Some Employers Will Have Workplace Rules Re-Evaluated By NLRB

The National Labor Relations Board is affording dozens of employers the chance to have cases involving the legality of their workplace rules re-evaluated under a 2017 Board decision. The Board decision overruled Obama-era Board precedent that hampered employers’ ability to maintain workplace conduct rules without running afoul of the National Labor Relations Act. The Board’s new initiative, first reported by Bloomberg Law, involves remanding numerous cases that held against employers for reconsideration by NLRB administrative law judges.

Workplace rules have been a contentious issue under federal labor law for years. In 2004, the NLRB issued its controversial decision in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), which set a tough standard to determine whether workplace rules, policies, and handbook provisions unlawfully interfere with rights of employees protected by the Act. In Lutheran Heritage, the Board held that a neutrally worded rule would violate the NLRA if employees may “reasonably construe” the rule to prohibit an employee’s exercise of his or her protected rights. Lutheran Heritage made it considerably harder for employers to maintain otherwise benign-sounding handbook provisions prohibiting rude or disruptive workplace behavior.

In 2017, after the composition of the Board shifted to a Republican majority, the NLRB issued Boeing Co., 365 NLRB 154 (2017). In Boeing, which overruled Lutheran Heritage, the Board held that determining whether an employer rule is unlawful involves a balancing test that measures the rule’s impact on employee rights against an employer’s legitimate business interests in maintaining the rule. The Board created a three-tiered rules classification system: “Category 1” rules are those the Board has specifically designated as lawful; “Category 2” rules are those that require individualized scrutiny to determine their legality; and “Category 3” rules are those specifically designated by the Board as unlawful.

On June 8, 2018, the NLRB’s General Counsel, Peter Robb, issued a memo providing specific examples of which rules would fall into each of these categories. For example, the General Counsel’s memo identified as a Category 1 rule one that prohibited “behavior that is rude, condescending or otherwise socially unacceptable.”

The Board’s latest action remands at least 40 workplace rules cases for a fresh look under Boeing. Any new decisions will strengthen Boeing as precedent. Moreover, the new decisions certainly will provide employers clear examples of what employee conduct they can and cannot prohibit or limit through workplace rules.

NLRB Regulatory Action on ‘Quickie Election’ Rule Put on Back Burner

Employers waiting for the National Labor Relations Board’s revisions to union election rules will have to wait a bit longer. According to the latest agency regulatory agenda, that is a “long-term” action item, a downgrade from its prior ranking. This is a possible indication that revisions to the rules have become a less important priority for the Board for the upcoming year than issuance of joint-employer rules. The Board announced its intent to consider revisiting the election rules in December 2017. See Labor Board Asks: Retain, Modify, or Rescind ‘Quickie Election’ Rules?

Among other significant changes, the Obama-era representation election rules, in effect since April 2015, significantly shortened the time between the date of the filing of a petition for an election with the NLRB to the date the election is held. The rules also require pre-election hearings generally to be held beginning on the eighth day after the filing of a representation petition and require employers to provide union representatives with more information on potential voters than in the past. The rules, often referred to as the “quickie” or “ambush” election rules, have been criticized since their inception as a hindrance to employers’ ability to respond to and educate employees about the impact of union organizing activity.

According to Law360, NLRB Chairman John Ring told attendees at the American Bar Association’s labor and employment conference in San Francisco that the Board will engage in rulemaking to change the rule, but will do so issue by issue, rather than taking on the entire rule at once. According to Ring, the Board will release the first in a series of proposed rules this winter, covering the NLRB’s blocking charge policy and voluntary recognition bar.

Meanwhile, the Board is moving forward with its proposed revisions to the standard for determining joint-employer liability under the National Labor Relations Act. See NLRB’s Proposed Rule Adopts Pre-Browning-Ferris Joint-Employer Standard. The window for public comment on the proposed rule closes on December 13, 2018.

 

Labor Board Sets New Deadline for Submitting Comments on Proposed Joint-Employer Rulemaking

The National Labor Relations Board has extended the deadline for submitting comments regarding its proposed rulemaking on the standard for determining joint-employer status under the National Labor Relations Act to December 13, 2018.

The proposed rule was originally published in the Federal Register on September 14, 2018, and comments were due by November 13, 2018. Replies to comments submitted during the initial comment period must be received by the Board on or before December 20, 2018.

Companies that use or provide temporary or supplemental staffing services are strongly encouraged to submit comments to the Board for consideration. Companies that regularly work with franchisors and franchisees or with subcontractors also may want to comment, as the proposed changes may affect them directly.

This public-comment period is an important opportunity for companies to submit input and concerns and increase the possibility of a well-informed, comprehensive final rule that will provide clear guidance to and limit the risk of litigation for employers.

If you have questions, would like to discuss the implications of this rulemaking in detail, or need assistance with the preparation or submission of comments on your behalf, please contact the Jackson Lewis labor lawyer with whom you regularly work.

Unions to Face Greater Scrutiny for Negligent Conduct to Their Members

National Labor Relations Board’s field office staff have been directed to prosecute a broader array of cases against unions that engage in negligent behavior toward their members, according to an internal memorandum obtained by Bloomberg BNA.

The Office of the General Counsel Memorandum expresses a marked contrast to the Board’s historical position with respect to cases addressing a union’s “duty of fair representation.” “General Counsel’s Instructions Regarding Section 8(b)(1)(A) Duty of Fair Representation Charges” Memorandum ICG 18-09 (Sept. 14, 2018).

A union owes its members an obligation to represent them in good faith and without discrimination. A union breaches the duty of fair representation when it engages in conduct that is arbitrary, discriminatory, or in bad faith. Vaca v. Sipes, 386 U.S. 171, 190 (1967). Where, for example, a member believes that a union has failed to adequately prosecute a grievance on the member’s behalf, the member may file a duty of fair representation charge against a union under Section 8(b)(1)(a) of the National Labor Relations Act.

Under existing Board law, a union can defend itself against such a charge by showing its behavior was “merely negligent.” As one example, a union may successfully argue that where the union lost or misplaced a grievance, the union’s conduct was merely negligent and did not constitute a violation of the duty of fair representation. Citing an “increasing number of cases” where unions have employed such a defense, the Memorandum toughens considerably the standards on unions. This is particularly true in two specific circumstances.

The first pertains to situations where a union loses track of, misplaces, or otherwise forgets about a member’s grievance. Under the Memorandum, the loss of a grievance will constitute gross negligence, unless the union can show that it had an established, reasonable tracking system in place for grievances, but the system failed “for an identifiable and clearly-enunciated reason.”

The second example pertains to situations where a union fails to communicate its decisions about a grievance or fails to respond to inquiries for information from a member on the status of a grievance or the member’s attempt to file one. The Memorandum states that such conduct (for example, where a union ignores emails or phone calls) is willful and arbitrary, unless the union can prove that it had a “reasonable excuse or meaningful explanation” for its lack of responsiveness.

While the Memorandum is not controlling law (ultimately, the five-member Board issues controlling interpretations of federal labor law), because the General Counsel’s office prosecutes cases filed with the NLRB, the Memorandum may cause a considerable uptick in cases filed against unions. This increase, in turn, could increase members’ awareness that the duty of fair representation owed to them cannot be taken lightly by their unions.

NLRA Preempts Municipality’s Right-to-Work Ordinance, Seventh Circuit Holds

While the National Labor Relations Act allows states to enact right-to-work laws, it does not authorize local municipalities to do so, the U.S. Court of Appeals for the Seventh Circuit, in Chicago, has held. I.U.O.E. Local 399 v. Village of Lincolnshire, No. 17-1300 & 17-1325 (7th Cir. Sept. 28, 2018).

This decision is contrary to the Sixth Circuit’s holding in United Automobile, Aerospace, and Agricultural Implement Workers of America Local 3047 v. Hardin County, Kentucky, 842 F.3d 407 (6th Cir. 2016). This creates a circuit split that the U.S. Supreme Court may be called on to resolve.

A “right-to-work” law generally prohibits employers and unions from enforcing or entering into union security provisions, which require employees to join the union or pay dues as a condition of employment. Section 14(b) of the NLRA authorizes states to pass right-to-work laws.

Illinois has not enacted a right-to-work law. In 2015, the Village of Lincolnshire in Illinois enacted a local ordinance with a right-to-work provision. Several unions challenged the ordinance in federal district court, arguing the NLRA preempted the ordinance. In 2017, the federal district court ruled the NLRA preempted the ordinance and the Village appealed.

Citing U.S. Supreme Court precedent, the Seventh Circuit determined that state and local laws banning union security provisions “clash” with Section 8 of the NLRA and would be preempted, unless they fall within the scope of Section 14(b). The Seventh Circuit rejected the argument that by allowing a state to enact right-to-work laws, Section 14(b) permits the state’s authority to be re-delegated to its political subdivisions.

“True, section 14(b) cedes some power back to the states, but it makes no sense to say that states can re-delegate that power …. [N]o one would be able to figure out what is legal and what is not,” wrote Chief Judge Diane Wood.

The Court reasoned that employers operating within multiple local jurisdictions with varying ordinances might be placed in the “impossible position” of having to risk an unfair labor practice charge for refusing to bargain over a union shop clause or civil and criminal penalties for violating the ordinance. The Seventh Circuit’s decision relied on the potential for “other administrative nightmares” based upon the sheer number of local jurisdictions in Illinois.

The Seventh Circuit also ruled that the NLRA preempted two other provisions of the Village’s ordinance, which restricted the use of union hiring halls and dues checkoff.

Until the Supreme Court settles the issue, municipalities in Illinois, Indiana, and Wisconsin (which are covered by the Seventh Circuit) are prohibited from passing right-to-work laws, while those in Kentucky, Michigan, Ohio, and Tennessee (which are covered by the Sixth Circuit) are free to adopt right-to-work laws.

We will report any further developments. Please contact a Jackson Lewis attorney if you have any questions.

 

 

 

E-Verify Subject to Collective Bargaining

While I-9 compliance is important, companies cannot forget about other labor and employment laws. In May 2018, a meatpacking company in Illinois was caught between ICE and the National Labor Relations Board.ICE conducted an audit of the company’s I-9s. Upon notice of the audit, the company began implementing E-Verify. An NLRB judge ruled that the company violated the National Labor Relations Act by:

  • Transferring work to temporary staffing agency workers without first notifying the union;
  • Dealing directly with the terminated employees regarding severance;
  • Failing to provide the requested documents to the union; and, importantly,
  • Unilaterally changing the terms and conditions of employment by instituting E-Verify without bargaining.

On August 27, 2018, a three-member NLRB panel upheld this decision (even though the union eventually agreed to the use of E-Verify through collective bargaining).  For more on this important decision, please click here.

 

NLRB General Counsel Urges Reversal of Purple Communications Email Rule

The National Labor Relations Board’s office of the General Counsel is urging the Board to overrule its decision in Purple Communications, Inc., 361 NLRB 1050 (2014), which allowed employees to use employer email systems for NLRA Section 7 purposes (e.g., union organizing and protected concerted activity) during nonworking time.

On August 1, 2018, the Board invited briefs on whether the Board should adhere to, modify, or overrule Purple Communications, in connection with another case, Caesars Entertainment Corporation d/b/a Rio All-Suites Hotel and Casino, No. 28-CA-060841.

In its September 14, 2018, brief, the General Counsel’s office advised the Board to abandon Purple Communications and return to the Register Guard standard, which allowed employers to prohibit, in a nondiscriminatory manner, the use of their email systems. Register Guard, 351 NLRB 1110 (2007).

In support of its position, the General Counsel’s office relied on a “variety of legal and practical reasons.” First, it argued that Purple Communications contradicted decades of established precedent and “impermissibly created a right by employees to use employer-owned and -financed communication systems, even where employees possess a plethora of other means of communication.” The General Counsel’s office noted that the employees in Purple Communications had alternative methods of communication, including their personal cellphones.

Second, the General Counsel’s office raised First Amendment concerns, invoking the Supreme Court’s decision in Janus v. AFSCME Council 31, No. 16-1466 (June 27, 2018). According to the General Counsel’s brief, a presumptive right to use employer email systems for Section 7 purposes “raises First Amendment concerns because the Board, as a government entity, may not compel an employer to subsidize hostile speech by requiring the employer to pay for an email system to send, receive, and store speech with which it does not agree.”

Finally, the General Counsel’s office asserted the Purple Communications standard imposes significant burdens on employers, including lost productivity, threats to digital security, compromises to proprietary and confidential information, and increased costs of monitoring email systems. These burdens are unnecessary, because of other “easier and more efficient means for employees to communicate with one another,” such as smartphones, according to the brief.

In restoring the Register Guard standard, the General Counsel’s office recommended a limited exception in circumstances where an employer email system is the only means of communication. The General Counsel’s office noted such an exception could exist in “rare” workplaces with no access to face-to-face communication and no cellphone coverage. Personal email, text messaging, and social media, however, would constitute viable alternatives for employees to communicate for Section 7 purposes.

The Board’s invitation for briefs concerning Purple Communications remains open until October 5, 2018. The Board’s decision in Purple Communications also is on appeal before the Ninth Circuit.

Jackson Lewis is available to prepare amicus briefs to the NLRB on this very important issue. If you would like to file an amicus brief, please contact the Jackson Lewis attorney with whom you regularly work.

NLRB’s Proposed Rule Adopts Pre-Browning-Ferris Joint-Employer Standard

The National Labor Relations Board has announced that it will publish a “Notice of Proposed Rulemaking” in the Federal Register regarding its joint-employer standard. The notice will be published on Friday, September 14. The proposed rule will adopt the pre-Browning-Ferris standard for determining if two or more employers are joint employers of employees.

The “Notice of Proposed Rulemaking,” dated September 14, “provides that an employer may be found to be a joint-employer of another employer’s employees only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment and has done so in a manner that is not limited and routine. Indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint-employer relationship.”

Board Chairman John F. Ring and Board Members Marvin E. Kaplan and William J. Emanuel formed the majority in favor of the rule. Board member Lauren McFerran dissented. Ring, Kaplan, and Emanuel were appointed to the NLRB by President Donald Trump; McFerran is an Obama appointee.

A 60-day period for commenting on the proposed rule begins on September 14 and ends on November 13. Comments may be submitted electronically to www.regulations.gov or by mail or hand-delivery.

Jackson Lewis is available to assist your organization in preparing comments.

NLRB Invalidates Voluntary Severance Agreements, Orders Reinstatement and Full Back Pay

The National Labor Relations Board has upheld an Administrative Law Judge’s decision to invalidate 11 severance agreements that provided payments to employees laid off shortly after an election in violation of the National Labor Relations Act.  The 11 individuals were awarded full reinstatement and back pay. Terex, 366 N.L.R.B. No. 162 (Aug. 21, 2018). The Board found the factors set out in its decision in Independent Stave, 287 NLRB 740 (1987), weighed in favor of invalidating the severance agreements.

Thirteen permanently laid off employees in the employer’s paint department and welding and fabrication department were offered severance agreements that included severance pay to which they were not otherwise entitled. In exchange, the employees had to sign severance agreements containing broad release language, including that the employees would not pursue NLRB charges. Eleven signed.

Relying on Independent Stave,  the NLRB upheld the ALJ’s decision to invalidate the severance agreements finding that they were “part and parcel of the [company’s] effort, through plantwide threats and a mass layoff, to prevent any of its production employees from winning union representation.” Moreover, the NLRB found that the company “laid off the [employees] with the unlawful motive of defeating the union,” and therefore should not be permitted to “rely on the severance agreements, which at a minimum facilitated its unlawful conduct.”

Independent Stave directs the NLRB to examine four factors when determining whether to give effect to non-Board settlements relating to unfair labor practice allegations. The four factors include:

(1) whether the parties to the Board case have agreed to be bound, and the position taken by the General Counsel regarding settlement; (2) whether the settlement is reasonable in light of the violations alleged, the risks inherent in litigation, and the stage of litigation; (3) whether there has been any fraud, coercion, or duress by any party in reaching the settlement; and (4) whether the respondent has a history of violating the Act or has previously breached settlement agreements.

The ALJ and Board found that factors (1), (2), and (4) weighed in favor of invalidating the severance agreements.

In dissent, Member Marvin Kaplan sharply disagreed with the majority’s application of the Independent Stave factors. Kaplan relied heavily on the fact that the employer had no prior NLRA violations and that the employees voluntarily entered into the severance agreements and, therefore, were free to reject it.

As this decision demonstrates, it is crucial that employers consider the Independent Stave factors prior to entering into any settlement or severance agreements that may include the waiver or release of unfair labor practices. The Board is fully prepared to extend its reach into private severance agreements that may not meet the intent of the NLRA and invalidate those agreements even when they were voluntarily entered into by employees.

Will Filing A Class Action Continue To Be Protected Concerted Activity?

The National Labor Relations Board will reconsider whether an employer can discipline an employee for the act of filing a class action, which has long been held to be protected concerted activity under the National Labor Relations Act. Cordua Restaurants, Inc., 16-CA-161380 (Aug. 15, 2018) (Cordua II).

The Board, sua sponte, vacated its Decision and Order in Cordua Restaurants, Inc., 366 NLRB No. 72 (Apr. 26, 2018) (Cordua I). In that case, the NLRB found the employer had violated the Act when it fired a worker for filing a collective wage and hour lawsuit against the company. The decision was issued prior to the U.S. Supreme Court’s Epic Systems Corp. v. Lewis, 584 U.S. __, 138 S. Ct. 1612 (2018), in which the Court ruled, 5-4, that class action waivers in employment arbitration agreements do not violate federal law.

In Cordua I, the NLRB (Members Mark Gaston Pearce, Lauren McFerran, and Marvin Kaplan formed the majority) held there was no dispute that the filing of the collective wage and hour lawsuit constituted protected concerted activity. The employer defended the termination, maintaining the employee was fired not because of his protected concerted activity, but because he attempted to steal employee wage information from confidential company files and lying about it during investigative interviews. The Board rejected the employer’s defense, noting that requests by employees for information relevant to Section 7 activities are protected, citing Faurecia Exhaust Systems, 355 NLRB 621, 622 (2010). That is the case even if the information is protected. However, the protection is lost if the information is sought or obtained surreptitiously. Ridgely Mfg. Co., 207 NLRB 193, 197 (1973), enfd. 510 F.2d 185 (D.C. Cir. 1975).

In Cordua II, an unpublished decision, Board Chairman John Ring and Members Kaplan and William Emanuel voted to vacate Cordua I, sua sponte. The Board held that it wants to “reconsider the entire proceeding.” The Board’s action signals the majority may hold that an employer may discipline an employee for the act of filing a class action.

Pearce and McFerran dissented, noting that nothing in Epic Systems Corp. warranted reopening the case since that Supreme Court decision addressed “the question of whether an employer’s maintenance of an arbitration agreement barring employees from bringing a collective action violated the Act,” whereas, in the instant case, the Board found the employer violated the Act by terminating an employee in response to his filing of a collective wage-and-hour lawsuit against the employer. Pearce and McFerran noted that it is “well settled that the filing of such a lawsuit constitutes protected concerted activity.”

We will report any further developments. Please contact a Jackson Lewis attorney if you have any questions.

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