Category Archives: National Labor Relations Board

Before You Acquire That Business, Understand the NLRB’s Successor Bar Doctrine

Contributed by Beverly Alfon, April 24, 2017

handshake over contract

Two business people shaking hands over a contract

When a change of ownership occurs for a business that employs individuals who are represented by an incumbent union, the new owner must be aware of the National Labor Relations Board’s (NLRB) successor bar doctrine.  It used to be that following a sale or a merger of a business, there was a window of time during which employees, the new employer, or a rival union, could challenge a union’s majority status as representative of those employees. However, in 2011, the NLRB modified the doctrine in UGL-UNICCO Service Co., 357 NLRB No. 76 (Aug. 26, 2011), holding that for stability, the new relationship between the successor employer and incumbent union should be insulated from challenges for a reasonable period of time (6 months if the new employer adopts the previous terms and conditions; 6-12 months if the new employer sets new terms and conditions).

A few weeks ago, a federal appellate court in NLRB v. Lily Transportation Corp. (1st Cir. March 31, 2017), affirmed the revised successor bar doctrine, holding that the NLRB had a sound basis to implement it. The court also held that the NLRB properly applied that revised successor bar doctrine in finding that Lily Transportation unlawfully refused to bargain with a union that represented a group of truck drivers at a newly acquired facility.

Lily argued to the board that less than a month after it took over operations, it received signed statements from a majority of drivers indicating that they no longer wanted to be represented by the union. Lily argued that the successor bar would force a union upon the employees who had clearly rejected it. The NLRB rejected the argument and required Lily to negotiate with the union.

On appeal, Lily challenged the validity of the successor bar doctrine itself. It argued that the NLRB should be required to provide reasoned explanation for the change in precedent. The court rejected the arguments, reasoning:

The greater the number of successor situations with unionized employees, the greater the potential volatility in union-management relationships across the national labor market. The greater the level of that instability, the greater the likelihood of precipitate disruption in litigation challenging union support during the unsettled period with the new employer.

Bottom line: NLRB activism or not, the modified successor bar doctrine has survived the scrutiny of a federal appellate court. Employers must carefully evaluate all potential labor and employment issues prior to the acquisition of any business.

NLRB Decision Reminds Employers to Tread Cautiously Amidst Union Push

Contributed by Suzanne Newcomb, April 20, 2017

On April 13, 2017 the National Labor Relations Board (NLRB) set aside a vote defeating a union organizing campaign and ordered a new election because the workforce could have perceived management’s statements as impermissible promises to provide benefits if they voted down the union (see full decision here).

44905665 - hand put voting paper in ballot box. voting flat conceptDuring a unionizing campaign, management held a meeting in which it advised employees that another facility’s employees received a 12% pay raise the pay period after they rejected union representation. Management explained that the raises were the result of a survey of wages in that geographical area and stated that the company was in the early stages of conducting a similar survey in their area. All of these statements were true.

Management then opined that if the union won the election, any pay raise could take “a whole lot longer” – perhaps 6 months, a year, 18 months, and that there was a “really big chance” that they might not get the raise at all or could end up losing money. Finally, management added that although they were not promising anything, they planned to follow the same process and therefore, a “reasonable man” could expect a 12% increase.

A PowerPoint presentation shown during the meeting stated that the company was not making promises, the wage survey would continue regardless of the election outcome, the collective-bargaining process could result in wages going up or down or remaining the same, and included a hypothetical in which the union won the election and employees received a 12% raise.

The NLRB concluded that despite repeatedly stating that they were not making any promises, management implied that employees would receive a benefit if they defeated the union. Quoting a 1978 decision, the NLRB stated: “it is immaterial that an employer professes that he cannot make any promises, if in fact he expressly or impliedly indicates that specific benefits will be granted.

All employers are prohibited from interfering with, restraining, or coercing employees regarding their right to join a union. Prohibited conduct includes:

  • Providing or promising (expressly or implicitly) to provide benefits in an effort to thwart the unionization effort;
  • Withholding benefits that would have been provided absent the unionization campaign;
  • Taking or threatening adverse action for union involvement or sympathies;
  • Questioning employees about their union loyalties or that of their co-workers; and
  • Spying on union activities.

This list is not exhaustive. If you suspect an organizing campaign, exercise extreme caution and seek expert advice immediately.

NLRB Finds Violation for Independent Contractor Misclassification

Contributed by Noah A. Frank, September 22, 2016

The National Labor Relations Board (NLRB) enforces the National Labor Relations Act, the law that allows private sector employees to address the terms and conditions of their employment (e.g., wages, hours, benefits) through collective action. Through a recently released Advice Memorandum, the NLRB expanded its role to include regulating independent contractor relationships.  Pac. 9 Transp., Inc., Advice Mem., No. 21-CA-150875 (NLRB 12/18/2015, released 8/26/2016).

independent-contractorIn Pac 9, multiple unfair labor practice charges were filed, alleging violations of the Act as it related to the company’s relationship with its independent contractor drivers. The NLRB Regional Director sought an opinion from the NLRB General Counsel as to whether the NLRB had jurisdiction and whether a complaint should issue. Recognizing that the NLRB “has never held that an employer’s misclassification of statutory employees as independent contractors in itself violates” the Act’s protection of an employee’s rights, the General Counsel nonetheless recommended that, absent a settlement agreement, the company should be ordered to:

  • cease and desist telling workers that they are independent contractors (rather than employees), and
  • rescind portions of its independent contractor agreements that purport to classify the workers as “independent contractors.”

The General Counsel confirmed that the traditional common law independent contractor test would apply. While no factor is determinative, control was the most important. Other factors include: a distinct occupation or business, direction of work, skill required, providing supplies & equipment, length of the relationship, method of payment, the company’s and worker’s regular businesses, the parties’ belief as to whether they were employee/employer or independent. The General Counsel found it significant that the workers lacked: entrepreneurial opportunity, realistic ability to work for others, ownership or proprietary interest in their work, control over important business decisions, and real investment of capital. Therefore, these factors militated towards an employment relationship.

The Bottom Line:

In a year of NLRB-activism in the non-union workforces (e.g., see our posts on employee handbooks), companies using independent contractors to supplement their workforce must now worry that the NLRB will come after them for a misclassification issue. This is in addition to complying with regulations and tests from the IRS, U.S. and state Departments of Labor, unemployment and worker’s compensation boards, and other agencies regulating the employment relationship. Pac 9 demonstrates that while independent contractor agreements are not the last word in defining the relationship.

Care must be used when engaging individual workers as “independent contractors.” Multiple governmental agencies’ independent contractor tests must be analyzed to confirm that the relationship is both structured and implemented correctly. This includes written contracts, proof of insurance policies, and following good corporate practices. Experienced employment counsel can assist with forming the relationship and ensuring compliance for best practices.

NLRB Rules that Graduate Assistants at Private Universities May Unionize

Contributed by Julie Proscia, August 23, 2016

Today, August 23, 2016, the National Labor Relations Board issued a 3-1 decision ruling that graduate students, who work as teaching and research assistants at private universities, are entitled to collectively bargain.

The NLRB did so by expanding its interpretation of the definition of statutory employees to include student assistants working at private colleges and universities. The decision reversed a 2004 decision involving a similar campaign at Brown University. While many graduate students at public universities are already unionized, their right to do so was covered by various state laws and not federal law.

classroomThe controversy in question involved a bid by the United Auto Workers to organize graduate students at Columbia University. The University argued that collective bargaining would intrude on the educational relationship between graduate students and their universities. While this argument was successful in the past it did not sway the current Board. Rather the Board countered that the argument “is unsupported by legal authority, by empirical evidence or by the board’s actual experience.” Moreover, the Board noted that the Act contained no clear language prohibiting student assistants from its coverage and further found no compelling reason to exclude student assistants from its protections.

Although it is not clear whether or not the expansion will adversely impact the educational experience it is clear that the NLRB is progressively gaining ground in their goal to expand labor rights one step, or in this case, student at a time.

The NLRB’s Latest Target? Dress Codes and Already Rescinded Policies

Contributed by Suzanne Newcomb, July 13, 2016

The Federal Court of Appeals for the First Circuit recently upheld a National Labor Relations Board decision finding a car dealership’s dress code ban on “pins, insignias, and message clothing” was, in and of itself, an unfair labor practice. The case is another in a long line of NLRB decisions striking down policies as unfair labor practices because, the board claims, employees might interpret them as infringing upon their right to unionize or engage in other concerted activity protected by Section 7 of the National Labor Relations Act.

The board concluded the dealership’s interest in maintaining its public image did not justify the outright ban. Adding insult to injury, the Board found a second violation for the dealership’s failure to properly repudiate overly restrictive policies contained in an earlier version of its handbook.

Employee handbookThe NLRB had earlier challenged several provisions in the dealership’s handbook. The dealership worked closely with the NLRB to draft new NLRA-compliant policies and issued a whole new handbook. In fact, the NLRB’s own General Counsel stipulated that, with the exception of the dress code policy, the new handbook was NLRA-compliant. So, even though the employer rescinded the offending policies and replaced them with policies the NLRB explicitly approved, the employer was still found to have engaged in an unfair labor practice because it had previously maintained policies the Board viewed as overly restrictive and the employer did not properly repudiate those policies.

The Board ordered the employer to issue a notice that specifically addressed the policies it found to be unlawful, advised employees of their Section 7 rights, and assured employees there would be no future interference with those rights. The Federal Appeals Court upheld the Board’s ruling, concluding that to be relieved of liability for unlawfully restrictive policies, even policies that have since been discontinued or appropriately revised, an employer must “signal unambiguously to employees that it recognizes it has acted wrongfully, that it respects their Section 7 rights, and that it will not interfere with those rights again.”

Notably, no employees were alleged to have actually suffered discipline or any other adverse action under the ban. The policies alone formed the basis for finding the employer liable for two distinct unfair labor practices.

In light of the NLRB’s aggressive approach, employers are again reminded to review handbooks and employment policies regularly. Anything the Board believes employees could reasonably interpret as improperly constraining Section 7 activity could form the basis for an unfair labor charge. If any of your policies are questionable, consult legal counsel to determine how best to revise those policies to bring them into compliance and, if necessary, to devise a strategy to effectively repudiate any policies that run afoul of the Board’s broad interpretation of Section 7 rights.

NLRB Rules Temp Workers and Regular Employees May Be Organized In Single Bargaining Unit Without Employers’ Consent

Contributed by Julie Proscia, July 11, 2016

In a 3-1 decision the National Labor Relations Board made it easier to organize a company with a contingent workforce. Today’s Board decision returned to the rule established in M.B. Sturgis, Inc., 331 NLRB 1298 (2000) (“Sturgis”), reversing Oakwood Care Center, 343 NLRB 659 (2004) (“Oakwood”) thereby holding that employer consent is not necessary for units that combine jointly employed and solely employed employees of a single user employer.

So what does this mean?

Under the newly resurrected Sturgis standard temporary employees can once again be included in a single bargaining unit, with regular employees, if:

(1) The staffing agency and the employer are determined to be joint employers, and

(2) the temporary employees shared a community of interest (e.g., similar working conditions, similar skills, functions, wage and benefit packages, and common supervision) with the company’s regular employees.

Under the Sturgis standard there is no requirement of a finding of joint employment for all employees in the bargaining unit. Rather under the Sturgis standard unions are allowed to organize both joint-employer and single-employer employees into a single bargaining unit when at least some of the impacted employees were jointly employed.

This newly resurrected rule is a departure from the NLRB standard that allowed a union to organize only if both the employer and the staffing agency consent. The resurgence of the Sturgis standard is part of a trend at the NLRB to expand the “joint employer” doctrine and increase the organization of separate businesses that are interrelated.

Employers should take care in their selection of staffing companies and be cognizant that a contingent workforce does not necessarily mean a union free workforce.

Blunted by the Board: NLRB Weakens Employer’s Right to Permanently Replace Strikers

Contributed by Beverly Alfon, June 30, 2016

11058927 - protesters crowd landscape background illustrationFor more than 75 years, employers have had broad access to a powerful weapon to counterbalance a union’s ability to engage in an economic strike: the right to permanently replace those economic strikers. On May 31, however, the National Labor Relations Board (NLRB) replaced that powerful weapon with a water gun. In a 2-1 decision, the NLRB held that despite the economic nature of a strike, an employer violated the National Labor Relations Act (NLRA) by permanently replacing strikers because the employer was motivated by “a purpose prohibited by the Act.” American Baptist Homes of the West, 364 NLRB No. 13 (May 31, 2016). This ruling effectively overruled long-standing NLRB case law which stood for the principle that employer motive to permanently replace strikers is irrelevant in the context of an economic strike.

In this case, the union and employer were engaged in contract negotiations for 4 months before the union issued a notice of intermittent strike (5 days). Picket signs confirmed that the union was striking over economics:  health care and pension. After day one of the strike, the employer exercised its right to permanently replace a majority of the economic strikers. In finding that the employer violated the Act, the NLRB focused on the following facts:

  • The individual who made the decision to hire the permanent replacements admitted that she was motivated by her desire to avoid another strike at the facility. She “assumed that because these people [temporary workers who the Company extended the permanent job offers to] were willing to work during this strike, they’d be willing to work during the next strike.”
  • When the union’s attorney asked the employer’s attorney for an explanation for the permanent replacements, he replied that the employer “wanted to teach the strikers and the Union a lesson.”

If this Board decision is upheld by the Courts, it will likely result in a marked shift of power at the bargaining table that will empower unions to use the leverage of a strike (including intermittent strikes) with less risk to its members, while weakening the employer’s ability to use the leverage of permanent replacements. As described by the dissenting NLRB member, this decision is “a substantial rearrangement of the competing interests balanced by Congress when it chose to protect various economic weapons, including the hiring of permanent replacements.”

Bottom line:  Since March 2016, NLRB charges involving allegations of unlawful motive in the permanent replacement of economic strikers have been subject to heightened scrutiny. NLRB regional offices are required to send these cases up to the NLRB’s Division of Advice in Washington, D.C. for “centralized consideration.” Accordingly, any employer who may consider permanent replacement of economic strikers should consult with counsel to ensure there are legitimate business reasons to defend the decision to permanently replace strikers.