Obama Reappoints NLRB Member Hirozawa, But Senate Not Expected to Act Quickly

Board Member Kent Y. Hirozawa has been reappointed by President Barack Obama to a second term on the National Labor Relations Board, according to the White House.

Hirozawa, whose current term expires on August 27, 2016, is one of three Democrats on the NLRB, along with Chairman Mark Gaston Pearce and Member Lauren McFerran. The fourth current Member is Republican Philip Miscimarra. If confirmed by the United States Senate, Hirozawa’s term will expire in 2021.

The fifth seat on the Board became vacant when Republican Harry Johnson’s term expired on August 27, 2015. President Obama has taken no action to fill that seat. Typically, three of the Board’s five seats are occupied by Members who belong to the same political party as the President. The NLRB can act on matters as long as it has at least three validly appointed Members.

Quick Senate action on Hirozawa’s nomination is not expected. If Hirozawa’s nomination has not been confirmed before the end of his current term, Board-watchers expect that before he leaves, the NLRB will release a flurry of decisions on cases in which he participated.

Late Mail Delivery Turns Out to be Problem [Again] for Mail Ballot Election

The NLRB has ruled that there is a significant difference between an employee’s having the opportunity to vote in an NLRB mail ballot election and his or her vote being counted.

In Premier Utility Services, LLC, 363 NLRB No. 159 (Apr. 5, 2016), 101 employees living and working in New York City’s five boroughs were eligible to vote in a mail ballot election ending November 4, 2015, to determine whether Communications Workers of America, Local 1101 would represent the workers. By the November 5 tally date, the NLRB had received only four ballots, so the parties agreed to postpone the vote count until November 12. Still, by that date, the Board had received only 34 ballots, from just about a third of the eligible voters. Nevertheless, the ballot count occurred and the union received a majority of the votes, 20-14.

Sure enough, following the count, the NLRB Regional office received 48 ballots that were postmarked before November 4, the end of the voting period. However, the Regional Director refused to count them and certified the union as the exclusive bargaining representative for the 101 employees, despite having received the votes of scarcely one-fifth of the unit employees.

The employer filed “objections” to the Regional Director’s decision not to count the 48 late-arriving ballots, as they could have affected the results, but the objections were overruled.  The Board denied the employer’s request for review and upheld the Regional Director’s decision.  The NLRB panel majority (Chairman Pearce and Member Hirozawa) expressed “concern about the United States Postal Service’s late delivery of many, many ballots after the count,” but noted that the Board “customarily does not permit mail ballots received after the count to be opened,” citing Classic Valet Parking, 363 NLRB No. 23 (Oct. 23, 2015). In Classic Valet, the Board refused to count ballots that were timely mailed, but not received by the deadline because “adhering to [its] established practice” of counting votes by a fixed deadline was deemed more important than its purported “strong interest in effectuating employee choice” by counting all timely-mailed ballots, citing Kerrville Bus. Co., 257 NLRB 176 (1981). In Kerrville Bus, however, the Board actually counted all ballots mailed at least three days before the deadline from a city within 100 miles because those “employees mailed their ballots at a time when they could reasonably anticipate timely receipt by the Board through the normal course of the mails. … As a matter of fundamental statutory policy, it behooves the Board ‘to afford employees the broadest possible participation in the Board elections’ as long as ‘the election procedures are not unduly interfered with or hampered.’”

Member Miscimarra dissented in both Premier Utility Services and Classic Valet, voicing the concern the employers in those cases no doubt had with the Board’s rigid adherence to rules that resulted in its refusing to count a determinative number of votes – that when the Board’s regular procedures have been deficient, its “normal rules must be balanced against [the Board’s] statutory responsibility to assure that employees have been reasonably permitted to freely exercise their rights under the Act.”



Employee Disloyalty Not Sufficient for Firing Where Part of Concerted Protest, Board, Court Hold

The National Labor Relations Board did not err in holding a sandwich store chain violated the National Labor Relations Act by disciplining and terminating employees for placing posters on community bulletin boards in the public areas of several of its locations suggesting the chain required sick employees to come to work and make sandwiches, the federal appeals court in St. Louis has ruled. MikLin Enters., Inc. v. NLRB, No. 14-3099 (8th Cir. Mar. 25, 2016).

MikLin Enterprises owns and operates several Jimmy John’s restaurants in Minneapolis, Minnesota. It had a sick leave policy that required employees to find replacement workers when they called out sick. Several employees attempted to persuade the company to change the policy by placing posters on community bulletin boards. According to the court, the posters:

featured two identical, side-by-side photographs of a sandwich…. Above the left sandwich was a label stating: “Your Sandwich Made By A Healthy Jimmy John’s Worker.” Above the right sandwich was a label stating: “Your Sandwich Made By A Sick Jimmy John’s Worker.” Below the photographs, the poster stated: “Can’t tell the Difference?” “That’s Too Bad Because Jimmy John’s Workers Don’t Get Paid Sick Days.” “Shoot, We Can’t Even Call In Sick.” “We Hope Your Immune System Is Ready Because You’re About To Take The Sandwich Test.”

MikLin removed the posters, but . . . the employees then posted the flyer in public areas surrounding several Jimmy John’s restaurants. Those flyers also included the telephone number of MikLin’s co-owner and vice-president. The employer did not change its sick leave policy.

MikLin fired six employees for “being the leaders and developers” of the flyer campaign and disciplined three others for being “foot soldiers” in the campaign.

Unfair labor practice charges were filed against MikLin alleging violations of the NLRA. By a 2-1 vote, the NLRB held the flyers were “sufficiently related to an ongoing labor dispute to be protected and that there was nothing in the posters that was so disloyal, reckless, or maliciously untrue so as to cause the employees to lose the Act’s protection.” It said that in order to lose the NLRA’s protection, a false statement has to be made with “actual malice,” which it defined as “knowledge of falsity or reckless disregard for the truth.” The Board held that actual malice was not shown in this case.

MikLin appealed, and in a 2-1 decision, the Eighth Circuit affirmed. Finding substantial evidence to support the Board’s decision that the flyer’s untrue claim that workers could not call-out sick was not so maliciously false as to place it outside the Act’s protection, it enforced the Board’s order.

Dissenting, Judge James Loken said the Board’s definition of malice was so narrow that it effectively removed employee disloyalty from the analysis. He would have found the employees’ knowledge of the statement’s falsity concerning their ability to call in when sick was sufficient to show a malicious intent to harm the employer, which was not protected. The discharge of employees, therefore, would not violate the Act, in Judge Loken’s opinion.

The decisions in this case raise questions about the signal they might send about employee latitude when publicly disparaging their employers and how employer and employee rights will be balanced.




Doubling Down: NLRB Joint Employer Standard Under Dual Review

Whether the National Labor Relations Board’s recently articulated joint employer standard can withstand judicial scrutiny is about to be tested. Browning Ferris Industries of California has filed a petition for review (in the United States Court of Appeals for the District of Columbia Circuit) of the NLRB’s bargaining order, asking the Court to deny enforcement of the Board’s Order requiring the company to bargain with the union based on an election conducted pursuant to the agency’s decision in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015). That decision significantly eased the requirements for showing joint employer status, and is often cited as allowing unions to leverage their bargaining power by requiring host employers to bargain with unions that have organized a staffing company’s employees who work on the staffing company’s premises.

Meanwhile, the Board is reviewing an NLRB regional director’s decision refusing to find a staffing agency was a joint employer with a host construction contractor in the wake of the Board’s decision in Browning-Ferris. Green JobWorks LLC/ACECO, LLC, is believed to be the first case post-Browning-Ferris to apply the new joint employer standard and the Board’s review is expected to provide greater guidance regarding its intended reach.

As we noted in our post, Union Seeks Labor Board Review of Regional Director’s Adverse Joint Employer Decision, the Regional Director for Region 5 (Baltimore) concluded that the union failed to establish “specific, detailed and relevant evidence” demonstrating a joint employment relationship comparable to BFI. The union then sought review of the decision.

The Board granted the union’s Request for Review, agreeing to revisit the application of Browning-Ferris in the construction industry setting. The parties recently filed their briefs. ACECO, the host contractor employer, argued the Regional Director correctly applied all of the criteria set forth in Browning-Ferris and properly concluded that the facts of this case are significantly different from the facts of BFI. In the alternative, ACECO argued that Browning-Ferris must be overruled as improperly decided.

Conversely, the union argued that the Regional Director’s decision was contrary to Browning-Ferris. Moreover, because the Regional Director ordered an election that named only Green JobWorks as the employer, the union argued it was unable to negotiate with ACECO, a party with material control over the discipline, discharge, transfer, layoff, recall, placement, wages, overtime pay, and even hiring of employees of Green JobWorks. The union concluded that unless the Board reverses the decision, Browning-Ferris will be undone and joint employer determinations “will continue to be based upon microscopic parsing of the degree and routineness of the control exercised or held by putative joint employers.”

A Board decision in Green JobWorks is not expected before fall. We will keep you apprised as the Board provides further guidance on this important issue.




NLRB General Counsel Announces Wish-List Of “Hot-Button” Issues To Be Handled By His Office

The National Labor Relations Board’s General Counsel has assembled his latest wish-list of “hot-button” issues he hopes to present to the Board for decision when the right cases are presented to his office.

Because certain NLRB unfair labor practice cases “are of particular interest and would benefit from centralized consideration,” the General Counsel has determined that they “should be submitted to the Division of Advice” rather than decided by the Regional Office where the charge is filed. Memorandum GC 16-01, “Mandatory Submissions to the Division of Advice,” dated March 22, 2016, from General Counsel Richard F. Griffin, Jr., is addressed to all NLRB Regional Directors, Officers-in-Charge and Resident Officers. This will allow the General Counsel’s Office in Washington to make the decision whether to prosecute cutting-edge issues in certain cases.

The types of cases recommended for submission to the General Counsel’s Office Division of Advice are divided into three groups in the Memorandum. The first and second are most important because they offer insight into areas of particular interest to the General Counsel where he may urge the Board to change its interpretations of the NLRA in a suitable case.

The first group includes those matters that involve General Counsel initiatives or priority areas of the law and labor policy. Included in this group, among others, are cases involving: (1) the application of Purple Communications, 361 NLRB No. 126 (2014) to electronic systems other than email, (2) the applicability of Weingarten principles in non-unionized settings, (3) allegations that “English-only” policies violate the National Labor Relations Act, and (4) whether the misclassification of employees as independent contractors violates the NLRA.

Purple Communications held that employers generally could not bar employees from using company email systems for personal reasons, including union organizing, during non-work time.

The Supreme Court’s 1975 decision in NLRB v. J. Weingarten, Inc., 420 U.S. 251, held that unionized employees were entitled to the assistance of their union representative during investigative interviews by their employer that the employee reasonably believed might lead to his discipline. However, the Board has seesawed over whether Weingarten also should apply in non-union settings. The Board held Weingarten applicable in non-union settings in Epilepsy Foundation, 331 NLRB 676 (2000), but subsequently reversed itself in IBM Corp., 341 NLRB 1288 (2004).

The second group consists of matters that involve “difficult legal issues or the absence of clear precedent.” The General Counsel wants to review cases involving: (1) the rights of contractor employees to have access to the property where they are working to communicate with coworkers or the public, (2) whether novel forms of disruptive conduct, such as coordinated “shopping,” excessive use of loudspeakers, or corporate campaigns, constitute violations of the NLRA, and (3) the need to harmonize the NLRA with local, state or federal statutes or where potential or actual overlapping jurisdiction with other federal agencies exists, among others.

The Memorandum lists a total of 24 types of cases in the two groups that must be submitted to the Division of Advice, although it also recognizes that “the vast majority of cases may be processed without guidance from Headquarters.” In light of the Memorandum, 2016 and beyond should prove to be “interesting times” in labor law.

Supreme Court Upholds Right of Public Sector Unions to Charge Mandatory Union Fees

By a 4-4 decision, the U.S. Supreme Court has affirmed a lower court ruling that public sector unions could require employees to pay an agency fee to a union as a condition of employment. Friedrichs v. California Teachers Association, No. 14-915 (Mar. 29, 2016).

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 (also known by the euphemism “fair share payment”) a union whose views they did not necessarily wholly share. Agency fees are similar in amount to the dues paid by union members. Read our previous post for more detail.

In a single sentence — “The judgment is affirmed by an equally divided court” — the justices demonstrated that the passing in February of Justice Antonin Scalia will have a distinct effect on cases before it. (Approximately a third of the cases before the Supreme Court in recent years have been decided by a 5-4 vote.) Many court observers believed Justice Scalia would have voted with the plaintiffs and found a government requirement that public sector employees pay a mandatory agency fee violates the First Amendment rights of those workers. During oral argument, Justice Scalia and others justices expressed the view that collective bargaining was political speech and the requirement that public sector employees pay mandatory agency fees was “compelled speech.”

Had the Court reversed the appeals court decision, public sector unions stood to lose millions of dollars in fees as employees exercised their new right to decline to pay an agency fee. For example, after Wisconsin in 2013 prohibited unions who represented state employees from charging mandatory agency fees, AFSMCE Council 24’s revenue in the state dropped from $5 million in 2010, before the law changed, to $1.5 million.

The High Court’s decision does not finally resolve the issue. The plaintiffs could ask for a rehearing, although success is unlikely because an affirmative vote of five justices is required and a rehearing is rarely granted. In addition, several cases that raise the same issue are working their way through the lower courts. One of them may reach the Supreme Court for a definitive ruling after the Court is restored to a full complement of nine justices.

DOL’s New “Persuader Activities” Rule Is Finalized – Effective Late April 2016

The United States Department of Labor (DOL) has announced that it will publish its final rule relating to “persuader” activity under the Labor-Management Reporting and Disclosure Act (LMRDA) on March 24, 2016, almost five years after first proposing it. The rule (which was opposed by, among others, the American Bar Association, Association of Corporate Counsel, the Attorneys General of many states, most employers and many key trade associations) is briefly summarized below.

Although scheduled to take effect 30 days after publication (i.e. late April 2016), it is likely that the new rule’s implementation and legality will be challenged in court in the next few days. Other efforts (e.g., through Congress) to stop the new rule from being implemented also are likely. The rule will be applicable to agreements, arrangements and payments made on or after July 1, 2016.

We will provide further updates and information regarding the rule prior to the late April 2016 effective date.  For an analysis of the new rule, click here.


Labor Board Acts to Address Budget Deficit

The National Labor Relations Board’s General Counsel has directed the Board’s regional offices to institute  cost-cutting measures in light of a significant budget deficit facing the agency for the balance of fiscal year 2016 (ending September 30).

In Memorandum OM-16-09, NLRB Associate General Counsel Anne Purcell instructed regional directors, officers-in-charge, and residents officers to institute cost-saving actions across the full range of Board activities, including representation elections, unfair labor practice investigations and trials, and office administration.

Among the actions being taken are the following:

  • Board agents are to redouble efforts to avoid hearings and trials by reaching stipulated election agreements (although, under the Board’s new “quickie” election rules, there are fewer issues to litigate at a hearing) and to settle “meritorious” unfair labor practice charges as early in the investigation as possible. (The Board’s pursuit of these goals could help employers in settlement negotiations.)
  • The hallmark of a Board unfair labor practice investigation had been the face-to-face affidavit. The Memorandum instructs that, in unfair labor practice investigations, the full use of “alternative investigatory techniques,” such as “questionnaires, telephone affidavits, videoconference interviews…position statements and other techniques that reduce or eliminate…travel costs,” is encouraged. The Memorandum also advises investigators to exceed the Board’s time targets (for deciding whether unfair labor practice charges have merit) if doing so can reduce costs; particularly if there are multiple cases involving the same parties or are open in the same locale.
  • Where cases are going to hearing or trial, in order to reduce travel expenses, the Memo urges that preparation be conducted in the regional office, making use of telephone and videoconferencing to prepare witnesses and for other pre-litigation matters. (Despite this advice, as is the case now, Board attorneys are expected to meet with witnesses twice, but with one meeting occurring on the eve of trial.) Preferably, trials should be conducted at the regional offices to reduce facility rental costs and to permit “inexperienced counsel the opportunity to ‘second chair’ senior counsel as a training exercise.” The General Counsel also will be more receptive to witness testimony by video.
  • Lastly, confirming that desperate times call for desperate measures, Board staff are instructed to save on paper costs in a number of ways: by foregoing filing post-trial briefs and, instead, encouraging judges to issue bench decisions, utilizing “double-sided photocopying . . . whenever possible,” and using “single space…for documents that are not filed with the Board or courts.”

While the directed actions are focused on the present budget, they also look to be “best practices” that the Board may continue in future years.

Seattle Ordinance Giving Drivers Right to Bargain Collectively Violates Federal Law, Chamber Says in Lawsuit

The U.S. Chamber of Commerce has challenged the Seattle City Ordinance giving drivers of app-based transportation companies that use independent contractors to provide services (such as Uber and Lyft) the right to collectively bargain.  (See our post, Seattle City Council Enacts Ordinance Giving Drivers Right to Collectively Bargain, Legal Challenges Expected.)

On its face, the federal lawsuit seeks to invalidate the Ordinance on the grounds that it violates federal anti-trust law and is preempted by federal labor law.  However, if the Chamber is successful, the lawsuit will have accomplished a much larger goal – the promotion of competition to benefit consumers, the elimination of a major challenge to app-based companies’ business model, and protection of these companies’ ability to operate union-free.

The National Labor Relations Act governs most private sector employees’ rights to bargain collectively. The Chamber argues that the Ordinance is preempted by the NLRA because (1) it attempts to regulate independent contractors who were intentionally excluded from the collective bargaining requirements of the NLRA, and (2) administration of the Ordinance requires the Seattle Director of Finance to determine whether a particular driver is an independent contractor or employee, a determination which is reserved to the exclusive jurisdiction of the NLRB. The Chamber has asked the court to declare the Ordinance unlawful and enjoin its enforcement.

The lawsuit is not expected to diminish the Seattle City Council’s support for the legislation or deter unions from seeking to represent drivers pursuant to the Ordinance. Teamsters Local 117 has publicly denounced the lawsuit as an attempt to derail collective bargaining for independent contractor drivers.  Regardless, given the importance of the issue and the potential economic impact to app-based transportation companies, the litigation is expected to be hard fought.


Browning-Ferris Appeals NLRB’s Landmark Joint Employer Decision to U.S. Court of Appeals

As expected, Browning-Ferris Industries has appealed to the United States Court of Appeals (in Washington, D.C.) from the National Labor Relations Board’s ground-breaking decision finding that BFI, as a joint employer of employees that BFI used from Leadpoint Business Services, unlawfully refused to bargain with Teamsters Local 350. BFI’s “Petition for Review” was filed in the District of Columbia Circuit.

On August 27, 2015, the NLRB announced a new, broader standard for determining joint employer status under the National Labor Relations Act, and in the process, found that BFI and Leadpoint were joint employers of the Leadpoint employees. (See our article, Labor Board Sets New Standard for Determining Joint Employer Status). After an election in which the union prevailed, the Board certified the union as the collective bargaining representative of those employees. Disagreeing with the Board’s joint employer determination, BFI refused the union’s request to bargain. The union then 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.

The NLRA does not provide for a direct appeal to a federal appeals court from a Board “representation case” decision (one involving an election). An employer contesting such a decision first must refuse to bargain and thereby be found to have violated the NLRA. The “unfair labor practice” decision may be appealed.

In its “Statement of Issues to be Raised” filed in connection with its appeal on February 26, 2016, BFI contends that the Board’s new joint employer standard is defective for several reasons — because it is contrary to the definition of “employee” established by Congress in the 1947 Taft-Hartley amendments, relies upon “economic realities,” which was prohibited by Congress in the 1947 Taft-Hartley amendments, fails to promote stable collective bargaining relationships as required by the NLRA, and is arbitrary and capricious because it is “hopelessly vague.”

A briefing schedule should be issued shortly. Thereafter, the Court will schedule oral argument. A decision is not anticipated before the fall. We will continue to monitor developments in this important case.