Category Archives: Labor Law

December 12, 2014

Supreme Court Says No Pay For Security Screening Time

Supreme Court Says No Pay For Security Screening Time

By Brad Williams

Should employers pay employees for time spent in mandatory, post-shift security screenings designed to deter theft? Not according to a recent Supreme Court decision.

On December 9, 2014, the Supreme Court unanimously held in Integrity Staffing Solutions, Inc. v. Busk, No. 13-433 (2014), that post-shift, anti-theft security screenings are not compensable work time under the Fair Labor Standards Act (FLSA). The decision reversed a Ninth Circuit decision holding that workers in two Amazon.com warehouses were entitled to pay for periods spent waiting for, and being screened at, security checkpoints after their shifts had ended. The workers claimed that they spent roughly twenty-five minutes per day in such screenings, which included removal of their wallets, keys, and belts.

Splitting from other courts to have considered the issue, the Ninth Circuit held that such time was compensable because the workers’ post-shift screening activities were necessary to their principal work activities, and were performed for the benefit of their employer. However, the Ninth Circuit’s understanding of compensable work time under the FLSA echoed that in earlier judicial decisions that had been expressly overruled by Congress.

Specifically, in response to a flood of litigation caused by the earlier decisions, Congress had passed the Portal-To-Portal Act in 1947 to clarify that employers are not obligated to pay employees for activities which are “preliminary” or “postliminary” to the principal activities they are employed to perform. As such, time spent before or after a worker’s “principal activities” is not compensable unless it is spent on activities that are themselves “integral and indispensable” to the worker’s principal activities. Regulations interpreting the Portal-To-Portal Act had long held that activities like checking into and out of work, or waiting in line to receive paychecks, is not compensable work time.

In its December 9th ruling, the Supreme Court reaffirmed that just because an activity may be required by, or may benefit, an employer, does not mean that it is a compensable “principal activity,” or is “integral and indispensable” to a principal activity. The warehouse workers’ employer did not employ the workers to undergo security screenings; it employed them to retrieve products from warehouse shelves and to package the products for shipment to customers. The security screenings were also not “integral and indispensable” to the warehouse workers’ principal activities because their employer could have eliminated the screening requirement altogether without impairing the workers’ ability to perform their jobs.

In reaching its decision, the Supreme Court stated a new definition of “integral and indispensable” activities to guide lower courts. An activity is now “integral and indispensable” to an employee’s principal work activities if it is an “intrinsic element of those activities and one with which the employee cannot dispense if he is to perform his principal activities.” Examples include time spent by battery-plant employees showering and changing clothes because chemicals in the plant are toxic to humans. It also includes time spent by meatpacker employees sharpening knives because dull knives cause inefficiency and other problems on the production line.

The Supreme Court’s decision gives employers much-needed certainty regarding the compensability of certain “preliminary” or “postliminary ” activities. It clarifies that most employers may continue performing uncompensated pre- and post-shift security or anti-theft screenings without fear of successful FLSA collective actions. The decision is particularly relevant to employers in the retail industry, who regularly conduct anti-theft screenings, and to other employers who are increasingly performing security screenings in an era of heightened concerns over terrorism.

Because the FLSA sets minimum standards for wage and overtime payments, states may set higher standards for compensable work time, including with respect to “preliminary” or “postliminary” activities. Unions may also bargain with employers to make such activities compensable. But the Supreme Court’s recent decision helps push back on the tide of FLSA collective actions filed by employees claiming that certain activities are compensable because they are essential to their jobs. The decision also follows a similar Supreme Court decision in January 2014, Sandifer v. U.S. Steel Corp., No. 12-417 (2014), in which the Court held that time spent by union-employees donning and doffing personal protective equipment was not compensable. Taken together, these decisions suggest a concerted judicial effort to address the explosion of FLSA collective actions.

November 10, 2014

NLRB Unwilling to Give Up on Workers’ Right to Class Actions

By Brian Mumaugh

Reaffirming its controversial D.R. Horton decision, the National Labor Relations Board (NLRB or Board) recently ruled that an employer who required its employees to agree to resolve all employment-related claims through individual arbitration, waiving their right to pursue class actions, violated the National Labor Relations Act (NLRA). Though two members of the Board dissented, the three member majority pointed to the core objective of the NLRA, namely the protection of workers acting in concert, to find that mandatory arbitration agreements waiving an employee’s right to file a class or collective action is unlawful. Murphy Oil USA, Inc., 361 NLRB No. 72 (Oct. 28, 2014).

Employees Filed FLSA Collective Action

Four employees of Murphy Oil USA, Inc., which operates over 1,000 retail fueling stations across 21 states, filed a lawsuit in federal court in Alabama alleging that the company violated the Fair Labor Standards Act (FLSA) by failing to pay overtime and requiring employees to perform work-related activities off-the-clock. They brought the case as a collective action under the FLSA which allows them to sue on behalf of themselves and all other similarly situated Murphy Oil employees. The company asked the court to dismiss the collective action, seeking to enforce arbitration agreements signed by the employees that require that all claims be arbitrated on an individual basis. One of the plaintiff-employees then filed an unfair labor charge with the NLRB alleging that the company was violating Section 8(a)(1) of the NLRA by using and enforcing mandatory arbitration agreements that prohibited employees from engaging in protected, concerted activities.

Board Asserts D.R. Horton Was Correctly Decided

In deciding this NLRA violation issue, the Board believes the rationale articulated in its 2012 D.R. Horton case is correct, asserting that “[m]andatory arbitration agreements that bar employees from bringing joint, class, or collective workplace claims in any forum restrict the exercise of the substantive right to act concertedly for mutual aid or protection that is central to the National Labor Relations Act.” The Board states that the basic premise of federal labor law – protecting the right of workers to engage in collective action – makes the NLRA different from other labor and employment statutes. The Board points to earlier Supreme Court decisions that made clear that the NLRA protects employees “when they seek to improve working conditions through resort to administrative and judicial forums . . .” Other court decisions cited by the Board held that individual agreements between employees and an employer (as opposed to collective bargaining agreements) cannot restrict employees’ Section 7 rights. Relying on these cases and the majority’s interpretation of the core objective of federal labor law, the Board adheres to its position that protecting workers’ right to pursue collective actions to improve working conditions is a substantive right under the NLRA that cannot be waived by employees through a mandatory arbitration agreement.

Fifth Circuit Got D.R. Horton Decision Wrong, According to the Majority Opinion of Board

In December 2013, a divided Fifth Circuit Court of Appeals held that the NLRA did not override the Federal Arbitration Act (FAA), thereby allowing an employer’s arbitration agreement to be enforced according to its terms, including the agreement’s waiver of class claims. D.R. Horton, Inc. v. NLRB, ___ F.3d ___, 2013 WL 6231617 (5th Cir. Dec. 3, 2013). Rather than settling the issue for the NLRB and employers nationwide, the Fifth Circuit’s decision did little to quell the NLRB’s belief that class action waivers violate the NLRA. In the Murphy Oil case, the Board attempts to explain why it believes the Fifth Circuit got it wrong.

First, the Board asserts that the Fifth Circuit simply followed other FAA cases that did not involve a substantive right under Section 7 of the NLRA. The Board argues that both the NLRA and the FAA must be accommodated and the Fifth Circuit’s decision gave too little weight to the NLRA and its underlying labor policy. Second, the Board states that the Fifth Circuit’s decision forces workers into more costly and disruptive forms of concerted activity than bringing a collective action in court. The Board believes that there is no basis for carving out concerted legal activity as entitled to less protection than other concerted activities, such as picketing, strikes and boycotts. Third, the Board notes that the Supreme Court, while favoring arbitration, prohibits a prospective waiver of a party’s right to pursue statutory remedies and an arbitration agreement that precludes employees from filing joint, class or collective claims regarding working conditions in any forum amounts to a prospective waiver of a right guaranteed by the NLRA.

Analysis By Other Circuits Rejected by Board

The Board pays little attention to and dismisses decisions by three other circuit courts of appeal that rejected the Board’s D.R. Horton rationale. In essence, the Board states that the Second and Eighth Circuits purportedly did not conduct a thorough analysis of the legal issues and the Ninth Circuit amended its decision to refrain from deciding the issue. Consequently, the Board found those decisions to be unpersuasive.

Two Board Members Dissent

Two of the five board members dissented, rejecting the majority’s D.R. Horton rationale. Member Miscimarra stated that the NLRA “cannot reasonably be interpreted as giving employees a broad-based right to “class” treatment under other Federal, State, and local laws.” Member Johnson stated that the Board’s “interpretation of the FAA – which otherwise requires an agreement to be enforced exactly according to its terms – would allow Section 7 to swallow up the FAA itself.” The dissenters also noted that the majority essentially ignored numerous clear decisions of the Supreme Court. In citing the Supreme Court’s 2011 AT&T Mobility, LLC v. Concepcion case, member Johnson stated “Notably, the Court forbade [the majority’s] interpretation [of the FAA] when it decided that the FAA’s savings clause could not be construed to include a right that would be “absolutely inconsistent” with the FAA’s provisions.” He went on to write:

The governing law could not be plainer. Provisions in arbitration agreements precluding class actions may not be condemned simply because they restrict an employee’s ability to use litigation procedures established under other statutes in litigating those employment-related claims. This is especially so where the governing statutes clearly describe the litigation procedures as procedural rights.

The dissenting members believe that employees and employers may enter into agreements that waive class procedures in litigation or arbitration.

What’s Next For Arbitration Agreements That Waive Class Actions?

The current majority of the Board appears unpersuaded by federal court decisions—not to mention the Supreme Court of the United States–holding that its position in D.R. Horton is simply wrong. It appears that, absent a further Supreme Court decision on the issue, the NLRB General Counsel likely will continue to issue complaints against employers who require employees to sign arbitration agreements that include a waiver of joint, class and collective actions. If and when the makeup of the Board changes, the dissenting opinion may become the majority opinion for future cases. In the meantime, employers who mandate such agreements should continue to enforce them. In other words, if faced with a class or collective action by an employee or employees who signed an agreement waiving class claims, the employer should ask the court to compel individual arbitration, dismissing the class/collective action. Despite the Board’s current position, a court is likely to grant that request. Employers should review their arbitration agreements, however, to ensure that any disputes arising under the NLRA are not subject to the mandatory arbitration provision and that employees are not prohibited from participating in proceedings before the Board.

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October 28, 2014

Defeating Micro-Units: Employer Strategies to Challenge Smaller Bargaining Units

By Brian Mumaugh

Unions are organizing smaller segments of an entire workforce in order to get their foot in the door and keep organizing efforts alive. The National Labor Relations Board (NLRB or Board) has approved so-called micro-units, setting employers up for difficult battles over appropriate bargaining units in the future. Employers should think about the possibility of seeing a micro-unit proposed in their workforce—and how to avoid them.

Unions Can More Easily Win Representation For Smaller Groups

As unions press to increase their membership in the United States, unions are looking for new ways to organize workers and remain relevant. Organizing large workforces requires unions to expend significant resources – money, personnel and time – to collect signatures from at least 30% of the proposed bargaining unit to trigger an election (some unions want to see upwards of 70% signing authorization cards before petitioning for an election). Then additional resources are needed to get out the vote to ensure a majority of votes cast are in favor of the union. Large organizing campaigns also give the company time to mount an anti-union campaign.

Organizing micro-units, however, can be done relatively quickly, cheaply and often without much response from the company. Think about it – organizing a unit of 30 workers in a single department may need only one or two union organizers to persuade the 15 to 20 employees needed to win the organizing campaign. Before you know it, you’ve got a segment of your workforce represented by a third party with whom you must collectively bargain. This can lead to multiple micro-units at your company represented by different unions and the headaches multiply.

Parameters For Micro-Units Are Evolving

The NLRB has discretion in representation cases to determine the appropriate bargaining unit, whether an employer unit, craft unit, plant unit or subdivision thereof, pursuant to section 9(b) of the NLRA. Although decided on a case-by-case basis, the main, long-standing factor for determining an appropriate unit was the “community of interest” of the employees involved. In 2011, however, the Board significantly changed that analysis in a case called Specialty Healthcare, allowing the unit petitioned-for by the union to govern except in those situations where the employer can establish by “overwhelming evidence” that the requested unit is inappropriate. This new approach places a high burden on employers who wish to challenge the make-up of the unit proposed by the union.

In recent months, the Board has decided a couple of micro-unit cases that offer some guidance on what it takes to challenge a micro-unit. In a case involving a Macy’s Department store in Massachusetts, the Board deemed appropriate a micro-unit made up of only cosmetics and fragrances employees at the store. Macy’s Inc., 361 NLRB No. 4 (July 22, 2014). The store argued that the unit was too narrow and that the appropriate unit in a retail store context is a “wall-to-wall unit” or, alternatively, all selling employees at the store. The Board did not agree. It concluded that the cosmetics and fragrances employees were a readily identifiable group that shared a community of interest not shared by other store employees. Factors weighing in favor of the micro-unit included the fact that the cosmetics and fragrances employees were in the same department and were supervised by the same managers. In addition, there was little regular contact between the cosmetics and fragrances employees and other store employees. The NLRB found that Macy’s had not met the high burden of showing that other employees should be included in the unit because they did not share an “overwhelming community of interest.”

Coming to the opposite conclusion, however, the Board rejected a micro-unit of sales associates who sold shoes at the Manhattan Bergdorf Goodman store. The union had petitioned for the unit to be made up of 35 women’s shoes sales associates in the Salon shoes department (high end designer shoes) and 11 women’s Contemporary shoes sales associates in the Contemporary Sportswear department (modestly priced shoes). The Board concluded the proposed unit was inappropriate because the two shoe departments were located on separate floors, did not share the same supervisors and managers, did not have any cross-over or interchange between employees and did not have much contact with employees in other departments storewide. The Neiman Marcus Group, Inc. d/b/a Bergdorf Goodman, 361 NLRB No. 11 (July 28, 2014).

Strategies for Attacking Micro-Units

The Macy’s and Bergdorf Goodman cases offer some guidance to help employers avoid union organizing of micro-units. Strategies to consider now, before a union organizing campaign begins, include:

Combining departments or job classifications that share skills or tasks
Cross-training and cross-utilizing workers across departments, classifications or locations
Allowing for promotional and transfer opportunities across department and organizational lines
Revising supervisory and managerial structures so that more employees report to the same managers
Maintaining pay and bonus structures common to all employees or for all in a larger unit.

Micro-units can be a game-changer when it comes to union organizing so employers have to change their own tactics to combat such bargaining units. Taking time now to change organizational and reporting structures can go a long way in overcoming a proposed micro-unit in the future.

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June 26, 2014

Recess Appointments to NLRB Invalid, Rules U.S. Supreme Court in Noel Canning Opinion

By Brian Mumaugh

In a unanimous decision, the U.S. Supreme Court ruled today that President Obama lacked the authority to make three recess appointments to the National Labor Relations Board (NLRB) while the Senate was in pro forma session in early January 2012. While affirming the decision of the D.C. Circuit that the appointments fell outside the scope of the Recess Appointments Clause, the Supreme Court came to that conclusion on different grounds. NLRB v. Noel Canning, No. 12-1281 (June 26, 2014). The decision effectively invalidates the rulings made by the three NLRB members who were improperly appointed via recess appointment.

Recess Appointments Clause

The Recess Appointments Clause gives the President the power “to fill up all Vacancies that may happen during the Recess of the Senate.” This power essentially allows the President to fill vacant federal positions without obtaining Senate confirmation of the appointments and is intended to ensure the continued functioning of the government at those times when the Senate is not in session.

At issue in the Noel Canning case was whether President Obama’s appointment of three members of the NLRB while the Senate was on a three-day intra-session break in which the Senate was in pro forma session fell within his authority under the Recess Appointments Clause. The Supreme Court said no.

Vacancies May Be Filled During Intra-Session and Inter-Session Recesses

Unlike the D.C. Circuit, the Supreme Court ruled that the Recess Appointments Clause applies during intra-session recesses (breaks in the midst of a formal Senate session) as well as during inter-session recesses (breaks between formal sessions of the Senate). The Court stated that the Senate is equally away and unavailable to conduct business during both types of breaks. The Court also looked carefully at the history of recess appointments and found that Presidents have made intra-session recess appointments going all the way back to President Andrew Johnson in 1867. During that time, the Senate has never taken any formal action to deny the validity of intra-session recess appointments. Accordingly, the Court gave great weight to the long-standing practice of allowing recess appointments during both intra- and inter-session recesses.

Recess Must Be Of Sufficient Length

Although the Recess Appointments Clause does not establish how long a recess must be in order to trigger the President’s recess appointment power, the Court held that the Senate’s recess must be of sufficient duration as to be a significant interruption of legislative business. Noting that the government’s attorney conceded that a three-day recess would be too short and that throughout history, no recess appointments had been made during an intra-session recess of less than ten days, the Court wrote that a recess of more than three days but less than ten days is presumptively too short to fall within the Clause.

Vacancies Filled As Recess Appointments Need Not Arise During the Recess

The Court interpreted the Recess Appointments Clause to allow the President to fill vacancies that existed prior to the start of the Senate’s recess. The D.C. Circuit had interpreted the Clause differently, applying only to vacancies that first come into existence during a recess. The Supreme Court chose a broader interpretation to ensure that offices that need to be filled can be filled, even if the vacancy arose before the Senate went into recess. Again, the Court looked at historical practices and found that nearly every President since James Buchanan (term: 1857-1861) has made recess appointments to pre-existing vacancies. Unwilling to counter this long-accepted practice, the Court ruled that any vacancy, whether pre-existing or one that arises during the recess, may be filled under the Recess Appointments Clause.

Applying the Clause to the 2012 NLRB Recess Appointments

The Court ruled that the President lacked the authority to appoint the three members of the NLRB in early 2012 because the Senate was still in session during that time. Although the Senate was meeting just every three days in pro forma sessions, it retained the power to conduct business. Consequently, because the Senate was in session and the three-days between its pro forma sessions was too short of a break to bring it within the scope of the Recess Appointments Clause, the President lacked the authority to make the three NLRB member appointments in January of 2012.

Big Picture – Effect of Noel Canning

There are two primary effects that will come out of today’s Noel Canning decision. First, the NLRB rulings that were made by the improperly appointed members will need to be revisited. Numerous challenges have already been made in some of the affected cases and the current NLRB, which now has five Senate-confirmed members, may need to revisit those rulings.

Second, the future of Presidential recess appointments will hinge on the length of a Senate recess. Political analysts are already stating that both the House and Senate have mechanisms to force the Senate out of a recess into a pro forma session so if those mechanisms are exercised, Congress could limit or block a President’s ability to make recess appointments. We will likely learn a great deal about the scheduling powers of Congress in the days to come.

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March 5, 2014

NLRB GC Identifies Initiatives and Policy Concerns

By Steve Gutierrez

Richard Griffin, General Counsel for the National Labor Relations Board (NLRB) recently issued a memorandum that identifies his initiatives and the areas of labor policy and law that are particularly concerning to him. The memo informs the NLRB regions which cases must be submitted to the Division of Advice at the Board’s Washington, D.C. headquarters so that the General Counsel’s office may “provide a clear and consistent interpretation of the [National Labor Relations] Act.”

The list of mandatory advice cases is split into three categories: (1) matters that are particularly concerning to the General Counsel and involve his initiatives; (2) cases involving difficult legal issues that are relatively rare in the regions and issues where there is no established precedent or the law is changing; and (3) cases that have traditionally been submitted to headquarters for legal advice. A look at the issues identified in the first two categories provides employers with useful insight into areas that will be targeted for further legal scrutiny and possible reversal of existing labor precedent.

General Counsel Initiatives and Issues of Labor Policy Concerns

GC Griffin points out a dozen labor issues that are top initiatives for him, including the following:

The applicability of Weingarten rights in non-unionized settings. (Weingarten rights provide union employees the right to have a union representative present during an employer’s investigation interview that could result in disciplinary action against the employee. In 2004, the NLRB ruled that non-union employees are not entitled to have a representative present during such meetings. IBM Corp., 341 NLRB 1288 (2004)).
Whether employees have a right to use an employer’s e-mail system for union-related communications and the standard concerning discriminatory enforcement of company rules and policies. (In 2007, the NLRB established a narrow standard for discrimination regarding company rules about solicitation and communications, ruling that an employer could make distinctions in its rules that might adversely affect employees’ NLRB Section 7 rights so long as the policies (and enforcement of the policies) did not discriminate along union-related lines. Register Guard, 351 NLRB 1110 (2007)).
Whether a “perfectly clear” successor must bargain with a union before setting the initial terms of employment. (The NLRB takes the position that in cases when it is obvious that a new employer that acquired a unionized workplace will retain all of the employees in the bargaining unit, the successor employer is obligated to bargain even over the initial terms of employment – the so-called “perfectly clear” exception.)
Whether an employer violates the NLRA when it acts with an unlawful motive in hiring permanent strike replacements. (Under NLRB precedent going back to 1964, the employer’s motive for replacing economic strikers is essentially irrelevant. Hot Shoppes, 146 NLRB 802 (1964). The GC is likely looking for an appropriate case to overrule this long-standing decision so that an employer’s desire to defeat the economic strikers’ rights to reinstatement will be deemed unlawful.

Additional issues that are on the GC’s list include cases where the possible remedies for unfair labor practices related to an organizational campaign include access to nonwork areas, access to the employer’s electronic communications systems and equal time for the union to respond to captive audience speeches.

Difficult Labor Issues or Cases Without Clear Precedent

Griffin also instructs the regions to submit to headquarters cases that involve difficult legal issues or those without clear, established legal precedent. Some of those issues include:

Mandatory arbitration agreements with class action waivers not resolved by D.R.Horton
Cases involving “at-will” provisions in employer handbooks that are not resolved by existing advice memoranda.
Cases concerning undocumented workers where the issues are unresolved.
Union access to lists of employee names and addresses during an organizing campaign where the employees are widely dispersed or have no fixed work location.
The validity of partial lockouts.
Cases involving novel conduct, such as excessive use of loudspeakers, coordinated “shopping” or corporate campaigns.

Don’t Be The Precedent Setting Case

Employers should review and become familiar with the GC’s list of priority issues. If any of the noted issues arise in your workplace, you’d be wise to consult with legal counsel early on because if the NLRB gets involved, the regional directors and officers will be forwarding your case to Washington for advice from the GC’s office. Proper handling of the matter from the start may help avoid your case being the conduit for the GC to establish new precedent that furthers his initiatives.

A copy of the memorandum may be found here.

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February 7, 2014

NLRB Again Proposes Rules to Speed Union Elections

By John M. Husband

After dropping its appeal of a District Court ruling that invalidated its “ambush election” rules, the National Labor Relations Board (NLRB or Board) has proposed those rules again. By a vote of 3-2, the Board reissued proposed amendments to its representation case procedures. The Board states that the amendments are designed to remove unnecessary delays and inefficiencies in representation case procedures. The effect, however, is expected to be an increase in union wins as the union election procedures are streamlined and votes occur quicker.

Board Lacked Quorum When Rules Adopted in 2011

The NLRB first proposed its rules to speed up the union election process in June of 2011. At the time, the Board had just three members as two positions were vacant. Despite an outcry by the business community and receipt of almost 66,000 comments, two of the three Board members voted to adopt the rules. The final rules were published in December of 2011 and went into effect on April 30, 2012.

The U.S. Chamber of Commerce and other interested groups sought to stop the implementation of the ambush election rules by suing the NLRB in federal court in the District of Columbia. Just two weeks after the rules went into effect, the judge in the case invalidated the rules, finding the Board lacked a three-member quorum needed to pass the rules. Although two of the Board members voted in favor of the rules, the third Board member, the sole Republican, did not participate in the vote. Finding that the rules were invalid for lack of the statutorily-mandated quorum, the judge did not need to address the challenge to the rules’ constitutionality and the lack of authority of the NLRB to adopt the rules. In a distinct incident of foreshadowing of this week’s events, the judge specifically stated “nothing appears to prevent a properly constituted quorum of the Board from voting to adopt the rule if it has the desire to do so."

The NLRB appealed the District Court’s decision, asking the U.S. Court of Appeals for the District of Columbia Circuit to reverse the lower court’s ruling. On December 9, 2013, the NLRB withdrew its appeal pursuant to a joint stipulation by the parties. It did so in anticipation of doing exactly what the District Court judge had suggested, namely proposing the rules again so that a properly constituted quorum of the Board can vote to adopt the rules. Board Chairman Mark Gaston Pearce and Board members Kent Y. Hirozawa and Nancy Schiffer approved the re-issuance of the proposed rules.

“Ambush Election” Rules Would Speed Union Election Process

Published in the February 6, 2014 Federal Register, the proposed changes are virtually identical to those proposed in 2011. Highlights of the proposed amendments include:

A union may file its representation petition electronically, rather than by hand or regular mail.
A hearing must be held within 7 days of the union filing its petition.
Employers must provide a comprehensive “statement of position” on the union’s representation petition in advance of the hearing; any issues not included in the statement are waived.
Pre-election hearing is to determine only whether a question concerning representation exists; issues related to individual voter eligibility may be deferred to post-election procedures.
The parties right to file a post-hearing brief is discretionary as allowed by the hearing officer.
Deadline for employer to provide voter eligibility list is shortened from 7 work days to 2 work days from the Direction of Election.
Employer must provide email addresses and telephone numbers for employees eligible to vote in addition to the required names and home addresses.
Election need not wait for 25 days after the issuance of a Direction of Election.
Pre-election appeals to the Board are eliminated, leaving only a discretionary appeal of both pre- and post-election issues after the election occurs.

Two Board Members Dissented

Board members Philip A. Miscimarra and Harry I. Johnson III are not in favor of the proposed rules. Although stating that they share in the majority’s desire to protect and safeguard the rights and obligations of those subject to the National Labor Relations Act, they do not believe it necessary to adopt a “wholesale rewrite” of the Board’s election procedure.

Interested parties and the public may submit comments on the proposed rules until April 7. Electronic comments may be submitted through http://www.regulations.gov. Comments may also be mailed or hand delivered to: Gary Shinners, Executive Secretary, National Labor Relations Board, 1099 14th Street NW., Washington, DC 20570. The Board intends to hold a hearing on the amendments during the week of April 7. We will keep you informed of developments on this issue.

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January 27, 2014

Union Membership: By the Numbers – 2013

By Jeffrey T. Johnson (retired)

The results are in. For 2013, the percentage of union members in the private sector ticked up slightly, to 6.7%. The percentage for 2012 was 6.6%. The total number of union members working in the private sector rose from 7.0 million in 2012 to 7.3 million in 2013.

Numbers for the public sector dipped slightly from 2012, with 35.9 percent of public sector employees reported to be union members in 2012 and 35.3 percent in 2013. The total number of public sector union members remained relatively flat, with 7.2 million union members in 2013, down just over 100,000 members from 2012.

In analyzing the data provided by the U.S. Department of Labor’s Bureau of Labor Statistics (BLS), the trend in both percentage and total number of union members has been a steady downward one. For example, in 2005, 7.8% of private sector employees were union members. In 2005, 15.7 million workers (private and public) were union members; in 2013, only 14.5 million.

The BLS report breaks down the union membership data by many categories, including by state, gender, age, industry, and occupation. It also provides comparative earnings information. Here are some highlights:

Men had a higher union membership rate (11.9%) than women (10.5%).
The age category with the highest percentage of union members was age 55-64 (14.3%).
The occupations with the highest percentage of private sector union members were protective service occupations (35.3%), utilities (25.6%), and transportation and warehousing (19.6%)
New York continues to have the highest union membership rate (24.4%), while North Carolina had the lowest rate (3.0%).

Statistics for 2013 union membership in the primary states served by Holland & Hart’s offices were as follows:

Nevada – 14.6% unionized, total of 169,000 members
Montana – 13.0% unionized, total of 52,000 members
Colorado – 7.6% unionized, total of 171,000 members
New Mexico – 6.2% unionized, total of 751,000 members
Wyoming – 5.7% unionized, total of 15,000 members
Idaho – 4.7% unionized, total of 29,000 members
Utah – 3.9% unionized, total of 49,000 members

Note: Above figures are private and public sectors combined

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January 16, 2014

(Un)Happy New Year for NLRB

By Brad Williams

The National Labor Relations Board began 2014 on a sour note, conceding defeat on its controversial “Poster Rule” and facing skeptical Supreme Court justices in the blockbuster Noel Canning case testing the president’s power to appoint NLRB members under the Constitution’s so-called “Recess Appointments Clause.”

“Poster Rule” Challenge Dropped

On January 6, 2014, the NLRB announced that it would not appeal two federal circuit court decisions that had rejected the Board’s controversial “Poster Rule.” The rule, originally issued in 2011 under the NLRB’s long-neglected rulemaking power, required 6 million private employers to post a government-issued notice advising employees of their rights under the National Labor Relations Act. Business groups excoriated the rule as requiring posting of unbalanced information, and as violative of their free speech rights. Two federal circuit courts broadly agreed, holding that the Board lacked authority to issue the rule, and that its enforcement mechanisms were incompatible with the NLRA.

Although the Board obtained extensions of time in which to appeal these decisions to the Supreme Court, it announced on January 6th that it had “decided not to seek Supreme Court review.” The Board urged that the poster could still be displayed “voluntarily,” but effectively conceded defeat in the litigation. A similar rule issued by the Department of Labor in 2010, and applicable only to federal contractors, remains on the books. However, one of the parties behind the successful challenge to the NLRB’s “Poster Rule” recently filed a lawsuit challenging the DOL’s rule on similar grounds. The DOL has not yet responded in that litigation.

Skeptical Questioning in Noel Canning

On January 13, 2014, the NLRB faced skeptical Supreme Court justices in oral argument in the blockbuster Noel Canning case. The case arose from a Board order finding that an employer had violated the NLRA by refusing to sign a collective bargaining agreement after orally agreeing to the contract. The employer, Noel Canning, appealed the Board’s decision to a federal circuit court on the basis that three of the Board’s members had been improperly appointed by President Obama, and that the Board’s unfair labor practice decision was accordingly void.

The federal circuit court agreed, holding that the Board appointments had violated the Constitution’s so-called “Recess Appointments Clause.” That clause, which has never before been interpreted by the Supreme Court, provides that the president may “fill up all Vacancies that may happen during the Recess of the Senate.” President Obama had appointed the three Board members during a 2012 intra-session break in which the Senate had been convening every three days in pro forma sessions, but had been conducting no business. The federal circuit court held that the Recess Appointments Clause only permits presidential appointments between the Senate’s annual official “sessions,” and only for vacancies that have arisen during these inter-session breaks, not before. Because the federal circuit court found that the Board members’ appointments had been improper, it vacated the NLRB’s decision against Noel Canning.

On January 13th, the Supreme Court held oral argument in the case which implicates such technical questions as whether presidential recess appointments are only permitted during inter- (as opposed to intra-) session breaks; whether the vacancies must arise during Senate recesses, not before; and whether the Senate is in recess when it conducts pro forma sessions every three days. Practically, these questions address the political struggle between presidents and the Senate over appointments, and threaten to eliminate a workaround presidents have increasingly used to place officials in top positions where their appointments would otherwise be delayed or rejected by the Senate.

During the oral argument, the justices seemed broadly skeptical of the NLRB’s position that a robust recess appointment power is needed as a “safety valve” to deal with Senate intransigence; that the president (as opposed to the Senate) may decide when the Senate is actually in “recess;” and that a long history of presidential appointments seemingly at odds with the plain text of the Recess Appointments Clause justifies President Obama’s appointments in 2012. In particular, some justices seemed unpersuaded that there was an intelligible “limiting principle” that would permit a president to decide, on his own, whether the Senate was actually in “recess.” For instance, Justice Kennedy raised the prospect of “lunch break” appointments given the NLRB’s position.

A decision in the Noel Canning case is expected by this June. The Supreme Court might avoid some of the case’s stickier questions, including whether the legal acts of improperly appointed officials dating back to the Washington administration are somehow void, by deciding the case on the narrow question of whether recess appointments are proper when the Senate is convening every three days in pro forma sessions. Curtailment of the president’s recess appointment power will have limited short-term effects following the Senate’s elimination of the filibuster for most presidential appointments last November. That change made President Obama’s need for the power far less pressing because Democrats currently control the Senate. However, any curtailment of the power is likely to have significant longer-term effects, particularly when different parties once again control the Senate and the presidency.

Of course, should the recess appointment power be significantly curtailed come this June, future presidents may still always fall back on that old constitutional standby: “Advice and Consent of the Senate.”

Disclaimer: This article is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal advice and are not intended to create an attorney-client relationship between you and Holland & Hart LLP. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.

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December 3, 2013

Divided Fifth Circuit Overturns D.R. Horton on Enforceability of Employer’s Arbitration Agreement Prohibiting Class Claims

By Jeffrey T. Johnson

In a much-anticipated decision, the Fifth Circuit Court of Appeals rejected the National Labor Relations Board’s controversial D.R. Horton decision, which held that an arbitration agreement requiring an employee to waive his or her right to bring class claims violated the National Labor Relations Act (NLRA). Agreeing with its sister circuit courts, the Fifth Circuit held that the NLRA did not override the Federal Arbitration Act (FAA) meaning the employer’s arbitration agreement must be enforced according to its terms, including the agreement’s preclusion of class claims. D.R. Horton, Inc. v. NLRB, No. 12-60031 (5th Cir. Dec. 3, 2013). The Court upheld, however, the NLRB’s finding that the arbitration agreement could be misconstrued by employees as precluding the filing of unfair labor practice charges which violates Section 8(a)(1) of the NLRA.

Arbitration Agreement Prohibiting Class Claims Does Not Violate NLRA

The Fifth Circuit’s ruling puts to rest a thorny issue for employers who have struggled with the Board’s D.R. Horton decision. The controversy arose in early 2012 when the NLRB concluded that home builder D.R. Horton violated Sections 7 and 8(a)(1) of the NLRA by requiring employees to sign a Mutual Arbitration Agreement that precluded employees from filing class or collective claims related to their wages, hours or other working conditions. In re D.R. Horton, Inc., 357 NLRB No. 184 (Jan. 3, 2012). The Board found that the agreement interfered with the exercise of employees’ substantive rights under Section 7 of the NLRA which allows employees to act in concert with each other for their mutual aid or protection.

Two of the three judges on the Fifth Circuit panel disagreed. First, the majority found that the use of class action procedures is not a substantive right but is instead a procedural device. Then, the judges analyzed whether there is a conflict between the NLRA and the FAA that would preclude application of the FAA to enforce the arbitration agreement according to its terms. Relying on the U.S. Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011), the Fifth Circuit determined that requiring a class mechanism is an impediment to arbitration and violates the FAA so the Board’s attempt to fit its rationale into the FAA’s “savings clause” failed. The Court then concluded that neither the NLRA’s statutory text nor its legislative history contains a congressional command to override the FAA. Failing to find an inherent conflict between the NLRA and the FAA, the Court ruled that the arbitration agreement must be enforced according to its terms under the FAA.

The Fifth Circuit pointed out that every one of its sister circuits to consider this issue had refused to defer to the NLRB’s rationale in D.R. Horton, and had held arbitration agreements containing class waivers enforceable. The two judges in the majority stated, “we are loath to create a circuit split.” Judge Graves dissented, stating that he agreed with the Board that the arbitration agreement interfered with the exercise of employees’ substantive rights under Section 7 of the NLRA.

Agreement Violates NLRA Because Employees Might Believe it Prohibits Filing Unfair Labor Practice Charges

The arbitration agreement used by D.R. Horton required that employees agree to arbitrate “without limitation[:] claims for discrimination or harassment; wages, benefits, or other compensation; breach of any express or implied contract; [and] violation of public policy.” Although the agreement provided four exceptions to arbitration, none of the exclusions referred to unfair labor practice charges. All three judges found that this could create a reasonable belief that employees were waiving their administrative rights, including the right to file unfair labor practice charges under Section 8(a)(1) of the NLRA. Therefore, the Court enforced the Board’s order that D.R. Horton violated Section 8(a)(1) because an employee would reasonably interpret the arbitration agreement as prohibiting the filing of a claim with the Board, validating the need for D.R. Horton to take the ordered corrective action.

Challenges to Composition of the Board Rejected

While this case was on appeal to the Fifth Circuit, the D.C. Circuit issued its Noel Canning decision which vacated an order of the three-member panel of the Board by ruling that recess appointments of the panel members were invalid. Noel Canning v. NLRB, 705 F.3d 490 (D.C.Cir. 2013) cert. granted 133 S.Ct. 2861 (U.S. June 24, 2013)(No. 12-1281). Because the panel that decided the D.R. Horton case included a member appointed by recess appointment, the Fifth Circuit asked the parties to submit briefs on whether it must consider the constitutionality of the recess appointments. The Court ultimately decided it need not consider the issue, finding that it retained jurisdiction to resolve the dispute at hand and leaving it to the U.S. Supreme Court to decide the constitutionality of the Board’s recess appointments. The Fifth Circuit also rejected D.R. Horton’s challenges that Board Member Becker’s recess appointment expired before the Board issued its decision, and that the Board had not been delegated authority to act as a three-member panel.

Favorable Result for Employers

Although there are pros and cons to using arbitration agreements in the employment context, today’s ruling by the Fifth Circuit (absent review by the Supreme Court) removes the impediment to incorporating class action waivers in employment arbitration agreements. The decision reinforces, however, that certain language within an arbitration agreement may violate the NLRA if it is reasonably seen as limiting an employee’s right to file an unfair labor practice charge. Employers should consult with employment counsel to review whether arbitration agreements are appropriate for their workforce, and if so, to ensure the wording of the agreement is enforceable.

August 26, 2013

Ninth Circuit Joins Growing Trend – Declines to Follow D.R. Horton and Upholds Arbitration Agreement Prohibiting Class Claims

By Jeffrey T. Johnson

On August 21, 2013, the Ninth Circuit Court of Appeals, in Richards v. Ernst & Young, LLP, Case No. 11-17530, became the third federal Circuit – together with the Second and Eighth – to reject the National Labor Relations Board’s (NLRB’s) controversial D.R. Horton decision, which held that an arbitration agreement requiring an employee to waive his or her right to bring class claims violated the National Labor Relations Act. The Richards Court also rejected the plaintiff’s argument that Ernst &Young had waived its right to arbitrate her claims by waiting to seek arbitration until after discovery and several rulings by the court. Therefore, the Court held that the arbitration agreement between Richards and Ernst &Young was enforceable, even though it precluded class arbitration.

Federal Courts of Appeal Reject NLRB’s D.R. Horton Decision

Decided in January 2012, the NLRB’s D.R. Horton ruling attempted to thwart efforts by employers to reduce their risk of class action claims through the use of arbitration agreements containing a class/collective action waiver. In re D.R. Horton, Inc., 357 NLRB No. 184 (Jan. 3, 2012). Despite D.R. Horton, employers have continued to argue for the enforceability of such agreements, and like Ernst & Young, have often prevailed in court. In fact, the overwhelming majority of courts that have considered the enforceability of mandatory arbitration agreements with class waivers subsequent to the D.R. Horton decision have rejected the NLRB’s reasoning and refused to follow its holding.

In addition to numerous district courts so ruling, the Ninth Circuit becomes the third federal appellate court to reject D.R. Horton. In January 2013, the Eighth Circuit Court of Appeals held that a class arbitration waiver in the employer’s mandatory arbitration agreement did not preclude arbitration of the employee’s claims under the Fair Labor Standards Act (FLSA). Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013). The Eighth Circuit found that without a congressional mandate under the FLSA indicating that a right to engage in class actions overrides the mandate of the Federal Arbitration Act in favor of arbitration, the NLRB’s rationale in D.R. Horton must be rejected.

Earlier this month, the Second Circuit Court of Appeals also upheld an arbitration agreement containing a class action waiver in another FLSA case brought against Ernst & Young in New York. Sutherland v. Ernst & Young LLP, No. 12-304-cv, 2013 U.S. App. LEXIS 16513 (2d Cir. Aug. 9, 2013). Despite the employee’s argument that the class action waiver removed the financial incentive for her to pursue a claim under the FLSA, the Court ruled that the arbitration agreement must be enforced. Like the Eighth Circuit, the Second Circuit declined to follow the D.R. Horton decision.

NLRB ALJ’s Bound by D.R. Horton Precedent

Despite employer victories in court, arbitration agreements with class action waivers are still being invalidated by the NLRB and its Administrative Law Judges (ALJs). Just this week, an NLRB ALJ found that the employer violated the NLRA with its mandatory class waiver arbitration agreement of employment claims. Despite the employer’s attempt to distinguish its agreement from the one at issue in D.R. Horton and to point out how courts have rejected the D.R. Horton rationale, the ALJ stated that he was bound by the D.R. Horton decision and required to apply it unless it is overturned by the Supreme Court or reversed by the NLRB itself.

Fifth Circuit to Decide D.R. Horton Appeal

The D.R. Horton decision is currently on appeal in the Fifth Circuit. Union and non-union employers alike will be watching to see whether the Fifth Circuit will follow the other circuits that have rejected the NLRB’s rationale, and overturn the D.R. Horton ruling. If, on the other hand, the Fifth Circuit affirms the D.R. Horton decision, the split between the Circuit Courts could result in the Supreme Court taking up the issue. We will continue to monitor these cases and keep you informed.