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.

Pearce Nominated for Third Term on NLRB

Mark Gaston Pearce has been nominated by President Donald Trump to serve a third term on the National Labor Relations Board. Pearce, a 2010 recess-appointee under then-President Barack Obama, was reappointed to a second term in 2013. That term expired on August 27, 2018. Pearce’s nomination now heads to the Senate for consideration.

Pearce was instrumental to the Board’s shift toward a labor-friendly approach during the Obama Administration. However, following the Senate’s confirmation of Trump’s Republican nominees Marvin Kaplan on August 2, 2017, William Emanuel on September 25, 2017, and John Ring on April 11, 2018, the Board has established a firm Republican and pro-business majority. Indeed, Trump’s Board has already reversed several significant Obama-era decisions.

In July, industry groups reportedly were urging the Trump Administration not to re-nominate Pearce, one of two remaining Democrats on the Board (along with Lauren McFerran). The Trump Administration’s process, which had already begun, was put on pause at the time.

Bloomberg BNA later reported that the Senate was working on a deal with President Trump that would allow Pearce to be reconfirmed and, consistent with tradition, the minority party would retain two of the five seats on the Board. The deal also would ease the backlog of pending nominees to numerous positions within the Department of Labor and other departments. More than 150 nominees reportedly are awaiting confirmation.

A deal could be reached to confirm Pearce by the end of August.

Jackson Lewis attorneys are available to discuss how these and other developments and trends at the NLRB may affect your organization.

NLRB GC Institutes Changes to Certain Decision-Making Processes

The National Labor Relations Board’s General Counsel’s office has issued an internal Memorandum (“Changes to Case Processing Part 1”) to all regional directors, officers-in-charge, and resident officers announcing immediate enactment of case processing changes.

The six-page memorandum, obtained by Bloomberg BNA, addresses four policies. Memorandum ICG 18-06 (July 30, 2018). According to the Memorandum, the changes are based “almost entirely from suggestions received from all levels of the Agency….”

The first four pages of the memorandum, on “Decision-Writing Centralization,” outline the “streamlin[ing of] the decision-writing process” of pre-election R-Case decisions that arise within each of the four NLRB Districts (each District consists of a number of Regions). The General Counsel wants a dedicated group of decision writers who have “the time, resources, and specialized skills to efficiently draft decisions…” and, therefore, would be able to help achieve quality consistency across all Districts and Regions.

The Memorandum states that the number of writers for each District will vary from one to three, based on an analysis of the number of R-Case pre-election decisions issued during fiscal year 2017. During the time an individual is a decision writer, his unfair labor practice case workload will be adjusted to accommodate his writing duties.

The Memorandum contains some interesting statistics. They show a large disparity across the NLRB in the number of pre-election R-Case decisions written in each Region. During FY 2017, 157 decisions were issued across the NLRB. Four Regions wrote at least 12 decisions, and nine wrote three or fewer. The Memorandum also reveals wide disparities in the amount of time it takes Regions to write decisions. The median amount of time two Regions took to write decisions was 15 or fewer days (the lowest regional median was 14 days), while the median amount of time one of the Regions took was 68 days. Thus, another goal of centralized decision-writing is “lower and more consistent medians across Districts and Regions.”

The second policy, on “Streamlining Advice Branch Submissions,” addresses the delays in processing cases submitted to the Advice Division that have “been a cause of criticism” inside and outside of the NLRB. The General Counsel proposes to reduce required paperwork through the submission of “short form memos” to Advice. Additionally, some Advice submissions may be in the form of an email. Further, other submissions may be made by incorporating all of the necessary evidence by reference if it can be found in, for example, the “Agenda Minute.”

The third policy, on “Streamlining Ethics Issues,” states that legal ethics guidance memoranda will be categorized and stored in a searchable format that Regional personnel can access. Consistent with the overall goal of the Memorandum, this should increase consistency and efficiency across the Regions when they deal with ethical issues.

The final policy change is entitled “Team-Decisions.” Regional Directors are instructed to “delegate appropriate case-handling decision-making authority” to supervisors, rather than participating in even “the more mundane case-handling decisions.” The breadth of the “decision-making authority” that may be given to supervisors may include, for example, approving dismissals, withdrawals, or settlements. It also may involve allowing the supervisor and agent to make the final decision about a charge where they agree on the merit or lack thereof. The General Counsel’s office notes that 17 regions allow supervisors to participate in decision-making and have experienced “great success.”

The Memorandum states that delegation is “appropriate in most Category 1 [exceptional impact] cases and some Category 2 [significant impact] and 3 [important impact] cases.” The Memorandum notes that a Regional Director’s appropriate delegation of authority to supervisors and managers will be positively noted in their annual appraisals under “critical element 2 (leading people 10%).” The Memorandum also states “the extent to which a supervisor or manager steps up and assumes these responsibilities will be positively noted in their appraisals.”

Additional changes should be expected. In addition to the Memorandum’s title (“Changes to Case Processing Part 1”), footnote 1 states that “some other items… will be addressed in one or more memos soon to follow.”

Please contact Jackson Lewis if you have any questions.

 

 

 

 

NLRB Revisiting Rule on Employees Use of Employer’s Email System

The National Labor Relations Board has invited briefs on whether it should modify or overrule its rule under the National Labor Relations Act, established in Purple Communications, that employers must permit employees who have been provided access to their employer’s email system to use that system for statutorily protected communications on their non-working time. Rio All-Suites Hotel and Casino, No. 28-CA-060841 (Aug. 1, 2018).

The Board also asked whether the Board’s standard should apply to computer resources beyond email systems, such as instant messages, text messages, postings on social media, and the like.

In Purple Communications, 361 NLRB 1050 (2014), the Board also decided that an employer may restrict the right to use of its email system if it can demonstrate that special circumstances exist to maintain production or discipline.

The Board had overruled Register Guard, 351 NLRB 1110 (2007), in Purple Communications. The Board held in Register Guard that an employee does not have a statutory right to use his employer’s email system for Section 7 activity. It decided that an employer may impose Section 7-neutral restrictions on employees’ non-work-related uses of its email systems, even if those restrictions limit the use of its systems for union or other protected communications.

In Rio All-Suites Hotel and Casino, the rule in question (as promulgated and currently maintained) barred employees from “send[ing] chain letters or other forms of non-business information.” Administrative Law Judge Mara-Louise Anzalone held that, insofar as the rule banned all use of the employer’s email system for non-business distribution and solicitation, it violated Purple Communications. The ALJ further found that no special circumstances existed. The employer excepted (appealed), asking the Board to overrule Purple Communications and, indirectly, to return to the Register Guard standard.

The Board wants briefs to address the following questions:

  1. Should the Board adhere to, modify, or overrule Purple Communications?
  2. What standard should the Board adopt instead of Purple Communications?
  3. Should the Board return to the holding of Register Guard or adopt another standard?
  4. If the Board returns to the holding of Register Guard, should it make exceptions for circumstances that limit employees’ ability to communicate with each other through means other than their employer’s email system (e.g., because of a scattered workforce or facilities located in areas without broadband access)? If so, should it specify such circumstances or leave them to be determined on a case-by-case basis?
  5. Should the Board apply a different standard to the use of computer resources other than email and what should that standard be?

NLRB Chairman John F. Ring and Members Marvin E. Kaplan and William J. Emanuel joined to issue the Notice and Invitation to File Briefs. Members Mark Gaston Pearce and Lauren McFerran dissented. Briefs must be filed by September 5, 2018. Responsive briefs may be filed by September 20, 2018.

Jackson Lewis is available to file amicus briefs on behalf of employers and employer associations in connection with this Notice and Invitation to File Briefs.

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