The General Counsel for the National Labor Relations Board (“NLRB”) recently published a guidance memorandum that provides specific examples of lawful and unlawful employee handbook rules in the areas of confidentiality, professionalism and employee conduct, use of company logos, copyrights and trademarks, conflicts of interest, photography and recording, and interaction with the media and other third parties.  The memorandum also includes General Counsel-approved handbook rules that were adopted as part of an unfair labor practice settlement with the fast-food chain, Wendy’s. Over the past few years, the NLRB and its General Counsel have aggressively scrutinized many frequently used employee handbook provisions.  The basis for this scrutiny is the alleged infringement of the right of employees to engage in protected concerted activity under Section 7 of the National Labor Relations Act (“NLRA”).  Section 7 activity includes the right to discuss, challenge, question, and advocate changes in wages, hours, and other terms and conditions of employment in both unionized and non-unionized work environments.  Of course, it also includes the right to engage in union organizing.  A majority of the current NLRB will deem an employee handbook provision to violate the NLRA if it specifically prohibits Section 7 activity or if “employees would reasonably construe” the rule as prohibiting such activity.  It is this “reasonably construe” language that has resulted in many common employee handbook provisions being declared unlawful by the majority of the current NLRB. While one could editorialize at length regarding the razor-thin distinctions drawn between the provisions found lawful and unlawful, the usefulness of the guidance for employers lies in its concrete examples, some of which are highlighted below. Confidentiality Rules A confidentiality policy will be deemed by the current NLRB to violate the NLRA if it specifically prohibits employee discussions regarding terms and conditions of employment, such as wages or workplace conditions, or if employees would reasonably construe the policy to prohibit such discussions. Unlawful

• Do not discuss customer or employee information outside of work, including phone numbers and addresses.
• Never publish or disclose the employer’s or another’s confidential or other proprietary information.  Never publish or report on conversations that are meant to be private or internal to the employer.

Lawful

• No unauthorized disclosure of business secrets or other confidential information.
• Do not disclose confidential financial data, or other non-public proprietary company information.  Do not share confidential information regarding business partners, vendors, or customers.

Employee Conduct/Professionalism Rules The memorandum reinforces that employees have the right to criticize their employer’s policies and actions toward its employees, and therefore, any policies prohibiting disrespectful, inappropriate, or rude conduct toward the employer have been deemed unlawfully overbroad.  In contrast, rules requiring employees to be respectful to co-workers, clients, and customers have generally been found to be lawful. Unlawful

• Be respectful of the company, other employees, customers, partners, and competitors.
• No defamatory, libelous, slanderous, or discriminatory comments about the company, its customers and/or competitors, its employees, or management.

Lawful

• No rudeness or unprofessional behavior toward a customer or anyone in contact with the company.
• Being insubordinate, threatening, intimidating, disrespectful, or assaulting a manager/supervisor, co-worker, customer, or vendor will result in discipline.

Use of Company Logos, Copyrights, and Trademarks The NLRB has found that a broad ban on use of an employer’s name, logo, or other trademark is unlawful because it may restrict the use of the company name and logo on picket signs, leaflets, and other protest material. Unlawful

• Do not use any company logos, trademarks, graphics, or advertising materials in social media.

Lawful

• Respect all copyright and other intellectual property laws.  For the employer’s protection as well as your own, it is critical that you show proper respect for the laws governing copyright, fair use of copyrighted material owned by others, trademarks, and other intellectual property, including the employer’s own copyrights, trademarks, and brands.

The release of this guidance suggests the NLRB will continue to aggressively enforce and scrutinize the employment policies of union and non-union employers.  An unlawful policy is itself a violation of the NLRA, and if an employee is disciplined or terminated for violating an unlawful policy, the discipline could be rescinded and the employer could be ordered to restore the employee to his/her position with back pay. As seen in the examples above, tweaking one or two words or adding additional context and clarification to what would be an otherwise overbroad policy can mean the difference between an unlawful or lawful policy.  Employers should, therefore, use this memorandum as a guide in reviewing and revising their handbooks and other employee rules.

On December 11, 2014, the National Labor Relations Board ("Board") issued a 3-2 decision (with Board Members Philip Miscimarra and Harry Johnson dissenting) in Purple Communications, Inc., holding that employees have a presumptive right to use their employer's e-mail system during non-working time to communicate regarding union organizing and to engage in other protected concerted activities under Section 7 of the National Labor Relations Act ("Act").  The Board's decision overruled its 2007 decision in Register Guard. Purple Communications' electronic communications policy provided that its electronic communications systems and equipment were "to facilitate Company business" and that "all such equipment and access should be used for business purposes only."  The policy also prohibited employees from using its systems and equipment to engage "in activities on behalf of organizations or persons with no professional or business affiliation with the Company" and to send "uninvited e-mail of a personal nature."  There was no dispute that, under the Board's 2007 Register Guard decision, the policy was perfectly lawful as written. In the fall of 2012, the Communications Workers of America ("Union") filed petitions to represent employees at seven of Purple Communications' facilities.  After an election was held, the Union filed objections to the results of the election at two facilities and an unfair labor practice charge, alleging (among other things) that the electronic communications policy interfered with the employees' Section 7 rights. The Administrative Law Judge, relying on the Board's 2007 Register Guard decision, found the electronic communications policy to be lawful.  The Board majority, however, found that the Register Guard decision improperly placed too much weight on the property rights of employers in their own e-mail systems and too little weight on the Section 7 right of employees to communicate in the workplace about their terms and conditions of employment.  The Board majority also believed that the Register Guard decision failed to recognize the importance of e-mail as a means by which employees engage in protected communications.  Therefore, the Board majority overruled its Register Guard decision and held that employees have a presumptive right to use their employer's e-mail system during non-working time to engage in communications protected by Section 7 of the Act. The Board made clear in its decision that this presumption applies only to employees who have been granted access to the employer's e-mail system in the course of their work and does not require an employer to provide access to its e-mail system to employees who do not otherwise need it.  In addition, the Board held that an employer may rebut the presumption and justify a total ban on non-business use of its e-mail system by demonstrating that "special circumstances make the ban necessary to maintain production or discipline."  Virtually no guidance is provided in the decision regarding what those "special circumstances" might be, but the Board majority stated that "we anticipate that it will be the rare case where special circumstances justify a total ban on non-work e-mail use by employees."  The Board remanded the case back to the Administrative Law Judge for a determination of whether Purple Communications could successfully rebut the presumption and justify the scope of its prohibition on the personal use of e-mail. The restriction that employees may use their employer's e-mail system for Section 7 purposes only during non-working time raises a significant question:  can an employer monitor employee use of its e-mail systems during working time to ensure compliance with this restriction and discipline employees who are found to have engaged in Section 7 activity through e-mail during working time, without risking potential liability for unlawful surveillance or discrimination based on union activities?  According to the Board's decision, an employer may continue to notify employees that they should have no expectation of privacy in their use of the employer's e-mail system and may continue to monitor the use of its e-mail system for legitimate business purposes.  However, the Board stated that this monitoring is lawful only if "the employer does nothing out of the ordinary."  For example, the Board's decision leaves open the possibility that an employer's increased monitoring during a union organizing campaign or an employer's particular focus on employees who are known union activists could result in potential liability under Sections 8(a)(1) or 8(a)(3) of the Act. Members Miscimarra and Johnson both wrote strong dissenting opinions.  In the view of the dissenters, an employer's interests in controlling the use of its own electronic communications system should prevail over employees' interests in using that system for union organizing activities, especially in light of the availability of other electronic communications networks such as employees' own personal e-mail and social media sites. Many employers' electronic communications policies already permit employees to engage in some limited personal use of their e-mail systems as long as that personal use does not interfere with the employee's work duties or the work duties of other employees.  This type of policy may very well be lawful even under the Board's Purple Communications decision, because, on its face, it likely would not be interpreted to prohibit Section 7 protected activity during non-working time.  At this point, however, if your electronic communications policy contains a blanket prohibition on the use of your e-mail system for personal reasons, you may want to consider potential revisions to your policy. Andrew Bobrek, one of my colleagues in the Labor and Employment Department of Bond, Schoeneck & King, will be conducting a webinar on the Board's Purple Communications decision on Thursday, December 18, at 11:00 a.m.  More details will follow.

The exact limits of employee protected speech on social media are still finding definition, but a recent National Labor Relations Board decision identifies at least one limit:  premeditated insubordination.  In Richmond District Neighborhood Center, the Board held that two employees who discussed their plans on Facebook to engage in insubordinate activity on the job did not engage in protected activity, and the employer therefore did not commit an unfair labor practice by rescinding their rehire offers. In Richmond, the employer operated a teen center in San Francisco.  At an employee meeting, the employer solicited feedback on the program and employees submitted their perceived “pros” and “cons” regarding the program.  Following the meeting, two employees requested a follow-up meeting and the employer denied their requests.  During the subsequent summer break (during which employees are sent offer letters for rehire), the employer sent the two employees offer letters and the two employees engaged in the following conversation on Facebook about their plans to return to the program the following year: EMPLOYEE 1:  I'll be back, but only if you and I are going to be ordering s***, having crazy events at the Beacon all the time.  I don't want to ask permission, I just want it to be LIVE.  You down? EMPLOYEE 2:  Im gOin to be a activity leader im not doin the [teen center] let them figure it out and when they start loosn kids i aint helpn HAHA EMPLOYEE 1:  hahaha.  Sweet, now you gonna be one of us.  Let them do the numbers, and we'll take advantage, play music loud, get artists to come in and teach the kids how to graffiti up the walls and make it look cool, get some good food.  I don't feel like bein their b**** and making it all happy-friendly-middle school campy.  Let's do some cool s***, and let them figure out the money.  No more Sean.  Let's f*** it up.  I would hate to be the person takin your old job. EMPLOYEE 2:  Im glad im done with that its to much and never appriciated sO we just gobe have fuN dOin activities and the best part is WE CAN LEAVE NOW hahaha I AINT GOBE NEVER BE THERE even thO shawn gone its still hella stuCk up ppl there that dont appriciate nothing EMPLOYEE 1:  You right.  They dont appreciate s***.  Thats why this year all I wanna do is s*** on my own.  have parties all year and not get the office people involved.  just do it and pretend they are not there.  i'm glad you arent doing that job.  let some office junkie enter data into a computer.  well make the beacon pop this year with no ones help. EMPLOYEE 2:  They gone be mad cuZ on wednesday im goin there aNd tell theM mY title is ACTIVITY LEADER dont ask me nothing abOut the teen cenTer HAHA we gone have hella clubs and take the kids ;) EMPLOYEE 1:  hahaha!  F*** em.  field trips all the time to wherever the f*** we want! EMPLOYEE 2:  U f**** right see u WednesdaY EMPLOYEE 1:  I won't be there wednesday.  I'm outta town.  But I'll be back to raise hell wit ya.  Dont worry.  Whatever happens I got your back too. After a co-worker took a screenshot of the conversation and showed the employer, the employer rescinded the employees’ rehire offers.  The Board's General Counsel challenged the revocation of the offers as an unfair labor practice, arguing that the employees’ Facebook conversation constituted protected concerted activity under Section 7 of the National Labor Relations Act. The Board disagreed, noting that the “Facebook exchange contains numerous statements advocating insubordination” which could not be “easily explained away as a joke, or hyperbole divorced from any likelihood of implementation.”  The Board distinguished the conversation from “brief comments” which, in contrast, might be dismissed as hyperbole.  The Board held:  "The magnitude and detail of insubordinate acts advocated in the posts reasonably gave the Respondent concern that [the employees] would act on their plans, a risk a reasonable employer would refuse to take.  The Respondent was not obliged to wait for the employees to follow through on the misconduct they advocated.”  Accordingly, the employees’ conduct was not protected and the employer did not commit an unfair labor practice by withdrawing the rehire offers. This decision demonstrates that even the current Board has a limit to what type of employee conduct on social media must be tolerated by employers.  Although this decision will likely enable employers to more confidently take action against employees who discuss premeditated insubordination on social media, the distinction between true threats of insubordination and what the Board might consider to be hyperbole is somewhat murky.  Employers should still tread carefully before disciplining employees for conversing on Facebook about work-related issues.

In a decision issued last week, an Administrative Law Judge (“ALJ”) for the National Labor Relations Board (“NLRB”) ruled that an interim grievance procedure between an employer and a newly-certified union did not have to include an arbitration option in order to relieve the employer of the obligation to provide the union with notice and an opportunity to bargain before imposing significant discretionary discipline. As we previously posted, in late 2012, the NLRB issued a groundbreaking decision in Alan Ritchey, Inc., requiring for the first time that in the absence of a binding agreement addressing discipline, an employer must provide the union with a bargaining opportunity prior to issuance of significant discretionary discipline (i.e., suspension, demotion, or discharge).  This issue would ordinarily arise during the period after a union is newly certified, but before an agreement has been reached with the employer on an initial contract. The Alan Ritchey decision did not specifically address whether an interim grievance procedure had to offer an arbitration option if internal grievance efforts failed to resolve any disagreement over the proposed discipline.  There was no binding agreement between the employer and the union in the Alan Ritchey case and, recognizing the significant change in the law that the decision entailed, the NLRB decided to apply the new requirement on a prospective basis only. In Medic Ambulance Service, ALJ Cracraft found that an interim grievance procedure did not require an arbitration option to satisfy the Alan Ritchey requirements.  In Medic Ambulance, while negotiations for an initial collective bargaining agreement were underway, the employer and the newly certified union agreed to follow the first two steps set forth in the grievance/arbitration section of the employer’s expired agreement with a prior union.  The parties also expressly agreed, however, that the third step (arbitration) would not be available until a new contract was signed. ALJ Cracraft found that the agreement regarding the first two grievance steps constituted an agreed-upon interim grievance procedure that relieved the employer of its obligation to bargain with the union prior to imposing significant discretionary discipline.  The General Counsel for the NLRB contended that the procedure did not satisfy the Alan Ritchey requirements because it did not include an arbitration option, but ALJ Cracraft summarily rejected that argument:

Surely if the Board intended to mandate arbitration as a part of an interim grievance procedure, its decision would have clearly provided such guidance.  Thus, in disagreement with the General Counsel, I find that Alan Ritchey does not specifically require that an interim grievance procedure contain an arbitration component.

Having concluded that arbitration was not a required element of an interim grievance procedure, the ALJ held that the two-step “grievance only” procedure was sufficient to relieve the employer of its obligation to provide the union with notice and an opportunity to bargain before it terminated several employees. The ALJ's Medic Ambulance decision offers a welcome constraint to the far-reaching scope of the NLRB's Alan Ritchey decision.  Employers should be cautioned, however, that the ALJ's decision is not binding precedent and the union may still pursue an appeal to the NLRB.

In a stunning and potential landmark decision, a Regional Director of the National Labor Relations Board has found that football players receiving grant-in-aid scholarships from Northwestern University (the “University”) are “employees” under the National Labor Relations Act.  In his decision released Wednesday afternoon, the Regional Director determined that “players receiving scholarships to perform football-related services for [the University] under a contract for hire in return for compensation are subject to [the University]’s control and are therefore employees within the meaning of the Act.”  Accordingly, the Regional Director ordered that an election be conducted among all football players receiving grant-in-aid scholarships who have not exhausted their playing eligibility for the University. In support of his decision, the Regional Director found that the players receive compensation for the athletic services they perform in the form of scholarships, which pay for the players’ tuition, fees, room, board, and books and can total as much as $76,000 per calendar year for up to five years.  Furthermore, the Regional Director found that the players are under the strict control of the University throughout the year.  The coaches determine the location, duration, and manner in which the players carry out their football-related activities; they monitor the players’ adherence to NCAA and team rules; and they control “nearly every aspect of the players’ private lives,” including their living arrangements, applications for outside employment, off-campus travel, social media posts, and communications with the media.  In contrast, the Regional Director held that “walk-ons do not meet the definition of ‘employee’ for the fundamental reason that they do not receive compensation for the athletic services that they perform.” The University has confirmed that it plans to appeal the decision to the full National Labor Relations Board in Washington, D.C.  If upheld, the decision has the potential to dramatically alter the world of big-time athletics in higher education as it would open the door for scholarship athletes at all private universities to unionize.  Indeed, the decision could have implications for scholarship students in a number of areas beyond athletics. The Union, College Athletes Players Association (“CAPA”), which has the financial backing of the United Steelworkers, is seeking, among other demands, financial coverage for former players with sports-related medical expenses and the creation of an educational trust fund to help former players graduate.

In collective bargaining, a “final” proposal is often a term of art, used to signal the end of a party’s willingness to move.  However, negotiators frequently will continue to move even after a purportedly final offer.  In the view of the National Labor Relations Board ("NLRB"), “final” does not always really mean final.  Recently, the Fifth Circuit Court of Appeals agreed with the NLRB's view.  In Carey Salt Co. v. NLRB, the Fifth Circuit Court of Appeals affirmed the NLRB's holding that labor negotiations had not reached impasse, even though the union had asked for the company’s “final” proposal, the company had provided it, the union had rejected it, and the parties had thereafter confirmed that they were far apart. These facts, on their face, would seem to suggest that the parties had reached impasse, and that the company was therefore entitled at that point to suspend negotiations and implement its final offer.  However, the NLRB looked behind these facts, and concluded that the union, when it requested the company’s final offer, had not intended to bring negotiations to a halt.  The NLRB credited the union’s testimony that the union had wished only to poll its membership on the company’s position and continue bargaining.  The union’s negotiator testified – without significant rebuttal – that his request for a “final” offer had included the caveat that the parties negotiate further after receiving it.  Under these circumstances, the NLRB held, and the Fifth Circuit affirmed, that the company had prematurely seized on the final offer phraseology to declare impasse and to decline to meaningfully negotiate thereafter. This strategy had disastrous consequences for the company, not the least of which was that it was ultimately responsible for wages lost during an ensuing strike, which – as a result of the company’s premature cessation of negotiations and implementation of its final offer – was held to constitute an “unfair labor practice strike.”  Although the Fifth Circuit does not have jurisdiction over employers in New York, the Court's decision illustrates the treacherous waters that employers in any state must navigate when assessing whether impasse – always an evasive concept – has truly been reached.  The Fifth Circuit's decision includes a particularly scholarly recitation on the subject of impasse in collective bargaining, recounting and discussing precedent on this difficult issue. A second issue addressed in the case is whether, and under what circumstances, purportedly “regressive” proposals – i.e., company proposals that reduce previous terms or concessions – can be a factor in assessing “bad faith” bargaining on the part of the company.  The NLRB held that the company had bargained in bad faith by introducing so-called regressive proposals.  However, the Fifth Circuit rejected the NLRB's position, clarifying that regressive proposals are lawful as long as they are not designed or intended to avoid or frustrate bargaining.  The Fifth Circuit found no evidence that the regressive proposals had been deployed in a bad faith manner in this instance.  Therefore, the Court rejected the NLRB’s sweeping conclusion of bad faith based on these proposals alone.

In D.R. Horton, Inc., the National Labor Relations Board ("NLRB") held that a mandatory arbitration agreement between an employer and an employee that included a class action waiver was unlawful under Section 8(a)(1) of the National Labor Relations Act ("NLRA") because it prohibited the employee from engaging in concerted activity with other employees.  The NLRB's D.R. Horton ruling, which was the subject of a prior blog post, dealt a significant blow to employers who sought to manage their litigation risk by requiring employees to sign mandatory arbitration agreements and class action waivers as a condition of employment.  The Second Circuit Court of Appeals, in a separate case decided on August 9, 2013, expressly declined to follow the NLRB's D.R. Horton ruling and held that a class action waiver in an arbitration agreement was enforceable under the Fair Labor Standards Act ("FLSA").  Recently, the Fifth Circuit Court of Appeals rejected the NLRB's D.R. Horton ruling, holding that class action waivers contained in mandatory arbitration agreements do not violate the NLRA and are enforceable under the Federal Arbitration Act ("FAA"). The Fifth Circuit began its analysis by noting that the FAA requires arbitration agreements to be enforced according to their terms, with two exceptions:  (1) an arbitration agreement may be invalidated "upon such grounds as exist at law or in equity for the revocation of any contract" (commonly referred to as the FAA's "saving clause"); and (2) application of the FAA may be precluded by another statute's contrary congressional command.  The Court concluded that neither of these exceptions applied to preclude the enforceability of the class action waiver contained in the mandatory arbitration agreement. The Court stated that the saving clause "is not a basis for invalidating the waiver of class procedures in the arbitration agreement."  The Court then examined whether the NLRA contained a congressional command to override the provisions of the FAA, and found that it did not.  The Court found that the "NLRA does not explicitly provide for such a collective action, much less the procedures such an action would employ," and concluded that "there is no basis on which to find that the text of the NLRA supports a congressional command to override the FAA."  The Court also looked to the legislative history of the NLRA for evidence of a congressional command to override the FAA, and found no such evidence.  Finally, the Court determined that no congressional command to override the FAA could be inferred from the underlying purpose of the NLRA.  Accordingly, the Court held that the class action waiver in the mandatory arbitration agreement was valid and enforceable under the FAA. The Fifth Circuit recognized that every other Circuit Court of Appeals that considered the issue (including the Second Circuit, as noted above) either suggested or expressly stated that they would not defer to the NLRB's rationale, and held class action waivers in arbitration agreements to be enforceable.  The Court stated that it did not want to create a split among the Circuit Courts by enforcing the NLRB's D.R. Horton decision. Although the Court refused to enforce the NLRB's ruling that the class action waiver violated the NLRA, the Court agreed with the NLRB that the mandatory arbitration agreement violated the NLRA to the extent that it would lead an employee to believe that the filing of unfair labor practice charges was prohibited.  The employer argued that this was not the intent of the mandatory arbitration agreement, and that employees remained free to file unfair labor practice charges with the NLRB.  However, the Court nevertheless enforced the portion of the NLRB's order requiring the employer to clarify the language of the mandatory arbitration agreement to permit the filing of unfair labor practice charges. It remains to be seen whether the NLRB will ask the U.S. Supreme Court to review the Fifth Circuit's decision.  In the meantime, employers should consider whether arbitration agreements with employees containing class action waivers might be a useful tool to limit the risk and cost associated with employment-related litigation.

Recently, in Quicken Loans, Inc., the National Labor Relations Board ("NLRB") continued its close scrutiny of employers' confidentiality rules by affirming an administrative law judge's decision invalidating a rule prohibiting non-union employees from disclosing personal information about themselves or their co-workers, such as home phone numbers, cell phone numbers, addresses, and email addresses. Quicken's "Proprietary/Confidential Information" rule that was included in certain employment agreements prohibited employees from disclosing non-public information relating to the company's personnel, including "all personnel lists, rosters, personal information of co-workers, managers, executives and officers; handbooks, personnel files, personnel information such as home phone numbers, cell phone numbers, addresses, and email addresses" to any person, business, or entity. In affirming the administrative law judge's decision, the NLRB held that "there can be no doubt that these restrictions would substantially hinder employees in the exercise of their Section 7 rights."  Quicken defended the rule as necessary to protect the time and expense invested in its employees, and to protect the confidential and proprietary information entrusted to the company.  The NLRB rejected this defense, and agreed with the administrative law judge that complying with Quicken's rule would prohibit employees from discussing with union representatives or their co-workers their own wages and benefits, or the names, wages, benefits, addresses, or telephone numbers of other employees.  The NLRB concluded that "this would substantially curtail their Section 7 protected concerted activities." The NLRB also affirmed the administrative law judge's invalidation of Quicken's Non-Disparagement provision in its entirety.  The provision stated that employees would not "publicly criticize, ridicule, disparage or defame the Company or its products, services, policies, directors, officers, shareholders, or employees, with or through any written or oral statement or image . . . ."  The NLRB concluded that an employee would reasonably construe this provision as restricting his or her rights to engage in protected concerted activities. In the wake of this decision, and considering the fact that the NLRB is now comprised of a Senate-approved Democratic majority led by Chairman Mark Gaston Pearce, employers should expect continued close scrutiny of confidentiality policies.  Employers should carefully review their confidentiality rules to ensure that they do not prohibit employees from discussing wages, benefits, or other terms and conditions of employment either with their co-workers or with union representatives.  Employers should also consider including specific examples of prohibited disclosures and a clause specifically providing that the rule is not intended to prohibit an employee's exercise of rights protected by Section 7 of the National Labor Relations Act.

In a recent decision of statewide applicability to public employers with unionized members of the Police and Fire Retirement System (“PFRS”), the New York Court of Appeals (“Court”) addressed the issue of whether the City of Yonkers’ refusal to pay or reimburse new employees for their statutorily-required Tier V pension contributions was arbitrable.  In City of Yonkers v. Yonkers Fire Fighters, the Court affirmed the decision of the Appellate Division, Second Department (which had reversed the lower court’s decision), and held that the dispute was not arbitrable, thereby affirming a permanent stay of arbitration.  The case will likely have positive implications for similarly-situated public employers across the state.  The City of Yonkers ("City") was represented by Bond, Schoeneck & King in the litigation.

The dispute arose in connection with the 2009 enactment of Article 22 of New York’s Retirement and Social Security Law (“Tier V”).  Among other changes, Tier V provides that those who join the PFRS on or after January 10, 2010 must contribute 3% of their salary towards the retirement plan in which they are enrolled.

Prior to the enactment of Tier V, the City and the Yonkers Fire Fighters (the “Union”) were parties to a collective bargaining agreement (“CBA”) which expired on June 30, 2009.  Like many other firefighter and police collective bargaining agreements throughout the state, the CBA required the City to provide a “non-contributory” pension/retirement plan to its firefighters.

In late 2009, the City hired several firefighters who, because of a “gap” in the law, had the option of joining the PFRS as either members of Tier III or Tier V – both contributory (3%) tiers.  In an attempt to apply the terms of the expired CBA to relieve its Tier V members of the statutorily-required 3% member contribution, the Union filed a grievance and sought arbitration based upon the contractual obligation to provide a non-contributory plan.

The Union relied upon an exception (Retirement and Social Security Law, Article 22, Section 8) in the Tier V statute which provides that members of the PFRS need not join the contributory Tier V if there is an alternative (non-contributory) retirement plan available to them under a CBA “that is in effect on the effective date of Tier V.”  This provision gives new members of the PFRS a means by which they could avoid Tier V and its 3% contributions and join an existing non-contributory plan.  The Union sought to use the “Triborough” provisions of the Taylor Law, which require that the terms of an expired agreement continue until a new agreement is reached, to extend this exception to its members hired in late 2009 on the theory that its CBA, which expired on June 30, 2009, was nonetheless still “in effect.”

Finding that the Union’s reliance on “Triborough” applying to the statutory Section 8 exception was misguided and not the Legislature’s intent, the Court found that the CBA in question expired on June 30, 2009 and, therefore, was not “in effect” on January 10, 2010, the effective date of Tier V.  The Court adopted a position taken by the City and determined that the Legislature intended to honor only agreements providing for non-contributory status that had not expired at the time the statute became effective.

The Union also grieved, and attempted to arbitrate, an alternative argument that even if its new members could not join Tier V as non-contributing members, then, under the CBA, the City should pay (or potentially reimburse) its new members’ 3% pension contributions.  The Court, however, found that the arbitration sought by the Union was barred as an impermissible negotiation of pension benefits.  The Court accepted the City’s argument that Section 201(4) of the Civil Service Law and Section 470 of the Retirement and Social Security Law prohibit the arbitration of this dispute.  While New York generally favors arbitration, an issue is not proper for arbitration when the subject matter of the dispute violates statutory law, as was the case here.  Among other things, Sections 201(4) and 470 state that the benefits provided by a public retirement plan are prohibited subjects of collective bargaining.  In this case, arbitration of the relevant dispute would be improper, as these statutes clearly bar the negotiation of benefits provided by a public retirement system such as the PFRS 3% contribution.

Finally, the Court rejected the Union’s remaining contention that the Section 8 exception runs afoul of the Contract Clause of the United States Constitution, which prohibits the retroactive impairment of contracts after their inception.

This 4-2 decision of the Court could impact any public employer that employs police and/or firefighter members of Tier V, and who has a collective bargaining agreement that addresses non-contributory retirement plans.  However, because of the many complex legal issues involved, it is recommended that these matters, as well as those involving questions surrounding the applicability of this decision to Tier V, be reviewed with labor counsel.

Citing “unprotected, indefensible conduct” that “created a reasonably foreseeable danger” to patients, the Second Circuit, in NLRB v. Special Touch Home Care Services, Inc., stung the National Labor Relations Board (“NLRB”) by upholding a home care employer’s refusal to reinstate strikers who “misled the employer” by falsely advising that they intended to report to work.

In 2003, when 1199 SEIU announced a three-day strike -- after giving 10 days advance notice required for health care institutions -- the employer lawfully polled its home health aides as to whether they intended to report to work as usual at the homes of patients they were assigned to assist.  While the employees were under no obligation to answer, most of them did respond, and the employer made arrangements to cover those who said they would not report to work, in order to meet the employer’s duty to its patients.

However, 48 home health aides who advised the employer that they intended to report to work nevertheless did not do so.  The employer argued that this conduct was “unprotected,” because, by misleading the employer, the aides failed to take “reasonable precautions” to avoid a risk of injury to the homebound (typically frail and elderly) patients whom the aides were assigned to assist.  Because the employer had no notice that these 48 employees would not report to work -- and none of them called in to say so -- the employer had to struggle to find coverage belatedly, and could not cover all of the patients, many of whom suffer from conditions like Alzheimer’s, strokes, Parkinson’s disease, and diminished mobility.

Seventy-five strikers who told the employer they would be out, or who called in prior to their shift, were reinstated to their positions when the three-day strike ended.  However, the 48 who misrepresented that they would report to work were not immediately reinstated (the employer instead placed them on a list for future openings).

The NLRB held that both groups of strikers were protected, reasoning that the 10-day advance-notice for strikes at health care entities was the only pre-strike notice required.  However, the Second Circuit rejected the NLRB’s view, holding that an otherwise lawful striker becomes unprotected if he “cease[s] work without taking reasonable precautions” to shield employers (or here, patients) from “foreseeable imminent danger due to sudden cessation of work.”  This conduct was regarded as unprotected under a line of industrial cases where strikers left their workstations in conditions that were potentially perilous to the public or the employer.  Here, by misleading the employer as to their intention to report to work, the 48 home health aides left the employer unable to protect seriously ill patients, thereby placing them in “imminent danger,” and rendering their strike activity “unprotected.”

For nearly 35 years, employers in pre-arbitration discovery with a union have not been required to disclose witness statements obtained during internal workplace investigations.  However, consistent with its unabashedly pro-union year-end theme of overturning longstanding precedent, the National Labor Relations Board (“NLRB” or "Board") in American Baptist Homes of the West, d/b/a Piedmont Gardens abandoned this bright-line rule in favor of a fact-specific balancing test.  The balancing test will be applied to all information requests made after December 15, 2012.

Under Section 8(a)(5) of the National Labor Relations Act (“NLRA”), an employer must furnish a union with relevant information necessary to the union’s performance of its duties, including for grievance or arbitration purposes.  Under a rule established in its 1978 Anheuser-Busch decision, the Board had consistently applied a blanket exemption from disclosure for witness statements obtained during internal investigations of employee misconduct, reasoning that such an exemption was necessary to avoid coercion and intimidation and to encourage cooperation in internal investigations.

Finding its logic “flawed,” the Board in Piedmont Gardens explicitly rejected the Anheuser-Busch rule.  In its place, the Board held that the production of witness statements should be subject to the same standard as other union information requests and that any attempts to withhold disclosure should be analyzed using the test developed by the U.S. Supreme Court in Detroit Edison Co. v. NLRB.  Under this test, where requested witness statements may contain relevant information, an employer may refuse to produce them only if it can show that a legitimate and substantial confidentiality interest outweighs the union’s need for the information.  Additionally, in order to assert a valid confidentiality defense, an employer must raise its concerns to the union in a “timely manner” and offer an accommodation regarding the information requested before refusing to disclose the statement.

Essentially, a longstanding bright-line rule has been replaced with a test that will force employers to make a case-by-case prediction of how the Board will apply a subjective balancing of interests.  This unclear standard is almost certain to extend the grievance process as parties engage in lengthy proceedings to resolve confidentiality claims.  Lone dissenting member Brian Hayes expressed these very concerns, and he also noted that the production of witness statements is inconsistent with existing guidance from the Equal Employment Opportunity Commission regarding confidentiality in connection with an investigation of an employee’s harassment complaint.

When this decision is combined with the NLRB’s Banner Health decision (previously reported here), which found that an employer’s rule requiring confidentiality during an internal investigation was an unfair labor practice, the effect is a major shift in the law that impedes an employer’s ability to conduct effective and meaningful internal investigations.  In light of these decisions, employers should reassess their current investigatory practices, including whether to continue to produce witness statements, and if so, how best to protect employees from legitimate confidentiality concerns regarding the disclosure of those statements.

The National Labor Relations Board (“NLRB”) continues to issue rule-changing decisions that create troubling results for employers.  We recently reported, for example, on the NLRB’s reversal of decades-old precedent when it ruled that a dues checkoff provision survives the expiration of a collective bargaining agreement.  Two days after issuing that decision, the NLRB issued a decision in Alan Ritchey, Inc., holding that an employer must bargain with a union under certain circumstances prior to imposing discretionary discipline on an employee who is represented by a union.

This new rule will apply only in the absence of a binding agreement between the employer and the union to address discipline, such as a grievance-arbitration procedure.  Therefore, as the NLRB explained, this obligation to bargain over employee discipline will typically arise only after a union is newly certified, but before the parties have agreed to a first contract.

In Alan Ritchey, Inc., after the union was certified and while negotiations were being conducted for a first contract, the employer continued to rely on its pre-existing five-step progressive disciplinary system set forth in its employee handbook to discipline several employees for absenteeism, insubordination, threatening behavior, and failure to meet efficiency standards.  Pursuant to the handbook, the employer reserved the right to exercise discretion in the enforcement of policies, and the employer admittedly exercised this discretion in setting the levels of discipline with regard to the employees in this case.  For example, when imposing discipline for failing to meet performance standards, three employees were treated leniently because of extenuating circumstances -- one employee’s husband died, another worked in a low volume area, and another was unable to work consecutive days in the same position.

The Union filed unfair labor practice charges to challenge these disciplinary actions, taking the position that it should have first been notified and given an opportunity to bargain.  The NLRB agreed.  It held that even though the employer’s existing discipline system represents the status quo that can and must be continued during bargaining for a first contract, the employer was not privileged to exercise any discretion with regard to that discipline system without negotiating with the union.  Rather, the employer was required to provide the union with notice and an opportunity to bargain each time it seeks to exercise any discretion with regard to employee discipline.  Recognizing that it had never articulated this requirement before, the NLRB opted to apply the rule only prospectively.

The NLRB set forth a few limiting principles in laying out this rule:

• First, the employer will only be required to provide the union with notice and an opportunity to bargain prior to implementing the discipline where it seeks to impose a suspension, demotion, or discharge.  For lesser forms of discipline, such as warnings and counselings, there is still a bargaining obligation, but the employer can delay providing the notice and opportunity to bargain until after the implementation of the discipline.
• Second, where there is an obligation to provide pre-implementation notice and opportunity to bargain, the employer need not bargain to agreement or impasse at this stage.  The employer need only provide sufficient notice, and provide responses to union information requests, if any.  If the parties cannot reach an agreement, the discipline can be imposed, and the bargaining obligation continues after imposition (albeit with the possibility that the discipline may have to be rescinded or altered).
• Third, no prior notice is required where “exigent circumstances” exist.  The NLRB defines this as a reasonable, good faith belief that “the employee’s continued presence on the job presents a serious, imminent danger to the employer’s business or personnel.”  This includes situations where the employer believes the employee is engaging in unlawful conduct, is posing a significant risk of imposing legal liability on the employer, or threatens safety, health, or security inside or outside the workplace.

In its decision, the NLRB expressed its view that this new bargaining obligation will not “unduly burden” employers.  It is difficult to agree with this assessment.  This new obligation presents a significant impediment to an employer's ability to manage its workforce while bargaining for an initial contract.  Although the employer need not complete bargaining regarding the discipline before imposing the proposed discipline, the obligation to provide meaningful notice and to respond to union information requests prior to imposing the proposed discipline will certainly create significant delays in the disciplinary process.