national labor relations board (nlrb) update/media/files/insights/... · 2015-10-20 · the new...

Squire Patton Boggs Labor & Employment Webinar Series

October 14, 2015

Daniel B. Pasternak

D. Lewis Clark Jr.

W. Michael Hanna

National Labor Relations Board (NLRB) Update

An Unprecedented Year at the NLRB: How It Affects You

2 squirepattonboggs.com 2 squirepattonboggs.com

Agenda

The NLRB’s new joint employer standard

The new union election rules, six months later

2015 case law developments

Update on class/collective action waivers in arbitration agreements

NLRB potpourri

Q&A



Joint Employers Under the NLRA


NLRB Broadens Joint Employer Standard

Issue: When do two (or more) independent business constitute a joint employer, and

thus may be required to jointly recognize and bargain with a labor union representing

jointly-employed employees, as well as held jointly liable for labor-related liabilities?

For 30-plus years, NLRB found joint employer status only when one business

immediately and directly controlled essential terms and conditions of employment of

the other business’ employees, such as hiring, firing, discipline, supervision and

direction.

In Browning Ferris Industries, 362 NLRB No. 186 (August 27, 2015), the NLRB

rejected that test, reverting to earlier standard that permits a joint employer finding

based on indirect control, or even the unexercised potential to assert control.

In the past, employers receiving services through temp agencies were not responsible

for agency workers’ union organizing, collective bargaining, and other NLRB-based

rights unless the contracting employer exercised “direct and immediate” control over

the temporary employees’ working terms and conditions.

Now that indirect control is enough to support joint employer status, far more business

relationship are subject to the possibility of having to share unfair labor practice liability

and bargaining obligations.


• Most significant potential impact in the franchising area.

December 2014: NLRB GC issued consolidated complaints against McDonald’s

franchisees – as well as against their franchisor, McDonald’s USA, LLC – alleging

unfair labor practices arising out of a series of one-day strikes in 2012 (allegations of

discriminatory discipline, reductions in hours, discharges, and other coercive conduct

directed at employees in response to union and protected concerted activities).

Complaint alleges that franchisor jointly employed the franchisees’ employees.

Very little evidence that the corporate franchisor was involved in any of the alleged

unlawful conduct. GC alleges that the franchisor should be held jointly liable for the

allegedly unlawful conduct of its franchisees because “McDonald’s USA, LLC, through

its franchise relationship and its use of tools, resources and technology, engages in

sufficient control over its franchisees’ operations, beyond protection of the brand, to

make it a putative joint employer with its franchisees, sharing liability for violations.”

The McDonald’s litigation commenced earlier this year, and is in its very early stages,

with a decision not expected until next year.



• NLRB’s new formulation allows for ordinary operational measures and controls put in

place by the typical franchisor to protect its brand – such as requiring franchisees to

use specific POS or crew management systems to ensure consistent delivery of the

franchisor’s core product or service – to be used as evidence of the franchisor’s

indirect or potential control over the franchisee’s employees, thus creating a joint

employer relationship.

• Because joint employers are jointly liable for each other’s liabilities and can be required

to bargain with their jointly-employed employees’ unions, expansion of the NLRB’s joint

employer test is likely to either impose substantial new costs on both franchisors and

franchisees, or create an enormous disincentive for franchisors to offer any form of

substantial support to its franchisees, lest that support be construed as demonstrating

indirect or potential control sufficient to give rise to a joint employer relationship.

• Reduction in assistance provided to franchisees to reduce likelihood of joint employer

status = more franchisee labor violations and less franchisor control over brand?



Legislative response

Federal

S. 2015 – Protecting Local Business Opportunity Act

Would require that joint employers “exercise actual, direct and immediate control over

essential terms and conditions of employment.”

Hearings held before Senate HELP Committee on October 6, 2015.

States

Texas: S.B. 652 (effective September 1, 2015) amends Texas Labor Code to specify that a

franchisor is not considered an employer of a franchisee or a franchisee’s employee unless

the franchisor has been found by “a court of competent jurisdiction in this state to have

exercised a type or degree of control over the franchisee or the franchisee’s employees not

customarily exercised by a franchisor for purposes of protecting the franchisor’s trademarks

or brands.”

Tennessee: S.B. 475 (effective April 10, 2015) clarifies that “neither a franchisee nor a

franchisee’s employees shall be deemed to be an employee of the franchisor for any

purpose.”

Louisiana: H.B. 464 (passed June 2015) provides similar protections for franchisors.

Attorneys General of CO, MI, NV, SC, UT, and WA co-signed a letter to NLRB prior to BFI

decision expressing concern about a change to the joint employer standard and its impact

on business in their states – possibly more state legislation to come?




The New Union Election Rules



Summary of Changes:

Elections can be held in as few as 13 days after filing of a petition.

Petitions can be filed electronically and served by the union on the employer.

Pre-election posting and email notices must be sent by the employer within 2

business days after service of the petition.

Employers must file a statement of position on the appropriateness of the

proposed unit within 7 days after the Board serves a notice of the petition.

Failure to raise issues precludes raising the issues in later proceedings,

including pre-election unit hearing (if any).

If it seeks a pre-election hearing, the employer must provide full names, work

locations, shifts, and job classifications of all employees in the proposed unit

and all employees the employer seeks to add or exclude from the unit.

Any pre-election hearing must be held within 8 days of the notice of hearing,

and the issues are limited to whether there is a question concerning unit

appropriateness, and not individual employee eligibility.



Summary of Changes, cont’d:

The 25-day waiting period between the issuance of a Decision and Direction

of Election (DDE) and an election is eliminated.

Within 2 business days after issuance of the DDE or approval of a stipulated

election agreement, the employer must electronically file with the Board and

serve on the union a list of all eligible voters, including names, addresses,

and available cell and home phone numbers and personal email addresses.

Post-election objections (along with supporting evidence) must be filed within

7 days after the tally of ballots. A hearing will be held within 21 days after the

tally.



Impact Since Going into Effect April 2015:

Average election time down 40%.

Too early to tell if unions are winning more. Unions were winning about 68%.

Median time for elections sought and held between April and July 2015 was

23 days. Prior to rule change, target was 42 to 45 days.

A Teamsters local won an election in 17 days in Florida.

A Teamsters local lost an election in 23 days in California.

An important post-rule change development: NLRB GC bypassed the

rulemaking process and issued GC Memorandum 15-08 on September 1,

2015, allowing for electronic signatures to be accepted for purposes of

showing of interest; ink-signed authorization cards now no longer required.

Fraud/abuse concerns

“Click here to join the union”



2015 Case Law Developments


Case Law Update – Protected Concerted Activity

General Counsel Report on Workplace Rules – March 18, 2015

Report addresses the following common workplace rules:

• confidentiality

• conduct toward the employer and management

• conduct toward co-workers

• communications and interaction with outside parties and the media

• use of logos, copyrights or trademarks

• photography and recording in the workplace

• leaving work or premises, or walking off the job

• conflicts of interest

Report reinforces the Board’s decision in Lutheran Heritage Village-Livonia that:

• the mere maintenance of a work rule may violate Section 8(a)(1) of the Act if the rule has a

chilling effect on employees' Section 7 activity. The most obvious way a rule would violate

Section 8(a)(1) is by explicitly restricting protected concerted activity; by banning union

activity, for example. Even if a rule does not explicitly prohibit Section 7 activity, however, it

will still be found unlawful if 1) employees would reasonably construe the rule's language to

prohibit Section 7 activity; 2) the rule was promulgated in response to union or other

Section 7 activity; or 3) the rule was actually applied to restrict the exercise of Section 7

rights.


Case Law Update – Misconduct or PCA?

Healthbridge Management LLC, 362 NLRB No. 33 (March 24, 2015)

Employee led a group of employees into management office to present complaints

about working conditions.

It was alleged that the leader engaged in menacing conduct toward the supervisor

and was terminated.

ALJ found the company terminated the employee for engaging in concerted

protected activity and order reinstatement.

NLRB adopted the ALJ’s findings and used the Atlantic Steel four factor analysis to

determine if the alleged misconduct caused the employee to lose his Section 7

rights:

• The place of the discussion

• The subject matter of the discussion

• The nature of the employee’s outburst

• Whether the outburst was provoked by the employer’s unfair labor practices



Pier Sixty LLC, 362 NLRB No. 59 (March 31, 2015)

Several days before a union election, a supervisor spoke to his employees in a loud

voice and in a harsh tone. One of the employees took offense and posted the

following on his personal Facebook page:

• Bob is such a NASTY MOTHER F***ER” don’t know how to talk to people!!!!! F**k his

mother and his entire f***ing family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!!!!

Co-worker reported the posting and the employee was fired.

NLRB found the comments were not egregious enough to lose his Section 7 rights

in part because “vulgar language is rife in [Pier Sixty]’s workplace among managers

and workers alike.”

The NLRB followed the Triple Play factors in determining if the employee’s

comments were such that he lost his Section 7 protections.



Pier Sixty (cont.)

The Triple Play factors are:

• whether the record contained evidence of antiunion hostility on the part of the employer;

• whether the employer provoked the employee’s conduct;

• whether employee’s conduct was impulsive or deliberate;

• the location of the employee’s Facebook post;

• the subject matter of the post;

• the nature of the post;

• whether the employer considered language similar to that used by the employee to be

offensive;

• whether the employer maintained a specific rule prohibiting the language used; and

• whether the discipline imposed on the employee was typical of that imposed for similar

violations or was disproportionate to his offense.


Case Law Update – Confidentiality

Battle’s Transportation, Inc., 362 NLRB No. 17 (February 24, 2015)

Battle’s involved the company’s confidentiality agreement. The ALJ found the

agreement did not violate the employees’ Section 7 rights, but the NLRB overturned

the ALJ’s findings.

Company’s policy stated:

• The Employee acknowledges that, in the course of employment by the Employer, the

Employee has, and may in the future, come into the possession of certain confidential

information belonging to the employer including but not limited to human resources related

information, drug and alcohol screening results, personal/bereavement/family leave

information, insurance/worker’s compensation, customer lists (address, telephone number,

medical/health related), investigations by outside agencies (formal and informal)[,] financial,

supplier lists and prices, fee/pricing schedules, methods, processes or marketing plans.

The Employee hereby covenants and agrees that he or she will at no time, during or after

the term of employment, use for his or her own benefit or the benefit of others, or disclose

or divulge to others, any such confidential information

• NLRB held – “Contrary to the judge, we find the confidentiality agreement overbroad to the

extent that it bars employees from discussing “human resources related information” and

“investigations by outside agencies,” because employees would reasonably construe those

phrases to encompass terms and conditions of employment or to restrict employees from

discussing protected activity, such as Board complaints or investigations.”


Case Law Update – Confidentiality

Battle’s Transportation (cont.)

Also at issue was a memo posted by the company following an incident, which

stated in part:

• We were contacted this morning by the Front Office staff at the VA Medical Center. They

wanted to report that Battle’s Drivers notified clients that they were transporting that

Thursday was the last day of our contract. They interpreted it that it was the last day we

would be transporting them. It is important to correct this miscommunication and to advise

all drivers that you are not to communicate any Battle’s company business with our

clients. If there is information to communicate, the management staff will handle these

matters.

• The NLRB found that: “Reading the memo as a whole, we find that the prohibition against

employees discussing ‘any Battle’s company business with our clients’ is unlawfully vague

and overbroad. Employees would reasonably construe this prohibition to restrict discussion

about union-related matters.”


Case Law Update – Investigations

American Baptist Homes of the West d/b/a Piedmont Gardens, 362 NLRB

No. 139 (June 26, 2015)

Board overturned longstanding precedent that protected the confidentiality of

employee witness statements.

Under the NLRB’s 1978 decision in Anheuser-Busch, all written statements by

employee-witnesses were automatically exempt from disclosure as long as they

qualify as “witness statements.”

NLRB has abandoned that rule and has adopted a balancing test:

• The NLRB will balance the union’s need for the information against “any legitimate and

substantial confidentiality interest established by the employer.”

• The party asserting confidentiality must prove that a legitimate and substantial

confidentiality interest exists which outweighs the need for the information by the party that

requested the information.

• The NLRB will consider whether the information withheld is sensitive or confidential based

on the specific facts in each case.

• Even where a legitimate and substantial confidentiality interest outweighs the union’s need

for the requested information, the party asserting the confidentiality defense must raise its

confidentiality concerns in a timely manner and seek an accommodation from the other

party.


Case Law Update – Investigations

The Boeing Company, 362 NLRB No. 195 (August 27, 2015)

The Board affirmed a 2013 ALJ ruling condemning a Boeing policy asking employees

to keep workplace investigations confidential.

Boeing’s original policy “directed” witnesses to not discuss the case with any Boeing

employee other than investigators or the witness’ union representative.

Boeing revised the policy to only recommend witnesses to refrain from discussing the

matter with other employees.

The ALJ found the revised policy still violated the Act, and the Board affirmed, since it

could still be interpreted to request confidentiality and nothing suggested the employee

would be free to disregard the policy.


Case Law Update – Brief Suspension Violated Act

Bellagio, LLC, 362 NLRB No. 175 (August 20, 2015)

The Board concluded the employer violated the Act when it allegedly denied an

employee’s request for union representation during a disciplinary interview.

A hotel guest complained the employee had acted rudely. The employee’s supervisor

brought the employee in for an interview. The employee asked if discipline was a

possibility and asked for union representation. When the supervisor could not locate a

union representative, he told the employee it was his responsibility to find a union

representative and directed him to sign a statement relating to the guest complaint.

When the employee refused, the supervisor suspended the employee pending an

investigation. The investigation resumed the following day, and the employee did not

lose any pay.

The Board found the employer violated the employee’s Weingarten rights.


Case Law Update – “Embarrassing the Company”

Cellco Partnership dba Verizon Wireless, JD(SF)38-15 (September 18, 2015)

An ALJ found Verizon’s handbook provision that would allow Verizon to discipline

employees for causing the company “embarrassment” over the Internet was too broad.

The ALJ found the handbook provision went against the NLRB’s Purple

Communications precedent which established a presumption that employees would be

able to use employer email on nonworking time.



NLRB’s Continued Opposition to Arbitration Agreements


NLRB’s Continuing Rejection of Class/Collective

Action Waivers in Arbitration Agreements

SCOTUS’ strong endorsement of arbitration agreements over the past 10 years – in

employment cases and in general – has led to greater numbers of employers adopting

arbitration as means to resolve employment disputes.

Trend started about six years ago: employers include waiver of right to file, or

participate in, class or collective action, and instead limit employee to arbitrating only

his or her individual claim.

NLRB: D.R. Horton, Inc. (January 2012) – requirement that employees waive the right

to engage in class or collective action and instead arbitrate claims individually

interferes with Section 7 right to engage in protected concerted activity.

D.R. Horton appeals to Fifth Circuit, and wins. Other courts agree; refuse to follow or

endorse NLRB’s position.

Murphy Oil USA, Inc., 361 NLRB No. 72 (Oct. 28, 2014)

NLRB doesn’t seek review of D.R. Horton, instead “doubles down”

Murphy Oil appeals to Fifth Circuit; argument held in July 2015, but no decision yet.

Outcome does not appear to be in doubt, but NLRB’s next steps this time?




200 E. 81st Rest. Corp., 362 NLRB No. 152 (July 29, 2015)

Individual employee filed a wage and hour collective action on behalf of himself and

other employees. The other employees were unaware of the action and did not

consent or otherwise join in the action.

NLRB, relying on D.R. Horton and Murphy Oil, held that the filing of an action by a

single employee, seeking to vindicate the rights of co-workers is protected

concerted activity.

“By definition, such an action is predicated on a statute that grants rights to the

employee’s coworkers, and it seeks to make the employee the representative of his

colleagues for the purpose of asserting their claims, in addition to his own. Plainly,

the filing of the action contemplates—and may well lead to—active or effective

group participation by employees in the suit, whether by opting in, by not opting out,

or by otherwise permitting the individual employee to serve as a representative of

his coworkers… Specifically, we hold that the filing of an employment-related class

or collective action by an individual employee is an attempt to initiate, to induce, or

to prepare for group action and is therefore conduct protected by Section 7.”




On Assignment Staffing Service, Inc., 362 NLRB No. 189 (August 27, 2015)

NLRB addressed an issue not decided in D.R. Horton or Murphy Oil: does a non-

mandatory waiver of class/collective action rights violate the NLRA?

On Assignment’s arbitration agreement contained a waiver, but permitted employees

to “opt-out” of the agreement within 10 days.

On Assignment argued no interference with Section 7 rights because agreement was

not a condition of employment and voluntary.

NLRB (majority) rejected, finding that the agreement is still unlawful because it

requires workers to prospectively give up their right to engage in protected activity –

“existence of an opt-out procedure … does not change this fact.”

NLRB (majority) finds a violation:

giving employees an opportunity to opt out of the agreement doesn't mean it ceases to be a

condition of employment; and

the requirement that employees have to affirmatively opt out significantly burdens the exercise of

their right to pursue class or collective litigation.


NLRB Potpourri – Microunits

DPI Secuprint, 362 NLRB No. 172 (August 20, 2015)

The Board affirmed a regional director’s decision approving a unit of hourly pre-press,

digital press, offset bindery, digital bindery, and shipping and receiving employees. The

employer contended that hourly offset-press employees should be included.

The Board disagreed with the company’s contention that the offset press employees

shared an “overwhelming community of interest” with the petitioned-for workers and

that excluding them would result in a fractured unit.

The Board followed its previous Specialty Healthcare decision.

Two other closely-watched cases working their way through the courts involving

microunit issues (Macy’s (cosmetics and fragrance department employees); Bergdorf

Goodman (shoe department employees))


NLRB Potpourri - Dues Checkoff

Lincoln Lutheran of Racine, 362 NLRB No. 188 (August 27,2015)

In a decision that surprised no one, the NLRB overturned 53 years of established law,

holding that an employer must continue to comply with a CBA’s contractual dues

check off provision even after the CBA expires, like other terms and conditions of

employment.

The Board’s decision in Bethlehem Steel Co., 136 NLRB 1500 (1962), held that the

contractual dues check off provisions do not survive expiration of collective bargaining

agreements.

The NLRB began to erode this principle in a series of cases referred to as the

Hacienda decisions. It attempted to overturn Bethlehem in the 2012 WKYC-TV case,

but that case was voided by the Noel Canning decision.

Significantly (but predictably), the NLRB expressly did not extend the ruling to select

contractual provisions such as arbitration, no-strike provisions, union security

provisions, and management rights clauses. These provisions do not survive the

expiration of the agreement.

The parties can waive the continuation of dues check off, but the wavier must be clear

and unmistakable.


NLRB Potpourri – No Good Deed Goes Unpunished

Boch Imports, Inc., 362 NLRB No. 83 (April 30, 2015)

Boch’s handbook contained several provisions that the NLRB believed violated

employees’ Section 7 rights. A complaint was issued, but rather than litigate the issue,

Boch worked with the NLRB’s Regional Office to modify the handbook to ensure

compliance with the NLRA. A revised handbook was published to replace the old

handbook.

The NLRB found that Boch did not do enough to repudiate its earlier versions of the

handbook policies. In order to relieve itself of liability, an employer’s repudiation must

be timely, unambiguous, and “specific in nature to the coercive conduct.” In addition,

“such repudiation or disavowal of coercive conduct should give assurances to

employees that in the future their employer will not interfere with the exercise of their

Section 7 rights.”

Here, Boch’s 2013 revisions were found to be insufficient to avoid liability for two

reasons: first, because one provision (“dress code and personal hygiene”) was left

unrevised; and second, because there were no specific assurances to employees that

in the future the company would not interfere with the employees’ Section 7 rights

regarding protected concerted activity.


NLRB Potpourri – The Best (Worst) of the Rest

Northwestern University

NLRB declines to assert jurisdiction over scholarship athletes at private universities.

Roundy’s

Parties settle and NLRB dismisses oldest case on NLRB docket involving issue of

non-employee union organizer access to leased premises.

SW General, Inc. (D.C. Circuit)

Court finds that appointment of Acting General Counsel from January 2011 to

November 2013 was invalid under Federal Vacancies Reform Act (but not Noel

Canning, Part Two).

33 squirepattonboggs.com

Lew Clark

Partner - Phoenix

(602) 528-4065

[email protected]

Mike Hanna

Partner – Cleveland

(216) 479-8699

[email protected]

Dan Pasternak

Partner – Phoenix

(602) 528-4187

[email protected]

Contact Information

Blog: www.employmentlawworldview.com

Twitter: @SPB_EmpLaw and @SPB_Global

national labor relations board (nlrb) update/media/files/insights/... · 2015-10-20 · the new...

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