Tag Archives: NLRB

August 30, 2018

Mark Gaston Pearce Nominated for Another NLRB Term

Steven Gutierrez

Late on August 28, 2018, President Trump nominated Mark Gaston Pearce to serve another term on the National Labor Relations Board (NLRB or Board). Pearce was appointed to the Board in 2010 by then-President Barack Obama for a partial term. He then served a full five-year term from 2013 until this week. Due to the expiration of Pearce’s term on August 27, 2018, the Board currently sits at four members, rather than the full five-member contingent.

As with all Board nominations, the Senate must vote to approve Pearce’s nomination before he may begin to serve a new five-year term. As a former union attorney, Pearce may face some opposition from management groups that see him as too pro-union. But the make-up of the five-member Board is traditionally comprised of three members who align with the president’s political party, in the current case, Republican, with the remaining two members aligning with the minority party. Currently, the three Republican members are Chairman John Ring, William Emanuel, and Marvin Kaplan. The lone Democrat, at least until Pearce or another person is confirmed, is Lauren McFerran whose term expires on December 16, 2019.

With the Board revisiting many hot button issues, such as joint-employer status and the use of an employer’s e-mail system for union activities, the Board members wield significant influence on workplace policies and potential employer liability for both union and non-union employers alike. We will keep you informed on Pearce’s confirmation as well as any other Board developments.

August 2, 2018

NLRB Revisiting Use of Employer E-Mail Systems

Steven Gutierrez

By Steve Gutierrez

On August 1, 2018, the National Labor Relations Board (NLRB or Board) issued an invitation for interested parties to file briefs on whether the Board should change or overrule its 2014 decision in Purple Communications, Inc., 361 NLRB 1050. In that case, the Board ruled that employees who already have access to an employer’s e-mail system at work may use that e-mail system during non-working time for Section 7 communications. In other words, employees may send e-mails to their co-workers related to union organizing and concerted activities related to wages or other terms and conditions of employment via their company’s e-mail system.

The Purple Communications decision had overturned an earlier ruling in Register Guard, 351 NLRB 1110 (2007) which held that facially neutral employment policies restricting employees’ use of their employer’s e-mail system did not violate the National Labor Relations Act merely because the policies might have the effect of limiting the use of those systems for union-related communications. The Board is now considering a case that will permit it to reconsider the use of an employer’s e-mail system by employees for Section 7 purposes. In fact, the Board also seeks comments on the appropriate standard for the Board to evaluate policies that govern the use of other employer-owned computer resources, not just e-mail.

NLRB Chairman John Ring and NLRB members Marvin Kaplan and William Emanuel issued the Notice and Invitation to File Briefs over the dissent of the other two Board members, Mark Gaston Pearce and Lauren McFerran. Those wishing to file an amicus brief must submit it on or before September 5, 2018.

March 20, 2018

Settlements Reached in Joint-Employer Case That Could Have Affected Franchisors Nationwide

Steven Gutierrez

By Steve Gutierrez

Franchisor McDonald’s USA LLC has agreed to settle the high-profile labor disputes over whether it is a joint employer with its franchisees. Although the settlement still needs to be approved by the administrative law judge overseeing the litigation, McDonald’s and its franchisees negotiated settlement agreements with the National Labor Relations Board (NLRB) to settle allegations of unfair labor practice charges without admitting liability or wrongdoing. In doing so, McDonald’s avoids prolonged litigation and a potentially adverse decision that would have had sweeping ramifications for franchisors and their franchisees nationwide.

Protracted Litigation Over Joint-Employer Status

In 2012, multiple McDonald’s employees filed unfair labor practice charges against their employer, seeking to improve their working conditions. In 2014, former NLRB General Counsel, Richard Griffin, approved filing dozens of unfair labor practice complaints against the larger franchisor, McDonald’s USA, under a theory that McDonald’s USA is a joint employer of the employees of McDonald’s franchises. By pursing the franchisor, the 2014 NLRB signaled that it was attempting to hold the larger, nationwide entity responsible for treatment of its franchisees’ employees.

McDonald’s USA, along with many restaurant, industry, and employer groups, vigorously objected, arguing that a franchisor is not a joint employer with its franchisees and therefore, cannot be held liable for any labor law violations made by a franchisee. The joint-employer test at the time was based on whether the putative employer exercises direct control over the employees and McDonald’s USA argued that it did not exercise such control over its franchisees’ employees.

In 2015, the NLRB issued its controversial decision in Browning-Ferris Industries that significantly broadened the joint-employer test so that an entity could be deemed a joint employer if it reserved contractual authority over some essential terms and conditions of employment, allowing it to have indirect control over the employees. (See our post here.) Under that expanded test, McDonald’s USA faced higher scrutiny from the NLRB as to whether it was a joint employer and whether it retained some indirect control over the employees of its franchisees.

Due to changes in the makeup of the NLRB under the Trump Administration, as well as a new NLRB General Counsel, the NLRB has sought to reverse Browning-Ferris Industries and return to the former joint-employer test that required direct and immediate control. In December 2017, the NLRB overturned Browning-Ferris in its Hy-Brand decision, only to have to vacate Hy-Brand in February 2018 because new Board member William Emanuel should not have participated in that decision. As a result, the 2015 Browning-Ferris joint-employer test is still the standard used to determine joint-employer status under the National Labor Relations Act.

Leaving The Status Quo on Joint-Employer Status – For Now

By settling these cases, both McDonald’s USA and the current NLRB avoid having to litigate and have a judge rule on whether franchisors like McDonald’s can be deemed a joint employer under the current Browning-Ferris test. Although the Board (and Congress) continue to seek to overturn Browning-Ferris, the McDonald’s settlement will push the issue down the road to another day.

According to the NLRB’s March 20, 2018 announcement, the settlement will provide a full remedy for the employees who filed charges against McDonald’s, including 100% of backpay for the alleged discriminatees. The settlement also will avoid years of potential additional litigation.

Take Aways

Franchisors, staffing companies, and other entities who have some contractual authority or obligations related to employees of a second entity need to use caution to ensure that the second entity complies with all applicable labor laws. With the broad Browning-Ferris test in place, entities with reserved contractual control or indirect control of another entity’s employees may be found to be a joint employer under the NLRA. This could open the door to liability for labor law violations as well as union organization and collective bargaining obligations related to joint employees. If in doubt about your exposure, consult with an experienced labor attorney.

Photo credit: AP2013/Jon Elswick

December 14, 2017

NLRB Overturns Controversial Standards on Joint-Employer Status and Neutral Employment Policies; Questions Quickie Election Rule

By Steve Gutierrez

In a series of decisions that affect both union and non-union employers, the National Labor Relations Board (NLRB or Board) has overruled numerous controversial standards that had broadened the coverage of employee rights in recent years. On December 14, 2017, the Board returned the standard for determining joint-employer status to the pre-Browning-Ferris standard as well as walking back the standard for determining whether facially neutral employment policies infringe on employees’ section 7 right to engage in protected concerted activities. The return to more employer-friendly standards will help ease the risk of engaging in unfair labor practices under the National Labor Relations Act (NLRA). Here are the highlights of the new developments.

Joint-Employer Status Depends on Control

In its 2015 controversial decision in Browning-Ferris Industries, the NLRB significantly broadened the circumstances under which two entities could be deemed joint employers for NLRA purposes. In that case, the Board ruled 3-to-2 that Browning-Ferris Industries was a joint employer with a staffing company that provided workers to its facility for purposes of a union election because Browning-Ferris had indirect control and had reserved contractual authority over some essential terms and conditions of employment for the workers supplied by the staffing company.

Today, in a 3-2 decision, the now Republican-majority Board overruled Browning-Ferris, now requiring that two or more entities actually exercise control over essential employment terms of another entity’s employees and do so directly and immediately in a manner that is not limited and routine, in order to be deemed joint employers under the NLRA. This returns the joint-employer standard to the pre–Browning Ferris standard. Consequently, proof of indirect control, contractually-reserved control that has never been exercised, or control that is limited and routine, will no longer be sufficient to establish a joint-employer relationship.

This doesn’t mean that the Board will no longer find two or more entities to be joint employers under the NLRA. In fact, in the current case in which it overturned Browning-Ferris, it applied the tougher standard and still ruled that two construction companies were joint employers and therefore jointly and severally liable for the unlawful discharges of seven striking employees. Still, the requirement that entities have direct control that is exercised over the workers in question is a more workable and beneficial rule for employers.

New Standard For Facially Neutral Policies

In recent years, the NLRB has ruled that many types of standard employee policies unlawfully interfered with employees’ section 7 rights. That scrutiny went back to the 2004 decision in Lutheran Heritage Village-Livonia which ruled that employer policies that could be “reasonably construed” by an employee to prohibit or chill the employees’ exercise of section 7 rights violated the NLRA, even if such policies did not explicitly prohibit protected activities or were not applied by the employer to restrict such activities. Consequently, a series of Board rulings deemed certain language in employer policies unlawful even when facially neutral on their face, including policies on confidentiality, non-disparagement, recording and video at work, use of social media and company logos, and other typical employment rules.

In its recent decision, the Board ruled 3-to-2 to overturn Lutheran Heritage Village-Livonia and its standard governing facially neutral workplace rules. The new standard for evaluating employer policies will consider: (1) the nature and extent of the potential impact on NLRA rights, and (2) legitimate justifications associated with the rule. To provide greater clarity for employers, employees, and unions, the Board announced that prospectively, it will categorize workplace rules into three categories depending on whether the rule is deemed lawful, unlawful, or warrants individualized scrutiny. This change should significantly relieve the uncertainty that has existed under the “reasonably construed” standard.

Quickie Elections Being Reconsidered

In another move to reverse recent Board rules, the Board published a Request for Information (RFI) asking for public input on the 2014 representation election rule that changed the process and timing of union elections. In particular, the Board seeks public input on whether the 2014 quickie election rules should be retained, changed, or rescinded. The deadline for submitting responses is February 12, 2018. This RFI signals that the quickie election rule could be on its way out.

Conclusion

We will continue to monitor these and other Board developments. If you have any questions or concerns about these changes and how they may affect your workplace, you should reach out to your labor counsel.

June 22, 2017

U.S. DOJ Files Brief Supporting Arbitration Agreements That Bar Employee Class Actions

By Emily Hobbs-Wright

Last September, the U.S. Office of the Solicitor General urged the U.S. Supreme Court to rule that arbitration agreements that prohibit employees from pursuing work-related claims on a class action basis are unlawful because they violate the National Labor Relations Act (NLRA). On June 16, 2017, however, the federal government filed a brief taking the exact opposite position, namely that class-action waivers in arbitration agreements should be enforced. This flip-flop in position is quite extraordinary, even with the change in administrations, making this important case one to watch next term. Here are the issues at stake for employers.

NLRB Appeal of Murphy Oil Case

With its controversial 2012 decision in the D.R. Horton case, the National Labor Relations Board (NLRB) has advocated that arbitration agreements between an employer and its employees that ban employees from pursuing work-related claims as a class or group are unenforceable as they violate employees’ rights to engage in concerted activities for their mutual aid and protection under the NLRA. In 2013, the Fifth Circuit Court of Appeals overturned the NLRB’s ruling in D.R. Horton, holding that the use of class action procedures is not a “substantive right” of employees under the NLRA and therefore, arbitration agreements with class-action waivers should be enforced under the Federal Arbitration Act (FAA).

The Fifth Circuit rejected the NLRB’s view on class-action waivers a second time when it ruled that Murphy Oil, which operates more than 1,000 gas stations in 21 states, did not commit an unfair labor practice when enforcing its arbitration agreements that required employees to resolve work-related claims on an individual basis. Two other appellate circuits – the Second and Eighth – have agreed with the Fifth Circuit’s position that class-action waivers are enforceable. Other circuits, however, including the Ninth and Seventh, have ruled in favor of the NLRB on this issue, creating inconsistencies concerning whether such agreements are lawful.

In the closing days of the Obama administration in September 2016, the Office of the Solicitor General (which is tasked with conducting government litigation before the Supreme Court) filed a petition with the Supreme Court asking it to decide the validity of class-action waivers in arbitration agreements through appeal of the Murphy Oil case. The government argued on behalf of the NLRB that such agreements were unlawful. Employers Ernst & Young and Epic Systems also sought Supreme Court review of their adverse decisions from other circuits on this same issue. In January 2017, just days before President Trump’s inauguration, the high court agreed to hear all three consolidated cases in its next term.

The NLRB Left To Go It Alone

When the United States filed its brief with the Supreme Court last week changing positions, it did so as a “friend of the court.” The June 16th brief is signed by lawyers from the Solicitor General’s office but not by any NLRB lawyers – although both offices were signatories to the original petition seeking review.

Under the Court’s briefing schedule, briefs from the NLRB and the employee-petitioners are due on August 9, 2017. According to a short statement on the NLRB’s website, the Solicitor General’s Office “authorized the National Labor Relations Board to represent itself” in the Murphy Oil case before the Supreme Court. This sets up a unique situation for oral arguments this fall when a lawyer from the Solicitor General’s office may argue against a lawyer for another federal agency, the NLRB.

What It Means For Employers

The change in position by the Solicitor General’s Office could lend additional weight to the employers’ arguments in favor of upholding class-action waivers in arbitration agreements. It is a business-friendly position that reins in the extensive reach of the NLRB in recent years. If the Supreme Court rules in favor of employers and against the NLRB, businesses will be able to enforce arbitration agreements containing class action waivers nationwide. We will keep you posted as this case proceeds to a ruling, which could be published about this time next year. Stay tuned!

June 20, 2017

No-Recording Policies: May Employers Ban All Worker Recordings?

By Steve Gutierrez

With a smartphone in almost every pocket, workers have high definition video and audio recording capabilities at their fingertips. It may be easier than ever before for employees to record workplace operations, meetings, disciplinary discussions, picketing, and other conditions and happenings in the workplace.

Some employers see potential worker recordings as detrimental to open and honest workplace dialogue and as well as potentially undermining a company’s protection of its proprietary or confidential information. These concerns may lead employers to adopt a policy to limit or prohibit employees from making recordings at work. After all, it seems inherently reasonable to require that employees get prior management approval before recording anything at work, or to limit what employees may do with video or audio recordings after they are made. So what’s the problem? Broad recording bans may infringe on employees’ rights under the National Labor Relations Act (NLRA).

How Policies May Violate The NLRA

Section 7 of the NLRA guarantees employees the right to “engage in . . . concerted activities for the purpose of collective bargaining or other mutual aid or protection.” This means that employees, whether unionized or not, have the right to take actions to help protect, enhance, or improve the terms and conditions of employment for themselves and their co-workers. Employers who interfere with or restrain employees’ Section 7 rights may be found to have committed an unfair labor practice (ULP) under the NLRA.

So how does a no-recording policy interfere with such rights? Even when a policy or rule does not expressly restrict protected Section 7 activities, mere maintenance of a policy can constitute a ULP in three scenarios: (1) if employees would reasonably construe the language in the policy to prohibit protected activity; (2) if the policy was implemented in response to union activity; or (3) if the policy has been applied to restrict the exercise of protected rights.

Overly Broad Restrictions May “Chill” Section 7 Rights

Typically, it is the first scenario that gets employers in trouble. You see, the National Labor Relations Board (Board) has held that in certain circumstances, employee recordings in the workplace can itself be a protected Section 7 activity. Generally, the Board finds that employee photographing, videotaping, and recording is protected by Section 7 when employees are acting in concert for their mutual aid and protection and there is no overriding employer interest. For example, employees recording images of employee picketing, or documenting discussions about unsafe working conditions, inconsistent application of work rules, or other terms of employment could be concerted activities protected under the NLRA.

When employers implement an overly broad policy that prohibits employees from making any workplace recordings, or permits recordings only with advance management approval, the Board takes the position that employees would reasonably construe that language as prohibiting protected Section 7 activities. As such, broad no-recording policies are seen as “chilling” employee rights, and therefore, a violation of the NLRA.

Second Circuit Recently Upheld ULP On Broad No-Recording Policy

In December of 2015, the Board ruled that Whole Foods had violated the NLRA by maintaining an overbroad no-recording policy. The company’s policy prohibited all recording without management approval. Whole Foods stated that its purpose for the policy was to promote employee communication in the workplace. The Board saw it differently, ruling that the policy’s overly broad language could “chill” an employee’s exercise of Section 7 rights because it was not limited to controlling those activities in which employees are not acting in concert.

Whole Foods appealed the Board’s decision to the Second Circuit Court of Appeals which recently issued its summary order affirming the Board’s 2015 decision. The appellate court wrote that the Board’s determination was supported by substantial evidence and was decided in accordance with law.

In a footnote, however, the Court noted that not every no-recording policy will necessarily infringe on employees’ Section 7 rights. But a lawful policy would have to be drafted narrowly so that it protects the company’s interests without interfering with employees’ protected activities.

Practical Policy Pointers

Employers generally have the right to control what goes on in their workplaces, so long as their policies do not violate specific employee rights. Legitimate business concerns, such as protecting confidential and proprietary information and fostering open and honest communications in the workplace, may justify a policy that limits employees from recording what goes on at work. In order to craft an enforceable policy that would likely avoid NLRB scrutiny, consider implementing the following practical tips:

Tailor the policy narrowly – identify those areas, activities, and/or times when employees are prohibited from recording, leaving non-problematic areas, activities, and times open to recording. An outright ban will likely be struck down.
Identify the legitimate reasons for the policy – by stating the strong business reasons for not allowing recording at certain times or places, employers help dispel the argument that the policy infringes on employee rights.
Be consistent – if your business permits visitors to your plant to take video or audio recordings of your operation, it will be difficult to argue a legitimate business reason for denying employees to make recordings in the same areas. Similarly, if your business has surveillance cameras throughout the workplace, it may be difficult to argue that employee recordings will harm your business interests. Also, be consistent in policy enforcement because allowing some employees to record while denying that ability to other similarly situated employees will lead to trouble.
Include a disclaimer – the policy should state that it is not intended to infringe on any employee’s right to engage in protected concerted activity.

Like most employment policies, a no-recording policy should reflect your specific business interests and industry and be narrowly tailored to achieve your end goal. If in doubt about whether you need or should revise a no-recording policy, please consult with your employment attorney.

March 21, 2017

Supreme Court Rules That NLRB Acting GC Became Ineligible To Serve After Nomination To Permanent Role

By Steve Gutierrez

Once a President nominates a candidate for a Senate-confirmed office, that person may not serve in an acting capacity for that office while awaiting Senate confirmation, pursuant to a ruling today by the U.S. Supreme Court. In a 6-to-2 decision, the Court ruled that Lafe Solomon, who had been appointed by President Obama to serve as acting general counsel for the National Labor Relations Board (NLRB) during a vacancy, could no longer serve in that acting role after the President later nominated him to fill the position outright.

NLRB General Counsel Appointment

The position of general counsel of the NLRB must be filled through an appointment by the President with the advice and consent of the Senate – a so-called “PAS” office. When a vacancy in a PAS office arises, the President is permitted to direct certain officials to serve in the vacant position temporarily in an acting capacity. Under the Federal Vacancies Reform Act of 1998 (FVRA), only three classes of government officials may become acting officers. The FVRA, however, prohibits certain persons from serving in an acting capacity once the President puts that person forward as the nominee to fill the position permanently.

In Lafe Solomon’s case, he was directed by President Obama in June 2010 to serve temporarily as the NLRB’s acting general counsel when the former general counsel resigned. Solomon had worked for ten years as the Director of the NLRB’s Office of Representation Appeals and was within the classes of officials who could be directed to serve in an acting capacity under the FVRA. In January 2011, President Obama nominated Solomon to serve as the NLRB’s general counsel on a permanent basis. Solomon continued to serve as acting general counsel for an additional two-plus years as the Senate failed to act on his nomination. In mid-2013, the President withdrew Solomon’s nomination, putting forward another candidate whom the Senate confirmed in late October 2013.

Company Facing ULP Argued Solomon Couldn’t Be Acting GC After Nomination

In January 2013, while Solomon was acting general counsel, SW General, Inc., a company that provides ambulance services, received a complaint alleging it committed an unfair labor practice (ULP) for failing to pay certain bonuses to employees. After an administrative law judge and the NLRB concluded that SW General had committed the ULP, the company argued in court that the complaint was invalid because Solomon could not legally perform the acting general counsel duties after the President had nominated him for the permanent position. The company pointed to wording in the FVRA restricting the ability of acting officers to serve after being nominated to hold the position permanently. Whether the FVRA prohibits all classes of acting officials or only first assistants who automatically assume acting duties from continuing to serve after nomination was the issue before the Supreme Court.

Once Nominated, Official Is No Longer Eligible To Serve In Acting Capacity

The Court ruled that once a person has been nominated for a vacant PAS office, he or she may not perform the duties of that office in an acting capacity. The Court rejected the NLRB’s position that the FVRA restricted only first assistants who were in an acting capacity, rather than restricting all classes of officials directed to serve in an acting capacity who are later nominated for the permanent position. In applying its ruling to Lafe Solomon, the Court ruled that Solomon’s continued service as the NLRB acting general counsel after he had been nominated to fill that position permanently violated the FVRA. NLRB v. SW General, Inc., ___ 580 U.S. ___ (2017).

Solomon’s Actions “Voidable”

So what does this mean for all of Solomon’s actions taken during the over two-year period in which Solomon improperly served as the acting general counsel after his nomination for the permanent position? For example, what happens to the ULP complaints filed by, or at Solomon’s direction, during that period?

The Court noted in a footnote that the FVRA exempts the general counsel of the NLRB from the general rule that actions taken in violation of the FVRA are void ab initio (i.e. from the beginning). The Court of Appeals had ruled that Solomon’s actions during that period were “voidable.” Because the NLRB did not appeal that part of the lower appellate court’s ruling, it was not before the Supreme Court to decide. Consequently, the Court of Appeals’ decision that Solomon’s actions are voidable stands. Accordingly, each action taken by Solomon during the time that he improperly served as acting general counsel would need to be challenged on an individual basis.

August 24, 2016

NLRB Reverses Position on Grad Student Assistants, Allowing Them To Unionize

By Steven Gutierrez

Overruling its 2004 Brown University decision, the National Labor Relations Board (NLRB or Board) decided that graduate student assistants at private colleges and universities can be considered statutory employees under the National Labor Relations Act (NLRA), permitting them to organize and form a union. Columbia University, 364 NLRB 90 (August 23, 2016). The Board concluded that student assistants who perform paid work at the direction of their university have a common-law employment relationship with the university and therefore, are entitled to the protections of the NLRA.

Why Brown University Was Wrong

The 2004 Board that decided this issue in Brown University ruled that graduate assistants could not be statutory employees under the NLRA because they are primarily students and have a primarily educational relationship with the university, not an economic one. The current Board rejected that view, finding that because student assistants perform work, at the direction of the university, for which they are compensated, they are statutory employees and the fact that there may be another relationship not covered by the NLRA, namely an educational relationship, did not foreclose their coverage as employees.

The current Board also disagreed with the Brown University Board’s “fundamental belief that the imposition of collective bargaining on graduate students would improperly intrude into the educational process and would be inconsistent with the purposes and policies of the [NLRA].” Instead, this Board believes that allowing grad assistants to be covered employees meets the “unequivocal policy” of the NLRA to encourage the practice and procedure of collective bargaining, and will make sure that an entire category of workers are not deprived of the protections of the law.

Multiple Flip-Flops On Graduate Assistants

In overruling Brown University, the Board’s position returns to the position held in the 2000 New York University (NYU) ruling, which itself was overruled in Brown University. Prior to the NYU ruling, however, the Board had long held that various student assistants could not be included in petitioned-for bargaining units.

This new flip-flop on the issue of coverage for graduate student assistants is not surprising given the leanings and make-up of the majority of the current Board, which has favored the extension of coverage and its jurisdiction, when possible. Board member Philip Miscimarra dissented in this case, writing that he agreed with the Brown University reasoning that graduate student assistants have a predominately academic, rather than economic, relationship with their school. He would not have overruled Brown University, or permitted the petitioned-for bargaining unit to proceed. Read more >>

January 12, 2016

Anticipating Revisions To The “Persuader Rules” – What You Need To Know

By Brian Mumaugh

As early as March, the U.S. Department of Labor (DOL) plans to issue its final rules that will significantly narrow the type of union-avoidance activities that employers and their labor attorneys and relations consultants may engage in without having to report those activities to the government. The tightening of the so-call “persuader rules” will mean that employers who utilize labor relations consultants, including lawyers, to help with union-avoidance or collective bargaining activities will need to disclose many more of those activities, and the fees paid for them.

Evolution of the “Persuader Rules”

In the late 1950’s, because of perceived questionable conduct by both unions and employers involved in union organizing and collective bargaining campaigns, Congress enacted the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA). The LMRDA seeks to make labor-management relations more transparent by imposing reporting and disclosure requirements on labor organizations and their officials, employers, and labor relations consultants.

Under the LMRDA, the reporting requirements for employers and their labor consultants are triggered when they undertake activities intended to directly or indirectly persuade employees to exercise (or not to exercise) the employees’ right to organize and bargain collectively through representatives of their own choosing. Employers must file a Form LM-10 (Employer Report) that discloses all payments made to unions and union officials, persuader payments made to employees and employee committees, persuader agreements/arrangements made with labor relations consultants, including lawyers, which includes the amount and dates of payments made to such consultants, and any expenditures made to interfere with, restrain or coerce employees, or otherwise obtain information concerning employees or a labor organization. Labor relations consultants must file a Form LM-20 specifying, among other things, information about the consultant and the nature of the “persuader activities” to be performed. Under the LMRDA, the DOL must make all such forms available for public inspection.

The “Advice” Exemption

The LMRDA contains an exemption from the reporting requirements for persuader activities for services that give “advice” to the employer. Except for brief periods when the LMRDA was first enacted and again in 2001, the DOL has interpreted this “advice” exemption to apply to activities where a consultant or lawyer prepares a speech or documents for use by the employer, or revises materials initially drafted by the employer. In other words, as long as the consultant or lawyer did not directly deliver or disseminate speeches or materials to employees for the purpose of persuading them with respect to their organizational or bargaining rights, behind-the-scenes activities where the consultant/lawyer drafts materials for use by the employer would not trigger a reporting obligation. Under the proposed rules, that is about to change.

Expanded Proposed Interpretation of “Advice” Exemption

Believing its long-standing interpretation of the “advice” exemption to be overly broad, the DOL proposed a narrower interpretation that would require reporting in any case in which the agreement or arrangement with a labor consultant/lawyer in any way calls for the consultant to engage in persuader activities, regardless of whether or not advice is also given. The revised interpretation would define reportable “persuader activity” to include activities where a lawyer or consultant provides material or communications to, or engages in other actions, conduct, or communications on behalf of an employer that at least in part, has the objective of persuading employees concerning their rights to organize or bargain collectively. Exempt “advice” would be limited to recommendations, verbal or written, regarding an employer’s decision or course of conduct.

Stated examples of covered persuader activities that would require disclosure include:

drafting, revising, or providing written materials for presentation, dissemination, or distribution to employees
drafting, revising, or providing a speech, video, or multi-media presentation to be presented, shown or distributed to employees
drafting, revising, or providing website content for employees
planning or conducting individual or group employee meetings, and training supervisors or employer representatives to do the same
coordinating or directing the activities of supervisors or employer representatives
establishing or facilitating employee committees
developing personnel policies or practices
deciding which employees to target for persuader activity or disciplinary action
conducting a seminar for supervisors or employer representatives

The DOL justifies this expansion of the reporting circumstances, in part, because the role of outside consultants and law firms in managing employers’ anti-union efforts has grown substantially over the years, citing reports that somewhere between 71% and 87% of employers facing organizing drives hire third-party consultants to assist in their counter-organizing efforts. The DOL also states that underreporting of persuader activities is a problem as “employees are not receiving the information that Congress intended they receive.” Regardless of its reasoning, the DOL’s proposed change of its 50-year old interpretation will result in significant burdens on both employers and their consultants.

March 2016 Is New Target Date for Final Rule

Almost five years has passed since the DOL published its proposed rule changing the “persuader rules.” After numerous delays in publishing its final rules, the DOL’s regulatory agenda indicates that it expects to issue the final “persuader rules” this March. We will let you know when the final rules are published, or if the timeline changes. In the meantime, you might want to take advantage of the next few months before the new rules kick in to obtain union-avoidance materials and training from your consultants now. At a minimum, talk to your labor relations consultant/labor lawyer about the upcoming changes so that you are aware of how they may impact your labor strategies in the future.

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December 4, 2015

Court Upholds NLRB Ruling On Overly Broad Employment Policies

By Steven M. Gutierrez

The National Labor Relations Board (NLRB or Board) may feel emboldened after a recent ruling by the District of Columbia Circuit Court of Appeals, which upheld the Board’s decision that an employer’s policies on investigation confidentiality, electronic communications, and work hours were overly broad, potentially chilling employees’ rights to engage in protected concerted activities. As a result, employers should expect the further onslaught of NLRB attacks on seemingly neutral employment policies to continue, or worse, escalate.

NLRB’s Attack on Handbook Policies

In recent years, the Board has scrutinized many handbook policies, including those of non-union employers. As we’ve written in a past post, the NLRB attacks those policies that it believes interferes with, or chills, employees’ §7 rights to form labor organizations, bargain collectively, and engage in similar concerted activities. If the employer’s policy or rule would reasonably tend to chill employees in the exercise of their statutory rights, then the employer violates §8(a)(1) of the National Labor Relations Act, committing an unfair labor practice.

Analysis of Whether Policies Violate NLRA

The D.C. Court of Appeals set forth the proper analysis for determining whether an employment policy or work rule can amount to an unfair labor practice under the National Labor Relations Act (NLRA). Hyundai Am. Shipping Agency, Inc. v. NLRB, No. 11-1351 (D.C.Cir. Nov. 6, 2015). First, the Board must determine whether the policy explicitly restricts §7 rights, such as by restricting employees from discussing or forming a union. An explicit restriction on employees’ rights will invalidate the policy, amounting to an unfair labor practice.

In the absence of an explicit restriction on §7 rights, the Board must ask whether the rule:

could be reasonably construed by employees to restrict §7 activity;
was adopted in response to such activity; or
has been used to restrict such activity.

If the answer is “yes” to any of these three questions, then the employer must show an adequate justification for the restrictive language to avoid it constituting an unfair labor practice.

Court Upholds Board Order On Three Policies

The Court reviewed the Board’s order regarding four policies maintained by employer Hyundai America Shipping Agency in its employee handbook, namely its policies on investigation confidentiality, electronic communications, work hours, and complaint provisions. Here is how the Court analyzed whether the Board correctly concluded that each of the policies was restrictive of employees’ §7 rights:

Investigative Confidentiality Rule: Hyundai had an oral rule that prohibited employees from discussing information about matters under investigation. The Court stated that “this blanket confidentiality rule clearly limited employees’ §7 rights to discuss their employment.” The Court then looked at whether Hyundai had offered a legitimate and substantial business justification for the rule that outweighed the adverse effect on its employees’ rights. While acknowledging that there may be a legitimate business justification for mandating confidentiality for particular types of investigations, such as sexual harassment investigations, the Court found that those concerns did not justify a ban on discussion of all investigations. Because the confidentiality rule was overly broad, the Court upheld the Board’s determination that it violated the NLRA.

Electronic Communications Rule: The electronic communications policy in Hyundai’s employee handbook stated that employees should only disclose information or messages from the company’s electronic communications systems to authorized persons. The Court stated that the key to determining the validity of this policy was whether the prohibition was limited to confidential information. Because Hyundai’s rule was not limited to the disclosure of confidential information, a reasonable reader could conclude that it applied to information about the terms and conditions of employment and therefore, it was overly broad and invalid.

Working Hours Rule: Hyundai maintained a handbook policy that allowed for employees to be disciplined, including termination, for “[p]erforming activities other than Company work during working hours.” Here, the key distinction is the use of the phrase “working hours” rather than “working time.” “Working time” excludes break periods so restrictions on union activity during working time is acceptable. On the other hand, “working hours” describes the period from the beginning of a shift to its end, including breaks. Because restrictions on union activity during working hours (sg., including break time) is presumptively invalid, the Court upheld the Board’s conclusion that Hyundai’s rule was invalid.

Complaint Provision: Hyundai’s handbook provided that employees should voice complaints directly to their immediate supervisor or to Human Resources, rather than complaining to fellow employees which would not resolve the problem. Although the Board had ruled this provision invalid, believing it prohibited employees from complaining about the terms or conditions of work among themselves, the Court disagreed. It stated that although the rule urged employees to voice complaints to a supervisor or to Human Resources, it was not mandatory, did not preclude alternative discussions, and did not provide penalties if an employee complained to fellow employees. Therefore, the Court found that the language would not be read to prohibit complaints protected by §7.

Court Rejects NLRB’s Investigation Confidentiality Rule Standard Affirmed in Banner Health

Interestingly, while discussing Hyundai’s investigation confidentiality rule, the Court rejected the ALJ’s opinion that in order to show a legitimate and substantial justification for an investigation confidentiality policy, the employer must determine whether any “investigation witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated and there is a need to prevent a cover up.” The NLRB had reaffirmed that standard in its widely cited Banner Health ruling on confidential investigation policies.

The D.C. Court of Appeals stated that it “need not and do[es] not endorse the ALJ’s novel view” on how employer’s must show a legitimate justification for an investigation confidentiality rule. The Court instead simply held that Hyundai’s confidentiality rule was “so broad and undifferentiated that the Board reasonably concluded that Hyundai did not present a legitimate business justification for it.”

Review and Narrow Your Policies

To help avoid NLRB scrutiny, review your employee handbook and other employment policies to determine whether any language could potentially chill employees’ §7 rights. If possible, narrow any restrictions that may infringe on employees’ rights and make certain that your organization can articulate a legitimate and substantial justification for your restrictions. Because these issues are continually evolving, discuss any questionable policy wording with your employment counsel.

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