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By: Marjorie Soto, Esq.

After being reportedly close to nominating retired Jones Day partner Roger King for the role, the White House announced last Friday that President Donald Trump will nominate Peter Robb, a management-side labor and employment attorney from Vermont, as the new NLRB General Counsel. If confirmed, he will replace former President Barack Obama’s current appointee, Richard F. Griffin, Jr., whose term expires this November.

Since 1995, Robb has been with Downs Rachlin Martin, a Vermont-based law firm. Robb represents corporations in all aspects of labor and employment law. Robb has recently published articles critical of the NLRB’s rules designed to speed up the representation election process and of the Board’s recent decisions that have struck down common workplace rules. Robb has experience working for the NLRB. He worked as a NLRB field attorney and Chief Counsel to former Board Member Robert Hunter.

This announcement comes as the Board commences to change to a Republican-majority Board– the first time this has occurred in over a decade. As a result, we expect to see policy shifts in the next upcoming years.

 

  By:  Timothy M. Hoppe, Esq.

Seyfarth Synopsis: With the NBA season opener just over a month away, at least one team could be getting an unexpected influx of free agents. In Minnesota Timberwolves Basketball, LP, 365 NLRB No. 124 (2017), the Board recently held that the production crew responsible for operating the Timberwolves’ center court video display were employees under the National Labor Relations Act and could form a bargaining unit to negotiate the terms and conditions of their employment.

Facts

The Minnesota Timberwolves, like most professional sports teams, has a large video display in the center of its arena to broadcast live game footage, player statistics, replays, advertisements, and fan favorites like the kiss cam during games. Behind all of these visual effects are sixteen crewmembers who operate video cameras in the arena and direct what video gets displayed during the games.

The Timberwolves maintain a roster of about 51 crewmembers with the skills to operate the video display. The team circulates a game schedule at the beginning of each season and the individual crewmembers decide which, if any, games they will work. Most perform production work for other entities when not working for the Timberwolves. For each game, the team sets the crewmembers’ start time and pays a set fee, which varies based on the game and position crewmembers hold. The team also provides the crewmembers with a basic game plan prior to each game outlining the timing of some of the promotions it wants to broadcast. But the crew maintains significant control over what makes it onto the video display during the game.

In February of 2016 the crewmembers sought to enlist an agent, the International Alliance of Theatrical Stage Employers, to form a union. The team appealed to its referee, the NLRB, claiming that the crewmembers where independent contractors under the Act and, therefore could not unionize. The Regional Director, whistled the crewmembers’ play dead, holding that they were not employees. The crewmembers sought a booth review from the Board.

Board’s Ruling

The Board has long applied common law agency principals to decide if an employee-employer relationship exists. It considers eleven “non-exclusive” factors, none of which is “decisive:” (1) the extent of control by the employer; (2) whether the individual is engaged in a distinct business; (3) the level of supervision from the employer; (4) skills required in the occupation; (5) who provides the tools, equipment, and work place; (6) the length of employees’ employment; (7) method of payment; (8) whether the work is part of the employer’s regular business; (9) whether the parties believe an independent contractor relationship exists; (10) whether the principal is in business; and (11) whether the employee renders services as part of an entrepreneurial business with opportunity for gain or loss.

Two of the Board’s pro-union members used these sprawling factors to overturn the Regional Director’s decision. They acknowledged that crewmembers exhibited some characteristics of independent contractors. The crew retained control over which games they worked, did not receive Timberwolves’ credentials, handbooks or written guidelines, and completed W-9 and 1099 forms for tax purposes. But the majority held that the amount of control the team exerted over the crewmembers, along with the “essential component” crewmembers provided to the team’s business, rendered the crew employees under the Act. The majority emphasized that the team provided guidance to the crew prior to and sometimes during games, and characterized running the video board as “plainly among the [Team’s] central business concerns.” It also noted other things, like the team-dictated start time of each member’s shift, the team-set pay for each game, and the team-provided tools necessary to perform the crewmembers’ jobs.

Chairman Miscimarra cried foul. Also emphasizing the control factor, he noted that the relevant issue was not whether the Timberwolves helped shape the final product that was displayed on the video board by providing a broad outline to the crew; such high level control is a hallmark of any independent contractor relationship. Instead, what should matter is the control over the details of the work. And in this case, he would have held the possession arrow pointed decidedly toward independent contractor status. During each game, crewmembers determine things like which video feeds to broadcast, what shots to capture, and other aspects of the live coverage. Chairman Miscimarra also rejected the majority’s view that the crewmembers’ function was central to the team’s business; without the crew, the team would still play basketball in the arena and the television broadcast would proceed uninterrupted. In Chairman Miscimarra’s opinion, these facts, when combined with things like the crew’s ability to choose their schedules, their per-game payment structure, and lack of any meaningful supervision from the team, “substantially outweighed” any factor supporting employee status.

Employer Takeaways

The decision does not dramatically change the Board’s employee/independent contractor jurisprudence. Instead, it highlights the perils of asking any referee, whether basketball or judicial, to apply an eleven factor test to anything. It is inherently unpredictable and open to the whims of hometown (for Basketball) or political party (for the Board) biases. Nevertheless, it is unlikely that even a more reasonable Board will completely abandon a multi-factor employee test. Therefore, the Timberwolves decision should act as a reminder to employers to carefully analyze their independent contractor relationships and ensure that the contractors retain as much control over the terms and conditions of their employment as business necessity permits.

 

By: Howard M. Wexler, Esq.

As we previously reported (http://www.employerlaborrelations.com/2017/06/29/management-side-attorney-nominated-for-final-seat-on-nlrb/), President Trump nominated two candidates for vacancies on the five-member National Labor Relations Board – William Emanuel and Marvin Kaplan.  The Senate approved Mr. Kaplan to fill one of the vacancies on August 2, 2017 by a 50-48 vote, but has yet to schedule a date to vote on Mr. Emanuel’s appointment.

Just as the Board was about to have its full complement of five members, Chairman Philip Miscimarra, in a letter to President Trump, announced that he will leave the Board when his term expires on December 16, 2017.  Accordingly, even if Mr. Emanuel is confirmed by the Senate, the Board will be back down to four members and President Trump will have the opportunity to appointment another Board member (and Chairperson) to replace Mr. Miscimarra.   In addition,  the term of Richard F. Griffin Jr. as the Board’s general counsel is set to expire in December as well. A Republican appointment to fill his position is likely to follow.

While employers hoped for sweeping changes at the Board with the election of President Trump, especially in connection with some of the Board’s more controversial rulings, such as those dealing with class action waivers in employment agreements, use of an employer’s email systems for union purposes, and unlawful handbook rules, we’ve previously cautioned our readers (http://www.employerlaborrelations.com/2017/05/25/change-to-occur-slowly-at-nlrb/) that such change tends to move more slowly at the Board.  With Chairman Miscimarra’s Beatles-esque decision to “say goodbye as [Mr. Kaplan and Emanuel] say hello“ we expect it to take even longer for the Board to restore some balance to decisions reached over the past eight years that many believe have been the most pro-union in the agency’s history.  Stay tuned!

 

 

NLRB By: Samuel Sverdlov, Esq.

Seyfarth Synopsis: President Trump has nominated a candidate for the final remaining vacancy on the five-member National Labor Relations Board, who, if confirmed, would give the Republicans a 3-2 majority on the NLRB.

Five months after his inauguration, President Donald Trump has finally nominated a candidate for the remaining vacancy on the five-member National Labor Relations Board. The nominee, William Emanuel, is a management-side labor attorney with decades of labor and employment experience. President Trump’s nomination comes just days after the President nominated another Republican lawyer, Marvin Kaplan, to the other vacancy on the NLRB. Currently, the Democrats enjoy a 2-1 majority on the NLRB. However, if confirmed, Emanuel and Kaplan would join fellow Republican, Philip Miscimarra, in a 3-2 majority for Republicans on the NLRB.

President Trump’s recent nominations should give hope to private-sector employers. The business community has roundly criticized the Obama Board for a number of rulings that they argued overreached the Board’s authority, resulting in unreasonably pro-union decisions. With a Republican majority, the NLRB is poised to take a more employer-friendly approach. This is especially critical for employers as the Board may see fit to evaluate high-profile issues such as graduate student employment status, “micro-unit” issues, and “joint employer” relationships.

Emanuel’s nomination would be for a five-year term set to expire on August 27, 2021. At present, no confirmation hearing dates have been made public, and it is unclear whether the candidates will be confirmed before the August recess. As always, we will continue to update you with more information as it becomes available.

Dept. of LaborBy: Ashley Laken, Esq.

Seyfarth Synopsis: Trump Administration DOL issues notice of proposed rulemaking to rescind Obama Administration DOL’s long-embattled final persuader rule. The proposed rule is open for public comments for 60 days.

Last year, we reported extensively on the Department of Labor’s final persuader rule, which was scheduled to take effect on July 1, 2016 and would have required certain public reporting by employers and their consultants (including attorneys). However, as we reported in late June 2016, a federal district court in Texas issued a nationwide preliminary injunction preventing the rule from taking effect.

The most recent development in this saga took place just over a week ago, with the Trump Administration’s DOL issuing a notice of proposed rulemaking to formally rescind the Obama Administration DOL’s final persuader rule. In the notice of proposed rulemaking, the DOL said that it is seeking to rescind the rule so that it can consider in more detail the interaction between the new categories of “indirect” persuasion that were created by the rule and the role of attorneys in advising their clients. The DOL also said that it is proposing to rescind the rule so that, if it elects to change the scope of reportable activity beyond what has been in place since 1962, it can provide as thorough an explanation of its statutory interpretation as possible. The DOL also said that it is proposing to rescind the rule in light of “limited resources and competing priorities.”

The proposed rule was opened for public comments last Monday, and the comment period will last for 60 days. We plan to submit comments in a letter to the DOL, and we would be more than happy to include our readers’ comments in our letter. If you would like us to incorporate any particular points, please reach out to your favorite Seyfarth labor lawyer.

Gavel By: Christopher Lowe, Robert T. Szyba, Kaitlyn F. Whiteside

Seyfarth Synopsis: The New Jersey Appellate Division reinstated plaintiff’s state law discrimination and retaliation claims, finding the claims were not pre-empted by Section 301 of the LMRA.

In a published opinion issued on May 9, 2017, the three-judge panel of the New Jersey Appellate Division held that a union member’s Law Against Discrimination (“LAD”) and Workers’ Compensation Law (“WCL”) claims were not preempted by Section 301 of the Labor Management and Relations Act (“LMRA”), despite the presence of an applicable collective bargaining agreement (“CBA”) and potential CBA-based defenses available to the employer.

The plaintiff was employed as a commercial truck driver, and was a member of Teamsters Local Union No. 813.  Following a workplace injury, he was cleared for light duty work, so long as it did not involve commercial driving. The plaintiff then filed a workers’ compensation claim with the New Jersey Department of Labor and Workforce Development, Division of Workers’ Compensation.

Three months after filing the workers’ compensation claim, the company asked plaintiff to leave work, and by letter to the union, indicated that plaintiff would need to be recertified for duty as required by Department of Transportation (“DOT”) regulations before returning to work.  The company scheduled an independent medical examination, but the plaintiff declined to undergo the exam, and therefore, was not returned to work.

The union filed a grievance challenging the company’s failure to reinstate the plaintiff.  The grievance proceeded to arbitration, and was denied by the arbitrator who concluded that reinstatement would require examination and recertification pursuant to the DOT regulations.

The plaintiff then sued in New Jersey Superior Court alleging unlawful discrimination under the LAD and retaliation under the WCL. Concluding that the claims were pre-empted, the trial judge dismissed the complaint for lack of subject matter jurisdiction.  The plaintiff appealed.

The question before the Appellate Division was whether the trial judge correctly concluded that the LAD and WCL claims were pre-empted under Section 301 of the LMRA, which pre-empts claims that require an interpretation of a collective bargaining agreement.

The court first looked to the elements of the plaintiff’s claim that the company retaliated against him based on his workers’ compensation claim, which required showing that (i) he made, or attempted to make, a claim for workers’ compensation, and (ii) he was discharged for making that claim.

According to the court, under U.S. Supreme Court precedent in Lingle v. Norge Div. of Magic Chef, 486 U.S. 399 (1988), each of these is a “purely factual inquiry,” and therefore, requires no interpretation of the CBA.  Plus, plaintiff did not make any mention of any provision of the CBA in his complaint.  So, his WCL claim was not pre-empted under Section 301.

The court then turned to the LAD claim, which proved to be a more difficult question.  To establish a prima facie LAD claim, the plaintiff had to demonstrate (i) he was disabled; (ii) he was objectively qualified for his former position; (ii) he was terminated; and (iv) the company sought a replacement.  Although the court determined that each of these also presented a “purely factual inquiry,” the court recognized that the company may have a CBA-based defense based the CBA’s requirement that employees promptly comply with DOT physicals. Further, whether the plaintiff was “objectively qualified” for the position potentially implicated the CBA.

Ultimately, however, the appellate court determined that neither the requirement that the plaintiff was objectively qualified nor the company’s potential defenses required an interpretation of the CBA that would preempt the claim.  As noted by the New Jersey Supreme Court in Puglia v. Elk Pipeline, Inc., 226 N.J. 258, 279 (2016), “… a CBA-based defense is ordinarily insufficient to preempt an independent state-law action.”

Further, the CBA was not the only source, or even the primary source of the plaintiff’s duty to recertify.  Instead, it was DOT regulations that set forth the requirement and “To the extent an interpretation of them is required, federal law [and not the CBA] must be applied.”

Looking forward, unionized employers in New Jersey who are defending against claims under state law thus face additional hurdles stemming from decisions like Hejda v. Bell Container Corporation. For example, a Section 301 claim, which is a claim under a federal statute, could be removable to federal court.  Without the Section 301 claim, a defendant thus loses a potential basis for removal.  Additionally, where CBAs otherwise provide an administrative process that must be utilized before a Section 301 claim is filed, employers may lose the ability to enforce the administrative remedies provisions, or otherwise have a lawsuit dismissed if the administrative remedies were not exhausted. Last, unionized employees have a greater ability to circumvent Section 301’s limitation to contract-based remedies, and instead seek the full panoply of tort-based remedies that the LAD affords plaintiffs. Accordingly, the dynamics for any employer with an organized workforce that is defending a claim under New Jersey state law have shifted further in the direction of state-law protections, and away from the uniformity and precedent of the LMRA.

Hejda v. Bell Container Corporation, while not a sea change in the law, is representative of the both the trend in New Jersey of courts declining to find Section 301 pre-emption, as well as the courts’ interpretation of the LAD as a wide-reaching, liberally-construed source of employee protections.

 

NLRB (Logo)By: Glenn Smith, Esq.  & Kaitlyn F. Whiteside, Esq.

Seyfarth Synopsis: In a unanimous decision, a three-member panel of the NLRB found that a cab company violated the NLRA by changing the length of the waiting period for employee health insurance from one year to sixty days.

On May 16, 2017, Chairman Miscimarra, Member Pearce, and Member McFerran upheld an Administrative Law Judge’s determination that Western Cab Company violated Section 8(a)(5) of the NLRA by failing to give notice and an opportunity to bargain to the United Steelworkers during its 2014 implementation of the Patient Protection and Affordable Care Act (“ACA”).

According to the Board, because the ACA only prohibits waiting periods for employee health insurance of longer than ninety days, the employer had discretion over whether to reduce its one-year waiting period to “a 60-day waiting period….a 30- or 90-day waiting period, or even no waiting period at all.” Therefore, the employer owed the Union notice and an opportunity to bargain over the waiting period and any other aspects of the law that gave the employer discretion in compliance, such as the notice and enrollment and even the overall type of health insurance.

The reality for employers, which was not discussed by the Board, is that quite often employers are forced to attempt to make significant changes very quickly in order to comply with a newly effective law. According to the Board, these changes must be made while also navigating the legal obligation to provide notice and an opportunity to bargain to the Union over the implementation.  This obligation requires that employers have a robust and sophisticated understanding of the requirements of the law, and those aspects that may be discretionary, with enough advance time to allow for notice and bargaining with the Union.

Here, Western Cab received notice from its insurance provider in December 2013 that as of January, the ACA would require a significant shortening of Western Cab’s current waiting period, which at the time was one year. According to testimony before the ALJ, it was the insurance provider that mistakenly indicated that the waiting period under the ACA had to be sixty days.  As a result, Western Cab may not have even been aware when it implemented the sixty-day rule that it had made a discretionary decision.

Although he joined the majority, Chairman Miscimarra took the opportunity in a footnote to re-emphasize that “employers’ compliance with the NLRA should not frustrate their compliance with the complex array of non-NLRA legal obligations that confront them.” Further, in his view, the question is not simply whether the employer had any discretion in implementing the law.  Rather, the Chairman would focus on “whether the actions are similar in kind and degree to what the employer did in the past.”

In addition to finding a violation for failure to bargain over the ACA implementation, the panel also found the employer violated the Act by failing to give pre-imposition notice and an opportunity to bargain over discipline issued during negotiations for a first contract with the Union as required in the Board’s recent Total Security Management decision.  For more information on this disciplinary bargaining obligation, see our September 29, 2016 blog post here.  In a footnote, Chairman Miscimarra reiterated his disagreement with Total Security Management, a telling reminder that reversal may be in the cards should an appropriate case come before the Board when and if President Trump’s nominees to the NLRB are confirmed.

The key takeaway here is that for employers with unionized workforces, any change in terms and conditions of employment, whether positive or negative, requires notification and bargaining with the union.

casino  By: Howard M. Wexler, Esq.

Seyfarth Synopsis: A three-member panel of the U.S. Court of Appeals for the D.C. Circuit put the National Labor Relations Board “on tilt” when it overturned a decision finding that Bellagio, LLC violated Section 8(a)(1) of the NLRA when it interfered with an employee’s Weingarten right to have a union representative present during an investigatory meeting; retaliated against him for invoking that right; unlawfully surveilled him; and coercively prevented him from discussing his suspension with other employees.

In Bellagio, LLC v. NLRB¸ No. 15-1327 (D.C. Cir. April 25, 2017), the U.S. Court of Appeals for the D.C. Circuit denied the NLRB’s cross-application for enforcement of its decision, where the NLRB found that Bellagio, LLC violated Section 8(a)(1) of the NLRA by interfering with an employee’s Weingarten right to have a union representative present during an investigatory meeting; retaliating against him for invoking that right; unlawfully surveilling him; and then coercively preventing him from discussing his suspension with other employees.  The Court ruled against the NLRB on each of the Board’s findings.

Background

A guest complained that an employee inappropriately solicited a tip and directed a sarcastic comment towards him when he did not provide the employee with a tip. When the employer tried to interview the employee, the employee requested union representation.  The employer then asked if the employee would provide a written statement, which the employee refused without representation.  The employee declined to contact a union representative himself so the employer tried to find one for him.  When they could not, the employee was placed on paid suspension pending investigation.  While gathering his belongings before leaving the building, the employee started to tell a co-worker about what happened, at which point an employer representative entered the area and told him that he could not discuss the matter at that time and directed him to leave.

The Board found that the employer had violated the Act when it asked the employee to provide a statement after he requested union representation, suspended him in retaliation for asking for a representative and “engaged in coercive conduct to compel [employee] to cease speaking to coworkers about his discipline.”

On appeal, the D.C. Circuit Court dealt Bellagio a full house and overturned the Board’s decision. As to the Weingarten violation, the Court held that, “the mere fact that an employee’s request for union representation is not met does not, without more, mean that the employer has committed an unfair labor practice.”  Once an employee validly requests a union representative, an employer has three paths open to it: grant the request, end the interview, or offer the employee the choice between having an interview without a representative or having no interview at all.  Here, the employer “worked diligently” to find a representative, however, when it could not, it placed the employee on paid suspension and conducted the interview the next day (with union representation).  The employer simply allowed the employee to play his hand and either have the interview unaccompanied by a representative, or have no interview and forego any benefits that might be derived from one, as is permitted under Weingarten.

The Court then doubled down on its decision and rejected the Board’s retaliation finding as the employee’s job status was not adversely affected by the paid suspension and held that there is nothing in the record to suggest that the employee was surprised or otherwise intimidated during his interactions with the supervisors.

Bellagio’s jackpot was complete when the Court rejected the Board’s unlawful surveillance determination, finding that it “borders on absurd”; as well as the Board’s unlawful coercion decision, finding that, “it was perfectly reasonable for the Company to instruct [employee] to leave the workplace pending investigation of his alleged wrongdoing.”

Employer Takeaway

The decision highlights that employers are not without recourse to continue with an investigation simply because an employee has requested to have a union representative present and the employer for whatever reason is unable to provide a representative. The Court’s decision is a reminder that “the Board must take account of the context in which a request for union representation has been made as “the [Weingarten] right is not absolute, however, because it may not interfere with legitimate employer prerogatives.”  Importantly, the “mere fact that an employee’s request for union representation is not met does not, without more, mean that the employer has committed an unfair labor practice.”  Employers must, however, tread carefully and not check in the dark as these situations are highly variable and a bad beat remains a possibility.

Texting  By: Jennifer M. Holly, Esq.

Seyfarth Synopsis: The Second Circuit agrees with the Board that the use of profanity in a Facebook post was not “opprobrious enough” to lose the NLRA’s protections and justify the employer’s termination of the employee.

A server whose “conduct [sat] at the outer bounds of protected, union-related comments” when he posted that his manager is a “nasty mother f***er” and “f*** his mother and his entire f***ing family,” was not “opprobrious enough” to lose the protection of the NLRA, a three-judge panel for the Second Circuit Court of Appeals ruled in NLRB v. Pier Sixty, LLC, No. 15-1841 (2nd Cir. Apr. 21, 2017).

Pier Sixty operates a catering company in New York, NY. In early 2011, many of its service employees began seeking union representation.  Following a very contentious union organizing campaign, Pier Sixty employees voted to unionize on October 27, 2011.

Two days before the election, during the work day, a Pier Sixty supervisor gave employee Perez and two other servers instructions, which the Board’s opinion described as “harsh tone,” and included the following instructions: “stop chitchatting” and “spread out, move, move.” Approximately 45 minutes later, Perez, upset by the “continuing disrespect for employees,” wrote the following Facebook post about the supervisor during an authorized break:

Bob is such a NASTY MOTHER F***ER don’t know how to talk to people !!!!!! F*** his mother and his entire f***cking family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!!

The post was publicly accessible and Perez knew that his post would be visible to his coworkers. Perez removed the post three days later. Management, however, had already become aware of the post, and after an investigation, the employer terminated Perez on November 9, 2011.

Perez filed an NLRB charge alleging retaliation for engaging in protected concerted activities. On April 18, 2013, the ALJ issued a decision finding that Pier Sixty had violated sections 8(a)(1) and 8(a)(3) of the NLRA by discharging Perez in retaliation for his protected activity. Pier Sixty filed exceptions, and a three-member panel of the NLRB affirmed the ALJ’s decision on March 31, 2015.  The NLRB filed an application for enforcement, and Pier Sixty filed a cross-petition for review.

The Second Circuit affirmed the NLRB’s determination based on the deference afforded to the ALJ’s factual findings. The Court explained that in light of the General Counsel’s guidance for evaluating employees’ use of social media to post public criticisms of their employers and workplaces, a nine-factor “totality of the circumstances” test in social media cases had emerged.  The Court acknowledged that while the test the ALJ applied may not have “adequately balance[d] the employer’s interests, Pier Sixty did not object to the ALJ’s use of the test in evaluating Perez’s statements before the Board.”   Accordingly, the Court did not address the validity of the applied test.

Rather, Pier Sixty argued that the Board’s decision that the comments were not so egregious as to exceed the Act’s protection was not supported by “substantial evidence” in the record. The 2nd Circuit disagreed and found:

  • Although the post contained vulgar attacks, the subject matter of the message included workplace concerns.
  • Pier Sixty consistently tolerated widespread profanity amongst its workers, including supervisors, and had never before terminated any employees for such behavior until two days before the union election.
  • The location of the comments was an online mode of communication among coworkers and was not in the immediate presence of coworkers.

Accordingly, the Court found that the Board did not err in ruling that the post, while “vulgar and inappropriate,” was not so egregious as to exceed the NLRA’s protection.

Takeaways for Employers:

  • The Board will not apply the Atlantic Steel test to cases involving social media, even if the posts are public in nature, in light of the fact that the place of discussion is the internet and not face-to-face in the workplace.
  • Companies should ensure policies and handbooks comply with the NLRB’s current guidance on social media and do not interfere with employees engaging in protected concerted activity when off duty. However, while policies prohibiting vulgar and offensive comments need to be sensitive about infringing on NLRA-protected rights, employers should not hesitate to enforce those policies in appropriate circumstances.
  • Employee discipline should not be selectively enforced to prohibit behaviors that relate to union-related activities; discipline should be applied uniformly to all employees.

NLRB (Logo)By: Joshua M. Henderson, Esq.

Seyfarth SynopsisA recent federal appeals court decision makes it even more difficult for an employer to withdraw recognition from a union that has lost majority support.  Employers need to be aware of the possibility of union “gamesmanship” when deciding how to proceed.

An employer that withdraws recognition from a union as the exclusive bargaining agent of its employees does so, as the Board and Courts say, “at its peril.” It’s a risky move, one that requires objective evidence that a union has actually lost the majority support among the employees it represents.  And the employer must be correct about the actual loss of majority support or it will face an unfair labor practice charge for refusing to bargain with a union.  Consider it a form of strict liability in the labor-relations context.  But what if the employer has objective evidence that a union has lost majority support, and then the union regains the majority support before the employer withdraws recognition?  Also, if an employer is found to have violated the law under those circumstances, what is the remedy when the union deliberately did not disclose to the employer it had regained majority status?

In Scomas of Sausalito v. NLRB (March 7, 2017), the D.C. Circuit considered these two questions.  The Court upheld the unfair labor practice charge against the employer that withdrew recognition without knowing that the union had regained majority status.  The Court observed that the employees had suffered from “an extended period of Union neglect.”  Thus, the union had not sought to bargain with the employer for over a year, and held no meetings and provided no information to its members for more than a year, but continued to collect dues from them all the while.  Perhaps not surprisingly, a majority of employees notified the employer in writing that they no longer wanted the union to represent them.  Two days after being confronted with this news, a union representative notified the employer that the union wanted to negotiate a new collective bargaining agreement, and worked behind the scenes to persuade six employees to revoke their signatures on the decertification notice that had been given to the employer.  Yet the union never told the employer that these signatures had been revoked, or that (in light of the size of the bargaining unit) this meant the union had in fact not lost majority support.  The Court decried the union’s “gamesmanship” in not informing the employer, but held that under the Board’s Levitz Furniture test (which the Court had approved of in an earlier case), the employer assumed the risk that it was wrong in evaluating majority support.  Because the employer was wrong, it could not lawfully withdraw recognition.

In answer to the second question, however, the Court reversed the Board’s decision that a “bargaining order” was the appropriate remedy. Bargaining orders are reserved for flagrant, deliberate unfair labor practices.  In the Court’s view, the employer was not acting in bad faith when it withdrew recognition from the union.  The evidence showed that the employer did not act in haste.  Rather, it took steps to ensure that the signatures on the petition delivered to it matched those on the employees’ payroll records.  Moreover, the signatures that remained on the petition after the revocation comprised 42 percent of the bargaining unit.  That exceeds the 30 percent threshold for directing an election, whether filed by a union, an employer, or an employee.  The disaffected employees also had filed a decertification election petition with the Board, but withdrew it after their employer withdrew recognition from the union.  Under the circumstances, the Court rejected the Board’s argument that an election was not an appropriate alternative remedy.

Takeaway for Employers:  Under the Board’s current test (which may or may not be reconsidered by a new Republican-majority Board), an employer may withdraw recognition from the union only when there is an actual loss of majority support for the union; as a practical matter, the employer must be absolutely certain that more than half of the employees in the bargaining unit no longer want the union to represent them.  Even then, the union may be able to undermine the employer’s basis for withdrawal and place the employer’s decision in jeopardy.  When faced with an apparent loss of majority support for a union, an employer should seriously consider choosing the safer option of filing an RM petition (a management election petition) with the NLRB to allow the employees an opportunity to vote on whether to oust the union in a formal election overseen by the Board.  [Good-faith uncertainty of majority status could, in some circumstances and under the Board’s current standard, support an internal poll of employees as to their support for the union, but polling requires fastidious attention to procedural safeguards and is fraught with legal risk as well.]