NLRB Regional Director Says College Athletes Can Unionize

Joel Barras wrote a new article on Forbes.com discussing the NLRB Regional Director for the Chicago Region's recent ruling that Northwestern University football players are "employees" of the University and therefore have the right to organize and be represented by a union.  If upheld, expect Division I football and basketball players from across the country to seek to unionize.

To read the full article, please visit forbes.com.

NLRB Case May Give Unions Two Bites at the Apple

The National Labor Relations Board has just agreed to consider forcing employers to defend unfair practice claims twice—once before an arbitrator, and then again before the Board.  The case is Babcock v. Wilcox Constr., No. 28-CA-022625 ("Babcock"). Interested parties are invited to submit briefs to the Board on whether it should maintain, modify, or abandon its current approach on deferral to arbitration awards. 

Under existing standards, the Board will defer to the arbitrator’s award if (1) the Board finds that arbitral proceedings were "fair and regular"; (2) the arbitrator’s decision would otherwise be binding on the parties; (3) the arbitrator’s ruling on collective bargaining agreement ("CBA") issues included consideration of the factual issues underlying any parallel, pending unfair labor practice ("ULP") charges over the same dispute; and (4) the arbitrator’s outcome is not "repugnant" to the purposes and policies of the National Labor Relations Act ("NLRA" or "Act"). The party seeking to avoid such a deferral result (typically the union), bears the burden of convincing the Board not to defer.

But recently, the NLRB general counsel has urged a new framework. The professed goal is to afford greater protection to employees’ rights under the Act. If the Board in Babcock adopts the urged framework, the burden will shift to the party seeking deferral (typically the employer), and the Board will not defer unless it concludes that the CBA in arbitration actually incorporates the statutory rights at issue in the ULP charge, or that the arbitrator actually considered and decided whether those statutory rights had been violated.  In addition, the party seeking deferral must convince the Board not only that the arbitrator’s decision is not clearly repugnant to the Act, but also that the arbitrator correctly articulated and applied the relevant NLRA principles when resolving the parties’ CBA dispute.

The negative consequences for employers of the proposed new framework plainly are huge. In addition to making it much harder to get the Board to defer to favorable arbitration awards, the new framework would imperil the finality of all arbitration awards that implicate NLRA issues. Unions also would get a "do-over" at the Board in these cases—resulting in employers having to spend duplicative time and resources, plus run the risk of inconsistent decisions. Board adoption of the new framework could even cause collateral damage in additional areas, such as the Board’s willingness to defer on ULP charges pending arbitral consideration in the first instance (known as a Collyer deferral).

Stay tuned for any developments in Babcock. Briefs to the Board are due by March 25, 2014. 

Employers Beware - NLRB Proposes Once Again To Shorten Union Election Process

Valerie Eifert wrote a new article on Forbes.com discussing the NLRB's proposed amendments to its rules that would expedite the union election process and significantly limit employer participation in that process.

To read the full article, visit forbes.com.

NLRB Judge Invalidates Company Dress Code

A National Labor Relations Board (“NLRB”) Administrative Law Judge (“ALJ”) partially invalidated a Honda dealer’s dress code that prohibited employees who have contact with the public from wearing pins, insignia or other message clothing. A copy of the decision is attached here. Even though the work rule applied to all messaging regardless of the topic, the ALJ concluded that the rule violated the employees’ rights to display union insignia in the workplace.

In reaching his conclusion, the ALJ relied on the NLRB’s longstanding holding that employees have the presumptive right to wear union insignia at work. An employer seeking to overcome this presumption must establish special circumstances that make the rule necessary to maintain production or discipline, or to ensure safety. Such special circumstances include situations where wearing messages may jeopardize employee safety, damage machinery or products, exacerbate employee dissension, or unreasonably interfere with an employer’s public image, or may be necessary to maintain decorum and discipline among employees.

As the ALJ noted, “In determining whether an employer, in furtherance of its public image business objective, may lawfully prohibit uniformed employees who have contact with the public from wearing union insignia, the [NLRB] considers the appearance and message of the insignia to determine whether it reasonably may be deemed to interfere with the employer’s desired public image.” Notably, customer exposure to union insignia, alone, is not a special circumstance allowing the employer to prohibit its display.

The ALJ did uphold the employer’s prohibition on employee-worn pins because the pins could potentially damage a vehicle or injure a service technician.

This case serves as yet another reminder that the NLRB will continue its heightened scrutiny of employee handbook provisions. Whether the NLRB will extend this ruling to non-union employers remains to be seen. Employers are encouraged to review the longstanding personnel policies that they may have taken for granted to ensure they will withstand this NLRB scrutiny.

Employers Beware: 2014 NLRB is Unrestrained and Ready for Activism

For the first time in over a decade, the National Labor Relations Board enters the New Year with a fully constituted (properly nominated and confirmed) complement of Board Members and General Counsel. Having removed the “acting” or “recess appointee” caveat from their titles, the NLRB and its independent prosecutor are now free of many of the legal and procedural challenges that questioned the legitimacy of their recent actions.

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Federal Employment Agencies Grind to a Halt During Government Shutdown

The lights are still on but the overwhelming majority of desks are empty at the national and regional offices of the Department of Labor (DOL) and its subagencies, as well as the National Labor Relations Board, Equal Employment Opportunity Commission. These offices will continue to receive and docket filings to preserve statutory deadlines but otherwise will tend to only the most extraordinary cases “involving the safety of human life or protection of property.” All other activities, including investigating complaints and public outreach, are suspended. Below is an example of the employee furlough numbers and their dramatic impact on government operations.

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The Times They Are A-Changin' For Labor Union Organizing

Labor unions seeking to stem steady losses within their ranks are getting creative. The AFL-CIO recently passed a resolution permitting anyone in the country to join its organization, regardless of union affiliation. Pushing for passage of this resolution, AFL-CIO head Richard Trumka proclaimed that “[T]he success of our movement…is measured by the progress of working people – all working people – by the lives we lead, by the hopes and dreams we make real together.” 

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NLRB General Counsel Keeps Unfriending Employer Social Media Policies

In a just-released Advice Memorandum found here, the NLRB General Counsel’s office (“GC”) publicized its position that employers must bargain with their unions before implementing new social media policies. The Memo “casually” notes that work rules, such as social media guidelines, provide an independent basis for discipline and are mandatory subjects of bargaining.  According to the GC, even if an employer navigates around the ever-increasing landmines set by the Board and GC in developing a social media policy, employers must also seek union approval before implementing the policy, unless, of course, the underlying collective bargaining agreement contains a clear and unmistakable waiver of the union’s right to bargain over such policies.

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Fourth Circuit Joins D.C. Circuit in Ripping Up NLRB Poster Rule

Alexandria E. Cuff contributed to the content of this post.
 

The U.S. Court of Appeals for the Fourth Circuit joined the U.S. Court of Appeals for the D.C. Circuit in striking down a National Labor Relations Board (“NLRB”) rule requiring employers to post a notice telling employees about their National Labor Relations Act (“NLRA”) rights, including their right to form or join a union. Attached is the decision in Chamber of Commerce v. NLRB.

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Two Strikes Against NLRB and its Poster Rule is Out

On Tuesday, another appeals court struck down an NLRB rule that would have required millions of businesses to display posters informing workers of their right to form a union and engage in other concerted activity.  The U.S. Court of Appeals for the District of Columbia Circuit held that the NLRB rule violated employers’ free speech rights by forcing them to display the posters or face charges of committing an unfair labor practice.

To read the entire post on Forbes.com, click here.

NLRB Recess Appointments Ruled Unconstitutional: Hundreds of Decisions Affected and Board Unable to Act

In a decision handed down today, the U.S. Court of Appeals for the D.C. Circuit ruled that President Obama lacked the authority to install three recess appointments to the National Labor Relations Board early last year. In its opinion for Noel Canning vs. NLRB, attached here, the Court concluded that the President ignored the Senate’s “advise and consent” role by appointing three Members to the Board while the Senate remained in session.

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Non-Disclosure and Non-Disparagement Provisions in Employment Agreements Not Off-Limits Under the NLRA

In a recent case involving Quicken Loans, Inc., Case No. 28-CA-75857, JD(NY)-03-13 (January 8, 2013), attached here, an NLRB Administrative Law Judge (“ALJ”) found that employers’ commonly adopted practice of including non-disclosure and non-disparagement provisions in employment agreements violated the NLRA. The ALJ concluded that these contract provisions created a chilling effect on the employees’ right to discuss their working conditions with coworkers and others. 

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NLRB Overturns 36-Year-Old Precedent Protecting Confidential Witness Statements From Disclosure to Union

This post was written by William Bevan, III and Valerie M. Eifert.

On the heels of its December 12 decision overturning 50-year-old Board precedent in WKYC-TV, the NLRB reversed a 36-year-old Board ruling which protected confidential witness statements during workplace investigations from disclosure to the labor organization representing the employee or employees involved in the investigation. Prior to the Board’s December 14 decision in Am. Baptist Homes of W. d/b/a/ Piedmont Gardens , it was well-settled under Anheuser-Busch Inc., 237 N.L.R.B. 982 (1978), that the law exempted witness statements made to employers by employees with assurances of confidentiality from the requirement to provide the union involved with copies of the statements, even though such statements were arguably relevant to the Union’s representation of bargaining unit employees.

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NLRB Overturns 50 Year Old Case to Require Employers to Continue Union Dues "Check-off" Payments Despite Expiration of Underlying Labor Agreement

The National Labor Relations Board issued a ruling to preserve the flow of union dues income to unions during protracted labor negotiations. The ruling is that an employer must continue to deduct union dues from employee paychecks despite the expiration of a collective bargaining agreement that required the payments. 

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NLRB Requires Employers to Respond to Irrelevant Information Requests from Unions

The NLRB added to its step-by-step expansion of union rights at the expense of employers, this time by requiring employers to “promptly respond” to even irrelevant information requests from unions. This “irrelevant” ruling is an extension of well-established NLRB case law that an employer’s duty to bargain in good faith includes the obligation to provide requested information relevant and necessary to the union’s role as bargaining representative.

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Watch for Unions At Your Doorstep!

Employers must remain watchful for increased union organizing at their workplaces. Those that dismiss the possibility that their employees would consider unionizing are often left disappointed and unionized when last minute anti-union campaigns in response to “surprise” representation petitions are “too little, too late.” Recent actions by the National Labor Relations Board—examples are below-- highlight the need to prepare now, well before a union targets an employer.

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NLRB General Counsel Backs Off Prohibiting All Employment-At-Will Disclaimers

In an apparent victory for employers, the NLRB’s General Counsel (“GC”) issued a pair of Advice Memoranda upholding handbook employment-at-will disclaimers comparable to provisions found unlawful several months ago by the same GC. In the Memos, found here and here, the GC concludes that the following disclaimers did not explicitly restrict employees’ protected activities and were not in response to union or other NLRA-protected activity:

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NLRB Nixes Still More Employer Policies in Costco

Once again attacking personnel policies largely designed to comply with other laws, the National Labor Relations Board invalidated certain personnel policies protecting the dissemination of employee health information and personal identifiers. View the full decision by clicking on Costco Wholesale Inc.

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H-2B Visas May Be a Heavy Burden for Employer's Wallets

On Monday, August 20, a federal judge in Philadelphia upheld the Department of Labor ("DOL") rule setting minimum wage requirements for foreign workers holding H-2B visas. The proposed rule has drawn much attention, and criticism, because it potentially will cost $874,000,000 or more per year in increased labor costs for employers with H-2B visa holders.

For over fifty years, employers have relied on non-immigrant workers with H-2B visas to fill temporary positions in non-agricultural industries that qualified U.S. workers declined to accept. Although the Department of Homeland Security ("DHS") has final authority to determine whether to issue a H-2B visa, it defers to the DOL for advice on the validity of the employer’s need to hire such non-immigrant workers. Critics argue that availability of H-2B visas is a millstone on U.S. workers because it permits employers to hire non-immigrant workers at depressed rates.

In January 2011, the DOL issued proposed rules that, among other things, would require H-2B visa holders to be paid wages equal to or exceeding the highest of the prevailing wage among the applicable federal, state and local minimum wages. The DOL estimated its new rule would increase hourly wages for such positions by $4.83 per hour. Not surprisingly, the DOL received over 300 comments to its proposed rule. After a series of DOL postponements, the rule is now to go into effect on October 1, 2012.

The proposed rule also sparked lawsuits by industry groups that argued that the DOL lacks congressional authority to promulgate rules on the H-2B program because (i) final decision making authority lies with the DHS, and (ii) the DHS’ rulemaking authority is non-delegable and/or DHS never delegated it to the DOL. In response to these legal challenges, the DOL postponed implementation of the proposed rule three times. Monday’s decision in The Louisiana Forestry Assn v. Solis may be a significant first-step towards final adoption of the proposed rule. Rejecting the procedural challenges described above, the court found that the DOL had followed proper guidelines and procedural requirements in formulating and announcing the proposed rule. More importantly, the court also determined that the DOL had acted properly when promulgating guidelines for a program technically administered by another agency. According to the court, while the DHS has the ultimate power to grant H-2B visas, it may rely upon recommendations from the DOL in determining whether to grant a particular H-2B visa application. Accordingly, to the extent the DHS has sought the DOL’s advice, the agency has the authority to establish its own set of requirements or guidelines that employers seeking its blessing must satisfy.

Interestingly, before the court entered Monday’s ruling, other industry groups filed a lawsuit in the United States District Court for the Northern District of Florida that raised the same procedural challenges. In that case, Bayou Lawn & Landscaping Service v. Solis, the court entered a temporary injunction barring the DOL, on a nationwide basis, from implementing its proposed rule. Appealing to the United States Court of Appeals for the Eleventh Circuit, the DOL, among other arguments, asserts that the lower court abused its discretion in entering a nationwide injunction. Undoubtedly, the DOL will raise The Louisiana Forestry Association, Inc. to support the legality of its rulemaking authority and as evidence of a "split" among the federal courts over this issue that requires review by the United States Supreme Court.

These conflicting decisions muddy whether the DOL’s proposed rule will actually be implemented on October 12. The DOL also recognizes the immediate limbo and, in its appellate submission, suggests a interim hiatus of the H-2B visa program. That "solution", however, is likely as unpalatable for most affected employers because of the "Can we or can’t we?" increased costs they face if the proposed rule is ultimately adopted. Reed Smith will continue to monitor and provide guidance regarding the status of DOL’s proposed rule and its impact for employers.

Employer's E-Mail System May Become Tool for Union Organizing

The National Labor Relations Board (“NLRB”) is expected to issue a ruling shortly on whether employers can lawfully prohibit their employees and unions from using employer-owned e-mail and intranet systems to distribute union campaign materials. An NLRB decision favoring employee and union use of these internal communication avenues for union organizing and other NLRA-protected activities would effectively extend and be the NLRB’s “blessing” of its Acting General Counsel’s social media “rules” and guidelines discussed here and here.

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NLRB Forbids "Do Not Discuss" Warnings to Employees During Confidential Investigations

 

NLRB holds that employer’s practice of requesting employees to keep internal investigations confidential violates the NLRA.

 

The National Labor Relations Board ("NLRB" or "Board") is at it again, this time finding that an employer's policy prohibiting employees from discussing ongoing investigations of employee misconduct infringes upon employees’ Section 7 rights in violation of Section 8(a)(1) of the National Labor Relations Act ("Act" or "NLRA"). Banner Health Sys. d/b/a Banner Estrella Med. Ctr., 358 NLRB No. 93 (July 30, 2012).

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Alaska First State to Recognize Union-Employee Privilege in Communications

In a decision that may extend to other state and federal courts, the National Labor Relations Board, and to labor arbitrations, Alaska’s Supreme Court became the first state or federal court to recognize an implied statutory privilege for union-employee communications during a disciplinary or grievance proceeding to block questioning about them. Comparable to confidential attorney-client communications, the privilege extends to confidential communications between an employee or the employee’s attorney and union representatives acting in their official capacity.  The communications must also relate to anticipated or ongoing disciplinary or grievance proceedings.

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Legality of "At Will" Language in Employee Handbooks Left Unresolved

Inserting itself once again in the relationship between employers and their non-union employees, the National Labor Relations Board ("NLRB") recently settled a case in which the General Counsel alleged that certain common "at-will" disclaimers in employee handbooks and manuals violated the National Labor Relations Act ("NLRA"). Raised but unresolved is the impact of this settlement on "at will" disclaimers in general. 

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NLRB General Counsel Issues Third Report on Social Media Cases

The National Labor Relations Board’s (NLRB’s) Acting General Counsel Lafe Solomon issued his third report on social media cases handled by the NLRB. Copies of all three memos are available here, here and here, in the order issued. Our previous blog post discussing the second memo can be found here.

The most recent, third report reviews 7 social media policies, finding 6, at least in part, violative of the National Labor Relations Act. Solomon found  the seventh policy compliant with the Act and attached that full policy to his memo.

Extracted from the six “violation” cases are the following examples of impermissible elements of social media policies.

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NLRB'S "Quickie Election" Rules Invalidated

The United States District Court for the District of Columbia voided the NLRB’s so-called “quickie election” rules because the NLRB lacked the quorum necessary when it adopted its Amended Election Rules to expedite the current union election process. See Chamber of Commerce, et al v. NLRB. Our more in-depth analysis of those amended rules is in our earlier post at here. As noted there, the United States Chamber of Commerce and several trade organizations sought to invalidate the rules on several legal grounds, including lack of quorum.

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NLRB Continues To Oppose Arbitration Policies That "Chill" Employee Class Actions

The General Counsel for the National Labor Relations Board ("Board") issued a complaint yesterday alleging that 24 Hour Fitness USA, Inc., violated the National Labor Relations Act ("NLRA") by insisting that all employment-related disputes be resolved through individual arbitration. The employer, which operates fitness centers nationwide, requires its non-union workforce, as a precondition of hire, to sign written waivers surrendering any right to pursue collective or class action lawsuits or arbitrations against the Company. Employees may later opt-out of this waiver, but only by submitting a Company-created form within 30 days of their signing the original release.

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UPDATE to D.C. Circuit Litigation Over NLRB Posting Rule: D.C. Circuit Halts Implementation Pending Appeal

This post was written by Valerie M. Eifert and William Bevan, III.

The District of Columbia Circuit Court of Appeals granted a motion for an injunction pending appeal filed by national trade associations challenging the NLRB Posting Rule that requires all employers covered by the National Labor Relations Act to post a notice informing employees of their rights under the Act.  In granting the motion to enjoin the implementation of the rule pending appeal, the Circuit Court noted that the Board earlier agreed to postpone operation of the rule during the district court proceedings.  The Circuit Court also found that the district court's decision to uphold the posting rule while depriving the Board of its primary enforcement mechanism against noncompliance creates uncertainty regarding the application of the rule and counsels in favor of granting the request for an injunction.  The Circuit Court has expedited the appeal, requiring all briefing to be concluded by June 29, 2012 and oral argument to be held in September, 2012.   

A copy of the order can be found here:  
 
For more information and analysis on the district court's decision, check out our earlier blog posts on the rule: http://www.employmentlawwatch.com/2012/03/articles/employment-us/nlrb-posting-requirement-upheld-but-enforcement-limited/

NLRB Posting Requirement Upheld, But Enforcement Limited

This post was written by William Bevan, III and Joel S. Barras.

As we have discussed in earlier posts found here and here, several national trade associations challenged the NLRB’s Rule that requires all employers covered by the National Labor Relations Act to post a notice notifying employees of their rights under the Act. In response to those filings, a federal district court upheld the posting requirement, but struck down the Rule’s enforcement provisions that considered an employer’s failure to comply with the posting requirement an unfair labor practice. The court similarly struck down a provision within the Rule that extended the time an employee could file an unfair labor practice against an employer that failed to comply with the posting requirement.

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NLRB General Counsel Issues Second Report on Social Media Cases

This post was written by Joel S. Barras and Samantha M. Clancy.

The National Labor Relations Board’s (NLRB’s) Acting General Counsel Lafe Solomon recently issued a report on social media cases handled by the NLRB. This second report—he issued his first in August 2011— provides guidance to employers in developing and enforcing social media policies to comply with the National Labor Relations Act (NLRA). Copies of his two memos are available here and here.

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White House Announces Recess Appointments to NLRB

This afternoon, the White House announced President Obama's intention to recess appoint three members of the National Labor Relations Board, including Sharon Block, Deputy Assistant Secretary for Congressional Affairs at the U.S. Department of Labor, Terence F. Flynn, Chief Counsel to Member Brian Hayes, and Richard Griffin, General Counsel for International Union of Operating Engineers. A link to the NLRB press release which contains the prospective members' biographies is found here. For now, these appointments render the Board's recent procedural actions taken in anticipation of its loss of a quorum moot. We anticipate that industry groups will challenge the President's authority to make recess appointments while Republican Senators hold pro forma congressional sessions. We will continue to follow this closely and update you on any future developments.

National Labor Relations Board Passes Rules to Assist Union Organizing Campaigns

This post was written by William Bevan, IIIJohn A. DiNome and Joel S. Barras.

On November 30, 2011, the National Labor Relations Board (“Board”) voted 2-1 to advance certain proposed rules to expedite the current union election process and significantly limit employer participation in that process. The proposed rules will be drafted in final form for eventual publication in the Federal Register and re-voted by the Board. Uncertainty lingers, however, because the final vote must occur before expiration of Member Craig Becker’s recess appointment when Congress adjourns for the year. While the proposed rules are not as onerous as originally proposed by the Board, (1) they would effectively minimize an employer’s time to express its views about bargaining with its employees and (2) will eliminate any legal pre-election challenge to contested issues such as the scope of the bargaining unit and voter eligibility.

The New Rules

The Board is responsible for administering representation elections under the National Labor Relations Act (“NLRA”). Historically, the Board adheres to an internal policy designed to schedule elections within approximately six weeks after the filing of a representation petition. As indicated by the Board’s annual statistics, the actual elections in the overwhelming majority of cases fell within this six-week benchmark, because most are usually conducted pursuant to election agreements.

The Board’s proposed rules would significantly reduce the time between the filing of a representation petition and the election. This cut from filing to election leaves employers with significantly less time to present their views on unionization and bargaining to their employees and to attempt to convince employees that the union’s side of the story is not the only side.

Specifically, the proposed changes that the Board acted on include:

  1. Authorizing hearing officers to limit any pre-election hearing issues only to whether an election should be held. Previously, employers could challenge election unit scope, and voter inclusion/exclusion eligibility issues, such as supervisory, casual, or confidential employee status. These issues will now be raised only after the election.
  2. Authorizing the hearing officer to decide whether to permit the parties to file post-hearing briefs. Previously either party had the right to file post-hearing briefs.
  3. Eliminating all pre-election review and consolidating pre- and post-election issues in a single, post-election request for review.
  4. Eliminating the Board’s discretionary option to postpone elections to resolve a pre-election request for review.
  5. Eliminating the practice of special appeals at the hearing stage of the proceeding.
  6. Giving the Board discretion on whether to hear and decide appeals, thus eliminating what had been either party’s guaranteed right to appeal on election issues.

The Board has yet to act on a number of additional proposed changes which still require further deliberation.

U.S.: California's "Wage Theft Prevention Act" Imposes New Requirements and Potential Penalties On Private Employers Starting January 1, 2012

Effective January 1, 2012, private California employers of non-exempt employees not subject to certain collective bargaining agreements will face new reporting and recordkeeping requirements and penalties for violations of California's aggressively-titled "Wage Theft Prevention Act" signed into law in October 2011. Similar to New York's law of the same name enacted last year, the Act includes:

  • New Labor Code Section 2810.5 requires private employers of newly-hired, non-overtime-exempt employees to provide each new hire with:

(a) The job rate or rates of pay and whether it pays by the hour, shift, day, week, salary, piece, commission, or otherwise, including any rates for overtime.
(b) Any allowances claimed as part of the minimum wage, such as for uniforms, meals, and lodging.
(c) The employer's regular payday, subject to the Labor Code.
(d) The employer's name, including any “doing business as” names used.
(e) The address of the employer's main office or principal place of business, and its mailing address, if different.
(f) The employer's telephone number.
(g) The name, address, and telephone number of the employer’s workers’ compensation insurance carrier.
(h) Other information added by the Labor Commissioner as material and necessary.

Exempted from the Act and these requirements are public employees, employees exempt from California wage/hour laws requiring overtime pay and, under circumstances detailed in the Act, employees covered by collective bargaining agreements.

  • Employers must also notify employees of any changes in this information within seven days of the change.
  • Increases in civil and criminal penalties for wage-related violations, as well as an increase from 1 to 3 years for the Department of Labor Standards Enforcement to seek wage-violation-related penalties, but no change in the 1-year limit for seeking penalties in private enforcement actions.

In addition to increasing employers' administrative reporting and recordkeeping requirements and penalty risks, the Act adds pressure on employers to properly classify their employees as overtime exempt versus non-exempt. That is because employers who misclassify employees as exempt risk violating the Act and incurring incurring its increased penalties.

California employers need to work on prompt compliance strategies. Consider, for instance, periodic, attorney-led, privileged reviews of wage/hour practices to ensure compliance.

U.S.: NLRB Rules & Decisions Challenged in Congress & in Court

The U.S. House of Representatives Committee on Education and the Workforce has approved the Workforce Democracy and Fairness Act (“Bill”), which is part of the House Republican jobs agenda aimed at removing regulatory hurdles to creation of jobs. The Bill is a legislative challenge to a recent NLRB Rule. That Rule provides for conducting union representation elections within 10 days of the filing of a representation petition with the NLRB— a move favored by unions to expedite elections and, unintentionally of course, to drastically limit an employer’s time to provide employees with a fuller understanding of the facts prior to a vote. In contrast to the NLRB Rule, the Bill would mandate a waiting period of at least 35 days before an election.

The Bill also addresses the NLRB’s recent decision in Specialty Healthcare and Rehabilitation Center of Mobile, 357 NLRB No. 83 (2011). That decision adopted a new approach for determining an appropriate bargaining unit. Specialty Healthcare “opens the door” to smaller, more narrowly defined bargaining units that, being smaller, take fewer votes to become unionized. Under the Specialty Healthcare standard, an employer that argues that a proposed unit inappropriately excludes certain employees must prove that the excluded employees share “an overwhelming community of interests” with employees in the proposed unit. The proposed House legislation would reinstate the more than 50 year old NLRB standard for determining employee-voter inclusions and exclusions in the proposed bargaining unit. That traditional standard includes in the proposed voting unit all employees who share a sufficient—rather than “overwhelming”-- community of interests.

 

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In a related matter involving a different NLRB Rule, several national trade associations have filed federal lawsuits to prevent the NLRB from enforcing another Rule that would require employers to post a notice notifying employees of their rights under the National Labor Relations Act. The multiple judicial challenges-- now consolidated in the District of Columbia in federal court—are before the court on motions for summary judgment to declare the Rule unlawful and block the Board from implementing and enforcing it.

 

Deadline to Comply with NLRB Required Notice Posting Extended

This post was written by William Bevan, III and Joel S. Barras.

As we noted in our August 26 posting, the National Labor Relations Board (“Board”) has adopted a Rule that requires all employers covered by the National Labor Relations Act (“Act” or “NLRA”) to post a notice notifying employees of their rights under the Act. This requirement will apply to some 6 million private-sector employers, but not agricultural, railroad, airline or very small employers. The Rule is to inform employees – both unionized and non-unionized – of their rights under the Act, similar to posting requirements under the FLSA, FMLA and a recent Department of Labor rule requiring posting of NLRA rights by federal contractors.

Originally, the Rule was effective November 14, 2011. However, the NLRB has recently extended that deadline to January 31, 2012. The NLRB explained its reasoning for the extension as follows: “The decision to extend the rollout period followed queries from businesses and trade organizations indicating uncertainty about which businesses fall under the Board’s jurisdiction, and was made in the interest of ensuring broad voluntary compliance.” The Board also noted that the Rule was not otherwise amended and that no future changes are contemplated.

Therefore, unless one of the legal challenges filed by several national trade associations is successful in enjoining the Board from enforcing this Rule, employers will be required to post the 11-by-17-inch poster in a conspicuous location seen by all employees in the workplace by the new January 31, 2012, deadline.

NLRB Limits Employees' Rights To Challenge the Majority Status of Unions

This post was written by Joel S. Barras and John A. DiNome.

Recently and just prior to the expiration of National Labor Relations Board Chairman Wilma Liebman’s term, the Board issued two decisions that reverse the rights of employees to challenge the majority status of their unions following a voluntary recognition of the union by the employer or a sale or merger involving their employer. These decisions represent yet another example of the Board’s ideological shift towards creating a more union-friendly legal environment under President Obama’s administration. 

In Lamons Gasket Co., 357 NLRB No. 72 (August 26, 2011) the Board reversed its 2007 decision in Dana Corp.  Under Dana Corp., 351 NLRB 434 (2007), the Board required employers who voluntarily recognized unions to post a notice to their employees for 45 days informing them of the voluntary recognition. The notice had to contain employee rights and options regarding that voluntary recognition such as challenging that recognition. During that 45-day period, for instance, employees could file a decertification petition to reverse the employer’s voluntary recognition and vote to expressly reject union representation. Alternatively, another union could file a petition seeking to represent the same employees.

As a result of the Board’s decision in Lamons Gasket, however, neither the employees nor a rival union may challenge the recognized union’s status until a “reasonable period of time” after the voluntary recognition. This reasonable period of time ranges from six months to a year, depending on the circumstances.

In UGL-UNICCO Service Company, 357 NLRB No. 76 (August 26, 2011), the Board overruled another of its prior decisions, MV Transportation, 337 NLRB 770 (2002). Under MV Transportation, after a sale or merger of a unionized company, the bargaining unit employees or a rival union had the option to immediately challenge the union’s representative status in a Board-conducted secret ballot election. As a result of UGL-UNICCO, however, the incumbent union’s status as the employees’ bargaining representative is only subject to challenge after a “reasonable period of time” following the sale or merger. If the employer agrees to follow the existing collective bargaining agreement, this period is six months. If. Instead, the employer exercises its right to set new initial terms and conditions of employment, the bar to challenging the union’s status can be extended to a year.

Employers need to consider the impact of these cases when contemplating mergers or acquisitions and in deciding whether to adopt an existing collective bargaining agreement or unilaterally set initial terms and conditions of employment. 

NLRB Requires Notice Posting by NLRA-Covered Employers

This post was written by Eugene K. Connors, William Bevan III, and Joel S. Barras.

The National Labor Relations Board has adopted a Rule that, effective November 14, 2011, requires all employers covered by the National Labor Relations Act (“Act”) to post a notice notifying employees of their rights under the Act. This requirement will apply to some six million private-sector employers, but not agricultural, railroad, airline and very small employers. The Rule is to inform employees -- both unionized and non-unionized -- of their rights under the Act, similar to posting requirements under the FLSA, FMLA, and a recent Department of Labor rule requiring posting of NLRA rights by federal contractors. 

The Notice states that employees have the right to act together to improve wages and working conditions, to form, join and assist a union, to bargain collectively with their employer, and to refrain from any of these activities. It also provides examples of unlawful employer and union conduct and instructs employees on how to contact the NLRB with questions or complaints.

The Rule requires employers to post an 11-by-17-inch poster in a conspicuous location seen by all employees in the workplace, such as where notices concerning personnel rules or policies are customarily posted. Employers will be able to download the notice from the Board’s website (www.nlrb.gov) and print it out in color or black-and-white on one 11-by-17-inch paper or two 8-by-11-inch papers taped together.

Beyond physical posting, the Rule requires every covered employer to post the Notice on an Internet or Intranet site, to the extent that personnel and policies are customarily posted electronically. There is no requirement, however, to distribute the posting by email or other electronic means, as originally proposed by the NLRB. Further, if at least 20 percent of an employer’s workforce is not proficient in English, the Notice must be posted in English and the other language(s) spoken by the employees.

Finally, the Rule goes beyond a simple notice-posting requirement to specify penalties for noncompliance. Included among the penalties are:  (1) a finding of an unfair labor practice, accompanied by a cease and desist order; (2) tolling of the six-month statute of limitations under the Act for filing unfair labor practice charges, unless the employee filing the charge has “actual or constructive notice that the conduct in question is unlawful;” and (3) treating a willful refusal to post the notice as evidence of an unlawful motive in other unfair labor practice cases where motive is an issue. 

NLRB Charges New York Nonprofit With Labor Law Violations for Discharging Employees Based on Working-Condition Discussions on Facebook

This post was written by  Roy D. Prather, III, Joel S. Barras and Eugene K. Connors.

In yet another instance illustrating the National Labor Relations Board’s (“NLRB’s”) intent to prosecute violations of the National Labor Relations Act (“NLRA”) related to employee activity on social media sites, the NLRB’s Buffalo, NY regional office has issued a complaint against Hispanics United of Buffalo Inc. (HUB), a New York nonprofit agency. The complaint alleges that the employer fired five employees because they complained about working conditions on Facebook in violation of NLRA sections 8(a)(3) and 8(a)(1). Those provisions prohibit employers from taking or threatening adverse action against employees for engaging in so-called “concerted” activities protected by the NLRA. Firing or threatening employees with adverse action for voicing complaints or concerns over working conditions has been illegal for decades. But the NLRB has logically extended its reach to include email exchanges and, more recently, discussions and comments made using social media such as Facebook and Twitter.

According to the complaint, a HUB employee on Facebook named a co-worker who claimed that HUB employees failed to adequately assist its clients. This prompted Facebook rejoinders from other HUB employees who, in defending their job performances, criticized HUB’s working conditions, including workloads and staffing issues. HUB discharged five employee participants in this online forum on the basis that their comments illegally harassed the co-worker who made the “inadequacy” claim.

As noted, the NLRB asserts that the Facebook discussions were concerted activities under NLRA section 7 because they involved terms and conditions of employment such as job performances, workloads, and staffing levels. 

A hearing before an NLRB Administrative Law Judge is set for June 22, 2011, in Buffalo. We will track and report on this case as it progresses.

This matter is on the heels of two recent attempts by the NLRB to regulate employers’ reactions to employee use of social media to discuss workplace issues. The first concerned an NLRB complaint against American Medical Response, Inc., a Connecticut ambulance provider, for discharging an employee over her criticism of her supervisor on Facebook. In the second, the NLRB threatened a complaint against Thomson Reuters Corp. for its restrictive social media policy and for disciplining a reporter for a message she posted on Twitter. Both cases settled.

The lessons to be learned from the NLRB’s new and increased attention to social media activities are simple but crucially important. First, be ever-vigilant on what the NLRA permits and what it condemns. Second, “where” discussions and other protected actions occur makes no difference. Protected activities are protected if they are face-to-face, over the telephone, in a letter, in a fax, on TV, on the radio, in a news story, and “spoken” electronically, in emails or on social media sites. Put simply, the NLRA applies fully to the “cloud.” For this reason, take a thorough look at every policy to make sure that it recognizes and complies with the NLRA by balancing employer needs against the NLRA’s protections.

Feel free to discuss any concern with one of the authors or with another Reed Smith attorney of your choosing.

U.S. Supreme Court Reverses Ninth Circuit: Federal Arbitration Act Preempts California Law To Uphold Waiver of Class Action Option in Mandatory Arbitration

In AT&T Mobility v. Concepcion, U.S., No. 09-893, 4/27/11, an ideologically divided U.S. Supreme Court held that the Federal Arbitration Act (FAA) trumped California law to uphold class action waivers in arbitration. 

According to the majority opinion authored by Justice Antonin Scalia, a blanket prohibition on arbitration provisions requiring individual arbitration in favor of class-wide procedures would undermine the FAA's "liberal federal policy in favor of arbitration."  In so holding, the Court rejected the California Supreme Court rule in Discover Bank v. Superior Court, 36 Cal. 4th 148 (2005) that voided as unconscionable an arbitration clause containing a class action waiver. The Ninth Circuit Court of Appeals had upheld the Discover Bank rule. The U.S. Supreme Court, however, disagreed with both courts and held that the Discover Bank rule impermissibly "interferes with arbitration" under the FAA.

AT&T Mobility v. Concepcion, involving a consumer arbitration provision, has important implications for employers. Employers with mandatory pre-dispute arbitration agreements for employees should consider amending them to make collective class action relief impermissible. 

Stay tuned for further insight into arbitration and class action issues, including the eagerly awaited U.S. Supreme Court decision in WalMart over whether the court-certified class size is too broad. But, in pre-dispute arbitration, AT&T offers potential insulation from class action claims to at least employers and commercial service providers.

U.S. Supreme Court Voids Almost 600 Decisions Issued By Two-Member NLRB

This post was written by Daniel J. Moore and James A. Burns, Jr.

 On June 17, 2010, the U.S. Supreme Court held that the National Labor Relations Board (“NLRB” or “Board”) lacked the authority to issue any decisions during a 27-month period when it had only two members. New Process Steel, L.P. v. NLRB, No. 08-1457. The Court’s ruling effectively invalidates nearly 600 decisions issued by the two-member Board, leaving unclear how those cases will be resolved by a Board that is now back to a full five members, three of whom are generally expected to favor unions. A full copy of the Court’s decision is available here.

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Reed Smith's U.S. Employment and Labor Practice Highly Ranked by Legal 500 and Chambers USA

Reed Smith is proud to have been named one of the top employment and labor firms in the United States by Legal 500, a leading legal industry publication. The firm was highly ranked for both Labor and Employment Litigation and Labor Management Relations. Legal 500 cited in particular Reed Smith’s national reputation for experience in the areas of wage and hour and employee benefits class action defense, as well as our strong reputation for advising employers on traditional labor-law matters in diverse industries on a multi-state, regional and national basis.

Chambers USA also ranked the firm’s labor and employment practice in Pennsylvania and California as being industry leaders. In addition, seven of our U.S. attorneys were highly ranked by Chambers USA for their practices.

To learn more about the firm’s Legal 500 rankings, please click here.

To learn more about the firm’s rankings, Chambers USA, rankings or the methodology behind the rankings, please click here.

For more information about Reed Smith's Labor and Employment practice, please contact Karl Fritton, Casey Ryan, Linda Husar, Jim Burns, or the Reed Smith attorney with whom you regularly work.

Federal Contractors and Subcontractors Must Notify Employees of Right to Unionize

This post was written by Daniel J. Moore, James A. Burns, Jr. and Joel S. Barras.

Just 10 days after taking office, President Obama signed Executive Order 13496, requiring all federal contractors and subcontractors to notify employees of their rights under the National Labor Relations Act (NLRA), including their right to join and support unions, and to include in every contract, subcontract, and purchase order, a pledge to honor the employee notice requirements. The U.S. Department of Labor (DOL) has now issued its final rule implementing the Executive Order, specifying how contractors and subcontractors must comply with those requirements, including a poster describing employees’ rights and how they can file claims with the National Labor Relations Board (NLRB), and the penalties employers will face if they fail to comply. The rule will take effect June 21, 2010.

Who Is Affected by Executive Order 13496?

Executive Order 13496 (“the Order”) affects contractors and subcontractors who contract or subcontract with a federal government agency and are covered under the NLRA. The Order does not apply to the federal government, state or local governments, labor unions, or employers who are covered by the Railway Labor Act. The Order also does not apply to prime contracts under the simplified acquisition threshold, currently set at $100,000, or subcontracts of $10,000 or less.

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President Announces Weekend Recess Appointments to NLRB and EEOC

This post was written by Bill Bevan, John DiNome and Joel Barras.

This past weekend, with the Easter Congressional recess just under way, President Barack Obama wasted no time in announcing the recess appointments of his two proposed Democratic nominees to serve as members on the National Labor Relations Board (NLRB). One appointment was Buffalo union-side attorney Mark Pearce; the other was the highly controversial Craig Becker from Washington, D.C., who is counsel to the AFL-CIO and the Service Employees International Union. President Obama decided not to install his Republican nominee, Brian Hayes, as a recess appointment to the NLRB. As a result of these recess appointments, Democrats now occupy three of the four filled seats on the NLRB, with Mr. Hayes awaiting Senate confirmation to occupy the remaining seat. Mr. Becker’s and Mr. Pearce’s appointments will last until the end of the next Congressional session, which coincides with the end of 2011. Notably, the terms of Republican Board Member Peter Schaumber and Republican NLRB General Counsel Ronald Meisburg expire in August 2010. The president, of course, could simply take his time filling Mr. Schaumber’s seat, leaving the Board at three Democratic Members, and let the general counsel’s side of the Agency be run by a career acting general counsel until his administration sees what the makeup of Congress looks like after the 2010 elections. Given Mr. Becker’s published works, which are explicitly pro-union, and his stated belief that the Act can be structurally reformed by Board decision-making and rule-making, it is expected that employers’ rights, particularly during union organizing campaigns, will be greatly diminished through future NLRB decisions. Indeed, Mr. Becker’s stated views in the past are that employers should essentially have no involvement in union organizing elections. As always, we will continue to monitor the NLRB docket and decisions to update you on any legal developments.

Also included in the president's announcement were two appointments to the Equal Employment Opportunity Commission (EEOC), Georgetown Law Professor Chai Feldblum and the former Assistant Secretary of Labor for Employment Standards under President George W. Bush, Victoria Lipnic.

To learn more about the appointments, please read the White House's press release.

Labor Department Will Seek to Expand Employers' Obligation To Report 'Persuader Activity'

The U.S. Department of Labor (“DOL”) recently released its 2010 regulatory plan, which envisions a major change in how DOL interprets the Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”) as to when an employer must disclose its use of attorneys or consultants to help persuade employees not to unionize. In particular, DOL will be seeking to narrow a longstanding exemption that allows employers not to report having received “advice” from lawyers and consultants on union organizing.

LMRDA requires employers to file annual reports with DOL identifying every “agreement or arrangement with a labor relations consultant or other independent contractor or organization” pursuant to which such a third party: (1) engages in “activities where an object thereof, directly or indirectly, is to persuade employees to exercise or not to exercise, or persuade employees as to the manner of exercising,” their right to unionize; or (2) supplies the employer with “information concerning the activities of employees or a labor organization in connection with a labor dispute involving such employer, except information for use solely in conjunction with an administrative or arbitral proceeding or a criminal or civil judicial proceeding.” 29 U.S.C. § 433(a). Employers must also report any payment made pursuant to such an arrangement. Id.   LMRDA imposes a similar reporting requirement on those who provide such services. 29 U.S.C. § 433(b). Willful violations of the law, as well as knowing material misstatements or omissions, are a crime. 29 U.S.C. § 439.

In a key exception, LMRDA does not require employers to report “services of [a] person by reason of his giving or agreeing to give advice to [an] employer” in the covered areas. 29 U.S.C. § 433(c). In the union organizing context, DOL has traditionally distinguished between “direct persuaders,” who communicate directly with employees on behalf of employers and are covered by the reporting requirements, and “advisors,” who have no direct contact with employees and are not covered. Until now, DOL has construed “advice” to include a consultant's review of and comments on persuasive materials prepared by the employer, as well as the consultant's preparation of materials for the employer to use that the employer is free to reject.

Moreover, under current regulations, reports need not be filed as to services that consist of “representing or agreeing to represent an employer before any court, administrative agency, or tribunal of arbitration,” or “engaging or agreeing to engage in collective bargaining on behalf of an employer … or the negotiation of an agreement or any question arising thereunder.” 29 C.F.R. § 406.5(b). Reports filed by attorneys need not include “information which was lawfully communicated to such attorney by any of his clients in the course of a legitimate attorney-client relationship.” 29 U.S.C. § 434 (emphasis added); see also 29 C.F.R. § 406.5(d). Neither the law nor the regulations mention communications by an attorney to a client, presumably because that falls within the more general “advice” exception.

In announcing DOL’s regulatory agenda for 2010, Labor Secretary Hilda Solis said that the agency will seek to expand the LMRDA reporting requirements by narrowing what DOL treats as exempt “advice.” Although DOL has not yet signaled what specific changes it may implement, one model may be regulations that the Clinton administration implemented in its final days. Under those rules, employers would have been required to disclose all persuasive scripts, letters, videotapes, or other materials that were prepared by attorneys or consultants if one goal of the materials was to persuade employees regarding their union rights – even if the attorney or consultant who prepared the materials had no direct contact with employees. The Bush administration quickly rescinded those rules, but Secretary Solis’s 2010 agenda suggests that DOL may be looking to adopt a similar approach.

"EFCA Lite": Revised Version of Employee Free Choice Act Moves Forward

As we predicted in our September 14 piece on the Employee Free Choice Act (EFCA), organized labor’s increased pressure on Congress to pass such legislation is starting to bear fruit.  At this week’s AFL-CIO convention, Sen. Arlen Specter (D-Pa.), a leader in the Democrats’ effort to forge a bill that can withstand a Republican filibuster, announced the outlines of a compromise that he has been discussing with a small group of senators, which he predicted would become law before year-end.  Specter’s prediction echoes comments by Sen. Tom Harkin (D-Iowa), who said last week that there had been 60 votes to pass some compromise form of EFCA in July, and that the Senate could act on the bill later this year.

Sen. Specter said that he and his colleagues had reached a “consensus” on three “core principles:”

  • No card check, but speedier elections and union access.  Any revised version of EFCA would not include the widely attacked “card check” provision found in the current version of EFCA, under which employees could find themselves represented by a union without any vote.  Saying that no bill that did away with secret ballot elections could be passed, Specter described the proposed compromise as requiring such elections to take place promptly after a petition for certification was filed with the National Labor Relations Board (rather than the current approach, which allows elections to take place as late as six weeks later), and giving unions a right to enter the workplace to campaign.  Specter did not specify how long the shortened election period would be, or give any details about how and when unions could visit employees at work.
  • Mandatory “baseball style” arbitration.  The bill would retain the binding interest arbitration found in the current version of EFCA, so that if an employer and union failed to reach agreement on a first contract within so many days following the election, federal arbitrators could step in and impose an agreement on the parties dictating employees’ wages, benefits, hours, layoff procedures, and so on.  To address concerns that this approach would give parties an incentive to make unreasonable proposals, Sen. Specter said the bill would require the arbitrators to adopt the last best offer of one party or the other, so-called “baseball style” arbitration.  He said no decision had yet been reached on how long the parties would have to sign a contract before they would be forced into arbitration.  The current version of EFCA allows 120 days.
  • Treble back pay.  The bill would include significantly increased penalties like those found in the current version of EFCA, under which employers who discharge employees because they join or support a union would face treble back pay.

Shortly after Sen. Specter announced this framework, however, labor officials said they had not agreed to it.  Incoming AFL-CIO president Richard Trumka said “card check” remained in play, and the AFL-CIO’s director of governmental affairs said the labor federation had not agreed to any compromise.  Business leaders were equally dismissive, describing Specter’s approach as permitting “ambush elections,” contracts imposed by a “government-appointed bureaucrat,” and acting as a smokescreen for a last-minute return of card check.

All sides agree that any revision of EFCA cannot and will not move forward until the Democrats have 60 votes, which will depend on when Massachusetts selects a replacement for the late Sen. Ted Kennedy.  Although the special election to replace Kennedy will not take place until January, the Massachusetts legislature is considering a bill that would give the Democratic governor authority to name an interim replacement, meaning that a new Democrat could join the Senate within the next few weeks.

We will continue to keep a close eye on EFCA so that our clients can be fully prepared for whatever bill may emerge.

The Employee Free Choice Act: An Update

While many suspected that the Employee Free Choice Act (“EFCA”) might become law within the first 100 days of the new Administration, that has not come to pass. Indeed, with the focus in Congress on the recession and the Administration’s push for healthcare reform, EFCA seems to have been all but forgotten. Like the disappearing canine in the old childhood song that we all remember, “Oh Where, Oh Where Has My Little Dog Gone,” EFCA seems to be lost in the Congressional agenda. 

But has it been forgotten? As we headed into Labor Day, EFCA emerged in the news. Although Senate Majority Leader Harry Reid (D-Nev.) announced last week that EFCA was unlikely to be considered until some time next year because Congress had “too many other things on [its] plate,”1 staunch supporters of the bill within organized labor beg to differ. Indeed, Andy Stern, president of the Service Employees International Union, was quoted in The New York Times as saying that he not only expected to see EFCA pass, but that it would still include “card-check” — the provision, widely attacked by Republicans and the business community — that would mandate union representation on employees without any secret ballot election in which employees could vote.2 While EFCA may be on the back burner, for now it is unlikely that labor will let it remain there for long. 

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New Law Forces Employers to Think Twice Before Hiring and Firing Employees in New York

This post was written by David Weissman, Cindy Schmitt Minniti, and Daniel Schleifstein.

The New York Legislature recently passed a new law that requires greater communication and transparency from employers in the hiring and firing process. Employers who fail to comply risk incurring penalties and unwanted scrutiny of labor and employment policies and practices. The Labor & Employment team at Reed Smith is here to help employers comply with this new statute and avoid undesirable consequences.

Pursuant to McKinney’s Labor Law § 195, New York employers must now provide any new employee hired on or after October 26, 2009, with information on the following subjects:

  • Rate of Pay: Employers must provide the employee with the employee’s regular hourly rate of pay, overtime rate of pay (if applicable), and regular payday at the time the employee is hired.
  • Written Acknowledgement: Employers must obtain written acknowledgment of the rates of pay and the regular payday from each employee at the time the employee is hired. The form and content will be provided by the Commissioner of Labor at a later date.
  • Payday Changes: Employers must notify employees of any change in paydays before the change.
  • Wage Statement: Employers must provide each employee with every payment of wages, listing gross wages, deductions and net wages, and must, at the employee’s request, explain how the wages were computed.
  • Recordkeeping Requirements: Employers must establish, maintain and preserve records showing the hours worked, gross wages, deductions, and net wages for each employee, for not less than three years.
  • Time-Off Policies: Employers must notify employees in writing or by publicly posting the employer’s policy on sick leave, vacation, personal leave, holidays and hours.
  • Termination: Employers must notify any employee terminated from employment – in writing – of the exact date of termination, as well as the exact date of cancellation of employee benefits connected with the termination. Notice must be provided within five working days of the actual date of termination. Failure to notify an employee of cancellation of accident or health insurance subjects an employer to penalties, including a fine of up to $5,000 paid to the Commissioner of the New York State Department of Labor, as well as potential liability in a civil action brought by the employee in which damages may include reimbursement for medical expenses that were not covered by the insurer because of the termination of the employee without notice.

Labor Department Proposes Rule Requiring Federal Contractors and Subcontractors to Notify Employees of Right to Unionize

Just 10 days after taking office, President Obama signed Executive Order 13496, requiring all federal contractors and subcontractors to notify employees of their rights under the National Labor Relations Act (NLRA), including their right to join and support unions. On Aug. 3, 2009, the U.S. Department of Labor (DOL) issued a proposed regulation specifying how contractors and subcontractors must comply with that Order, including a poster describing employees’ rights, and how they can file claims with the National Labor Relations Board (Board). Parties wishing to comment on the proposed rule must do so by Sept. 2.

Executive Order 13496

Citing the government’s need to deal with “contractors whose work will not be interrupted by labor unrest,” and a belief that industrial peace is best achieved when employees are “well informed of their rights,” Executive Order 13496 requires most federal departments and agencies to include in virtually all government contracts, provisions that require the contractor to post a notice for employees describing their rights under the NLRA, to follow all DOL rules relating to the Order, and to be subject to penalties for noncompliance that can include debarment from future contracts. The Order exempts two types of contracts: collective bargaining agreements, and contracts for purchases under the “simplified acquisition threshold” of $100,000. The Order also requires contractors to include such provisions in every subcontract they enter into in connection with the government contract. The Order directs the DOL to issue regulations implementing its requirements, and they will take effect when those regulations become final.

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Governor Conditions State Funding for Hotels and Convention Centers on Inclusion of "Labor Peace" Contract Provision

This post was written by David L. Weissman and Joel S. Barras.

New York Governor David Paterson issued an order on April 24, 2009, making it easier for labor unions to organize employees for agencies and public authorities that provide financial aid to projects that will entail the construction of a hotel or convention center. The directive requires the operators of new construction projects that receive state aid, including loans, tax incentives or long-term leases from state agencies or public authorities, to obtain Labor Peace Agreement (“LPA”) with unions seeking to organize their workers. These LPA must also be included in any contract between the project operators and any subcontractors that work on the project. 

Under these mandated agreements, employees would be prohibited from striking, boycotting or engaging in other actions that would disrupt business or deprive the state of revenues. While the directive’s language appears to favor employers, unions will enjoy unprecedented leverage to gain concessions from companies in exchange for entering into LPA. For example, unions will likely demand right-to-organize agreements, including “card-check” rights that allow a union to be recognized as soon as a majority of workers sign authorization cards.

For purposes of the governor’s directive, covered hotel and convention center projects include those in which New York state, or an agency with at least one member appointed by the governor, owns title to part of the facility or has entered into a 40-year or longer lease to occupy a portion of the new facility. The directive also applies to construction projects that receive financing from the state or state agency, including direct financial subsidies, loans or loan guarantees, credit enhancements, or other similar aid. 

The directive includes two limited exceptions. First, a state agency may decide not to include the LPA if the agency determines that such a requirement will not further the state’s proprietary interest prior to the issuance of the initial request for proposal. Second, the agreement would not be required if the financial assistance at issue is provided pursuant to a specific statute or regulation that prevents the conditioning of such assistance on an LPA. Any company preparing to undertake a construction project in New York should be aware of this pending order, and make sure to consider a union workforce when budgeting for the project.

U.S. Supreme Court Holds That Union Contracts Can Require Employees To Arbitrate Discrimination Claims

The Supreme Court has ruled that employees represented by a union cannot sue for age discrimination when their union and employer have agreed that any such claims should go to arbitration rather than court. In a 5-4 split, the Court held that so long as the collective bargaining agreement (“CBA”) between an employer and a union “clearly and unmistakably” includes discrimination claims among those disputes that must be arbitrated, union members subject to the CBA must pursue such claims before an arbitrator rather than a judge or jury. 14 Penn Plaza LLC v. Pyett, No. 07-581 (Apr. 1, 2009).

Background

The CBA in this case prohibited discrimination based on “race, creed, color, age, disability, national origin, sex, union membership, or any other characteristic protected by law,” including claims made under several federal laws listed by name, among them the Age Discrimination in Employment Act (“ADEA”). The contract said all such claims were subject to the CBA’s grievance and arbitration procedures “as the sole and exclusive remedy for violations.”

After the employer reassigned several union employees to other positions, they asked their union to file a grievance claiming that the reassignments violated that clause by discriminating against them because of their age, as well as running afoul of seniority and overtime provisions in the CBA. The union did so, but withdrew the age discrimination portion of the grievance before the arbitration was complete. The employees then filed an ADEA claim in federal court, but their employer moved to dismiss the suit based on the CBA provision requiring such claims to be arbitrated. The lower courts sided with the employees, holding that under a 1974 Supreme Court case, Alexander v. Gardner-Denver Co., a CBA could not effectively waive employees’ right to bring statutory discrimination claims in court. Although the lower courts recognized that the Supreme Court had since enforced an agreement to arbitrate ADEA claims in Gilmer v. Interstate/Johnson Lane Corp.(1991), they distinguished that case on the grounds that it had involved an individual agreement by an employee rather than a collective agreement by a union.

The Supreme Court’s Decision

The Supreme Court reversed the lower courts, holding that a CBA provision that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law. It first held that an employer and the union representing its employees are free to negotiate whatever lawful terms they believe appropriate to govern the employees’ terms and conditions of employment, and that under federal labor law such agreements should generally be upheld. The Court found that, as it had held in Gilmer, nothing in the ADEA precluded the arbitration of age discrimination claims so long as the relevant agreement clearly requires employees to arbitrate rather than litigate.

The Court rejected the employees’ argument that agreements to arbitrate statutory claims are suspect when found in CBAs instead of individual employee contracts, finding that the ADEA makes no such distinction. The Court distinguished its decision in Gardner-Denver as involving a CBA that covered only contractual disputes, not statutory claims. Here, where the CBA expressly covered statutory claims, and in light of Gilmer and other more recent cases favoring arbitration of such claims, the Court held that Gardner-Denver did not affect its conclusion.

The Court also dismissed the concern that a union and its members might have a conflict of interest over the union’s decision whether or not to pursue arbitration of a discrimination claim on behalf of certain employees. Writing for the majority, Justice Thomas said that the ADEA did not reflect any such concern, and that it was best left to Congress to decide how to resolve any such possible conflict. The Court also noted that if employees believed their union had improperly refused to pursue a discrimination claim in arbitration, they could always sue the union for breaching its duty to fairly represent all of its members or for itself having violated the ADEA. Finally, the Court held that it would not decide whether a CBA provision that allowed a union to block any arbitration of discrimination claims by refusing to act on the employees’ behalf amounted to an unenforceable waiver of the employees’ substantive rights. The Court noted that the parties disagreed over whether the union, after it stopped pursuing the age discrimination claim in arbitration, had offered to allow the employees to do so themselves, and that the parties had not briefed that issue.

Practical Effects

This decision gives employers the opportunity to avoid lawsuits and jury trials in discrimination cases by including provisions in their CBAs like that upheld by the Court, just as many employers have done through arbitration agreements with individual non-union employees since Gilmer was decided. But the decision leaves open many important questions that may limit its scope:

  • Many if not most CBAs allow only the union, not individual employees, to invoke the grievance and arbitration procedure. In such cases, if a union decided not to take a discrimination claim to arbitration, it seems likely that the courts would allow the employees to pursue their claims in court lest they be left with no way to enforce their rights.
  • Unions may be reluctant to add language to their CBAs like that in Pyett, fearing that if they do so, and then fail to pursue a discrimination claim through arbitration, the employee may sue the union for violating its duty of fair representation or discriminating against the employee.
  • Congress may accept the Court’s invitation to address the issue. The Arbitration Fairness Act of 2009 (H.R. 1020), recently introduced in the House of Representatives, would ban all predispute agreements that require arbitrating any employment dispute, thus overturning Gilmer. Although the current version of the bill exempts CBAs from its scope, that provision will surely be revised to ensure that Pyett is reversed as well. If Congress passes such legislation, Pyett may prove to be a Pyrrhic victory for employers.

Organized Labor Gets Its Wish: Congress Introduces the Employee Free Choice Act

This post was written by William Bevan III and James A. Burns, Jr.

Seeking to impose dramatic changes in how employers are unionized and who writes an employer’s first contract with a union, Democrats in the House and Senate yesterday re-introduced the Employee Free Choice Act (“EFCA”). The bill (H.R. 1409, S. 560) is identical to legislation that passed the House in 2007 as H.R. 800.

EFCA would make three radical changes to the National Labor Relations Act:

  • First, the bill would permit unions to obtain certification through a mandatory card check reviewed by Regional Offices of the National Labor Relations Board (“NLRB” or “Board”), rather than through a secret ballot election held and closely monitored by the Board. Predictably, the proposed legislation would not allow employees seeking decertification of a union to use such card check procedures; employees who wished to oust a union would instead be required to vote in an election.
  • Second, EFCA would allow an arbitration panel to write the first labor contract between an employer and a union where the parties themselves cannot do so. In particular, if the parties had not reached agreement on their own within 90 days, either side could ask the Federal Mediation and Conciliation Service to mediate the contract and, if no contract was in effect 30 days later, an arbitration panel would step in and write the contract for the parties. Any such contract would remain in effect for two years.
  • Third, the bill would change the procedures and penalties for alleged violations arising out of union organizing campaigns. NLRB Regional Directors, acting at their own discretion, would be allowed to seek injunctive relief against employers for such alleged violations. The Board would be required to assess both back pay and double liquidated damages on employers who discharge employees during an organizing campaign. The Board would also have authority to assess a civil penalty of up to $20,000 per violation of Section 8(a)(1) or (3) of the Act that substantially interferes with the union organizational process during the period of organizing and, after certification or recognition of a union, until a first contract is signed.

Like its predecessor, EFCA requires that the Board certify a union once it finds that most of an employer’s employees in a unit appropriate for collective bargaining have signed valid authorization cards designating a particular union as their representative. In other words, if a union submitted cards to the Board signed by 50 percent plus one of the employees in an appropriate bargaining unit, the Board would be required to certify the union as the representative of all employees in that unit without holding any secret ballot election. The proposed legislation, like the prior bill, is silent on what sort of authorization cards would be valid, and directs the Board to develop language for such cards and procedures for determining their validity without setting any deadline for the Board to do so. The current House version of EFCA also does not indicate how traditional representation issues involving the scope and composition of bargaining units will be determined. Under current NLRB procedures, these issues are determined by means of a representation case hearing that results in a written decision by a Regional Director, which is subject to review by the NLRB.

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The Employee Free Choice Act: The Crown Jewel of Organized Labor's Legislative Agenda

In perhaps no U.S. presidential election in recent memory has the outcome been more important to a change in our basic labor law, the National Labor Relations Act (“NLRA” or “Act”). Predictions are that if Sen. Obama is elected President and the Democrats take control of Congress, the crown jewel in labor’s legislative agenda, the Employee Free Choice Act, which passed the House last year but fell short in the Senate,1 could become the law of the land.2

The Employee Free Choice Act (“EFCA”), as passed by the U.S. House of Representatives, has three major features that make sweeping changes in the current provisions of the NLRA. First, the Act will permit unions to obtain certification through a mandatory card check conducted by Regional Offices of the National Labor Relations Board (“NLRB” or “Board”). Second, EFCA will impose first contracts through interest arbitration where the parties are unable to agree on the terms of such agreements. Third, EFCA will amend certain provisions of the Act to permit NLRB Regional Directors, acting at their own discretion, to seek injunctive relief against employers for alleged violations arising out of union organizing campaigns. The Board will be required to assess both back pay and double liquidated damages on employers who discharge employees during an organizing campaign. In addition, the Board will have authority to assess a civil penalty of up to $20,000 per violation of Section 8(a)(1) or (3) of the Act that substantially interferes with the union organizational process during the period of organizing and, after certification or recognition of a union, until a first contract is entered into. Each of these changes and its significance is examined below.

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U.S. Supreme Court Strikes Down California's Union Neutrality Law

This post was written by John A. DiNome and Daniel J. Moore.

In a 7–2 decision, the U.S. Supreme Court held that California’s Assembly Bill 1889 (“AB 1889” or the “Act”) is preempted by the National Labor Relations Act (“NLRA”). Chamber of Commerce v. Brown, 554 U.S. ___ (2008). The decision represents a significant victory for employers and maintains the current federal policy favoring free debate between employers and employees on unionization. 

Background — On September 28, 2000, California enacted AB 1889, known as the union “neutrality law.” AB 1889 forbids private employers who receive either state grants or more than $10,000 in state funds during a calendar year from using such funds to “to assist, promote, or deter union organizing.” Although termed the “neutrality law,” AB 1889 benefited employees because few, if any, employers would dedicate funds to encourage its employees to unionize. AB 1889 requires employers to maintain strict accounting records demonstrating a complete separation of state funds. The penalties for violating AB 1889 are severe—employers found in violation of AB 1889 are subject to treble damages, attorneys’ fees, and costs. 

The U.S. Chamber of Commerce, along with a group of employers and business associations, filed a lawsuit challenging the Act. In 2002, a federal district court held that the Act was preempted by the NLRA and therefore unenforceable. The U.S. Court of Appeals for the Ninth Circuit struggled with the case. In two separate decisions, a three-judge panel affirmed the district court’s decision. However, in 2006, the full Ninth Circuit vacated the earlier panel decisions, and ruled that the Act was not preempted by the NLRA. Chamber of Commerce v. Lockyer, 463 F.3d 1076 (9th Cir. 2006) (en banc). 

The Decision — In reversing the Ninth Circuit, the Supreme Court relied on a doctrine known as Machinists preemption, which forbids states to regulate conduct that Congress intended to be unregulated and left to the free play of economic forces. The Court found that both the text and the history of the NLRA demonstrated a congressional policy “favoring uninhibited, robust, and wide-open debate in labor disputes.” The NLRA protects an employee’s right not only to unionize, but also to refuse to join a union, which implies an underlying right to receive information opposing unionization. Accordingly, AB 1889, which embodied California’s judgment that partisan employer speech necessarily interferes with an employee’s choice about whether to join a labor union, violated Congress’s policy in favor of free debate. 

Practical Impact — AB 1889, and similar statutes, threatened to seriously undermine the speech rights of employers related to union organizing campaigns. The potential costs of litigation, plus the threat of severe penalties gave employees tremendous leverage to halt employer campaigns in opposition to labor organizing activities. The Supreme Court’s decision preserves the federal policy in favor of free debate on unionization. It also maintains a consistent policy throughout the nation, thereby avoiding a patchwork approach to employer speech varying from state to state.

New Jersey Department of Labor and Workforce Development Publishes Millville Dallas Act Notification Form

This post was written by Sherri A. Affrunti and Meghan O. Offer.

The New Jersey Department of Labor and Workforce Development has now published the form mandated to be used by New Jersey employers to provide notice of mass layoffs or the transfer or termination of operations under the Millville Dallas Airmotive Plant Job Loss Notification Act (“Millville Dallas Act” or state “Baby WARN”). An interactive copy of the form is attached, along with the Department’s Summary of the Law.

Employers who have been in operation three years or longer and who have at least 100 or more full-time employees are required to use the form to provide a minimum of 60 days’ advance notice of plant closings or mass layoffs to: (a) all affected employees and their collective bargaining unit representatives (if any); (b) the Commissioner of Labor and Workforce Development; and (c) the chief elected official of the municipality where the business is located.

Employers must insert the following information into the form:

  • The number of employees whose employment will be terminated
  • The date(s) each employee termination will occur
  • The reasons for the mass layoff or transfer or termination of operations
  • A list of all available employment opportunities, including the pay, benefits, location, and other terms and conditions of such alternate employment
  • A summary of employee rights with respect to the payment of wages, severance, pension, and other benefits in connection with the termination, including rights based on an existing collective bargaining agreement or other existing employer policy

Employers who fail to timely provide notice face substantial penalties, including mandatory severance to each affected employee equal to one full week of pay for each full year of employment, in addition to the payment of other available severance benefits.

Use the following link for an interactive copy of the Millville Dallas Form.