Posted on September 8, 2011 by Joel S. Barras

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. 

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Posted on June 29, 2010 by

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.

Background

The Board, which decides cases involving union elections and unfair labor practices under the National Labor Relations Act (“Act”), has five members. The Act allows the Board to delegate any of its powers to three or more members, and provides that “three members of the Board, shall, at all times, constitute a quorum of the Board, except that two members shall constitute a quorum of any group” in the event of a delegation. The Act also says that a vacancy in the Board “shall not impair the right of the remaining members to exercise all the powers of the Board.”

In late 2007, the Board was down to four members, and the terms of two of those members were set to expire at year-end. In an effort to continue functioning, the Board delegated its powers to a three-member group, consisting of Members Liebman, Schaumber, and Kirsanow. Starting in January 2008, after Member Kirsanow’s term had expired, Members Liebman (a Democratic former union lawyer) and Schaumber (a Republican former management lawyer) continued to issue decisions on behalf of the Board, acting as a two-member quorum of that three-person group. With only two members, they issued decisions only where they agreed, and tabled controversial cases until the Board had at least one more member. The Board continued to operate that way for 27 months, issuing nearly 600 decisions during that time. At that point, President Obama made a recess appointment to the Board, and just this month, Congress approved two other members, bringing the Board back to its full five-member strength.
 

In New Process Steel, the two-member Board upheld a finding that the employer had committed unfair labor practices. The employer appealed to the U.S. Court of Appeals for the Seventh Circuit, arguing that a two-member Board had no authority to issue decisions. The court disagreed, holding that the two members who had decided the case constituted a valid quorum of a three-member group of the Board. The same day, however, the U.S. Court of Appeals for the D.C. Circuit reached the opposite conclusion in another case. Indeed, by the time the Supreme Court decided New Process Steel, the same issue had been raised in five cases before that Court and 69 cases before the Courts of Appeals.

The Court’s Decision

In a 5-4 decision, Justice Stevens, writing for the majority, held that two members could not act for the Board, even though the Board had delegated its authority to a three-person group. The Court held that the Act requires the Board’s powers to be vested in a group of at least three members at all times, noting that if Congress had meant to allow two members to act for the Board, it could have said so.

In dissent, Justice Kennedy argued that “[n]othing in the statute suggests that a delegation to a three-member group expires when one member’s seat becomes vacant,” seizing on the Act’s language that “[a] vacancy in the Board shall not impair the right of the remaining members to exercise all the powers of the Board.”

Impact of the Case

At the very least, the Court’s decision means that the Board must now issue new decisions in all 74 cases that were pending before the Supreme Court or federal courts of appeals in which the losing party challenged the authority of the Board to act with only two members. Because Members Liebman and Schaumber issued decisions only where they agreed, the Board, in the interest of stability, may resolve those cases by issuing new decisions that simply adopt the Board’s earlier reasoning. Still, with the Board now consisting of three Democrats and two Republicans, it is at least possible that the majority could use this as an opportunity to issue new opinions in some of those cases that favor labor over management.

Even more uncertain is what will happen to the 500 or so cases in which neither party challenged a ruling by the Board based on it having been decided by only two members, including many in which the parties have moved forward by treating the Board’s decision – now invalidated – as controlling. It is not clear whether the Board can or will issue a ruling adopting the two-member panel’s reasoning in some or all of those cases, or how it will treat a losing party in such a case that now seeks “another bite at the apple” in the hopes of reversing an unfavorable outcome. With an “Obama Board” in place that is expected to issue rulings that are less favorable to employers, unions that lost those cases may be particularly motivated to seek such reversals. Still, it seems reasonable to expect that the Board will be reluctant to engage in a wholesale reversal of those earlier decisions – not only because they were, by definition, not controversial, but also because parties have relied on the Board’s earlier decisions.

Finally, employers should keep in mind that the two-member Board could not and did not decide cases on which its members expected to disagree, creating an even larger backlog awaiting action by the full Board. With the Board now consisting of a Democratic, pro-union majority, it seems safe to say that most of those delayed decisions are likely to come down in favor of labor.
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Posted on June 8, 2010 by James A. Burns, Jr.

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.

Employee Rights’ Notice

Federal contractors subject to the Order must post an “Employee Rights Notice,” which informs employees about their right to form, join, assist or support unions and bargain collectively with their employer; lists several examples of conduct by employers and unions that violates employees’ rights; and tells employees how to contact the NLRB to ask questions or file charges. Copies of the Notice are available for download at the DOL’s website. Employers must post the Notice exactly as issued by the DOL, meaning that it cannot be altered in size, color, or content. If a significant portion of a contractor’s workforce is not proficient in English, the contractor must provide the notice in the other language(s) that the employees speak. Translations of the Notice may be requested from the Division of Interpretations and Standards of DOL’s Office of Labor-Management Standards (OLMS).

Posting the Notice

The Notice must be posted conspicuously in the contractor’s or subcontractor’s facilities so it can be easily seen by employees. Indeed, the DOL’s rules require a copy of the Notice to be posted at each location where the employer posts other required employee notices, and at each part of the facility where any employee covered by the NLRA performs work related to the contract or subcontract, presumably meaning each office, production floor, warehouse, and so on. In addition, if a contractor or subcontractor customarily posts notices to its employees electronically, then the Notice must be posted electronically as well. The electronic posting requirement can be met by displaying the Notice prominently on the employer’s website or intranet (using the heading “Important Notice about Employee Rights to Organize and Bargain Collectively with Employers”), or by posting a link to the DOL’s website containing the full text of the Notice.

Employee Notice Clause

The DOL rule sets out four paragraphs that must be included in all non-exempt government contracts, subcontracts, and purchase orders entered into on or after June 21, 2010, although it may be cited by referring to 29 CFR Part 471, Appendix A to Subpart A.

Complaints, Enforcement and Penalties

Any employee of a covered contractor or subcontractor may file a complaint with the OLMS or DOL’s Office of Federal Contract Compliance Programs (OFCCP) that his or her employer has failed to post the Notice or failed to include the required notice clause in subcontracts or purchase orders. As might be expected, an employer is prohibited from retaliating against any employee for filing such a complaint.

Separately, the OFCCP may conduct compliance reviews to determine whether a contractor or subcontractor holding a covered contract is complying with Executive Order 13496 and the DOL rules. All federal contractor and subcontractors, therefore, should expect that any OFCCP compliance review will include such an evaluation, just as they now review compliance with affirmative action and Form I-9 rules.

Penalties for violating the Executive Order may include cancellation, suspension or termination of the contract or subcontract, or debarment of the employer from future federal contracts or subcontracts, at least until it has demonstrated full compliance with the Order and rule. Finally, employers should keep in mind that any substantive violations of the provisions of the Notice may amount to a violation of the NLRA, with its accompanying remedies.
 
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Posted on January 8, 2010 by James A. Burns, Jr.

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.

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Posted on August 6, 2009 by James A. Burns, Jr.

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.

DOL’s Proposed Rule

The DOL’s proposed rule outlines what the required notice must say, which contractors and subcontractors are covered, and the range of penalties that may be imposed on employers who fail to comply.

Proposed notice

Instead of merely quoting Sections 7 and 8 of the NLRA, which describe employees’ rights and unlawful employer and union conduct, the DOL’s proposed notice goes into some detail, “derived from [Board] or court decisions,” as to what those rights mean and what sort of activities are prohibited. For instance, in addition to telling employees that they may form, join or assist unions and bargain collectively for a contract with their employer, the notice informs employees that they have the right to “[d]iscuss your terms and conditions of employment with your co-workers or a union, join other workers in raising work-related complaints with your employer, government agencies, or members of the public… [and] take action with one or more co-workers to improve your working conditions, including attending rallies on non-work time, and leafleting on non-work time in non-work areas.” After briefly noting that employees also have the right to refrain from these activities, the proposed notice provides several specific examples of prohibited employer conduct, and only a brief general description of what unions cannot do, devoting about four times as much space to the former as the latter.

The proposed notice also tells employees that “[i]llegal conduct will not be permitted,” that the Board will “prosecute” those who violate the NLRA, and that employees have only six months to file a complaint. To facilitate that process, the proposed notice directs employees to the Board’s website address and toll-free phone number.

Who must post the notice

Broadly interpreting the Order, the DOL’s proposed rule would require the notice to be posted not only by federal contractors and first-tier subcontractors, but also by every subcontractor below that first tier. Although the Order exempts contracts below $100,000, because the DOL does not say that limit applies to subcontracts, it has proposed that all subcontracts be covered regardless of size, so long as they are “necessary to the performance of the prime contract.” Becoming a subcontractor to a government contractor or subcontractor, therefore, even for a small amount, will require posting the notice if the subcontract is viewed as “necessary” to the performance of the main federal contract.

Where and how the notice must be posted

The Order itself requires posting the notice “in conspicuous places in and about [the] plants and offices where employees covered by the [NLRA] engage in activities relating to the performance of the contract.” The DOL will supply copies of the required poster free of charge and make it available on its website. The proposed regulation says that if a contractor or subcontractor normally posts employee notices electronically, it must do the same with this notice by posting it on the employer’s intranet or external website, including a link to the Board’s website.

Enforcement

The proposed rule would allow employees to file complaints that an employer has failed to post the notice or include the required clause in its contracts with the DOL’s Office of Labor-Management Standards or its Office of Federal Contract Compliance Programs. If the DOL finds a violation, penalties can include cancellation, suspension, or termination of the contract or subcontract, or debarment of the employer from future federal contracts or subcontracts until it has complied with the Order.

How to Comment on the Proposed Rule

The DOL has invited comments on all parts of the proposed regulation, including the proposed notice and coverage of subcontractors. Comments may be sent to Denise M. Boucher, Director of the Office of Policy, Reports and Disclosure, Office of Labor-Management Standards, U.S. Department of Labor, 200 Constitution Avenue, N.W., Room N-5609, Washington, DC 20210, or electronically through the Federal eRulemaking Portal at www.regulations.gov. All comments must contain the identification number 1215-AB70, and be received by Sept. 2, 2009.
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Posted on May 6, 2009 by David L. Weissman

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.

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