Management Memo

Management’s inside guide to labor relations

Unions Can Now Use Electronic Signatures for Showing of Interest for NLRB Elections

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Unions no longer will need to gather employees’ signatures on authorization cards before they can file a petition with the National Labor Relations Board (“NLRB” or “Board”) for a representation election.  General Counsel Richard F. Griffin, Jr. has issued Memorandum 15-08 (pdf) announcing that effective immediately unions filing petitions will be allowed to submit and the Board will “accept electronic signatures in support of a showing of interest if the Board’s traditional evidentiary standards are satisfied.”

Acceptance of Electronic Signatures Flows from the Amended Election Rules

As the General Counsel points out, when the Board voted to adopt its Amended Election Rules in December 2014, it made clear that additional changes to the election procedures and rules were likely.  The Board held at that time that its regulations, as they then existed, were “sufficient to permit the use of electronic signatures” to form the basis for the 30% showing of interest required when a petition for an election is filed.  At that time the Board assigned to the General Counsel the responsibility “to determine whether, when and how electronic signatures can be practically accepted” and to “issue guidance on the matter.”

The Minimum Requirements for Electronic Signatures

For an electronic signature to be acceptable and considered authentic and reliable by the Board’s Regional Offices, the General Counsel has ruled that it must include the following information

  1. the signer’s name;
  2. the signer’s email address or other known contact information (e.g., social media account);
  3. the signer’s telephone number;
  4. the language to which the signer has agreed (e.g., that the signer wishes to be represented by ABC Union for purposes of collective bargaining or no longer wishes to be represented by ABC Union for purposes of collective bargaining);
  5. the date the electronic signature was submitted; and,
  6. the name of the employer of the employee

The Memorandum also explains the procedures for submission of a showing of interest based on electronic signatures as follows:

A party submitting electronic digital signatures must submit a declaration (1) identifying what electronic signature technology was used and explaining how its controls ensure: (i) that the electronic signature is that of the signatory employee, and (ii) that the employee herself signed the document; and (2) that the electronically transmitted information regarding what and when the employees signed is the same information seen and signed by the employees.3

When the electronic signature technology being used does not support digital signatures that lend itself to verification as described in paragraph 2, above, the submitting party must submit evidence that, after the electronic signature was obtained, the submitting party promptly transmitted a communication stating and confirming all the information listed in la through lf above (the “Confirmation Transmission”).

  1. The Confirmation Transmission must be sent to an individual account (i.e., email address, text message via mobile phone, social media account, etc.) provided by the signer.
  2. If any responses to the Confirmation Transmission are received by the time of submission to the NLRB of the showing of interest to support a petition, those responses must also be provided to the NLRB.
  3. Submissions supported by electronic signature may include other information such as work location, classification, home address, and additional telephone numbers, but may not contain dates of birth, social security numbers, or other sensitive personal identifiers. Submissions with sensitive personal identifiers will not be accepted and will be returned to the petitioner. They will not be accepted until personal identifiers are redacted

Questions Remain About Authentication

GC Memorandum 15-08 lays out the General Counsel’s instructions to the Board’s Regional Offices and to unions seeking to file elections under the new rules as to the nuts and bolts of collecting and verifying electronic signatures in place of actual signatures on cards that have been the norm since the NLRB began conducting elections 80 years ago and appears on its face to establish procedures for the agency’s employees to follow to verify the authenticity of electronic signatures submitted in support of a petition for an election, as anyone who has had even cursory experience with the Board’s handling of a union’s showing of interest knows, employers have little if any opportunity to meaningfully challenge a showing of interest even where it has substantial doubts as to its authenticity.  While the processes described in the Memorandum appear robust on their face, the fact remains that an employer or other interested party will never really know whether and to what degree the processes are being followed.

What Allowing Electronic Signatures Means

Although the General Counsel and the Board suggest that the decision to allow use of electronic signatures for a showing of interest is not significant and is consistent with the Board’s opinion that it is Congress’s intent that “that Federal agencies, including the Board, accept and use electronic forms and signatures, when practicable—i.e., when there is a cost-effective way of ensuring the authenticity of the electronic form and electronic signature given the sensitivity of the activity at issue, here the showing of interest,” it would be a mistake to view this development in isolation.

Rather, it should be seen as yet another demonstration of the fact that the Board and the General Counsel share the view that the purpose of the Act and the agency is to encourage and promote collective bargaining and make it easier for employees to unionize. The decision to allow electronic signatures should be viewed alongside the Board’s decision last week in Browning Ferris Industries jettisoning its long standing test for determining joint employer status for a that looked to whether the entity claimed to be a joint employer had exercised direct and immediate control over the terms and conditions of employment of the workers in question, for a new far looser test that simply  asks whether the purported joint-employer possesses the authority to control the terms and conditions of employment, either directly or indirectly.”. As the Board puts it, “reserved authority to control terms and conditions of employment, even if not exercised, is clearly relevant to the joint-employment inquiry.”

Given the lowering of the bar for a union to obtain an election that is augured by the move to accept electronic signatures, effective immediately, we can certainly expect a continued increase in organizing and the filing of petitions, followed by ever faster elections.

NLRB Redefines and Expands “Joint-Employer” Status

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The National Labor Relations Board (“NLRB” or “Board”) has issued its long-anticipated  decision in Browning-Ferris Industries, 362 NLRB No. 186 (pdf), establishing a new test for determining joint-employer status under the National Labor Relations Act (“NLRA” or the “Act”).  Because this revised standard will resonate with businesses relying on contractors and staffing firms throughout the economy and across industry lines, employers should be wary of its potential impact upon relationships with service providers that are supportive of, or critical to, their enterprise.

By fashioning a new standard in Browning-Ferris, the Board springs open new questions of which legally distinct entities will bear responsibility in NLRB cases addressing union recognition and bargaining obligations, as well as for any unfair labor practices that may follow.  Given the Board’s lead in fashioning a new standard, described as based on common law principles, it is likely to be relevant as well to other agencies, such as the Equal Employment Opportunity Commission and Department of Labor.

The majority opinion in this 3-2 decision makes clear that its objectives are far reaching: to address “the diversity of work­place arrangements in today’s economy,” including the increase in “[t]he procurement of employees through staffing and subcontracting arrangements, or contingent employment,” and fulfill a “primary function and responsibility.”

A New Standard for a Different Economy

Under the new standard enunciated by the majority, “[t]he 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.” Browning-Ferris jettisons the long standing requirement that not only must a party have the means to influence such matters, but it must also have exercised that right in a meaningful way.  If the decision is upheld and followed, no longer will the Board need to find that an employer retains and exercises direct control over another employer’s employees to be liable as a joint employer of those employees.

In the decision and press release, the Board suggests that “the current economic landscape”, which includes some 2.87 million people employed by temporary agencies, warrants a “refined” standard for assessing joint-employer status. As the majority puts it: “If the current joint-employer standard is narrower than statutorily necessary, and if joint-employment arrangements are increasing, the risk is increased that the Board is failing what the Supreme Court has described as the Board’s ‘responsibility to adapt the Act to the changing patterns of industrial life.’”

What Is the New Test for Finding Joint Employer?

So what exactly is changed? Previously, an employer had to exercise direct and immediate control over the terms and conditions of employment to be found to be a joint-employer. Under the new standard, what matters is whether the purported joint-employer possesses the authority to control the terms and conditions of employment, either directly or indirectly. In other words, the actual or potential ability to exercise control, regardless of whether the company has in fact exercised such authority, is the focus of the Board’s inquiry.  As the Board puts it, “reserved authority to control terms and conditions of employment, even if not exercised, is clearly relevant to the joint-employment inquiry.” (emphasis added).

The Board’s decision also extends joint-employer status to employers that only exercise a degree of indirect control over the work performed by the employees of another. By way of example, in support of its holding that Browning-Ferris Industries (“BFI”) was a joint-employer of the employees of its contractor, Leadpoint Inc., a supplier of temporary labor, the Board emphasized that BFI had “communicated precise directives regarding employee work performance” to Leadpoint supervisors.

Why This Matters

As former NLRB Chair Wilma Liebman told Noam Scheiber of The New York Times, the Board’s decision changes the critical fact of which company is required to negotiate when employees unionize: “This is about, if employees decide they want to bargain collectively, who can be required to come to the bargaining table to have negotiations that are meaningful,”

One significant indicator of how broadly the Browning-Ferris decision will be applied may be seen when the decisions issue in the pending unfair labor practice charges in which McDonald’s is alleged to be a joint-employer of the employees of various franchisees. While the full import of Browning-Ferris may unfold over years of administrative litigation and court review, we know that the obvious (and intended) effect of the decision is to permit the Board to find joint-employer status where it did not previously exist. Indeed, the Board majority notes that extending joint-employer status is necessary to “encompass the full range of employment relationships wherein meaningful collective bargaining is … possible.” Notwithstanding the arrangements employers and contractors have made in years past to guard against joint-employer exposure, unions will be at the ready with unfair labor practice charges and representation petitions as vehicles for the Board to apply its new standard and examine or reexamine relationships forged before the pronouncements of Browning-Ferris. Thus, employers should anticipate a role in newly filed proceedings alleging joint-employer status – even as they contemplate reforming or redefining terms by which they engage with contractors and other providers of services supportive of their business.

Especially troubling is the prospect that the Board, in its zeal to create new applications for its joint-employer criteria, will ignore existing facts showing no actual exercise of control by one employer over employee relations of another, and instead look for control that potentially could be exercised in an ordinary arm’s length business relationship.

Given these circumstances, even those employers who do not exercise any direct or indirect control over the employees of their contractors should review carefully the terms of such arrangements, keeping in mind the Board’s stated intention of expanding joint-employer status.

What to Do Now

It is not an exaggeration to say that the new standard for determining joint-employer status will impact employers in almost every industry across the country.  As a first step, employers will want to closely examine their relationships with those who provide them with temporaries and other contingent workers, and their contracts and relationships with those other businesses that provide integral services and support, to assess whether there is a vulnerability to findings of joint-employer status.

NLRB Elections Now 40% Quicker – Median of 23 Days From Filing

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Evidence continues to mount as to how much more quickly representation elections are being held since the National Labor Relations Board’s (“NLRB” or “Board”) Amended Representation Election Rules that took effect on April 14, 2015. Melanie Trottman of The Wall Street Journal has crunched the data and reports today that the median number of days between the filing of a representation petition and the day on which employees vote has fallen to 23 days in uncontested elections where the employer and union stipulated to the terms for the vote, and 25 days in the 20 contested cases in which the election was directed by the Board after a hearing.  In comparison, during the Board’s 2014 fiscal year, the last full year before the new rules took effect, the median time was 38 days for all elections and 59 days in contested elections.

While challenges were filed to the Amended Election Rules by business groups, the two District Courts that have considered arguments that the NLRB exceeded its authority when it adopted the new Rules last December in each case the challenge was dismissed.   Both cases are being appealed.

Meanwhile, employers and unions alike continue to await the Board’s decisions in two other cases likely to have major impacts on organizing and representation case law. In Browning-Ferris, the Board is considering whether to adopt standard for determining joint-employer status that would make it much easier for unions to claim that separate businesses are joint employers.  In Miller & Anderson  the Board will decide whether it will continue to follow its decision in Oakwood Care Center (pdf), which disallowed inclusion of solely employed employees and jointly employed employees in the same unit absent consent of both employers, and if not, whether the Board should return to the holding of M.B. Sturgis, Inc. (pdf), which permits the inclusion of both solely and jointly employed employees in the same unit without the consent of the employers.

Student Athletes as Employees – Second Down: The Steelworkers and The NLRB

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As we reported, earlier this week the National Labor Relations Board (“NLRB” or “Board”) decided that it would not exercise jurisdiction with respect to the representation petition filed by the College Athlete Players Association seeking to represent the scholarship members of the Northwestern University football team.  The Board did not answer the question of whether it considered the team members to be employees of the university and explained that for policy reasons it was not answering the critical questions at this time.  It did however make clear that it might well do so in the future and that it very well could find players on scholarship to be employees who have the right to negotiate with the university as their employer.

Since then, the United Steelworkers of America which is the union behind the College Athlete Players Association has made clear that this is only the first play in what it promises will be an ongoing effort to change the way student athletes are treated under the NCAA rules.  As reported by the New York Times, the Steelworkers goal is for student athletes to be recognized as employees of the universities for whom they “play” and to secure for them collective bargaining rights. Steelworkers President Leo F. Gerard said yesterday that “the USW remains as committed as ever to the idea that scholarship athletes deserve the same rights and protections afforded to other Americans.”

He also made clear that from his union’s perspective that although the campaign to have student athletes recognized as employees with bargaining rights may well be a long one but that the Steelworkers are in it for the duration.  “Maybe it won’t happen in 2015,” he said, “But before today’s athletes send their children to college, every college scholarship football player and every college scholarship basketball player will be a proud union member and no longer exploited on their jobs.”

Ramogi Hama, President of the College Athlete Players Association and John Adam, the lawyer for the Association in the Board proceedings, spoke of lobbying and lawsuits as tools the Association plans to use in its fight to secure bargaining rights.  They compared this effort to the challenges to the reserve clause in baseball that culminated in the Curt Flood case and opened the era of free agency in major league baseball.

Clearly the stakes are huge and the battle is nowhere near resolved.  If the Steelworkers and the College Athlete Players Association have their way, college sports in this country may well be unrecognizable in the near future.

NLRB Sacks Northwestern Student Athletes Union Effort-Punts on Real Issue

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The National Labor Relations Board (“NLRB” or “Board”) has ruled in a unanimous decision that it is dismissing the petition filed by the College Athlete Players Association for an election declaring Northwestern University football team members who receive grant-in-aid scholarships are “employees” within the meaning of the National Labor Relations Act (“Act”).  The Board explained that it had concluded that “asserting jurisdiction in this case would not promote stability in labor relations.”  The Board made clear however that it might well assert jurisdiction in a future case involving grant-in-aid scholarship players.

The Players Association’s Petition

It has been over a year (March 26, 2014) since the Regional Director of the Chicago Region of the NLRB found that football players at Northwestern University who receive grant-in-aid scholarships were “employees” within the meaning of the National Labor Relations Act (“Act”) and therefore could be represented by a union. Northwestern argued that these players were student athletes and were therefore not eligible to vote. The Regional Director directed an election which took place last year.  The ballots were impounded pending the outcome of an appeal to the Board.

In a surprising Decision (pdf), the five member panel of the Board unanimously held that it would not take jurisdiction over the case and dismissed the union’s Petition.  As a result, the ballots will be destroyed since the decision is not appealable.

The Board’s Decision Not To Assert Jurisdiction

The Board based its ruling on the unique nature of this case stating that  its decision is primarily premised on the nature of the sports league (the NCAA Division 1 Football Bowl Subdivision) and the substantial  control exercised by the league over the individual teams,   it would not promote  stability in labor relations to assert jurisdiction in this case.   The Board looked to its experience in professional sports, where it noted it had not directed elections on a single team basis but rather on a league wide basis. It also noted at length that Northwestern, a member of the Big Ten Conference, was the only private university in the conference, that the rest of the schools in the conference were public universities and therefore, that even if their football players were deemed to be employees, the other teams would be outside the Board’s statutory jurisdiction since they would be public employees.

Northwestern is a private university over which the Board has jurisdiction. Its football team is part of the NCAA which has about 125 schools.  Only 17 of those schools are private schools. Northwestern was also in the Big Ten Conference and was the only private school in that league. The other schools in the leagues are public institutions over which the Board has no jurisdiction. Because the NCAA and the Big Ten have the authority to enforce its rules over all of their members, the Board concluded that it would be difficult to create any degree of stability in labor relations or competition in the conference as constituted since it could not assert jurisdiction over Northwestern’s state school competitors.

In reaching its decision, the Board made it very clear that it’s the scope of its decision was limited—e.g. it only applied to grant-in-aid scholarship players; it was not deciding whether or not these players were employees or students; that it was only dealing with Northwestern which was in a unique conference with public and private universities; and that its decision “did not preclude a reconsideration of this issue in the future”. The Board was also influenced by the fact that Northwestern had made significant changes in the terms and conditions of these players and that the NCAA had been encouraged to make significant reforms which “may result in changes to the circumstance of scholarship players that influenced.”

What This Means

While the Board did not decide whether the scholarship players were students or employees, it did distinguish the main case relied on by Northwestern and the many other universities that submitted amicus briefs to argue that these players were student athletes and not employees,  In Brown University, 342 NLRB 483 (2004), the Board found that graduate student assistants were not employees.  In fact, many observers had expected that the Board would use the Northwestern University decision as an opportunity to reverse its holding in Brown University and return to the short-lived decision in New York University (pdf) and once again hold that graduate teaching assistants are employees for purposes of the Act. The Board, in a footnote, noted that “with the potential exception of students seeking undergraduate degrees in physical education—the football activities they engage in are unrelated to their course of study or educational programs.”  This may be an indication of the Board’s position on this issue if the right case comes before them to reverse Brown.

Given the enormous ramifications in so many areas, if the Board had allowed these players to unionize, both the leagues and Northwestern, as well as the innumerable private schools and other individuals that have been waiting for this decision, have already expressed great relief over this ruling by the Board.  However, since the Board went out of its way to emphasize the narrow scope of its decision, the issues in in the case are far from over.


NLRB Denies McDonald’s Appeal of Motion to Dismiss Joint Employer Claims

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The National Labor Relations Board has issued an Order (PDF) denying a request for a special appeal filed by McDonald’, USA, LLC and its franchisees (collectively referred to as “McDonald’s” in the Board’s Order) and found that the Administrative Law Judge presiding in the unfair labor practice hearing did not err when she denied McDonald’s motion for a bill of particulars explaining the factual basis for the General Counsel’s claim that McDonald’s, USA, LLC and the named franchisees are joint employers.

The ALJ Had Denied McDonald’s Motion for a Bill of Particulars

McDonald’s had asked the ALJ, if she denied its request for a bill of particulars explaining the facts that the General Counsel intended to reply upon in support of its claim that the franchisor and its franchisees are joint employers, to strike the joint-employer allegations and dismiss the 2014 complaint.  McDonald’s had argued that without the information that it was requesting, and an explanation of what the General Counsel would rely upon in alleging a new standard for evaluating whether there was a joint employer relationship, it would be denied due process.

The Board Majority’s Ruling

In the short five-paragraph August 14, 2015 Order, Chairman Mark Pearce and Board Members Kent Hirozawa and Lauren McFerran found that Administrative Law Judge Lauren Esposito “conducted a well-reasoned analysis of the relevant authority and its application to the pleadings in this matter,” when she denied their motion for a bill of particulars or to dismiss.  The majority based its decision on its conclusion that “the consolidated complaint was sufficient to put McDonald’s on notice that the General Counsel is alleging joint employer status based on McDonald’s control over the labor relations practices of its franchisees.”

Members’ Miscimarra and Johnson’s Dissent

Board Members Philip A. Miscimarra and Harry I. Johnson, III did not agree with the majority and issued a far lengthier dissent, in which they argued that the denial of the request for permission to file a special appeal of the ALJ’s Order “presents an acute due process problem and is shortsighted in terms of prudently managing the Board’s resources and minimizing the burden placed on the parties.”

The dissent pointed out that although the complaint “is consistent with the Board’s current joint employer standard,” “the complaint language provides no notice regarding the new joint employer standard upon which the General Counsel intends to rely upon in the alternative, nor what facts the General Counsel believes will prove joint employer status under the alternative standard.”  Significantly, as the dissent noted, that “alternative theory may be the sole basis for finding that Respondent violated the Act” despite the utter lack of notice in the complaint regarding the underpinnings of that theory.

What This Means

Such a denial of due process, as the dissenters pointed out, means that if the Board ultimately, at the end of these lengthy, expensive and time consuming proceedings, finds that McDonald’s is a joint employer with its franchisees under the alternative theory, and that the Act was violated, “Respondent [McDonald’s] will have a plausible and potentially compelling argument that its due process rights have been violated – and the Board may find that it has expended substantial resources building and litigating a case on an unstable foundation.”

Court Invalidates Solomon’s Appointment As Acting NLRB General Counsel– What Does It Mean?

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On August 7, in SW General Inc. v. NLRB 2015 US App LEXIS 13812, a federal appellate court ruled that the January 5, 2011 appointment of Lafe Solomon as Acting General Counsel to the NLRB violated the Federal Vacancies Reform Act 5 U.S.C. Sections 3345 et. seq. (FVRA) (PDF). For that reasons it held that his authorizations to issue an unfair labor practice (“ULP”) complaint in the case was invalid and the NLRB’s decision finding the employer guilty of ULPs must be vacated. Since Solomon served as Acting General Counsel until November 4, 2013, the Court’s decision renders potentially suspect any and all NLRB ULP  decisions based upon complaints issued during that period.

Noel Canning

In NLRB v. Noel Canning 134 S. Ct. 2550 (2014) the Supreme Court invalidated a plethora of NLRB decisions based on its finding that the appointments of Board members who had participated in the decisions  were  invalid recess appointments because the Court found that the Senate was not in fact in recess at the time the appointments were made. In the wake of Noel Canning, the Board, then composed of members whose appointments had been properly confirmed by the Senate reconsidered and reissued most of those decisions.  SW General  seems to be another decision invalidating a scheme by the Administration to get around Senate roadblocks to appointments which has been invalidated by the Courts.

The Impact of SW General

But the Court in SW General made clear that its holding in that case would actually be much narrower in its impact.  That is because it held that if an employer had  not timely raised the issue of the General Counsel’s appointment,  the defense was waived:

We hold that the former Acting General Counsel of the NLRB, Lafe Solomon, served in violation of the FVRA from January 5, 2011 to November 4, 2013. But this case is not Son of Noel Canning and we do not expect it to retroactively undermine a host of NLRB decisions. We address the FVRA objection in this case because the petitioner raised the issue in its exceptions to the ALJ decision as a defense to an ongoing enforcement proceeding. We doubt that an employer that failed to timely raise an FVRA objection—regardless whether enforcement proceedings are ongoing or concluded—will enjoy the same success. See 29 U.S.C. § 160(e); Andrade, 729 F.2d at 1499.

In SW General, the defense was raised in exceptions to the Administrative Law Judge’s decision. Whether it can be raised after the decision by the NLRB is questionable.  29 U.S.C. Sec 160 (e) specifically provides: No objection that has not been urged before the Board, its member, agent, or agency, shall be considered by the court, unless the failure or neglect to urge such objection shall be excused because of extraordinary circumstances In Andrade v. Lauer, 729 F2d 1475 (D.C. Cir. 1984), the DC Circuit set forth the requirements needed to attack decisions by an invalidly appointed official:

 The core purposes of the doctrine are served if a plaintiff challenging government action on the ground that the officials taking that action improperly hold office meets two requirements. First, the plaintiff must bring this action at or around the time that the challenged government action is taken. Second, the plaintiff must show that the agency or department involved has had reasonable notice under all the circumstances of the claimed defect in the official’s title to office. This does not require that the plaintiff perform any particular rituals before bringing suit, nor does it mandate that the agency’s knowledge of the alleged defect must come from the plaintiff. It does, however, require that the agency or department involved actually knows of the claimed defect.

What This Means for Employers

Thus, employers found to have committed unfair labor practices in proceedings between January 5, 2011 and November 4, 2013, during Lafe Solomon’s  tenure as  Acting General Counsel should review the status of the proceedings against them and determine whether they are still able  to raise this issue as quickly as possible in any proceeding which has not yet been decided by the NLRB.

Vice Editorial Staff to be Represented by Writers Guild – Unions Continue New Media Push

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As we have been reporting, the Writers Guild of America East has been actively pursuing writers in the new media arena.   On Friday August 7th, the Guild announced that Vice had agreed to recognize the Guild as the bargaining representative of its editorial staff without an election. It is reported that there are approximately 80 employees in the unit.

While VICE’s management’ statement this past Friday concerning the Guild’s campaign and demand for recognition left some room for doubt as to whether VICE would recognize the union without an election,  they announced today that they would grant recognition without a vote.

These developments reinforce the fact that unions like the Guild are actively organizing in the tech and new media fields where they are finding a receptive audience. It is clear that as expected, the NLRB’s adoption of more union friendly rules for representation elections has expanded union organizing and employee interest in a number of industries and presented employers with new challenges in responding to petitions filed under the new expedited election rules.

NLRB Wants Employer to Pay Union’s Bargaining Expenses – Aggressive Push For Broader Use of “Enhanced Remedies” Continues

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One of the hallmark initiatives of NLRB General Counsel Richard F. Griffin Jr. has been the pursuit of more aggressive remedies in response to what the General Counsel considers to be egregious unfair labor practices (“ULP’) activity.  While his predecessors and prior Board members spoke of “special remedies” that they would seek to impose in what they deemed extraordinary cases, General Counsel Griffin and today’s National Labor Relations Board (“NLRB” or “Board”) are much more frequently arguing for and directing remedies that go beyond those that the NLRB routinely imposed over the first 75 years following passage of the National Labor Relations Act (the “Act” or the “NLRA”).

The General Counsel Wants Guitar Center Stores to Pay the Union’s Bargaining Expenses

On July 24, 2015, Peter Sung Or, Regional Director Region 13 issued a Consolidated Complaint (pdf) against Guitar Center Stores, Inc., a nationwide retail chain, accusing the company of bargaining in bad faith in its negotiations with the Retail Wholesale and Department Store Union (“Union”) for contracts at the Chicago, New York and Las Vegas locations where the Union represents sales employees.  The Complaint consolidates seven ULP charges involving negotiations at those locations for collective bargaining agreements.  In addition to seeking the traditional remedy of an order directing the employer to bargain in good faith, the Complaint also calls for a Board order that would require the company “to reimburse the Union for its costs and expenses incurred in collective bargaining for all negotiations from July 2013 forward, including for example, reasonable salaries, travel expenses, and per diems” incurred by the Union.  The Complaint does not call for a date when the obligation to pay the Union’s bargaining expenses would conclude, but  apparently the General Counsel wants the employer to pay these costs until negotiations are completed and contracts are reached at each of these locations.

This Case Reflects the General Counsel’s Decision to Pursue “Enhanced Remedies” Much More Routinely

This case reflects decisions by the NLRB and its General Counsel to take a much more aggressive approach in seeking what are arguably punitive remedies against employers who are alleged to have violated the  Act and to more aggressively seek injunctive relief in the federal courts against what the General Counsel and Board believe to be serious ULP activity .  Section 10 of the Act gives the Board broad authority to remedy ULPs in order to effectuate the purposes of the Act and to encourage collective bargaining.  However, the Supreme Court has long interpreted this authority as being entirely remedial– the Board has no authority to issue punitive remedies such as fines or damages other than back pay.  Traditionally, the Board has ordered an employer who violated the Act to: (i) cease and desist the conduct found to be unlawful; (ii) cease and desist from violating the Act in any like or related manner; (iii) take appropriate affirmative action, e.g., rehire, bargain in good faith; expunge records, make employees whole, and (iv) post a notice to employees for 60 days.  In truly egregious and rare cases, the Board has ordered an employer to bargain with a union without an election where an employer commits such serious unfair labor practices that a fair election cannot be held and where the union can show that a majority of employees supported the union before the unfair labor practices– so-called Gissel Bargaining Order (pdf). The Board also has authority to seek Section 10(j) injunctive relief in appropriate cases.  Here too, the General Counsel is continuing to exercise his discretion to recommend (pdf) and pursue such relief far more than in the past.

Starting in 2006, the General Counsel begun  a series of initiatives involving bargaining for  initial contracts and undocumented aliens, in which the General Counsel has sought to expand the scope of the Board’s traditional remedies in cases of “extraordinary and flagrant violations.”  See “NLRB Reiterates Its Position That Undocumented Workers Are Entitled To ‘Conditional Reinstatement’ in Unfair Labor Practice Cases. These new remedies include: (i) extension of the certification year for bargaining with a newly certified union, (ii) gaining access to the employer’s property, (iii) notice reading by Board agents or Company officials, (iv)  imposing a schedule for bargaining; (v) requiring reports of bargaining status, and (vi) reimbursement of bargaining or litigation costs.

As a result of these initiatives, labor unions, as well as the General Counsel are starting to request that the Board award bargaining expenses as part of the remedy in cases where the Board finds that an employer has bargained in bad faith. NLRB General Counsel Griffin recently commented on this trend at the Annual Midwinter meeting of the ABA Labor and Employment Section when he stated that “[t]his is a continuation of previous initiatives by the Office of the General Counsel (citations omitted).  The relief may be requested by the Charging Party or sua sponte by the Regional Director, when the Regional Director believes such relief may be appropriate.” See General Counsel Memorandum GC-15-05, at 25 (pdf).

It is not yet clear how the federal courts will view the Board’s increased awarding of enhanced remedies since at this point there have been very few cases in which such Board orders have been subject to judicial review.  While the Supreme Court has long and unequivocally held that the Board cannot impose punitive remedies, recent court of appeals cases appear to cast doubt on where the line is drawn.  On May 8, 2015 the D.C. Court of Appeals in a case entitled FallBrook Hospital Corporation v NLRB  upheld the Board’s authority to award bargaining costs in a case in which the Board had found an employer to have engaged in what it referred to as an  egregious case of bad faith bargaining.  Citing the Board’s discretion in fashioning remedies for violations of the Act, and the great degree of deference that the Courts are to afford the Board’s interpretation of the Act,  the Court noted that the Hospital had not only committed a large number of ULPs but also had acted  in an “obstinate and pugnacious manner” in its negotiations with its employees’ union representative and had bargained with a “closed mind” and, in the course of the parties’ negotiations had “put up a series of roadblocks designed to thwart and delay bargaining.” For these reasons the Court deferred to the Board and enforced its order directing the Hospital to reimburse the union for its expenses and costs over the course of the negotiations.

What’s Next?

Given, all of this, it is no surprise that unions are increasingly asking for the Board to pursue these and other types of enhanced remedies when they file ULP charges and over the course of Board proceedings. Whether and where the Board will draw a bright line differentiating between what it will consider to be an egregious violation which it believes justifies and requires enhanced remedies and more routine hard bargaining cases, in which it will hold traditional remedies are adequate is yet unknown.  Also unknown is whether the Board is prepared to issue orders calling for such enhanced remedies when it is a union, not an employer, that has bargained in bad faith, is also unknown at this stage.

Washington Court Dismisses Challenge to NLRB’s Ambush Election Rules

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U.S. District Court Judge Amy Berman Jackson on Wednesday issued a 72 page opinion (PDF) rejecting each of the arguments raised by the U.S. Chamber of Commerce, the National Retail Federation and other business groups and found that the Amended Election Rules adopted by the National Labor Relations Board in December 2014, which took effect in April 2015, in an action that argued that the Board had exceeded its authority, violated the Administrative Procedures Act and that the Amended Rules were unconstitutional.

This is the second district court decision to reject such challenges to the Amended Election Rules. In April, Judge Robert L. Pitman of the U.S. District Court for the Western District of Texas rejected a similar challenge brought by the Associated Home Builders of Texas and the National Federation of Independent Businessmen.

Since the Amended Election Rules took effect in April, there has continued to be a dramatic increase in the number of petitions filed by unions across the county.

Clearly the dismissal of these challenges will not be the final answer to the questions surrounding the election rules.  Not only is it almost certain that these decisions will be reviewed on appeal, but Congressional oversight and, potentially, legislative action to reverse the Board’s rulemaking remains a possibility.