NLRB Members Intend to Revisit Applicability of ‘Contract Coverage’ Standard in Unilateral Change Cases

How the NLRB analyzes defenses to unilateral change unfair labor practice charges may be in for a substantial revision.

National Labor Relations Board (NLRB) Chairman John Ring and Member Marvin Kaplan have signaled their interest in reviewing the law in this area. E.I. du Pont de Nemours & Co., 368 NLRB No. 48 (Sept. 4, 2019). In footnote 13 of the decision, they expressed their intention to revisit the applicability of the “contract coverage” defense in a future appropriate unilateral change case.

Under the National Labor Relations Act (NLRA), employers have a duty to bargain in good faith with the union that represents its employees about mandatory subjects of bargaining (e.g., wages, hours, and other terms and conditions of employment). An employer’s unilateral change to a mandatory subject of bargaining without first offering to bargain with the union is a violation of the NLRA, unless the employer has a valid defense, such as the union’s waiver of the right to bargain.

An employer has a difficult burden to establish a waiver defense; it must prove the union clearly and unmistakably waived its right to bargain over the topic. This can be shown through contract language, bargaining history, and/or past practice. An employer must show the parties “unequivocally and specifically express[ed] their mutual intention to permit unilateral employer action with respect to a particular employment term, notwithstanding the statutory duty to bargain that would otherwise apply.” Provena St. Joseph Med. Ctr., 350 NLRB 808, 811 (2011). Under this standard, the Board narrowly construes waivers and has been hesitant to imply waivers not expressly mentioned in the collective bargaining agreement (CBA).

The Board in Provena applied the “clear and unmistakable waiver” standard in analyzing the employer’s defense. Then-Chairman Robert Battista dissented, writing that he would have applied a less restrictive “contract coverage” standard to the case. He explained:

Under this [contract coverage] test where there is a contract clause that is relevant to the dispute, it can reasonably be said that the parties have bargained about the subject and have reached some accord. Thus, there has been no refusal to bargain. In sum, the issue is not whether the union has waived its right to bargain. The issue is whether the union and the employer have bargained concerning the relevant subject matter. If so, the Board and the courts should honor the fruit of that bargaining.

Where the contract coverage defense is asserted in response to a unilateral change allegation, the employer would claim the change was allowed by a clause or clauses in the CBA. If the union disagreed, it would be expected to file a grievance alleging the clause or clauses did not permit the unilateral change and that the employer’s actions violated the CBA. Through the grievance process, an arbitrator would apply normal principles of contract interpretation to decide whether the contract clause or clauses were relevant to the dispute. If they are found relevant, the arbitrator would determine if the employer’s change violated the CBA.

The contract coverage defense has been adopted by some U.S. Courts of Appeal, including the D.C., First, and Seventh Circuits. If the defense is adopted by the NLRB, employers will have an easier burden to defend against unilateral change allegations.

We will report any further developments. Please contact a Jackson Lewis attorney if you have any questions about this issue or the NLRB.

Employers Take Note: Americans’ Approval of Unions Continues to Grow

According to a recent Gallup poll, almost two-thirds of Americans approve of labor unions.

After reaching an all-time low of 48% in 2009, approval of labor unions has increased steadily to 64%. This increase crosses political party lines. According to the Gallup poll, 82% of Democrats approve of unions. Although only 45% of Republicans approve of unions, this represents a significant increase from only 29% in 2009. Approval among Independents also has grown 17% since 2009, to 61%.

According to Gallup, unions have enjoyed higher approval ratings only twice since 1970: in 1999 and 2003. Union leaders partially credit highly publicized strikes and walkouts for the rise in support, and they have pledged to organize more aggressively to capitalize on the growing popularity.

As public support for unions grows, it is more important than ever for employers to educate supervisors about how to recognize early warning signs and lawfully respond to organizing by explaining what union representation may mean for employees and their families. Jackson Lewis attorneys are available to work with employers to provide legal advice on these issues, and on how employers can create an environment where employees feel well-treated and see no need for union representation.

 

NLRB Members Lean Toward Possible Easing of Restrictions on Off-Duty Employee Access Rules

Two of the four members of the National Labor Relations Board (NLRB) have indicated they are willing to rethink a key element of the Board’s more-than-40-year-old precedent regarding employers’ off-duty employee access rules under the National Labor Relations Act (NLRA). Southern Bakeries, 368 NLRB No. 59 (Aug. 28, 2019).

Members William Emanuel and Marvin Kaplan, both nominated by President Donald Trump, wrote in a footnote in Southern Bakeries that they were prepared to “reconsider … in a future appropriate case” the “third prong” of the test in Tri-County Medical Center, 222 NLRB 1089 (1976), for determining the validity of employer off-duty employees access rules.

Tri-County

Under Tri-County, an employer’s rule prohibiting access by off-duty employees is valid only if three conditions are met: “it (1) limits access solely with respect to the interior of the plant and other working areas; (2) is clearly disseminated to all employees; and (3) applies to off-duty employees seeking access to the plant for any purpose and not just to those employees engaging in union activity.” . The third prong of the test has proven to be vexing for employers because it does not even permit an employer to maintain a rule that allows an employee to return to the workplace for innocuous reasons, such as to pick up a paycheck.

NLRB General Counsel Memo

Among other responsibilities, the NLRB hears appeals of decisions made by administrative law judges in unfair labor practices cases. In connection with their desire to review the Tri-County test, Members Emanuel and Kaplan will find a willing ally in NLRB General Counsel Peter Robb. The General Counsel decides which unfair labor practice charges to prosecute and, therefore, to shepherd through the NLRB processes to the Board. In a memorandum issued on December 1, 2017, Robb listed the types of cases he would like to present to the Board with the goal of convincing the NLRB to reverse or modify current law (“to present [to the Board] an alternative analysis” to the existing one). NLRB Memorandum GC 18-02 (“Mandatory Submissions to Advice”). Among them were cases arising under Tri-County.

If you have any questions about Southern Bakeries or the NLRB, please contact a Jackson Lewis attorney.

Union’s Goal: 100,000 New Members by 2024

UNITE HERE hopes to increase its membership by one-third, to 400,000 members, by 2024, according to Bloomberg Law.

UNITE HERE represents employees in the hotel, gaming, food service, airport, textile, manufacturing, distribution, laundry, transport, and other industries. With approximately 300,000 members and a well-publicized history of strikes and demonstrations, it is widely recognized as one of the most aggressive and combative unions in the country.

Although such an increase in membership is ambitious, UNITE HERE has met similar goals in the past. It announced at the union’s 2014 constitutional convention that it would add 50,000 employees by its 2019 convention. UNITE HERE added 62,000 employees during that five-year period.

UNITE HERE stated it would increase focus on southern states with traditionally lower unionization rates in order to reach its 100,000-member goal. It also pledged to support more members in elections for political office.

As UNITE HERE and other unions continue to gain political strength and organize aggressively throughout the country, it is increasingly important for employers to educate supervisors about their rights and responsibilities in response to organizing. Jackson Lewis attorneys are available to advise employers in such legal matters, and on how employers can create an environment where employees feel well-treated and see no need for union representation.

 

 

NLRB Issues Proposed Rules To Modify Portions Of Its Election Procedures

The National Labor Relations Board has issued a proposed rule to modify three aspects of its election procedures.  According to the board’s announcement, the Notice of Proposed Rulemaking (NPRM), which will be published in the Federal Register on Monday and be subject to a comment period, would affect the Board’s blocking charge rule, voluntary recognition bar and collective-bargaining relationships in the construction industry:

  • Blocking Charge Policy: The NPRM proposes replacing the current blocking charge policy with a vote-and-impound procedure. Elections would no longer be blocked by pending unfair labor practice charges, but the ballots would be impounded until the charges are resolved.
  • Voluntary Recognition Bar: The NPRM proposes returning to the rule of Dana Corp., 351 NLRB 434 (2007). For voluntary recognition under Section 9(a) of the Act to bar a subsequent representation petition—and for a post-recognition collective-bargaining agreement to have contract-bar effect—unit employees must receive notice that voluntary recognition has been granted and a 45-day open period within which to file an election petition.
  • Section 9(a) Recognition in the Construction Industry: The NPRM proposes that in the construction industry, where bargaining relationships established under Section 8(f) cannot bar petitions for a Board election, proof of a Section 9(a) relationship will require positive evidence of majority employee support and cannot be based on contract language alone, overruling Staunton Fuel, 335 NLRB 717 (2001).

For more information, see our article, Representation-Case Procedures, Students as Employees, Access to Private Property on NLRB Rulemaking Agenda. Jackson Lewis is preparing a more extensive analysis of the proposed rule, which will appear on our website shortly.

 

U.S. House of Representatives Passes $49 Billion Bill to Revive Underfunded Pension Plans

In an effort to save pension plans from insolvency, the U.S. House of Representatives has passed the Rehabilitation for Multiemployer Pensions Act of 2019 (H.R. 397).

The Act would allow the federal government to make grants and loans to multiemployer pension plans that are insolvent or facing insolvency. To accomplish its purpose, the Act proposes to establish the Pension Rehabilitation Administration, an agency within the Department of Treasury that would be authorized to issue bonds to finance loans to the insolvent pension plans. The Congressional Budget Office estimates that if H.R. 397 becomes law, the Act would cost $48.5 billion in the next 10 years. A similar version has been introduced in the Senate, but that bill has not progressed beyond introduction.

Approximately 10 million people participate in multiemployer pension funds. Between 10% and 15% of multiemployer pension fund participants are in funds that are projected to become insolvent within the next 20 years, according to the Congressional Research Service. Supporters of the Act consider it necessary to prevent a loss of benefits to retirees. Opponents believe the Act is a waste of money because, although it may temporarily infuse money into struggling pension funds, it does not include provisions requiring the structural changes necessary to solve the problems that led to insolvency in the first place.

Please contact a Jackson Lewis attorney with any questions about the bill.

 

 

NLRB Reminds Employers: ‘Fighting’ During Union Organizing May Be Protected Activity

The National Labor Relations Board has reminded employers that they must tolerate a certain degree of heated discourse during a union organizing campaign before discipline or termination may be warranted.

On June 27, 2019, the Board, in Pacific Green Trucking, Inc., 368 NLRB No. 14, ruled that a union organizer was unlawfully terminated for his union support and organizing activity, not, as the company asserted, for “fighting” with coworkers.

Although the employment “at will” doctrine generally allows employers to terminate an employee (and allows an employee to quit) for any reason, or even for no reason at all, the National Labor Relations Act protects most private-sector employees from discrimination or retaliation for engaging in protected concerted activity under Section 7 of the NLRA, such as engaging in union organizing.

The employee allegedly was spearheading an organizing effort. He alleged that he was interrogated, treated less favorably, and ultimately terminated because of his union activity, in violation of the NLRA.

The Board invoked its familiar Wright Line doctrine to examine whether the employer’s legitimate, non-discriminatory reason for terminating the union organizer (“fighting”) was a mere pretext for anti-union animus.

After the Board found that the company’s manager knew of the employee’s union organizing activity, it inferred anti-union animus from the manager’s statement that he “knew [the employee] was with the Union” and that the employee “shouldn’t do that” because the company “was giving [the employee] work” – comments the Board considered an implicit threat of job loss. It also found the statement to constitute an unlawful interrogation because it implicitly called for the employee to confirm or deny the statement.

The Board also found the manager’s reference to “fighting” an unlawful “euphemism for discussing or debating the union,” citing several other Board cases referring to similar euphemisms for union activity, including referring to an employee as a “problem person” or an “instigator.”

Thus, absent specific evidence of physical violence, and considering what it already had found to be unlawfully threatening and coercive statements toward the employee, the Board found the employee’s termination unlawful. The Board found further support for its decision in the fact that the company did not contest the employee’s unemployment claim. This suggested to the Board that the company did not sincerely believe the employee was terminated for cause, or that he had quit.

This case provides valuable lessons for employers experiencing union organizing, including:

  • A statement by a manager to an employee that the manager “knows” the employee supports the union may be unlawful interrogation, because the statement implicitly call for the employee to confirm or deny it;
  • Enforcement of workplace civility rules and policies against “fighting” with coworkers, without reliable evidence of actual (or credible threats of) physical violence, may be found to be evidence of unlawful “code” for anti-union discrimination;
  • Failure to oppose an employee’s unemployment compensation claim may give rise to an inference by the NLRB that the employee did not quit or was not terminated “for cause.”

Regardless of an employee’s “at-will” employment status, employers must be cautious before disciplining or terminating an employee during any stage of a union organizing effort. Consult your experienced labor and employment attorney for guidance.

Labor Board: Employee Conduct in Response to Employer’s Unlawful Actions Not Grounds for Discharge

An employer violated the National Labor Relations Act (NLRA) when it discharged an employee who refused to participate in a performance evaluation scheduled for discriminatory reasons, the National Labor Relations Board (NLRB) has ruled, reversing the decision of an Administrative Law Judge (ALJ). United States Postal Service, 367 NLRB No. 142 (June 4, 2019).

In this case, an employee was reinstated by a labor arbitrator who ruled in his favor on a grievance challenging his termination. On the employee’s first day back at work, which was still within the employee’s 90-day probationary period, his manager told him he would be given a performance evaluation. The employer did not have a prior practice of doing so for probationary employees.

The supervisor told the employee his “work quality” and “dependability” were “unacceptable.” The employee argued with the supervisor. The employee eventually stated he “could not take this” and left. The next day, the employer discharged the employee for “improper conduct” at his evaluation.

The employee filed an unfair labor practice charge. After a trial, an ALJ found the employer had violated the NLRA because it discriminatorily had given the employee the performance evaluation in retaliation for the employee’s grievance. Nonetheless, the ALJ recommended dismissal of the employee’s charge. The ALJ reasoned that the employee could not refuse to cooperate in the evaluation, and none of the evidence indicated the employer’s assessment of the employee’s performance was discriminatory.

The NLRB’s General Counsel appealed the decision to the NLRB, and the NLRB reversed the ALJ. The NLRB noted that the employer did not file exceptions (appeal) the ALJ’s finding that conducting the performance evaluation was unlawful. The NLRB found the employee “would not have been at that meeting but for [the employer]’s unlawful actions—specifically ordering the evaluation as retaliation for [the employee]’s protected activity.” Although the NLRB acknowledged “that there could be circumstances where an employee’s misconduct at an unlawful meeting could be so extreme as to [justify the termination],” it determined the facts in this case fell short of that standard.

The NLRB’s decision re-confirms that employee conduct — even if otherwise inappropriate (up to a point) — cannot result in discipline if it arose in response to the employer’s unlawful conduct. Employers should carefully evaluate all of the circumstances leading to an employee’s alleged insubordination or inappropriate conduct before deciding whether to discipline the employee.

Ride-Hail Drivers Are Independent Contractors, Not Employees, NLRB GC Concludes

UberX and UberBLACK drivers are independent contractors, not employees, of Uber, the General Counsel (GC) of the National Labor Relations Board (NLRB) has determined in a recently released Advice Memorandum.

The drivers therefore are not employees within the meaning of the National Labor Relations Act (NLRA) and are not eligible for NLRB-certified union representation or the protections of the NLRA.

The Memorandum applies the NLRB’s decision in SuperShuttle DFW, Inc., 367 NLRB No. 75 (Jan. 25, 2019), in which the NLRB overruled a 2014 Board decision that had made it harder to prove an individual was an independent contractor. In SuperShuttle, the Board held that, in deciding whether an individual is an independent contractor or an employee, it will return to focusing on the extent to which the arrangement between the ostensible employer and the alleged employee provided an “entrepreneurial opportunity” to the individual, a factor downplayed in the 2014 decision.

NLRA Definition of Employee

Section 2(3) of the NLRA defines an “employee.” That definition expressly excludes “independent contractors.”

To determine whether an individual is an employee or independent contractor, the Board looks to the 10-factor common law test of agency in the Restatement (Second) of Agency. No single factor is controlling, and the chief focus is on the individual’s risks and opportunities from entrepreneurial activity. In the ride-hail and taxicab industry the NLRB gives significant weight to two factors: (1) the degree of control the company has over the amount and manner of the work performed; and (2) the relationship between the individual’s compensation and the revenue collected.

Control of the Work

The GC found that UberX drivers had significant entrepreneurial opportunities, because drivers had “near complete control of their cars and work schedules” and log-in (i.e., work) location, and they were completely free to work for competitors at any time. Drivers had complete discretion to work or not, any day or any time, as long as they provided at least one ride per month. Drivers may increase their earnings by working during periods of high demand, when Uber triggered “surge” pricing, logging in in certain areas and at certain times and accepting a minimum number of riders when Uber provided incentives to do so.

The GC noted that Uber exercised little control over the drivers. Uber requires certain minimum service standards, such as the cleanliness, condition, and comfort of cars, professional appearance, cordial behavior, safe driving, and efficient navigation. However, the GC noted that none of the standards demonstrated significant control by Uber or affected the drivers’ entrepreneurial opportunities.

Method of Payment

The GC explained that the method of payment for individuals is important because it can influence the incentive the company has to control the individual’s work. If the individual is paid by a flat fee, the company has little incentive to control the work because its cost and profit are not affected by how the work is performed. However, if the individual is compensated by commission, the company has a distinct incentive to control the work to increase the amount of commission as it shares in the increased fees. The GC stressed that the actual control exercised by the company is more important than the incentive for control a particular manner of pay may provide.

While noting Uber keeps a portion of the fee received for each ride, and it, therefore, has an incentive to control the drivers’ work, Uber actually exercised minimum control over the work of the drivers. Consequently, although the manner of payment suggests the drivers are employees, the limited control Uber exercised over the work of the drivers negated the importance of the incentive the manner of payment created.

Other Factors Favoring Independent Contractor Status

The GC discussed three additional factors that militated toward a finding of independent contractor status. First, the drivers were in control of “the principal instrumentality of the work” — the car — and they paid the chief operating expenses associated with the work: fueling, cleaning, and maintaining the vehicle. Second, the drivers received no supervision of their work from Uber. Finally, both the drivers and Uber understood their relationship was one of independent contractor, reflected by the facts that Uber issued the drivers with a Form 1099, not a Form W-2, and did not provide them any fringe benefits.

Factors Favoring Employee Status

The GC noted two factors that favored finding employee status: (1) the drivers needed no special skills to perform their work; and (2) the drivers were not working in a distinct business, but were working to fulfil Uber’s business purpose. However, the GC concluded those factors did not overcome the strong facts favoring independent contractor status.

UberBLACK

The GC found that UberBLACK drivers shared nearly all the characteristics of UberX drivers, and that the differences between the two even more strongly supported a finding of independent contractor status. The GC noted four facts: (1) UberBLACK drivers made a more significant capital investment, as their vehicles were more expensive; (2) they could hire other drivers to take a fare; (3) they could accept UberX riders in addition to UberBLACK riders; and (4) Uber contracts with UberBLACK drivers as a business, rather than as an individual.

Employers should expect the release of other Advice Memoranda from the GC dealing with this issue in other industries. As those are released, it will become clearer what the GC believes are the parameters of the SuperShuttle decision.

Jackson Lewis attorneys are available to answer questions about the Uber and SuperShuttle decisions and other developments from the Board.

 

Representation-Case Procedures, Students as Employees, Access to Private Property on NLRB Rulemaking Agenda

Among the National Labor Relations Board’s (NLRB) rulemaking priorities under the National Labor Relations Act (NLRA) are its representation-case procedures, “blocking charge” and voluntary recognition standards, student status as employees, and access to employer private property.

The priorities are included in the Unified Agenda of Federal Regulatory and Deregulatory Actions (Long Term Actions/Short Term Actions), a semiannual compilation of information about regulations under development by federal agencies, published in the spring and fall, that detail the most significant regulatory actions agencies expect to take in the coming year. The Board did not set forth expected rulemaking dates, but short-term actions likely will occur during 2019.

Representation-Case Procedures – Long-Term Action

It appears the Board has its sights squarely set on making substantial changes to the union-friendly amendments made by the Obama-era Board to representation election procedures. In the summary that accompanies this action item, the Board has written: “The . . . NLRB will be revising the representation election regulations located at 29 CFR part 102 (the Election Regulations), with a specific focus on amendments to the Board’s representation case procedures adopted by the Board’s final rule published on December 15, 2014 (the Election Rule or Rule).” (Emphasis added.) Those amendments have been effective since April 14, 2015. They allow union organizing to move at an accelerated pace by, among other things, significantly reducing the time between the filing of a representation petition and the election from an average of approximately six weeks to an average of 23 days. Other provisions create substantial burdens on employers by requiring, within seven days, submission of a Statement of Position addressing all potential bargaining unit issues, the provision of copious amounts of information regarding potential voters, and deferring critical election issues, such as supervisory status issues, until after the election is held. The conventional wisdom is that the NLRB will make employer-friendly changes to the procedures.

Blocking Charges and Voluntary Recognition – Short-Term Action

The Board has carved out items from its representation-case procedures review and included them in its short-term action list. The Board expects to reconsider the standards for blocking charges and the voluntary recognition bar.

The Board’s current practice is to suspend the processing of an NLRB representation petition if a “blocking charge” is filed by the union. (A “blocking charge” is an unfair labor practice charge alleging unlawful conduct which, if true, might interfere with employees’ ability to make a free and uncoerced choice of representative.) In rulemaking, the Board could eliminate blocking charges altogether.

The NLRB’s “voluntary recognition bar” policy requires workers to wait at least six months before seeking to oust a union that had been voluntarily recognized as their bargaining representative (as opposed to having been selected by a majority of the employees voting in an NLRB representation election). In rulemaking, the Board could shorten the bar to less than six months.

Students as Employees – Short Term Action

The NLRB also will consider rulemaking regarding the standard for determining whether students who perform services at private colleges or universities in connection with their studies are “employees” within the meaning of Section 2(3) of the National Labor Relations Act (29 U.S.C. Sec. 153(3)). For more information, see our article, Labor Board to Revisit Right of Graduate Students to Unionize.

Access to Employer Private Property – Short-Term Action

The NLRB will consider rulemaking regarding the standards for access to an employer’s private property. Conflicts between employer property rights and federal labor law have long been complicated and controversial, often leading to litigation. The case law in this area can be complex and interpretations of the NLRA by the Board have been subject to change. To provide clarity, the NLRB will consider rulemaking about the standards for access (by employees and unions) to an employer’s private property.

Access rules also have been front and center for change on the agenda of the NLRB’s General Counsel, Peter Robb. Robb directed the NLRB’s Regional Directors to submit to his Division of Advice unfair labor practice cases filed in the Regional Offices related to “off-duty employee access to property.” (See “Mandatory Submissions to Advice” Memorandum GC 18-02.) The Memorandum included examples of NLRB decisions and situations when the GC was interested in potentially asking the NLRB to change existing case law. Two of those decisions were Capital Medical Center, 364 NLRB No. 69 (2016), and Piedmont Gardens, 360 NLRB No. 100 (2014).

Joint Employer – Long-Term Action

In addition to the priorities included in the unified agenda, the NLRB also is in the process of rulemaking on the joint employer issue. The NLRB Notice of Proposed Rulemaking (NPRM) regarding the standard for determining joint employers received more than 7,000 comments. (See our article, Labor Board Seeks Public Comments on Proposed Rule for Determining Joint-Employer Status.) They are now being reviewed by a contractor hired by the NLRB to categorize the comments. No timetable has been set for issuance of the rule.

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The NLRB’s published agenda is ambitious and significant. According to Chairman John F. Ring, the Board majority has a strong interest in continued rulemaking and “addressing these important topics through rulemaking allows the Board to consider and issue guidance in a clear and more comprehensive manner.”

 

 

 

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