On Monday, February 4, Governor Phil Murphy made good on a campaign promise and signed into law a new bill (A-15) that will raise the State’s minimum wage to $15 per hour by 2024. This hike in minimum wage, however, will not happen immediately and increases will be phased in over time.

Currently, the minimum wage rate in New Jersey is $8.85 per hour. Under the new law, this rate will jump to $10 per hour on July 1, 2019 and will again increase to $11 per hour by January 1, 2020. At that point, these two increases will amount to an almost 25% increase in minimum wage in about 11 months. After January 1, 2020, the statewide minimum wage will increase by $1 per hour every year on January 1 until the rate reaches $15 per hour on January 1, 2024. Afterward, any further increase in minimum wage would be in accordance with the consumer price index (CPI) for urban wage earners and clerical workers as calculated by the U.S. Department of Labor, Bureau of Labor Statistics. In other words, the federal government uses the CPI to measure the cost of living and, thereafter, the New Jersey Department of Labor and Workforce Development (“NJLWD”) evaluates any changes to the CPI and adjusts the minimum wage as necessary.

Notably, this new minimum wage law places New Jersey in an exclusive group of other states and districts – California, Massachusetts, New York and the District of Columbia – who have similarly authorized such increases in minimum wage.

However, the new minimum wage law will not affect every employee equally – at least at first – and comes with exceptions for certain workers. For instance, seasonal workers and small business employees (businesses that employ five or less individuals) will experience wage increases at a slower rate and have to wait until 2026 for the minimum wage to reach $15 per hour. Specifically, these employees’ minimum wage – currently at $8.85 per hour – will increase to $10.30 per hour by January 1, 2020 and every year thereafter by $.80 per hour until January 1, 2025. Then, a final $.70 increase on January 1, 2026 will be implemented to bring their minimum wage to $15 per hour.

Agricultural workers in New Jersey will also see a similar – and slower – progression in minimum wage increases as their rate will only jump to $12.50 per hour by January 1, 2024. Then, by no later than March 31, 2024, the NJLWD Commissioner and the Secretary of Agriculture (“Secretary”) will decide whether to continue minimum wage increases up to $15 per hour by 2027. (If the Commissioner and Secretary cannot agree on how to move forward, the Governor shall appoint a member of the public – subject to the advice and consent of the Senate – to serve as a tie-breaking vote, if necessary.)

Additionally, tipped workers – who currently earn $2.13 per hour – will see their minimum hourly wage increase to $5.13 per hour by 2024. Further, starting January 1, 2020, employers will be able to pay newly hired employees enrolled in an established on-the-job or other training program a “training wage” of not less than 90% of the established minimum wage at the time. Employers can pay these new employees this training wage for their first 120 hours of work (or first three weeks on-the-job based on a 40-hour workweek), provided the new employee has no previous similar or related experience. The NJLWD Commissioner will implement and adopt standards by which a training program must abide.

At this time, it is critical that employers start preparing themselves for the effect of these increases. For example, employers must think about overtime and the increased amount they will have to pay nonexempt employees for each hour over 40 worked per workweek. Moreover, employers should consult experienced labor and employment attorneys before making any changes to their payment practices and/or business model in an attempt to offset these forthcoming increases in minimum wage, e.g., laying off employees or reducing work hours. Noncompliance with the new minimum wage law could result in substantial penalties and lengthy/costly litigation, as well as possibly lead to unwanted attention from, and increased oversight by, the NJLWD.

Further, unionized employers should be aware that future increases in the State’s minimum wage rates, e.g., $12-$15 per hour, might be higher than the negotiated wage rates in their then-current collective bargaining agreements. In such instances, it is possible – if not likely – that the parties will need to re-open negotiations as to wages to meet the current statutory minimum wage (and this is a certainty where parties provide for such specific re-openings in their contracts themselves).

In sum, New Jersey employers must remain vigilant, proactive, and cautious in complying with these impending changes to the minimum wage rates as their failure to do so could result in serious legal consequences.

For more information about this alert, please contact Carlos Torrejon at ctorrejon@foxrothschild.com or 973.548.3312, or any member of the firm’s Labor and Employment Department.

Carlos A. Torrejon is a former NLRB Attorney and an associate in the firm’s Labor and Employment Department, resident in its Morristown office.

Employee complaints must be “concerted” to enjoy the protections of federal labor law.  This requirement, contained in the language of the NLRA, stems from the collective nature of rights guaranteed by the NLRA, which ensure protection for union activity or activity that is made for “mutual aid or protection.”  Despite rather clear statutory language, the labor bar has debated the meaning of “concerted” for many decades and the NLRB’s case law has alternated between restricted and expansive definitions over time.

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In Alstate Maintenance, the NLRB has swung the pendulum back toward the literal meaning of “concerted” by excluding individual employee complaints from protection of the Act.  The facts of the case involved skycap/baggage handler who refused to assist some passengers because he expected little or no tip.  The skycap complained to managers about his perceptions regarding the passengers in front of other employees.  After being terminated for his actions and complaint, the skycap brought his dispute to the NLRB.

The NLRB found that the skycap’s complaint, even though it was made in front of other employees, was not made “in concert” with those employees.  The employee did not bring a truly group compliant to the attention of management or take some other action to induce group action of employees.  Essentially, the employees merely “griped” about his individual thoughts about a single employment incident after it was concluded.  The NLRB discounted the fact that the employee used the language “we” in his complaint.

Alstate is an important development for several reasons.  First, the NLRB has returned its standard for “concerted” activities to cover only group complaints.  Second, it has clarified that complaining in front of employees, or using the words “we” or “us” in a complaint, does not convert an individual complaint to a group complaint.  Third, and possibly most the important aspect of this decision, the NLRB’s narrowing of the “concerted” standard will have the greatest impact in non-union workplaces where employees lack union protection and mainly rely on the protections for concerted activities embodied in Section 7 of the NLRA.  Alstate will likely be a significant tool for employers defending against NLRB charges related to protected concerted activity.

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

There is another yet another development in saga of the NLRB’s joint employer standard.  This issue, which has caused consternation in the business community, concerns the Board’s standards for finding that two entities are jointly responsible under federal labor law as the employers of a certain group of employees.  Just before the New Year, the federal Court of Appeals for the District of Columbia upheld the joint employer standard issued by the Board in 2015 in the Browning-Ferris Industries case.

We’ve covered this topic here, and here, but a quick review of the background is in order:  In 2015, the Board issued Browning Ferris Industries, 362 NLRB No. 186 (2015) (“BFI”), which loosened the standard from “direct and immediate control” to “share or codetermine,” which could lead to a joint employer finding based solely on indirect or reserved control over employees.  In late 2017, the Board returned to the “direct and immediate control” standard in Hy-Brand Contractors Ltd., 365 NLRB No. 156 (2017).  Then, only a few months later in February, 2018, the Board reversed Hy-Brand due to possible ethical concerns related to the representation of one of the parties in BFI by the former law firm of a Board member.  After vacating Hy-Brand the Board announced that it would engage in rule-making to publish joint employer rules.

All the while, the appeal of the 2015 BFI case was pending before the D.C. Circuit, which held off on issuing a decision while the Board dealt with Hy-Brand.  Now, the D.C. Circuit has issued its’ decision upholding the looser “share or codetermine” standard, including indirect control over employees, as a matter of law.  Since the Board had been applying the BFI standard after it abandoned Hy-Brand, there will be no immediate impact on labor relations around the country.  However, the D.C. Circuit partially remanded the case to the NLRB to clarify the application of the “share or codetermine” test to the facts of the case.

Even though the D.C. Circuit partially remanded the matter back to the NLRB, the Board may not be able to use BFI to change the joint employer standard back to the pre-BFI framework.  On this issue, the Board is not just constrained by the fact that the case could be appealed to the Supreme Court and heard prior to the Board’s decision on remand.

While the Supreme Court may, of course, take the case and overrule BFI, the Board may be hampered in changing the BFI standard by decision or rulemaking because the D.C. Circuit made clear that the joint employer question is a matter of law, which is not subject to administrative agency interpretation.  The Board may apply the legal joint employer test to distinct situations, but it cannot fundamentally change the joint employer standard (by decision or rulemaking).  The meaning of “employer” is restricted, and subject to court review, because it is defined by traditional principles of agency under the common law.  Therefore, unless the Supreme Court weighs in soon, it is likely that this issue will be debated by the Board, in case law and rulemaking, and the federal appeals courts around the country.  Labor practitioners, brace yourselves accordingly.

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

 

In Silvan Industries, 367 NLRB No. 28 (2018), the Board decided that an employer, upon being presented with evidence that creates well-founded uncertainty as to a union’s majority support, may file an election petition despite previously agreeing to a collective bargaining agreement with the union that had not yet taken effect.  This Board decision reviews important principles of labor law applicable to employers in a unique situation wherein the majority status of the union representing its employees is challenged.

Generally, employers may file election petitions with the NLRB (referred to as “RM” petitions) only under certain circumstances.  Unlike employees, who may solicit or poll fellow employees as to union support or lack thereof, employers are usually prevented from doing so and must passively react to information provided by employees.  Thus, where a union already represents its employees, an employer must demonstrate that it has a “reasonable good-faith uncertainty” of majority status by the union.

For example, an employer may base its uncertainty on a petition presented by employees seeking to oust their union.

This is exactly what occurred in Silvan Industries.  In this case, Silvan’s employees were represented by a union, but did not have a collective bargaining agreement in place.  After reaching a tentative agreement with the union that was set to take effect one month later, Silvan management received a petition from an employee that led it to question the union’s majority support.  Silvan immediately filed an RM petition with the Board and continued to recognize the Union and followed the terms of the collective bargaining agreement.

Following a delay of approximately two months, the Board’s Regional Director dismissed the petition.  While there was nothing wrong with the petition or the employer’s good faith uncertainty as to majority support of the employees, the Regional Director found that the petition was barred by the Board’s contract bar doctrine.

The contract bar doctrine prevents any party, including unions, employers, or employees, from filing an election petition while a collective bargaining agreement is in effect for up to three years.  The Regional Director found that the tentative agreement reached between the employer and the union, which had not yet gone into effect, barred the processing of the petition.

The Board reversed the Regional Director’s ruling.  It noted that the contract bar doctrine only prevents the filing of petitions while agreements are in effect and, since the contract between Silvan and the union had not yet taken effect, there was no bar in that situation.  Furthermore, the contract bar rule equally applies to employee decertification petitions seeking to oust unions, something which could have been filed by the employees who presented the petition to Silvan management.  Since the employees could have filed a decertification petition, the there are no valid reasons, in the eyes of the Board, that justified barring the employer from filing the RM petition in this case.  This is especially so where the employer’s other alternative would be to unilaterally withdraw recognition from the union, which is disfavored on policy grounds by the Board and risky for employers since under that circumstance it must be able to prove actual loss of majority status instead of “reasonable good-faith uncertainty.”

In sum, employers faced with evidence of lack of support for unions representing their employees must consider not only whether the grounds for the uncertainty will withstand scrutiny, but also – under certain scenarios – whether the contract bar doctrine will prevent the filing of an RM petition.

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

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Can employees engage in a concerted stretching exercise during work hours?  The NLRB recently said yes.

The NLRA allows employees to engage in demonstrations to support their union, including demonstrations in support of contract proposals.  However, the law does not protect employees from engaging in work slowdowns or other refusals to perform work.  Strikes are protected, but they generally are an “all or nothing” proposition.  The general rule is that employees must completely stop work and leave the premises to enjoy the protections of the NLRA for strike activity.  Employees must normally show this support for their union in nonworking areas of the workplace during nonworking time.

In Consolidated Communications, a group of employees stood up from their workstations at an appointed time and engaged in stretching exercises in unison.  But, they did so during working time and in working areas.  So, how did the Board find that this action was protected?

The majority of the board panel viewed the action as protected because they found that the employees did not refuse to perform work or engage in a “slowdown.”  The majority noted that there was no rule against stretching, that employees had normally stretched from time-to-time at their workstations, and that the stretching activity did not result in work not being performed.  Seeing no refusal to work, the Board majority concluded that the action remained protected even if it occurred during working time in working areas.

In dissent, Member Emanuel viewed the matter differently.  By participating in the stretching action during work time, the employees necessarily engaged in a refusal to work.  Even if the time away from work was minimal, it had to result in some lost work time.  As such, he viewed the action as being unprotected and thought that the employer could lawfully discipline the employees.

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

In a recent decision, a Board panel majority found that an employee was unlawfully fired for writing “whore board” on an overtime sign-up sheet at work.  This decision highlights the expansive nature of employee activity protected by the NLRA and the limited value that the NLRB can sometimes place on employer property rights.

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In this case, the employer instituted a new overtime policy, which, unlike the old policy, included discipline for failure to work an overtime shift.  As with the old policy, the employer maintained an overtime sign-up sheet.  The union representing the employees filed grievances and unfair labor practice charges against the new policy.  Due to the new disciplinary consequences of failing to work an overtime shift, employees began to refer to the sign-up sheet as the “whore board.”

Importantly, the employer took no action against employees for using the phrase “whore board” and acknowledged that employees (and supervisors) often used vulgar language at work.  However, when an employee transformed words into action and wrote “whore board” in graffiti on the overtime sign-up sheet, the employer terminated his employment.

Section 7 of the NLRA grants employees the “right to … form, join, or assist labor organizations … and to engage in … concerted activities for the purpose of collective bargaining or other mutual aid or protection.”  Section 7 has been construed to give employees the right to engage in activity to oppose employer policies, including by using profane or vulgar language (sometimes referred to as “shop talk”).

When an employee’s conduct reaches the outer bounds of protected activity, the NLRB essentially asks if the conduct is so outrageous that the employee loses the protections of the Act.  As part of this inquiry, the NLRB tries to balance the employee’s Section 7 rights and the employer’s right to maintain order in the workplace.

Here, the Board panel held that writing “whore board” on the sign-up sheet was not so egregious for the employee to lose protection of the Act.  As to the substance, the Board found the use of profanity to be relatively uncontroversial.  In this regard, the use of the profane phrase “clearly impl[ied] that those who signed it were compromising their loyalty to the Union and their coworkers in order to benefit themselves.”  Regarding the act of graffiti, the Board found that the act was spontaneous and grew out of the employees’ protest of the new policy.  Furthermore, the Board noted that there was no effect on production at the facility and that the employer tolerated profanity in the workplace.

In dissent, Member Emanuel observed that the majority did not adequately consider the employer’s property rights when balancing the respective interests of the employer and employees.  He further noted that prior Board decisions had held that property defacement – which undisputedly occurred in this case – was not protected activity under the Act.  Emanuel called for the Board to reconsider the test for employee misconduct in a future case to give more weight to lawful employer property interests.  Given current the republican-majority, Board-watchers should pay close attention to future cases involving conduct that is arguably more egregious than the “whore board” graffiti in this case.  If such a case reaches the Board, it is reasonable to expect that it may change its approach to these cases.  The case also serves as a reminder that even a more management friendly Board can still issue labor friendly decisions due to the fact that most decisions are issued by three-member panels that can include a labor friendly majority.

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

A fully constituted NLRB is comprised of five members. Decisions are typically issued by three-member NLRB panels. Three is also the minimum number of members the NLRB must have to issue a decision. However, the NLRB will only overrule existing precedent where it has at least three members ruling in favor of a change. By custom, the NLRB will only overrule existing precedent when the NLRB has at least four members and at least three of them vote to overrule the extant precedent. That said, the NLRB has on a number of occasions operated with fewer than five members and even been reduced to just two members for a time during the Obama Administration. With just two members, the NLRB cannot issue a decision and the Agency experiences a backlog of work.

A full-term for an NLRB member is five years with the terms staggered such that one member’s term expires each year. The party holding the White House typically has a three to two advantage on the NLRB.   Thus, when a Republican is in the White House, the NLRB has a more management-friendly bent. When a Democrat is in the White House, the NLRB has a more union-friendly bent. As a result, NLRB law at times changes when the White House changes parties.

Presently, the NLRB has five members, but it will likely soon have four as Member Mark Pearce’s term is set to expire on August 27, 2018. In fact, certain employer groups have informed the White House they do not want Pearce nominated for another term. As NLRB chairman during the Obama Administration, Pearce led an aggressively union-friendly NLRB that, among other things, expanded section 7 rights for employees, introduced quickie elections, approved of micro-units, and infringed on employer property rights all with goal of aiding union organizing. Employer groups are concerned that should democrats regain the White House in 2021, Pearce could be appointed chairman again and resume his aggressive and pro-labor re-interpretation of the NLRA.

Now, President Trump could simply appoint and nominate a less objectionable candidate to fill Pearce’s seat, but what is more likely is that President Trump will wait. Leaving Pearce’s seat unfilled means there will only be one labor-side member on the NLRB. This means there will be no three-member panel that would likely issue labor friendly decisions. There is no downside to waiting as the NLRB by custom will still be able to reverse Obama era precedent that the Trump NLRB disagrees with provided all three management-side members agree the precedent should be reversed.

How long President Trump will wait is not clear. President Trump could wait until shortly before December 16, 2019 when the other labor-friendly member, Lauren McFerran’s term expires, or the President could wait until management-side member Marvin Kaplan’s term expires on August 27, 2020.   The third option is that President Trump could simply refuse to appoint another member to the NLRB during his first term. Should he choose the last option, the NLRB would not be able to iissue a decision after August 27, 2020 as the NLRB would be reduced to just two members. This means, his Administration would be unable to overrule any further decisions the management-side NLRB members wish to overturn.

My personal belief is that President Trump will take action sometime shortly after Member McFerran’s term ends on December 16, 2019.   My reasons are twofold. First, President Trump may want sufficient time to ensure that the Board does not revert to two members when Member Kaplan’s term expires on August 27, 2020. Should this happen, the Board would not be in a position to reverse remaining Obama era precedent that employer groups wish to be reversed.. Second, by having two labor-side seats vacant and one management-side seat nearing vacancy, President Trump can horse trade with Senate Democrats to secure the appointment of two labor-side members least objectionable to employer groups while possibly extending Member Kaplan’s tenure on the NLRB for another term.

Only time will tell what happens. Stay tuned for further developments.

 

Chip Zuver is an associate in the firm’s Los Angeles office and a former NLRB attorney.

On June 6, 2018, the NLRB issued two Orders that put an end to the Hy-Brand case, which briefly changed the NLRB’s standard for determining whether two employers were jointly responsible for violations of federal labor law and collective bargaining. As we explained in previous posts (links), in December 2017 the Hy-Brand Board returned the joint employer standard back to require “direct and immediate” control over the terms and conditions of employment that existed prior to the Board’s 2014 decision in Browning-Ferris Industries. Hy-Brand was a relief to the business community because it ensured that a business would not become a joint employer without actually exercising control over the employment of employees of other companies.

Hy-Brand came crashing down, however, when the Board vacated the decision based on the failure of Board Member William Emanuel to recuse himself due to ethical issues. The NLRB’s Inspector General investigated Emanuel’s links, through his former law firm, to an employer in the Browning-Ferris Industries case and found that he should have recused himself in the matter. The IG’s report found that Emanuel’s participation in Hy-Brand affected the client of his former law firm by overruling Browning Ferris Industries. After vacating the decision, the Board remanded the case for further proceedings.

On remand, the Board found that the employers in Hy-Brand were jointly liable under federal labor law, but not on joint employer grounds. Instead, the Board found that the employers were single employers, meaning, essentially, that their corporate structure was so intertwined that they acted as a single company in terms of control over employment terms. Therefore, the result of the decision was basically the same as the original Hy-Brand decision, but it now has no effect on the Board’s joint employer standard. Thus, the broader and more labor-friendly “share or codetermine” test of Browning-Ferris Industries is still the law of the land.

The Board has now decided that rather than wait for the next case involving joint employment to come onto its docket, it will address this issue by way of rulemaking. For context, the Board rarely promulgates rules and it usually makes rulings on a case-by-case basis, but it does have the power to do so like any other administrative agency. Going forward, the Board will need to publish the rule after drafting it and allow for comment from the public on any new rule it announces before it takes effect.  At this point, we will have to wait and see what happens.  Stay tuned.

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

 

In General Counsel Memorandum 18-05, General Counsel Peter Robb expressed his views on the use of temporary injunctions under Section 10(j) of the Act. Section 10(j) gives the NLRB the discretion upon issuance of a complaint to seek temporary injunctions against employers and unions (typically employers) in federal district courts to stop alleged unfair labor practices while the case is being litigated before the NLRB. The Region’s argument is that injunctive relief is allegedly necessary to ensure that the Board’s final decision will be meaningful. Thus, the courts can order an employer to stop the alleged unlawful activity before the NLRB ultimately decides the matter.

A district court will order 10(j) injunctive relief when it finds: (1) reasonable cause to believe that an unfair labor practice has been committed or a likelihood of success on the merits; and (2) that ordering the temporary injunction is just and proper. Under the first prong, the courts give the NLRB considerable deference to its belief that a violation has occurred, and frequently rely on a very limited evidentiary record in finding reasonable cause/likely success on merits. The courts effectively need to conclude that the NLRB’s theory of violation is substantial and not frivolous. The second prong looks to see whether remedial failure is likely if the court does not grant the injunction.

If ordered, injunctions can require employers and unions to refrain from certain actions (such as refrain from interfering with employees’ Section 7 rights) or to take certain affirmative actions (such as requiring employers to reinstate employees or to bargain with a union). Although the NLRB does not seek 10(j) relief in most cases, the Obama Board sought 10(j) relief on a more frequent basis than prior Administrations.

In GC Memo 18-05, GC Robb appears to indicate that he will seek 10(j) relief in fewer categories of cases than his predecessor and will require Regions to seek 10(j) relief earlier in unfair labor practice cases.

First, Robb announced that remedial failure is more likely, and 10(j) relief more often appropriate, in cases involving: (1) discharges during organizing campaigns, (2) unfair labor practice charges filed shortly after a union is certified as the employer’s bargaining representative, (3) a successor employer’s refusal to bargain with the representative of the predecessor employer’s employees, and (4) a successor’s refusal to hire the predecessor’s employees. This appears to be a somewhat narrower class of cases than the Obama GC considered in seeking 10(j) relief.

Second, Robb also indicated that Regions should request authorization to seek 10(j) relief promptly once they determine it appropriate and not to wait until after a hearing has been held for the ALJ to decide the case. This makes great sense and stands in sharp contrast to the NLRB’s practice under the Obama Administration where the Board frequently waited until after a record had been developed in a hearing before an ALJ. Waiting until after the administrative record had been developed made it easier for Regions to show likely success on the merits, particularly in those cases where the ALJ already issued a decision, but this was puzzling because it undercut a Region’s argument that a temporary 10(j) injunction was needed on an immediate basis to prevent remedial failure. Under these circumstances, a Region has already waited months, and potentially even more than a year, after an alleged unfair labor practice had been committed and has only then attempted to restrain the alleged misconduct. If time is critical, remedial failure likely occurred prior to the NLRB even seeking 10(j) relief (and thus should have been sought early on). If there is no immediate need, there is likely little risk of remedial failure by waiting until the NLRB decides the case.

One downside for employers contained in GC Robb’s memo is that he urges Regions to pursue 10(j) relief even when the Region is in the midst of settlement discussions, “unless there is a very strong likelihood that the case is going to settle.” But, in reality, this practice will place added pressure on employers to settle cases to the extent the Region alerts the employer that it intends to seek 10(j) relief or that the NLRB has approved the Region’s request for such relief. This is so, because it is difficult to erase the effects of a remedy imposed by temporary injunction if the NLRB later concludes there was no violation of the Act.

Chip Zuver is a former NLRB Attorney and an associate in the firm’s Labor and Employment Department, resident in its Los Angeles office.