Tag Archives: NLRA

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.

A Hint of Change: NLRB Allows Employer to Defend Blanket Prohibition on Use of Cameras/Video Recording Devices

Contributed by Beverly Alfon, May 16, 2017

Recently, there has been much discussion about the composition of the five-member board in Washington, D.C., including President Trump’s appointment of Philip Miscimarra as National Labor Relations Board (NLRB) Chairman, and the expected shift from pro-labor initiatives – especially in light of the expiring term of the NLRB General Counsel who was appointed by President Obama. The NLRB recently issued an order that may be a sign of things to come.

No Camera

Camera with a red circle and slash over it

On May 5, a divided NLRB denied the NLRB General Counsel’s motion for summary judgment (a request for judgment as a matter of law where there are no disputed facts) against Mercedes-Benz. Mercedes-Benz U.S. International, Inc. (MBUSI), 365 N.L.R.B. No. 67 (May 5, 2017). The General Counsel argued that legal precedent clearly establishes that a company rule prohibiting any use of cameras and video recording devices without prior authorization interferes with employees’ rights to engage in union or protected concerted activity. The General Counsel relied upon the NLRB decisions in Whole Foods Market, 363 NLRB No. 87 , slip op. at 3-5 (Dec. 24, 2015) (in which a similar rule was found unlawfully overbroad) and T-Mobile USA, Inc., 363 NLRB No. 171 , slip op. at 3-5 (April 29, 2016) (same). These decisions state that blanket bans on workplace photography and recordings generally violate the Act.

Mercedes-Benz argued that it should be allowed to show that employees did not interpret the rule to restrict protected activity under the National Labor Relations Act (NLRA) and that the rule furthers legitimate business interests, including the protection of proprietary and confidential information, the maintenance of safety and production standards, and open communication. These are nearly identical to the arguments that the board rejected in Whole Foods Market. However, this board majority, including Chairman Miscimarra, agreed that the employer should be allowed to present their evidence at a hearing. Interestingly, they relied upon two decisions in which the employer was ultimately found to have violated the NLRA, including the Whole Foods Market decision.

Bottom line: This NLRB order is notable because it shows some flexibility from the NLRB as to work rules and legitimate business interests – in contrast to recent decisions that many viewed to curb management rights. Ultimately, however, the law has not changed (yet) and the Whole Foods Market decision remains intact. Therefore, before disciplining an employee for taking photos or making recordings in the workplace, you must consider whether the employee’s actions constitute protected activity under the NLRA. Employer policies should remain carefully tailored to specify the restrictions and the business reasons for them. We will be monitoring the developments in this case. Stay tuned.

Are Mandatory Arbitration Agreements Headed for the Supreme Court?

Contributed by Carlos Arévalo, October 25, 2016

This past June, our blog reported on the Seventh Circuit’s decision in Lewis v. Epic Sys. Corp., 823 F.3d 1147 (7th Cir. 2016), which found that the Federal Arbitration Act does not require enforcement of an arbitration agreement based on the employee’s right under the National Labor Relations Act (NLRA) to engage in protected concerted activity. Specifically, in Lewis the Seventh Circuit held that employment arbitration agreements that include class action waivers violate the NLRA and cannot be enforced. This was the first time that a circuit court had adopted the NLRB’s position in D.R. Horton, Inc., 357 NLRB 184 (January 3, 2012).

Gavel2A couple of months later, the Ninth Circuit, in Morris v. Ernst & Young, LLP, (9th Cir. (Cal.) August 22, 2016), followed suit and also found that an arbitration agreement that required employees to bring claims in “separate proceedings,” thereby prohibiting class and collective actions, violated the employees’ right to engage in concerted activity under the NLRAJust like in Lewis, the employees in Morris had to sign arbitration agreements as a condition of employment. Stephen Morris subsequently filed a class and collective action against the company, alleging he and others had been misclassified as employees exempt from overtime under the Fair Labor Standards Act and California state law. In response, the employer filed a motion to compel arbitration pursuant to the agreements the employees had signed. The district court ordered individual arbitration for each and dismissed the complaint. The Ninth Circuit, however, reversed and held that such agreements interfere with the employees’ rights under Sections 7 and 8 of the NLRA regarding concerted activity.

Back in 2013, three circuit courts ruled that the NLRA does not prohibit class waivers. First, the Eighth Circuit ruled that class waivers were appropriate in Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013). The Second Circuit did likewise in Sutherland v. Ernst & Young, 726 F.3d 290 (2nd Cir. 2013).  Finally, the Fifth Circuit reversed the NLRB’s decision that such agreements were unenforceable in D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013). Then, in 2014 the Eleventh Circuit arrived at the same conclusion and upheld class waivers in Walthour v. Chipio Windshield Repair, LLC, 745 F.3d 1326 (11th Cir. 2014).

Certainly, this split among circuits makes it more likely that the Supreme Court will soon address whether employees will be able to waive their right to participate in collective actions if they choose to sign arbitration agreements. Indeed, petitions for writs of certiorari seeking review by the Supreme Court were filed in Lewis on September 2nd and in Morris on September 8th. How this issue is ultimately resolved, of course, depends largely on the outcome of the 2016 election.

Irrespective of who fills the vacancy left as a result of Justice Scalia’s passing, employers should still seek labor and employment counsel’s guidance with respect to arbitration agreements to determine if they are enforceable and/or if necessary revisions and amendments are required. Similarly, employers, with counsel’s assistance, should develop new strategies in light of potential changes that may be in the offing.

Too Little Too Late: NLRB Rejects Employer’s Attempt To Repudiate

Contributed by Beverly Alfon

In a 2-1 decision, the National Labor Relations Board (NLRB) issued a decision against an auto dealer, finding that the company violated the National Labor Relations Act (act) by implementing and maintaining: (1) a 2010 social media policy that required employees to identify themselves when posting comments about the company, its business, or a policy issue and prohibited employees from using the company’s logo in any manner; and (2)  a 2010 dress code policy that prohibited employees from wearing pins, insignia or other message clothing.  Boch Imports, Inc., 362 NLRB No. 83, 4/30/2015.  In light of the NLRB’s aimed campaign to attack what it characterizes as “overly broad” work rules, these findings are not all that surprising.  What makes this decision a brow-raiser is the fact that the NLRB rejected the company’s attempts to correct these policies – even though the company did so with the assistance and approval of the NLRB regional office that investigated the unfair labor practice charge.

Notice PostingIn 2013, the company replaced the 2010 policies with lawful language (except for the dress code provision) and distributed a new employee handbook to every employee.  The purpose was clearly to achieve compliance with Section 7 of the act.  Nonetheless, the board found violations by the company for its 2010 policies – regardless of the company’s rescission of those policies.  The board found the revised policies to be an inadequate remedy and ordered the company to post a notice to employees that enumerated the various overbroad policies and rules that were contained in the 2010 handbook.

This decision is troublesome for employers because although the board acknowledged that an employer may repudiate its unfair labor practices, it would have required the company to provide notice of the unfair labor practices to the employees, an admission of wrongdoing, even before an administrative law judge ruled on the merits of the charge.

Bottom line:  The region’s informal blessing of your attempts to correct the conduct at issue in an unfair labor practice charge, does not amount to an effective repudiation.  Before you decide to correct a policy or procedure that is the subject of an unfair labor practice charge, explore the possibility of a non-board settlement with the charging party – one that would not require a notice posting or admission of fault.

NLRB Weighs In On Dispute Over Kentucky County’s Right-To-Work Laws

Contributed by Julie Proscia and Steven Jados

Last week, the National Labor Relations Board (board) filed a legal brief in an ongoing federal lawsuit over the viability of a multi-part right-to-work law implemented through a county-wide ordinance in Hardin County, Kentucky.  Among other things, the ordinance at issue prohibits the use of union-security provisions in collective bargaining agreements, and also regulates hiring halls, dues check-off, anti-coercion and discrimination provisions, and the penalties for violations of Section 8 of the National Labor Relations Act.  The board’s central argument is that federal law preempts the county’s legislation on those issues.

This action by the board (which is not actually a party to the lawsuit at issue) in support of the plaintiff unions is indicative of the board’s unprecedented and aggressively pro-union agenda.  The underlying lawsuit was filed by the United Auto Workers and other unions in a Kentucky federal district court to challenge the legality of the county’s ordinances.  That said, the board’s brief indicates that this likely will not be a precursor to challenges to right-to-work laws that have been implemented on a state-wide level across the country.  In that regard, the board’s brief references the statutory basis for states’ right-to-work laws, but then argues that that statutory text should not be applied to local government entities for reasons that include the possibility that county-wide legislation could result in a “crazy-quilt” of varying regulations that could make it impossible to administer industry-wide labor agreements.

While the Kentucky district court’s jurisdiction is obviously limited, local governmental bodies around the country are certain to be watching the outcome of this decision, and an opinion favoring Hardin County is likely to spur more legislation of this sort on the local government level all across the country.

Non-Union Employers Should Act Now as Washington Addresses Quickie Election Rule

Contributed by Jamie Kauther

Ever since the NLRB attempted to put into effect its ambush (aka “quickie”) election rule on April 30, 2012, we have addressed its back and forth. As a reminder, this rule required employers to counter union organizing campaigns in 14-21 days versus the previous 42 day requirement.  The first action to block this new rule occurred on May 14, 2012 when a U.S. District Court ruled the rule was invalid because improper procedure had been used to pass it.   U.S. Chamber of Commerce et. Al. v. NLRB (D.C. Cir. 1:11-cv-02262).   However, the court did not clarify if the rule itself was enforceable, only that the proper procedure wasn’t followed.  On February 5, 2014, the NLRB announced that it was re-proposing the quickie rule.   In December 2014, it issued its final rule.   The rule was adopted by a 3-2 vote and is set to take effect on April 14, 2015.

On February 9, 2015, republican lawmakers moved to halt the rule and issued a resolution stating “Congress disapproves the rule……and such rule shall have no force or effect.”   The resolution was discussed on February 11th before a Senate subcommittee and was placed on the full Senate calendar on February 23rd.  It went before a congressional subcommittee on March 3, 2015 and a preliminary vote shows the resolution will pass.   If a majority of each the House and Senate pass the resolution, the President can override it with a veto.   However, such veto can then be overridden by Congress with 2/3 vote.   The President hasn’t yet publicly addressed whether he’d veto the resolution or not, but in April 2012 the White House stated it was “strongly” against any possible resolutions and the President’s advisors have recently indicated a veto is imminent.

While the political machine is churning, numerous business groups, including the U.S. Chamber of Commerce, have rigorously been challenging the rule in the courts.  On February 5th, a district court judge was asked to order the rule was illegal as a First Amendment violation and contrary to the NLRA.   The court’s decision is still pending and will likely be appealed well after the rule gets implemented.

As our various posts have explained, the quickie rule could be disastrous to employers and employees if implemented.   Under the rule, after a union petition is filed employers will likely not have the time to fully inform their employees about their rights in the workplace.   Absent such vital information, employees will not receive a full picture and will be unable to make a well-informed personal decision to vote the union in or not.   It is imperative that employers start implementing preventative measures now in the event the rule challenges are unsuccessful.

Beyond Talking Smack — NLRB Draws the Line at Advocating Insubordination

Contributed by Beverly Alfon

Six months ago, the NLRB held (on remand from the Ninth Circuit) that an employer violated the National Labor Relations Act by firing an employee even though he called his supervisor a “[multiple expletives deleted]“  and even threatened that if he was fired, the boss would “regret it.”  Plaza Auto Center, Inc., 360 NLRB No. 117 (2014).  That decision left many employers exasperated, and still does.  Recently however, the board issued a decision that confirms that even this pro-labor board recognizes that some employee conduct falls outside the protections of the National Labor Relations Act (NLRA).  Richmond District Neighborhood Center, Case 20-CA-091748 (Oct. 28, 2014).

In Richmond District Neighborhood Center, the board upheld an administrative law judge’s ruling that Facebook dialogue between two employees of the center was not protected under the NLRA and the employer did not violate the act by considering that dialogue when it revoked their employment offers for the following school year.  The employees’ expressed their intent to have “field trips all of the time to wherever [ ] we want”, “teach the kids how to graffiti up the walls…” and other similar statements expressing their intent to disregard their job duties and undermine the leadership at the center.  The board agreed that the employees’ statements, which included obscenities and statements regarding how they would “raise hell” at the center, went beyond discussion and complaints about work terms and conditions.  The board further stated that the center was “not obligated to wait for the employees to follow through on the misconduct they advocated” before terminating their employment.

How do we reconcile these two decisions?  In Plaza Auto Center, the employee’s profanity and personal attacks were expressed in the context of a discussion regarding commission rates and break times.  The NLRB reasoned that the discharge violated the employee’s right to discuss terms and conditions of employment.  In contrast, the employees in Richmond District Neighborhood Center went beyond expressing their discontent with their work terms and conditions through “pervasive advocacy of insubordination in the Facebook posts, compromised of numerous detailed descriptions of specific insubordinate acts, constituted conduct objectively so egregious as to lose the act’s protection.”  

Bottom line:  There is no bright-line scope of protected activity versus unprotected activity under the NLRA.  As demonstrated by the board’s decisions, the analysis is very fact-specific.  For both union and non-union employers, before issuing discipline to employees who engage in conduct that involves or is related to an expression of discontent about work terms and conditions, consult counsel to review the particular facts of the case before making a decision.

Court Awards Against National Labor Relations Board for Improper Restriction Regarding E-Verify

Contributed by Michael Hughes and Sara Zorich

On October 30, 2014 in the case of Overstreet v. Farm Fresh Co. Target One LLC, No. 2:13-cv-02358, the Arizona Federal District Court ordered attorney’s fees be paid to Farm Fresh Co. Target One LLC (Farm Fresh) by the National Labor Relations Board (NLRB) due to the NLRB’s demand that Farm Fresh reinstate four employees without following the federal and Arizona state laws governing the use of E-Verify.

In 2013, Farm Fresh was purchased through an asset purchase agreement by a new owner.  The new owner (after receiving advice and guidance from the Dept. of Homeland Security) sought to treat all existing employees as new hires after the company acquisition.  As part of that transition, all employees could be run through E-Verify to confirm their authorization to work in the United States.  On March 1, 2013, it was announced to all employees that due to the acquisition, all employees would be run through E-Verify.  Four days later some employees sought unionization and four employees were terminated.  The employees claimed their termination was in violation of the National Labor Relations Act (NLRA) and an administrative law judge agreed, finding the employees should be reinstated.  Farm Fresh agreed to reinstate the employees but stated that the employees would be required to be run through the Federal E-Verify system which was the process for all other existing and new employees.  The NLRB refused to allow any “conditions” on the reinstatement and sought injunctive relief under Section 10(j) of the NLRA from the Arizona Federal District Court restraining Farm Fresh for the “unconditional” reinstatement of the four employees.  The court, however, sided with the employer and found that the employees, like all other employees of the company, should be treated as “new” employees and processed through E-Verify.  Moreover, the court awarded the company over $55,000 in attorney’s fees under the Equal Access to Justice Act.

Employers should be cautioned that the facts of this case are very fact specific.  In general, employers cannot require employees to go through additional testing or application process when ordered by the NLRB to be reinstated.  It was only because the company through the acquisition was able to treat all employees as “new employees” and process all employees through E-Verify in accordance with federal and Arizona law.  This case shows the important interplay immigration laws can have on both employment and traditional labor disputes.  Further, it highlights that any reinstatement ordered by the NLRB cannot be predicated on terms that are against the law.

NLRB Answers: Como Se Dice ‘Unlawful Threat’ En Español

Contributed by Beverly Alfon

One week before an election to decertify Teamsters Local 734 as the bargaining representative of drivers at LaBriola Baking Co., the company held a mandatory meeting for its drivers to make a final push against continued union representation.  At the meeting, the company’s Chief Operating Officer spoke about the upcoming election.  The COO said in English, “If you choose union representation, we believe the union will push you toward a strike.  Should this occur, we will exercise our legal right to hire replacement workers for the drivers who strike.”  Roughly 80 percent of the drivers were Spanish-speaking, so the employer relied on one of its payroll administrators to translate his remarks.

The election resulted in 20 votes against union representation, 16 votes in support of the union, and 4 uncounted challenged ballots.  The union challenged the results and appealed its objections to the NLRB.  The union presented evidence that the employer’s Spanish translation ended with the statement the employer would replace the workers with “legal workers” or a “legal workforce.”  Despite objection from the dissent, which pointed out that the union’s allegations was contradicted by the record and improperly disregarded well-established principles regarding the relative burdens of proof – the NLRB majority found that the employer’s reference to “legal workers” in its Spanish translation conveyed an unlawful threat to the non-English speaking employees, regardless of their immigration status.  Accordingly, the majority ordered a second election – despite the heavy burden typically placed on the objecting party to prove that the objectionable conduct actually interfered with the results of the election.

Among other deficiencies, the dissent pointed out that the majority’s finding was based on a mistaken premise that it is objectionable for employers to make even the slightest reference to the legal requirement of work authorization in the presence of non-English speaking employees:  “The only potential basis for inferring the existence of immigration-related fears—an inference drawn by our colleagues—is the participation by Spanish-speaking employees in the meeting.”

For those who raise their arms over what they have viewed as evidence upon evidence of the NLRB’s pro-labor agenda, this latest decision only solidifies their stance.  It was just one year ago that the NLRB raised eyebrows by executing a letter of agreement with the Foreign Ministry of Mexico, committing to strengthening its efforts to educate Mexican workers in the U.S. about their rights under the NLRA.  The move was seen as in lock-step with the AFL-CIO’s “Work Without Fear” immigration campaign.

Bottom line:  Whether or not your employees are represented by a union, if you have a largely non-English speaking workforce, give special consideration to all of your verbal and written communications.

The ‘Big Mac’ is Under Attack: Radical NLRB Labeling the Franchisor as “Joint Employer” of Franchisee Employees

Contributed by Caryl Flannery and Jeffrey Risch

Franchisors across the U.S. may be surprised to learn that the general counsel for the National Labor Relations Board has taken the position that they are likely joint employers with their franchisees under the National Labor Relations Act (NLRA).  The announcement came in the context of finding joint liability for alleged unfair labor practices, but the true impact and purpose is to open the door to unionization of all employees of local franchises as a single bargaining unit of the corporate franchisor.

Since 2012, the NLRB has received 181 complaints from employees of individual McDonald’s franchises claiming that their rights were violated when they were disciplined or fired for participating in union-organized employee protests. On July 29, 2014, the general counsel released a statement saying that his office is prepared to move against the individual franchisees along with franchisor McDonald’s, USA, LLC, as joint employer respondents on 43 charges unless settlements can be reached.  In other words, the NLRB is going to try and muscle McDonald’s into submission.  Time will tell how it all plays out, but it is anticipated that the courts will ultimately have to intervene.

Since the early 1980s, a finding of “joint employer” status requires both entities to exercise direct and immediate control over the employees and the terms and conditions of their employment. Determinative factors include having the power to hire and fire, setting work schedules, determining rates of pay, and keeping employment records.  These factors rarely exist in traditional franchise arrangements.

In June, the NLRB accepted amicus briefs in an active matter involving the joint employer/franchisor issue.  While numerous manufacturing, hospitality, and business associations strongly advocated for retaining the current test, the general counsel’s brief argued that the direction and control test fails to take into account shifts in the U.S. workforce such as increasing use of contingent employees, outsourcing, and franchising.  The result, the GC argued, is to frustrate the purpose of the NLRA by limiting opportunities for collective bargaining.   The general counsel went even further, suggesting (without citing actual specific factual evidence) that corporations have moved to the franchise model for the specific purpose of limiting collective bargaining. The general counsel proposed an “industrial realities” test; arguing that a franchisor’s control over matters such as pricing, inventory, branding, and supply, effectively dictate the terms and conditions of employment that franchise owners could offer their employees.

It is no secret that the current NLRB is all about providing opportunities for collective bargaining and with an estimated 3-5 million fast food workers in the U.S., many of whom are paid at the lower-end of the wage scale, it’s not surprising that unions have focused their efforts on that industry.  The expense and effort of organizing and negotiating with thousands of individual franchise units makes industry-wide unionization difficult. The ability to organize all 700,000+ McDonald’s employees through a single election and secure employment terms for (and dues from) those employees in a single collective bargaining agreement, however, would be a significant game-changer.

Bottom Line for Employers:  The general counsel’s statement does not have the effect of binding law and it could be years before a board decision applying a new joint employer standard works its way through the courts to become law, but franchisors and franchisees should be aware of the writing on the wall and be sure that the franchise documents, policies and practices clearly vest all employee-related decisions and duties in the franchisee.  Additionally, employers should note that the underlying issue involved here goes well beyond the franchisor/franchisee relationship.  The real issue in play here is the larger INDEPENDENT CONTRACTOR or SUBCONTRACTOR relationship.  From temporary staffing relationships (see https://laborandemploymentlawupdate.com/2014/07/09/nlrb-expanding-joint-employer-standard) to the 1099-worker, the NLRB is attempting to do everything and anything in its power to broaden the employer/employee relationship.  In effect, the NLRB very much wants to allow labor unions to target “dual employers” and consequently organize employees in unprecedented numbers.  Yes, the ‘Big Mac’ is under attack, and all employers who are part of a franchise agreement, supply or use temporary staffing and/or rely on independent contractors should take serious note — and continue to work with competent legal counsel on diminishing “joint employer” liabilities.