Litigation News & Updates

On April 20, 2018, the National Labor Relations Board, by adopting an ALJ’s decision, held that employees who replied in agreement to another employee’s critical group email about the employer’s workplace were engaged in protected concerted activities under the Act. The email discussed wages, work schedules, tip policies, working conditions, and management’s treatment of employees – all of which are protected topics of conversation as they encompass workers’ terms and conditions of employment. Notably, the email specifically addressed the other employees and advised that it was illegal for “management to intimidate” them, among other remarks.

Still, in the course of investigating, the employer ended up terminating each employee who responded positively to the critical email. The employer argued that these employees were not terminated for their responses, but rather were terminated for refusing to be interviewed by the restaurant regarding their concerns about the email and for skipping/walking out on scheduled shifts. In essence, the employer contended that the ALJ expanded the reach of protected concerted activity by finding concerted insubordination to be protected.

Ultimately, the Board held that neither the critical email nor the employees’ responses – which included such statements as “Thank you for standing up for us” and “I agree a 100% as well” – were egregious enough to lose the protections of the Act. The Board further found that the employer’s purported reasons for discharge were pretextual in nature. As such, the Board ordered the restaurant reinstate these employees to their prior positions, provide them with backpay for lost wages, and hang a notice posting at the job location (though compliance in terms of reinstatement and notice posting may be difficult since the restaurant has since closed).

In sum, this case serves as a helpful reminder to tread lightly whenever your employees are discussing terms of employment like wages, working conditions, and their general treatment at work, regardless of the forum (e.g., in-person, social media, or a group email). Here, the restaurant’s reaction to this critical email, and the employees’ responses, was less than ideal as it resulted in the employer terminating each employee within two days of responding to the email.  Notwithstanding legitimate reason(s) for discipline, the optics of this case placed the employer in an uphill battle from the beginning. And this, of course, would likely not have been the outcome had the employer contacted experienced labor attorneys prior to taking any action.

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

On February 2, 2018, a split three-member Board panel held that a prior election won by a union must be vacated and, accordingly, ordered a second election as it found merit to the employer’s objection arguing that the tardiness of the Board Agent conducting the election potentially disenfranchised a dispositive number of eligible voters.

In February 2017, employees at Bronx Lobster Place LLC voted in favor of unionization by a narrow margin of 14-12. There were 4 eligible voters that did not vote for unknown reasons but, significantly, the Board Agent running the election opened the second voting session 7 minutes after it was scheduled to begin. Notwithstanding the fact that none of the missing voters actually showed up during the Board Agent’s absence, the employer argued that this alone should be enough to set aside the election results. Indeed, the Regional Director, in adopting the Hearing Officer’s recommendation, relied on this fact – no eligible voters were actually prevented from voting due to the late opening of the polls – in certifying the election results.

But, contrary to the Regional Director and the lone dissenting (Democratic) Board member, the Board majority found that case law “rejects such an actual-disenfranchisement standard, in favor of a potential-disenfranchisement test.” Interestingly, one of the two Democratic Board members left on the panel from the Obama-era ruled in favor of undoing the election results and conducting a second election.

In the end, this Board decision reaffirms precedent dating back almost two decades by clearly articulating the applicable standard, and it is yet another example of a favorable decision for an employer under this new administration. This application is also consistent with frequent management-side requests for bright line rules that make it simpler for parties to operate under. Expect more of the same in the (somewhat) near future once the Board has a fully constituted five-member panel with a Republican majority. Stay tuned.

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

On January 29, 2018, the DC Circuit remanded a 2016 NLRB decision – Grill Concepts Servs., Inc., 364 NLRB No. 36 (2016) back to the Board for reconsideration of several employee handbook violations found unlawful under the now-replaced Lutheran Heritage standard in light of the Board’s new standard recognized in Boeing Co., 365 NLRB No. 154 (2017).

As explained in a previous Alert, the prior standard considered work rules unlawful if employees would “reasonably construe” them to interfere with union or other protected concerted activity under Section 7 of the Act.  Until this past December, the Obama Board unreasonably interpreted and applied this decision for several years. That, however, changed in Boeing when the Board adopted a balancing approach that considers “the nature and extent of the potential impact” on Section 7 rights and the employer’s “legitimate justifications” for the rule.

Fast forward to this case and the DC Circuit has agreed to remand several work rules the Board previously found unlawful under the now-overruled “reasonably construe” standard.  These rules, contained in the restaurant’s employee handbook, include a “Team Member Relations/Positive Culture” rule requiring employees to interact respectfully with management, an “Online Communications” rule, and a “Team Member Conduct While Representing the Restaurant” rule (just to name a few). And while it is not unusual for a federal court of appeals to remand a matter back to an agency, especially when encountered with a change in policy by said agency, this situation should help instruct employers previously found to have unlawful work rules and currently in the midst of an appeals process.

This decision to remand will also allow the Board to give more guidance to employees and employers alike by actually applying the new standard to different facts and circumstances than those examined in the Boeing case. Yet, the clear guidance we all desire – but at times hardly get – can only happen when John Ring is confirmed by the Senate and gives the Board a 3-2 Republican-majority once again. Until then, any case taken up by a four-member Board evenly divided among party lines will likely end up deadlocked 2-2 and possibly constrain the application of the new Boeing standard.

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

Hy-Brand Industrial Contractors – the recent Board case overturning Browning Ferris Industries and restoring the previous joint employer standard – was perhaps the most important decision among the many decided prior to former Board Chairman Miscimarra stepping down in late 2017; but the decision may not be as significant for all.

As explained in an earlier Alert, the Republican-controlled Board returned to the pre-BFI standard in place for decades and once again found that joint employer status depends on whether entities have “direct and immediate” control over employees’ terms and conditions. And, even though Browning Ferris Industries exposed corporations that franchise to greater legal liability by making it easier to find joint employer status, overturning this incredibly broad standard is less substantial for those employers who do not just sit on the sidelines and observe (reserved control) but who actually have direct and immediate control over the employment terms of another entity.

Primarily, Hy-Brand is a huge victory for business advocacy groups and employers of all sizes as it returns the joint employer standard to its logical place and abandons the nonsensical propositions put forth in Browning Ferris Industries. Additionally, since Hy-Brand applies retroactively to all pending cases regardless of stage in the proceedings, respondents involved in such matters can expect any evidence of indirect and reserved control that the NLRB may have against them to likely be moot and not bear any impact on the outcome.

Hy-Brand will also present the NLRB’s new General Counsel, Peter Robb, with a decision in terms of resources the Agency will allocate when cases purport to show a joint employer finding by relying more on reserved, non-exercised control evidence rather than direct and immediate control. Still, notwithstanding how the General Counsel decides to allocate Agency resources, one thing is certain: businesses – large, small, and in between – can rest a little more easily knowing several Obama-era policies are on their way out.

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

A recent Memorandum from Peter B. Robb, the NLRB’s newly installed General Counsel, reminded me of a stanza from Lewis Carroll’s The Walrus and The Carpenter. To paraphrase: “The time has come” the GC said, “To talk of many things: Of handbook rules and Weingarten, of email use and salt-ings.” Though perhaps not as prosaic, the GC’s December 1 Memorandum presages his intent to take Board law back through the looking glass and review all issues overruled by the Obama Board.

The Memo – which new GCs typically issue at the start of their terms – mandates that all Regional Offices seek guidance from Advice before issuing complaints on “significant legal issues,” shorthand for subjects about which the Board overruled precedent during the last eight years. This appears to be the GC’s way of putting the brakes on the application of Obama Board precedents that have been widely viewed as overreaching.

Just in time for the holidays, the GC’s Memo recites is an employer’s wish list of Board rulings to be overturned or revisited:

  • A presumptive right of employees to use employer email systems for Section 7 activities;
  • Employer handbook rules found be unlawful that barred “disrespectful” conduct, use of employer intellectual property, and workplace recording;
  • Finding protected activity was concerted where only one employee had a stake in the outcome, or where the activity involved obscene or vulgar conduct;
  • Broad expansion of the Weingarten right;
  • Joint employer and successorship issues;
  • An employer duty to provide witness statement to unions;
  • And so much more!

Besides identifying issues of focus for potential complaints, the Memo also immediately withdraws a number of prior GC memoranda. Most notably, the GC has withdrawn GC Memo 15-04, “Report of the General Counsel Concerning Employer Rules,” which vexed many employers who scrambled to review and revise their seemingly innocuous handbooks in an often vain attempt to ensure that employees could not reasonably construe them in a way that would chill their NLRA-protected activity.

Finally, the Memo also halted initiatives of the prior administration, such as application of the Weingarten doctrine to non-union workplaces, and an effort to shift the burden of proof in cases involving back pay for salts.

A full analysis of the Memo and its potential implications – both immediate and in the future – is beyond the scope of this post. However, the Memo confirms the expectations of employers, unions and advocates on both sides: the pendulum is on the backswing and the Board is eager to correct the imbalance created over the past eight years.

Justin Schwam is an associate in the firm’s Labor and Employment Department, resident in its Morristown office.

The Obama Board did not pull any punches when it came to analyzing the lawfulness of workplace rules. Still, as previously blogged about here, a more balanced approach to workplace rules may – hopefully – be on the horizon. On October 19, 2017, the ALJ in Green Apple Supermarket of Jamaica, Inc., issued a decision wherein he found, among other various Section 8(a)(1), (3), and (5) violations, that the employer did not violate Section 8(a)(1) by maintaining and promulgating overly broad texting and confidentiality rules. The ALJ found the following two rules lawful:

  • “All documents are considered confidential and the sole property of Green Apple Supermarket and are not to be distributed or taken off the premises. There is to be no copying, faxing or photographing of documents. Failure to comply may result in dismissal and legal action.”
  • “Texting and playing electronic games is strictly prohibited and will result in a warning: 3 warnings will result in a dismissal.”

In doing so, the ALJ reasoned that these two rules did not fall victim to the Board’s overly broad interpretation of what constitutes an illegal workplace rule under its Lutheran Heritage standard.  Specifically, the ALJ held these rules did not violate the first, and most expansive, prong of Lutheran Heritage, i.e., “employees would reasonably construe the language to prohibit Section 7 activity.” The ALJ found that the record was devoid of evidence “as to how and in what manner these rules affected the employees from exercising their Section 7 rights.” The ALJ relied on the fact that the rules were in place before the employer was unionized and that the General Counsel failed to show how they were applied to coerce, interfere, or restrain employees’ rights under the Act.

EE HandbookMoving forward, although this ALJ decision is nice to see among the majority of administrative and Board decisions that find workplace rules unlawful, employers must still be mindful of implementing broadly worded and vague rules. Employers need to be cautious when using certain words (e.g., “all”) and are advised to provide context and examples when constructing their rules to demonstrate that they are not intended, nor are they trying, to prohibit employees from exercising their rights under the Act. Presently, Lutheran Heritage is still the law of the land and whether employees “would reasonably construe” rules to restrict their rights under Section 7 is still the incredibly broad employee-friendly standard workplace rules are generally analyzed under.

Ideally, this Republican-controlled Board will issue a decision that appropriately balances the interests of both sides sooner rather than later. Perhaps something along the lines of Board Chairman Philip A. Miscimarra’s 2016 William Beaumont dissent where he proposes adopting a balancing approach that considers an employer’s justifications in promulgating a workplace rule. At this point, however, our only option is to wait and see. So stay tuned.

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

The Ninth Circuit, a historically employee-friendly court, recently issued a decision that backs the NLRB’s revised post-arbitral deferral standard laid out in its December 15, 2014 Babcock & Wilcox decision. This Board decision was previously blogged about here. On Tuesday, October 17, 2017, the Court affirmed the Board’s decision to apply its new deferral standard only prospectively and upheld the denial of the petitioner’s unfair labor practice complaint as it was analyzed under the previous more deferential standard. In doing so, the Court considered a five-part balancing test and ultimately found that a prospective application was appropriate.

Significantly, the Court held that the new post-arbitral deferral standard was an abrupt departure from a well-established practice that the employer relied on and a retroactive application would severely burden the employer and not appropriately balance statutory interests as it would undermine the previous arbitration and ALJ proceedings in the case at hand. Critically, retroactively applying the new standard “would impair the ‘stability of labor relations [that] was the primary objective of Congress in enacting the National Labor Relations Act’” and thus the Court found “the primary purpose of the NLRA favors prospective application.”

In Babcock & Wilcox, the Board majority found its previous post-arbitral deferral standard failed “to ensure that employees’ statutory rights are adequately protected,” despite the fact that it had been in place for decades without substantial change (and the several challenges made by the Board’s Republican members at the time). Specifically, the Board majority held that the previous standard relied on a “conclusive presumption that the arbitrator ‘adequately considered’ the statutory issue” since the underlying ULP issue and contractual issue only needed to be “factually parallel” and the arbitrator only needed to be “presented generally” with the relevant facts.

Accordingly, the Board now defers to an arbitrator’s decision if it is shown that (1) the arbitrator was explicitly permitted to decide the underlying ULP issue; (2) the arbitrator was presented with and considered the statutory issue, or was blocked from doing so by the party opposing deferral; (3) and Board law reasonably permits the arbitral award. Notably, the previous post-arbitral deferral standard placed the burden of proof on the party opposing deferral to demonstrate that the deferral criteria were not met, but the new standard places the burden on the party urging deferral to prove that the deferral standard is satisfied (i.e., usually the employer). The NLRB’s General Counsel issued a memorandum back on February 10, 2015 offering guidance on the Babcock & Wilcox decision and noted that this decision also changed the standards for pre-arbitral deferral and grievance settlements.

In short, the Court correctly noted that this revised post-arbitral deferral standard “makes deferral to an arbitral decision less likely.” As such, employers should continue to be mindful of the discretion Regional Offices across the country have in refusing to defer to an arbitrator’s decision and, critically, the possible arguments that a union who loses at arbitration may make to Regions investigating ULP charges that encompass issues already litigated in a previous arbitration.

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

Earlier this month, the U.S. Supreme Court heard oral arguments on whether employment agreements that require an employee to resolve a dispute with her employer through individual arbitration and waive the option of having the dispute handled collectively is unlawful.

In D. R. Horton, 357 NLRB No. 184 (2012), the NLRB first held that arbitration agreements requiring employees to forfeit their right to proceed collectively violate Section 8(a)(1) of the Act. The waiver of the right to proceed collectively is termed a “class waiver.” The Fifth Circuit Court of Appeals refused to enforce the NLRB’s order.  The Court of Appeals concluded that the NLRB’s interpretation of the NLRA placed it in conflict with the FAA’s requirement that arbitration agreements be enforced according to their terms; and pursuant to recent Supreme Court precedent, the NLRB’s interpretation of the NLRA must yield to the FAA, where, as here, there is no contrary congressional command.

The NLRB accepted the Fifth Circuit’s decision as the law of the case, but continued to issue decisions finding class waivers unlawful.  Three circuit court of appeals subsequently enforced NLRB orders finding class waivers in arbitration agreements unlawful.  The Supreme Court granted certiorari to hear three cases to resolve the circuit split.

The consensus among court watchers and labor attorneys before oral argument was that the Court would likely split 5-4 to uphold the validity of class waivers with the Court’s newest member, Justice Gorsuch, casting the deciding vote. However, no one is certain.  Because of this, court watchers and labor attorneys eagerly listened to hear if the Justices would say anything to signal their view on the issue. Of the seven Justices that asked questions — none said anything to suggest the prognosticators were wrong.  Still, we are no more certain of the outcome of the cases, largely because Justice Gorsuch, the likely deciding vote, did not question the parties.

Based on the questions and comments of Associate Justices Breyer, Ginsburg, Kagan, and Sotomayor, we are virtually certain they will find class waivers in employment arbitration agreements violate the NLRA and are therefore unenforceable under the FAA.  For instance, Justices Kagan and Ginsberg suggested employees have a substantive non-waivable right to proceed collectively in any forum if workplace-related. Justice Ginsburg also expressed concern that approving such waivers would prevent employees from effectively vindicating their rights as the cost of individual arbitration might exceed the award.

It also appears based on questions and comments during argument that Chief Justice Roberts and Associate Justices Kennedy and Alito are inclined to uphold class waivers in arbitration agreements. For instance, Chief Justice Roberts pointed out that if the Court found such waivers unlawful it would invalidate arbitration agreements covering 25 million employees and the Court’s recent support for arbitration.  Justice Kennedy, in turn, questioned whether class waivers really foreclosed employees from acting concertedly, pointing out that the waivers would not preclude employees from concertedly joining together to hire an attorney to handle their individual arbitrations on related claims, potentially sharing information, strategy, and reducing costs.  Although Justice Thomas did not question the parties during oral argument, most people believe he will find waivers in employment arbitration agreements lawful.  This is because of his past votes upholding arbitration agreements in other contexts.

Justice Gorsuch is the wild card on this issue.  He did not ask any questions of the parties during oral argument.  Although his views as a Judge on the U.S. Court of Appeals for the Tenth Circuit suggest he will find class waivers in arbitration agreements enforceable, his elevation to Associate Justice of the Supreme Court gives him the independence to depart from past positions and precedent with which he disagrees but was bound to follow at the Tenth Circuit.  Justices have surprised their backers in the past.

We will let you know if the prognosticators were correct.

The National Labor Relations Board (“NLRB” or “Board”) has taken a jaundiced view of employer policies that require respect and civility in the workplace over the past several years. The Board has found such rules generally interfere with employees Section 7 rights and thereby violate Section 8(a)(1) of the National Labor Relations Act (“the Act”). Fortunately, the Fifth Circuit Court of Appeals (“the Court”) takes a more holistic view of civility rules. In T-Mobile USA, Incorporated v NLRB, No. 16-60284 (5th Cir. June 25, 2017), the Court, contrary to the Board, found lawful two civility rules because nothing in the language of the rules, nor in their implementation, would lead a reasonable employee to believe the rules restrict protected, concerted activity.

In the underlying case, the Board found that T-Mobile (“the Company”) violated Section 8(a)(1) by maintaining in its employee handbook two civility rules:

  • a workplace conduct rule that encouraged employees to “maintain a positive work environment by communicating in a manner that is conducive to effective working relationships with internal and external customers, clients, co-workers, and management”; and
  • a commitment to integrity policy that required employees to “exercise integrity, common sense, good judgment, and act in a professional manner …” and prohibited, among other things, “[a]rguing or fighting with co-workers, subordinates or supervisors; failing to treat others with respect; or failing to demonstrate appropriate teamwork.”

With respect to the workplace conduct rule, the Court rejected the Board’s contention that reasonable employees would view the language of the rule to discourage protected activity, such as contentious discussions about a unionization. The Court noted, under Lutheran Heritage Village-Livonia, the Board is not to presume that an employer’s rule improperly interferes with employee rights, nor look to see if the rule could conceivably cover Section 7 activity. Rather, the Board is to determine objectively how a reasonable employee would read the rule. The Court noted the employer did not adopt the rules in response to any protected, concerted activity nor were the rules applied to restrict such activity. In short, nothing in the context of the case suggested that a reasonable employee would read the rule to restrict Section 7 activity. In a normal workday in a normal workplace, a reasonable employee would read the rule to “express a universally accepted guide for conduct in a responsible workplace.”

Similarly, with respect to the commitment to integrity policy, the Court rejected the Board’s contention that the policy violated the Act because it would inhibit robust discussion of labor issues, concluding that the policy is a “common sense civility guideline.” The Court noted that the rule’s prohibition on “arguing or fighting,” “failing to treat others with respect,” and “failing to demonstrate appropriate teamwork” appeared in a list of other prohibited actions, “including theft, fraud, dishonesty, and sleeping on the job.” Noting the serious nature of the other listed acts of misconduct, the Court concluded that a reasonable employee would not interpret the integrity policy to prohibit two employees heatedly debating the merits of union or other protected activity, but rather prohibit only more egregious misconduct similar in nature to theft or fraud. The Court also reasoned that the policy would not interfere with a reasonable employee’s Section 7 activity because an employee would surely be able to engage in vigorous debate with others over union activity or working conditions without fighting, disrespecting colleagues, or refusing to act as a team.

Once President Trump’s nominees are confirmed by the Senate, the Board will likely adopt a more balanced approach to employer civility rules. Until then, the Board will continue to find civility policies similar to these unlawful, and employers will need to seek review in United States Court of Appeals such as the Fifth Circuit if they wish to retain their civility rules.

Charles “Chip” Zuver is an associate in the firm’s Labor and Employment Department, resident in its Los Angeles office.

The issue of joint employer has been frequently discussed in the labor & employment law circles, and even the media, since the National Labor Relations Board (“NLRB” or “the Board”) issued its 2015 decision in Browning-Ferris Industries, 362 NLRB No. 186 (2015). The issue has had so much attention that a bill, H.R. 3441, has been introduced in the Republican dominated Congress to overturn the decision before the appellate courts rule on the legality of the NLRB’s reinterpretation of the joint employer standard. It would normally be safe to assume that a decision on the issue of joint employer by the D.C. Circuit Court of Appeals (“Court”) would be consequential, but, due to procedural issues in this case, the opinion leaves the standard in place for now.

In CNN America, Inc., No. Civ. 15-1112 (D.C. Cir. August 4, 2017), the court addressed a long-running case involving CNN and its camera operators and technicians who were terminated and subject to a re-hiring process in 2003. Since shortly after its inception, CNN used contractors to staff its technical employees, who were represented by a union. However, around 2003, CNN decided to bring its technical staff in-house as employees. CNN hired some, but not all, of the former contractors as its own in-house employees. In response to CNN’s actions, the union of the former contractors claimed that CNN violated the NLRA. After a complaint issued against CNN in 2007, an opinion was handed down by an NLRB Administrative Law Judge (ALJ) in 2008, which the NLRB largely affirmed in 2014. The matter finally came before the Court on appeal in 2017. The court, in an opinion written by none-other-than Judge Merrick Garland, partially remanded and partially affirmed the NLRB’s decision.

The NLRB had found that CNN engaged in unlawful behavior during the process of terminating the agreement with the contractor and hiring the in-house staff by (1) terminating the agreement as a joint employer with the contracting company to rid itself of the union-represented employees, (2) failing to hire former contractors based on their union status, and (3) failing to recognize and bargain with the union as the representative of its newly-minted in-house employees. On the latter issues, the court affirmed the NLRB’s findings primarily based on the Board’s factual evidence regarding CNN’s hiring process, which showed a desire to avoid hiring union members when staffing its new in-house technical employees. In addition, the Board found that, in terminating the agreement with the contracting company, CNN had violated the Act because it was a joint employer with the contractor at the time it terminated the agreement.

On the issue of joint employer, the Court essentially remanded the matter to the NLRB to “re-do” its analysis. The court reviewed the Board’s law on joint employer and found that its precedent at the time of the decision required a finding that a putative joint employer had “direct and immediate control” over employees technically employed by another company. However, the Board in CNN skipped over this issue and found that CNN and the contractor were joint employers based on the “share or codetermine” test that required only indirect control. This test, which is less stringent than the “direct and immediate control” test, was adopted by the Board in Browning Ferris Industries, which was issued after CNN. The Court found it interesting that, after it rendered its decision in CNN, the Board engaged in a rigorous review of its joint employer standard in Browning Ferris Industries and, ultimately, the Court found that the prevailing standard at the time was the “direct and immediate control” standard. Therefore, the Board in CNN had, without analysis, disregarded the contemporary standard and used the lesser “share or codetermine” test to find CNN was a joint employer with its former contractor.

The court remanded the case back to the Board because it, like all administrative agencies, could not change the joint employer standard without providing an explanation for the change in the law. On remand, the court directed the Board to provide an explanation for its deviation from the then-existing standard or utilize that “direct and immediate control” standard in rending its decision.

In the end, we will all need to wait for the Court to render its decision in Browning Ferris Industries for any actual developments in the law of joint employer under the NLRA.

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