Executive Labor Summary - February / March 2015

Constangy, Brooks, Smith & Prophete, LLP


Massive labor disputes on two of three U.S. coasts - Large scale industry-wide labor disputes were in the news daily in early 2015. A West Coast port labor dispute between the International Longshore and Warehouse Union and the Pacific Maritime Association has had a huge negative impact on logistics in the U.S.-Pacific trade. Container ships waited for days to load and unload at ports from Seattle to Southern California. The Longshoremen have been working without a contract since July 2014, but continuing work slowdowns have taken a toll on West Coast commerce since then. Manufacturers and shippers of agricultural products, seasonal merchandise, and just-in-time inventory were particularly hard hit. Secretary of Labor Thomas E. Perez traveled to the West Coast on February 17 to broker a resolution. After Secretary Perez threatened to force the parties to come to Washington, D.C., the parties reached a tentative five-year collective bargaining agreement, but ratification by the employees is not expected until April, and the fallout continues. The Port of Portland, Oregon, has lost its largest ocean carrier line, which operated Asia-to-Portland routes, and is looking for new carriers to fill the void.

Shippers and other businesses on the Pacific, Gulf, and Atlantic coasts are looking for ways to reduce the risk of another labor dispute. The Longshoremen, no doubt, are finding increased leverage in negotiations with ports, given the increasing reliance of the U.S. economy on international trade and the large percentage of trade that its members handle.

Meanwhile, on the West and Gulf Coasts, the United Steelworkers are striking several major oil refineries, just when the price of oil has plummeted. At press time, the strike has gone on for three weeks with no end in sight and no intervention from the Obama Administration. So far, inventories of refined crude oil products are relatively high, helping to keep prices reasonable, which is good news for consumers. But the news for workers may not be as good: after several years of boom times, job losses in the industry are beginning to surge, making a strike an increasingly risky endeavor.

Republican Congress tries to check NLRB's pro-labor efforts - The new Republican majority in both houses of Congress is trying to slow what it sees as the negative impact on the economy of continuing attacks on employers by the National Labor Relations Board. In early February, a joint resolution to block the NLRB's new "quickie election" rule, issued in December with an April 14 effective date, was introduced by Republican lawmakers in both the House and the Senate. The Senate Committee on Health, Employment, Labor and Pensions held a hearing on the rule on February 11. Witnesses generally testified that the rule would make it difficult for employees to make an informed choice and for employers, particularly small employers, to communicate lawfully with advice of counsel given the "rush" to election. Some witnesses also indicated that the rule improperly compromises the privacy interests of the employees involved, as unions will be entitled to personal information to contact employees.

Many, if not most, objective commentators see the new rule as an effort by the NLRB to give unions a leg up in organizing efforts. The joint resolution is a little-used mechanism to challenge administrative action under the Congressional Review Act and is not subject to Senate filibuster. If successful, the resolution is likely to be vetoed by President Obama.

NLRB Chairman Mark Gaston Pearce issued a statement in response to the introduction of the joint resolution, saying that the Board will continue to discuss the rule but asserting that the Board's representation case process is overdue for "modernization" and "streamlining." Chairman Pearce asserted that the rule provides a process that is "effective, fair, and free of unnecessary delays."

The HELP Committee also held a hearing in February on the NLRB's current effort to change its "joint employer" standard. Witnesses opposing the proposed standard generally testified that the Board's proposed position threatens job growth, asserting that the franchise business model as well as many businesses that use or provide contract services will be negatively affected.

Unions double up at Volkswagen's Chattanooga plant - Last fall, Volkswagen adopted a Community Organization Engagement Policy at its plant in Chattanooga, Tennessee, setting out a "tiered" corporate policy on employee organizations that do not satisfy the majority threshold required for bargaining under the National Labor Relations Act. In December, the United Auto Workers union presented evidence to Volkswagen that it represented more than 45 percent of the Chattanooga plant's blue-collar workforce and thus was entitled under the policy to the highest level of access to management and employees at the plant. The Union claims that it has since obtained the support of more than 50 percent of the workforce.

Now, the American Council of Employees, a local group opposed to the UAW, has been certified as representing more than 15 percent of the plant's hourly and salaried workers. That level of certification entitles the ACE to access, but at a lower level than the UAW gets.

This differential treatment of employee organizations based on level of support presents legal questions that may be novel. Volkswagen has been open about seeking to create a European-style "works council" in Chattanooga. Members-only or minority unions are a regular part of labor relations in Europe and other parts of the globe, but their status under U.S. law is an open question.

The UAW's goal, of course, is to have Volkswagen voluntarily recognize it as the exclusive representative of a bargaining unit of blue-collar employees at the plant. The Union has faced stiff opposition from some employees, including employees who make up the core of the ACE, and politicians and local interests in Chattanooga and in Tennessee.

In February 2014, the UAW lost a Board election by a 712-626 vote of blue-collar employees. After that defeat, the Union formed a local "members-only" union dedicated to the organizing effort at Volkswagen, and is seeking to make inroads at all the large, foreign auto manufacturers with U.S. operations. The UAW also seeks to organize suppliers to the automotive industry that have operations in the Southern United States.


Wisconsin unions badgered with right-to-work legislation - Wisconsin's Republican-majority Senate passed right-to-work legislation in late February, and the Republican-controlled state assembly is likely to do the same in early March. Gov. Scott Walker, a potential Republican presidential aspirant, has said he expects to sign the bill into law. Most right-to-work states are in the South and the land-locked West, but in the last few years Indiana and Michigan – typically known as blue-collar, "union" states – have also adopted such legislation. Wisconsin would be the third state in the industrial upper Midwest to go "right-to-work."

Teamsters are on a roll with pursuit of workers who support tech industry in Silicon Valley - Teamsters Local 853 is not resting on its laurels after successfully organizing the drivers of Loop Transportation, who shuttle employees to and from the Facebook campus in Silicon Valley. The local now has won the right to represent drivers of Compass Transportation, who transport employees for other tech industry employers such as Apple, Ebay, Yahoo, and Genentech, as well as Stanford University. An NLRB election of the Silicon Valley Compass transportation drivers on February 27 resulted in a 104-38 win for the Teamsters.

It didn't hurt that the local was able to show that it had negotiated a collective bargaining agreement with Loop (contingent upon Facebook approval) that included higher wages, better insurance, and other improved terms and conditions of employment. Rome Aloise, a Teamsters spokesman, said the drivers in the Valley deserve to share in the money being made in the tech industry — and also need it, so that they can afford the high cost of living in the Silicon Valley area.

The Teamsters local is apparently seeking to organize other service employees in the area, including security guards and custodians. Mr. Aloise said, "These tech companies need to step up and stop demanding the lowest bid contract" and "need to all agree to pay their contractors an amount that allows the union to negotiate for decent wages and benefits. Of all of the industries in the world, the tech industry can afford to compensate those who help make them successful."

Are the Teamsters in the driver's seat? Or will lower-cost, non-union transportation operators arrive on the scene and get the contracts, making these perceived gains short-lived?

Court order will phase out 25-year federal supervision of Teamsters - In other good news for the Teamsters, a court order will bring an end to 25 years of federal government supervision of the International Brotherhood of Teamsters that stemmed from a civil racketeering lawsuit filed by then-U.S. Attorney Rudolph Giuliani in 1988. The order, issued by Judge Loretta Preska of the Southern District of New York and approving a deal agreed upon by the Union and the U.S. Department of Justice, will phase out the federal supervision over the next five years.

The racketeering lawsuit alleged union corruption and control by the Mafia. In 1999, the Union and the government entered into a consent decree, establishing an independent oversight panel and special rules of nomination and election of officers. A number of Teamsters officials were criminally indicted.

The court order, issued February 17, was welcomed by the Union, which has been fighting to end the special supervision for years. "This is a historic agreement that returns our great union to our 1.4 million Teamster members," said James P. Hoffa, General President of the Union. The settlement is complicated, but it retains some election rules designed to ensure fair opportunities for nomination and election of officers. It also allows the Justice Department to seek an injunction if the Union makes rule changes that the government believes would make the election process unfair and deprive members of reasonable opportunity to nominate candidates, hold office, vote for and otherwise support candidates of their choice.

Teamsters for a Democratic Union, a group historically associated with insurgent candidates for leadership positions against incumbent union leaders and their selected heirs, supported the settlement but sought some changes to it that ultimately were not included.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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