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Seyfarth Synopsis: AB 1654 provides a PAGA exemption for certain employees covered by a collective bargaining agreement. While AB 1654 is limited to the construction industry, its underlying rationale applies much more broadly, and may augur further thoughtful restrictions on PAGA’s broad scope.

California’s Private Attorneys General Act, imposing draconian penalties for even relatively trivial Labor Code violations, remains the bane of California employers. Efforts to restrict PAGA’s scope thus arise from time to time in the California Legislature, which occasionally enacts some reform. Lost in the attention received by recent high-profile employment legislation was a bill of enormous import for the construction industry specifically but also (potentially) for the future of PAGA enforcement more broadly.

AB 1654, effective on January 1, 2019, exempts “employees in the construction industry” from PAGA if employees’ collective bargaining agreements meet certain requirements. To qualify for a PAGA exemption, a CBA must

  • apply to working conditions, wages, and hours of work of employees in the construction industry,
  • ensure employees receive a regular hourly wage not less than 30% more than the minimum wage,
  • prohibit Labor Code violations redressable by PAGA,
  • contain a grievance and binding arbitration procedure to redress Labor Code violations remedied by PAGA,
  • expressly waive the requirements of PAGA in clear and unambiguous terms, and
  • authorize an arbitrator to award all remedies available under PAGA, except for penalties payable to the LWDA.

While limited to the construction industry, AB 1654 suggests the question: why are not all industries afforded this exemption option? This thought was not lost on AB 1654’s opponents, who wondered if the bill was a “camel’s nose under the PAGA tent”:

The immediate impact of this bill is limited to the construction industry. Its longer term policy implications may not be. The justification provided for the PAGA exemption proposed by this bill is that some construction industry employers have been recently targeted by frivolous PAGA lawsuits. It is not hard to imagine employers in many other sectors making the same argument.

. . .

With that in mind, a key policy question presented by this bill is whether there is sound basis for distinguishing the construction industry from other sectors of the economy in relation to the application of PAGA. If not, it may be difficult, from a policy point of view, to rationalize denying future requests for PAGA exemptions under similar circumstances.

This is indeed the key policy question, and to which there is an easy answer: there is no sound basis to single out the construction industry for special protection from PAGA lawsuits. AB 1654 undermines the PAGA defenders’ argument, adopted by the California Supreme Court in Iskanian, that a PAGA plaintiff stands in for the state and cannot waive the state’s power by private arbitration agreement. In the bill, the Legislature says otherwise. PAGA claims can be waived—in this case through a valid CBA—provided employees have redress for Labor Code violations through a grievance and arbitration procedure in the CBA. While AB 1654 applies only to the construction industry, its reasoning supports an argument employers should use to argue against the logic of Iskanian in other contexts.

By:  Alison C. Loomis

Seyfarth Synopsis:  Employers may challenge whether unions still have majority support between the date that agreement on a collective bargaining agreement was reached and the date that the agreement becomes effective.

The Board’s contract-bar doctrine limits the circumstances under which an election petition is processed if the petition is filed during the term of a collective bargaining agreement.  In other words, employers (or rival unions) are “barred” from filing an election petition during the “contract” period.  In Silvan Industries, the Board held that employers are not barred from filing a petition if it is in the time period after an agreement has been reached but before that agreement’s effective date.

On October 13, 2016, the employer and union reached tentative agreement on a contract, which was set to go into effect on November 7, 2016.  On October 15th, the union notified the employer that the bargaining unit employees had ratified the contact, and the parties agreed to meet in person on October 25th to execute the contract.

On October 25th, an employee gave the employer a petition which expressed opposition to the union.  Later that day, the employer filed an RM petition with the NLRB regional office seeking to challenge whether the union still had majority support of the bargaining unit.  Also on that day, as previously planned, the parties executed the contract.

The Regional Director dismissed the petition without a hearing, on the ground that it was filed after the union accepted the employer’s contract offer.

In a 3-1 decision, the Board majority granted the employer’s request for review of the dismissal, agreeing with the employer that the parties’ agreement cannot bar an election petition which was filed prior to the agreement’s effective date.  In so finding, the majority stated that “the Employer filed its [election] petition at a time when there was no contract in effect, which means there was no contract to bar the Employer’s petition.  Accordingly, the Board is required to process the petition, thereby giving employees the election that Congress contemplated when it provided for Board-conducted elections to resolve questions concerning representation.”

The majority noted that the employer filed the petition at a time when it could not have lawfully withdrawn recognition of the union.  Filing the petition in response to its employees’ notification of opposition to the union was good-faith bargaining, “as required by the Act.”

Although the particular timeframe presented in Silvan may be unique, it provides employers with a strategic consideration when approaching the effective date of a collective bargaining agreement.

 

By: Tiffany Tran, Esq.

Seyfarth Synopsis: In another signal that the Board may overturn the Obama Board’s decision in Purple Communications allowing employees to use their employer’s email systems to communicate about wages, hours, working conditions and union issues, the Board recently published a letter reiterating its decision to reconsider Purple Communications and invited comment from the public on the standard the Board should apply in these cases.

Under Purple Communications, 361 NLRB 1050 (2014), employees who have access to their employer’s email system for work-related purposes have a presumptive right to use that system for Section 7 protected communications regarding wages, hours, working conditions and union issues on nonworking time. Purple Communications overturned the Board’s decision in Register Guard, 351 NLRB 1110 (2007), holding that employers may lawfully impose neutral restrictions on employees’ non-work-related uses of their email systems, even if those restrictions have the effect of limiting the use of those systems for communications regarding union or other protected concerted activity.

In December 2017, the newly appointed NLRB General Counsel Peter Robb issued a memo containing a broad overview of his initial agenda as General Counsel. The memo cited Purple Communications as one of the cases the GC “might want to provide the Board with alternative analysis.” We previously blogged about the GC’s memo on this issue here.

Less than one year later, in August 2018, the Board announced, and Seyfarth blogged about it here, that it would invite briefing on whether it should “adhere to, modify, or overrule Purple Communications.” The Board made this announcement in Caesars Entertainment Corporation d/b/a Rio All-Suites Hotel and Casino, a pending case before the board that directly applied Purple Communications. In Caesars Entertainment Corporation d/b/a Rio All-Suites Hotel and Casino, the Administrative Law Judge had found that the employer’s policy prohibiting the use of its email systems to send non-business communications violated Section 8(a)(1) of the NLRA under Purple Communications. The employer excepted to the decision and asked the Board to overrule Purple Communications. Rather than immediately issue a decision, the Board invited the public to comment on this issue.

After extending the deadline to file briefs until October 5, 2018, nineteen amicus briefs were filed from various unions, senators, and interested groups on both sides of the issues. Notably, the GC submitted a brief urging the Board to overrule Purple Communications and return to the holding of Register Guard. The GC further urged that exceptions should be made on a case-by-case basis where the Board determines that employees are unable to communicate in any way other than through the employer’s email system. Finally, the GC argued that Register Guard should apply to other employer-owned computer resources not made available by the employer to the public.

And while five Democrat Senators recently sent a letter to NLRB Chairman John Ring expressing concern over the Board’s invitation to file briefing on the Purple Communications standard, Chairman Ring’s response letter reaffirmed the Board’s decision to reconsider Purple Communications and stated “the Board requested briefing from all interested parties to ensure we are fully informed of the arguments on all sides.”

Although the Board has yet to issue its decision, the Board’s and GC’s actions appear to signal that employers may continue to have hope about winning this battle.

By: Christopher W. Kelleher and John T. Ayers-Mann

Seyfarth Synopsis: Though the NLRA provides robust protections for striking employees, the Board’s decision in Consolidated Communications demonstrates some of the limits of those protections. On October 2, 2018, the NLRB held that inherently dangerous acts calculated to intimidate do not fall within the broad scope of the NLRA’s protections.

The National Labor Relations Board, in a recent decision, has provided further guidance on the limits of protections for strike-related activities.  In Consolidated Communications, Cases 14-CA-094626, 14-CA-101495 (NLRB Oct. 2, 2018), the Board found that striking employees’ use of vehicles to intentionally obstruct non-striking employees traveling on the road was an “inherently dangerous” activity calculated to intimidate non-strikers, and thus forfeited the National Labor Relations Act’s protections.

The facts underlying the case arose while the company was engaged in a contentious strike with its union, IBEW Local 702.  During the course of the strike, two striking employees, Hudson and Weaver, were traveling on a highway when they spotted and approached a company vehicle driven by two managers.  The striking employees drove alongside each other in front of the company truck in order to prevent it from passing.  After some time, a queue of vehicles grew behind one of the blocking employees, who then decided to transition into the lane in front of the company truck to allow cars to pass.  The company truck attempted to pass as well, but Hudson returned to the left lane to intentionally block its path.  As a result, one of the managers driving the truck filed a complaint and Hudson was fired for her actions.

Initially, the Board adopted the Administrative Law Judge’s determination that Hudson’s activities were protected by Section 8(a)(3) of the Act, focusing on the fact that her actions were nonviolent. The D.C. Circuit reversed the Board’s decision, explaining that while the absence of violence was relevant, the Board failed to focus on the central legal question of whether the strikers’ actions may reasonably tend to coerce or intimidate.  The D.C. Circuit remanded the case to the Board for further proceedings.

On remand, the Board held in a 2-1 decision that Hudson’s actions were unprotected under the Act.  The Board found that Hudson and Weaver sent a clear message to the managers that they were intentionally using their vehicles to obstruct or impede passage.  From those acts, the Board reasoned, Hudson and Weaver’s actions were calculated to intimidate the two managers.  Further, the Board concluded that intentionally obstructing a public highway jeopardized the lives of all motorists driving on the highway at that time, and was therefore “inherently dangerous.”  Because Hudson and Weaver’s actions were both inherently dangerous and calculated to intimidate, their actions were not protected by the NLRA.

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.