By:  Bradford L. Livingston

On July 17, 2018, the DOL rescinded its 2016 “persuader rule” — a controversial reinterpretation of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA) that would have required employers and their consultants (including lawyers) to report their relationships and the fees paid related to persuading employees “to exercise or not to exercise… the right to organize and bargain collectively… .”

The 2016 rule effectively eviscerated the LMRDA’s exemption for reporting advice, including legal advice, if the DOL concluded that an object of the advice — directly or indirectly — was persuading employees about whether or not to form or join a union.  Activities that would have triggered reporting included indirect consultant activity undertaken with a potential object to persuade employees, such as planning, directing, or coordinating activities undertaken by supervisors; providing material or communications for dissemination to employees; conducting positive employee relations seminars for supervisors or other employer representatives; and developing or implementing personnel policies, practices or actions for the employer.  The reporting would have included any agreements between the employer and third party, and both fees paid to and received by the third party.

Employers and their consultants believed that such reporting would have a chilling effect on employers’ willingness to seek legal advice during union organizing campaigns — a time when obtaining such advice is critical.  Several lawsuits challenged the DOL’s 2016 reinterpretation, and a federal district court entered a nationwide injunction to prevent it from being implemented.  An appeal is pending before the Fifth Circuit Court of Appeals.

After President Trump was inaugurated, the DOL sought public comments as to whether it should rescind the 2016 rule.  Among several other employer groups, Seyfarth Shaw filed comments on our and our clients’ behalf where we argued that the DOL’s 2016 interpretation was contrary to the LMRDA, inherently vague and ambiguous, and would inhibit employers from seeking needed and proper legal advice.

In its final pronouncement yesterday, the DOL specifically cited Seyfarth Shaw’s comments in explaining why the 2016 rule was being rescinded.  The DOL is reverting to the longstanding prior interpretation of the LMRDA and its advice exemption, whereby neither employers nor their consultants or lawyers are required to report advice so long as the consultant or lawyer is not directly persuading employees.

But in Washington, no bad idea ever dies.  Democrats in Congress are looking to pass legislation that would codify the now-rescinded rule.  And who knows what the mid-term elections will bring this November, or what the 2020 elections will bring.  So stay tuned.

By: Glenn J. Smith and Jason J. Silver

Seyfarth Synopsis: Public-sector labor unions were dealt a heavy, but not unexpected, blow as the Supreme Court of the United States issued a landmark decision in Janus v. AFSCME. By a vote of 5 to 4, the Court held that fair share fees for public-sector unions are unconstitutional.   Whether the actual fallout from the decision will match the level of the pre-decision rhetoric remains to be seen. 

Janus v. AFSCME was brought by Mark Janus, a child support worker in Illinois who opted not to join the union, the American Federation of State, County and Municipal Employees (“AFSCME”), that represents Illinois state government employees. The primary issue in the case was the propriety of the $45 “agency” or “fair share” fee that was automatically deducted from Janus’ paycheck on a monthly basis. AFSCME assessed this monthly fee to Janus (and other Illinois government employees who opted out of membership in AFSCME), allegedly for services that nonunion members, like Janus, benefit from, such as negotiating and administering a collective bargaining agreement, and handling grievance procedures.

The decision overrules the prior position of the Court that a public-sector union may collect agency or fair share fees, which has been the law since the Supreme Court’s 1977 Abood v. Detroit Board of Education decision. The Janus v. AFSCME case revisited Abood and examined whether public-sector unions can continue to compel nonunion members to pay agency or fair share fees, or whether they constitute compelled speech and therefore violate First Amendment rights given that the money may also be utilized to support the union’s political speech and legislative agenda.

Janus v. AFSCME has garnered significant national interest and attention, including the filing of over fifty (50) amici briefs, including many from industry groups and labor unions. The primary legal arguments on the issue were as follows:

Janus – Janus argued that the fair share fee constitutes a violation of his First Amendment rights for two primary reasons. First, Janus argued that collectively bargaining with a government employer is akin to lobbying the government. Second, Janus argued that fair share fees are a form of compelled speech and association that deserve strict constitutional scrutiny. Janus further argued that the use of fair share fees for purposes of labor stability and to discourage “free riders” should be found unconstitutional.

AFSCME – AFSCME argued that Janus misconstrues the intent behind the First Amendment, how the Supreme Court has previously applied the First Amendment and the nature and idiosyncrasies of collective bargaining. AFSCME further argued that the Supreme Court has articulated a narrower view of First Amendment rights for public employees, limiting those rights speaking as both a citizen and on matters of public concern. AFSCME highlighted that the Supreme Court has always balanced a public-sector employee’s rights in speech with the government’s interests, as outlined in Abood. AFSCME also argued that collective bargaining primarily concerns terms and conditions of employment, are non-political in nature and have nothing to do with lobbying. AFSCME contended that if the Supreme Court accepts Janus’ arguments, it has the potential to deprive the government from making basic personnel decisions, a managerial cornerstone of collective bargaining.

The Court held that Illinois’ extraction of agency fees from nonconsenting public-sector employees violates the First Amendment. The Court concluded that forcing free and independent individuals to endorse ideas they may find objectionable raises serious First Amendment issues, which includes compelling a person to subsidize the speech of other private speakers.

In rejecting and overturning Abood, the Court reasoned that exclusive representation of all the employees in a bargaining unit and the extraction of fair share fees is not inextricably linked. The Court reasoned that the risk of free riders (nonmembers that benefit from the union’s efforts) is not a compelling state interest sufficient to overcome First Amendment rights. Importantly, the Court held that “States and public-sector unions may no longer extract agency fees from nonconsenting employees.” Specifically, the Frist Amendment is violated when money is taken from nonconsenting employees for a public-sector union. This means that “employees must affirmatively consent before fees can be withheld from their paychecks – the system must be opt-in, not opt-out.[1]

The Court also rejected AFSCME’s argument that public employees have no free speech rights as a position that would have required “overturning decades of landmark precedent.” In determining that Abood must be overruled, the Court primarily considered five factors: “the quality of Abood’s reasoning, the workability of the rule it established, its consistency with other related decisions, developments since the decision was handed down, and reliance on the decision.” Each factor favored establishing new precedent.

The decision in Janus serves to further explain the current Court’s view on the treatment of compelled state speech. In NIFLA v. Beceera, decided the day before Janus, the Court found that the California Reproductive Freedom, Accountability, Comprehensive Care, and Transparency Act (“FACT ACT”) was unconstitutional. The FACT ACT required clinics that serve pregnant women to provide certain notices related to free or low-cost medical services, including abortions. The Court found the FACT ACT to be an unconstitutional content based law that that was not narrowly tailored to serve compelling state interests. In other words, the Court found that the FACT ACT impermissibly mandated speech on a political agenda (i.e. pro-choice), much like the holding in Janus finds that fair share fees used by a union for lobbying impermissibly compels a certain political agenda not narrowly tailored to serve compelling state interests.

Practically, the outcome will necessarily have some impact on the financial statements of unions that are heavily engaged in public sector representation.  Surely, there will be employees who do not work in a right-to-work state (an employee in a right-to-work state does not have to pay fair share fees if not a member of the union), and who will resign their membership based solely on the financial implications. This assumes that reclaiming $540 a year in fees that are no longer required will be meaningful to some state workers.  The magnitude of the defection could potentially determine the fate of some unions, but whether the predicted landslide of members will occur remains anyone’s guess. As noted by the Court, one also must consider the “billions of dollars” received from non-members in the past 41 years.   According to the Bureau of Labor Statistics, 10.7% of U.S. workers were union members in 2017 – down from 20.1% in 1983. Nearly a third of U.S. government employees are members of a public-sector union.

Organized labor will most certainly bemoan the potential impacts, of this decision, particularly following another recent blow to organized labor: the Supreme Court’s decision in Epic Systems holding that the maintenance of individual arbitration agreements containing class-action waivers does not violate the National Labor Relations Act.

[1] It is essential to highlight that the Court’s holding is limited to public-sector unions. It is not unlawful for private-sector unions and employers to negotiate and agree upon agency and fair share fees in collective bargaining agreements, subject to the existence of any right to work laws governing their jurisdiction.

By: Rashal G. Baz

Seyfarth Synopsis: On June 20, 2018, Peter B. Robb, General Counsel for the NLRB, directed regional offices to continue aggressively pursue temporary injunctions to stop categories of potentially unfair labor practices

In a newly released memorandum, National Labor Relations Board (“NLRB”) general counsel, Peter B. Robb (“Robb”) urged regional offices to continue to pursue Section 10(j) relief as an “important tool” for effective enforcement of the National Labor Relations Act (“NLRA”).

Section 10(j) of the NLRA authorizes the NLRB to seek temporary injunctions in federal district courts against employers and unions while a case is being litigated before the administrative law judges and the Board.  Robb touts that “in [his] first six months in office, [he] sent 11 cases to the Board for 10(j) authorization, receiving authorization to proceed” in all of them.

The General Counsel urges regional offices to submit recommendations to the Injunction Litigation Branch of the Board to ask whether or not to seek an injunction for certain types of cases that will most likely warrant a 10(j) injunction. Robb described them as unfair labor practices that may lead to “remedial failure,” including:

  • Discharges that occur during an organization campaign;
  • Violations that occur during the period following certification when parties should be attempting to negotiate their first collective-bargaining agreement; and
  • Cases involving a successor’s refusal to bargain and/or refusal to hire.

Ultimately, Robb notes that “[o]f upmost importance” is that regions expedite the processing of any potential 10(j) case that raises a threat of irreparable harm or remedial failure. The memo explains that the “threshold for proving a violation to a district court is very low” and in light of the highly deferential standard, it doesn’t serve the NLRB’s purposes to delay seeking an injunction solely to strength the theory of violation or merit within the case.

Employers should be mindful of this initiative and, as always, prepared to defend against a possible 10(j) injunction, especially in those categories of cases identified by Robb as appropriate for such extraordinary relief.

By: Glenn J. Smith and Samuel Sverdlov

Seyfarth Synopsis: Given the Ninth Circuit’s recent holding that successor withdrawal liability is governed by a constructive notice standard, private equity companies and other businesses seeking to acquire other enterprises should be hyper-diligent in determining whether the transaction will expose their organizations to withdrawal liability triggered by the seller.

Under the Employee Retirement Income Security Act (“ERISA”), as amended by the Multiemployer Pension Plan Amendment Act (“MPPAA”), generally, an employer may face withdrawal liability when withdrawing from, or ceasing to make payments to, a multiemployer pension plan. If a successor employer acquires an entity that has unpaid withdrawal liability, then the purchasing entity is potentially responsible for that withdrawal liability if it has notice of the liability. Existing precedent provides that to be liable, the purchaser must “(1) be a successor, and (2) have notice of the withdrawal liability.” Withdrawal liability can sometimes be overlooked by successor employers that assume the operations of their predecessor because, broadly speaking, withdrawal liability is an unperfected liability that does not necessarily appear on the seller’s financial statements. Said otherwise, purchasing entities must be completely certain of that which they are assuming.

New case law makes clear that acquirers can no longer simply rely on a seller’s representation that no withdrawal liability exists. On June 1, 2018, in Heavenly Hana, LLC v. Hotel Union & Hotel Industry of Hawaii Pension Plant, the Ninth Circuit held that a private equity company that purchased a hotel in Hawaii was liable for the seller’s unpaid withdrawal liability under the MPPAA. In doing so, the Court overruled the lower District Court’s holding that no withdrawal liability was assumed because “actual notice” was missing. The Ninth Circuit held that the private equity company had “constructive notice” of the selling entity’s unpaid withdrawal liability, which is a sufficient basis upon which to impose successor withdrawal liability “because a reasonable purchaser would have discovered their predecessor’s withdrawal liability.” The Court determined that the purchasing entity had constructive notice of the liability because:

(1) the private equity company had experience with other acquisitions involving multiemployer pension plans, and was familiar with withdrawal liability;

(2) the private equity company was on notice that the employees at the hotel were unionized and that the seller had previously contributed to a multiemployer plan; and

(3) the multiemployer pension plan’s funding notices were publically available, and clearly demonstrated that the plan was underfunded.

The Court rejected the private equity company’s argument that it relied upon the representation of the seller that no withdrawal liability existed. Further, the Court noted that the purchasing entity, rather than the seller or the pension plan, was in the best position to determine whether it will face withdrawal liability because: (1) the seller is incentivized to under-represent any potential withdrawal liability; and (2) the pension plan should not be tasked with keeping track of every sales rumor and identifying all potential purchasers. As the Court stated: “[p]urchasers .. have the incentive to inquire about potential withdrawal liability in order to avoid unexpected post-transaction liabilities.”

This decision serves as a helpful reminder to purchasing entities that in the world of acquisitions, acquirers must push deeply on their inquiries into labor agreements and potential withdrawal liability that frequently accompanies a collective bargaining relationship. As made evident by the Court’s decision in Heavenly Hana, LLC, a purchasing entity cannot simply claim ignorance as an excuse to be absolved of successor withdrawal liability. Rather, purchasing entities should retain experienced transactional counsel, including traditional labor and benefits counsel, to make sure there are no hidden landmines in the transaction.

If you have any questions regarding withdrawal liability, please contact your local Seyfarth Shaw attorney. Glenn J. Smith is a Partner in Seyfarth’s New York office whose practice focuses on management-side traditional labor law. Samuel Sverdlov is an Associate in Seyfarth’s New York office.

 

By:  Jason Silver and Kevin Fritz

Seyfarth Synopsis: On June 6, 2018, Peter. B. Robb, General Counsel for the National Labor Relations Board (“Board”), provided employers with the first substantive guidance regarding workplace policies since the Board’s Boeing decision. General Counsel Memorandum 18-04 is a victory for employers as the Board seems to be returning to a common sense approach when evaluating workplace policies concerning on the job conduct, confidentiality, defamation, intellectual property, among other things.

Under Boeing, the Board established a new standard focused on the balance between an employees’ ability to exercise their Section 7 rights and the employers’ right to maintain discipline and productivity in the workplace. The Board broke down workplace policies into three categories:

  • Category 1 – Rules that do not prohibit or interfere with the exercise of protected rights, or the potential adverse impact on protected rights is outweighed by justifications associated with the rule.
  • Category 2- Rules that the warrant individual scrutiny on a case-by-case basis and whether any adverse impact on protected conduct is outweighed by legitimate justifications.
  • Category 3 – Rules that that the Board will designate as unlawful to maintain because they would prohibit or limit protected conduct, and the adverse impact on Section 7 rights is not outweighed by justifications associated with the rule. (https://www.employerlaborrelations.com/2017/12/19/the-boards-return-to-civility-and-common-sense-regarding-workplace-rules/)

This latest memorandum adds guidance to the three categories set out in Boeing.

Category 1 Policies that are Lawful to Maintain

  • Civility rules – Rules that require courteousness in the workplace, that prohibit rude or unbusinesslike behavior and that prohibit an employee from disparaging another employee. These types of rules advance substantial employee and employer interests, including an employer’s responsibility to maintain a workplace free of harassment and violence.
  • No photography/no recording rules – Rules that prohibit photography in the workplace and that forbid recording conversations, meetings and phone calls with co-workers, supervisors, and third parties unless such recordings are approved by the Company. These type of rules advance an employer’s interest in limiting recording and photography on Company property. Be advised however, employers still must ensure that a no recording policy passes legal muster under applicable state law.
  • On the job conduct rules – Rules that prohibit insubordination, being uncooperative or otherwise engaging in conduct that does not support the employer’s goals and objectives. These type of rules allow an employer to prevent non-cooperation at work.
  • Disruptive behavior rules – Rules that prohibit boisterous or other disruptive conduct. These type of rules allow an employer to prevent dangerous conduct or bad behavior and ensure safety and productivity.
  • Rules protecting confidential, proprietary and customer information – Rules that prohibit the discussion and dissemination of confidential, proprietary or customer information. These types of rules allow an employer to protect confidential and proprietary information, as well as customer information.
  • Rules against defamation or misrepresentation – Rules that prohibit defamatory messages and misrepresent the employer’s products, services, or employees. These types of also allow an employer to protect themselves, their reputation, and their employees from misrepresentation, defamation and slander.
  • Rules against using an employer’s intellectual property – Rules that prohibit the use of Employer logos, trademark, or graphics without prior written approval.
  • Rules that require authorization to speak for the Company – Rules that prohibit employees to comment on behalf of the employer and to respond to media request only through designated spokespersons. These types of rules allow an employer to designate who should speak on behalf of the employer.
  • Rules banning disloyalty, nepotism, or self-enrichment – Rules that prohibit disloyal conduct, conduct that is damaging to the employer, and conduct that competes with the employer and/or interferes with an employee’s judgment concerning the employer’s best interests. These type of rules allow an employer to prevent a conflict of interest, self-dealing or maintaining a financial interest in a competitor. These type of rules, when reasonably interpreted, have no meaningful impact on Section 7 rights.

Category 2 Policies Warranting Individualized Scrutiny

  • Broad conflict-of-interest rules that do not specifically target self-enrichment and that do not restrict membership in, or voting for, a union.
  • Confidentiality rules that broadly encompass employer business or employee information, versus confidentiality rules specifically regarding customers and/or proprietary information.
  • Rules that disparage or criticize the employer versus civility rules that bar the disparagement of employees.
  • Rules that regulate the use of the employer’s name versus rules that regulate the use of the employer’s intellectual property.
  • Rules that restrict speaking to the media or third parties versus rules that restrict speaking to the media on the employer’s behalf.
  • Rules that ban off-duty conduct that might harm the employer versus rules that ban insubordination and other disruptive conduct while at work.
  • Rules against making false or inaccurate statements versus rules against making defamatory statements.

Category 3 Policies that are Unlawful to Maintain

  • Confidentiality rules about wages, benefits, and working conditions – The ability to freely discuss terms and conditions of employment is a cornerstone of Section 7 rights. There are no legitimate business justifications in banning employees from discussing wages or working conditions.
  • Rules against joining outside organizations or voting on matters concerning the employer – Employees have a right to join outside organizations, specifically unions. While employers have a legitimate and substantial interest in preventing nepotism, fraud, self-dealing, and maintaining a financial interest in a competitor, rules that prohibit membership in outside organizations or from participation in any voting concerning the employer unduly infringe upon Section 7 rights.

While the pendulum could swing back in a new administration, the Board’s return – at least for now – to allow employers to require employees to maintain a reasonable level of civility in the workplace is a refreshing victory for employers. Both the Boeing decision and General Counsel Memorandum 18-04 prove that the Board clearly understands that the prior Board standard laid out in Lutheran Heritage, which prohibited any rule that can reasonably be interpreted as covering Section 7 activity, was unduly burdensome, oppressive, and an operational hindrance.

Now’s a good time for employers to review their handbook policies.  If you have any questions regarding your workplace’s handbook and social media policies or practices, please contact the authors, or another Seyfarth attorney.

 

 

The 2018 edition of The Legal 500 United States recommends Seyfarth Shaw’s Labor & Employee Relations group as one of the best in the country. Nationally, for the second consecutive year, our Labor practice earned Top Tier.

Based on feedback from corporate counsel, Seyfarth partner Brad Livingston was ranked in the editorial’s “Leading Lawyers” list, and 4 other Seyfarth Labor attorneys were also recommended in the editorial.

The Legal 500 United States is an independent guide providing comprehensive coverage on legal services and is widely referenced for its definitive judgment of law firm capabilities. The Legal 500 United States recognizes and rewards the best in-house and private practice teams and individuals over the past 12 months. The awards are given to the elite legal practitioners, based on comprehensive research into the U.S. legal market.

By:  Monica Rodriguez

Seyfarth Synopsis: The ALJ found that the employer did not violate the Act where it terminated an employee for using vulgar language during a staff meeting in efforts to undermine the general manager’s managerial authority.

Disciplining employees can sometimes be a challenge when attempting to comply with the National Labor Relations Act (the “Act”). Fortunately for the employer, the Administrative Law Judge (the “ALJ”) in Buds Woodfire Oven LLC d/b/a Avas Pizzeria & Ralph D. Groves, 2018 WL 2298221 (May 18, 2018), found that the termination of the employee who used vulgar language when criticizing the general manager during a staff meeting did not result in protected activity so as to violate the Act.

Background Facts

The general manager of a pizza restaurant had called a staff meeting to make a broad critique of the staff’s performance, and requested feedback from the employees of how they could do better. The general manager set the tone of the meeting by stating that he “didn’t want to come to work to be anybody’s f*cking babysitter.” In response, the charging party employee criticized the general manager and said: “how do you know you don’t do sh*t around here”.

The employee had been frustrated that the general manager did not assist with the kitchen operations like the other managers. The employee had previously expressed his frustration about the general manager to his co-workers. At the hearing, the other employees testified that they joked about the general manager’s actions or inaction, or that they’d ask the general manager to help out in certain cases.

After the staff meeting, the employee went back to work to finish his shift. The general manager terminated the employee after the employee completed his shift. The employee then filed an unfair labor practice claiming that the general manager violated section 8(a)(1) of the Act.

ALJ’s Analysis

The ALJ’s central focus when determining whether the termination constituted a violation section 8(a)(1) of the Act was whether the employee had engaged in concerted protected activity.  The ALJ acknowledged that individual action could rise to the level of concerted activity if those activities were linked to the actions of his co-workers. Just about two years ago, the National Labor Relations Board (the “Board”) reminded that even conduct personal in nature could be enough to constitute concerted activity.[i] The ALJ recognized, however, that the coworkers’ “jokes” about the general manager’s actions and inactions, where none of the coworkers shared the charging party’s concerns,  “falls short of concerted activity.”

The ALJ further noted that it is “difficult to imagine how lashing out at a manager who asks employees for feedback by asking, ‘how do you know you don’t do sh*t around here,’ even begins to lay the foundation for meaningful dialogue about employees’ terms and conditions of employment.” The ALJ found that the employee’s conduct did not entail the nature of his work conditions, but rather, was calculated to undermine the general manager’s managerial authority.

This decision is a pleasant reminder that not all vulgar comments and acts of insubordination need to be tolerated. And while this decision ended favorably for the employer as to this allegation, employers should be mindful that where more than one employee is sharing a similar concern, a vulgar comment seeking to improve employees’ terms and conditions of employment will likely be protected. In these situations, employers should exercise caution before terminating an employee based on the fact that the employee undermined the manager, or the employer might find itself undermined by the Board.

[i] M.D.V.L., Inc., d/b/a Denny’s Transmission Service, 363 NLRB No. 190 (2016) (finding that the employer violated the Act because employee discussed a demand letter for overtime pay with another employee and rejecting employer’s argument that conduct was personal in nature and not concerted protected activity).

 

 

 

 

By Andrew R. Cockroft

Seyfarth Synopsis: On Wednesday, May 9, 2018, the Office of Information and Regulatory Affairs announced that the NLRB is considering rulemaking to establish the standard for determining joint-employer status under the National Labor Relations Act.   

NLRB Chairman, John F. Ring, announced on Wednesday, May 9, 2018, that the Board is considering rulemaking to address the standard for joint-employer status under the National Labor Relations Act.

In the announcement, Chairman Ring acknowledged the importance of the Board’s joint-employer standard as “one of the most critical issues in labor law today.”  Chairman Ring went on to address some concerns voiced by employers following the Board’s ruling in Browning-Ferris and more recently with the Board’s decision to vacate Hy-Brand, while noting the importance of the rulemaking to cure the push and pull of the Board’s recent joint-employment decisions:

The current uncertainty over the standard to be applied in determining joint-employer status under the Act undermines employers’ willingness to create jobs and expand business opportunities. In my view, notice-and-comment rulemaking offers the best vehicle to fully consider all views on what the standard ought to be. I am committed to working with my colleagues to issue a proposed rule as soon as possible, and I look forward to hearing from all interested parties on this important issue that affects millions of Americans in virtually every sector of the economy.

Indeed, as Seyfarth has covered previously, under the existing joint-employer standard the NLRB finds that two or more entities are joint employers of a single workforce if (1) they are both employers within the meaning of the common law; and (2) they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the Board presently will – among other factors — consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so. This  approach, first arrived at by the Board in 2015, vastly expands the types and number of entities that can be held responsible for unfair labor practice violations and who may be held to have collective bargaining obligations regarding employees of a totally separate, independent employer.

While the Board rarely has  used rulemaking to establish  standards under the NLRA, the importance of the joint-employer standard to businesses’ ability to function in the modern economy makes the issue a prime candidate for this seldom exercised power.

Any proposed rule requires approval by a majority of the Board, followed by the issuance of a Notice of Proposed Rulemaking. The Chairman’s proposal does not reflect the participation of the two Democratic Board Members, Members Pearce and McFerran.

Employers should be aware of this beneficial opportunity to affect potential joint-employment policy and be prepared to offer input on any proposed rule.

By Ashley Laken

Seyfarth Synopsis: NLRB affirms ALJ’s ruling finding that a cocktail bar waitress was illegally fired for voicing workplace concerns during a staff meeting.

On April 26, 2018, in Parkview Lounge, LLC d/b/a Ascent Lounge, 366 NLRB No. 71, the National Labor Relations Board affirmed an NLRB administrative law judge’s ruling that found that a non-unionized employer violated the National Labor Relations Act by discharging a cocktail waitress in response to her engaging in protected concerted activity when she vocally discussed workplace concerns at a staff meeting.

The Facts

During an all-staff meeting on January 27, 2016, the cocktail waitress raised a number of concerns affecting employees at the employer’s facility, including concerns about the employer’s on-call scheduling system, its failure to provide certain workplace benefits, its recent decrease in the pay rate during parties, the cold temperature in the bar, and the uncomfortable uniforms imposed on servers.  Other servers at the meeting nodded their heads in approval as the waitress voiced the various work issues.

After the meeting, the waitress sent an email to management in which she claimed that comments they had made to her were irresponsible, that it was her right to look for another job, and “I feel you’re personally holding a vendetta against me because I speak my mind on issues that affect us (the employees).”  Just two days later, the employer’s operating owner fired the waitress, telling her she was being terminated because she did not get along with management.

The Board’s Ruling

In finding that the employer violated the Act in firing the waitress, the Board found that the employer had terminated the waitress in response to her raising group workplace concerns during the January 27th staff meeting.  In reaching this conclusion, the Board observed that it was uncontested that the waitress was engaged in protected concerted activity when she voiced a number of group workplace concerns during the staff meeting, which were met by nods of approval from the assembled employees.  The Board also found that the employer’s operating owner had knowledge of the waitress’s protected concerted activity when he made the decision to terminate her.

The Board further found that the employer held animus toward the waitress speaking out at the meeting, noting that the suspicious timing of the discharge (just two days after she engaged in protected concerted activity) was evidence of animus and that the employer’s proffered reason for her termination (her inability to work with management) was pretextual.  In this regard, the Board observed that management had praised the waitress’s work performance just a week before her termination, and that the employer had listed performance issues as a reason for the waitress’s termination in its official report to the New York State Department of Labor.  The Board ordered the employer to offer the waitress reinstatement to her former job or a substantially equivalent position and to make her whole for any loss of earnings or other benefits.

Employer Takeaways

The decision serves as a reminder that it is unlawful for both unionized and non-unionized employers to terminate employees for raising group workplace concerns.  Because it is sometimes unclear whether an employee is raising group workplace concerns or purely personal gripes, when considering terminating any employees who have made complaints about their terms or conditions of employment, employers would be well-advised to consult labor counsel before proceeding with termination.

By Ron Kramer

Seyfarth Synopsis:  While an employer can bargain to impasse and exit a critical status multiemployer pension fund, under the Pension Protection Act it cannot bargain to impasse and implement a proposal that would have it remain in the fund, but under different terms than the rehabilitation plan schedule the parties had previously adopted.

In a case of first impression, the Fourth Circuit held that the Pension Protection Act’s (“PPA”) obligation on bargaining parties to continue to follow a multiemployer pension fund’s rehabilitation plan schedule trumps an employer’s right, upon lawful impasse, to unilaterally implement a proposal to move new hires to a 401(k) plan.  Bakery & Confectionary Union & Industry International Pension Fund v. Just Born II, Inc., Case No. 17-1369 (4th Cir., decided April 26, 2018).

Just Born, the maker of Peeps, participated in the Bakery & Confectionary Union & Industry International Pension Fund (“Pension Fund”).  The Pension Fund is in critical and declining status, and had adopted a rehabilitation plan under the PPA which included a preferred schedule adopted by the Company and its Union pursuant to which Just Born was required to contribute hourly for every bargaining unit employee.

The Company proposed during its 2015 union negotiations that it remain in the Pension Fund for existing employees, but move new hires to a 401(k) plan.  The parties bargained to impasse, and the Company implemented its pension proposal.  The Pension Fund sued.  The Pension Fund relied on a PPA provision (as amended by the Multiemployer Pension Reform Act), 29 U.S.C. § 1085(e)(3)(C)(ii) (“the “Provision”), that the bargaining parties to an expired contract remain obligated to contribute under the rehabilitation plan schedule, which under the Pension Fund’s schedule included all employees, until such time as they reached an agreement.  Indeed, the Provision expressly provides that if the parties cannot reach an agreement within 180 days after contract expiration, the Pension Fund must apply the schedule, as updated, upon which the parties had previously agreed.

The Fourth Circuit ruled for the Pension Fund.  In addition to rejecting various affirmative defenses, the Court rejected the Company’s claim that it ceased being a “bargaining party” governed by the Provision once it reached a lawful impasse because it was no longer a party to an operative collective bargaining agreement.  The Court found that a plain reading of the Provision makes clear that a contract’s expiration cannot alter the employer’s status as a bargaining party.  Indeed, the Provision only applies to parties whose contracts have expired.

The Court further rejected the Company’s Hotel California argument that such an interpretation would mean that once an employer found itself in a critical status plan it would never be able to exit.  The Company argued that Trustees of the Local 138 Pension Trust Fund v. F.W. Honerkamp Co., 692 F.3d 127 (2d Cir. 2012), which upheld an employer’s right to bargain to impasse and implement a proposal to exit a critical status fund, gave it the Company the right to implement its proposal.  The Court distinguished Honerkamp, for it did not provide that an employer could implement a proposal to remain in the fund under different rules than provided for in the rehabilitation plan.

Last but not least, the Company argued that the Pension Fund’s interpretation undermined the Company’s right under the National Labor Relations Act (“NLRA”) to implement its last, best proposal upon impasse.  The Court disagreed, noting that although the right to implement a final offer applies to the Company’s bargaining rights and obligations, the Company’s statutory obligations under the PPA are separate and independent from its rights and obligations under the NLRA.  Just Born was free to bargain to impasse and implement its proposals provided, however, the Company could not implement proposals contrary to the PPA.

Just Born sets an important limit on an employer’s right to bargain to impasse over its participation in a critical or endangered status fund.  An employer is free under the PPA to bargain out and pay the resulting withdrawal liability, even if it has to reach lawful impasse and unilaterally implement.  What it cannot do, according to Just Born, is to remain in the fund but negotiate to impasse and implement conditions on participation different from the rehabilitation or funding improvement plan schedule to which it is a party.  Just Born does not address whether an employer can negotiate to impasse and implement a different schedule provided for in a rehabilitation plan — although it is doubtful since there would still be no agreement as required by the Provision.  Nor does it provide that the bargaining parties can just agree to terms different from a rehabilitation plan schedule.  While a fund may agree to different schedules, it is under no obligation to do so.  Employers beware.