Executive Labor Summary - November/December 2014

Constangy, Brooks, Smith & Prophete, LLP


NLRB changes longstanding rule for deferral to arbitration awards - The National Labor Relations Board has had a busy December with four major new developments. We have already reported on two of the four: Purple Communications, involving employee access to employer email systems for union solicitation during non-working time, and the "quickie election" regulations. Here is the third: On December 15, the Board decided 3-2 to change its 30-year standard for deferring to an arbitrator's award under a collective bargaining agreement when an unfair labor practice charge is filed concerning essentially the same dispute. Historically the Board, as a matter of its discretion, would defer to an arbitration award where (1) a contractual issue under a collective bargaining agreement was factually parallel to an issue in an unfair labor practice charge, (2) the arbitrator was presented with relevant facts that allowed him or her to resolve the issue, and (3) the arbitration award was not clearly repugnant to the National Labor Relations Act.

Under the new standard announced last week, the party arguing for deferral must show the following:

• That the arbitrator was explicitly authorized to decide the unfair labor practice issue (this element would probably need to be in the collective bargaining agreement itself or in the submission to the arbitrator);
• That the arbitrator was presented with and considered the statutory issue, or was prevented from doing so by the party opposing deferral; and
• That Board law reasonably permits the award.

The two Republican Members of the Board, Harry Johnson and Philip Miscimarra, dissented. Member Miscimarra commented that "if parties do not rewrite their collective bargaining agreements, the majority's new standards make two track arbitration/ Board litigation a near certainty, thereby eliminating the benefits previously afforded by 'final and binding' arbitration." Likewise, Member Johnson commented that the new policy "virtually guarantees the proliferation of bifurcated, prolonged litigation in many more cases." But is that exactly what the current Board majority wants as a policy matter - increased, prolonged litigation to provide more leverage to organized labor? It certainly seems like it!

NLRB General Counsel issues complaints against McDonald's USA and franchisees alleging joint employer relationships - And here is number four: On December 19, the NLRB's General Counsel announced the issuance of complaints against certain McDonald's franchisees and their franchisor, McDonald's USA, LLC, as joint employers. According to the General Counsel's office, the litigation will commence on March 30, 2015. As we have reported previously, the Board's aggressive posture in both the McDonald's case and the Browning Ferris case could have significant impact if the Board ultimately prevails on its "joint employer" theory.

NLRB "doubles down" on its D.R. Horton theory - As we have previously reported, the current Board majority has taken the position that employees have a Section 7 right to pursue class or collective grievances in arbitration, that employee waivers of class or collective arbitration are unenforceable as violating the NLRA, and that employers requiring such waivers violate the NLRA (the D.R. Horton theory). The Board's theory has been rejected by three federal circuit courts of appeal as well as many other state and federal courts. In the highly publicized D.R. Horton case, the Board lost when the employer sought review by the U.S. Court of Appeals for the Fifth Circuit. The Board chose not to place its theory at risk by seeking review by the U.S. Supreme Court.

Because the Supreme Court has not addressed the issue, the Board is free to pursue its D.R. Horton theory in federal circuits that have not specifically ruled against it, and it appears that this is exactly what the majority of the Board did in Murphy Oil USA. Republicans Johnson and Miscimarra again dissented, with one warning that the Board majority is "doubling down" on a theory that has been rejected time and time again by various courts.

The employer in Murphy Oil may seek review of the Board's decision. Whether a court ultimately agrees with the Board or not, the outcome could provide another opportunity for Supreme Court review, which could result in a decision with nationwide effect.

Employers outside of the Second, Fifth, and Eighth circuits who use or are thinking about using arbitration agreements with class or collective action waivers should consider the Board's current position, and carefully weigh the benefits of arbitration against the risks of costly Board litigation.

Capitol Hill staffer Lauren McFerran "on Board" to replace Nancy Schiffer - On December 17, Lauren McFerran was sworn in as a Board Member for a five-year term ending on December 16, 2019. She succeeded Nancy J. Schiffer, who served on the Board for just over a year and whose term expired last week. Member McFerran has extensive experience as Chief Labor Counsel and Deputy Staff Director to the Senate Democrats and the Senate's Health Education Labor and Pension Committee. She began on the HELP Committee as Senior Labor Counsel to the late Sen. Edward Kennedy (D-Mass.), and to Sen. Tom Harkin (D-Iowa) from 2005 to 2010. Before her Senate career, Member McFerran was an associate at a union-side law firm based in Washington, D.C., and a law clerk to a Chief Judge Carolyn King on the U.S. Court of Appeals for the Fifth Circuit.

Midterm election results may give new life to proposed NLRB Reform Act, but it's still unlikely to become law - Back in September, soon-to-be Senate Majority Leader Mitch McConnell (R-Ky.) sponsored the NLRB Reform Act with Sen. Lamar Alexander (R-Tenn.). The bill has not seen the light of day under the Democrat-controlled Senate HELP Committee, but after the Republican midterm victories in 2014, it might. The purpose of the bill, according to Sen. McConnell, is to "restore the NLRB to its proper role as an umpire, instead of an advocate of the Right or the Left." If enacted, the bill would expand the Board to six members (from the current five) with synchronized terms so that all Board actions are bipartisan. The bill would also give respondents (employers) the right to seek review of any NLRB complaint in federal court and allow certain discovery rights to memoranda and files of the NLRB General Counsel. In some circumstances, Board decisions would have to be issued within one year, and respondents could appeal in federal court if the Board failed to act within that time frame. Finally, the bill would place 20 percent of Board funding at risk if it did not decide at least 90 percent of its cases within one year during the first two years after enactment of the reforms.

Despite the GOP majority in 2015 and optimistic prospects for passage, enactment is unlikely. It's doubtful that the Republicans would have enough votes to override an almost certain veto by President Obama.


UAW wins "Cadillac" rights at VW plant in Chattanooga - We have previously reported that Volkswagen-Chattanooga adopted a new "Community Organization Engagement Policy" that provided different levels of management access to employee representatives, depending on the representatives' level of support from the workforce. Earlier this month, an independent auditor reportedly certified that UAW Local 42 had more than the 45 percent support necessary for the highest level of access. Among other things, the UAW will be entitled to bi-weekly meetings with VW management. According to news reports from the Detroit Free Press, the union plans to talk "wages" and will push for recognition as the exclusive bargaining representative of the Chattanooga employees. The union reportedly claims to have more than 50 percent support, which could allow VW to voluntarily recognize it as the exclusive representative under the NLRA. No doubt the UAW hopes to be practicing saying "Fahrvergnugen, y'all" soon, if it is not doing so already.

Does NCAA now owe back pay to scholarship athletes? - Northwestern University's appeal challenging an ALJ's decision finding that its scholarship football players are "employees" under the NLRA is still pending before the Board. Meanwhile, the NCAA is now having to contend with a collective action under the Fair Labor Standards Act. Samantha Sacko, who played soccer for the University of Houston from 2010 through 2014, has sued the NCAA and all of its 352 Division I schools, including her alma mater, asserting that the scholarship athletes at those schools are "employees" who are owed the FLSA minimum wage of $7.25 an hour. Ms. Sacko's complaint generally follows the Northwestern football players' argument to the NLRB, but she also creatively alleges that scholarship athletes are essentially in a "work-study program." The suit is pending in federal court in Indiana, where the NCAA is based.

In another suit involving UCLA basketball player Ed O'Bannon, the NCAA was found to have violated federal antitrust law by prohibiting college athletes from receiving payments for use of their names, images, and likenesses. The NCAA appealed. Can anyone say, "Time Out"? Legislation may be in the works in some states and in Congress to establish, once and for all, that student-athletes are not "employees."

Is it a taxi service, or "just an app"? Teamsters give ride-sharing industry a run for its money - Taxi companies and car service drivers have been fighting for survival against mobile phone app-driven "ride sharing/ride-hailing" businesses such as Uber, Lyft, and Sidecar. In Washington, D.C., a Teamsters local representing taxi drivers challenged legislation that authorized the operation in the city of Uber and Lyft. The Teamsters' efforts included a protest that involved several hundred cab drivers' blocking intersections in the center of the city. But to no avail: the City Council went ahead and approved the companies for operation.

Meanwhile, legal battles over regulation of Uber, Lyft, and Sidecar continue across the country. The companies claim that they are "just an app" that facilitates transactions between willing drivers and riders. But the basic business model, relying on drivers who are classified as independent contractors, is under assault on several fronts. Governments want to regulate and tax the businesses as taxi or limousine services.

In any event, the price of success for these upstarts is likely to be more regulation and more labor troubles. A Teamsters-affiliated group called the California App-Based Drivers Association has already launched a labor action against Uber to address allegedly low pay, unfair working terms, and passenger-to-driver harassment. The CADA drivers in Los Angeles struck in late October by turning off their apps for three hours. They were joined by Uber drivers in San Francisco (who themselves had struck in March 2013), New York City, and London, England. The London drivers have formed their own union as well.

If Uber is correct and its drivers really are independent contractors, then the U.S. drivers are not "employees" who can form a union with the protections available under the NLRA. But, as you might imagine, the independent contractor classification is under attack. Drivers for Uber have filed a class and collective action in federal court in San Francisco, alleging that they are misclassified and are entitled to compensation for various past and continuing wage payment violations.

(And while we are on the subjects of technology, drivers, and California -- on November 19, drivers who transport employees to and from Facebook's headquarters in Silicon Valley voted 43-28 for representation by Teamsters Local 853. The bus company is not Facebook but Loop Transportation. We will continue to keep you "in the loop" on this issue.)

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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