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.

In an early May 2020 decision, the Board declared a temporary pause in charged parties (usually an employer) complying with the NLRB’s standard notice posting remedy in response to the ongoing COVID-19 public health crisis. Thereafter, on May 20, 2020, General Counsel Peter B. Robb issued GC Memo 20-06 and made this temporary change applicable to informal settlement agreements (as a notice posting is typical in such arrangements).

A party that is liable for violations of the Act and/or who enters into a settlement agreement will need to post a notice within 14 days of a decision being issued, or execution and approval of an agreement (the notice is usually served by the involved NLRB Regional office). As known to traditional labor practitioners, notices must be physically posted somewhere at the facility where all employees have access to it and remain posted for 60 consecutive days. Additionally, an employer must distribute a notice electronically (e.g., Intranet, email, etc.) if it customarily communicates with employees in such fashion. However, with the closures of businesses around the country due to the Coronavirus, the remedial effect of notice postings has been hindered because there are minimal-to-no employees working at some of the facilities where notices must be put up. As such, a notice posting has proven not to be an effective way of advising employees of violations of the Act and their rights under federal labor law – the purposes of the notice – since employees are not around to read it.

Understanding this reality, the Board and General Counsel announced and implemented the aforementioned temporary delays in relation to remedial notices. For now, Employers (or union charged parties) do not need to post and/or electronically distribute notices “within 14 days” of service . If a facility is currently closed or is open and operating with less than a substantial complement of employees, then the 60 consecutive day notice period for posting will begin when a facility reopens and a substantial complement of employees have returned to work. A “substantial complement” is at least 50% of the total number of employees working before the COVID-19 related closing occurred. That said, an employer who reopens and is required to electronically distribute notices does not need to wait until a substantial number of employees return to work, and must – if appropriate – email the notices as soon as the workplace reopens.

These changes to remedial notices do not apply to charged parties that have remained opened and staffed with a substantial complement of employees during the Coronavirus pandemic. As noted by the Board, a return to the standard timeline for notices will happen when “conditions warrant” but, until then, these directives are applicable. Stay tuned for what happens next.

Summer Associate Kelly McNaughton contributed to this blog post.  

On June 17, 2020, National Labor Relations Board General Counsel Peter Robb issued GC Memo 20-08 (“Memo”), providing Regional offices new directives for taking certain witness testimony and accepting audio/video recording evidence in unfair labor practice (“ULP”) investigations.

First, the Memo instructs Regions allow a charged party – in most cases an employer – to be present and observe the “substantive communications” with a former supervisor or agent if that individual is now testifying against the charged party about a contested action, e.g., terminating an employee for union activity. Regional staff is to “apprise the party or its representative in advance of communicating with the individual about the substance of the matter” and afford the charged party the opportunity “to be present for the taking of any affidavit.” This guidance applies even if jurisdictional skip counsel rules would not prohibit communications with the former supervisor or agent. It does not apply, however, if an individual is only a “fact witness” (an inquiry requiring further communications with the NLRB Ethics Office and Operations). Similarly, if a former supervisor or agent has their own counsel, does not want the charged party’s representative present, and/or where the charged party’s attorney wants to participate as more than an observer, the Region should contact the Ethics Office.

Next, and perhaps most significant, this Memo discusses changes to the Board’s standard in accepting and using recording evidence. The NLRB has historically relied on recording evidence – whether or not surreptitiously and/or unlawfully obtained in violation of federal or state wiretap laws or work policies – to investigate and prosecute ULP charges. This often led to employers being blindsided at trial or during settlement negotiations with evidence that they did not know existed nor been given an opportunity to address. Now, pursuant to the Memo, there will be a level of transparency at the investigative stage of a ULP case that never existed before.

New Guidance on Recordings Proffered During ULP Investigations:

  • 1) Regional employees – e., Field Examiners and Board attorneys – investigating ULP charges should not receive “recordings they know to have been made without the consent of any participant in the conversation and with an expectation of privacy.”
    • Regions should consult with the Ethics Office when this is in doubt.
  • 2) Regions will alert charged parties, before making merit determinations, that they possess highly relevant recordings, offer to play the recordings for them, and solicit the charged party’s position on the recordings.
    • However, Regions will deny charged party requests for copies of the recordings.
  • 3) Regions will advise the individual or party offering the recording, before receiving the actual recording, about the Region’s potential use of the evidence, e., sharing it with the charged party, and put them on notice about the possible breach of any law or work rule that may have occurred in making the recording.
    • Individuals will be advised concerning prosecution or civil claim possibilities if the recording was made unlawfully or, if made in violation of a workplace policy, potential adverse employment consequences.

Notably, the Memo does not outright prohibit Regions from accepting a recording that may have been made in violation of a statute or employment policy. Regions may continue accepting such evidence, provided they follow the above-referenced framework so that a “person can make an informed choice as to whether or not to provide a recording to the Region” in the first place.

While some argue that this Memo hamstrings NLRB staffers’ ability to investigate ULP charges, provides a level of “discovery” not allowed under the Act, and may lead to deterring whistleblowers from coming forward, Agency leadership correctly disavows of this criticism. The Memo, as described by an NLRB spokesperson to Bloomberg Law, aims to provide “timely relief for individuals whose rights have been violated … by ensuring that Regions candidly disclose appropriate evidence accumulated during the investigation phase.” Further, in terms of advising those parties or individuals proffering recording evidence, the guidance is “intended to protect them, not to intimidate them.”

In sum, management-side practitioners should rejoice at the changes this Memo brings to NLRB cases. Employers will no longer be surprised with recording evidence they never even knew existed (and possibly illegally obtained) and, generally, ULP investigations will take a more even-handed approach moving forward.

On April 29, 2020, the Ninth Circuit Court of Appeals affirmed a National Labor Relations Board decision where an employer was lawfully permitted to refuse a union’s request for financial information because it appropriately clarified its previous “inability to pay” statements and explained that it was only unwilling, not unable, to meet the union’s wage demands. 

Normally, when an employer justifies its bargaining position by claiming an inability to pay a union’s demands, the union may request financial documents sufficient to substantiate the employer’s position. The Supreme Court held in NLRB v. Truitt Mfg. Co., 351 U.S. 149, 153-54 (1956), that a union is entitled to an employer’s financial information when an employer bases its bargaining position on an asserted inability to pay. That said, the NLRB has long held that a union is generally not entitled to this information without an employer claiming an inability to pay across the bargaining table. In this regard, the Ninth Circuit noted that an employer “asserting an unwillingness to pay a union’s demands during negotiations is different than asserting a financial inability to pay” and such an employer “does not have a duty to produce information about its financial viability upon request from the union.”

In the instant case, the employer initially told the union it would be committing “suicide” and put the company “underwater” if it granted the union’s wage demands, statements that the employer conceded constituted an inability to pay position.  Thereafter, however, the employer further explained its bargaining stance and stated how “no employer in this business would pay such a wage to its hourly workforce that was so grossly outside of its business model and if it did so, it would be suicide for the company.” This, the employer clarified, was “not an inability to pay for lack of revenue” but rather “a refusal to pay an hourly rate that would be detrimental to the business.” In affirming the NLRB, the Court held that the employer’s subsequent explanation established a proper disavowal of its previous inability to pay statements, and that the employer had a legal right to do so.

Ultimately, the Court found that the overall weight and substance of the employer’s bargaining position was an unwillingness to pay the union’s wage demands. The Court noted that “[n]ot every financially-motivated decision by an employer establishes … an [in]ability to pay” and, to this end, the employer not referencing “financial nonviability after retracting its inability-to-pay claim” reinforced its finding that the employer was simply unwilling to pay, not unable.

Any employer bargaining with a union must be careful not to make inability-to-pay-type statements during negotiations, or otherwise risk opening up its financial records to a union. This case helps solidify the NLRB’s current position on when employers may lawfully withhold turning over financial information to a union and, specifically, how employers can retract/disavow prior inability to pay claims under certain conditions. The guidance in this case should provide helpful tips for those employers taking an unwillingness – not an inability – to pay stance during contract negotiations.

By announcement on April 1, 2020, the NLRB resumed representation elections beginning on April 6, 2020.  Previously, the NLRB had suspended elections until April 3, 2020.  The details on elections will be decided on a case-by-case basis by the Board’s regional directors.

Board Chairman John F. Ring provided the following reasons for resuming elections:  “Conducting representation elections is core to the NLRB’s mission, and ensuring elections are carried out safely and effectively is one of our primary responsibilities. Two weeks ago, when the Board made the difficult decision to suspend elections, the developing situation made it impossible to ensure the safety of our employees or the public. With many regional offices closed and most employees teleworking, the Board was not confident that any type of election could be run effectively. Based on these concerns, the Board determined that a two-week suspension would provide the General Counsel, who is delegated authority to supervise the regional offices, which conduct elections on the Board’s behalf, the opportunity to fully review the logistics of the election procedures in light of the unprecedented situation. The General Counsel now has advised that appropriate measures are available to permit elections to resume in a safe and effective manner, which will be determined by the Regional Directors. We appreciate the patience and understanding of all NLRB stakeholders during this challenging time.”

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