If the National Labor Relations Board seemed to be on the ropes in 2013, it certainly came out swinging in 2014. Last year, we reported that the Board faced a number of serious legal battles. Although the Board certainly got knocked down in 2014 by a blockbuster United States Supreme Court decision, it bounced right back and issued a number of important decisions that will undoubtedly have significant long-term implications for employers. And unfortunately, it was employers who "took it on the chin," because the Board's pro-union agenda was at the fore of most of its major actions.
The number of decisions issued by the Board decreased as compared with fiscal year 2013, but the Board still managed to issue 248 decisions in fiscal year ending September 30, 2014. These included 205 unfair labor practice cases and 43 representation cases. The Board also reported in its annual performance and accountability report that its presence on social media continues to grow. The Board proudly announced that it has 12,500 "likes" on Facebook and more than 7,000 followers on Twitter. The Board also noted that its free mobile application (app) has been downloaded over 13,500 times.
As we reported last year, the most significant issue facing the Board in 2014 was undoubtedly the challenge to its very authority to perform its statutory duties. As fully detailed below, the validity of hundreds of Board decisions was called into question in Nat'l Labor Relations Bd. v. Noel Canning, ___ U.S. ___ (2014). In Noel Canning, the Supreme Court held that President Obama's 2012 recess appointments to the Board were constitutionally invalid, and therefore, the Board did not have the necessary quorum to issue valid decisions. As a result, hundreds, if not several thousand decisions, were rendered invalid. Noel Canning is examined in detail below.
Later in the year, the Board was eventually properly constituted, with five members confirmed by the Senate. The Board then committed itself to addressing the decisions called into doubt by Noel Canning, and it did just that, reissuing many of the decisions that had been effectively negated by the Court's holding in Noel Canning. Throughout the year, the Board continued to focus on its pro-union agenda. And the reader should recall that, the vast majority of these decisions are important to all employers, both union and non-union, because the Board's jurisdiction under the National Labor Relations Act ("Act") is broad.
We certainly expect the Board to continue with its pro-union agenda in 2015. We will continue to report on the Board's initiatives on our blog. Below we have summarized the major actions of the Board and the major actions impacting the Board in 2014.
President's Appointments to the Board Unconstitutional
On June 26, 2014, the United States Supreme Court unanimously found that President Obama's recess appointments to the Board in 2012 were unconstitutional. The Court, in an Opinion authored by Justice Breyer, affirmed a January 2013 decision of the U.S. Court of Appeals for the District of Columbia Circuit amid similar holdings by the Fourth Circuit Court of Appeals and the Third Circuit Court of Appeals.
On January 4, 2012 President Obama had appointed three Board Members, despite the fact that previously he had been unable to obtain Senate confirmation of his appointments. The U.S. Constitution requires that the United States Senate must confirm such presidential appointments. The President thereafter made the appointments anyway, claiming that the Senate was in "recess" for its 2011-2012 winter holiday break, and that he had authority under the Constitution's Recess Appointments Clause to make such appointments at that time. The Senate, however, did not consider itself to be in recess, as it had agreed to reconvene every three business days during the period from December 20, 2011 through January 23, 2012.
Although the Supreme Court unanimously held that the appointments were invalid, the Court split 5-4 on the rationale for confirming the Court of Appeals' judgment. Justice Scalia and three other Justices would have more broadly limited the President's recess appointment powers. Justice Breyer and the four remaining Justices concluded that the Recess Appointments Clause does empower the President to fill vacancies during a recess of sufficient length, which Breyer opined should be a hiatus of at least 10 days. At the time of the appointments in question, the Senate had been on only a three day break. All nine Justices effectively agreed that a three day break was not of sufficient length to constitute an actual recess to allow the President to make these unilateral appointments.
The Supreme Court also upheld the company's position that the Board's finding that it had committed unfair labor practices must be overruled because the Board lacked a proper quorum, due to the fact that three of the Board's five Members had been unlawfully appointed. And by doing so, the Court implicitly invalidated literally hundreds of decisions issued from January 4, 2012 to July 30, 2013, the date on which new Members were finally and lawfully confirmed by the Senate during its regular session.
Many of the Board's Decisions issued during that January 2012 to July 2013 time period were quite significant, and were discussed with you in our 2013 Year in Review. Many of these decisions have by now already been reinstated by the Board. In the end, Noel Canning may be remembered much more for its rebuke of President Obama's usurpation of legislative authority than it will be for its impact on principles of substantive labor law.
Update on the Board's Rulemaking Initiatives
We provided an overview of the Board's rulemaking initiatives in our previous Year in Review Reports. One of these initiatives has fallen flat and appears to be down for the count, but another has been resuscitated and is alive and well. The Board's February 2011 attempt to require employers covered by the Act to post a Notice of Employee Rights, which outlined employee rights under the Act, such as the right to organize, the right to strike, the right to engage in concerted activities, etc. was found to be unlawful and to date there has been no effort by the Board to revive it. However, the Board's other major rulemaking initiative, which will make significant changes to representation case election procedures, is very much alive.
a. Proposed Rule Changes for Representation Elections
Despite the fact that unions are already winning close to 70% of Board-conducted elections, and that Board elections are already conducted quite promptly, with a median processing time of about 38 days from date of petition filing to date of election, the Board made it a priority to modify the election rules to shorten the election timeframe. This rule change is clearly designed to help unions organize non-union employers.
Over the vehement dissent of the two Republican Members, the Board Majority, on December 15, 2014, issued a Final Rule amending the election procedures to ensure quicker elections. This has led to a now well-publicized nickname, the "Quickie Election" Rule. Thankfully, the Rule does not become effective until April 14, 2015, and has already been challenged by a handful of employer organizations including the U.S. Chamber of Commerce and the Society for Human Resource Management. The implications of the Rule are starkly clear – effective April 14, elections will be held approximately 10 to 21 days after a union election petition has been filed – with profound consequences for non-union employers.
If this all sounds familiar, it should. The Board first issued a nearly identical Rule in 2011. That attempt was thwarted by a federal court because the Board lacked a proper quorum when it had voted to adopt the Rule. See Chamber of Commerce of the U.S. v. Nat'l Labor Relations Bd., 879 F. Supp 2d 18 (D.D.C. 2012).
Undeterred by the initial setback, the Board proposed virtually the same Rule in February 2014, and has now adopted it, despite an overwhelmingly negative reception by employers and trade associations, and over the strenuous dissent of the two Republican Members. The new Rule is every bit as pro-union as the original 2011 Rule, and in some ways is even more problematic.
The changes will operate to dramatically shorten the period of time from the date the election petition is filed to the date the election is conducted. That time period is particularly critical for employers, because it is often the only time the employer will get to express to employees its views on unionization. An organizing effort may have been ongoing for weeks or months without the employer's knowledge, with the employer only learning about it when it is served with the election petition (typically, via fax, and often at the worst possible time, like late on a Friday afternoon). A dramatically shortened time period prior to the date of the election necessarily deprives employers of much-needed time to fairly present both sides of the representation question to employees.
The Final Rule includes the following provisions:
The employer, upon receipt of the petition will have just two business days in which to post a "Notice of Petition for Election" and distribute it electronically to employees. The Notice references various employer conduct which, if committed, would constitute unfair labor practices. Failure to comply with this posting requirement, inadvertent or otherwise, will constitute grounds to set aside the results of the election if the employer wins.
The employer will have seven days from date of service of petition to file with the Board and serve on the union a "Statement of Position" regarding any issues it plans on raising at the pre-election hearing, and failure to raise an issue in the Statement will preclude the employer from litigating the issue at the pre-election hearing.
Pre-election hearings will be held precisely eight days after the petition is served, but unlike present procedures, there will be no litigation of individual voter eligibility issues. Rather, such issues will be deferred to the post-election challenge procedure. This provision is particularly onerous for employers, as it is likely to prevent the employer from litigating the supervisory status of individuals, thereby making it more difficult for the employer to know which individuals it can rely on as company representatives and spokespersons during the election campaign.
Under current procedures, post-hearing briefs can be filed seven days after the hearing. Under the Final Rule, such briefs will no longer be entertained, resulting in less time for the Board's Regional Director to consider the issues and less time until the issuance of a Decision and Direction of Election. Briefs help crystallize the real issues and ensure appropriate case law is considered, but after the Rule is effective, Regional Directors will be issuing decisions without this critical piece of the puzzle.
Employers will now be required to provide to the Board and the union expanded personal information about employees, to include not only names and home addresses (per present procedures) but also home telephone number, personal cell phone number and e-mail address if known by the employer, work location, shift, and job classification. All of this of course is to enhance the union's ability to contact employees for pre-election campaigning purposes.
The above are only some of the changes, with others including eliminating the right to seek pre-election review of a Regional Director's Decision by the Board, eliminating the current 25 day waiting period to conduct elections after the issuance of a Decision and Direction of Election, and expediting post-election objections. The bottom line, of course, is that effective April 14, 2015 it will be easier than ever before for unions to unionize the presently unorganized.
Some actions nonunion employers may want to take now, if they want to stay nonunion, include:
Adopt proactive strategies, because it is clear that if you wait until a petition is filed to deal with the threat of union organizing, it will very likely be too late.
Consider conducting union avoidance training for managers and supervisors now, before the Final Rule becomes effective. Teach supervisors and managers what to look for and what to do when they see it.
Honestly consider whether your organization is susceptible to a union organizing effort. If it is, perhaps you should be analyzing potential bargaining unit issues, reviewing company policies (such as solicitation and use of electronic resources), determine who is likely to be considered supervisory and who is not, compose a company response team which can promptly address union organizing efforts, etc.
These are but a few of the proactive steps that all non-union entities should be considering in light of the Board's adoption of its Quickie Election Rule.
The Board Gives Unions another Weapon: Micro-Units
Adding to employers' consternation regarding the Quickie Election Rule was the Board's decision in Macy's Inc., 361 NLRB No. 4 (July 22, 2014), which essentially requires deference to the union's definition of the group of employees sought to be represented by the union, also known as the "bargaining unit."
When a union petitions the Board to conduct an election to determine whether employees desire union representation, the election must take place in "an appropriate unit" for voting, and potentially, bargaining. Where the employer and union cannot agree on what constitutes the appropriate unit, the Board makes that determination. Typically, larger units may be more difficult to organize than smaller units, simply because the union has to convince a greater number of employees to favor representation when the unit is larger.
For example, Macy's operates a department store in Saugus, Massachusetts, employing about 150 individuals, with 120 of those involved in selling merchandise. Of those 120, the United Food and Commercial Workers Union sought to represent only 41 employees of a single department, "cosmetics and fragrances." The Union's task in organizing a single department is obviously much easier than having to organize all employees, store-wide. However, store-wide units had been the norm in the retail industry for decades, prior to issuance of Macy's Inc. The Board was willing, however, to help address this problem for the Union.
In Macy's, the Board found the petitioned-for unit of "cosmetics and fragrances" department employees to be an appropriate unit, rejecting the company's position that the appropriate unit should consist of all store employees, or alternatively, at least all sales employees. For the first time in the retail industry, the Board applied the rationale it had used in Specialty Healthcare & Rehabilitation Ctr. of Mobile, 357 NLRB No. 83 (2011), which held that an election could be held in a unit limited to the nursing home's certified nursing assistants (contrary to decades of Board case law in the health care industry holding that assistants must be part of a larger "service and maintenance" employees unit).
The Board has essentially confirmed it will consider appropriate virtually any petitioned-for grouping of employees, i.e. the group identified by the union. The burden is now squarely on the employer to prove that the petitioned-for unit is inappropriate. Unless the employer can demonstrate that employees in a larger unit share an "overwhelming" community of interest with those in the petitioned-for unit, the petitioned-for unit will be deemed appropriate. This is an exceedingly difficult test for any employer to meet, no doubt intended as such by the present Board.
Macy's refused to bargain with the union in the unit of employees approved by the Board, and the Board subsequently issued an order directing Macy's to do so. Macy's has appealed that order to the Fifth Circuit Court of Appeals, which will allow Macy's to challenge and place before the Court the underlying Board decision regarding the appropriateness of the bargaining unit.
While it will be interesting to see how that appeal plays out, there are steps that can be taken now, before the union comes knocking, to better position your organization. For example, employers may wish to review and possibly revise their organizational structures. Should companies begin to combine departments under common supervision? Should employees in several departments be cross-trained so that jobs can become more interchangeable? Blurring the lines between presently-defined departments could be effective in combating the Board's preference for allowing organizing by department. The more overlap there is between employees in what are now considered separate departments, the more likely the employer can prevail in arguing that the larger unit is appropriate.
Board Grants Employees Essentially Unfettered Access to Employer's Email System
Last year, we mentioned that the Board was setting itself up to change its stance on employee access to employer-provided email systems. We hate to say we told you so, but the Board took action on this key issue, and the result is not good for employers. Without doubt, this is still another initiative to help union organizing efforts. In Purple Communications, Inc., 361 NLRB No. 126 (Dec. 11, 2014), the Board decided that if an employer provides employees access to its email system, then the employees must be permitted to use that e-mail system, during non-working time, to communicate with each other about workplace issues, including but not limited to union organizing efforts.
In reaching this determination, the three Democrats on the Board, over the vigorous dissent of the two Republican members, reversed the Board's decision in Register Guard, 351 NLRB No. 70 (2007), which had held that employees have no statutory right to use their employer's e-mail system for engaging in union or other activities protected by Section 7 of the Act.
The Purple Communications majority premised its decision on what it deemed "the importance of e-mail as a means of workplace communication," noting that "e-mail remains the most pervasive form of communication in the world" (tell that to a teenager, who will probably tell you that no one uses email anymore).
Keep in mind that the Board's decision applies to employees only, and does not allow outside union organizers with the right to use the employer's e-mail system. In addition, it does not require employers to now provide e-mail access to employees who do not already have such access. Nor does the decision reach any employer communication system other than e-mail. And while the decision announces a "presumption" that employees have the right to use the e-mail system for protected communications on non-work time, it also states that employers can at least try to rebut the presumption by demonstrating "special circumstances" that would allow a ban on such use of e-mail if necessary to maintain production or discipline. It is unclear what type of special circumstances the Board would find appropriate, if any.
Notwithstanding Purple Communications, it is still permissible for employers to prohibit employee use of employer e-mail systems for non-work-related activities during working time, including communications regarding union or other Section 7 activities. But that would be the case only if the employer consistently enforces such rule against employee use of e-mail during working time for other non-work-related communications as well. Such a rule is difficult to enforce, and therefore, many employers do not even attempt to do so. As a practical matter, employees will likely use the employer's email system for union activities during working time, and there is little the employer will be able to do about it.
This decision raises significant issues for virtually all employers, unionized and non-unionized. No doubt there will be appeals, but for the immediate future at least, Purple Communications is the law of the land, and as a result, employers are strongly encouraged to review their electronic resources, Bring Your Own Device ("BYOD"), solicitation, and other relevant policies.
Another Blockbuster: College Athletes Are Employees and Can Form and Join Unions
In March of 2014, a Board Regional Director in Chicago ruled that certain players on the Northwestern University football team could seek to form a union. Perhaps more importantly, the Regional Director adopted a quite expansive interpretation of the term "employee" under the Act.
The Regional Director found that scholarship athletes are actually "employees" of the University, as the term "employee" is defined in the Act. According to the decision, "an employee is a person who performs services for another under a contract of hire, subject to the other’s control or right of control, and in return for payment." The Regional Director reasoned that Northwestern's scholarship football players are employees because they sign a "tender" before each scholarship period, are granted scholarships (payment) in exchange for their services (playing football), are under the strict control of the University's athletic department, and perform valuable services because they generated over $235 million for the school's football program over a ten year period. The Director further found that these scholarship football players are "paid" over $76,000 per year, in the form of tuition, fees, room, board, and books – and that this scholarship payment is directly tied to their performance on the football field. Notably, the Director concluded that non-scholarship and "walk-on" players do not meet the definition of "employee," because they receive no compensation for the services they perform.
Northwestern has filed a Request for Review of the Regional Director's Decision with the full Board, and we are anxiously awaiting the Board's decision (although we are pretty sure it will not be favorable to Northwestern). If the Regional Director's decision is upheld, the Board's Chicago Office will conduct a secret ballot election in a voting unit consisting of "all football players receiving football grant-in-aid scholarships and not having exhausted playing eligibility" employed by Northwestern University. If the Northwestern football players do eventually vote to form a union, this will give them the right to collectively bargain with their so-called "employer," Northwestern University. There is no guarantee that they will receive additional payment or benefits at all – they could even conceivably find themselves with fewer benefits depending on the terms of an eventual collective bargaining agreement, if one is ever reached. And there are a number of other potential downsides for the players – if the money they receive in scholarships is "income," the IRS could very well demand that players pay an income tax on the scholarship funds deemed to be payment for their athletic services.
For now, the Regional Director's decision directly impacts only Northwestern University, although certainly players at other schools may be pursuing similar actions. Remember that the Board does not have jurisdiction over public universities and colleges. Such state-related institutions would be under the jurisdiction of the appropriate state labor relations boards. Remember, too, that the Northwestern decision is fact-specific, and that other Division I football programs could be treated differently by the Board.
Only time will tell if the Board, federal appellate courts, including possibly the U.S. Supreme Court, will agree that federal labor law was intended to grant collective bargaining rights to student athletes, albeit ones that receive scholarships and whose college activities may indeed be tightly controlled by their coaches.
The Board Continues to Dismantle Employer Social Media and Other Policies
We have covered this topic in detail before, and you can review our prior Year-in-Review papers or articles on our blog for some background information on the Board's aggressive approach to social media and employer policies. Suffice to say, the Board has continued its rigorous review of employer efforts to police employee social media activity and employer policies governing employee conduct.
a. Board Weighs Employer's Interests Against Employee Rights in Area of Social Media – Guess Who Wins
In Triple Play Sports Bar and Grille, 361 NLRB No. 31 (Aug. 22, 2014), the Board made clear its position that under the Act, employees have the right to act together to improve the terms and conditions of their employment and to "improve their lot." The Board went on to state that this includes the right to use social media to communicate with each other and with the public for this purpose.
The Board first noted that online communications can implicate legitimate employer interests, including the right to maintain employee discipline. The Board also agreed that the competing interests of the employees and employer must be weighed carefully. In this case, however, and not surprisingly given the Board's proclivities, the Board found that the employees' interests outweighed the employer's interests and that the employees' conduct did not lose the protections of the Act despite the use of some pretty offensive language.
Triple Play is a non-union establishment, and at some point, employees learned that they owed state income taxes because their paycheck withholdings were incorrect due to an apparent accounting error. As employees tend to do when they are upset, these employees took to Facebook to vent their frustration. A discussion ensued among employees and customers on Facebook, and the owner of Triple Play was referred to using some pretty colorful names such as asshole. In addition, the group used insulting language to refer to Triple Play. There was some dispute regarding who had access to the posts--the entire world or only Facebook friends--but the discussion came to the attention of the owners of Triple Play the day after it was posted. When the employees returned to work, one was immediately fired. Another was questioned about the posts, and admitted that when he "liked" the posts made by other employees, he was expressing his support for the content of the posts. This employee was promptly fired as well.
The Board found that the employees' discussion of the calculation of tax withholdings, the complaints they intended to raise at an upcoming meeting about the issue, and possible complaints to the Department of Labor, constituted concerted protected activity under Section 7 of the Act. The employer argued that the employees' comments lost the protection of the Act because the comments they had made were defamatory and disparaging and because they were made in a public forum. This argument makes sense, given that the world wide audience on the web really changes the dynamics of these situations and it cannot seriously be suggested that such discussions are analogous to mere "discussions around a water cooler."
The Board did say that given the public nature of the posts, which were made offsite and outside of working hours, it would not apply its Atlantic Steel test, which is used to determine whether comments which otherwise may be protected are so outrageous as to lose protection of the Act. Instead, the Board found that its Jefferson Standard test was the appropriate test. The Jefferson Standard test examines whether comments made by employees to third parties are so disloyal, reckless, or maliciously untrue as to lose the protection of the Act. This latter test balances the employees' rights under the Act against the employer's interests in preventing the disparagement of its products and services and its interest in protecting its reputation.
When it applied the Jefferson Standard test to the facts of the Triple Play case, the Board found that the comments related to an ongoing "labor dispute" and were not directed toward the general public, because the comments were posted on a personal Facebook page. (A personal page, it should be noted, that could have a worldwide audience, a fact apparently lost on the Board.) The Board likened the conversation to one that could be overheard at the bar or in a workplace. This is an analogy that really seems to miss the mark.
The Board ultimately concluded that under the Jefferson Standard test, the employees' comments were not so disparaging or disloyal as to lose the protection of the Act. The Board, therefore, ordered that the employees be reinstated. It also held that the employer's Internet/Blogging policy violated the Act. The Board concluded that a reasonable employee could construe the policy's prohibition on "inappropriate discussions about the company, management and/or coworkers" as a restriction on their rights under the Act. The Board determined the policy to be overly broad and could therefore "chill" the exercise of employee rights under the Act.
The employer lost on all fronts, which again is not in itself surprising, but it is interesting that the Board spent some time discussing the public nature of the Facebook posts. Given that the Board found that the employee comments were not so disloyal or disparaging as to lose the protections of the Act, this discussion by the Board was essentially irrelevant. This could mean that the Board may have been outlining a new framework for how it will evaluate social media activity; and specifically, how the Board may distinguish between private, semi-private, and public posts when considering these issues in the future. Hopefully, employers who find themselves before the Board in the future will make a detailed record outlining the extremely public nature of everything posted to the internet.
b. Screaming Profanities and Threatening Boss is Protected Activity
The employee's outburst was too obscene to reproduce here, but here is a summary. The employee, who was employed for only about two months, called the owner of the company a crook and a number of other colorful names; and the verbal attack was personal, contained a veiled threat; and was described as "physically aggressive" by a Board Administrative Law Judge ("ALJ"). The Board nevertheless found this conduct acceptable!
The employee was a car salesman, and asked some general questions about restroom breaks and employee compensation during his first few days on that job. Then, when the employee sold his first car, he questioned the commission payment he received and questioned the dealership's draw on commissions policy. At various times, the employee was told, basically, if you don't like how we do things here, quit and find yourself another job. The employee did not, but instead continued to question the dealership's policies. Eventually, the dealership's owner met with the employee to talk with him about his constant complaining. During the meeting, the employee apparently lost it, as described above, and was fired for the outburst.
The employee filed a complaint with the Board, and the ALJ initially concluded that the employee had engaged in concerted activity, but that his belligerent, physically aggressive and menacing behavior caused him to lose the protection of the Act. The Board disagreed and reversed the ALJ's determination, holding that the Atlantic Steel factors, which are used to determine whether employee conduct loses the protection of the Act, all weighed in favor of the employee. The Board ordered the employee to be reinstated. The employer appealed to the Ninth Circuit Court of Appeals, which determined that the Board's decision was internally inconsistent, i.e. did not make sense, and remanded the case to the Board.
On remand, in Plaza Auto Ctr., Inc., 360 NLRB No. 117 (May 28, 2014), the Board affirmed its earlier decision. The Board noted that although one of the Atlantic Steel factors did weigh against the employee, overall the factors weighed in favor of protecting the employee's conduct. The Board disagreed with the ALJ's determination that the employee's conduct was physically aggressive or menacing. The Board concluded, contrary to the ALJ, that the veiled threat was not really a threat. Ultimately the Board held that the employee's conduct did not lose protection of the Act.
This decision demonstrates that the Board is clearly willing to split hairs when evaluating employee misconduct and that the Board's efforts to expand the protections of the Act continue. Unfortunately, it appears that the Board is going to require an express (rather than implied) threat, or even actual physical violence, in order to find that an employee's outburst loses protections of the Act.
c. Union Threats Toward Non-Striking Workers Made In-Person Unlawful; Those on Facebook All Clear
Its always important to remember that the Act specifically authorizes employees to refrain from engaging in concerted activity, i.e., to refrain from joining a union or supporting one in place. What many of us lose sight of from time to time is that it is an unfair labor practice for a union or its agents to restrain or coerce employees who elect to exercise these rights to refrain from supporting the union.
In Amalgamated Transit Union, Local Union No. 1433, 360 NLRB No. 44 (Feb. 12, 2014), the charge alleged that the union had violated the Act by posting threatening comments on its Facebook page and by engaging in other coercive conduct. Specifically, it was alleged that comments had been posted on the union's Facebook page, which threatened physical violence and other harm against employees that crossed the union's picket line. It was further alleged that threatening comments were made by the union's vice president at a union meeting, and that certain union agents told employees who crossed the picket line that the union would no longer represent them.
Although more than willing to police employer social media activities, the Board seemed unwilling to intrude on the union's Facebook page. The Board held that the comments, including comments about giving one of the non-striking workers "2 black eyes" and comments about bringing "Molotov cocktails," were not violations of the Act. The Board also held that because the comments were not made by actual union agents but rather by employees, the comments could not be attributed to the union. Interestingly, the Board found that the union had no obligation to remove the posts and that the discussion on Facebook was not an extension of union picket line activities. This theory seems to conflict directly with other Board cases finding employee discussions of terms and conditions of employment that occur on social media sites are indeed extensions or continuations of discussions that began in the workplace.
One has to wonder how similar comments of management personnel would be viewed by this Board. In any event, the Board found no violations in the threatening comments on Facebook.
The Board also found that the union vice president's comments at the union meeting were not threatening, but that the comments made by certain union agents at the picket line, which informed those crossing the picket line that the union would no longer represent them, were in violation of the Act.
Unfortunately, it appears that there may very well be a double standard at work here. It appears that the Board views union social media activity quite differently as compared to employer social media activity.
d. No Gossip Policy Found to be Unlawful
On December 11, 2013, an ALJ found that a technical school violated the Act by implementing a "no gossip policy" and by firing an employee who violated the policy. On June 13, 2014, the Board affirmed the ALJ's decision in Laurus Technical Institute, 360 NLRB No. 133 (June 13, 2014).
The "no gossip policy" was implemented to address a number of workplace problems, and provided that gossip would not be tolerated. The policy prohibited employees from engaging in gossiping about the company, other employees or customers, and stated that employees who violated the policy would be subject to disciplinary action. The policy also defined gossip in a number of different ways.
The ALJ found that the policy violated the Act on its face because it was overly broad and essentially banned any discussion of an employee's personal or professional life and negative comments/criticisms of other employees. The ALJ found that these prohibitions covered activities, such as discussing terms and conditions of employment, which are clearly protected by the Act. The ALJ concluded that because the policy contained no narrowing or clarifying language, and did not further define terms, the policy was unlawful. As noted, the Board affirmed the ALJ's findings.
The Board concluded that, because the employee in question was terminated for violating the policy, her termination was also a violation of the Act. The Board ordered that the employee be made whole.
As this case demonstrates, the Board continues its assault on employer policies. Employers must be vigilant when crafting policies to ensure compliance with the Act. In addition, employee disciplinary decisions should be closely scrutinized to ensure claims under the Act are not triggered.
e. Some Things are Still Beyond the Protection of the Act
(i) Actions Directly Adverse to Business Interest Not Protected
The Board did issue a few positive decisions, which provide useful guidance to employers facing employee misconduct. In Flex Frac Logistics, LLC, 360 NLRB No. 120 (May 30, 2014), the Board found that an employee's discharge for breaching the employer's confidentiality policy was lawful, despite the Board's finding that the underlying confidentiality policy was itself unlawful.
In a prior decision, the Board had found that the employer's confidentiality policy was unlawfully overbroad because it prohibited or could be interpreted to prohibit employees from discussing wages, hours and other terms and conditions of employment. As part of that prior decision, the Board remanded to an ALJ the question of whether the employee's termination pursuant to the confidentiality policy was also unlawful.
The ALJ held, and the Board affirmed, that the employer did not violate the Act when it discharged the employee. Discipline pursuant to an unlawful policy is only unlawful if the employee violated the rule by engaging in protected activity under the Act, or by engaging in conduct that otherwise implicates the concerns underlying the Act. The Board found that even though the employee's conduct implicated the concerns underlying the Act, her discharge was lawful because the employee deliberately betrayed the employer's strong, expressly articulated confidentiality interests.
The Board noted that there was no dispute that the employer had a legitimate business interest in maintaining the confidentiality of the rates it charged its customers, and that the employer was harmed by the employee's disclosure of that information. The Board found that it was clear that the employee was not discharged for engaging in protected activity but was instead discharged for deliberately violating the confidentiality policy. Importantly, the Board noted that the employer cited the employee's interference with its operations as the reason for her discharge.
As previously noted, there are some limits to the protections of the Act. The Flex Frac decision provides a good discussion of the types of misconduct that will not be protected by the Act, even if the employer relied on an unlawful policy in taking disciplinary action against the employee.
(ii) Not all Whining and Complaining Protected by the Act.
As with the decision in Flex Frac, in Edifice Restoration Contractors, Inc., 360 NLRB No. 29 (Jan. 31, 2014), the Board explored the limits of the Act's protections. In Edifice, the employer hired an employee to perform waterproofing duties on a project at a university in Ohio. The project was a public project, and therefore, it was covered by the applicable prevailing wage laws. The employee, however, was not happy about the prevailing wage rate that he received on the project, and essentially complained about his wage rate throughout the entire time he spent working on the project. In fact, as the foreman testified, the employee "whined and complained" about basically everything during his brief tenure with the employer. You probably know an employee like that.
The employee apparently constantly voiced his opinion that the company was doing "everything wrong." As it turns out, the employee did receive some pay increases during the term of the project. However, he often told other employees about the wage increases, which led to some discontent and caused at least one long term employee to quit. Eventually, the payroll clerk wrote the employee a note on his pay stub that stated, "Please keep your pay to yourself."
Under the Act, employees are permitted to engage in concerted protected activity. This includes discussions regarding terms and conditions of employment, such as wages. Accordingly, the Board quickly concluded that the handwritten statement on the pay stub was a direct restriction on protected activity, and therefore, a violation of the Act.
The employee was laid off at the end of the project, and proceeded to file multiple complaints against the company, including a complaint to the university that the work performed on the project was "shoddy." Before the Board, the employee argued that his termination was retaliation for engaging in protected activity, i.e. complaining about his wages. The company, however, argued that the employee was terminated because the project came to an end and it had no more work for the employee. The Board agreed with the company. The Board concluded that there was no evidence to suggest that the employee's complaints about his pay were the reason for his lay off. The Board noted that the employee had actually received pay increases after he complained, and that several other employees were laid off at the conclusion of the project.
The employee also argued the fact that the company failed to rehire him for other projects was in retaliation for his protected activity. The company countered that it would not rehire the employee because of the allegations that he made to the university regarding the quality of the company's work. The Board actually sided with the company on this one, finding that its explanation was credible, and that the statements about the quality of work in this instance were not protected activity.
It seems that employers are regularly finding themselves in hot water with the Board as a result of overly restrictive policies and procedures. Even in situations like the present case, where there were obvious negative consequences following the employee's discussion of his wage rate (another employee quit), the Board will find a violation of the Act. In fact, the Board noted that the motivation for the restriction on the employee's conduct was "irrelevant." Nonetheless, this decision is a reminder that there are some limits to the protections of the Act. Indeed, not all "complaining and whining" is protected.
Board Continues Impairment of Internal Company Investigations
Last year, we discussed the significant roadblocks the Board had thrown down for employers attempting to conduct thorough and actionable internal investigations. The Board continued those efforts in 2014 by declaring that an employer's request that a union-covered employee sign his own witness statement at the conclusion of an interview was unlawful.
In Murtis Taylor Human Services Sys., 360 NLRB No. 66 (Mar. 25, 2014), the Board held that a union representative was within his rights when he advised an employee not to answer questions posed during an investigatory interview. The Board's hair splitting on this issue was evident, at various points in the decision the Board states:
"The union rep advised the employee not to answer certain questions until the employer clarified the nature of the alleged policy violation."
"At no time during the interview did the union rep attempt to prevent the employee from answering questions."
"Although the union rep advised the employee to refrain from answering..."
We are not entirely sure how the Board reconciled these seemingly contradictory statements, but we are sure that this decision will lead to more aggressive interference from union reps during investigatory interviews, which in turn will lead to poorer overall investigative results. Ironically, that will very likely result in a negative outcome for both employers and employees.
In addition, the Board found that the employer violated the Act by directing an employee to review the notes taken during his interview, make any changes that were necessary and then sign the document. The employee was even told he could take the statement to his attorney for review. Nonetheless, the Board held that by unilaterally implementing the signature requirement without first bargaining with the union, the employer violated the Act.
Although the employer argued that the management rights clause in its contract with the union allowed it to implement reasonable rules and regulations such as the signature requirement, the Board quickly dispensed with that argument finding that the contract clause was not specific enough to constitute waiver of the union's right to bargain. As it stands, an employer without a prior practice of requiring employees to sign witness statements, must first bargain with the union prior to implementing such a requirement.
The principles set forth in this decision are specific to unionized workforces, for now, but the decision in Murtis Taylor further erodes unionized employers' ability to conduct thorough and accurate internal investigations. Employers will likely face significant interference from union representatives during investigatory interviews, which will very likely impede the fact gathering process. In addition, employers may be unable to secure an employee's signature on a witness statement, which may lead to more employees changing their stories during the investigation process.
Despite the Holdings of the Federal Courts, the Board Continues to Find Most Arbitration Agreements Unlawful
Last year we reported that the Board had ruled that arbitration provisions in employment agreements that prohibit class or collective action claims violate the Act. In D.R. Horton, Inc., 357 NLRB No. 184 (2012), the Board found an employer policy that required mandatory arbitration of employee claims on an individual basis, and specifically prohibited class or collective actions, unlawful. The Board held that the policy could be construed to prohibit employees from engaging in concerted activity in violation of the Act, and as such, the policy was unlawful. But the employer in the D.R. Horton case appealed the Board's decision to the Fifth Circuit Court of Appeals, and that court reversed the Board's decision, holding that the decision failed to give proper weight to the Federal Arbitration Act (FAA).
In D.R. Horton, Inc. v. Nat'l Labor Relations Bd., 737 F.3d 344 (5th Cir. 2013), the court stated that the FAA states a congressional intention to favor and support arbitration as a means of dispute resolution. The Court held that Board's decision inappropriately relied on the NLRA over the FAA.
Undeterred, throughout 2014, the Board continued to examine arbitration agreements and policies, and to find those agreements unlawful in accordance with the rationale it had set forth in its D.R. Horton decision. In Murphy Oil USA, 361 NLRB No. 72 (Oct. 28, 2014), for example, the Board affirmed its holding in D.R. Horton, finding that the employer's policy of requiring employees to resolve all claims through individual arbitration violated the Act.
The Board began the Murphy Oil decision with a bit of a history lesson, and even acknowledged that the federal courts that had examined the issue had been hostile to the Board's view of arbitration policies. Nonetheless, the Board went on to hold that the Act protects employee rights to bring claims against the employer in concert, or stated another way, collectively, and that therefore any arbitration agreement requiring employees to bring claims on an individual basis violates the Act.
Employers that require employees to agree to the individual arbitration of employment-related disputes should discuss with counsel how best to proceed in light of the Board's approach to this issue. As it stands, such agreements are enforceable in certain parts of the country. However, according to the Board, in other parts of the country, mandating such agreements constitutes an unfair labor practice. Furthermore, the courts have affirmed the Board on one point, that arbitration agreements cannot prohibit an employee from filing an unfair labor practice charge with the Board.
Murphy Oil was a 3-2 decision, which contained a strong dissent by the two Republican members of the Board. It is likely, that the fight over the Board's stance on arbitration agreements will continue into 2015, and perhaps all the way to the Supreme Court of the United States.
Board Significantly Broadens Joint Employer Analysis
On July 29, 2014, the Board's Office of the General Counsel ("GC") issued a press release, which stated that the GC had authorized the issuance of unfair labor practice complaints against franchisor McDonald's USA, LLC for the actions of some of its franchisees. For franchisors, it was the shot heard round the world. In a typical franchisor-franchisee relationship, a franchisor, like McDonald's, may contract with a franchisee to provide the latter with use of the franchise name, logo, processes, recipes, etc., in exchange for an upfront franchise fee and sales-based royalties. This is a fairly typical arrangement, and for the most part, the franchisor is insulated from legal liability from the actions of the franchisee, which is a wholly separate entity.
However, in the press release, the GC declared its intention to prosecute McDonald's USA as a "joint employer" with potentially over 13,000 franchisee locations in the United States, which means that McDonald's would be legally liable for any violations of the Act by those franchisees.
Over the past two years, 181 charges have been filed with the Board involving numerous McDonald's restaurants. The charges arose largely from the termination of a number of fast food workers who had participated in various protests and union organizing efforts at McDonald's franchised stores across the country. Per the GC's press release, 68 of those cases were found to be meritless, 64 are pending investigation, and 43 were found to have merit. In those 43 cases found to have merit, the GC contends that the various franchisees and McDonald's USA, LLC (the franchisor headquartered in Illinois) are "joint employers" and will therefore be named as parties to the complaints. On December 19, 2014, the GC announced the issuance of 13 complaints involving 78 unfair labor practice charges, which name McDonald's USA, LLC as the joint employer of franchisee employees.
Typically, the Board (and the reviewing federal courts) has found that franchisees are independent operations, that franchisors like McDonald's USA are not responsible for decisions made by the franchisees about hiring, firing, wages, benefits, etc., and that consequently they are not joint employers with the franchisees. If the franchisor is deemed to be a joint employer with the franchisee, the franchisor can potentially be held liable for any violations of law engaged in by the franchisee. The GC's theory, if ultimately adopted by the Board, would no doubt render the franchisor-franchisee model much less appealing to the business community. Why would any company want to license its intellectual property and business model, losing out on potential profit, if the franchisor will be held responsible for actions undertaken by the separately-owned franchisee?
Unions are of course thrilled with the GC's decision because they have consistently asserted that large franchisors like McDonald's and Burger King have ultimate control over everything that goes on in their franchisees' restaurants. Union activists, like those at the Service Employees International Union (SEIU), the Charging Party in the McDonald's cases, believe that by holding large franchisors as joint employers with the franchisees, workers can put more pressure on large fast food chains and other franchisors to improve employee benefits and raise wages. No doubt that unionizing McDonald's/fast food workers on a nationwide basis is also on their minds.
At this stage, this is only a prosecutorial determination by the Board's GC based on his opinion and investigation of the cases referenced above. And while his decision to authorize the issuance of complaints is not a precedential court decision, Board Decision, or even a decision by an Board ALJ, employers—especially franchisors and those who utilize contractors or subcontractors—should take heed. The GC's announcements come at a time when the Board itself has been reconsidering its whole approach to the joint employer issue. It is very likely that the pro-union Board will soon adopt a broader definition of the term "joint employer," once again making it easier for unions to organize employees.
If an employer is in what could be determined to be a joint employer relationship, the employer may want to consider steps to further define boundaries between the two employers. This may help lessen the likelihood of a finding of joint employer status. At a minimum, employers should take reasonable measures intended to ensure that their business partners, franchisees, and subcontractors are in compliance with applicable federal and state employment laws.
Board Changes Standard, Will Defer to Arbitration Decisions Less Often
In Babcock & Wilcox Construction, Inc., 361 NLRB No. 132 (Dec. 15 2014), the Board decided to modify nearly 30 years of precedent, explaining that the standard for deferring to arbitration decisions in cases involving unfair labor practices is solely a matter of Board discretion and that the previous deferral standard did not adequately protect employee rights under the Act.
The Board's deferral standard was created to provide the Board with a means to reconcile the Board's obligation to resolve unfair labor practices (such as allegations that an employer retaliated against an employee for engaging in protected activity) with the policy of encouraging voluntary settlement of labor disputes. As a result, the deferral standard had required the Board to defer to arbitration decisions if the arbitration proceedings appeared to be fair, the parties agreed to submit the issue to arbitration, and the resulting decision was not clearly inconsistent with the Act. In a prior decision dating back to the 1980s, the Board had held that deferral was appropriate if the issue in the arbitration matter was factually parallel to the unfair labor practice issue, the arbitrator was presented with relevant facts, and the award was not inconsistent with the Act.
In early 2014, the Board's GC asked the Board to modify this standard, because in the GC's view, the standard did not adequately protect employees. The Board agreed to review its deferral standard.
Although the Board did not adopt the GC's specific proposed standard, it did modify its deferral standard to a more union-friendly approach. The Board held that the party seeking deferral (typically the employer) will need to establish that the parties presented the unfair labor practice issue to the arbitrator, the arbitrator considered the unfair labor practice issue or was prevented from doing so by the party opposing deferral, and the arbitration decision is reasonably permitted by Board law.
The new standard will result in fewer deferrals. As a result, more employees will get two bites at the apple. For example, if an employee challenges his or her discharge through the grievance arbitration process and loses, he or she may be able to also pursue an unfair labor practice charge alleging that he or she was discharged in retaliation for engaging in protected activity. Under the new standard, if the employer requests the Board to defer to the arbitration decision, the Board will be less likely to do so, thus giving the employee a second avenue for appeal. Employers should be sure to anticipate this lower likelihood of deferral, and should ensure that it adopts an arbitration strategy to ensure the greatest likelihood of success and to ensure that an employee and/or the union does not get multiple bites at the apple.
The Board Clarifies Timing Provisions Following Union-Security Deauthorization Election
Under Section 9(c) of the Act, union employees may petition to invalidate a union-security clause. A union-security clause in a collective bargaining agreement is a common provision that requires that all employees in the bargaining unit become dues-paying members of the union. An affirmative de-authorization election provides employees with an opportunity to revoke their dues check-off authorizations and resign from the union. However, as the Board clarified this year, these rights only arise after the Board's certification of the de-authorization election – not while the election results are pending.
In Service Employees International Union, Local 32BJ, 360 NLRB No. 89 (April 29, 2014), a group of employees filed an unfair labor practice charge against the union alleging that the union violated the Act by continuing to collect union dues following a de-authorization election but before the results were certified by the Board. Although the ALJ sided with the employees, and held that the union's actions were unlawful, the Board reversed.
The Board held that although the de-authorization vote was unanimous, the employees attempted to resign from the union and revoke authorization for dues deduction 10 days before the election results were certified and thus deemed valid. An affirmative vote to withdraw the authority of the union to require union membership as a condition of employment suspends an agreed upon union-security clause. However, such suspension only occurs upon certification of the election results and not immediately as of the election date.
Fair Share Fees Unconstitutional in the Public Sector, in Certain Situations
The United States Supreme Court makes a second appearance in our Year in Review, although the Court's decision in Quinn v. Harris, ___ U.S. ___ (2014), paled in comparison to the blockbuster that was Noel Canning. Prior to the decision though, many observers thought that the Court's decision in Harris might result in some significant fireworks. Harris examined the constitutionality of union fair share fees, but only in the public sector and only in limited circumstances.
The issue in Harris was whether a requirement that public sector employees pay "fair share" fees to a union was "compelled speech" in violation of the First Amendment. Fair share fees are fees that non-union members must pay to the union in order to reimburse the union for the costs of representing the employees in collective bargaining and related matters. These fees are required even though the employee is not an actual member of the union because, under the law, the union has the obligation to fairly represent all employees, whether or not the employee is a member of the union. The payment of fair share fees is typically authorized by state law. In those states where fair share fees are authorized by law, non-union member employees are typically forced to pay the fair share fee.
That was the case in Harris, which dealt with a specific group of employees, Personal Assistants (PAs), who provided in-home personal care services funded by Medicaid. Although employed by the individual to whom they were providing care, PAs were also employees of the State of Illinois by operation of state law. In addition, under Illinois law, PAs were permitted to form a union and nonmembers could be compelled to pay fair share fees. The PAs were represented by the Service Employees International Union and several of the non-union member PAs took issue with the required payment of fair share fees to a union that they did not support.
The Supreme Court has previously held fair share fees to be constitutional as they can assist in keeping labor peace and prevent non-dues paying employees from "free-riding on the backs of dues-paying members." The majority in Harris really dismantled this prior case law and concluded that these justifications for the payment of fair share fees were not sufficient to overcome a First Amendment challenge. However, the Court came up short of expressly overruling its 1977 decision in Abood v. Detroit Bd. of Educ., 431 U.S. 2009 (1977), which had declared fair share fees constitutional.
The Court decided Harris based on its specific facts, and held that the PAs were in a unique situation. The Court held that the justifications supporting fair share fees were not sufficient to overcome the challenge with respect to the PAs. The Court found that the labor peace justification was flawed. In addition, the Court found that the union was limited in the ability to negotiate on behalf of the PAs, and therefore, the free-riding concern was not that significant with respect to the PAs. Therefore, the Court concluded that, in this specific situation, the First Amendment prohibited the collection of the fee from PAs who did not want to join or support the union.
Although somewhat factually complicated, the Harris case had the potential to send shock waves through the public sector labor community. If fair share fees were declared unconstitutional, public sector unions would have suffered a significant negative financial impact, and as a result, their political clout would have likely been significantly diminished.
In the end, it was a very limited holding. Fair share fees in the public sector survive in most cases, for now. The Court did significantly undermine the legal precedent upon which fair share fees stand and that could mean a change in the future. But for now, fair share fees would be deemed constitutional in the vast majority of cases.
Board Orders Additional Consequences for Failing to Bargain in Good Faith
After a union wins a representation election, the parties are obligated to bargain in good faith regarding terms for a collective bargaining agreement. In addition, the union is granted the exclusive right to represent the bargaining unit, i.e. its status as the employees' exclusive bargaining representative cannot be challenged by the employer or a rival union, for one year. At the end of the one year period, the union can be challenged by a rival union or it can be decertified. But what happens when one of the parties fails to bargain in good faith during the certification year? As referenced below, there could be significant consequences.
In Fallbrook Hospital, 360 NLRB No. 73 (April 14, 2014), the Board answered this question, holding that because the employer failed to bargain in good faith, the newly elected union was entitled to an additional year of protection as the exclusive bargaining representative, and was entitled to reimbursement for its negotiation expenses.
The Board found that the hospital deliberately acted to prevent any meaningful bargaining. The Board reached this conclusion because the hospital failed to provide any proposals or counterproposals until it received a full set of proposals from the union, and the hospital left a negotiation session abruptly and left another session shortly after arriving. The Board pointed out that the hospital threatened to stop bargaining if the union continued to use "assignment dispute" forms, which the union was encouraging nurses to use to object to certain staffing practices.
The Board held that all of this conduct "infected the core of the bargaining process" to such an extent that extraordinary remedies were warranted. As a result, in addition to the traditional remedy, an additional one year of protection for the union, the Board ordered that the hospital reimburse the union for its negotiation expenses. This requirement was ordered "both to make the union whole for the resources that were wasted because of the hospital's unlawful conduct, and to restore the economic strength that is necessary to ensure a return to the status quo ante at the bargaining table."
Board Modifies Standard Remedial Notice
The Board took the opportunity, in a case dating back to 2011, to update and modernize some of the standard language contained in the remedial notice that the Board requires to be posted as a remedy for unfair labor practices. By way of background, in nearly every case in which the Board finds a violation of the Act, it requires the offending party (union or employer) to post or otherwise furnish a notice to employees setting forth their rights under the Act. The notice will also include information regarding the remedial actions that will be taken by the violating party. In the recent past, the Board has begun to require parties to issue the notice in electronic format, but for the most part the standard language in the notice has not changed.
In Durham School Services, L.P., 360 NLRB No. 85 (April 25, 2014), the Board upheld an ALJ decision reinstating an employee who was allegedly discharged in retaliation for supporting the union during a hotly contested union organizing campaign. The Board also affirmed the ALJ's finding that the employer engaged in objectionable conduct during the period prior to the election, which warranted the setting aside of the election results, which had been in favor of the employer. As a result, the ALJ ordered that a third election be held (the first election had also been overturned).
Additionally, the Board took the opportunity, at the request of the union, to prospectively modify the standard language it includes in all remedial notices. In Durham, the Board granted the union's request that it modify its current standard notice to inform employees that a copy of the Board's full decision and order are available on the Board's web site.
The Board found that making the decisions and orders more readily available will facilitate a better understanding of the violations that occurred and why the Board granted the remedies directed. The incorporation of technology is consistent with the Board's expansion of its presence on the internet and social media. It will be interesting to see what the future holds for the Board's standard notice as the Board continues its unprecedented outreach efforts and continues to attempt to facilitate employees' awareness of their rights under the Act, including their right to form or join unions.
What can we take from all of this? Clearly, the Board is not afraid to push the limits of the Act, and is certainly not bashful in its efforts to pave the way for organized labor to make a comeback. Indeed, during 2014, the Obama Board showed why many observers believe it to be the most pro-union Board since the days of Franklin Roosevelt. The Board is certainly not shy about publicizing its aggressive initiatives. Unfortunately, this can only mean another "bumpy ride" for employers in 2015. Fasten your seatbelts, and stay tuned to our blog for continuing developments.