NLRB Again Imposes Duty to Bargain Over Discipline Even Before Agreement on a Contract
September 15, 2016
New York Labor and Employment Law Report
September 15, 2016
August 24, 2016
July 13, 2016
Temporary, contracted-for, or leased employees who are employed by a “supplier,” but are assigned to work at another employer’s premises, currently comprise as much as 5% of American workers, and are among the fastest growing sectors. Noting this trend, the National Labor Relations Board, in its Miller & Anderson, Inc. decision this week, announced a new standard that makes it much easier for unions to organize these temporary employees working at another employer’s facility; and further, allows them to be organized in a single bargaining unit together with the host employer’s employees who perform similar functions, if both groups share a “community of interest.” The case addressed a petition by the Sheet Metal Workers for a union election among a group of (a) Miller & Anderson’s workers at its Pennsylvania construction site, together with (b) a second group of sheet metal workers employed by a separate company, Tradesmen International, who had supplied additional workers at the site on a contract basis. Under the Board’s newly-liberalized “joint employer” standards promulgated in its recent Browning-Ferris decision, Miller & Anderson was deemed to be the joint employer of its own sheet metal workers on the site and also those provided by contract with Tradesmen International. By contrast, however, Tradesmen International had no employment relationship at all with the Miller & Anderson employees. Both groups -- and both employers -- were included by the Board in a single unit, on the ground that they shared a “community of interest” since they worked side-by-side under common working conditions. Thus, the Board’s decision allowed a single bargaining unit of employees even where there would be two different employers at the bargaining table -- with potentially differing interests -- without the consent of both employers. Further, it authorized for the first time a bargaining unit with two employers, where one (the “supplier” of temporary help) employed only a portion of the unit, but had no employment relationship with the remainder. The Board’s majority, however, brushed aside concerns raised by dissenting Board Member Miscimarra that this result would be “unworkable” and lead to “confusion and instability,” holding instead that each employer will be expected to bargain over “jointly employed workers’ terms and conditions which it possesses the authority to control.” This decision should be viewed together with the Board’s newly-expanded joint-employer standards articulated in Browning-Ferris (holding that “indirect” or “potential” control over terms and conditions suffices to show joint employer status; “actual” or “immediate” exercise of control are no longer required). Together, these cases allow proliferation of combined units including not only employees directly employed by an employer, but also temps performing similar functions, in circumstances that may involve only indirect control by the host company, or incidental collaboration with the temp agency. The decision appears to be yet another element of the Board’s program to broaden opportunities for unionization. At a minimum, employers who are supplied by agencies with temporary, contract or leased personnel -- and agencies who supply these personnel -- must be wary that these arrangements are now targets for union organizing, and that the user of these personnel is more likely to be viewed as jointly employing both groups. Employers using these personnel, and agencies who supply them, should closely review their contractual arrangements, and the level of control assigned to each employer in practice, with these issues in mind.
July 4, 2016
Last month, the United States Court of Appeals for the Fifth Circuit affirmed the lower court’s decision upholding the National Labor Relations Board’s “quickie” election rule. As we previously reported, the final rule, among other things, significantly reduces the time period between the filing of an election petition to the date of the election, narrows the issues that may be raised at a pre-election hearing, and requires disclosure of employees’ personal information, including personal telephone numbers and e-mail addresses. The rule was effective as of April 14, 2015. The Associated Builders and Contractors of Texas, Inc. (“ABC”) mounted the challenge to the rule’s lawfulness, asserting that the Board both exceeded its authority under the National Labor Relations Act (the “Act”) and violated the Administrative Procedure Act. ABC first argued that the rule unlawfully postpones the resolution of certain voter eligibility issues until after the election is complete, in contravention of the Act. The Fifth Circuit rejected this argument, reasoning that under the plain language of the Act the purpose of the pre-election hearing is to determine whether a question of representation exists -- not to resolve all voter eligibility issues. Next, ABC contended that the rule arbitrarily and capriciously requires the disclosure of employees’ personal information to the petitioning union in violation of the Administrative Procedure Act. The Fifth Circuit found that the Board had sufficiently considered employees’ privacy concerns as well as the burden on employers when it expanded the disclosure requirement, and thus, the requirement was not arbitrary and capricious in violation of the Administrative Procedure Act. ABC also challenged the rule on the grounds that faster elections interfere with an employer’s right to free speech during organizing campaigns. In rejecting this argument, the Fifth Circuit found that there is no language in the Act which requires a specified waiting period between the filing of the petition and the date of the election. Additionally, the Fifth Circuit noted that the Board’s Regional Directors, who are responsible for setting the date of the election, are to consider the interests of both parties when setting an election date, which may include an employer’s opportunity to communicate its views concerning unionization to its employees. Now that the Fifth Circuit has joined an earlier decision from the United States District Court for the District of Columbia upholding the Board’s “quickie” election rule, employers must be prepared to respond before an election petition is even filed. The time employers have from date of petition to date of election has been effectively cut in half (from about 6 weeks to about 3 weeks), making a successful counter campaign extremely difficult to mount without advance planning and preparation. We recommend regular supervisory training and the creation of a tentative campaign blueprint that is ready for immediate activation in the event of a union petition. As before, an employer’s best opportunity to remain union-free comes from early awareness of organizing activity and an effective pre-petition campaign that discourages employees from signing the number of union authorization cards needed for the union to trigger an NLRB election.
January 6, 2016
In Whole Foods Market, Inc., the National Labor Relations Board, in a 2-1 decision, held that Whole Foods' rules prohibiting the recording of conversations in the workplace violated Section 8(a)(1) of the National Labor Relations Act. The two rules that were found to be unlawful were nearly identical. Both appeared in the company's General Information Guide, a guide that applied to all employees. The first rule prohibited the recording of company meetings without prior approval from store management, and the second rule prohibited all recording in the workplace without similar prior approval. The stated purpose of both rules (as set forth in the Guide) was to encourage open conversation and dialogue, and to eliminate the chilling effect that may exist when someone is concerned a conversation is being secretly recorded. Contrary to the stated purpose of the rules (to encourage open and honest communication), the Board majority instead found that such rules would reasonably be interpreted by employees to prohibit them from engaging in protected Section 7 activity. The Board majority reasoned that such rules would unlawfully prohibit employees from engaging in Section 7 activity such as (1) recording images of protected picketing, (2) documenting hazardous working conditions, or (3) documenting and publicizing various issues relating to terms and conditions of employment. The Board majority rejected the employer’s (and the dissent’s) contention that the stated intent of the rules (to encourage open and honest communications in the workplace without fear of surreptitious recordings) constituted a valid overriding employer interest to justify the rules. So, it is clear that the current Board will likely find no-recording rules in the workplace to be a violation of the NLRA unless the employer can establish a valid overriding interest to justify such rules. Considering the current pro-union makeup of the Board, establishing such an overriding interest will likely be difficult, and such rules will be aggressively scrutinized. Nonetheless, certain narrowly tailored restrictions supported by valid business justifications may be upheld by the Board. For example, a rule prohibiting the recording of meetings in which confidential information or trade secrets are discussed, or a rule prohibiting the recording of conversations involving private client or patient information, may be found to be lawful. However, at this point, employers should be wary of imposing broad no-recording rules in the workplace. Employers may require employees to follow applicable state or federal laws regarding secret recordings. The impact of an employer's ability to impose this restriction is limited in New York, where an individual may lawfully record a conversation as long as the individual doing the recording is a party to the conversation. However, an employer's ability to impose this restriction would have a significant impact in states such as Massachusetts and California, where the law requires that all parties to a conversation must consent to the recording of the conversation. The Board's decision in the Whole Foods case may not necessarily be the last word on this issue, because the company has appealed the decision to the Second Circuit Court of Appeals, which may be more sympathetic to the valid business justification for the company's no-recording rules. However, it may be worthwhile for employers to consider whether they currently have policies in their employee handbooks that prohibit recordings in the workplace, and if so, whether those policies should be revised. Employers should consult with legal counsel to assess the potential valid business justifications for the policies and to review any recording laws that may be applicable to employees in particular locations. Both the valid business justifications and any legal restrictions on recordings in the workplace should be expressly stated in the policies.
September 9, 2015
September 3, 2015
In Browning-Ferris Industries of California, Inc., the National Labor Relations Board (“NLRB” or “Board”), in a 3-2 decision, expanded who may be considered a joint employer under the National Labor Relations Act (“NLRA” or the “Act”). The Board’s decision significantly lowers the threshold for joint employer status, making it more likely that entities such as staffing agencies, franchisors, and contractors will be considered joint employers under the Act. A joint employer finding is significant because this means that an entity may be subjected to joint bargaining obligations and potential joint liability for unfair labor practices or breaches of collective bargaining agreements. Joint Employer Analysis Before Browning-Ferris Prior to the Board’s decision in Browning-Ferris, the standard for establishing joint employment was that both entities in question had to share the ability to control or co-determine essential terms and conditions of employment. Hiring, firing, supervising, and directing employees were generally considered to be the essential terms and conditions of employment. Board decisions further clarified that the type of control over the essential terms must be direct and immediate, and the alleged employer must have actually exercised that control -- it was not enough that it may have reserved some level of control through a contract. Rather, the control had to be exercised in practice. Joint Employer Analysis After Browning-Ferris The Board significantly modified this approach in Browning-Ferris. The Board’s stated new test, which sounds similar to the old test in words, but not in application, is that:
The Board may find that two or more entities are joint employers of a single work force if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms and conditions of employment.
The application of this test is where the Board makes sweeping changes. The Board will now evaluate the evidence to determine whether an alleged employer affects the means or manner of employees’ work and terms of employment, either directly or indirectly. In other words, the control no longer needs to be direct or immediate. Additionally, the Board found that it is not critical that the entity actually exercise such authority so long as it possesses or reserves the right to do so. The Board also expanded on those items found to be “essential terms and conditions” beyond just hiring, terminating, supervising, and directing employees. The Board included such things as dictating the number of workers to be supplied, setting work hours, controlling seniority and approving overtime, and assigning work and determining the manner and method of work performance. In short, the new test makes widespread changes by finding indirect control significant in establishing an employment relationship, not requiring that such control actually be exercised, and including more terms and conditions of employment as relevant in this analysis that were previously not considered to be “essential.” Applying the New Test in Browning-Ferris The issue before the Board in Browning-Ferris was whether Browning-Ferris, which operated a recycling facility, was a joint employer with LeadPoint, a staffing company that supplied employees to perform various work functions at the facility. Under the Board’s old test, it is almost certain there would have been no joint employer finding. LeadPoint set its employees’ schedules, engaged its own human resources manager to work at the Browning-Ferris facility, and had the sole responsibility to discipline, review, evaluate, and terminate its own employees. In addition, LeadPoint employed an Acting On-Site Manager, three shift supervisors, and seven line leads to manage and supervise LeadPoint employees working at the facility. Nonetheless, applying the new test, the Board found sufficient evidence of direct and indirect control (relying on control both exercised and reserved by contract) to support its joint employer finding. The Board relied on the following facts in making its determination: Browning-Ferris gave LeadPoint supervisors fairly detailed directives concerning employee performance that the LeadPoint supervisors then communicated to their employees; Browning-Ferris set some conditions on hiring that LeadPoint was contractually bound to follow (must have appropriate qualifications and meet or exceed Browning’s own standard selection procedures and tests); Browning-Ferris had the authority to discontinue the use of LeadPoint employees; Browning-Ferris determined when overtime was necessary; and Browning-Ferris' contract with Leadpoint prohibited LeadPoint from paying its employees more than Browning-Ferris paid its own employees who performed comparable work. Takeaways and Potential Implications The primary change resulting from Browning-Ferris is that indirect control over terms and conditions of employment may now be enough to create a joint employment relationship. Unfortunately, the Board’s decision fails to provide any real clarity on just how much indirect control may be sufficient to create such a relationship. The two dissenting members take issue with how broad the majority’s decision appears to be, stating that “the number of contractual relationships now potentially encompassed within the majority’s new standard appears to be virtually unlimited.” The dissent then lists the following examples:
The dissent’s list showcases the potential reach of the Board’s new test and the potential to significantly alter the landscape of how employment is understood under the NLRA. While employers wait for the Board to issue more decisions further delineating the scope of this test, there are some practical steps employers can take. Employers can revise their contracts to clarify that control over terms and conditions of employment rests with the contractor, use as little detail as possible in directing the work of the contractor, and stay out of all hiring, firing, and wage-related decisions. Alternatively, some employers may choose to wait to make any changes until this decision is eventually challenged in federal court. Employers should discuss with counsel how to best respond to this change. Ultimately, because of the wide array of factual arrangements involving contingent workers, franchisees, and independent contractors, and the reality of business relationships, there will certainly be some situations where letting go of some level of operational control is not a practical option. This must be weighed against the risk of being found to be a joint employer, and carefully evaluated when entering into and reassessing all business relationships.
August 17, 2015
In a long-awaited decision issued on August 17, 2015, the five-member National Labor Relations Board (“Board”) unanimously shut down an attempt by Northwestern University’s scholarship football players to become the first group of college athletes to form a labor union. This Board holding vacates the direction of election issued by an NLRB Regional Director in March 2014 and dismisses the representation petition filed by the College Athletes Players Association (“CAPA”), but does not address the fundamental issue of whether the players are “employees” under the National Labor Relations Act (“Act”). Instead of deciding this issue, the Board declined to assert jurisdiction over this case based on its conclusion that it “would not promote stability in labor relations” and therefore would not effectuate the policies of the Act. The Board noted that it had never been asked to assert jurisdiction in a case involving college athletes, nor had there ever been a petition for representation of a unit of a single college team, or even a group of college teams. The Board also pointed out that the players in this case did not “fit into any analytical framework” the Board had used in other cases involving college students (such as graduate student assistants or student janitors and cafeteria workers) because this case involved student athletes who receive scholarships to participate in what traditionally has been regarded as an extracurricular activity. The Board also distinguished these scholarship players from professional athletes, because the scholarship players are required to be enrolled full time as students and meet various academic requirements. The Board further observed that bargaining units in professional sports have never been limited to a single team’s players – they have always included the players of all teams in the entire league. Therefore, the Board concluded that there was no precedent that required it to assert jurisdiction, and that it was free to exercise its discretion to decline jurisdiction over this case. In justifying its decision to decline jurisdiction, the Board explained that Northwestern is a member of the National Collegiate Athletic Association (“NCAA”), which has a “substantial degree of control over the operations of individual member teams, including many of the terms and conditions under which the scholarship players (as well as walk-on players) practice and play the game.” Under these circumstances, the Board determined that its assertion of jurisdiction over only Northwestern and its scholarship football players would not promote stability in labor relations across the NCAA. The Board further explained that Northwestern competes in the NCAA Football Bowl Subdivision (“FBS”), where 108 of the 125 member schools are public institutions that are not covered by the Act. As a result, the Board does not have jurisdiction over the vast majority of the FBS teams. In fact, the Board pointed out that because Northwestern is the only private school in the 14-member Big Ten Conference, it “cannot assert jurisdiction over any of Northwestern’s primary competitors.” The Board cited this as an additional reason why its assertion of jurisdiction over only Northwestern and its scholarship football players would not promote stability and uniformity in labor relations. Although the Board’s exercise in restraint in this decision comes as somewhat of a surprise given this Board’s activism in expanding the reach of the Act, the Board made clear that its decision does not “preclude a reconsideration of this issue in the future,” and should be interpreted narrowly. In fact, the Board seemingly opened the door for consideration of a broader proposed bargaining unit than scholarship football players at one university by stating that its decision is not intended to “address what the Board’s approach might be to a petition for all FBS scholarship football players (or at least those at private colleges and universities).” So, the landscape of collegiate athletics will remain the same for now, but this may not be the last unionizing effort of student athletes that we see.
July 31, 2015
April 13, 2015
March 27, 2015
December 22, 2014
In the latest example of dramatic changes to well-developed principles of federal labor law and policy, the National Labor Relations Board ("NLRB" or Board") issued its long-awaited decision in Pacific Lutheran University last week. For a description of the Board's decision and its potential impact on union organizing at colleges and universities, please click here for our article on the Bond Higher Education Law Report.