The John Deere Co. Strike – Sign of the Times?

In case you missed it, a major battle between labor and management is playing out in the heartland.   On October 14, over 10,000 UAW-represented workers at John Deere Co. plants in Iowa, Illinois and elsewhere walked out following the expiration of their collective bargaining agreement.  Workers overwhelmingly rejected the Company’s first proposal for a new contract, with approximately 90% voting against it.   In subsequent bargaining, the Company sweetened its offer to include an eye-popping 10% wage increase in the first year of the contract, 5% wage increases in alternate years, no-premium health insurance and employee signing bonuses of $8,500, which the Company presented as its “best and final offer.”  On November 2, workers again voted to reject the Company’s proposal, but by a much narrower margin – 55%-45%, according to media reports.

Management has vowed to continue production and has implemented a “Customer Service Continuation Plan” to continue supplying customers.  In this regard, Deere does have several production facilities in the U.S. and overseas not affected by the strike, and the Company reportedly has been using salaried workers and other nonunion personnel at the struck plants.

Management insists that it will not improve its contract offer.  So, what are the Company’s options at this point?

  • Hire replacement workers. During an economic strike, an employer may hire new workers to permanently replace striking employees.   There are media reports that Deere is hiring “strikebreakers,” which is an unflattering term for employees willing to cross a picket line.  However, in the current labor market, it is unlikely that Deere would be able to hire several thousand skilled workers to replace most of the striking employees, even if it wanted to.  Clearly, the Union is betting that the Company will not permanently replace its striking members.
  • Relocate or outsource production work. During a strike, an employer typically may relocate struck work to other facilities or outsource the work to other producers.   While Deere does have significant manufacturing capacity overseas, given the current snarls in the supply chain, sourcing production to Asia does not seem like an ideal solution.
  • Persuade striking employees to return to work. Employers have a legal right to communicate with union-represented employees during a strike.  While the Company cannot bargain or “deal with” its striking employees to the exclusion of the Union, it is may educate employees about the details of its contract proposal, and media reports indicate that Deere is doing just that.  As the strike enters its fourth week, undoubtedly, many striking employees are beginning to feel the bite of going without a paycheck, although wage losses may be offset by strike benefits paid by the Union.  Deere may be calculating that some of the employees who voted to accept its last offer are willing to come back.

This strike is emblematic of a broader pattern of labor unrest throughout the economy.   Recent data show that workers are quitting their jobs in record numbers – the so-called “Great Resignation” – and the overall job participation rate remains low.  Workers are becoming ever more assertive in their demands, not just for higher wages and benefits to keep up with inflation, but increasingly with record to social and political issues.   Indeed, Cornell University reports that over 25,000 workers walked off the job in October, more than double the average over the previous three months.   One thing is certain:  the John Deere strike is one of the highest profile labor actions in recent memory, but it certainly won’t be the last.

If enacted into law, the so-called Build Back Better reconciliation package (“BBB”) will drastically expand the remedial power of the National Labor Relations Board (“NLRB”) effective January 1, 2022.  The BBB incorporates the penalty provisions the PRO Act, which is a pro-labor bill that had been pending in the Senate after passing the House. Picture of the Senate Building

This proposed legislation, the text of which has been released but has not passed the House or the Senate, would provide for the following:

  • Civil penalties up to $100,000 for violations of the National Labor Relations Act (“NLRA”). Penalties can reach $100,000 if an employee is discharged or faces “other serious economic harm.”  Other violations are subject to fines up to $50,000.
  • Individual liability for corporate officers and directors for the civil penalties.

Currently, the NLRB does not have the authority to issue monetary fines.  Instead, the NLRB has the power to order employers to reinstate employees, pay backpay to employees who are unlawfully terminated, and grant other remedies like cease and desist orders to prevent future violations of the National Labor Relations Act.

Penalties would be payable to Uncle Sam, not the affected employee(s).  Moreover, employers should be aware that these new penalties could be based on highly technical violations of the NLRA, which, for example, could depend solely on language written in an employee handbook that the NLRB views as interfering with employee rights.  Consistent with the Administration’s “get tough” approach to employers, the penalties in the BBB only apply to unfair labor practices by employers, not those committed by unions.

The individual liability for officers and directors would apply where the officer or director committed the violation of the law, established a policy that led to the violation of the law, or had actual or constructive knowledge of the violation but failed to prevent it from occurring.  These broad grounds for individual liability could apply to almost any employment decision or policy that leads to a violation of the NLRA.

The civil penalty provisions outlined above will not only affect employers with a unionized workforce.  The NLRA applies to most private employers, regardless of union status.  Even employers without any unions or ongoing union activity are subject to the restrictions of the NLRA  The civil penalty provisions and possible officer and director liability, coupled with new aggressive enforcement by the NLRB’s General Counsel, should put private employers on notice of the seriousness of these impending amendments.  Employers – both union and non-union – should consult with experienced labor counsel to address these changes to federal labor law.

Andrew MacDonald is a partner in the firm’s Labor and Employment Department, resident in its Philadelphia office.

In a recent guidance memorandum, Jennifer Abruzzo, the General Counsel of the National Labor Relations Board, has announced her intention to consider college athletes as employees under federal labor law.   The implications of this memo are far-ranging and include the possibility of union representation of college athletes and unfair labor practice charges against universities for alleged violations of labor law.  Essentially, the memo places private universities on notice that the NLRB will be eager to pursue claims against them on behalf of college athletes.

By issuing this memo, Abruzzo contradicts relatively recent NLRB precedent, namely the 2015 decision involving Northwestern University football players.  In that case, the NLRB declined to exercise jurisdiction over Northwestern for various reasons, including the nature of the collegiate sports “industry” and lack of Congressional direction regarding the coverage of college athletes.  In addition, the NLRB noted in that case that it would be difficult to exercise jurisdiction over private universities where they compete against public universities, over which the NLRB cannot exercise jurisdiction.  Overall, the NLRB concluded that exercising jurisdiction over college athletes would not stabilize labor relations, which is the overriding goal of the National Labor Relations Act.  While the NLRB in the Northwestern case stated that it might assert jurisdiction in another case involving college athletes, the reasons for the Board’s non-intervention remain relevant and applicable now just as in 2015.

The General Counsel takes the position in the memo that college athletes (referred to as “Players at Academic Institutions” in the memo) should be treated as employees because they receive compensation, in the form of scholarships and other aid, and are subject to various rules and regulations while attending school.  In the General Counsel’s view, the fact that college athletes receive an education in addition to their athletic responsibilities is of no consequence.

While the General Counsel cannot change NLRB precedent in a memo, she can signal her intentions on a particular issue, which this memo certainly accomplishes.  Under this new memo, NLRB regional offices are required to submit any charges filed with the agency that are related to student athletes to the General Counsel’s office for review.  The memo makes it abundantly clear that, once such a case reaches her desk, the General Counsel intends to extend all protections of the NLRA to student athletes.  Specifically, the memo advises that the General Counsel will even prosecute claims of employee misclassification against universities by merely labeling athletes as “student athletes” instead of employees.

Private universities should be aware of this new position of the NLRB and consult with experienced labor counsel to address its implications.

Andrew MacDonald is a partner in the firm’s Labor and Employment Department, resident in its Philadelphia office.

According to news reports, the upcoming budget reconciliation bill will likely contain some portions of the PRO Act, which is a piece of proposed pro-union legislation.  As detailed in a prior post, the PRO Act would dramatically change federal labor law.  The details of the reconciliation bill are not yet public, but reportedly include electronic voting in union elections and the ability for the NLRB to issue fines against employers. Picture of the Senate Building

Currently, the NLRB has the power to order employers to reinstate employees, pay backpay to employees who are unlawfully terminated, and grant other remedies like cease and desist orders to prevent future violations of the National Labor Relations Act.  It does not, however, have the authority to issue monetary fines against employers.  The possible provision in the reconciliation bill would change this and allow the NLRB to order employers to pay civil fines up to $100,000.00, depending on the nature of the violation.

It is unclear whether parts of the PRO Act will survive the reconciliation process, which involves a ruling by the Senate Parliamentarian on issues that are arguably non-budgetary.  However, it is expected that Congressional Democrats will push for PRO Act items to be included in the final reconciliation bill, as that bill is a priority of the Biden Administration and the Democratic Party as a whole.  In addition, regardless of the outcome of the reconciliation process, prudent employers will begin planning for its potential passage now because some of its provisions may also be implemented by the NLRB in the near future.

Andrew MacDonald is a partner in the firm’s Labor and Employment Department, resident in its Philadelphia office.

The Supreme Court ruled on Wednesday that a California regulation permitting labor organizations a “right to take access” to an agricultural employer’s property to solicit support for unionization violated the constitutional rights of those employers.

The case, Cedar Points Nursery et al. v. Hassid et al., No. 20-107, arose from union organization efforts surrounding Cedar Point Nursery and Fowler Packing Company, California growers of strawberries, table grapes, and citrus.  Organizers from the United Farm Workers sought access to property owned by the growers pursuant to a state regulation, issued in 1975, allowing union organizers to meet with agricultural workers at work sites for up to three hours per day, 120 days per year.  The growers filed suit against members of the California Agricultural Labor Relations Board in 2016, arguing that enforcement of the access regulation amounted to a government taking in violation of the Fifth and Fourteenth Amendments.  The district court dismissed the action, finding that the access regulation did not “allow the public to access [the growers’] property in a permanent and continuous manner for whatever reason,” and therefore did not equate to a taking.  A divided panel of the Court of Appeals for the Ninth Circuit subsequently affirmed.

The Court, in a 6-3 party-line decision, disagreed with the lower courts, holding that the California access regulation constitutes a per se physical taking in violation of employers’ constitutional rights.  Chief Justice Roberts, writing for the majority, stated:

Unlike a mere trespass, the regulation grants a formal entitlement to physically invade the growers’ land.  Unlike a law enforcement search, no traditional background principle of property law requires the growers to admit union organizers onto their premises.  And unlike standard health and safety inspections, the access regulation is not germane to any benefit provided to agricultural employers or any risk posed to the public.  The access regulation amounts to simple appropriation of private property.

Justice Breyer wrote a dissenting opinion, which was joined by Justices Sotomayor and Kagan.

It should be noted that the National Labor Relations Act excludes agricultural workers from coverage, and that this case is particular to California state law regarding agricultural labor relations.   Nonetheless, and while the Court’s decision may have minimal impact outside of California, it signals the Court’s receptiveness to arguments that favor employer property rights over labor organizing efforts, which will likely be at odds with future expected rulings of the National Labor Relations Board under the Biden Administration.

Andrew Esler is an associate in the firm’s Labor and Employment Department, resident in its Philadelphia office.

Congress may be on the cusp of passing legislation that would transform labor law in dramatic ways. This proposed law has potentially dire consequences for private-sector employers nationwide.

The Protecting the Right to Organize Act (the PRO Act) would essentially rewrite the National Labor Relations Act (NLRA) to favor unions and employees seeking to organize unions, while rolling back important employer protections. If passed, this legislation is likely to trigger a wave of union organizing and launch a wave of lawsuits affecting employers of all sizes and industries.

Breathtakingly broad in scope, the PRO Act targets several longstanding features of existing law perceived by unions and labor activists to be unfair to labor and too favorable to employers. The proposed legislation is essentially a grab-bag of grievances that the labor movement has compiled over decades and sought to change through legislation and before the National Labor Relations Board (NLRB) without success in the past.

Among other things, the PRO Act would make the following structural changes to the NLRA:

  • Expand the available penalties for employers for violations of the NLRA, including civil penalties against employers with individual liability for officers and directors.
  • Impose interest arbitration, which would foist an initial collective bargaining agreement on employers if initial discussions failed to produce a contract within only 90 days of a union victory in an election.
  • Expand “joint employer” status by applying labor law to multiple employers who share control over employees, even if the control is indirect or reserved in contractual arrangements.
  • Allow employees to engage in disruptive intermittent “hit-and-run” strikes of short duration.
  • Override “right-to-work” laws, which are currently permitted under the NLRA to allow states to prohibit conditioning employment on the payment of union dues.
  • Overturn the decades-long prohibition on secondary boycotts, meaning that unions would be able to pressure neutral employers and ensnare them in labor disputes with unrelated companies.
  • Include contractors as employees covered by the NLRA unless they meet a strict “ABC” test that excludes only individuals who have their own business, which is separate from the employer’s business, and are not controlled by the employer.
  • Include supervisors who assign and direct work to other employees as employees covered by the NLRA. This would allow many frontline supervisors to unionize.
  • Abolish individual arbitration agreements that prohibit class actions (overturning the Supreme Court decision in Epic Systems v. Lewis).
  • Prohibit employers from permanently replacing economic strikers or locking out employees.
  • Codify the “persuader rule” requiring employers to report payments for labor relations advice to the Department of Labor, which would even include legal advice from attorneys under some instances.

The PRO Act would also help facilitate unionization of nonunion employees by fundamentally changing the union election process and the rights of unions and employers during organizing campaigns in the following ways:

  • Strangling employers’ voices in union election proceedings by prohibiting employers from having any input with the NLRB. Decisions in election cases, like the eligibility of employees and certain job titles, would be determined based only on the union’s presentation to the NLRB.
  • Aiding unions in election campaigns, including by:
    • allowing employees to use employers’ email systems to organize;
    • giving unions the right to choose the manner of elections (in-person, mail or email elections); and
    • permitting “micro-units” – small groups of employees targeted for union elections based primarily on union choice and selection
  • Prohibiting “captive audience” meetings, where employers directly communicate their views about unionization to employees.

In addition to upending the labor-management balance which has prevailed for decades, the PRO Act also would expose employers to costly litigation in federal court. Specifically, the PRO Act would allow unions and employees to bring claims in court if the NLRB dismisses the claim after an initial review. These claims would allow for:

  • liquidated damages equal to double the amount of actual economic damages;
  • backpay without offsetting for interim earnings of the employee;
  • attorneys’ fees; and
  • punitive damages.

These remedies are not currently available under the NLRA, which historically has afforded aggrieved employees “make-whole” relief including reinstatement, backpay, and other remedial actions.

If passed, the PRO Act would be a game-changer for ALL employers, regardless of size. As of this writing, the bill has passed the House of Representatives, and it is pending in the Senate, where 45 Senators have signed on as co-sponsors, and, this week, Sen. Manchin of West Virginia added his support. Since the PRO Act is unlikely to draw any Republican support, the real question is whether the Senate will seek to modify or eliminate the filibuster or tack it onto legislation that can pass on a simple majority vote. Regardless, prudent employers will begin planning for its potential passage now because some of its provisions may also be implemented by the NLRB in the near future.

Andrew MacDonald is a partner in the firm’s Labor and Employment Department, resident in its Philadelphia office.

NLRB Acting General Counsel Peter Ohr is moving swiftly to put his stamp on national labor policy.   Last week, my partner Andrew MacDonald blogged about Ohr’s withdrawal of a complaint that had challenged the use of a neutrality agreement by an employer and a union.  Ohr also rescinded several General Counsel Memoranda issued by his predecessor that, according to Ohr, were “inconsistent” with national labor policy.   While the none of the withdrawn memoranda were particularly critical to employers’ labor relations prerogatives, the speed with which Ohr moved is notable, as is his pronouncement that national labor policy is “to encourage the practice and procedure of collective bargaining and the protection of workers’ exercise of their full freedom of association, self-organization and designation of representatives of their own choosing for [collective bargaining].”

Moreover, with regard to the withdrawal of certain Memoranda, Ohr’s actions might be seen as putting the interests of unions ahead of employees.   In this regard, Ohr withdrew GC 19-01, in which Ohr’s predecessor had sought a change in Board law to require unions raising a “mere negligence” defense to a “duty of fair representation claim” concerning a union’s grievance handling to establish the existence of established, reasonable procedures or systems in place to track grievances.   In practice, this means that unions who fail to properly handle employee grievances are less likely to be held accountable through the NLRB’s procedures.  Correspondingly, Ohr withdrew GC 19-04, which had urged the Board to require unions to be more transparent and accommodating to employees seeking to withdraw their authorization for union dues payroll deductions and GC 18-06, which was intended to facilitate employee participation in unfair labor practice cases involving union decertification.   Again, none of these decisions are particularly impactful to employers’ rights and prerogatives under the Act, but, collectively they move the needle somewhat in favor of unions.

Likely a harbinger of things to come at the Board . . . .

In his first few days on the job, Acting General Counsel of the NLRB Peter Sung Ohr has withdrawn a complaint that had challenged the use of a neutrality agreement by an employer and union.  This early move by the Acting GC indicates the direction that he will take in attempting to change the course of labor law during the Biden Administration.

In general, a neutrality agreement contains a promise from the employer to remain neutral during a union organizing drive in exchange for the union’s promise not to strike or publicly disparage the employer.  The former NLRB GC who brought the case at issue, Peter Robb, also issued a guidance memorandum that characterized most neutrality agreements as unlawful because they provided illegal assistance to a unions.  (For a more detailed article about that memo, see our previous post here).  Former GC Robb issued the complaint against the employer and the union based on this theory of unlawful union assistance provided by the employer and accepted by the union.

Reversing course, Acting GC Ohr’s ordered the complaint to be withdrawn based on his prosecutorial discretion, stating that, in his view, the neutrality agreement at issue did not violate the law.  Essentially, the Acting GC’s action brings the sometimes murky law on the legal boundaries of neutrality agreements back to the status quo.

This action by the Acting GC demonstrates the power of that office to select the cases that will reach the NLRB and potentially change precedent.  In addition, the withdrawal of the complaint sends a powerful signal to employers and unions that the NLRB will not be policing neutrality agreements outside of the few defined boundaries established in prior precedent.  Unions are likely to be especially receptive to this signal and view it as an early victory in the policy shift on labor issues under the new administration.

Andrew MacDonald is a partner in the firm’s Labor and Employment Department, resident in its Philadelphia office.

In an unprecedented action that delighted organized labor but sounded alarm bells for employers, in one of his first acts, President Biden  fired the General Counsel and Deputy General Counsel of the National Labor Relations Board.   On January 25, the White House appointed Peter Sung Ohr to serve as Acting General Counsel.   Mr. Ohr long has served as the Regional Director of the Board’s Chicago office and is perhaps best known for his controversial decision several years ago that scholarship football players at Northwestern University were “employees” who had legal standing to unionize under the National Labor Relations Act.   The abrupt ouster of General Counsel Robb is significant because virtually all private sector employers are covered by the National Labor Relations Act (“NLRA”), regardless of their size or whether their employees are unionized, and the General Counsel has the power to issue complaints against alleged labor law violators and shape the legal theories presented to the Board, which impacts the development of the law.   Relatedly, Acting General Counsel Ohr may withdraw complaints in a number of high profile cases pending against unions, including one involving whether “Scabby the Rat” is subject to the provisions of the Act prohibiting secondary boycotts.  Under the law, Mr. Ohr may serve in an acting capacity for up to forty (40) days, so it is likely that the Administration will present a nominee for consideration by the Senate in the next several weeks.   Moreover, President Biden will be able to appoint two (2) new members to the Board later this year (subject to Senate confirmation) which likely will cement a pro-union majority on the Board for the next four years.  The new Board Members and General Counsel almost certainly will work to bend national labor policy to favor unions at the expense of employers.   During the campaign, President Biden promised to be the most “pro-union President in history,” and these early moves suggest he intends to make good on that promise.

The NLRB’s General Counsel recently issued a memo that demonstrates his hostility toward neutrality agreements.  Generally, neutrality agreements contain a promise from an employer that it will remain neutral in a union organizing campaign.  These agreements often contain other provisions, such as allowing unions access to employer property to address employees and providing unions with employee contact information.  In return, a union often promises employers that employees will not strike.

Initially, it is extremely important to note that the General Counsel’s views are not binding as NLRB precedent.  Only the Board itself can change its precedent, either by way of its decisions in NLRB cases or through rulemaking.  It is also unclear what the composition of the Board will be if/when any cases come before it under the theories set forth in the General Counsel’s Memo.   While the General Counsel cannot change NLRB law, he is in charge of brining cases before the NLRB by way of issuing complaints.  In this regard, the memo signals that he will prosecute cases based on neutrality agreements deemed to be unlawful.

The NLRA prohibits employers from providing assistance to a union seeking to organize its employees.  That said, the NLRB has historically allowed cooperation between employers and unions regarding organizing, but has prohibited certain forms of assistance.  “Cooperation” crosses the line to unlawful “assistance” when it interferes with employees’ free choice in selecting whether a union will represent them or not.

Somewhat surprisingly, the topic of neutrality agreements as tools of unlawful assistance has not frequently come before the Board in the past.  Aside from ruling that an employer and union cannot bargain for a full collective bargaining agreement before the union represents a majority of employees, the Board has generally left unions and employers free to enter into neutrality agreements.

The memo marks an important turn in this area of the law.  The General Counsel provides examples of neutrality agreement provisions that would be considered violations of the NLRA under his proposal.  Some examples include provisions that are common in most, if not all, neutrality agreements.  Examples include:

  1. Allowing union organizers to access employer facilities (even during non-working time).
  2. Allowing union solicitation (by employees or non-employees) during working time.
  3. Providing unions with employee contact information.
  4. Agreeing to some limited CBA terms before certification that a majority of employees support the union, including: (a) interest arbitration to set the terms of a CBA if bargaining fails and (b) no-strike / no lockout provisions (although the union could agree that it would not call for or encourage employees to strike).

If adopted by the Board, the proposals contained in the memo would render common provisions of neutrality agreements unlawful.  Even prior to a Board ruling, however, unions and employers could be subject to unfair labor practice charges from objecting rival unions or employees pursuant to the General Counsel’s memo.  Again, the General Counsel decides which cases to bring before the Board, so the signal contained in this memo strongly indicates that he is prepared to prosecute cases that involve these types of neutrality agreements.

But, what about the election?  Wouldn’t President-Elect Biden replace the General Counsel?  As it turns out, the General Counsel’s five-year term overlaps any change in Presidential administrations.  The current General Counsel will be in his position until 2022, and will have the power to bring neutrality agreement cases before the Board anytime during his tenure.

Andrew MacDonald is a partner in the firm’s Labor and Employment Department, resident in its Philadelphia office.