Tag Archives: National Labor Relations Board

Dust off Those Handbooks: NLRB Restores Sanity to Employment Policies

Contributed by JT Charron, December 27, 2017

Thirteen years ago the National Labor Relations Board issued its decision in Lutheran Heritage Village-Livonia, 343 NLRB 646, which held that facially neutral work rules violated the National Labor Relations Act if employees would “reasonably construe” the rule to restrict the employees’ rights to engage in protected concerted activity under Section 7 of the Act. Following that decision, the Board used the “reasonably construe” standard to invalidate even the most well intentioned work rules. See e.g., T-Mobile USA Inc., April 29, 2016 (finding that employer’s policy requiring employees to maintain a positive work environment violated the NLRA).

On December 14, in The Boeing Company, 365 NLRB 154, the Board overturned Lutheran Heritage and articulated a new test for evaluating the validity of facially neutral work rules. In place of the unworkable “reasonably construe” standard, the Board introduced a balancing test for analyzing facially neutral work rules. Under the new standard, the Board will “evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.” (emphasis in original).

Workplace investigation

Examining Documents

Utilizing this standard, the Board reversed the administrative law judge’s decision that Boeing’s no-camera rule violated the NLRA. Instead, it found that the employer’s legitimate business reasons for the policy — protecting proprietary information and national security interests — outweighed any potential Section 7 violation. The Board also articulated three broad categories of work rules that would result from the new balancing test:

  • “Category 1 will include rules that the Board designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule.”
  • “Category 2 will include rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.”
  • “Category 3 will include rules that the Board will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule.”

Boeing is a big win for employers and represents a clear change in the Board’s attitude towards work rules. While only time — and additional Board decisions — will tell, the new standard should provide “far greater clarity and certainty” to employers in drafting workplace policies. Additionally, employers may want to consider taking a second look at policies previously removed and/or revised in the wake of Lutheran Heritage and its progeny. Finally, as we head into 2018, employers should evaluate all workplace policies in light of the Board’s new balancing test and be prepared with strong justifications for any policies that have the potential to infringe on an employee’s rights under the Act.

U.S. Supreme Court to Address Legality of Class Action Waivers in Arbitrations Agreements

Contributed by Suzanne Newcomb, January 17, 2017

16306823 - 3d illustration of scales of justice and gavel on orange background

16306823 – 3d illustration of scales of justice and gavel on orange background

The U.S. Supreme Court announced Friday, January 13, 2017 that it will hear a trio of cases concerning the right of employers to include class action waivers in employment-related arbitration agreements. Arbitration agreements are contracts through which an employee and an employer agree to resolve potential future disputes through binding arbitration rather than through the courts. Class action waivers are provisions in arbitration agreements that prohibit employees from joining together to arbitrate multiple related claims in a class or collective action. If such a waiver is enforced, employees are required instead to arbitrate each employee’s dispute separately.

The general counsel for the National Labor Relations Board (NLRB) has long argued, with varying degrees of success, that the right to engage in collective legal action is itself “concerted activity” protected by Section 7 of the National Labor Relations Act, and therefore, it is unlawful to ask employees to waive that right.

As we reported here, the Federal Court of Appeals for the Fifth Circuit (Louisiana, Mississippi and Texas) rejected the general counsel’s argument back in 2013 and upheld an employer’s right to include a class action waiver in an employment arbitration agreement. Other circuits agreed. However, the NLRB continued to challenge these provisions, and as a result, many employers remained wary.

In May 2016, the Federal Court of Appeals for the Seventh Circuit (Illinois, Indiana, and Wisconsin) sided with the NLRB’s general counsel. The seventh circuit struck down a class action waiver concluding it was an impermissible restraint of employees’ right to engage in “protected concerted activities.” Later in the year the ninth circuit followed suit. This split between the circuits further clouded the issue, leaving employers with no clear answer.

It is this difference of opinion between the federal courts of appeal that prompted the Supreme Court to agree to hear the issue. While a definitive ruling is not guaranteed, the fact that the Supreme Court granted certiorari (i.e. agreed to hear) three cases on the issue (consolidating them for purposes of oral argument) suggests the Court intends to issue a definitive ruling. Resolution on this issue will provide employers with welcome clarity and certainty regardless of how the Court ultimately rules on the legality of class action waivers in employment arbitration agreements.

For now, employers should stay the course. We will continue to monitor the issue and report on significant developments as they arise.

Save the Date! February 16th Webinar – The New Administration: Impact on the Workplace Examined

How do your company’s policies and procedures comply with the views of our new administration? Please join us as we discuss how you can best prepare for any likely impacts on your business.

Join us for the next installment of our quarterly labor and employment series on Thursday, February 16 at 12:00PM CT to learn about what workplace changes you can expect under the new administration.

Topics to be discussed include:

  • The Affordable Care Act
  • Minimum Wage
  • National Labor Relations Board developments
  • Department of Labor changes
  • Executive Orders
  • Supreme Court and other judicial vacancies

This program is available via webinar. You can register here.

This Rocky Road Is Not Chocolate: NLRB Wins Again On Micro-Units

Contributed by Beverly Alfon, May 2, 2016

On April 26, the 4th Circuit of the U.S. Court of Appeals joined other federal circuits that have upheld NLRB approval of “micro-units.” See, Nestle Dreyer’s Ice Cream Co. v. NLRB, No. 14-2222 (4th Cir. Apr. 26, 2016). This is another boost for unions because micro-units ease their path into industries and business that have been difficult for them to organize in the past.

How do micro-units help unions and hurt employers?  When a union files a petition with the NLRB to represent a group of employees, a larger unit is generally favorable for an employer because it is more difficult for the union to garner cohesive support and secure a win. Unions tend to favor smaller units because it is generally easier to gain majority support and win a representation election. Micro-units only further increase the union’s chances of success, leading to a “foot in the door” with the company and exposure to other employees. Meanwhile, more micro-units can cause instability, inconsistency and administrative mires for a company.

Union workersIn the good old days, when there was a dispute about the scope of a union’s petitioned-for unit, the NLRB would consider arguments regarding the “community-of-interest” between the employees. Depending on the interrelationship between the employees in the context of operations, an employer could push for a broader unit of employees. However, in Specialty Healthcare, 357 NLRB No. 83 (2011), the NLRB imposed a new standard requiring an employer who seeks to expand the petitioned-for unit to demonstrate that those employees excluded from the union’s petition have an “overwhelming community of interest” with those included in the union’s proposed unit. Arguably, this high standard gives unions carte blanche to define the unit in its favor.

Employers have continued to attack the new standard, but the NLRB has now prevailed in the 6th, 8th and 4th circuits. In Nestle Dreyer’s Ice Cream Co., an NLRB regional office approved a petitioned-for unit for 113 maintenance workers, while excluding 578 production workers. The union won the election, but the company refused to recognize the union or bargain with it. The regional director entered an order directing the company to bargain. The company appealed to the Board in Washington, D.C. (which affirmed the order) and further appealed to the 4th Circuit.  The company argued that the NLRB abused its discretion by imposing this new standard and contradicted 4th Circuit precedent by blindly deferring to a union’s proposed unit. Despite strong backing from national business associations, the appellate court unanimously rejected the company’s arguments, affirmed the Board’s approval of the unit and determined that the standard articulated in Specialty Healthcare was only a clarification of law – and therefore, not an abuse of discretion.

Bottom line: Union organization of micro-units remains in tact. Whether you have a union-free work force or only a portion of your workforce is organized – now is the time to consider (or revisit) management training regarding union organization, analyze your operations/management structure and consult with labor counsel regarding best practices in light of these developments.

Unfair Competitive Advantage for Union Contractors Remains In Tact

Contributed by Beverly Alfon

Union job targeting programs, also known as “market recovery funds,” are used by unions to provide a bidding advantage to union contractors. As part of these programs, unions collect voluntary deductions from members’ wages, which are then used to subsidize union contractors’ bids on building projects. With the union subsidy, the union contractor is able to successfully bid on projects that may otherwise go to nonunion contractors. The subsidy further allows employees to be paid at union scale, rather than the lower wages set forth in the contractor’s bid. These programs are clearly aimed at ousting non-union contractors.

Union Block WordsJob targeting has been criticized as unfair competition, and has been found to violate the Davis-Bacon Act under some circumstances where funding  for the program has been derived, at least in part, from wages paid to union members under the Davis-Bacon Act. However, the National Labor Relations Board (NLRB) held in J.A. Croson Company, 359 NLRB No. 2 (Sept. 28, 2012) that, “union job targeting programs, including those funded in part by voluntary deductions from the wages of union members employed on State-funded public works projects, are clearly protected under Section 7 of the Act.”  The NLRB confirmed that the dues-checkoff provision, requiring employers to deduct and remit 1.75% of unit employee gross wages as “market recovery assessment,” was protected under the National Labor Relations Act (NLRA).Furthermore, the NLRB held that the company violated the Act by maintaining a state court lawsuit challenging the job targeting program because it interfered with the protected operation of the program.

Last week, the federal Court of Appeals for the Ninth Circuit further cemented organized labor’s continued ability to utilize job targeting programs. In Idaho Bldg. & Constr. Trades Council, AFL-CIO v. Wasden, 2015 BL 298844, 9th Cir., No. 11-35985 (Sept. 16, 2015), the Idaho Legislature passed a bill in 2011 to ban unions’ job targeting programs. The Idaho Fairness in Contracting Act placed misdemeanor penalties on unions and contractors that pay or receive job targeting subsidies. It included fines up to $100,000 per repeat offense. However, organized labor successfully obtained an injunction to stop the legislation from taking effect. Litigation over the validity of the bill continued and proceeded to the Ninth Circuit.

The Ninth Circuit determined that on projects that do not involve federal funds (Davis-Bacon Act), Idaho law is preempted by the NLRA regarding the use of union job targeting funds from members’ wages earned on such projects because, “no NLRB case has held collective action by employees to subsidize wages on non-Davis-Bacon jobs by distributing funds to the workers or employers on those jobs is not protected concerted activity under § 7 because of the source of those funds.” Based on this reasoning, the court held that the state’s Fairness in Contracting Act was facially invalid because it interferes with the NLRB’s interpretation and enforcement of the NLRA.

We will be watching closely regarding a possible appeal of the Ninth Circuit’s decision to the U.S. Supreme Court.

Decision Reminds Employers to Think Before Speaking to Employees About Union Issues

Contributed by Suzanne Newcomb

On September 4, a Federal Appeals Court upheld a National Labor Relations Board (NLRB) decision finding management comments to employees during the early stages of a union organizing campaign unlawful. Section 8(a)(1) of the National Labor Relations Act makes it unlawful “to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7.” Section 7 rights include “the right to self-organization, to form, join, or assist labor organizations.” The NLRB and the Courts interpret this language broadly.

people shaking handsBack in 2011 rumors about a possible unionizing campaign prompted an in house attorney and regional HR director to meet with employees, one of whom secretly taped the meeting. Comments made during that meeting were found to unlawfully: (1) threaten by suggesting unionizing was futile; (2) imply a promise of pay increases if the employees did not vote for a union; (3) threaten that unionization would result in demotion for some employees; and (4) threaten blacklisting of union supporters.

The following comments by management officials during the meeting were found to unlawfully imply that unionizing was futile and would not produce the benefits sought:

  • Be “very careful” when listening to the union’s “sales pitch.”
  • “In many cases, when you enter these negotiations, if you ever get there, employees tend to lose things.”
  • Negotiations are “a wide open game of uncertainty” in which “nothing is guaranteed” even if the union wins the election.
  • Answering “it’s possible” when asked if unionizing would cause wages to decrease adding, “we start from scratch…we don’t start with what you guys are making today.  Everything goes to zero.”
  • Employees at a unionized location have gone nearly three years without a bargaining session or contract. The bargaining process is “never automatic” and employees might never see the benefits they seek.

The finding of an unlawful implied promise to raise wages arose when, in response to an employee’s specific request, management agreed to review the current pay structure to ensure it was fair and competitive adding, “we want a chance to address … [your concerns] before you pay somebody else to address them.”

Management’s answer to questions about the apprentice and journeyman system was found to be an unlawful threat to demote certain employees if the workforce unionized. Finally, reference to union membership as a “scarlet letter,” and suggestions that other employers might be less inclined to hire job applicants who had worked in a union shop, were deemed unlawful threats to blacklist employees for union activity.

As the Court stated, “the underlying message…is that an employer…needs to take care in the rhetoric it uses when discussing union issues with its workers.” Employers must be very careful when discussing union related matters with their employees. Special and careful considerations must be paid to developing labor law. Detailed scripts, approved through seasoned labor counsel, should be in place to ensure appropriate language is being communicated.

“We Recommend Keeping This Confidential” Still Violates the Law According to the NLRB

Contributed by Jamie Kauther

Over the last few years the National Labor Relations Board (“NLRB”) has been cracking down on employee confidentiality mandates. An employer can legally require employees to keep trade secrets and legally protected information confidential, but according to the NLRB’s most recent ruling on August 27, 2015 an employer cannot even “recommend” that employees keep internal investigations confidential  (Boeing Co., 362 N.L.R.B. No. 195, 8/27/2015). The Board ruled that Boeing Company’s revised policy that “recommends” employees refrain from discussing HR investigations was unlawful as it violates employee’s rights to engage in concerted activity under Section 7 of the National Labor Relations Act (“NLRA”).

Confidential StampThe Board explained that although employers may “legitimately require confidentiality in appropriate circumstances” the impact of any confidentiality policy must be limited. Essentially, the Board created an individualized balancing approach that requires an employer to weigh its interests in confidentiality against employees’ Section 7 rights. Although it laid out examples of what situations would tip the scales, the Board did not set a clear standard. The examples provided include instances of likely witness intimidation or harassment, destruction of evidence or other misconduct that could jeopardize the investigation’s integrity. However, no specific examples were provided as to when these issues can occur. This standard imparts on employers a requirement to tailor-fit their confidentiality policies to be enforced on a case-by-case basis. As the Board explained, “generalized concern” about the integrity of all investigations is “insufficient to justify [a] sweeping policy,” including one that simply “recommends” confidentiality.

This new individualized balancing standard is a bit of a head scratcher. However, the Board did identify some bad practices that would not pass muster. It expressly pointed out Boeing’s requirement to have employees sign a policy notice without a Section 7 disclaimer in the policy or notice that the employee could disregard the confidentiality recommendation. The Board held that this clearly communicated Boeing’s improper desire for confidentiality.

So what is a best practice in light of this decision? Remove sweeping confidentiality policies pertaining to internal investigations and eliminate requirements that when employees sign notices they understand the confidentiality recommended. Instead, discuss with the employee during an investigation the desire for confidentiality based on the facts of the specific investigation. Remember this ruling only applies to what limits can be placed on employees with knowledge of the investigation. It has no bearing on a company’s approach or handling of an investigation – meaning the company can and should still clearly reiterate in its policies that it will handle all investigations with discretion and will preserve the confidentiality of all involved persons to the extent possible. Essentially, an employer can still control the information it relays, just not what other involved employees communicate.