Overruling Brown University, NLRB Finds Private College And University Student Assistants Are Employees Under the NLRA

The National Labor Relations Board today decided that student assistants working at private colleges and universities are statutory employees covered by the National Labor Relations Act. Columbia University, 364 NLRB No. 90 (August 23, 2016). The 3-1 decision reversed Brown University, 342 NLRB 483 (2004). We will have a detailed analysis of this landmark decision shortly.

NLRB: Failure to Bargain Over Non-Compete Agreement Violated NLRA, But Confidentiality Provision Lawful (Surprise!)

A company’s requirement that new employees represented by a union sign a non-compete and confidentiality agreement (NCCA) as a condition of employment violated the National Labor Relations Act because the NCCA is a mandatory subject of bargaining that could not be unilaterally implemented, the NLRB has held. Minteq International, Inc., 364 NLRB No. 63 (July 29, 2016). However, contrary to its recent inclinations, the Board also found that an individual provisions of the NCCA – concerning confidential information – was lawful.

The collective bargaining agreement between Minteq and the union provided that new hires are probationary employees for the first six months of their employment and that any discipline, layoff, or discharge of a probationary employee “shall not be a violation of this Agreement.” After concluding their six-month probation, new hires may be disciplined, suspended, or discharged only if the employer has “just cause” to do so.

Shortly after the parties’ collective bargaining agreement went into effect, and without the union’s knowledge, Minteq unilaterally implemented a policy requiring new hires to sign the NCCA. The NLRB held the NCCA was a mandatory subject of bargaining and the union did not waive its right to bargain over its implementation. Accordingly, the Board held that Minteq violated the Act when it unilaterally implemented the NCCA policy.

The Board explained, among other reasons, that the NCCA “includes rules governing employees’ conduct that have the potential to affect the employees’ continued employment” since “agreeing to comply with the requirements of the NCCA is a term of employment, implicit in the NCCA is the threat of discipline or discharge for failing to comply with its provisions.” The Board also found that the provisions of the NCCA “have a clear and direct economic impact on employees – and thus represent precisely the sort of matters suitable for collective bargaining.” As another example, the Board stated the non-compete provision “prohibits an employee from working for another company that might have any connection to the Respondent’s business for 18 months afterward, effectively imposing a cost of lost economic opportunities on employees as a consequence of working for Respondent.”

Surprisingly, however, the Board held that the “Confidential Information” provision of the NCCA was lawful. The provision read as follows:

Confidential Information. [Employee agrees not to disclose Confidential Information] Confidential Information refers to any information not generally known in the relevant trade or industry which was obtained from the Company, or which was learned, discovered, developed, conceived, originated, or prepared by me in the scope of my employment. Such Confidential Information includes, but is not limited to, software, technical, and business information relating to the Company inventions or products, research and development, production processes, manufacturing and engineering processes, machines and equipment, finances, customers, marketing, and production and future business plans and any other information which is identified as confidential by the Company. …

The Board explained that the language of the provision must not be read “in isolation” and that the phrase cited by the ALJ “does not stand alone and must be read in context.” The Board observed that the provision “defines ‘confidential information’ as ‘any proprietary or confidential information or know-how belonging to the company,’ that is ‘not generally known in the relevant trade or industry,’ and which the employee ‘obtained from the Company … in the scope of [his or her] employment.’” The Board also noted this definition “is followed by examples of confidential information which illustrate its scope and meaning.” Thus, the Board held that “employees reading the concluding phrase, ‘any other information which is identified as confidential by the Company,’ would reasonably understand it to refer to the preceding examples of proprietary information and trade secrets, not information related to employees’ wages or working conditions.”

Minteq is another in a series of Board decisions attacking employer policies on the grounds that employees might interpret them to bar or restrict their right to engage in protected concerted activities. However, it also teaches that policy language must be read in context, not in isolation. Clear drafting, including illustrations and limiting or clarifying language, can avoid unintended unfavorable interpretations.

 

Sour Note – Musicians Are Employees, Not Independent Contractors, NLRB Tells Theater Company

A Regional Director of the National Labor Relations Board has ruled that a group of musicians were statutory employees under the National Labor Relations Act and, therefore, entitled to vote in an NLRB-conducted union representation election. In the Matter of Fiddlehead Theatre Company, Inc. and Boston Musicians Association et al., Case Number 01-RC-179597 (July 26, 2016).  The decision comes on the heels of a holding by the U.S. Court of Appeals for the District of Columbia Circuit granting enforcement of an NLRB Order that musicians with the Lancaster Symphony Orchestra were employees, not independent contractors, and entitled to join the union. Lancaster Symphony Orchestra v. NLRB, No. 14-1247 (D.C. Cir. 2016).

Whether individuals performing services for an entity are employees, who are protected by the NLRA, or independent contractors, who are not, is determined by 11 well-established factors in the Restatement (Second) of Agency § 220 (1958), the NLRB held in 2014 and 2015. FedEx Home Delivery, 361 NLRB No. 55 (2014) and Sisters’ Camelot, 363 NLRB No. 13 (Sept. 25, 2015).

The factors are:

  1. Extent of control by the employer
  2. Whether or not the individual is engaged in a distinct occupation or business
  3. Whether the work is usually done under the direction of the employer or by a specialist without supervision
  4. Skill required in the occupation
  5. Who provides the supplies, tools, and place of work
  6. Length of time for which individual is employed
  7. Method of payment
  8. Whether or not the work is part of the regular business of the employer
  9. Whether or not the parties believe they are creating an independent contractor relationship
  10. Whether the principal is or is not in the business
  11. Whether the evidence tends to show that the individual is, in fact, rendering services as an independent business 

In Lancaster, the NLRB and the Circuit Court relied heavily on the orchestra’s control over the manner of the musicians’ performance, including limiting their conversations during rehearsals and performances. In Fiddlehead, the Regional Director ruled the musicians were employees despite the employer’s having established the existence of several factors tending to show the musicians were independent contractors: (1) they worked on a show-by-show basis, (2) they were highly skilled workers, (3) they supplied their own instruments, and (4) they were paid a flat fee. However, the Regional Director relied on several other factors in finding employee status, including that (1) the employer exercised substantial control over the details of the musicians’ work, (2) the musicians had very limited input into scheduling of performances, (3) the musicians were instructed to follow the company’s dress code, and (4) the musicians did not have the potential for entrepreneurial gain. Regional Director’s decision is appealable to the NLRB in Washington, D. C.

In a related development, the Board’s General Counsel has announced that he will seek to convince the five-member NLRB that misclassification of individuals as independent contractors instead of employees independently violates the NLRA because it restricts those misclassified employees from exercising their Section 7 (of the NLRA) rights to engage in protected concerted activity. Employers that utilize individuals whom they believe are independent contractors rather than employees should scrutinize carefully the relationship with a keen understanding of the factors deemed relevant by the NLRB. As is the case under many other federal and state laws, proving independent contractor status is likely to be an uphill battle.

Overruling Precedent, Board Finds Violation May Be Established Without Specific Unfair Labor Practice Complaint Allegation

In a decision having far-reaching implications, a National Labor Relations Board panel  consisting of Chairman Mark Gaston Pierce and Members Kent Hirozawa and Lauren McFerran, (Member Miscimarra dissented) has overruled almost 10 years of NLRB precedent, deciding  that a violation of the National Labor Relations Act could be found based on an employer’s failure to inform the union that it did not possess information the union requested, despite the absence of a specific unfair labor practice complaint allegation to that effect.

The Board concluded the employer had violated the NLRA by not informing the union representing its employees in a timely manner that it  did not possess information the union had requested about rule and policy changes despite the fact that the agency’s administrative  complaint did not include an unfair labor practice allegation to that effect. Graymont PA, Inc., 364 NLRB No. 37 (June 29, 2016). In so doing, the Board overruled Raley’s Supermarkets & Drug Centers, 349 NLRB 26 (2007).

In Raley’s, the Board majority (Member Liebman dissented) ruled that, although the unfair labor practice complaint alleged the employer had unlawfully failed and refused to provide the union with a copy of an investigative report into possible supervisor inappropriate behavior toward two female employees (or a summary of the pertinent findings) the union had sought, “at no time, even after learning that such a report did not exist, did the General Counsel amend the complaint to allege that the employer violated the Act by failing to timely inform the Union that there were no such reports.” (The dissent had argued that the employer violated the Act by failing to timely inform the union that it did not have reports the union had requested.) 

In Graymont, an NLRB administrative law judge found that the employer had violated the NLRA by unilaterally changing its work rules, absenteeism policy, and progressive discipline policy. Based on Raley’s, the judge also found that the employer did not violate the NLRA by failing to timely inform the union that the information the union had requested about these changes did not exist because it had not been asserted as an unfair labor practice in the complaint.

The Board reversed. It held instead that the “test” in Pergament United Sales, Inc., 296 NLRB 333 (1989), enfd., 920 F2d 130 (2d Cir 1990), should apply. (Interestingly, the NLRB did not cite or mention Pergament in Raley’s.) In Pergament, the NLRB decided that an unalleged violation may be considered where it is so closely connected to the subject matter of the complaint that a finding of violation would not cause “manifest injustice,” would not constitute a denial of due process, and therefore, would not be prejudicial. The Board held that “Raley’s Supermarkets should be overruled to the extent that it precludes the Board from considering [as in Graymont], an unalleged failure to timely disclose that requested information does not exist when, as here, the unalleged issue is closely connected to the subject matter of the complaint and has been fully litigated.”  The Board further explained the complaint “is not the exclusive source of notice of the material issues to be addressed in a Board proceeding” and “notice may also be provided by the General Counsel’s representations at the hearing, or it might be evident from the respondent’s conduct in the proceeding.”

Whether an unasserted violation is so “closely related” to the subject matter of a complaint as to place the employer on notice for purposes of due process has been the subject of Board litigation under Section 10(b) of the Act. In Redd-I, Inc., 290 NLRB 1115 (1988), the Board held that in deciding whether complaint amendments are closely related to charge allegations, it would apply a “closely related” test, comprised of the following factors. First, the Board will look at whether the otherwise untimely allegations involve the same legal theory as the allegations in the pending timely charge. Second, the Board will look at whether the otherwise untimely allegations arise from the same factual circumstances or sequence of events as the pending timely charge. Finally, the Board may look at whether a respondent would raise similar defenses to both allegations.

It is not clear why the Board chose not to apply a Redd-I approach in Graymont. The Pergament standards   arguably are more subjective ( “manifest injustice”, “closely connected”, “respondent’s conduct at the hearing”)  and may indicate that the Board wants more flexibility than Redd-I accords. Whatever the Board’s motivation, we can expect to see more litigation on this subject in the future.

Labor Unions Use Technology to Grow and Maintain Membership

Labor unions today are “tech” savvy, using mobile app and other technology to grow and maintain their memberships.

According to a report in the Bloomberg Bureau of National Affairs Daily Labor Report (136 DLR C-1 July 18, 2016), a number of labor unions, including the International Association of Machinists, Communication Workers of America, and Service Employees International Union, are using app technology to inform members of union news, sign political action petitions, access video clips and pictures, read press releases, view union social media accounts, and report workplace violations, all with the goal of reaching and growing their memberships.

Since labor unions are not generally permitted on an employer’s property to organize, labor unions are attempting to reach more and more workers through the use of their smartphones by mobile app technology and social media platforms, including Facebook, Snapchat, dedicated websites for blogging and reporting alleged workplace misconduct and the like. The use of technology by labor unions coupled with the National Labor Relations Board’s focus on broadening employee rights through the use of technology requires employers to stay ahead of the game.

In recent years, the NLRB also has developed a website to publicize employer labor violations, permitted the use of electronic union authorization cards in order to establish a “showing of interest” in support of the union representation petition, and allowed workers to use an employer’s email system on non-working time to engage in union organizing and other Section 7 (of the NLRA) concerted protected activities. The NLRB also has developed its own app. According to Bloomberg BNA, once it is free of its budget constraints, the NLRB has plans to upgrade the app to allow “workers, employers, and unions to take action from anywhere,” according to NLRB chairman Mark Gaston Pearce.

The use of technology by labor organizations to address labor issues and beef up declining memberships undoubtedly will increase regardless of the industry, labor climate, and overall workplace demographics.

Because of these new techniques, more and more organizing can be done by unions without face-to-face contact with employees. That could make it easier for unions to “meet with” many more employees in a shorter period of time and more effectively. To persuade employees to sign authorization cards who become star struck by the union’s glossy and upbeat electronic organizing tools. Employers should consider taking a preventive approach and informing their employees about these organizing techniques and cautioning employees not to be persuaded by glossy, upbeat organizing tools.

 

 

 

 

 

 

 

Ham-Handed Tactic? NLRB Says Union Giveaway Not Grounds for Setting Aside Election Victory

A union’s gift of free hams on the eve of an NLRB-conducted election did not influence the outcome, a union victory, the National Labor Relations Board has determined. Nuverra Environmental Solutions, Inc., 08-CA-164447 (July 8, 2016).

The union had distributed holiday hams to eligible voters five or six days prior to the election. After the union prevailed in the election, the employer filed “objections” with the NLRB’s Regional office, alleging the giveaway unlawfully influenced the results of the election and requesting the Regional Director to invalidate the election and conduct a rerun. The Regional Director denied the request and certified the union as the employees’ bargaining representative. The employer then filed an appeal (“request for review”) with the NLRB in Washington, D.C.

The NLRB denied the employer’s request for review, finding the union’s holiday giveaway did not interfere with the election. The Board noted that: the hams were of modest value ($10-$12); the stated purpose was to extend holiday greetings to the union’s members, their families, and friends; it was a yearly event; the union informed only one unit employee that unit employees were eligible after the employee inquired; attending the giveaway and accepting the hams was entirely voluntary; the union did not link the giveaway to the election and only unit employees who attended the giveaway received the hams.

The Board summarily dismissed the fact that “a potentially dispositive number of employees received free hams” or that the giveaway was so close to the election (the Board also noted that it had refused to overturn other elections where a giveaway occurred even closer, the day before, to the vote date). The Board cited the test articulated in B & D Plastics, Inc., 302 NLRB 245 (1991), for the proposition that the employer had not shown the union’s giveaway “tended to unlawfully influence the outcome of the election.”

Further, the Board concluded, even assuming the giveaway warranted an inference that the free hams were coercive, the union had rebutted that inference by its “uncontradicted” explanation for the timing of the giveaway, that is, the giveaway occurred yearly and was open to all current as well as prospective union members.

The Board did not address whether unit employees who actually received hams, rather than simply being aware of their eligibility to receive them, might have been influenced. The Board also did not consider whether the union had given away hams to other who were not union members and their families in the past or that the date of this giveaway was the same as in the past.

Nuverra likely will be a model for union giveaways in the future. However, more important, it also is a useful guide for employers, since many of the factors cited by the Board as insignificant also should be considered unimportant if similar election objections are raised by a union protesting an employer’s election victory: the voluntary nature of the giving, the fact that it had been done in the past (and not necessarily on the same date), the fact that $10-$12 is considered to be of “modest value,” and the timing of the giveaway.

NLRB Overrules Precedent, Holds Bargaining Units Combining Jointly- and Solely-Employed Employees Okay Without Consent

The National Labor Relations Board has decided that bargaining units combining employees who are jointly employed by a user employer and supplier employer and solely employed by the user employer do not require the consent of either employer. In so doing, the NLRB overturned its 2004 decision in Oakwood Care Center, 343 NLRB 659. Miller & Anderson, Inc., 364 NLRB No. 39 (July 11, 2016). The Board in Oakwood Care Center decided that in order for these employees to be combined in the same bargaining unit, all parties must consent. We will have more about this decision shortly.

Court Repudiates NLRB’s Award of Attorney’s Fees and Expenses for Their ‘Deterrent Effect’

The United States Circuit Court of Appeals for the District of Columbia has determined that the National Labor Relations Board lacks inherent power and the authority under Section 10(c) of the National Labor Relations Act to order an award of attorneys’ fees and litigation expenses to itself and a labor union.

The Board found that the employer, a hotel operator, had committed, in the words of the Court, a “host of severe and pervasive unfair labor practices” and ordered the employer to pay the attorneys’ fees and litigation expenses of the NLRB’s General Counsel and the International Longshore & Warehouse Union Local 142 based on the Board’s “inherent power” to control its proceedings. HTH Corporation, 361 NLRB No. 65 (2014). The Board also contended that these remedies were “clearly compensatory” (rather than punitive) and needed to preserve the integrity of Board processes, serve as a deterrent to violations of Board Orders, and to protect the rights of parties.

However, on May 20, 2016, the three-judge Circuit Court of Appeals panel denounced the Board’s rationale and denied enforcement of that part of the Board’s order.  Writing for the Court, Judge Williams said the NLRB is a creature of statute with powers limited to those set forth in the NLRA.  Concurring, Judge Henderson agreed the Board’s only power is that which is granted by Congress and “contrary to the Board’s apparent belief, it is not a court of law or equity.”  The Court noted that, due to statutory constraints on its authority, the Board may only impose remedies that are remedial and not punitive. The Court rejected the Board’s assertion that it has “inherent authority” to control and maintain the integrity of its own proceedings through an application of the bad-faith exception to the American rule and order payment of attorneys’ fees and litigation expenses. Although the NLRB had not argued the applicability of Section 10(c) (which authorizes the Board to “take such affirmative action…as will effectuate the policies” of the Act), the Court decided it was appropriate to determine whether the Board’s remedy was authorized by that Section because, among other things, “the distinction between inherent authority and implicitly granted authority [under Section 10(c)] is a subtle one.”

The Court found that “any attempt to rest on the compensatory character of a fee award” collides with the basic underpinnings of the “American rule” that parties are free to assert rights and defenses and each bears its own expenses. In addition, the Court noted “the Supreme Court has consistently classified application of the bad-faith exception to the American rule as punitive,” citing Hall v. Cole, 412 U.S. 1, 5 (1973).

The Court also rejected the Board’s claim that ordering payment of fees and expenses serves “as a deterrent to violations” of its orders, noting that such a remedy flies in the face of Supreme Court precedent. In Republic Steel Corp v. NLRB, 311 U.S. 7, 12 (1940), the Supreme Court “firmly rejected the Board’s reliance on deterrent effect” when it ordered a party to pay another’s expenses, noting if “a deterrent effect is sufficient to sustain an order of the Board, it would be free to set up any system of penalties which it would deem adequate to that end.”

The Court  expressly did not decide whether the power to shift fees in cases of a party’s bad faith may be implicit in a provision of the NLRA other than Section 10(c), so it is not inconceivable that the Board in the future may seek to  order fee-shifting based on its reading of another statutory provision.

 

 

 

 

Workplace Dress Codes – Auto Dealer Can’t Bar Workers from Wearing Message Pins, Court Affirms NLRB

A divided panel of the U.S. Court of Appeals for the First Circuit has upheld a National Labor Relations Board decision that a Massachusetts automobile dealer’s policy banning the wearing of “message pins” violated union insignia protections under the National Labor Relations Act. Boch Imports, Inc., d/b/a Boch Honda v. NLRB, Nos. 15-1653, 15-1721 (1st Cir. June 17, 2016).

Based on an unfair labor practice charge filed by a union representing some Boch Honda employees, the NLRB’s regional office in Boston issued an unfair labor practice Complaint against Boch Honda, contending the dress code and personal hygiene provision in Boch’s employee handbook, which banned employees who had contact with the public from wearing pins, insignias and other message clothing, was unlawful.  An NLRB Administrative Law Judge found the provision violated the NLRA with respect to insignias and other message clothing, but held that the ban on pins was lawful because of Boch’s interests in promoting workplace safety and preventing damage to vehicles.

Boch Honda appealed the unfair labor practices finding to the Board.  The NLRB’s General Counsel also appealed, excepting to the Judge’s refusal to find the ban on pins unlawful. Upholding its ALJ generally, the Board,  however, disagreed with the ALJ’s failure to find a violation in the ban on pins, because the ban was not narrowly tailored to address workplace safety and prevention of damage to customers’ vehicles.

Boch Honda sought review of the NLRB’s decision in the First Circuit, contending the NLRB ignored Boch Honda’s substantial interest in protecting its public image, which justified its insignia and message clothing bans. It also contended the pin ban was justified by safety concerns.

The Court denied Boch Honda’s appeal and granted the NLRB’s petition for enforcement, concluding the ban on pins violated employees’ right to wear union insignia during work hours.  The Court noted the NLRB can require employers to demonstrate “special circumstances” to justify a ban on employees wearing union insignia. The Court explained that special circumstances exist, for example, when the wearing of  “union attire” could jeopardize employee safety, damage machinery or products, or unreasonably interfere with a public image that the employer has established. The Court also explained that the limitations must be tailored to the particular special circumstances advanced by the employer.

The Court held that Boch Honda had not met the special circumstances standard because it had “simply failed to explain why . . . non-uniformed employees’ wearing a small and unobtrusive union pin (for example) would unreasonably interfere with the general professional environment Boch sought to create.”  The Court also rejected Boch Honda’s argument that its interests in promoting workplace safety and preventing damage to vehicles justified its blanket ban on pins because it was not sufficiently narrowly tailored. Although the Court agreed that an employee’s pin could fall into an engine while the employee was working under the hood of a car or damage the car’s paint or leather, the ban on pins was not narrowly tailored to protect against those situations.

Dissenting only as to majority’s decision on the pin ban, Judge Norman Stahl disagreed that the NLRA automatically grants employees a presumptive right to wear union paraphernalia at work, and noted the NLRB’s decisions on worker attire make it difficult for companies to design or enforce lawful dress code policies.  Judge Stahl noted that by “rubber-stamping” the NLRB’s “arbitrary infatuation” with workplace dress codes, the Court was granting the NLRB the authority to play “fashion police.”

An unfair labor practice charge can be filed with the NLRB by a union, employee, or other person at any time to challenge a workplace conduct, social media, or dress code policy.  The “ground rules” by which the NLRB judges the legality of such policies can, and do, change, so that periodic review and revision of workplace policies is prudent and necessary.

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.

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