Employer Labor Relations Blog

Back to School: NLRB Takes Aim at Colleges and Universities

Posted in Collective Bargaining, Current Events, Organizing, Representation Cases

By:  Christopher W. Kelleher, Esq., Mary Kay Klimesh, Esq. & Jeffrey A. Berman, Esq.

Seyfarth Synopsis:  The National Labor Relations Board issued three important decisions this week that will significantly impact private colleges and universities.

Student Assistants Eligible to Unionize

By a vote of 3 to 1, the Board held that college and university student assistants — including undergraduates — who perform services in connection with their studies, are “employees” under Section 2(3) of the NLRA, and therefore have the right to bargain collectively. Columbia University, 364 NLRB No. 90. In doing so, the Board overruled Brown University, 342 NLRB 483 (2004), which held that student assistants are not statutory employees. The ruling directly contradicts the Board’s nearly 80-year treatment of students under the Act.

Because Section 2(3) does not adequately define the term “employee,” the Board looked to common law agency principles to determine whether student assistants are covered. The Board thus found that even when the economic relationship “may seem comparatively slight” relative to the academic relationship, “the payment of compensation, in conjunction with the employer’s control, suffices to establish an employment relationship[.]” The Board found no compelling statutory or policy considerations to hold otherwise.

Member Miscimarra, the Board’s lone dissenter, argued that the relationship between the students and the university is “primarily educational,” and thus does not fit “the complexities of industrial life.” The dissent warned that the Majority disregarded “what hangs in the balance when a student’s efforts to attain [a] … degree are governed by the risks and uncertainties of collective bargaining and the potential resort to economic weapons” such as strikes, slowdowns, lockouts, and litigation.

Religious Universities Covered by NLRA

The issue in Seattle University, 364 NLRB No. 84 and Saint Xavier University, 364 NLRB No. 85 was whether these religiously affiliated institutions should be exempted from the Board’s jurisdiction based on First Amendment guarantees against entanglement between church and state. The universities argued that as religious institutions, their faculty members are not covered by the National Labor Relations Act. At the very least, they argued, teachers in religious studies departments should be excluded from the proposed bargaining units, which comprised part-time and contingent faculty.

In both cases, the Regional Director determined that the university’s faculty members generally were covered by the NLRA and that the unit appropriately included religious studies faculty. On review, the Board applied its test set forth in Pacific Lutheran, 361 NLRB No. 157 (2014), which permits Board jurisdiction unless: (1) the university or college holds itself out as providing a religious educational environment; and (2) it holds out the petitioned-for faculty members as performing a specific role in creating or maintaining the school’s religious educational environment. (For more about the Board’s decision in Pacific Lutheran University, 361 NLRB 157 (2014), see here ).  The Board found that both universities met this test when it came to faculty in the religious studies departments, thereby excluding them from the bargaining units.

While this might sound like good news, the Board denied review of the Regional Director’s determination that faculty in other departments were covered. The Board thus continues to ignore the Supreme Court’s mandate in NLRB v. Catholic Bishop of Chicago, 440 U.S. 490 (1979) that the NLRA must be construed to exclude teachers in church-operated schools. The Board is not entitled to base jurisdiction on the conclusion that certain teachers perform a role in creating or maintaining the school’s religious educational environment. However, that is exactly what happened in these two cases. According to the Supreme Court, this type of inquiry by itself may impermissibly impinge on rights guaranteed by the Religion Clauses of the Constitution.

Conclusion

The Board continues to broadly exercise its authority in order to maximize the number of employers and employees covered by the Act, this time in cases involving three universities. We can expect challenges to all three decisions.

 

 

 

NLRB PAVES WAY FOR STUDENT UNIONIZATION

Posted in Bargaining Unit, Collective Bargaining, Concerted Activity, Organizing, Recognition, Representation Cases

By:  Christopher W. Kelleher, Esq.

Seyfarth Synopsis: The NLRB ruled that students who work as teaching assistants at colleges and universities are “employees” under the NLRA and are thus permitted to engage in collective bargaining.

On August 23, 2016, the National Labor Relations Board issued a 3-1 decision in Columbia University, Case 02-RC-143012, holding that private college and university student assistants — including undergraduates — who perform services in connection with their studies, are “employees” under Section 2(3) of the National Labor Relations Act, and therefore have the right to bargain collectively.

In doing so, the Board overruled Brown University, 342 NLRB 483 (2004), which held that student assistants are not statutory employees. The ruling directly contradicts the Board’s treatment of students under the Act for nearly all of its 80-year history.

Because Section 2(3) does not adequately define the term “employee,” the Board looked to common law agency principles to determine whether student assistants are covered. The Board thus found that even when the economic relationship “may seem comparatively slight” relative to the academic relationship, “the payment of compensation, in conjunction with the employer’s control, suffices to establish an employment relationship[.]” The Board found no compelling statutory or policy considerations to hold otherwise. The decision applies only to private schools and universities.

Member Miscimarra, the Board’s lone dissenter, argued that the relationship between the students and the university is “primarily educational,” and thus does not fit “the complexities of industrial life.” The dissent warned that the Majority disregarded “what hangs in the balance when a student’s efforts to attain [a] … degree are governed by the risks and uncertainties of collective bargaining and the potential resort to economic weapons” such as strikes, slowdowns, lockouts, and litigation.

And Now There Are Two: The Ninth Circuit Strikes Class Arbitration Waivers Joining the Seventh Circuit on Finding that these Waivers Violate the NLRA

Posted in Arbitration, Concerted Activity, Current Events, NLRB, Protected Concerted Activity, Uncategorized, Unfair Labor Practices

NLRB 2By: Karla E. Sanchez, Esq.

Seyfarth Synopsis: The Ninth Circuit joined the Seventh Circuit and the NLRB in finding that mandatory arbitration agreements that require all claims to be brought by employees on an individual basis violate the NLRA.

On August 22, 2016, the Ninth Circuit issued an opinion in Morris v. Ernst & Young, LLP, Case No. 13-16599, holding that an arbitration agreement which required employees to individually bring legal claims against their employer exclusively through arbitration violated Sections 7 and 8 of the National Labor Relations Act (“NLRA”).

In the case, an employee who had signed the arbitration agreement brought a class and collective action against the employer alleging employee misclassification to deny overtime wages under the Fair Labor Standards Act (“FLSA”).   The employer moved to compel arbitration arguing that the employees had to individually arbitrate their respective claims.  The trial court agreed and ordered individual arbitrations.

The Ninth Circuit reversed finding that concerted litigation—class or collective action—is protected activity under Section 7 of the NLRA, is a substantive right under the NLRA, and cannot be waived. Notably, Section 7 of the Act protects employees’ rights to, among other things, “engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”  29 U.S.C. § 157 (emphasis added).  The Court held that concerted activity, is the “essential, substantive right” established by the NLRA. Id. slip op.at  6.   The Ninth Circuit then noted that Section 8 of the Act “enforces” the rights provided in Section 7, including engaging in concerted activities, by making it an unfair labor practice to interfere with these rights Id. slip op. at  9.  Given that Section 7 grants a right to engage in concerted activity and Section 8 precludes an employer from interfering with employees’ Section 7 rights, the Ninth Circuit concluded that an employer violates the Act by: 1) conditioning employment on signing an agreement that precludes collective and class actions, and 2) interfering with employees’ rights to engage in concerted activity.

The Ninth Circuit disagreed with the employer that the Federal Arbitration Act (“FAA”) required the enforcement of the arbitration agreement, finding that at issue here was the fact that the agreement required individual litigation and not that it required arbitration. Under the majorities’ reasoning, it would have found the same violation if the agreement required all suits to be brought in court if the suits had to be brought on an individual basis.  The Court further noted that the “FAA does not mandate the enforcement of contract terms that waive substantive federal rights.” Id. at slip op 18.

The dissent disagreed with the majority’s analysis, finding that while the NLRA “protects concerted activity, it does not give employees an unwaivable right to proceed as a group to arbitrate or litigate disputes.” Id. at slip op. 37.  The dissent found that the NLRA did not create a substantive right to litigate collective and class actions and concluded “nothing in the text, legislative history, or purposes of [Section] 7 precludes enforcement of an arbitration agreement containing a class action waiver.” Id. at slip op. 37.

Through the Court’s decision in Morris, the Ninth Circuit joins the Seventh Circuit in finding that arbitration agreements waiving collective legal action violate the Act. See Lewis v. Epic Sys. Corp., — F.3d –, 2016 WL 3029464 (7th Cir. 2016).  The Second, Fifth, and Eighth Circuits have concluded that the NLRA does not invalidate these agreements.

Given the split in the circuits, cases dealing with these type of mandatory class action waiver agreements will likely continue to be litigated until the Supreme Court rules on this issue.

Employers with these type of agreements need to consider whether they want to maintain these agreements in light of the current split and whether they are better served by making changes to their existing agreements. Employers concerned about their arbitration agreements are advised to consult with their labor and employment attorneys.

Caught at the Red Light: Challenge to Ordinance Granting On-Demand Drivers the Right to Bargain Collectively is Brought to a Screeching Halt

Posted in Bargaining Unit, Collective Bargaining, Concerted Activity, NLRB, Organizing, Recognition, Representation Cases, Uncategorized

Red Light   By: Alison Loomis, Esq.

Seyfarth Synopsis: A challenge to Seattle’s first-of-its-kind ordinance, which established the right for on-demand drivers to collectively bargain, was dismissed by a Washington federal court on the basis that the suing entity lacked standing. 

Seattle recently enacted an ordinance granting “on-demand” drivers the right to bargain collectively. The ordinance, which took effect on January 22, 2016, established a mechanism through which a union could request recognition as a qualified driver representative (“QDR”) for on-demand drivers, and ultimately, negotiate pay and conditions of employment on their behalf with their driver coordinator company (such as, for example, Uber).  If recognition was granted, the QDR would contact the company whose drivers it seeks to represent to obtain the drivers’ contact information.  Once the QDR had the contact information, it could then solicit those drivers regarding their interest in union representation.  If and when a majority of the drivers expressed interest in representation, the city of Seattle would certify the QDR as the exclusive driver representative for all drivers associated with that driver coordinator and the driver coordinator would be required to negotiate with the QDR regarding topics including payment, hours and conditions of work, and equipment standards.

On March 3, 2016, the U.S. Chamber of Commerce, a trade group that has two driver coordinator companies as members, filed a complaint against the city of Seattle, alleging, among other things, that the ordinance was preempted by the NLRA and the Sherman Antitrust Act. Chambers claimed that the ordinance would “restrict the market freedom relied upon for all for-hire drivers who are part of independent-contractor arrangements” and would “insert a third-party labor union into the relationship between independent contractors and companies.”  In seeking an injunction to stop the enforcement of the ordinance, Chambers alleged that two of its member companies suffered present harm and would likely face a “substantial risk of injury” in the future as a result of the ordinance.

The city of Seattle filed a motion to dismiss the lawsuit on the grounds that Chambers did not have the requisite standing. In granting the city’s motion, the District Court for the Western District of Washington at Seattle noted that the Chambers’ two member driver coordinator companies had not yet suffered harm, even if they faced the eventual prospect of a union organizing drive.  The court dismissed the lawsuit “without prejudice,” meaning that Chambers can effectively revive the action at a later date, assuming it gains standing.

In the interim, we’ll wait until the light turns green, and a challenge to this legislation ripens.

Get Off My Lawn (Or Gurney): Off Duty Employees Allowed To Picket on Hospital Employer’s Property

Posted in Concerted Activity, Picketing, Protected Concerted Activity, Unfair Labor Practices

 By:  Susan Jeanblanc Cohen, Esq.

Seyfarth Synopsis: In a split decision, the NLRB ruled that off-duty employees of an acute care hospital had the right to picket the hospital’s main lobby entrance.

After the collective bargaining agreement between acute care hospital Capital Medical Center (“the Hospital”) and UFCW Local 21 (“the Union”) expired on September 30, 2012 and the parties engaged in negotiations for months, the Union and some bargaining unit employees decided to engage in picketing and handbilling at the Hospital.  During this union activity, off-duty employees distributed handbills at the main lobby entrance of the hospital and the physicians’ pavilion entrance. In addition, a group of employees distributed handbills and carried picket signs along the public sidewalk next to the hospital driveway.  The Hospital did not interfere with these activities.  Later in the day, at least two off-duty employees went to the main lobby entrance of the Hospital with their picket signs, and one of the employees also distributed leaflets at the lobby entrance for a short period of time while holding her picket sign.  The Hospital informed the picketing employees that they were welcome to remain at the doorway and hand out leaflets, but that they were not allowed on Hospital property with their picket signs.  The picketers disregarded their employer’s instruction and remained at the lobby entrance with their picket signs.  The Hospital contacted the police, who said he would not force the picketers to leave because they were not being disruptive or blocking doors or ingress and egress.

In Capital Medical Center, 364 NLRB No. 69 (August 12, 2016), a split panel of the NLRB decided that the Hospital violated Section 8(a)(1) of the National Labor Relations Act (“NLRA”) by attempting to prevent the off-duty employees from picketing, threatening the employees with discipline and arrest for engaging in picketing, and contacting the police in an effort to have the picketing ended.  The majority did not rule that off-duty employees have an absolute right to picket a hospital’s lobby entrance, but cited the standard enunciated by the Supreme Court in Republic Aviation Corp. v. NLRB, 324 U.S. 793 (1945) that employee rights under Section 7 of the NLRA must be balanced against employer property rights and business interests.  Accordingly, picketing could be restricted if an employer shows that the restriction is required to maintain discipline and production.  Recognizing that acute care hospitals involve special considerations, the majority noted that hospitals may prohibit picketing in non-patient care areas if necessary to prevent patient disturbance or disruption of health care operations.  However, the majority decided that the Hospital did not show that the picketing in this case created any such disturbance or disruption or that restricting picketing was required to maintain discipline and production.  The majority felt that the presence of individuals peacefully holding picket signs near the main entrance to the Hospital was not likely to be any more disruptive or disturbing than the handbilling that the Hospital allowed.

The dissent, Member Miscimarra, felt that the majority improperly applied standards governing on-premises solicitation and distribution and applied them to on-premises picketing, noting that picketing is very different than other modes of communication and that the very presence of picketers on hospital property could disturb patients entering and exiting the facility. Member Miscimarra opined that the Hospital should have been allowed to restrict the on-premises picketing in this case.

 Employer Takeaway: Be prepared to allow off-duty employees to come onto employer property and even position themselves at entrances  while holding picket signs. Before restricting off-duty employees from such picketing, make sure there is evidence of real potential patient disturbance or disruption.  Conclusory statements that picketers could deter patients (or customers) from entering or, the acute care context, impact the healing environment will be insufficient.  In the case the a hospital, the NLRB will likely want to see evidence of the following types of behavior for a hospital to be able to lawfully restrict picketing:  patrolling the doorway, marching in formation, chanting and making noise, creating a barrier to entrances/exits, or other behavior that actually disturbed patients or disrupted hospital operations.

Blurred Lines: Under New “Perfectly Clear” Standard, NLRB Finds that Seller’s Conduct Prohibits Asset Purchaser from Setting Initial Terms

Posted in Bargaining Unit, Collective Bargaining, NLRB, Recognition, Representation Cases, Unfair Labor Practices

NLRBBy: John L. Telford, Jr. and Kaitlyn Whiteside

Seyfarth Synopsis: In yet another pro-union, results-driven decision, the NLRB announces a new approach to evaluating whether an asset purchaser has forfeited its right to set initial terms and conditions when offering employment to a seller’s employees.

In Nexeo Solutions, LLC, 364 NLRB No. 44 (July 18, 2016), a split panel of the NLRB found that Nexeo Solutions lost its right to set initial terms and conditions of employment for the employees of Ashland Distribution’s Fairfield, California facility, which Nexeo acquired in an asset purchase.  The employees were drivers, material handlers, and warehouse employees who had been represented by the Teamsters for approximately 18 years.

Under well-settled law, a purchaser is not typically bound by the collective bargaining agreement governing the seller’s employees, and instead the purchaser may set its own initial terms and conditions of employment. See NLRB v. Burns Security Services, 406 U.S. 272 (1972).  The Supreme Court did, however, carve out an exception to the general rule when “it is perfectly clear that the new employer plans to retain all of the employees in the unit…” Id. at 294-95.  These purchasers are known as “perfectly clear successors.”  The NLRB then interpreted and expanded on the obligations of perfectly clear successors in Spruce Up Corp., 209 NLRB 194 (1974), enf’d. per curiam 529 F.2d 516 (4th Cir. 1975).

Under Spruce Up, a purchaser loses the right to set initial terms when “the new employer has either actively or, by tacit inference, misled employees into believing they would all be retained without change in their wages, hours, or conditions of employment…” or “where the new employer…has failed to clearly announce its intent to establish a new set of conditions prior to inviting former employees to accept employment.” Id. at 195.

The Union and amici, including the SEIU and the AFL-CIO, asked that the Board overturn Spruce Up as inconsistent with the Supreme Court’s decision in Burns.  Rather than overrule Spruce Up, however, the Board instead stretched the perfectly clear successor analysis so that the facts of the case at hand would fit within the expanded meaning of the term.

In justifying its decision, the Board relied on the parties’ November 10, 2010 Purchase and Sale Agreement stating that the employees would be offered “(i) a base salary or wages no less favorable than those provided immediately prior to the Closing Date and (ii) other employee benefits, variable pay, incentive or bonus opportunities…substantially comparable in the aggregate” to those provided by the seller. Nexeo, 364 NLRB at 2  The Board also focused on the seller’s communications, rather than the buyer’s, with the employees.  For example:

  • On November 7, 2010 an email from seller’s president was delivered via hard copy to the employees stating, “[W]e anticipate approximately 2,000 Ashland Distribution employees and dedicated resource group and supply chain partners will transfer to the new business.” Id.
  • On November 8, 2010 an employee Q&A was posted on the intranet and the bulletin board at the Ashland facility stating, “Under the terms of the agreement, for at least 18 months following closing, the newly independent company is required to provide, to each transferred employee, base salary and wages that are no less favorable than those provided prior to closing; and other employee benefits that are substantially comparable in the aggregate to compensation and benefits as of January 1, 2011.” Id. at 3.

The Board’s reliance on these communications completely disregarded the buyer’s later statements, which made it clear that any continued employment would be under new and different terms and conditions. The purchaser’s statements included the following:

  • On February 16, 2011, the purchaser met with the union business agent and provided a draft copy of an offer letter to be distributed to the employees. The letter stated, “[W]e think you should know that Nexeo Solutions has not agreed to assume any of Ashland’s collective bargaining agreements.  We have chosen not to adopt, as initial terms and conditions of employment, any of the provisions contained in any current or expired collective bargaining agreement…” Id. at 4.
  • On February 17, 2011, the purchaser mailed the offer letters to the employees along with a document called “Your New Benefits at a Glance,” which detailed the changes to the employee’s health insurance, life insurance, and retirement benefits should they accept the offer. Id.

In relying so heavily only on the seller’s statements, the majority blurred the identity of the speaker and the time at which the buyer’s responsibility for communication kicks in. It held that the seller’s statements to the employees may be imputed to the purchaser for purposes of the perfectly clear successor analysis, a stark departure from the Board’s previous requirement that a perfectly clear successor have engaged in a misrepresentation to the employees in order to lose its right to set initial terms.  Now, the purchaser’s obligation to notify the union of a change in terms and conditions may be triggered simultaneously with the seller’s effects bargaining obligation.

Member Miscimarra, dissenting, noted that “The new affirmative duty created by my colleagues is especially unfortunate because it will predictably have consequences–however unintended they may be–that will generate greater uncertainty for, and impose greater hardship on, employees and unions involved in a sale, transfer or other conveyance of operations.” Id. at 23.

As a result, Miscimarra noted that “[M]any potential successor employers will negotiate strict limitations on a predecessor’s ability to convey any information to its employees regarding their potential employment with the successor.  Nothing in the NLRA requires purchasers to disclose their employment plans to the seller, and–in view of my colleagues’ decision–purchaser would be well advised to prohibit sellers from communicating anything to their employees and unions regarding the purchaser’s employment-related plans.” Id.

The Union has petitioned for the case to be reviewed by the Ninth Circuit. The employer has requested reconsideration by the Board.  It is unclear whether the Ninth Circuit Court of Appeals will push back against the Board’s extraordinary encroachment on the buyer’s ability to set initial terms.

In the meantime, potential successors contemplating asset purchases from unionized sellers should:

  • Carefully review purchase agreements for any language that could trigger a perfectly clear successor obligation under the Board’s new standard including obligations to provide similar or comparable wages and benefits to the seller’s employees.
  • Negotiate strict limitations on the seller’s ability to communicate the terms of the deal to its employees or the ramifications of the deal on their continued employment.
  • Recognize that although the seller has an effects bargaining obligation, the purchaser may want to consider insisting that any communications by the seller to the employees be coupled with affirmations that any continued employment with the buyer will be under different terms and conditions of employment.
  • Potentially require that a decision on the initial terms and conditions of employment be made prior to execution of a purchase agreement including the terms of any communications regarding those initial terms.

Ultimately, employers will continue to face the difficult balancing required in order to achieve a smooth sale while assuaging employee anxiety against the potential inability to set initial terms of employment. For many purchasers, the inability to set initial terms and conditions of employment could destroy the viability of the deal itself, a result much worse for the employees created by the NLRB’s overreach.

 

D.C. Circuit Upholds NLRB Finding that Employment Agreement’s Confidentiality and Non-Disparagement Provisions Violated the NLRA

Posted in Current Events, Unfair Labor Practices

By:  Ashley Laken

Seyfarth Synopsis: The U.S. Court of Appeals for the D.C. Circuit recently denied Quicken Loans, Inc.’s petition for review of an NLRB decision finding that confidentiality and non-disparagement provisions in the company’s Mortgage Banker Employment Agreement unreasonably burdened employees’ rights under Section 7 of the NLRA.

Back in 2013, an NLRB administrative law judge found that certain confidentiality and non-disparagement provisions contained in Quicken’s Mortgage Banker Employment Agreement violated the NLRA (see our earlier blog post here).  The Board agreed with the ALJ, and the Company petitioned the D.C. Circuit for review.  Recently a three-judge panel of the D.C. Circuit denied the Company’s petition for review and granted the NLRB’s cross-application for enforcement, finding that there was nothing arbitrary or capricious about the Board’s decision and there was no abuse of discretion in the Board’s hearing process (Case No. 14-1231).

Facts

As a condition of employment, mortgage bankers were required to sign a Mortgage Banker Employment Agreement that included a confidentiality provision and a non-disparagement provision.  The confidentiality provision prohibited employees from disclosing nonpublic information regarding the company’s personnel, including personnel lists, handbooks, personnel files, and personnel information of coworkers such as phone numbers, addresses, and email addresses.  The non-disparagement provision prohibited employees from publicly criticizing, ridiculing, disparaging or defaming the company or its products, services, policies, directors, officers, shareholders or employees.

Court’s Reasoning

The D.C. Circuit noted that its review of the Board’s decision was limited, as Congress has entrusted the Board with implementing Sections 7 and 8(a)(1) of the Act and determining when an employer’s workplace rules run afoul of those provisions.  The three-judge panel noted that the Board’s determinations are therefore entitled to considerable deference and will be sustained as long as the Board “faithfully applies” the legal standards and its textual analysis of a challenged rule is “reasonably defensible” and adequately explained.

In finding that the Board properly determined that the confidentiality provision violated employees’ Section 7 rights, the court noted that the very information the provision forbids employees from sharing (i.e., personnel lists and employee rosters) has long been recognized as information that employees must be permitted to gather and share among themselves and with union organizers.  With respect to the non-disparagement provision, the court found that the Board “quite reasonably found that such a sweeping gag order would significantly impede mortgage bankers’ exercise of their Section 7 rights because it directly forbids them to express negative opinions about the company, its policies, and its leadership in almost any public forum.”

In reaching its conclusions, the appeals court noted that the validity of a workplace rule turns not on subjective employee understandings or actual enforcement patterns, but on an objective inquiry into how a reasonable employee would understand the rule’s disputed language.  The court observed that this approach serves “an important prophylactic function: it allows the Board to block rules that might chill the exercise of employees’ rights by cowing the employees into inaction,” rather than forcing the Board to wait until that chill is manifest and then try to undertake the difficult task of dispelling it.  The court also noted that the absence of enforcement “could just as readily show that employees had buckled under the Employment Agreement’s threat of enforcement.”

Employer Takeaway

In recent years, the Board has issued numerous decisions in which workplace rules were found to unlawfully restrict employees’ Section 7 rights, and the D.C. Circuit’s decision demonstrates that employer petitions for review of such decisions may not be successful.  The decision also highlights the need to not just draft and review employee handbooks and policies for possible non-compliance with the NLRA, but employment agreements as well.

NLRB Tells Employers to Mind their Own Business

Posted in Concerted Activity, NLRB, Protected Concerted Activity, Uncategorized, Unfair Labor Practices

Ee Handbook - 2

By: Howard Wexler, Esq. & Samuel Sverdlov, Esq.

Seyfarth Synopsis: An Administrative Law Judge held that an employer’s policy of prohibiting employees from conducting personal business at work, along with its social media and solicitation/distribution policies, violated the National Labor Relations Act (“NLRA”).

In Casino Pauma, the NLRB’s General Counsel (“GC”) alleged that four of the employer’s handbook policies violated Section 8(a)(1) of the NLRA.  Specifically, the NLRB took issue with the wording of the following policies: (1) Conducting Personal Business; (2) Solicitation and Distribution; (3) Social Media; and (4) Conflicts of Interest (which relates to solicitation and distribution).

With regard to the policy prohibiting employees from conducting personal business, the GC alleged that such a policy was unlawful because it “bans employees from all of [the employer’s] property except when conducting [the employer’s] business.” The GC contended that “the rule unlawfully restricts off-duty employees from engaging in protected activity; and it prohibits protected activity during nonworking time.”

The solicitation policy was alleged to be unlawful because “it prohibits protected solicitation and distribution ‘if the intended recipient expresses any discomfort or unreceptiveness whatsoever.’”

The GC alleged that the social media policy was unlawful “because it prohibits employees from (1) ‘communicating anything to do with work’ on social media without an employer-approved disclaimer; (2) posting social media references to co-workers without their prior approval; and (3) posting photos ‘in conjunction with work-related postings’ without [the employer’s] prior approval.”

Finally, the GC contended that the conflicts of interest policy unlawfully required the employer’s advance notice before employees could solicit co-workers.

An NLRB Administrative Law Judge (“ALJ”) agreed with the GC that the wording of these policies violated the NLRA.  The ALJ held that the “prohibition against conducting ‘personal business’ on company property and ‘while at work’ can reasonably be read to restrict the communications of employees with each other about union or other Section 7 protected rights in non-work areas and on nonwork time.”  In particular, the ALJ found that the language “while at work” was overly broad.  Moreover, the ALJ found that the term “personal business” was ambiguous enough to include union activity.

With respect to the solicitation, social media, and conflict of interest policies, the ALJ noted that employees are permitted to “engage in persistent union solicitation even when it annoys or disturbs the employees who are being solicited.” The ALJ also found that the employees should not be required to get the employer’s pre-approval in writing.

The ALJ also admonished the employer, by stating that the policies: “restrict the free exercise of [employee’s] Section 7 right to comment to fellow employees and others, including union representatives, about their work-related complaints concerning wages, hours and working conditions.”  With regard to the restriction on posting pictures, the ALJ held that, “[o]ne can easily imagine an employee who observes unsafe conditions in the workplace taking a photo for use by a union, to obtain the support of fellow employees in an effort to resolve the unsafe working conditions, or even to report them to the appropriate government agencies.”

Outlook

When an employee handbook has ambiguous or overbroad language, or has language that could conceivably be interpreted to restrict employees from engaging in broadly defined protected activities, the NLRB will not hesitate to allege a violation of the NLRA. The wording of each policy in an employee handbook must be carefully crafted so as to not restrict employees from communicating about union activity, or wages, hours and other working conditions during employees non-working time.  As such, it is imperative that employers have their handbooks constantly updated, and reviewed by attorneys familiar with the NLRA.

Guidance On Handbooks, Policies, And Social Media Guidelines – Employers’ Attempts to Protect Themselves Too Much Can Lead to Loss of Protection

Posted in Concerted Activity, NLRB, Uncategorized, Unfair Labor Practices

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By: Candice Zee, Esq. & Monica Rodriguez, Esq.

Seyfarth Synopsis: The NLRB orders employer to cease and desist from maintaining numerous provisions in its Social Networking Guideline and provisions in the Handbook related to social media, privacy, and confidentiality, and no solicitation on the grounds that language violated Section 8(a)(1) of the Act.

On July 15, 2016, the National Labor Relations Board (the “Board”) in Cy-Fair Volunteer Fire Department and Robert Berleth, et al., 364 NLRB No. 49 (July 15, 2016) affirmed an Administrative Law Judge’s decision that various provisions in Cy-Fair Volunteer Fire Department’s (“Cy-Fair”) Handbook and Social Networking Guideline violated Section 8(a)(1) of the Act because the language could lead an employee to reasonably believe that he/she was prohibited from organizing or engaging in concerted activity.

In determining whether a challenged rule is unlawful, the Board considered the following evidence: (1) whether employees would reasonably construe the language to prohibit Section 7 activity; (2) whether the rule was promulgated in response to union activity; or (3) whether the rule was applied to restrict the exercise of Section 7 rights.

Cy-Fair’s Social Networking Guideline Violated The Act

Cy-Fair’s Social Networking Guideline’s prohibited the use of its logos, names, pictures or accounts of activities without prior approval. In finding that Cy-Fair’s Social Networking Guideline violated the Act, the Board reasoned that employees could reasonably believe that they, or a union, were not permitted to seek support from other employees, or publicize a dispute with Cy-Fair by using its name or logo on their clothing or literature.

Provisions of Cy-Fair’s Handbook Also Violated The Act

The following provisions of Cy-Fair’s Handbook were also at issue: (1) overview; (2) essential behavioral expectations; (3) department systems; (4) blog; (5) social media; (6) proprietary information/confidentiality; (7) no solicitation/distribution policy; and (8) employee records and privacy. The Board held that some language in each of these provisions violated the Act.

Cy-Fair’s overview, essential behavioral expectations, blogging, proprietary information/confidentiality, and employee records and privacy sections attempted to protect Cy-Fair’s confidential/proprietary information and its employees’ personal information. It provided that employees would be disciplined if they shared this information without the express consent of the appropriate person/entity.  The Board, however, found that these sections were unlawful because such provisions limited the scope of the information that employees could share or discuss (i.e. confidential/proprietary information and other employees’ personal information), they impeded the employees’ right to discuss terms and conditions of employment.

The Board determined that one of the three sentences in the non-solicitation/distribution policy also violated the Act. The first and second sentences of the policy prohibited solicitation/distribution of literature during work time and required that the topics discussed by off-duty employees engaging in solicitation/distribution not disturb working employees.  The Board found that these sentences were lawful because the complete prohibition of solicitation/distribution was limited to “work time” and  the limitation to the topics discussed was rational.  The Board determined that the Union failed to satisfy its burden that there were no other means of communicating with employees.  Thus, Cy-Fair’s restriction that non-employees obtain HR approval prior to soliciting or distributing literature was lawful.

The Board, however, found that third sentence prohibiting solicitation and distribution of literature in areas frequently visited by customers, or solicitations that otherwise interfered with operations, violated the Act. The Board reasoned that because the nature of Cy-Fair’s business made it unclear who its “customers” were and how it would affect its operations, employees could reasonably believe that they were prohibited from exercising their section 7 rights.

Lessons Learned

It is important to note that all of the policies that were found unlawful were in place prior to any union activity at Cy-Fair. In its analysis, the Board instead focused on whether employees would reasonably construe the above language to prohibit their Section 7 rights.  Ultimately, the Board ordered that Cy-Fair cease and desist from maintaining the above mentioned provisions in its Handbook and the unlawful language in the Social Networking Guideline.

This case serves as a reminder that employers should be careful when drafting their policies and be mindful of any restrictions. It is particularly important for employers to review language in its policies that could be construed as being overbroad as it may result in less protection for the employer in the future.  If you have any questions regarding your workplace’s handbook and social media policies or practices, please contact the authors, or another Seyfarth attorney.

Paying Employees to Opt Out of Insurance? BEWARE

Posted in Collective Bargaining, Current Events, NLRB, Uncategorized

By: Ronald Kramer, Esq. & Benjamin J. Conley, Esq.

Seyfarth Synopsis: That “win-win” in contract negotiation wherein employees are paid to opt out of employer insurance has become much more complicated thanks to the IRS. Basically, if bargaining parties do not follow new IRS rules, those opt-out payments may end up costing an employer much more in the form of fines for not providing employees with affordable coverage under the Affordable Care Act (“ACA”).

In December 2015 the IRS announced that any unconditional payment to employees to opt out of employer-sponsored insurance was basically a salary reduction towards the payment of health insurance costs, since it is lost if the employee takes employer insurance. Thus, the amount of any unconditional opt-out payment should be counted along with any other employee premium contribution obligations towards whether employer-offered insurance is ”affordable.”  Under the ACA, if the employee cost of single coverage for the employer’s lowest cost plan option exceeds 9.66% of his household income, it is considered unaffordable.  For each employee offered unaffordable coverage who receives subsidized insurance from an exchange, the employer is charged an employer shared responsibility penalty of $3,240 per year.  Given the size of some opt out payments, those payments — along with whatever the employee’s single coverage contributions/premiums are — could exceed the affordability threshold.

Pending formal rule making the IRS provided that an employer need not count unconditional opt-out payments as employee health insurance contributions for purposes of insurance affordability provided the opt-out arrangement was adopted before December 16, 2015. For more information on this earlier guidance, see our Health Care Reform alert.

As promised, on July 6, 2016, the IRS issued proposed rules regarding opt out payments scheduled to take effect for plan years beginning after December 31, 2016. The rules set forth when opt out payments must be added to the cost of coverage for purposes of determining whether such coverage is affordable.

Critically, the IRS rejected requests that the rules exempt conditional opt-out payments made pursuant to a collective bargaining agreement (“CBA”). The IRS did agree, however, to limited grandfathering for contractual opt-out agreements.  Opt-out plans required under CBAs in effect before December 16, 2015 — for both employers and successor employers — will be treated as having been adopted prior to December 16, 2015, and excluded under the new rules until the later of:  (i) the beginning of the first plan year that begins following the expiration of the CBA (disregarding any extensions); or (ii) plan years beginning after December 31, 2016 (the applicable date of the rules).

Except for this CBA exception, going forward all opt out arrangements, union and non-union, conditional (other than those identified below) and unconditional, will be treated as part of the employee’s required contribution for employer health insurance. Certain “eligible opt-out arrangements” will be excluded, however, but only if the opt out arrangement satisfies the following requirements:

  1. The employee’s right to receive an opt-out payment is conditioned on the employee providing “reasonable evidence” that the employee and all other individuals for whom the employee reasonably expects to claim a personal exemption deduction for the taxable year or years that begin or end in or with the employer’s plan year to which the opt-out arrangement applies (the employee’s expected tax family) have or will have minimal essential coverage during the period of time for which the opt-out arrangement applies.
  2. That minimal essential coverage cannot be obtained from an individual market or an insurance exchange.  In other words, the coverage must be through another employer- sponsored plan, such as a spouse’s.
  3. While not the subject of these rules, the DOL has opined, in Technical Release 2013-03, that to avoid other ACA pitfalls, the health plan the employee opting out of enrolls in (just like the plan he is opting out of) also must provide “minimum value” — i.e., that it covers at least 60% of the actuarial value of health costs.  Thus, the employer must further have the employee confirm that the employee’s other group coverage provides “minimum value.”
  4. The “reasonable evidence” of alternative coverage may include an employee’s attestation of coverage for the relevant period, but the employer may always require some other reasonable evidence of coverage.
  5. The “reasonable evidence” must be provided no less frequently than every plan year to which the opt-out arrangement applies.  It can be provided no earlier than a reasonable period of time before the commencement of the period of coverage (e.g., an open enrollment period) to which the opt-out arrangement applies.  The employer may require evidence of alternative coverage to be provided at a later date, such as after the plan year, to enable it to require evidence that alternative coverage has already been obtained.
  6. The arrangement must provide that the opt-out payment will not be made (and the employer must not make the payment) if the employer knows or has reason to know that the employee or other members of his expected tax family does not have or will not have the alternative coverage.

This new rule applies to all employers subject to the ACA’s employer mandate, both union and non-union. (But, see the note regarding minimum value in item 2 above, which applies to any group health plan, regardless of size.)  Employers with represented employees must take care as their contracts expire to negotiate language either giving them the discretion to have the opt-out program comply with IRS rules or incorporating detailed compliant language in the CBA itself.  Failure to do so could result in an unexpected and costly surprise in the form of employer shared responsibility penalties that cannot be rectified until the next negotiations.