Management Memo

Management’s inside guide to labor relations

BIG MAC ATTACK : NLRB General Counsel Argues Franchisees and McDonald’s Are Joint Employers

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NLRB General Counsel Richard Griffin announced on Tuesday July 29th   that he has authorized issuance of Unfair Labor Practice Complaints based on 43 of 181 charges pending against McDonald’s, USA, LLC and various of its franchisees, in which the Board will allege that the company and its franchisees are joint-employers. If the General Counsel prevails on his theory that McDonalds is a joint employer with its franchisees, the result would be not only a finding of shared responsibility for unfair labor practices, but could also mean that the franchisor would share in the responsibilities of collective bargaining if unions are successful in organizing franchisors’ workers.  The news, which comes as Fast Food Forward, which is affiliated with the Service Employees International Union (“SEIU”) wraps up its convention in Illinois.

In May of this  this year, General Counsel Griffin signaled his intent to ask the Board to revisit the standards for determining when and in what circumstances two or more employers could be found to be joint employers.  At that time the General Counsel invited the filing of amicus briefs in Browning-Ferris, the General Counsel asked interested parties to share their views on the following questions:

  • Should the Board adhere to its existing joint-employer standard or adopt a new standard?
  • What considerations should influence the Board’s decision in this regard?
  • And If the Board adopts a new standard for determining joint-employer status, what should that standard be?
  • If it involves the application of a multifactor test, what factors should be examined? What should be the basis or rationale for such a standard?

While submissions in Browning-Ferris on these questions were to be received by June 26, 2014, it would appear that the General Counsel has reached his decision that a new standard should be adopted and that it should be a much broader one than has been applied in the past.

Under the Board’s practices, the Advice Memorandum issued in the McDonald’s cases has not yet been made available to the public.  While the General Counsel has indicated that absent settlement in the 43 cases that he finds to have merit the Board’s regional directors are directed to issue unfair labor practice complaints and to try the cases before the Board’s Administrative Law Judges, it has been reported that McDonald’s will contest the matters, noting that it does not direct hirings, terminations or the setting of hours and wages by its franchisees and that it has never been found to be a joint employer with them in the past.

Adoption of a new standard for determining whether a joint employer relationship exists between companies in these and other circumstances, such as between companies and those to whom they outsource work and functions could have far broader implications beyond the franchise setting.

NLRB Drops Next Shoe On Micro-Units In Retail: Finds Bergdorf Goodman Women’s Shoe Sales Employees Not An Appropriate Unit

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The NLRB finds that the women’s shoe sales employees at Bergdorf Goodman’s New York Store are not an appropriate unit for bargaining. The Board’s unanimous decision to reverse the Regional Director’s finding that the shoe sales team did constitute an appropriate unit and could have their own vote on union representation comes one week after its decision finding that a unit limited to the cosmetics and fragrance sales employees at a Macy’s in Saugus were an appropriate unit for bargaining. The Regional Directors who issued the Decisions and Directions of Election in Macy’s and Bergdorf Goodman each had relied on the Board’s Specialty Health Care decision, which is now often referred to as the “Micro Unit” decision.

The Bergdorf Goodman decision and the Board’s explanation of why a different outcome than the one in Macy’s relies heavily on the record of facts developed by the employer in the representation hearing that took place when the union filed its petition for an election among the women’s shoe sales persons at the Bergdorf Goodman store.  In what is almost certain to create further confusion in both management and labor, the decision in Bergdorf (which was four pages in length in contrast to the 33 page Macy’s decision) reached their decision that the women’s shoe sales persons at Bergdorf Goodman “lack a community of interest,” the Board first acknowledged that the women’s shoes salespersons “share some community-of-interest factors,” their work, a draw against commission pay plan unique in the store and the highest commission rates of any of the store’s employees.

In finding that they did not however share a community-of-interest” under Specialty Healthcare, the Board stated in conclusory fashion that the “boundaries of the petitioned-for unit do not resemble any administrative or operational lines drawn by the Employer.”  It was apparently significant to the Board that the Bergdorf Goodman shoes sales employees were assigned to two different selling areas, Salon shoes and Contemporary shoes, located on different floors of the store and that Contemporary shoes was in part of Contemporary Sportswear, another department.

Reading the decision, which contains summaries of the facts that support a finding that the shoe salespersons share a community-of-interest and those that lead the Board to its conclusion to reverse the Regional Director’s conclusions makes clear how critical a well- developed factual record is in representation proceedings such as this.  However, under the Board’s proposed new election rules, which remain pending and are likely to be adopted in some form before the end of the year, one of the critical changes that the Board is proposing is the elimination of the right to a hearing when a petition is filed to resolve precisely the type of factual questions that the Board says distinguish its decisions in Macy’s and Bergdorf Goodman.

An Unconventional Convention: Fast Food Workers Of The World Unite With SEIU Support

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The New York Times reported today in its business section in article by Steven Greenhouse, who covers labor matters for the paper, about a convention taking place in Addison. The convention is underwritten by the Service Employees International Union or SEIU, which has been not very quietly backing the “Stand for Fifteen,” movement in its quest for wages of $15 per hour in the fast food field.  It is probably not a coincidence that Addison is just four miles from McDonald’s headquarters in Oak Brook, Il.

While most of last week’s focus in labor relations law was on the NLRB’s decision in Macy’s, finding a micro-unit consisting of just the cosmetics and fragrance sales employees at the chain’s Saugus MA store to be an appropriate unit for an NLRB election and collective bargaining, the Times article points to the other side of the coin:  the NLRB’s consideration of whether franchisees and franchisors are joint employers and/or common integrated enterprises. Such findings would likely increase the pressure on and more greatly involve franchisors in union organizing and other claims involving the employees of their franchisees.  With today’s Labor Board, it is a pretty safe bet that the NLRB will be finding more and more joint employer relationships to exist.

Two for One: Noel Canning and D.R. Horton Continue to Generate Waves at the NLRB

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By: Steven M. Swirsky, Adam C. Abrahms, and D. Martin Stanberry

In case you were hoping that the Supreme Court’s recent decision in Noel Canning would finally put to bed any questions regarding President Obama’s recess appointments to the NLRB, or that the Fifth Circuit’s rejection of the Board’s decision in  D.R. Horton might alter the NLRB’s position on the right of employers to require employees to abide by mandatory arbitration agreements , think again.

In Fuji Food Products a decision issued on July 15, 2014, NLRB Administrative Law Judge Jeffrey D. Wedekind held that former NLRB Board Member Craig Becker’s recess appointment was valid and that Fuji Food Product’s arbitration agreement, which required  employees  to arbitrate all federal claims,  was unlawful.

Specifically, the ALJ concluded  that Member Becker’s recess appointment was valid under Noel Canning because unlike the others appointments made by President Obama, his occurred during a 17-day intra-session recess, during which  no sessions of the Senate (pro-forma or otherwise) took place. For a closer look at the Noel Canning decision and its impact on the Board’s decisions from August 27, 2011 through July 17, 2013 read our earlier post.

With regards to D.R. Horton, the ALJ acknowledged that the Fifth Circuit Court of Appeals had rejected the Board’s conclusion upon which his decision was based, but he explained that because of the doctrine of non-acquiescence, he was “required to follow Board precedent unless and until it is reversed by the Supreme Court.” Our analysis of the Fifth Circuit’s decision in D.R. Horton v. NLRB can be read here.

ALJ Wedekind’s decision is evidence that significant questions remain in the post-Noel Canning world and that the principle in D.R. Horton is far from a settled matter.

The holding that former Member Becker’s appointment was valid may determine whether those decisions issued by the Board between August 27 and December 31, 2011 were valid. A finding that Member Becker’s appointment was unconstitutional and invalid would leave the Board without the requisite three members needed to issue decisions as established in New Process Steel.

The ALJ’s non-acquiescence to the Fifth Circuit Court of Appeals decision in D.R. Horton v. NLRB is also intriguing, although not surprising.  Indeed, NLRB ALJs are loath to disregard Board precedent even where federal courts have overturned their holding. As a practical matter, this means that ALJs will continue to find similar binding arbitration agreements unlawfully interfere with employees’ rights under the National Labor Relations Act unless and until the Supreme Court rules on the issue.  Don’t expect that any time soon however, the NLRB’s decision not to petition the Supreme Court for a writ of certiorari challenging the Fifth Circuit Court of Appeals decision, which it would have had to file earlier this month to be timely, means that the NLRB will likely continue to rely upon its holding in D.R. Horton for the foreseeable future.

OSHA and NLRB Agreement Opens New Door To Whistleblower Claims

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On Epstein Becker Green’s OSHA Law Update blog, Eric Conn reviews the agreement between the NLRB and OSHA, which allows employees to file out-of-date safety related whistleblower claims to be filed with the NLRB.

Following is an excerpt from the blog post:

On May 21, 2014, the National Labor Relations Board (NLRB) published a memorandum discussing a new agreement between NLRB and OSHA regarding a backdoor route for employees to file safety related whistleblower claims that are too stale to be filed with OSHA. The NLRB memo directs OSHA representatives to “notify all complainants who file an untimely [OSHA] whistleblower charge of their right to file a charge with the NLRB.” As a result of this agreement, employers should expect an increase in the number of unfair labor practice claims filed by employees alleging retaliation for protected safety related whistleblower activity.

To access the full blog post, please click here.

 

Stuart Gerson on the Supreme Court’s Harris and Hobby Lobby Decisions

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Our colleague Stuart Gerson of Epstein Becker Green has a new post on the Supreme Court’s recent decisions: “Divided Supreme Court Issues Decisions on Harris and Hobby Lobby.”

Following is an excerpt:

As expected, the last day of the Supreme Court’s term proved to be an incendiary one with the recent spirit of Court unanimity broken by two 5-4 decisions in highly-controversial cases. The media and various interest groups already are reporting the results and, as often is the case in cause-oriented litigation, they are not entirely accurate in their analyses of either opinion.

In Harris v. Quinn, the conservative majority of the Court, in an opinion written by Justice Alito, held that an Illinois regulatory program that required quasi-public health care workers to pay fees to a labor union to cover the costs of wage bargaining violated the First Amendment. The union entered into collective-bargaining agreements with the State that contained an agency-fee provision, which requires all bargaining unit members who do not wish to join the union to pay the union a fee for the cost of certain activities, including those tied to the collective-bargaining process. …

An even more controversial decision is the long-awaited holding in Burwell v. Hobby Lobby Stores, Inc. Headlines already are blasting out the breaking news that “Justices Say For-Profits Can Avoid ACA Contraception Mandate.” Well, not exactly. …

Both sides of the discussion are hailing Hobby Lobby as a landmark in the long standing public debate over abortion rights. It is not EBG’s role to enter that debate or here to render legal advice, but we respectfully suggest that the decision’s reach is already being overstated by both sides. In the first place, the decision does not allow very many employers to opt out of birth control coverage – only closely-held for-profit companies that have a good-faith ideological core, as clearly was the case for Hobby Lobby. That renders such companies functionally the same as non-profits that are exempted from the mandate by the government. Publicly-held companies are not affected by the decision (though some are likely to argue that Citizens United might require such an extension. Nor are privately-held companies that can’t demonstrate an ingrained belief system.

Read the full post here.

All NLRB Decisions and Actions From August 27, 2011 Through July 17, 2013 Are Invalid or in Doubt

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By: Adam C. Abrahms, Kara M. Maciel, Steven M. Swirsky, and Mark M. Trapp

The U.S. Supreme Court today held that the US Senate was not in recess on January 4, 2012, when President Obama made three “recess” appointments to the National Labor Relations Board under the Constitution’s Recess Appointment Clause.  In simple terms that means that the recess appointments were not proper and s decisions in which the recess appointees participated were not valid.

What this now means is that hundreds of cases decided by the NLRB following the January 4, 2012 recess appointments to the Board from January 4, 2012 until the Senate confirmed the current Board members who joined the NLRB as of August 12, 2013, were unconstitutionally decided because the Board lacked a quorum and could not decide cases or issue orders.  Additionally, while Noel Canning concerned the January 2012 recess appointments, there is also doubt as to earlier decisions in which previous recess appointees participated going back to August 2011.

The Court’s decision upheld the January 2013 decision of the US Court of Appeals for the District of Columbia Circuit which found that the panel of the NLRB that had previously decided an unfair labor practice case against Noel Canning, a Pepsi bottler, was unconstitutionally constituted and therefore the decision was invalid.  There the DC Circuit held that because the Senate, whose advice and consent is required for appointments to the NLRB had not been in recess when the President made his appointments, the company’s “understanding of the constitutional provision is correct, and the Board’s is wrong. The Board had no quorum, and its order is void.”  The Court of Appeals for the Third Circuit had also reached a similar conclusion concerning the lack of a quorum due to the Senate not having been in recess when the January 2012 appointments were made.

This decision now casts into doubt and makes suspect more than 1,300 NLRB decisions, including both published and unpublished, issued by the NLRB.  An excellent summary of the cases that are implicated by the Court’s decision, and the issues involved in each has been prepared by the US Chamber of Commerce Litigation Center.

The Court’s holding, which found that the Senate was not in recess while it was conducting pro forma sessions during December 2012, arose in the context of a challenge to a Board Order in which recess appointees participated; the implications however  are far greater and may implicate a wide range of other Board actions such as the appointment of Regional Directors, the consolidation of Regional offices and other administrative and personnel actions requiring Board approval or authorization.  Notably, in a case decided by a District Court in the Eastern District of Washington last August an employer successfully challenged not only the Board’s authority to authorize a Regional Director to pursue an injunction under Section 10 (j) of the National Labor Relations Act, but the appointment of then Acting NLRB General Counsel Lafe Solomon, who was then a recess appointee.  That case turned on other provisions of the Pay Act, a federal law authorizing the payment of salary to properly appointed recess appointees.

In a relatively understated press release following the Court’s decision, Board Chair Mark Gaston Pearce emphasized the fact that “the National Labor Relations Board has a full contingent of five Senate-confirmed members who are prepared to fulfill our responsibility to enforce the National Labor Relations Act.”

What this means to Employers, Unions and Others With Cases Before the NLRB

If the Board’s actions following the Supreme Court’s decision concerning an earlier attempt by the NLRB to delegate its decision making authority to a two member panel in the face of  earlier disputes between the President and the Senate is any precedent, it is likely that at least three members of the current five member Senate confirmed Board will try to essentially adopt and approve as many as possible of the Board Orders and actions that would be invalid under Noel Canning.  As shown in the Chamber’s chart, there are a large number of cases that are essentially on hold in Courts of Appeal across the country that have been waiting for the Court’s ruling today.  It is likely that the courts will dismiss these matters or that the NLRB will seek to withdraw those in which it is seeking enforcement of Board Orders.

However, as we and others have pointed out since the issue of the 2012 and earlier recess appointments were placed in doubt, employers and others with matters before the Board, the most prudent course of action would have been to make sure that in addition to any other defenses or grounds for appeal, that parties specifically raise the issue that the Board lacked a quorum and the authority to act when it made decisions, issued orders and took other action.  However even in those cases that were decided by the Board during the period that it lacked a proper quorum, parties may be able to raise the lack of quorum argument in light of today’s decision. Each matter will require an analysis based on its own individual facts and issues.

Additionally, today’s ruling has broad impact even in cases which are currently being investigated at the Regional level or are currently pending before the Board.  Not only can we expect even further delay in Board action (including at the Regional level) as the agency attempts to deal with the backlog created by having to address hundreds cases directly impacted by the Decision.  Specifically, there are thousands of cases which are currently being prosecuted or advanced at various stages which explicitly or tangentially rely on theories or precedents relying on a now invalid Board decision.  Specifically, cases involving at-will employment agreements, arbitration agreements, employee investigations, employee access, dues deductions post-contract expiration, and bargaining over employee discipline have all now been stripped of much of the precedence on which a Region, a union or an employee may be relying.  Again each matter will require an analysis based on its own individual facts and issues.

Management Missives

  • If the “invalid” Board issued a decision impacting an employer it should promptly analyze its options;
  • If an employer has a case in abeyance or pending based on Noel Canning it should obviously expect action in the coming weeks;
  • Employers should look for settlement opportunities with Regions, unions and individuals which may be present as these adverse parties may be more amendable to now that the theory of the case now lacks valid authority or based on their increased workloads;
  • Employers should explore filing supplemental position statements or other filings in any case where a Region, union or employee is relying on an “invalid” decision;
  • Employers should still remain cautious as while many decisions have been put into question, the current composition of the Board provides absolutely no reason for employers to rejoice or be less vigilant, as the current, lawfully confirmed, Board is unlikely to view most issues any differently.

 

OSHA’s Hospital Worker and Patient Safety Guidance

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On Epstein Becker Green’s OSHA Law Update blog, Eric Conn reviews an article about OSHA’s web-based “Worker Safety in Hospitals” guidance. The article is entitled “Hospitals’ Heavy Lifting: Understanding OSHA’s New Hospital Worker and Patient Safety Guidance” and is co-authored by our colleagues Eric Conn, James Frank, and Serra Schlanger. As Management Memo readers are aware, unions frequently use OSHA complaints as a tactic in corporate campaigns and OSHA has increased its cooperation with the NLRB in their enforcement mandates.  OSHA compliance is an important part of any union avoidance strategy. 

Following is an excerpt from the blog post:

The article, published in AHLA’s Spring 2014 Labor & Employment publication, summarizes OSHA’s new web-based “Worker Safety in Hospitals” guidance, explains how the guidance relates to OSHA’s existing regulatory framework, and details what OSHA considers necessary for an effective Safe Patient Handling Systems as well as an effective Safety and Health Management System.

To access the full blog post, please click here.

Unions Swim Against the Tide as Pension Issues Surface for Negotiations and Organizing

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Our colleague Allen B. Roberts recently wrote a client advisory entitled “Unions Swim Against the Tide as Pension Issues Surface for Negotiations and Organizing,” which appears on Epstein Becker Green’s website.

Following is an excerpt:

Contributions to multiemployer defined benefit pension plans have been a mainstay, legacy feature of union negotiations in many industries. But the fabric of such staples may be tearing apart as employers contemplate the potential of escalating contributions to amortize unfunded liabilities that increase costs but may have imperceptible value for their own employees. Increasingly, employers and their employees are questioning whether the promise of retirement security can be delivered cost effectively—or at all—by defined benefit pension plans maintained under union contracts.

With private sector union membership standing at 6.7 percent nationally in 2013, major sectors of the economy and geographic areas are not affected significantly by either current unionization or successful organizing efforts.

Read the full article here.

NLRB Continues to Increase Use of Section 10(J) Injunctions

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By Steven M. Swirsky and Peter M. Panken

NLRB General Counsel Richard Griffin has declared in an April 30, 2014 General Counsel Memorandum. that his office will continue and expand the increasingly aggressive pursuit of injunctions in Federal Court against employers in connection with union organizing and bargaining for initial collective bargaining agreements.

In GC Memorandum GC 14-30, the Board’s regional offices have been directed that they should aggressively consider requesting authorization from the General Counsel and the Board to pursue Section 10(j) injunctions in the following types  of cases :

  1. Those alleging Unfair Labor Practice violations involving contract negotiations  that occur during the period after a Union is first  certified to represent employees  when the parties are or should be bargaining for a first collective bargaining agreement;
  2. charges involving claims of employee terminations during campaigns for union recognition;
  3. employee terminations occurring during the bargaining for an initial collective bargaining agreement;
  4. cases involving successor employers refusal to bargain, which involve claims of conduct that  “undermines [the union which will] lead to disaffection, concomitant loss of bargaining power and loss of benefits that cannot be restored by final Board order”; and
  5. “cases where a successor employer refuses to hire employees to avoid bargaining with an incumbent union, the potential scattering of those employees creates an even greater risk that a final Board order will not effectively restore the parties to establish a good faith bargaining relationship.”

The reasoning behind the aggressive use of this extraordinary relief is the General Counsel’s view that in cases of these types the passage of time between the filing of the ULP charges and any relief that the Board may ultimately render following an investigation of the charges, the litigation of the issues before an Administrative Law Judge and the issuance and enforcement of a final Board Order, will often render any ultimate findings meaningless.

NLRA Section 10(j), 29 U.S.C. § 160, permits the NLRB to seek injunctive relief in Federal Court if they issue an unfair labor practice complaint “for appropriate temporary relief or restraining order.”  From 2002 through 2010, the NLRB sought between 11 and 23 such injunctions each year.  However, in 2012 and 2013 the NLRB brought 55 such actions and recovered over $5,000,000 in backpay before the unfair labor practice charges were litigated by Administrative law Judges.