By: Timothy Hoppe

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

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

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

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

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

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

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

 

 

By: Joshua M. Henderson

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

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

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

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

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

By: Kaitlyn F. Whiteside

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

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

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

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

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

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

By:  Bradford L. Livingston

On July 17, 2018, the DOL rescinded its 2016 “persuader rule” — a controversial reinterpretation of the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA) that would have required employers and their consultants (including lawyers) to report their relationships and the fees paid related to persuading employees “to exercise or not to exercise… the right to organize and bargain collectively… .”

The 2016 rule effectively eviscerated the LMRDA’s exemption for reporting advice, including legal advice, if the DOL concluded that an object of the advice — directly or indirectly — was persuading employees about whether or not to form or join a union.  Activities that would have triggered reporting included indirect consultant activity undertaken with a potential object to persuade employees, such as planning, directing, or coordinating activities undertaken by supervisors; providing material or communications for dissemination to employees; conducting positive employee relations seminars for supervisors or other employer representatives; and developing or implementing personnel policies, practices or actions for the employer.  The reporting would have included any agreements between the employer and third party, and both fees paid to and received by the third party.

Employers and their consultants believed that such reporting would have a chilling effect on employers’ willingness to seek legal advice during union organizing campaigns — a time when obtaining such advice is critical.  Several lawsuits challenged the DOL’s 2016 reinterpretation, and a federal district court entered a nationwide injunction to prevent it from being implemented.  An appeal is pending before the Fifth Circuit Court of Appeals.

After President Trump was inaugurated, the DOL sought public comments as to whether it should rescind the 2016 rule.  Among several other employer groups, Seyfarth Shaw filed comments on our and our clients’ behalf where we argued that the DOL’s 2016 interpretation was contrary to the LMRDA, inherently vague and ambiguous, and would inhibit employers from seeking needed and proper legal advice.

In its final pronouncement yesterday, the DOL specifically cited Seyfarth Shaw’s comments in explaining why the 2016 rule was being rescinded.  The DOL is reverting to the longstanding prior interpretation of the LMRDA and its advice exemption, whereby neither employers nor their consultants or lawyers are required to report advice so long as the consultant or lawyer is not directly persuading employees.

But in Washington, no bad idea ever dies.  Democrats in Congress are looking to pass legislation that would codify the now-rescinded rule.  And who knows what the mid-term elections will bring this November, or what the 2020 elections will bring.  So stay tuned.

By: Glenn J. Smith and Jason J. Silver

Seyfarth Synopsis: Public-sector labor unions were dealt a heavy, but not unexpected, blow as the Supreme Court of the United States issued a landmark decision in Janus v. AFSCME. By a vote of 5 to 4, the Court held that fair share fees for public-sector unions are unconstitutional.   Whether the actual fallout from the decision will match the level of the pre-decision rhetoric remains to be seen. 

Janus v. AFSCME was brought by Mark Janus, a child support worker in Illinois who opted not to join the union, the American Federation of State, County and Municipal Employees (“AFSCME”), that represents Illinois state government employees. The primary issue in the case was the propriety of the $45 “agency” or “fair share” fee that was automatically deducted from Janus’ paycheck on a monthly basis. AFSCME assessed this monthly fee to Janus (and other Illinois government employees who opted out of membership in AFSCME), allegedly for services that nonunion members, like Janus, benefit from, such as negotiating and administering a collective bargaining agreement, and handling grievance procedures.

The decision overrules the prior position of the Court that a public-sector union may collect agency or fair share fees, which has been the law since the Supreme Court’s 1977 Abood v. Detroit Board of Education decision. The Janus v. AFSCME case revisited Abood and examined whether public-sector unions can continue to compel nonunion members to pay agency or fair share fees, or whether they constitute compelled speech and therefore violate First Amendment rights given that the money may also be utilized to support the union’s political speech and legislative agenda.

Janus v. AFSCME has garnered significant national interest and attention, including the filing of over fifty (50) amici briefs, including many from industry groups and labor unions. The primary legal arguments on the issue were as follows:

Janus – Janus argued that the fair share fee constitutes a violation of his First Amendment rights for two primary reasons. First, Janus argued that collectively bargaining with a government employer is akin to lobbying the government. Second, Janus argued that fair share fees are a form of compelled speech and association that deserve strict constitutional scrutiny. Janus further argued that the use of fair share fees for purposes of labor stability and to discourage “free riders” should be found unconstitutional.

AFSCME – AFSCME argued that Janus misconstrues the intent behind the First Amendment, how the Supreme Court has previously applied the First Amendment and the nature and idiosyncrasies of collective bargaining. AFSCME further argued that the Supreme Court has articulated a narrower view of First Amendment rights for public employees, limiting those rights speaking as both a citizen and on matters of public concern. AFSCME highlighted that the Supreme Court has always balanced a public-sector employee’s rights in speech with the government’s interests, as outlined in Abood. AFSCME also argued that collective bargaining primarily concerns terms and conditions of employment, are non-political in nature and have nothing to do with lobbying. AFSCME contended that if the Supreme Court accepts Janus’ arguments, it has the potential to deprive the government from making basic personnel decisions, a managerial cornerstone of collective bargaining.

The Court held that Illinois’ extraction of agency fees from nonconsenting public-sector employees violates the First Amendment. The Court concluded that forcing free and independent individuals to endorse ideas they may find objectionable raises serious First Amendment issues, which includes compelling a person to subsidize the speech of other private speakers.

In rejecting and overturning Abood, the Court reasoned that exclusive representation of all the employees in a bargaining unit and the extraction of fair share fees is not inextricably linked. The Court reasoned that the risk of free riders (nonmembers that benefit from the union’s efforts) is not a compelling state interest sufficient to overcome First Amendment rights. Importantly, the Court held that “States and public-sector unions may no longer extract agency fees from nonconsenting employees.” Specifically, the Frist Amendment is violated when money is taken from nonconsenting employees for a public-sector union. This means that “employees must affirmatively consent before fees can be withheld from their paychecks – the system must be opt-in, not opt-out.[1]

The Court also rejected AFSCME’s argument that public employees have no free speech rights as a position that would have required “overturning decades of landmark precedent.” In determining that Abood must be overruled, the Court primarily considered five factors: “the quality of Abood’s reasoning, the workability of the rule it established, its consistency with other related decisions, developments since the decision was handed down, and reliance on the decision.” Each factor favored establishing new precedent.

The decision in Janus serves to further explain the current Court’s view on the treatment of compelled state speech. In NIFLA v. Beceera, decided the day before Janus, the Court found that the California Reproductive Freedom, Accountability, Comprehensive Care, and Transparency Act (“FACT ACT”) was unconstitutional. The FACT ACT required clinics that serve pregnant women to provide certain notices related to free or low-cost medical services, including abortions. The Court found the FACT ACT to be an unconstitutional content based law that that was not narrowly tailored to serve compelling state interests. In other words, the Court found that the FACT ACT impermissibly mandated speech on a political agenda (i.e. pro-choice), much like the holding in Janus finds that fair share fees used by a union for lobbying impermissibly compels a certain political agenda not narrowly tailored to serve compelling state interests.

Practically, the outcome will necessarily have some impact on the financial statements of unions that are heavily engaged in public sector representation.  Surely, there will be employees who do not work in a right-to-work state (an employee in a right-to-work state does not have to pay fair share fees if not a member of the union), and who will resign their membership based solely on the financial implications. This assumes that reclaiming $540 a year in fees that are no longer required will be meaningful to some state workers.  The magnitude of the defection could potentially determine the fate of some unions, but whether the predicted landslide of members will occur remains anyone’s guess. As noted by the Court, one also must consider the “billions of dollars” received from non-members in the past 41 years.   According to the Bureau of Labor Statistics, 10.7% of U.S. workers were union members in 2017 – down from 20.1% in 1983. Nearly a third of U.S. government employees are members of a public-sector union.

Organized labor will most certainly bemoan the potential impacts, of this decision, particularly following another recent blow to organized labor: the Supreme Court’s decision in Epic Systems holding that the maintenance of individual arbitration agreements containing class-action waivers does not violate the National Labor Relations Act.

[1] It is essential to highlight that the Court’s holding is limited to public-sector unions. It is not unlawful for private-sector unions and employers to negotiate and agree upon agency and fair share fees in collective bargaining agreements, subject to the existence of any right to work laws governing their jurisdiction.

By: Rashal G. Baz

Seyfarth Synopsis: On June 20, 2018, Peter B. Robb, General Counsel for the NLRB, directed regional offices to continue aggressively pursue temporary injunctions to stop categories of potentially unfair labor practices

In a newly released memorandum, National Labor Relations Board (“NLRB”) general counsel, Peter B. Robb (“Robb”) urged regional offices to continue to pursue Section 10(j) relief as an “important tool” for effective enforcement of the National Labor Relations Act (“NLRA”).

Section 10(j) of the NLRA authorizes the NLRB to seek temporary injunctions in federal district courts against employers and unions while a case is being litigated before the administrative law judges and the Board.  Robb touts that “in [his] first six months in office, [he] sent 11 cases to the Board for 10(j) authorization, receiving authorization to proceed” in all of them.

The General Counsel urges regional offices to submit recommendations to the Injunction Litigation Branch of the Board to ask whether or not to seek an injunction for certain types of cases that will most likely warrant a 10(j) injunction. Robb described them as unfair labor practices that may lead to “remedial failure,” including:

  • Discharges that occur during an organization campaign;
  • Violations that occur during the period following certification when parties should be attempting to negotiate their first collective-bargaining agreement; and
  • Cases involving a successor’s refusal to bargain and/or refusal to hire.

Ultimately, Robb notes that “[o]f upmost importance” is that regions expedite the processing of any potential 10(j) case that raises a threat of irreparable harm or remedial failure. The memo explains that the “threshold for proving a violation to a district court is very low” and in light of the highly deferential standard, it doesn’t serve the NLRB’s purposes to delay seeking an injunction solely to strength the theory of violation or merit within the case.

Employers should be mindful of this initiative and, as always, prepared to defend against a possible 10(j) injunction, especially in those categories of cases identified by Robb as appropriate for such extraordinary relief.

By: Glenn J. Smith and Samuel Sverdlov

Seyfarth Synopsis: Given the Ninth Circuit’s recent holding that successor withdrawal liability is governed by a constructive notice standard, private equity companies and other businesses seeking to acquire other enterprises should be hyper-diligent in determining whether the transaction will expose their organizations to withdrawal liability triggered by the seller.

Under the Employee Retirement Income Security Act (“ERISA”), as amended by the Multiemployer Pension Plan Amendment Act (“MPPAA”), generally, an employer may face withdrawal liability when withdrawing from, or ceasing to make payments to, a multiemployer pension plan. If a successor employer acquires an entity that has unpaid withdrawal liability, then the purchasing entity is potentially responsible for that withdrawal liability if it has notice of the liability. Existing precedent provides that to be liable, the purchaser must “(1) be a successor, and (2) have notice of the withdrawal liability.” Withdrawal liability can sometimes be overlooked by successor employers that assume the operations of their predecessor because, broadly speaking, withdrawal liability is an unperfected liability that does not necessarily appear on the seller’s financial statements. Said otherwise, purchasing entities must be completely certain of that which they are assuming.

New case law makes clear that acquirers can no longer simply rely on a seller’s representation that no withdrawal liability exists. On June 1, 2018, in Heavenly Hana, LLC v. Hotel Union & Hotel Industry of Hawaii Pension Plant, the Ninth Circuit held that a private equity company that purchased a hotel in Hawaii was liable for the seller’s unpaid withdrawal liability under the MPPAA. In doing so, the Court overruled the lower District Court’s holding that no withdrawal liability was assumed because “actual notice” was missing. The Ninth Circuit held that the private equity company had “constructive notice” of the selling entity’s unpaid withdrawal liability, which is a sufficient basis upon which to impose successor withdrawal liability “because a reasonable purchaser would have discovered their predecessor’s withdrawal liability.” The Court determined that the purchasing entity had constructive notice of the liability because:

(1) the private equity company had experience with other acquisitions involving multiemployer pension plans, and was familiar with withdrawal liability;

(2) the private equity company was on notice that the employees at the hotel were unionized and that the seller had previously contributed to a multiemployer plan; and

(3) the multiemployer pension plan’s funding notices were publically available, and clearly demonstrated that the plan was underfunded.

The Court rejected the private equity company’s argument that it relied upon the representation of the seller that no withdrawal liability existed. Further, the Court noted that the purchasing entity, rather than the seller or the pension plan, was in the best position to determine whether it will face withdrawal liability because: (1) the seller is incentivized to under-represent any potential withdrawal liability; and (2) the pension plan should not be tasked with keeping track of every sales rumor and identifying all potential purchasers. As the Court stated: “[p]urchasers .. have the incentive to inquire about potential withdrawal liability in order to avoid unexpected post-transaction liabilities.”

This decision serves as a helpful reminder to purchasing entities that in the world of acquisitions, acquirers must push deeply on their inquiries into labor agreements and potential withdrawal liability that frequently accompanies a collective bargaining relationship. As made evident by the Court’s decision in Heavenly Hana, LLC, a purchasing entity cannot simply claim ignorance as an excuse to be absolved of successor withdrawal liability. Rather, purchasing entities should retain experienced transactional counsel, including traditional labor and benefits counsel, to make sure there are no hidden landmines in the transaction.

If you have any questions regarding withdrawal liability, please contact your local Seyfarth Shaw attorney. Glenn J. Smith is a Partner in Seyfarth’s New York office whose practice focuses on management-side traditional labor law. Samuel Sverdlov is an Associate in Seyfarth’s New York office.

 

By:  Jason Silver and Kevin Fritz

Seyfarth Synopsis: On June 6, 2018, Peter. B. Robb, General Counsel for the National Labor Relations Board (“Board”), provided employers with the first substantive guidance regarding workplace policies since the Board’s Boeing decision. General Counsel Memorandum 18-04 is a victory for employers as the Board seems to be returning to a common sense approach when evaluating workplace policies concerning on the job conduct, confidentiality, defamation, intellectual property, among other things.

Under Boeing, the Board established a new standard focused on the balance between an employees’ ability to exercise their Section 7 rights and the employers’ right to maintain discipline and productivity in the workplace. The Board broke down workplace policies into three categories:

  • Category 1 – Rules that do not prohibit or interfere with the exercise of protected rights, or the potential adverse impact on protected rights is outweighed by justifications associated with the rule.
  • Category 2- Rules that the warrant individual scrutiny on a case-by-case basis and whether any adverse impact on protected conduct is outweighed by legitimate justifications.
  • Category 3 – Rules that that the Board will designate as unlawful to maintain because they would prohibit or limit protected conduct, and the adverse impact on Section 7 rights is not outweighed by justifications associated with the rule. (https://www.employerlaborrelations.com/2017/12/19/the-boards-return-to-civility-and-common-sense-regarding-workplace-rules/)

This latest memorandum adds guidance to the three categories set out in Boeing.

Category 1 Policies that are Lawful to Maintain

  • Civility rules – Rules that require courteousness in the workplace, that prohibit rude or unbusinesslike behavior and that prohibit an employee from disparaging another employee. These types of rules advance substantial employee and employer interests, including an employer’s responsibility to maintain a workplace free of harassment and violence.
  • No photography/no recording rules – Rules that prohibit photography in the workplace and that forbid recording conversations, meetings and phone calls with co-workers, supervisors, and third parties unless such recordings are approved by the Company. These type of rules advance an employer’s interest in limiting recording and photography on Company property. Be advised however, employers still must ensure that a no recording policy passes legal muster under applicable state law.
  • On the job conduct rules – Rules that prohibit insubordination, being uncooperative or otherwise engaging in conduct that does not support the employer’s goals and objectives. These type of rules allow an employer to prevent non-cooperation at work.
  • Disruptive behavior rules – Rules that prohibit boisterous or other disruptive conduct. These type of rules allow an employer to prevent dangerous conduct or bad behavior and ensure safety and productivity.
  • Rules protecting confidential, proprietary and customer information – Rules that prohibit the discussion and dissemination of confidential, proprietary or customer information. These types of rules allow an employer to protect confidential and proprietary information, as well as customer information.
  • Rules against defamation or misrepresentation – Rules that prohibit defamatory messages and misrepresent the employer’s products, services, or employees. These types of also allow an employer to protect themselves, their reputation, and their employees from misrepresentation, defamation and slander.
  • Rules against using an employer’s intellectual property – Rules that prohibit the use of Employer logos, trademark, or graphics without prior written approval.
  • Rules that require authorization to speak for the Company – Rules that prohibit employees to comment on behalf of the employer and to respond to media request only through designated spokespersons. These types of rules allow an employer to designate who should speak on behalf of the employer.
  • Rules banning disloyalty, nepotism, or self-enrichment – Rules that prohibit disloyal conduct, conduct that is damaging to the employer, and conduct that competes with the employer and/or interferes with an employee’s judgment concerning the employer’s best interests. These type of rules allow an employer to prevent a conflict of interest, self-dealing or maintaining a financial interest in a competitor. These type of rules, when reasonably interpreted, have no meaningful impact on Section 7 rights.

Category 2 Policies Warranting Individualized Scrutiny

  • Broad conflict-of-interest rules that do not specifically target self-enrichment and that do not restrict membership in, or voting for, a union.
  • Confidentiality rules that broadly encompass employer business or employee information, versus confidentiality rules specifically regarding customers and/or proprietary information.
  • Rules that disparage or criticize the employer versus civility rules that bar the disparagement of employees.
  • Rules that regulate the use of the employer’s name versus rules that regulate the use of the employer’s intellectual property.
  • Rules that restrict speaking to the media or third parties versus rules that restrict speaking to the media on the employer’s behalf.
  • Rules that ban off-duty conduct that might harm the employer versus rules that ban insubordination and other disruptive conduct while at work.
  • Rules against making false or inaccurate statements versus rules against making defamatory statements.

Category 3 Policies that are Unlawful to Maintain

  • Confidentiality rules about wages, benefits, and working conditions – The ability to freely discuss terms and conditions of employment is a cornerstone of Section 7 rights. There are no legitimate business justifications in banning employees from discussing wages or working conditions.
  • Rules against joining outside organizations or voting on matters concerning the employer – Employees have a right to join outside organizations, specifically unions. While employers have a legitimate and substantial interest in preventing nepotism, fraud, self-dealing, and maintaining a financial interest in a competitor, rules that prohibit membership in outside organizations or from participation in any voting concerning the employer unduly infringe upon Section 7 rights.

While the pendulum could swing back in a new administration, the Board’s return – at least for now – to allow employers to require employees to maintain a reasonable level of civility in the workplace is a refreshing victory for employers. Both the Boeing decision and General Counsel Memorandum 18-04 prove that the Board clearly understands that the prior Board standard laid out in Lutheran Heritage, which prohibited any rule that can reasonably be interpreted as covering Section 7 activity, was unduly burdensome, oppressive, and an operational hindrance.

Now’s a good time for employers to review their handbook policies.  If you have any questions regarding your workplace’s handbook and social media policies or practices, please contact the authors, or another Seyfarth attorney.

 

 

The 2018 edition of The Legal 500 United States recommends Seyfarth Shaw’s Labor & Employee Relations group as one of the best in the country. Nationally, for the second consecutive year, our Labor practice earned Top Tier.

Based on feedback from corporate counsel, Seyfarth partner Brad Livingston was ranked in the editorial’s “Leading Lawyers” list, and 4 other Seyfarth Labor attorneys were also recommended in the editorial.

The Legal 500 United States is an independent guide providing comprehensive coverage on legal services and is widely referenced for its definitive judgment of law firm capabilities. The Legal 500 United States recognizes and rewards the best in-house and private practice teams and individuals over the past 12 months. The awards are given to the elite legal practitioners, based on comprehensive research into the U.S. legal market.

By:  Monica Rodriguez

Seyfarth Synopsis: The ALJ found that the employer did not violate the Act where it terminated an employee for using vulgar language during a staff meeting in efforts to undermine the general manager’s managerial authority.

Disciplining employees can sometimes be a challenge when attempting to comply with the National Labor Relations Act (the “Act”). Fortunately for the employer, the Administrative Law Judge (the “ALJ”) in Buds Woodfire Oven LLC d/b/a Avas Pizzeria & Ralph D. Groves, 2018 WL 2298221 (May 18, 2018), found that the termination of the employee who used vulgar language when criticizing the general manager during a staff meeting did not result in protected activity so as to violate the Act.

Background Facts

The general manager of a pizza restaurant had called a staff meeting to make a broad critique of the staff’s performance, and requested feedback from the employees of how they could do better. The general manager set the tone of the meeting by stating that he “didn’t want to come to work to be anybody’s f*cking babysitter.” In response, the charging party employee criticized the general manager and said: “how do you know you don’t do sh*t around here”.

The employee had been frustrated that the general manager did not assist with the kitchen operations like the other managers. The employee had previously expressed his frustration about the general manager to his co-workers. At the hearing, the other employees testified that they joked about the general manager’s actions or inaction, or that they’d ask the general manager to help out in certain cases.

After the staff meeting, the employee went back to work to finish his shift. The general manager terminated the employee after the employee completed his shift. The employee then filed an unfair labor practice claiming that the general manager violated section 8(a)(1) of the Act.

ALJ’s Analysis

The ALJ’s central focus when determining whether the termination constituted a violation section 8(a)(1) of the Act was whether the employee had engaged in concerted protected activity.  The ALJ acknowledged that individual action could rise to the level of concerted activity if those activities were linked to the actions of his co-workers. Just about two years ago, the National Labor Relations Board (the “Board”) reminded that even conduct personal in nature could be enough to constitute concerted activity.[i] The ALJ recognized, however, that the coworkers’ “jokes” about the general manager’s actions and inactions, where none of the coworkers shared the charging party’s concerns,  “falls short of concerted activity.”

The ALJ further noted that it is “difficult to imagine how lashing out at a manager who asks employees for feedback by asking, ‘how do you know you don’t do sh*t around here,’ even begins to lay the foundation for meaningful dialogue about employees’ terms and conditions of employment.” The ALJ found that the employee’s conduct did not entail the nature of his work conditions, but rather, was calculated to undermine the general manager’s managerial authority.

This decision is a pleasant reminder that not all vulgar comments and acts of insubordination need to be tolerated. And while this decision ended favorably for the employer as to this allegation, employers should be mindful that where more than one employee is sharing a similar concern, a vulgar comment seeking to improve employees’ terms and conditions of employment will likely be protected. In these situations, employers should exercise caution before terminating an employee based on the fact that the employee undermined the manager, or the employer might find itself undermined by the Board.

[i] M.D.V.L., Inc., d/b/a Denny’s Transmission Service, 363 NLRB No. 190 (2016) (finding that the employer violated the Act because employee discussed a demand letter for overtime pay with another employee and rejecting employer’s argument that conduct was personal in nature and not concerted protected activity).