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By: Samuel Sverdlov and Howard Wexler

Seyfarth Synopsis: The E-Verify program has become a controversial topic in the political arena and throughout workplaces nationwide.  Last month, the NLRB held, amongst other things, that an employer violated the NLRA by unilaterally enrolling in the E-Verify program without first bargaining with the union.

Immigration law has long been at the forefront of political discourse in the United States.  One question that employers continue to grapple with is whether they should enroll in  E-Verify — a U.S. Department of Homeland Security website that allows employers to determine whether employees are eligible to work in the United States.  The NLRB’s recent decision in  The Ruprecht Company only complicates matters as it held than an employer committed an unfair labor practice when it failed to first bargain with its employees’ union prior to enrolling in E-Verify.

By way of background, in January 2015, a meatpacking company received a subpoena from ICE requesting documents regarding its employee verification process.  Following the receipt of the subpoena, the company unilaterally enrolled in E-Verify.  A month later, the union contacted the company regarding rumors of an ICE audit, which the company confirmed.  Shortly thereafter, ICE informed the company via letter that it apprehended 8 of its employees who were deemed unauthorized to work in the United States.  The company informed the union of the letter, and the union requested a copy, which the company provided with the names redacted.  The company refused to provide an unredacted copy until it had an opportunity to confer with counsel.  (The company later received another letter from ICE regarding 194 additional employees who were also deemed unauthorized to work in the United States.)  The company thereafter informed the union that it a confidentiality agreement to provide the unredacted letters.  Two weeks later, the company provided the union with a draft confidentiality agreement, which the union did not sign.  The union did not provide a copy of a draft confidentiality agreement at any time.  In the interim, the company began terminating bargaining-unit employees deemed unauthorized to work in the United States.  The union thereafter filed ULP charges against the employer arguing that the company’s enrollment in E-Verify and refusal to provide the unredacted ICE letters violated the NLRA.

With respect to E-Verify, the Board held that the company’s unilateral enrollment in the E-Verify program “compromised the union’s ability, and the [company’s] incentive, to engage in the give-and-take process with respect to E-Verify by changing the starting point for bargaining.  Once the [company] enrolled in the program, it had the greater leverage.”  Consequently, the Board ordered the company to withdraw from the E-Verify program at the union’s request.

With respect to the ICE letters containing bargaining-unit employee names, the Board held that the company violated the NLRA by withholding the letter.  The Board held that the names of the employees are relevant to the union’s representative duties.  Further, even if the names of the employees are entitled to confidentiality protections, the company “did not timely assert a confidentiality interest or propose a reasonable accommodation and engage in accommodation bargaining.”  Specifically, the Board held that “the party asserting confidentiality has the burden of proposing the accommodation.”  Thus, it was untimely for the company to wait two weeks to send the union a draft confidentiality agreement because the delay “hampered any ability the [u]nion may have had to timely assist adversely affected employees.”  As a result, the Board ordered the company to provide the unredacted ICE letters to the union.

Ruprecht serves as an example of the intense scrutiny an employer faces during an ICE audit.  Not only does the employer have to defend itself in the face of a government investigation, but the company’s actions are also being closely monitored by both its workforce and the public at-large.  Mistakes can lead to ULP charges, public backlash, and more.  Following Ruprecht, employers with unionized workforces should be cautious.  To that end, employers should consult with labor and immigration counsel when considering enrollment in E-Verify, or during any inquiry by the government regarding the citizenship of their employees.

By Monica Rodriguez and Jeffrey A. Berman

Seyfarth Synopsis: The National Labor Relations Board recently commenced an examination of the continued validity of a number of Obama Board actions. These include joint employer status, employee use of company email systems, and the “quickie election rules.” This blog provides an overview of the Board’s recent activities.

Just like Vladimir  and Estragon in Waiting for Godot, employers, unions, and employees are waiting for the National Labor Relations Board (“NLRB”) to finalize the actions it recently commenced.

Here are the highlights of the Board’s and General Counsel’s recent activities.

New Proposed Joint Employer Standard

Just this week, on September 13, 2018, the Board commenced the rule making process with an eye toward changing the current joint employer standard. Unlike Board decisions, which are subject to change as the composition of the Board majority changes, Board-issued rules are much more permanent. For a more in depth discussion, see Seyfarth’s management alert.

Review Of The Board’s Ethics And Recusal Guidelines

The Board’s ethics and recusal procedures recently received a fair amount of attention in connection with its joint employer decisions. In response, Chairman Ring announced that the Board would undertake a “comprehensive internal ethics and recusal review to ensure that the Agency has appropriate policies and procedures in place to ensure full compliance with all ethical obligations and recusal requirements.”

On June 8, 2018, the Board formally announced that it would commence a review of its policies and procedures governing ethics and recusal requirements for Board Members. Eventually, the Board will issue a report, which should contain findings and establish guidelines for the future.

Changes To Bargaining Relationship Standards In The Construction Industry

Focusing its attention on the construction industry, the Board recently issued a request for amicus briefs on what the standard should be to determine the majority status of construction unions that have entered into pre-hire agreements, which are permitted under the Act.

Most bargaining relationships are governed by Section 9(a) of the Act, which requires the union to have the support of a majority of employees in the bargaining unit. However, Section 8(f) of the Act allows construction industry employers to extend recognition to unions without necessity of showing majority support.

In Staunton Fuel & Material, 335 NLRB 717 (2001), the Obama Board held that a construction union could continue its status as the majority representative merely by showing that the collective bargaining agreement unequivocally indicates that the union requested and was granted recognition as the majority or Section 9(a) representative of the unit employees, based on the union having shown, or having offered to show, evidence of its majority support.

The Board has asked for amicus briefs on whether it revisit Staunton.

The Board also has requested amicus brief on whether a construction industry employer that wants to challenge the extension of Section 9(a) recognition pursuant to a pre-hire agreement must do so within six months of the time that recognition was extended.

The briefing is due October 26, 2018.

Employee Use Of Employer Email Systems

As Seyfarth reported, shortly after becoming General Counsel, Peter Robb, issued a GC memo signaling that the Trump Board may review the issue of whether employees have the right to use employer email systems for protected activity. Last month, the Board invited interested parties to file briefs on the issue.

In 2014, the Obama Board held that employees who have been given access to their employer’s email system for work-related purposes have a presumptive right to use that system, on nonworking time, for communications protected by the Act. In doing so, the Board overruled the previous rule, which held that employees did not have such a statutory right.

The Board now invites briefing to see if the Board should revert back to the old rule, or adhere to, modify, or overrule the old standard. The Board also wants to know that, if it reverts back to the old rule, should the Board carve out any exceptions. Because the case currently pending before the Board involves computer resources, not just email systems, the Board also seeks input regarding whether a different standard should apply to computer resources.

The initial deadline to submit briefing was September 5, 2018, but the Board extended the briefing period to October 5, 2018.

Misclassification Of Employees

The previous General Counsel, Richard Griffin, successfully argued to several Administrative Law Judges that misclassifying employees as independent contractors constitutes an unfair labor practice. In addition, Griffin’s Assistant General Counsel issued an Advice Memorandum advising a Regional Director to issue a complaint premised on the misclassification theory, which Seyfarth reported here.

One of the cases brought under former General Counsel currently is pending before the NLRB, Velox Express, Inc. (15-CA-184006). Because of the importance of the case, the NLRB invited interested parties to file amicus briefs. One of the amicus briefs was filed by the current General Counsel, Peter Robb. Parting company with Griffin, Peter Robb has argued that misclassifying an employee as independent contractor, which deprives the worker of protection under the Act, standing alone, does not violate the Act.

2014 Representation Election Regulations

As previously discussed, in December 2017, the Board invited comments regarding whether the quickie election rules promulgated by the Obama Board should be retained, modified or rescinded. The comment period was extended to April 2018. Although the comment period has ended, the Board has yet to release its findings.

We will continue to monitor the Board’s developments on these issues to see if the tides will change for employers.  Based on the Board’s and GC’s actions, it seems like there is hope for employers yet.

Seyfarth Synopsis: The National Labor Relations Board (NLRB or Board) announced that it will publish a Notice of Proposed Rulemaking on September 14, 2018 in the Federal Register regarding its standard for assessing whether a joint-employer relationship exists.

Under the NLRB’s joint-employer doctrine, the Board analyzes whether two separate business entities (e.g., service provider and client, franchisor and franchisee) share sufficient control over key employment terms such that both enterprises may have joint collective bargaining obligations, or may be jointly liable for certain unfair labor practices.   The reach of the NLRB’s joint-employer doctrine determines whether a business relationship intended by the parties that only one of them is to be an employer (i.e., an independent contractor relationship) will be recognized as such under the National Labor Relations Act.

In August 2015, in a 3-2 decision, the NLRB overruled 30 years of its precedent to dramatically expand its joint-employer standard.  (Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015)) (“BFI”).   In BFI, the Board majority held that it no longer would require proof that a putative joint employer has exercised any “direct and immediate” control over the essential working conditions of another company’s workers.   Under the Board’s BFI standard, a company could be deemed a joint-employer even if its “control” over the essential working conditions of another business’s employees was indirect, limited and routine, or contractually reserved but never exercised.

The NLRB’s BFI decision currently is on appeal to the United States Court of Appeals for the District of Columbia Circuit. Seyfarth Shaw represents the appellant, Browning-Ferris Industries of California, Inc., in that case.

Under the NLRB’s new proposed rule — set forth below with accompanying examples — an employer may be found to be a joint-employer of another employer’s employees only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment and has done so in a manner that is not limited and routine. Indirect influence and contractual reservations of authority  no longer would be sufficient to establish a joint-employer relationship.

In announcing the new proposed joint-employer standard, NLRB Chairman John Ring was joined by Board Members Marvin Kaplan, and William Emanuel. Board Member Lauren McFerran dissented from the proposed rule.  Employers and others who are interested in submitting comments to the Board regarding the proposed rule are being provided 60 days to do so.  If you potentially would like to submit a comment or have one drafted and submitted on your behalf, please do not hesitate to contact your Seyfarth Shaw attorney.

Proposed Rule and Examples

§ 103.40: Joint employers

An employer, as defined by Section 2(2) of the National Labor Relations Act (the Act), may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision, and direction. A putative joint employer must possess and actually exercise substantial direct and immediate control over the employees’ essential terms and conditions of employment in a manner that is not limited and routine.

EXAMPLE 1 to § 103.40. Company A supplies labor to Company B. The business contract between Company A and Company B is a “cost plus” arrangement that establishes a maximum reimbursable labor expense while leaving Company A free to set the wages and benefits of its employees as it sees fit. Company B does not possess and has not exercised direct and immediate control over the employees’ wage rates and benefits.

EXAMPLE 2 to § 103.40. Company A supplies labor to Company B. The business contract between Company A and Company B establishes the wage rate that Company A must pay to its employees, leaving A without discretion to depart from the contractual rate. Company B has possessed and exercised direct and immediate control over the employees’ wage rates.

EXAMPLE 3 to § 103.40. Company A supplies line workers and first-line supervisors to Company B at B’s manufacturing plant. On-site managers employed by Company B regularly complain to A’s supervisors about defective products coming off the assembly line. In response to those complaints and to remedy the deficiencies, Company A’s supervisors decide to reassign employees and switch the order in which several tasks are performed. Company B has not exercised direct and immediate control over Company A’s lineworkers’ essential terms and conditions of employment.

EXAMPLE 4 to § 103.40. Company A supplies line workers and first-line supervisors to Company B at B’s manufacturing plant. Company B also employs supervisors on site who regularly require the Company A supervisors to relay detailed supervisory instructions regarding how employees are to perform their work. As required, Company A supervisors relay those instructions to the line workers. Company B possesses and exercises direct and immediate control over Company A’s line workers. The fact that Company B conveys its supervisory commands through Company A’s supervisors rather than directly to Company A’s line workers fails to negate the direct and immediate supervisory control.

EXAMPLE 5 to § 103.40. Under the terms of a franchise agreement, Franchisor requires Franchisee to operate Franchisee’s store between the hours of 6:00 a.m. and 11:00 p.m. Franchisor does not participate in individual scheduling assignments or preclude Franchisee from selecting shift durations. Franchisor has not exercised direct and immediate control over essential terms and conditions of employment of Franchisee’s employees.

EXAMPLE 6 to § 103.40. Under the terms of a franchise agreement, Franchisor and Franchisee agree to the particular health insurance plan and 401(k) plan that the Franchisee must make available to its workers. Franchisor has exercised direct and immediate control over essential employment terms and conditions of Franchisee’s employees.

EXAMPLE 7 to § 103.40. Temporary Staffing Agency supplies 8 nurses to Hospital to cover during temporary shortfall in staffing. Over time, Hospital hires other nurses as its own permanent employees. Each time Hospital hires its own permanent employee, it correspondingly requests fewer Agency-supplied temporary nurses. Hospital has not exercised direct and immediate control over temporary nurses’ essential terms and conditions of employment.

EXAMPLE 8 to § 103.40. Temporary Staffing Agency supplies 8 nurses to Hospital to cover for temporary shortfall in staffing. Hospital manager reviewed resumes submitted by 12 candidates identified by Agency, participated in interviews of those candidates, and together with Agency manager selected for hire the best 8 candidates based on their experience and skills. Hospital has exercised direct and immediate control over temporary nurses’ essential terms and conditions of employment.

EXAMPLE 9 to § 103.40. Manufacturing Company contracts with Independent Trucking Company (“ITC”) to haul products from its assembly plants to distribution facilities. Manufacturing Company is the only customer of ITC. Unionized drivers—who are employees of ITC—seek increased wages during collective bargaining with ITC. In response, ITC asserts that it is unable to increase drivers’ wages based on its current contract with Manufacturing Company. Manufacturing Company refuses ITC’s request to increase its contract payments. Manufacturing Company has not exercised direct and immediate control over the drivers’ terms and conditions of employment.

EXAMPLE 10 to § 103.40. Business contract between Company and a Contractor reserves a right to Company to discipline the Contractor’s employees for misconduct or poor performance. Company has never actually exercised its authority under this provision. Company has not exercised direct and immediate control over the Contractor’s employees’ terms and conditions of employment.

EXAMPLE 11 to § 103.40. Business contract between Company and Contractor reserves a right to Company to discipline the Contractor’s employees for misconduct or poor performance. The business contract also permits either party to terminate the business contract at any time without cause. Company has never directly disciplined Contractor’s employees. However, Company has with some frequency informed Contractor that particular employees have engaged in misconduct or performed poorly while suggesting that a prudent employer would certainly discipline those employees and remarking upon its rights under the business contract. The record indicates that, but for Company’s input, Contractor would not have imposed discipline or would have imposed lesser discipline. Company has exercised direct and immediate control over Contractor’s employees’ essential terms and conditions.

EXAMPLE 12 to § 103.40. Business contract between Company and Contractor reserves a right to Company to discipline Contractor’s employees for misconduct or poor performance. User has not exercised this authority with the following exception. Contractor’s employee engages in serious misconduct on Company’s property, committing severe sexual harassment of a coworker. Company informs Contractor that offending employee will no longer be permitted on its premises. Company has not exercised direct and immediate control over offending employee’s terms and conditions of employment in a manner that is not limited and routine.

By Ashley Laken

Seyfarth Synopsis: U.S. Court of Appeals for the D.C. Circuit rules that the NLRB properly found that a hospital violated the NLRA by threatening employees with discipline and arrest for peacefully picketing on hospital property.

On August 10, 2018, in Capital Medical Center v. NLRB, No. 16-1369, the U.S. Court of Appeals for the D.C. Circuit agreed with the NLRB that off-duty employees at a hospital had the right under Section 7 of the National Labor Relations Act to peacefully hold picket signs on hospital property next to an entrance.  In reaching this conclusion, the court observed that the NLRB had permissibly balanced the employees’ rights against the hospital’s interests in controlling its property.

The Facts

On May 20, 2013, a large number of off-duty hospital employees picketed and chanted on the public sidewalks around the hospital to advocate for a new collective bargaining agreement.  Then, late in the day, a handful of them began distributing leaflets and holding picket signs on hospital property next to an entrance.  The picket signs contained the messages “Fair Contract Now” and “Respect Our Care.”

The hospital informed the employees that they could continue distributing leaflets but they could not stand on hospital property with their picket signs.  The employees refused to comply, and the hospital threatened them with discipline and called the police.  The employees chose to leave a short time later, and an unfair labor practice charge against the hospital followed.  The NLRB found that the hospital’s conduct violated the NLRA, and the hospital petitioned the D.C. Circuit for review.

The Court’s Ruling

The court denied the hospital’s petition for review.  The court observed that when employees seek to exercise Section 7 rights on employer property, their rights are balanced against the employer’s property interests and management prerogatives.  The court found that the NLRB had properly examined whether prohibiting the employees’ conduct was necessary to avoid disrupting patient care, and had properly concluded that the hospital had failed to make that showing, thereby violating the employees’ rights by attempting to bar their conduct.

In reaching this conclusion, the court observed that the employees were holding signs near a nonemergency entrance “without any patrolling, chanting, or obstruction of the entrance,” and that the hospital had therefore failed to meet its burden to show that it needed to bar the picketing to prevent patient disturbance or disruption of health care operations.  The court further noted that the NLRB “presumably will develop principles on a case-by-case basis that will guide employers about the circumstances in which they can prohibit picketing on company premises.”

Employer Takeaways

The permissibility of restricting on-premises picketing is a highly fact-specific inquiry that will depend on an examination of both the employees’ conduct in picketing and the employer’s interest in avoiding disrupting its operations.  Employers would therefore be well-advised to consult labor counsel before restricting off-duty employees from picketing on company premises.

By:  Jason Silver

Seyfarth Synopsis: A mere six weeks after the Supreme Court held that fair share or agency fees for public-sector unions are unconstitutional in Janus v. AFSCME, Pennsylvania introduces a bill that would require public-sector unions to obtain a majority vote of all employees, including non-union employees, to authorize a strike.

On August 7, 2018 republican representatives in Pennsylvania introduced and referred to the committee on labor and industry House Bill No. 2586, which would require public-sector unions to conduct a vote by secret ballot and win approval from a majority of all employees, both union and non-union, to authorize a strike.

Nearly half of all government workers in Pennsylvania are dues paying union members and the state leads the nation in teacher strikes, according to the Commonwealth Foundation, a free-market think tank.

House Bill No. 2586 would amend Pennsylvania’s Public Employee Relations Act, which allows public-sector union employees to authorize a strike as an economic weapon during collective bargaining. As it currently stands, non-union members in the public-sector generally do not have the authority to participate in a strike vote conducted by union members, even if they perform the same work. The proposed bill would change that, and allow public-sector non-union employees to have a voice in the workplace if union members were to ever contemplate authorizing a strike in response to stalled collective bargaining.

With public-sectors unions across the country set to lose hundreds of millions of dollars in fair share or agency fees, without an adequate plan on how to recoup those monies, Pennsylvania presents another challenge by introducing a bill that would grant all employees the right to vote on a strike. Whether the bill makes its way through the legislature is to be determined. However, the proposed bill sends a message that Pennsylvania is following the letter and spirit of Janus in an attempt to provide all public-sector employees with unencumbered free choice.

By: Timothy Hoppe

Seyfarth Synopsis: Labor friendly states will likely be looking for opportunities to lessen the financial blow of the Supreme Court’s decision in Janus v. AFSCME. The Ninth Circuit’s recent decision in Interpipe Contracting v. Becerra just helped give California a head start (although perhaps only a small one). 

For many years, California employers subject to the state’s prevailing wage law (employers working on public works projects) could take a credit towards their wages for contributions to Industry Advancement Funds (“IAFs”)funds that entities (both union and non-union) can use for a variety of things including political activities. This meant that employers could reduce their employees’ wages on public works projects based on the amount the employer contributed to an IAF.

Beginning in 2017, the California Legislature imposed a new limit on the prevailing wage credit. Under amendments to Labor Code § 1773.1, employers could only discount their employees’ wages for IAF contributions if the employees agree to IAF contributions through a CBA. In essence, the Legislature created an additional benefit for union shops. These shops could take a credit to fund activities such as political speech, while non-union shops could not.

In Interpipe Contracting v. Becerra, an “open shop” (non-union) plumbing contractor and the Associated Builders and Contractors of California Cooperation Committee (“ABCC”), an IAF, challenged the constitutionality of the law. They argued, among other things, that the statute violated the Supremacy Clause by frustrating the purposes of the NLRA, and that it infringed on ABCC’s First Amendment right to free speech. The Ninth Circuit rejected both arguments.

Interpipe advanced a so called “Machinist” preemption argument, which prohibits states from interfering with the collective bargaining process, and from regulating non-coercive labor speech. Interpipe argued that the California statute interfered with its labor speech of supporting pro-open shop advocacy by non-union IAFs. The Ninth Circuit disagreed. The court first concluded that the wage credit constituted a minimum labor standard, which required a heightened showing that the law impaired labor speech. The court then distinguished between labor standards affecting employers’ ability to fund their speech with unlawful regulations of their speech. The court acknowledged that the NLRA prohibits states from frustrating or regulating speech about unionization. By way of example, states cannot restrict (directly or indirectly) employers from using their own money to fund anti-union (or pro-union) speech. But here, the court held the California legislature merely restricted employers’ ability to divert their employees’ funds to a particular type of speech without the employees’ consent. This, the court determined, did not infringe on anyone’s rights under the NLRA to engage in labor speech.

ABCC took a different line of attack.  It argued that the First Amendment gave it the right to receive employee-subsidized funds, claiming that laws restricting the ability to fund speech are burdens on speech. In rejecting this argument, the court reiterated that the First Amendment protects individual (and corporate) rights to expression through finance (by contributing to IAFs or political organizations of their choosing). But the First Amendment does not establish a standalone right to receive the funds necessary to finance one’s own speech. As a result, the court held that the law did not implicate the First Amendment. California could provide union shops an incentive to fund their IAFs that was not available to non-union shops.

The direct impact of Interpipe will likely be relatively small. It only effects union shops, working on public works projects, whose employees have bargained for contributions to IAFs in their CBAs. Nevertheless, given the potential financial implications of the Supreme Court’s recent Janus decision on public sector unions, this probably is not the last legislation pro-labor states will pass to make it easier for unions to raise funds. Stay tuned to this blog for future developments.

 

 

By: Joshua M. Henderson

Seyfarth Synopsis:  Just when employers thought they were safe to restrict offensive speech and restore decorum in the workplace, a recent decision by the Board serves as a stark reminder that offensive workplace speech may still find protection under the National Labor Relations Act.

In Constellium Rolled Products Ravenswood, LLC, the Board decided that an employee who wrote the words “whore board” on an overtime sign-in sheet was engaged in protected activity by protesting unilateral employer changes to overtime scheduling.

Though the decision split 2-1 (with Member Emanuel dissenting), the Board hardly batted an eye at the use of the word “whore” by an employee in a labor dispute, other than to quote a passage from a prior decision that “the language of the shop is not the language of ‘polite society.’” In fact, the crux of the dispute between the majority and the dissenter was over employer property rights only, and whether employee defacement of an employer’s postings should be protected. Of course, “whore” can mean something other than a misogynistic epithet. Although the Board characterized this language as “harsh and arguably vulgar,” it also observed that the phrase “whore board” was “clearly implying that those who signed it were compromising their loyalty to the Union and their coworkers in order to benefit themselves and accommodate the [Employer].” Maybe. But the Board gives not a whit of concern to this gendered language and how the use of the word “whore” to describe those with whom one disagrees is ultimately corrosive and detrimental to the cause of women’s equality in the workplace.

Judge Millett of the D.C. Circuit issued a powerful opinion two years ago in which she admonished the Board for its casual indifference to the effects of racist and sexist speech while giving wide latitude to the emotional responses one sometimes finds in labor disputes, noting that the Board’s “repeated forbearance of sexually and racially degrading conduct in service of that admirable goal [of protecting section 7 rights] goes too far.”

Given the evidence in this case, however, Constellium is not the best vehicle to judge whether the Board has heeded Judge Millett’s call for greater sensitivity. According to the decision, even supervisors used the phrase “whore board” and vulgar language was otherwise tolerated. Nevertheless, it feels like the Board missed an opportunity to state clearly that language can wound, and that employees can express their fervent disagreement with management without using such language. This case is a practical reminder, too, that employers jeopardize their defense to restricting offensive language in the workplace when supervisors also casually use such language.

By: Kaitlyn F. Whiteside

Seyfarth Synopsis: Seattle has long been at the forefront of progressive labor policies.  Take, for example, its 2014 Minimum Wage Ordinance, which made it the first major city in the nation to increase wages to $15 an hour.  Since then, dozens of other cities have followed suit.  The same story is true of Seattle’s Paid Sick and Safe Time Ordinance, which when passed in 2012, made Seattle only the third city in the nation to implement protected sick leave.  Paid sick leave has spread since that time to more than nine states and countless local municipalities.

Seattle now has a new “first” to add to its resume, one which should cause employers nationwide to pay attention given its track record.  On Monday, July 23, 2018, Seattle became the first city to pass a domestic workers “Bill of Rights,” which extends the protections of its minimum wage ordinance to domestic workers (including independent contractors) and sets standards for meal breaks and rest periods. Seattle now joins other states like New York, California, and Hawaii in implementing domestic workers Bill of Rights.

The Seattle ordinance also establishes a nine-member Domestic Workers Standards Board charged with creating and recommending legislation to the City Council on wage standards, benefits, and worker protections, among other topics.

This body appears to be a de facto “wage board” or bargaining panel, reminiscent of European collective bargaining.  Wage boards operate as industry-wide bargaining groups, setting key threshold terms and conditions of employment.  While prominent in Europe, these industry-wide groups stand in stark contrast to the employer-based collective bargaining model in the United States.

Recently, a number of progressive policy advocates have argued in favor of the creation of national wage boards for the United States, particularly given the decline of unionization in the private sector along with the Supreme Court’s recent decision in Janus.

Whether Seattle’s experiment predicts a national trend remains to be seen.  At a minimum, other cities with progressive labor policies, such as Portland, are likely to follow suit.  Regardless of whether these policies catch on in other municipalities or states, unions and pro-labor advocates hope to replicate the model on the federal level.  The National Domestic Workers Alliance has announced that it will propose a federal Bill of Rights similar to Seattle’s later this year.  Employers should stay tuned and feel free to contact Seyfarth Shaw with any questions.

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.