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.

By Monica Rodriguez

Seyfarth Synopsis: Administrative Law Judge finds confidentiality work rule unlawful under new standard set forth in The Boeing Company, 365 NLRB No. 154 (2017) (“Boeing”).

Employers had hoped that the Board’s recent decision would reel in decisions concerning employer work rules.  And while it did, the recent decision in Lowe’s Home Centers, LLC and Amber Frare, makes clear that there are some work rules that will not pass legal muster.

Just last week, on April 17, 2018, Administrative Law Judge Amita Tracy ruled that Lowe’s confidentiality rules violated the Board’s new rule in Boeing.  Judge Tracy focused on the fact that the original and revised versions of Lowe’s confidentiality rules at issue prohibited employees from discussing their wages, and that employees could be subject to discipline if they violated the rules.

The problem with the confidentiality work rule was how it defined confidential information.  Specifically, the confidentiality work rule defined salary information as confidential.

Original Confidentiality Work Rule:

Confidential information includes all non-public information that might be of use to competitors of the company, or harmful to Lowe’s, its suppliers or customers, if disclosed. It includes all proprietary information relating to Lowe’s business such as customer, budget, financial, credit, marketing, pricing, supply cost, personnel, medical records and salary information.

Revised Confidentiality Work Rule:

Confidential information includes, but is not limited to:

  • Material, non-public information; and
  • Proprietary information relating to Lowe’s business such as customer, budget, financial, credit, marketing, pricing, supply cost, personnel, medical records or salary information, and future plans and strategy.

Judge Tracy discussed the three Categories outlined in Boeing, and found that Lowe’s rules fell under Category 3.  A Category 3 consists of an unlawful rule where the adverse impact on NLRA rights is not outweighed by justifications associated with the rule.  Judge Tracy made note that the Board’s example of a Category 3 was a policy prohibiting employees from discussing wages or benefits with one another.  Judge Tracy also made particular mention that the rule notified employees that disciplinary action could ensue if employees violated either versions of the confidentiality work rules.

Because the confidentiality rules prohibited employees from discussing salary information, Judge Tracy found that, per Boeing, this was a “per se unlawful [policy] bypassing the need to conduct a balancing test.”

Judge Tracy, nevertheless, engaged in a balancing test of weighing Lowe’s business interests against the charging party’s NLRA rights.  Lowe’s asserted the following business justifications for its confidentiality rules: preventing employees from engaging in insider trading; protecting competitively sensitive information; and complying with antitrust laws.  Judge Tracy was unpersuaded that Lowe’s justifications outweighed employees’ rights to discuss their wages; and thus, found the confidentiality work rules unlawful.

Although the ALJ decision is not binding, it is a reminder to employers that they should still review their policies to ensure that they will be found lawful even under the more reasonable Boeing test.  If you have any questions regarding your workplace’s rules and policies or practices, please contact the author, or another Seyfarth attorney.

By:  Kyllan Kershaw & Kaitlyn Whiteside 

Seyfarth Synopsis: In Colorado Symphony Association, 366 NLRB No. 60 (April 13, 2018), the NLRB found that an employer had an obligation to disclose information related to individual overscale contracts because the request related to the union’s investigation of potential sex discrimination, a mandatory subject of bargaining.

In a unanimous decision issued on April 13, 2018, the NLRB upheld an Administrative Law Judge’s (“ALJ”) decision ordering the production and disclosure to the Union of individual overscale contracts entered into between the Colorado Symphony Association and certain of its musicians.

The catalyst for the request came from the Principal Flutist in the Symphony who believed that she was being paid less than her male counterparts.  The Flutist raised this concern to the Union during her individual contract negotiations with the Symphony, which did not involve the Union. She also alerted the Union to the fact that she was considering filing a charge with the Equal Employment Opportunity Commission (“EEOC”) regarding her alleged sex discrimination.  Although the Union advised the Flutist that they could not assist with her EEOC filing, they subsequently requested copies of the individual overscale contracts from the Symphony.  A mere two days later, and without the requested information, the Flutist filed her EEOC charge.

According to the ALJ and the NLRB, the Symphony was required to provide copies of the individual overscale agreements to the Union despite the fact that: (i) the CBA expressly authorized the Symphony to negotiate and enter into these agreements; (ii) the Union did not participate in the individual overscale agreement negotiations; (iii) the Union never filed or assisted with a grievance related to the overscale agreements, nor had it raised any issue regarding these agreements during negotiations for a new CBA; and (iv) the CBA did not prohibit the Symphony from engaging in race or sex discrimination or contain a clause obligating the Symphony to comply with all applicable federal and state law, meaning that there was no way for the Flutist to file a grievance under the agreement for her alleged discrimination.

Regardless, the ALJ found that “investigating possible employer race or sex discrimination is a legitimate purpose related to a union’s collective-bargaining duties and responsibilities,” even without the presence of a non-discrimination clause in the contract.  The ALJ speculated that because the parties were in negotiations, the Union could have used the individual overscale agreement information to propose the inclusion of such language in a future agreement.  Even if that was not the goal, however, the ALJ asserted that the Union was investigating potential sex discrimination, which is a well-established mandatory subject of bargaining.   The ALJ further noted that the Union “may therefore be entitled to information that is relevant and necessary to determining whether a particular employment action is discriminatory, even if the employment action itself is not a mandatory subject [of bargaining].”

The ALJ likewise dismissed the Symphony’s claim that the Union’s request constituted an improper fishing expedition for information to support the Flutist’s EEOC charge, noting that the Flutist had not filed the EEOC charge at the time of the initial request, the information sought was presumptively relevant, and that regardless of the EEOC charge filing, a union may conduct its own investigation of possible employer discrimination as part of its legitimate collective-bargaining duties and responsibilities, even where the CBA lacks any non-discrimination provision.

Employers should note that this case can be seen as emblematic of the increased expectations of a union’s responsibilities in the “Me Too” era.  It also appears that the NLRB is willing to accept these additional expectations as a legitimate responsibility of a union as the employee’s collective bargaining representative.  What remains to be seen is how far a union will go to protect its female members from sex discrimination and how much information the NLRB will require an employer to provide on non-mandatory subjects of bargaining where a union claims its request relates to investigating possible discrimination.

By Bradford L. Livingston

Seyfarth Synopsis:  Unions represent only 6.5% of all private sector employees.  However, rather than focusing on the past and why its fortunes have declined, a more interesting question may be what organized labor is actively doing to reverse this trend.

 

Organized labor is facing tough times.  In their heyday during the mid-1950’s, labor unions represented over 35% of America’s private sector workforce. Today, over sixty years later, unions represent only 6.5% of all private sector employees.  And even where unions do represent workers, dues revenue — the lifeblood for a labor union — is likely to decline even further when employees opt out of union membership in the growing number of states that have enacted Right to Work laws, including traditionally-unionized,  “rustbelt” manufacturing states such as Michigan, Wisconsin and Indiana. (With a pending US Supreme Court decision and some newer state laws, labor’s current far greater density and influence in the public sector is also at risk.)   How the mighty have fallen.

But to paraphrase Mark Twain, “the reports of organized labor’s demise have been greatly exaggerated.”  And rather than focusing on the past and why its fortunes have declined, a more interesting question may be what organized labor is actively doing to reverse this trend. Here are just a few of the ways that unions are trying to change their fortunes:

The Four Tops Approach: “It’s The Same, Old Song…”

Let’s be clear from the outset: unions will not abandon their traditional methods of organizing new groups of workers.  So there will continue to be the historical “bottom up” organizing, where union organizers meet with employees, they obtain enough employees’ signatures on authorization cards to file petitions with the National Labor Relations Board, both unions and employers conduct campaigns to convince employees of their positions, and the Board conducts secret ballot elections.  (And by the way, the so-called “quickie” election rules passed by the NLRB under the Obama Administration continue unchanged for now.) Whether opportunistic by finding a few dissatisfied workers at a potential site or more targeted in selecting a particular industry or location, unions will continue to use and try to improve upon their traditional organizing skills.

 

And there will also continue to be the somewhat more recent method of “top down” organizing, where unions engage in corporate campaigns against targeted companies.  These campaigns attack a company in various and well thought out ways where it may be particularly vulnerable: adverse publicity, filings with government agencies, litigation, contacting suppliers and customers, shareholder resolutions, and more.  The goal is to create enough pain for the company to eventually agree to “labor peace,” usually including the employer’s agreement to supply the union with employees’ names and contact information, its pledge not to oppose unionization, and its agreement to recognize and bargain with the union if a majority of the employees simply sign authorization cards.

But these tried and supposedly true methods of organizing have existed for decades.  And where unions once represented more than one in three private sector employees, they now represent fewer than one in fifteen.  So in addition to conventional organizing, labor needs a few alternative approaches.

The Pragmatic Approach: If You Can’t Beat ‘Em, Join ‘Em

Nobody disputes that technology has transformed the workplace and will continue to do so.  While some labor unions have fought the trend, others have recognized that change is inevitable and have successfully adapted to it.  Not that long ago, the International Longshoremen’s Association (ILA) and International Longshore and Warehouse Union (ILWU) had a lock on the labor-intensive work of loading and unloading goods entering or leaving virtually every port in the United States. Over the past several decades, this work was transformed as containerized cargos, more efficient cranes, and computers made this work far easier, quicker, and less labor intensive.  Rather than simply watching their influence wane, however, the ILA and ILWU successfully adapted by negotiating agreements preserving their members’ exclusive rights to perform the “work,” albeit now involving computers and mechanized equipment.  Brains rather than brawn. And while there may be fewer longshoremen doing it, their continued jurisdiction over the work gives them significant bargaining leverage in contract negotiations (with the effective ability to shut down a port),  and thus secure, good-paying jobs.

Unions are recognizing the need to adapt in other industries as well.  Affecting the very core of its  membership base, the International Brotherhood of Teamsters (IBT) understands the challenge it faces, as robotic, automated distribution centers are reducing the need for warehouse workers, and self-driving vehicles and delivery drones eventually may reduce the need for dues-paying truck drivers. (In fact, it may appear that every employer’s ultimate dream to staff a factory with only a man and a dog is coming true: the man’s job will be to feed the dog while the dog’s job is to keep the man from touching anything inside the factory).  Recognizing what is perhaps the inevitable, a San Francisco IBT local union recently announced that it will represent the employees building these robots.  When life gives you lemons, make lemonade.

The Dale Carnegie Approach: How To Win Friends And Influence People

Organized labor has a successful track record of promoting many social justice issues, including the eight-hour workday, forty hour workweek, and anti-discrimination laws. And as we have witnessed, over the past several years different community activist groups across the country have ostensibly led the fight  to increase pay for low-wage employees by conducting demonstrations, sit-ins, sick-outs, and other events.  Under the names “Fight for Fifteen” (dollars per hour), “Fast Food Forward,” or others, they have actively promoted higher pay — successfully in many cities, counties, and states — for what are often short-term jobs among younger workers.  And behind many of these groups are different labor unions, such as the Service Employees International Union (SEIU) or United Food and Commercial Workers (UFCW), which eventually hope to succeed in organizing the employees at these establishments. Get them while they’re young and perhaps they’ll stick with you as they move on in their careers.  And despite what is often a relatively small number of employees (and, thus, potential dues-paying union members) at any individual location, jobs at these brick and mortar businesses — retail stores, fast food/fast casual restaurants, and coffee shops — cannot effectively be outsourced abroad.

This trend will likely continue regarding other social issues.  The past several months have seen a dramatic shift in the visibility and recognition of the need to eliminate workplace sexual harassment.  With universal agreement that things must change, some union officials have identified the #MeToo movement as an opportunity to attract female members by showing that unions are protectors of women’s rights in the workplace.  A potential hurdle, however, is labor’s lengthy track record of protecting male union members when they are accused of being the harassers.  For just a few examples, see Robbins Co., 233 NLRB 549 (1977); Gloversville Embossing Corp., 297 NLRB 182 (1989); Calliope Designs, 297 NLRB 510 (1989); Nickell Moulding, 317 NLRB 826 (1995); and Fresenius Manufacturing, Inc., 362 NLRB No. 130 (2015).  Just recently, a female legislator introduced a resolution in Illinois’ legislature asking both the EEOC and NLRB to investigate the United Auto Workers’ responsibility for sexual harassment at a Chicago-area auto plant.   After all, it continues to be the International Brotherhood of Teamsters and International Brotherhood of Electrical Workers, not the Sisterhood.

Time will tell whether this particular initiative succeeds or it is actually #MeTooExceptWhenUs.  But the real point is that organized labor will continue to seek out social issues that generate popular support, and use its resources to pursue those causes with the hope of expanding its membership base.

The Beatles Approach: I Get By With A Little Help From My Friends (In Government)

Almost a decade ago, the big push from organized labor was for the so-called  Employee Free Choice Act (EFCA), which would have provided for “card check” union recognition, eliminated employee secret ballot elections in choosing whether or not to unionize, and provided binding arbitration to secure the terms in first collective bargaining agreements.  And despite what was then a democratic President, U.S. Senate, and U.S. House, this federal bill was never enacted.

Perhaps learning from that experience, unions have been far more active in getting a little help from their friends in local government.  It’s a fairly simple strategy: you scratch my back, and I’ll scratch yours.  More union members means more money for political donations.  Focusing opportunistically on the “blue” cities and states rather than the “red,” labor has succeeded with and will continue to promote these local initiatives.  For example, New York City, Los Angeles, San Francisco, Washington, D.C., and many other jurisdictions now require the purchaser of buildings employing janitors or service workers, hotels, or retail grocery stores to hire its predecessor’s employees for what is usually at least 60 days, thereby ensuring that an incumbent union will continue to represent those employees and adopt the terms of the preexisting collective bargaining agreement.  Under federal labor law, the new employer would typically have had the right to set its own initial terms of employment and make largely independent decisions regarding whom it wished to hire.

In other ways, local governments have given labor a boost in organizing by providing incentives for employers to embrace unions in their facilities.  In addition to the widespread use of project labor agreements requiring the payment of prevailing (union) wages for employers contracting for publicly-funded works, just a few examples of laws affecting purely private employment include:

  • A New York City ordinance requiring non-union car washes to post a $150,000 surety bond to ensure wage payments to employees, but making the bond for unionized car washes far lower;
  • Ordinances in Chicago and elsewhere requiring paid sick leave for all employees (40 hours per year in Chicago), except those covered by a labor agreement that waives this requirement;
  • Local laws in multiple cities across the country providing employees with a higher minimum wage, except where a collective bargaining waives this requirement; and
  • A California law requiring sellers of recreational marijuana to have signed a “labor peace” (neutrality in the face of union organizing) agreement.

These laws are often subject to legal challenge (the New York City car wash ordinance is on appeal after having been struck down by a federal judge), but legislation like this will continue to sprout and take root in various cities. And when enacted in one location, it is likely to spread to others.  Unions have learned that it is far easier to gain successes at the local level.

The Charles Darwin Approach: The Survival Of The Species

While organized labor undoubtedly faces challenges, it is actively working to meet them.  Some approaches will be more successful, and others less so.  Successful strategies will be replicated, and others abandoned.  Change is inevitable, but anybody who chooses to write off unions is making a big mistake.  The question is not whether organized labor can reorganize, but instead how it will adapt to do so.