Employer Labor Relations Blog

The NLRB’s Alan Ritchey Decision is Alive, Well, and Still Dangerous

Posted in Collective Bargaining, NLRB, Unfair Labor Practices

By: Ronald J. Kramer

While Alan Ritchey Inc., 359 NLRB No. 40 (2012), became “non-binding” as a result of the Noel Canning decision, its holding is alive and well with the Board and the General Counsel’s Office. In a recently released Advice Memorandum, the General Counsel’s Office took the position that “Alan Ritchey was soundly reasoned and that the Board should adopt the Alan Ritchey rationale as its own.”  Washington River Protection Solutions, Case 19-CA-125339 (Div. Advice Oct. 14, 2014), released Nov. 18, 2014.

This alone is not earth shattering news, given that the General Counsel was a member of the Board when Alan Ritchey issued. In Alan Ritchey, the Board decided that newly organized employers normally cannot discipline employees without first notifying the union and bargaining over the decision. Although a few exceptions to the obligation to bargain before issuing the discipline (minor discipline, exigent circumstances) may exist and impasse need not be reached in negotiations before implementing discipline, an employer cannot act unilaterally and negotiations to agreement or impasse must follow. We reviewed this decision in a previous blog post.

Nor was the decision in Washington River Protection Solutions arguably that surprising. There, during the hiatus between contracts, the employer discharged an employee for misconduct in accordance with the disciplinary policy it had instituted under the contract before it expired, which gave the employer the right to implement work rules and discipline for just cause. The employer also refused to arbitrate because the discharge occurred after contract expiration. The Office of the General Counsel found that “it would not be appropriate to apply the Alan Ritchey pre-discretionary discipline bargaining obligation rationale here because the parties were operating under a discipline system that resulted from collective bargaining and there is no evidence that the Employer made any unilateral change to that discretionary discipline system or to the parties’ grievance-arbitration procedure.”

But what is disturbing is a reference in Washington River Protection Solutions to what appears to be an unpublished Advice Memorandum: Arlington Metals Corp., Case 13-CA-119045 (Div. Advice May 20, 2014). In Arlington Metals, the General Counsel’s Office apparently found that an employer that “lawfully implements a disciplinary system after impasse but refuses to arbitrate a grievance regarding discipline imposed pursuant to that system” on the basis that the parties lack a binding grievance-arbitration provision thereby commits an unfair labor practice. Apparently, the unilateral implementation of terms and conditions of employment “do not satisfy Alan Ritchey’s requirement of a ‘binding agreement’ to resolve disputes.” Such an employer remains obligated to bargain over discipline despite having implemented a disciplinary system.

It is difficult, especially without access to the opinion, to see how Arlington Metals can be reconciled with an Advice Memorandum issued just a month before Alan Ritchey, in which the General Counsel’s Office determined that an employer did not commit an unfair labor practice by lawfully implementing the “for cause” discipline portion of its management rights article upon reach impasse without implementing the grievance/arbitration procedure that would permit the union to test the employer’s “for cause” determinations. Anchorage Hilton, Case 19-CA-078070 (Div. Advice Nov. 15, 2012). While that case focused on whether the phrase “for cause” was so discretionary that it could not be implemented upon impasse, the charge was filed after the employer had relied upon that implemented language to discipline employees. Moreover, one would think, given that the General Counsel must have been aware of Alan Ritchey’s imminent issuance when Anchorage Hilton was issued, it was intended to be applicable even after Alan Ritchey was issued.

How is an employer to reconcile Alan Ritchey, Washington River Protection Solutions, Arlington Metals, and Anchorage Hilton?

1.         An employer negotiating for a first contract should follow Alan Ritchey until a contract is reached (or until the Board or a court reverses Alan Ritchey’s holdings).

2.         An employer implementing a last, best, and final offer for a new bargaining unit must continue to bargain discipline in accordance with Arlington Metals even if it has implemented a just cause discipline provision since the discipline was not issued pursuant to a “binding agreement.”

3.         During the pendency of bargaining a new contract after an old contract has expired, an employer may continue to discipline employees in accordance with the expired contract and existing disciplinary policies and practices without bargaining pursuant to Washington River Protection Solutions.

4.         Should an employer implement a last, best, and final offer during successor contract negotiations, it should hope it does not have to discipline anyone. An argument can be made, especially if the discipline provisions of the implemented contract did not change, that pursuant to Washington River Protection Solutions discipline is still being imposed under what at least was once a “binding agreement,” and pursuant to Anchorage Hilton an employer can implement just cause discipline upon impasse. It is possible, however, that Arlington Metals involved a successor contract instead of an initial contract. In such a case, an employer would be running a risk by failing to “bargain” over discipline once the successor contract was implemented.

In short, Arlington Metals (at least as it is described in Washington River Protection Solutions) makes no sense. That an employer could implement a proposal on discipline but must still bargain seems contrary to traditional principles of labor law—unless the General Counsel is backing away from Anchorage Hilton by claiming that “for cause” discipline is too discretionary to permit an employer to implement. But if that were true, then the right to discipline under the contract in Washington River Protection Solutions would have expired when the contract expired — no different than any other discretionary management right.

Time will tell where the Board eventually falls on these issues—assuming Alan Ritchey’s findings are even valid law. In the meantime, employer beware.

Ninth Circuit Finds Mall Owner’s State Trespass and Nuisance Claims Not Preempted in a Secondary Boycott Context – A Circuit Split on Preemption

Posted in Current Events, Picketing, Protected Concerted Activity

  By: Sarah K. Hamilton, Esq. & Alison Loomis, Esq.

In a recent case of note, the Ninth Circuit held that federal labor laws did not preempt a shopping mall owner’s state law claims for trespass and nuisance against a union that was picketing a store in the mall.  See Retail Property Trust v. United Brotherhood of Carpenters, No. 12-56427 (9th Cir. September 23, 2014). 

The owner of a California shopping mall brought state trespass and nuisance claims against a union that protested in front of an Urban Outfitters store for its hiring of non-union subcontractors.  During the picketing, the union chanted loudly, blew whistles, hit and kicked a construction barricade, and banged picket signs against mall railings.  The mall responded by filing a lawsuit seeking declaratory and injunctive relief in state court.   The union removed the case to federal court on the grounds that the state law claims were preempted by federal law and stated a federal cause of action. 

Citing to a Seventh Circuit decision which held that, generally, claims involving secondary boycotts (i.e.  union action in support of a strike initiated by workers in a separate company) were “completely” preempted by LMRA Section 303, the District Court found that the mall owner’s trespass and nuisance claims were preempted by federal labor laws.   Based on the District Court’s preemption finding, the court dismissed the mall owner’s claims.

The Ninth Circuit reversed the lower court’s dismissal, finding that the alleged property-based torts of trespass and nuisance only incidentally involved union conduct, and therefore, were not preempted by federal labor laws.  For example, the mall owner did not seek to punish or prevent labor conduct; rather, it merely sought to stop conduct which violated its time, place, and manner rules. 

In its opinion, the court provides a comprehensive background of preemption, including discussion of the distinction between “complete” versus “defensive” preemption and the three types of defensive preemption: (1) express preemption, (2) field preemption, and (3) conflict preemption.  The Ninth Circuit noted that courts commonly use these terms inconsistently, and at times, incorrectly.  To read the Ninth Circuit’s thorough discussion of preemption analysis, see the court’s decision here.

The Ninth Circuit addressed the Seventh Circuit’s prior finding that state law claims involving secondary boycotts are  “completely” preempted (relied on by the District Court), stating that its sister circuit was “simply wrong.” Instead, the Ninth Circuit focused on the fact that trespass and nuisance are labor-neutral torts, with non-economic interests, and that regulation of this conduct is “deeply rooted in local feeling and responsibility.”  Here, per the Court, the mall owner was not trying to prevent or punish union activity; but rather, to prevent conduct that violates time, place, and manner restrictions. As such, the Ninth Circuit found that the conduct involved was only a peripheral concern of federal labor law.

The creation of a circuit split does nothing to clear the muddy waters of preemption.  That said, this case helps to provide a guide of labor preemption doctrines, as applicable in the Ninth Circuit. 

In addition, the case provides some positive recourse for employers facing a secondary boycott disrupting the workplace. Where an employer has content-neutral time, place, and manner restrictions in place, a civil action may be a possible remedy to explore.

Employees Finally “Face[book]” the Music for “Insubordinate” Posts

Posted in Concerted Activity, Current Events, NLRB

By: Paul Galligan and Howard M. Wexler

In Richmond District Neighborhood Center, 361 NLRB No. 74 (2014) (“Richmond”) the National Labor Relations Board (“Board”) affirmed an ALJ’s decision (previously discussed here) finding that the “insubordinate” and “egregious” Facebook comments of two employees went too far and thus lost protection of the Act, justifying their termination. The Board’s decision in Richmond came just weeks after it ruled in Triple Play Sports Bar & Grille, 361 NLRB No. 31 (2014), that a Facebook discussion regarding an employer’s tax withholding calculations and an employee’s “like” of the discussion constituted concerted activities protected by the Act.

Richmond and Triple Play provide the best guidance from the Board so far as to where the boundaries are concerning “protected” employee speech about the employer in social media. The Board’s decision in Triple Play told employers that the appropriate standard to determine whether employees’ statements on social media have lost the protection of the Act was whether the communication was disloyal, reckless or maliciously untrue, applying the Supreme Court’s disloyalty standard from NLRB v. Electrical Workers Local 1229 (Jefferson Standard), 346 U.S. 464 (1953) and the Court’s defamation standard from Linn v. Plant Guards Local 114, 383 U.S. 53 (1966). Richmond adds insubordination (objectively analyzed, of course) into the mix of unprotected communications.

The Decision

In Richmond, two employees had a profanity-laced conversation via Facebook regarding their employer—a non-profit corporation that provides youth, adult, and family programs that address critical community needs in San Francisco. The employees at Richmond were not represented by any union. The Facebook communications considered insubordinate included: “Let’s do some cool sh*t, and let them figure out the money”; “field trips all the time to wherever the f*** we want!”; “teach kids how to graffiti up the walls”; “when they start loosn kids I aint helping . . .let’s f*** it up.”

Upon receiving a screenshot of this conversation, provided to management by another employee, the Company terminated both employees, citing concerns based on their Facebook conversation that the employees would refuse to follow the directions of management.

The employees alleged that their termination violated the Act because their Facebook conversation constituted protected concerted activity. In a Decision issued on November 5, 2013, ALJ Jay R. Pollack agreed that the two employees were engaged in concerted activity given that the crux of their Facebook conversation revolved around “their disagreement with management’s running of the teen center. However, the ALJ held that the comments were so egregious as to take it outside the protection of the Act, and thus the employer’s decision to rescind their job offers was lawful.

The Board agreed with the ALJ that the speech lost the protection of the Act because of its egregious nature. However, the Board disagreed with the method in which the ALJ arrived at his decision. The Board held that the correct standard for determining whether the speech lost the protection of the Act is an objective standard, and not merely whether the employer subjectively believed these employees planned on following through with their threats of insubordination. However, given the nature of these comments, the Board held that even under the more stringent objective standard, the comments set forth a “wide variety of planned insubordination in specific detail” and therefore rose to such a magnitude that even a reasonable [objective] employer would be concerned and not take the risk of continuing to employ these individuals. It should be noted that the Board distinguished these comments from those “brief comments that might be more easily explained away as a joke, or hyperbole divorced from any likelihood of implementation.” The Board also did not rely on the employees’ use of profanity.

Significance For Employers

In language that should be added to employers’ defense toolkits, the Board then held that the employer “was not obliged to wait for the employees to follow through on the misconduct they advocated.” Given that an employee’s typical first line of defense when confronted with their inappropriate social media comments is that they were just “venting” and never really intended on following through with the threats, this language is a welcome ruling for employers who do not have to sit back and actually wait for an employee to act on their contemplated insubordination.

Richmond drives home the fact that not every social media post is protected by the Act. Where, as here, an employee makes a statement that is so egregious as to cause harm to the employer’s business or is of such character as to render the employee unfit for further service, employers are allowed to take corrective action, up to and including termination. That being said, employers should still tread lightly given that the Board remains on “high alert” regarding all things relating to social media. Using the objective standard means the Board, not the employer, will ultimately decide if it is insubordination.

NLRB and EEOC Leaders Caution Against Looking at Employment Applicants’ Social Media Activity

Posted in Concerted Activity, Current Events, Unfair Labor Practices

By:  Ashley K. Laken, Esq.

 On Wednesday, November 12, 2014, NLRB General Counsel Richard Griffin, NLRB Board Member Harry Johnson, and EEOC Commissioner Chai Feldblum participated in a panel discussion that touched upon employers’ use of social media during the hiring process.  Their remarks highlighted the need for employers to be cautious about looking at potential hires’ social media profiles and posts.

 The panelists explained that while hiring managers can look at applicants’ personal details or opinions that are posted online, they cannot use those details or opinions when making hiring decisions.  Easy enough right?

 Well, that’s where the peril lies.  Take this for an example.  Sally applies for a job at Factory X, which is non-union.  Bob, the hiring manager at Factory X, takes a look at Sally’s Facebook profile before he interviews Sally for the job.  Sally’s profile, which is public, indicates that she is both an avid union supporter and a bird watcher.  During the interview, Bob mentions that he saw on Sally’s Facebook profile that she’s a bird watcher, and that he loves watching birds too.  Bob ultimately decides not to hire Sally because he doesn’t think she has enough experience for the position.  Sally files an unfair labor practice charge with the NLRB, alleging that the reason she wasn’t hired for the job is because she’s a union supporter.  Factory X may have a difficult time proving that Sally’s union support didn’t have anything to do with her not getting the job.

 Indeed, during the panel, Griffin explained that “The issue is obviously going to be whether the person who didn’t get the job . . . suspects the reason he didn’t get the job [was because he was pro-union] and files [a] charge.”

 What if Bob had instead asked another manager to search Sally’s social media presence and “sanitize” the information (i.e., not tell him anything about whether or not Sally is a union supporter) before providing it to him?  Member Johnson addressed this hypothetical during the panel, explaining that the standard for allowing knowledge to be imputed among different supervisors is very liberal under current interpretations of the National Labor Relations Act, meaning that if management were to do that, it would have to make sure that the process is “very hermetically sealed.”

 The panelists also noted that employers must be cautious in monitoring current employees’ social media activity and their reactions to it.  Griffin observed that “very few people engage in protected and concerted activity about the terms and conditions of their employment in order to praise them,” that criticism and dissatisfaction are “grist for the mill” of the NLRA, and that if an employer takes the position that employees can’t be critical, the employer is “going to run afoul of people’s right to be critical.” 

 The moral of the story: employers should tread lightly when considering whether to take a look at applicants’ or employees’ social media activity, and even more lightly when considering whether to act on it.

Indiana Supreme Court Upholds Right to Work Act

Posted in Current Events, Organizing, State Law

By: Marc R. Jacobs

On November 6, 2014, the Indiana Supreme Court reversed the ruling of a superior court judge and held that the Indiana Right to Work Law does not violate the Indiana Constitution. Zoeller v. Sweeney, Case No. 45S00-1309-PL-596 (2014) (“Sweeney”).

The Indiana state law challenge decided in Sweeney raised a novel issue under the Indiana Constitution. Section 21 of the Indiana Bill of Rights, Article I of the Indiana Constitution, states in part: “No person’s particular services shall be demanded without just compensation.” The plaintiff union argued that because federal labor law requires a union with an exclusive bargaining relationship with the employer to represent the interests of all employees in the bargaining unit regardless of union membership, the law is a demand on the union to provide services without compensation. The lower court agreed and held that the Act violated Section 21.

The Indiana Supreme Court rejected the union’s claim, reversed the lower court decision, and held that the Act was constitutional. The Court ruled that the Indiana Constitution only limits “state, not federal, power.” As we reported on September 4, 2014, the U.S. Court of Appeals for the Seventh Circuit upheld the Act against federal law challenges in Sweeney v. Pence, Case No. 13-1264 (7th Cir. 2014). Borrowing from the Seventh Circuit’s decision, the Indiana Supreme Court determined that federal law and not Indiana state law provides the duty to represent all employees in the bargaining unit. As a result, the Court concluded that the Act did not violate Section 21 because “Article 21 requires just compensation when the state demands particular services, not when the federal government does so.”

In a statement after the ruling, Indiana Governor Mike Pence state: “Today’s unanimous decision by the Indiana Supreme Court upholding Indiana’s right to work law is a victory for the freedom of every Hoosier in the workplace. By this ruling, our Court reaffirmed Indiana law that no Hoosier may be compelled to join a union as a condition of their employment but every Hoosier is free to join a union if they choose.”

Although you might think that the unanimous decision of the Indiana Supreme Court in Sweeney should put to rest the validity of Indiana’s Right to Work Law, legal challenges remain pending. First, the federal court challenge to the Act (mentioned above) continues because the plaintiff union filed a request that the entire Seventh Circuit re-hear the case en banc. Briefs related to that request have been filed (the most recent filing was on October 30). Second, another case brought by a different union is pending before the Indiana Supreme Court. Zoeller v. United Steel, Paper, Forestry, Rubber, Manufacturing, Allied Industrial and Service Workers International Union, AFL-CIO, Case No. 45S00-1407-PL-00492. In this second state court case, a different Indiana superior court judge also determined that the Act violated Section 21 of the Indiana Constitution. Given the ruling by the Indiana Supreme Court in the Sweeney case, it is reasonable to expect that the second state law case will be dismissed in the near future.

NLRB, ignoring criticism from the Courts, overrules Planned Building Services in Pressroom Cleaners

Posted in Current Events, Unfair Labor Practices

By:  Michael Rybicki, Esq.

A Board Majority has used Pressroom Cleaners, 361 NLRB No. 57 (September 30, 2014) to overrule Planned Building Services, 347 NLRB 670 (2006), a decision that had responded to the criticism of various Courts with respect to the remedies imposed by the Board in successorship cases. Members Miscimarra and Johnson filed a lengthy and well-reasoned dissent.

In Pressroom Cleaners the employer was found to have committed certain unfair labor practices and to be the successor to the bargaining relationship of its predecessor, a conclusion that was supported by the evidence. The Administrative Law Judge, applying Planned Building Services, directed that the employer have the opportunity in the compliance stage of the proceeding to limit its liability by showing that even in the absence of its unfair labor practices, it would not have agreed to the monetary provisions of the predecessor’s contract with the Union.

The Majority overruled Planned Building Services, which it dismissed as a “well-meaning” but “fundamentally flawed” attempt to balance two competing principles: placing the burden of uncertainty on the wrongdoer and avoiding a potentially punitive remedy. Coming down squarely in favor of potentially punitive remedies, the Majority issued a “make whole remedy” ordering “restoration of the predecessor’s terms and conditions until the parties bargain in good faith to agreement or impasse,” slip op. at p. 6.

While Members Miscimarra and Johnson concurred with the findings of successorship and unlawful discriminatory hiring practices, they dissented from the remedy imposed by the Majority as violating two of the cardinal principles embodied in the National Labor Relations Act, those being that the Board’s authority is remedial, not punitive, and that the Board may not impose any term of an agreement on the parties in a collective-bargaining relationship. The Dissent noted further that in Planned Building Services “the Board did not adopt the more extreme stand [the Ninth and D.C. Circuits] proposed of limiting the duration of the backpay period to a reasonable period of bargaining [but] instead … adopted the more modest approach articulated by the Sixth Circuit [permitting a successor] an opportunity to prove when any required bargaining would have resulted in impasse or an agreement on different terms than those set forth in the predecessor’s collective-bargaining agreement,” id at p. 12.

Coming on the heels of numerous other controversial decisions, see e.g., FedEx Home Delivery, 361 NLRB No. 55 (September 30, 2014) and CNN America, Inc., 361 NLRB No. 47 (September 15, 2014), we expect a lot of activity in the Courts of Appeal as employers challenge the current Board’s efforts to fundamentally re-write the law.

NLRB Rules That Facebook Comments And Pressing The “Like” Button Constitute Protected Concerted Activity

Posted in NLRB, Protected Concerted Activity, Unfair Labor Practices

By Jeffrey A. Berman and Candice T. Zee

In Triple Play Sports Bar & Grille, 361 NLRB No. 31 (2014), the National Labor Relations Board ruled that a Facebook discussion regarding an employer’s tax withholding calculations and an employee’s “like” of the discussion constituted concerted activities protected by the National Labor Relations Act (“Act”). The Board also held that the employer’s internet and blogging policy  violated the Act.

The employer, Triple Play Sports Bar and Grille, is a bar and restaurant. In 2011, at least two employees discovered that they owed more in state income taxes than they expected. Employees discussed the situation at work and complained to Triple Play, which had planned a staff meeting to discuss the employees’ concerns. Prior to the meeting, a former employee posted the following “status update” to her Facebook page:

Maybe someone should do the owners of Triple Play a favor and buy it from them.  They can’t even do the tax paperwork correctly!!! Now I OWE money…Wtf!!!!

Several Facebook friends posted comments in response to the status update, including two of Triple Play’s employees. One employee commented, “I owe too.  Such an asshole.” A second employee “Liked” the former employee’s status update, but posted no comment. When Triple Play discovered that two of its employees had participated in the Facebook discussion, it terminated their employment for disloyalty.

The Board held that Triple Play violated the Act by terminating the employees’ for engaging in activities protected by the NLRA. In its analysis, the Board first determined that the Facebook discussion at issue should not be analyzed under the Atlantic Steel Co., 245 NLRB 814 (1979) standard.  To determine whether an employee loses the Act’s protection under Atlantic Steel, the Board balances four factors: (1) the place of the discussion; (2) the subject matter of the discussion; (3) the nature of the employee’s outburst; and (4) whether the outburst was provoked by the employer’s unfair labor practices. The Board noted that the first factor alone supported its conclusion that Atlantic Steel’s framework is tailored for workplace confrontations with the employer, and not for the type of employee activities in this case.

Instead, the Board applied the standards set forth by the US Supreme Court in the Jefferson Standard and Linn cases. In Jefferson Standard, the Court upheld the discharge of employees who publicly attacked the quality of their employer’s product and business practices without relating their criticisms to a labor controversy. NLRB v. Electrical Workers Local 1229 (Jefferson Standard), 346 US 464 (1953). In Linn, the Court limited state-law remedies for defamation in the course of a union-organizing campaign to instances where the complainant could show that “the defamatory statements were circulated with malice” and caused damage.  Linn v. Plant Guards Local 114, 383 US 53, 64-65 (1966).

Applying Jefferson Standard and Linn to the facts of the case, the Board determined that both the employees’ comments and “like” in response to the Facebook post constituted a dialogue among employees about working conditions that was protected by the Act. The Board determined that the evidence did not establish that the discussion was directed to the general public. Although the record did not establish the former employee’s privacy settings on Facebook, the Board noted that the comments were posted on an individual’s personal page rather than a company page providing information on its products or services. The Board concluded that the employees’ comments were not “so disloyal  as to lose the Act’s protection” because they did not disparage their employers products or services, or undermine its reputation. The Board also held that the comments were not defamatory, but simply a statement of a negative personal opinion of Respondent’s owner.

The Board also found that the Triple Play’s Internet/Blogging policy in the employee handbook violated Section 8(a)(1) of the Act. The policy warned that “engaging in inappropriate discussions about the company, management, and/or co-workers, the employee may be violating the law and is subject to disciplinary action, up to and including termination of employment.”

The Board held that the policy was overly broad and unlawfully chilled employees in the exercise of their Section 7 rights. It further noted that Triple Play’s subsequent termination of the employees who engaged in the Facebook discussion further demonstrated the employer’s improper prohibition of Section 7 activity. The Board ordered Triple Play to discontinue using the policy.

In his dissent, Member Miscimarra agreed with his colleagues that Triple Play unlawfully discharged the employees and questioned them about their Facebook activity. He disagreed, however with the finding that the Internet/Blogging policy violated the Act. Member Miscrimarra noted that the language of the policy did not expressly or implicitly restrict Section 7 activity, and was not applied to restrict protected activity. Specifically, Triple Play did not apply or refer to the policy when it discharged the employees.

What does this mean for employers? Employers must tread lightly before disciplining employees for social media comments that might appear to be critical of their employer. Employers should also review their social media policies to make sure that they are not in violation of the Act. Remember, the employees in this case were not a part of any union or labor organization.

Victory? Indiana Right to Work Act Survives Seventh Circuit Review–Indiana Supreme Court Up Next

Posted in Current Events, State Law

By:  Ronald J. Kramer, Esq.

It is black letter law that states can prohibit contracts from requiring bargaining unit members to pay money to unions, right?  Maybe not, at least according to the Chief Judge of the Seventh Circuit.  On September 2, 2014, the Seventh Circuit upheld Indiana’s Right to Work Act in a contested 2-1 decision that ultimately may raise more questions than it resolves.  Sweeney v. Pence, Case No. 13-1264 (7th Cir. Sept. 2, 2014).  And the Indiana Supreme Court will soon be weighing in on state constitutional issues as well.

Indiana’s 2012 Right to Work Act (“Act”) prohibits any person from being required to become a union member or to pay dues, fees, assessments or other charges of any kind or amount to a union (or a similar equivalent to charity in lieu to the union).  Such right to work acts have existed for decades, even well before the 1947 Taft-Hartley Act added Section 14(b) to the National Labor Relations Act (“NLRA”), which expressly recognized the right of states to prohibit union “membership” as a condition of employment.

The Union challenged the Act on two grounds.  First, the Union claimed that the Act was preempted by NLRA Section 8(a)(3), which expressly permits bargaining parties to require union membership as a condition of employment.  According to the Union, NLRA Section 14(b) only gave states the limited right to ban union security agreements requiring “membership,” and thus states had no authority to interfere with provisions addressing what non-union bargaining unit members might have to pay for to cover their “fair share” of bargaining costs.  As long as bargaining unit personnel who did not want to be members did not have to become members or pay full membership dues, the Union claimed, they could be required to pay for the costs the Union incurred in representing them under its statutory duty of fair representation.

The Court majority disagreed.  Initially, the majority found “membership” to have the same meaning under both NLRA Sections 8(a)(3) and 14(b), and noted that the Supreme Court had described union membership under Section 8(a)(3) to be whittled down to its “financial core,” given decisions preventing unions under union security agreements from requiring non-members to pay more than the union’s actual bargaining costs.  Thus, according to the majority, any bargaining unit member who paid money to the Union was a union financial core “member” under both Sections 8(a)(3) and 14(b).  Accordingly, under Section 14(b) states could ban parties from negotiating provisions requiring the payment of any fees to the union.  Moreover, when it adopted the Taft-Hartley Act, Congress did so to protect existing right to work laws, seven of the twelve of which had language similar to Indiana’s law.  Thus, the legislative history supported the majority’s view that Indiana’s law fell within a state’s authority under Section 14(b).  Last but not least, the sole appellate court to directly address the issue similarly found as much.

Second, the Union raised numerous federal constitutional claims.  The Court dismissed the Contracts and Ex Post Facto Clause arguments since the Act expressly provided it would only apply prospectively as existing collective bargaining agreements expired.  The Court also dismissed the Unions’ Equal Protection Clause claim that somehow the Act infringed on union members free speech rights by taking away union financial resources, and/or infringed on the right of union membership, which the Union asserted was a fundamental right since it involved the exercise of First Amendment association and assembly rights.  The Court found that unions have no constitutional right to non-member fees, and that there is no fundamental right to union membership.  Given the Act did not encroach on any “fundamental” rights, the Court applied a deferential standard of review to the law to find that the statute bore a reasonable relation to its legislative purpose of contributing to a business friendly environment.

The Court majority also found that the Act did not constitute an unconstitutional taking — i.e., that the Union was being required to provide a service (fair representation regardless of membership) without just compensation.  The majority noted that the Union never raised the argument, and thus had forfeited it.  Nonetheless, the majority questioned whether the state was even the proper party in such a claim since, while Indiana law prohibited the Union from collecting fees, it was federal law that required it to provide fair representation.  The majority asserted that the Union nonetheless was justly compensated for its fair representation obligation by the federal law’s grant of exclusive representation to the Union — something which provided the Union with benefits and powers that it would not otherwise have.

Chief Judge Wood issued an extensive dissent.  Judge Wood agreed with the Union that Section 14(b) only permitted states to prohibit union membership, not to prohibit unions from collecting fees for representational services rendered.  In her review of the underlying precedent, Judge Wood found the Supreme Court never considered non-members who were required to pay representation fees to be “members” under Section 14(b).  Moreover, in its cases addressing Section 14(b), the Supreme Court had not addressed the issue at hand but instead only found that states could prohibit agreements from requiring membership or attempting an end run by imposing non-member fees equal to those paid by union members.  Judge Wood dismissed the legislative history argument, noting that the Court had no idea what Congress thought, and that Congress also could have easily believed the courts would decide which state laws complied with Section 14(b).  In any event, the statutory language itself should control.

If the Act was not preempted, Judge Wood argued that it violated the Takings Clause.  The government may only confiscate private property for public use with just compensation, and is prohibited from taking property from one private party for the sole purpose of transferring it to another private party, regardless of whether “just” compensation is paid.  Here, according to Judge Wood, the state did exactly that by forcing one private party, the Union, to give services to another private party, non-union members.  Judge Wood  claimed no public purpose for the taking was even alleged.  Judge Wood compared the situation to the equivalent of requiring a gas station, if it wanted a business license, to give away gas to customers who did not want to pay.  Wood rejected the majority’s just compensation claims for numerous reasons, including that it ignored the tangible costs placed on unions in administering the contract and handling grievances.

Thus, Indiana’s Right to Work Act survived federal preemption and constitutional challenge, for now.  Judge Wood’s dissent may give the Union cause to consider a petition for rehearing en banc or a petition for certiorari, and no doubt it will give others the idea to bring their own challenges to Indiana’s Act or other similar state right to work statutes.

While Indiana’s Act survived Judge Wood, it is not out of the woods.  Two state courts, in cases involving IUOE Local 150 in September 2013 and the USW just last July, found the Act violated an Indiana State Constitutional provision barring the delivery of particular services without just compensation.  The Indiana Supreme Court is set to hear oral argument on IUOE Local 150’s case on September 4th.  Stay tuned.  This fight is far from over.

NLRB Holds Unwritten Confidentiality Policy Prohibiting Employee From Discussing His Disciplinary Record Violates NLRA

Posted in Concerted Activity, Protected Concerted Activity

By: Michele Haydel Gehrke, Esq.

In a 2-1 decision with Board Member Philip Miscimarra dissenting, the National Labor Relations Board recently held that Philips Electronics North America Corp. violated Section 8(a)(1) of the National Labor Relations Act by having an unwritten confidentiality rule prohibiting employees from discussing their disciplinary records.  Philips Electronics North America Corp., 361 NLRB 16 (August 14, 2014).  The Company argued that it  did not have a policy prohibiting employees from discussing discipline issues.  However, the majority of the Board found that documentation in an employee’s discharge file “effectively admitted” that the Company maintained an unwritten rule prohibiting employees from discussing discipline they had received.

The case arises from the discharge of Lee Craft in January 2012.  Prior to his discharge, Craft was placed on a final written warning because of his performance deficiencies, and disruptive, intimidating, and offensive behavior toward a female co-worker, Kim Coleman.  Craft was instructed to stay away from Coleman and her work area.

Instead, Craft drove his forklift to Coleman’s area and complained in a loud voice to co-workers that he had been disciplined because of Coleman’s allegations of harassment against him and showed co-workers the disciplinary form.  Co-workers confirmed that Craft had shared that he had been disciplined because of complaints by Coleman.

The Company fired Craft for “disrupting the operation, and sharing confidential documentation and information during working hours and continu[ing] to use intimidating language towards management.”  The disciplinary memo completed by the manager indicated that employees “are aware that disciplinary action forms are confidential and should not be shared on the warehouse floor at any time.”

Craft filed an unfair labor practice charge challenging his discharge.  An NLRB Regional Director issued a complaint alleging that the discharge violated the NLRA, and that the Company maintained an illegal policy prohibiting the discussion of employee discipline.

The Administrative Law Judge dismissed the Complaint, but the Board reversed in part.  While the Board upheld Craft’s discharge finding he would have been terminated regardless of sharing his disciplinary record, the Board found the Company violated Section 8(a)(1) by maintaining the unwritten confidentiality rule prohibiting employees from discussing discipline.  The Board explained that under established NLRB precedent, “[a]n employer violates Section 8(a)(1) when it prohibits employees from speaking with coworkers about discipline and other terms and conditions of employment absent a legitimate and substantial business justification for the prohibition.”  In justifying its finding of a violation, the Board stated: “It is difficult to see how the Respondent can claim that such a [confidentiality] rule did not exist and at the same time cite Craft for violating it.”

Board Member Miscimarra dissented finding that the record lacked sufficient evidence of the unwritten confidentiality policy, particularly in light of the unrebutted testimony from Company witnesses that no such policy existed.

This decision is an important cautionary tale that the Board will look not only at employer policies in an employee handbook, but also employer practices and any documentation in an employer’s records to determine if an employer is maintaining illegal policies.  Employers must be vigilant in their review of employee handbooks, and just as importantly, train managers and supervisors in the field on the legal limitations concerning confidentiality rules and other employer policies.  At the very least, managers and supervisors need to be aware that they must think carefully before disciplining an employee and creating documentation  evidencing a violation of an unspoken rule.

The Big Impact from Nixed Recess Appointments: Supreme Court’s rejection of President Obama’s NLRB picks could upset hundreds of decisions.

Posted in Current Events, NLRB

By:  Kenneth R. Dolin, Esq.

The U.S. Supreme Court last month decided the Noel Canning case, unanimously holding that President Obama’s proposed recess appointments of Terrence Flynn, Sharon Block and Richard Griffin to be members of the National Labor Relations Board (Board) were unconstitutional. The Court reasoned that the brief Senate break in January 2012, during which time the appointments were made, was of insufficient length to be a “recess.” Thus, the Court found the Board order against the soda pop bottling company, Noel Canning, was invalid because the Board lacked a quorum, as three of its five members were improperly appointed.

Noel Canning will have a significant impact on the board. Hundreds of board decisions between January 2012 (when the appointments were made) and August 2013 (when new appointees were confirmed by the Senate) will likely be invalidated and reconsidered by the current Board, which now has a full contingent of five Senate-confirmed members.

Chairman Mark Gaston Pearce issued a brief statement shortly after the Noel Canning decision issued, acknowledging the possibility that the Board cases in which the January 2012 recess appointees participated may have to be revisited. Further, NLRB general counsel Richard Griffin recently stated that the Board has already taken action in about 100 cases pending in federal appellate courts, settling decisions in almost 50 cases and asking federal courts to remand dozens of other cases to the Board.

Among the decisions directly impacted by Noel Canning that the Board will likely revisit are those involving such contested issues as: (1) an employer’s ability to promulgate rules regulating employee behavior at the workplace and on social media; (2) to limit access to its premises by off-duty employees; (3) to discontinue deductions of union dues after expiration of its collective bargaining agreement; (4) to obtain a mandatory arbitration agreement with a class action waiver; (5) to not continue granting wage increases after the expiration of a collective-bargaining agreement; (6) to impose discipline on employees during first contract negotiations; (7) to refuse to provide witness statements to a union during the employer’s internal investigation of employee misconduct; and (8) to instruct employees to maintain confidentiality during internal workplace investigations.

It is unlikely, however, that the results will differ materially even if the current Board revisits all the decisions issued by the former Board comprised of the invalidly appointed recess appointees because the current Board, like the prior Board, remains comprised of a majority of Democratic appointees.

That said, there is no guarantee that all decisions will be decided identically, and at the very least, revisiting these cases will certainly hamper the current board’s ability to decide pending cases.

In addition to the case decisions that will likely be invalidated, any administrative action in which the recess appointees participated may also be invalidated, including the appointments of regional directors and administrative law judges as well as perhaps even the delegation of Board authority to the general counsel regarding temporary injunction proceedings. It can be argued that all official actions by the Board during the prior period when it lacked a three-member quorum were invalid.

Thus, it is possible that decisions issued by improperly appointed Regional Directors and administrative law judges may be found invalid as well.

All told, the effect of Noel Canning is likely to be significant, invalidating numerous board decisions and hampering the Board’s ability to decide new cases, though this delay will likely not prevent the Board from issuing its new representation election rule, which would significantly shorten the union election period, before year end.

Likewise, it is unlikely that Noel Canning will impact the General Counsel’s emphasis on using temporary injunctive relief for first-contract bargaining cases, unlawful discharges in organizing campaigns and successor cases involving the successor’s refusal-to-hire union-represented employees.

It remains to be seen whether the effect of Noel Canning will prevent the current board from issuing decisions in ongoing cases before year end concerning such currently contested issues as (1) whether college football players are employees; (2) an employer’s right to prevent its employees from using its e-mail system for union and other protected, concerted purposes; (3) an employer’s right to refuse to provide financial information to a union when it does not claim an “inability to pay;” (4) whether the post-arbitral deferral standard should be more limited; (5) whether the joint employer standard should be broadened; (6) whether a “perfectly clear” successor should have a broader obligation to bargain with the union before setting initial terms of employment than it does presently; (7) the legality of any aspect of a “neutrality” or card check agreements or other pre-recognition agreements: and (8) the rights of contractor employees, who work on other employer’s property, to have access to the premises to communicate with workers or the public.

Portions of this article were excerpted from Mr. Dolin’s article, which was published in the July 21, 2014 edition of The National Law Journal, reprinted with permission. 

 ©2014 ALM Properties, Inc. All rights reserved.  Further duplication without permission is prohibited.