By Monica Rodriguez

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

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

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

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

Original Confidentiality Work Rule:

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

Revised Confidentiality Work Rule:

Confidential information includes, but is not limited to:

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

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

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

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

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

By:  Kyllan Kershaw & Kaitlyn Whiteside 

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

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

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

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

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

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

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

By Bradford L. Livingston

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

 

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Charles Darwin Approach: The Survival Of The Species

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

 

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.

 

By:  Bryan R. Bienias

Seyfarth Synopsis: The Board affirms an employer’s decision to discharge an employee for engaging in dishonesty and a security breach. In the process, it clarifies the legal standards to be used when assessing whether non-verbal employee misconduct occurring in the midst of otherwise protected concerted activity loses the protections of the Act.

Background

The case, KHRG Employer LLC, 366 NLRB No. 22 (February 28, 2018), involved a Chicago-area hotel and a restaurant server who was leading an organizing drive at the property. The hotel terminated the server’s employment after he engaged in a security breach in the process of leading a delegation of nearly twenty individuals — only six of whom were hotel employees and only some of whom the server knew personally — into the non-public areas of the hotel to deliver a petition to the hotel’s General Manager. The GM’s office was located in a secure area of the hotel, behind a locked door, where the hotel stored cash, corporate checks, guest contracts, and personnel files.

Even before the server punched in a security code to gain access to the secure area, he lied to a security guard to gain entry to the hotel. After the security guard told the server that only he and a few others could come inside, the server falsely insisted that the entire delegation consisted of hotel employees who supposedly had the “right” to come in to see the GM.

While acknowledging that the server’s conduct in presenting the petition with other employees ordinarily would have been protected concerted activity under the National Labor Relations Act, the hotel nonetheless terminated the server’s employment because he engaged in a “serious security breach” by allowing unknown and unauthorized strangers into the secure area of the hotel.

The ALJ and Board Decisions

The ALJ dismissed the complaint, applying the decades-old Wright Line test to find that hotel’s decision was motivated by the server’s misconduct, not by the server’s protected concerted activity or by anti-union animus. The Board affirmed the ultimate outcome, but it declined to apply the Wright Line test. The Board noted that Wright Line was inapplicable because “when misconduct is a part of the res gestae of the employee’s protected concerted activity, the employer’s motive is not at issue.” At the same time, the Board also declined to apply Atlantic Steel, another decades-old case involving a four-factor balancing test normally applied to unprofessional verbal outbursts during otherwise protected concerted activity. The Board stated that the Atlantic Steel test was “ill-suited” to analyze misconduct “that does not occur during a workplace conversation with a supervisor or manager.”

Instead, the Board explained that, in situations involving non-verbal misconduct that is part of the “res gestae” of an employee’s protected concerted activity, it will “balance employees’ right to engage in concerted activity, allowing some leeway for impulsive behavior, against employers’ right to maintain order and respect.”

Applying this test, the Board found that the server’s conduct lost the Act’s protection.  The Board noted that the server’s conduct was not “impulsive,” but pre-meditated, and that he lied to the security guard and used a security passcode to provide unauthorized access to the secured area.

Key Takeaways

This decision should be considered a win for any employer hoping to maintain a secure facility and not have to hand over the keys (or the passcodes) to unauthorized strangers the moment employees seek to invoke Section 7 rights.

In addition, particularly given the makeup of the Board panel that decided the case (with Democrat appointees making up a majority, even during a Republican administration), this decision also should provide employers with a fair degree of going-forward legal certainty regarding the standard the Board will apply when addressing non-verbal employee misconduct that is otherwise part of protected concerted activity. That said, it remains the case that employers may not enforce their rules against misconduct more harshly against union supporters than against others or more harshly precisely because the misconduct occurred in conjunction with otherwise protected concerted activity.

 

  By: Paul Galligan, Esq. and Samuel Sverdlov, Esq.

Last month, the National Labor Relations Board (“NLRB”) vacated election results from a representation election because the Board agent opened the polling for a voting session 7 minutes late. The employer lost the election by a vote of 14-12, with one challenged ballot. However, there were 4 eligible voters (who were present in the polling location during the 7-minute delay) who did not vote in the election. Following the election, the employer filed two objections, one of which challenged the election results because the delay in voting resulted in potential disenfranchisement of a dispositive number of voters. At a hearing before a Hearing Officer, there was no evidence presented regarding either the reasons why the employees did not vote or whether any employees complained that they were prevented from voting due to the delay. Thus, the Hearing Officer overruled the employer’s objection, and the Regional Director adopted the Hearing Officer’s decision.

The employer thereafter appealed the Regional Director’s decision to the Board. In the 2-1 decision, in which Board Members William Emanuel, a Trump-appointee, and Lauren McFerran, an Obama appointee, participated in the majority, together, the Board applied the “potential disenfranchisement test” rather than the “actual disenfranchisement test” to determine whether to set aside the election. The Board majority cited Pea Ridge Iron Ore Co., 355 NLRB 161 (2001) in holding that the key issue in deciding whether to vacate the election is whether the late opening of the polls results in the “possible disenfranchisement of potentially dispositive voters.” As the Board in Pea Ridge stated:

When election polls are not opened at their scheduled times, the proper standard for determining whether a new election should be held is whether the number of employees possibly disenfranchised thereby is sufficient to affect the election outcome, not whether those voters, or any voters at all, were actually disenfranchised.

The Board rejected dissenting Board Member and Obama appointee Mark Pearce’s contention that setting aside an election requires proof of actual-disenfranchisement. Accordingly, the NLRB vacated the results of the election and remanded the case to the Regional Director to conduct a second election.

OUTLOOK

In an era when bipartisan politics appears to be as forgotten as the film, A Bronx Tale, the Bronx Lobster decision reminds us that Republicans and Democrats can still find common ground applying hyper-technical interpretations of union election rules. Specifically, the NLRB is willing to vacate a union election when the polling began 7 minutes late! This decision serves as a valuable lesson to employers that any deviation from the union election rules could result in an election being set aside. Thus, employers should consult with experienced counsel when preparing for a union election to understand the applicable rules, select appropriate observers, and remain vigilant during the election for any irregularities.

If you have any questions please contact your local Seyfarth Shaw attorney.

Yesterday, the National Labor Relations Board (NLRB or Board) issued an Order vacating the Board’s decision in Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., 365 NLRB No. 156 (2017), in light of the determination by the Board’s Designated Agency Ethics Official that Member William Emanuel is, and should have been, disqualified from participating in the Hy-Brand proceeding. In Hy-Brand, the NLRB had overruled its joint employer test set forth in Browning-Ferris Industries, 362 NLRB No. 186 (2015),and returned to its pre Browning-Ferris test.

Under the pre Browning-Ferris joint employer test, which the Board had restored in Hy-Brand, two or more entities were deemed joint employers under the National Labor Relations Act (NLRA) if there was proof that one entity has exercised control over essential employment terms of another entity’s employees (rather than merely having reserved the right to exercise control) and did so directly and immediately (rather than indirectly) in a manner that was not limited and routine.

In contrast, under the Browning-Ferris test again in effect, 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 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.

As the Hy-Brand Board majority underscored, the breadth and vagueness of such a joint employer test threatens to ensnare a vast range of economic relationships, including:

  • insurance companies that require employers to take certain actions with their employees in order to comply with policy requirements for safety, security, health, etc.
  • franchisors
  • banks or other lenders whose financing terms may require certain performance measurements
  • any company that negotiates specific quality or product requirements
  • any company that grants access to its facilities for a contractor to perform services there, and then regulates the contractor’s access to the property for the duration of the contract
  • any company that is concerned about the quality of contracted services
  • consumers or small businesses who dictate times, manner, and some methods of performance of contractors

Accordingly, companies in or contemplating such relationships should account for this new development.  While it is widely expected that the Trump NLRB will eventually overrule Browning-Ferris, when that may occur is uncertain.

By Timothy M. Hoppe and Jack Lambremont

Seyfarth Synopsis: In some early spring cleaning, last week the NLRB’s Office of General Counsel released 43 memos authored by its Division of Advice meant to provide guidance to regional offices on pending charges. Here are some of the highlights that employers should not miss.

Either the General Counsel’s office has started spring cleaning a little early or it is working hard to clear its plate before spring break. Either way, last week its Division of Advice released 43 advice memoranda. The cache weighs in on a number of cogent issues, including Google’s decision to fire an employee for suggesting that men are more suited for the tech industry than women, and the lawfulness of a union’s shadow Facebook group meant to harass dissenting union members.

An arm of the General Counsel’s office, the Division of Advice provides guidance to the regional offices on how to approach difficult or novel legal issues. The General Counsel has discretion to release the memos the Division prepares after cases are closed. Although they are not binding on the Board, the memos can provide insight into the General Counsel’s priorities and approach to charges.

Here are a few highlights from last week’s wave of releases.

Google Lawfully Discharged an Employee for Violating Its Anti-Harassment and Discrimination Policies

In a memorandum issued on January 16, 2018, the Division of Advice weighed-in on whether Google violated the NLRA when it terminated an employee for drafting and circulating a document containing a number of statements suggesting that men were more suited for the tech industry than women.

After attending a summit on Google’s diversity programs, the employee authored a critique of the company’s inclusion initiatives, which included statements attempting to rationalize the gender gap in the tech industry and at Google using gender stereotypes. The document also accused Google of not tolerating certain types of political views. The employee posted versions of the document on a couple of internal, company-sponsored discussion groups. A number of coworkers complained about the postings and, according to the advice memo, a few employment candidates withdrew from consideration due to the posts.

After an investigation, Google concluded that the employee violated Google’s anti-harassment and discrimination policies, and discharged the employee. In explaining its rational to the employee, Google stated that it based the decision solely on the employee’s comments regarding gender stereotypes. It was not based in any way on the employee’s discussion of training programs or Google’s treatment of differing political views. Google also sent a company-wide email echoing these points.

The Division of Advice acknowledged that much of the content of the employee’s memorandum likely constituted protected, concerted activity (such as criticisms about Google’s culture and training). Nevertheless, the discharge did not violate the Act. The memo noted that the Act does not protect conduct creating a hostile work environment, or constituting racial or sexual discrimination. The employee’s comments about gender stereotypes constituted this type of unprotected conduct. The Division also concluded that Google only terminated the employee’s employment for the unprotected conduct. The company’s termination memo and company-wide email were enough to demonstrate that Google did not consider the protected portions of the employee’s posts. Accordingly, the Division of Advice advised the region to dismiss the charge.

Employee Benefits PowerPoints Helped Create a Binding Contract Term

The Division of Advice concluded in a November 7, 2017 memo that a charge should issue against an employer for failing to bargain before rescinding an Employee Stock Purchase Plan (ESPP) for union members.

The memo concerns union employees at a chemical facility in Kentucky that employed both union and non-union workers. The ESPP was not an express term in the union’s CBA. However, in late 2016, the employer gave a number of power point presentations to both union and non-union employees indicating that all employees were eligible for the benefit. The union and employer also discussed the ESPP on a few occasions, and the employer held it out to the union as a potential offset to its proposed health insurance premium increases. Nevertheless, shortly before opening enrollment to the ESPP, the employer notified the union that bargaining unit employees were not eligible for the benefit.

The Division of Advice concluded that the employer’s “initial announcements of the ESPP to unit employees and reinforcing representations to [u]nion officials established a term and condition of employment.” Although the employer rescinded the purported contract term before it was implemented, the Division concluded that the employer’s statements alone had “established the ESPP as an employment term the unit employees reasonably expected.”

Franchisor Not Liable for Social Media Policies Adopted By Franchisees

On September 21, 2017, the Division of Advice determined that Subway could not be liable for its Franchisees’ use of a corporate social media policy Subway authored because Subway did not require the franchisees to adopt it.

Subway created the social media policy and made it available to its 26,000 franchisees through the company’s internet portal. On a few occasions, the company encouraged the franchisees to use the policy, but the company never required them to adopt the policy.

Phoenix’s Region 28 determined that the Subway policy was overly broad and discriminatory, and sought advice on whether it could hold Subway liable for the franchisees’ violations. The Division did not consider the policy’s legality (for a summary of the Board’s new, more moderate position on handbook provisions click here); it only considered whether a franchiser could be liable for its franchisees’ use of the policy.

The Division noted that companies may be liable for other employers’ violations of the Act if the company directs other employers with whom it has business dealings to engage in the unlawful conduct. Here, however, the Division concluded that it could not prove that Subway directed its franchisees to adopt the social media policy. Subway only recommend, encouraged, and asked the franchisees to consider adopting it. It did not track which franchisees had downloaded the policy, did not punish franchisees for not adopting the policy, and only a couple hundred franchisees actually adopted it. Accordingly, the Division recommended dismissing the charge against Subway, provided it was not first withdrawn.

Union’s Shadow Facebook Group Violated the NLRA

A shadow Facebook group started by Teamsters Local 610 violated the NLRA, according to an advice memo issued on September 21, 2017.

The Facebook group was created by union leadership during contract negotiations in response to a union member’s complaints about the composition of the union’s bargaining team, and terms the team was negotiating for some union members. The union excluded the member and his supporters from the Facebook group. It also posted a number of derogatory statements directed at the member to the Facebook page.

The Division of Advice concluded that the union’s Facebook group violated the Act for two reasons. First, the union created it to restrain and coerce dissenting members to refrain from exercising protected Section 7 activities. As the Division noted, although many of the comments may have been trivial and immature, they were “nonetheless deliberate and otherwise unprovoked acts made in direct response to the [members’] protected activity.” Thus, they were meant to exclude, ostracize, and humiliate the members. The Facebook group also violated the Act because the union unlawfully denied the dissenting members access to the group based solely on their disagreement with the union. The Division equated this to restricting access to a union bulletin board, which violated employees’ Section 8(b)(1)(A) rights.

As a remedy, the Division of Advice recommended requiring the union to (1) remove all offensive posts from the Facebook page; (2) pin a notice to the top of the page as a notice of improper conduct; and (3) invite all union members to join the Facebook group.

 

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By Andrew Cockroft

Seyfarth Synopsis: On Monday, February 5, 2018, the U.S. Chamber of Commerce’s lawsuit challenging the City of Seattle’s ordinance allowing independent-contractor drivers to engage in collective bargaining was before the U.S. Court of Appeals for the Ninth Circuit for oral argument. The outcome of the litigation could have a far reaching impact on the growth of the “gig-economy.”

In December 2015, the City of Seattle became the first city in the United States to pass an ordinance creating collective-bargaining rights for “taxi-cab, flat-rate vehicle and transportation network company drivers,” that would allow such drivers to bargain with their respective companies concerning issues such as payment to drivers, vehicle safety, and other matters of mutual interest. Seyfarth has previously covered similar state and local proposals which sought to provide collective bargaining rights to such workers.

The Chamber’s Lawsuit: Antitrust and NLRA Preemption

Seattle’s ordinance was immediately questioned by business community groups. In March 2016, the U.S. Chamber of Commerce filed suit against the city seeking to enjoin the new law. The Chamber’s complaint rests on two key claims:

  • First, the ordinance violates the Sherman Antitrust Act because it permits independent-contractors to collude on the prices they will accept for their services and that such activities are per se illegal.
  • Second, the ordinance is preempted by the National Labor Relations Act because it grants collective bargaining rights to independent-contractors even though Congress intended them to be left entirely unregulated in their labor activity and, furthermore, because these drivers are “arguably employees,” the ordinance encroaches on uniform labor law that is properly adjudicated before the NLRB.

Ultimately, the Chamber’s case attempts to put the ordinance, and others like it, in a double-bind: if the drivers are independent-contractors, then the ordinance violates antitrust law by allowing such contractors to collude against the companies they work with, but if they are employees the ordinance is preempted by the NLRA because the city seeks to create municipal bargaining rights where the NLRB is the only agency authorized to make such determinations.

The District Court Grants the City’s Motion to Dismiss

The city moved to dismiss and, in August 2017, the District Court granted their motion. Specifically, the Court rejected the Chamber’s antitrust claim, holding instead that the ordinance was immune from federal antitrust suits. The Court reasoned that the ordinance was authorized by Washington statutes that allow for regulating “for-hire transportations services” in order to promote safe and reliable service. The Court rejected the Chamber’s argument that granting drivers rights to collectively bargain was not related to promotion of safety or reliability, but rather payment for services. The city persuaded the Court that collective bargaining rights promoted safety and reliability in for-hire transportation because, for example, “in other parts of the transportation industry  . . . collective negotiation processes have reduced accidents and improved driver and vehicle safety performance.”

The Court also dismissed the Chamber’s NLRA preemption claim on two basis. First, because the Chamber has alleged that the drivers covered by the ordinance are independent-contractors and are not subject to the NLRA, they could not argue that the drivers where “arguably protected” under the NLRA, a necessary pre-condition of preemption. Second, the Court found that because the NLRA did not explicitly exclude independent-contractors from unionization, it was left up to states and municipalities to determine if such workers could be granted collective bargaining rights. As such the Court found “that Congress was indifferent to the labor rights of independent contractors  . . . because their disputes were thought to be of insufficient magnitude to affect commerce.”

Ninth Circuit Appeal and Oral Argument

The Chamber appealed the District Court’s dismissal to the Ninth Circuit. During oral argument on February 5, 2018, the audio of which is available here, the parties mostly focused on the antitrust aspect of the case, particularly whether Washington State statutes authorized the ordinance and whether permitting bargaining over compensation was sufficiently related to safety and reliability in the transportation industry.

The panel seemed skeptical of the city’s position, with Judge Milan Smith even stating, “You can regulate [the for-hire transportation industry] in terms of the drivers having to get a lube job, they have to get the car washed, they have to stop and help people, that’s all cool. But that has nothing to do with fixing rates, that’s what I’m struggling with.”

While very little of the argument focused on NLRA preemption, when given the opportunity counsel for the Chamber took issue with the District Court’s holding that the Chamber’s own opinion on whether the drivers were, in fact, employees was determinative of preemption. Rather, he explained the issue was whether the drivers where “arguably” employees and given that the issue is currently in front of the NLRB, three District Courts in California had deemed them employees, and that the Teamsters Union are advocating on behalf of such drivers, it is difficult to state they are not “arguably” employees.

Seyfarth will be watching this case very closely and encourages employers to do the same. A decision in favor of the Chamber could provide a road-map for preventing and challenging similar ordinances in other large cities. However, if the Ninth Circuit affirms the District Court’s decision, one can except to see labor organizations push even harder to organizing rights at the municipal level.

By:  Jaclyn W Hamlin

Seyfarth Synopsis: The business community has another opportunity to convince the NLRB to rescind the expedited election rules that have been wreaking havoc on workplaces since 2014, after the agency extended the public comment period to March 19, 2018.

In the fast-paced, ever-changing world of NLRB precedent and procedures, April of 2015 seems like an eternity ago.  Nearly three years ago now, the Board under President Obama implemented new expedited election rules which overhauled the Board’s existing representation case procedures.  The rules, which many employers came to call the “ambush” or “quickie” election rules, shortened the time for pre-election hearings; required rapid filing of a pre-hearing position statement and preliminary voter list (and deemed any issues not raised by the employer in the position statement waived); vested more discretion in regional directors, including giving the regional director the authority to determine whether parties could file post-hearing briefs; imposed new Excelsior list requirements including an earlier submission date; and required earlier elections with limited to no right to NLRB review of post-election disputes.  Unsurprisingly, employers were alarmed by the new rules, which placed management on the defensive with only a short period of time to make the company’s case to employees considering unionization.

With the change in Presidential Administrations, and accompanying changes in the makeup of the Board, NLRB-watchers have already seen more business-friendly policies begin to fall into place – and there is a chance that representation case procedures could be among them.  In December of 2017, the Board published a notice in the Federal Register asking for public comment on three questions:

  1. Should the 2014 Election Rule be retained without change?
  2. Should the 2014 Election Rule be retained with modifications? If so, what should be modified?
  3. Should the 2014 Election rule be rescinded? If so, should the Board revert to the Representation Election Regulations that were in effect prior to the 2014 Election Rule’s adoption, or should the Board make changes to the prior Representation Election Regulations?  If the Board should make changes to the prior Representation Election Regulations, what shoul be changed?

The comment period was originally set to expire on Monday, February 12, 2018, but in late January the Board issued a press release informing the public that “to aid in the consideration of the issues involving the 2014 Election Rule,” the Board would extend the public comment period through Monday, March 19, 2018.  The Board did not explain its reasoning in extending the public comment period, but it is possible that it concluded that more comments would help it to reach the most fully-informed decision about the fate of representation case procedures.

With this extension, the business community has another chance to make its views known to the Board about the fairest and most efficient way to conduct union representation elections.  The public comment period is an opportunity to draw the Board’s attention to the real impact that representation case procedures have on employers of all sizes and industries – before the Board turns its attention to other matters and the opportunity to regain sanity in union elections is relegated to the back-burner.