Court Halts Labor Department’s New Persuader Rule

The U.S. District Court for the Northern District of Texas, Lubbock Division, has issued a nationwide preliminary injunction against the U.S. Department of Labor’s “persuader” rule promulgated under the Labor-Management Reporting and Disclosure Act. National Federation of Independent Business, et al. v. Perez, Civil Action No. 5:16-cv-00066-C (N.D. Tex. June 27, 2016). Unless the ruling is overturned by the U.S. Court of Appeals for the Fifth Circuit or the U.S. Supreme Court, the new rule will not go into effect on July 1, 2016.  For more on this important decision, please click here.

No Supreme Court Rehearing in Case on Public Sector Unions’ Right to Charge Mandatory Union Fees

The United States Supreme Court has refused to rehear Friedrichs v. California Teachers Association et al., in which the Court had issued a 4-4 opinion in April. Friedrichs v. California Teachers Association, No. 14-915 (Mar. 29, 2016). Friedrichs  sought to overrule, on First Amendment grounds, Abood v. Detroit Board of Education, a 1977 Supreme Court decision  allowing public sector unions to require members and non-members to pay agency service fees (also known by the euphemism “fair share payment”), as long as workers are not forced to pay a portion of the fees that covers political or ideological activities.

The tie vote resulted in affirmance of the decision of the U.S. Court of Appeals for the Ninth Circuit ruling in favor of the defendants and permitting required payment of agency service fees for nonmembers in the public sector. The plaintiffs had argued that their First Amendment rights were violated when the government, through a collective bargaining agreement, required the employees to pay an agency fee to a union whose views they did not necessarily wholly share. (Agency fees are similar in amount to the dues paid by union members.) The tie vote came about after the death of Justice Antonin Scalia, who was expected to vote to overturn Abood. The Court’s decision in Friedrichs, however, is not precedential, and the Court may revisit the issue when it again has nine justices.

NLRB Drops 30-Year Precedent on Employers’ Right to Unilaterally Oust Unions Representing ‘Mixed-Guard’ Units

A divided National Labor Relations Board has overturned its 30-year-old rule that an employer may withdraw recognition, even without a showing of a loss of majority status, from a voluntarily-recognized union that represents both guards and non-guards (“mixed-guard union”) with respect to a unit of guards.

Adopting a new rule proposed by the NLRB General Counsel and the six Teamsters-affiliated unions which represented Loomis employees at various California locations, the Board holds that an employer of security guards, like other employers, remains bound by a collective-bargaining relationship into which it voluntarily entered unless and until the union is shown to have actually lost majority support among unit employees. Loomis Armored US, Inc., 364 NLRB No. 23 (June 9, 2016). 

Section 9(b)(3) of the National Labor Relations Act prohibits the NLRB from “certifying” any union which represents both guards and non-guards as the bargaining representative of a unit of security guards, but does not prohibit an employer from voluntarily recognizing such a union. Historically, the NLRB has held if an employer did so, it could still withdraw recognition from such a “mixed-guard union” if no bargaining agreement is in place, even if the union had not lost majority support among employees.

The Board articulated three reasons for its decision. First, although Section 9(b)(3) prohibits such mixed-guard unions from being certified by the Board, it does not expressly address the situation where an employer voluntarily recognizes a mixed-guard union for a unit of guards, but then seeks to withdraw such recognition.  Second, the Supreme Court has observed that exemptions from NLRB coverage should be narrowly construed so as not to deny the protections of the NLRA to workers.  Third, the new rule will promote the statutory purpose of fostering stable labor-management bargaining relationships.

The new standard will not be applied retroactively. For the foreseeable future, the rights of any employer which is a party to a mixed-guard bargaining relationship are as set forth in Loomis.  As with any other unit of employees, once an employer voluntarily recognizes a mixed-guard union as the representative of its security guards, the employer must continue to recognize and bargain with the union unless and until it can be shown that the union has actually lost majority support among unit employees.  Absent that showing, the Board will hold that an employer’s unilateral withdrawal of recognition from the union will violate the employer’s duty to bargain under the NLRA.



NLRB Associate General Counsel Warns Regions About ‘Potential Literacy Issues’

The Associate General Counsel of the National Labor Relations Board has notified the NLRB’s Regional Directors, Officers-in-Charge and Resident Officers that they “should be cognizant of potential literacy issues when considering remedies” and consider requiring employers who have been found in violation of the Act to read aloud the Board’s “Notice To Employees” to assembled employees to overcome written language barriers in appropriate cases. Memorandum OM 16-21 (June 21, 2016).

Remedies in unfair labor practice cases against employers almost always include a “Notice to Employees” that must be posted in conspicuous places in the employer’s workplace, typically for 60 days. (The Notice contains several paragraphs beginning with “WE WILL” and “WE WILL NOT” by which an employer assures employees it will comply with the National Labor Relations Act and not repeat the violations of the Act that the Board has found.)

The Board has required that a notice be read aloud to employees where an employer’s misconduct has been “sufficiently serious and widespread that reading of the notice will be necessary to enable employees to exercise their Section 7 rights free of coercion.” This re­medial action is intended to ensure that “employees will fully perceive that the [r]espondent and its managers are bound by the requirements of the Act.”

The Associate General Counsel’s memorandum seeks to ensure that Notice readings are extended to situations “where a traditional notice posting remedy may be ineffective because some unit employees are unable to read the notice, either in English or the language of their country of origin.” The Memorandum also instructs that regional offices that become “aware of literacy issues among affected workers” during the investigative stage of a case “should seriously consider whether traditional notice posting will sufficiently remedy the statutory violations if the charge allegations are found to have merit.”

Minnesota Court Rules in Persuader Lawsuit, Finds “Strong Likelihood” of Success on the Merits, But Rule Remains Effective July 1

The U.S. District Court for the District of Minnesota today ruled in Labnet Inc. d/b/a Worklaw Network, et al v. United States Department of Labor, et al, that the plaintiffs have a strong likelihood of success on the merits of their lawsuit challenging the DOL’s new “persuader” rule, but refused to stay or enjoin the rule. Therefore, for now, the rule will go into effect on July 1. However, based on the judge’s comments, there is reason for optimism that the rule ultimately will be found invalid. There are two other lawsuits challenging the rule pending, in Arkansas and Texas, where rulings have not been issued.

The new  rule  requires  employers  as  well  as  consultants/attorneys  to  report  to  the  DOL  all arrangements  in  which  an  “object”  (directly  or  indirectly)  is  to  persuade  employees  in  the exercise  of  their  “rights  to  organize  and  bargain  collectively  through  representatives  of  their own  choosing”  under  federal  labor  law.    The rule significantly broadens labor services that are reportable, and greatly narrows the legal “advice” exception.


Employer Attacks NLRB’s New Joint Employer Standard on All Fronts in Court Brief

Browning-Ferris Industries of California, Inc. took its first shot at convincing the U.S. Court of Appeals for the District of Columbia Circuit to reject the National Labor Relations Board’s new joint employer standard and vacate two decisions that obligate the company to bargain with the Teamsters as a joint employer of temporary employees assigned to its facility.

The battle began in July 2013, when the Teamsters petitioned to represent a bargaining unit of sorters, housekeepers, and screen cleaners that were assigned to a Browning-Ferris facility by staffing agency Leadpoint. In the petition, the Teamsters alleged that Browning-Ferris and Leadpoint were joint employers; however, after an evidentiary hearing, an NLRB Regional Director determined that Leadpoint was the sole employer of these employees. The Board granted the union’s request for review and, reversing, adopted a new joint employer standard.

Under the former joint employer standard, which had been in place since 1984, a putative joint employer needed to exercise direct and immediate control over the essential terms and conditions of employment of the employees in question. However, under the Board’s new Browning-Ferris standard, indirect control or even an unexercised right to control also are probative of joint employer status and may be determinative.

Following the Board’s August 27, 2015, decision, an election was held and the Teamsters were certified as the bargaining representative for the petitioned-for unit. After Browning-Ferris refused to bargain with the Teamsters in order to pursue review of the new joint employer standard, on January 12, 2016, the Board issued its Decision and Order finding that Browning-Ferris was a joint employer of the employees and requiring it to recognize and bargain with the Teamsters. On January 20, 2016, Browning-Ferris filed a timely petition for review in the appeals court

In its opening brief, Browning-Ferris argued the Board’s new joint employer standard is defective and unenforceable because: (1) it is contrary to the employment relationships recognized by Congress in the 1947 Taft-Hartley amendments to the NLRA; (2) it relies upon the kind of assessment of “economic realities” prohibited in the Taft-Hartley amendments; (3) it fails to promote stable collective bargaining relationships; and (4) it is arbitrary and capricious because it overturns decades of settled law and imposes a standard so broad and unconstitutionally vague that parties cannot arrange their affairs to achieve predictable legal outcomes. Browning-Ferris also argued that it is not a joint employer of Leadpoint employees under either the old joint employer standard or the new, and that, even if the new joint employer standard survived judicial scrutiny, it was inherently inequitable to apply the new test retroactively.

The waste and recycling company didn’t pull any punches it its opening submission.  The company voiced indignance and frustration with the “[v]irtually boundless scope of the Board’s new joint-employer test.” It also expressed concern the new standard will adversely affect a panoply of bargaining obligations. Moreover, Browning-Ferris took care to point out that, while the Board claimed the new joint employer standard would not address a broad range of relationships (meaning it would apply to some business relationships but not others), the Board is not permitted to do that – to apply a different joint employer standard to some business relationships and not to others.

Briefing will continue through July 28. We will continue to monitor the appeal and report any new developments.




Supreme Court to Hear Appeal of NLRB’s Former Acting General Counsel’s Decisions Following Nomination

The U.S. Supreme Court has accepted the National Labor Relations Board’s petition to decide if a former acting general counsel of the NLRB served in violation of federal law. NLRB v. SW General, Inc., Case 15-1251 (June 20, 2016).

As we wrote here earlier  (“Complaint Issued by NLRB’s Acting General Counsel was Unauthorized, Federal Appeals Court Rules”), in vacating a Board order, the U.S. Court of Appeals for the D.C. Circuit held that former Acting General Counsel Lafe Solomon could not have lawfully delegated authority to an NLRB Regional Director to issue the underlying unfair labor practice complaint against Southwest Ambulance because Mr. Solomon, at the time, was not lawfully appointed as the Board’s Acting General Counsel. SW General, Inc. v. National Labor Relations Board, No. 14-1107, 2015 U.S. App. LEXIS 13812 (D.C. Cir., Aug. 7, 2015).  The court held that Solomon served in violation of the Federal Vacancies Reform Act (FVRA) for nearly three years, from 2011 through most of 2013, because the FVRA prohibited him from serving as the Acting General Counsel after President Obama nominated him for the position.

The case is important to all statutorily created agencies, as the FVRA affects all federal positions that require a presidential nomination and Senate confirmation. For most agencies, decisions by the unauthorized official are void ab initio, that is, from the moment they are made, and may not be ratified by a subsequently validly nominated and confirmed successor. However, the FVRA exempts the position of NLRB General Counsel from these provisions, instead making the decisions of an acting general counsel, or a regional director acting on his behalf, only voidable. The NLRB can raise different arguments as to why the decision should not be voided.

The case will be heard by the Court during its next term, which begins in October. A decision should issue before the term concludes in June 2017.


Another Court of Appeals Upholds NLRB’s ‘Micro-Unit’ Policy for Union Elections

The Fifth Circuit Court of Appeals, in New Orleans, is the latest circuit court to uphold the National Labor Relations Board’s restrictive “micro-unit” approach to voting units in NLRB elections adopted in Specialty Healthcare, 357 NLRB No. 83 (2011). Macy’s Inc. v. NLRB, No. 15-60022 (5th Cir. June 2, 2016).

In Specialty Healthcare, the NLRB held that if a union petitions to represent a group of employees within a workplace and the employer challenges that voting unit as inappropriate, the employer must show that all employees it seeks to add share “an overwhelming community of interest” with the petitioned-for employees in order to prevail. This rule puts the burden on the employer to prove the appropriateness of the voting unit, setting a significant evidentiary hurdle for employers when opposing small “micro-units.” (A small petitioned-for unit often includes only those employees whom the union believes it has the greatest chance of organizing successfully).

In Macy’s, the United Food and Commercial Workers petitioned to represent a unit of about 30 cosmetic and fragrance employees who work on two separate floors in Macy’s Saugus, Massachusetts store. About 110 other employees work in 10 other departments in the store. Cosmetics and fragrance employees have incidental contact with other store employees, assist in store-wide inventory, attend store meetings and training, receive the same benefits, and are subject to the same personnel and labor relations policies as other store employees. There is little, if any, interchange and transfer of these employees with employees in other departments.

The union had lost an election held several years before in a voting unit that included all store employees. However, this time, the union sought to represent employees in just one department. Macy’s contended that a traditional “retail” voting unit of all store employees, or at least all sales employees, was the appropriate unit for an election and bargaining. The NLRB rejected Macy’s position and approved the smaller unit sought by the UFCW, finding that Macy’s had failed to demonstrate an “overwhelming community of interest” among all store employees which would justify that larger voting unit.

Macy’s appealed to the Fifth Circuit Court of Appeals. However, like the Sixth, Eighth, and Fourth Circuit Courts of Appeals, the Fifth Circuit deferred to the NLRB’s policy, and held that even where there is evidence that an alternative voting unit “might also [be] an appropriate bargaining unit, the unit approved by the NLRB will nevertheless be enforced unless it is ‘clearly not appropriate.’” The Court rejected Macy’s argument that the employees at the Saugus store constitute a “homogenous work force.” It noted that there was “little evidence of temporary interchange between the petitioned-for employees and other selling employees.”

The U.S. Supreme Court and the Courts of Appeals historically have granted substantial deference to the NLRB on issues involving the composition of groups of employees appropriate for an NLRB election and collective bargaining. Employers are on notice that they will bear a heavy burden opposing a union’s petition to represent a small group of employees. Even in the face of substantial facts reflecting a strong “community of interest” among groups of employees such as was present in Macy’s, the NLRB presumably will continue to approve a union’s request to carve out a select group for an election, confident that appeals courts  will defer to the NLRB’s decision.

Eighth Circuit Finds Class and Collective Action Waivers Lawful Under NLRA, Contrary To Seventh Circuit

On the heels of the 7th Circuit’s May 27 Lewis v. Epic Systems decision, reported here, yesterday the Eighth Circuit Court of Appeals held that the NLRB erred in determining that Cellular Sales of Missouri, LLC violated the NLRA by maintaining and enforcing a mandatory arbitration agreement under which employees waived their rights to pursue class or collective action to redress employment-related disputes in any forum. (The court agreed with the Board that employees of Cellular Sales would reasonably understand the arbitration agreement to waive or impede their rights to file unfair labor practice charges with the Board.) Cellular Sales of Missouri, LLC v. National Labor Relations Board, No. 15-1860 (June 2, 2016).  The Eighth Circuit’s decision, issued days after the Seventh Circuit’s contrary ruling, underscores that the issue is ripe for United States Supreme Court review.

NLRB Requires Employer to Bargain with Union over Unilateral Use of Temp Agency Employees and E-Verify

An Administrative Law Judge of the National Labor Relations Board recently ruled that a meat processing company had violated provisions of the National Labor Relations Act when it utilized a temporary employment agency to fill vacant bargaining unit positions, and enrolled in the E-Verify program without first adequately notifying or bargaining with the local union. The Ruprecht Co., Nos. 13-CA-155048, 13-CA-155049, 13-CA-156198 and 13-CA-158317, JD(NY)-14-16 (May 13, 2016).  For more about this decision, please click here.

By Amy Peck and Patrick Peters