Labor Relations Update

BREAKING: The Department of Labor and The National Labor Relations Board Announce Agreement Enhancing Cooperation Between the Agencies

On January 6, 2022, the U.S. Department of Labor (DOL) and the National Labor Relations Board (NLRB) announced that the two agencies signed a Memorandum of Understanding (MOU) detailing procedures on information-sharing, joint investigations and enforcement activity, and training meant to strengthen the agencies’ partnership in enforcing the laws administered between the two agencies.

The MOU outlines several areas where the agencies agree to cooperate and work in concert to enforce federal labor and employment laws.  For example, with respect to information sharing, the agencies agree to share any information or data that “supports each agency’s enforcement mandates,” including complaint referrals and information in investigative files.

The agencies also pledge to share information regarding the following topics:

  • Unlawful compensation practices,
  • Retaliation based on the exercise of rights guaranteed by the NLRA or laws enforced by the DOL/Wage and Hour Division (WHD),
  • Discriminatory failure to hire, and
  • The “identification and investigation of complex or fissured employment structures, including single or joint employer, alter ego, and business models designed to evade legal accountability.”

Further, each agency has agreed to advise employees when they have reason to believe that there may be “unlawful conduct that falls within the jurisdiction” of the other agency.  For example, if in the course of an investigation of an employer, the DOL uncovers conduct that it believes may violate the NLRA, the DOL will advise employees that an opportunity may exist to file a charge with the NLRB.

The MOU also announces initiatives to provide training to each agency’s staff in identifying cases and issues that potentially arise under the other’s jurisdiction, joint participation in regional presentations and to develop shared training materials and programs.   The MOU takes effect immediately and, absent renewal, will expire in five years.

The impact of this MOU likely will be an uptick in enforcement actions by the respective agencies.  As always, we will keep you informed of any updates on this interagency collaboration.

NLRB Considers Abandoning Current Standard for Independent-Contractor or Employee Status

In what will have a significant impact on the employment status of “gig” economy workers under federal labor law, the National Labor Relations Board (“NLRB” or “Board”) seems poised to revert to a more worker-friendly standard for determining independent contractor or employee status.

On December 27, 2021, the NLRB invited public input on whether it should abandon the current standard for determining if a worker is properly classified as an independent contractor or is an “employee” under the National Labor Relations Act (“NLRA”).  See The Atlanta Opera, Inc., NLRB No.10-RC-276292 (2021).

The case at issue involves a determination of whether the workers – makeup artists, wig artists, and hairstylists – are employees of The Atlanta Opera, Inc. or independent contractors. In reconsidering the standard, the Board asks interested amici to provide responses to the following two questions:

  1. Should the Board adhere to the independent-contractor standard in SuperShuttle DFW, Inc., 367 NLRB No. 75 (2019)?
  2. If not, what standard should replace it? Should the Board return to the standard in FedEx Home Delivery, 361 NLRB 610, 611 (2014), either in its entirety or with modifications?

In SuperShuttle, the Board returned to the traditional common-law agency test for determining whether a worker is an employee or independent contractor, overturning the 2014 Board decision in FedEx. The current test considers the following factors under the totality of the circumstances:

(a) The extent of control which, by the agreement, the master may exercise over the details of the work.

(b) Whether or not the one employed is engaged in a distinct occupation or business.

(c) The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision.

(d) The skill required in the particular occupation.

(e) Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work.

(f) The length of time for which the person is employed.

(g) The method of payment, whether by the time or by the job.

(h) Whether or not the work is part of the regular business of the employer.

(i) Whether or not the parties believe they are creating the relation of master and servant.

(j) Whether the principal is or is not in business.

The Board, in SuperShuttle, found the majority decision in FedEx erroneously diminished the significance of “entrepreneurial opportunity” as a factor in the independent-contractor analysis, and revived the “economic dependency” standard when constructing the analysis.  Pursuant to this standard, companies have been able to emphasize the “entrepreneurial opportunity” for economic gain when determining employment status.

The Board split 3-2 on inviting public discourse in the matter. The dissenters assert there is no need to revisit the SuperShuttle standard set in 2019, given no party in the present case asked the Board to overrule, modify, or revisit the precedent, nor has anything occurred warranting a re-examination of the decision. The majority argues previous Board majorities have overruled precedent sua sponte, and the Board, in recent years, “has not hesitated to reverse precedent despite the absence of adverse judicial decisions.”

Interested amici may e-file briefs not exceeding 20 pages in length to the Board by Thursday, February 10, 2022.

NLRB Plans to Revise Joint Employer Standard Once Again

On Friday, December 10, 2021, the Board announced in its regulatory agenda that it plans to engage in rulemaking on the standard for determining whether two employers are “joint employers” under the NLRA.  It remains to be seen exactly what the contours of the new joint-employer rule would be, although it has been widely predicted that the Board will revert to the standard that previously existed, which does not require the purported joint employer to actually exercise control over employment conditions, as long as the company possesses such authority.

Relevant Background

Under the National Labor Relations Act (“NLRA”), “joint employment” refers to a situation where two or more separate entities “share or codetermine” essential terms and conditions of employment, such as decisions about hiring, firing, disciplining, supervision, and direction of employees.  This issue typically arises in the context of contractor/subcontractor relationships, entities that engage temporary staff, professional employment organizations, parents/subsidiaries and franchisor/franchisee situations.

The impact of a joint-employer finding is that a joint employer may have a duty to participate in collective bargaining for the other entity’s employees; may jointly or independently be responsible for unfair labor practices committed by either employer; may be subject to accretion (i.e., the process by which a union is permitted to add individuals to a bargaining unit without holding an election); and may face a greater likelihood that picketing by the employees in question would be held lawful.

Although joint employment requires that two or more separate entities “share or codetermine” essential terms and conditions of employment, the devil is in the details—and the details have been revised several times over the past decade.  The key detail that has vacillated over the years is whether the purported joint employer actually exercised authority over employees’ terms and conditions of employment, or whether possession of such authority is enough.

The History of the Joint Employment Standard

The recent evolution of the joint-employment standard began in 2015, when the Board’s decision in Browning-Ferris Industries, 362 NLRB 1599 (2015), expanded the scope of whether an entity is deemed a joint employer under the NLRA.  Prior to Browning-Ferris, an entity could be held a joint employer under the NLRA only if it exercised “direct and immediate” control over employment terms and conditions in more than a limited and routine manner.  The Board, in Browning-Ferris, relaxed that standard so as to extend joint employer status even to entities possessing an ability to control employment terms and conditions indirectly (e.g., by using an intermediary), and even if the entity never actually exercised that ability.

In late 2017, the Board, in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (Dec. 14, 2017), overruled the Browning-Ferris decision and reinstated the earlier, more exacting joint employment standard that governed prior to 2015.  We discussed that reversal here and here.

Just two months later, however, the Board vacated that 2017 Hy-Brand decision due to extensive political pressure related to alleged conflicts of interest by one of the Board members who participated in the decision, thereby effectively reinstating Browning-Ferris.  See Hy-Brand Indus. Contractors, Ltd., 366 NLRB No. 26 (Feb. 26, 2018).  We discussed that turn of events here.

Three months later, in May 2018, the Board announced that it would consider revising the joint employer standard by means of rule-making, and in September 2018 the Board published a Notice of Proposed Rulemaking.  We discussed those communications here and here.  Essentially, the Board proposed to revert to the pre-Browning-Ferris standard of joint employment.  The proposed rule attracted considerable attention, to the extent that the Board received approximately 29,000 comments on the proposed rule during the notice and comment period.

In February 2020, the Board confirmed that it would replace the Browning-Ferris standard with a new rule, effective April 27, 2020.  We discussed that announcement here.  That new rule, codified at 29 C.F.R. § 103.40, provides that a joint employer relationship requires that the purported joint employer “possess and exercise . . . substantial direct and immediate control” over one or more “essential terms and conditions of employment” of another employer’s employees, such that the “entity meaningfully affects matters relating to the employment of those employees.”

When announcing the enactment of that new final rule in 2020, then-Chairman of the NLRB John Ring stated that “[w]ith the completion of today’s rule, employers will now have certainty in structuring their business relationships, employees will have a better understanding of their employment circumstances, and unions will have clarity regarding with whom they have a collective-bargaining relationship.”  Thus, the uncertainty generated by Browning-Ferris surrounding the joint employment standard finally resolved—or, so it seemed.

NLRB’s Rulemaking Agenda Signifies Potential Reversion to Browning-Ferris Standard

The current Board’s announcement that it plans to reopen the question of what constitutes joint employment was not surprising.  Given that the existing standard was established by means of the Board’s rule-making powers, the Board cannot overrule that standard merely by issuing a decision on a case.  Rather, the Board can revise the existing standard only by exercising its rule-making powers once again.

Specifically, the Board could either use those powers to fashion a new rule to replace the April 2020 rule, or use those powers to simply rescind the April 2020 rule without offering any replacement.  Under the latter scenario, the joint employment standard would once more be subject to adjudicative determination, in which case the law would immediately revert to the Browning-Ferris standard that prevailed prior to the April 2020 rule.  That Browning-Ferris standard would control unless and until it is replaced once more by some future Board decision or rule.

We will continue to monitor and keep you updated on developments regarding these and related questions.

BREAKING: Senate Committee Proposes Bill to Add Civil Penalties to NLRA

As we have discussed previously (here, here, here and here), Congressional Democrats have been attempting to amend the National Labor Relations Act (“NLRA”) for the last few years.  However, attempts to invoke sweeping changes to a number of areas of the NLRA through the Protect the Right to Organize Act (“PRO Act”) have stalled in Congress.

The most recent proposed amendment to the NLRA as part of the Build Back Better Act (“BBB Act”) would impose civil penalties on an employer who commits an unfair labor practice, including potential individual liability to officers or directors.  The proposed fines in the BBB Act are up to $50,000 per violation, or up to $100,000, for willful violators or if there is “serious economic harm” to an employee. This would represent a dramatic change to the enforcement of the NLRA, as historically, the NLRA’s remedy for employer unfair labor practices has been to compensate the aggrieved party with money (e.g., backpay) and/or by equitable means (e.g., reinstatement of a bargaining unit member who was improperly terminated).

As we discussed here, the House passed the BBB Act on November 19, 2021.  While the BBB Act still faces significant hurdles in the Senate, on December 11, 2021, the Senate Health, Education, Labor and Pensions Committee approved text of the BBB Act containing the same NLRA civil-penalties language that was contained in the House bill.

A version of the BBB Act–which includes a number of other tax and spending measures having nothing to do with the NLRA–is expected to go to a vote before the entire Senate in the coming weeks.

We will be sure to keep you updated with developments.

 

Here We Go Again: NLRB Foreshadows A Potential Return To Micro-Units

The ability to form smaller bargaining units by breaking up larger aspects of an employer’s organization—sometimes called “micro-units”—is generally seen as an effort to enhance the ability of unions to gain entry into an employer by making it easier to organize.  Those opposed to the practice, including both employers and trade groups, contend that carving out a small portion of an employer’s workforce into a bargaining unit fractures the workplace and thereby undermines both productivity and workers’ rights.

Whether a “micro-unit” is permissible under the National Labor Relations Act (“NLRA”)—like so much else in labor law during the last several years—depends on timing.  Longstanding rules of bargaining unit make-up have changed drastically with the change of administrations.

In 2011, the Board lowered the bar for unions to organize smaller groups into bargaining units, notwithstanding decades of precedent to the contrary.  In 2017, the Board restored the pre-2011 standard for evaluating the appropriateness of a petitioned-for bargaining unit.  We have discussed these cases in detail here, here and here.  On December 7, 2021, in American Steel Construction, 371 NLRB No. 41 (2021), the Board invited public input as to whether it should reconsider that standard once more and possibly revert back to the 2011 rule making it easier for unions to organize employees into micro-units.  The Board’s recent request to the labor-relations community for amici briefing foreshadows that it likely will adopt the 2011 model that permitted “micro-units.”

Procedural History

Local 25, International Association of Bridge Structural, Ornamental, and Reinforcing Iron Workers, AFL-CIO, filed a petition on November 18, 2020, seeking to represent a bargaining unit composed of the full- and regular part-time journeymen and apprentice field ironworkers employed by American Steel Construction, Inc.  Citing PCC Structurals, Inc., 365 NLRB No. 160 (2017), and The Boeing Company, 368 NLRB No. 67 (2019), the Region held that the community of interest shared among employees encompassed by the proposed unit was not sufficiently distinct from the interests of other employees excluded from the petitioned-for unit.

Accordingly, the Region agreed with the Employer that the petitioned-for unit was inappropriately narrow in scope, adding that the appropriate unit would include American Steel’s fabrication shop employees, painters, and drivers.  Noting that the Union declined to represent that broader unit, the Region dismissed the petition.

The Board Majority’s Analysis and Request for Briefing

The Board noted that, prior to the decision in PCC Structurals, the Board’s Specialty Healthcare & Rehabilitation Center of Mobile opinion set out a more permissive standard for determining the appropriateness of a petitioned-for bargaining unit.  357 NLRB 934, 945-946 (2011), enfd. sub nom. Kindred Nursing Centers East, LLC v. NLRB, 727 F.3d 552 (6th Cir. 2013).  The standard under Specialty Healthcare was whether the employees encompassed by a petitioned-for bargaining unit were readily identifiable as a group and shared a community of interest.  Under that standard, whether the community of interest among included employees was meaningfully distinct from the interests of excluded employees who arguably might also belong in that group was irrelevant unless the employees of the broader potential unit shared an “overwhelming community of interest” with those in the petitioned-for unit.

The Board, in PCC Structurals, discarded that standard, explaining that when comparing the “shared and distinct interests of petitioned-for and excluded employees,” the key question is whether the excluded employees have “‘meaningfully distinct interests in the context of collective bargaining that outweigh similarities with unit members.’”  365 NLRB No. 160, slip op. at 9, 11 (quoting Constellation Brands U.S. Operations, Inc. v. NLRB, 842 F.3d 784, 794 (2d Cir. 2016)).  Later, in Boeing, the Board noted that if the distinctions among excluded and included employees’ interests do not outweigh their similarities, the unit is not appropriate in scope.  368 NLRB No. 67, slip op. at 4.

In the instant decision, the Board found that the Union raised substantial issues warranting review of the Region’s determination that the petitioned-for unit was inappropriately narrow in scope.  Accordingly, the Board granted review of the issue and invited both parties and amici to e-file briefs on or before January 21, 2022, regarding the following two questions:

  1. Should the Board adhere to the standard in PCC Structurals, Inc., 365 NLRB No. 160 (2017), as revised in The Boeing Company, 368 NLRB No. 67 (2019)?
  2. If not, what standard should replace it? Should the Board return to the standard in Specialty Healthcare, 357 NLRB 934 (2011), either in its entirety or with modifications?

The Dissenting View

Board Members Marvin Kaplan and John Ring criticized the majority opinion, observing that it ran contrary not just to existing precedent under PCC Structurals and Boeing, but also to the long-established precedent properly interpreting Section 9 that prevailed before the brief tenure of the aberrational Specialty Healthcare opinion.

The dissenting members criticized the Specialty Healthcare standard because it would mean that the Board would accept the petitioned-for unit as appropriate in “all but the rarest cases,” as it would require that the Board find appropriate any petitioned-for bargaining unit with an internal community of interest, except where the objecting party can meet the extraordinarily heavy burden of proving that excluded employees share an “overwhelming community of interest” with included employees.

 

Google’s Union Campaign Strategy Documents Not Privileged, NLRB Administrative Law Judge

Google recently suffered a blow in its ongoing National Labor Relations Board litigation, when an Administrative Law Judge appointed to rule on a discovery dispute ordered the Silicon Valley company to turn over the lion’s share of certain documents subpoenaed by former Google employees. Discovery issues have become more prevalent in NLRB litigation as massive document subpoenas issued by the government are the norm. The disputes are almost singularly one-sided: The agency is shielded from almost all discovery but is free to serve its own subpoenas. A recent ruling by an Administrative Law Judge demonstrates the perils of attempting to cloak vast categories of documents as attorney-client privileged or work product.

Google, which faces allegations of unlawful interference with, and retaliation for, employees’ union organizing activity, had sought to characterize the documents at issue, communications between Google and a labor relations consulting firm, as privileged. The disputed documents included advice and materials provided by the consultants to assist Google in mapping out its own campaign strategy.

“Privileged” materials are, of course, generally not discoverable. The attorney-client privilege protects communications between an attorney and client made, in confidence, for the purpose of obtaining legal services. It is generally insufficient to simply mark a document with a privileged label or to copy attorneys on the communication to protect the information from discovery.

In rejecting Google’s argument that the attorney-client privilege applied, the Administrative Law Judge focused on the consultants’ status as third parties outside of Google’s attorney-client relationship. Communicating with a non-legal third party, like a consulting firm, can be fatal to later attempts to classify those communications as confidential or legal in nature, as is required for privilege to attach.

“Between an Attorney and Client”

Google argued that its communications with its consultants were protected by the attorney-client privilege because Google’s lawyers were included on these communications. However, simply including lawyers on an email thread or forwarding materials to them does not automatically shield those materials.

For example, instead of sending certain materials directly to Google, the consultants would first send them to Google’s outside counsel, who then passed the materials to Google. The Administrative Law Judge labeled this practice as a “disingenuous” effort to “conjure a privilege.” For privilege to attach, the attorney must actively participate in the communications.

“For the Purpose of Obtaining Legal Services”

Sharing communications with a third party generally but not always waives the attorney-client privilege. When sharing is necessary to obtain legal advice (for example, when the client requires a translator), the privilege can remain.

The Administrative Law Judge poured cold water on Google’s argument that this exception applies to the consultants’ materials. The consultant communications could not have been “necessary” to obtain legal advice because, at the time, Google was not seeking legal advice at all. Rather, Google contracted with the consultants to obtain advice on campaign strategy, which is not a legal issue.

The fact that Google’s lawyers reviewed the consultants’ materials in order to issue advice on the materials’ legality did not change this calculus. The Administrative Law Judge deemed this argument “nonsensically circular” because the necessity for that particular legal advice did not arise until after the documents were created.

Takeaways

The bottom line for employers is that they should be mindful that communications with third parties, such as labor relations campaign consultants, are not necessarily privileged and may be discoverable in litigation. This is the case even if lawyers are included on those communications.

This decision comes shortly after another discovery ruling that covered similar ground. In October, a New York judge found that actor Kevin Spacey’s emails to a public relations firm—another non-legal third party—were not privileged, even though Spacey’s lawyers were included on the emails.

In the ruling discussed here, the Administrative Law Judge had reviewed only 80 out of a total of 1507 disputed documents. Of those 80, he only characterized nine as privileged, suggesting he may continue to take a narrow view of privilege for the remaining materials. Interested parties should keep an eye on whether future rulings shed additional light on the scope of privilege.

NLRB Takes One Step Closer to Expanding The Possible Damages Awarded to Employees Fired in Violation of the Act

On November 10, 2021, the National Labor Relations Board announced that it is seeking public input to address whether the Board should award consequential damages to make employees whole for economic losses and under what circumstances.  See Thyrv, Inc. 371 NLRB No. 37 (2021).

The Board’s traditional remedy for unlawful layoffs or terminations requires that these employees be (i) reinstated to their previous position or a substantially equivalent position, and (ii) made whole for any loss of earnings and other benefits incurred as a result of the unlawful layoff or termination.  As part of its “make-whole” relief, the Board has awarded two remedies that may be characterized as consequential damages: (1) reasonable search-for-work expenses, and (2) interim employment expenses.

Even though no party in the litigation asked for the issue to be addressed, the Board utilized its broad discretionary authority to invite the parties and interested amici to brief the following questions:

  1. Should the Board modify its traditional make-whole remedy in all pending and future cases to include relief for consequential damages, where these damages are a direct and foreseeable result of a respondent’s unfair labor practice?
  2. Alternatively, should the make-whole remedy include relief for consequential damages only upon findings of egregious violations by a respondent?
  3. If consequential damages are to be included in make-whole relief, how should they be proved, and what would be required to demonstrate that they are a direct and foreseeable result of an employer’s unfair labor practice?
  4. What considerations support making the proposed change to the Board’s traditional make-whole remedies?
  5. What considerations support retaining the Board’s traditional exclusion of consequential damages from its make-whole remedies?

Interested amici may e-file briefs not exceeding 20 pages in length to the Board by Monday, December 27, 2021.

BREAKING: NLRB General Counsel Issues Memo on Bargaining Obligations Under OSHA’s Vaccination Requirements

On November 10, 2021, General Counsel Jennifer Abruzzo issued a memorandum outlining bargaining obligations under OSHA’s Emergency Temporary Standard to Protect Workers from Coronavirus (“ETS”).  Responding to Inquiries Regarding Bargaining Obligations Under the Department of Labor’s Emergency Temporary Standard to Protect Workers from Coronavirus, GC 22-03 (November 10, 2021).

The ETS, which took effect on November 5, 2021, requires employers with 100 or more employees to “develop, implement, and enforce a mandatory COVID-19 vaccination policy.”  The ETS, however, provides an exception, permitting employers to adopt a policy either requiring employees to receive the vaccination or submit to regular COVID-19 testing if they opt to remain unvaccinated.  Immediately following the ETS’s implementation, numerous lawsuits challenging the rule were filed resulting in the Fifth Circuit Court of Appeals temporarily staying the ETS on November 6th.

In the memorandum, GC Abruzzo takes the position that “covered employers would have decisional bargaining obligations regarding aspects of the ETS that affect terms and conditions of employment.”  The memorandum argues that the ETS “clearly affects terms and conditions of employment” because of its potential to affect the continued employment of employees who are affected by the rule and thus bargaining is required.  Although Abruzzo acknowledged that there is no duty to bargain where a change in the terms and conditions of employment is statutorily mandated, the memorandum emphasizes the discretion afforded to employers in complying with the ETS and the duty to bargain that arises as a result.  Namely, employers have the option of mandating vaccination for all employees or requiring employees to either become vaccinated or undergo regular testing if they refuse the vaccine.  As the memorandum notes, an employer “may not act unilaterally so long as it has some discretion in implementing” statutory requirements.

Even where the ETS does not provide employers any discretion, Abruzzo goes further, noting that large employers are required to bargain over the effects of their decision to implement changes under the ETS.  The memorandum cites National Labor Relation Board (“NLRB”) precedent for the proposition that even where an employer can unilaterally change policies under federal law, failure to bargain over the effects of the change can constitute a violation of Section 8(a)(5) of the National Labor Relations Act.

Takeaways

Although the memorandum is relatively short, it plainly makes the NLRB’s position known.  Failure to bargain and reach agreement or impasse over: (i) the effects of ETS-compliant policies; or (ii) the employer’s decision about how to comply with the ETS where it is afforded discretion may constitute an unfair labor practice.  While each individual case may differ, employers aiming to comply with the ETS should immediately take steps to bargain with their unionized workforce prior to implementing any policy changes required by the regulation.  As always, we will continue to keep you apprised of the latest developments at the NLRB.

NLRB, DOL, and EEOC Announce Joint Initiative to Combat Worker Retaliation

Today, the National Labor Relations Board (NLRB), along with the U.S. Department of Labor (DOL) and the Equal Employment Opportunity Commission (EEOC), announced the creation of an interagency initiative to raise awareness of worker retaliation issues. Building upon their pre-existing interagency relationships, the NLRB, DOL, and EEOC seek to further protect workers from unlawful retaliatory conduct, educate the public about unlawful retaliation against workers who exercise their rights under federal labor laws, and engage with key stakeholders, including employers, trade and business associations, labor organizations and civil rights groups.

The initiative is scheduled to officially kick-off on November 17, 2021 with a virtual dialogue with employers on the importance of worker retaliation protections and the agencies’ joint commitment to the “vigorous enforcement” of these protections. In a press release published by the NLRB, DOL, and EEOC, NLRB General Counsel Jennifer Abruzzo explained that “[retaliation] issues cut across multiple worker protection agencies, which is why it is so important to work collaboratively to effectively prevent and forcefully address retaliatory acts against workers.”

The civil law enforcement agencies have not yet provided further information about the full scope of the initiative or how to participate in the “virtual dialogue” scheduled for November 17. As always, we will keep you informed of any updates on this interagency collaboration.

While Democrats Whittle Down Pro-Labor Provisions Of Social Spending Bill, Civil Penalties Remain

As we discussed here, members of the House Education and Labor Committee have been attempting to end-run the procedural hurdles that have prevented the Protect the Right to Organize Act (“PRO Act”) legislation from becoming law, through a process called “budget reconciliation.”  (For a refresher on the PRO Act, see our blog posts on the proposed legislation here and here.)

In September, the Committee released its proposed language for the federal budget incorporating several key provisions from the PRO Act that would have drastically amended federal labor law, such as establishing civil penalties for violations of the National Labor Relations Act (“NLRA”), personal liability for officers and directors, and newly-defined unfair labor practices that would effectively prohibit employers from utilizing some of the economic weapons traditionally thought to be lawful under the NLRA.  Through the budget reconciliation process, these provisions have a greater chance of becoming law where the bill only requires majority support in both the House and Senate and is not subject to a filibuster.

However, as the social spending bill faced challenges from both parties, the Administration presented a revised framework on October 28, 2021, entitled the “Build Back Better Act.”  The new bill  among other major edits, significantly pared down the proposed pro-labor provisions.

Even under the revised framework, there still exists for the first time ever civil penalties for those who commit unfair labor practices. If passed into law in its current form, the Build Back Better Act would:

  • Impose civil penalties of up to $50,000 per violation of the NLRA;
  • Double civil penalties up to $100,000 for NLRA violations that resulted in discharge or serious economic harm where the employer committed another similar violation within the past 5 years; and
  • Assess civil penalties against directors and officers where the facts indicate that personal liability is warranted.

Fortunately, some of the most significant PRO Act-inspired provisions of the prior reconciliation bill have been dropped from this spending bill; specifically, language that would have made it an unfair labor practice to:

  • Permanently replace strikers;
  • Discriminate against a worker who has unconditionally offered to return to work based on participation in a strike;
  • Lockout, suspend, or otherwise withhold employment from employees prior to a strike;
  • Misrepresent to a worker that they are excluded from the definition of “employee” under the Act, such as misclassifying independent contractor or supervisor;
  • Require or coerce employees to attend so-called “captive audience meetings” or other campaign activities;
  • Enter into, enforce, coerce, or retaliate against employees with respect to class or collective action waivers

The revised spending bill framework is now up for discussion and debate in both the House and the Senate. The bill needs majority support in both chambers in order to become law, and the amendments in the proposed language must withstand potential challenges in the Senate (called the Byrd Rule), which (as we discussed here) is intended to limit amendments that change substantive policy of federal law, rather than limited to taxes or spending.  The significantly narrowed labor law amendments in the revised bill would seem to have a greater likelihood of withstanding a Byrd Rule challenge than the prior iteration.

As always, we will monitor this situation and report updates as they occur.

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