID-19 Community Levels by County and provides Community Level information on its website. The CDC COVID-19 Community Levels measure the impact of COVID-19 in terms of hospitalizations and healthcare system strain, while also accounting for community transmission.

The Board explained the shift to Community Levels, noting:

Unlike the stand-alone data points that currently underlie Aspirus factor 2, the Community Level measure is grounded in a collective assessment of three data points: new COVID-19 cases; new COVID-19 hospital admissions; and the percent of staffed inpatient beds in use by COVID-19 patients.

The Board also emphasized that data regarding Community Levels is calculated on a weekly basis as opposed to the previous 14-day basis, and “Community Levels” are developed through an aggregation of various data sources, whereas positivity rate was based solely on the reporting of localities.

The Board clarified that a Community Level of “Medium” or “Low” will not independently support a mail-ballot determination under factor 2. The Board further stated that a Regional Director who directs a mail-ballot election based on Community Level should cite directly to the relevant Community Level shown on the CDC’s COVID-19 data tracking page or COVID-19 by County page as of the date the Decision and Direction of Election issues.

The Board also rejected a return to its pre-pandemic mail-ballot standards, instead noting that it hoped the Aspirus factors would gradually be less applicable as COVID-19 conditions continued to improve.

The Board acknowledged the dissent’s argument that the CDC’s guidance does not prohibit manual elections from occurring when there exists a “High” Community Level. The Board instead asserted that while the CDC’s community levels are a helpful reference point, the Board ultimately determines the guidelines for how an election should be facilitated.

The Board addressed brief criticisms levied by the Employer against the remaining factors, noting that while factor 1 regarding mandatory telework may not currently be relevant, there exists the possibility that in the future, conditions may necessitate mandatory telework.  The Board justified factor 3 on similar grounds, noting that localities may change gathering restrictions in the future.  Finally, the Board firmly held that Regional Directors should be able to direct mail-ballot elections when an outbreak occurs at a facility. The Board also dismissed concerns from dissenting Board members that mail-ballot voting has recently had a surge in “voting irregularities.

Dissent Believes the Board Did Not Adjust the Aspirus Factors Enough

The dissenting members Ring and Kaplan agreed with the Board’s decision to revisit the Aspirus factors, but felt the Board’s decision did not go far enough. The dissent criticized the majority’s failure to consult expert guidance before modifying the Aspirus factors, noting that the Board does not have expertise in public health. The dissent emphasized that COVID-19 conditions have improved significantly since the Apsirus factors were promulgated.

The dissent also noted that the CDC’s own guidance does not recommend that individuals avoid workplaces or public spaces when there is a “High” Community Level, which cast doubt on whether that should be the appropriate standard for directing a mail-ballot election.

Finally, the dissent concluded that the majority failed to consider a surge in mail-ballot voting irregularities (see here) and urged a reexamination of the Aspirus factors and what safeguards can be implemented to make in-person elections appropriately safe.

We will continue to keep you posted as the NLRB continues its examination of these factors governing representation elections.

 

NLRB Signals Pullback on Consequential Damages Against Unions

As we previously reported, the National Labor Relations Board (“NLRB” or “Board”) has indicated that it is committed to considering consequential damages as a possible make-whole remedy applicable to damages both caused by an employer’s unfair labor practice (“ULP”) and against a union for damages caused to an employer.

A recent settlement agreement involving the United Mine Workers of America (“UMWA”) illustrated the Board’s commitment in this regard, when – in June 2022 – the NLRB estimated that the union would have to pay $13.3 million in damages to an Alabama coal company pursuant to an agreement intended to resolve several strike-related unfair labor practice changes.  Recently, however, the NLRB Regional Office indicated an intent to reduce the estimated consequential damages to below $500,000 to settle the ULP.

Background

UMWA-represented mine workers at the employer coal company have been on strike for over a year in protest against what the workers deem to be unsatisfactory negotiations for higher wages and improved benefits. Over the course of the year-long strike, the workers have picketed outside of the employer’s Alabama coal mines and offices.

During this time, UMWA and the employer have filed a number of ULP charges against each other, including charges alleging that the UMWA has engaged in strike misconduct by placing devices like jackrocks in the roads leading into and out of the employer’s facilities, blocking the ingress and egress to the mines, threatening security guards at the employer’s facilities, and engaging in vandalism of the employer’s and replacement workers’ property at the employer’s worksite.

The UMWA, the employer, and NLRB General Counsel’s Office negotiated a formal settlement agreement to resolve the strike-misconduct ULPs, which the Board approved in June 2022. As stipulated in the settlement agreement, the NLRB Regional Office later issued calculations for the damages UMWA owed to the employer and to the individuals injured by the alleged strike misconduct, totaling over $13 million.

Part of the NLRB’s calculations included consequential damages for economic losses suffered by the employer, including the costs incurred by the employer to increase security at its facilities as well as the lost revenues to the employer for the unmined coal.

Appeal to the Regional Office and Takeaways

In response to the Regional Office’s multi-million dollar projection, the UMWA announced in the first week of August that it would appeal the Board’s damages calculations.

On September 19, the NLRB Regional Office in Atlanta slashed the proposed settlement amount by nearly $13 million. The Atlanta Regional Office’s recalculation will, instead, require the UMWA to pay the Alabama coal company $435,000 to settle the ULP charges.

This prosecutorial decision by the NLRB Regional Office suggests that the Board is less inclined than what was previously signaled to apply costly make-whole remedies to unions that cause damages to employers.  It is unclear whether the Board may be more inclined to apply this approach to downstream economic losses that the employer has caused employees by engaging in ULPs.

The Board’s next determination with respect to alleged damages caused by an employer’s ULP bears watching, and as always, we will keep you apprised of the latest updates from the NLRB.

National Labor Relations Board Gets Back on the Joint-Employer See-Saw – Proposes Rulemaking to Return to “Browning-Ferris” Indirect Control Standard

Coming on the heels of the Labor Day holiday, in a long anticipated move, the National Labor Relations (“NLRB”) Board issued a draft of a new proposed joint employer standard, scheduled to be published on September 7, 2022.  If ultimately implemented, the NLRB’s Notice of Proposed Rulemaking (“NPRM”) would nix the most recent joint employer standard (established in 2020) and return to the rule established by Browning-Ferris Industries of California, Inc., 362 NLRB 1599 (2015).  The joint employment framework is used to determine whether more than one entity controls the terms and conditions of employees, and thus, can be responsible under the NLRA to negotiate with a union, among other things.  Joint employer issues are most common between labor staffing firms and those using their services and franchise/franchisor relationships.

Since 2015, the NLRB has gone back-and-forth between two joint employment standards – one requiring direct control by both entities and the other focusing on potential “indirect” control. Democrat-majority Boards seek a broad rule which would include entities as joint employer that indirectly control or merely reserve the right to control the terms and conditions of employment of employees (2015 Browning Ferris decision); meanwhile, Republican-majority Boards have maintained the previously long-standing, traditional view that the joint employer framework must focus on whether a putative employer exercised “actual control” over the terms and conditions of employees (2018-2019 Rule).

Over just a few short years, both joint employment standards have received significant political backing from supporters and challenges by their respective detractors.  In 2017, the then-Republican-majority Board first attempted to reverse the Browning-Ferris rule via Board decision in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017).  However, the decision was later vacated after the NLRB Office of the Inspector General determined Board Member William Emmanuel’s participation in the Hy-Brand case violated an ethics rule (Exec. Order No. 13770(1)), because he had previously worked as a partner at Littler Mendelson, the law firm that represented an unsuccessful party in the Browning-Ferris litigation.

After Hy-Brand was vacated, the Trump Board looked to rulemaking to make their sought-after joint employer changes.  In 2018, the Trump Board proposed and later (in 2020) implemented a rule reversing the Board’s holding in Browning-Ferris and returning the joint employment framework to the previous, narrower standard.

In the September 6, 2022 NPRM, the Board majority asserted that the Browning-Ferris rule is most consistent with both Supreme Court precedent and over a century of common law joint employment decisions.  The NPRM announces: “[t]he proposed rule states that ‘two or more employers of the same particular employees are joint employers of those employees if the employers share or codetermine those matters governing employees’ essential terms and conditions of employment.’”  Such language, the Board asserts, captures the ultimate meaning of joint employment as “not whether the [putative joint employer] actually exercised control over the details of the work, but whether he had a right to exercise that control.”  NPRM, at 24 (citing treatises and several cases).  The Board insists the NPRM is consistent with the joint employment frameworks endorsed by several Courts of Appeal, including the Third Circuit and the D.C. Circuit.

Furthermore, citing “shortcomings” of the 2020 rule’s specific and exclusive list of essential terms and conditions of employment, the NPRM would also expand the definition of “essential terms and conditions of employment” by including workplace health and safety, assignments, and work rules and directions governing the manner, means, or methods of work performance.  Importantly, the new list is also specifically not exhaustive or limiting.

The two Republican Board members dissented to the issuance of the NPRM, stating that the NPRM is both legally incorrect and simply comes too soon after the 2020 rulemaking, which, among other things, could prevent the ability to provide meaningful guidance to employers regarding joint employment issues.

The Board seeks public comment on the NPRM for the next sixty (60) days — comments must be received by the NLRB on or before November 7, 2022, and reply comments must be received on or before November 21, 2022.  It is anticipated that the Board will move forward with the NPRM and implement it as a Final Rule shortly after the comment period expires.

Any such Final Rule will greatly expand the potential for labor litigation for employers that have relationships with staffing agencies, are part of a franchise model, or even use outside organizations to handle certain aspects of their employees’ working conditions, such as payroll companies.

As always, we will provide detailed analysis and guidance on the far-reaching effects of any issued Final Rule in the weeks to come.

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