Tag Archives: collective bargaining agreement

Seventh Circuit Opinion Clarifies What Language is Necessary for Collective Bargaining Agreements to Require Arbitration of Statutory Claims

Contributed by Allison Sues, July 14, 2017

The seventh circuit recently clarified under what circumstance a collective bargaining agreement may restrict an employee’s access to a judicial forum for purposes of resolving statutory claims. In Vega v. New Forest Home Cemetery, the appellate court reversed the lower court’s dismissal of a Fair Labor and Standards Act (FLSA) claim brought by a former employee who had not complied with the grievance process provided in his collective bargaining agreement (CBA).

Luis Vega filed an FLSA lawsuit claiming New Forest failed to pay him for 54 hours of work. Vega was a union member and therefore subject to the union’s CBA which included a mandatory grievance process culminating in arbitration. The district court dismissed Vega’s claim because he had not exhausted his contractual remedies under the CBA.

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Hand signing contract on white paper

The seventh circuit heard the appeal to answer a straightforward question: “Does the collective bargaining agreement require Vega to resolve his FLSA minimum wage claim through the specified grievance process, or does it allow him to ask a court to resolve that claim regardless of whether he has exhausted his contractual remedies?”

In answering this question, the seventh circuit confirmed several key points:

  1. An employee’s contractual obligations under a CBA are independent from an employee’s statutory rights, such as those under the FLSA, and therefore, a CBA cannot waive an employee’s statutory rights.
  2. However, a contractual agreement to arbitrate a statutory claim does waive that statutory right. Accordingly, a CBA can compel a union employee to pursue statutory claims through arbitration instead of in court.
  3. But, an arbitration provision in a CBA will only operate to compel arbitration of individual union member’s statutory claims if its intent to do so is stated in “clear and unmistakable terms.”

The court concluded that Vega’s CBA did not state in sufficiently “clear and unmistakable terms” that the grievance system, culminating in arbitration, was the exclusive remedy for alleged FLSA violations or pay disputes, and therefore, Vega’s failure to pursue a grievance was irrelevant and he was allowed to pursue his claim in court.

To add clarity, the court provided examples:

  • An arbitration provision that lists a variety of statutory claims and states that all such claims “shall be subject to the grievance and arbitration provision […] as the sole and exclusive remedy for violations” constitutes an explicit waiver of access to a judicial forum.
  • On the other hand, arbitration provisions merely stating that disputes as to any provision of the agreement, pay, or working conditions must be resolved through arbitration is not a clear and unmistakable waiver, because an employee could read the provision as covering only disputes over the CBA requirements themselves as opposed to statutory violations.

Employers should take care when drafting mandatory arbitration provisions to ensure that provisions intended to mandate arbitration of statutory claims are stated in sufficiently “clear and unmistakable terms.”

For Employee to Be Compelled to Pursue FLSA Claims Pursuant to Contract Grievance Procedures, Language of CBA Must be Clear and Unmistakable

Contributed by Carlos Arévalo, June 6, 2017

On May 15, 2017, the seventh circuit ruled that unless the language in a collective bargaining agreement (“CBA”) explicitly states that the employee must resolve his statutory and contractual rights through the grievance procedures in the contract, an employee is free to file suit in court to resolve his statutory claims.

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Judge holding gavel 

After being terminated from employment, Luis Vega, a seasonal employee at Forest Home Cemetery, attempted to collect unpaid wages by resorting to the grievance procedures of his CBA.  When these efforts proved futile, Vega filed a Fair Labor Standards Act (FLSA) claim in the United States District Court for the Northern District of Illinois. Vega’s employer filed a motion to dismiss based on Vega’s failure to exhaust the grievance procedures in the CBA. Judge Charles Norgle agreed with the employer’s argument and entered judgment against Vega.

On appeal before the seventh circuit, the employer asserted that the CBA, by establishing a grievance procedure to resolve disputes over pay, compelled Vega to go through said procedure to resolve his FLSA claim. This argument prompted the question of whether the terms of the CBA required Vega to resolve his FLSA wage claims through its grievance procedures, or whether Vega could pursue a FLSA claim in court even if he had not yet exhausted his contractual remedies.

Writing for the court, Judge Ilana Rovner ruled in Vega’s favor reversing the district court ruling. In the decision, the court noted that an employee has statutory as well as contractual rights and that the former are independent from any rights under the union contract. Moreover, citing 14 Penn Plaza LLC v. Pyett, a 2009 Supreme Court case, the court also stated that an agreement to arbitrate statutory claims is enforceable against an aggrieved employee if the language of the agreement to that end is “clear and unmistakable.” In Vega’s case, the court found that generalized language regarding pay disputes was insufficient and that the agreement could not be read to compel an employee to resolve his rights under FLSA through the grievance process. Accordingly, Vega did not have to exhaust his contractual remedies.

The Vega decision clearly establishes that employers looking to have statutory claims resolved through arbitration grievance procedures must pursue explicit language to that end. However, before doing so, employers should carefully consider if arbitration represents the best method for resolution of such claims. Grievance procedures may be suitable for resolution of some statutory rights, but not for others. And while arbitration may expedite claims and even limit remedies, vacating unfavorable awards can be an unsurmountable task. Bottom line, before bargaining for such language, employers should consult counsel to determine the proper course of action.

Missouri Has Become the 28th Right-to-Work State

Contributed by Beverly Alfon, February 10, 2017

On February 6, 2017, the newly elected GOP Governor Eric Greitens, signed into law a right-to-work (RTW) bill that passed the state’s Republican-controlled state legislature.

Nuts and Bolts of the Missouri RTW law

  • Effective date:  August 28, 2017
  • Who it applies to:  Both private and public sector employers (except those in the airline and railroad industries, as well as certain federal employers).
  • What it prohibits:
    • No employee can be required to become or remain a union member as a condition of employment.
    • No employee can be required to pay dues, fees or assessments of any kind to a union (or any equivalent of a dues payment to any charitable organization).
  • Penalties for violations:  Criminal sanctions – a violation is a class C misdemeanor, punishable by a fine of $750 and up to 15 days in jail. Civil sanctions – private parties may obtain injunctive relief, damages and an award of attorneys’ fees.
  • Effect on collective bargaining agreements:  For collective bargaining agreements (CBA’s) entered into before August 28, 2017, the law has no effect. However, the law will apply to any CBA renewal, extension, amendment or modification after August 28, 2017. This will likely jolt Missouri unions to seek contract extensions of existing CBA’s in order to delay the impact of the law.

Unions Continue to Battle

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Flag of Missouri

The Missouri AFL-CIO has submitted different versions of a proposed initiative petition to the secretary of state’s office that is aimed at reversing the RTW law. Basically, with enough signatures, it would present the opportunity for Missouri voters to decide in 2018 whether to adopt a constitutional amendment that would protect contracts that require employees to pay union representation fees.

Perspective

Seven of eight states that surround Missouri have existing right-to-work laws, including Kentucky, which passed a right-to-work law last month. The current tally of RTW states includes: Alabama, Arizona, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska, Nevada, North Carolina,  North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin, Wyoming. Just last week, the New Hampshire senate passed a RTW bill, which is awaiting passage by the state House.

On a federal level, two Republican Congressmen re-introduced the National Right to Work Act last week. The bill would amend the National Labor Relations Act and the Railway Labor Act to prohibit the use of union security clauses which require union membership and payment of dues and fees.

If there was any doubt, this flurry of activity confirms that the right-to-work movement is recharged.

Universally Applied Seniority-Based Bidding System Trumps ADA Accommodation Says Seventh Circuit – Though Dissenter Disagrees

Contributed by Suzanne Newcomb

On December 3, the Federal Court of Appeals for the Seventh Circuit (Illinois, Indiana and Wisconsin) affirmed dismissal of a failure to accommodate claim brought by an employee bumped from a job assignment that accommodated his disability after his employer opened that assignment to seniority-based bidding pursuant to the terms of the collective bargaining agreement (CBA).

After a series of injuries and several extended leaves of absence, the employee was released to return to work with permanent restrictions that prevented him from performing many of the physically demanding essential functions of his position. The employer accommodated his restrictions by placing him into the fairly sedentary “Matrix position.” The CBA allowed employees to bid on their desired work assignments and required the employer place them in their selections according to seniority. The Matrix assignment, however, was reserved for employees with permanent restrictions and was not subject to seniority-based bidding.

The employee had held the Matrix position for years when the employer decided the position should be included in the seniority-based competitive bidding scheme. The employee did not have enough seniority to hold the position. He inquired about several no-bid positions, but none were available at the time. Ultimately he was placed on extended leave and sued.

Office PeopleThe employee claimed his employer failed to accommodate his disability by refusing to allow him to remain in the Matrix position and by failing to place him in a no-bid position. Relying on U.S. Supreme Court precedent, the Court held that the employer was not required to violate a uniformly enforced seniority system in order to accommodate an employee’s disability. The employee’s argument with respect to the no-bid positions failed because he could not show a vacancy existed at the relevant time, reaffirming that the Americans with Disabilities Act (ADA) does not require an employer to create a vacancy or “bump” other employers in order to provide an accommodation.

Notably, however, a dissent was filed. The dissenting judge pointed out that the prior precedent on which the majority relied, specifically allowed that “special circumstances” can warrant a finding that the requested accommodation is reasonable under the particular facts despite the existence of a seniority system. He concluded that evidence that the employer excluded the Matrix position from the seniority system for years could warrant such a finding. Whether the employee will ask the United States Supreme Court to review the decision remains to be seen.

Bottom line: Although this decision is a win for the employer and welcomed guidance for employers who regularly find themselves balancing individual employee’s ADA rights and its obligations under a CBA, the dissent highlights the fact that, as with all things ADA, there are no clear answers. Careful analysis of all accommodation options and a review of available positions must be conducted on a case by case basis.

Collectively Bargained Retiree Health Benefits for Life? U.S. Supreme Courts Says Ordinary Contract Principles Apply

Contributed by Kelly Haab-Tallitsch

On January 26, 2015, the U.S. Supreme Court established a new standard for the vesting of collectively bargained retiree medical benefits, holding in M&G Polymers USA, LLC, et al. v. Tackett, et al., that collective bargaining agreements (CBAs) must be interpreted using ordinary principles of contract law and rejecting the presumption that collectively bargained retiree welfare benefits vest for life.  M&G Polymers, No. 13-1010 (U.S. Jan. 26, 2015).

In M&G Polymers, a group of retirees brought suit against their former employer after the announcement that retirees would be required to begin making contributions toward their retiree health coverage premiums. The plaintiffs argued that a CBA provision requiring the employer to pay 100% of retiree medical premiums created a vested right to contribution-free health care benefits beyond the expiration of the CBA’s three-year term. The Sixth Circuit Court of Appeals found in favor of the retirees based on an “inference” that collectively-bargained retiree health benefits were intended to vest for life, absent language to the contrary.

The Supreme Court expressly rejected the Sixth Circuit’s “inference” of lifetime benefits, stating that the inference placed a “thumb on the scale in favor of vested retiree benefits in all collective-bargaining agreements,” and distorted attempts to ascertain the parties’ real intent. Relying on the Employee Retirement Income Security Act (ERISA), the Court found that “when a contract is silent as to the duration of retiree benefits, a court may not infer that the parties intended those benefits to vest for life,” but must use ordinary contract principles to determine whether retiree health benefits continue past the expiration of a CBA.

The concurring opinion in M&G Polymers cautioned that clear and express language is not required to demonstrate intent that retiree benefits vest, intent may arise from the implied terms of an agreement.  As such, employers must be cautious in negotiating and drafting CBA provisions relating to retiree welfare benefits.  If the inclusion of an express term that retiree benefits do not survive the expiration of the agreement is not possible, employers must take care to avoid any language that could be interpreted (under ordinary contract law) as demonstrating the intent to provide vested or lifetime retiree medical benefits.

Further, employers should review all retiree benefit plan documents and communications to ensure the contractual term of the benefit is clearly explained and consider how best to include language that will reserve the right to amend or terminate the arrangement, wherever possible.

Union’s “Fair Share” Found Unfair

Contributed by Larry Smith and Rita Gitchell

In March 2003, former Illinois Governor Rod Blagojevich issued an executive order calling for state recognition of a union as the exclusive representative of home health care personal assistants employed in the “rehabilitation program.” The executive order was subsequently codified by the Illinois legislature, which declared personal assistants to be “public employees” of the state of Illinois “solely for the purposes of coverage under the Illinois Public Labor Relations Act.” Subsequently, the personal assistants selected SEIU as their exclusive representative for purposes of collective bargaining.

The collective bargaining agreement required non-union personal assistants to pay a “fair share” of the union dues in return for the representation they received from the collective bargaining unit. These “fair share” payments were deducted directly from the Medicaid payments to the personal assistants. In 2009, Governor Pat Quinn signed another executive order that expanded the pool of home-care workers to include disability home health aides. Under the legislation enacted after Governor Blagojevich’s executive order, these disability care workers, whether union or non-union, were subject to the same “fair share” payments as other caregivers governed by the program.

One of these disability care workers, Pamela Harris, filed a class action suit that argued that the compulsory payments constituted a free speech violation, under the First and Fourteenth Amendments.

In Harris v. Quinn, the U.S. Supreme Court decided that non-union home health care disability care workers in Illinois were not required to pay so-called “fair share” fees to SEIU for the union’s role in handling collective bargaining on behalf of both union and non-union members alike.

The Harris decision discussed the difference between being labeled a state employee by either executive order or statute compared to the practical situation in place with these workers in Illinois. The Supreme Court noted that the disabled individuals had the hiring and firing decisions, not the state. These home health care workers do not receive the same benefits as full time state of Illinois employees. It is not clear if the decision would have been the same if the home health care workers were clearly employees of the state.

The decision raises many questions for non-government employers who have home health care disability workers on their payrolls. Harris does not provide much guidance to the private sector that employs home health care workers represented by a collective bargaining union such as SEIU. Does such an employer have the obligation or authority to advise those non-union members, who are subject to fair share payments to a collective bargaining representative, of the Harris decision?

At least, eighteen other states have similar “schemes” in place, which are subject to the ruling in Harris. Anti-union groups were disappointed that the Supreme Court did not go further in striking “fair share” payments in other settings. There are, however, other cases pending both in district courts and before the Supreme Court, which will hopefully clarify those affected by the rationale employed by the court in Harris.

There are two large groups that may be affected by the Harris decision: non-union workers who make “fair share” contributions to collective bargaining representatives; and all workers who disagree with the way in which “fair share” payments are used for political contributions. Politically, both the unions and those who receive political contributions from the unions lose in the wake of the Harris decision.

Supreme Court Holds that Donning and Doffing of Work Gear Under a Collective Bargaining Agreement is “Changing Clothes” Under FLSA Section 203(o)

Contributed by Sara Zorich

On January 27, 2014, in Sandifer v. U.S. Steel Corp., 12-417, 2014 WL 273241 (U.S. Jan. 27, 2014), the U.S. Supreme Court upheld the Seventh Circuit decision that time spent donning and doffing protective gear was time spent “changing clothes” under Section 203(o) of the FLSA allowing parties to a collective bargaining agreement the ability to bargain over compensability of such time at the beginning and end of the work day.

Clifton Sandifer filed a collective action under the FLSA seeking compensation for the time he and others spent donning and doffing work gear items including: flame-retardant jackets, pair of pants, hoods, hardhats, snoods, wristlets, work gloves, leggings, steel-toed boots, safety glasses, earplugs and respirators.  U.S. Steel argued that such time was not compensable under the FLSA because it had bargained on the issue of donning and doffing and made it part of its collective bargaining agreement with Sandifer’s union.

Section 203(o) of the FLSA provides that compensability of time spent “changing clothes or washing at the beginning and end of each work day” is subject to the collective bargaining process.  However, the debate ensued as to what constituted “changing clothes” under the law. Sandifer argued that anything protective in nature could not be deemed clothes under the FLSA.  The Supreme Court disagreed with Sandifer finding that only three (3) of the items Sandifer was required to don and doff did not qualify as clothes: glasses, earplugs and respirators while the other nine (9) items should be deemed as clothes.  The Supreme Court then went on to hold that the proper standard for determining whether the time spent “changing clothes” is covered by 203(o) must be looked at for a period on a whole.  Thus, where an employee spends the vast majority of his/her time in question donning and doffing clothes then the time is not compensable, but if the majority of time is spent donning and doffing non-clothes items the entire time period is compensable.  Here, the Court held that the majority of time was spent changing clothes and little time was spent putting on and taking off non-clothes items thus the employee did not have to be compensated for any donning and doffing time under Section 203(o).  The Court choose to adopt the new method of view the period “on a whole” for 203(o) matters over applying the de minimus doctrine as had been previously done by the Seventh Circuit.

Practice Pointer – This case is only applicable to situations involving a union workforce and when the issue has been the subject of fair bargaining between the union and the employer.  Further, if the state in which the employee is employed has a more restrictive or stringent state law applicable to payment of time spent donning and doffing than the provisions of the FLSA, the employer must follow the state law and may not be afforded the Section 203(o) exception to compensating for donning and doffing.  This case is another reminder for employers to carefully review and regularly audit all payroll, time keeping and compensation practices.