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By:  Paul Galligan and Samuel Sverdlov

Seyfarth Synopsis: The NLRB’s Office of General Counsel has issued an Advice Memorandum stating that an employer lawfully refused a union’s information request regarding its tax cut savings during bargaining.

During collective bargaining, employers often deal with an uncomfortable dilemma — comply with invasive and overbroad information requests from unions or withhold information, and risk Board litigation.  However, in a recent Advice Memorandum, the NLRB’s Office of the General Counsel channeled its inner Mick Jagger, and told the union, no, you can’t always get what you want … you get what you need.  Specifically, the GC’s office concluded that an employer did not violate Section 8(a)(5) of the NLRA by refusing to provide the union with information concerning the its tax cut savings because the information was neither relevant nor necessary to the union’s performance of its statutory functions.

Background

On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act of 2017 (TCJA).  Among other features, the law cut corporate tax rates from 35% to 21%.  In response to the new law, Nexstar Media Group, Inc. sent a memo to its employees announcing that the that the company wants to extend its benefits from the TCJA to its employees via a one-time bonus, and increase to the employees’ 401k plan company match.  This benefit, however, was not extended to Nexstar’s unionized employees whose collective bargaining agreements were open for negotiation.

While the parties were bargaining for successor contracts, the union sent Nexstar a broad information request regarding the company’s financial gains from the TCJA.  The union prefaced its request by stating that Congress intended the TCJA’s corporate tax cut to trickle down to workers’ paychecks and return jobs to the USA, and invited Nexstar to “join it” in implementing Congress’ goals through bargaining.  The union then proceeded to request a deluge of information regarding Nexstar’s financial information, employment of foreign employees, political contributions, etc.  Nexstar refused to provide the information, and the union responded by filing a charge under Section 8(a)(5) of the NLRA.  (The Regional Director then sent the issue to the Division of Advice for a recommendation.)

Advice Memorandum

The GC’s office was unpersuaded by the union’s argument that the information was necessary to: (1) ensure, through bargaining, that Nexstar’s benefits from the TCJA went to workers’ paychecks and returning jobs to the United States; and (2) to aid the union in bargaining about bonus payments and increased 401(k) contributions. The GC’s office rejected the union’s first argument because the goals of the TCJA are not sufficiently related to the union’s collective bargaining relationship with Nexstar — the union could not identify any provision of the TCJA either requiring Nexstar to spend its tax savings towards the union’s preferred objectives or giving the union a right to enforce the statute.  Next, the GC’s office rejected the union’s second argument because the requested information is not necessary to either frame the union’s proposals, evaluate and respond to the Nexstar’s proposals, or verify any of Nexstar’s factual assertions in support of its bargaining positions.  The GC’s office reasoned that Nexstar’s memorandum to its employees did not contend that Nexstar’s ability to grant benefits to union employees was impacted by its tax savings in any way.  Accordingly, the GC’s office concluded that Nexstar did not commit a violation of Section 8(a)(5).

Employer Takeaways

This Advice Memorandum is encouraging for unionized employers.  If the GC’s office had found Nexstar’s conduct to be unlawful, it could have opened a floodgate of invasive requests from union’s regarding employers’ tax cut savings information during collective bargaining.  However, employers should take this decision with a grain of salt and continue to evaluate each union information request carefully.  Employers are reminded to consult experienced labor counsel during collective bargaining.

On December 28, a panel of the United States Court of Appeals for the District of Columbia Circuit (D.C. Circuit), in a 2-1 decision (Browning-Ferris Indus. of Cal. v. NLRB, No. 16-1028), invalidated the National Labor Relations Board’s (NLRB or Board) controversial joint employer test adopted in Browning-Ferris, 362 NLRB No. 186 (2015) (Browning-Ferris). The Court remanded the case back to the Board for further proceedings consistent with its opinion.

Joint employer status potentially can exist under the National Labor Relations Act (NLRA) — and other employment laws — in a variety of circumstances including labor user-supplier, parent-subsidiary, contractor-subcontractor, franchisor-franchisee, predecessor-successor, creditor-debtor, and contractor-consumer relationships.

The Board’s joint employer doctrine is significant because a unionized joint employer has or shares an obligation to collectively bargain over those employment terms it controls or jointly controls. Similarly, a union or non-union joint employer may be found to have committed unfair labor practices within the scope of its control over the workplace. Additionally, under the NLRA, a union can engage in certain forms of picketing, secondary boycotts, or other economic protest activity against an entity determined to be a joint employer instead of a neutral third party.

In Browning-Ferris, the Board majority (3-2) held that even when two entities never have exercised joint control over essential employment terms, and even when any such joint control is not “direct and immediate,” they still will be joint employers based on the existence of unexercised “reserved” joint control or “indirect” control, including control that is “limited and routine.”

In reviewing Browning-Ferris, the D.C. Circuit majority (i.e., Judges Patricia Millett and Robert Wilkins) held that the NLRB “can” consider indirect control and unexercised reserved control as joint employer factors; and, if so, has flexibility in determining what weight to give those factors. As a result, a future Democratic NLRB will have the ability to recognize at least some concepts of indirect and/or reserved control as relevant to joint employer analysis. However, in invalidating the Browning-Ferris formulation, the Court found that the Board’s current test failed to adequately distinguish between indirect control over employment terms and influence or control over “routine” matters related to the formation and maintenance of contractor arrangements. The D.C. Circuit identified cost-plus billing, cost containment measures, providing an “advance description of tasks,” setting basic parameters of performance, and developing contractor “objectives” and “expectations” as examples of actions which — although they may indirectly control or influence a putative contractor’s employees — are not pertinent to a joint employer assessment. The Court sent the case back to the Board to “erect some legal scaffolding that keeps the inquiry within traditional common law bounds.”

The D.C. Circuit also concluded that a remand to the Board was required because the Browning-Ferris decision did not delineate what constitutes “meaningful” collective bargaining — either in general, or with respect to Browning-Ferris’ particular circumstances. In other words, the Court found that the NLRB had not sufficiently explained what employment terms Browning-Ferris co-controlled which made “meaningful” bargaining possible. The Court also appeared to be indicating that the Board needed to address the parameters of any bargaining related to the contours of a joint employer relationship itself, e.g., allocation or reallocation of bargaining obligations between the joint employers.

Although the Court rejected the argument that substantial direct control is the most important factor in any joint employer analysis, the Court found that Browning-Ferris did not present facts as to whether reserved (or indirect) control apart from any actual control alone could result in a joint employer finding. As a result, that question seemingly remains open and unresolved.

In dissent, Judge A. Raymond Randolph criticized the majority for issuing its decision given that the NLRB is presently undertaking joint employer rulemaking. Judge Randolph also considered the majority to have misconstrued the governing common law control concepts.

The D.C, Circuit’s decision will be far from the last word in the joint employer controversy. Apart from the NLRB having been ordered to reformulate the Browning-Ferris test for application to, at least, Browning-Ferris, the Board is engaged in comprehensive joint employer rulemaking which could supersede any test to be developed through case adjudication.

If you would like further information, please contact Seyfarth Shaw at seyfarthshaw@seyfarth.com.

By: Monica Rodriguez, Esq.

Seyfarth Synopsis: In September 2018, the NLRB released its new proposed rule regarding the joint employer standard. The NLRB extended the comment period twice since the release of the new proposed rule. Comments are now due on or before January 14, 2019.

Individuals waiting on pins and needles in anticipation of the outcome of the new proposed joint employer rule will have to wait a bit longer.

On September 14, 2018, the NLRB published its new proposed rule, which Seyfarth discussed here and here. The new proposed rule attempts reverse the joint employer rule created by the Obama Board in 2015. Under the proposed rule, for another employer to be a joint employer, the other employer must possess and exercise substantial, direct and immediate control over the essential terms and conditions of employment in a manner that is more than merely “limited and routine.” Indirect influence of the terms and conditions, contractual reservations of authority never invoked, and mere “limited and routine” authority are insufficient.

Since publishing the rule for comment, the NLRB has twice extended the deadline to submit comments. The new deadline to submit comments is January 14, 2019. The deadline to reply to comments submitted is January 22, 2019. The number of comments submitted is 25,543 and counting.

If you would like to submit a comment or have a comment drafted and submitted on your behalf, please contact your Seyfarth attorney.

 By: Monica Rodriguez, Esq.

Seyfarth Synopsis: The NLRB suspends its request for briefing regarding potential changes to the construction industry bargaining relationship in light of Charging Party Union’s withdrawal of the underlying charge.

The review of whether to make changes to construction industry bargaining relationship has been put on hold. As Seyfarth reported, the NLRB had 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.

Because the Charging Party Union requested a withdrawal of the underlying charge, the NLRB suspended the request for additional briefs on October 15, 2018, pending the Board’s decision on the request for withdrawal. So, employers and unions alike will have to wait and see before we receive additional clarity regarding pre-hire agreements.

  By: Ashley Laken, Esq.

Seyfarth Synopsis: Millennials are an ever-growing portion of the workforce, and they generally have favorable views toward labor unions.  Employers would be well-advised to be attuned to this reality and they may want to consider developing and implementing strategies aimed at heading off union organizing before it starts.

According to a Pew Research Center analysis earlier this year, Millennials now make up more than 35% of the U.S. labor force, making them the largest generation currently in the workforce.  Their numbers are continuing to grow, and it’s estimated that they will make up 75% of the labor force by 2025.

At the same time, according to an analysis by the Economic Policy Institute, the number of union members in the U.S. grew by 262,000 in 2017, and 76% of that increase was comprised of workers under age 35.  Many believe that one reason younger workers are joining labor unions is because they are concerned about workforce trends that are increasing work insecurity, including the rise of automation and companies’ increased use of independent contractors.

Millennials are also generally known to have favorable views toward labor unions.  A 2017 report published by the Pew Research Center showed that adults younger than age 30 view unions more favorably than corporations.  According to that report, 75% of adults aged 18 to 29 said they have a favorable opinion of unions, while only 55% said they have a favorable view toward corporations.  And in late summer of this year, the National Opinion Research Center at the University of Chicago found that 48% of all nonunionized workers would join a union if given the opportunity to do so.

Millennials have also demonstrated an interest in social activism.  Many younger workers perceive unionization as potentially combating those aspects of jobs that they view as suboptimal, including perceived racial and gender discrimination and a lack of advancement opportunities.  Union organizers are increasingly recognizing that younger workers place a lot of importance on equitable treatment, upward mobility, fair wages, and work/life balance.  Unions are also using new and often informal methods to recruit employees, including social media and text messaging, effectively “speaking the language” of Millennials.

Indeed, the last few years have seen union organizing in industries that traditionally haven’t been unionized, including digital media, nonprofits, and coffee shops.  It almost goes without saying that employees in these industries are often predominantly comprised of Millennials.

And the recent walkout by thousands of non-unionized Google employees at offices around the world was the first protest of its kind by well-compensated tech employees, many of whom are Millennials.  The stated demands of the brief walkout, which were posted on an Instagram page, included an end to forced arbitration in cases of harassment and discrimination, a commitment to “end pay and opportunity inequity,” to “promote the chief diversity officer to answer directly to the CEO,” and to have a “clear, uniform, globally inclusive process for reporting sexual misconduct safely and anonymously.”

Although demands such as these fall outside the scope of what the National Labor Relations Board considers to be mandatory subjects of bargaining between employers and labor unions, they shed light on some of the concerns held by the modern workforce.  On this point, in a recent national survey conducted by MIT, a majority of workers said they don’t have as much of a voice as they believe they should on issues ranging from compensation and benefits to protection against harassment.  These sorts of sentiments can provide fertile feeding ground for union organizers.

Even though many employers recognize some of the negative aspects that can come along with union representation, many employees (including managers and supervisors) might not.  For example, union representation can and often does result in a loss of flexibility in addressing employee issues, and it also results in the insertion of an outside third party between management and employees, which can create a counterproductive “us versus them” attitude.

Employers would therefore be well-advised to train their managers and supervisors on these topics, and also to be on the lookout for union organizing activity among their employees.  Employers should also consider providing positive employee relations training for their managers and supervisors, which could head off union organizing activity before it starts.

 

 

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:  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.

 

 

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 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: Christopher W. Kelleher

Seyfarth Synopsis: On March 15, 2018, the Second Circuit Court of Appeals issued its decision in Novelis Corp., et al. v. NLRB, et al., upholding several unfair labor practices against Novelis Corp., but due to passage of time and changed circumstances, halting the National Labor Relations Board’s efforts to issue a Gissel bargaining order against the Company.

Background

In December 2013, aluminum manufacturer Novelis Corp. announced to employees at its Oswego, New York facility that they would no longer receive Sunday premium pay and that holiday and vacation days would no longer count towards overtime eligibility.  In response, several employees began a union organizing campaign, and obtained union-authorization cards from a majority of eligible employees.  In early January 2014, after declining the union’s request for voluntary recognition, Novelis restored Sunday and holiday pay.

In its efforts to resist organizing, the Company reminded employees that Novelis’ unionized plant in Quebec had closed while its plant in non-unionized Oswego continued to flourish.  The Company also suggested that unionization would lead to loss of business.

Novelis narrowly prevailed in the February 2014 election by a vote of 287 to 273.  After the election, pro-union employee Everett Abare posted a vulgar remark on Facebook complaining about his paycheck and criticizing those who did not vote for the union.  In response, Novelis demoted Abare.

After a hearing, Administrative Law Judge Michael A. Rosas found Novelis committed numerous unfair labor practices.  Specifically, the Company violated Section 8(a)(1) by restoring Sunday and holiday pay, removing union literature, interrogating employees, and prohibiting employees from wearing union paraphernalia.  The ALJ also found that Novelis threatened employees with wage loss, plant closure, and more difficult working conditions if they were to unionize.  Finally, the ALJ found Novelis violated Sections 8(a)(1) and 8(a)(3) by demoting Abare after his Facebook post.  The ALJ recommended several forms of relief, but most notably, he recommended a Gissel bargaining order because, in his view, “traditional remedies … would be insufficient to alleviate the impact reasonably incurred by eligible unit employees[.]”

Novelis filed exceptions with the NLRB, seeking to introduce evidence of significant employee and management turnover since the alleged unfair labor practices, and arguing that changed circumstances rendered the bargaining order inappropriate.  In August 2016, even though more than two years had passed, the Board adopted the ALJ’s findings and refused to reopen the record.  Specifically, the Board noted that it “does not consider turnover among bargaining unit employees or management officials and the passage of time in determining whether a Gissel [bargaining] order is appropriate.”

Discussion

While the Court upheld the Board’s findings as to the unfair labor practices, it disagreed as to the appropriateness of the bargaining order.  In NLRB v. Gissel Packing Co., 395 U.S. 575 (1969), the Supreme Court held that sufficiently serious violations of the NLRA can justify an order requiring an employer to bargain with a union that did not win an organizing election.  However, the Second Circuit has “repeatedly held” that bargaining orders are a rare remedy which are warranted only when it is clearly established that traditional remedies such as a secret ballot rerun election cannot eliminate the effects of the employer’s past unfair labor practices.  Thus, employees should not have unions imposed upon them when, by exercise of their own free will, they might choose otherwise.

The Court found that the Board failed to consider changed circumstances in determining whether to hold a rerun election.  And the Court specifically disagreed with the Board’s contention that it should not consider turnover and passage of time in determining whether a bargaining order is appropriate.  Indeed, “relevant circumstances must be measured at the time of the issuance of the bargaining order and not at the time of the election.”

Several key factors led the Court to hold that a bargaining order was not a suitable remedy:  (1) Novelis took numerous remedial actions since committing the unfair labor practices; (2) two years had passed between the election and the Board’s decision, and a “substantial lapse of time casts doubt” on whether a majority of employees would choose to unionize; (3) the Board ignored key turnover in company leadership; and (4) the Board failed to consider significant employee turnover since the election.  It was thus inappropriate to impose union membership absent a finding that a new, fair election more than three years after the violations was not reasonably possible.

Key Takeaways

This case is instructive for several reasons.  First, employers should take caution when responding to organizing activity.  Novelis committed several avoidable unfair labor practices through its union avoidance techniques.  On the other hand, the case reaffirms that bargaining orders are extreme forms of relief, and should not be issued without careful consideration of whether changed circumstances render such an order inappropriate.