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Labor & Collective Bargaining

President Obama Withdraws NLRB Nominee

President Barack Obama reportedly has withdrawn former-National Labor Relations Board member Sharon Block’s nomination to the NLRB to replace Nancy Schiffer, whose term expires on December 16, 2014.  Obama instead will nominate Lauren McFerran, chief labor counsel for the Senate Health, Education, Labor and Pensions Committee.

Block’s renomination earlier this year has met with significant Republican opposition — she was one of the three NLRB members whose January 2012 recess appointments were held to be invalid in the Supreme Court’s Noel Canning decision.   Block left the NLRB in August 2013.

It is unclear whether McFerran’s nomination will be taken up by the Senate before the 114th Congress is seated in 2015 with a Republican majority. The Democrats have the Senate votes to confirm a nominee until January 1, 2015.  However, commenters say the White House will reserve that strategy for more significant nominations, perhaps for Attorney General.   (Note that the GOP no longer has the filibuster rule to rely on to stop the majority from confirming a nomination.)

McFerran will need to be confirmed by the time Schiffer leaves the Board or there will be a 2-2 ideological tie.  It has been suggested that the Democrats will move quickly to confirm McFerran, even though the White House did not want to do that for Block.   The change in nominees may be something of an olive branch to the GOP, which has strenuously opposed Block, ostensibly because she did not resign when her recess appointment was called into doubt.

Since she is presently Chief Counsel for the Democratic-controlled HELP Committee, it is not a given that that committee will report favorably on her nomination once a Republican majority is seated in 2015.

Predictably, Post-Noel Canning, Board Batting 1.000

The National Labor Relations Board through November 5 has reconsidered 35 decisions issued by Board panels found to be invalidly constituted under the Supreme Court’s ruling in NLRB v. Noel Canning.  Not surprisingly, in all of the decisions it has reconsidered, the NLRB reached the same conclusions as did the original, invalid Board panels.  See Daily Labor Report (Bloomberg-BNA, 11/10/14), reporting on NLRB General Counsel Richard Griffin’s remarks at ABA labor and employment conference, November 6, 2014.

In Noel Canning, the Supreme Court held that the recess appointments of Board members Sharon Block, Richard Griffin and Terence Flynn on January 4, 2012 were unconstitutional, and therefore invalid.   As a result, the Board had only two validly appointed members at the time of its Noel Canning unfair labor practice decision until August, 2014, when members Johnson, Miscimarra and Hirozawa were sworn in.

Many other invalidated decisions await Board reconsideration. We anticipate the Board will be reached the same results in those cases, as well.  As we noted in our article,Supreme Court Issues Historic Decision on President’s Recess Appointment Power,” “the current Board will move swiftly to reconsider all of [the decisions invalidated by Noel Canning] and essentially reconfirm them — the composition of the current Board is not unlike the composition of the Board that decided the cases that are now under question.”

NLRB Rules against Employee Arbitration Agreements with Class or Collective Actions Limitations

Despite criticism from some United States Courts of Appeals, the National Labor Relations Board (“NLRB”) has reasserted its position in D.R. Horton in which it held that class-action lawsuits are protected under the National Labor Relations Act (“NLRA”).  Murphy Oil USA, Inc., 361 NLRB No. 72 (Oct. 28, 2014).

In its 2012 D.R. Horton Inc., 357 NLRB No. 184 (Jan. 3, 2012) decision, the NLRB held that requiring employees to sign arbitration agreements that prevented them from participating in class or collective action lawsuits against employers was a violation of the employees’ right to engage in the concerted protected activity guaranteed under the NLRA.  Subsequently, an overwhelming majority of the federal district and appellate court decisions to have considered the issue rejected and criticized D.R. Horton.  A panel of the Fifth Circuit Court of Appeals previously denied enforcement of D.R. Horton, Inc., disagreeing with the NLRB’s interpretation of the NLRA and concluded that class and collective action waivers in employer arbitration agreements do not violate the NLRA and are enforceable under the Federal Arbitration Act as long as employees maintain the right to bring suit as individuals.  Subsequently, the Fifth Circuit denied the NLRB’s Petition for Rehearing En Banc. The NLRB never sought Supreme Court review of the Fifth Circuit’s adverse decision.

In Murphy Oil, Inc., the Company’s binding arbitration agreement was provided to employee Sheila Hobson as a condition of employment when she was hired.  Nevertheless, Hobson later filed a collective action alleging violations of the Fair Labor Standards Act in federal district court in the Northern District of Alabama.  The Company filed a motion to compel arbitration, seeking to force Hobson and three other employees to arbitrate their claims on an individual basis.  Hobson then filed an unfair labor practice charge with the NLRB, claiming that the arbitration agreement violated Section 7 of the NLRA by prohibiting employees from litigating their employment related claims concertedly.  The NLRB’s General Counsel agreed with Hobson and issued an unfair labor practice complaint against the Company.

The District Court granted the Company’s motion to compel individual arbitration.  However, while the District Court action was stayed pending arbitration, the NLRB issued its decision which declared unlawful the class and collective action waiver clause from the Company’s arbitration agreement, and directed that it be removed from Company policies.  Adhering to its reasoning in D.R. Horton, the Board in Murphy Oil rejected subsequent judicial criticism of that decision.  On November  6, 2014, Murphy Oil filed a Petition for
Review with the Fifth Circuit – the same court that previously overturned the Board in D.R. Horton.

Employers who have implemented class or collective waivers in employee arbitration agreements should review those agreements with counsel to determine whether any modification is recommended in light of the Board’s Murphy Oil ruling pending any further developments.


What the November Election May Mean to the “Quickie” Election Rule

The National Labor Relations Board may be poised to  issue its revised “quickie” election case rules before NLRB Member Nancy Schiffer’s term expires on December 16, 2014 (see Expect NLRB Whirlwind before Schiffer Leaves).

But the revised election rules could be short-lived. After the Republicans have gained a majority the Senate in the midterm elections, it is a good bet that Congress will move to block implementation of the rules come January.

Congress could stymie them with a rider to the NLRB’s fiscal 2015 budget, similar to past attempted riders.  (In 2012, the House Appropriations Committee proposed a rider to the NLRB’s budget that would have prohibited the Board from enforcing its notice posting rule.)  Now that both Houses of Congress are Republican-controlled, a similar rider to deprive the NLRB of funds to implement or enforce the new election rule changes is possible and more likely to be successful than past attempts.  Indeed, according to an October 18, 2014, article in The Economist, “Mitch McConnell, the new Majority Leader in the Senate, has set out how a new majority might be used. In a speech to donors that was leaked, he said: ‘We own the budget.’  Republicans would use riders on spending bills to restrict the federal bureaucracy, he explained. ‘No money can be spent to do this or that. We’re going to go after them on health care, on financial services, on the Environmental Protection Agency, across the board,’ he said.”

The article notes that this strategy could be thwarted by the Republicans’ lack of a “super-majority” of 60 Senators, and “it would take 60 votes to attach riders to run-of-the-mill spending bills, meaning that Democratic support would be needed.”  Quoting former Republican Senator Judd Gregg, “[t]he game is to attach so many popular spending plans to a bill that some Democrats will back it . . .”

Employer Can Discharge Disloyal Employee, NLRB Division of Advice Finds

An employer may discipline employees who engage in disloyal conduct by disclosing confidential information obtained in the course of their job duties, the Board’s Division of Advice has found, concluding that an employer did not commit an unfair labor practice (under Section 8(a)(1) of the NLRA) when it discharged an employee.  IAM District Lodge 751, 19-CA-119268 (Div. of Advice Aug. 18, 2014).

This case shows where the line is drawn between employees’ rights to engage in protected concerted activity by sharing an employer’s “confidential” information and disloyal conduct not protected by the Act.

The employee-charging party was a payroll clerk/staff assistant in the accounting office for a local union.  She had signed an agreement to maintain the confidentiality of information regarding the union’s personnel and operations.  When she was told by the union’s secretary/treasurer that the employer would be revising its leave policy because of abuse by a certain clerical employee, she advised that employee that the secretary/treasurer had had said her conduct was a motive for changing the leave policy.

The employer-union suspended and later terminated the charging party for disseminating the confidential information. Finding no violation of Section 8(a)(1), the Division of Advice explained that disloyal conduct is not protected by the Act if “the information that was disclosed was of a type which the employer had a right to expect would be treated as confidential, such that the disclosure was fundamentally a breach of trust.” The Division of Advice noted that the information in this case qualified since it was regarding “the Employer’s concern about leave abuse and its investigation of an employee’s leave abuse.” The Division of Advice also found it noteworthy that the “Employer took several steps to maintain the confidentiality of personnel decisions and conversations about personnel decisions,” including requiring the employee to sign a confidentiality agreement. It concluded that, because she learned of the policy change and investigation “solely because of her job responsibilities…, [b]y repeating the impetus behind the change in leave policy and warning the employee under investigation, the Charging Party violated her duty to maintain the confidentiality of this information, and thus was lawfully terminated for breaching that duty.”

Although the Board often has found employers’ restrictions on employees’ dissemination of company confidential information to be overbroad and unlawful, employers may lawfully require employees to sign confidentiality agreements to protect legitimate confidential information.  Such agreements should be narrowly tailored to include information that could be obtained only in the course of the employee’s job.


Expect NLRB Whirlwind before Schiffer Leaves

Hold on for the National Labor Relations Board’s version of the popular Disneyland attraction, Mr. Toad’s Wild Ride.

With NLRB Member Nancy Schiffer’s term ending on December 16, 2014, expect a flurry of important NLRB activity similar to that which attended the expiration of former-NLRB Member Brian Hayes’ term on December 16, 2012.

Among the matters  awaiting  Board decision are many contentious cases, including Northwestern University (Case 13-RC-121359) (whether scholarship student-athletes are employees under the NLRA); Browning-Ferris Industries (Case 32-RC-109684), (where the standard for “joint employer” status is in question); Pacific Lutheran University (Case 19-RC-102521), (whether a religiously-affiliated university is subject to the Board’s jurisdiction and whether certain university faculty members seeking to be represented by a union are employees covered by the National Labor Relations Act or excluded managerial employees); and Purple Communications, Inc. (Cases 21-CA-095151; 21-RC-091531; and 21-RC-091584) (whether  a new standard for employee use of employer electronic communications systems (including email) should be adopted).  In addition, the Board still must finalize its “quickie” election rules, which will make it easier for unions to successfully organize employees, and review the 300+ decisions invalidated by the U.S. Supreme Court’s Noel Canning decision.

In the six days preceding Member Hayes’s departure, the Board issued at least seven notable decisions – WKYC-TV, Inc., 359 NLRB No. 30 (2012) (overruling 50 years of precedent to hold that a dues deduction provision in a collective bargaining agreement survived the expiration of that agreement); Supply Technologies, LLC, 359 NLRB No. 38 (2012) (finding a non-union employer’s mandatory grievance-arbitration program unlawfully restricted employees’ access to the NLRB); Hispanics United of Buffalo, Inc., 359 NLRB No. 37 (2012) (holding  an employer  violated the NLRA by discharging five employees because of their Facebook posts); Hawaii Tribune-Herald, 359 NLRB No. 39 (2012) (defining a “witness statement”  that is exempt from disclosure to a union under Anheuser-Busch, 237 NLRB 982 (1978)); Alan Ritchey, Inc., 359 NLRB No. 40 (2012) (ruling employers must bargain with  a union representative   over discretionary discipline administered to unit employees that occurs after the union is certified, but before a first collective bargaining agreement is reached); Piedmont Gardens, 359 NLRB No. 46 (2012) (overruling Anheuser-Busch and finding an employer must give the union that represents its employees witness and other statements); and Latino Express, 359 NLRB No. 44 (2012) (interpreting the NLRA’s remedial “scheme” to require a respondent (charged party) to reimburse a victim of discrimination for any additional federal and state income taxes the victim may owe as a consequence of receiving a lump-sum backpay award covering more than one calendar year).

Most commentators, including this one, believe the NLRB will issue decisions that favor employees and unions in all of the pending matters, continuing the Board’s decidedly pro-labor leanings.

Buckle your seat belts.

NLRB Cannot Show Unlawful Discharges Where Decision-Maker Was Unaware Of Employees’ Pro-Union Activity

Rejecting a National Labor Relations Board decision that two employees were unlawfully discharged for engaging in union activities because there was no evidence that the person who made the decision to discharge the workers knew that they had engaged in any union activity, a federal appeals court in Richmond has refused to enforce a Board order directing that the employees be reinstated to their jobs with back pay.

In Gestamp S.C., LLC v NLRB, Case No. 11-2362 (4th Cir., October 8, 2014), two union supporters were discharged after it was determined that they had falsified an application and time card.  The decision to discharge the employees was made by the Director of Human Resources.  There was no evidence she had any knowledge that the employees had been active union supporters.  It was undisputed, however, that two front-line supervisors did know that the discharged employees were actively supporting the union, and because of this, the Board’s administrative law judge found the discharges were unlawfully motivated.  The Board upheld that finding.

On appeal, the Board argued that it was not required to prove knowledge on the part of the decision-maker to show the terminations violated the National Labor Relations Act.  Instead, it said, the knowledge of the two supervisors that the employees had engaged in union activity should be imputed to the employer and another of its agents, the Human Resources Director.  The Court rejected this argument. It held that without evidence that the person who made the discharge decision had knowledge of the employees’ union activity, the finding that their discharge was unlawfully motivated could not be upheld.

Vicarious liability has vexed more than one employer.  The court’s decision, however, offers some assurance to employers, at least those in the states embraced by the Fourth Circuit (Md., Va., W.Va., N.C., and S.C.), that adverse personnel actions taken by a human resources or other management official for legitimate, non-discriminatory reasons will not be questioned later because of a first-line supervisor’s knowledge of an employee’s protected activity, of which the decision-maker was entirely unaware.

Employer’s Warning Violates NLRA, Board Rules

An employer’s verbal warning for “continued frivolous requests for information…and interfering with the operation of the business,” directed to a shop steward who made two  requests to the employer for information including payroll information, violated the National Labor Relations Act, according to the National Labor Relations Board. Dover Energy, Inc.,Blackmer Division, 361 NLRB No. 48 (Sept. 17, 2014).  The Board did not find it significant that the steward was not a union negotiator, his requests were not authorized by the union, and there was no indication he acted on anyone else’s behalf.

The shop steward’s role was to investigate grievances, but he had no role in ongoing collective bargaining negotiations and was not authorized by the union to take action regarding the negotiations. Despite this, the steward twice made voluminous information requests of the employer allegedly related only to the negotiations (financial and payroll information).  The company did not provide the information.  After the second request, the company gave the steward a verbal warning.  The company explained it was not bargaining with him individually, and warned, “Similar requests such as this will result in further discipline up to and including discharge.”

A Board panel majority, reversing its Administrative Law Judge, found a violation in the warning.  Although it did not find the steward’s information requests were “protected, concerted activity” — they were not authorized by the union in connection with the negotiations and the steward was not acting together with or on behalf of any other employee — the warning, the Board said, “would reasonably be understood [by the employee] to proscribe future protected activity.”  In other words, according to the NLRB, because of the warning, the steward might be unlawfully inhibited from making similar information requests in the future in properly investigating grievances.

One Board Member dissented.  He wrote that a reasonable employee would recognize that only “frivolous” future information requests (“such as this”) would be subject to discipline, not those made legitimately in the performance of his duties as shop steward.

This is another example of the NLRB extending the reach of the concept of protected activity.  Most of the examples of this occur in the context of the Board’s decisions about the lawfulness of handbook rules, but this case demonstrates that warnings (and, presumably, other employer documents, e.g., performance evaluations) are fair game for the Board’s protected activity scrutiny.

416 Reasons Why There is No Rest for the NLRB

When the U.S. Supreme Court decided in June that President Barack Obama’s three recess appointments to the National Labor Relations Board in January 2012 were invalid, NLRB Chairman Mark Gaston Pearce stated, “[The Board is] committed to resolving any cases affected by today’s decision as expeditiously as possible.”

Now, the Board has issued a 21-page list of 416 “contested cases in which one or more of [the] challenged appointees [under the Supreme Court’s NLRB v. Noel Canning decision] participated in the issuance of a decision.”  See Supreme Court Issues Historic Decision on President’s Recess Appointment Power.

While the NLRB does not now indicate any plans for review of the cases, given Chairman Pearce’s statement, the Board may reconsider all of the decisions on the list and  reconfirm them. The composition of the current Board is not unlike that of the Board that decided the cases earlier.

The cases deal with important issues:

  • unlawful confidentiality policy
  • “inability to pay” argument made at bargaining table
  • Facebook/protected concerted activity
  • duty to bargain over discretionary discipline post-certification of representative but pre-contract
  • confidentiality of witness statements/work product doctrine
  • unlawful grievance-arbitration policy restricting employees’ rights to access NLRB processes
  • dues deduction after expiration of collective bargaining agreement
  • unlawful “courtesy” rule in handbook
  • miscellaneous work rules, including unlawful rule prohibiting employees from electronically posting statements that “damage the Company . . . or damage any person’s reputation.”
  • confidentiality of investigations policy

If you have any questions about the list or other workplace issues, please contact a Jackson Lewis attorney.

Republican Senators Propose to Make Significant Changes to NLRA

If two Republican United States Senators have their way, membership on the National Labor Relations Board will be increased from five to six, and other  significant changes will be made to the National Labor Relations Act.

The “National Labor Relations Board Reform Act,” introduced on September 16 by Senators Lamar Alexander (R-TN) and Mitch McConnell (R-KY), would alter the way the nation’s principal labor relations law works.

According to Senator Alexander’s press announcement, the bill will “end partisan advocacy,” “rein in the General Counsel,” and “encourage timely decision-making.”

The bill would make the following changes to the Act, among others:

  • Increase Board membership from five to six.
  • Three members would have to be from each major political party.
  • Instead of Board members being appointed by the President and confirmed by the Senate, they would be “appointed by the President, after consultation with the leader of the Senate representing the party opposing the party of the President,” and then confirmed by the Senate.
  • Four Board members would be needed for a quorum.
  • Unfair labor practice complaints issued by the NLRB General Counsel would be subject to review in Federal District Court upon a written petition for review.
  • Further proceedings by the NLRB on the complaint would be prohibited if it is shown that the General Counsel “does not have substantial evidence that [there has been a violation of the] Act.”
  • Unions and employers against whom unfair labor practice complaints are issued will be able to obtain advice, internal, inter- and intra-agency memorandum and other documents relevant to the complaint within 10 days after requesting them.
  • The NLRB would be required to act finally on appeals of decisions by agency Administrative Law Judges and Regional Directors within one year.
  • Funding for the NLRB would be reduced by 20 percent if the Board is not able to decide 90 percent of its cases within one year during the first two-year period after the law is enacted.

The bill is unlikely to pass given the current composition of the Senate.  However, changes in that body could result in the bill receiving a full review in the future.