By David Wilson, Timothy M. Hoppe, Nick Geannacopulos, and Jeffrey Berman

Seyfarth Synopsis: California agricultural employers won big before the United States Supreme Court on Wednesday. In Cedar Point Nursery v. Hassid, the Court deemed unconstitutional a California labor regulation which required agricultural employers to allow union organizers onto their property to solicit membership. The case, while focused on private property not opened to the public, could provide employers a tool to limit labor access to other types of private property as well.

In a 6-3 decision authored by Chief Justice John Roberts, the United States Supreme Court held that California Code of Regulation title 8, section 20900(e) amounts to a per se taking under the Fifth Amendment. The regulation requires agricultural employers to allow union organizers onto their property for the purpose of meeting and soliciting union membership. Specifically, it permits labor organizers to “take access” to the employer’s property for up to three hours per day, during four 30-day periods in a calendar year. An employer’s violation of the regulation amounts to an unfair business practice under the California Labor Relations Act of 1975.

Precedential Background

In 1976, this same regulation was upheld by the California Supreme Court in Agricultural Labor Relations Board v. Superior Court. Justice Mosk penned the 4-3 decision, emphasizing the fact that “incidental damages to property resulting from governmental activities, or laws passed in the promotion of the public welfare are not considered a taking.” However, the ensuing 45 years has seen a shift in Takings Clause jurisprudence which ultimately paved the way for Cedar Point Nursery. The Rehnquist and Roberts Courts established a per se takings rule when a regulation imposes a permanent physical occupation or deprives an owner of all economically beneficial use of the property. This stands in contrast to the Penn Central three-factor test, in which courts consider (1) the economic impact of the regulation, (2) its interference with reasonable investment-backed expectations, and (3) the character of the government action in determining whether a regulation has “gone too far.”

The Facts

The Petitioners are two California farms. Cedar Point Nursery is a strawberry farm near the Oregon border, and Fowler Packing is a Fresno-based grower of table grapes and citrus. The farms employ roughly 500 and 2,500 workers, respectively. At both facilities, none of the workers live on the premises. In 2015, organizers from the United Farm Workers attempted to access Fowler’s property in order to solicit membership, but the company blocked them from entering. In anticipation of another visit by UFW, the growers filed suit, requesting declaratory and injunctive relief prohibiting the Board from enforcing the regulation and allowing the union onto their farm.

The Decision

The Court held that a physical invasion of real property, even if temporary, can constitute a per se appropriation of property and require just compensation under the Takings Clause. This holding is founded on two related premises: first, that private property consists of several discrete rights, and second, that the ability to exclude is “one of the most essential sticks in the bundle of rights.” Since the regulation interfered with one of the most important aspects of owning private property, it did more than merely restrain the grower’s use of the land. An appropriation like this, the Court said, deserves per se treatment under the Fifth Amendment.

It is not dispositive, Roberts noted, that the invasion was only temporary and intermittent, as “[t]he duration of an appropriation—just like the size of an appropriation—bears only on the amount of compensation,” and not whether an appropriation has occurred. It is also irrelevant that there was no formal easement granted to union representatives. In the majority’s view, an easement and the revocation on the right to exclude are two sides of the same coin.

The Dissent

In his dissent, Justice Breyer took issue with the majority’s characterization of section 20900(e) as an appropriation of property. Instead, he viewed the regulation as a restriction on the use of the land—an aspect of the police power which is typically evaluated under the more deferential Penn Central test. Further, as a matter of administrability and policy, Breyer expressed concern that the majority’s reasoning could be used to restrict health and safety inspections, since these also involve temporary restrictions on the right to exclude.

What Should Employers Do

This decision is significant for agricultural employers, as well as other private property owners faced with the prospect of labor activities on their properties. For agriculture businesses, a burdensome labor code regulation has been struck down which restricted the activities they could exclude from their workplaces.

And while Cedar Point Nursery involved access to rural agricultural sites, the reasoning of the case—in particular the protection of the private property right to exclude—may affect current and future legislation aimed at restricting other property owners’ ability to exclude labor activities from their premises. For example, California’s Moscone Act (Cal. Code of Civil Procedure § 527.3), which the California Supreme Court has construed to allow for union activities on private retail properties, and other regulations like it, may now be subject to challenge.

By: Jennifer L. Mora and Jeffrey A. Berman

The National Labor Relations Board’s sole Democrat, Chairman Lauren McFerran, has issued two new dissents that portend how a Biden Board likely will reverse precedent established by the Trump Board. This update is our fourth in a multi-part series discussing how Chairman McFerran’s dissents are likely to become the law once President Biden appoints new Board members and the Democrats are in the majority (see here regarding confidentiality in arbitration agreements, here regarding implementation of employee handbooks, and here regarding investigative confidentiality rules). The latest examples appear in separate Board decisions issued on April 30, 2021 (The George Washington Univ. Hospital) and May 3, 2021 (AT&T Mobility, LLC).

In George Washington, the Republican majority dismissed a complaint alleging that the employer had engaged in surface bargaining (i.e., going through the motions of negotiating a collective bargaining agreement with no intent of actually reaching a deal). In sum, according to the majority:

The [employer] met with the Union for 30 bargaining sessions, made many of its initial proposals at the outset of the negotiations, solicited counterproposals from the Union, made concessions in response to the Union’s bargaining positions, and never refused to bargain over any mandatory bargaining subject—and all the while it calmly answered the Union’s bellicose conduct by continuing to bargain.

Noting that the Board “does not sit in judgment of a party’s bargaining proposals,” and faced with this evidence, the majority rejected the administrative law judge’s reliance on the substance of the employer’s proposals (primarily an initial request for substantial concessions) in finding bad faith bargaining, pointing to the fact that “not one of the … proposals was unlawful in and of itself.”

McFerran disagreed, pointing to the substance of the employer’s proposals, especially as they related the management rights clause, the no-strike provision, union security, and the grievance and arbitration process. What the majority described as a permissible “wish list, throw-in-the-kitchen-sink” proposal, McFerran’s dissent characterized as an “attempt to disrupt the process to reach an agreement.”

On this critical point,  McFerran argued that “employer proposals which, taken as a whole, would leave employees with fewer rights than they would have without a contract are clearly designed to frustrate the collective-bargaining process.” She would have found a violation based solely on the employer’s presentation of its proposals relating to management rights, strikes, and grievance and arbitration procedures.

McFerran also would have found a violation based on the employer’s proposal to remove union security and dues-checkoff clauses from the agreement. And while the Board faulted the union for not responding to certain employer proposals (opining that the union had decided early on that the employer wasn’t interested in reaching a deal), McFerran stated that the majority was improperly “giv[ing] out points for politeness” and engaging in victim blaming.

The George Washington decision provides a good example of the stark contrast between how Republican and Democrat members view the same facts. It also serves as a reminder to employers to work with experienced labor counsel to develop a bargaining strategy that will withstand scrutiny under the soon-to-be Biden Board.

In AT&T Mobility, LLC, the Republican majority dismissed part of the complaint alleging that the employer violated the National Labor Relations Act by maintaining a work rule stating that employees “may not record telephone or other conversations they have with their co-workers, managers or third parties unless such recordings are approved in advance by the legal department.” Applying the Board’s 2017 Boeing decision, the Board balanced the employer’s justification for a policy the Board deemed to be neutral on its face against employees’ Section 7 rights. The Board upheld the policy concluding that, “[a]lthough the policy may prevent recording of some protected conversations, the vast majority of conversations covered by the policy bear no relation to Section 7 activity.”

In dissent, Chairman McFerran signaled that the analytical framework for analyzing handbook policies under Boeing is likely to be jettisoned by the Biden Board. Specifically, she described the rule as “unlawfully overbroad” and asked the Board to “reject the analytical framework of Boeing,” stating that it was “so forgiving to employers that it cannot be reconciled with the Act’s guarantees to employees.”

The fundamental flaw with Boeing, according to McFerran, “is that it permits employers to maintain rules that reasonably tend to chill employees in the exercise of their rights under the Act, while failing to require that employers narrowly tailor their rules to serve demonstrated, legitimate interests.” In comparing the standard for considering work rules before and after Boeing, she wrote:

Until Boeing, an employer was required to tailor workplace rules so that workers would understand that they were free to engage in activity protected by the NLRA without subjecting themselves to discipline or discharge. After Boeing, workers must not only be brave enough to engage in protected activity, but they must also be brave enough to knowingly violate workplace rules and so subject themselves to the threat of discipline. A clearer recipe for stifling protected activity is hard to imagine. (Emphasis in original.)

It is anticipated that, consistent with McFerran’s dissent, the Biden Board will overturn Boeing and return to the Obama Board’s framework for considering employee work rules. According to McFerran, the no-recording rule in AT&T Mobility would have been unlawful under pre-Boeing precedent. As such, employers, including those with non-union workforces, would be well-advised to review their handbook policies in anticipation of a possible dramatic shift in Board law.

By: Jennifer L. Mora and Jeffrey A. Berman

Once again, the National Labor Relations Board’s sole Democrat, Chairman McFerran, has issued a dissent that sheds light on how a Biden-Board likely will reverse precedent established by the Trump-Board. This update is our third in a multi-part series discussing how Chairman McFerran’s dissents are likely to become the law once President Biden appoints new Board members and the Democrats are in the majority (see here regarding confidentiality in arbitration agreements and here regarding implementation of employee handbooks). The latest example of this appears in the Board’s April 16, 2021 decision, Alcoa Corporation, which considered the enforceability of an employer’s investigative confidentiality rules.

Alcoa interviewed a handful of employees as part of an investigation into the alleged misconduct by one of their co-workers. The company interviewer told each employee that the conversation was confidential, and that the conversation should not be shared with others, including supervisors and other employees. The employees also were told to decline to answer questions if asked. Alcoa’s stated reason for the confidentiality directives was that “historically hourly employees did not write out statements on other hourly employees” (even though there was no evidence of this).

These directives subsequently were challenged as restraining and coercing the witnesses in violation of Section 8(a)(1) of the National Labor Relations Act. After a trial, the administrative law judge agreed, finding the directives particularly problematic because they were not limited by time or place because they did not tell the witnesses that they could speak about the investigation once it was over.

The Board majority, consisting of two Republican Members, disagreed, relying on two recent Board decisions:  Apogee Retail LLC (2019), and Watco Transloading LLC (2020). In Apogee, the Board held that investigative confidentiality rules that, by their terms, apply only for the duration of any investigation are categorically lawful. That holding did not, however, extend to rules that would apply to non-participants or that would prohibit employees from discussing the event or events giving rise to the investigation. Watco held that the Apogee framework applied to an employer’s one-on-one confidentiality instruction to an employee, but noted that in the context of an oral directive, “it is appropriate for the Board to assess the surrounding circumstances to determine what employees would reasonably have understood concerning the duration of required confidentiality.”

In finding lawful the confidentiality directive given to employees, the Alcoa Board disagreed with the ALJ that the directives were unlawfully unlimited in time and place. In reaching this conclusion, the Board noted that the employer ultimately provided notes of the interviews to the union and took no action against a union steward for discussing the interview. Thus, according to the Board, these facts demonstrated that “employees would reasonably understand that the confidentiality restriction was limited to the duration of the investigation.” The Board declined to consider whether the employer’s stated need for the confidentiality directive outweighed employees’ Section 7 rights, noting that “[t]he need to encourage participation in an ongoing workplace investigation is self-evident.”

In what she referred to as “an especially tortured effort to excuse an employer’s obvious infringement of the Act,” Chairman McFerran wrote a lengthy dissent, arguing against the Apogee and Watco holdings, and also finding that even under those decisions, Alcoa violated Section 8(a)(1). In terms of the Board’s finding that employees would have understood that the confidentiality directives were limited to the duration of the investigation, McFerran pointed to the lack of evidence that any employee knew that the employer had shared witness summaries or that a union steward had escaped discipline for talking about the interviews.

As did her dissents in the two earlier cases, McFerran’s dissent in Alcoa sets the stage for what the standard is likely to be under a Biden Board. Specifically, citing to previous Board law addressing the employees’ Section 7 right to discuss investigations with coworkers and their union, McFerran explained that “[t]raditionally, the Board has protected that right by allowing employees to impose confidentiality requirements only if they could prove that a legitimate and substantial business justification outweighed employees’ rights in the circumstances of a particular case.” This framework prevents a bright line rule as each case will depend on its facts. Summarizing her dissent in Apogee, McFerran wrote in Alcoa:

I endorsed the Board’s existing approach, exemplified in cases like Banner Estrella, which required employers to proceed on a case-by-case basis in imposing investigative-confidentiality restrictions on employees. This approach properly accommodated the competing interests of employers and employees. It focused the Board, the employer, and employees on the relevant circumstances of each case and so tended to minimize the chilling effect on employees, who would better understand not just “why nondisclosure is being requested, but also what matters are not appropriate for conversation.”

As the McFerran dissent is likely to become Board law once Biden appoints new Members, employers should review their investigative policies and practices. Notably, McFerran pointed out that “[r]ank and file employees do not generally bring law books to work or apply legal analysis to company rules as do lawyers, and cannot be expected to have the expertise to examine company rules from a legal standpoint.”

In this podcast episode, Ashley Cano, Partner in the Labor and Employment department of Seyfarth’s Chicago office, and John Phillips, Senior Associate in the firm’s Houston office, discuss the National Labor Relations Board’s changing view of the scope of protected concerted activity.

With a new Acting General Counsel in charge at the NLRB, the Board is already beginning to shift its focus and promote a more worker- and union-friendly agenda. On March 31st, Acting General Counsel Peter Sung Ohr issued a memorandum to all Regional Directors setting forth an expansive view of workers’ rights to engage in protected, concerted activity. He also promised to “vigorously” prosecute retaliation against workers who engage in such activity. In this podcast, Ashley and John explore what employers can expect moving forward.

Listen to the podcast here.

By Molly Gabel

Seyfarth Synopsis: The National Mediation Board’s new decertification rule survived the first round of legal challenge. In 2019, the NMB issued a final rule providing a direct decertification process under the Railway Labor Act and a two-year period of repose under which the NMB cannot conduct an election following a decertification. The Transportation Trades Department, AFL-CIO and its member unions challenged the rule through a lawsuit against the NMB in the United States District Court for the District of Columbia, alleging that the rule violated the RLA and the Administrative Procedures Act. The Court granted summary judgment for the NMB and against the TTD on March 31, 2021.

Unlike the National Labor Relations Act, the RLA does not contain an express decertification provision. Section 2, Ninth of the RLA merely establishes the NMB and enables the agency to hold elections and resolve election disputes. 45 U.S.C. § 152, Ninth (“If any dispute shall arise among a carrier’s employees as to who are the representatives of such employees designated and authorized . . . it shall be the duty of the Mediation board, upon request of either party to the dispute, to investigate such dispute and to certify [the representatives] . . . .  In such an investigation, the Mediation Board shall be authorized to take a secret ballot of the employees involved . . . .”). The Supreme Court, however, has interpreted Section 2, Ninth to give employees the right to decertify. See, e.g., Brotherhood of Ry. & S.S. Clerks, Freighthandlers, Express & Station Employees v. Association for the Benefit of Non-Contract Employees, 380 U.S. 650, 670 (1965) (Railroad employees have the “right to determine who shall be the representative of the group or, indeed, whether they shall have any representation at all.”).

Before 2019, employees who wanted to decertify their union needed to follow a confusing “straw man” process. An individual employee seeking to decertify the union would need to file an election application, win an election, be certified as the representative, and then disavow representation. The ballot included three options in this scenario: (1) for the existing representative; (2) for the straw man; or (3) for “no union.” The straw man would need to choose whether the straw man would direct employees to vote for the straw man or for “no union” (to ensure the vote was not split between the straw man and “no union”), communicate that choice and instruction to employees, and then ensure that choice won a majority of votes in order to achieve decertification. One can imagine how confusing this process was for employees.

The NMB sought to change this through formal rulemaking. In 2019, the agency finalized formal, notice-and-comment rulemaking under the APA. The final rule enables the NMB to accept a direct decertification application from employees and to run a decertification election.  The rule further extended the period of repose to two years, prohibiting elections absent “unusual or extraordinary circumstances” following a decertification for two years. 84 Fed. Reg. 35,987; 29 C.F.R. § 1206.4.

The TTD and its member unions filed suit on October 16, 2019 (Case No. 1:19-cv-03107 (CJN) (D.D.C.)), alleging that the final rule violated Section 2, Twelfth of the RLA and was arbitrary and capricious under the APA. Plaintiffs claimed that Section 2, Twelfth allows the NMB to conduct elections only to certify a representative. See 45 U.S.C. § 152, Twelfth (“The Mediation Board, upon receipt of an application requesting that an organization or individual be certified as the representative of any craft or class of employees, shall not direct an election . . . unless the Mediation Board determines that the application is supported by a showing of interest from not less than 50 percent of the employees in the craft or class.”) (emphasis added).

The Court disagreed, first concluding that the NMB’s interpretation of Section 2, Ninth and Section 2, Twelfth was entitled to Chevron deference because the agency had engaged in formal rulemaking subject to extensive notice and comment procedures and because Section 2, Ninth and Section 2, Twelfth is silent on decertification and does not “unambiguously preclude the direct decertification method adopted in the Final Rule.” Slip Opinion at 8. The Court went on to hold that the NMB had adequately explained as part of the rulemaking process why it interpreted Section 2, Ninth and Section 2, Twelfth to allow for decertification elections. The Court concluded that the agency’s interpretation of these two statutory provisions was entitled to deference.

In reaching this holding, the Court reasoned that Section 2, Ninth grants the NMB the power to hold elections—not Section 2, Twelfth—and “the Board enjoys exceptional latitude when acting within its proper sphere of Section 2, Ninth power.” Railway Labor Execs. Ass’n v. National Mediation Bd., 29 F.3d 655, 662 (D.C. Cir. 1994). The Court stated that Section 2, Twelfth provides only a carveout within the NMB’s authority under Section 2, Ninth, namely that the agency cannot hold an election unless the application is supported by at least half of the employees in the applicable craft or class. Slip Opinion at 7-8.

The TTD further argued that there was no rational basis for the NMB to extend the one-year period of repose following a decertification to a two-year period of repose. The Court also disagreed with this argument, ruling that the NMB had adequately explained its rationale for extending the election bar: the two years matches the period of repose following certifications so that employees can have time to “judge the advantages and disadvantages of their decision without the turmoil of an immediate organizing campaign.” 84 Fed. Reg. 35,986.

Ultimately, the Court entered summary judgment for the NMB in full and denied the unions’ cross-motion for summary judgment in its entirety. It remains to be seen whether the unions will appeal or whether a Biden Administration majority NMB—when one is seated—will undo the rule. For the time being, however, the rule remains in effect, and railroad, air carrier, and derivative carrier employees have a direct decertification process under the RLA.

By: Jennifer L. Mora and Jeffrey A. Berman

As the National Labor Relations Board transitions from a Republican-majority to a Democrat-majority, the Board’s sole Democrat, Chairman McFerran, continues to provide a window into what the future is likely to look like under a Biden Board. This blog is another in a multi-part series discussing how Chairman McFerran’s dissents may become the law once President Biden appoints new Board members and the Democrats are in the majority. Another example of this appears in the Board’s March 18, 2021 decision, Dish Network, LLC, which considered the enforceability of certain provisions in a mandatory arbitration agreement.

The employer’s arbitration agreement required employees to submit “any” claim or controversy to mandatory arbitration, without any carve-out for unfair labor practices charges alleging violations of the National Labor Relations Act. The agreement further provided, among other things, that “all arbitration proceedings, including but not limited to hearings, discovery, settlements, and awards shall be confidential…”

The Board majority had little trouble in finding that requiring employees to arbitrate “any” claim or controversy unlawfully restricted employees in their ability to access the Board to seek redress for unfair labor practices. It was the confidentiality provision, however, that sparked a very lengthy debate between the Republican majority and McFerran’s dissent, with both sides either relying on or criticizing the Board’s decision in California Commerce Club, Inc. (2020) and disagreeing about the import of the Supreme Court’s decision in Epic Systems (which upheld class waivers in arbitration agreements).

In Dish, the Republican majority upheld the confidentiality provision, except to the extent that it required that “settlements” be kept confidential. On the former, the majority relied on the decision in California Commerce Club, which held that “provisions in an arbitration agreement requiring that arbitration be conducted on a confidential basis, including provisions precluding the disclosure of evidence, award, and/or decision beyond the arbitration proceeding, do not violate the Act and must be enforced according to their terms pursuant to the [Federal Arbitration Act].”

The Dish majority wrote: “the Supreme Court has repeatedly made clear that ‘the FAA requires that courts rigorously enforce arbitration agreements according to their terms, including terms that specify … the rules under which …arbitration will be conducted.” Thus, according to the majority, if a provision in an arbitration agreement pertains to arbitration “proceedings,” then the FAA shields the challenged provision.

However, the Board majority concluded, and McFerran agreed, the provision that “settlements” be kept confidential was unlawful because a settlement (an alternative to arbitration) is not part of the arbitral “proceeding.” As such, the FAA did not shield that provision. That being the case, the Board had to consider whether the requirement that settlements remain confidential violated Section 7. The Board agreed that it did, pointing to the fact that a settlement might cover an issue that could have been submitted to the Board and arguably would prohibit an employee from filing charges with the Board over a settlement that violated the Act.

Advancing the notion that the majority’s decision was yet another effort at forcing employees to “suffer in silence at work,” the McFerran dissent was forceful enough to result in the majority writing a separate section in response. In short, the McFerran maintained that the confidentiality provision restricted employees in their ability to seek redress from the Board and prohibited them from discussing terms and conditions of employment.

In terms of interfering with Board access, McFerran’s dissent gave as an example an employee being unable to seek Board redress if the employee learned during the arbitration about Section 7 violations. Or employees might be subject to “coercive interrogation” during arbitral discovery or directed not to discuss with co-workers the facts at issue in the matter. By maintaining a rule generally prohibiting disclosure about anything taking place at the proceeding to anyone necessarily meant that an employee could not reveal the information to a private attorney or the Board. It made no difference to McFerran that an employer would not actually be able to enforce these provisions as the Board as long recognized that such rules might have a “chilling effect” on employees.

Chairman McFerran made clear that the Board’s decision in California Commerce Club may have a short shelf-life, stating flatly that the case was “wrongly decided” and that the Board misapplied Supreme Court precedent “when it concluded that the NLRB and the FAA cannot be reconciled and that the FAA must displace the NLRA with respect to confidentiality provisions in mandatory arbitration agreements.” It could be the case that the Supreme Court will have to finally put the issue to rest.

As the McFerran dissent is likely to become Board law once Biden appoints new Members, employers should review their arbitration agreements to ensure that cannot be read to prevent employees from filing charges with the Board or discussing any settlement they might have with an employer over an employment-related dispute. Employers concerned about their confidentiality provisions should work with experienced labor counsel until the dust (hopefully) settles.

Wednesday, March 24, 2021
1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 a.m. Pacific

One part of the recently passed $1.9 trillion “American Rescue Plan” is the “Butch Lewis Emergency Pension Plan Relief Act of 2021” (“Butch Lewis”).  Butch Lewis is the long awaited law designed to provide underfunded multiemployer pension plans with sufficient monies to pay for all accrued benefits owed to retirees, without reduction, through the plan year ending in 2051.  Is this the reform plans and participating employers have been looking for?  In this webinar, Seyfarth attorneys will review Butch Lewis, address what it means for multiemployer plans, and discuss what it means for employers participating in those plans.

Topics will include:

  • Overview of prior pension reform attempts and the state of multiemployer pension plans
  • Butch Lewis as adopted
  • Plan eligibility for relief and the application process
  • Conditions on relief
  • Impact for multiemployer plans
  • Impact for participating employers

Register Here

Wednesday, March 24, 2021
1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 a.m. Pacific

One part of the recently passed $1.9 trillion “American Rescue Plan” is the “Butch Lewis Emergency Pension Plan Relief Act of 2021” (“Butch Lewis”).  Butch Lewis is the long awaited law designed to provide underfunded multiemployer pension plans with sufficient monies to pay for all accrued benefits owed to retirees, without reduction, through the plan year ending in 2051.  Is this the reform plans and participating employers have been looking for?  In this webinar, Seyfarth attorneys will review Butch Lewis, address what it means for multiemployer plans, and discuss what it means for employers participating in those plans.

Topics will include:

  • Overview of prior pension reform attempts and the state of multiemployer pension plans
  • Butch Lewis as adopted
  • Plan eligibility for relief and the application process
  • Conditions on relief
  • Impact for multiemployer plans
  • Impact for participating employers

Register Here

By Jennifer L. Mora and Jeffrey A. Berman

Seyfarth Synopsis: When a new President is about to shift the balance of power at the National Labor Relations Board, a Board dissent can foreshadow how the newly constituted Board will consider a similar issue. Such is the case in Stericycle, Inc., a February 17, 2021 divided Board decision addressing unilateral implementation of an employee handbook.

In Stericycle, the employer had a collective bargaining relationship with the Teamsters. In February 2015, the employer distributed a company-wide handbook at one of the union facilities. The handbook was inconsistent with several provisions in the parties’ collective-bargaining agreement, including those involving attendance, overtime, time off, work rules, discipline, grievance procedures, and the employee probationary period.

However, the first page of the handbook stated that “[s]ome benefits may not apply to union team members and in some cases these policies may be impacted by collective bargaining agreements.” The last page of the handbook required employees to sign and return to human resources a statement attesting that they “understand it is [our] responsibility to know and abide by its contents.” The employer had not applied the nationwide employee handbook in a manner inconsistent with the collective bargaining agreement.

The administrative law judge (ALJ) found the employer was obligated to provide the union advance notice and an opportunity to bargain over the handbook before distributing it. According to the ALJ, the handbook “contained numerous Company policies and practices that affected numerous mandatory subjects of bargaining.” The ALJ also ruled that the disclaimer language on the first page referring to union-represented employees “did not provide . . . clear guidance as to the applicable policies affecting certain terms and conditions of employment.”

A majority of the three Member panel, Members Emanuel and Ring, disagreed. While the handbook undoubtedly conflicted with some mandatory subjects in the labor agreement, the majority concluded the employer did not represent to employees that the handbook trumped the labor agreement and did not profess to make any changes to the collective bargaining agreement. The majority found it telling that the handbook stated on the first page that the labor agreement affected the policies in the handbook, and that some terms in the handbook might be different for the union-represented employees. Thus, the majority found no evidence of an intent to “modify, alter or change the existing contract” – – essentially, the employer’s disclaimer carried the day.

But it is Chairman McFerran’s dissent which, in the end, may be the most important part of the decision as it likely provides a roadmap for how the Biden Board will consider employer efforts to implement employee handbooks. Starting with the undisputed premise that the handbook conflicted in some respects with the labor agreement, the dissent took issue with the Board’s conclusion that the employer did not purport to change the labor agreement or represent to employees that the handbook superseded the agreement. The problem with this argument, according to McFerran, was that union-represented employees were required to sign an acknowledgement of their receipt of the handbook. Thus, the employer was essentially telling employees that it “was free to sidestep the Union and supplant, expand, or alter terms and conditions of employment that the parties had reached through bargaining and impose additional terms and conditions of employment without bargaining.”

Chairman McFerran also found the disclaimer lacking for several reasons. First, the disclaimer did not communicate to employees with “the clarity or the specificity required by the duty to recognize and bargain with the Union as employees’ exclusive representative.” Next, the handbook should have advised employees that the labor agreement trumped the handbook (rather than the opposite). This failure meant that employees were left to guess which handbook provisions were impacted by the labor agreement. And the disclaimer was silent about the application of new terms and conditions in the handbook that were not in the collective bargaining agreement. Ultimately, according to the dissent, the message the employer communicated to unit employees was that “it did not respect the Union as their exclusive representative.”

While employers with a mix of union and non-union workforces might understand that their employee handbooks do not supplant or alter a collective bargaining agreement with their employees’ bargaining representative, the Biden Board will ask in future cases – – do union-represented employees share this same understanding? The lesson for employers with mixed workforces is take a fresh look at their handbook disclaimers to make it extremely clear to unionized workforces that, if conflicts exist, the labor agreement always wins. However, depending on the composition of the new Biden Board, even this may not be sufficient.

By Ronald KramerSeong Kim, and James Hlawek

Seyfarth Synopsis:  On Monday, the Senate Parliamentarian ruled that the multiemployer pension plan bailout provisions in the $1.9 trillion American Rescue Plan (a.k.a. the latest COVID-19 relief bill) would be eligible for a simple majority vote in the Senate as part of the budget reconciliation process, and thus will remain as part of the relief bill likely to become law shortly.

On Monday, March 1st, Senate Finance Committee Chair Ron Wyden released a statement reporting that the Senate Parliamentarian had determined that the multiemployer pension plan reform provisions of the American Rescue Plan, entitled the “Butch Lewis Emergency Pension Plan Relief Act of 2021” (“Butch Lewis”), has the necessary budget impact to remain part of what is to be a budget reconciliation bill that will need only majority approval in the Senate.

In his press release, Senator Wyden stated the following:

“I’m pleased our pension protection package will remain in the critical relief bill. This economic crisis has hit already struggling pension plans like a wrecking ball, and the retirement security of millions of American workers depends on getting this package across the finish line.”

Given that the inclusion of Butch Lewis will not derail plans to vote the American Rescue Plan into law by a simple majority vote in the Senate, with Vice President Harris being the tie breaker, it is highly likely that Butch Lewis will remain in the final bill and, if passed, will become law very shortly.

As discussed in our prior post, Butch Lewis as drafted will make a seriously underfunded multiemployer plan eligible for “special financial assistance” that is not subject to any financial repayment obligations, designed to cover the amount required to pay all accrued benefits through the last day of the plan year ending in 2051.