NLRB Solicits Briefs on Independent Contractor Misclassification as ULP Issue

National Labor Relations Board Administrative Law Judge Arthur J. Amchan had ruled in Velox Express, Inc. that misclassification of employees as independent contractors violates Section 8(a)(1) of the National Labor Relations Act. 2017 NLRB LEXIS 486 (Sept. 25, 2017). Now the case is before the NLRB, and the Board has invited interested parties to file amicus briefs to address “under what circumstances, if any, the Board should deem an employer’s act of misclassifying statutory employees as independent contractors a violation of Section 8(a)(1) of the National Labor Relations Act.” Briefs must be submitted on or before April 16, 2018.

Velox Express operates a courier service. In 2016, Velox employed what it considered independent contractors to drive to hospitals and other medical facilities to collect medical samples for diagnostic laboratories. Jeannie Edge briefly worked as a driver for Velox on an independent contractor basis until Velox terminated her contract in August 2016. Edge filed an unfair labor practice (ULP) charge with the NLRB. In an unfair labor practice complaint, the General Counsel alleged that Edge was an employee, not an independent contractor, and that Velox had violated Section 8(a)(1) of the Act by the mere act of misclassifying its drivers as independent contractors.

The Board reviews multiple factors, such as extent of control by the employer, in determining whether an individual is an employee or independent contractor. If an individual is classified as an independent contractor, rather than an employee, the individual is not protected by Sections 7 and 8 of the Act. After reviewing the factors, Judge Amchan determined that the drivers were employees. With almost no analysis, he then found that:

By misclassifying its drivers, Velox restrained and interfered with their ability to engage in protected activity by effectively telling them that they are not protected by Section 7 and thus could be disciplined or discharged for trying to form, join or assist a union or act together with other employees for their benefit and protection.

Velox then appealed that decision to the Board.

Judge Amchan’s ruling, if upheld by the Board, has serious policy considerations for employers. Businesses that employ individuals who they classify as independent contractors could face unfair labor practice liability if the classification is mistaken. It behooves interested employers to give the Board their views. Jackson Lewis attorneys are available to help.

 

 

 

NLRB Continues to Ask Whether Voters Were Potentially Disenfranchised When Polls Not Timely Opened

The National Labor Relations Board has reaffirmed it will apply a “potential-disenfranchisement” test, not an “actual-disenfranchisement” test, in determining whether employees were affected by a late opening of the polls at an NLRB-conducted election. Bronx Lobster Place LLC, Case 02-RC-191753 (Feb. 2, 2018) (unpublished).

The employer had lost the election 14-12; there was one challenged ballot. Four eligible voters did not vote. In the second of two voting sessions, the NLRB Agent assigned to supervise the election opened the polls seven minutes late. Since the number of eligible voters who did not vote (four) was more than the union’s margin of victory, the NLRB found that the number of voters potentially disenfranchised were thus enough to affect the election outcome. Consequently, sufficient basis existed for conducting a new election.

Rejecting Member Mark Gaston Pearce’s dissenting opinion, which advocated setting aside an election only where objective evidence showed a determinative number of eligible employees were actually prevented from voting because of the late opening of the polls, the NLRB followed the Board’s reasoning in Pea Ridge Iron Ore Co., 335 NLRB 161 (2001). In that case, the polls also were opened seven minutes late and a determinative number of employees did not cast ballots. According to the Board:

[w]hen election polls are not opened at their scheduled times, the proper standard for determining whether a new election should be held is whether the number of employees possibly disenfranchised thereby is sufficient to affect the election outcome, not whether those voters, or any voters at all, were actually disenfranchised.

The NLRB’s decision underscores how closely the Board guards the integrity of the elections it conducts. Although the four eligible voters who did not cast ballots may have done so voluntarily, there was a possibility they tried to vote and could not because the polls were not open when they should have been. Therefore, the Board decided a new election had to be conducted.

Surprisingly, the pro-employer majority in this case was formed by an odd couple: NLRB Members William Emanuel, a Republican, and Lauren McFerran, a Democrat. Union-friendly Pearce, a Democrat, dissented. Could the decision be a sign of good NLRB times ahead for employers? Time will tell.

NLRB Joint Employer Decision at Risk?

The Board overturned Browning-Ferris Industries, 362 NLRB No. 186 (2015), in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (Dec. 14, 2017), and returned to the more employer-friendly principles governing joint-employer status that existed prior to that decision. Now, however, the five individual Charging Parties in Hy-Brand have filed with the Board a Motion for Reconsideration of its decision. (Browning-Ferris was appealed to the U.S. Court of Appeals for the D.C. Circuit and, pursuant to a motion by the General Counsel, was remanded on December 22, 2017, to the Board for review in light of Hy-Brand.)

Administrative Law Judge Robert A. Ringler found the Charging Parties, former employees, had been terminated in violation of the National Labor Relations Act, and that Hy-Brand and Brandt Construction Co. were single employers and joint employers (using the Browning-Ferris (362 NLRB 186 [2015]) test created by the Obama Board) responsible for the unlawful terminations. Although, on appeal, the Board reversed Browning-Ferris, it found that, even under the Board’s new joint employer analysis, Hy-Brand and Brandt were joint employers responsible for the illegal terminations. Given that finding, the Board concluded it was unnecessary to also decide the single employer issue.

In their motion for reconsideration, the Charging Parties took issue with the Board’s failure to decide the single-employer issue, and asked the Board to strike from its decision references to Browning-Ferris and joint employer status. They argued that, in failing to affirm the single-employer finding, the Board granted the employers, who violated the NLRA, “a potential avenue to escape liability for future damages.” They also objected to the “Board’s use of the Respondent’s unfair labor practice as a vehicle to overturn Browning-Ferris … and thereby to deprive other workers of meaningful protections and effective bargaining.”

The Charging Parties also requested that Board Member William Emanuel recuse himself from participating in the reconsideration because of his “clear conflict of interest” in Browning-Ferris. Emanuel was a shareholder of the law firm that represented the employers in Browning-Ferris.

On January 25, 2018, Counsel for the General Counsel filed a response to the motion, surprisingly taking “no position on” the motion. Then, on January 30, 2018, Teamsters Local 350, the charging party in Browning-Ferris, filed with the Board a Motion to Intervene in the Hy-Brand proceeding to support the Charging Parties’ Motion for Reconsideration. Teamsters Local 350 argues that it has been severely prejudiced by the Board’s failure to give it notice that it was considering overruling Browning-Ferris in Hy-Brand because, in Hy-Brand, the NLRB discussed and expressed a negative opinion about the facts in Browning-Ferris (particularly those involving the “cost-plus” arrangement in the contract between Browning-Ferris and Leadpoint, the supplier employer). According to Teamsters Local 350, this negative discussion in light of Hy-Brand inevitably means that, on remand, the Board will rule against it. Teamsters Local 350 thus contends that it will be severely prejudiced in the litigation of its own case before the Board if it is not allowed to participate in the motion for reconsideration of Hy-Brand.

Teamsters 350 also argues that neither the General Counsel nor the Charging Parties in Hy-Brand can adequately protect its interests. Regarding the General Counsel, Teamsters Local 350 points to the General Counsel’s failure to support the Charging Parties’ Motion for Reconsideration in Hy-Brand and that the General Counsel has acted contrary to its interests in the Browning-Ferris proceeding by moving to remand the case to the Board and opposing its motion to reconsider the remand. Teamsters Local 350 also contends that the Charging Parties in Hy-Brand lack the resources and intimate knowledge of the record in Browning-Ferris to fully protect its interests.

The motion is now before the Board for consideration. The Board had five members and a 3-2 Republican majority when Hy-Brand was decided. Now, the Board is evenly split: two Republicans and two Democrats. (Republican Member Philip Miscimarra’s term expired on December 16.) Adjudication of the motion likely will wait until a fifth member is confirmed by the Senate. President Donald Trump has nominated John Ring, a Republican, to fill the vacant Board seat.

We will provide updates about this case as developments warrant.

 

 

GC Robb’s Proposed Structural Changes to NLRB Draw Fire

NLRB General Counsel Peter Robb’s reported comments on a January 11, 2018, conference call about his proposed changes to how the NLRB operates has stoked resistance from NLRB career staff and others. Robb reportedly plans to centralize the decision-making process about which unfair labor practice cases his office will pursue and reduce the authority of the NLRB’s 26 regional directors, partly to address budget cuts.

Following the January 11 call, a committee of NLRB regional directors expressed “grave concerns” about possible field office restructuring, establishment of large field districts, elimination of regions, and downgrading of regional director status. In a letter, the regional directors wrote that Robb’s proposed changes to the regional structure would “exponentially negatively impact” the NLRB’s ability to enforce the NLRA without achieving more budget relief than other cost-cutting plans.

Robb’s planned changes are hardly etched in stone. In reported comments to a committee of the American Bar Association on January 19, 2018, Robb acknowledged that many of the proposed changes require public comments and approval by the NLRB. NLRB Chairman Marvin Kaplan also reportedly told the ABA committee that many of Robb’s proposed changes would require formal, notice-and-comment rulemaking before being implemented. NLRB memoranda on regional structuring and federal employee rules and regulations are also implicated in Robb’s reported plans.

If you have any questions on this developing story, please feel free to contact the Jackson Lewis Labor and Preventive Practices attorney with whom you work.

NLRB Reverses Course, Permits Employer Unilateral Changes

The National Labor Relations Board has restored the right of unionized employers to implement changes that are consistent with past practice (as long as the change does not materially vary in kind or degree from past changes), even if that practice developed under a management rights clause in a collective bargaining agreement that has expired, and whether or not the changes are discretionary. Raytheon Network Centric Systems, 365 NLRB No. 161 (Dec. 15, 2017).

The NLRB overruled E.I. du Pont de Nemours, 364 NLRB No. 17 (2016), which had significantly restricted the right of employers to unilaterally implement changes — even where a past practice existed – if the practice arose under a management rights clause in an expired collective bargaining agreement. The Board also held that every action constitutes a change, regardless of whether the employer has a practice of making similar changes in the past, if the employer’s actions involve any discretion.

In this case, Raytheon and the union had a long history of entering into labor agreements that allowed the company to make unilateral changes to its health plan. The union never objected or requested to bargain about such changes the company made every January between 2001 and 2011. In 2012, however, when the labor agreement expired during negotiations for a successor agreement, a significant topic was whether the next agreement would continue to permit the company to unilaterally make changes to the health plan. The parties did not reach an agreement, and in January 2013, the company made discretionary changes to the health plan as it had done every year from 2001 to 2011. The union filed a charge with the NLRB, claiming Raytheon had violated its duty to bargain.

An NLRB administrative law judge ruled against Raytheon, finding the unilateral changes violated the company’s obligation to maintain the “status quo” while a contract was not in effect.

Reviewing longstanding Supreme Court precedent, the Republican-dominated Board explained that an established past practice can become part of the “status quo,” even if the practice grew out of the exercise of a contractual right during the term of a labor agreement. It held that a given action constitutes a change that must be bargained about only if the action materially differs “in kind or degree” from those the employer has made in the past. The Board also held that this principle applies even where the changes may involve discretion.

Finally, the Board made it clear that, while the employer may be able to make an action without bargaining, it still has a duty to bargain upon request by the union over the general subject matter at issue. For example, Raytheon could not refuse to bargain over health insurance in its entirety. However, it was not precluded from making changes consistent with past practice while bargaining.

Raytheon ensures that unionized employers retain the ability to run their businesses by making the same kinds of decisions they always have made, even when a labor contract is not in effect. How broadly the decision will be applied remains to be seen. Employers should view the decision as a potential shield to protect continued normal business operations.

Union Membership Rates Remain Low – And AFL-CIO Claims Victories

Despite the National Labor Relations Board’s “quickie election” rule, the percentage of unionized workers in the private sector remained essentially stable 2017, according to the Bureau of Labor Statistics of the U.S. Department of Labor.

Only 6.5 percent of private-sector workers were in unions in 2017, an increase of 0.1 percent over the previous year. As expected, public-sector employees had a much higher union membership rate: 34.4 percent. 

According to the report, men (11.0 percent) had a slightly higher union membership rate than women (10.0 percent). Among states, New York had the highest union membership rate (23.8 percent), while South Carolina had the lowest (2.6 percent). Among race and ethnicity groups, Black workers had the highest union membership rate (12.6 percent), followed by White (10.6 percent), Hispanic (9.3 percent), and Asian (8.9 percent) workers.  

Union membership rates were highest for workers over age 45: 13.2 percent of workers between ages 45-54 were unionized, and 13.5 percent of workers aged 55-64 were union members. Aside from the public sector, industries with the highest percentage of union membership in 2017 were utilities (23.0 percent), transportation and warehousing (17.3 percent), telecommunications (16.1 percent), and construction (14.0 percent). 

Despite the stagnant union membership rate, in a January 19 press release, AFL-CIO President Richard Trumka said the “power of working people is on the rise.” While claiming “critical organizing victories over a range of industries,” Trumka maintained that the BLS figures were “more than numbers on a page, it’s a growing movement of working people that can’t be measured as easily.”  

Both unionized and union-free employers should be aware of local, industry, occupation, and other union membership trends. If you have any questions, please feel free to contact Jackson Lewis.

 

Kentucky’s Right-to-Work Law Survives Challenge

Kentucky’s right-to-work law has survived a challenge by the AFL-CIO and Teamsters union. The Kentucky legislation passed in the first week of the 2017 legislative session, making the Bluegrass State the 27th to adopt right-to-work legislation (Missouri was the 28th).

A Kentucky state court dismissed the unions’ challenge to the law, which prohibits unions and employers from requiring an employee to be a union member, or pay any dues or like amounts, as a condition of continued employment. The law does not apply to existing union contracts, only to new ones or those renewed after the law became effective in January 2017.

The unions argued the law’s prohibition of “union security” payments from nonunion employees is an unconstitutional taking from unions and violates the equal protection clause of the Kentucky Constitution. The court disagreed, holding that unions do not have a protected property interest in dues or fees generated by collective bargaining.

NLRB Extends Time For Filing Responses To “Quickie Election” Request For Information

The National Labor Relations Board has extended the time for filing responses to its request for information regarding its 2014 election rule. The new date for submissions is Monday, March 19, 2018. In that request for information, the NLRB asked three questions:

  1. Should the 2014 Election Rule be retained without change?
  2. Should the 2014 Election Rule be retained with modifications? If so, what should be modified?
  3. Should the 2014 Election Rule be rescinded? If so, should the Board revert to the Representation Election Regulations that were in effect prior to the 2014 Election Rule’s adoption, or should the Board make changes to the prior Representation Election Regulations? If the Board should make changes to the prior Representation Election Regulations, what should be changed?

The amendments, which took effect on April 14, 2015, allowed 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, the submission of an onerous 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.

While the Board’s stated purpose in adopting the 2014 rules was to simplify representation-case procedures, the rules placed substantial pressure on employers to make critical decisions and produce important documentation within tight deadlines. By compressing the time period between the filing of the petition and the election, the rules also eliminated much of an employer’s ability to communicate with its employees about unionization issues.

The official Request for Information as approved by the Board, including the dissenting views, may be found here. Instructions for filing responses are available here on the NLRB’s website.

Action Items for Employers

Jackson Lewis, a nationwide management labor law firm whose attorneys have represented employers in thousands of NLRB representation case matters, is analyzing the rules to make recommendations to employers or employer groups about the best courses of action. Employers and employer groups who wish to comment will have a full opportunity to do so, either singly or in conjunction with labor counsel experienced in representing employers in representation cases.

If you or an industry group of which you are part desire further information or guidance or representation in submitting comments, please contact Philip Rosen, Jon Spitz, Thomas Walsh, Howard Bloom or the Jackson Lewis attorney with whom you regularly work.

 

Missouri to Vote on State’s Right-to-Work Law

When Missouri Republican Governor Eric Greitens signed “right-to-work” legislation into law on February 6, 2017, the Show-Me State was on the way to becoming the 28th state to prohibit unions and employers from requiring any employee to be a union member, or pay any dues or like amounts, as a condition of continued employment. Now, the fate of the legislation will be put before voters in November.

Just 10 days before the law’s August 28, 2017, effective date, labor union activists delivered several hundred thousand signatures in support of a referendum to put the legislation to a public vote. The referendum asks whether the people of Missouri wish to adopt the legislation, with a “yes” vote being in favor of the right-to-work law’s continued existence. A copy of the right-to-work referendum can be found here.

Although the Secretary of State reportedly rejected approximately 20 percent of the 310,567 signatures submitted by labor union supporters, the nearly 250,000 signatures remaining were more than twice the 108,467 needed to put the issue to a vote. On November 22, 2017, the Secretary of State certified that the referendum has sufficient support.

Now that the referendum has been certified by the Secretary of State, the right-to-work law passed by the legislature and signed by Governor Greitens remains on hold pending the results of the vote. Currently, the referendum is set to be on the ballot during the November 2018 mid-term elections, but the legislature could schedule a different day in 2018 for the referendum vote.

Regardless, along with a highly anticipated 2018 mid-term election, the people of Missouri will determine whether Missouri becomes the 28th right-to-work state.

 

NLRB General Counsel Signals Important Changes at NLRB

National Labor Relations Board General Counsel Peter Robb continues to outline his plans for change at the NLRB.  First came his sweeping five-page Memorandum directing NLRB Regional Offices to submit to his Division of Advice for review cases involving “significant legal issues.” See our article, “New Labor Board General Counsel Issues Plans For Reversing Course.”  That was followed by his Memorandum to Regional Offices setting forth a variety of circumstances under which those offices should process “currently active [representation] cases” applying the NLRB’s recent decision (PCC Structurals, Inc.) that overruled Specialty Healthcare.  For more on that Memorandum, see “New NLRB GC Opens Door to Possible Widespread Bargaining Unit Changes.”

Robb’s latest plan for change was revealed in a recent conference call with NLRB regional directors. During that January 11, 2018 call, Robb said he wants to reorganize the agency’s 26 regional offices into a smaller number of districts or regions, run by officials who report directly to the General Counsel, Bloomberg Law has reported. This could place decision-making in the hands of officials who are not located in the local regional offices.  An NLRB spokesperson said there is currently no plan to reorganize the Board’s regional office structure.

Robb’s reported plan could change significantly how the NLRB operates. Presently, regional directors generally decide how their offices investigate unfair labor practice (ULP) charges and handle representation proceedings. They decide the course of ULP allegations against employers and unions: a formal complaint for hearing by an administrative law judge or dismissal.

Jackson Lewis attorneys are available to discuss the possible effect of the GC’s reported ideas for change on your organization. We will continue to report on important NLRB decisions and other developments that affect your workplace.

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