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

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

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

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

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

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

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

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

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

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

By: Monica Rodriguez, Esq.

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

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

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

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

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

  By: Ashley Laken, Esq.

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

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

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

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

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

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

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

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

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

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

 

 

  By: 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: Robert A. Fisher & Skelly Harper

Seyfarth Synopsis: A 2016 decision of the National Labor Relations Board (“Board”) finding that the graduate students at Columbia University were employees under the National Labor Relations Act (“NLRA”) has been teed up for review by the Court of Appeals. In order to obtain appellate review of the Board’s decision, Columbia University has refused to bargain with the union certified to represent its graduate-student assistants.

In a landmark ruling, Columbia University, 364 NLRB No. 90 (2016), the Obama Board reversed prior precedent and held that graduate-student assistants at Columbia University were employees and therefore could vote on whether to form a union. After the Union prevailed at the election in December 2016, Columbia filed objections and requested a rerun election. In a decision issued in December 2017, the current Board rejected those objections and certified the Union as the exclusive bargaining representative of the graduate-student assistants. 365 NLRB No. 136.

Teeing up the issue of whether graduate-student assistants are employees under the NLRA, Columbia has now refused to bargain with the Union. There is no right to a direct appeal of Board decisions in representation cases, and the only way for the University to obtain review of the earlier election determination is by refusing to bargain with the Union. Presumably, the Union will file an unfair labor practice charge against Columbia that will then lead to an adverse Board decision against Columbia. At that point, the University would be able to ask a federal Court of Appeals to assess whether the Board correctly decided the employee issue in the first instance.

While it is not the Board’s practice to review representation cases in the context of a refusal to bargain, there is reason to believe that the current Board may revisit whether graduate-student assistants are employees under the NLRA. Both Columbia decisions included vigorous dissents by a Republican Board member. In addition, in a separate December 2017 decision in a case involving Harvard University, another Republican Board member noted his view that Board precedent on the employee-status of students warrants reconsideration. Indeed, the Board had previously gone back and forth on the issue. In Brown University, 342 NLRB 483 (2004), the Board held that graduate-student assistants were not employees. Just two years earlier, in New York University, 332 NLRB 1205 (2000), the Board had held that graduate-student assistants were employees under the NLRA.

Regardless of whether the Columbia University decision is revisited through the appeals process or by the Board itself, it is unlikely that the 2016 decision will be the last word on the issue. The final outcome will most certainly impact efforts by unions to organize graduate-student assistants and other students such as residence assistants. The final decision also may impact the cases in which certain college athletes, usually scholarship athletes, are claiming employee status for purposes of state and federal wage-hour laws.

  By: Kyllan B. Kershaw, Esq.

Seyfarth Synopsis: Union organizers are increasingly embracing the #MeToo movement as an organizing tool, claiming that unions are the key to eliminating gender inequity and sexual harassment in the workplace.

Employers across the country are examining their corporate culture and taking steps to avoid being the next sexual harassment headline in response to the #MeToo movement. While employers already have plenty of reason to eliminate sexual harassment in the workplace, the #MeToo movement has also created an uptick in unions claiming that joining their ranks is the key to preventing sexual harassment.

Female union organizers are openly embracing this strategy, publicly forecasting plans to collaborate with the Women’s March and use political action committees to promote unions aimed at protecting women. Given the current focus on sexual harassment, employers can also expect to see unions increasingly target companies with high-profile sexual-harassment or gender-discrimination claims, including employers facing collective actions.

Female union leaders are not only using #MeToo as an organizing tool but to call out organized labor on its own gender issues. For example, in a recent article entitled “What #MeToo Can Teach the Labor Movement,” union organizer Jane McAlevey bemoans the “sexist male leadership inside the labor movement” and calls on women to embrace the idea of a female-led labor movement focused on obtaining free childcare, schedule control, and family leave, including in areas such as education and healthcare where women employees comprise the majority.

Employers should expect that the #MeToo movement’s substantial momentum will spur increased organizing efforts aimed specifically at women and quite possibly result in a significant shakeup of union leadership or the formation of new female-focused unions. As such, female-driven union campaigns are likely on the rise, creating unique issues for employers and an increased need for well-trained female members of management who can persuasively assure female employees that a union is not necessary to stopping harassment, achieving pay equity, and otherwise improving the workplace for women.

Seyfarth lawyers have extensive experience devising strategies to avoid and respond to union campaigns targeted towards women, including those involving claims of sexual harassment or raising issues of gender equity. Please do not hesitate to reach out to any Seyfarth lawyer for more information.

 

By: Ashley Laken, Esq. & Brian Stolzenbach, Esq.

Seyfarth Synopsis: Although many employers may think they can let their guard down a little bit when it comes to the NLRB under the Trump Administration, history suggests otherwise. During the last Republican Administration, labor unions often decided to wage their battles outside the NLRB, using tactics like the “corporate campaign.” Although corporate campaigns have been around for a long time and continued even during the Obama Administration, union corporate campaign activity during the Bush Administration suggests that employers would be well advised to implement strategies aimed at reducing their vulnerability to such campaigns and effectively responding to such campaigns in the event they become a target.

When the NLRB shifts from Democrat control to Republican control, as it has under the Trump Administration, many employers rejoice, believing that a Republican-controlled NLRB will take a more employer-friendly approach. This is almost certainly true, but employers should keep in mind that appeals to NLRB intervention are not the only ways for unions to create incredible headaches for employers.

Background on Corporate Campaigns

A corporate campaign is an attack by a union on a company or an industry with the goal of putting so much pressure on the target that it will give in to the union’s demands. Such attacks are multi-pronged and often long-running. Indeed, unions have devoted millions of dollars and multiple years to individual corporate campaigns, and such campaigns have become more sophisticated and coordinated over the years. The typical union philosophy in launching such a campaign is to cost an employer so much time and money and cause it so much disruption that it ultimately gives in to what the union wants.

A corporate campaign’s most common objective is to facilitate union organizing, often by coercing an employer into accepting a card-check agreement along with neutrality commitments (in other words, to agree to recognize the union without a formal election and to stay silent on its views regarding the unionization of its workforce). Corporate campaigns are widely known as a means of organizing workers by disorganizing companies.

In launching a corporate campaign, a union identifies and then exploits a company’s perceived vulnerabilities. Common tactics unions employ in corporate campaigns include:

  • Filing a stream of unfair labor practice charges against the company
  • Encouraging investigations of potential OSHA, wage and hour, environmental, and/or antitrust violations by the company (see our recent management alert regarding antitrust enforcement against employers here)
  • Causing union-paid organizers to get jobs within the company (known as “salting”)
  • Placing print, digital, radio, and/or TV ads attacking the company, establishing anti-company websites, and distributing anti-company materials (including emails and social media messages) to customers, shareholders, and employees
  • Introducing shareholder resolutions aimed at reducing management’s independence
  • Challenging the zoning or permitting of new company facilities
  • Alleging or implying sexual misconduct by company executives or claiming that the company does not pay its employees fairly (the #metoo and #timesup movements are likely to add more fuel to any such fire)
  • Recruiting celebrities, politicians, clergy, and other community leaders to put pressure on the company

A variety of unions have launched a multitude of corporate campaigns over the years, and they often team up with each other and pool their resources against a single company. Collectively, unions employ hundreds of professional corporate campaigners, with job titles such as “online advocacy organizer” and “strategic communications specialist.” The typical position postings for such jobs list responsibilities that include developing campaign strategies and messages, conducting online research, and executing effective media plans. Given the growing presence of Millennials in the workforce, a group that (broadly speaking) considers itself both technologically savvy and socially conscious, unions are likely to have no shortage of candidates for such positions.       

What Employers Can Do

Companies of all sizes, in all locations, and in all industries are potentially vulnerable to corporate campaigns. Of course, the larger the company, the more attractive that company may be as a target, as more employees equals more potential revenue from union dues. In reality, however, almost no relatively large company is safe from such an attack.

Given the power of the internet and the ubiquity of social media platforms such as Facebook, Snapchat, Twitter, and Instagram, the speed with which unions can launch and carry out sophisticated and well-coordinated corporate campaigns is nothing short of astounding. Employers would be well-advised to proactively develop strategies aimed at reducing their vulnerability to such campaigns and quickly and effectively responding to such campaigns. Such strategies could include:

  • Conducting OSHA, wage and hour, and antitrust compliance audits
  • Engaging in positive employee relations training and messaging
  • Conducting up-to-date anti-harassment training
  • Evaluating pay equity within the company
  • Creating an effective internal and external communication system in relation to potential and actual union activity
  • Assembling a dedicated team of inside or outside counsel to respond to filings at the NLRB, such as unfair labor practice charges and representation petitions

Seyfarth lawyers have extensive experience devising and implementing strategies designed to avoid and effectively respond to corporate campaigns. Please don’t hesitate to contact your favorite Seyfarth attorney for more information.

 By: Bryan R. Bienias, Esq.

Seyfarth Synopsis: On Friday, December 1, 2017, newly appointed NLRB General Counsel Peter Robb issued a memorandum containing a broad overview of his initial agenda as General Counsel. It previews many anticipated developments during the Trump Administration. Our blog is exploring a different aspect of the memo each day during the first three weeks of December.  Click here, here, here, here, here, here, here, here, here, here, here, here & here to find prior posts.

While the weather outside may be frightful (for some), the agenda recently set forth by NLRB General Counsel Robb in GC 18-02 is sure to make some employers delightful this holiday season. In this installment, we will focus on the GC’s targeting of the Obama Board’s controversial decisions imposing the duty to bargain over discipline of newly unionized employees, as well as the GC’s preservation of longstanding Board doctrines governing employer campaign communications and withdrawing recognition of unpopular unions.

Out with the Old: The End of Alan Ritchey?

As we discussed here, the Board in Total Security Management, 364 NLRB No. 106 (Aug. 26, 2016) not only reaffirmed the Board’s employer-maligned Alan Ritchey decision, which required employers to bargain over discretionary discipline issued to newly organized employees prior to execution of a first contract, but also mandated prospective make-whole relief including reinstatement and back pay for future violations.

Total Security Management went even further and held that such make-whole relief would be subject to an employer’s “for cause” affirmative defense, placing the ultimate burden of persuasion on the employer to show at the compliance phase that (1) the employee engaged in misconduct; (2) the misconduct was the reason for the suspension or discharge; and (3) that the employee would have received the same discipline regardless of any disparate treatment or reasons for leniency shown by the charging party.

With GC 18-02’s listing of Total Security Management as one Board decision that “might support issuance of complaint, but where we also might want to provide the Board with an alternative analysis,” GC Robb sends a gift-wrapped message to employers that, much like 2017, Alan Ritchey’s and Total Security Management’s days may be numbered.  However, employers should continue treading carefully when considering discipline for newly unionized employees. While the Board’s reversal of these precedents are on the agenda, they remain the law of the land.

In with the . . . Old?: Preserving the Levitz Furniture and Tri-Cast Doctrines

GC Robb’s memo also expressly rescinds former General Counsel Peter Griffin’s GC 16-03, which implored the Board to overturn the framework set forth in Levitz Furniture, 333 NLRB 717, 717 (2001), which allows employers to unilaterally withdraw recognition from a union based on objective evidence that the union has lost majority support (i.e., employee signatures).  Griffin advocated for a new rule requiring a Board-sanctioned election before an employer could lawfully withdraw recognition.  With Robb’s rescinding of GC 16-03, employers can sleep somewhat easier in the year(s) ahead knowing that the Levitz framework will remain intact and that the option for employees to quickly rid themselves of an unpopular union will not be impeded through a long and costly election process.

In addition, GC 18-02 announces Robb’s abandonment of GC Griffin’s initiative to overturn the Board’s Tri-cast doctrine regarding the legality of employer statements to employees during organizing campaigns.  In Tri-Cast, 274 NLRB 377 (1985), the Board held that an employer could lawfully inform employees during a union campaign that they will not be able to discuss matters directly with management if they vote for the union and that such statements could not reasonably be characterized as retaliatory threats.

While the Obama Board had indicated its willingness to eventually overturn Tri-Cast, GC 18-02 effectively ensures that the current Board will maintain the status quo in the new year.

Should you have any questions about GC 18-02 or any labor relations issue, please contact the author, your Seyfarth attorney, or any member of the Labor & Employee Relations Team.