The U.S. House of Representatives has passed legislation to ratify the United States-Mexico-Canada Trade Agreement (USMCA) and create an unprecedented level of oversight over another country’s labor relations. If the bill becomes law, it could prompt even greater reforms to Mexico’s labor laws.

For at least 50 years, a company in Mexico could recognize a union and sign a contract with the union with little input or approval from workers. These agreements, referred to as “Protection Agreements,” often set employer-friendly contract terms before the company even hires workers at its worksite. With limited accountability, transparency, and no democratic elections, most unions in Mexico were accommodating to the needs of the companies. In this climate, foreign direct investment in Mexico skyrocketed, but employee wages remained relatively low. Unions were present in workplaces, but sometimes in name only. (For more, see our article, Mexico’s Overhaul of Federal Labor Laws: Updates, Timelines for Employers.)

As part of the USMCA, Mexico agreed to reform its labor laws. Under the terms of the USMCA, Mexico must implement new laws to protect workers’ rights to collectively bargain and democratically elect a union, among other major changes. The reforms were fully supported by Mexico’s president, Andrés Manuel López Obrador and the Morena Party, which controls Mexico’s congress. The expected changes likely will spur greater — and more confrontational — independent unionization than Mexico has experienced in decades.

Mexico quickly ratified the USMCA, and on May 1, 2019, it passed legislation to overhaul its federal labor laws that address the reforms required by 2023. The United States still has not ratified the USMCA. The U.S. House of Representatives, controlled by Democrats, sought ways to ensure Mexico would fully implement its promised labor law reform, and enforcement of Mexico’s labor reforms became the critical priority (and the cause of delay) to ratification.

House’s Proposed Legislation

Under the House bill, the United States will create an interagency labor committee chaired by the U.S. Trade Representative and the Secretary of Labor to monitor Mexico’s implementation of its labor reforms. Newly created “labor attachés” from the Department of Labor will be assigned to U.S. Embassies or U.S. Consulate offices across Mexico to assess Mexico’s implementation of its labor reforms.

The bill also establishes a hotline where any individual (from the U.S. or Mexico) can report a violation of Mexican workers’ right to collectively bargain or freely elect a union to the United States.

In addition, it creates certain benchmarks the United States will assess to determine whether Mexico has made sufficient efforts to implement labor reforms. Those benchmarks include:

  1. The amount of money Mexico provides for the creation of new labor courts and agencies tasked with enforcing the law;
  2. U.S. review of Mexico’s legal decisions addressing Mexico’s federal labor laws; and
  3. Whether Mexico has met its self-imposed deadlines for fully enacting labor reforms by May 1, 2023.While Mexico’s law provides for the prospect of more aggressive and independent unions, the laws also could provide employees the choice to become union-free for the first time. Companies seeking to maintain the flexibility necessary to respond to a changing global marketplace should evaluate their labor relations strategy and seek legal counsel on how to comply with Mexico’s new labor laws.
  4. Jackson Lewis is collaborating with its Mexican counterpart in its international alliance of labor and employment firms, L&E Global, to assist our clients in navigating this major change in the law. We will continue to provide updates as the legislation develops.
  5. If the committee determines that Mexico has not complied with its promised labor reforms, the U.S. Trade Representative could file a complaint with an independent international labor arbitration panel established under the USMCA to address Mexico’s labor compliance and temporarily increase duties on specific Mexican imports or permanently restrict certain Mexican imports until the violation is corrected.

Overruling Banner Estrella Medical Center, 362 NLRB 1108 (2015), the National Labor Relations Board (NLRB) has held that investigative confi­dentiality rules are lawful Category 1 rules under The Boeing Company, 365 NLRB No. 154 (2017), where by their terms the rules apply for the duration of any investi­gation. Apogee Retail LLC d/b/a Unique Thrift Store, 368 NLRB No. 144 (2019). Where a rule does not, on its face, apply for the duration of any investigation, a determination is made whether one or more legitimate justifications exist for requiring confidentiality even after an investigation is over. If legitimate justifications exist, a determination is then made whether those justifications outweigh the effect of requiring post-investigation confidentiality on employees’ exercise of their Section 7 rights.

Watch our website for a more extensive analysis of the decision.

Overruling Purple Communications, the National Labor Relations Board (NLRB) has held that employees do not have a right under the National Labor Relations Act (NLRA) to use employer equipment, including email and other IT systems, for Section 7 purposes. Caesars Entertainment d/b/a/ Rio All-Suites Hotel and Casino, 368 NLRB No. 143 (Dec. 17, 2019).

The NLRB also decided that it would recognize an exception in “those rare cases where an employer’s email system furnishes the only reasonable means for employees to communicate with one another.”

In addition, the NLRB noted “there is no Section 7 right to use employer-owned televisions, bulletin boards, copy machines, telephones, or public-address systems.”

Watch our website for a more extensive analysis of the decision.

The National Labor Relations Board has held that an employer has no obligation to continue deducting union dues from employee paychecks pursuant to a dues checkoff provision in a collective bargaining agreement (CBA) after the CBA expires. Valley Hospital Medical Center, 368 NLRB No. 139 (Dec. 16, 2019). Chairman John Ring and Members William Emanuel and Marvin Kaplan were in the majority. Member Lauren McFerran dissented.

The NLRB overruled Lincoln Lutheran of Racine, 362 NLRB 1655 (2015), in which the Board held an employer continues to have an obligation to deduct union dues from employee paychecks despite the expiration of a CBA containing a dues checkoff provision on which the deductions were based.

Background

Most CBAs contain a dues checkoff provision obligating the employer to deduct union dues from employee paychecks and remit those funds to the union. Whether checkoff provisions were part of the “status quo” that had to be maintained after a contract expired or whether the obligation expired with the contract was an open question until 1962. In 1962, the Board, for the first time, in Bethlehem Steel, 136 NLRB 1500 (1962), held that a dues checkoff provision was not part of the “status quo,” and the obligation to deduct dues expired when the contract expired. This, of course, provided an employer significant leverage to engage in negotiations for a new contract. If the contract expired, the employer could exercise its right to cease deducting and remitting dues to the union, eliminating a union revenue stream.

In 2015, the Board, comprised of members appointed by President Barack Obama, overruled Bethlehem Steel in Lincoln Lutheran of Racine, effectively altering the balance of bargaining power that existed for more than 50 years. Lincoln Lutheran held that dues checkoff was part of the “status quo” that must be maintained after contract expiration (like wages and benefits). The Obama Board viewed the promise to deduct dues as a convenience for employees, akin to deductions for charitable contributions or deposits into savings accounts. Therefore, checkoff was to be treated as a term and condition of employment that could not be altered until the employer met its obligation to bargain with the union to an impasse or to a new contract. The practical effect of the decision was that it became easier for a union to play “hard ball” in bargaining since the employer no longer had the ability to cut off its revenue.

Valley Hospital Medical Center

In Valley Hospital Medical Center, the Board returned to the 1962 standard, expressly overruling Lincoln Lutheran and holding that dues checkoff does not survive contract expiration as part of the status quo. Unless there is a contract in force requiring it do so, an employer may cease deducting dues from employee paychecks, the Board ruled. This is true whether the checkoff provision was part of a contract that included union security or whether it was a stand-alone provision, not connected to union security (common in right to work states).

The practical effect of the decision on the balance of power between unions and employers is clear. Comparing dues checkoff provisions to no-strike and no-lockout provisions which also expire when the CBA expires, the Board stated:

Accordingly, as with similarly excepted contractual no-strike and no-lockout provisions, an employer is free upon contract expiration to use dues checkoff cessation as an economic weapon in bargaining without interference from the Board.

(Emphasis added.)

 

 

 

 

 

 

 

 

The National Labor Relations Board has held that an employer’s obligation to deduct union dues ends when the collective bargaining agreement containing the checkoff provision expires. Valley Hospital Medical Center, Inc. d/b/a Valley Hospital Medical Center, 368 NLRB No. 139 (Dec. 16, 2019).

The NLRB overruled Lincoln Lutheran of Racine, 362 NLRB 1655 (2015), in which the Board held an employer continues to have an obligation to deduct union dues from employee paychecks despite the expiration of a collective bargaining agreement containing a dues check-off provision on which the deductions were based.

Watch our website for a more extensive analysis of the decision.

 

The NLRB has announced long-awaited major modifications to its controversial 2014 election rule. The draft rule will be published on December 18 and will go into effect 120 days after that, on April 16, 2020. 

Critics of the so-called Quickie Election Rule are bound to view this as good news. The Board characterizes this draft as important to allow parties adequate time to prepare and to avoid unnecessary litigation.

Among the changes under the proposed rule are:

– Pre-Election Hearing Date: Moved from eight days from service of papers by the NLRB on the employer to 14 business days.

– Statement of Position Due Date: Currently, non-petitioning parties have seven days from service of papers to file this comprehensive document. The amended rule moves that to eight business days.

– A New Responsive Statement of Position: For the first time, petitioners will have to respond to employers’ Statements of Position, asserting their position with respect to issues raised. This new petitioner statement of position will be due at noon three business days before the scheduled hearing.

– Unit Scope and Voter Eligibility to be Determined Pre-Election: The Board will return to its earlier standard, holding hearings prior to an election to resolve disputes concerning unit scope and voter eligibility (including issues of supervisory status) before an election is directed.

– Restoration of Post-Hearing Brief: Current rules largely dispense with briefs following a pre-election hearing. The amended rule would restore the right to file a brief within five business days of the hearing, with the possibility of one extension.

– Elimination of the “Quickie” Election: The amended rule would set the standard for scheduling an election as no less than 20 business days following the direction of election. Currently, elections are sometimes held in less than two calendar weeks following the filing of a petition.

– Impounding Ballots upon Filing a Request for Review: To further address resolution of unit and eligibility issues before votes are counted, upon a timely appeal of a regional director’s decision, a scheduled election will go forward, but the ballots will be impounded pending resolution of the review.

In addition, among other changes, the amended rule will provide more time before employers must post and distribute the “Notice of Petition” and deliver final voter eligibility lists.

These changes are positive for the employer community and will give employers greater certainty regarding voter eligibility and unit composition.

We will provide a more in-depth review of the proposed rule soon. Please contact us with any questions.

 

The National Labor Relations Board (NLRB) has ruled an employee’s effort to decertify his union could proceed, despite a previous agreement between the employer and union extending the time during which decertification petitions are barred. Pinnacle Foods, 368 NLRB No. 97 (Oct. 21, 2019).  

An employee filed a petition to decertify his union after the expiration of the “certification year,” the period during which the parties cannot challenge a union’s majority status. However, as part of a settlement of pending unfair labor practice charges, the employer and union had agreed (without the employee-petitioner’s consent) to extend the certification year by seven months. An NLRB regional office dismissed the decertification petition because it was filed during the seven-month extension period.

Reversing the dismissal, the NLRB allowed the decertification process to continue. Citing TruServ Corp., 349 NLRB 227 (2007), the Board held that where there is no finding of a violation of the National Labor Relations Act or an admission by the employer of a violation, there is no basis for dismissing a petition “based on the settlement of alleged but unproven unfair labor practices.” Here, the settlement agreement contained a non-admission clause and, as a result, there was no “basis for finding that the alleged unfair labor practices tainted the petition.”

The NLRB also held that “the processing of the petition … may not properly be held in abeyance simply because the Employer and the Union have agreed to an extension of the certification year …. [A] decertification petitioner cannot ‘be bound to a settlement by others that has the effect of waiving the petitioner’s right under the Act to have the decertification petition processed.’”

Please contact a Jackson Lewis attorney with any questions about this case or the NLRB.

 

Unpaid interns are not “employees” as defined by the National Labor Relations Act (NLRA), and employee advocacy on their behalf is not protected concerted activity under Section 7 of the NLRA, the National Labor Relations Board (NLRB) has ruled. Amnesty International of the USA, Inc., 368 NLRB No. 112 (Nov. 12, 2019).

The NLRB also concluded the employer’s expression of frustration and disappointment with its employees’ actions on behalf of the interns was not an unlawful implied threat.

Background

Amnesty International is a nonprofit advocacy organization that typically hires 15 unpaid interns to volunteer each academic semester.

In February 2018, a group of interns, assisted by an employee, circulated a petition requesting the organization pay them for their volunteer work. Nearly all the organization’s employees signed the petition. At the same time, the organization’s executive team was considering a paid intern program with only three interns.

On April 2, 2018, unaware of the unpaid intern’s petition, the Executive Director of the organization shared the organization’s plans for a paid internship program during an employee meeting. The unpaid interns sent their petition to the Executive Director the next day.

On April 9, 2018, the Executive Director held separate meetings with the current interns and the employees who signed the petition to announce plans to implement the paid internships that fall. The employees reacted negatively and expressed concern about the reduced number of interns. The Executive Director stated that she was disappointed the employees did not take advantage of the organization’s open-door policy to discuss the matter with management before using a petition. The Executive Director also stated that she viewed the petition as adversarial and felt it threatened litigation.

On May 9, 2018, the employee who assisted the unpaid interns with their petition met privately with the Executive Director. The employee recorded the conversation. The Executive Director stated she was “very embarrassed” that her employees felt unable to approach her about the issue and “disappointed that she did not ‘have the kind of relationship with staff’ that she thought she had.” The Executive Director said that it would have been “really helpful” to know about the intern’s interest in paid internships in advance and that the employee could have told the interns to “give me a heads-up to let me know it’s coming.” The Executive Director indicated that a petition “sets off a more adversarial relationship” and is not effective when the demand could “be met without applying that pressure.” She further stated, “you could try talking to us before you do another petition.”

Administrative Law Judge Decision

After a trial, ALJ Michael A. Rosas held that the employees had engaged in protected activity under Section 7 of the NLRA by joining the interns’ petition. He also determined the organization violated Section 8(a)(1) of the NLRA by: (1) instructing employees to make complaints orally before making them in writing; (2) threatening unspecified reprisals because of the employees’ protected concerted activity; (3) equating protected concerted activity with disloyalty; and (4) requesting employees to report to management other employees who are engaging in protected concerted activity. He dismissed the allegation that the Executive Director’s statements “impliedly threatened to increase employees’ workloads as a result of the petition.”

NLRB Decision

The NLRB reversed the ALJ’s conclusions and dismissed the complaint.

Holding that “[a]ctivity advocating only for nonemployees is not for ‘other mutual aid or protection’ within the meaning of Section 7,” the NLRB reasoned that the unpaid interns were not employees because they did not “receive or anticipate any economic compensation from [Amnesty International].”

The NLRB also held that the Executive Director’s statements did not coerce the employees. It concluded the Executive Director’s statements fell within Section 8(c) of the NLRA, which permits employers to express views, arguments, or opinions that are not accompanied by coercion (e.g., threats or promises of benefits). Considering the timing of the petition and the employees’ reaction, the NLRB determined that the Executive Director’s “opinions about how to handle petitions in the future to be, at most, suggestions, rather than commands or even direct requests.” Her statements “clearly expressed her frustration that, as a result of the lack of communication, management’s attempt to provide a positive response to the … petition had instead resulted in a backlash from employees.” However, the comments did not rise to the level of conveying anger, threaten reprisal, or accuse the employees of disloyalty, the NLRB ruled. Therefore, it concluded they did not violate Section 8(a)(1) of the NLRA.

***

The NLRB has been signaling a hesitancy to impose obligations on employers outside the traditional employment context. It has proposed exempting paid undergraduate and graduate students from the NLRA, for example. Over the last several years, as employers are forced by the low employment rate to increase their use of nonemployees, unions have increased their efforts to expand the NLRA’s reach by organizing non-traditional workers, including temporary campaign workers and graduate students.

Please contact a Jackson Lewis attorney with any questions about this case or the NLRB.

The National Labor Relations Board has issued its “Ethics Recusal Report,” which announces several process changes that may add new wrinkles to practice before the Board.

Much of the Report, dated November 19, 2019, is minutiae and insider information regarding existing methods of identifying ethical conflicts.

In 2018, the NLRB faced a high-profile ethical crisis. The Board vacated a significant decision, Hy-Brand Industrial Contractors, Ltd., 366 NLRB No. 93 (2018), in which it overruled Browning-Ferris, 362 NLRB No. 186 (2015), and reinstated the previous, more employer-friendly, test for determining joint employer status. The Board vacated the decision after a finding by the NLRB’s Designated Agency Ethics Official that NLRB member William Emanuel should have been disqualified from participating in the proceeding.  Although the circumstances were uncommon, and initially cleared Board conflict check mechanisms, the controversy was an embarrassment for the Board. Chairman John Ring ordered a thorough review, resulting in issuance of the Report.

The Report details little-known Board processes, such as the maintenance of “recusal lists” cataloguing companies whose cases are subject to recusal for each Board member. The NLRB’s Executive Secretary examines these non-published lists before assigning every case. To promote transparency, the Board shortly will issue a protocol requiring public disclosure of these lists. Time will tell whether publication of the lists will encourage increased recusal motions and related litigation.

Recommendations that a member recuse him or herself are not self-enforcing. Individual Board members decide whether to recuse themselves from a particular case. In Ring’s view, this cannot be changed. The NLRB is developing consistent procedures and protocols for handling recusal motions.

The Board also is preparing a rule that all parties must file (and subsequently update) an Organizational Disclosure Statement (ODS) at the outset of a matter. These filings will be used to improve the reliability of the recusal lists. The new rule (based on federal civil litigation rules), at a minimum, will require employers to identify corporate parent entities and all publicly-held corporations owning at least 10 percent of its stock. Unions will be required to identify their parent or subsidiary entities.

While the form of the (ODS) has not been made public, it is probable the Statement must be filed promptly. In representation cases (those generally involving unions attempting to represent an employer’s employees), that likely means filing at the same time the employer’s “Statement of Position” is filed – within seven days after the union has filed its representation petition at the NLRB.

The Report does not address ODS enforcement mechanisms or the penalty for non-compliance. Currently, NLRB procedure requests vague pro forma corporate information to establish its jurisdiction to adjudicate a particular case. Accurately reporting data on interrelated companies may require participation by the employer’s corporate legal department. Concerns include the potential for increased allegations of joint employer status or expanded unfair labor practice exposure to related corporate entities.

In the Report, the Chairman also ordered improved ethics training, including a checklist of uncommon conflict situations developed by the agency’s Designated Agency Ethics Official.

We will revisit these issues and new rules and requirements after they are issued. If you have any questions about this article or the NLRB, please contact a Jackson Lewis attorney.

An employee who paid “fair share” union fees under protest is not entitled to damages to refund any of the money he paid the union, the U.S. Court of Appeals for the Seventh Circuit has held. Janus v. Am. Fed’n of State, No. 19-1553 (Nov. 4, 2019). The Court explained fair share fees were “an exchange of money for services” that was permitted under the law in effect at the time they were deducted from the employee.

The Court also applied its reasoning to Mooney v. Ill. Educ. Ass’n, No. 19-1774 (Nov. 5, 2019), a case in which the employee sought restitution, rather than damages. It concluded, in substance, that claim also was for damages.

Background

Mark Janus was a Child-Support Specialist at the Illinois Department of Healthcare and Family Services. American Federation of State, County and Municipal Employees, Council 31, AFSCME was the exclusive representative of Janus’s employee unit. Janus exercised his right not to join the union and objected to the $44.58 in fair share fees that was deducted from his paycheck each month.

Janus brought a case arguing that the National Labor Relations Act’s compulsory fair share scheme violated the First Amendment and that the Supreme Court’s Abood v. Detroit Board of Educ., 431 U.S. 209 (1977), should be overturned. The Supreme Court agreed and overruled Abood. Janus v. AFSCME, Council 31, 138 S. Ct. 2448 (2018). In Abood, the Supreme Court upheld a Michigan law authorizing public sector unions and government employers to use agency-shop agreements (which allowed charging employees a fee for union representation even though they objected to becoming union members). The high court in 2018 held these “fair share fees” were constitutional “insofar as [they] are applied to collective-bargaining, contract administration, and grievance-adjustment purposes.” (For more on that decision, see our article, Supreme Court Rules Unconstitutional Mandatory Fees Imposed on Non-Union, Public Sector Employees.)

7th Circuit Decision

Janus followed up on the Supreme Court’s 2018 decision with a request for damages from AFSCME pursuant to 42 U.S.C. § 1983. Section 1983 supports a civil claim against “every person who, under color of any statute … of any State … subjects, or causes to be subjected, any citizen of the United States … to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws.” The District Court granted summary judgment to AFSCME and the Seventh Circuit upheld its decision.

The Seventh Circuit Court considered several issues in reaching its conclusion, including whether the Supreme Court’s Janus decision was retroactive, if the requirements under § 1983 were met, and whether AFSCME had a good-faith defense. The Court concluded that § 1983 was satisfied, finding AFSCME was a “person” that could be sued and that it acted under the color of state law. In addition, the Circuit Court explained that the Supreme Court did not specify whether its decision was retroactive, noting that retroactivity “poses some knotty problems.” Ultimately, the Circuit Court decided to assume retroactivity “for the sake of argument.”

Finally, the Court analyzed “to what remedy or remedies” was Janus entitled. It clarified the retroactive application was not determinative of what, if any, remedy could be obtained. The Court explained that the Supreme Court has acknowledged the retroactive application of a new rule of law does not foreclose the opportunity to raise “reliance interests entitled to consideration in determining the nature of the remedy that must be provided.” Accordingly, the Court considered whether AFSCME was entitled to a good-faith defense to the relief sought by Janus.

The Seventh Circuit, joining its sister circuits, concluded there was a good-faith defense in § 1983 actions when the defendant reasonably relied on established law. The Court held AFSCME had a legal right to receive and spend fair share fees collected from nonmembers if it complied with state law and Abood and it did not demonstrate bad faith when it followed these rules.

Implications

This decision demonstrates the current trend on the fair share fees damages issue. According to the Seventh Circuit, every district court that has considered the question whether there is a good-faith defense to liability for payments collected prior to the Supreme Court’s decision overruling Abood has answered affirmatively.

Please contact a Jackson Lewis attorney with any questions about this case.