Seattle Ordinance Giving Drivers Right to Collectively Bargain Not Preempted by NLRA

A landmark law giving drivers of app-based transportation companies, such as Uber and Lyft, the right to collectively bargain is not preempted by the National Labor Relations Act, a three-member panel of the Ninth Circuit Court of Appeals has ruled. U.S. Chamber of Commerce v. City of Seattle, No. 17-35640 (9th Cir. May 11, 2018).

Among other things, the NLRA regulates union activity and collective bargaining among almost all private-sector employees in the United States. The Seattle law affords covered drivers with rights analogous to those accorded employees under the NLRA, such as the right to select a representative to negotiate certain terms and conditions of employment.

The Court also ruled the law is not exempted from the Sherman Antitrust Act, under the Sherman Act’s exemption for states to enact laws that regulate competition. (The Sherman Act prohibits price-fixing and other practices that inhibit competition.) The Ninth Circuit panel decided that Seattle’s law did not meet either of the exemption’s requirements. First, the law does “not ‘plainly show’ that the Washington legislature ‘contemplated’ allowing for-hire drivers to price-fix their compensation.” Second, “[i]t is undisputed that the State of Washington plays no role in supervising or enforcing the terms of the City’s ordinance,” the Court said, and the lack of active state supervision meant the “active-supervision requirement” of the exemption also was not met.

The Seattle City Council passed the law on December 13, 2015; it took effect in January 2016. From the outset, the law faced numerous legal challenges, with advocates for businesses and employees weighing in. On its face, the law is intended to improve public health, safety, and welfare by providing Seattle with a means to regulate for-hire and taxicab transportation services.

In addition to opening the door to further legal challenges under the Sherman Act, the panel’s ruling offers a potential silver-lining to workers’ rights advocates. By ruling that the law was not preempted by the NLRA, efforts to organize independent contractors, who are exempt from the NLRA, may increase through the passage of state laws similar to Seattle’s.

Please contact a Jackson Lewis attorney if you have any questions.

 

 

NLRB Chair Responds to Senators, Confirms NLRB Will Engage in Rulemaking for Joint Employer Standard

New NLRB Chairman John Ring has stated that the Board intends to use rulemaking to create a new joint employer standard.

The statement was in response to a May 29 letter from Democratic Senators Elizabeth Warren, Kirsten Gillibrand, and Bernie Sanders that harshly questioned whether the agency planned to use rulemaking to create a new joint employer standard to evade ethical restrictions in deciding cases that come before the NLRB.

The Democratic Senators also accused Ring of being biased and that the rulemaking outcome was predetermined. The Senators requested the NLRB refrain from using the rulemaking process to change the current union-friendly joint employer standard. (For more on the current joint employer standard under Browning-Ferris Industries, 362 NLRB No. 186 (2015), see our post, Labor Board Considers Joint Employer Standard Rulemaking.)

In his June 5, 2018, response, Ring confirmed that the NLRB will engage in rulemaking to determine what the standard is for two entities to be deemed a joint employer under labor law. Ring stated that a Notice of Proposed Rulemaking (NPRM) would be issued by this summer.

Ring denied that there was any intent to evade ethical restrictions in using the notice-and-comment rulemaking process. He explained that the rulemaking process would allow the NLRB to consider all views on what the joint employer standard ought to be. He also explained that rulemaking will permit the Board to address the joint employer standard in a comprehensive manner that will provide greater guidance for all interested parties — employers, unions, and employees — than traditional case-by-case adjudication allows.

Ring concluded by pledging to keep an open mind and to consider all points of view received from interested parties during the rulemaking process. However, he also reminded the Senators that he has his own opinions on this issue based on his many years as a management-side labor lawyer, and he should not be expected to be devoid of opinions any more than some of the previous union-side NLRB members were when they embarked on rulemaking to change the NLRB’s representation-case procedures in 2011 and 2014. The rules ultimately resulted in shorter, union-friendly election procedures.

For now, the public will have to wait for the NPRM, affording the opportunity for public comment on a newly proposed rule. A majority of the five-member NLRB will need to approve the proposed rule, and any new joint employer standard would be applicable only prospectively after approval of a final rule.

NLRB General Counsel Issues Employer-Friendly Work Rule Guidance

On June 6, NLRB General Counsel Peter Robb, the NLRB’s chief prosecutor, issued a detailed, 20-page Memorandum to the NLRB Regional Offices entitled “Guidance on Handbook Rules Post-Boeing.” (As General Counsel, Robb decides which unfair labor practice charges filed in the various NLRB regional offices should be pursued. Through his memorandum, GC Robb has instructed the regional offices when charges involving the legality of employer work rules should be pursued.) In The Boeing Company, 365 NLRB No. 154 (Dec. 14, 2017), the NLRB established a new standard for evaluating employer rules that balances the potential impact of the rule on employees’ NLRA rights against the employer’s legitimate justification for the rule. The decision also sets forth three categories of work rules: (1) rules that are generally lawful to maintain; (2) rules that require case-by-case consideration to determine if they are lawful; and (3) rules that are unlawful. In the memorandum, he articulates the types of work rules that he believes generally will fall under each category.

As we previously reported, in, Boeing, the Trump Board overruled an earlier NLRB case, Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), and adopted a new framework for deciding whether merely maintaining a facially-neutral work rule violates the National Labor Relations Act. Lutheran Heritage had set forth an analysis that, as applied, resulted in the Board finding many common-sense employer work rules unlawful. In Boeing, the NLRB established a new standard that balances the potential impact of the rule on employees’ NLRA rights against the employer’s legitimate justification for the rule and sets forth the three categories into which a work rule may fall.

Category 1 lawful rules include many rules that the NLRB likely previously would have found unlawful, such as those related to: (1) civility; (2) no-photography/no-recording; (3) insubordination, non-cooperation, or on-the-job conduct that adversely affects operations; (4) disruptive behavior; (5) protecting confidential, proprietary, and customer information or documents; (6) prohibiting defamation or misrepresentation; (7) prohibiting use of employer logos and trademarks; (8) requiring authorization to speak for the company; and (9) banning disloyalty, nepotism, or self-enrichment.

Category 2 rules – those that warrant individualized scrutiny. GC Robb advised that “possible examples” of Category 2 rules include: (1) “Broad conflict-of-interest rules that do not specifically target fraud and self-enrichment”; (2) “Confidentiality rules broadly encompassing ‘employer business’ or ‘employee information’ (as opposed to confidentiality rules regarding customer or proprietary information…)”; (3) “Rules regarding disparagement or criticism of the employer (as opposed to civility rules regarding the disparagement of employees…)”; (4) “Rules regulating use of the employer’s name (as opposed to rules regulating use of the employer’s logo/trademark…)”; (5) “Rules generally restricting speaking to the media or third parties (as opposed to rules restricting speaking to the media on the employer’s behalf…)”; (6) “Rules banning off-duty conduct that might harm the employer (as opposed to rules banning insubordinate or disruptive conduct at work…”); and (7) “Rules against making false or inaccurate statements (as opposed to rules against making defamatory statements…).”

Last, the GC’s examples of Category 3 unlawful rules include: (1) those that require confidentiality with respect to wages, benefits, or other working conditions and (2) those that prohibit joining outside organizations or voting on matters concerning employers.

It appears the General Counsel intends to apply The Boeing Company broadly. Please contact us if you have questions about your work rules.

Labor Board Considers Joint Employer Standard Rulemaking

The National Labor Relations Board has begun the process to consider rulemaking to establish a standard for determining joint employer status under the National Labor Relations Act, according to the Board’s filing in the Unified Agenda of Federal Regulatory and Deregulatory Actions.

The current standard is set forth in Browning-Ferris Industries, 362 NLRB No. 186 (2015). In that case, the NLRB announced a union-friendly joint employer test under which the Board will find two entities are joint employers where one exercises direct or indirect control over the other’s employees, or where one entity has reserved rights of control over the other’s employees, even if unexercised. The Browning-Ferris standard was reinstated when the NLRB vacated its decision in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017) on February 26, 2018.

Hy-Brand, which overruled Browning-Ferris and reinstated the former joint employer standard requiring a finding of direct control, was vacated after the Board’s Inspector General released a report stating that Member William Emanuel should have recused himself from participating in the decision. Emanuel’s law firm represented one of the joint employers involved in the Browning-Ferris decision.

Since Hy-Brand was already overruled once, conventional wisdom is the Board, once again, will reverse Browning-Ferris when the opportunity arises. However, to reverse Browning-Ferris,all three Republican Board members (Emanuel, Marvin Kaplan, and Chairman John Ring) likely would need to participate in the decision to form a 3-2 majority. (A 2-2 vote would result in the Browning-Ferris standard remaining in place.)

It appears that the rulemaking proposal, which was prepared at the request of Chairman Ring, is an effort to avoid any future conflict problems and the inability of Senate Republicans to get legislation to overturn Browning-Ferris passed. (Legislation to overturn Browning-Ferris has been filed in Congress, but Senate Republicans have struggled to get the Democratic votes necessary to pass it.) Now, the 3-2 Republican-majority Board is seeking an alternate route around these roadblocks.    Next, a Notice of Proposed Rulemaking will be issued, affording the opportunity for public comment. A majority of the five-member Board will need to approve the proposed rule.

Supreme Court Rules Class Action Waivers in Employment Arbitration Agreements Valid

Class action waivers in employment arbitration agreements do not violate federal law, the U.S. Supreme Court has ruled in a much-anticipated decision in three critical cases. Epic Systems Corp. v. Lewis, No. 16-285; Ernst & Young LLP et al. v. Morris et al., No. 16-300; National Labor Relations Board v. Murphy Oil USA, Inc., et al., No. 16-307 (May 21, 2018).

The Supreme Court’s decision resolves the circuit split on whether class or collective action waivers contained in employment arbitration agreements violate the National Labor Relations Act (NLRA). They do not, the Court ruled in a 5-4 decision. Justice Neil Gorsuch wrote for the majority of the Court. Justice Ruth Bader Ginsburg dissented, describing the majority holding as “egregiously wrong.”  For more on this historic ruling, click here.

NLRB Failed to Support Conclusion that Employee’s Disparaging Comments Were Protected, Not Disloyal

The U.S. Court of Appeals for the District of Columbia Circuit has refused to enforce the NLRB’s order finding that an employee’s discharge violated the National Labor Relations Act because the Board did not satisfy the Supreme Court’s two-prong Jefferson Standard test for determining whether an employee’s disparaging statements to third parties about his employer are protected. Oncor Electric Delivery Co. v. NLRB, No. 16-1278 (D.C. Cir. Apr. 13, 2018). The Court remanded the case to the NLRB for a re-examination and a thorough explanation of its decision.

The Supreme Court in Jefferson Standard, 346 U.S. 464 (1953), which later was followed by the NLRB and other court cases, ruled that employee public attacks on the quality of the employer’s products, services, or operations are protected by the NLRA when they are made in furtherance of a union’s position in a labor dispute. The public comments must (1) indicate that they are being made as part of a labor dispute and (2) not be extremely disloyal, reckless, or maliciously untrue.

In this case, the employee, who also served on his union’s negotiating committee, repaired and serviced “smart meters” at residential and commercial sites of utility users. The union and the employer had a history of disagreement over the increased use of the smart meters, primarily because this would reduce the need for employees to read meters, and therefore eliminate some union-represented jobs.

The union and the employer were deadlocked in collective bargaining negotiations, particularly over the length of a new agreement. The employee gave the employer an ultimatum: agree to the union’s demands, or he would voluntarily appear before a state senate committee hearing on whether smart meters had harmful effects on public health. The employer did not agree.

In his brief testimony before the committee, the employee identified himself as a union member and said he was personally handling an increasing number of work orders where the smart meters had burned up and burned the meter bases as well. He concluded that “these things are causing damage to people’s homes.” The employee did not reveal the ongoing contract dispute.

The employer reviewed the employee’s service call records, concluded that his testimony was false, and fired him. The NLRB administrative law judge and the Board ruled that the employee’s statements were protected and that his discharge violated the NLRA.

The Court explained that the first Jefferson Standard requirement is important so the audience can take this into account when assessing the employee’s credibility. The NLRB did not explain how this requirement was satisfied and the Court doubted whether the requirement could be satisfied under the record in the case. The Court also ruled the NLRB had to clearly take a position on which party has the burden of proof on the two requirements for NLRA protection — the General Counsel or the employer.

Public attacks on the quality of an employer’s products and services as leverage in labor disputes is a regular union tactic. Employers faced with this situation should carefully determine whether the employee referred to the labor dispute when uttering the disparaging remarks, as well as whether the remarks were disloyal, or recklessly or maliciously untrue. The NLRB historically has given employees the benefit of the doubt in such cases.

 

 

Jackson Lewis Responds to NLRB Request for Information on Election Rules


Jackson Lewis, which has represented management before the National Labor Relations Board for 60 years, has filed its comments suggesting several important changes to the NLRB’s far-reaching 2014 election rule amendments.  

In December 2017, the Board asked the public to submit comments on the efficacy of its 2014 election rule amendments, expressly asking if the rules should be retained, rescinded, or modified.  

In its comments, Jackson Lewis advocates that the Board take affirmative steps to protect the right of employees to make an informed choice in representation elections. An informed choice means employees casting their ballots with full knowledge of which of their coworkers would be included in the putative bargaining unit, and which individuals would be excluded as supervisors. Jackson Lewis advocates rule amendments that guarantee prompt examination and resolution of these issues before employees are asked to cast their ballots. Possession of this knowledge, pre-election, is likewise important to clarify employers’ legal obligations. An educated employee decision also needs an adequate opportunity to consider the benefits, risks, and obligations of union representation. Jackson Lewis also endorses simplification of the pre-election process by eliminating needless data collection and pointless notifications, and further avoiding unnecessary disclosure of personal employee information. 

In drafting the current rules, the Board did not focus on employees’ ability to make a knowing choice, but, rather, upon the speed with which the NLRB could conduct an election. Under the 2014 amendments, in most cases, the parties may be pressured to hold votes in a little over three weeks from the filing of an election request – about half the time of the Board’s previous goal. To accomplish this, the NLRB all but eliminated pre-election determinations of unit composition and voter eligibility, instead allowing the parties to challenge voters and to defer resolution of these legally significant issues until after the vote – and, often, never at all. The result is employee and employer confusion and uncertainty. Conflating celerity with choice helps neither the employees the National Labor Relations Act was intended to protect nor their employers. 

The 2014 amendments were the most significant change in election practice in the history of the Act – and the most controversial. Now, after the three-year experiment, the Board is commended for taking the unusual step of asking the public for its assessment. The Board, at this time, is not proposing a formal change to its rules, although its request is widely seen as a prelude to possible amendments.  

Jackson Lewis believes employee choice is essential to the democratic process Congress intended in enacting the NLRA. The Board has often acknowledged the importance.  

Jackson Lewis’ full response to the Board can be accessed at https://www.nlrb.gov/reports-guidance/public-notices/request-for-information/submission. Share your thoughts on this with us.

 

Changes in Circumstances Counsel against NLRB Issuing Bargaining Order, Court Concludes

A bargaining order is an extreme form of relief and should not be issued without careful consideration of whether changed circumstances render such an order inappropriate, the U.S. Court of Appeals for the Second Circuit, in New York, has explained, remanding an unfair labor practice case to the Board. Novelis Corp. v. NLRB, 2018 U.S. App. LEXIS 6462; 201 L.R.R.M. 3523 (2d Cir. Mar. 15, 2018).

In Novelis, after a majority of employees had signed union recognition cards, and before the election, the company changed benefits to discourage employees from voting for the union, threatened employees with plant closure, and unlawfully demoted a union supporter. The company won the election conducted by the National Labor Relations Board. The union filed multiple unfair labor practice charges against the company, and the Administrative Law Judge found the company had committed an unfair labor practice. Two years after the election, the NLRB adopted the ALJ’s findings and issued a “bargaining order” requiring the company to bargain with the union despite the companies having won the election. The Board refused to consider the passage of time and changed circumstances since the election.

The Second Circuit upheld the Board’s finding on the unfair labor practice charges, but disagreed with the issuance of the bargaining order. The Court noted that “a bargaining order is a rare remedy warranted only when it is clearly established that traditional remedies cannot eliminate the effects of the employer’s past unfair labor practices.” Such a remedy is “appropriate only when traditional remedies, such as a secret ballot rerun of an election, do not suffice.” The Court further noted “the superiority of, and [its] preference for, secret ballot elections over bargaining orders.” Consequently, the Court said, the Board “carries a heavy burden to justify a bargaining order in lieu of a second election.”

The Second Circuit concluded the Board:

  • Ignored the fact that Novelis had taken meaningful steps to remedy the unfair labor practices.
  • Did not account for the passage of time, which casts doubt on the employees’ union support expressed years ago by authorization cards.
  • Failed to take into account significant employee turnover since the election.
  • Bargaining orders are not often issued by the NLRB, but when they are, their issuance must be justified. Although the employer here was able to avoid the issuance of a bargaining order, all of the factors on which the Court based its decision may not be present in other cases. Employers are permitted to aggressively communicate with their employees in the face of a union organizing campaign, but they should consult with experienced counsel to reduce the likelihood a bargaining order will be issued.

Ultimately, the Court concluded that there was no reason to believe a fair rerun election could not be held. 

Bargaining orders are not often issued by the NLRB, but when they are, their issuance must be justified. Although the employer here was able to avoid the issuance of a bargaining order, all of the factors on which the Court based its decision may not be present in other cases. Employers are permitted to aggressively communicate with their employees in the face of a union organizing campaign, but they should consult with experienced counsel to reduce the likelihood a bargaining order will be issued.

 

Ring Confirmed to Join NLRB

John Ring, a management labor attorney, has been confirmed by the U.S. Senate to a seat on the National Labor Relations Board, filling the NLRB’s only remaining vacancy.   Ring was confirmed by a 50-48 vote.  The Board now has a full complement of five members — three Republicans and two Democrats.  The Board is expected to overturn a number of union-friendly Obama-era decisions.

Charter Schools Covered by NLRA? Not in Texas

The U.S. has more than 6,000 charter schools. They are authorized in almost every state. While state laws vary, their purpose is the same: to permit alternatives to traditional public schools, unbound by local school districts or district-wide collective bargaining agreements that can stifle innovation.

These laws frame charters as public schools, subject to the usual educational goals and regulations. While publicly funded, each school is initiated by private individuals, rather than a public entity. Founders apply for a charter to an authorizing body (usually a government entity). If granted, the school is governed by a board of trustees comprised of private individuals. The state does not appoint trustees and has only attenuated power to remove them.

Most states provide collective bargaining rights for public employees. A few do not. However, Section 7 rights for protected concerted activity enjoyed by private sector employees under the National Labor Relations Act have not been applicable. By statute, a “state or a political subdivision” cannot be a covered “employer” under the Act. Thus, it was assumed that charters’ labor relations would be governed by whatever state labor law applied to public schools.

However, in 2012, the National Labor Relations Board returned to an old standard affirmed by the Supreme Court where an employer is deemed a “state or political subdivision” if it is (1) created directly by the state to be a department or administrative arm, or (2) administered by individuals who are responsible to public officials or to the general public.

Under this standard, if the school was not initiated by a government official or entity, its leadership is not appointed by the state, and its trustees are removable only by the state in unusual circumstances, the school is not exempt from the NLRA as a public entity. The Board and its regional offices consistently have held since 2012 that charters in Arizona, California, Connecticut, Illinois, Louisiana, Michigan, Minnesota, New York, Ohio, Oregon, Pennsylvania, Tennessee, and the District of Columbia are subject to the NLRA. Indeed, since 2012, there have been no cases in which the Board failed to find NLRA jurisdiction over a charter school.

Until now.

In LTTS Charter School, 366 NLRB No. 38 (Mar. 15, 2018), an individual employee filed an unfair labor practice charge against her charter school employer, alleging retaliation against the employee for engaging in protected concerted activity. Based on the growing body of Board cases, the regional director found NLRA jurisdiction and issued a complaint. After a trial, an NLRB administrative law judge found the Act did not confer jurisdiction over the school. The Board upheld the decision and dismissed the case.

Texas charter school law differs from other states’. Commonly, under certain circumstances, a state may remove members of school governing bodies; but Texas law permits the state to disband and reconstitute the membership – including appointing new members. This distinction was enough for the Board to find the school’s leadership was “responsible to public officials.”

Thus, Texas law, not the NLRA, governed the employment relationship, and Texas law does not recognize public employees’ rights to engage in concerted activity or to unionize.

LTTS applies only where this Texas law applies. Other states articulate government oversight differently. Charter schools (at least outside Texas) should note that NLRB jurisdiction remains the law in some states (and possibly in states in which the issue has yet to be tested). Schools interested in reviewing the potential for Board jurisdiction (or in considering a challenge to jurisdiction) should consult counsel.

LexBlog