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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.

On May 29, 2018, the D.C. Circuit asked the NLRB to explain – and justify – why it used a “clear and unmistakable waiver” standard when dealing with a Burns successor setting initial terms and conditions of employment, possibly offsetting its duty to bargain with a union in certain situations. As such, the court partially vacated an April 2017 Board decision holding that a successor employer, Tramont Manufacturing, LLC, violated the Act by laying off 12 workers without first notifying the employees’ union or bargaining over the effects of this layoff decision.

In 2014, Tramont, after acquiring the assets of a bankrupt company, decided to hire many of the predecessor employees and recognize the union, thus becoming a Burns successor. Tramont exercised its legal right as a Burns successor to set initial terms and conditions of employment by issuing an employee handbook that included a section covering layoffs. Then, in 2015, Tramont issued layoff notices to 12 employees without first notifying the union. The union attempted to bargain over the layoffs’ effects, but Tramont refused, which led to the subsequent filings of unfair labor practice charges with the NLRB.

In its ruling, the Board held that Tramont, in not notifying the union of these layoffs and refusing to bargain over its effects, violated the Act. In analyzing the case, the Board rejected Tramont’s argument that the “contract coverage” standard governed the lawfulness of this action and instead applied its “clear and unmistakable waiver” standard. Tramont appealed the decision.

Now, the D.C. Circuit has asked the Board to clarify and explain its use of the “clear and unmistakable waiver” standard when analyzing the bargaining obligations of a Burns successor in relation to the initial terms and conditions it is legally entitled to set. But, notably, the D.C. Circuit did not actually seem convinced that Tramont’s “contract coverage” standard should apply in place of the Board’s “clear and unmistakable waiver” standard:

Where…an employer seeks release from its statutory obligations on the basis of initial employment terms it has itself drafted… it would be perfectly reasonable for the Board to decide as a policy matter to construe those terms under a standard other than the one that would apply to the terms of a bargained for agreement.

Similarly, besides asking for an explanation, the court also opined on the soundness of the Board’s use of a “clear and unmistakable waiver” standard in this context. The court stated that it did not “see how employment terms unilaterally imposed by an employer could ever effect a waiver of bargaining rights by the union” and that “framing that standard in terms of waiver is far from intuitive.” Simply put, the court wants the Board to show their work and further explain why it applied this standard.

Lastly, even if the NLRB abandons its waiver standard in this context on remand, the court noted the Board may still decide that unilaterally imposed employment terms should be narrowly construed, thus leaving Tramont liable for violations under the Act. In this instance, the court asked the Board to respond to Tramont’s position that this outcome would counter Board precedent from 2001 that held a Burns successor did not have a bargaining obligation over the rate of pay offered to its new employees as part of initial terms and conditions it imposed.

In sum, whatever standard the Board decides to apply to the question of how far a Burns successor’s initial employment terms displace the duty to bargain with a union, it must clearly explain its reasoning for applying such standard. More significant, however, this decision will help both management and labor bars as employers and unions will better understand what conduct is legal and not legal under the established, but still evolving, successorship doctrine.

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

Previously, I wrote about the “preemption” problem with the Seattle Ordinance regulating ride-sharing services like Uber and Lyft.  After Seattle passed the Ordinance, the federal Ninth Circuit Court of Appeals quickly stayed the Ordinance pending an appeal.  The Ninth Circuit recently issued its opinion on the case.  Although the law remains stayed due to antitrust law issues (that topic is for another blog…), the court’s decision provided a potentially game-changing decision on the preemptive force of national labor law as it relates to independent contractors.

As explained in my previous post, the National Labor Relations Act, which governs the formation of unions for most employees in the private sector, only covers “employees” and explicitly excludes independent contractors.  Since the ride-sharing drivers are independent contractors, Seattle passed the Ordinance based on the reasoning that, if the NLRA does not cover these workers, then it should be permissible for local government to step in and provide its own collective bargaining regime.  The counterargument, brought by the Chamber of Commerce on behalf of the ride-sharing companies and other interested employers, was that the exclusion of independent contractors from the NLRA’s coverage was purposefully intended to exclude them from any type of collective bargaining regime.

The Ninth Circuit agreed with Seattle on the preemption issue and found that the NLRA does not prohibit local governments from creating their own collective bargaining law covering independent contractors.  The Court found that, in passing the statute, Congress did not intend to prohibit independent contractors from bargaining collectively.  The NLRA only excluded them from coverage of its own provisions.  Moreover, the Court noted that the Ordinance itself provided that any drivers who were found to be employees of a business would be excluded from coverage of the Ordinance and, instead, subject to coverage of the NLRA.

Thus, the Ninth Circuit’s decision gives the “green light” to local governments (or even states) to create collective bargaining laws for independent contractors.  However, as in the Seattle case, local governments and independent contractors must beware of the potential antitrust implications of such arrangements.  It is expected that, regardless of the NLRA preemption holding, interested municipalities will wait for the remainder of the case to run its course on the antitrust issues before creating their own collective bargaining laws.

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

As is often the case with the NLRB, footnotes include critical information and signal where the NLRB is heading. And, that is certainly the case with the NLRB’s blocking charge policy. On May 9, 2018, in a footnote to an NLRB Order, Board Members Marvin Kaplan and William Emanuel signaled their intent to reconsider the NLRB’s blocking charge policy.

The blocking charge policy is one of the NLRB’s longest standing rules. In a nutshell, the rule allows the NLRB to place in abeyance election petitions where there are outstanding unfair labor practice (“ULP”) charges pending that, if true, could interfere with the employees’ free choice to vote either for or against a union. However, that is not to say that there have not been modifications to this long-established policy. Under NLRB Rules & Regulations, Section 103.20, any party wishing to block an election petition must now file a request that the petition be blocked, along with a request to block the processing of the petition, and simultaneously file a written offer of proof. The Regional Director will hold the election in abeyance if he/she determines that the allegations, if proven, would interfere with employee free choice and prevent a fair election.

Of course, protecting employee free choice is laudable; however, unions frequently use the blocking charges to delay elections seeking to remove the union as the employees bargaining representative in hopes that employee interest in decertification may fizzle out during the period in which the NLRB evaluates the merits of the ULPs. This can be an effective strategy given that the merits of ULPs frequently turn on the credibility of witnesses, and NLRB regional offices will not make credibility resolutions and will instead set a case for hearing before an NLRB administrative law judge. NLRB proceedings typically take months. Consequently, the filing of charges—even meritless ones—usually buy unions months of additional time collecting dues and trying to sway the minds of their membership or to discourage employees eager to rid themselves of the union by delaying the election process in the hope that those opposed to the union may not participate in the eventual decertification election. This, in turn, may enable a union with only minority support to continue representing employees.

In recognition of this, Board Members Kaplan and Emanuel signaled in a footnote that they intend to revisit the rule in a future case. Emanuel stated he believes that employee petitions should not be dismissed or even held in abeyance based on unproven allegations in unfair labor practice charges that are contested. Further, Emanuel and Kaplan are not alone in their desire to modify or do away with the policy, as NLRB General Counsel Peter Robb has noted that he believes that elections should proceed even in the face of unfair labor practice charges but only uphold the election if the charged party is cleared of all charges. Employee and labor groups oppose any such changes.

Still, the NLRB does not necessarily have to wait for the right case to come up; instead, the NLRB could modify its blocking charge policy through rulemaking. The NLRB did this in 2015 with its election rules (often described as “Quickie Election” rules). Given the NLRB is currently considering whether to revise these election rules, the NLRB could chose to modify its blocking charge policy by this route as well.

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

In Epic Systems Corp. v. Lewis, No. 16-285, 584 U.S. ____ (May 21, 2018), the United States Supreme Court upheld the enforceability of arbitration agreements between employers and employees that require claims to be arbitrated on an individual basis, rather than on a class, collective, or multi-employee basis. Specific to the facts of the cases involved in the Court’s decision, this ruling means that the plaintiffs must individually arbitrate their wage and other employment-based claims against their employers, rather than pursue them in court as a class or collective action on behalf of themselves and others.

As background, for the past few decades, the Court has consistently ruled in favor of strictly enforcing the terms of arbitration agreements under the Federal Arbitration Act (“FAA”). The challengers in the three consolidated cases in Epic Systems attempted to stem this tide by arguing that the National Labor Relations Act (“NLRA”) conflicted with, or at least could be harmonized with, the FAA in terms of the prohibition on class actions in arbitrations because the NLRA inherently protects “concerted activities” by employees. Indeed, the National Labor Relations Board (“NLRB”) had even ruled in 2012 that joining together in a class action was a form of concerted activity that was protected by the NLRA (and subsequently reaffirmed this proposition through its numerous decisions issued in the years following).  Therefore, the challengers sought to use the NLRA and the NLRB’s rulings to invalidate restrictions on class action imposed by the challenger’s arbitration agreements.

However, the Court disagreed. Writing for the majority, Justice Neil Gorsuch, found that the NLRA’s protections were not sufficient to overcome the FAA’s mandate to enforce arbitration agreements by their terms. The NLRA did not show a “clear and manifest” intention by Congress to overrule the clear language of the FAA. In addition, the Court concluded that the NLRB was not owed any judicial deference in its interpretation of the interplay between the NLRA and the FAA and that the FAA governed. On this basis, the Court ruled that the agreements to arbitrate employment related claims on an individual basis must be enforced.

In sum, the cloud of uncertainty surrounding class action waivers in arbitration has been lifted.  These agreements are now fully enforceable as long as their terms do not conflict with “generally applicable contract defenses, such as fraud, duress, or unconscionably” (and, of course, provided Congress does not pass legislation to overrule the Court’s decision).

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