Labor Relations Update

Federal Appeals Court Vacates Arbitration Award, Concluding Arbitrator Issued Own “Brand of Industrial Justice”

In the field of labor relations, there exist some rare occurrences, things that happen so seldom that it seems as if they are impossible.  As we’ve previously discussed, one such “unicorn sighting” is the NLRB overturning an Administrative Law Judge’s credibility determinations.

Another event that falls in the category of “super rare” is a court invalidating an arbitration award.  Most labor practitioners know that arbitrators have a wide latitude to decide cases, frequently returning to work employees who have unquestionably engaged in misconduct and interpreting labor agreements.  The latitude given arbitrators is so high that it is often considered a waste of time and resources to challenge the award in court.  This is because the standard used by reviewing courts is whether the arbitration award “draws its essence” from the contract.  If the court determines the arbitrator relied upon the contract to make a decision then the inquiry is over.

But, as one court recently pointed out, “deference [to arbitration awards] is not unlimited.  If it were, it would by an oxymoron.”  In an end of year decision, the Third Circuit issued a rare rebuke of an arbitrator and affirmed a federal district court’s ruling vacating an arbitration decision.  The appeals court acknowledged that “[t]he bar may be low to uphold an arbitration award, but it still exists.”  Monongahela Valley Hospital Inc. v. United Steel Paper and Forestry Rubber Manufacturing Allied Industrial and Service Workers International Union AFL-CIO CLC, No. 19-2182 (3rd Cir. Dec. 30, 2019).

The case stemmed from a dispute over preference for selecting vacation days between a bargaining unit employee and her working supervisor, a non-bargaining unit employee at a hospital employer.  The labor agreement  between the employer and the union contained a provision concerning the scheduling of vacation, which provided that: “Vacation will, so far as possible, be granted at times most desired by employees; but the final right to allow vacation periods, and the right to change vacation periods is exclusively reserved to the Hospital.”

The employer denied the bargaining unit employee’s vacation request because her working supervisor had requested that same week off and both could not be away at the same time.  The bargaining unit employee then filed a grievance alleging the requested vacation denial as a CBA violation.  The union’s assertion was that the agreement’s language should have granted the bargaining unit preference.

The arbitrator ruled that the employer violated the agreement.  In interpreting the scheduling of vacation provision of the agreement, the arbitrator reasoned that the employer’s “exclusivity in allocating vacations” was subordinate to the “so far as possible” language.  The arbitrator ruled the agreement prevented the employer from denying bargaining unit employees their desired vacation when no “operating need” existed.

The employer appealed.  Courts provide a “heavy degree of deference” to an arbitrator’s decision, but “that deference is not unlimited.”  Here, the appeals court, using  sharp language, declined to reinstate the arbitration award because (1) the award “manifestly disregard[ed] the plain language of the CBA,” and (2) the arbitrator “deviated far beyond the scope of his authority by force-feeding the ‘operating need’ requirement into the CBA.”

The court ruled that the arbitrator ignored the plain language of the contract.  The CBA gives the employer the “final” and “exclusive[ ]” right to deny bargaining unit employees their desired vacation.  The “so far as possible” language is a generalization that “cannot hold hostage” the explicit rights granted to the employer in the agreement.

The court also ruled that the arbitrator exceeded his authority by inserting the requirement that the employer establish “operating need” to not give a bargaining unit preference language that appears nowhere in the agreement.  Indeed, the court noted that the agreement’s grant of authority to the arbitrator contained the common limitation: the arbitrator has no authority to “add to, detract from or alter in anyway” the agreement.

The court stated that “an arbitrator’s authority sources from the CBA itself” and that the arbitrator “dispens[ed] his own brand of industrial justice” by inserting the “operating need” restriction.

This case is a good reminder of the importance of drafting labor agreement provisions in a manner that clearly define the authority of the employer.  While the parties’ agreement stated the employer would grant vacation preference “so far as possible,” the reservation of rights to the employer to make the “exclusive” decision ultimately won the day.

NLRB: Outsized Payment to Union Supporter to Waive Reinstatement in Board Settlement Not Unlawful Bribe

Shamrock Foods Company, 369 N.L.R.B. No. 5 (January 7, 2020) is the latest in the National Labor Relations Board’s series of employer-friendly decisions.  In Shamrock Foods, the Board held that an employer did not violate Sections 8(a)(3) and (1) of the National Labor Relations Act by offering and entering into a settlement agreement with an unlawfully-discharged employee who waived his right to remedial reinstatement in exchange for a large cash payment.  In doing so, the Board affirmed its longstanding policy favoring the compromise and settlement of unfair labor practice charges.

Factual Background

During an active campaign by a union to organize a distribution warehouse, the employer fired an employee, a key figure in the union’s campaign.  An administrative law judge later found this discharge to be unlawful.  The employee remained active in the union’s efforts after his discharge, and soon became a focal point for union supporters, who picketed with signs including the slogan, “Workers United to Bring [Employee] Back”.  Thereafter, as part of an NLRB injunction proceeding, a federal court issued an order reinstating the employee to his position while the matter was in litigation.  Union supporters viewed the order as a win, and distributed flyers around the warehouse.

Initially, the employer complied with the court order and offered the employee reinstatement.  The employer then changed its position and offered the employee a settlement of $178,000 in exchange for waiving his right to reinstatement.  The figure also included settlement of a separate disability charge the employee had filed with the EEOC over his termination.  The employee rejected the offer and countered with $350,000 as well as 3 years of medical coverage.  Eventually, the two parties agreed on $214,270.30, which the employee accepted.  This settlement figure represented more than four times the amount of remedial back pay the employee could have received as part of the NLRB litigation.  The employer stated several times during negotiations that it did not want the employee back.

The union filed additional charges alleging the settlement constituted an unlawful bribe in violation of the Act.

Analysis

In determining whether the settlement agreement constituted an unlawful bribe in violation of the NLRA, the Board noted that this was an “unusual case warranting careful scrutiny.”

The Board found substantial evidence that the employer had used the settlement offer as a means of preventing the employee from returning to work.  The evidence was clear the employer knew that the employee was a well-known and active supporter of the union’s efforts.  In addition, the employer was not raising typical defenses to remedial reinstatement—that employee’s work was deficient, or that his reinstatement would cause friction with other employees or management.  The employer also knew that the employee’s reinstatement had become a prominent issue among warehouse employees, and its prevention would deal a setback to the union’s efforts.  Finally, the employer offered the employee more than four times the amount of his lost pay and related expenses, and failed to present any witnesses to explain its reasons for offering such a large sum.  The Board noted that put together, these facts raise “at least a colorable basis for finding that [employer’s] settlement offer to [the employee] was unlawful.”

However, the Board distinguished several cases in which they had declined to give effect to settlement agreements conditioned upon prospective waivers of Section 7 rights.  In this case, the employee waived no rights; he was only asked to decline re-employment.  The Board also found significant that the employee had independently negotiated with the employer regarding the settlement figure, and had the option of refusing, forcing his employer to reinstate him or be held in contempt.  Finally, though the settlement figure was substantially larger than the sum of the employee’s remedial back pay, it also included compensation for the resolution of his disability claim with the EEOC.

In reaching its conclusion, the Board emphasized its longstanding policy to encourage compromise and settlement, as established in Independent Stave and related cases.  Ultimately, given the evidence on both sides, the Board decided that its policy favoring settlements tipped the scale, and adopted the ALJ’s dismissal of the union’s allegation.

Takeaways

This is an interesting case involving an allegation that an employer used its economic resources to buy-off a union supporter. Absent the context of a settlement of NLRB litigation, this payment clearly would be an unlawful bribe.  However, making such a payment as part of a settlement made it acceptable.  Parties settle litigation for all sorts of reasons, and this is not the first time an employer has been willing to pay a premium to have an employee waive reinstatement.

The case does put a spotlight onto the competing interests in NLRB settlements.  The union clearly saw the outsized payment as a deliberate attempt to thwart its organizing efforts by removing a strong pro-union adherent.  The employer had openly expressed that it did not want the employee to come back to work.  The employee, for his part, had a price he was willing to accept to waive reinstatement, and that figure ultimately was met by the employer.

In the end, the strong preference to settle litigation won out.  If the union’s allegation had been found to have merit, the settlement payment would be put into jeopardy and the employee might have been faced with reinstatement to a job with some lower amount of backpay.

The Board’s decision was a continuation of a long line of cases approving settlements in which the employee waives reinstatement in exchange for a larger remedial payment from the employer.

NLRB Gives End of Year Gift for Employers, Restores Longstanding Standard for Deferring to Arbitral Decisions

In yet another end-of-2019 decision overruling significant NLRA precedent, the Board reverted to the less stringent Spielberg / Olin standard for determining whether to defer to arbitration decisions in the context of Section 8(a)(1) and (3) unfair labor practice cases.  See United Parcel Service, Inc., 369 NLRB 1 (2019). The Board issued this decision unanimously, in the first significant decision with only three Republican members after Member McFerran‘s term ended on December 16th.

Factual Background

A package driver was discharged for allegedly violating the employer’s delivery procedures.  The driver filed two grievances under the parties’ collective bargaining agreement, which also alleged that he was discharged in violation of 8(a)(3) of the Act.  The grievance panel denied the grievances.

The driver filed unfair labor practice charges over the same issues as addressed in the grievances.  After trial, an Administrative Law Judge found the discharge violated the Act.  The ALJ applied the 2014 Babcock standard for evaluating the case in light of the grievances.

The NLRB reversed and in so doing, overruled Babcock and reinstated the Spielberg / Olin standard, restoring the standard that had been in place prior to 2014.

Babcock Standard

In 2014, the Board, in Babcock & Wilcox Construction Co., 361 NLRB 1127 (2014), stated it would not defer to arbitral decisions unless “(1) the arbitrator was explicitly authorized to decide the unfair labor practice issue; (2) the arbitrator was presented with and considered the statutory issue, or was prevented from doing so by the party opposing deferral; and (3) Board law reasonably permits the award.” The burden of proof under this standard rested with the party urging deferral.

Babcock also established a standard for pre-arbitral deferral to grievance arbitration proceedings and to pre-arbitral grievance settlements in unfair labor practice cases alleging discharge or discipline in violation of NLRA § 8(a)(1) and (3):  the Board would not defer to grievance arbitration proceedings in these cases unless the parties in a collective-bargaining relationship have “explicitly authorized an arbitrator to decide the unfair labor practice issue, and that it would not defer to grievance settlement agreements that did not comport with the new requirements for postarbitral deferral.”

Almost no grievance procedure provides such explicit authorization, so the Babcock standard resulted in employers having to defend the employment action twice, under the grievance procedure and in unfair labor practice proceedings.

Overruling Babcock

In its unanimous decision, the Board explained that deferral to collectively-bargained grievance-arbitration procedures is meant to balance the Board’s exclusive Section 10(a) authority to prevent unfair labor practices with the NLRA’s purpose to “reduce industrial strife by ‘encouraging practices fundamental to the friendly adjustment of industrial disputes’ and ‘encouraging the practice and procedure of collective bargaining.’” The Board noted it prefers – when feasible – to let “parties resolve employment disputes through negotiated mechanisms of their own choosing without resort to the Board’s processes.”

Spielberg/Olin Standard Reinstated

The Board‘s order has two significant components on arbitration deferral.  First, the Board reinstated pre-arbitral deferral standards that existed prior to Babcock, and second, the Board reverted to the Spielberg/Olin standard for deferring to post-arbitral decisions in unfair labor practice cases alleging discharge or discipline in violation of NLRA Sections 8(a)(1) and (3).

Now, the Board will defer to an arbitration decision and award if: “(1) the arbitration proceedings were fair and regular, (2) the parties agreed to be bound, (3) the contractual issue was factually parallel to the unfair labor practice issue, (4) the arbitrator was presented generally with the facts relevant to resolving the unfair labor practice, and (5) the decision was not clearly repugnant to the purposes and policies of the Act.” The burden is once again on the party arguing against deferral.

The key difference is that the arbitrator need not expressly consider the unfair labor practice, as long as the contractual issue and ULP are factually parallel. Applying the post-arbitral deferral standard to the facts of this case, the Board reversed the ALJ and dismissed the case.  The Board also noted that it would apply this standard retroactively to all other pending cases, at whatever stage.

Implications

This decision makes it far more likely that the Board will defer to the parties’ grievance arbitration process when faced with parallel unfair labor practice claims.  This outcome aligns with long-standing Supreme Court precedent trumpeting arbitration, and encourages the collective bargaining parties to resort to negotiated dispute resolution machinery to resolve their disputes that potentially overlap with unfair labor practices.  It also preserves the parties’ and the Board’s resources by potentially avoiding multiple litigations over the same facts and circumstances.

As noted above, this is the first significant decision after Member McFerran – the lone Democratic member of the Board — left the NLRB at the end of her term on December 16, 2019.  Neither McFerran nor the other prior Democratic member, former Chairman Mark Gaston Pearce, has been replaced by President Trump, and the Board is now comprised of 3 Republican members.  Traditionally, under such circumstances without a minority voice on the Board, the NLRB has declined to overturn precedent.  But the UPS decision appears to depart from this precedent and signals that the Board may continue to stay busy into 2020 by overturning precedent.

Buttoning Up Rules on Union Insignia – Board Makes It Easier for Employers to Restrict Size and Scope of Union Buttons For Those With Customer Contact Work

The Board continues churning out precedent-setting decisions as year-end approaches.  Two days before the Christmas holiday, in Wal-Mart Stores, Inc., 368 NLRB No. 146 (Dec. 16, 2019), the NLRB applied its new view on handbook rules—the Boeing test—to Wal-Mart’s policy that employees can only wear “small, non-distracting” union insignia in the workplace, holding that the policy did not run afoul of the Act in customer-facing areas of the store.  It did make clear, however, that the policy was unlawful in “employee-only” zones.

The Board identified an important distinction between two types of employer policies regarding union buttons and insignia:

  • Where an employer bans the wearing of all union buttons and insignia, the Board and Supreme Court has found that such rules are presumptively unlawful. The burden is then placed on the employer to justify the rule on account of “special circumstances”—a very narrow exception.
  • Where an employer—as in Wal-Mart Stores, Inc.—instead allows certain buttons, but limits the size and/or appearance of union buttons and insignia that employees can wear, the Board has now held that the Boeing test for facially-neutral rules applies instead.

While the Board has not overturned the “special circumstances” exception to all prohibitions on union buttons and insignia, this decision could foreshadow the potential application of the Boeing test to other areas of federal labor law where the Board had previously established separate analyses that had been more difficult for employers to satisfy.

Factual Background

Wal-Mart’s dress code policy limited, though did not prohibit, the wearing of union insignia for employees.  The policy allowed employees to wear “small, non-distracting logos or graphics” no larger than the size of their employee badge.  Wal-Mart’s justification for its policy was to “enhance the customer shopping experience and protect merchandise from theft or vandalism.”  Wal-Mart’s policy applied to employees both on the selling floor and employee-only backrooms.

Analysis

It is well-settled employees have a Section 7 right under the NLRA to wear union buttons and other insignia.  See Republic Aviation Corp. v. NLRB, 324 U.S. 793 (1945).  The right is not absolute, but when employers announce a blanket prohibition for wearing such insignia in the workplace, the Board has found that the restriction is presumptively unlawful, unless the employer justifies the rule based on “special circumstances.”  Indeed, as the Board recently held in In-N-Out Burger, Inc., 365 NLRB No. 39 (2017), employers are generally only limited to prohibit all union insignia where displaying such items would (1) jeopardize employee safety; (2) damage machinery or products; (3) exacerbate employee dissension; or (4) unreasonably interfere with a public image that the employer has established, as part of its business plan, through appearance rules for its employees.  This exception is exceedingly narrow and depends on the circumstances of each case.

Here, however, the Board analyzed the lawfulness of Wal-Mart’s policy using the test it set forth for facially-neutral employer policies in Boeing Company, 365 NLRB No. 154 (2017), because the rule only limited the wearing of union buttons and insignia; it did not ban them altogether.  As a result, according to the Board, the impact on Section 7 rights was relatively slight compared to the Republic Aviation line of cases and analysis.  As we have discussed in prior posts, under the Boeing test, the Board must balance the rule’s potential impact on employees’ exercise of Section 7 rights against the employer’s legitimate justifications associated with the policy.

Applying the Boeing test, the Board held that:   

  • Wal-Mart’s policy was lawful as applied to the selling floor because the employer’s interest in providing its customers a satisfying shopping experience, on balance, outweighed the employees’ interest in having no restrictions on the size of the insignia they could wear.
  • The policy was unlawful, however, in “employee-only” zones because “the whole point” of wearing a large or distracting union button was precisely to “catch the attention of coworkers” to communicate a message the Act intends to protect.

Member McFerran Dissents

In one of Member McFerran’s final dissents, she highlighted how wearing union insignia is “at the core of the activity the National Labor Relations Act is intended to protect” and criticized the majority for applying the less demanding Boeing test.

Member McFerran also expressed concern over the Board’s sweeping application of Boeing into other areas of “well-settled” Board law that require separate analyses.

Takeaways

On its face, this decision now makes it easier for employers to restrict the type and manner of union buttons and insignia employees could wear when interacting with clients and customers.  As Member McFerran recognized, by the Board applying the Boeing test to the insignia-policy at issue, rather than the traditional “special circumstances” test, in the absence of an absolute button ban, the employer’s policy will be presumptively valid and the burden instead is placed on the NLRB GC to prove otherwise.

Wal-Mart also raises the question of whether the Board will now begin to apply the Boeing framework to additional situations where an employer limits Section 7 activity, but does not prohibit it altogether.

Busy Board Returns to Rule Permitting Workplace Confidentiality Restrictions during an Employer’s Investigation

As anticipated, in one of the last decisions before the end of Member McFerran’s term, the NLRB issued another important opinion.  Reverting back to precedent that preceded a 2015 decision, the Board, in Apogee Retail LLC d/b/a Unique Thrift Store, 368 NLRB No. 144 (2019), held that an employer’s confidentiality restrictions for information relating to workplace investigations are categorically lawful under Boeing where such rules explicitly apply for the duration of an investigation.  The Board’s decision overruled a 2015 case that demanded a case-by-case determination of whether confidentiality is required in a particular investigation.

With the wave of workplace complaints and employer-initiated investigations on the rise in recent years, the Board’s Unique Thrift Store decision provides helpful clarity for employers looking to ensure confidentiality of information revealed during the pendency of an open investigation.

Factual Background

Unique Thrift Store promulgated two investigative confidentiality rules and disseminated copies of the rules to its employees:

  • One rule required employees to “cooperate fully in investigations and answer any questions truthfully and to the best of their ability,” and indicated that both reporting persons and interviewees are “expected to maintain confidentiality.”
  • The other rule listed behaviors that could result in disciplinary action, which included the “unauthorized discussion” of investigations or interviews “with other team members.” Unique Thrift Store had never disciplined an employee for violating those rules, but asserted that the provisions were necessary for a multitude of business reasons.

Board History:  From Banner to Boeing

In its 2015 Banner Estrella opinion, the Board addressed whether employers could lawfully impose such confidentiality restrictions on employers – more specifically, whether employers could lawfully instruct employees to refrain from discussing workplace investigations.  Banner Estrella Medical Center, 362 NLRB 1108 (2015), enf. denied on other grounds 851 F.3d 35 (D.C. Cir. 2017).  In finding that such instructions restricted employees’ exercise of their rights under Section 7 and thus violated Section 8(a)(1), the Board “placed the burden on the employer to determine, on a case-by-case basis, whether its interests in preserving the integrity of an investigation outweighed presumptive employee Section 7 rights.”  (Emphasis added.)  In other words, the Board placed the burden on the employer to set forth specific evidence indicating that a lack of confidentiality would interfere with the investigation.  Only if the employer satisfied that showing could it lawfully mandate confidentiality among its employees.

After Banner Estrella Medical Center, the Board established a balancing test in Boeing Company, 365 NLRB No. 154 (2017) to analyze facially-neutral rules that may reasonably be construed to interfere with employees’ Section 7 rights.  Under the Boeing test, the Board must balance the rule’s potential impact on employees’ rights against the employer’s legitimate justifications associated with the rule.  As a result of that analysis, the Board would designate the rule at issue in one of three categories:  (i) rules that are always lawful; (ii) rules that may be unlawful, depending on the circumstances; and (iii) rules that are plainly unlawful.  Since Boeing, the Board has applied the three-category approach to myriad employer-promulgated workplace rules, to varying results.

Rejection of Banner Estrella and Application of Boeing

A majority of the current Board, comprised of Chairman Ring and Members Kaplan and Emanuel, rejected the approach set forth in Banner Estrella because it failed to balance employee and employer interests, and instead wrongfully imposed a burden on employers to establish that their interests in obtaining confidentiality outweighed those of their employees.

In rejecting the Banner Estrella test, the Board instead faithfully applied the balancing test set forth in Boeing Company, concluding that investigative confidentiality rules of this nature are “Category One” lawful to the extent those rules apply only during open investigations.  Although the Board recognized that the two confidentiality provisions at issue could potentially interfere with the exercise of Section 7 rights, it nevertheless found that the impact was relatively slight in comparison to the employer’s compelling business justifications, which included, among other things, preventing theft, protecting employee privacy, and ensuring the integrity of investigations.

Ultimately, however, the majority remanded the case, as the rules at issue did not explicitly limit confidentiality to the duration of the investigation.  According to the majority, employees could reasonably interpret such rules to apply beyond the duration of the investigation and, therefore, a remand for further consideration was appropriate.

Member McFerran Dissents

In one of her final published dissents, Member McFerran criticized the majority for again choosing to reverse precedent “without notice or good reason.”  Member McFerran expressed great concern that employers are now permitted to “hold gag rules over their workers if the rule is linked to an open investigation of workplace misconduct.”  According to Member McFerran, there is no getting around the fact that employer “gag rules” of this sort infringe upon employees’ Section 7 rights.

Takeaways

Confidentiality in workplace investigations is important.  It allows the employer to assess witnesses without fear of taint to the process that can come from unrestricted discussion. As anyone charged with conducting a workplace investigation knows, witness recollection is imperfect at best and so trying to preserve it is good practice.  What is often lost in the discussion of workplace investigation is that someone may be disciplined or terminated as a result:  it is better for all concerned if the investigation is thorough and unimpeded by workplace discussion.

Employers can now rest-assured that facially-neutral rules requiring workplace confidentiality during the term of an open investigation are lawful under the NLRA.  Whereas under Banner Estrella, the burden was placed on the employer to justify its rule, now the Board has blessed such rules without necessitating a case-by-case review.

To be sure, this decision comes at an interesting time in the wake of the #MeToo movement, as a number of states have passed (or have considered passing) legislation that will impact the enforceability of workplace non-disclosure provisions, particularly in the context of the settlement of workplace sexual harassment claims.  The enacted and proposed legislation reflect recent pressure by legislators and the public at large to ensure complainants and victims are not “silenced.”  A key distinction between the recent spate of these types of laws restricting public disclosure by #MeToo victims as part of settlement agreements and the Board’s decision here is that the Unique Thrift Store decision applies only during the term of an investigation – not forever.  As a result, Unique Thrift Store appropriately reflects the Board’s determination that confidentiality is necessary for an employer investigation to achieve the desired results of preventing or remediating potential civil or criminal violations in the workplace, such as discrimination, retaliation, theft or violence.

Finally, as we have discussed in recent posts (see here and here), the criticism that precedent is being changed without notice and good reason rings somewhat hollow.  The last several years have seen significant changes to longstanding precedent with no notice.  As for the existence of “good reason,” one fundamental policy underlying the National Labor Relations Act is stability in labor relations.  One can argue that the constant change of precedent hardly makes for stability or good labor relations.

It is likely that the Board will issue more decisions in the coming days, as Member McFerran’s term just ended on Monday, December 16th.  We will, as always, keep you apprised of any new developments.

NLRB Eliminates Many “Quickie” Election Rule Components

The National Labor Relations Board issued a new rule on Friday that will significantly amend NLRB election rules and procedures.  Expected to take effect on April 16, 2020, the new rules, in large part, reverse course from the “quickie” election rules of 2014, and restore reasonableness to election procedures.

Key provisions from the Board’s new rule are set forth below:

Reasonable Time Limits During the Election Process:  

  • Pre-election hearings will no longer be scheduled to open eight calendar days after a hearing notice is served on the parties. Now, there must be at least fourteen business days between the hearing notice and the pre-election hearing.
  • Employers now have five business days – as opposed to two under the current rule – to post a “Notice of Petition for Election” indicating that an election has been requested.
  • Employers will still be required to file a Statement of Position, but will now have eight business days to do so, as opposed to seven calendar days under the current rule.
  • When providing a voter eligibility list, employers currently have only two business days from either the signing of a stipulated election agreement or the issuance of a Decision and Direction of Election. Under the new rule, employers will now have five business days.
  • While the Regional Director may continue to schedule elections for the earliest practicable date, the new rule clarifies that elections will normally not be scheduled before the twentieth business day after the date a Decision and Direction of Election is issued.

Ensuring Thoughtful, Fair and Efficient Resolution of Election Issues:

  • Under the new rule, parties will once again be permitted to litigate issues regarding unit scope and voter eligibility in a pre-election hearing. Currently, these issues do not automatically qualify for a pre-election hearing, as it is left to the discretion of the Regional Director.
  • The new rule will restore the parties’ right to file post-hearing briefs with the Regional Director as of right. The current rule only permits such briefing if the Regional Director provides special permission.
  • Under the current rule, the petitioning party is not required to file a Statement of Position – only the non-petitioning employer is required to do so. However, under the new rule, the petitioning party will be required to file its own Statement of Position at least three business days before the pre-election hearing.
  • Under the new rule, the Regional Director will no longer be permitted to certify election results if a request for review is pending or if one could still be timely filed.

Implications:

By scaling back some of the current rule’s draconian deadlines, the new rule will allow employers to more meaningfully identify and raise unit issues as well as properly prepare for litigating such issues at a pre-election hearing.  Furthermore, because the new rule again gives employers the right to litigate voter eligibility issues prior to an election, employers can avoid being caught between a “rock and a hard place” when they have individuals who are not clearly an excluded employee, like a supervisor. Now employers will get answers to those important questions prior to an election which will enable employers to avoid unnecessary unfair labor practices.

The new rule in many ways restores the various election rule guidelines that were in place for decades prior to the 2014 rule change.  It also keeps intact some of the provisions of the 2014 rule, like the Statement of Position.  The new rules will reduce some of the frenetic pace imposed by the 2014 rules while still ensuring such issues get resolved efficiently.

The new rule does not take effect until April 16, 2020.  If you have any questions, please don’t hesitate to reach out.

NLRB Restores 50+ Year-Old Precedent: Employers (Once Again) May Unilaterally Stop Deducting Union Dues Upon Contract Expiration

Mid-December is always a time where one can expect significant decisions to issue from the NLRB.  In recent years, we saw the Board, among other decisions, abandon the much criticized “micro unit” standard and the equally criticized handbook violation standard.

December is also one of the main times of year that a Board Member’s term ends.  December 16 was the last day of Member Lauren McFerran’s term.  As of December 17, the Board will have a bare quorum of three members (Chairman Ring, Members Emanuel and Kaplan), all of whom are Republican.  There has been no indication that the two vacancies on the Board will be filled anytime soon, especially since 2020 is an election year.

In Valley Medical Center, Inc. d/b/a Valley Hospital Medical Center, 368 NLRB No. 139 (2019), the NLRB restored precedent that had been in place for over 50 years prior to it being reversed in a 2015 decision.  This case restores the bright-line rule that employers may unilaterally cease deducting dues upon the expiration of the contract.

Factual Background

A “checkoff” provision in a collective bargaining agreement provides that the employer agrees to deduct union dues from the pay of employees who have voluntarily signed-on for deductions, regardless of whether that employee is a union member, until the employee revokes such authorization as specified in the agreement.

In Valley Medical Center, the CBA between Valley Hospital and the Local Joint Executive Board (Culinary Workers Local 226 and Bartenders Local 165) in Las Vegas, Nevada had been expired for roughly 13 months when, on February 1, 2018, the employer stopped deducting Union dues.  The expired agreement contained a checkoff provision that, by its terms, “continued in effect for the term of the Agreement.”  The Authorization form also stated that it was valid “during the term of the Agreement.”  While the agreement also had a “Union Shop” article, Nevada is a “right to work” state and the agreement also contained language that the Union Shop provision would not be applicable if it conflicted with state law.  Accordingly, the Union Shop clause was void.

NLRB Upends 50-Year Precedent in 2015 

In 1962, the Board issued Bethlehem Steel, 136 NLRB 1500 (1962), holding that unilateral termination of union-security and dues-checkoff provisions in an expired agreement was not only lawful, but mandatory pursuant to Section 8(a)(3) of the National Labor Relations Act.  Id. at 1502.  The Board noted that ceasing dues deduction was another form of economic warfare, just like a strike or lockout. The Board applied this rule for more than a half century until a new Board majority in 2015 abruptly reversed course in Lincoln Lutheran of Racine, 362 NLRB 1655 (2015).

There, the Board held that while some contractual provisions can be lawfully unilaterally changed upon CBA expiration (e.g., no-strike, arbitration, and management-rights clauses), dues checkoff provisions were matters of “administrative convenience” and survived the term of the CBA.  Id. at 1658.  Further, the fact that dues checkoff provisions were created by contract did not mean the provisions expire with the contracts that created them.

Majority Opinion Restoring Bethlehem Steel  

In Valley Medical Center, a majority comprised of Chairman Ring and Members Kaplan and Emanuel overturned Lincoln Lutheran and returned to Bethlehem Steel, focusing primarily on the contractual nature of dues-checkoff provisions.  Though the Board agreed that dues-checkoff is a mandatory subject of bargaining, the Board acknowledged that there are some mandatory subjects that an employer can unilaterally terminate.  The Board majority concluded that not all mandatory subjects of bargaining were equal.  The relevant distinction between the two types of mandatory subjects lies between terms that can exist from the commencement of the bargaining relationship and terms that cannot exist until the parties affirmatively contract to them.  The former, such as terms related to wages, pension and welfare benefits, hours, working conditions, and numerous others, are not as inextricably tied to an Agreement as the latter subjects like dues checkoff, no-strike, and mandatory arbitration provisions.  The latter group are subject to statutory obligations only for the duration of a contract establishing them.  Valley Medical Center, at *4.

The Board held that its return to Bethlehem Steel was warranted noting that Lincoln Lutheran conflicted with NLRA statutory bargaining principles.  A rule restricting employers from unilaterally terminating dues-checkoff provisions undermined labor relations stability because parties negotiated under the Bethlehem Steel rule for more than five decades and were unprepared for the reversal.  Further, the Board noted that this sudden shift was unsupported by any facts – e.g., the majority in Lincoln Lutheran did not provide any statistics demonstrating how many employers actually chose to unilaterally terminate dues-checkoff provisions.

Finally, the majority decided to apply the revived rule to all pending cases.

One of Member McFerran’s Final Dissents

Handed down on the final day of her five-year term, Valley Medical Center marked one of Member McFerran’s final published dissents.  In her dissent, Member McFerran framed the Majority’s decision – along similar lines as other recent NLRB decisions – as permitting employers to “dispense with bargaining and [] make unilateral changes in employees’ terms and conditions of employment.”  Valley Medical Center, at *9.  In her view, the Majority failed to demonstrate how a rule that allows employers to unilaterally act serves to encourage bargaining.

Member McFerran took issue with the contractual distinction described above, arguing that nothing stops parties from setting up voluntary dues checkoff prior to reaching a collective bargaining agreement, and, unlike union-security provisions, there is no statutory requirement that dues checkoff provisions be included in a collective bargaining agreement to be lawful.  Id. at *12.  While the majority viewed Valley Medical Center as a return to lengthy precedent, the dissent repeatedly insisted that that precedent had been flawed from its inception, and there was thus no justification to revert to it.

Takeaways

The Board’s decision restores an economic weapon taken away from employers in 2015.  There is nothing in the decision that says unions may not collect dues, only that, post-expiration, the employer does not have to do it for them.  The return to longstanding precedent likely will result in more successor agreements being reached without expiration.

The decision also provides employers with more clarity as to the definition of mandatory subjects of bargaining.  Not all mandatory subjects are created equal and some, like union security and checkoff, are statutory and others are contractual creatures that once granted may be revoked upon expiration of the agreement.

It is very likely more significant decisions will be issued in the coming days and we will keep you posted.

Unpaid Interns are Not Statutory Employees, NLRB Concludes

The National Labor Relations Board recently held that a group of employees who were advocating on behalf of unpaid interns were not engaged in protected activity because the interns were not “employees” as that term is defined in Section 2(3) of the National Labor Relations Act.  In so doing, the Board reaffirmed its longstanding precedent that individuals who do not receive or anticipate economic compensation are not statutory employees.  The Board also rejected the application of a test for defining employees that has been adopted by numerous courts and the Department of Labor for determining whether unpaid interns are employees under the Fair Labor Standards Act (FLSA).

The Board also concluded that a management representative’s comments to its employees that she was disappointed that her employees provided her with a petition memorializing their thoughts concerning the pay status of unpaid interns rather than using the company’s “open doors” policy, among other similar commentary, did not rise to the level of a threat of reprisal in violation of Section 8(a)(1) of the Act.

Factual Background

The employer is a non-profit organization employing approximately 25 employees and 15 unpaid interns.  The unpaid interns started a petition requesting compensation for their volunteering.  Two paid, unionized employees provided feedback and support on the petition, and helped the interns solicit signatures.  Eventually, the unpaid interns collected signatures from all but a few of the office’s paid employees—but the group of interns and employees had yet to provide the petition to the employer.

At a staff meeting a few months later, an employee asked the employer to consider paying the interns.  The employer responded positively and discussed the organization’s upcoming plans for implementing a paid internship program, which would include a significant reduction in the number of interns at the office.  At this point, the employer was still unaware of the petition.

That changed the next day, when the interns e-mailed the employer their signed petition, which included signatures of the paid employees.  In response, the employer’s director and the executive team decided to accelerate plans to switch to paid internships.  To management’s frustration, many employees reacted negatively to the paid internship plan, concerned that a sharp reduction in interns would constrain employees’ ability to do their work.  The employer’s representative expressed disappointment that employees did not avail themselves of the organization’s open-door policy to discuss this matter before using an “adversarial” petition.

The following month, an employee who had been a driving force behind the petition initiated a one-on-one meeting with the employer.  The employer mentioned she perceived the petition to be “litigious,” “adversarial” and “sort of levy[ing] a threat.”  She suggested that the employee could have told the interns to “give me a heads-up.”  She repeated later, “I’m not asking anybody to tell on somebody… if you let [me] know your intentions, what you are seeking.”

This conversation resulted in charges being filed.  The ALJ, applying the test of employees used by the Department of Labor concluded that the unpaid interns were employees.  The ALJ also concluded that management’s statement of being “disappointed” in employees who signed the petition violated Section 8(a)(1) as a coercive statement.

NLRB Reverses

In reversing the ALJ the Board reaffirmed a more than 20-year NLRA principle that unpaid workers are not “employees” who are protected by  the Act because they do not “receive or anticipate any economic compensation” from the employer.  Here, the employer’s interns were unpaid and, therefore, were not protected by the Act.  The Board declined to extend a multi-factor test for determining “employee” status of unpaid interns at for-profit institutions used by a majority of courts and the DOL.  This test focuses on whether the unpaid intern or purported employer primarily benefitted from the relationship.

Under the Act, unpaid interns are not protected and do not have a right to unionize.  The Board concluded that because the paid employees’ actions in signing the petition did not concern “wages, hours or other terms and conditions of employment “ of employees, then the paid employees were not engaged in protected activity.

The Board also concluded the employer’s statements did not violate Section 8(a)(1) and instead were protected under Section 8(c) of the Act, as the statements did not constitute a threat of reprisal or force or promise or benefit.  The Board found that in this context, the employer’s statements merely evidenced a desire for better communication from her employees in the future.  She did not threaten them, according to the Board majority.

Member McFerran’s Concurrence

While Member McFerran concurred with the majority’s result that the employer’s statements did not violate the Act because they did not constitute unlawful threats, she sharply disagreed with the majority’s conclusion that protected covered workers who joined together to help their coworkers who are not statutory employees did not constitute protected Section 7 activity.  McFerran noted that the Supreme Court has interpreted for “other mutual aid or protection” broadly, and the employees’ advocacy on behalf of the unpaid interns could improve or affect their own terms and conditions of employment directly.  This, according to Member McFerran, constituted protected conduct.

Takeaways

This is a decision that follows longstanding Board precedent.  Unpaid interns are not “employees” and so actions in support of these individuals by statutory employees was not covered by the Act.  This case demonstrates that the NLRB is not willing to apply tests used under other statutes to administer the Act.  The fact the Board members agreed that no violation of Section 8(a)(1) occurred because a member of management expressed “disappointment” in employees is a fairly commonsense conclusion.  To hold that such a statement was actually coercive of employees would be to upend a good many discussions held between management and employees.

No, Unions Do Not Have A Free Speech Right To Engage In Unlawful Secondary Boycott Activity, Federal Appeals Court Rules

On October 28, 2019, the Ninth Circuit, following in the footsteps of the D.C. Circuit and the Second Circuit, affirmed an order entered by the NLRB confirming that prohibitions on secondary boycotts under Section 8(b)(4)(i)(B) of the NLRA do not violate the First Amendment of the United States Constitution. Nat’l Labor Relations Bd. v. Int’l Ass’n of Bridge, Structural, Ornamental, & Reinforcing Iron Workers, Local 229, AFL-CIO, No. 17-73210, 2019 WL 5539505 (9th Cir. Oct. 28, 2019).

Facts

A union was hired by a subcontractor to perform work at a construction site. Sometime after work started, the union engaged in a strike due to allegedly substandard wages.  The union’s activity included picketing from August through November 2016. At the start of the picketing, a business agent for the union engaged in conversations with neutral employees of a different subcontractor regarding “Picket Line Etiquette,” which included, among other things, texting and calling neutral employees and delivering flyers to them in an effort to get these employees to stop working. The subcontractor filed an unfair labor practice under Section 8(b)(4)(i)(B) of the Act alleging that the Union induced a secondary boycott by directly encouraging neutral employees to support the strike.

Analysis

The union conceded its activities violated the NLRA by communicating with and distributing flyers to neutral employees in an effort to get them to stop working.  However, the union claimed that decades of NLRB case law was unconstitutional and that its activity was protected as free speech under the First Amendment of the United States Constitution pursuant to Reed v. Town of Gilbert, 135 S. Ct. 2218 (2015), where the Supreme Court applied strict scrutiny to restrictions imposed on content-based restrictions on freedom of speech.

In a brief opinion, the Ninth Circuit found the union’s argument unpersuasive because here, unlike in Reed, the issue was not the content of the communications but rather the purpose of those communications. The union communicated directly with neutral employees in an attempt to persuade them to engage in a secondary boycott to gain an unlawful unfair advantage in a labor dispute. The Court relied upon International Brotherhood of Electrical Workers v. NLRB (IBEW), 341 U.S. 694 (1951), where the Supreme Court found that the NLRA’s prohibition on secondary boycotts does not unlawfully abridge free speech. Previously, two other Circuit Courts (D.C. Circuit and Second Circuit) have addressed this same issue and came out the same way:  the First Amendment protections on freedom of speech do not absolve Unions when their communications are directed at neutral employees in an attempt to induce a secondary boycott. See Warshawsky & Co. v. NLRB, 182 F.3d 948 (D.C. Cir. 1999); NLRB v. Local Union No. 3, Int’l Bhd. Of Elec. Workers, 477 F.2d 260 (2d Cir. 1973).

 Takeaways

The secondary boycott provisions of the NLRA are among the violations the agency takes most seriously because of the impact such conduct can have on employers not directly involved in a labor dispute.  Repeat violations of the secondary boycott provisions can lead to increased oversight and sanctions.  This is why unions almost always settle such charges early in the process, usually by agreeing to walk away from the dispute. The union’s argument deserves an “A” for effort, but it was unlikely that any federal appeals court was suddenly going to declare secondary boycott activity to be a “free speech right” of union representatives.

NLRB Continues to Aid Workers in Ousting Unions

The NLRB recently reiterated its position that the agency should not be so quick to dismiss petitions filed by employees seeking to decertify a union. The Board, in a 3-1 decision, held that if a petition for decertification is properly filed prior to the employer entering into an agreement settling unfair labor practice charges in which the parties agreed to extend the bargaining period, the petition for decertification may go forward. See Pinnacle Foods Group, LLC, 368 NLRB No. 97.

Key Facts

On March 17, 2017, a Union was certified at an Employer’s facility in St. Louis. The Union and the Employer bargained but never reached agreement on a first contract. On August 31, 2018, some six months after the close of the original certification year, a petition for decertification was filed by the employees. Shortly thereafter, on September 7, 2018, the Union filed an unfair labor practice charge against the Employer. During the pendency of the unfair labor charge, the Regional Director held the petition for decertification in abeyance. The Union and the Employer entered into a settlement agreement concerning the unfair labor charge, which was approved by the Regional Director on March 25, 2019. The employee-Petitioner refused to consent to the settlement agreement. The settlement agreement included a non-admission clause and that the Union certification period would be extended, effective March 25, 2019, by seven months to allow additional bargaining. On April 1, 2019, the Regional Director dismissed the petition for decertification.

In dismissing the petition for decertification, the Regional Director relied on the seven month extension of certification, and noted that “representation petitions filed during the certification year must be dismissed.” Id. The Petitioner requested review of the Regional Director’s decision, asserting that the Regional Director erred in dismissing the decertification petition because the petitioner did not consent to the settlement agreement, the settlement included a non-admission clause, and the decertification petition was properly filed prior to entry of the settlement agreement.

Analysis

The Board majority (Chairman Ring, Members Kaplan and Emanuel) reversed the Regional Director and reinstated the decertification petition.

The Board concluded that the Regional Director’s determination that the decertification petition was filed during the extended certification year was erroneous because the petition was filed six months after the original certification year ended and nearly eight months prior to the March 25, 2019 settlement agreement.

In its analysis, The Board majority relied on its recent decision in Cablevision Systems Corp., 367 NLRB No. 59 (2018).  We discussed Cablevision here. Under Cablevision, the Board “reaffirmed that ‘when a decertification petition has been blocked by subsequently settled unfair labor practice charges, a timely filed decertification petition . . . should be reinstated and processed at the petitioner’s request following the parties’ settlement and resolution of the unfair labor practice charge.’” Additionally under existing case law, the Board stated that a decertification petitioner cannot be bound by a settlement that waives its rights under the NLRA. The Board majority went on to note that in order to dismiss a properly-filed petition for decertification on the basis of settlement, there must be a finding of a violation of the NLRA or an admission by the employer that there was a violation of the NLRA, neither of which was present in this case.

The Board held that because the decertification petitioner did not consent to the settlement and the settlement agreement included a non-admission clause, the dismissal of the decertification petition was improper and the decertification petition should go forward during the extended bargaining period.

Takeaways

The Board’s policy of blocking decertification petitions during the pendency of unfair labor practice charges has been a subject of much criticism. In this case, long after the certification period expired, and with no hint that any violations of the law were alleged, the employees filed a decertification petition.  The Union’s charges filed after the petition were served to block the processing of the petition, thereby denying the employees an opportunity to vote on whether to continue union representation.  Despite this timeline, a Regional Director dismissed the petition based on a settlement agreement which was entered into after the petition but which extended the certification period.  The Board majority was unwilling to deny employee rights by events over which the employees had no control.

This case also demonstrates the importance of securing a non-admissions clause in any unfair labor practice settlement.  Such clauses, which are harder to secure these days, are legally significant.  In cases like this, it shows the employer was settling but refusing to acknowledge it did anything wrong.  Legally, non-admissions clauses are very important for another reason: if the employer complies with the term of the settlement then the matter cannot be referenced in subsequent cases.

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