Employer Labor Relations Blog

NLRB Targets Independent Contractor Classification of Truck Drivers

Posted in Collective Bargaining, Current Events, Organizing, Unfair Labor Practices

By:  Christopher W. Kelleher, Esq.

Seyfarth Synopsis:  NLRB claims that employers violate Section 8(a)(1) of the NLRA by misclassifying employees as independent contractors, thereby restraining and coercing employees in the exercise of their rights guaranteed under Section 7 of the Act.

The NLRB’s Regional Director in Los Angeles has issued a complaint against Intermodal Bridge Transport alleging that the misclassification of truck drivers as “independent contractors” itself constitutes a violation of the National Labor Relations Act.  The complaint states that such a misclassification “inhibit[s] them from engaging in Section 7 activity and depriv[es] them of the protection of the Act.”  Section 7 provides that “employees,” as opposed to independent contractors, have the right to self-organize and bargain collectively.

This novel interpretation of Section 7 is no doubt a reaction to NLRB General Counsel Richard Griffin’s March 22, 2016 Memorandum GC 16-01 to all Regional Directors requiring them to submit to his Division of Advice cases that involve “the General Counsel’s initiatives and/or priority areas of the law and labor policy.”  Included in his list of “mandatory submissions” are “cases involving the employment status of workers in the on-demand economy,” and “cases involving the question of whether the misclassification of employees as independent contractors violates” the NLRA.

It is clear from the complaint where the NLRB stands on this “question.”  It states: “By the conduct described above … Respondent has been interfering with, restraining, and coercing employees in the exercise of the rights guaranteed in Section 7 of the Act.”  And given the current Board’s strong ties to labor, it would not be surprising to see this argument prevail.

The case is Intermodal Bridge Transport v. International Brotherhood of Teamsters, Case No. 21-CA-157647.  A hearing will take place before an administrative law judge on June 13, 2016 in Los Angeles.

 

DOL States Its Position On The True Effective Date Of Its Final Persuader Rule

Posted in Current Events

By:  Ashley K. Laken, Esq.

Seyfarth Synopsis:  DOL states that the Rule is only applicable to arrangements and agreements made on or after July 1, 2016, and to payments made pursuant to arrangements and agreements entered into on or after July 1, 2016.

As a follow-up to our recent blog post regarding the motion for preliminary injunction that was filed by the plaintiffs in the first lawsuit challenging the DOL’s Final Persuader Rule, Associated Builders and Contractors of Arkansas v. Perez (Case No. 4:16-cv-169, U.S. District Court for the Eastern District of Arkansas), we have learned that the DOL has stated in that case its position on the true effective date of the Rule.

After a status conference was held in that case, the DOL filed a status report in which it informed the court that while the effective date of the Rule is April 25, 2016, the Rule is only applicable to arrangements and agreements made on or after July 1, 2016, and to payments made pursuant to arrangements and agreements entered into on or after July 1, 2016.  The DOL also stated that it will not apply the Rule to arrangements or agreements entered into prior to July 1, 2016, and that consequently, no employer, labor relations consultant, or other independent contractor will have to report or keep records on any activities engaged in prior to July 1 that are not presently subject to reporting, or file the new Forms LM-10 or LM-20 (revised pursuant to the Rule) for any purpose prior to July 1.

We will keep you apprised of  further developments as they occur.

More Updates on the Legal Challenge to DOL’s Final Persuader Rule

Posted in Current Events, Elections, NMB, Organizing, Uncategorized

Gavel      By: Ashley Laken, Esq.

Seyfarth Synopsis: With respect to the lawsuits challenging the Final Persuader Rule, further amicus briefs have been filed and hearing dates have been set for the plaintiffs’ motions for preliminary injunctions.

In follow-up to our earlier blog post regarding the motion for preliminary injunction that was filed by the plaintiffs in the first lawsuit challenging the DOL’s Final Persuader Rule, Associated Builders and Contractors of Arkansas v. Perez (Case No. 4:16-cv-169, U.S. District Court for the Eastern District of Arkansas), the court has set April 28, 2016 as the deadline for the defendants to file their response to the plaintiffs’ motion, and the court has set May 9, 2016 as the date for the hearing on the plaintiffs’ motion.

The court also granted the U.S. Chamber of Commerce’s motion for leave to file an amicus brief in support of the plaintiffs’ motion, and additional amicus briefs in support of the plaintiffs’ motion have been filed by the Employment Law Alliance and the States of Arkansas, Alabama, Arizona, Michigan, Nevada, Oklahoma, South Carolina Texas, Utah, and West Virginia.

Additionally, in follow-up to our earlier blog post regarding the suit filed in the U.S. District Court for the District of Minnesota, Labnet Inc. d/b/a Worklaw Network v. United States Department of Labor (Case No. 0:16-cv-00844), the plaintiffs in that case have similarly filed a motion for a temporary restraining order, or in the alternative, for a preliminary injunction or stay, and the court has set May 26, 2016 as the date for the hearing on that motion.

We will keep you apprised of further developments as they occur.

Unworkable Employer Work Rules: The Board Once Again Makes Perfection the Enemy of the Good

Posted in NLRB, Unfair Labor Practices

By: Kyllan B. Kershaw, Esq.

Seyfarth synopsis: The Board majority holds firm to its standard for evaluating employer work rules despite Member Miscimarra’s vigorous dissent advocating for a new, clearer standard that takes into account an employer’s legitimate business justifications.

Last Wednesday, a split Board panel (Hirozawa, McFerran) held in William Beaumont Hospital and Jeri Antilla, 363 NLRB No. 162,  that several work rules promulgated by a Michigan hospital violated the National Labor Relations Act.  The Board’s analysis of the hospital’s work rules arose out of a dispute regarding whether the hospital acted lawfully in firing two nurses for bullying behavior following an investigation into the death of a newborn at the hospital.  The Board unanimously upheld the Administrative Law Judge’s finding that the terminations were lawful, but Member Miscimarra, in a scathing partial dissent, disagreed with the Board panel’s finding that certain work rules were unlawful. He called for the Board to adopt a new standard that would allow the Board to consider the degree of adverse impact a given rule might have on protected activity and the legitimate justifications an employer may have for maintaining such a rule.

The Board panel, in affirming the administrative law judge’s finding that several of the rules violated the Act, reached even farther–declaring two additional rules to be unlawful under the Board’s Lutheran Heritage standard.  Specifically, the Board panel found the hospital’s language prohibiting conduct that “impedes harmonious interactions and relationships” and “negative or disparaging comments about the…professional capabilities of an employee or physician to employees, physicians, patients, or visitors” to be unlawful because such language “would reasonably be construed to prohibit expressions of concerns over working conditions.”

In his dissent, Member Miscimarra called for the Board to abandon its Lutheran Heritage standard, under which he claimed that “reasonable work requirements have become like Lord Voldemort in Harry Potter: they are ever-present but must not be identified by name.”  In doing so, Member Miscimarra identified numerous defects with the Lutheran Heritage “reasonably construe” standard, including that the standard: (1) ignores legitimate employer justifications of particular rules; (2) invalidates facially neutral work rules solely because they are ambiguous;  and (3) prohibits the Board from differentiating among industries or taking specific events into consideration that may justify the work rule, noting that the hospital setting should have factored into the analysis of the rules in this case.  Member Miscimarra commented that the standard has resulted in extensive confusion and litigation, arguing that the application of the standard does not permit one to understand the difference between many “lawful” and “unlawful” rules.    Member Miscimarra noted that the Board’s standard stems from a misguided belief that unless employers correctly anticipate and carve out every possible overlap with NLRA coverage, employees are best served by not having employment policies, rules, and handbooks, claiming that “in this respect, Lutheran Heritage requires perfection that literally has become the enemy of the good.”

Employer Takeaways

Although Member Miscimarra’s dissent may offer some solace to employers frustrated by the Board’s recent rulings in the context of employer policies and work rules, unfortunately, the Board majority has chosen not to pursue a clearer standard for evaluating employment policies, once again leaving employers seeking guidance as to what constitutes a lawful work rule with confusion instead of answers. While the Board’s intense focus on workplace rules lingers, employers should consult their labor lawyers to ensure their work rules can withstand the Board’s scrutiny and to determine whether such narrowly-tailored lawful rules actually further the employer’s legitimate business interests.

More Updates on the Legal Challenge to DOL’s Final Persuader Rule

Posted in Current Events, Elections, Organizing, Representation Cases

By: Ashley Laken, Esq.

Seyfarth Synopsis: The plaintiffs in the first lawsuit challenging the Final Persuader Rule have filed a motion for preliminary injunction, and the U.S. Chamber of Commerce seeks to file an amicus brief in support of that motion.

In follow-up to our earlier blog post about the first lawsuit to challenge the U.S. Department of Labor’s Final Persuader Rule, Associated Builders and Contractors of Arkansas v. Perez (Case No. 4:16-cv-169, U.S. District Court for the Eastern District of Arkansas), the plaintiffs in that lawsuit have filed a motion for preliminary injunction and for an expedited hearing on the motion, and the U.S. Chamber of Commerce has filed a motion seeking leave to file an amicus brief in support of the plaintiffs’ motion.

In their motion, the plaintiffs argue that absent injunctive relief, the challenged Rule, which is otherwise scheduled to take effect on April 25, 2016, will cause a radical change in the well-settled application of the Labor-Management Reporting and Disclosure Act’s advice exemption that would irreparably harm the plaintiffs’ First and Fifth Amendment Rights. The plaintiffs also argue that an order for injunctive relief will simply preserve the status quo and temporarily retain the same interpretation of the advice exemption that has been in effect for more than 50 years, and therefore, the DOL will not be harmed by a preliminary injunction.

In the proposed amicus brief, the Chamber argues that the Rule will chill the free exchange of ideas between employers and employees and will impose substantial compliance costs as employers and their attorneys are forced to grapple with DOL’s incoherent new guidelines. The Chamber explains that of greatest concern is the fact that the DOL’s new interpretation of the LMRDA’s advice exemption—if allowed to take effect— threatens to expose thousands of companies, law firms and lawyers to potential criminal liability for failure to abide by an exceedingly vague interpretation of the LMRDA.  The Chamber also explains that the Rule “adopts an unworkably vague standard and imposes severe burdens on attorney-client confidences.”

It is unclear when any hearing on the motion for preliminary injunction will or could be, but we will keep you apprised of further developments as they occur.

Another Reason To Avoid a Mail Ballot Election

Posted in Elections, NLRB

By:  Karla Sanchez, Esq.

In a recent blog post (here), we discussed the Board decision changing the rule concerning captive audience speeches in mail-ballot elections by setting the prohibition (on such speeches) to start 24 hours before the Region is scheduled to mail the ballots, rather than from the date and time the mail ballots are to be mailed.  This decision means that employers now have one less day to hold campaign-related meetings with their employees. In Premier Utility Services, LLC, 363 NLRB No. 159 (April 5, 2016) (decision), the Board has given employers yet another reason to try to avoid mail ballot elections.  In that case, the Regional Director refused to count 48 ballots that were postmarked before the voting period ended.  Instead, the union was certified as the bargaining representative based on only 34 votes out of 101 eligible voters.

The employer, a utility company with five boroughs throughout New York City and Long Island, had approximately 101 eligible voters who lived and worked in the five boroughs.  As a result, the parties held a mail ballot, which was conducted from October 20 to November 4, 2015.  November 5, 2015 was set as the date to tally the votes.  However, as of November 5, the Region had only received 4 ballots out of the 101.  Due to this extremely low number of ballots, the employer and the union agreed to postpone the tally for one week or until November 12.  This was a deviation from the NLRB’s normal procedures.  By November 12, the Region received 34 valid ballots—still a low number of ballots for a unit of 101.  Later, the Region received an additional 55 valid ballots, including 48 ballots that had been postmarked before November 4, which had been the last day of the original voting period. The Regional Director refused to count these ballots because they had been received after November 12.  In response, the employer filed objections to the election by which the employer sought to have those 55 ballots counted. The Regional Director overruled the employer’s objections and the employer requested review of the Regional Director’s decision.

The Board (Chairman Pearce and Member Hirozawa) denied the employer’s request for review stating that there were “no substantial issues warranting review.”  The Board apparently had no issue with certifying a union as the bargaining representative of 101 employees by only counting the ballots of about a third of the unit, when an additional 55 employees—more than half of the entire bargaining unit—had voted but not had their ballots counted.

Member Miscimarra dissented.  He noted that while the Board will usually not count mail ballots received after the count, there are times when the Board’s normal rules “must be balanced against our statutory responsibility to assure that employees have been reasonably permitted to freely exercise their rights under the Act.” Member Miscimarra further noted that here, the Regional Director had already deviated from the Board’s normal processes by moving the count day by a week.  Thus, there was no reason why another deviation couldn’t have been granted.

Again, the takeaway for employers is to try to avoid a mail ballot election.

Two Additional Lawsuits Filed Challenging the DOL’s Final Persuader Rule

Posted in Current Events, Elections, Organizing, Representation Cases

By Ashley K. Laken, Esq.

In follow-up to our earlier blog post about the first lawsuit to challenge the U.S. Department of Labor’s Final Persuader Rule that was promulgated in late March, two additional lawsuits have been filed challenging the Final Rule, this time in the U.S. District Court for the District of Minnesota and in the U.S. District Court for the Northern District of Texas.

The suit filed in Minnesota, Labnet Inc. d/b/a Worklaw Network v. United States Department of Labor (Case No. 0:16-cv-00844), was filed by a group of eleven law firms who are all members of an association of independent law firms.  The suit filed in Texas, National Federation of Independent Business v. Perez (Case No. 5:16-cv-00066), was filed by an association of small businesses, a national trade association, and a local chamber of commerce.

The new lawsuits attack the Final Rule on the following grounds:

  1. The DOL exceeded its statutory authority in promulgating the Final Rule because: the Final Rule is contrary to the plain meaning of and completely destroys the Labor-Management Reporting and Disclosure Act’s advice exemption; it illegally attempts to usurp state laws with respect to regulation of the attorney-client relationship; it attempts to amend the LMRDA by rulemaking; and it improperly attempts to regulate the conduct of union representation proceedings, a role that has been delegated to the National Labor Relations Board under the National Labor Relations Act.
  2. It violates free speech and association rights guaranteed under the First Amendment because it interferes with employers’ free speech right to express views regarding union organizing, it targets those who communicate a particular message conveying a particular viewpoint, and it will substantially hinder employers from consulting attorneys when formulating and delivering their views on the topic of unionization.
  3. It violates due process rights guaranteed under the Fifth Amendment because it is too vague, and laws that carry criminal sanctions are subject to a strict application of the void for vagueness test.
  4. It violates the Regulatory Flexibility Act because the DOL both failed to properly conduct the regulatory flexibility analysis required by that Act and was arbitrary and capricious in its certification that the Final Rule will not have a significant impact on a substantial number of small entities. In this regard, an independent analysis by the former Chief Economist at the DOL concluded that the first-year cost alone would be $10,433 per firm.
  5. Even if the Final Rule is determined to be valid as applied to advice given to a particular client, the ensuing reporting requirement is overbroad because it requires disclosures concerning all receipts from all clients “regardless of the purposes of the advice or services” and because it requires the filer to disclose all disbursements to its officers and employees.

Both lawsuits ask the courts to declare that the Final Rule is unlawful under the Administrative Procedure Act, to preliminarily and permanently enjoin implementation and enforcement of the Final Rule, to set aside the Final Rule, and to award the plaintiffs their attorneys’ fees and costs. We will keep you apprised of  further developments as they occur.

First Lawsuit Filed Challenging the DOL’s Final Persuader Rule

Posted in Current Events, Elections, Organizing, Representation Cases

By: Ashley K. Laken, Esq.

Yesterday, a group of plaintiffs (including a trade association, the Arkansas Chamber of Commerce, the Coalition for a Democratic Workplace, the National Association of Manufacturers, and a law firm) filed suit in the United States District Court for the Eastern District of Arkansas against the U.S. Department of Labor challenging the DOL’s Final Persuader Rule that was promulgated last week (a link to our One Minute Memo regarding the Final Rule is available here).

The lawsuit, Associated Builders and Contractors of Arkansas v. Perez (Case No. 4:16-cv-169), is the first of several likely suits challenging the Final Rule.  The Complaint contains seven grounds to attack the new Rule:

  1. The DOL exceeded its statutory authority because the new limits on the “advice” exemption conflict with and thereby violates the plain language and legislative intent of the Labor-Management Reporting and Disclosure Act’s exemption from reporting “advice.”
  2. The Final Rule is arbitrary and capricious under the Administrative Procedure Act.
  3. The Final Rule violates the First Amendment because it infringes on the rights of freedom of speech and association by arbitrarily narrowing the definition of advice that will be considered exempt from public reporting under the LMRDA.
  4. The Final Rule violates due process rights under the Fifth Amendment because it is too vague and does not give fair notice as to what conduct could subject plaintiffs to criminal penalties under the LMRDA (specifically, employers and their potential advisors will be left to guess at the meaning of the new reporting requirements because the Final Rule is confusing and open-ended with regard to potential persuader activity).
  5. The Final Rule violates the National Labor Relations Act because the U.S. Supreme Court has held that Section 8(c) of the NLRA precludes all regulation of non-coercive speech about unionization.
  6. The Final Rule infringes upon attorney-client confidentiality because it blurs the line between advice and reportable persuader activity.
  7. The Final Rule violates the Regulatory Flexibility Act of 1960 and the Small Business Regulatory Enforcement Fairness Act of 1996, which require agencies to analyze the impact of their regulatory proposals.

The suit seeks a preliminary injunction to enjoin the Final Rule’s implementation, a declaratory judgment declaring the Final Rule invalid, an order vacating the Final Rule and permanently enjoining it from being implemented, and the plaintiffs costs and attorneys’ fees under the Equal Access to Justice Act. It was assigned to Judge Kristine G. Baker, who was appointed to the bench by President Obama in 2012.  We will keep you apprised of further developments as they occur.

Ignorance Is A Shame But Not An Excuse

Posted in NLRB

By: Adam J. Vergne, Esq.

NLRB General Counsel, Richard F. Griffin, Jr., issued the latest installment of “Mandatory Submissions to the Division of Advice” on March 22, 2016. [Memorandum] The Memorandum broadly broke down the Board’s focus into three categories: priority policy concerns, novel issues, and matters traditionally submitted to the Division of Advice.  While the memo contained no surprises, its warnings should be heeded.   

As to priority policy concerns, the Board clearly has an eye on technology and continuing its effort to expand its relevance in non-union settings.  Griffin’s memo calls out cases concerning use of e-mail systems and the application of Purple Communications to electronic systems beyond e-mail.  Not surprisingly, the Board also has its eye out for any cases involving the “on‑demand economy” and a related focus on classification of employees as independent contractors in violation of Section 8(a)(1).  Beyond that, the Board is also focusing on cases involving “make-whole” remedies for construction industry applicants and challenges to “English‑only” policies.  Last but certainly not least, the Board will be looking for cases that may offer the opportunity to expand the application of Weingarten principles in nonunionized settings.  Apparently, the Board is also looking for cases that offer the opportunity to argue St. George Warehouse should be overturned  

Among the “novel issues” on the Board’s radar are issues arising from the application of Alan Ritchey — despite its invalidated status.  Also included are cases involving “novel conduct” such as coordinated shopping or involving the legality of lawsuits or the need to harmonize the NLRA with local laws, which are becoming increasingly restrictive in some areas.  Again, contractors’ rights are a focus along with the legality of allegedly overbroad discovery requests. 

As for the “traditional” matters, the focus will continue to be injunction litigation matters and subpoena authorization issues.

You’ve been warned.   

 

Department of Labor Reveals Final Persuader Rule

Posted in Elections, NLRB, Organizing, Representation Cases

By: Brian M. Stolzenbach, Esq.

This morning, the DOL revealed its final “persuader” rule — a regulation that has been in the works for years. According to the DOL, the rule “realign[s] the Department’s regulations with the text of . . . the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA).”  Among other things, the LMRDA requires certain public reporting by employers and the third parties they retain to persuade their employees “to exercise or not to exercise, or . . . as to the manner of exercising, the right to organize and bargain collectively through representatives of their own choosing.”

The Final Rule, which will be published in the Federal Register tomorrow, is designed to be effective April 25th. In its press release, the DOL says the Final Rule will apply to covered agreements and arrangements with so-called “persuaders” that are entered into on or after July 1, 2016.

The Final Rule seeks to significantly expand the scope of what employers and “persuaders” must publicly report to the DOL. You can expect legal challenges to the Final Rule, with requests to enjoin implementation while that litigation proceeds and to permanently enjoin implementation at the conclusion of the litigation.

At present, however, all employers — not just those with unionized employees and not even just those who believe they are the target of actual or potential organizing by labor unions — need to familiarize themselves with the Final Rule and its potential effects on their businesses.

Alas, the Final Rule is more than 400 pages long! Seyfarth Shaw attorneys are already hard at work performing an in-depth analysis of the Final Rule, potential legal challenges to the Final Rule, and best approaches for compliance with the Final Rule.  As soon as we have conducted a thorough analysis, we will be prepared to provide further and more specific guidance.

In the meantime, you may wish to consider the DOL’s own basic summary of the Final Rule, which reads as follows:

Consultant activities that trigger reporting of an agreement or arrangement with an employer include direct contact with employees with an object to persuade them, as well as the following categories of indirect consultant activity undertaken with an object to persuade employees:

  1. Planning, directing, or coordinating activities undertaken by supervisors or other employer representatives including meetings and interactions with employees;
  2. Providing material or communications for dissemination to employees;
  3. Conducting a union avoidance seminar for supervisors or other employer representatives; and
  4. Developing or implementing personnel policies, practices or actions for the employer.

Agreements are not reportable if the consultant merely advises or represents the employer. For example, agreements under which a consultant exclusively provides legal services are not to be reported.  Representation of the employer before a court or similar tribunal or during collective bargaining negotiations also does not trigger reporting.  Other examples of non-reportable agreements include:

  1. Guidance on employer personnel policies and best practices
  2. Seminars in which the consultant does not develop or assist the attending employers in developing anti-union tactics or strategies
  3. “Vulnerability Assessments,” including the use of surveys, in which a consultant evaluates an employer’s proneness to union-related activity and offers possible courses of action
  4. Sales pitches
  5. Sales of “off-the-shelf” materials
  6. Provision of information for use only in conjunction with an administrative, arbitral, or judicial proceeding
  7. Franchisor-franchisee agreements

The entire Final Rule and related information from the Department of Labor can be found here: http://www.dol.gov/olms/regs/compliance/ecr_finalrule.htm