On July 17, 2025, President Trump announced his selection of two choices for the National Labor Relations Board (NLRB). The President tapped Scott Mayer and James Murphy to fill those seats. If confirmed, Mayer and Murphy would fill two seats that have been vacant since President Trump returned to the White House. Mayer currently serves as Boeing’s Chief Labor Counsel and has been in that role since 2022. Murphy is a longtime NLRB official who first clerked for the NLRB in 1974 and most recently served as Chief Counsel to Marvin Kaplan, chair of the NLRB. Both bring strong management-side credentials to the table. Subject to Senate confirmation, Mayer and Murphy filling two of the three vacant seats will provide the NLRB with a quorum and enable it to issue decisions, engage in rulemaking, and fulfill its statutory duties. The NLRB has lacked a quorum since President Trump’s controversial termination of former member Gwynne Wilcox. Those in opposition to their nomination argue that, procedurally, they should not be confirmed until the validity of the termination of Wilcox is resolved by the federal courts. For questions regarding these nominations, the anticipated impact of the NLRB regaining a quorum, or other labor-related issues, please contact a member of Polsinelli’s Management-Labor Relations Practice Group.

The Ninth Circuit has now joined a growing number of appellate courts holding that, in Fair Labor Standards Act (FLSA) collective actions, personal jurisdiction must be determined on a claim-by-claim basis when general jurisdiction over the defendant is absent. In Harrington v. Cracker Barrel Old Country Stores, Inc., a group of current and former employees alleged that Cracker Barrel had violated the FLSA in its treatment of tipped workers’ wages. The case was filed in the District of Arizona, though Cracker Barrel is incorporated and headquartered in Tennessee. The plaintiffs sought conditional certification of a nationwide collective action. Following the traditional two-step certification process, the district court conditionally certified the collective and authorized notice to be sent nationwide, reasoning that the presence of a single plaintiff with a connection to the forum state sufficed to establish specific personal jurisdiction for all claims. Cracker Barrel then asked for an interlocutory appeal on three issues. The Ninth Circuit affirmed the district court on two, but took up the third question: Does the Supreme Court’s decision in Bristol-Myers Squibb Co. v. Superior Court of California apply to FLSA collective actions in federal court, thereby rendering nationwide notice improper? In Bristol-Myers Squibb Co. v. Superior Court of California, 582 U.S. 255 (2017), the Supreme Court held that the Fourteenth Amendment’s Due Process Clause prohibits state courts from exercising specific personal jurisdiction over claims by non-resident plaintiffs against a non-resident defendant when the claims lack a sufficient connection to the forum state. The Third, Sixth, Seventh and Eighth Circuits have already extended this principle to FLSA collective actions, while only the First Circuit has reached a different conclusion. Aligning with the majority, the Ninth Circuit held that when a collective action is based on specific personal jurisdiction — that is, where the defendant is neither incorporated nor headquartered in the forum state — each opt-in plaintiff’s claim must be evaluated for its connection to the defendant’s activities in that state. Accordingly, the Ninth Circuit reversed the District of Arizona’s authorization of nationwide notice, concluding it was based on the “mistaken assumption” that such specific personal jurisdictional analysis was unnecessary. For questions and assistance regarding collective actions or other issues involving the FLSA or other wage-and-hour laws, please contact your Polsinelli attorney. 

What You Need to Know The U.S. Department of Labor has announced it will no longer enforce the 2024 independent contractor rule under the Fair Labor Standards Act (FLSA), reverting to the more employer-friendly 2008 “economic reality” test. The 2008 Rule and a reinstated 2019 Opinion Letter—favorable to app-based and gig economy businesses—will guide enforcement actions, emphasizing factors like control, investment, and profit/loss potential to determine worker status. While the shift is seen as beneficial to businesses, employers must continue to monitor developments and ensure compliance with federal, state, and local classification standards to avoid misclassification penalties. On May 1, 2025, the Wage and Hour Division of the U.S. Department of Labor (“DOL”) announced that it will no longer enforce its 2024 independent contractor rule under the Fair Labor Standards Act (“FLSA”). The nixed 2024 rule previously set forth a six-factor test to classify workers as employees or independent contractors based on a “totality of the circumstances test” of non-exhaustive factors. The 2024 rule had been subject to numerous legal challenges in district courts across the country because employers considered it to skew towards classifying workers as independent contractors. Now, the DOL will revert back to the framework set out back in 2008 in Fact Sheet #13 (the “2008 Rule”) until it can develop a revised standard. The DOL’s Guiding Independent Contractor Standard (for now) The 2008 Rule asserts that “an employee, as distinguished from a person who is engaged in a business of his or her own, is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business which he or she serves.” Under this 2008 Rule, the employer-employee relationship under the FLSA is tested by “economic reality” rather than “technical concepts.” It also states that the following factors are considered significant in determining whether there is an employee or independent contractor relationship: The extent to which the services rendered are an integral part of the principal’s business; The permanency of the relationship; The amount of the alleged contractor’s investment in facilities and equipment; The nature and degree of control by the principal; The alleged contractor’s opportunities for profit and loss; The amount of initiative, judgment, or foresight in open market competition with others required for the success of the claimed independent contractor; and The degree of independent business organization and operation. Finally, the 2008 Rule provides that certain factors, such as (i) where work is performed; (ii) the absence of a formal employment agreement; (iii) whether an alleged independent contractor is licensed by a state or local government; and (iv) the time or mode of pay, are immaterial to determining whether there is an employment relationship. Impact of the DOL’s Recent Departure from the 2024 Test The DOL’s announcement does not formally revoke the 2024 rule, but it does indicate that changes to the rule will be forthcoming. The DOL will now utilize the Fact Sheet #13 and a 2019 Opinion Letter (which was previously withdrawn) to conduct audits and other enforcement actions. The 2019 Opinion Letter re-instituted by the DOL on May 2, 2025, addresses whether the workers of a virtual marketplace company that provides an “online and/or smartphone-based referral service that connects service providers to end-market consumers” are independent contractors or employees. In essence, the 2019 Opinion Letter concludes that these “on-demand” workers for virtual marketplace companies, who perform services for users (such as transportation, delivery, shopping, moving, etc.), are independent contractors, not employees. App-based rideshare companies and other similar technology-based service companies will be directly impacted by the DOL’s announcement. While these recent DOL announcements are generally viewed as more employer-friendly, time will tell if that is the practical reality of these changes. Don’t forget – state and local laws can impact the analysis of proper worker classification, so employers need to stay vigilant to ensure they are not making any major changes that would violate those pesky geographic nuances. Employers Should Proactively Monitor This Area Employers should evaluate their existing employee classifications in light of these recent developments to ensure that employees are properly classified to avoid violations of the FLSA’s requirements, including minimum wage, overtime, and recordkeeping. This is particularly important for employers to consider because misclassification issues can be costly. Additionally, employers need to stay alert for any further changes because the DOL has signaled that additional rulemaking regarding independent contractor classification under the FLSA is expected. Please contact your Polsinelli attorney if you have any questions related to this important legal development.

On November 13, 2024, the National Labor Relations Board (“NLRB”) issued a sharply divided decision in Amazon.com Services LLC, overruling yet another decades-old rule and holding that captive-‍audience meetings violate national labor law after being lawful since 1948. Captive-Audience Meetings. A captive-audience meeting occurs when employees are required to attend a meeting where the employer expresses its views on unionization. Under Section 8(c) of the National Labor Relations Act (the “Act”), employers are allowed to express those views so long as there is “no threat of reprisal or force or promise of benefit.” In 1948, the NLRB decided in Babcock & Wilcox Co. that the Act generally does not prohibit captive-audience meetings, even when attendance is compelled through implicit or explicit threats of discipline. The New Ruling. Calling the Babcock & Wilcox rule “largely unexplained” and “flawed as a matter of statutory policy,” the NLRB majority overruled the 76-year-old decision and held that captive-audience meetings and “other similar mandatory employer-employee encounters” are unfair labor practices under Section 8(a)(1) of the Act. The majority explained that such meetings “have a reasonable tendency to interfere with and coerce employees in the exercise of their Section 7 right to freely decide whether or not to unionize” when employees should “be free from such domination.” Under this decision, an employer violates the Act whenever it requires employees to attend a meeting for the employer to express its views on unionization, regardless of whether those expressions support or oppose unionization. What Meetings are Allowed? Under the majority’s decision, a voluntary workplace meeting during work hours is lawful if, reasonably in advance of the meeting, the employer provides and follows through with the following assurances to its employees: The employer intends to express its views on unionization at a meeting at which attendance is voluntary; Employees will not be subject to discipline, discharge, or other adverse consequences for failing to attend the meeting or for leaving the meeting; and The employer will not keep records of which employees attend, fail to attend, or leave the meeting. The Dissent. Member Kaplan, in a lengthy dissent, argued that an employer’s right to hold a captive-audience meeting is supported by the free speech provision in Section 8(c) of the Act, that they are not coercive, and that the majority’s decision unconstitutionally infringes on an employer’s right to free speech. To comply with the NLRB’s majority decision, employers should carefully adhere to the above guidelines for voluntary meetings. For questions and assistance regarding such meetings, please contact your Polsinelli attorney.

On November 8, 2024, the National Labor Relations Board (“NLRB”) issued a decision in Siren Retail Corp. d/b/a Starbucks, throwing out an almost 40-year-old rule that categorically allowed employers to tell their employees how unionization will impact the employer-employee relationship. The NLRB’s new standard will apply to cases filed after November 8, 2024. The Prior Standard. In 1985, the NLRB decided in Tri-Cast, Inc. that employers may lawfully tell their employees that, when they unionize, their relationship will change, and the employer will no longer be able to address individual grievances once the union is involved. Since that time, Tri-Cast, Inc. has been broadly applied as a categorical rule that explaining the negative consequences of unionization is not an unlawful threat, so long as the employer’s statements are truthful. The Starbucks Case. In Siren Retail Corp., the NLRB criticized the Tri-Cast, Inc. standard because it “categorically immunized nearly any employer statement to employees touching on the impact that unionization would have on the relationship between individual employees and their employer” when such statements “could have a reasonable tendency to coerce employees.” Although the NLRB kept the Tri-Cast, Inc. standard for the Siren Retail Corp. case to avoid an unfair result, it prospectively overruled Tri-Cast, Inc. for all cases filed after November 8, 2024. The “New” Standard. The NLRB’s decision in Siren Retail Corp. effectively tosses out the Tri-Cast, Inc. standard in favor of returning to an even older approach set forth in NLRB v. Gissel Packing Co., a case decided by the United States Supreme Court in 1969. Under the Gissel rule, an employer’s statements concerning the potential impact of unionization are evaluated on a case-by-case basis and must be “carefully phrased on the basis of objective fact to convey an employer’s belief as to demonstrably probable consequences beyond his control.” But if, under that case’s circumstances, the statement implies that the employer will act differently “solely on his own initiative for reasons unrelated to economic necessities,” then the statement will be considered an unlawful threat. What Should Employers Do Now? The “new” standard requires an employer’s statements to be not only substantiated with facts beyond the employer’s control but also carefully worded. Because it involves a case-by-case analysis, employers will not have certainty about the risks and legality of their communications. As such, it will be critical for employers to vet communications to employees about unionization efforts with experienced counsel. For questions and assistance regarding your statements to employees and how to comply with this new standard, please contact your Polsinelli attorney.

The National Labor Relations Board has issued a new rule that returns to pre-2019 union election standards. The primary impact is that workers will wait less time to vote on whether to unionize and employers will have less time respond to unionization efforts. The new rule will apply to representation petitions filed on or after December 26, 2023. One of the key revisions made by this new 2023 Rule is a requirement that elections are to be held prior to litigation being resolved. Previously, issues such as unlawful conduct and workers’ eligibility to vote were required to be litigated prior to an election being held. Another one of the key provisions is the elimination of a 20-day waiting period between approval of an election petition and the beginning of a vote. Instead, regional directors are now required to hold elections “at the earliest date practicable.” Employers are also now required to post the Notice of Petition for Election in conspicuous workplace locations within 2 business days after service of the Notice of Hearing. If employers regularly communicate with its employees electronically, the employer must also electronically distribute the notice within 2 business days. Previously employers had 5 days. Pre-election hearings must also commence within 8 calendar days from the service of the Notice of Hearing. Additionally, the 2023 Rule limits pre-election hearings to issues of whether representation is present. Issues such as the size and scope of a proposed unit or eligibility will be resolved after elections. In sum, under the 2023 Rule, employers must act quickly to protect their interests. Employers should contact their Polsinelli attorney immediately if they suspect a union campaign.

The National Labor Relations Board (the “Board”) issued its long-awaited decision regarding employer work rules that impacts both unionized and non-unionized workplaces. In Stericycle, the Board altered the standard for whether a seemingly neutral workplace rule is nevertheless unlawful. Now, for such a rule to be unlawful, the General Counsel must only prove that the rule has a “reasonable tendency” to chill employees from exercising their rights under the National Labor Relations Act. The new standard is a return to a more expansive interpretation of Section 7 Rights and erodes the balancing test that has been in place since the Board’s Boeing decision. The Board made clear that under the new standard employers may still rebut the General Counsel’s showing by proving that the rule advances a legitimate and substantial business interest. The employer must also demonstrate that they are unable to advance that same interest with a narrower rule. The Board also stated that the new workplace rule standard will be applied retroactively, meaning any workplace rules currently in place will be evaluated under this new standard. If an employer is engaged in a pending case regarding a workplace rule, that rule will also be evaluated under the new standard. The remedy in such a case will be to rescind the rule. Employers should contact their Polsinelli attorneys for assistance in reviewing their workplace rules and handbooks.

The General Counsel of the National Labor Relations Board (“NLRB”) set her sights on a new target with the latest memorandum: non-competition agreements. The memorandum, while not binding, lays out the General Counsel’s belief that the proffer, maintenance, and enforcement of agreements containing provisions prohibiting employees from competing with their former employer are unlawful because they have a tendency to chill employees’ rights under Section 7 of the National Labor Relations Act, which protects employees’ right to organize. Indeed, General Counsel Abruzzo states that “retaining employees or protecting special investments in training employees are unlikely to ever justify an overbroad non-compete provision.” Specifically, General Counsel Abruzzo provides that a non-compete provision in an employment or severance agreement is unlawful “when the provisions could reasonably be construed by employees to deny them the ability to quit or change jobs by cutting off their access to other employment opportunities that they are qualified for based on their experience, aptitudes, and preferences as to type and location of work.” These provisions, General Counsel Abruzzo believes, interfere with employees’ ability to: Concertedly threaten to resign to secure better working conditions; Carry out concerted threats to resign or otherwise concertedly resign to secure improved working conditions; Concertedly seek or accept employment with a local competitor to obtain better working conditions; Solicit their co-workers to go work for a local competitor as part of a broader course of protected concerted activity; Seek employment, at least in part, to specifically engage in protected activity, including union organizing, with other workers at an employer’s workplace. The memorandum notes that non-compete provisions that only restrict an individual’s managerial or ownership interest in a competitor could be lawful. Furthermore, it is important to note while the National Labor Relations Act applies to all workforces, including non-union workforces, it does not apply to statutory supervisors or managers. Consult your Polsinelli attorney for assistance evaluating your non-competes against this new guidance as well as other recent developments such as the Federal Trade Commission’s pending proposal addressing non-competes.

On March 22, 2023, the General Counsel of the National Labor Relations Board (the “Board”) issued a memorandum purporting to provide guidance in response to inquiries about the Board’s February 2023 decision in McLaren Macomb (which we covered in a previous blog post). In that decision, the Board held that the merely offering of a severance agreement containing broadly drafted nondisparagement and confidentiality provisions was unlawful under the National Labor Relations Act (the “Act”). The decision raised more questions than answers, which employers hoped would be resolved by the much-anticipated guidance from the General Counsel. While the guidance does not provide any specific examples of clauses that are permissible or impermissible, the General Counsel did offer further guidance on her interpretation of the decision that employers should weigh in drafting and enforcing separation agreements. The key takeaways are as follows: RetroactiveApplication. The memo confirmed that the decision applies retroactively, including to agreements entered prior to February 21, 2023. Further, the memo stated that the General Counsel believes that, despite the Act’s six-month statute of limitations period, “maintaining and/or enforcing a previously-entered severance agreement with unlawful provisions” will constitute a continuing violation, such that an unfair labor practice (ULP) charge would not be time-barred if filed beyond that six-month window. Application to Supervisors. While the General Counsel correctly noted that supervisors are not protected by the National Labor Relations Act, she references at least one scenario under which she “believe[s]” that severance agreements proffered to statutory supervisors may fall within the decision. Specifically, the General Counsel indicated that a provision that prevents a former supervisor from participating in a Board proceeding could be unlawful. Potential Consequences of Overbroad Clauses. The General Counsel indicated that Regions should generally seek to void only unlawful provisions, rather than the entire agreement. Foreshadowing the Board’s Next Targets. In addition to confidentiality and nondisparagement clauses, the General Counsel dubbed a number of other common contractual provisions as “problematic” and potentially unlawful, including restrictive covenants, “broad liability releases and covenants not to sue that may go beyond the employer and/or may go beyond employment claims and matters as of the effective date of the agreement,” and requirements that an employee participate in future investigations or proceedings. Polsinelli will continue to monitor developments from the Board regarding severance agreement.  Contact your Polsinelli attorney for further information on the General Counsel’s memorandum and for assistance in navigating the potential impact of the decision.

The National Labor Relations Board (the “Board”) issued another precedent-shifting decision, this time taking aim at provisions commonly included in severance agreements. In McLaren McComb, an employer now violates Section 8(a)(1) of the National Labor Relations Act (“the Act”) when it merely “proffers” a severance agreement that conditions severance benefits on the waiver or restriction of an employee’s exercise of his or her rights afforded by the Act, including broadly written provisions prohibiting the employee from disparaging the employer or disclosing the terms of the agreement. In its decision, the Board reasoned that a broad non-disparagement provision in a severance agreement is unlawful because “public statements by employees about the workplace are central to the exercise of employee rights under the Act.” Section 7 of the Act provides protections for employees who communicate with a wide variety of third parties (including on social media) regarding terms and conditions of employment, an ongoing labor dispute, and even former supervisors and coworkers. Thus, the Board reasoned, that conditioning receipt of severance benefits on acceptance of a non-disparagement provision has a chilling tendency on workers’ ability to communicate to improve the terms and conditions of their employment and, thus, constitutes a violation of the Act. The Board similarly reasoned that provisions that prohibit disclosure of the agreement’s terms “to any third person” are unlawful because of their chilling effect on the exercise of an employee’s Section 7 rights. While the Act applies to all employers – even those without a unionized workforce –employers still have opportunities to protect themselves. For example, the decision does not apply to employees who are excluded from the Act’s coverage, including supervisors. The ruling also does not grant employees carte blanche to say whatever they want. Rather, the Board placed limitations on its ruling, stating that “employee critique of employer policy pursuant to the clear right under the Act to publicize labor disputes is subject only to the requirement that employees’ communications not be so disloyal, reckless, or maliciously untrue.” Contact your Polsinelli attorney for assistance in navigating the decision’s potential impact on your agreements.

One year during the holidays, probably when I was about six or seven, I was gifted a Magic 8 Ball.  Hours were spent asking what I believed to be the most salient questions of the day, such as “Will the White Sox ever win the World Series?” or “Am I going to be an astronaut when I grow up?” or “Does this girl like me?”  Fast forward forty-plus years to my non-astronaut job, and the question I get most often from clients this time of year is, “Should Employers have any hope for impartiality and good decisions from the National Labor Relations Board (“NLRB” or the “Board”) in 2023?”  Posed to the old Magic 8 Ball, the answer is “Don’t count on it.” If the past week is prologue, 2023 is shaping up to be more 2022 than 2020.  Consider the following pro-Union, pro-employee decisions issued by the NLRB: Redefining “make whole” awards to include damages above and beyond backpay, for example, reimbursement for medical/transportation/legal expenses, increases in health insurance costs, in addition to other out-of-pocket expenses; Reversing precedent and permitting “micro-units” once again while shifting the burden to Employers to demonstrate the inappropriateness of a petitioned-for units under the “overwhelming community of interest standard”; Rejecting a request to undo the disclaimers, an Employer must provide to workers when defending unfair labor practice charges; and Limiting property owners’ rights to oust non-employee protesters from its property. All of these decisions were split, with the three Board Members appointed by a Democratic president constituting the majority. This week, the Magic 8 Ball provided the answer “Signs point to yes” when asked whether captive audience meetings (e.g., mandatory meetings where employers can relay facts, opinions, and experiences to employees to try and lawfully persuade them to vote against union representation) will be eliminated next year.  The NLRB General Counsel gave this present to unions/employees when she argued in a post-hearing brief that employer captive audience meetings are inherently coercive and should be outlawed.  It is expected that the Board will agree, effectively stripping one of an employer’s most effective tools to educate employees as to the risks of unionization. The Magic 8 Ball was kind when it answered, “Better not tell you now,” about whether the General Counsel’s Notice of Proposed Rulemaking will ruin the holidays for employers.  Any day now, we expect a reversal of the joint employer test, which would restore the Obama Board’s holding that two separate entities will be found joint employers, even if the secondary employer possesses only indirect control, which never is exercised.  This is a complete 180 from the NLRB’s current position on joint employers, where the secondary employer must exert substantial direct and immediate control over the primary employer’s employees. The General Counsel also is expected to formalize her more recent Notice of Proposed Rulemaking, which will bring back or modify: “Blocking charges” when unfair labor practices (“ULPs”) are committed during representation elections.  Instead of going ahead with elections and impounding ballots, the Region will indefinitely postpone elections, potentially for years, until ULPs are investigated and ultimately adjudicated. The voluntary recognition bar.  Procedural safeguards (i.e., notifying the NLRB of voluntary recognition and allowing a 45-day window for a challenge) would be swept away in favor of a complete and immediate bar that would preclude employees from decertifying unions they did not elect and/or rival unions to file an election petition. Construction industry voluntary recognition rules where employers/employees/rival unions will be limited to six months to challenge voluntary recognition under a pre-hire contract.  Likewise, the Board will honor collective bargaining agreements that seek to convert Section 8(f) contracts (which can be terminated with proper notice upon expiration) to 9(a) agreements (which would need to be decertified by employees). With such favorable policies coming from the Board, the Magic 8 Ball has suggested that “It is decidedly so” as to whether we should continue to expect an increase in union organizing and strikes.  Representation petitions increased by 53% this calendar year, and high-profile organizing and disputes at Starbucks, Amazon and Apple littered the news.  The New York Times’ employees went on strike, and Twitter janitors also walked off the job.  With the Board making it easier than ever to unionize, employers will face heightened challenges to remaining non-Union. While the prognosis does not look great, there is one case that may receive a favorable result for employers.  The United States Supreme Court granted certiorari in a case called Glacier Northwest which, if it finds for the company, will allow employers to pursue litigation against unions that intentionally engage in property damage.  There, a union struck a concrete contractor when it was about to make a pour, effectively destroying the concrete and costing the employer several thousands of dollars.  The employer sued under an intentional tort theory, but on appeal, the Court of Appeals held that when an activity (such as the picketing in this case) is arguably subject to Section 7 or 8 of the Labor Act, state and federal courts must defer to the Board.  As the Board has found this activity protected (and consequently, the employer unable to recoup damages), a favorable decision from the Supreme Court would eliminate a tool unions have used to exert maximum (yet lawful) economic damage in labor disputes. The Magic 8 Ball says it is “Very doubtful” that “help” will arrive for employers from the Board before the next presidential election, at its earliest.  For those of our clients that would like to remain non-union, education and training of managers and supervisors as to the signs of union organizing is strongly recommended.  Please contact your Polsinelli attorney with any questions.  And try to enjoy the holidays!

December never is a “slow” month in “labor law land.” Even though offices are winding down and some are closing for the holidays, the National Labor Relations Board (the “Board”) always enjoys dropping a few seismic cases for unions/employees/employers to enjoy, huddling next to their fires. This year, the Board was in an especially giving mood, gifting two favorable decisions to unions and employees. First, the Board redefined what constitutes a “make whole” remedy, paving the way for damages above and beyond backpay, frontpay, and interest. In a 3-2 decision in a case called Thryv, Inc., the Democratic majority clarified that a “make whole” award must compensate affected employees for “all direct or foreseeable pecuniary harms” resulting from the employer’s unlawful conduct. The decision defines “direct harms” as “those in which an employee’s loss was the direct result of the [employer’s] illegal conduct” and “foreseeable harms” as “those which the [employer] knew or should have known would be likely to result from its violation of the Act, regardless of its intentions.” Examples of foreseeable pecuniary harms could include expenses for transportation, room, and Board; legal expenses and fees; medical expenses incurred, including any increases in premiums, copays, coinsurance, deductibles, other out-of-pocket expenses, and any unpaid medical bills; search-for-work and interim employment expenses; interest and late fees on credit cards, etc.  The dissenting members’ argument that “foreseeable harms” may permit employees to recover a windfall was not persuasive to the majority. In another 3-2 decision, the Board reversed recent precedent and reverted back to the Obama Board “micro-unit” test. In American Steel Construction, the Democratic majority re-shifted the burden back to employers and held that a union petitioned-for unit will be presumptively appropriate unless the employer proves that excluded employees have an “overwhelming” community of interest. Just a few years ago, the Trump Board held that unions had a burden to show “sufficiently distinct” community of interests in order to exclude employees from an otherwise “wall to wall” unit. With yesterday’s decision, unions will more easily be able to define proposed bargaining units and exclude employees who do not share their coworkers’ pro-union sympathies. This means that petitioned-for bargaining units, including groups of as little as two employees, will have an opportunity to vote in a union election, regardless of whether their coworkers share a community of interest. It has been clear for some time that the Board and General Counsel are doing their part to encourage, cultivate, and increase union density in the privatized workforce. In an upcoming blog, Polsinelli will share its thoughts on what to expect from the Board in 2023; spoiler alert, it is not welcome news to employers. In the interim, please contact your Polsinelli attorney for any questions about these decisions and related labor law issues.

The National Labor Relations Board has issued a proposed rule that would, once again, relax the burden to demonstrate joint employer liability. This action is a step toward reversing the Trump administration’s rule which provided that an employer only can be a joint employer of an unrelated entity if it exercised direct and immediate control over the unrelated entity’s employees. The proposed rule, which, based on the composition of the current Labor Board, will likely take effect, makes it easier to establish a joint employer relationship. For example, if companies share or co-determine essential job terms, joint employer status may be found, and both employers could be found liable for unfair labor practices.  It could also result in a non-employer (or an entity who believes it is not the employer) being required to engage in collective bargaining over non-employees.  The non-employer also could be subjected to picketing without violating the laws against secondary boycotts.  This would be the case even if an employer has indirect or unexercised control over the terms and conditions of a job. Employers may contact their Polsinelli attorney for assistance with the significant ramifications coming from the proposed rule.

We are pleased to release the next episode of "The Future is Now" hosted by Polsinelli's Labor & Employment Practice. In this podcast, Robert E. Entin, Shareholder, and Mark D. Nelson, Senior Partner, review the first year of National Labor Relations Board’s General Counsel, Jennifer Abruzzo, and what to expect for Year 2. Spoiler alert, things don’t look much better. Click here to listen to the full podcast.

This week, the National Labor Relations Board (NLRB) reversed a 2019 decision concerning union apparel bans in the workplace. This decision was the first of the Biden Administration era NLRB to shift precedent. In the split decision, the NLRB ruled that any attempt by an employer to restrict an employee’s ability to wear union clothing or insignia is “presumptively unlawful.” Now, employers may only restrict workers from wearing pro-union clothing or insignia if they are able to establish “special circumstances,” representing a heightened burden for employers to justify limitations on employees’ apparel. At issue was the employer’s apparel policy, which required employees to either wear black polos imprinted with the company’s logo or a black shirt with no logo. During a union organizing campaign, employees attempted to wear shirts bearing a union logo. The NLRB concluded that the employer’s policy implicitly prohibited employees from wearing pro-union apparel and insignia without the presence of special circumstances, as the employer had previously permitted production employees to wear different colored shirts or shirts with logos unrelated to the employer. Because no special circumstances were present to justify the policy, the NLRB ordered that the company rescind its policy prohibiting employees from wearing black shirts with pro-union insignia. This decision marks the first time the NLRB has issued a ruling that overturns or materially shifts Board precedent under the Biden Administration. Employers should be mindful of the changing landscape and are advised to contact their Polsinelli attorneys should they have questions on how such decisions impact them.

The National Labor Relations Board and The Department of Justice joined forces to sign a memorandum of understanding (“MOU”) between the two entities. The MOU follows President Biden’s Executive Order in 2021 aimed at increasing competition in the economy. The NLRB and DOJ plan to coordinate in order to ensure workers are able to freely exercise their rights and to protect competitive labor markets. According to the DOJ, this new partnership will allow the two agencies to “share information on potential violations of the antitrust and labor laws, collaborate on new policies and ensure that workers are protected from collusion and unlawful employer behavior.” The two agencies plan on greater coordination in information sharing, enforcement activity and training. Furthermore, the two agencies will now refer potential violations that they discover in their own investigations to each other. For employers, this continues the trend of the federal government stepping up their investigatory and enforcement actions. Employers should continue to consult with their Polsinelli attorney to ensure compliance with federal, state, and local laws.

On June 15, 2022, the U.S. Supreme Court issued its highly anticipated opinion in Viking River Cruises, Inc. v. Moriana, which considered whether or not claims brought under the California Private Attorneys General Act (“PAGA”) can be waived by an arbitration agreement. Existing case law in California held that PAGA claims could not be waived via an arbitration agreement because these claims are brought on behalf of the state. The defendant in Viking River Cruises challenged this California rule on the grounds that it was preempted by the Federal Arbitration Act (“FAA”). The Court’s nuanced opinion in Viking River Cruises delivers good news to California employers who use arbitration agreements with their employees insofar as the Court ruled that the FAA preempts California’s rule that PAGA actions cannot be divided into individual and representative claims. Thus, while the Court stopped short of invalidating California’s rule preventing wholesale waivers of PAGA claims via an arbitration agreement, the Court held that an enforceable arbitration agreement can mandate arbitration of individual PAGA claims. Therefore, in the case at issue, the Court ruled that the named PAGA representative’s individual PAGA claims were subject to an arbitration agreement she had signed with her employer. Although the arbitration agreement included a waiver of class, collective or representative PAGA actions, it also included a severability provision specifying that if the waiver was found invalid, such a dispute would be litigated in court, and any portion of the waiver that remained valid would be enforced in arbitration. As a result of having to arbitrate her individual PAGA claims, the Court further held that the named PAGA representative, therefore, lacked statutory standing to maintain her representative PAGA claims in court, and that these claims must be dismissed. While the precise implications of the Viking River Cruises case will likely be refined through further litigation, the Court’s opinion represents a favorable shift in the law for California employers who can now compel arbitration of an employee’s individual claims where that employee has signed an enforceable arbitration agreement that covers such claims, and seek dismissal of any related representative PAGA action for lack of standing. Additionally, following the Supreme Court’s decision in Viking River Cruises, the Ninth Circuit is set to consider a Petition for Rehearing en banc in another case, Chamber of Commerce of United States v. Bonta, which deals with the enforceability of AB 51, a new California law prohibiting mandatory arbitration agreements as a condition of employment which has been stayed pending the Court’s decision in Viking River Cruises. In light of the Viking River Cruises decision, employers will want to immediately review their arbitration agreements to evaluate whether they are effectively written to cover individual PAGA claims and avoid wholesale waivers of PAGA claims. As issues relating to California arbitration agreements continue to make their way through the courts, Polsinelli attorneys will be monitoring new developments in this area and remain prepared to assist employers with navigating these issues.

On March 15, 2022, the Office of Federal Contract Compliance Programs (OFCCP) issued its first directive of the Biden Administration to address the requirement that federal government contractors and subcontractors perform pay equity audits. Consistent with predictions that the Biden OFCCP would focus on pay equity enforcement, the new Directive 2022-01 highlights the requirement that federal contractors and subcontractors perform regular pay equity audits as part of their affirmative action program (AAP) obligations, and indicates that OFCCP will closely scrutinize the results of these audits during its compliance evaluations. OFCCP’s AAP regulations have long required that a federal contractor “perform in-depth analyses of its total employment process to determine whether and where impediments to equal employment opportunity exist,” including evaluation of “compensation system[s] to determine whether there are gender-, race-, or ethnicity-based disparities.” However, OFCCP has not previously provided specific guidance about the scope of this requirement.  In the new directive, OFCCP appears to take the position that the AAP regulations require that contractors perform a regular, in-depth pay equity audit of their workforce to identify potential disparities. More importantly, OFCCP’s directive also makes clear that the agency intends to request and scrutinize contractor pay equity audits in its compliance evaluations.  Under the directive, if a compliance evaluation “reveals disparities in pay or other concerns about the contractor’s compensation practices,” then OFCCP intends to request documentation of the contractor’s pay equity audits.  Some circumstances that OFCCP identifies as triggering a request for this follow-up information include: 1.     Pay disparities or evidence of pay discrimination among similarly-situated employees. 2.     Employee complaints of pay discrimination or other anecdotal evidence of discrimination. 3.     Inconsistencies in how the contractor is applying its pay policies. 4.     Statistical analyses or other evidence that a group of workers is disproportionately concentrated in lower paying positions or pay levels based on a protected characteristic. If one of these circumstances occurs, OFCCP will seek “a complete copy” of the pay equity audit showing all pay groupings that were evaluated, any variables used, and the results of the analyses. OFCCP will also seek information about model statistics if a statistical analysis is employed and the frequency of audits, communication to management, and how the results were used. The directive also takes an aggressive position regarding the privileged status of contractor pay equity audits.  Contractors commonly perform pay equity audits with the assistance of legal counsel in order to ensure the audit is protected from disclosure by the attorney-client privilege.  In the directive, however, OFCCP takes the position that because its regulations require that contractors maintain and provide OFCCP with evidence of their compliance with the AAP obligations, “contractors cannot withhold these documents by invoking attorney-client privilege or the attorney work-product doctrine.”  The directive does recognize, however, that a contractor may conduct a “separate” pay equity audit for the purpose of obtaining legal advice, not for compliance with OFCCP obligations, which remains privileged.  The directive asserts that the failure to provide pay equity audits in response to an OFCCP request will be considered “as an admission of noncompliance with these regulatory requirements.” The new directive ups the ante for federal contractors and subcontractors to perform regular pay equity audits as part of their AAP compliance efforts.  Such audits have always been advisable as a best practice to identify and rectify potential compensation disparities before they ripen into litigation, but are now a required exercise for those doing business with the federal government.  In light of OFCCP’s aggressive positions about the application of the attorney-client privilege to pay equity audits, contractors and their counsel will also need to carefully structure their audits in order to ensure that at least a portion of the audit remains protected from disclosure.

We are pleased to announce the launch of the first episode in the new Inside Law podcast series, “The Future is Now” hosted by Polsinelli's Labor & Employment practice. In this podcast, Rob Entin and Mark Nelson discuss the impact of the new National Labor Relations Board General Counsel Jennifer Abruzzo, her decades of experience with the Board, and what employers should expect in her aggressive pro-union agenda as the “chief prosecutor” of the National Labor Relations Act: significant change is on the horizon. Click here to listen to the full podcast.

Walkouts by non-union employees have increased sharply over the past couple of years. “Walkout Wednesdays” have become a favorite organizing strategy for labor unions. Unions, like SEIU, make a significant investment of their resources to galvanize non-union employees’ support and participation in walkouts. The National Labor Relations Act provides protections to employees who engage in protests with coworkers related to their own working conditions, as well as actions taken to support employees of another employer. Workers at a fast-food company with locations worldwide have staged walkouts to have their employer work collaboratively with them to create a plan to stamp out sexual harassment. The Labor Board would likely find that the walkout was protected because the company had the ability to effectuate the change employees demanded: the employer can choose to work with employees to eliminate sexual harassment in its workplaces. Employee rights in this area are not unlimited, however. Employees who stage a walkout to support a political cause or other concern over which the employer has no control, may find that the Act does not protect them from discipline or discharge. Consider a walkout by employees to protest existing health disparities in a city—how non-whites in general and African Americans in particular are at higher risk for conditions like cardiovascular disease and diabetes—as well as access to healthcare disparities. Does the employer have the ability to affect solutions to these healthcare matters? In many situations, this issue is beyond the control of a single employer and employees who stage a walkout may well be outside the protection of federal labor law if they are disciplined or discharged for their participation in the walkout. Likewise, employees who are represented by a union may not have the right to engage in walkouts during working time. Many collective bargaining agreements prohibit employees from engaging in any work stoppage during the term of the agreement. But, if the CBA has expired, or it does not prohibit work stoppages, the unionized employees may have the same right to engage in a walkout as non-union employees. Employers are well-advised to work with experienced labor counsel to plan for, or respond to, walkouts, or other types of job action employees may take.

On March 19, 2021, California Governor Gavin Newsom signed into law S.B. 95, which requires covered California employers to provide qualifying employees with up to 80 additional hours of COVID-19-related paid sick leave through September 30, 2021, upon oral or written request by the employee.  The new state law, which goes into effect beginning March 29, 2021, applies to all California employers with more than 25 employees.  Some of the more notable features of the new state law include: Establishing a new “bank” of 80 hours of COVID-19-related supplemental paid sick leave for covered employees Expanding the qualifying reasons for COVID-19-related sick leave under state law, including the addition of a COVID-19 vaccination appointment and recovery from COVID-19 vaccination-related symptoms as qualifying reasons for leave Requiring employers to provide employees with notice of their rights to expanded COVID-19-related leave Providing special COVID-19-related leave for providers of in-home supportive services and waiver personal care services Authorizing retroactive payments to employees who took unpaid leave for qualifying COVID-19-related reasons on or after January 1, 2021 The provisions of the new state law providing for retroactive payments to employees who took qualifying leave on or after January 1, 2021 are likely to cause problems for employers, who may find it difficult to question employee requests for such retroactive payments in the absence of detailed record-keeping that memorialized these employees’ stated reasons for having taken leave.  However, employers should note that they are not required to make such retroactive payments unless and until they receive an oral or written request from a covered employee. Additionally, employers should note that SB 95 allows for employers to offset any COVID-19 related leave provided to employees on or after January 1, 2021 that was payable for the same reasons and at the same rate as provided in SB 95. As COVID-19-related sick leave and other employment-related issues regarding COVID-19 continue to evolve, Polsinelli attorneys continue to monitor new developments in this area and remain prepared to assist employers with navigating these issues.

The American Rescue Plan that was sent to President Biden’s desk on March 11, 2021 includes an $86 Billion aid package that provides financial assistance to underfunded multiemployer pension plans facing critical or declining financial status. Upon signature, the bill will provide eligible underfunded plans with “special financial assistance.” The special financial assistance is designed to cover the payments of accrued pension benefits through the 2051 plan year and is not subject to any repayment obligations. Multiemployer pension plans eligible for special financial assistance include plans meeting any one of the below criteria: Plans in critical and declining status in any plan year from 2020 through 2022. Plans that have had a suspension of benefits approved under the provisions of the Multiemployer Pension Reform Act of 2014 as of the date the new American Rescue Plan becomes law. Plans certified by an actuary to be in critical status in any plan year from 2020 through 2022, have a modified funded percentage of less than 40 percent, and a ratio of less than 2 active participants to 3 inactive participants. Plans that became insolvent after December 16, 2014 that have not been terminated by the date the American Rescue Plan is signed into law. The Pension Benefit Guaranty Corporation (“PBGC”) has 120 days to issue regulations or guidance setting forth application requirements for special financial assistance. Because eligible plans have through December 31, 2025 to apply for special financial assistance, plans may not receive any special financial assistance for several years. Prior to sending the bill back to the House of Representatives, the Senate removed a significant provision concerning employer withdrawal liability. The original language drafted by the House of Representatives provided that an employer’s withdrawal liability would be calculated without taking into account the special financial assistance received by a pension plan for 15 calendar years following the receipt of such assistance. While the removal of this language may allow for quicker relief for employers, they are left without clarity as to how and when the special financial assistance will impact their withdrawal liability, if at all. Instead, employers must wait for the PBGC to issue regulations or guidance on the issue. The legislation provides extensive assistance to pension plans that were suffering long before the COVID-19 pandemic and ensures that many retirees will receive their full benefits. However, it does not freeze accruals, curtail the practices that led to the pension plans’ current underfunding problems, or otherwise provide guidance as to how the plans will function financially in 30 years when the special financial assistance ends. Polsinelli attorneys will continue to monitor the PBGC’s issuance of regulations and other developments and remain prepared to assist with any questions.

As part of Polsinelli’s efforts to help employers and employees maintain a healthy workplace during the pandemic, we have released the third video in our “Work Together, Healthy Together” series: “Stay Healthy As America Reopens.” This video is aimed demonstrating the importance of social distancing and mask wearing by showing how COVID-19 spreads through respiratory droplets in the air. The video features new data, images and video from recent studies, along with remixed vintage film footage to help keep the content entertaining. As COVID-19 continues to surge in communities across the country, it is critical that employers and employees work together to safely navigate the return to work by paying attention to three simple things that can help people avoid potentially infected respiratory droplets: Time, Barriers and Distance (TBD). The video includes practical tips for navigating TBD in the workplace and in day-to-day life. We hope that you will find this video helpful and encourage employers to share it with their workforce.

The National Labor Relations Board has overruled a previous Board’s 2016 Decision and reset an employer’s ability to discipline union-represented employees before reaching a first contract with the union. In 2016, a Democratic-dominated Board created an obligation for employers, whose employees were newly represented by a union, to bargain with the union over disciplinary action even though no collective bargaining agreement had been negotiated. Total Security Management Illinois, 364 NLRB No. 106 (2016).  For 80 years prior to Total Security Management, the Board and the U.S. Supreme Court recognized an employer’s right to impose discretionary discipline on employees, consistent with the employer’s policy or practice, without first negotiating with the union.  In a 3-0 decision issued June 23, 2020, the Board overruled Total Security Management.  800 River Road Operating Company, d/b/a Care One at New Milford, 369 NLRB No. 109 (2020).  The Board acknowledged the U.S. Supreme Court has ruled that once a union has certified as the representative of a group of employees, an employer cannot make material changes to employees’ wages, hours, and working conditions without first giving the union notice of the contemplated change, and bargaining with the union over the change if the union demands to do so.  However, the Board held the pre-discipline bargaining obligations created by Total Security Management conflicted with prior Supreme Court and Board precedent, misconstrued the Supreme Court’s unilateral-change doctrine concerning what constitutes a material working conditions change and imposed a too-complicated and too-burdensome scheme irreconcilable with the general body of law governing statutory bargaining practices. The Board’s Decision applies retroactively to all pending cases. If you have questions regarding this Board decision or matters relating to labor relations and collective bargaining duties and negotiations, contact your Polsinelli attorney.

Update – On April 8, 2020, the NLRB delayed the effective date of the Election Protection Rule 60 days, to July 31, 2020. The Board cited “the ongoing national emergency caused by the coronavirus” for its decision. The National Labor Relations Board (“NLRB” or “Board”) has issued its Election Protection Rule which makes changes regarding three important aspects of its representation election process and procedures.  These changes, which take effect June 1, 2020, will remove “unnecessary barriers to the fair and expeditious resolution” of employees’ right of free choice regarding union representation through an NLRB-conducted secret ballot election, the Board stated. Blocking Charge Policy.  The Board’s new policy will change a process by which a union can prevent employees from voting whether they wish to have new union representation (representation election) or if they wish to continue being represented by the incumbent union (decertification election).  The NLRB’s current practice allows a party—usually a union—to file an unfair labor practice charge which results in the postponement or denial of a secret-ballot election.  Under the new rule, the Board will impound election ballots when a party files an unfair labor practice charge that alleges a party has interfered with the conduct of the election or has unlawfully coerced employees related to the election.  In those situations, the Board will conduct a secret-ballot election then impound the ballots for  up to 60 days after the election if (1) the charge has not been withdrawn or dismissed, or (2) if a complaint has not issued, prior to the conclusion of the election.  If a complaint issues with respect to the charge at any time prior to expiration of that 60-day post-election period, the ballots shall continue to be impounded until there is a final determination regarding the charge and its effect, if any, on the election petition. In addition, the 60-day impound period will not be extended, even if additional charges are filed, and although the filing of a blocking-charge request will not delay the conduct of an election it may delay the vote count or certification of the election results. Voluntary Recognition Bar.  This rule applies when an employer voluntarily recognizes a union instead of the more common situation where employees vote to have the union represent them.  The old rule permitted an employer and a union to enter into an agreement for the union to represent employees even though there may be no evidence a majority of employees supported the union, much less voted for union representation.  The new rule requires an employer to provide notice to employees that it has recognized the union.  In addition, the rule requires: The employer and/or the labor organization must notify the Regional Office that recognition has been granted; The employer must post, in conspicuous places, including all places where notices to employees are customarily posted, a notice of recognition (provided by the Regional Office) informing employees that recognition has been granted and that they have a right to file a petition during a 45-day “window period” beginning on the date the notice is posted; The employer must distribute to all employees in the petitioned-for unit the Board-approved notice; and 45 days from the posting date must pass without an election petition, with proper evidence of support by voting unit employees, being filed. If all of these requirements are met, the voluntary recognition will be valid. Section 9(a) Recognition in the Construction Industry.  Finally, in a victory for construction contractors, the Board reversed its decision in Staunton Fuel & Material, 335 NLRB 717 (2001), holding that language alone cannot convert a Section 8(f) construction contract, terminable upon expiration, into a Section 9(a) agreement, where a presumption of majority support exists. The majority of collective bargaining agreements are considered Section 9(a) agreements.  Upon expiration of those agreements, employees who no longer desire union representation must file a decertification agreement with the Board.  In contrast, construction agreements are Section 8(f) agreements.  There, contractors can voluntarily recognize a labor union, even if they do not have employees and irrespective of their employee wishes.  However, upon expiration of a Section 8(f) collective bargaining agreement, employers can terminate the agreement and simply walk away. In Staunton Fuel, the Board held that language alone could convert a Section 8(f) construction agreement to a Section 9(a) agreement.  To do so, there must be language where employers agreed that, upon a demonstration of support by the majority of bargaining unit employees, the employer has granted voluntary recognition to the union.  For almost two decades, construction unions have engaged in “top down” organizing, where under the threat of a picket, they have forced contractors to sign a collective bargaining agreement with this language, even in the absence of authorization cards or other objective evidence of majority support by employees.  When employers tried to walk away upon expiration (like they would with typical construction contracts), the Board did not allow them to do so, because the Section 8(f) contract was converted to a 9(a) agreement by that language.  Employers were left with little choice; since they cannot persuade employees to decertify the union, they often were harnessed with collective bargaining agreements that none of their employees ever supported. With this new rule, should a construction contractor try to walk away from a collective bargaining agreement upon expiration, a union will need to demonstrate that it had majority support from employees at the time that voluntary recognition was extended.  In the absence of that affirmative proof, the Board no longer will convert these construction agreements to Section 9(a) agreements.  This will impede Union efforts to engage in “top down” organizing, forcing them to obtain authorization cards from the majority of the proposed bargaining unit and/or petition for a union election so that it can enjoy the protections afforded by Section 9(a) agreements.  While the new rule does not help contractors who have previously signed collective bargaining agreements with 9(a) language (since the rule does not become effective until June 1st), after that date unions will need to actually organize bargaining unit employees in the construction industry. Employers seeking guidance regarding the specific impacts of these new rules on their employees and workplaces should consult their in-house or outside labor counsel.

On March 20th, the National Labor Relations Board (“NLRB”) suspended all representation elections, including those by mail ballot, through April 3, due to concerns related to the coronavirus. In its announcement, it indicated it was taking this unprecedented action to protect the “health and safety of its employees, as well as members of the public.” Many NLRB regional offices are closed, and the majority of NLRB investigators are working remotely. In an April 1 notice on its website, the NLRB opted not to extend this deadline, and it announced it will resume elections beginning on Monday, April 6.  NLRB Chairman John Ring explained, “The Board determined that a two-week suspension would provide the General Counsel…the opportunity to fully review the logistics of the election procedures in light of the unprecedented situation. The General Counsel now has advised that appropriate measures are available to permit elections to resume in a safe and effective manner, which will be determined by the Regional Directors.” The Chairman did not expand on what are the “appropriate measures…available to permit elections to resume in a safe and effective manner.”  Regardless, employers whose facilities were being unionized prior to the COVID-19 pandemic are on notice that the global pandemic no longer will indefinitely suspend the processing of election petitions and scheduling of elections.  Considering the NLRB has postponed the implementation of its revised election rules through May 31, 2020, elections over the next two months will be occurring pursuant to the current “quickie” election rules and will likely occur very quickly. Employers should consult in-house or outside labor counsel immediately following any signs of a union organizing campaign.

Update – On April 8, 2020, the NLRB delayed the effective date of the Election Protection Rule 60 days, to July 31, 2020. The Board cited “the ongoing national emergency caused by the coronavirus” for its decision. The National Labor Relations Board (“NLRB” or “Board”) has issued its Election Protection Rule which makes changes regarding three important aspects of its representation election process and procedures.  These changes, which take effect June 1, 2020, will remove “unnecessary barriers to the fair and expeditious resolution” of employees’ right of free choice regarding union representation through an NLRB-conducted secret ballot election, the Board stated. Blocking Charge Policy.   The Board’s new policy will change a process by which a union can prevent employees from voting whether they wish to have new union representation (representation election) or if they wish to continue being represented by the incumbent union (decertification election).  The NLRB’s current practice allows a party—usually a union—to file an unfair labor practice charge which results in the postponement or denial of a secret-ballot election.  Under the new rule, the Board will impound election ballots when a party files an unfair labor practice charge that alleges a party has interfered with the conduct of the election or has unlawfully coerced employees related to the election.  In those situations, the Board will conduct a secret-ballot election then impound the ballots for  up to 60 days after the election if (1) the charge has not been withdrawn or dismissed, or (2) if a complaint has not issued, prior to the conclusion of the election.  If a complaint issues with respect to the charge at any time prior to expiration of that 60-day post-election period, the ballots shall continue to be impounded until there is a final determination regarding the charge and its effect, if any, on the election petition. In addition, the 60-day impound period will not be extended, even if additional charges are filed, and although the filing of a blocking-charge request will not delay the conduct of an election it may delay the vote count or certification of the election results. Voluntary Recognition Bar.  This rule applies when an employer voluntarily recognizes a union instead of the more common situation where employees vote to have the union represent them.  The old rule permitted an employer and a union to enter into an agreement for the union to represent employees even though there may be no evidence a majority of employees supported the union, much less voted for union representation.  The new rule requires an employer to provide notice to employees that it has recognized the union.  In addition, the rule requires: The employer and/or the labor organization must notify the Regional Office that recognition has been granted; The employer must post, in conspicuous places, including all places where notices to employees are customarily posted, a notice of recognition (provided by the Regional Office) informing employees that recognition has been granted and that they have a right to file a petition during a 45-day “window period” beginning on the date the notice is posted; The employer must distribute to all employees in the petitioned-for unit the Board-approved notice; and 45 days from the posting date must pass without an election petition, with proper evidence of support by voting unit employees, being filed. If all of these requirements are met, the voluntary recognition will be valid. Section 9(a) Recognition in the Construction Industry.  Finally, in a victory for construction contractors, the Board reversed its decision in Staunton Fuel & Material, 335 NLRB 717 (2001), holding that language alone cannot convert a Section 8(f) construction contract, terminable upon expiration, into a Section 9(a) agreement, where a presumption of majority support exists. The majority of collective bargaining agreements are considered Section 9(a) agreements.  Upon expiration of those agreements, employees who no longer desire union representation must file a decertification agreement with the Board.  In contrast, construction agreements are Section 8(f) agreements.  There, contractors can voluntarily recognize a labor union, even if they do not have employees and irrespective of their employee wishes.  However, upon expiration of a Section 8(f) collective bargaining agreement, employers can terminate the agreement and simply walk away. In Staunton Fuel, the Board held that language alone could convert a Section 8(f) construction agreement to a Section 9(a) agreement.  To do so, there must be language where employers agreed that, upon a demonstration of support by the majority of bargaining unit employees, the employer has granted voluntary recognition to the union.  For almost two decades, construction unions have engaged in “top down” organizing, where under the threat of a picket, they have forced contractors to sign a collective bargaining agreement with this language, even in the absence of authorization cards or other objective evidence of majority support by employees.  When employers tried to walk away upon expiration (like they would with typical construction contracts), the Board did not allow them to do so, because the Section 8(f) contract was converted to a 9(a) agreement by that language.  Employers were left with little choice; since they cannot persuade employees to decertify the union, they often were harnessed with collective bargaining agreements that none of their employees ever supported. With this new rule, should a construction contractor try to walk away from a collective bargaining agreement upon expiration, a union will need to demonstrate that it had majority support from employees at the time that voluntary recognition was extended.  In the absence of that affirmative proof, the Board no longer will convert these construction agreements to Section 9(a) agreements.  This will impede Union efforts to engage in “top down” organizing, forcing them to obtain authorization cards from the majority of the proposed bargaining unit and/or petition for a union election so that it can enjoy the protections afforded by Section 9(a) agreements.  While the new rule does not help contractors who have previously signed collective bargaining agreements with 9(a) language (since the rule does not become effective until June 1st), after that date unions will need to actually organize bargaining unit employees in the construction industry. Employers seeking guidance regarding the specific impacts of these new rules on their employees and workplaces should consult their in-house or outside labor counsel.

The COVID-19 crisis challenges unionized employers in unique ways. They are mandated under the National Labor Relations Act (NLRA) to bargain with unions over wages, hours, and working conditions, including schedule changes, safety protocols, furloughs and layoffs. They cannot act unilaterally to implement changes in these areas and instead must either reach an agreement, or reach an impasse, following good faith bargaining. These unprecedented times demand greater flexibility in order to keep workers safe and businesses operating.  Both the rapid spread of COVID-19, as well as the onslaught of ever-changing legislation such as new paid leave requirements and government stay-at-home orders, are devastating workplaces. Employers need latitude to make immediate and substantial changes, including reduced hours, schedule changes, new safety protocols, furloughs, and layoffs. How can unionized employers respond appropriately to this emergency situations while complying with the NLRA and its prohibition on unilateral changes? On March 27, 2020, the National Labor Relations Board (“NLRB”) General Counsel issued a memorandum GC 20-40 addressing the issue. The memorandum discusses prior NLRB decisions regarding the duty to bargain during emergency situations, both public and employer specific. In public emergencies (e.g., hurricanes and post-September 11, 2001 situations) as well as employer-specific crises, the Board has upheld the employer’s unilateral implementation of changes where “economic exigencies” resulted from “extraordinary events which are an unforeseen occurrence, having a major economic effect requiring the company to take immediate action.” However, the employer must first notify the union of the changes and offer to bargain, even on an expedited basis. Employers with unionized workforces who are impacted by the COVID-19 crisis are not without options as far as responding swiftly and in the best interest of their workers and their operations. Employers should not limit their COVID-19 response options based on the typical bargaining framework. But, carefully crafted communications with the union and the opportunity for expedited bargaining are critical. Our labor team can guide you through this process so you can avoid unfair labor practice charges, while making the best decisions to protect your company.

Last week, the National Labor Relations Board (“NLRB”) delayed the implementation of its revisions to the representation election process. In a Notice published on its website, it stated, “[T]o facilitate the resolution of legal challenges, it is postponing the effective date of its final rule modifying the Agency’s Representation Case Procedures from April 16, 2020 to May 31, 2020.” Currently, the NLRB is defending itself in a lawsuit filed by the AFL-CIO, challenging its right to implement these changes. While there is no mention of COVID-19 in the decision to delay the application of the new election rules, the NLRB recently postponed all elections, including mail ballots, until April 3rd, due to the global pandemic. Employers were excited about the new election procedure, as it undid many of the “ambush election” rules that were implemented under the Obama Board in 2014, all of which inured to the benefit of employers seeking to engineer a pro-employer campaign. These modifications to the current election process include, among other things: Pushing back the pre-election conference to 14 days (from the current 8 days). Pushing back the obligation to post a Notice of Petition for Election to 5 days (from the current 2 days). Allowing parties to litigate, and the Regional Offices to decide, issues related to unit scope, voter eligibility and supervisory status. Giving parties the right to file post-hearing briefs after pre-election hearings. Scheduling elections no earlier than 20 days following the pre-election hearing. Polsinelli will keep you posted on the latest developments on this litigation and the rollout of the new election rules, whether on June 1st or later.

The $2 trillion stimulus package that the House of Representatives approved on March 27—and President Trump is expected to sign—contains a provision that may provide a significant stimulus to labor unions. One provision of the bill provides new loans to businesses affected by the pandemic.  Companies with 500 and 10,000 employees that apply for a direct loan from the Treasury Department would be required to “make a good-faith certification that the recipient will remain neutral in any union organizing effort for the term of the loan.” The legislation does not define “neutral” or provide guidance on what exactly is a “union organizing effort.”  Neutrality agreements involving union organizing attempts typically require the employer to refrain from urging its employees to oppose union representation.  Other neutrality agreements require employers to accept unionization of its employees without a secret ballot election. Loan recipients would also be required to use loan proceeds to retain at least 90 percent of their workforce at full compensation and benefits until Sept. 30, 2020. In addition, these loan recipients would be banned from moving jobs offshore for the term of the loan plus an additional two years after repayment. The legislation also places limits on compensation for officers and other employees of the organization.  An officer or employee whose total compensation exceeded $425,000 in calendar 2019 cannot receive any increase in compensation until 1 year after the loan is repaid.  Employees who received total compensation of $3,000,000 or more in calendar 2019, cannot receive total compensation greater than $3,000,000 plus 50% of any amount in excess of $3 million.

The National Labor Relations Board (“Board”) announced today that it will suspend all representation elections, including mail ballot elections, effective immediately through April 3, 2020 because of the COVID-19 pandemic. The Board stated that the election suspension is necessary to ensure the health and safety of its employees, as well as members of the public who would be involved in the election process. Another factor in the Board’s decision was its potential inability to effectively conduct elections due to the closure of several Regional Offices caused by staff exposure to the virus, and the significant number of Board employees who were required to work remotely because of COVID-19. The Board did not disclose how many representations will be affected, how the elections will be rescheduled, or the impact on recently filed election petitions.

New Jersey continues to become one of the country’s most employee-friendly states.  On January 21, 2020, Governor Phil Murphy signed into law a slate of employee-friendly bills.  In this post, we discuss the significant expansion of rights for employees impacted by mass layoffs.  In our next post, we will cover the wave of laws aimed primarily at combating worker misclassification and expanding potentially liable persons and entities. S.B. 3170 increases notification time and requires severance pay for mass layoffs.  Beginning July 19, 2020, when 50 or more full-time workers are laid off from an establishment in a 30-day period, employers must pay terminated employees severance equaling one week of pay for each full year of employment.  The changes to the law also expand the definition of “establishment” form a single employment site to any single or group of locations in New Jersey, meaning that the 50 affected employees do not need to have been employed at the same physical location. Under the same bill, employers who employ 100 or more employees (whether full-time or part-time) must provide at least 90 days’ notice (instead of 60) of the layoff to affected workers, any union representing affected workers, local officials, and the Commissioner of Labor and Workforce Development.  If an employer fails to provide the required notice to any employee, the employer must pay an additional four weeks of pay to that employee. Employers considering a mass layoff or in the process of mass layoff should consult their Polsinelli attorney to ensure compliance with this new, extensive New Jersey law.

The National Labor Relations Board recently announced significant changes to its rules regarding Representation Elections.  The new rules undo many of the controversial 2014 modifications made by the Obama Board, as discussed below.  These changes are not scheduled to become effective until April 16, 2020.  Until then, the Old Rules still apply. 1. The Pre-election Hearing New Rule:  The pre-election hearing will be held within 14 business days from issuance of the Notice of Hearing (NOH). Old Rule:  The pre-election hearing will be held within 8 business days from the issuance of the NOH. 2. Notice of Petition for Election New Rule:  The employer must post and distribute the Notice of Petition for Election (NAPE) within 5 business days after service of the NOH. Old Rule:  The employer must post and distribute the NAPE within 2 business days after service of the NOH. 3.  Service of Statements of Position New Rule: The employer (and any other non-petitioner parties) must serve the Statement of Position SOP) on all other parties within 8 business days after service of the NOH. In addition, petitioners (usually unions) will be required to serve an SOP on all other parties by noon at least 3 business days before the hearing is scheduled to start. Timely amendments to the petitioner’s statement may be made if good cause is demonstrated. Old Rule:  The employer (and any other non-petitioner parties) must serve the SOP at least 1 business day before the Pre-election Hearing, which typically was 7 business days after service of the NOH. The petitioner is required to respond to the SOP(s) at the opening of the hearing. 4.  Other Petition Issues (Unit Scope, Voter Eligibility, Supervisory Status) New Rule:  These issues will normally be litigated at the pre-election hearing and be resolved by the Regional Director prior to an election being directed.  The parties may agree to defer litigating these issues until after the election. Old Rule:  These issues, which can be critically important in the Representation Election process, are not required to be either litigated or resolved before an election is conducted. 5.  Post-hearing Briefs New Rule:  All parties will have the right to file a post-hearing brief after a pre-election hearing and, also post-election briefs may be filed.  Such briefs will be due within 5 business days of the close of the hearing, and the hearing officer may grant an extension of up to 10 additional business days, for good cause. Old Rule:  Post-hearing briefs are permitted only upon special permission from the Regional Director. 6.  Notice of Election New Rule:  The rule emphasize that the Regional Director has discretion to issue a Notice of Election after issuing the direction of an election. Old Rule:  The prior rule provides that regional directors “ordinarily will” specify election details in the direction of election. The Board believes this change will eliminate confusion caused by the prior rules, which led to unnecessary litigation. 7.  Scheduling the Election New Rule:  Regional Directors will continue to schedule the election for the earliest date practicable, but normally elections will not be scheduled before the 20th business day after the date of the direction of election, absent a waiver of the time limit by the parties.  This timeline will enable the Board to rule on certain types of requests for review prior to the holding of an election and reduce the number of cases in which there are unresolved issues when the election is held. Old Rule:  The Regional Director “shall schedule the election for the earliest date practicable,” with no minimum time between when the direction of the election issued and when the election is held. 8.  Requests for Review/Impounding Ballots New Rule:  Where a request for review of a direction of election is filed within 10 business days after the DOE, if the Board has either not ruled on the request or has granted it, and the election is held, ballots that could be affected by the request for review will be segregated and all ballots will be impounded and remain unopened pending a ruling or decision by the Board.  A party may also file a RFR more than 10 days after the direction of election, but the ballots will not be impounded. Old Rule:  Impoundment of ballots is not automatic when a request for review was filed. 9. Format and Procedural Requirements for all Requests for Review Made Consistent. New Rule:  The same formatting rules apply to all requests for review as well as opposition to a request for review.  Also, an opposition to a request for review is explicitly permitted. Old Rule:  Formatting is not consistent and oppositions to requests for review are not universally allowed. 10.  Election Observers New Rule: Whenever possible, observers will be a current member of the voting unit.  When no such individual is available, the party should select a current nonsupervisory employee. Old Rule:  The rule provides only that parties be represented by observers, without guidance regarding who is, and who is not, an acceptable observer. 11.  Certification of Election Results During the Time Period for Request for Review New Rule:  The Regional Director will no longer certify election results if:  1) a request for review is pending, or 2) the time has not passed for a request for review to be filed. Old Rule:  Regional Directors are required to certify election results despite a pending or possible request for review.  In fact, in cases where a certification issued, requests for review could be filed up until 14 days after the issuance of certification. The new rules will improve the representation election process measurably, even if they increase the time period between the filing of a petition for an election and when the election is held.

Tis the season to be jolly, and the National Labor Relations Board (“NLRB” or “Board”) was in an especially giving mood for employers over this past week.  In the span of five days, it reversed several Obama era union-friendly cases and measures, all to the benefit of employers. First, the NLRB vacated an Administrative Law Judge’s decision that had rejected a proposed global settlement to resolve all pending unfair labor practices (“ULP”) against McDonald’s Corporation.  The Board directed the ALJ to approve the settlement.  At issue was whether McDonald’s corporate was a joint employer with its franchisees and could be liable for their violations of federal labor law.    By settling the case, McDonald’s avoided creating bad case law for itself and all franchisees. Next, in a case called Valley Hospital Medical Center, the NLRB restored decades-old precedent permitting an employer to stop deducting dues after the expiration of a collective bargaining agreement.  Under the Obama Board, employers committed a ULP for stopping dues collection post-expiration, as there was a presumption that checkoff provisions remained active. The Board didn’t stop there.  In Apogee Retail, the Board held employers do not automatically violate the National Labor Relations Act (“Act”) when they forbid employees from discussing confidential workplace investigations.  Reversing the controversial Banner Health System decision, the NLRB held, so long as the confidentiality directive is limited to the period in which the investigation is pending, there will be no violation of the Act. Likewise, in Caesars Entertainment, the NLRB held employers again can preclude employees from using their work emails for personal reasons. Including union-related reasons.  Overruling the Obama Board’s Purple Communications decision, the Board held, “"Employees have no statutory right to use employer equipment, including IT resources, for Section 7 purposes." But perhaps the Board’s biggest “gift” this holiday season to employers was relaxing the punitive time limits in the “quickie/ambush” election rule.  While the rule was not overruled in its entirety, the Board made several changes which will provide management with more opportunities to put on a “pro employer” campaign.  These include, among other things: Requiring the Board to resolve worker eligibility issues, including supervisory status, prior to an election; Scheduling pre-election hearings two weeks (instead of eight days) after the filing of an election petition; Providing at least eight days to file a position statement (as opposed to the current rule which requires these briefs to be submitted a day before a hearing); and Directing regional offices to schedule elections no less than 20 days after the parties stipulate to an election and/or there is a decision on eligibility issues. Not coincidentally, all of these decisions were made prior to the expiration of the term of Lauren McFerran, the lone Democrat on the NLRB.  Currently, the remaining three members of the Board are Republicans.  While many experts expect that she will be nominated for the same position, the Board will operate with only Republican members for the first time in 85 years.  Employer should expect many more management friendly decisions in the near term.

On August 9, 2019, the National Labor Relations Board (“NLRB” or “Board”) issued the first of an anticipated sequence of regulations addressing certain union election procedures.  The proposed rule, published in the Federal Register, proposes modifying three Board policies governing election processes, including: The process for adjudicating  “blocking charges”; The voluntary recognition bar; and Presumed collective bargaining relationships in the construction industry. Board Chairman John Ring, Member Marvin Kaplan and Member Bill Emanuel voted to approve the proposed rule for publication, while Member Lauren McFerran dissented. The proposed rule first addresses the Board’s policy on blocking charges, which are allegations that a party to a union election unlawfully coerced workers. Because blocking charges ultimately delay elections pending the resolution of Board proceedings, the proposed rule would replace the current policy with a “vote-and-impound system,” in which the election would still proceed, and the Board would seize ballots cast in an election during the pendency of the unfair labor practice charge. The proposed rule further addresses the Board’s voluntary recognition bar standard, which currently prohibits challenges to whether a union has majority support to proceed with an election for a “reasonable period of time” (interpreted to be six months to a year) after an employer voluntarily recognizes a union. The proposed rule would shorten the voluntary recognition bar to 45 days. Finally, the proposed rule would heighten the evidentiary standard for a union that wishes to demonstrate a presumed collective bargaining relationship in the construction industry without a union vote pursuant to Section 8(f). Specifically, the proposed rule would require a union to present “extrinsic evidence” that its recognition “was based on a contemporaneous showing of majority employee support,” such as a petition or signed authorization cards. In dissent, Member McFerran opposed the proposed rulemaking, writing that the majority’s proposal “fails to meet even minimal standards of reasoned decision-making” that must be “fundamentally reassess[ed].” While still subject to notice-and-comment requirements, the proposed changes are good news to employers. Employers with questions regarding the proposed rule, or union election proceedings generally, should consult with competent counsel.Stay tuned to Polsinelli at Work for further updates.

On July 5, 2019, a Centers for Medicare & Medicaid Services (“CMS”) regulation (proposed by the Trump administration in July 2018) went into effect, prohibiting automatic union dues deductions from paychecks of home health workers directly paid by Medicaid.  The regulation will affect 350,000 workers who pay approximately $71 million annually in union dues nationwide. The regulation overturns an Obama administration policy that allowed for such deductions, along with deductions for other fees such as health benefits. Specifically, it prohibits states from diverting Medicaid dollars meant for home care providers to third parties, including employers and labor unions.  The regulation stems from CMS’ interpretation of a federal law that prohibits Medicaid funds meant to help the poor and disabled to be paid to anyone other than a Medicaid provider unless ordered by a court. The new regulation will affect home care workers who are paid by the state and hired and/or fired by their clients. Home care workers who are employed by a conventional employer that receives Medicaid funds will not be affected, and their employer can still make any deductions (including deductions for union dues) as required by applicable state laws. In addition, while the new regulation prohibits union dues paycheck deductions for such home health workers, it does not prohibit home care workers from unionizing or accessing benefits. Rather, these workers may continue paying union dues and/or contributing to other organizations. It forecloses, however, a worker’s option to assign a portion of his or her Medicaid payment to a union (or other organization). Unions representing self-directed care home health workers will now be responsible for collecting union dues from such workers either by manual payment methods or automatic bank account deductions. Several states and the Service Employees International Union have sued CMS regarding the regulation, and that litigation remains pending as of the date the new rule became effective.  Stay tuned to Polsinelli at Work for further updates.

On June 13, 2019, the U.S. Seventh Circuit Court of Appeals in Miller v. Southwest Airlines, Co., Case 18-3476 (June 13, 2019), ruled that claims asserted under the Illinois Biometric Information Privacy Act (“BIPA”), in the context of a unionized workforce must be resolved pursuant to the strictures of the Railway Labor Act. By way of background, BIPA applies to all biometric identifiers or measurements of physiological characteristics, such as finger prints, iris scans and facial geometry.  Crucially, BIPA requires that a private entity inform the subject of biometric data collection or the subject’s “legally authorized representative” in writing about the entity’s biometric data effort including, but not limited to, the method of collection, use, storage, retention and destruction of that data. In Miller, which was consolidated with Johnson v. United Airlines, Inc.,  employees complained the airlines’ timekeeping systems violated BIPA due to lack of required consent.  In both cases, Plaintiffs asserted that the employer violated BIPA by using fingerprints of workers to clock in and out.  As articulated by the court, the common issue in Miller and Johnson was “whether persons who contend that air carriers have violated state law by using biometric identification in the workplace must present these contentions to an adjustment board under the Railway Labor Act.” The court explained that “[T]here can be no doubt that how workers clock in and out is a proper subject of negotiation between unions and employers – is, indeed, a mandatory subject of bargaining.”  While Plaintiffs contended that a union is not a “legally authorized representative” for purposes of providing consent under BIPA, the court further found that “[n]either the statutory text nor any decision by a state court suggests that Illinois wants to exclude a collective-bargaining representative from the category of authorized agents.”  The Seventh Circuit remanded the matters with instructions to refer the parties to an adjustment board. Employers using processes involving biometric data or that desire to implement new processes would do well to do so only after developing a comprehensive program, including a written policy, for all aspects of use, collection, storage, retrieval and destruction of the data.  Illinois is not the only state with a statute in this area.  Both Washington and Texas have similar statues, but those do not permit a private right of action.  It is likely more states will follow.  Employers with questions should consult with competent counsel.

On June 14, 2019, the National Labor Relations Board (“Board”) ruled in a 3-1 decision that employers may prohibit nonemployee union representatives from conducting organizing activities on employer property that is open to the public. UPMC Presbyterian Shadyside, 368 NLRB No. 2 (June 14, 2019).  This decision overturns precedent dating back to the early 1980s which held that employers could not ban nonemployee union organizers from cafeterias and restaurants open to the public if they use the facility in a manner consistent with its intended use and are not “disruptive.”  See Montgomery Ward & Co., 256 NLRB 800, 801 (1981), enfd. 692 F.2d 1115 (7th Cir. 1982). The case arose when two union organizers for the Service Employees International Union Healthcare Pennsylvania (“SEIU”) met with six of the hospital employer’s employees in the hospital’s cafeteria, which was open to the public.  The group ate lunch and discussed union organizational campaign matters. In addition, at least one off-duty employee passed out union flyers.  Union flyers and pins were also displayed on the tables where the group was meeting. After receiving complaints, a hospital security guard asked each of the individuals in the group for their identification, and told the union representatives that the cafeteria was only open to patients, their families and visitors, and employees.  The guard further stated that the union representatives had to leave the premises.  They refused, and the security guard called police, who subsequently escorted the union representatives from the cafeteria.  Thereafter, the SEIU filed an unfair labor practice charge, alleging that the hospital had unlawfully discriminated against the union representatives in violation of Section 8(a)(1) of the National Labor Relations Act (“Act.”) When dismissing the charge, the Board ruled that the hospital did not violate the Act by ejecting union organizers from the cafeteria because there was no evidence that the hospital permitted any solicitation or promotional activity in the cafeteria.  In addition, the hospital regularly removed nonemployees who engaged in promotional activities in or near the cafeteria. Moreover, when reaching its decision, the Board overruled the “public space” exception rule, which held that discrimination prohibited by the Act could be established solely by showing that nonemployee union representatives were denied access to a public area within private property.  See Montgomery Ward & Co.  Specifically, the Board held thus: [A]n employer does not have a duty to allow the use of its facility by nonemployees for promotional or organization activity.  The fact that a cafeteria located on the employer’s private property is open to the public does not mean that an employer must allow any nonemployee access for any purpose.  Absent discrimination between nonemployee union representatives and other nonemployees –i.e., ‘disparate treatment where by rule or practice a property owner’ bars access by nonemployee union representatives seeking to engage in certain activity ‘while permit[ting] similar activity in similar relevant circumstances’ by other nonemployees–the employer may decide what types of activities, if any, it will allow by nonemployees on its property. The Board’s decision comes as welcome news.  Employers may now prohibit any nonemployee from soliciting on its property, including union organizers, “so long as it applies the practice in a nondiscriminatory manner by prohibiting other nonemployees from engaging in similar activity.”  Accordingly, employers should take this opportunity to review and update their policies regarding solicitation and distribution on company property.  Employers with questions regarding access or solicitation rules would do well to consult with able counsel.

“Scabby the Rat” and “Corporate Fat Cat”…beware.  A recent National Labor Relations Board (“NLRB” or the “Board”) Advice Memorandum has suggested that the use of oversized inflatable rats may constitute illegal secondary picketing. In the Advice Memorandum released May 14, 2019, the Board’s General Counsel pressed the Board’s Chicago office to issue a Complaint against an IBEW local (the “Union”) that used the inflatable balloon of “Corporate Fat Cat” (symbolizing the Employer) choking a construction worker at a neutral employer’s job site.  The Union also distributed handbills and displayed a banner in an attempt to force the general contractor to pressure a subcontractor to pay the “area standard” wages and benefits.  The Union did not have a primary labor dispute with the general contractor, to which the banner and balloon were directed. The U.S. Supreme Court long has held that handbilling (as opposed to picketing) at a neutral employer’s business is lawful, protected activity.  Three Board decisions issued during President Obama’s terms in office applied the same reasoning towards bannering and inflatable balloons.  In those cases, the NLRB concluded that a stationary banner was only a form of communication and not picketing, which is a combination of communication and conduct.  The Board’s reasoning extended to inflatable rats/cats; absent patrolling and/or blocking ingress or egress to a jobsite, the inflatables constitute lawful Union speech against a neutral. Here, the General Counsel disagreed.  In the Advice Memorandum, he opined that the banner was a “functional equivalent” of a picket sign, and by having it next to a “frightening,” “large, hostile looking cat,” the Union was picketing a neutral employer, which is a violation of Section 8(b)(4) of the National Labor Relations Act (“NLRA”).  The General Counsel further explained, “The [Chicago region] should use this case as a vehicle to urge the Board to reconsider its decisions in [the three Obama Board cases] and conclude that the Union’s conduct here was tantamount to traditional picketing and moreover constituted signal picketing.”  The General Counsel further posited that the banners used “were knowingly false” and not protected by the First Amendment. Since the parties informally settled the unfair labor practice charge, the Board will not have an opportunity to reconsider those earlier decisions.  Likewise, advice memorandums, by their very nature, are non-binding in all other cases and only serve to provide guidance to local NLRB offices.  Labor watchers anticipate that the current Board is looking for an opportunity to “pop” the use of inflatable rats at the work sites of neutrals.

On April 1, 2019, the U.S. Department of Labor (“DOL”) announced proposed changes to its joint-employer test. Specifically, the DOL set out a four-factor balancing test, which inquires whether an entity that does not directly employ an individual employee: 1. hires or fires the employee; 2. supervises and controls the employee’s work schedule and/or conditions of employment; 3. determines the employee’s rate and method of payment; and 4. maintains the employee’s employment records The proposed changes clarify that merely having the ability, power or contractual right to affect the other employer’s employees’ terms and conditions of employment is not relevant to the analysis.  Rather, the putative joint employer must actually exercise or exert control over the other employer’s employees to be considered a joint employer.  In addition, certain business models, such as a franchisor relationship, do not make a finding of joint-employment more likely.  And if adopted, the proposed changes would also provide examples to assist with determining joint employment status. Once the proposed changes are published in the Federal Register, the public will have 60 days to submit comments. These proposed changes mark the first time since 1958 that the DOL has meaningfully revised the joint-employer regulations.  According to the DOL, the proposed changes are meant to provide courts with clear guidance when considering joint employer status and reduce litigation.  Notably, the DOL’s proposed changes to the joint-employer test come on the heels of  the National Labor Relations Board’s proposed joint employer rule, which provides that  joint employment turns, in part, on whether a putative joint employer actually exercises control over the other employer’s employees’ terms and conditions of  employment. The DOL’s proposed changes would bring welcome clarity and certainty to employers that make use of another entity’s employees or that operate under certain business models.  We will keep you posted as the proposed changes move through the notice and comment period.

Employers have been waiting for the U.S. Department of Labor (“DOL”) to respond to the injunction halting the implementation of its 2016 proposal increasing the minimum salary threshold for the white collar exemptions. On March 7, 2019, the DOL issued its replacement proposal to the minimum salary requirement, raising the current $23,660 annual salary requirement to $35,308 annually (i.e., $679 weekly). This increase is in line with feedback presented at the DOL listening sessions and consistent with predictions of where the DOL would land on the salary increase. As a reminder, in 2016, the DOL proposed an increase that would have more than doubled the Fair Labor Standards Act’s (“FLSA”) minimum salary threshold for the white collar exemptions from $455 per week (i.e., $23,660 annually) to $913 per week (i.e., $47,476 annually). On November 22, 2016, a federal judge in Texas issued a nationwide injunction halting implementation of the DOL’s proposed rule. Appeals followed; however, the DOL eventually indicated that it intended to revisit the increase. In the fall of 2018, the DOL held numerous listening sessions to receive public feedback regarding the minimum salary requirements, in which Polsinelli attorneys participated. In addition to this proposed increase, the DOL is seeking public comment regarding its proposed language concerning automatic increases to the salary threshold. Under the newly proposed rule, periodic increases would only be implemented after notice-and-comment periods. The automatic increases (without notice-and-comment) included in the 2016 proposed rule were a factor that led to injunctive relief being granted It is estimated that this new increase will result in over a million workers being reclassified as non-exempt and, thus, entitled to overtime.  While the salary increase certainly impacts fewer workers than the 2016 proposed increase, employers should work with experienced counsel to evaluate modifications (including pay adjustments or reclassification) to blunt the impact of the new rule on labor budgets and operational capabilities. As always, we will continue to monitor developments regarding these new rules and will keep you updated.

On January 25, 2019, the National Labor Relations Board (“NLRB” or “Board”) in SuperShuttle DFW, Inc. (367 NLRB No. 75), overruled the Obama-era 2014 FedEx Home Delivery (361 NLRB 610) decision and returned to its traditional common-law independent contractor test, one more aligned with the test utilized by other federal agencies and courts nationwide. SuperShuttle arose when the Amalgamated Transit Union (“ATU” or “Union”) sought to represent franchisee drivers who worked for SuperShuttle Dallas Fort Worth (“DFW”).  DFW contended the ATU could not represent the franchisee drivers because they were independent contractors, not employees, and thus were barred from unionizing pursuant to Section 2(3) of the National Labor Relations Act (“NLRA” or “Act”). On August 16, 2010, the Board’s Region 16 Acting Regional Director issued a Decision and Order holding, based on the Board’s traditional common-law agency analysis, that the driver franchisees in the petitioned-for bargaining unit were independent contractors and, thus, not covered by the Act.  Accordingly, the Acting Regional Director dismissed the representation petition. The union appealed the Acting Regional Director’s decision to the Board. While the ATU’s appeal was pending, the Board issued its decision in FedEx, wherein the Board sought to “more clearly define the analytical significance of a putative independent contractor’s entrepreneurial opportunity for gain or loss.”  Specifically, the FedEx Board held that entrepreneurial opportunity was but “one aspect of a relevant factor that asks whether the evidence tends to show that the putative contractor is, in fact, rendering services as part of an independent business.” Thereafter, the Board, now a Republican-majority, rendered its SuperShuttle decision, overruling FedEx.  The SuperShuttle Board explained the FedEx Board “impermissibly altered” the NLRB’s common-law agency analysis, overruled FedEx’s pronounced test, and returned to the “traditional common-law test that the Board applied prior to FedEx (and that the Acting Regional Director applied” in the case below).  Stated another way, the SuperShuttle Board held “entrepreneurial opportunity” is but one of several principles by which to evaluate a given worker’s employment relationship with the employer as part of a broader analysis, and should not be the “overriding factor” when analyzing the employment relationship. The Board then applied its common-law agency analysis to the franchisee drivers and affirmed the Acting Regional Director’s decision.  In pertinent part, the Board held the franchisee drivers were “free from control by” DFW regarding most aspects of their work and could set their own schedules, decide whether to accept dispatch requests, and set their own routes.  Further, the franchisee drivers were required to purchase and supply their own vehicles, could accept tips (which they need not share with other franchisees or DFW), and were not supervised “in any meaningful way.” Thus, the franchisee drivers were properly held to be independent contractors and were not subject to the Act.  The Board’s return to its traditional independent contractor analysis should come as welcome news to employers. Moreover, the SuperShuttle decision clarifies the role “entrepreneurial opportunity” plays in the Board’s determination of independent-contractor status, and provides employers that make use of contingent workforces or franchisees with greater certainty regarding the employment status of their workforces.Employers with questions regarding the employment status of their workers should consult with outside labor counsel.

On January 11, 2019, the National Labor Relations Board (“Labor Board” or “NLRB”) overturned an Obama-era Labor Board decision that held that complaints made in front of colleagues always constitute protected concerted activity.  By doing so, the NLRB reverted back to decades-old precedent, which held that employers may discipline employees who “griped” about their working conditions in front of their coworkers, so long as the gripes were not an inducement to unionize or engage in other protected activity. In Alstate Maintenance, LLC, the Labor Board upheld an Administrative Law Judge’s decision that the employer’s termination of a skycap at JFK International Airport did not violate Section 8(a)(3) of the National Labor Relations Act (the “Act”).  The skycap complained, in front of several coworkers, to his supervisor that he did not want to move a traveling soccer team’s equipment because he did not receive any tips when he assisted the same team with their luggage the previous year.  Even though he initially refused to perform the work until inside baggage handlers first attended to the large party, he ultimately relented and did his job.  Regardless, the employer terminated the skycap, along with three other employees, due to his stated objections about last year’s failure to tip. In a 3-1 decision, the Labor Board held that the employee’s griping was not protected concerted activity.  Specifically, the Labor Board held that levying complaints in front of colleagues, even if the subject matter of the complaint relates to the terms and conditions of employment (in this case tipping), does not rise to the level of concerted activity if the complainant is not acting on behalf of a the group and/or trying to induce group action.  Had these complaints been made in a meeting called by the skycap with his colleagues or if the protest affected all of the employees (instead of just the individual skycap), the Labor Board may have found differently.  However, these stated objections were personal in nature and not made in furtherance of “mutual aid or protection.”  Hence, the employer’s decision to terminate the employee did not violate the Act, even though the complaints were made in front of others. In so ruling, the Labor Board overruled its 2011 decision in Worldmark by Wyndham, which held that complaints about terms and conditions of employment in a group setting are per se protected and concerted activity.  Going forward, "[t]he fact that a statement is made at a meeting, in a group setting or with other employees present will not automatically make the statement concerted activity." With this decision, employers, once again, may be able to discipline employees who make employment-related gripes in front of their coworkers. However, employers should consider carefully whether to do so, as the line between whether a complaint is personal in nature or intended to induce others to action remains a fact specific inquiry and is based on the totality of circumstances. If the complaint pertains to the terms and conditions of employment, it is recommended that a thorough investigation, including review by a legal professional, be conducted before discipline is imposed.

On December 28, 2018, the U.S. D.C. Circuit Court of Appeals upheld the National Labor Relations Board’s (“NLRB” or “Board”) joint-employer test as articulated in Browning-Ferris Industries, 362 NLRB No. 186.  Interestingly, the Court further held that the Board had failed to properly articulate what constitutes “indirect control” for purposes of the joint-employer test, and remanded that issue to the Board for further consideration. The Court framed the matter before it as “whether the common-law analysis of joint-employer status can factor in both (i) an employer’s authorized but unexercised forms of control, and (ii) an employer’s indirect control over employees’ terms and conditions of employment,” and determined that it can.  The Court explained that the Board’s joint-employer test as articulated in Browning-Ferris Industries finds extensive support in the common law of agency.  Specifically, “retained but unexercised control has long been a relevant factor in assessing the common-law master-servant relationship.”  In other words, the Board properly held that it was appropriate to consider both unexercised and indirect control when deciding whether a given entity is a joint-employer of another entity’s employees. However, the Court further held that the Board “failed to differentiate between those aspects of indirect control relevant to status as an employer, and those quotidian aspects of common-law third-party contract relationships.”  Stated plainly, the Board failed to explain what constitutes “indirect control” for purposes of the joint-employer test.  As a result, the Court remanded that issue to the Board for further consideration. For employers that make use of contingent labor forces, the D.C. Circuit’s decision is just another episode in the long-running joint-employer saga.  Readers will recall that the Board is currently taking comments regarding its proposed joint-employer rule until January 14, 2019.  Stay tuned to Polsinelli at Work for further updates.

On December 10, 2018, National Labor Relations Board (“NLRB” or “Board”) General Counsel Peter Robb released a comment to NLRB Board Members regarding the proposed Joint Employer Rule (“Rule”).  Not surprisingly, Mr. Robb concurs with the NLRB’s attempt to overturn its Browning-Ferris Industries, 362 NLRB No. 186 ruling via the rulemaking process. The reader will recall that Browning-Ferris Industries changed decades of precedent regarding the joint-employer standard and held that an employer could be considered a joint-employer where it maintained “indirect control” over another employer’s employees’ essential terms and conditions of employment. Yet to the surprise of labor-watchers, Mr. Robb argues the Board’s Rule does not go far enough. Mr. Robb argues that while the Rule “is an important step in the right direction,” employers would benefit from more “clarity” and guidance regarding its application. Indeed, Mr. Robb contends that the Rule leaves employers guessing as to which employment terms are “essential” when considering whether a putative joint-employer maintains “direct and immediate control” over a group of employees’ “essential terms and conditions of employment.” To provide employers with needed guidance, Mr. Robb suggests the Rule should list which “terms and conditions of employment” will be deemed “essential” for purposes of the joint-employer analysis. Mr. Robb argues such factors should include control over 1) the determination of wages and benefits; 2) hiring and firing of employees; and 3) discipline, supervision, and direction of employees. Moreover, Mr. Robb argues that the Board’s Rule should make clear that, for an entity to be a joint employer, “that entity must control all listed essential terms and conditions of employment.”  Per Mr. Robb, such a standard is necessary “[g]iven the grave concerns about subjecting an arms-length business partner to a bargaining obligation with another employer’s employees.”  Mr. Robb further emphasizes that a joint-employer finding should be “rare.” To be sure, Mr. Robb’s comment will not be the final say on the Rule. However, employers should consider the comment to portend good news. With the Board and the General Counsel on the same page regarding the need to revisit and tighten the joint-employer standard, employers that make use of another entity’s employees may soon face less legal risk regarding whether they will be deemed a joint-employer. Stay tuned to Polsinelli at Work for further updates.

On September 14, 2018, a three-member majority of the National Labor Relations Board (“NLRB” or “Board”) comprised of Members William Emanuel, John Ring, and Marvin Kaplan published a proposed rule in the Federal Register that would restore the Board’s joint-employer standard as it existed prior to the 2015 Browning-Ferris decision. Pursuant to the proposed regulation: “An employer may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision and direction.  More specifically, to be deemed a joint employer under the proposed regulation, an employer must possess and actually exercise substantial direct and immediate control over the essential terms and conditions of employment of another employer’s employees in a manner that is not limited and routine.” The rule’s proponents contend the proposed rule would return the joint-employer analysis to the Board’s traditional jurisprudence, which, per the majority, was “significantly relaxed” by the Board’s decision in Browning-Ferris.  Specifically, the Browning-Ferris decision held that the power to exercise control over a workforce, rather than whether such power is actually exercised, was the appropriate lens for assessing joint employment.  The new proposed rule, in contrast, seeks to restore the traditional standard, which found joint-employment when the employer actually exercised direct and immediate control over the other employer’s employees. Employers may recall that this is not the first time that President Trump’s Board has sought to restore its’ traditional joint-employment analysis.  In December 2017, the Board overruled Browning-Ferris in a decision styled Hy-Brand Industrial.  However, Hy-Brand Industrial was vacated in February 2018 when the Board’s Designated Agency Ethics Official determined that Member Emanuel should not have participated in the decision. In a sharp dissent, Member Lauren McFerran took the Board’s majority to task, arguing: “[T]here is no good reason to revisit Browning-Ferris, much less to propose replacing its joint-employer standard with a test that fails the threshold of consistency with the common law and that defies the stated goal of the National Labor Relations Act: ‘encouraging the practice and procedure of collective bargaining.’” Interested parties now have 60 days to comment on the proposed rule. For employers that make use of another entity’s employees, or otherwise have close relationships – such as franchisors and franchisees or contractors and subcontractors -- this proposed rule comes as welcome news.  Should the Board adopt the proposed rule at the end of the rulemaking process, employers will be provided greater certainty when entering into relationship with other entities. That said, labor watchers expect the road to the final rule to be bumpy.  Unions and their allies have already signaled they will challenge the rule through the comment process and – most likely – in the courts.  We have been following the Board’s joint-employer jurisprudence throughout the Browning-Ferris saga and will continue to do so.  Stay tuned for further updates.

In a 3-1 decision, the National Labor Relations Board (“NLRB” or “Board”) ruled that E.I. DuPont De Nemours and Company (“DuPont”) did not violate the National Labor Relations Act ( “Act”) by implementing unilateral changes to employee benefits without advance notice because the changes were consistent with annual past practice. (Decision can be found here.) For many years and across successive collective bargaining agreements, DuPont announced benefit plan changes in the fall and implemented them on January 1 without union objection. However, in 2004 and 2005, DuPont made unilateral changes following contract expiration and in response, the United Steelworkers local union filed unfair labor practice charges, alleging that DuPont unlawfully refused to bargain with the Union regarding the changes to the union members’ terms and conditions of employment. In 2010, the NLRB determined that DuPont’s unilateral changes violated Section 8(a)(5) of the Act because the reservation of rights provision waiving the union’s right to demand bargaining did not survive contract expiration. DuPont appealed the Board’s decision to the D.C. Circuit Court of Appeals. On appeal, the D.C. Circuit ruled that the NLRB departed without reasonable justification from its own precedent regarding past practice, and remanded the case to the NLRB for further proceedings. On remand in 2016, the NLRB affirmed its prior findings, which DuPont again appealed.  While the case was pending before the D.C. Circuit for a second time, the NLRB issued the Raytheon decision, which held that employers do not have to bargain over changes to employment terms so long as the changes are consistent with past practice.  Critically, the Raytheon decision expressly overruled the majority’s holding in DuPont 2016 and the precedent upon which it relied. The Board then returned to the instant matter.  Applying Raytheon, the majority, consisting of Chairman John Ring and Members Bill Emanuel and Marvin Kaplan, held that DuPont’s changes to the unit employees’ benefits “were consistent with a long-standing past practice of annual changes established over several years of the parties’ collective bargaining relationship.” Because the changes did not materially vary in kind or degree from prior changes, the employer was merely maintaining the status quo expressed in its past practice when the collective bargaining agreement was in effect. Accordingly, the employer did not violate the Act by implementing changes without providing the union with advance notice and the opportunity for bargaining. Member Lauren McFerran dissented only on procedural grounds, arguing that the NLRB lacked jurisdiction, as the case was still pending before the D.C. Circuit, and that the NLRB wrongfully deprived the parties of administrative due process by failing to provide notice. The Board’s decision affirms an employer’s right to make unilateral changes so long as those changes are similar in kind and degree to an established past practice consisting of comparable unilateral actions.  Employers considering making such unilateral changes would do well to consult with competent counsel beforehand to avoid an unfair labor practice charge.

In spite of all the controversy swirling around Judge Brett Kavanaugh’s nomination to take Justice Kennedy's seat, it’s business as usual at the United States Supreme Court as the Justices kicked off a new term on October 1.  Does the ADEA’s 20 employee threshold apply to public employers? The Justices heard argument their first day back in Mount Lemmon Fire District v. Guido, U.S., No. 17-587. The Court will determine whether the Age Discrimination in Employment Act’s (“ADEA”) 20 employee threshold applies to public employers in the same way it does private employers.  In that case, laid-off firefighters brought an ADEA claim against the District, which argued it was not subject to ADEA coverage because it had fewer than 20 employees. The U.S. Ninth Circuit Court of Appeals held otherwise, finding the ADEA protects all public employees regardless of employer size. Court to consider scope of FAA and issues of arbitrability Arbitration agreements make a repeat appearance on the Court’s docket this term. In Lamps Plus Inc. v. Varela, U.S., No. 17-988, the Court will review whether an arbitration agreement stating that "arbitration shall be in lieu of any and all lawsuits or other civil legal proceedings" effectively waived an employee's right to bring a class-action claim. The Ninth Circuit held the arbitration agreement was valid, but further held that language in the agreement should be construed against the drafter based on California law such that the employee could bring class action claims in arbitration. Lamps Plus appealed the Ninth Circuit’s decision, arguing that the agreement’s failure to mention class arbitration should be interpreted under the Federal Arbitration Act (FAA) and the Court’s precedent to require arbitration on an individual basis only. In New Prime Inc. v. Oliveira, U.S., No. 17-340, the Court will assess whether arbitration agreements may be enforced against long-haul truck drivers classified as independent contractors based on an exception to the FAA for "contracts of employment" with workers who engage in interstate commerce, such as long-haul truck drivers. The trucking company asserts that it may enforce the agreements because the drivers are not employees. Further, while some arbitration agreements delegate authority to decide such threshold questions, the Court will consider whether a court may keep and decide issues of arbitrability if they are “clear,” in an effort to preserve party resources. Finally, in Henry Schein Inc. v. Archer and White Sales Inc., U.S. No. 17-1272, the Court will determine whether the FAA permits a court to decline to enforce an agreement delegating questions of arbitrability to an arbitrator if the claim that the case should be arbitrated is "wholly groundless." If there is one thing employers may already take away from the Court’s new term, it is the repeat lesson that arbitration agreements must be drafted carefully and clearly. Indeed, all arbitration agreements should be thoroughly reviewed by legal counsel. In addition, employers may also consider asking a handful of employees to review draft agreements in advance of dissemination to help ensure their employees will understand the language and process set forth in the agreement.Employers with questions regarding the breadth, scope, or enforceability of their arbitration agreements would do well to consult competent counsel.

Employers subject to collective bargaining relationships often complain about the time they spend responding to objectively meritless grievances. From showing, for example, that it had just cause to terminate an intoxicated employee or justifying why it did not assign overtime to an employee who consistently refuses to work more than 40 hours a week, Employers may be compelled to expend resources responding to grievances that are filed without an appropriate investigation. One of the justifications proffered by Unions for filing and litigating such grievances is that they have a “duty of fair representation” under the National Labor Relations Act (the “Act”) to their members, violation of which could lead to an unfair labor practice charge (“ULP”).  Although true, this “bar” has been set artificially low, and so long as Unions do not act arbitrarily, discriminatorily, or in bad faith when failing to process grievances, they will not run afoul of the Act.  Longstanding National Labor Relations Board (“NLRB”) precedent has held that “mere negligence” when mishandling grievances is not a violation of the Act. Recently, Peter Robb, the General Counsel of the NLRB, issued a Memorandum that imposes a higher standard on Unions regarding the handling of grievances.  Doing away with the “mere negligence” standard, the General Counsel asked Regional Directors to more closely scrutinize decisions made by the Union not to pursue grievances on behalf of their members.  Going forward, the NLRB will issue complaints against Unions that claim that they, for example, “lost track, misplaced, or otherwise forgotten about a grievance.”  Likewise, where a Union fails to respond to a member’s request for a status of a grievance, the absence of a “reasonable excuse or meaningful explanation” will not pass muster. Facially, General Counsel Robb’s Memorandum appears to be another favorable outcome for Employers under the NLRB’s new Republican controlled majority. However, the increased scrutiny regarding the processing of grievances may actually increase the amount of grievances filed.  Instead of vetting whether a grievance has merit prior to its filing, Unions simply may file the grievance to satisfy their heightened “duty of fair representation” obligations.  Employers may also expect an increase in the number of information requests where Unions, as part of their grievance investigation, will ask for documents and other records earlier in the grievance process.  Objectively meritless grievances may be pursued to arbitration, especially in the case of vocal and antagonistic Union members, as Unions may prefer to lose at arbitration than justify its reasons not to pursue arbitration before the NLRB. Consequently, Employers are encouraged to maintain complete and accurate records of their employees’ work performances, since grievances regarding employee discipline likely will rise. Employers also should strictly enforce contractual time limitations throughout the grievance and arbitration process, since a Union’s failure to timely prosecute alleged violations of the collective bargaining agreement now may draw a ULP.

On September 14, 2018, a three-member majority of the National Labor Relations Board (“NLRB” or “Board”) comprised of Members William Emanuel, John Ring, and Marvin Kaplan published a proposed rule in the Federal Register that would restore the Board’s joint-employer standard as it existed prior to the 2015 Browning-Ferris decision. Pursuant to the proposed regulation: “An employer may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment, such as hiring, firing, discipline, supervision and direction.  More specifically, to be deemed a joint employer under the proposed regulation, an employer must possess and actually exercise substantial direct and immediate control over the essential terms and conditions of employment of another employer’s employees in a manner that is not limited and routine.” The rule’s proponents contend the proposed rule would return the joint-employer analysis to the Board’s traditional jurisprudence, which, per the majority, was “significantly relaxed” by the Board’s decision in Browning-Ferris.  Specifically, the Browning-Ferris decision held that the power to exercise control over a workforce, rather than whether such power is actually exercised, was the appropriate lens for assessing joint employment.  The new proposed rule, in contrast, seeks to restore the traditional standard, which found joint-employment when the employer actually exercised direct and immediate control over the other employer’s employees. Employers may recall that this is not the first time that President Trump’s Board has sought to restore its’ traditional joint-employment analysis.  In December 2017, the Board overruled Browning-Ferris in a decision styled Hy-Brand Industrial.  However, Hy-Brand Industrial was vacated in February 2018 when the Board’s Designated Agency Ethics Official determined that Member Emanuel should not have participated in the decision. In a sharp dissent, Member Lauren McFerran took the Board’s majority to task, arguing: “[T]here is no good reason to revisit Browning-Ferris, much less to propose replacing its joint-employer standard with a test that fails the threshold of consistency with the common law and that defies the stated goal of the National Labor Relations Act: ‘encouraging the practice and procedure of collective bargaining.’” Interested parties now have 60 days to comment on the proposed rule. For employers that make use of another entity’s employees, or otherwise have close relationships – such as franchisors and franchisees or contractors and subcontractors -- this proposed rule comes as welcome news.  Should the Board adopt the proposed rule at the end of the rulemaking process, employers will be provided greater certainty when entering into relationship with other entities. That said, labor watchers expect the road to the final rule to be bumpy.  Unions and their allies have already signaled they will challenge the rule through the comment process and – most likely – in the courts.  We have been following the Board’s joint-employer jurisprudence throughout the Browning-Ferris saga and will continue to do so.  Stay tuned for further updates.

It’s that time again! The annual run for school supplies, shopping for back to school clothes, and . . . time to review state laws covering school-related parental leave? As kids hurry off to new classrooms throughout the country, employers may notice an uptick in time-off requests for school-related events. Employers should be aware that several states (currently nine states and the District of Columbia) have laws authorizing leave time for parents to attend school functions. California’s law is most generous, providing up to 40 hours per year (but no more than 8 hours per month) to participate in children’s educational activities. Many of these state laws provide for leave beyond traditional school events or classroom activities including, for example, leave to find or enroll a child in a school or daycare facility or to attend a PTA event.  Also, many of the laws also cover not only biological parents, but also those with legal custody, acting as a parent, or otherwise related to the student. Generally speaking, these state laws require the employee to provide advance notice of a request for the school-related leave. Most states also allow employers to request documentation from the school to verify that the employee participated in a school activity on a specific date and time. Typically, however, the employer must accept documentation deemed appropriate and reasonable by the school. No state law requires employers to pay for school-related leave, but some states allow the employer to require use of any accrued PTO/vacation to participate in these activities (if that requirement is specified in the employer’s policy). Finally, similar to other leave laws, these state laws generally contain provisions protecting employees from discrimination or retaliation for taking leave to participate in school activities in compliance with the law. Employers with operations in states allowing for school-related leave should include references to the leave in their employee handbooks or policies, and make sure that any written policy addresses the interplay between existing PTO/vacation policies and school-related leaves.  Employers with questions regarding such leave laws should consult with competent counsel.

In light of the U.S. Supreme Court’s decision in Epic Systems Corp. v. Lewis [1] that class action waivers in arbitration agreements are enforceable, employers have been rejoicing.  However, is their excitement misplaced? As that eminent legal scholar, Isaac Newton, once said “for every action, there is an equal and opposite reaction.”[2]  To the extent class action waivers are enforceable, employers may experience an increase in individual cases, each of which includes the possibility for plaintiff’s counsel to obtain attorneys’ fees if he or she is successful.  Accordingly, companies should carefully evaluate whether to include a class action waiver in any arbitration agreement with their employees in light of the possibility of multiple individual arbitrations involving similar issues for which the company must pay for the arbitration fee, its attorney’s fees and the plaintiff’s attorneys’ fees if it is unsuccessful in each arbitration. Class Action Waivers Outside Of Arbitration The reasoning behind the Court’s decision in Epic Systems is tied closely to the policies underlying the Federal Arbitration Act (“FAA”), and it is unclear whether a class action waiver is enforceable in the absence of an arbitration agreement.  For example, in the absence of an arbitration agreement and the public policy underlying the FAA, would a non-arbitration class action waiver survive a challenge under Section 7 of the National Labor Relations Act involving concerted activity?  Similarly, in the absence of an arbitration agreement, would state statutes regarding unconscionability of a class action waiver be applicable?  See e.g., Gentry v. Superior Court, 42 Cal. 4th 443, 165 P.3d 556 (2007), abrogated by Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal. 4th 348, 327 P.3d 129 (2014).  Finally, in the absence of an arbitration agreement, can collective actions under the Fair Labor Standards Act (“FLSA”) be waived?  As a general matter, substantive rights under the FLSA cannot be waived.  The question is whether the right to a “collective action” is a substantive or procedural right, and the courts are split on this issue. Food For Thought A company should carefully consider whether to employ class action waivers in connection with any arbitration program and, in the absence of an arbitration program, should consider that a class action waiver may not be enforceable in certain circumstances. [1] Epic Systems Corp. v. Lewis, 138 S.Ct. 1612 (2018). [2] Sir Isaac Newton, Newton’s Third Law of Motion, in Philosophiæ Naturalis Principia Mathematica(1687).

Employers may desire to transfer an employee to a different position, division, or office because of personality conflicts, performance issues, a reorganization, or myriad other reasons.  While transferring an employee may resolve an immediate problem, it could also lead to a retaliation or disparate treatment claim. Here are at least three things to consider before transferring an employee: First, employers would be wise to review the impacted employee’s history at the company to determine if the transfer could be viewed as retaliatory or discriminatory. For example, employers should generally closely analyze a transfer of an employee who has recently engaged in a protected activity (e.g., filing an EEOC complaint, requesting FMLA leave, etc.). Moreover, employers should avoid a transfer if it would reconnect an employee with a supervisor or coworker with whom there have been previous issues. Often, reviewing personnel files and speaking with managers prior to any transfer will reveal these issues. Second, to avoid a discrimination or retaliation claim, employers should ensure that the new position is not “materially adverse,” or does not have a detrimental effect on the terms and conditions of a person’s employment, such as a decrease in compensation or benefits, or likely will severely limit promotion potential. For example, in Hendrix v. Jesse White, State of Illinois Secretary of State,[1] the court held that a transfer to a different facility was not materially adverse when the new position had the same job title, responsibilities, pay, and benefits. Similarly, in Montgomery v. Medstar Montgomery Medical Center,[2] the court found that a transfer was not materially adverse because the new position did not impact the employee’s compensation or potential for a promotion. Third, prior to the transfer, employers should document the legitimate, non-discriminatory reason(s) necessitating the transfer. Following these three steps – and consulting competent counsel -- will help limit discrimination and retaliation claims stemming from employee transfers. [1] http://hr.cch.com/ELD/HendrixWhite071118.pdf 2 http://hr.cch.com/ELD/MontgomeryMedStar071218.pdf

On July 17, 2018, a National Labor Relations Board (“Board”) Administrative Law Judge (“ALJ”) rejected a proposed settlement that would have concluded the  closely-watched consolidated unfair labor practice case against McDonald’s USA, LLC (“McDonald’s”), which has been ongoing for over three years.  The matter has drawn the interest of labor watchers, as the case hinges primarily on whether McDonald’s is a “joint employer” with its franchisees. In a prior blog post, we discussed Board General Counsel Peter Robb’s proposed settlement with McDonald’s and the impact of the proposed settlement moving forward, especially regarding its impact on employers that rely on the traditional franchise model.  We cautioned, however, that the proposed settlement still had to be ratified by an Administrative Law Judge (“ALJ”). It was not.  ALJ Lauren Esposito rejected the settlement, reasoning it was not a “reasonable resolution based on the nature and scope of the violations alleged.”  Additionally, the ALJ found that the proposed settlement lacked “certain fundamental elements” and contained “limited remedial impact” that would not fully resolve the dispute.  ALJ Esposito’s decision further emphasizes that any future settlement proposal must impose some liability against McDonald’s, rather than solely against its franchisees. Now,  McDonald’s and General Counsel Robb must determine  whether to abandon settlement discussions and prepare for what could be protracted litigation; resume settlement discussions in line with ALJ Esposito’s decision; or appeal the decision to the Board. Please stay tuned to our blog for further updates on this closely-watched dispute.

On July 13, 2018, the General Counsel of the National Labor Relations Board (“NLRB” or “Board”) released several memos authored by the Board’s Division of Advice, which offer further guidance to employers about how the Board will evaluate work rules under the new Boeing standard established in December 2017. Intellectual Property and Confidentiality Rules Determined to be Lawful The first advice memo analyzed intellectual property and confidentiality rules promulgated by Lyft Inc., which the Teamsters Union (Joint Council 7) challenged as unlawfully overbroad under the new Boeing standard.  The intellectual property rule barred employees from making use of Lyft’s logo without written permission, and the confidentiality rule barred employees from using or disclosing “User Information” and other confidential and proprietary information relating to Lyft’s business. “User information” was defined as the personal information of both riders and drivers who use the Lyft platform. The Division of Advice, in a memo dated June 14, 2018, determined that the policies in question are lawful under the Boeing standard.  Regarding the intellectual property rule, the Division of Advice found that it is a Category 1 rule under Boeing. Thus, although some protected concerted activity might fall under the rule’s ambit, including fair use of an employer’s intellectual property on picket signs and leaflets, when reasonably interpreted, most employees would understand that the rule would prohibit only commercial and other non-Section 7 protected uses of the logo.  Further, even if the rule could be interpreted by employees to prohibit the use of logos for protected activity, the rule is unlikely to deter using the logos or the protected activity itself.  The advice memo makes clear that, when balanced against an employer’s significant interest in protecting its intellectual property, any peripheral impact on Section 7 rights is permissible. The Division of Advice also found the confidentiality rule to be lawful, reasoning that it was unlikely to interfere with employees’ protected rights under the National Labor Relation Act.  Employees would not reasonably interpret the rule to prohibit the sharing of 1) information about working conditions, or 2) employee names and contact information. Rather, the rule is primarily designed to prohibit the disclosure of “technical, financial, strategic, and other proprietary” information, and does not specifically reference “employee information.” Social Media Policy Found to be Lawful A second advice memo, dated June 11, 2018, analyzed Kumho Tires’ social media policy.  Specifically, Kumho Tires fired an employee who violated its social media policy by posting a photograph of a team leader’s bonus request form in a closed social media group shared with other employees in the context of a union organizing campaign. The Division of Advice concluded that, although the employee was otherwise engaged in protected concerted activity when posting the form, the conduct was not protected because he photographed and disseminated the form after having received it from a co-worker, who the employee knew had improperly taken it from the team leader’s desk to another floor to photocopy. The employer therefore did not violate Section 8(a)(1) by discharging the employee. The Division of Advice also concluded that the employer’s social media policy is facially lawful under Boeing because, when reasonably interpreted, it would not be viewed as restricting employees’ Section 7 rights.  Rather, the social medial policy reasonably required employees to protect the employer’s confidential and trade secret information when engaging in social media communications. These and other advice memos released from the General Counsel’s office provide employers with further guidance on how the Board will interpret work rules under the Boeing standard.  Employers should review their employee handbooks and work rules, and consult with experienced counsel to make any recommended changes.

Employers, dust off your arbitration agreements and take a second look at the signature line. Is it signed by both parties? Did the employer representative sign on behalf of the correct corporate entity? If the answer to either of these questions is “no,” then the arbitration agreement may be unenforceable. Did the company sign the arbitration agreement? The United States Fifth Circuit Court of Appeals recently held that an arbitration agreement – which was signed by the employee but not by the employer – was unenforceable.[1] The employer argued that its signature was unnecessary because the employer drafted the agreement and maintained the agreement as a business record. Thus, the employer contended, that it intended to be bound by the arbitration agreement. The court rejected this argument, finding that such reasoning would allow an employer to “have it both ways – argue that it did not intend to be bound because it did not sign the agreement or it did because it kept the agreement and sought to compel arbitration.” Due to the absence of the employer’s signature, the court held that there was not a valid agreement to arbitrate and the employee could pursue her claims in federal court. Assuming your company executed the arbitration agreement, was it signed on behalf of the correct entity? Further, the U.S. Fourth Circuit Court of Appeals recently held that a subsidiary could not enforce an arbitration agreement when the document was signed by the parent corporation.[2] There, the plaintiff and the subsidiary’s representative, Vaughn, executed a “Services Agreement.” The plaintiff also signed an “Arbitration Rider,” which Vaughn executed on behalf of the parent corporation “d/b/a [the subsidiary].” The Fourth Circuit held that “the parties here must abide by what the agreement says. The Arbitration Rider binds [the plaintiff] and [the parent] to arbitration of their disputes…” Since the subsidiary was not named in the arbitration rider, the court held that it had no basis to compel arbitration, and the plaintiff could pursue his class-action wage claims in federal court. These cases demonstrate that simple oversights can invalidate otherwise enforceable arbitration agreements. Employers should remind their representatives to countersign all employment agreements and ensure that the agreements include all the desired corporate entities. Failure to do so could invalidate the agreement. [1] See Huckaba v. Ref-Chem, L.P., No. 17-50341 (5th Cir., June 11, 2018). [2] See Weckesser v. Knight Enterprises S.E., LLC, No. 17-1247 (4th Cir., June 12, 2018).

By letter dated June 5, 2018, National Labor Relations Board Chairman John Ring announced that the Board will issue a proposed regulation to determine when employers may be considered joint employers under the National Labor Relations Act “as soon as possible, but certainly by this summer.” In the letter, Chairman Ring argued that notice-and-comment rulemaking was the most prudent way to review the joint-employer standard, and further contended that establishing legal standards through precedential decisions limits the Board and results in less comprehensive rules. Per Chairman Ring: “Rulemaking offers the best vehicle to fully consider all views on what the [joint-employer] standard ought to be.” Chairman Ring emphasized that, if approved, any final rule would apply prospectively only, and would not affect pending cases. Labor watchers expect the Board to issue a Notice of Proposed Rulemaking in the coming weeks. Employers that could be affected by any changes to the current joint-employer standard would do well to closely follow the blog for further updates.

On May 9, 2018, National Labor Relations Board (“NLRB” or “Board”) Chairman John F. Ring announced the Board is considering whether to change the current joint-employer standard via the Board’s rulemaking process. As we discussed previously here, the Board’s joint-employer standard has garnered a great deal of attention in the past year, with the Board overturning, then returning to, the standard enunciated in the controversial Browning-Ferris decision. When announcing the Board’s consideration of the rulemaking process, Chairman Ring stated: Whether one business is the joint employer of another business’s employees is one of the most critical issues in labor law today.  The current uncertainty over the standard to be applied in determining joint-employer status under the Act undermines employers’ willingness to create jobs and expand business opportunities. In my view, notice-and-comment rulemaking offers the best vehicle to fully consider all views on what the standard ought to be. I am committed to working with my colleagues to issue a proposed rule as soon as possible, and I look forward to hearing from all interested parties on this important issue that affects millions of Americans in virtually every sector of the economy. Any proposed rule would require the approval by a majority of the Board’s five members, with the next step being the issuance of a Notice of Proposed Rulemaking. Employers that may be subject to the Board’s joint-employer standard should follow the Board’s potential rulemaking closely.  If the Board issues a Notice of Proposed Rulemaking, then employers will be able to submit comments to the Board expressing their opinion regarding the proposed rule(s).  In addition, the Board’s general counsel has suggested he will be searching for an appropriate case to seek to overturn the Browning-Ferris standard.  We will be watching this issue closely, so stay tuned.

Last month, the United States Senate confirmed attorney John Ring by a 50-48 vote to fill the National Labor Relations Board’s (“Board”) last vacancy.  Ring fills the seat vacated by Chairman Philip A. Miscimarra (R) when his term expired in December 2017. What this means for employers: With Ring’s confirmation, the Board returns to a GOP majority of three Republicans and two Democrats. The Board is anticipated to resume questioning the list of Obama-era policies that NLRB’s General Counsel, Peter Robb, identified late last year in GC Memorandum 18-02 (which we discussed in detail here).  Those policies include the controversial Purple Communications ruling, where the Board determined workers could use company email to conduct union business, and the Browning-Ferrisdecision, which made it easier for employees to hold companies associated with an employer liable as a joint employer. Notably, the Board attempted to overturn the Browning-Ferris decision late last year in Hy-Brand Industrial Contractors & Brandt Construction Co., 365 NLRB No. 156 (2017).  However, the Hy-Brand decision was rescinded in late February 2018 after the NLRB’s inspector general determined Member Bill Emanuel should have recused himself from the decision (which we previously reported on in detail here). We will continue to monitor Board rulings as they are issued, so stay tuned to the blog for further updates.

As we reported previously, the Bakery & Confectionery Union and Industry International Pension Fund (B&C Fund) has been underfunded for years, with actuaries estimating that the B&C Fund will become insolvent by January 2030. To address this shortfall, the B&C Fund’s trustees invited contributing employers to a meeting in December 2017, during which the B&C Fund representatives advised employers that they had obtained approval to implement an alternative withdrawal liability rule consisting of a two pool allocation method, which we previously discussed here. The B&C Fund’s representatives further stated they would provide employers with “participation agreements,” which employers would be required to sign by February 15, 2018 to participate in the “hybrid pool.” However, the participation agreements were not sent to employers until April 4, when the B&C Fund issued new details about the two pool plan, including an outline of payment terms for employers electing the new hybrid pool.  At that time, the B & C Fund advised employers they were required to review and sign the participation agreements, referred to as the Withdrawal and Reentry Agreement, by September 15 if they wished to participate in the hybrid pool. Employers that decide to participate in the hybrid pool would pay their withdrawal liability in the “old pool” based on a discounted formula.  Specifically, employers could pay their existing withdrawal liability over 30 years or in a lump sum, and employers that elect to pay pursuant to the 30 year payment schedule could prepay their remaining withdrawal liability at a later date if they chose to do so. Importantly, employers that participate in the new hybrid pool must remain contributing employers for 30 years. If a participating employer completely withdrew from the new hybrid pool prior to the end of the 30-year period, they would forfeit the discount they received for participating in the new pool.  In addition, if an employer partially withdrew from the new hybrid pool, it would forfeit a percentage of its discount determined by the contribution base units that were eliminated by the partial withdrawal. The terms for participating in the new hybrid pool are complex and the advantages and disadvantages of participation will vary from employer to employer. Employers considering participating in the new hybrid pool should seek guidance from attorneys and pension actuaries. Stay tuned to Polsinelli at work blog, where we will provide you further updates on the new B&C two pool plan program as they become available.

On February 21, 2018, the Eighth Circuit Court of Appeals issued new guidance regarding when and how the National Labor Relations Act (“NLRA”) protects union “salting” campaigns.  A “salting” campaign involves union members, known as “salts,” who seek to secure jobs at non-union work sites to recruit additional union members and organize the site. In Aerotek Inc. v. National Labor Relations Board, four members of the International Brotherhood of Electrical Workers Union (“IBEW”) applied for positions with Aerotek, Inc. (“Aerotek”) to attempt to recruit new members and organize the company’s non-union sites. In this case, the four “salts” were transparent about their intentions to organize the site; one stated he would accept any available position because he wanted to expose more electricians to the IBEW. Aerotek refused to hire any of the four salts, and the IBEW filed unfair labor practice charges. The Administrative Law Judge determined that Aerotek violated Sections 8(a)(1) and 8(a)(3) of the NLRA by refusing to hire or place the salts because of their background as union activists. The National Labor Relations Board (“NLRB”) affirmed the decision, which Aerotek appealed to the Eighth Circuit. On appeal, the Eighth Circuit affirmed the NLRB’s decision and provided new guidance regarding when an employer violates the NLRA during a “salting” campaign. Specifically, the Eighth Circuit stated that an employer violates the NLRA only if the NLRB’s General Counsel shows the following: (1)              The salt’s genuine interest in obtaining employment with the employer; (2)              the employer was hiring or had concrete plans to hire (or place); (3)              the salt had the requisite experience or training for the position; and (4)              anti-labor animus contributed to the decision not to hire (or place) the salt. Aerotek serves as a reminder to employers that salting campaigns may be protected activity under the NLRA, and attempts to circumvent or quash salting campaigns can result in steep penalties. Employers that are approached by applicants who express a desire to organize or further the efforts of a union should consult with labor counsel to ensure compliance with the NLRA.

Two recent decisions illustrate that the provision of benefits to employees prior to or during a union organizing campaign may violate the National Labor Relations Act (“NLRA” or “Act”). By way of background, Section 8(a)(1) of the NLRA provides that an employer commits an unfair labor practice by interfering with, restraining, or coercing employees in the exercise of their Section 7 rights to engage in protected and concerted activities.  Furthermore, the provision of benefits to employees during a union campaign may violate Section 8(a)(1) of the Act when the benefits are conferred in an effort to interfere with union organization. Such was the case in Novelis Corporation v. NLRB[1], a recent decision rendered by the U.S. Second Circuit Court of Appeals.  In that case, the employer recognized that a union was preparing to begin an organizing campaign and decided to provide its employees with extra pay when they worked either Sundays or holidays.  The court held that providing such “Sunday and holiday pay” was done to discourage employee support for the anticipated union organization campaign. In its decision, the Second Circuit cautioned that “the source of benefits conferred is also the source of benefits denied.” Similarly, in a recent National Labor Relations Board (“NLRB” or “Board”) decision – Charter Communications[2]– the Board held that the employer committed an unfair labor practice through an implied promise to resolve employee grievances during a union campaign. In Charter, the employer was in the middle of an organizing campaign, and a manager told an employee to come directly to the manager with any issues the employee was having with supervisors. Critically, the manager’s directive was contrary to company policy, which required employees to report issues to lower-level supervisors rather than directly to higher-level managers. Thus, the manager’s solicitation of employees’ potential grievances was found to be an implied promise to remedy said grievances, as well as an attempt to demonstrate to employees that union representation was unnecessary. The Board emphasized that such an unlawful “inference is particularly compelling when the solicitation significantly deviates from the employer’s established policy for addressing employee complaints.” Novelis and Charter demonstrate that during union campaigns employers should take great caution and seek counsel before offering to increase employee benefits or resolve potential disputes. [1] http://www.ca2.uscourts.gov/decisions/isysquery/52c2a907-129a-4f00-b957-cf9b0152105f/8/doc/16-3076_opn.pdf [2] https://www.nlrb.gov/case/07-CA-14017

When purchasing a business, the buyer often desires to set new terms of employment to more efficiently and profitably operate the new enterprise.  However, if the seller’s employees are members of a bargaining unit, the buyer must -- if planning on hiring all the seller’s union employees -- clearly advise employees of their new terms and conditions of employment, or the buyer will be unable to make any changes to same without first bargaining with the union. Traditionally, as enunciated in Spruce-Up Corp., 209 NLRB 194 (1974), a new employer need only bargain with the union prior to setting wages, benefits and conditions of employment for the buyer’s new employees where it was “perfectly clear that the new employer plans to retain all of the employees in the (bargaining) unit.”  Spruce-Up further held the perfectly clear bargaining obligation “should be restricted to circumstances in which the new employer has … misled employees into believing they would all be retained without change in their wages, hours or conditions of employment, or … failed to clearly announce its intent to establish a new set of conditions prior to inviting employees to accept employment.”  Thus, Spruce-Up, and most all subsequent cases, restricted application of the buyer’s bargaining obligation to when: (1) all former bargaining unit employees were hired; and (2) the former bargaining unit employees accepted employment believing the terms of their prior collective bargaining agreement applied.  Application of Spruce-Up has, however, been restricted in recent years.  That may be about to change. During President Obama’s administration, the NLRB took a restrictive view of Spruce-Up and found “perfectly clear” status (and a bargaining obligation) when a “successor (employer) expressed an intent to retain the predecessor’s employees without making it clear that employment will be conditioned on the acceptance of new terms.”  Thus, if the new employer indicated an “intent to retain” all current employees (or if the seller indicated the purchaser’s intent to retain all employees) without mentioning the new terms and conditions of employment, the new employer was obligated to bargain with the union over changes to terms and conditions of employment.  Former NLRB Chairman Miscimarra argued such an interpretation of Spruce-Up made successorship law a “legal trap” for new employers. In two very recent decisions, new NLRB Chairman Marvin Kaplan urged the Board to adopt the traditional view of Spruce-Up and overrule the Obama Board’s interpretation of same.  See First Student Inc., a Division of First Group America, 366 NLRB No. 13 (February 6, 2018) and Walden Security, Inc., 366 NLRB No. 44 (March 23, 2018).  In Chairman Kaplan’s view, application of the “intent to retain” standard is inconsistent with Spruce-Upand U.S. Supreme Court precedent.  Moreover, in Walden, new Member William Emanuel expressed that he is “open” to a re-examination of the Board’s recent Spruce-Up cases using the “intent to retain” standard. With the Senate expected to confirm Republican nominee John Ring to the Board the week of April 9, there appears to be a likely new (3-2) majority at the Board who are primed to “re-examine” the Obama Board’s interpretation of Spruce-Up, likely in order to nix the “intent to retain” standard.  However, pending any re-examination and return to the earlier Spruce-Up standards, employers acquiring new businesses with bargaining units that wish to implement new terms of employment should cautiously comment on plans for the new workforce -- and only commit to hiring all workers – after making it very clear that new terms and conditions of employment will apply to new hires.

The new General Counsel of the National Labor Relations Board (“Labor Board”), Peter Robb, continues to reshape the agency with his vision.  Consistent with his January 2018 promise to consider “settlements of any kind that are not inconsistent with the Act,”  the Labor Board has settled unfair labor practice charges brought against McDonald’s USA, LLC (“McDonald’s”) regarding allegations that it should be held liable -- as a joint employer --  for the unfair labor practices (“ULPs”) committed by its franchisees.  This litigation involved the consolidation of nineteen ULPs, filed in over a dozen regional offices, alleging that McDonald’s franchisees interfered with their workers’ attempts to improve their terms and conditions of employment, and terminated supporters due to their protected, concerted activity. This settlement brings to a conclusion the three years of ongoing dispute between McDonald's and the Labor Board.  While the settlement has not been publicly disclosed and still must be ratified by the Administrative Law Judge (“ALJ”), it is likely that she will approve the settlement because it provides full restitution to affected employees. Unions and their advocates stated they will be filing objections with the ALJ.  They are disappointed by the inclusion of a “non-admissions clause,” where McDonald’s would not need to admit that it terminated employees or harassed them for engaging in the “Fight for $15” collective action. Some context is required.  In December 2017, the Labor Board issued its decision in Hy-Brand, which overruled the joint employer test articulated in Browning-Ferris, and held that two independent employers will be found to be joint employers only where they exercise “direct and immediate” control over the essential terms and conditions of employment.  Subsequently, General Counsel Robb requested a stay of the McDonald’s proceedings to determine whether the Complaint allegations were consistent with the holding in Hy-Brand. Less than two months later, the Labor Board vacated Hy-Brand based on a report from the Labor Board’s Inspector General concluding that Member William Emanuel should have recused himself from considering Hy-Brand since his previous law firm represented a party in the Browning-Ferris case.  Per the Inspector General, since Hy-Brand re-examined the Labor Board’s Browning-Ferris decision, Member Emanuel “is and should have been, disqualified from participating” in the decision.  The Labor Board has (for now at least) restored the Browning-Ferris joint employer test, which allows the Labor Board to find liability where it is indirect or reserved (even if not exercised) authority to control another employer’s employees’ terms and conditions of employment. Going forward, employers should be encouraged by the General Counsel’s willingness to settle complicated litigation.  Considering that the prosecution of McDonald’s was a priority by his predecessor, its settlement, along with the purported non-admissions clause, bodes well for the resolution of labor disputes without further and expensive litigation.

A recent decision by the U.S. Court of Appeals for the 7th Circuit provides insight into the sometimes confusing world of when an employer can make decisions unilaterally, and when management must bargain with a union before making a change in employees’ working conditions. In Columbia College Chicago v. NLRB, Nos. 16-2080 & 16-2026 (7th Cir. 2017), the U. S. Court of Appeals reversed a ruling by the National Labor Relations Board (NLRB) that Columbia College Chicago unlawfully refused to bargain over its unilateral decision to make credit-hour changes to its performing arts curriculum. Columbia is a private, independent college that specializes in communication, media and the arts. The Part-Time Faculty Association (PTFA) represents more than 1,200 part-time faculty members at the college. At all relevant times, Columbia and PTFA were parties to a Collective Bargaining Agreement (CBA). The CBA contained a management rights clause that permitted Columbia to make decisions regarding educational, fiscal and employment policies without negotiating with PTFA. Under the CBA, Columbia determined part-time faculty compensation based in part upon the number of credit hours for the course. Columbia was required to notify the affected instructor, but not PTFA, if any significant changes, including credit hours, were made to a course. The CBA also contained a “zipper clause,” which stated the parties had full opportunity to make proposals and the CBA contains all understandings and agreements between the parties. Amidst contentious bargaining for a new contract, Columbia unilaterally decided to reduce the credit hours for ten courses. Columbia notified the affected instructors, but not PTFA. PTFA’s Unfair Labor Practice (ULP) charge alleged Columbia unlawfully refused to bargain over the effects of the credit hours reduction. In March 2013, an NLRB Administrative Law Judge (ALJ) found that Columbia failed to engage in effects bargaining, among other violations related to the protracted negotiations. Columbia appealed to the NLRB, and a divided panel upheld the ALJ’s findings. Columbia appealed to the 7th Circuit Court of Appeals in Chicago. The Court applied the “contract coverage” test it had previously adopted, which the U.S. Court of Appeals for the D.C. Circuit has also adopted. Applying that test, the Court gave effect to the management rights clause, and held that Columbia lawfully refused to bargain over the effects of its decision to reduce credit hours because that matter was “covered by the contract.” The Court stated that because the effects of the bargaining decision were the inevitable consequences of the bargaining decision, the consequences were also “covered by the contract,” and Columbia was not obligated to engage in separate effects bargaining. Although Columbia would have been obligated to bargain over the effects of the decision if the parties’ CBA or bargaining history demonstrated intent to treat effects bargaining separately from bargaining over the decision itself,” the Court found no evidence of such intent. The NLRB, and other Courts of Appeal that have addressed this issue apply a standard that presumes an obligation to bargain exists unless the CBA demonstrates a “clear and unmistakable waiver” by the Union of its right to bargain. Whether an Appeals Court would have reached a different decision under that standard is unclear; the breadth and specificity of Columbia’s management rights clause would provide a strong argument that the outcome would be the same. Lessons Learned A well-crafted management rights clause in a CBA can be a critical asset to an employer—it permits management to make decisions without having to bargain with the union over the decision itself as well as the effects of that decision. Unionized employers should review their management rights clauses and assess whether they permit unilateral action under either the “contract coverage” test or the “clear and unmistakable” waiver standard.

Peter Robb, General Counsel of the National Labor Relations Board (“NLRB, “Board,” or “Agency”), has proposed budget cuts that he contends are necessary to streamline some of the NLRB’s internal processes. Per Mr. Robb, despite a steady decline in NLRB case filings in recent years, the Agency has not updated its investigative processes since the 1980s. Mr. Robb has proposed further changes to the NLRB, including combining NLRB field offices and shifting more decision-making authority to the NLRB’s Washington office. In addition, Mr. Robb is considering a series of changes to the way the NLRB processes unfair labor practice and union representation cases, including shortening investigation times, imposing strict deadlines on parties in cases, and emphasizing settlement. These proposed budget cuts have caused consternation among some NLRB employees. In a letter to Senator Patty Murray of the Senate Appropriations Committee dated March 15, 2018, a group of nearly 400 Agency employees asked lawmakers to spare the NLRB from the proposed cuts to its annual budget. According to the employees, a proposed nine percent budget cut to the NLRB’s funding would limit the NLRB’s ability to investigate and adjudicate unfair labor practice charges and union representation cases. In the letter, the employees requested that Congress “fight to preserve the NLRB’s funding at FY2017 levels adjusted for inflation,” and further stated that “[i]f the NLRB’s budget and staff are reduced, the Agency will not be able to effectively serve the public and fulfill its core mission to protect workplace democracy while maintaining industrial peace.” The employees, who represent about 25 percent of the NLRB’s nationwide workforce, further expressed concern that the proposed budget cut could “inevitably leave the public further in the dark about their rights under federal labor law.” The employees signed the letters in their personal capacities. The NLRB is currently funded by a continuing resolution, which is set to expire March 23, 2018. Congress is widely expected to extend funding to the NLRB through the rest of the fiscal year

On February 26, 2018, the National Labor Relations Board (“NLRB”) issued an Order vacating its recent decision on the issue of joint-employer in  Hy-Brand Industrial Contractors & Brandt Construction Co., 365 NLRB No. 156 (2017).  The 3-0 decision by the NLRB (in which Member William Emanuel did not participate) effectively reinstates the NLRB’s controversial “indirect control” joint-employment test from the Browning-Ferris decision.  362 NLRB No. 186 (2015). The NLRB’s Hy-Brand decision, issued 3-2 along party lines on December 14, 2017, had sought to overturn the NLRB’s previous Browning-Ferris joint-employer jurisprudence.  In Browning-Ferris, the NLRB departed from long-established jurisprudence and determined that a joint-employment relationship could be found where an entity maintained “indirect control” over another entity’s employees’ terms and conditions of employment, or where “industrial realities” dictated the finding of a joint-employment relationship. Critically, Member Emanuel was a shareholder working at the same law firm that represented a party to the Browning-Ferris decision, yet still participated in the Hy-Brand decision.  Upon issuance of the Hy-Brand decision, the Charging Parties sought reconsideration from the NLRB and the recusal of Member Emanuel from any further case proceedings on the grounds that his former law firm was involved in the Browning-Ferris decision. Given the request for recusal, the NLRB’s Designated Agency Ethics Official investigated the propriety of Member Emanuel’s participation in the Hy-Brand decision.  The Ethics Official determined that because Member Emanuel would have been prohibited from participating in the Browning-Ferris decision as a result of his former firm’s involvement in the case, he was likewise barred from participating in the Hy-Branddecision because Hy-Brand involved the same legal arguments as Browning-Ferris.  Accordingly, based upon the Ethics Official’s determination, the NLRB vacated Hy-Brandand disqualified Member Emanuel from any further case proceedings.    Companies that rely on contingent staff or temporary workforces should proceed carefully (for now), as the NLRB’s “indirect control” joint-employment test from Browning-Ferris is once again the state of the law.  However, it is widely expected the NLRB will revisit the joint-employment issue in a different case once nominee John Ring, a management-side labor and employment attorney, is confirmed as the NLRB’s fifth member.  Mr. Ring’s confirmation is expected in the coming weeks.  In addition, the seemingly-mooted challenge to Browning-Ferris will now return to the U.S. Court of Appeals for the D.C. Circuit for further proceedings.  Stay tuned, as we will cover further updates to both the Hy-Brand and Browning-Ferris sagas, as well as other key NLRB rulings.

On February 22, 2018, the U.S Sixth Circuit Court of Appeals determined a union acted properly when it continued collecting union dues from members who did not follow protocol when seeking to revoke consent to their signed dues checkoff authorizations. Plaintiffs worked for a unionized grocery store in Michigan.  The collective bargaining agreement between the employer and the union allowed the employer to deduct union dues from an employee’s paycheck if the employee signed a dues checkoff authorization form.  The form provided that the dues checkoff authorization would be irrevocable for one year or until the termination date of the agreement, whichever occurred sooner, and thereafter for one-year periods unless revoked by certified mail during a 15-day window each year. Plaintiffs signed the authorization forms.  Three years later, they resigned their union memberships and sought to revoke their dues checkoff authorizations.  However, Plaintiffs did not follow the revocation protocol; they sent their written revocations by regular mail, not certified mail, and did so outside the 15-day revocation period.  The union refused to accept the revocations and the employer continued to deduct union dues from Plaintiffs’ wages, which the union continued to accept.  Plaintiffs filed a putative class action against the union, alleging the union violated 1) section 302 of the Labor Management Relations Act (“LMRA”) by imposing conditions on their ability to revoke their dues checkoff authorizations and 2) its duty of fair representation under the National Labor Relations Act (“NLRA”) by enforcing said conditions.  The district court dismissed the complaint as a matter of law, and the Sixth Circuit affirmed. The Sixth Circuit quickly disposed of Plaintiffs’ LMRA claim.  Specifically, section 302 of the LMRA does not contain an express private right of action.  The Court further explained that section 302 does not contain an implied private right of action either because Congress when drafting section 302, did not “imply a right of action in ‘clear and unambiguous terms.’”  Section 302 “does not create person-specific rights.”  Rather, “it focuses on the persons regulated rather than the individuals protected.” The Court also affirmed the dismissal of Plaintiffs’ NLRA claim, ruling that Plaintiffs failed to show the union’s conduct was “arbitrary, discriminatory, or in bad faith.”  Specifically, Plaintiffs agreed to the 15-day revocation window and the certified mail requirement when they signed the dues checkoff authorization form.  Having agreed to the requirements, Plaintiffs could not argue the union acted arbitrarily when enforcing those provisions.  When “holding [Plaintiffs] to this contract, the union did not act in bad faith.” This decision provides a timely reminder to unionized employers that deduct union dues from employees pursuant to dues checkoff authorizations to continue to deduct such dues until the employee properly revokes the checkoff authorization.  Employers with questions regarding dues checkoff authorizations and dues deductions would do well to consult with counsel.

In 2014, the National Labor Relations Board (“NLRB” or “Board”) published the controversial “ambush election” rule, which was intended to decrease the time between the filing of a petition for representation and a union election. The rule, which became effective in April 2015, changed the scope of pre-election hearings and the timing and content of pre-election disclosures and required that the time between petition and election be less than thirty days. Employers and industry groups unsuccessfully challenged the rule in federal court. See, e.g., Associated Builders and Contractors of Texas v. NLRB, 826 F.3d 215 (5th Cir. 2016). Last month, the Board, over the scathing dissent of two members, issued a request for information regarding whether the NLRB should retain without change, modify, or rescind the “ambush election” rule. In response to dissenting members, the Board emphasized that its request “merely poses three questions” and “does not suggest even a single specific change in current representation-election procedures.” However, the Board’s dissenting members characterized the request as part of a bad faith effort to rescind or substantially revise the rule. Members Mark Pearce and Lauren McFerran each prepared dissents lambasting the majority’s request and extolling what they believe to be the benefits of the rule. Member Pearce characterized the Board’s request as a search for “alternative facts to justify rolling back the [NLRB’s] progress in the representation-case arena.” Member McFerran made a similar objection, stating that the request amounts to “little more than an open-ended ‘raise-your-hand-if-you-don't-like-the-Rule’ straw poll” that is unlikely to generate meaningful feedback. Arguably more consequential is Member McFerran’s suggestion that the Board failed to articulate a reasoned basis for reconsidering the rule and, thus, any changes would run afoul of the Administrative Procedure Act. Perhaps laying the groundwork for future legal challenges, Member McFerran cautioned that “it should come as no surprise” in the future if a reviewing court “looks back skeptically” at what she characterized as a “partisan effort to roll back," the rule. The deadline to respond to the Board’s request for information is March 19, 2018. We will keep a close watch on the Board’s rulemaking process and provide substantive updates.

The U.S. Department of Labor’s (“DOL”) Office of the Inspector General (“OIG”) is investigating the rule-making process relating to the DOL’s new tip pool regulation in response to reports that the DOL buried internal estimates regarding the proposal’s impact on workers. On February 5, 2018, the OIG informed the DOL’s Wage and Hour Division that OIG will audit the DOL’s rule-making process regarding the tip-pooling rule. The DOL’s internal oversight office launched the review on February 2, 2018. Also on February 5, Democratic state attorneys general from 17 states — led by California, Illinois, and Pennsylvania—wrote to the DOL threatening litigation on the grounds that the DOL’s failure to release regulatory data on tip pooling violates the federal rulemaking law, and may also violate the Administrative Procedure Act. The letter further expresses concern that the DOL refused to release an internal analysis regarding the rule’s projected impact on worker tips. Employee advocates have also expressed serious reservations regarding the tip pooling rule, as media reports suggest that the DOL’s internal analysis of the rule indicated employees could receive fewer wages as tips. The rule would allow tip pooling among restaurant servers and other workers who earn gratuities and back-of-the-house employees who do not, reversing a 2011 regulation providing that tips are the property of the workers who earn them. In addition, if an employer pays tipped workers at least the federal minimum wage of $7.25 per hour, the employer could also share in the tip pool. The DOL is currently soliciting comments regarding the regulation’s economic impact.  Employers in the restaurant business would do well to pay attention to further developments regarding the rule, which will be posted here. Stay tuned

Recently, NLRB General Counsel Peter Robb announced his intention to restructure the NLRB’s field office operations and revamp the NLRB’s current case processing procedures. On January 11, 2018, Robb hosted a conference call with the NLRB’s Regional Directors to inform them of his plan to reorganize the NLRB’s 26 Regional Offices into a smaller number of districts or Regions supervised by officials who would report to the General Counsel. On January 29, 2018, Beth Tursell, who heads the NLRB’s Operational Management Division and reports directly to Peter Robb, issued a “Case Processing Memo,” which sets forth a number of suggested changes to the NLRB’s procedures, including: 1) Requiring all parties to respond to inquiries from the NLRB within two days or face closure of the investigation 2) Reducing the amount of time allotted for investigations from two weeks to one week, depending on the case type 3) Directing agency officials to seek settlements in “all” cases “in lieu of litigation,” (even without approval from the Regional Director) Some of the proposals outlined in the Case Processing Memo have drawn criticism. Specifically, if the proposals are implemented, investigations will likely be shortened, which limits an employer’s ability to respond to an Unfair Labor Practice Charge.  Robb and Tursell have requested input from agency staff regarding these proposed changes. Thus, it remains to be seen whether the current proposals will be implemented “as is,” or if further changes will result prior to adoption. Employers, particularly those with unionized labor forces, would be wise to stay abreast of these and other possible changes and can do so by watching this space. Stay tuned for further updates.

When President Elect Trump is inaugurated, he will immediately have the opportunity to appoint two new members of the National Labor Relations Board (NLRB). Both of those appointees will be Republican appointees, and will immediately provide the NLRB with a Republican majority. A new “Trump Board” will have the opportunity to review existing decisions as new cases arise, but due to the time progression of most NLRB cases, the result of this review will not likely be felt prior to the middle of 2018. This blog post will review precedential decisions established by the present “Obama Board” that are likely to be considered,revised, or reversed by the new Trump Board. Joint Employment.Since 2011, the NLRB has expanded the definition of joint employment. When two or more employers are found to be joint employers, they both have the same responsibilities to recognize and bargain with a union selected by their employees. Recently, the NLRB ruled that fast food franchisers and franchisees may be joint employers. Similarly, the NLRB determined that a business may be a joint employer of temporary employees supplied by a staffing agency, and that those temporary employees may be counted along with employees directly hired by the business to form a bargaining unit. The NLRB’s decisions have not depended upon whether both employers actually control the terms and conditions of employment of the temporary employees, but rather whether the putative joint employers have the authority to control such terms, regardless of whether such authority was ever exercised. Also, the Obama Board found that if a business can indirectly control employees by influencing the contractor who hired the employees, that indirect authority is sufficient to establish joint employment. A new Trump Board may reverse the joint employer decisions and revert to traditional NLRB principles, which only lead to a joint employer finding when both employers actually and directly control the terms and conditions of employment of employees in a bargaining unit. If the new Trump Board reaches such a determination, then franchisers and businesses who utilize contracting services that bring in temporary employees are much less likely to be considered joint employers. Micro-Units.Prior to the Obama Board, the NLRB most often determined that bargaining units comprised of all employees at a facility (with certain limited exceptions) were presumptively appropriate. The Obama Board reversed that doctrine and placed the burden on the employer, rather than the organizing union, to demonstrate that a small group of employees was an appropriate or inappropriate bargaining unit. Specifically, if there exists a sufficient community of interest among a small group of employees (i.e., common terms and conditions of employment), then the Obama Board considers that group of employees to be a presumptively appropriate bargaining unit, and an employer must show by “overwhelming evidence” that a broader group of employees should be included in the proposed bargaining unit. This decision, known colloquially as Specialty Healthcare and its progeny, paved the way for ”micro-units” that consist of only a few employees (e.g., only the cosmetics and fragrance employees at a Macy’s in Massachusetts). A new Trump Board could reverse the present policy and eliminate the presumptive appropriateness of “micro-units.” Handbook Interpretations. Numerous NLRB decisions over the last several years have concluded that provisions frequently included in employee handbooks are unlawful and overly broad because they might have a chilling effect on employees who wish to exercise their rights under the National Labor Relations Act (NLRA). In one case, the Obama Board determined that a handbook rule prohibiting “harassment” was too broad because it might cause employees to believe they could not vigorously argue with co-workers in the context of a union organizing campaign. Similarly, handbook provisions that required employees to keep investigations regarding employee misconduct confidential were held to be unlawful because employees could possibly construe such a prohibition as preventing them from discussing terms and conditions of employment. It is likely that a Trump Board will reverse these decisions and allow employers broader discretion in promulgating handbook provisions and other workplace rules. Mandatory Arbitration and Class Action Waivers. The NLRB has held that individual contract provisions between an employee and an employer requiring an employee to resolve disputes through arbitration and prohibiting employees from joining class actions filed in courts are unlawful. The NLRB found that these provisions, and particularly the prohibition against participating in class actions (e.g., “class action waivers”), prevented employees from joining together to address wages, hours, working conditions as specified in Section 7 of the NLRA. At the present time, two federal courts of appeals have sustained the NLRB’s decisions prohibiting mandatory arbitration and class action waivers and two courts of appeals have refused to follow those decisions. While a Trump Board is likely to reverse the Obama Board position, the issue may still be addressed by the Supreme Court because there is now a split among the federal circuit courts. Social Media Policies.Since 2011, the NLRB has limited an employer’s discretion to prohibit employee communications on social media about the employer. Among other things, employer efforts to restrict employees from social media communications about the employer’s workplace, supervisors, and/or products have been found to unlawfully limit an employee’s Section 7 rights. Again, it is likely that the new Trump Board will allow employers greater latitude to prohibit employee statements on social media, particularly with respect to statements about the employer’s products. The Obama Board attempted to facilitate union organization and limit the authority of employers to restrict communications by employees that might relate to efforts to improve wages, hours and working conditions. While the effect may not be felt for some time, it is likely that many of the changes initiated by the Obama Board will be sharply cut back or reversed by a new Trump Board.

As 2017 drew to a close, two key members of the National Labor Relations Board (“NLRB” or “Board”) signaled their readiness to revisit the Board’s current stance regarding the confidentiality of severance agreements. All employers should take notice. In a footnote to the Board’s December 27, 2017 order denying summary judgment in Baylor University Medical Center, 10-CA-195335, Members Marvin E. Kaplan and William J. Emanuel, both appointed by President Trump, not only expressed their concurrence with the order but further noted their belief “to the extent not already permitted under Board precedent, the legality of confidential severance agreements for former employees should be reconsidered.”  Days before the issuance of the Baylor University Medical Center order, President Trump named Member Kaplan the Board’s Acting Chair. Confidentiality provisions of agreements resolving alleged workplace sexual harassment allegations came under increasing fire in 2017 as reports circulated regarding Hollywood icons as well as high profile news anchors, commentators and executives, and the #MeToo national awareness campaign gained steam across professions and industries. Recent Decisions by the Obama-Era Board have indicated strong disfavor of “confidentiality” obligations imbedded in such instruments as “non-disclosure” and “non-disparagement” agreements, otherwise known as NDAs. Previously, the Board has barred such contractual obligations upon finding they overreach and infringe on certain rights of employees (unionized and non-unionized alike) to engage in “concerted activities” protected under the National Labor Relations Act (in other words, acting collectively to protect not only themselves but coworkers). Specifically, the Board has invalidated such provisions by finding they tend to chill employees’ Section 7 rights under the Act to discuss terms and conditions of their employment. Indeed, only rarely would the Board in the Obama Era uphold such provisions absent determining them to be very narrowly tailored. The December 27 footnote to what would have been an otherwise obscure Board Order by Members Kaplan and Emanuel caught the attention of employers throughout the country. These comments by the Board’s newest Members (including now the Acting Chair) portend another shift of the Trump Board away from the prior Obama Board, clearly signaling the Board may become more tolerant of employer-imposed confidentiality restrictions in not only severance agreements (as noted by Members Kaplan and Emanuel) but also NDAs. Such a shift would be similar to that recently announced on December 14, 2017 whereby the Board took a more lax position evaluating employer personnel policies, one that will generally be more favorable to employers seeking to enforce workplace rules.

Recently, we reported that the “new” National Labor Relations Board (“NLRB” or the “Board”) has commenced the anticipated roll back of decisions and procedures rendered by the Obama Administration’s NLRB. On Friday, December 15, 2017, the NLRB issued another important decision with far-reaching implications for all employers. In Boeing Company, 365 NLRB No. 154 (2017), the NLRB established a new standard for evaluating whether workplace rules, policies, or employee handbook provisions unlawfully interfere with employees’ exercise of rights under Section 7 of the National Labor Relations Act (“NLRA”). Under the new standard established in Boeing, the NLRB will balance the impact an employer’s proffered rule may have upon an employee’s Section 7 rights to engage in protected concerted activity against the employer’s business justification for the rule. The NLRB indicated it would categorize the results of future decisions in three ways: Category 1 will include rules the NLRB designates as lawful because (i) the rule, when “reasonably interpreted,” does not prohibit or interfere with the exercise of Section 7 rights; or (ii) the potential adverse impact on protected rights is outweighed by the employer’s business justification(s) for the rule. Category 2 will include rules warranting individual scrutiny on a case-by-case basis as to whether the rule would prohibit or interfere with Section 7 rights, and if so, whether any adverse impact on employees’ protected conduct is outweighed by legitimate justifications. Category 3 will include rules that the NLRB will designate as unlawful because they would prohibit or limit NLRA-protected conduct, and the adverse impact on employees’ Section 7 rights is not outweighed by legitimate business justifications. The Board specifically identified employer policies that would prohibit employees from discussing wages or benefits with each other as an example for this third category. The three categories identified by the NLRB represent a classification of results from the NLRB’s application of the new test and are not part of the test itself. The NLRB will determine in future cases the types of additional rules that fall into each category. The new balancing test established in Boeing Company overrules the “reasonably construe” standard in place since 2004. Under the “reasonably construe” standard, the NLRB could conclude that a proffered work rule violated the NLRA so long as an employee could “reasonably construe” the rule to interfere with their Section 7 rights. The Board’s new balancing test seeks to provide employees, employers and unions with greater clarity and certainty. While it will take time to determine the full impact of the Boeing decision, the fact that the new balancing standard requires the NLRB to consider the business purpose of a rule is a remarkable shift in the Board’s evaluation of workplace rules, policies and employee handbook provisions. In light of the new balancing test, employers should consider clearly articulating the business justification(s) for workplace rules, policies, and procedures, particularly those that could conceivably implicate rights arising under Section 7 of the NLRA.

At the end of an unprecedented week of reversals of “Obama Board” precedent, the National Labor Relations Board (“NLRB” or “Board”) reversed its 2011 decision in Specialty Healthcare & Rehabilitation Center of Mobile,357 NLRB 937 (2011), casting aside the concept of micro-units and reverting back to the traditional community of interests test for determining bargaining unit appropriateness in representation cases. In PCC Structurals, Inc.,365 NLRB No. 160 (2017), the International Association of Machinists & Aerospace Workers filed a petition for election with the NLRB, seeking to represent a unit of approximately 100 production employees. The Employer, a metal casting company, objected to the unit and argued that its maintenance employees shared the same community of interests as the production employees. It asserted that a wall-to-wall bargaining unit, consisting of 2,565 production and maintenance employees, was the only appropriate unit. The Regional Director disagreed and concluded that the maintenance employees did not share an “overwhelming” community of interests with the production employees. The Employer lost the representation election in this micro-unit by sixteen votes. On appeal, the newly constituted Republican majority reversed and remanded. In a 3-2 decision, the Board discarded the “overwhelming” community of interest standard, and reinstated its pre-2011 standard “that the Board has applied throughout most of its history” allowing it to “evaluate the interests of all employees – both those within and those outside the petitioned-for unit.” The majority criticized the NLRB’s Specialty Healthcare decision for changing the standard for appropriateness in representation petitions, disputing that there ever was a need to “clarify” the traditional community of interests test. Focusing on the interests of excluded employees, which it believed was ignored by the “overwhelming” community of interests standard, the NLRB held, “We believe Specialty Healthcare effectively makes the extent of union organizing ‘controlling,’ or at the very least gives far greater weight to that factor than statutory policy warrants, because under the Specialty Healthcare standard, the petitioned-for unit is deemed appropriate in all but rare cases.” The traditional test will focus on whether the excluded employees share the same community of interest as those in the petitioned-for unit and consider factors such as functional integration, organizational/departmental structure, skills and training, interchangeability, common supervision, along with similarities/differences in working conditions, wages and benefits. In a strongly worded dissent, the Democratic members of the NLRB chided their Republican colleagues as being hypocritical and opportunistic, in light of their newly found majority status and the impending departure of Chairman Miscimarra (who left the NLRB the following day). It argued, “Instead of performing its statutory duty…the Board’s newly-constituted majority seizes on this otherwise straightforward case as a jumping off point to overturn a standard that has been upheld by every one of the eight federal appellate courts to consider it.” As with the recent decision on joint employers, this decision is an overdue but welcome victory for Employers. Challenges to “arbitrary” or “irrational” designations of micro-units will likely be much more successful under the traditional standard. A Union’s ease in organizing smaller and smaller units will become more difficult.

On December 14, 2017, the National Labor Relations Board (“NLRB” or the “Board”), issued a case styled Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156, that expressly overruled the controversial Browning-Ferris Industries of California, Inc.,362 NLRB No. 186(Browning-Ferris)decision issued in 2015. When doing so, the Board reverted to its prior (and longstanding) joint-employer standard. In a 3–2 vote, the Board overturned the joint-employer standard enunciated in Browning-Ferris, which provided that two or more entities, such as a company and a contractor, would be considered joint employers where (for example) the company possessed “indirect control” over aspects of the contractor’s workforce, such as wages, hours, or other material terms and conditions of employment. The Board majority commented: “We think that the Browning-Ferris standard is a distortion of common law as interpreted by the board and the courts, it is contrary to the [National Labor Relations Act], it is ill-advised as a matter of policy, and its application would prevent the board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations.” The Board then announced it was returning to its longstanding joint-employer standard that existed prior to Browning-Ferris, which provides that two or more separate entities ( such as the company and contractor discussed above) will be considered joint-employers where the company exerts “direct and immediate” control over the contractor’s employees’ terms and conditions of employment. According to the Board majority: “A finding of joint-employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’” Applying the reinstated joint-employer standard, the Board affirmed the Administrative Law Judge’s determination that Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co. -- companies owned by the same individuals --are joint employers and therefore jointly and severally liable for the unlawful discharge of seven striking employees. The Hy-Branddecision represents a welcome change for employers that make use of another entity’s employees, such as franchisors and franchisees or contractors and subcontractors, among many other business relationships. Indeed, the Board’s decision to overrule Browning-Ferrisprovides businesses with greater certainty when entering into relationships with other entities, and further decreases the risk an employer will be found liable for a separate entity’s unfair labor practices.

In two recent developments, the “new” National Labor Relations Board (“NLRB” or the “Board”), which includes two Members nominated by President Trump, has commenced the anticipated roll back of decisions and procedures rendered by the previous Administration’s NLRB. 1. The NLRB General Counsel can no longer demand settlements with a full remedy for all violations. In UPMC, 365 NLRB No. 153 (December 11, 2017), the Board reversed a 2016 decision that prohibited settlements of NLRB complaints over the objection of the NLRB General Counsel (Prosecutor) and the party filing the charge, unless the settlement provided complete remedies for all violations alleged in the Complaint. The 2016 decision, United States Postal Service,364 NLRB No. 116 (2016), had overturned decades-long NLRB precedent established inIndependent Stove, 287 NLRB 740 (1987). In the UPMCmajority’s (Chairman Philip Miscimarra, Member William Emanuel, Member Marvin Kaplan) view, requiring a settlement of all violations with a full remedy for the employees (and union) “imposed an unacceptable constraint on the Board itself which retained the right under prior law to review the reasonableness of any … settlement terms” offered by Respondents (employers and unions). According to theUPMC majority, the 2016 USPSdecision unduly restricted the settlement of NLRB cases and ignored the risks inherent in NLRB litigation. The UPMC decision now allows a Respondent, with approval of the Administrative Law Judge, to settle a case without providing full and complete relief, so long as the resolution is “reasonable.” This approach should facilitate more settlements, and reduce the costs and uncertainty inherent in litigation (for employers and the NLRB). The dissent strongly disagreed with what it called “an eleventh hour” decision during Republican Chairman Miscimarra’s last week as a Board member. However, Chairman Miscimarra will soon likely be replaced by another Republican. 2. The NLRB seeks comments on quickie elections – is more change likely? The day after the UPMCdecision, the NLRB published a Request for Information (“RFI”) in the Federal Register seeking prompt public comments about the controversial 2014 Election Rule, commonly referred to as the “quickie election” rule. Specifically, the RFI seeks public input from December 13, 2017 until February 12, 2018 regarding the following three questions: Should the 2014 Election Rule be retained without change? Should the 2014 Election Rule be retained with modifications? If so, what should be modified? Should the 2014 Election Rule be rescinded? The “quickie election” rule, effective since April 2015, impacted NLRB elections in three main ways: It significantly shortened the time period between the date a petition for election is filed and the date of the election. As a result, elections frequently took place approximately three weeks after the petition was filed. This period shortened employers’ time to respond to the union’s campaign efforts from approximately 6 weeks to 23 days. It considerably restricted the scope of any pre-election challenges that might result in litigation, such as individual voter eligibility issues, unless the question relating to eligibility affected twenty percent (20%) of the proposed unit. Eligibility issues, including determining who is a supervisor and thus is precluded from voting, were generally delayed until after the elections if the union won. It forced employers to disclose a substantial amount of private employee information to the unions, including providing unions with employee contact information. In particular, the employer is required to disclose, for the first time, employee personal email addresses and phone numbers, including all cell phone numbers. Previously, only mailing addresses needed to be disclosed. While the “quickie election” rule has not substantially increased union election win percentage, opponents of the rule have objected to the limited time it provides employers to communicate with employees regarding the election, the deferral of election eligibility issues until after the election, as well as the procedural challenges. Takeaways Moving forward, interested parties should monitor the new Board’s actions. The recent developments indicate the new Board could likely overturn some of the decisions rendered and procedures proffered by President Obama’s NLRB.

On December 1, 2017, the newly appointed National Labor Relations Board (“NLRB”) General Counsel, Peter Robb, issued a memorandumstyled GC Memorandum 18-02 (the “Memorandum”), which provides insight into his likely agenda as General Counsel. While the Memorandum is relatively brief, it suggests that Mr. Robb may seek to revisit some of the policy decisions rendered by President Obama’s NLRB. The Memorandum instructs the NLRB’s Regional Offices to seek “alternative analysis” from the NLRB's Division of Advice regarding 15 separate issues before issuing Complaints, including matters that involve employer handbook rules; joint employer status; off-duty employee's access to property; protected work stoppages; expanded application of an employee's Weingarten rights; disparate treatment of represented employees during contract negotiations; establishing a duty to bargain before imposing discretionary discipline where parties have not executed initial collective bargaining agreement; dues checkoff; and appropriate remedies. The Memorandum also rescinded seven prior General Counsel Memoranda. Employers will be encouraged to note that the Memorandum expressly rescinds General Counsel Memorandum 15-04, which had barred employers from promulgating a host of seemingly innocuous rules in employee handbooks on the grounds that the rules could conceivably chill employees from exercising their Section 7 rights. Moreover, the Memorandum ended a number of initiatives that were pursued by President Obama’s NLRB, including efforts to extend NLRB decisions to electronic systems regularly used in the course of work. Employers have a number of reasons to be optimistic about the Memorandum, as it seems to portend a more employer-friendly agenda than the previous administration. However, the full implications of Mr. Robb’s tenure will more clearly be seen via Complaints that are proffered and NLRB decisions that are rendered. We will continue to report on NLRB cases and decisions here, so stay tuned.

The Bakery & Confectionery Union and Industry International Pension Fund (“B&C Fund”) has been underfunded for many years. Indeed, since the bankruptcy of Hostess Corporation in 2012, the B&C Fund’s financial position has worsened. The assets of the B&C Fund currently comprise only 37 percent of its liability. Stated differently, the B&C Fund has only 37 cents to pay for each dollar of vested benefits to employees and retirees. Employers also continue to leave the B&C Fund, and the demographics of the B&C Fund reflect a high ratio of retirees in relation to active employees. The B&C Fund’s actuaries estimate that the fund will become insolvent 13 years from January 1, 2017. In an effort to address its funding deficiency, the B&C Fund has invited contributing employers to a meeting to be held in December 2017 regarding a possible new “two-pool” program. The two-pool program will likely be similar to the program adopted by the New England Teamsters Pension Fund. Thus, employers who join the new pool will likely pay a withdrawal liability amount, possibly on a discounted basis, for past unfunded liability. They will then join the “new pool,” which will be funded at a very high rate—with reduced benefits—to prevent future unfunded liability problems like those in the present plan. In theory, employers who join the new pool will be shielded from additional liability payments should the B&C Fund become insolvent and suffer a mass withdrawal. A new two-pool proposal might offer benefits for contributing employers to the B&C Fund, although it is unlikely to be a panacea for the Fund’s long term financial problems. Nevertheless, the B&C Fund’s two-pool proposal may mark the first significant proposal by a large multiemployer pension plan since the proposal suggested by the Central States Pension Fund was rejected by the Pension Benefit Guaranty Corporation (“PBGC”) and The Treasury Department during 2016. Employers that contribute to the B&C Fund should explore any new two-pool program carefully. Among other things, employers should ask whether a discount of present withdrawal liability will be offered to employers who enter into the new pool, either for an initial lump sum payment or for payment over time. Employers should also determine whether the B&C Fund and the PBGC will provide written assurances that employers who pay current withdrawal liability as a condition to entering the new pool will be shielded from additional withdrawal liability should the B&C Fund face insolvency and mass withdrawal in the future. Lastly, employers should inquire whether there will be a partition plan included in the two-pool program that will separate benefits for “orphaned” employees of Hostess and other employers who are no longer contributing to the B&C Fund. Stay tuned to the Polsinelli at Work blog, where we will provide further updates regarding the “two-pool” program as they become available.

On August 2, 2017, the Senate confirmed Marvin E. Kaplan, President Trump’s first nominee to serve on the National Labor Relations Board (NLRB). Prior to joining the Board, Kaplan spent the majority of his career in government practice, most recently as the chief counsel of the Occupational Safety and Health Review Commission (OSHRC). Along with the confirmation of William Emanuel on September 27, 2017, President Trump’s second nominee to the NLRB, it was widely expected that the NLRB would now consist of three pro-management members – Kaplan, Emanuel and Chairman Phillip Miscimarra. In his first decision as a member of the NLRB, however, Kaplan voted with Mark Pierce, and contrary to Miscimarra, when denying an employer’s request to stay an upcoming union election. In PCC Structurals, Inc.,Case 19-RC-202188 (Sept. 22, 2017), an unpublished decision, the employer sought to stay an election scheduled for September 22, 2017, or in the alternative, to impound the ballots. The Board denied each of the employer’s requests by a 2-1 vote. Miscimarra dissented on the basis of his disagreement with the Board’s “quickie election” rule, which was implemented in April 2016. When ruling for the Union, Kaplan “expresse[d] no view with respect to whether he agrees or disagrees with the revisions made by the [Quickie] Election Rule…” This is just the first decision in which Kaplan has participated and his position on these and other issues will be clarified as additional decisions are released. We will keep you posted on future decisions.

Missouri’s new Right-to-Work legislation, signed by Governor Eric Greitens on February 6, 2017, was scheduled to go into effect on August 28; however, labor union leaders have obtained over 300,000 signatures on a Petition, which, if validated by the Secretary of State, will force a state-wide referendum on whether the bill should become law. Since only 5 percent of registered voters in six of Missouri’s eight Congressional districts need to sign the Petition to force a referendum, it seems almost certain that enough signatures have been submitted. Under the Missouri Constitution, once sufficient signatures are submitted to the Secretary of State, the issue must be submitted “to the people.” This means, assuming the Secretary of State validates the submitted signatures, the legislature’s Right-to-Work legislation will be “on hold” until the state-wide vote in the referendum. The Petition states, and the Missouri Constitution provides, that the vote will occur at the next general election, which is in November, 2018. However, the legislature could move the vote to an earlier date, such as the primary election in August, 2018. Observers of organized labor further speculate that unions may initiate a second petition drive to place an amendment to the Missouri Constitution on the ballot, which could restrict the legislature from passing Right-to-Work legislation in the future. The fight over Right-to-Work in Missouri continues.

Despite the National Labor Relations Board’s (“NLRB”) increasing scrutiny of common workplace policies, including those prohibiting employees from secretly recording conversations in the workplace (i.e., no-recording policies), two recent cases suggest employers may establish overriding business interests justifying restrictions on workplace recordings and provide guidance on crafting policies that don’t run afoul of the National Labor Relations Act (NLRA). In June 2016, the Second Circuit Court of Appeals affirmed the NLRB’s ruling (discussed here), that Whole Foods Market Group, Inc. (“Whole Foods”) violated the NLRA by maintaining an overbroad no-recording policies. Whole Foods Market Group Inc. v. NLRB, 2nd Cir., Nos. 16-0002-ag, 16-0346 (June 1, 2017) (Summary Order). The NLRB has held that the “mere maintenance” of overbroad bans on workplace recordings violates the NLRA because they impermissibly chill employees in exercising their Section 7 rights. Whole Foods’ policies prohibited employees from recording staff meetings or other workplace conversations without prior management approval or consent of all involved, and contained no exception for workplace recordings protected by Section 7, such as recordings of picketing or unsafe working conditions. Therefore, the Second Circuit agreed with the NLRB that employees could reasonably interpret the policies to prohibit protected activity, and the policies unlawfully interfered with employees’ rights under Section 7 to engage in concerted activities. Importantly, the Court stopped short of holding that “every no-recording policy” would violate employees’ Section 7 rights. Indeed, the Court ruled that Whole Foods’ justification for its policies, promoting open dialogue among employees, did not outweigh the “chill” such policies could have on employees’ exercise of their protected rights. However, a policy placing “some limits” on workplace recording may not violate the NLRA if it is narrowly tailored to further an employers’ business interest. Similarly, the NLRB heard a challenge to a no-recording policy maintained by Mercedes-Benz U.S. International Inc. (“Mercedes-Benz”), which also contained no exception for concerted activity. There, the NLRB declined to find that the policy was facially unlawful at the summary judgment stage, noting that in previous decisions the NLRB has permitted employers to introduce evidence regarding asserted business justifications. Because Mercedes-Benz argued that its policy furthered legitimate business interests – protecting proprietary and confidential information, maintaining safety and production standards, and open communications – the NLRB ruled that Mercedes-Benz could introduce evidence of its business justifications. It remains to be seen whether Mercedes-Benz’s business interests will ultimately justify its no-recording policy in the eyes of the NLRB. While it is difficult to predict how the NLRB will treat no-recording policies, there are several actions employers may take to minimize the risk that a workplace policy prohibiting secret recordings will be found unlawful: Ensure any no-recording policy is narrowly tailored to further legitimate business interests, such as protecting proprietary, confidential, and trade secret information, maintaining safety and production standards, and promoting open employee communications. Include an express statement in any no-recording policy explaining the justifications for the restrictions on workplace recording and clarifying that the policy is not intended to limit employees’ rights to engage in protected activity under Section 7. Consult with counsel before disciplining an employee for secretly recording a workplace conversation or interaction. For further guidance on handling secret employee recordings, click here.

On July 3, 2017, the United States Court of Appeals for the Eighth Circuit struck down a decision of the National Labor Relations Board (“NLRB” or the “Board”) in which the Board ruled that employees who disparaged Jimmy Johns’ products were engaged in protected concerted activity. As part of an organizing campaign against a Jimmy John’s restaurant franchise (Jimmy John’s), the Industrial Workers of the World (“Union”) sought sick leave for employees.  The Union employees posted images of Jimmy John’s sandwiches on community bulletin boards, stating that: MANY JIMMY JOHN’S WORKERS DON’T GET PAID SICK DAYS.  SHOOT, WE CAN’T EVEN CALL IN SICK.  WE HOPE YOUR IMMUNE SYSTEM IS READY BECAUSE YOU’RE ABOUT TO TAKE THE SANDWICH TEST.”  The Union also distributed a press release that stated “… Jimmy John’s workers have reported having to work with strep throat, colds and even the flu.”  Attached to the release was a letter from employees complaining that “by working sick, we are jeopardizing the entirety of [the company’s] image and risking public safety.” Union supporters then disseminated throughout the area a revised sick day poster listing the owner’s phone number and inviting calls to “LET HIM KNOW YOU WANT HEALTHY WORKERS MAKING YOUR SANDWICH.”  The owner received numerous calls from people who thought it was unsafe to eat at Jimmy John’s.  After these activities, six workers who coordinated the effort were fired. The NLRB Administrative Law Judge determined that the employees were engaged in protected concerted activity, as their communications related to a labor dispute and were not “so disloyal,  reckless, or maliciously untrue as to lose the Act’s protections.”   A divided panel of the Board affirmed.  But the Appeals Court denied enforcement of this portion of the Board’s Order, and  ruled that the employees’ conduct was so disloyal as to exceed the boundaries of protected activity.  Relying upon a prior Board decision styled Jefferson Standard, the Court reasoned that the employees’ conduct was unprotected because they were urging consumers to boycott Jimmy John’s because the restaurant was offering a shoddy product to the consuming public, rather than because it was purportedly being unfair to its employees.  The mere reference to a labor dispute, said the Court, did not save the employees’ conduct. In addition, the Court rejected the Board’s subsequent construction of Jefferson Standard that the employee’s public criticism must evidence an “evil motive” to lose the protection of the Act.  Rather, it is the means of the criticism at issue, not the purpose that counts.  The Court also rejected the Board’s interpretation of Jefferson Standard that employee disparagement of an employer’s product is given blanket protection when it is tied to a labor dispute.  Instead, disloyal statements by employees may lose the Act’s protection even without a showing of actual malice, with the critical inquiry being whether the employees were targeting their employer’s labor practices or the quality of its product or services.  In the former, customers are being asked not to patronize the employer because labor practices are unfair and a subsequent settlement removes the reason for customers not to return.  In contrast, disparaging a product as unsafe, unhealthy or shoddy brings harm that outlasts the labor dispute. Here, even though the purpose of the protest was to win sick days for employees, the protest was unprotected because the employees attacked the quality of Jimmy John’s product and customers were persuaded not to eat there because they might get sick – the “equivalent of a nuclear bomb in labor-relations.” Employers that may become embroiled in labor disputes may now have added authority to attack employee statements that disparage their products.  However, employers should expect that the NLRB will not adhere to the decision of the Eighth Circuit, given the Board’s policy of non-acquiescence.  Therefore, employers should seek counsel when deciding to discipline or terminate employees who engaged in similar speech and activities.

With the recent nominations of William Emanuel and Marvin Kaplan to the two vacant positions on the National Labor Relations Board (“NLRB” or “Board”), the current composition of the NLRB consists of two Democrats and one Republican appointment. Employers continue to watch as this Administration and its agencies roll back prior initiatives and wonder when (if) similar initiatives can be expected at the Board. Earlier this month, the U.S. House of Representatives introduced three bills to amend the National Labor Relations Act (“Act”) and reverse some of the policies advanced by the Board over the last eight years. The Employee Privacy Protection Act, if passed, will amend the Act and require that “lists of employees eligible to vote in organizing elections be provided” directly to the NLRB within seven days of the direction of an election. Currently, employers are obligated to submit that list within two days to the Union. Additionally, employers would need only to provide one form of contact (i.e., an employee’s home address, personal email address, home or mobile phone number); now, they must provide all such forms, if known. The Employee Rights Act would amend the Act to, among other things, only allow secret ballot elections, require selection of the bargaining representative by a majority of unit employees (as opposed to the majority of employees who vote in an election), and require representation elections in existing bargaining units that have experienced great turnover or expansion. The Workforce Democracy and Fairness Act would roll back the “quickie” or “ambush” election rules that the Board passed in 2015. The bill would change existing law in three material ways: It would require a hearing within fourteen days of the filing of a petition for election so that the parties can identify any “relevant and material pre-election issues;” It would require a period of at least thirty-five days between the filing of a petition for election and an election (an average increase of eleven days); and It would revert back to the “community of interests” standard that existed prior to the Board’s 2011 decision in Specialty Healthcare. Presently, the NLRB will direct elections in micro-units unless the employer can show that there is an “overwhelming community of interests” to include/exclude other job descriptions. Last week, Senator Lamar Alexander of Tennessee introduced the Senate’s version of the Workforce Democracy and Fairness Act. That bill, which combines aspects of the House version and the Employee Privacy Protection Act, also would not permit a union election within thirty-five days after the filing of a petition for election so that an employer has time to mount its own educational campaign.

Recently, top level executives in the media and tech industries have departed from their positions in the midst of investigations into allegations of workplace conduct that involved comments that were construed to create a hostile environment.  Two cases decided this month, one by a New York court and one by an Illinois court illustrate the potential liability to an employer if a supervisor utters comments that are seemingly race or gender neutral when correcting the behavior of an employee who is not performing his or her duties in a manner consistent with company culture or policies. In Wooding v. Winthrop University Hospital,  the employer hospital asked the trial court to dismiss a lawsuit filed by a former physician’s assistant, who was the only African-American employee in his department.  The hospital asserted that it discharged the plaintiff for disclosing patient information in violation of HIPAA.  However, the employee alleged that several of his supervisors treated him differently because of his race, including three who disciplined him for engaging in conduct that was "disrespectful" and "overbearing," terms he contended were "code words" for racial discrimination.  The trial court refused to dismiss the lawsuit as to these three supervisors, noting that while the words used by the supervisors "are typically used in an innocent fashion," some words that are facially non-discriminatory "can invoke racist concepts that are already planted in the public conscious." Consequently, a jury could determine that the words, when used toward the plaintiff, were motivated by racial animus. A week after the court's decision in Wooding, an Illinois federal court judge reached a similar result in Young v. Control Solutions, LLC.  The employee in Young alleged she was discharged because of her race, while her employer asserted that the discharge was a result of Young's failure to correct performance issues that were documented through a performance improvement process.  Specifically, the employee claimed she had presented evidence of discriminatory intent because the performance improvement plan repeatedly described her as "angry," which she contended was "an attempt to invoke the stereotype of the 'angry black woman.'"   There was no evidence that anyone at the employer ever referred to Young as an "angry black woman," or that the anger was attributed to her race.  However, the trial court allowed the case to proceed to a jury trial, finding that certain words have a long history "as part of a stereotypical depiction of black women," and could be interpreted by a jury as racially motivated. These decisions serve as a reminder to employers that care should be taken to train all employees regarding proper workplace conduct, how best to document employee behavior when providing discipline,   as well as on issues of implicit bias.  As the EEOC noted in a report issued last year on harassment in the workplace,  simply training employees that an anti-harassment policy exists may not be sufficient to avoid liability.  Words, even facially neutral ones, do matter -- and employers who fail to train their employees as to best practices in a rapidly changing legal environment may find themselves in litigation.

The attorney-client privilege continues to cause issues for in-house counsel who frequently play different roles at different times, and for employees involved in legal communications. The basic elements of the privilege are equally applicable to individual clients as they are to corporate clients, but tend to be far more problematic in the corporate setting. The basic elements of the privilege include: A confidential communication between a lawyer and a client, Related to legal advice, or with the expectation of legal advice, Without waiving the privilege. Counsel must consider whether those basic elements have been met for each communication. Whether a particular communication is protected by the privilege depends, in part, on the role in-house counsel is playing at the time they are engaged in the communication. In the simplest context, when in-house counsel wears their “legal hat” and provides clear legal advice, the likelihood a communication will be deemed privileged is high. But often in-house counsel serve as business advisors as well. When in-house counsel provides business advice, as opposed to legal advice, communications with others within the business is far less likely to be considered privileged. Complicating matters further, in-house counsel often serves as both a business and a legal advisor simultaneously. In such situations, sending an email to multiple recipients about issues that involve both legal and business advice, as but one example, may not be deemed privileged. It is also important to train employees to ensure that privileged communications remain protected. In the age of email and electronic information exchange, the privilege is easily waived. For example, an employee may waive the privilege by forwarding a privileged communication to recipients whose duties are not impacted by the legal advice and/or are not within the protection of the privilege. Then there are employees who wrongly assume that if they label something “privileged,” it will automatically become or remain privileged. Here is a list of five privilege pitfalls that employees and in-house counsel should remember: If you do notinvolve legal counsel on a legal issue, asserting a claim of privilege later will be virtually impossible. Being Loose Lipped!Discussing privileged communications with someone outside the protections of the privilege – including other coworkers – can waive the privilege. Assuming that if Legal Counsel is copiedon the email, the communication will be privileged. It is not that simple: the communication must involve legal advice or pending or threatened litigation. Labeling everythingwith the header or footer “Privileged & Confidential,” even when it should not be, undermines the credibility and jeopardizes the treatment of communications that should be privileged. E-carelessness! Too often a privileged communication is waived when an email is sent to individuals who are not directly involved or impacted by the legal advice. Or if legal advice is provided in a Reply All to more individuals than should be included. The overall rule is that attorney thoughts and analysis are protected, but not when they are shared improperly. Remind employees that sharing legal advice with third parties (“our lawyers don’t think your non-compete is enforceable….”) or attributing business decisions to the legal team (“we hate to do this, but we talked to legal and we have to let you go…”) may jeopardize attorney work product that would otherwise be protected by the attorney-client privilege.

On June 7, 2017, the Department of Labor (“DOL”) announced that legal guidance promulgated during President Obama’s term in office regarding both joint employment and the classification of workers as independent contractors has been withdrawn. In July 2015, the DOL’s Wage and Hour Division issued a 15-page Administrator’s Interpretation regarding the determination of workers as independent contractors or employees. Specifically, the Administrative Interpretation considered the Fair Labor Standards Act’s (“FLSA”) definition of “employ,” meaning to “suffer or permit” work, and the impact of the legal test for whether workers are considered employees or independent contractors. At that time, the DOL’s Wage and Hour Division took the position that, under the FLSA, “most workers are employees.” In January 2016, the Wage and Hour Division released another Administrator’s Interpretation, which indicated that “[t]he concept of joint employment, like employment generally, should be defined expansively under the [Fair Labor Standards Act] and [Migrant and Seasonal Agricultural Worker Protection Act].” In this guidance, the Wage and Hour Division considered the concept of “vertical joint employment”, where an employee has a relationship with an intermediary employer and the entity that engages the intermediary in providing labor. In the Administrator’s Interpretation, the Wage and Hour Division explained that its joint employer regulations would not be considered when analyzing whether vertical joint employment exists. Instead, the Wage and Hour Division adopted an “economic realities test.” When rescinding these Administrator’s Interpretations, the DOL stressed that its actions do not “change the legal responsibilities of employers under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act.” Accordingly, it is unclear what effect, if any, rescinding these Administrator’s Interpretations may have. By contrast, the National Labor Relations Board continues to press its expansive definition of “joint employer” as two or more entities that possess 1) a common law relationship and 2) those entities share or codetermine matters governing employees’ essential terms and conditions of employment. As such, employers cannot rely exclusively on the DOL’s decision to withdraw the Administrative Interpretation as sounding the all clear. The law with respect to joint employment issues and whether a given worker is an independent contractor is currently in flux. We will be following these and other legal developments closely.

A National Labor Relations Board (“NLRB” or “the Board”) Administrative Law Judge (“ALJ”) has issued another reminder to employers to be careful when drafting employee handbooks. In May 2017, a Board ALJ invalidated 10 different sections of the company’s employee handbook, including a section that required employees to report their co-workers’ potential violations of handbook rules or other conduct that could “hurt” the company. The consolidated ruling resolved five separate cases filed by the Communications Workers of America (“CWA”). The CWA challenged many different provisions of the company’s employee handbook on the grounds that the rules were unduly ambiguous, or so overbroad that they could cause employees not to exercise rights under the National Labor Relations Act (“NLRA”) to engage in protected and concerted activities. These rights, guaranteed by Section 7 of the NLRA, include the right to discuss wages, hours, and other terms and conditions of employment. The ALJ accepted the CWA’s arguments, and struck down as unlawful a rule that required employees to report conduct that “could” be “viewed as dishonest, unethical or unlawful,” or that “could cause” the company “to lose credibility with its customers, business providers or investors.” Indeed, the ALJ explained that the rule, referred to as the Speak Up Provision, infringed upon employees’ Section 7 rights to “criticize or protest” their employer’s business practices. The Speak Up Provision was also found to be overbroad as drafted. Specifically, the Speak Up Provision could chill employees from such conduct as discussing wages and hours or other conditions of employment, as such conduct could conceivably “cause” the company “to lose credibility with its customers, business providers or investors.” Moreover, the rule did not pass scrutiny because it “fail[ed] to explain what would be permissible conduct, leaving it up to the employees to guess . . . at their own peril.” In addition, the ALJ invalidated other handbook rules that 1) barred employees from using company resources, “including emails,” to solicit or distribute information; 2) prohibited employees from disclosing their employee records; and 3) prohibited employees from disparaging the company, its services, its products, or other employees. This recent decision is another timely reminder to employers that any employee handbook policies must be carefully drafted so that employees understand that protected Section 7 activities are not prohibited.

The Missouri legislature recently sent a new bill designed to severely limit the use of project labor agreements to Governor Greitens’ desk. Known as Missouri Senate Bill 182 (“S.B. 182”), its stated purpose is to ensure a more competitive and fair bidding process for public works projects. A project labor agreement is a collective bargaining agreement that requires public construction projects (e.g., improving infrastructure, or building schools, libraries, or police stations) to be performed only by contractors that agree to sign a labor union agreement for that project. While Missouri’s current system allows both union and non-union contractors to bid on a project, in practice non-union contractors are effectively compelled to engage union labor and abide by terms of a collective bargaining agreement. S.B. 182 passed the House 104-52 on April 27, 2017, and would prohibit the use of project labor agreements on any project where the state of Missouri or its subdivisions is funding the majority of the project. However, projects that are funded by 50 percent or less of state funds may still be subject to project labor agreements on a project-by-project basis if a certain process is followed. If signed into law by Governor Greitens, Missouri will join 23 other states that have already enacted laws to either limit or ban project labor agreements. We will keep you posted on the bill’s progress.

After millions of Americans celebrated Easter and Passover this month, the National Labor Relations Board (NLRB or the “Board”) provided a “celebration” of sorts to labor unions. In four decisions—three from the Board and one at the Baltimore regional office—the NLRB lowered the bar for organizing employees of religious institutions. In Saint Xavier University, the Democratic members of the Board allowed a Service Employees International Union (SEIU) local to organize the University’s housekeepers, notwithstanding the University’s religious mission. Characterizing their jobs as “wholly secular,” the majority held: “The housekeepers do not have any teaching role or perform any specific religious duties or functions but are confined to the secular role of providing cleaning services to the university.” The NLRB concluded that it could properly assert jurisdiction over the matter because the housekeepers’ duties were not related to the University’s “possible religious mission.” Less than a week later, the NLRB rejected an appeal from Duquesne University, which asserted that the school’s Catholic affiliation deprived the Board of jurisdiction. Taking the rationale in Saint Xavier University a step further, the Democratic majority distinguished part-time professors who taught theology and those who pursued more secular disciplines, and held that the latter can be organized. The same reasoning was applied in a case involving Manhattan College, where the Board held that it had jurisdiction over adjunct faculty, except those in the religious studies department, notwithstanding the college’s affiliation with the Roman Catholic Church. The distinction between religious and secular activities was further highlighted when the Baltimore regional office directed an election over a group of employees working for the Council on American-Islamic Relations (CAIR). There, the Regional Director held, “The evidence establishes that the employer’s purpose is a secular one – to promote a greater understanding of the Islamic faith and Muslim people to people, organizations, and governments, regardless of creed.” Despite its religious message and distribution of publications featuring verses of the Quran and a “glossary of Muslim terms,” CAIR’s commitment to “protecting the civil rights of all Americans, regardless of faith” was held not to further a religious mission. The lone Republican member, Acting Chairman Philip Miscimarra dissented in the Saint Xavier University, Duquesne University of the Holy Spirit, and Manhattan College cases. In those cases, Acting Chairman Miscimarra argued that distinguishing between secular and religious activities raised First Amendment concerns between the separation of church and state. His dissents focused on the Supreme Court’s NLRB v. Catholic Bishop of Chicagodecision, which held that the Board could not assert jurisdiction over the non-religious teachers at religious schools because doing so would create “a significant risk that the First Amendment will be infringed.” Acting Chairman Miscimarra further opined that the individuals in the proposed bargaining units play a role in maintaining their respective school’s religious educational environment, and consequently, the NLRB lacked jurisdiction in each case. These decisions should give religious organizations pause. While it may take several more months for the Board’s composition to transition to a Republican majority, the NLRB currently remains in activist mode. Certain organizations should not take for granted the fact that because they are a religious organization; they are for all purposes outside the Board’s jurisdiction. As secular aspects of a religious entity now seem ripe for organizing, religious entities concerned about the Board’s rulings should prepare to undertake legal challenges in the courts to challenge Board decisions extending jurisdiction into their workforces.

The employment and labor law cases we previously reviewed have now been resolved by the eight Justices. Despite the possibility of deadlock, a majority ruling was issued by the Court in most of the cases. A brief update: The Court affirmed and remanded with a 6-2 vote Tyson Foods v. Bouaphakeo, finding the district court did not err when certifying and maintaining a class of employees who alleged the employer’s failure to pay them for the additional time required to don and doff protective gear violated the Fair Labor Standards Act; The Court vacated and remanded in a 7-1 vote Green v. Brennan, holding the filing period for a constructive discharge claim begins to run when the employee resigns; The Court affirmed in a 6-2 vote Gobeille v. Liberty Mutual Insurance Company, finding ERISA pre-empts Vermont state law that requires certain entities – including health insurers – to report payments to the state, a program designed “to provide comprehensive state-level information about the distribution of health care services provided in the state and the costs of providing them.”; The Court vacated and remanded Spokeo v. Robins in a 6-2 vote, finding the Ninth Circuit failed to consider both aspects of the injury-in-fact requirements of the Fair Credit Reporting Act; The Court vacated and remanded CRST Van Expedited v. EEOC in an 8-0 vote, a case involving the EEOC’s conciliation obligations, holding that a favorable ruling on the merits is not a required predicate to find the defendant is a prevailing party for purposes of an award of attorney’s fees; The Court was deadlocked 4-4 in In Friedrichs v. California Teachers Association, which involved whether public employees who do not join a union can be required to pay an “agency” or “fair share” fee to cover costs that the union incurs. The case was affirmed by an equally divided court per curiam, which means the decision of the court below is affirmed, but the case is not considered to be binding precedent; The Court also vacated and remanded Zubik v. Burwell, a case involving religious freedom and contraception, in a per curium opinion; and The much anticipated MHN Government Services, Inc. v. Zaborowski, which involved California’s arbitration-only severability rule, settled. Perhaps this was in light of the Court’s recent resolution of DIRECTV, Inc. v. Imburgia, which rejected the California Supreme Court’s refusal to enforce the arbitration agreement in the case. Notably, in early February of this year, the Court informed litigants in Epic Systems Corp. v. Lewis that the Court will defer hearing argument in that case until the October 2017 term. The Epic Systems case involves the question of whether an employer’s use of mandatory arbitration clauses in employment contracts violates the National Labor Relations Act. In spring 2016, the Seventh Circuit determined such class action waivers were unlawful and unenforceable, in contravention of rulings from the Second, Fifth, and Eighth Circuits.

In December 2015, we broadly reviewed concerns and compliance issues for employers when managing employees engaged in workplace political speech or those accused of engaging in “hate” speech in the workplace. A brief scan of headlines so far into 2017 reveals more than 900 instances of alleged violence, hate speech, and harassment in and out of workplaces reported since late January. Human Resource professionals and in-house counsel may wonder, again—what are the company’s obligations and duties to our employees? A quick review: “Political activity” and “political affiliation” are only protected statuses for certain employees and in certain locales. Courts have held the First Amendment protects publicemployees from their employers using political affiliation as a basis for employment decisions. The Civil Service Reform Act of 1978 expressly prohibits political affiliation discrimination toward federalemployees. Several states have passed their own statutes concerning private-sector employees: Michigan prohibits direct or indirect threats against employees for the purpose of influencing their vote; Oregon prohibits threatening loss of employment in order to influence the way an employee votes on any candidate or issue; Florida considers it a felony criminal offense to discharge or threaten to discharge an employee for voting, ornot voting, in any election (municipal, county or state) for any candidate or measure submitted for a public vote; Kentucky, Ohio, Pennsylvania, and West Virginia prohibit employers from posting or distributing notices threatening to close their businesses or lay off employees if a particular candidate is elected; and California, Colorado, New York, North Dakota, and Louisiana have passed laws deeming it illegal for an employer to retaliate against an employee for off-duty participation in politics or political campaigns. Several cities, such as Lansing, Michigan; Madison, Wisconsin and Seattle, Washington, protect political affiliation similar to protections afforded race, sex, age and disability, even for private sector employees. Beyond these mandated protections, private sector employees should be mindful of workplace speech and conduct. For example, managers and supervisors who express any type of political opinion to subordinate employees may expose themselves to subsequent claims they acted out of bias against those employees on the basis of other protected statuses. How could an employee draw such a connection in his or her allegation? As we saw in the most recent election cycle, some political candidates across all levels (local, state and federal) voiced strong opinions about race relations, foreign relations policy, religious freedom, Second Amendment rights, immigration, LGBT rights and other issues directly related to characteristics protected by federal, state or local workplace anti-discrimination laws. Dropping into a workplace political debate with a subordinate employee about a candidate, elected official, political party, cause or other political issue risks allowing that employee to associate expressed opinions with some type of prohibited discriminatory bias. Best Practices Check-up Understand there could be laws relating to workplace political speech or activities in your location; Educate managers and supervisors regarding what laws impact the workplace as well as the employer’s workplace culture; training can form a vital line of defense by limiting potential exposure before it has a chance to evolve; Remind managers and supervisors how personal opinions can be viewed by subordinate employees as a form of prohibited workplace bias; and Encourage managers and supervisors to resist being drawn into workplace political discussions, particularly with subordinate employees. Should an employee file an internal complaint alleging a workplace hate-based incident, conduct a measured, consistent investigation to determine what (happened), who (was targeted) and if hate speech or other actions (based on a protected class or against company culture) is likely to have occurred. Resist assumptions. If the investigation yields a conclusion that inappropriate behavior occurred, initiate appropriate actions to (1) hold employees appropriately accountable (for example, through formal warning up to discharge) and (2) decrease the likelihood of repeated incidents. Resist any media, or social media, attention that can serve to derail thoughtful consideration of the facts and promote an atmosphere leading to impulsive decisions.

On February 6, 2017, The Center for Individual Rights (CIR)—a Washington, D.C. non-profit, public interest law firm—filed a federal lawsuit on behalf of a group of California public school teachers against the State and California Teachers Association to challenge California’s “agency shop” law, which requires teachers to pay certain union fees even when they are not union members. In the Complaint, the non-union, teacher plaintiffs allege that requiring them to pay union fees violates the First Amendment because, among other things, the teachers have political, moral, and/or religious objections to activities and efforts on which unions spend money and allocate resources. CIR previously represented plaintiff teachers in the recently-decided case Friedrichs v. California Teachers Association, which we discussed at length here. In a March 26, 2016, per curiam decision, the United States Supreme Court left in place the Ninth Circuit Court of Appeal decision upholding the legality of the union fees. The Court affirmed the Ninth Circuit’s decision without analysis due to a 4-4 split among the sitting justices, as the case came up for review following the death of Justice Antonin Scalia. Many commentators opined that the Court likely would decide the case in favor of the teachers challenging the law, for reasons we previously noted, including Justice Samuel Alito’s view that “no person in this country may be compelled to subsidize the speech of a third party that he or she does not wish to support.” By renewing this challenge, CIR and teachers are likely anticipating that Tenth Circuit Court of Appeals Judge Neil Gorsuch— President Trump’s nominee to replace Justice Scalia—will not only be confirmed, but also will be the fifth vote necessary to strike down the law. We will continue to monitor this case and provide updated information and analysis as it moves through the courts. The case is Yohn et al. v. California Teachers Ass’n, Case No: 8-17-cv-00202 (C.D. Cal. Feb. 6, 2017). The complaint is available here.

In Miller & Anderson, 364 NLRB No. 39 (2016), the National Labor Relations Board (“NLRB”) ruled that employer consent would no longer be required for bargaining units consisting of employees both solely and jointly employed. “Employer consent,” wrote the NLRB, “is not necessary for units that combine jointly employed and solely employed employees of a single user employer.” Id. at 2. The NLRB added that “we are persuaded that a unit combining employees solely employed by a user employer and employees jointly employed by that same user employer and a supplier employer logically falls within the ambit of a 9(b) employer unit.” Id. In this case, the union sought to represent employees of an HVAC contractor, Miller & Anderson, plus some additional employees furnished through a separate staffing company, Tradesmen International. Some employees were solely those of Miller & Anderson and others were jointly employed by both companies. The union’s petition was dismissed by the Regional Director because the two employers did not consent to a combined unit. The Regional Director relied on the NLRB’s decision in Oakwood Care Center, 343 NLRB 659 (2004) (employers’ consent to bargaining units of solely and jointly employed employees required). On appeal, the NLRB overruled Oakwood Care Center, reversed the Regional Director, and reinstated the petition. The NLRB held that consent to multi-employer bargaining by both employers is not necessary for units that contain employees who are solely and jointly employed, provided the petitioned-for unit is appropriate under the NLRB’s traditional community of interest standards (i.e., whether the employees share wages, hours, and other terms and conditions of employment). Miller & Anderson builds upon the NLRB’s decision in Browning-Ferris, 362 NLRB No. 186 (August 27, 2015), in which the NLRB reinterpreted the joint employer concept and broadened the circumstances in which it would find that two or more entities constitute a joint employer. The NLRB ruled that “it will no longer require that a joint employer not only possess the authority to control employees' terms and conditions of employment, but also exercise that authority,” and that the “[r]eserved authority to control terms and conditions of employment, even if not exercised, will now be relevant to the joint-employment inquiry.” The NLRB also held that it will no longer require that a statutory employer's control must be exercised directly and immediately. Control exercised indirectly - such as through an intermediary - may now establish joint-employer status. Together, Miller & Anderson and Browning-Ferris make it easier for unions to organize groups of employees in units that the NLRB would previously have found inappropriate, and conversely they make it more difficult for employers to plan for the use of contingent employees. The decisions also raise questions for employers that have existing collective bargaining units and find it necessary to supplement their work force by using outside staffing companies. Are staffing company employees to be considered part of the bargaining unit? Do staffing company employees have access to the grievance procedure of the employer to whom they are assigned? What, if any, seniority or recall rights can staffing company employees claim? To what extent may a union seek to apply its collective bargaining agreement to the staffing company, beyond the operations of the user employer? Employers would be wise to discuss these, and other questions, with labor counsel.

The New York Regional Director of the National Labor Relations Board (NLRB) recently issued a decision asserting jurisdiction over employees of an airline independent contractor (“AIC”) and ordered that the contractor’s workforce vote concerning whether to unionize. See PrimeFlight Aviation Services, Inc., 02-RC-186447 (2016). This is just another example of a growing trend that we have seen at both the NLRB and the National Mediation Board (NMB) in finding that air carriers are not asserting enough control over AICs to bring them under the jurisdictional umbrella of the Railway Labor Act (RLA). The NLRB’s recent decisions, encapsulated by PrimeFlight, indicate that the NLRB, rather than the NMB, will continue to assert its jurisdiction over an AIC absent air carrier ownership or robust carrier control. Relying on a jurisdictional test articulated by the NMB, the NLRB engages in a two-part analysis to determine whether such jurisdiction is appropriate. First, the Board determines whether the work at issue is traditionally performed by carrier employees.  Second, the Board assesses whether a carrier directly or indirectly owns or controls the AIC or both the AIC and the carrier are under common control. See, e.g., Airway Cleaners, LLC, 41 NMB 262, 267 (2014). The NMB will not assert jurisdiction unless both prongs of the test are satisfied. Id. The growing trend of NLRB jurisdiction over AICs not only complicates labor relations between AICs and their employees, but also impacts airline carriers’ operations, labor relations, and contract administration. In the November 4, 2016 PrimeFlight Aviation Services decision, the NLRB held that baggage handlers and wheelchair and line queue agents employed by PrimeFlight Aviation Services, an AIC providing services to carriers JetBlue and AFCO AvPorts Management, LLC at the Westchester County Airport in New York, properly fell under the jurisdiction of the National Labor Relations Act. Although both carriers could recommend personnel decisions and had access to records directly related to services provided by the AIC’s on-site employees, the AIC remained ultimately responsible for hiring, supervising, disciplining, and terminating its employees. The NLRB’s Regional Director weighed these factors under the NMB’s two-part test and ultimately determined that the airlines failed to exert sufficient control over PrimeFlight Aviation and its employees to establish RLA jurisdiction. As a result, the Regional Director granted the International Brotherhood of Electrical Workers’ petition seeking to represent the workers at issue via election. The wave of recent decisions similar to PrimeFlight by both the NMB and NLRB suggests that the pendulum has swung away from the NMB and towards the NLRB in overseeing labor relations for airline contractors. This move has important ramifications not only for AICs but also for airline carriers, including whether employees critical to an airline’s operations may strike, the scope of bargaining units for such employees which are not on a systemwide basis under the NLRA and can even include so-called “micro units”, and whether these decisions portend indirect NLRB jurisdiction over carriers themselves under the NLRB’s new Browning-Ferris joint employer standard. Whether this trend will continue remains to be seen, however, in light of the election giving a Republican President and Republican-led Congress power to shape federal labor relations policy. Although President-elect Donald Trump has so far remained relatively quiet on his plans for the NLRB, he will likely fill the Board’s two empty seats with pro-business appointees.  This new Board majority may return to earlier agendas and stave off or even turn back the Board’s increasingly aggressive labor-friendly decisions and initiatives, including issues surrounding independent contractors. We will continue to monitor these developments as we wait to see the effect the election may have on labor relations, particularly for the airline industry and its contractors.

Employers want their employees focused on work tasks while at work and not on personal business. Relatedly, employers, and many employees, want the work environment to be free from co-worker solicitations, regardless of topic. To achieve these goals, some employers may seek to implement policies that broadly prohibit co-worker solicitations and the conduct of personal business in the work place. While seemingly innocuous, these policies have received increased scrutiny from the National Labor Relations Board (“NLRB”). Employers should keep several tips in mind when drafting employee solicitation policies. The NLRB was formed to administer and enforce the National Labor Relations Act (“NLRA”). The NLRA generally defines the rights of employees to organize, join or assist labor organizations, to bargain collectively, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection such as wages, hours, and working conditions. The NLRA provides that employers may not interfere with, restrain, or coerce employees in the exercise of their NLRA rights. Over the past few years, the NLRB has been increasingly focused on how certain policies may have the potential to “chill” employees’ protected exercise of NLRA rights. Here are some tips to ensure employer policies do not potentially chill employees’ protected rights: Be Precise.Be specific about the types of solicitation or personal business that is prohibited. Ensure the items that are prohibited are not protected by the NLRA. Even if you do not intend to restrict employees’ rights to engage in protected activities, over broad policies may be seen as “chilling,” and thereby impermissible. Timing is Critical. Limit carefully tailored non-solicitation or personal business prohibitions to working time. Policies that arguably prohibit activity “while at work” or during “scheduled working hours” may violate the NLRA because those phrases may cover time when the employee is exercising protected rights at the employer’s location, but not actually working, including during lunch, breaks, and before and after “on-the-the-clock” work. Be Consistent and Non-Discriminatory.If an employer permits employees to talk about non-work-related matters during work time, then policies should not prohibit discussions between employees about NLRA-protected rights during work time. Location Can Matter.If policies have some type of prohibition against the distribution or posting of materials in certain areas of a facility, then this prohibition only should apply to work areas. If an area is a non-work area or is a mixed work/non-work area, a general prohibition against the distribution and posting of materials in these areas may be unlawful, absent some special circumstance related to the interference with work or equipment. Despite employers’ best intentions, an over broad policy can unlawfully chill employees’ rights to engage in protected concerted activity. Careful drafting of handbook policies related to other business and solicitation may defrost these policies, making them permissible. Policies must be narrowly tailored so that there is no doubt that employees are allowed to communicate about wages, hours, and other working conditions and union and collective bargaining during non-working times. Given the particularity of prose needed for such policies, employers should have their handbooks reviewed and updated by legal counsel on a regular basis.

Previously – In 2012, the National Labor Relations Board issued its controversial Alan Ritchey, Inc. decision, requiring employers to bargain before making discretionary discipline decisions in certain first contract situations where there was no established contract or grievance procedure. Two years later, the U.S. Supreme Court handed down NLRB v. Noel Canning, nullifying Alan Ritchey, among other NLRB decisions, when it invalidated two NLRB members’ recess appointments during that time period. And now – In August, the NLRB reaffirmed its prior Alan Ritchey doctrine through its decision in Total Security Management Illinois 1, LLC, 364 NLRB No. 106 (August 26, 2016), requiring employers to bargain over discretionary discipline issued to newly organized employees priorto executing either a first contract or separate side letter addressing discipline. What challenges await newly unionized employers in the face of Total Security? Before Alan Ritchey, employers negotiating with a recently certified union regarding a first contract were able to impose discipline consistent with past practices without providing notice and an opportunity to bargain to the union. Following Noel Canning, employers again held that management right. With Total Security, the three-member NLRB majority, led by Chairman Mark Gaston Pearce (who also chaired the Board when it issued Alan Ritchey), held an employer in those circumstances may not unilaterally impose discretionary discipline without violating Section (8)(a)(5) of the National Labor Relations Act. Rather, the Board held, such an employer must provide the recently certified union with notice and an opportunity to bargain over the potential disciplinary action(s) that will materially alter an employee’s terms of employment (for example, termination, suspension, demotion, etc.). Conversely, the Board noted this bargaining duty does not apply to discipline that does not materially alter the terms of employment for the subject employee (for example, a verbal or written warning). In so holding, the Board provided an exception to this doctrine where the employer has a reasonable, good faith belief the employee’s continued presence on the job presents a serious, imminent danger to the employer’s business or personnel. The Total Security majority declined to order retroactive enforcement of its decision, providing – for the first time – remedies available for prospective Alan Ritchey-type violations of the Act. Moving beyond traditional NLRA remedial relief (for example, cease-and-desist orders, a requirement to bargain and the omnipresent notice-posting requirement), the majority noted make-whole remedial relief, including reinstatement and back pay, would also be appropriate. Regarding potential back pay remedies, the Board indicated, in situations where (1) there was an Alan Ritchey violation and (2) the employer and union did bargain and later reach agreement on discipline, back pay would generally run from the date of the unilateral discipline until the date of the agreement, to the extent the agreement did not provide for such back pay. In situations where an agreement provided for less than full lost back pay and purported to settle the pre-discipline bargaining violation, such an agreement, if challenged, would be subject to the Board’s standards of review for non-Board settlement agreements. Where the parties, post-violation, bargained in good faith to impasse over the Alan Ritcheyviolation, back pay would run until the date of impasse. Again, the employer’s strongest affirmative defense to such a challenge would be that the subject discipline was “for cause” under the Act. Under Total Security, however, the employer now bears the burden of the defense during the compliance phase of the unfair labor practice case to show (1) the employee engaged in misconduct and (2) the misconduct was the reason for the suspension or discharge. The General Counsel and charging party could then demonstrate disparate discipline for similar behavior or other reasons for leniency. The employer could present evidence the employee would have received the same discipline regardless of circumstances. Ultimately, and at all times, the employer now bears the burden of persuasion. Moving forward under the new light of Total Security, employers negotiating initial collective bargaining agreements with recently certified unions should be mindful of their, revived, Alan Ritchey duty to bargain. With this NLRB decision, an employer negotiating a first contract risks an unfair labor practice determination if it does not comply with Alan Ritchey’s bargaining requirements for any discipline that could, even arguably, be seen as discretionary. Such employers should consult with in-house or outside labor counsel for specific guidance concerning the potential impacts of the NLRB’s Total Security decision on their discipline procedures.

Are employer/employee arbitration provisions containing class/collective action waivers enforceable? The law on this issue is anything but settled at this point. For now, it may depend upon where a case is filed, and the Supreme Court likely will resolve the conflicting lower court decisions on the issue. Five years ago, the United States Supreme Court in AT&T Mobility LLC v. Concepcion ruled, in a 5-4 decision written by Justice Scalia, that state laws prohibiting the enforcement of consumer contracts containing an arbitration provision with a class action waiver were contrary to the Federal Arbitration Act. Within a year of that decision, the National Labor Relations Board in D.R. Horton ruled that Concepcion did not apply in the context of employee rights under the National Labor Relations Act, specifically § 7 which vest employees with the right to engage in “concerted activities.” The NLRB found that D.R. Horton’s arbitration agreement which precluded class/collective actions was an unfair labor practice. D.R. Horton appealed the NLRB’s decision to the Fifth Circuit, which rejected the Board’s conclusion that § 7 of the NLRA prohibited class/collective action waivers in arbitration agreements with employees. In addition to the Fifth Circuit, the Second (Sutherland v. Ernst & Young LLP), Eighth (Owen v. Bristol Care, Inc.) and Eleventh Circuits (Walthour v. Chipio Windshield Repair) have ruled that class/collective action waivers in employer-employee arbitration agreements are enforceable. In June 2016, the Seventh Circuit in Lewis v. Epic Systems Corp. turned the tide, becoming the first federal court of appeals to adopt the NLRB’s rationale in D.R. Horton. The Court ruled that the class/collective action waiver in an arbitration provision which would have precluded plaintiff from pursuing a collective under the Fair Labor Standards Act violated the NLRA, and thus, was not enforceable. On August 22, 2016, the Ninth Circuit in Morris v. Ernst & Young, LLP, adopted the reasoning of the Seventh Circuit, becoming the second federal court of appeals to find that class/collective action waivers in an arbitration provision violates the NLRA. In those Circuits that have not opined on the issue, the federal district court decisions indicate the same conflicting views. Within the last week, Epic Systems Corp. and Ernst & Young have filed petitions for writ of certiorari to the Supreme Court. Given the conflicting court of appeals decisions, the Court will likely take the case. But, predicting how the Court might decide the issue is another matter. While Concepcion may support enforcement of class/collective action waivers, the 5-4 decision was written by the late Justice Scalia. When and how the Court decides this issue will likely depend on who fills Justice Scalia’s seat and when the new justice is confirmed.

Congress passed the Multiemployer Pension Plan Reform Act of 2014 (MPRA) in an effort to aid the many failing multiemployer pension plans. At the time of its passage, the MPRA was regarded as the most significant legislation in decades. Importantly, the MPRA permits trustees to reduce the pension benefits of plan participants, including benefits for some retirees who are already in pay-status, if the fund is projected to become insolvent within a specified number of years. However, the MPRA requires that proposed benefit cuts be submitted to the Treasury Department for approval. The first large multiemployer pension plan to submit an application to the Treasury Department for benefit cuts was the Teamsters Central States, Southeast and Southwest Areas Pension Fund (“Central States”). Because of Central States’ financial problems (it was projected to be insolvent by 2026), the union and management trustees agreed to submit a plan calling for benefit cuts to the Department of Treasury pursuant to the MPRA. On May 6, 2016, the Treasury Department denied Central States’ application and cast doubt upon the viability of pension reform under the MPRA. Treasury officials found that the plan submitted by Central States would not avoid insolvency. Among other things, the Treasury Department found that Central States’ presumed rate of investment return, the entry age of its participants, and its demographic assumptions were too optimistic. Accordingly, the Treasury Department rejected the application submitted by Central States, and Central States is still facing insolvency by 2026 and $35 billion dollars in unfunded liability. One unfortunate consequence of the Treasury Department’s rejection of Central States’ application appears to be that many other under-funded multiemployer plans may be reluctant to expend the financial and political resources necessary to reach an internal agreement between employer and union trustees that would result in approval  of the benefit reductions needed to avoid insolvency in the future. If one of the most useful tools provided by the MPRA has been stymied because the Treasury Department is unprepared to accept what it views as overly optimistic actuarial assumptions, what is the future of multiemployer pension plan reform? One proposal that was not included in the final version of the MPRA involved the use of so-called hybrid composite plans. While there are different types of hybrid composite plans, the basic concept is the combination of a traditional defined benefit plan with a defined contribution plan. As an example, an employer under a hybrid composite plan could contribute a fixed amount, and the trustees could be required to determine benefit levels based on actuarial calculations that provided assurances that the contributions would cover 120% of the promised defined benefit level. If the investments of the trustees performed better than expected, then the employees would be eligible for greater benefits. In any event, employees would be assured of receiving at least some fixed benefits because of the very conservative assumptions underlying the defined benefit portion of the plan. The proposals involving hybrid composite plans were originally eliminated from the MPRA because of the perception by some in Congress that many unions, in 2014, would oppose hybrid plans. In light of the Treasury Department’s rejection of Central States’ application, the assumption that many unions will oppose hybrid composite plans may no longer be accurate. Government reports have estimated that up to 15% of multiemployer plans are at risk of becoming insolvent over the next 20 years and that up to 1.5 million participants are at risk from those insolvencies. In addition, many other plans remain underfunded and employers who cease doing business or sell their businesses to buyers who do not assume their pension obligations face withdrawal liability for their shares of the unfunded portions of the plans. Until such time as Congress enacts hybrid composite plans or other solutions to multiemployer pension plan underfunding, employers who contribute to multiemployer pension plans and those companies considering purchasing businesses that contribute to such plans must continue to carefully scrutinize their potential liability.

On July 11, 2016, a combination punch thrown by the National Labor Relations Board (“NLRB”) scored a technical knockout of a decades old joint employer relationship test. The uppercut landed against employers who use temporary/contracted employees and, combined with the left cross of last year’s Browning Ferris decision, may leave some employers in pain. In  Miller & Anderson, Inc., 364 NLRB No. 39 (2016), the NLRB held that a Union seeking to organize employees of a primary (or user) employer and employees from a staffing/ contracting firm, in the same bargaining unit, does not need employer consent before an election is conducted. By doing so, it overturned its 2004 decision in Oakwood Care Center, 343 NLRB 659 (2004), which held that unions seeking to represent employees in bargaining units that combine traditional employees with contracted employees must first obtain consent from both the employer and the staffing agency before an election can be conducted. The primary beneficiaries are temporary/contracted workers, who now may have an easier time seeking union representation. Monday’s decision aligns with last year’s decision inBrowning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015), where the NLRB held that joint employer status can be conferred where an employer exercises indirect control or incidental collaboration. Whereas Browning Ferris lowered the bar for joint employer status and made it easier for a company to be a joint employer with temp agencies, contracting firms, or franchisees, Miller & Anderson makes it easier for Unions to organize temporary workers. Under the old standard, the primary/user employer could withhold consent, which would end the organizing effort. With this decision, primary/user employers can be stuck with a collective bargaining agreement and relationship, even if the temporary employees who pushed for union representation no longer work for them. Perhaps the greatest potential problem is that primary/user employers could be liable for actions solely attributable to the temp agency/contracting firm. For example, if the staffing agency fails to pay several of its employees overtime, by virtue of being parties to the same collective bargaining agreement, primary employers now run the risk of being jointly liable for the payment, even though they may have paid the staffing company and ordinarily would not have any duty to pay compensation directly to the temporary employees. Likewise, a primary employer may risk liability for any unfair labor practices committed by the staffing company. While Miller & Anderson was remanded to the local NLRB office for further proceedings, there likely will be an appeal. In the interim, employers that currently use staffing firms may want to reconsider the contracts under which they use them. Should temporary employees be necessary, consider the organization of the workforce such that the temporary employees perform separate and distinct duties from the primary employees (so that they do not share the same community of interests). Using a legal professional to avoid the effects of Miller & Anderson and Browning Ferris is advisable.

On Monday, June 27, the U.S. District Court for the Northern District of Texas issued a nationwide preliminary injunction barring the U.S. Department of Labor from implementing the revised Persuader Rule that was scheduled to become effective on July 1, 2016. Designed to amend certain provisions of the Labor Management Reporting and Disclosure Act (LMRDA), the now-enjoined Persuader Rule sought to impose onerous reporting obligations upon employers and threaten to disrupt the attorney/client relationship relating to union organization activities. The Court held that “the new rule is defective to its core because it entirely eliminates the LMRDA’s advice exemption.”  Further finding that DOL’s rule “nullifies” the exemption for advice, and fails to provide notice to employers, lawyers and consultants of what activities relating to persuasion are covered by the advice exemption, which means those impacted have to “guess what activities with an object to persuade fall within the LMRDA’s advice exemption.” However, this likely is not the final word on the Persuader Rule.  The Department of Labor may appeal this ruling and there are similar lawsuits pending in federal courts in Arkansas and Minnesota (where the district court found similar problems with the Final Rule, but refused to issue a preliminary injunction). Therefore, employers should give consideration to entering into agreements—before July 1, 2016—with their lawyers (and consultants) regarding the provision of indirect persuader activities, as the impact and status of the Persuader Rule is uncertain.

Now that the two major parties have presumptive presidential nominees, the heated discussions and press coverage of the primary season will turn to conventions and the general election.  Divisive political discourse may continue to escalate.  While many employees will heed the familiar adage not to discuss politics and religion in public, political discussions may enter the workplace and invite debates, arguments, and tension.  Consequently, Employers should understand what political conduct can be regulated or prohibited in the workplace, and what political conversations must be allowed. Some employees may presume they have a First Amendment right to free speech, unaware that those guarantees apply only in the public sector.  While most private employers have considerable leeway when crafting workplace rules about whether politics can be discussed during working time, laws vary from state to state.  For example, laws in states such as California, New York, and Washington DC (and some cities) prohibit employers from taking job related action based on political affiliation.  Other states and municipalities, such as Colorado and North Dakota, have laws limiting an employer's ability to take action based on off-duty activities (which could include political activity).  And, given the nature of some of the key issues in this year's national elections (such as immigration reform and the proper division between church and state), all employers still have an obligation to ensure compliance with the various federal laws against discrimination, as well as with Section 7 of the NLRA, given the NLRB's continued aggressive enforcement of that provision of the law. Earlier this month, the EEOC published proposed revisions to its Enforcement Guidance on National Origin Discrimination, signaling an emphasis on enforcement in areas such as immigration status, "English only" or accent policies, and discrimination against foreign nationals.  When this emphasis is coupled with the public debate on the issue of immigration reform and national security, employers will walk a thin line when determining what political discussion is appropriate in the workplace and what discussion could violate anti-harassment and anti-discrimination policies.  Similarly, the continued emphasis of the National Labor Relations Board on Section 7 concerted activity will affect policies employers may institute or enforce.  For example, it may be appropriate and lawful to enforce a "no political buttons" or “no political speech on t-shirts” rule (assuming the employer is not subject to a state law to the contrary).  The employer must recognize, however, that a difference may exist between a union worker wearing a button enforcing a particular candidate and wearing a button stating that the union supports that same candidate. Thus, as the conventions and general elections approach, employers should consider the following: Remind employees of all anti-harassment and anti-discrimination policies; Remind employees that a discussion of politics does not give license to bully or harass other employees, notwithstanding what is reported on the news; Private employers in many states (but not all) can ban political discussions among employees or between employees and customers, vendors or other third parties (but if this choice is made, the policy must be enforced consistently); Review and update dress code policies if the employer wants to prohibit political speech on clothing, buttons, etc.; and If the company maintains a "non-solicitation" policy, make sure that it is enforced consistently.

On April 29, 2016, the National Labor Relations Board deemed several handbook policies overbroad because employees could “reasonably construe the language [of the policy] to prohibit Section 7 rights” under the National Labor Relations Act. Most notably, the Board took exception to a “Positivity Policy” in an employment handbook stating: "The Company expects all employees to behave in a professional manner that promotes efficiency, productivity, and cooperation. Employees are expected to maintain a positive work environment by communicating in a manner that is conducive to effective working relationships with internal and external customers, clients, co-workers, and management." In light of this ruling, employers should consider revising any “positivity” provisions in employment handbooks. The Board ruled the undefined phrases "positive work environment" and "communicating in a manner that is conducive to effective working relationships" violate the Act to the extent they are ambiguous and vague, and reasonably chill employees’ exercise of Section 7 rights. In support of its decision, the Board stated: "Because labor disputes and union organizing efforts frequently involve controversy, criticism of the employer, arguments, and less-than-'positive' statements about terms and conditions of employment, employees reading the rule here would reasonably steer clear of a range of potentially controversial but protected communication in the workplace for fear of running afoul of the rule." Additionally, the Board deemed overbroad a rule prohibiting employees from recording “people or confidential information using cameras, camera phones/devices, or recording devices (audio or video) in the workplace” and (with the exception of calls that the company records for quality purposes) prohibiting employees from making “sound recordings of work-related or workplace discussions.” The Board determined the workplace recording rule failed to distinguish between recordings protected by Section 7 and those that are not; and did not exclude recordings made on nonworking time, in nonworking areas. Employee recording policies must be carefully drawn to survive present NLRB scrutiny. The NLRB continues to scrutinize and strike down handbook policies it considers “overbroad.” Accordingly, union and non-union employers should audit their policies to ensure that they are not setting vague standards of a “positive work environment” or requiring only “positive attitudes and communications.”

American workers are increasingly turning away from union representation. According to the U.S. Bureau of Labor Statistics, between 2011 and 2015, the rate for union membership, which is the percent of wage and salary workers who were members of unions, fell from 11.8 to 11.1. In 1983, the first year for which comparable union data is available, the union membership rate was 20.1 percent. In what would be a major reversal of long established NLRB case law, the NLRB General Counsel announced on May 9, 2016 that he will seek to have the NLRB overrule Levitz Furniture Co. of the Pacific, 333 NLRB 717 (2001). In Levitz, the NLRB reaffirmed that an employer need not await the outcome of an NLRB election to withdraw recognition from a union. The General Counsel now wants to place before the NLRB the proposition that, absent an agreement between the parties, an employer may lawfully withdraw recognition from a union representative based only on the results of an RM election (one requested by the employer) or RD election (one requested by employees). Under the General Counsel’s proposal, no longer would employees be able to circulate their own petition and present it to the employer—employees could resort to only those mechanisms approved and provided by the federal government.   Under Levitz, the NLRB held that an employer could unilaterally withdraw recognition from an incumbent union only on a showing that the union has actually lost the support of a majority of the bargaining unit employees. The NLRB overruled earlier decisions that allowed employers to withdraw recognition merely by establishing an objectively based, good-faith reasonable doubt as to unions' majority support. In the NLRB’s view at the time of Levitz, the good-faith reasonable doubt standard was flawed because it allowed employers to withdraw recognition from unions that had not, in fact, lost majority support. Accordingly, the NLRB held that an employer that unilaterally withdraws recognition violates Section 8(a)(5) unless it can show that, at the time it withdrew recognition, the union had actually lost majority support. Further, under Levitz, an employer could obtain an RM election by demonstrating an objectively based, good-faith reasonable uncertaintyas to the union's majority status, rather than by demonstrating a good-faith doubt or disbelief. The General Counsel maintains that abandoning Levitzis warranted because experience has shown that employers have not always acted where evidence “clearly indicates” a loss of majority support and this in turn has led to protracted litigation, which has interfered with the right of employees to choose a bargaining representative. In the General Counsel’s view, an NLRB election is the best means of ascertaining employee sentiment. However, the General Counsel does not take into account that unions will likely respond to an RM or RD petition by filing blocking charges, which will delay the conduct of an election and frustrate employee free choice. Importantly, under Levitz, an employer only may rebut the continuing presumption of an incumbent union’s majority status and withdraw recognition only on a showing that the union has in fact lost the support of a majority of employees in the bargaining unit. An employer acts at its peril in withdrawing recognition. The change now sought by the General Counsel would limit the means by which employees may seek to remove an incumbent union, force employers and employees to be more dependent on the federal bureaucracy as the arbiter of their work place, and more tightly bind a union upon employees and their employers – perhaps, forever.

These are difficult times for employers to craft lawful policies regarding employee conduct, behavior and communications. Over the past six years, the National Labor Relations Board (Board) has issued many decisions striking down employer conduct and behavior policies because they could be read by employees to prohibit them from engaging in activities that are protected by the National Labor Relations Act (Act). For example, is it unlawful for an employer to prohibit employees from engaging in conduct that is “offensive” to customers or coworkers? In a recent decision, the Board said the answer to that question is: “It depends.” In Valley Health System LLC, 363 NLRB No. 178 (May 6, 2016), the following statement in the employee handbook was alleged to be unlawful: Certain rules and regulations regarding employee behavior are necessary for the efficient operation of the System and the Facility and for the benefit and protection of the rights and safety of all. Conduct that interferes with System or Facility operations, brings discredit on the System or Facility, or is offensive to patients or fellow employees will not be tolerated. The issue in this case was whether employees would read the rule to prohibit permissible conduct under the Act, such as discussions of unionization, wages, and working conditions with other employees. The Administrative Law Judge (ALJ) found that the ban on conduct that “brings discredit on the System or Facility” was overbroad, and the Board agreed. The ALJ ruled that the bar on “offensive” conduct was not unlawful, but the Board disagreed. The Board stated that whether the ban on “offensive” conduct is unlawful requires an evaluation of the contextin which the word it used. According to the Board, “the rule’s restriction on conduct that is ‘offensive’…appears in the same sentence as, and immediately follows, the [illegal] prohibition on conduct that ‘brings discredit on the System or Facility,’” and the ‘discredit’ phrase is impermissibly overbroad. The Board cited its decision in Palms Hotel & Casino, 344 NLRB 1363 (2005) in which it approved the employer’s ban on “offensive” conduct.  In that case, the rule was “clearly directed at egregious and unprotected misconduct—it prohibited conduct that is ‘injurious, offensive, threatening, intimidating, coercing, or interfering with’” employees or patrons. Some could argue that these adjectives individually could be found unlawful as “offensive” was in the instant case. The take-away from Valley Health System may well be that an employer can ban conduct or behavior that is “injurious, offensive, threatening, intimidating, coercing, or interfering with” customers or coworkers, but other limitations in other contexts may violate the Act. Is the Palms Hotel work rule a safe harbor for employers’ conduct and behavior policies? Time will tell.

The presumptive appropriateness of a single site unit of production and maintenance employees has for many years been a given under well-established law of the National Labor Relations Board. J & L Plate, Inc., 310 NLRB 429 (1993). The NLRB typically defines a production and maintenance bargaining unit using the description “all hourly paid production and maintenance employees” employed at a designated location. This unit description can be found in numerous NLRB cases. See e.g., Allis Chalmers Corp., 237 NLRB 290 (1978).  Production operations and maintenance operations were typically not separated for unit purposes, but rather grouped together and distinguished from other types of work (e.g., building and construction). Background In Specialty Healthcare, 357 NLRB No. 83 (2011), the NLRB formulated a new standard for determining appropriate bargaining units. Under this decision, if a petitioned-for unit is for a clearly identifiable group of employees, the Board will presume the unit is appropriate and it falls to the employer to show that a larger group of employees share an "overwhelming" community of interest with those in the petitioned-for unit. Although Specialty Healthcare involved an acute care hospital, the NLRB applied this test in Nestle-Dreyer’s Ice Cream, Inc., 361 NLRB No. 95 (2014). The NLRB reasoned that maintenance employees were identifiable as a separate group: they formed their own department; worked in different job classifications; used different skills; and performed functions different than production employees. Further, explained the NLRB, the employer failed to demonstrate that maintenance employees shared an “overwhelming community” of interest with production employees because there was no significant interchange between production and maintenance employees and they did not have common supervision with production employees. Maintenance employees, in the NLRB’s view, did not constitute an arbitrary grouping of employees and a bargaining history for a production and maintenance unit was inadequate to prove that production and maintenance employees shared an overwhelming community of interest with one another. Recent Decision The United States Court of Appeals for the Fourth Circuit recently affirmed the Board’s decision, finding that the maintenance unit was appropriate and that the employer unlawfully refused to bargain for this unit. Nestle-Dreyer’s Ice Cream, Inc., v. NLRB, 2016 WL 1638039 (April 26, 2016). The Court held that the Board acted within its discretion, and rejected all of the employer’s contentions.  It first concluded that the NLRB had not given controlling weight to the extent of the union’s successful organization because maintenance employees shared community-of-interest factors separate and apart from production employees. The Court next said that the NLRB had not failed to provide a reasoned explanation for its adoption of the overwhelming community of interest test, which, according to the employer, resulted in a “repudiation of more than forty years of precedent.” This was because the NLRB had done no more than clarify its unit-determination analysis. The Court went on to reject the employer’s remaining arguments that it was unreasonable for the NLRB to use the same overwhelming community of interest test in this context that it has historically used in the context of accretions and that the issue of whether to adopt the overwhelming community of interest test had not been before the NLRB in Specialty Healthcare. In sum, the Court concluded that the Board did not violate the Administrative Procedure Act. The decision of the Fourth Circuit is part of a trend to approve so-called “micro units” as appropriate for purposes of collective bargaining. This trend may result in union petitions for smaller units that reflect the extent of the union’s efforts to successfully obtain support.

Experienced business people and lawyers are aware of the thorough due diligence necessary during the acquisition of any business. When a purchaser is exploring the acquisition of a business whose employees are represented by a union or by multiple unions, the purchaser is confronted with risks and financial exposure that require additional and sometimes complex due diligence. The first document that a purchaser must explore when considering the purchase of a business that has employees who are represented by a union or unions is the collective bargaining agreement or agreements (“CBAs”) by which the potential seller may be bound.CBAs detail the wages, hours and working conditions covering employees represented by a union or unions. However, because the National Labor Relations Act (“NLRA”) governs the interactions between unions and employers, a CBA is different from other contracts. As an example, a CBA does not expire when the term of the CBA is over. Absent a specific provision in the CBA, it continues indefinitely and an employer may not change its terms without first bargaining with the union to impasse. Second, a purchaser should determine whether the prospective seller is obligated to contribute to multi-employer pension plans.The CBAs will reflect whether the potential seller is so obligated, but the details of the employer’s obligations are set out in separate pension plan trust documents. Multi-employer pension plans are defined benefit contribution plans to which many employers contribute on behalf of their union employees. Most multi-employer pension plans are underfunded; this means that they have insufficient assets to cover the defined retirement benefits they have promised to pay employees. If an employer that contributes to a multi-employer pension plan ceases to make pension contributions or ceases to have an obligation to make contributions, then it is assessed “withdrawal liability.” The calculation of withdrawal liability is complex, and requires the use of an independent pension actuary. In many instances, the actuarial calculations result in significant liability that may have a material effect on the potential purchase of a business. Third, a purchaser must determine whether it is prepared to adopt the CBA or CBAs already in place between the potential seller and its union or unions.If the purchase is a stock purchase, assumption of the CBAs is automatic. If the purchase is an asset purchase, then the purchase agreement must reflect whether or not the purchaser is assuming the CBA, or any of the obligations under the CBA, and must detail which of the contract obligations, including the pension obligations, are the responsibility of the purchaser and which are the responsibility of the seller. Fourth, the purchaser should determine whether it wishes to hire the existing workforce, but not adopt the CBA. A purchasing employer may hire the existing workers, but not assume the existing CBA, although the process for achieving this result has become more difficult due to recent National Labor Relations Board (“NLRB”) decisions. If a purchaser announces in advance of closing that it does not intend to adopt the existing CBA, sets forth in detail the initial terms and conditions of employment that it intends to put in place, and offers to bargain with the union about possible changes to those terms and conditions after it acquires the business and begins operations, then, based on traditional interpretations of the NLRA, it would not have an obligation to adopt the existing bargaining agreement. However, recent memoranda by the NLRB’s General Counsel have left open the question of whether an employer may be required to adopt the CBA when it is “perfectly clear” it intends to hire all or substantially all of the existing workforce. Because this is a dynamic area of the law, employers should take particular care before attempting to hire an existing workforce but not adopt the existing CBA. The above discussion outlines only some of the potential issues facing purchasers who wish to acquire a business that is bound by union agreements. Purchasers must undertake careful due diligence, with the assistance of experienced labor counsel and pension actuaries, to analyze the risks associated with purchasing a unionized business.

Separation and severance agreements are intended to provide finality to the employment relationship. Without careful drafting, however, this goal can be frustrated by the National Labor Relations Act (“Act”), which applies to non-management employees, both union and non-union, including when employees sign separation or severance agreements. In Quicken Loans, Case 28-CA-146517 (Mar. 17, 2016), an Administrate Law Judge of the National Labor Relations Board invalidated three common severance agreement provisions (a confidentiality clause, a company property return clause, and a non-solicitation of employees and customers clause) as over broad and chilling the exercise of rights protected by the Act. Understanding why these common severance agreement provisions were invalidated can assist with drafting non-management severance agreements to include lawful restrictions protecting business information and assets. Confidentiality Clause The Act permits employers to prohibit current and former employees from misappropriating trade secrets and other legally protected confidential and proprietary information.  A confidentiality clause requiring secrecy of documents or information not maintained in secrecy by the employer, or which concern wages, work rules, or other terms and conditions of employment, should not be subject to a post-employment confidentiality clause.  Company Property Return Clause Employers have the right to demand that departing employees return computers, phones, and other tangible and intangible property (including documents containing trade secrets and legally protected confidential information) to the employer.  Company property subject to return, however, should not include employment handbooks and manuals with generally applicable employment policies, which generally do not qualify as legally protected information.   Non-solicitation of Employees Clause Employers should avoid separation agreement language prohibiting solicitation of employees “for any reason,” or for specified reasons that are an unlawful restraint of trade under applicable state law.  Under the most recent NLRB administrative rulings, an over broad non-solicitation clause may reasonably chill communications about wages and working conditions, and inhibit NLRB investigations, protected by the Act. When drafting employee severance and separation agreements, employers should be mindful of the breadth of post-employment restrictions and how they may implicate rights protected under the Act.

On March 23, the U.S. Department of Labor issued a Final Rule that significantly expands reporting requirements by employers and their consultants and attorneys related to “advice” given regarding employees joining a union or collective bargaining.  As a result, employers and the consultants/lawyers they engage regarding union organizing activity or contract negotiations will be required to file reports with the Department of Labor within 30 days after entering into an agreement to provide reportable services, and the reports will be available to the public online.  The reports must include fees paid by the employers and fees collected by the consultants/lawyers. The Way It Was— Previously, when employers hired consultants (including lawyers) to provide advice and assistance related to employees’ rights to organize and/or engage in collective bargaining, the employers and consultants were required to disclose the terms of their agreements and the fees paid only when the consultants/attorneys had direct communication with employees.  Other activities commonly undertaken by consultants/attorneys were not reportable, such as written communications, strategy and tactics, and training or coordinating supervisor activity regarding a union organizing campaign or collective bargaining.  These activities were not reportable because they were deemed to be “advice.” The Way It Will Be — The revised rule substantially narrows the definition of “advice,” and the intended consequence is to make reportable many of the arrangements that were not reportable previously.  “Advice” that does not trigger reporting is “an oral or written recommendation regarding a decision or course of conduct.”  Arrangements under which a lawyer provides legal services or representation in court or in collective bargaining negotiations are not reportable.  However, any work or advice where the “actions, conduct or communications by a consultant [lawyer] on behalf of an employer that are undertaken with an object, directly or indirectly, to persuade employees concerning their rights to organize or bargain collectively” must be reported. The following situations were previously not reportable but must be reported under the revised rule: The consultant/lawyer coordinates the activities of supervisors; The consultant/lawyer creates persuasive materials or communications in any form to be disseminated to employees; The consultant/lawyer revises or edits employer-created materials to increase the persuasiveness of a document; The consultant/lawyer conducts seminars that assist employers in developing anti-union tactics and strategies to be used by the employers’ supervisors or other representatives; The consultant/lawyer develops or implements human resource policies or actions that have as an objective to, directly or indirectly, persuade employees. The following situations are examples that are not reportable: The consultant/lawyer counsels employer representatives on what they may lawfully say to employees, ensures a client’s compliance with the law, offers guidance on human resource policies and best practices, or provides guidance on NLRB practice or precedent; The consultant/lawyer provides advice on the legality of a persuasive document created by the employer; The consultant/lawyer conducts a seminar that does not develop or assist the attending employers in developing anti-union tactics or strategies to be used by them, but instead provides guidance; The consultant/lawyer conducts employee attitude/engagement surveys or union vulnerability assessments, under most circumstances; The consultant/lawyer provides “off-the-shelf” persuasive materials. Trade associations are not required to report when they select “off-the-shelf” persuader materials for their members or distribute newsletters to their member-employers.  However, trade associations must report if an association employee is a presenter in a reportable union avoidance seminar or they undertake persuader activities for a particular member-employer. The revised rule becomes effective on April 22, 2016, and it will apply to all arrangements and agreements, as well as payments and reimbursed expenses, made on or after July 1, 2016.

Employers subject to collective bargaining agreements should consider how to address changes to health insurance and other plans and that arise during the term of the agreement. It is well established that no unlawful unilateral change occurs under Section 8(a)(5) of the National Labor Relations Act where an employer has a practice of sharing premium costs with employees according to a particular percentage, and simply allocates the carrier's premium increase in a manner that maintains that percentage. Maple Grove Health Care Center, 330 NLRB 775 (2000). Other changes to health insurance plans may entail something different than merely passing along increased costs on an agreed percentage basis. In those situations, the Board applies a different standard to allegations of unilateral changes. For example, in one case submitted to the Division of Advice, an employer announced that it was changing its short-term disability plan for all employees and would require all employees to pay 100% whereas previously the employer had paid 70%. During the course of collective bargaining, the employer and the union had agreed to a “me-too” arrangement whereby the employer could unilaterally change the provisions as long as the changes applied equally to all non-unit and unit employees as well. APL Limited, 2015 WL 2156793 (N.L.R.B.G.C.) (April 22, 2015). The union challenged the change on the ground that the employer had unilaterally changed terms and conditions of employment without bargaining (which it had). The Division of Advice directed that no complaint issue because the employer had “a sound arguable basis” for its position that the parties collective bargaining agreement permitted it to make the unilateral changes at issue. In other words, the basic issue was not whether there had been a unilateral change, but whether the employer’s position was defensible under the applicable agreement. The “sound arguable basis” standard means that changes to health insurance plans as well as other benefit plans will be found unlawful only if an employer cannot plausibly assert that its actions are permissible under the parties’ collective bargaining agreement. In practical terms, this means that when negotiating agreements employers should: 1) seek language that affords flexibility and allows modifications to benefit plans; 2) avoid provisions that require union approval for any changes or only after bargaining with the union or that state that any changes to be “equal or better” than those presently offered; 3) attempt to limit the employer’s obligation to one of notification only.

When purchasing the assets of a business with unions, employers have long enjoyed much leeway in establishing initial terms and conditions of employment without having to collectively bargain those terms.  This may be about to change, and employers should approach such transactions cautiously. In NLRB v. Burns International Security Services, Inc., 406 U.S. 272 (1972) (“Burns”), the United States Supreme Court held that when “a majority of the employees hired by the new employer” work for the previous employer and were unionized, the new employer had to recognize and bargain with the established union.  This general rule, however, does not apply to an asset purchase.  An asset purchaser can set its own initialterms and conditions of employment, although it must bargain with the union over subsequent changes. The Court in Burns created an important exception to the general rule for asset purchasers, known as the “perfectly clear” doctrine.  An asset purchaser must bargain with the union from the outset when “it is perfectly clear that the new employer plans to retain all of the employees in the unit and in which it will be appropriate to have him initially consult with the employees' bargaining representative before he fixes terms.”  (emphasis added).  The Supreme Court in Burns did not further define when the “perfectly clear” doctrine applies. In Spruce Up Corporation, 209 NLRB 194 (1974) (“Spruce Up”), the National Labor Relations Board (“NLRB”) limited the “perfectly clear” doctrine: to circumstances in which the new employer has either actively or, by tacit inference, misled employees into believing they would all be retained without change in their wages, hours, or conditions of employment, or at least to circumstances where the new employer … has failed to clearly announce its intent to establish a new set of conditions prior to inviting former employees to accept employment. (emphasis added).  Under Spruce Up, asset purchasers have significant discretion to set employment terms and conditions. The NLRB is now poised to specifically address and possibly overrule Spruce Up. Recently, the General Counsel argued that Spruce Up should be overturned.  The Administrative Law Judge ruled that an employer was a perfectly clear successor, though he declined to follow the request of the General Counsel to overturn Spruce Up.  The NLRB affirmed this decision, though it did not address Spruce Up. Current NLRB law regarding Spruce Up is poised to change, and employers contemplating the purchase of the assets of unionized business should carefully weigh how they go about extending employment offers and setting initial terms and conditions of employment.

A policy that prohibits employees from recording conversations without the knowledge or consent of others may violate the National Labor Relations Act. In addition, a policy that prohibits employees from taking photos at work may violate the Act too. In a recent decision, the National Labor Relations Board ruled that Whole Foods’ ban on all recordings or photography at work was illegal because it inhibited employees in making, recording or taking pictures regarding workplace safety, discriminatory conduct or harassment, which they have the right to do under the Act. Whole Foods Market Group, Inc., 363 NLRB No. 87 (2015) One challenged policy stated “[i]n order to encourage open communication, free exchange of ideas, spontaneous and honest dialogue and an atmosphere of trust,” the use of any recording device in meetings was prohibited unless prior management approval or the consent of all parties was obtained. The employer argued that the policies at issue were specifically created to advance its “core values” and “culture” that all employees feel free to “speak up and speak out” on many issues. In addition, the employer argued that its internal appeal process for employment termination decisions would be harmed without its no-recording policy. Under this process, a terminated employee could request a review of the decision by a five-member panel of “peers,” which met and reviewed documents provided by the employee, discussed the discipline and voted on whether to uphold or overturn the termination decision. Whole Foods asserted that the no-recording policy was also essential for the handling of employee requests to the Team Member Emergency Fund. The requests often involved confidential matters, including financial need, family illness or death, or personal crisis. In a 2-1 decision, the Board rejected Whole Foods’ arguments. The Board stated that employees would reasonably construe the rules to prohibit them from engaging in protected concerted activity. The Board noted that activities such as secretly taking pictures or making audio or video recordings in the workplace, as well as the posting of photos and recordings on social media, are protected under the Act if “employees are acting in concert for their mutual aid and protection and no overriding employer interest is present,” and found no overriding employer interest existed. Many states have laws regarding making, recording or taking videos of others. Some states require that all parties involved must consent to the recordings/videos (“two party consent”); other states require that only one party consent (“one party consent”), such as the person making the recording or video. Employers have the right to craft policies consistent with applicable state (and local) laws. Employers should consider engaging experienced counsel to ensure that any workplace recording policy complies with both applicable state and local laws, and the NLRB’s evolving standards.

When an employee threatens a discrimination claim, many fundamental questions immediately come to mind.  What type of discrimination is alleged?  Is this discrimination under federal or state law, or is it a claim that derives from contractual language?  What is the proper venue to resolve this claim?  And, what if there is a contract, policy or industry-specific statute that provides a mechanism for discrimination dispute resolution? This last question is of significant importance and can sometimes be rather complex in its analysis.  To address these issues, we will break down the analysis over the course of multiple blog entries.  We begin with how a contract, such as a Collective Bargaining Agreement (“CBA”), can impact the resolution of a federal statutory discrimination claim.  As can be anticipated, most employees will solidly insist on the right to file his or her federal discrimination claim in a court of competent jurisdiction, but under certain circumstances, CBA language to the contrary may trump that right. For an employer to require an employee to follow the CBA dictated dispute resolution procedure for a federal discrimination claim, specific contractual requirements must be met.  In the landmark 2009 U.S. Supreme Court case 14 Penn Plaza v. Pyett, the Court concluded that a CBA’s discrimination resolution provision is enforceable as long as the CBA’s language “clearly and unmistakably” requires the employee to resolve his or her federal statutory discrimination claim by other dispute resolution techniques in lieu of a judicial remedy. What does it mean to “clearly and unmistakably” require an employee to waive his/her right to judicial recourse and instead submit to alternative resolution?  Many federal courts have concluded that for a CBA’s waiver of an employee’s right to a judicial forum for federal statutory discrimination claims to be clear and unmistakable, the CBA must at least identify by name the specific federal statutes the CBA purports to incorporate in its dispute resolution clause.  Regardless, federal courts across the country have set the bar high when enforcing a CBA’s dispute resolution clause over an employee’s right to file in federal court, and have demanded that a CBA have a high level of specificity in exactly what is being waived by an employee. Employers with a CBA should ensure that the dispute resolution language is clear with respect to the types of claims it seeks to address, including specific reference to the applicable federal statutes.  We will continue to explore how this principle relates to state law discrimination claims and how other industry-specific statutes may impact discrimination dispute resolution. 

On Monday January 11, 2016, the United States Supreme Court heard argument in the case of Friedrichs v. California Teachers Association and, although nothing is certain until the Court issues its opinion, it appears likely that the Court will overturn precedent and hold that public employees cannot be forced to pay any amounts to unions, even if those payments are earmarked to pay for the costs of collective bargaining as opposed to political activities like campaign contributions. Although the outcome of this case will not directly impact private sector employment, the discussion surrounding Friedrichsaffords an opportunity to remind private sector employers that, even in non-right to work states, employees cannot be forced to become union members. The plaintiffs in Friedrichsargued convincingly that when the employer is a governmental entity, collective bargaining itself is political speech and that forced participation in that speech violates public employees’ First Amendment rights. If the Court rules as expected, the case will have significant implications for public employers and for the unions that rely upon the dues and agency fees paid by public employees. Regarding the private sector, the United States Supreme Court has long held that no private sector employee can be forced to join a union and pay full dues. Rather, employees in non-right to work states who work under the terms of a collective bargaining agreement that contains a union security clause can only be compelled to become core financial members and pay to a union only those amounts attributable to collective bargaining activities, as opposed to political activities. In addition, core financial members are not subject to union discipline. Private sector employers should not assist, and should scrupulously avoid the appearance of assisting, their employees in withdrawing their union membership in favor of core financial member status, as such activities could constitute unfair labor practices. There are, of course, many excellent free resources available on the internet for private sector union environment employees to learn about their right to resist union membership and assert their rights to free association and free speech.

On September 1, 2015, United States District Court Judge Edward Chen certified a class of Uber drivers who claim that the ridesharing and technology company misclassified them as independent contractors and deprived them of tips that Uber advertised but never paid.  Throughout this and other challenges to its business model, Uber has maintained that it properly classifies its drivers as independent contractors, pointing primarily to the fact that drivers can work whenever and wherever they want, for however long they want.  In this case, Uber argued that due to its “unique relationship” with each individual driver, the Court would be unable to make class-wide determinations as to whether each driver is properly classified. Ruling for the plaintiffs, Judge Chen concluded that UberX, UberBlack, and UberSUV drivers who signed up directly with Uber under their individual names from August 16, 2009, to the present, satisfied the requirements of Federal Rule of Civil Procedure 23(b)(3) to proceed as a class on the claims that they were misclassified as independent contractors and deprived of tips.   In his order, Judge Chen drove straight through Uber’s “unique relationship” argument: “On the one hand, Uber argues that it has properly classified every single driver as an independent contractor; on the other, Uber argues that individual issues with respect to each driver’s unique relationship with Uber so predominate that this Court (unlike, apparently, Uber itself) cannot make a classwide determination of its drivers’ proper job classification.” Highlighting the “inherent tension” of Uber’s position, the finding that dominated the decision is that Uber retained the right to control the drivers in every essential function of the business—even when it did not actually exercise that control.  From its exclusive right to control driver training, the fares charged to passengers, and the “star” ranking system, to Uber’s uniform policies against drivers accepting tips and permitting drivers to work as much or as little as they wanted, the Court concluded that Uber’s right to control these elements of its relationship with drivers could be answered the same way for every driver. While the decision is a challenge to Uber, all was far from lost for the company.  Uber prevailed in convincing Judge Chen that the drivers’ claims for expense reimbursement, e.g., gas, car maintenance, water, were too individualized for class treatment.  The Court also excluded from the class thousands of drivers who work for intermediate companies (not directly for Uber), and those who signed and did not opt out of a 2014 arbitration clause.  The Court did, however, give the drivers 35 days to amend their pleading to make a showing to warrant class certification of additional claims or subclasses. The Road Ahead In the context of this case, the decision means that the stakes for Uber to prevail on the merits increases significantly. Under Uber’s current business model, it avoids paying employment taxes, expensive driver benefits, reimbursing driver expenses, and being obligated to follow most of California’s employment laws. Uber’s $50 Billion valuation does not seem to be affected by one ruling on the merits but a case can be made that such an outcome could make operating the ridesharing company more expensive and significantly less profitable. On the other hand, Uber is one of the most successful disruptive technologies of the new millennia. The Court’s Order is the latest in a series of decisions attempting to determine worker status in today’s On-Demand Economy. In June, a California Public Utilities Commission hearing officer ruled that Uber driver Barbara Ann Berwick was an employee, which obligated the company reimburse her $4,152 in expenses relating to her driving. And last week, the National Labor Relations Board (NLRB), in an unprecedented decision, found that companies who use temporary workers from staffing agencies may be considered joint employers for purposes of collective bargaining (read here for Polsinelli’s take on the ruling). Like in the On-Demand Economy cases, the NLRB held that the power of an employer to control its workforce, rather than the power actually exercised, is the correct analysis for assessing the employer/employee relationship. These, and other related cases, are charting an unpredictable, and oftentimes incompatible, course for businesses to navigate their relationships with workers in the new On-Demand Economy. The uncertainty of the current state of the law with regard to workers in the On-Demand Economy leads to what we consider the most pressing question: What will the state and federal legislatures do? While courts and quasi-judicial bodies interpret the current laws, the real responsibility for moving ahead in the On-Demand Economy lies with state and federal government. The economy has evolved beyond the parameters of a two classification worker model of (a) employees or (b) independent contractors. As individuals continue to sign up to drive for Uber and Lyft, deliver food for Eat24 or Caviar, and act as personal shoppers for Instacart, companies need clear guidance and predictable rules and regulations to follow to grow these in-demand businesses. The case is O’Connor, et al. v. Uber Technologies, Inc., No. C-13-3826-EMC, and the class certification order is available here.

Earlier this month, the National Labor Relations Board (“NLRB” or the “Board”) again answered the question of “what not to wear” in unsurprising but disappointing fashion.  Continuing its crusade against handbook policies, an administrative law judge (“ALJ”) held that Walmart (Case No. 13-CA-114222) violated Section 8(a)(1) of the National Labor Relations Act (the “Act”) by maintaining a dress code which limited employees to wearing “small, non-distracting logos and graphics,” finding that such a provision was “overly broad, not justified by special circumstances, and place[d] unlawful restrictions on associates’ Section 7” rights.  This decision provides yet another reminder of the need to draft dress codes with a careful eye toward the NLRB’s evolving pro-employee interpretations of the Act. At issue in Walmart was a handbook policy which expressly provided: Walmart logos of any size are permitted.  Other small, non-distracting logos or graphics on shirts, pants, skirts, hats, jackets or coats also are permitted… Although Walmart did not establish a “definition for what logos qualify as ‘non-distracting,’” it provided several examples to the ALJ as to what did and did not violate its dress code policy.  Specifically, it allowed employees to wear buttons smaller than the Walmart nametag, including a 1.5 inch diameter button with a bible passage and a 2x2 inch photo of a coworker who died in a car accident.  Violations of the dress code included a 3x5 inch picture of a different employee who died in a car accident and a 3x5 inch piece of paper in which an associate drew a hammer and sickle and wrote “Comrade [name].  How may the Communist Party help you.”  Those items, it argued, were determined to be too large and/or distracting. Interestingly, Walmart allowed employees to wear a small button bearing the logo of the Organization United for Respect at Walmart, an association (though not a union) dedicated to improving the terms and conditions of employment for Company employees.  It banned a similar button from the same organization, because its 3.5 inch diameter was deemed too large. Despite this facially neutral policy, and the allowance of smaller “Union” buttons, the ALJ still held that such a restriction interfered with its employees’ exercise of their rights under the Act. Key to this determination was that Walmart had not demonstrated that there were any special circumstances that justified a departure from the general rule that employees are allowed to wear clothing bearing Union insignias at the workplace.  On the contrary, Walmart’s proffered reasons for the limitations (an interest in ensuring that its associates are easily identified by their nametags and that the noncompliant logos distracted customers from their shopping experience) “fell flat.” This ALJ may have decided differently had Walmart only enforced the limitation when associates were on the sales floor and in a position to interact with customers.  The Board has approved an employer’s “special circumstances” argument where it demonstrates that a strict uniform policy is necessary for a public image that the employer has established as part of its business plan. See, e.g., W San Diego, 348 NLRB 372, 373 (2006). This decision is another good reminder for employers to review their employee handbooks and eliminate overbroad dress codes that its employees would reasonably construe to interfere with their Section 7 rights.  Uniform policies should be narrowly tailored, such that prohibitions on “what to wear” are limited to public spaces with customer interaction.  Employers are encouraged to be proactive in ensuring compliance with the Board’s recent guidance on handbook policies (see GC 15-04, Report of the General Counsel Concerning Employer Rules).

A recent landmark ruling by the NLRB could allow unions to take full advantage of modern and inexpensive methods of communication to boost their organizing and recruiting campaigns in the workplace. Just months ago, an NLRB judge invalidated an employer’s e-mail policy that barred employees from discussing union activities via work e-mail.  This decision reversed years of precedent and may have sweeping ramifications for employers and unions throughout the country. In 2012, the Communications Workers of America (CWA) petitioned to represent Purple Communications’ employees. After losing the elections, the CWA filed unfair labor practice charges against Purple, asserting that the company’s electronic communications policy interfered with the workers’ freedom of choice in the elections, thereby unlawfully interfering with employees’ rights to engage in protected concerted activity. Broadly speaking, Purple barred company employees from using work e-mail for nonbusiness purposes. More specifically, Purple’s electronic communications policy prohibited employees from, among other things, using the company’s e-mail system to engage in “activities on behalf of organizations or persons with no professional or business affiliation with the Company” or to send “uninvited email of a personal nature.” In 2013, relying on longstanding case law, an Administrative Law Judge initially ruled in Purple’s favor and upheld the policy—citing a 2007 NLRB decision holding that policies prohibiting the use of a company’s e-mail system for purposes of union organizing were allowable.  But the union appealed, and in a 3-2 decision, the NLRB overturned the Register Guard decision and longstanding precedent.  In support of its holding, the NLRB stated that its 2007 decision was outdated because, in the years since Register Guard, e-mail had become the dominant force of communication.  Additionally, the NLRB held that employees have a presumptive right to use their employer’s e-mail systems to communicate about workplace issues—specifically including union organizing. Importantly, the Board’s holding in Purple was limited to e-mail only, and does not restrict an employer from monitoring its e-mail systems in furtherance of legitimate management objectives (i.e., to prevent harassment) or enacting certain constraints on the use of its systems (e.g., prohibiting large attachments).  Furthermore, the decision applies only to employees who have already been given access to their employer’s e-mail system in the course of their work; the opinion is not meant to address non-employee access to employer e-mail systems or require employers to provide employees with e-mail capabilities. With Register Guard overturned, the NLRB then sent the Purple case back to the ALJ to decide whether any “special circumstances” justified Purple’s e-mail policy.  In March of this year, the ALJ determined that no such circumstances were presented and, accordingly, summarily invalidated Purple’s e-mail restriction policy.[2] Purple appealed the decision and, in briefing submitted last month, argued that the ALJ’s original decision mistakenly assumed that employees who are granted access to their employer’s e-mail system for work purposes are entitled to use that same system on non-working time. Ultimately, this ruling has the potential to be a game-changer for organized labor.  Internal union organizers, who themselves may serve outside counterparts, now have powerful communication methods that can get the union message out cheaply, quickly and frequently—using the employer’s tools as their own.  Employers who wish to limit this activity should seek counsel for advice on restrictive methods under the bounds of the law.

The MTV Generation is well-familiar with the hooks of Rockwell’s 1984 hit, “Somebody’s Watching Me:” I'm just an average man, with an average life. I work from nine to five; hey hell, I pay the price. All I want is to be left alone in my average home; But why do I always feel like I'm in the Twilight Zone, and I always feel like somebody's watching me. And I have no privacy. Whoa, I always feel like somebody's watching me. Tell me is it just a dream? Flash forward to 2015 – and the advent of Global Positioning System (GPS) devices – and Rockwell’s lyrics strike an eerie, though paranoid, prophecy for the 21st Century Workplace. Today’s GPS technology, imbedded in employer-issued property such as smart or mobile phones, navigation systems or GPS devices installed on company cars, allows employers to monitor employees’ movements and locations in real-time almost anywhere. However, simply because GPS technology exists for employers to track employees, wary employers should balance their use of such technology with employees’ privacy rights. With the current paucity of pertinent case law, employers tracking employees through GPS devices may be vulnerable to litigation. Recently, a California-based employee, Myrna Arias, filed suit against her former employer, Intermex Wire Transfer, LLC, in California state court alleging Intermex fired her after she removed a job management app from her phone that tracked her GPS location while she was off duty. In her complaint, Arias alleges that her supervisor bragged that he knew how fast she was driving because of the app. Within weeks of Arias complaining about what she believed to be an intrusion onto her privacy, Intermex terminated her. Arias alleges Intermex violated her right to privacy and California labor laws, committed unfair business practices and wrongfully terminated her against public policy. At least 28 states and the District of Columbia have enacted statutes protecting employees from discrimination or retaliation based on the employee’s participation in lawful recreational or leisure activities during personal, off-duty time. For unionized employers, GPS monitoring might be challenged as an unfair labor practice under the National Labor Relations Act. Balancing business-related reasons for tracking employees with those employees’ privacy rights (which may be statutorily protected) should prove food for thought for the wary employer. Prior to implementing a GPS monitoring program on company-issued devices or company cars, an employer should consider: Is surveillance of employees via GPS devices business-related and truly necessary? What effect, if any, may GPS surveillance have on employee morale? How should implementation of a GPS surveillance program be communicated to employees? How should expectations of the proper use of GPS surveillance be communicated to management? What details of a surveillance program should be included in a GPS monitoring policy? In the end, employers should review their privacy policies regarding employee privacy issues and seek answers to such questions before implementing GPS surveillance of on- and off-duty conduct. Rockwell’s 1984 reflections on paranoia perhaps ring more true today.

Over the past few years, the National Labor Relations Board (“NLRB”) has increasingly focused on employer handbooks and policies as part of employee protections under the National Labor Relations Act (“NLRA”). This focus impacts both non-union and unionized workplaces. As the NLRB has admitted, this effort is simply part of the NLRB’s goal to remain “relevant’ to the modern and increasingly non-union workforce. As a result, increased NLRB scrutiny over employer handbooks and policies is a legitimate concern for all employers. The NLRB’s recent focus on employee handbooks is illustrated in Macy’s and UFCW, Local 1445. The Administrative Law Judge ruled that provisions in Macy’s handbook restricting the use of employee information, barring employee use of the company’s logo and intellectual property, and requiring employees to consult with the company before participating in a government investigation violated Section 7 of the NLRA, which prohibits employer interference with employee rights to organize and engage in “protected and concerted” activities. Several handbook provisions limiting the disclosure and release of employee and vendor identifying information (e.g., names and home and office contacts) were also found to be over broad because they prevented employees from engaging in protected activity, such as talking to each other about wages and terms of employment or soliciting each other to join a union. The ALJ also found that a provision prohibiting employees from using the Macy’s logo was unlawful because it unlawfully prohibited employees from using an effective communication tool. In addition, the handbook provision requiring employees to notify company representatives before participating in a government investigation was unlawful because it chilled employee participation. Finally, the ALJ rejected Macy’s argument that its “safe harbor” or “savings clause” rescued the otherwise unlawful policies. The savings clause, which specifically stated that the handbook “is intended to comply with all federal state, and local laws, including, but not limited to … the National Labor Relations Act, and will not be applied or enforced in a manner that violates such laws” was deemed too broad to be effective. Macy’s was ordered to rescind and revise each provision found to be unlawful. The decision in Macy’s should concern all employers. The handbook provisions deemed unlawful in Macy’s, or some variation thereof, are often found in handbooks that are not regularly revised for compliance with NLRB rulings. Employers should review their policies governing confidentiality, employee conduct toward coworkers and management, employee use of company logos, email access policies, and at-will employment statements to ensure that such policies comply with the NLRA and the evolving NLRB guidance.

Most employers are keenly aware of the state and federal taxes they must pay to fund unemployment benefits.  Many employers routinely include “no contest” provisions in their separation agreements whereby they agree not to contest unemployment benefit applications.  While a “no contest” provision seems like an easy, no-risk and inexpensive bargaining tool, the inclusion of a “no contest” provision can expose an employer to potential liability. In 2011, Congress passed the Unemployment Insurance Integrity Act (“UI Integrity Act”) to reduce payments of unemployment compensation to ineligible claimants attributed to employer non-responsiveness to unemployment claim notices.  The UI Integrity Act required states to enact laws by October 21, 2013 to (1) enhance penalties for fraudulent unemployment insurance claimants; (2) revise the timing of “new hire” reports; and (3) impose new obligations on employers with respect to responding to unemployment insurance claim notices. States’ responses to the UI Integrity Act have varied.  To date, almost all states, with the exception of Missouri, have successfully enacted legislation to comply with the UI Integrity Act. In states such as Kansas, Texas, South Carolina, Washington and California, employers that have established a “pattern” of failing to timely or adequately respond to unemployment claim notices are penalized. Under the legislation in these states, if an unemployment compensation payment is made to a claimant and it is later determined that the claimant was ineligible, the employer’s unemployment insurance account will be charged with the overpayment if (1) the employer failed to provide an adequate or timely response to the claim that has been deemed an overpayment, and (2) the employer has established a pattern of failing to timely or adequately respond. “Pattern” is defined differently by state. In addition, the legislation in Kansas, Oklahoma, and Washington contain provisions that disqualify an employer from having standing to appeal a determination regarding an unemployment benefits claim if the employer fails to respond to a claim within a certain period. California’s provisions are particularly strict, penalizing willful withholding of information, willful failure to report any relevant information, or willful failure to report a material fact concerning termination. In light of the varying state laws that have been enacted, employers should review and consider revising any standard “no contest” provisions in their separation agreements.  Doing away with language indicating that an employer will “not contest” a claim for unemployment benefits can insulate the employer from liability under the new state laws as well as liability for potential breach of contract claims if a state agency requires the employer to provide additional information that could be construed as opposition to a claim for benefits.