Teamsters Local Pension Fund Latest to Request Reduction in Vested Member Benefits

Citing the threat of future insolvency, a New Jersey Teamsters Local Pension Fund has applied to the U.S. Treasury Department for permission to reduce by 40 percent the vested member benefits in the Fund.

The Fund’s application is the third pension fund reduction application filed by unions in recent months. The Teamsters Local 469 Pension Fund’s Board of Trustees cited a growing concern that the Fund was “in ‘critical’ status, and … projected to become insolvent (that is, not have enough assets to pay benefits) in the year 2029.” The Board of Trustees argued the reduction is necessary to avoid insolvency despite the Fund’s having taken “all reasonable measures” to avoid it.

Multiemployer pension plans may apply for a reduction in vested benefits under the Multiemployer Pension Reform Act of 2014 (“Act”). The Act is aimed at helping pension funds avoid insolvency by proposing alternative solutions. Applications must be designed to help avoid insolvency, but also not be so broad as to seek a greater benefit reduction than necessary.

Under the Act, a pension plan’s Board of Trustees must provide notice to all employers and unions contributing to the plan, as well as plan participants and beneficiaries. Once the Treasury Department approves a reduction, pension fund participants and beneficiaries have the opportunity to vote on the proposal.

Two other multiemployer pension funds recently have applied for similar relief. On December 23, 2015, the Iron Workers Local 17 Pension Fund submitted an application for reduction in benefits, citing apparent insolvency by 2032. Last September, the Teamsters Central States, Southeast & Southwest Areas Pension Fund also submitted an application for a reduction in benefits.

The anticipated effective date of the Teamsters Local Pension Fund benefits reduction is October 1, 2016. A decision from the Treasury Department is expected within the next few months.


Labor Board Sets 24-Hour Ban on Meetings about Unions Prior to Mail Ballot Elections

The National Labor Relations Board has significantly changed its rule governing when “mass campaign meetings” with employees by the parties (employer or union) to an NLRB-conducted mail-ballot election may be held. Mass campaign meetings are planned or unplanned “captive-audience” meetings or discussions about unionization involving two or more employees at a time. The new rule provides that a captive-audience employee meeting by either of the parties to the election ending less than 24 hours prior to the ballot mailing by an NLRB’s Regional Office is unlawful. Guardsmark, LLC, 363 NLRB No. 103 (Jan. 29, 2016).

In 1953, in Peerless Plywood Co., 107 NLRB 427, the NLRB, in the context of a manual (in-person) election, ruled that mass captive-audience speeches by either party to the election ending within the 24-hour period prior to the start of such an election violated the National Labor Relations Act. Next, in Oregon Washington Telephone Co., 123 NLRB 339 (1959), involving a mail-ballot election, the Board decided that its captive-audience meeting prohibition did not begin until the time and date the ballots are mailed to voters. In its latest move, in Guardsmark, LLC, the Board decided that, because the Oregon Washington Telephone mail-ballot election rule did not contain a 24-hour component, there was a “counter-intuitive difference” between the rules in manual and mail-ballot elections that “invited confusion.” Therefore, the Board overruled Oregon Washington Telephone, adding a 24-hour requirement in mail-ballot elections “to align the mail-ballot rule more closely with the manual-ballot rule.”

As part of the pre-election procedure, the Regional Director notifies the parties of the date and time the ballots will be mailed. The Notice of Election issued by the Regional Director also will state the date and time the ballots will be mailed.

This rule change is very significant. It is a trap for the unwary:

  • It overturns guidance set more than 50 years ago in the questionable interest of symmetry.
  • It adds yet more time to the period in which employers are forbidden from addressing groups of employees about the issues in a Board mail-ballot election. (Employees typically are given two weeks to return their ballots; employers are forbidden to hold captive-audience meetings during that entire period, to which Guardsmark has added an additional 24 hours.)
  • It exposes unsuspecting employers to a greater risk of having the NLRB snatch election victories from their grasp.   An employer’s failure to comply with the captive-audience rule can result in the automatic invalidation of an employer’s election victory (if the union files a post-election “objection”) and the ordering of a re-run election.

An employer faced with a mail-ballot election must know the date and time the ballots will be mailed and instruct all of its supervisors not to conduct any group meetings or discussions with employees about unionization less than 24 hours prior to the NLRB’s mailing of ballots. Employers, however, may continue to have one-on-one discussions.

2015 Union Membership Rate Relatively Stable Despite New NLRB Election Rules

Despite the National Labor Relations Board’s “quickie election rules,” the percentage of unionized workers in the private sector remained stable during 2015, according to the Bureau of Labor Statistics of the U.S. Department of Labor: 6.7% of private-sector workers were in unions in 2015, up from 6.6% in 2014. Not surprisingly, public-sector workers had a much higher union membership rate: 35.2%.

According to the report, men had a higher union membership rate than women: 11.5% versus 10.6%. In addition, the percentage of African-American workers who were union members was greater than Caucasian workers.

New York (24.6%), Alaska (22.8%), and Hawaii (21.8%) had the highest unionization rates, whereas South Carolina (2.2%), Mississippi (3.7%), and Utah (3.7%) had the lowest.

The report found the median weekly earnings of nonunion workers were lower than the median weekly earnings for unionized workers ($776 per week versus $980 per week). The report, however, recognizes that this comparison may not be valid because the “comparisons of earnings in [the] release are on a broad level and do not control for many factors that can be important in explaining earnings differences.” Indeed, this is likely the case, as we noted in our post “Fuzzy Math May Be Basis for Labor Secretary’s Claim That Union Workers Earn More, Analysis Asserts.”

For much more on the impact of the NLRB’s new election rules through the end of 2015, click here for Jackson Lewis’ analysis.



Browning-Ferris Appeals ‘Joint Employer’ Decision to U.S. Court of Appeals

Browning-Ferris Industries of California, Inc. (“BFI”) has asked the U.S. Court of Appeals for the D.C. Circuit to review the National Labor Relations Board’s January 20, 2016 decision that it, a waste management company, and Leadpoint Business Services, Inc. (“Leadpoint”), a staffing agency that provided employees to BFI, were joint employers of those employees under the National Labor Relations Act.

BFI’s appeal marks the next step in BFI’s attempt to overturn the NLRB’s new joint employer standard, which provoked alarm among many employers when it was issued on August 27, 2015.

As we previously reported, under the NLRB’s former standard, joint employment would be found only where “two separate entities share or codetermine those matters governing the essential terms and conditions of employment.” This typically meant that an alleged joint employer had to exert direct and immediate control over matters such as hiring, firing, discipline, supervision, and direction. Under the Board’s new joint employer standard, however, the control asserted by a putative joint employer no longer must be direct and immediate; indirect control, or a reserved right to control, whether or not exercised, is sufficient to support a finding of joint employment.

After the NLRB determined that BFI and Leadpoint were joint employers, an NLRB election was conducted to determine whether the employees would be represented by the Teamsters. The Teamsters prevailed and were certified as the exclusive bargaining representative of the employees. To test the Board’s determination, BFI refused to recognize and bargain with the union. The Teamsters filed an unfair labor practice charge, leading the Board to issue a unanimous decision on January 12, 2016 that, based on the certification, BFI violated the NLRA. It is this decision that BFI has appealed.

The appeal likely will not be decided until late this year or 2017. It appears the topic of joint employment will remain a critical labor issue in 2016.


Labor Department Joins Joint-Employer Controversy with Interpretation of Fair Labor Standards Act

The U.S. Department of Labor’s Wage and Hour Division has issued an Administrator’s Interpretation on joint employment under the Fair Labor Standards Act taking a broad view of joint employment. To read about the DOL’s interpretation, click here.

This fuels the fire ignited by the National Labor Relations Board’s broad new standard for determining joint-employer status under the National Labor Relations Act. Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015). See here for more on Browning-Ferris.


Employer “Captive Audience” Communications Rule Under Attack

A group of 106 university and law school professors of labor law and employment relations has petitioned the National Labor Relations Board to issue a rule amending its long-held position regarding “captive audience” meetings held by employers in connection with NLRB-conducted union elections. The petition, filed on January 15, 2016, requires “equal time” for unions, if requested; if the union is not given equal time, an employer’s election victory will be overturned and a new election conducted.

More than sixty years ago the NLRB ruled in Peerless Plywood that employers are permitted under the National Labor Relations Act to hold captive audience meetings in connection with union elections. Under the captive audience doctrine, an employer is permitted to hold mandatory employee meetings preceding the election whereby an employer may speak to employees about unionization. These mandatory employee meetings typically are held at the employer’s worksite during working hours and, under the rule, may not end less than 24 hours prior to the opening of the polls. There is no requirement, however, that union organizers be given equal access to workers. In other words, employers may bar unions from the employer’s premises and not allow them to speak to employees during worktime.

Under the Board’s rules and regulations, an “interested person” may petition the NLRB “for the issuance, amendment, or repeal of a rule or regulation.” Those rules also provide that the Board may “either grant or deny the petition in whole or in part, . . .” Through their “interested person” petition, the professors argue that permitting only employers to hold “captive audience” meetings constitutes a violation of the “laboratory conditions” requirement for union elections.

The petition is not the first attack on the captive audience rule. States have unsuccessfully attempted to pass legislation invalidating the rule, and several members of Congress have introduced bills to overrule Peerless Plywood.

Despite the petitioners’ argument to the contrary, the captive audience rule is an important employer tool in communicating its message to employees, especially in view of the NLRB’s strict regulation of employer speech. While union communication, often comprised of lavish promises of greater benefits and higher wages, is largely unregulated during a campaign, employers cannot make promises of improvements and are largely prohibited from discussing employee grievances. Nor can employers make personal visits to employee homes to express their views on election issues, as can union representatives.

The NLRB has made it clear it intends to follow a pro-labor agenda encouraging increased unionization. However, given the common and established usage of captive audience meetings, based on such longstanding precedent, we think it unlikely the NLRB will alter its position on such speech. Employers should keep a close watch on this petition, however, and for any further action by the NLRB in 2016 .


NLRB Joint-Employer Decision Moves Closer to Review by Circuit Court of Appeals

The NLRB’s landmark Browning-Ferris Industries of California, Inc. decision, creating a new joint employer standard, has taken another step toward judicial review in a U.S. Circuit Court of Appeals.

On August 27, 2015, the Board found that Browning-Ferris and Leadpoint Business Services were joint employers of certain workers that BFI subcontracted from Leadpoint. After an election in which the union prevailed, the Board certified the Teamsters Union as the exclusive collective bargaining representative of those workers on September 14, 2015.

The National Labor Relations Act does not provide for a direct appeal to a federal appeals court from a Board “representation case” decision (one involving an election). An employer wishing to appeal such a decision first must refuse to bargain with the union as a result of the representation case determination and thereby be found to have violated the NLRA. Then, it may appeal that decision to a court.

Within two weeks of the certification, BFI refused the union’s request to bargain. BFI reasserted that it was not a joint employer with Leadpoint under the National Labor Relations Act. The union filed an unfair labor practice charge alleging BFI’s refusal to bargain was unlawful, and on January 12, 2016, the Board found that BFI and Leadpoint, as joint employers, had violated the Act.  This decision sets the stage for BFI’s appeal to a circuit court, which likely will be filed in the next few days.

We will continue to monitor this case as it moves forward and will keep you apprised of future developments.



Supreme Court Justices Appear Ready to Overturn Mandatory Union Fees for Public Sector Employees

The United States Supreme Court appears headed toward outlawing “agency-shop” or “fair share” provisions in public sector collective bargaining agreements, requiring non-members to pay union fees, sometimes reluctantly, in lieu of dues.  Frederichs v. Cal. Teachers Ass’n, No. 14-915, argued Jan. 11, 2016.

The Supreme Court held in Abood v. Detroit Board of Education, 431 U.S. 209 (1977), that public-sector unions are constitutionally prohibited from using the fees of objecting nonmembers for ideological or political purposes that are not germane to the union’s collective-bargaining duties. The Court, however, upheld a state law authorizing unions and government employers to enter into agency-shop agreements.  Under these arrangements, a union can levy a fee on employees who are represented by the union in collective bargaining but who object to becoming union members. For public sector employees, Abood remains the controlling standard.

Many states, including California, currently authorize such agreements.  In the public sector, agency fee arrangements raise First Amendment concerns because they force individuals to contribute money to unions as a condition of their government employment.

In Frederichs, ten California teachers requested the Supreme Court overrule Abood and find the agency fees unconstitutional.  When given the opportunity to overturn Abood in 2014, the Court declined.  Instead, in Harris v. Quinn, the Court held that “quasi-public” employees (those who do not actually work for a public employer, but who are paid by public funds, such as Medicaid) were not required to pay agency-shop fees, but left Abood (as it pertains to “full-fledged” public employees) intact.  For an extensive discussion of Harris v. Quinn, click here.

Although Justice Antonin Scalia’s earlier statements on the issue led some Court observers to believe he might support the union in Frederichs, his questioning at oral argument suggested otherwise. In Harris v. Quinn, he appeared to empathize with the union’s argument that agency fees were required to prevent “free-riders” (individuals who accept the “benefits” of collective bargaining without paying the costs associated with it). Now, he seemed to question the necessity for those fees to sustain the union’s survival.  Justice Anthony Kennedy also noted, “[t]he union basically is making these teachers ‘compelled riders’ for issues which they strongly disagree.”

Chief Justice John Roberts, Justice Scalia and Justice Kennedy seemed to support the teachers. However, as noted by Justice Elena Kagan, the teachers have a “heavy burden” to convince the Court to overturn long-standing precedent. Labor unions in the public sector depend on compulsory financial support for their bargaining strength and political influence. Approximately 5 million public sector employees are covered by union contracts and pay a compulsory fee. That means huge sums of money for unions representing public employees are at stake.

A decision is expected in the spring.


Quickie Election Rule Challenge To Be Heard By Fifth Circuit

A court challenge to the National Labor Relations Board’s “quickie” election rule will be heard by the United States Court of Appeals for the Fifth Circuit, in New Orleans, on February 29, 2016.

A lawsuit filed on June 1, 2015 by the Associated Building and Contractors of Texas in the United States District Court for the Western District of Texas sought a declaratory judgment that the rule is invalid under the Administrative Procedures Act and an injunction against implementation of the rule. The Fifth Circuit challenge is an appeal from Judge Robert L. Pittman’s decision denying the Association’s motion for expedited summary judgment and granting the Board’s motion for summary judgment in that lawsuit.

Hundreds of representation elections have been conducted by the NLRB since the rule became effective on April 14, 2015. A ruling in favor of the Association could invalidate the results of all of those elections, including those where the union won and was certified by the NLRB as the collective bargaining representative of the bargaining unit employees.



Seattle City Council Enacts Ordinance Giving Drivers Right to Collectively Bargain, Legal Challenges Expected

Landmark legislation giving drivers of app-based transportation companies, such as Uber and Lyft, the right to collectively bargain, has been passed by the Seattle City Council.  However, the new law faces significant legal hurdles.

Although the new law, enacted on December 13, on its face is intended to improve public health, safety and welfare by providing Seattle with a means to regulate for hire and taxicab transportation services, the ordinance attempts to provide these drivers, who may be independent contractors and therefore exempt from rights afforded by the National Labor Relations Act, with rights analogous to those accorded employees under that Act. The NLRA regulates unionization and collective bargaining among almost all private sector employees in the country.

Section 6.310.735 of the Seattle Municipal Code creates a process for designating Exclusive Driver Representatives (“EDRs”) and for overseeing the collective bargaining process. Any organization may apply to become a Qualified Driver Representative (“QDR”). The transportation company is then required to turn over driver contact information to all QDRs. The information can be used by the QDRs to solicit support from eligible drivers — drivers who have completed 150 trips in the 30 days before the commencement date established by Seattle’s Director of Finance and Administrative Services. To become an EDR of a company’s drivers, the QDR must submit a statement of interest from a majority of that company’s drivers to the Director, who will determine if the statements are sufficient, and certify the QDR as the EDR, if appropriate. If no QDR obtains majority support from the drivers, a QDR will not be certified; however, any QDR can request to repeat the process the following year.

Once an EDR is certified, the parties have 90 days to negotiate certain terms and conditions of work specified by the Director. Either party can request “interest arbitration” (placing their contract dispute in front of an arbitrator for resolution) if the parties are unable to reach agreement within the requisite time.  All agreements must be presented to the Director for review and to ensure compliance with the ordinance.

The ordinance also includes a QDR decertification process, an administrative and private right of action for enforcement, and hefty fines for any transportation company that fails to negotiate in good faith or provide contact information for drivers. The ordinance prohibits retaliation against any driver who participates in the representative process and adverse action against any driver who exercises rights provided by the ordinance.

Seattle Mayor Edward Murray criticized the legislation, citing several “flaws” and the unknown costs associated with the administration of the collective bargaining process. The legislation will become law without his signature.

The ordinance is expected to face significant legal challenges. First and foremost, the ordinance may be preempted by the NLRA, since the National Labor Relations Board may be called upon to decide whether the drivers are employees entitled to engage in collective bargaining under the NLRA, or independent contractors who are not. NLRA preemption may be invoked to oust the City of authority to regulate labor relations involving these drivers – to invalidate the ordinance. (This raises an interesting issue: would a finding of independent contractor status by the NLRB, making the drivers eligible to collectively bargain, nevertheless result in preemption of a city ordinance like Seattle’s?  Would this eligibility to collectively bargain paradoxically make the drivers-employees subject to NLRA coverage, preempting the city ordinance?) Second, if drivers are appropriately classified as independent contractors, the ordinance may run afoul of federal anti-trust laws against price-fixing.

Other municipalities likely are watching the Seattle ordinance closely, ready to enact their own ordinances if the Seattle version survives its challenges.