Category Archives: National Labor Relations Board

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.

Chipotle Decision Reminds Employers Once Again That Strict Social Media Policies Are Unlikely To Survive NLRB Scrutiny

Contributed by Steven Jados

A recent decision from a NLRB Administrative Law Judge (“ALJ”) serves as yet another reminder that most private sector employers must allow employees some leeway to make work-related complaints, especially on social media. The employer in the case, Chipotle Services LLC, operates Chipotle restaurants nationwide. As readers likely are aware, Chipotle has received a great deal of negative press in recent months, but this recent decision was unrelated to food safety or illness issues.

Instead, this case arose after Chipotle management confronted an employee who used the social networking application, Twitter, to complain of low wages and being required to work on days when heavy snow fell and public transportation was not operating.  The employee also tweeted that Chipotle, unlike its competitor, Qdoba, charged customers for guacamole.

Social MediaManagement met with the tweeting employee, handed him a copy of the company’s social media policy, and asked him to delete his tweets about Chipotle because they violated the policy.  Further showing that Chipotle cannot catch a break, the policy document that management gave the employee was not even Chipotle’s current social media policy—but that did not matter to the NLRB because Chipotle relied on the outdated policy when it asked the employee to delete his tweets.

Two particular provisions in the social media policy drew the NLRB’s ire. Those provisions prohibited:  (1) spreading “incomplete, confidential, or inaccurate information;” and (2) “making disparaging, false, misleading or discriminatory statements about or relating to Chipotle . . . .”

The ALJ concluded that prohibiting false, misleading, incomplete, or inaccurate statements was improper as prior NLRB decisions required more than a false statement for an employee to lose the protection of the National Labor Relations Act (“NLRA”).  Under existing precedent, in order to lose the protection of the NLRA, inaccurate statements must be combined with a malicious motive.

The ALJ also was troubled by the prohibition on disclosing confidential information, because the term “confidential” was not defined in the policy and, therefore (according to the ALJ) could have been broadly construed by employees to include NLRA-protected activity.  Prior NLRB decisions have struck down overly broad confidentiality provisions that could be construed to bar employees from discussing, for instance, their wage rates.  Similarly, the ALJ determined that the prohibition on “disparaging” statements was also too vague, and thus could be interpreted to bar protected activity.  Again, as NLRB precedent has shown, insulting one’s employer and supervisor often can be protected by the NLRA.

Bearing all of this in mind, it is critical that employers realize that employees do have certain rights to bite the hand that feeds them—and that efforts to enforce overly strict limitations on employee comments have the possibility to create more harm than the original comments ever could have.  In this regard, employers must also recognize that the NLRA covers most private sector employers with multiple employees, regardless of whether the employer’s employees are union members.  As such, employers must be mindful of the rights that exists under the NLRA, and should consult with experienced legal counsel when implementing and enforcing employee social media policies.

Yep, That Non-Union Employee’s Attitude Is Likely Protected

Contributed by Beverly Alfon

Sure, you’ve heard that non-union employees are protected by the National Labor Relations Act (NLRA), too. But do you realize just how quickly the protections of the Act can come into play?  If your front line managers are not properly trained, an employee’s attitude could quite literally turn a situation into a federal case.

14815491_sA federal appeals court recently affirmed the decision of the NLRB against an employer in a case where a non-union employee engaged in conduct that most employers would consider as straight up insubordination, Staffing Network Holdings, LLC v. NLRB, 2016 BL 62551, 7th Cir. No. 15-1534, 3/2/16. This case involved a staffing agency that provided its own employees, including an onsite supervisor, to stock its products. The supervisor had only been working for the company a few months, when a new employee told him that he would not work faster for $8.25 an hour. The supervisor directed the employee to go home because of his attitude and inability to keep up with work. This angered other employees, including Griselda Barrera, who briefly stopped working to tell the supervisor that sending the employee home was unfair. The supervisor told them to get back to work or he could also send them home for their attitude. Barrera refused to go back to work.

The supervisor angrily and repeatedly asked Barrera if everything was fine and told her again he could send her home if she had an issue. Barrera asked the supervisor if he was threatening her. Barrera countered by stating that she could send a letter to the IL Department of Human Rights. The supervisor told her to go home. Barrera refused to leave, insisting that she did nothing wrong. Then the supervisor’s assistant told Barrera to go home and not return to work.

Barrera filed an unfair labor practice charge with the regional NLRB office. The regional director issued a complaint against the employer alleging that it violated the Act by threatening to discharge employees for engaging in protected, concerted activity and by discharging Barrera. The administrative law judge (ALJ) rejected the employer’s assertions of insubordination and awarded back pay and reinstatement to Barrera. The Board affirmed the ALJ findings. The federal appeals court also upheld the decision, noting that “a brief on-the-job work stoppage is a form of economic pressure entitled to protection under the Act.”

Bottom line: Train your front line managers so that they are prepared and react correctly in these situations. A manager’s own behavior (e.g., threatening discharge for the employee’s bad attitude) can provoke an employee into protected activity, even if it appears to be insubordination. This does not mean that “anything goes” for an employee who is protesting a work term or condition, but an employee’s disrespect, rudeness or defiance toward a supervisor in that context will likely be protected under the NLRA.



The DOL Issues An Administrator’s Interpretation On Joint Employment Under The FLSA And MSPA

Contributed by Julie Proscia

The Department of Labor’s Wage & Hour Division (“WHD”) issued an Administrator’s Interpretation today that establishes new standards for determining joint employment under the Migrant and Seasonal Agricultural Worker Protection Act (“MSPA”) and the Fair Labor Standards Act (“FLSA”). The issue of joint employment and who is the employer, for purposes of liability, is one that has become increasingly more contested and is part of the DOL’s crackdown on issues ranging from independent contractor status to the proposed rules regarding exempt/non-exempt status.

Labor LawA finding of joint employment has significant ramifications on a number of areas of policy and procedure, none more so than to wage and hour practices. The purpose of the Administrator’s Interpretation is to expand the statutory coverage of the FLSA to small businesses and collect back wages from larger businesses. As such, the Administrator’s Interpretation states that “the concept of joint employment, like employment generally, should be defined expansively under the FLSA and MSPA.” While the Administrator’s Interpretation is impactful on all industries, it specifically identifies the construction (workers who work for a sub-contractor and possibly a general contractor), staffing, agricultural, janitorial, warehouse and logistics, and hospitality industries.

So what is joint employment and when is it found? Joint employment exists when an employee is employed by two (or more) employers such that the employers are responsible, both individually and jointly, for compliance with a statute.

While this definition is not new, the DOL interpretation presents two specific categories or routes for joint employment — vertical and horizontal. A vertical joint employment relationship focuses on the employee’s relationship with the employer and another intermediary entity, while the horizontal joint employment is defined as a relationship between or amongst two or more employers that “are sufficiently associated or related with respect to the employee such that they jointly employ the employee.”

Vertical Joint Employment

The most striking announcement occurred in the Vertical Joint Employment arena where the Administrator’s Interpretation adopted the “economic realities” test in lieu of the current evaluation. The crux of the economic realities test is an examination as to who the employee is economically dependent on. There is no hard line rule as to this test but rather multiple factors that can be examined. The MSPA regulations have seven economic reality factors that are examined in this determination. These factors include:

1. Directing, Controlling, or Supervising the Work Performed

Who exercises the direction, control and or supervision of the employee, whether directly or indirectly?

2. Controlling Employment Conditions

Who controls the employees terms and conditions of employment? This factor looks at which entity or entities have the ability to do such things as set wages, discipline, hire or fire the employee.

3. Permanency and Duration of Relationship

How long has the employee worked at the entity? Again, although there is no bright line date for the formation of joint employment a longstanding or permanent, full-time relationship suggests economic dependence.

4. Repetitive and Rote Nature of Work

What is the nature of the work? Positions that are viewed as repetitive and require little or no training are more likely to tip in the favor of economically dependent.

5. Integral to Business

How important is the work to the business? Conversely, if the employee’s work is deemed an integral part of the employer’s business then the employee may be deemed economically dependent on the potential joint employer.

6. Work Performed on Premises

Where is the work performed? Work performed on the potential joint employer’s premises is more likely to be viewed as employment that is economically dependent.

7. Performing Administrative Functions Commonly Performed by Employers

Are the functions administrative or creative? Administrative functions like processing payroll, workers’ compensation insurance or facilities and transportation are areas that are potentially viewed as dependent and thus could be deemed as joint employment.

As in all factor tests, there is a balance and just because the employee meets one factor does not necessarily mean a finding of economic dependence, and thus joint employment, under the vertical analysis. Rather, the factors will need to be examined as a whole.

Horizontal Joint Employment

The horizontal joint employment analysis did not substantially change, rather the DOL will continue to utilize the current joint employment regulations and examine the following non-inclusive factors:

  • who owns the potential joint employers (i.e., does one employer own part or all of the other or do they have any common owners)?
  • do the potential joint employers have any overlapping officers, directors, executives, or managers?
  • do the potential joint employers share control over operations (e.g., hiring, firing, payroll, advertising, overhead costs)?
  • are the potential joint employers’ operations inter-mingled? (for example, is there one administrative operation for each employer, or does the same person schedule and pay the employees regardless of which employer they work for?)
  • does one potential joint employer supervise the work of the other?
  • do the potential joint employers share supervisory authority for the employee?
  • do the potential joint employers treat the employees as a pool of employees available to both of them?
  • do the potential joint employers share clients or customers?
  • are there any agreements between the potential joint employers?

The announcement of the Administrative Interpretation is a continuation of the administration’s expansion of the joint employer definition. This expansion is not exclusive to the DOL and was most notably seen in the 2015 Browning-Ferris decision, where The National Labor Relations Board, through its General Counsel, filed multiple lawsuits against a franchisor for alleged unfair labor practices committed by its franchisees, and by doing so took the broadest possible interpretation of joint employment.

Whether or not joint employment exists is an issue that is fact and position intensive, and one that is not diminishing in the near future. Employers should work with counsel to assess their relationships, employees, and contracts to ascertain potential areas of weakness and diminish liability. It is never a good thing to be on the hook for someone else’s misdeeds.


NLRB Strikes Down Employee Handbook’s No-Recording Rules

Contributed by Steven Jados

The NLRB has, once again, struck down work rules the Board deemed overly broad. This time, the employer is Whole Foods Market, and the rules at issue essentially barred employees from photographing or making audio or video recordings during working hours—that is, when employees were being paid to do their assigned work. These rules did not apply while employees were on break.

Readers may remember that the NLRB’s rationale for striking down various employer policies in recent years has hinged on protecting employees’ rights under the National Labor Relations Act to engage in “concerted activity for mutual aid or protection.”  For example, the NLRB has struck down rules barring employees from discussing their wages because those discussions, in the NLRB’s eyes, are concerted activity protected by law.

Now, no employee was actually disciplined for violating the rules at issue in this most-recent case—and there is no accusation that the rules actually infringed on any employee’s right to engage in concerted activity for mutual aid or protection.  There also was no evidence that any employee even believed that the rules prohibited protected concerted activity.  Nevertheless, the NLRB felt it necessary to ban these rules based on the possibility that employees might believe the rules prohibited the recording of, for instance, picketing or unsafe working conditions—things that may generally be considered protected concerted activity.

No CameraOne of the more interesting aspects of the decision, aside from the fact that no one was harmed by the rules at issue, is that the NLRB dodged the issue of whether the rules would be enforceable in states in which at least some of the prohibited recording is illegal under state law. Whole Foods argued that in some of the states in which it does business, it is illegal to record a private conversation without the consent of the parties involved in the conversation. The NLRB, apparently having no interest in issuing a decision with any nuance, rejected that argument (with no acknowledgement of the irony) because such laws were not in effect in all of the states in which Whole Foods operated.

Also interesting is the fact that the NLRB did not overrule prior precedent in which no-camera rules were upheld in a hospital setting.  The rationale for that prior precedent was essentially that the privacy of hospital patients and their medical information outweighed potential concerns over employees’ protected concerted activity.

With all of that in mind, it is likely that some no-recording rules could survive NLRB scrutiny.  The key to drafting enforceable rules will be making them apply to a narrow set of circumstances—circumstances that, ideally, are already protected by existing laws on consent for recording, or which can be tied to significant privacy interests, like medical patient privacy or, perhaps, the protection of trade secrets—although the NLRB’s decision is unclear as to whether the protection of trade secrets would be a valid basis for a no-recording rule.

The bottom line is that employers implementing broad no-recording policies that could be misconstrued to cover protected employee activity face a considerable risk that those rules will be deemed unenforceable by the NLRB.  As such, we recommend that employers work closely with experienced legal counsel to craft no-recording rules that closely align with operational needs and other applicable laws, and at the same time make clear that the rules will not infringe on employees’ rights under the National Labor Relations Act.

Finally, we note in closing that Whole Foods appealed this decision to the U.S. Court of Appeals for the Second Circuit on January 5, 2016.  We will monitor that action closely, and provide updates here with any further information as it becomes available.

No Joint Employer Liability Found, Despite New NLRB Standard

Contributed by Beverly Alfon

A couple of months ago, we discussed the National Labor Relations Board’s (NLRB) startling decision in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015), in which it determined that a non-union company shared joint employer liability, under the National Labor Relations Act (NLRA), with a labor contractor at one of its recycling plants. The Board held that two or more entities are joint employers if each one possesses sufficient control over employee’s essential terms and conditions of employment. Employers were in an uproar over the decision because of the potential exposure it brings to the use of any subcontractor and the fact that it makes it more difficult for an employer to avoid union organization through the subcontracting of work.

In the first reported decision since Browning-Ferris, the Regional Director for NLRB Region 5 found that in Green JobWorks, LLC/ACECO, LLC, Case No. 05-RC-154596 (Oct. 21, 2015), the union failed to establish a joint employer relationship between a subcontractor and a staffing agency. So, what made the difference in this case? See the chart below. (Click here if chart does not appear) 

BAChart (2)

BOTTOM LINE:  Unlike the Browning-Ferris decision, the Regional Director’s decision in Green JobWorks, LLC is not binding in other cases and the union has a right to appeal it (and we’ll keep you posted). Nonetheless, the decision confirms that the specific terms of the parties’ agreement and their conduct under those terms will be scrutinized.  As we suggested before, now is the time to take action:

  • Analyze all written agreements between your organization and any third party. A user company’s reservation of rights as to contracted employees should be limited and specific. The agreement should clearly indicate that the servicing company maintains exclusive authority to hire, fire, discipline, etc. and the user company reserves no/minimal rights to influence or decide these matters.
  • Carefully evaluate supervisory functions and oversight in practice, training requirements and other day-to-day activities surrounding employee relations (of your own direct employees and 3rd party employees). Consider requiring on-site “lead workers” from the servicing company so that they are responsible for tracking contracted employee hours, determining breaks and removing poor performers. 
  • Determine whether your current business model needs to be tweaked or modified in light of these developments.

Hospital’s Second Bite at the Apple Violated Unionized Employees’ Rights for Open Positions Between Facilities

Contributed by Heather Bailey

Last week, the National Labor Relations Board (“NLRB”) – although divided – affirmed that Southcoast Hospitals Group violated unionized workers’ rights under Section 8(a)(3) and (1) of the National Labor Relations Act when the hospital created an open position hiring and transfer policy that gave unrepresented workers preference over unionized employees at the non-unionized hospitals.

Southcoast, located in Massachusetts, was comprised of 3 hospitals and 20 ancillary locations. The unionized employees made up 215 of the 550 employees who worked at one of the three hospitals, Tobey. The employees, unionized or not, were allowed to cross-pollinate between the three hospitals for open positions.  Since 1996, the parties’ collective bargaining agreement gave unionized employees the leg up when it came to hiring and transferring to open positions at Tobey and were to be given the “most senior qualified” preference for these positions. Somewhere around 1997-98, the hospital tried to negotiate and change this language to the “best qualified” which would have put the unrepresented employees at the same advantage as the unionized workers. This, of course, was rejected by the Union.

In 1999, the hospital decided to unilaterally change its written human resources policy to the following:

  • Upon application, regular status employees who are beyond the introductionary [sic] period will be given first consideration for job postings providing the regular status employee’s qualifications substantially equal the qualifications of external candidates. Employees in a union will be considered internal candidates if the collective bargaining contract provides reciprocal opportunity to employees who are not members of the union for open positions at the unionized site. Temporary and per diem status employees will be considered prior to external applicants . . . . Employees in a union whose collective-bargaining contract does not provide reciprocal opportunity to employees who are not members of the union will be considered external candidates.

The hospital defended its actions by stating 1) it was trying to head off unrepresented employee complaints of being shut out of represented employee positions (yet, the hospital did not bring one complaining employee or applicant forward) and 2) it was trying to “level the playing field” for the unrepresented employees at the other two hospitals to that of the unionized employees at Tobey. However, the underlying judge noted that the union employees only comprised of 215 of the 550 positions. Thus, the unionized employees were discriminated against and hindered in job advancement for being in the union because the unrepresented employees now had a much higher disproportionate amount of open positions that they were getting preferential treatment for over the unionized employees.

Ultimately, the NLRB agreed that neither of the reasons gave the hospital a “legitimate and substantial business justification” to thwart the unionized employees’ Section 7 NLRA rights that would outweigh the impact this HR policy had against unionized employees who had collectively bargained for rights at their hospital. Among other edicts of back pay and tax consequences and the requirement to reconsider passed over unionized employees for the positions at the non-unionized hospitals, the hospital was ordered to rescind its HR policy and notify all of the employees of same.

Practice Tips: NLRB scrutiny of employer policies is at an all-time high. Any employment policy or practice that makes a distinction between employees based on union member status must be scrutinized for any potential (or actual) adverse effect on the union members and potential (or actual) advantage provided to the non-union employees. If the change is going to give the unionized employees less rights, less opportunities, etc., it is better to be creative and think of a different approach (or get the union’s blessing before making the change). Whenever going against a collective bargaining agreement, it is best to run the change by your labor counsel first.