Management Memo

Management’s inside guide to labor relations

NLRB Reiterates Its Position That Undocumented Workers Are Entitled to “Conditional Reinstatement” in Unfair Labor Practice Cases

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As reported in Epstein Becker Green’s May 2015 Immigration Alert, the National Labor Relations Board (the “Board” or “NLRB”) continues to focus on issues concerning the rights of undocumented workers whose rights under the National Labor Relations Act (the “Act”) are interfered with for engaging in union activity and other forms of protected, concerted activity covered by the Act.

In its March 27, 2015, Supplemental Decision in Mezenos Maven Bakery, Inc., 362 NLRB No. 41 (2015), the Board, in response to a remand from the United States Court of Appeals for the Second Circuit, addressed the issue of whether the Board “should order the conditional reinstatement of employees who, at the time they were unlawfully discharged by [their employer], lacked proper documentation to work in the United States.” Four years earlier, the Board had found that under the Supreme Court’s decision in Hoffman Plastic Compounds, Inc. v. NLRB 535 U.S. 137 (2002), it was precluded from awarding the employees back pay “because they were undocumented workers, even though it was the Respondent and not the employees who had violated the Immigration Reform and Control Act (IRCA).”

While the Second Circuit affirmed the Board’s conclusion that the employees were not entitled to back pay because of their status, it asked the Board to answer the question of whether they were entitled to offers of conditional reinstatement, that is “offers of reinstatement conditioned upon their presentation to Mezenos of IRCA-compliant documentation to show that they were lawfully present in, and authorized to work in the United States” (362 NLRB No. 41, at page 2).  The Board concluded, in addressing the question of conditional reinstatement, that Hoffman “did not cast doubt on the use of conditional reinstatement in cases involving undocumented discriminatees,” and held that “conditional reinstatement is important in the immigration context in order to provide a meaningful remedy for the Respondent’s unfair labor practices.”  In  ordering conditional reinstatement, the Board stated that it would not decide in this case what constitutes a reasonable period for the discriminatees to meet the condition of reinstatement, noting “what constitutes a reasonable period . . . as that determination ‘will depend essentially on the situation in which the employee finds himself.’”

Several weeks earlier, on February 27, 2015, NLRB General Counsel Richard F. Griffin, Jr., issued General Counsel Memo 15-03, Updated Procedures in Addressing Immigration Status Issues that Arise During ULP Proceedings. The Memo reiterates the fact that the Act applies to and protects employees, including undocumented aliens, and that even in those cases where a discriminatee may not be eligible to receive back pay or unconditional reinstatement, the Board will continue to pursue such cases.  The Memo, which is intended to provide guidance to the Board’s Regional Offices, also describes the NLRB’s structures for interagency cooperation with the Departments of Justice and Homeland Security and the Board’s Memorandum of Understanding with the Department of Justice’s Office of Special Counsel for Immigration-Related Unfair Employment Practices.

As the Mezenos Maven Bakery decision and GC Memo 15-03 clearly demonstrate, the NLRB is continuing to vigorously pursue cases involving unfair labor practices in which the alleged discriminatees are undocumented workers.

Regional Directors Report Data on the NLRB’s Amended Representation Election Rules After One Month—Court Challenges Continue

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May 14th marked the one-month anniversary of the effective date of the NLRB’s Amended Representation Election Rules (“amended rules”).  That day, the Regional Directors for NLRB Regions 2 (New York, NY), 22 (Newark, NJ), and 29 (Brooklyn, NY) discussed their offices’ experiences processing representation petitions filed since the amended rules took effect on April 14th.

With respect to the questions of how the amended rules are actually affecting representation petitions and elections, while one month may not be representative, the data to date does offer some insights that will be of interest to employers, unions, and practitioners.  Perhaps the most interesting fact is that in these three Regional Offices, there were NO hearings held on petitions filed since the amended rules took effect.  In every case, the parties entered into a stipulated election agreement or a consent agreement, or the union withdrew its petition. Out of a total of 32 petitions filed in these regions during the one-month period, eight went to an election and 24 were withdrawn without an election.

What is not clear at this point is how many of the petitions were withdrawn after employers filed Statements of Position challenging the proposed units as inappropriate.  Under the amended rules, if an employer contends that the petitioned-for unit is not appropriate and should include additional classifications and/or locations, the employer must provide both the Regional Office and the petitioning union with the names, classifications, work locations, and shifts of the employees whom the employer believes must be included in the unit. Once a union receives that employee data, it may very well choose to withdraw its petition and then expand its organizing to include the additional employees. It is foreseeable that, in at least some cases, unions may be filing petitions with the expectation that the units will be challenged, in order to get such valuable data.

With respect to the question of how quickly votes are taking place under the amended rules, Regional Directors Karen Fernbach (Region 2), David Leach (Region 22), and James Paulsen (Region 29) reported that the elections based on petitions filed after the amended rules took effect were scheduled for between 25 and 30 days from the petition date.  This data confirms the expectation that the amended rules would result in faster elections than under the long-standing rules that they replaced.  Under the former rules, elections typically took place between 36 and 42 days after the filing of a petition.

The Regional Directors also reviewed the procedures under the amended rules, which were recently summarized in General Counsel Memorandum 15-04 issued by the Board’s General Counsel Richard F. Griffin, Jr.  Under the amended rules, employers not only must post a notice informing employees of the filing of a petition within two days but also must provide the Board and the petitioning union with a list of the names and job titles/classifications of all employees in the petitioned-for unit and all other employees whom the employer believes should be included in the unit.

The fact that there have not been any hearings in these three Regional Offices in the first month of the amended rules is probably a reflection of the fact that the amended rules make it much harder for an employer to have a hearing. The Regional Directors confirmed the fact that employers that want to raise issues, whether about unit composition, supervisory status, or other issues, are generally being told that they may not call witnesses but rather should make offers of proof to establish a record and basis for future appeals and challenges to the Board’s findings.

The Regional Directors acknowledged that, even where employers wish to make offers of proof at pre-election representation hearings, hearing officers are under instructions not to burden the R case record with protracted offers of proof and not to allow parties to delay the hearing “unnecessarily.”  Further, the Regional Directors stated that they were under orders not to allow hearings to go on for too long or permit any post-hearing briefs.  All argument would have to be made orally at a hearing.

According to the three New York area Regional Directors, unless the employer has raised eligibility issues as to more than 20% of the total voter complement, all unit placement and eligibility issues will be reserved for the challenged ballot process at the election or for a post-election hearing.  Obviously, if the challenged ballots are not determinative, issues as to those voters will never be heard. While this benchmark is not included in the amended rules, it has been mentioned on a number of occasions by representatives of the NLRB at various training programs conducted for the labor and management bars throughout the country.  It appears that this 20% standard has now replaced the 10% threshold that the Board relied upon under the prior rules and procedures.

The employer’s Statement of Position must be filed and served on the union within seven days of the filing of the petition and not later than noon on the day before the hearing is scheduled. Any issues not so raised will be waived.

On Friday, May 15, the day after the Regional Directors spoke, U.S. District Court Judge Amy Berman Jackson in Washington, D.C., heard argument on plaintiffs’ motion for summary judgment in the lawsuit brought by the U.S. Chamber of Commerce and other business groups challenging the validity of the amended rules under the National Labor Relations Act (“NLRA”). The hearing focused on the plaintiffs’ claims that the amended rules violate the NLRA and the Administrative Procedures Act. While it is generally not possible to predict from argument how the court will rule, Judge Jackson appeared skeptical that the plaintiffs had established that they were entitled to summary judgment at this stage, suggesting that the litigation is likely to continue.

The amended rules will present significant challenges for employers and their counsel.  More importantly, all of this will be layered onto the much shorter period between the petition and the actual voting, requiring employers to focus year round on appropriate practices and communications to their employees concerning the benefits of maintaining a non-union status.

We will continue to monitor and share data concerning the impact of the amended rules.

McDonald’s-Franchisee Joint Employer NLRB Hearing Begins, SEIU Expands Fight for Fifteen and Other Developments

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The National Labor Relations Board (“NLRB”) unfair labor practice hearing  against McDonald’s, USA, LLC (“McDonald’s) and numerous franchisees opened in New York City on Monday March 30, 2015, before Administrative Law Judge (“ALJ”) Lauren Esposito. (“ALJ”), a former NLRB field attorney and union lawyer. Also this week, the Service Employees International Union (“SEIU”) announced that it was investing an additional Fifteen Million Dollars in the Fight For Fifteen campaign, which seeks to organize fast food workers nationwide and that a series of events would take place across the country on April 15th as part of that effort.

In the McDonald’s cases, under the terms of a Case Management Order issued by ALJ Esposito on March 3, 2015, the ULP hearings are scheduled to take place in three phases, with adjournments between each phase.  The hearing which began this week in Manhattan will start with the closely watched claims by the Board’s General Counsel that McDonald’s and its franchisees are joint employers.  The General Counsel will produce witnesses who will offer testimony and evidence on the nationwide joint employer issue and will continue with evidence of joint employer status and evidence on specific violations allegedly committed by the franchisees in New York and Philadelphia.  The hearing will then move to Chicago and will conclude in Los Angeles with the presentation of evidence of joint employer status and evidence regarding specific violations alleged to have occurred in the Midwest and California, respectively.

As we previously reported, on December 19, 2014, the General Counsel of the NLRB issued 13 Consolidated Complaints in Regional Offices across the country charging that McDonald’s and franchisees are joint employers and seeking to hold McDonald’s liable for unfair labor practices allegedly committed by its franchisees. The NLRB’s press release broadly outlined the basis for its decision to issue the Complaints:

“Our investigation found that McDonald’s, USA, LLC, through its franchise relationship and its use of tools, resources and technology, engages in sufficient control over its franchisees’ operations, beyond protection of the brand, to make it a putative joint employer with its franchisees, sharing liability for violations of our Act.  This finding is further supported by McDonald’s, USA, LLC’s nationwide response to franchise employee activities while participating in fast food worker protests to improve their wages and working conditions.”

As a result of the interest generated by these cases, the NLRB has created a separate webpage entitled “McDonald’s Fact Sheet” with links the Complaints and the docket of proceedings.

At recent public appearances, including at the section meeting of the American Bar Association’s Committee on Developments Under the National Labor Relations Act, General Counsel Griffin addressed the legal theories he relied upon in authorizing the issuance of the Complaints alleging joint-employer status.  He noted that it was the General Counsel’s position that the facts (he did not say which ones) would support a finding of joint-employer status under the Board’s existing legal standards and were not dependent upon the Board adopting a new standard such as the one the General Counsel advocated in the amicus brief filed in the still pending Browning Ferris case in which the Board is considering adopting a new more lenient standard for determining whether a joint-employer relationship.

The General Counsel’s  Consolidated Complaints each contain three identical bare bones allegations with respect to the claim that franchisor and franchisees are joint employers: -“(1) McDonald’s and its franchisees are parties to a franchise agreement, (2) McDonald’s possesses and/or exercised control over the labor relations policies of each franchisee, and (3) McDonald’s and the franchisees are joint employers.”

On January 5, 2015, the General Counsel transferred the cases from Regions 4, 13, 20, 25 and 31 to the Regional Director from Region 2.  On January 6, 2015, the Director of Region 2 issued an Order Consolidating the Consolidated Complaints from Regions 2, 4, 13, 20, 25 and 31 with the already-consolidated cases from Region 2, and set the March 30, 2015 hearing date.

McDonald’s filed its Answer to the Consolidated Complaints and a “Motion for a Bill of Particulars or, the alternative, Motion to Strike Joint Employer Allegations and Dismiss the Complaint” alleging that the General Counsel’s consolidated complaint failed to provide it with sufficient notice of the basis for the joint employer status in violation of fundamental due process, the Administrative Procedure Act, and the Board’s own internal manuals and guidelines.  The franchisees also filed similar answers.  The General Counsel opposed McDonald’s Motion for a Bill of Particulars, arguing that the allegation of a franchising relationship between McDonald’s and the franchisees provides sufficient notice of the allegations.  The ALJ denied McDonald’s motion.  McDonald’s also filed a Request For Special Appeal with the NLRB seeking permission to file an appeal to reverse the ALJ’ Order denying its Motion for a Bill of Particulars.  That too was denied.

McDonald’s also filed a “Motion To Sever” the Consolidated Complaints, to allow for separate hearings for the charges from the six regional offices that had been consolidated for trial in New York.  While the Board’s Rules and Regulations give the General Counsel discretion to consolidate cases the General Counsel’s discretion is not unlimited.  Where the cases involve different factual issues, different backgrounds and different complaints or legal theories, the Board has held that consolidation was not proper.  McDonald’s argued in these cases that consolidation is improper because the cases  consolidated in Region 2 involve 61 charges, and perhaps most importantly, 22 separate distinct and unrelated employers, as well as 181 unrelated allegations and 30 individual restaurants.  McDonald’s urged the judge to sever the complaints so that each individual franchisee will have his or her case heard by a separate Administrative Law Judge in the region where the case arose.

McDonald’s requested oral argument on its Motion to Sever. On February 11, 2015, the ALJ held a telephone conference with McDonald’s and all of the franchisees and their separate attorneys to address McDonald’s motion as well as scheduling issues.  Given the number of parties and significant issues involved, McDonald’s counsel requested that the teleconference be transcribed by a court reporter, which the ALJ denied.  Not surprisingly, the ALJ  denied McDonald’s Motion to Sever.

On March 3, 2015, the ALJ issued a Case Management Order which the General Counsel had requested.  The Order provides that the issue of whether McDonald’s can be held liable as a joint-employer for the unfair labor practices of its franchisees will be heard before trying the merits of the underlying unfair labor practice allegation.  The Order further requires McDonald’s to present its evidence on the joint employer status specific to a franchisee immediately after the General Counsel and the Charging Parties present their evidence specific to the franchisee which allows the General Counsel and Charging Party multiple opportunities to hear and respond to McDonald’s evidence before resting their cases.  McDonald’s filed a Request for Special Appeal seeking to reverse the ALJ’s Order, arguing that its alleged status as a joint-employer is a remedial issue that should be tried only after the General Counsel has proven the merits of the underlying charges against the franchisees alleged to have committed unfair labor practices and arguing that the sequence of trial unfairly allows the General Counsel and Charging Party a preview of McDonald’s case before they rest their cases.

The pressure on McDonald’s by organized labor extends beyond the NLRB proceedings.  This week the New York Times reported that the Service Employees International Union (“SEIU”) has pumped more than $15 million into the Fight for Fifteen movement which seeks to raise the wages at McDonald’s and other fast food restaurants and  retailers to a minimum of $15 per hour and helped persuade the NLRB to go after McDonald’s on a joint-employer theory.

In addition to their NLRB claims, workers at McDonald’s restaurants  in at least 19 cities have also filed workplace health and safety complaints with the Occupational Safety and Health Administration (“OSHA”), alleging that they had been injured and placed in danger on the job because of a lack of adequate training and protective equipment.

The SEIU has arranged for a coalition of European and American unions to accuse McDonald’s of improper tax practices.  Moreover, Organizers for the Fight for Fifteen will hold rallies in New York, Chicago and Los Angeles on April 15, 2015 in which they expect upwards of 10,000 protestors.

The McDonald’s case along with a pending NLRB case involving Browning-Ferris, are significant high stakes litigation which have the potential to fundamentally alter the way employers conduct business with franchisees and third-party contractors.  Last week, the U.S. Chamber of Commerce’s Workforce Freedom Initiative (WFI) issued a 40 page report, “Opportunity at Risk: A New Joint-Employer Standard and the Threat to Small Business.”  The report highlights the administration’s ongoing effort to redefine the concept of “joint-employment” relationships, and how these efforts “threaten to disrupt major sectors of the economy such as franchising and subcontracting.”   The report is essential reading for employers, attorneys and anyone else interested in what the impact would be on the economy and employer-employee relations if the legal standards for determining joint-employer status change in the way that the Board’s General Counsel and the SEIU and other unions are urging in the McDonald’s cases and elsewhere.

We will continue to monitor these case closely and keep you appraised of new developments.

NLRB Extends “Specialty Healthcare” to Acute Care Hospitals: Carves Unit into Multiple Smaller Pieces

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My colleague Barry A. Guryan published a Health Employment And Labor (HEAL) blog post that will be of interest to many of our readers: “NLRB Extends “Specialty Healthcare” to Acute Care Hospitals: Carves Unit into Multiple Smaller Pieces.”

Following is an excerpt:

Ever since 1974, when the NLRB (“Board”) first took jurisdiction over health care institutions, the Board has paid particular attention to the impact of union organizing on the delivery of healthcare in this industry in general  and of acute care hospitals in particular.  When the Act was first amended in 1974, Congress stated its objective at that time was to avoid a “proliferation of bargaining units” as one method to limit the inevitable disruption created by numerous elections and negotiations while at the same time balancing employee’s opportunity to exercise its Section 7 rights to organize and collectively bargain.

Consistent with this goal, in 1987, the Board instituted a Rulemaking Procedure to streamline the organizing and collective bargaining process in the Health Care Industry and instituted the Health Care Rule, 29 C.F.R. Sect. 130, which sets forth the 8 appropriate units for acute care hospitals.

Read the full blog post here.

 

NLRB Issues Critical Guidance On Employer Handbooks, Rules and Policies, Including “Approved” Language

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On March 18, 2015, NLRB General Counsel Richard F. Griffin, Jr. issued General Counsel Memorandum GC 15-04 containing extensive guidance as to the General Counsel’s views as to what types employer polices and rules, in handbooks and otherwise, will be considered by the NLRB investigators and regional offices to be lawful and which are likely to be found to unlawfully interfere with employees’ rights under the National Labor Relations Act (“NLRA” or the Act”).

This GC Memo is highly relevant to all employers in all industries that are under the jurisdiction of the National Labor Relations Board, regardless of whether they have union represented employees.

Because the Office of the General Counsel investigates unfair labor practice charges and the NLRB’s Regional Directors act on behalf of the General Counsel when they determine whether a charge has legal merit, the memo is meaningful to all employers and offers important guidance as to what language and policies are likely to be found to interfere with employees’ rights under the Act, and what type of language the NLRB will find does not interfere and may be lawfully maintained, so long as it is consistently and non-discriminatorily applied and enforced.

As explained in the Memorandum, the Board’s legal standard for deciding whether an employer policy unlawfully interferes with employees’ rights under the Act is generally whether “employees would reasonably construe the rules to prohibit Section 7 activity” – that is action of a concerted nature intended to address issues with respect to employees’ terms and conditions of employment. As we have noted previously, this General Counsel and Board have consistently given these terms broad interpretations and have found many employer policies and procedures, in handbooks and elsewhere, that appear neutral and appropriate on their face, to violate the Act and interfere with employee rights.  Many of these cases have involved non-union workplaces where there is not a union present and there is no union activity in progress.

There are two sections to the Memo. Part 1 of the Memorandum, which begins at page 2 and runs to page 20, offers a recap of NLRB decisions concerning 8 broad categories of policies, with summaries of the Board’s holdings and examples of policy language that the NLRB has found to unlawfully interfere with employees’ Section 7 rights and policy language that the Board has found did not unlawfully interfere with employees’ rights.  Section 2 reports on the General Counsel’s settlement with Wendy’s International LLC following an investigation of charges in which the General Counsel found portions of Wendy’s employee handbook unlawfully overbroad, with an explanation as to why the General Counsel found the policies in question to interfere with employees’ rights under the Act and a description of the language Wendy’s adopted to replace the problematic policies as part of its settlement of the charges. Both parts of the Memorandum will be of interest to employers and attorneys who draft, apply and enforce handbooks and other workplace policy documents.

Part 1: Examples of Handbook Rules found by the Board to be Lawful and Unlawful in recent decisions

  • Employer Handbooks Rules Regarding Confidentiality – The Memorandum reviews the Board’s precedents holding that “Employees have a Section 7 right to discuss wages, hours, and other terms and conditions of employment with fellow employees, as well as nonemployees such as union representatives.” Interestingly, the Memorandum also states that “broad prohibitions on disclosing ‘confidential’ information are lawful so long as they do not reference information regarding employees or anything that would reasonably be considered a term or condition of employment, because employers have a substantial and legitimate interest in maintaining the privacy of certain business information.”  The Memorandum further “clarifies” by advising that “an otherwise unlawful confidentiality rule will be found lawful if, when viewed in context, employees would not reasonably understand the rule to prohibit Section 7 protected activity.”
  • Employer Handbooks Rules Regarding Employee Conduct toward the Company and Supervisors – As explained in the Memorandum, “Employees also have the Section 7 right to criticize or protest their employer’s labor policies or treatment of employees.”  The Memorandum offers an overview of decisional law, with particular attention to cases involving rules that “prohibit employees “from engaging in ‘disrespectful,’ ’negative,’ ‘inappropriate,’ or ‘rude’ conduct towards the employer or management, absent sufficient clarification or context.”  As further noted, employee criticism of the employer “will not lose the Act’s protection simply because the criticism is false or defamatory.”
  • Employer Handbooks Rules Regulating Conduct Towards Fellow Employees – This section of the Memorandum focusses on language and policies that the Board has found to interfere with the Section 7 right employees have ‘to argue and debate with each other  about unions, management, and their terms and conditions of employment,” which the General Counsel explains the Board has held will not lose their protection under the Act, “even if it includes ‘intemperate, abusive and inaccurate statements.” Of particular interest in this portion of the Memorandum is the examination of policies concerning harassment.  The Memorandum notes that “although employers have a legitimate and substantial interest in maintaining a harassment-free workplace, anti-harassment rules cannot be so broad that employees would reasonably read them as prohibiting vigorous debate or intemperate comments regarding Section 7 protected subjects.”
  • Employer Handbooks Rules Regarding Employee Interaction With Third Parties – This section of the Memorandum focuses on employer policies and provisions that seek to regulate and restrict employee contact with and communications to the media relating to their employment.  The General Counsel notes that “(A)nother right employees have under Section 7 is the right to communicate with the new media, government agencies, and other third parties about wages, benefits, and other terms and conditions of employment,” and that rules “that reasonably would be read to restrict such communications are unlawful.” The General Counsel acknowledges however that “employers may lawfully control who makes official statements for the company,” any such rules must be drafted so as “to ensure that their rules would not reasonably be read to ban employees from speaking to the media or third parties on their own (or other employees”) behalf.
  • Employer Handbooks Rules Restricting Use of Company Logos, Copyrights and Trademarks – The Board has found many employer policies, whether contained in employee handbooks or elsewhere, that broadly prohibit employees from using logos, copyrights and  trademarks to unlawfully interfere with employees’ Section 7 rights.  While the General Counsel acknowledges that “copyright holders have a clear interest in protecting their intellectual property,” the Board has found, with the approval of such courts as the Fourth Circuit Court of Appeals, that “handbook rules cannot prohibit employees’ fair protected use of that property.”  In this regard the General Counsel states in the Memorandum that it is his office’s position that “employees have a right to use the name and logo on picket signs’ leaflets, and other protected materials,” and that “Employers’ proprietary interests are not implicated by employees’ non-commercial use of a name, logo, or other trademark to identify the employer in the course of Section 7 activity.”
  • Employer Handbooks Rules Restricting Photography and Recording – While many handbooks and policies prohibit or seek to restrict employees from taking photographs or making recordings in the workplace and on employer policy, the Memorandum states that “Employees have Section 7 right to photograph and make recordings in furtherance of their protected concerted activity, including the right to use personal devices to take such pictures make recordings.”  The Memorandum further notes that such policies will be found to be overbroad “where they would reasonably be read to prohibit the taking of pictures or recordings on non-work time.”
  • Employer Handbooks Rules Restricting Employees from Leaving Work – With respect to handbook or other policies that restrict employees from leaving the workplace or from failing to report when scheduled, the Memorandum notes that “one of the most fundamental rights employees have under Section 7 of the Act is the right to go on strike,” and therefore “rules that regulate when an employee can leave work are unlawful if employees reasonably would read them to forbid protected strike actions and walkouts.”  Not all rules concerning absences and leaving the workstations are unlawful.  A rule would be lawful if “such a rule makes no mention of ‘strikes,’ ‘walkouts,’ ‘disruptions’ or the like” since employees should “reasonably understand the rule to pertain to employees leaving their posts for reasons unrelated to protected concerted activity.”
  • Employer Conflict of Interest Rules – The Memorandum states that under Section 7 of the Act, employees have the right to engage in concerted activity to improve their terms and conditions of employment, even if that activity is in conflict with the employer’s interests.  It cites as examples of such activities that could arguably be in violation of broad conflict of interest policies as protests outside the employer’s business, organizing a boycott of the employer’s products and services and solicitation of support for a union while on non-work time.  The Memorandum notes that when a conflict of interest policy “includes examples of otherwise clarifies that it limited to legitimate business interests (note: as that term is defined by the General Counsel and the Board) employees will reasonably understand the rule to prohibit only unprotected activity.”

Part 2: The Wendy’s International LLC Handbook Cases

The second part of the Memorandum relates to the Board’s settlement of a series of unfair labor practice charges against Wendy’s International LLC (Wendy’s) alleging that various provisions of the handbook were overbroad and unlawfully interfered with employees’ rights under the NLRA.  The company entered into an “informal, bilateral Board settlement agreement.  In this section, the GC explains why various provisions were found unlawful and then sets forth negotiated replacement policies that the GC found did not violate the Act.  While not a formal “safe harbor” since this is the position of the General Counsel and not the Board, it offers very good advice for employers and attorneys in this area.  The Wendy’s policies that the General Counsel argued violated employees’ Section 7 rights and the replacements that the General Counsel found acceptable concerned the following areas:

  • Handbook Disclosure Provision – The handbook in issue contained a broad prohibition against disclosure of the handbook and the information it contained without the company’s express prior written permission.  The General Counsel found this to be unlawful because it prohibited disclosure of employment practices to third parties such as a union or the NLRB.
  • Social Media Policy – While the General Counsel acknowledged that employers have “a legitimate interest in ensuring that employee communications are not construed as representing the employer’s official position,” the General Counsel found the company’s rule to be overbroad since it prohibited a much broader range of communications that would be protected by Section 7.  This included photography and recording and no retaliation provisions.
  • Conflict of Interest Policy
  • Company Confidential Information Provision
  • Employee Conduct
  • Walking Off the Job Without Authorization
  • No Distribution/No Solicitation Provision
  • Restaurant Telephone; Cell Phone; Camera Phone/Recording Devices Provision

While Memorandum GC 15-04 arguably does not contain “new” information or changes in policy or case law, it should be useful for employers and practitioners (and employees) in that it provides a concise summary of the General Counsel’s views on this wide range of matters and examples of language that is likely to be found lawful in future proceedings.  Of course it is important to note that each charge is decided on its own facts and the actions and statements of employers and their supervisors in connection with the application and enforcement of the particular provision will almost always be relevant to the determination of whether the Board will issue a complaint on a particular ULP Charge.

Teamsters and Technology II – Labor’s “Silicon Valley Rising” Campaign

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Last week we reported on the fact that Teamsters Local 853 and Loop Transportation had completed negotiations for a first collective bargaining agreement covering a unit of shuttle bus drivers who provide transport for employees of Facebook.  We pointed out that employers in technology, media and telecommunications were facing union organizing targeting employees of their vendors and suppliers for transportation, maintenance, food service and the like, that threatened to enmesh such employers as a consequence of unions gaining recognition of their vendors’ and suppliers’ employees. We also noted that with the NLRB’s expected broadening of its standards for finding joint-employer relationships to exist, that the risks were increasing that they would be held to be joint-employers of the suppliers’ personnel.

Who Are the Employers Impacted and At Risk?

Now, Silicon Beat, the “tech blog” of the San Jose Mercury News,  The Los Angeles Times, USA Today and other publications are all reporting  that while apparently not a direct party to the negotiations between Loop and the union, Facebook has now “approved” the collective bargaining agreement, which it had to do before the contract could go into effect.  In fact, Loop and Local 853 announced in their joint press release, that “The contract, which workers overwhelmingly voted to ratify went to Facebook for its agreement as Loop’s paying client before implementation.” Such economic realities are the type of consideration that the NLRB’s General Counsel has been urging the Board to look at in deciding whether a joint employer relationship exists.

Is Silicon Valley Rising ?

The Teamsters success with Loop and the Facebook drivers is not an isolated event.  Rather it is a part of an ongoing, well financed effort by a coalition of unions including the Teamsters  the Service Employees International Union (SEIU), The Communication Workers of America, UNITE-HERE, The South Bay Labor Council, the NAACP and other community organizations known as Silicon Valley Rising.  The group’s agenda is to address what it sees as a two tiered economic system in which, in its view, direct employees of the technology and media companies in the industry are paid well and receive good benefits, while those who support the industry as employees of contractors and suppliers are not.

While time will tell whether the movement is successful in organizing and unionizing, the successes to date such as those with the Loop Transport drivers,  reports of well known companies taking formerly contracted services such as security in house, and large wage increases for unrepresented drivers at others, suggests that the campaign is having an impact already.

What does This Mean For Employers?

Targeted, industry specific organizing that brings together unions and community and advocacy groups are increasingly working to make their case on arguments of “income inequality” and the differences in pay and benefits for those who are benefiting from the economy and those who are not.  The treatment and status of those employed by contractors and vendors versus the companies who rely upon their services is one of the forces giving rise to the redefining of employer-employee relationships in general and joint employer standards in particular.

As with the SEIU’s earlier Justice for Janitors and  Stand For Security campaigns, a key tactic is likely to be the application of pressure on corporations that rely on contractors to provide essential services will be to target and pressure the user to have its contractors increase pay, benefits and working conditions and, perhaps more importantly, not to resist union organizing among the contractors’ employees.

As a first step, it is critical that employers be aware of and consider these forces in structuring business relationships and deciding which services to perform in-house and which to contract out.  How agreements with contractors are structured and implemented will also remain critical:

  • Are contracts likely to result in findings of joint employer status?
  • Who will direct and control the performance of the contracted for services?
  • What degree of control or influence will the ultimate client exercise when a union organizes or represents the contractors’ employees?

Teamsters and Technology : Developing Labor Issues for Technology Industry Employers

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Employers in the Technology Media and Telecommunications (“TMT”) industries have generally not thought that union organizing was an issue that affected their businesses and workforces.  Recent developments suggest that this is no longer the case.

These industries have earned reputations for innovative workplaces, generous benefits, and free food. At the same time, technology companies have outsourced many non-core functions such as campus security, maintenance, and transportation to third party suppliers.  Employees of these vendors  generally receive less generous compensation, benefits and perks than high tech employees. The different treatment of primary employees and ancillary workers employed by subcontractors has given rise to claims that the industry is divided into the “haves” and “have not’s” and provoked a rising backlash among many workers.

Unions have been using this discontent to increase  their  influence in the TMT industry. Facebook’s shuttle bus drivers voted to unionize this past November and ratified a first contract on February 21 of this year. On February 27th  shuttle bus drivers employed by a  contractor that provides shuttle services for Apple, eBay, Yahoo, and Zynga employees voted to be represented by the Teamsters. At the same time , the Service Employees International Union (“SEIU”), which has been actively organizing fast food workers nationwide, has been working to organize custodial employees and security guards of high tech companies in the Silicon Valley. Most of these organizing campaigns are focused on the employees of subcontractors retained by TMT companies, but that has not deterred unions from pressuring those companies directly.

At the same time, the SEIU and other unions have been urging the  National Labor Relations Board (“Board” or “NLRB”) to expand the definition of a joint employer under the National Labor Relations Act (“Act”). The Board’s General Counsel is actively supporting this effort and urging the Board to adopt a much broader “economic realities” test that would result in more frequent and expansive findings of joint employer relationships.  If the Board agrees, it will likely redefine the definition and could adopt a standard that would hold TMT companies to be joint employers with their cleaning, transportation and food service suppliers.

Currently, only entities which exercise direct control as opposed to “limited or routine” control are held to be  joint employers. The General Counsel is asking the Board to expand the definition to cover entities who exercise “indirect control over significant terms and conditions of employment of another entity’s employees.”[1] This could foist joint employer status on many TMT employers and directly involve them in their  contractors’ collective bargaining relationships.

The General Counsel’s proposed standard for determining joint employer status is “where, under the totality of the circumstances, including the way the separate entities have structured their commercial relationship, the putative joint employer wields sufficient influence over the working conditions of the other entity’s employees such that meaningful bargaining could not occur in its absence.”[2]

Organizing campaigns from the west and expanded joint employer liability from the east is poised to trap TMT employers in a perfect storm. TMT employers may be able to address these concerns by  structuring their agreements and relationships such that they  do not retain or exercise sufficient indicia of control over their subcontractors’ employees to support findings of  joint employer status even under the standard the General Counsel has urged the Board to adopt. The General Counsel has proposed a number of examples of control sufficient to trigger joint employer status including: (1) veto power over hiring or the right to reject the supplier firm’s employees; (2) retaining the contractual right to direct or supervise the contractor’s employees; (3) requiring employees to abide by the user firm’s rules; (4) dealing with employee grievance and personnel issues; (5) affecting employees’ work schedules or work hours; (6) affecting employee discipline; (7) making recommendations to the supplier firm during the collective-bargaining process or otherwise retaining the right to give such input; and (8) giving employees daily assignments.

Employers in the TMT industries and other areas should review what functions are performed by employees of subcontractors and how those employees are managed. Businesses should consider revising their agreements with supplier employers to remove terms which permit them to exercise control over the contractor’s employees in favor of terms which focus on the quality of the product the contractor is expected to deliver. By planning ahead, TMT employers either can or may reduce the risk of being found to be joint employer with their contractors’ employees.

[1] General Counsel’s Brief

[2] General Counsel’s Brief

Attend EBG’s 2015 Labor Briefings in Westchester County, New York and Los Angeles, California

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New Union Rules and Rulings: Proactive Strategies for Employers Facing Today’s Aggressive National Labor Relations Board and New Expedited Representation Elections

April 14, 2015 – Hilton Westchester, Rye Brook, New York

May 7, 2015 – The L.A. Hotel Downtown, Los Angeles, California

The National Labor Relations Board (NLRB) has adopted dramatic new rules and processes for union representation elections scheduled to take effect on April 14, 2015. The NLRB has also changed many of its standards concerning workplace rules, handbooks and policies affecting ALL EMPLOYERS, not only unionized workplaces.

This interactive workshop will address critical headline issues developing from today’s aggressive, union-friendly NLRB and provide innovative techniques and proactive and preventive strategies to prepare and respond to these developments. Specifically, our speakers will explain and offer tactics on:

  • New election rules that will bring fast elections in small units, with limited opportunity for employers to present both sides to employees and resolve key questions before a vote
  • NLRB’s evolving and expansive definition of joint employers including franchisors and franchisees
  • Developing and enforcing handbooks, policies, practices and work rules, including use of email, social media, and protection of confidential information that will withstand the NLRB’s increasing scrutiny
  • NLRB’s expanding view of protected concerted activity, including social media, workplace confrontations, class action waivers and other recent NLRB decisions

To review locations and a briefing agenda, please click here.  To register, please click here.

The fee to attend this briefing is $50 for the first person and $25 for each additional person from the same organization. The fee includes breakfast, workshop materials, and lunch. Overnight accommodations can be arranged directly with the hotel.

For additional information, please contact Elizabeth Lynch Gannon at egannon@ebglaw.com or 202/861-1850.

First Circuit Reiterates Importance of Good Faith in ADA Interactive Process

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In a case emphasizing the importance of acting in good faith in the interactive process and how an employer can do it right, on February 13, 2015, the First Circuit denied the EEOC’s petition for a rehearing en banc of the court’s decision to dismiss a lawsuit brought against Kohl’s Department Stores, Inc. by a diabetic former employee who claimed that her erratic working hours were exacerbating her condition.  EEOC v. Kohl’s Dep’t Stores, Inc., 774 F.3d 127 (1st Cir. 2014), reh’g en banc denied (Feb. 13, 2015).

Pamela Manning, a former sales associate at Kohl’s, had type I diabetes.  For two years, she worked predictable shifts as a full-time sales associate.  Following a restructuring of the staffing system nationwide in January 2010, however, Manning began working a schedule with unpredictable shifts, including some night shifts followed by day shifts (in Kohl’s parlance, “swing shifts”).  Manning alleged that the new schedule aggravated her diabetes.

After informing her supervisor that working erratic shifts was endangering her health, Manning obtained a doctor’s note requesting that she be scheduled to work “a predictable day shift.”  Manning’s store manager contacted human resources to discuss Manning’s request.  Kohl’s determined that it could not provide Manning’s preferred schedule of day-time hours only, but authorized the store manager to offer a schedule with no swing shifts.

On March 31, 2010, during a meeting with her store manager and immediate supervisor, Manning again requested a “steady shift” with mid-day hours, but was told that she could not be given a consistent schedule.  Manning stormed out of the meeting, saying that she had no choice but to quit.  Her supervisor followed her and asked what she could do to help, but she could not convince Manning to reconsider her resignation or to discuss any alternative accommodations.

Two days later, Manning contacted the EEOC to file a charge of discrimination.  On April 9, 2010, the store manager called Manning and asked that she rethink her resignation and consider alternative accommodations for both part-time and full-time work.  Manning ignored this overture and got off the phone as quickly as possible.  A week later, after hearing nothing further Manning, Kohl’s treated her departure as voluntary and terminated her employment.

Based on this record, on December 19, 2014, the First Circuit concluded that Kohl’s made earnest attempts to discuss potential reasonable accommodations.  By contrast, Manning’s conduct constituted a refusal to participate in the interactive process in good faith, warranting summary judgment in favor of Kohl’s.  In addition, the First Circuit ruled against the EEOC on Manning’s constructive discharge claim, finding that a reasonable person would not have felt compelled to resign when her employer offered to discuss other potential work arrangements with her.

In reaching its decision, the First Circuit emphasized that both the employer and the employee have a duty to engage in good faith, and that empty gestures by the employer will not satisfy this duty.  But if an employer does engage in the interactive process in good faith, and the employee refuses or fails to cooperate in the process, the employer cannot be held liable for a failure to provide a reasonable accommodation.

Employers addressing reasonable accommodation requests from their employees can learn from Kohl’s actions in this case.  Kohl’s benefited from its representatives’ diligence in documenting their response to Manning’s request (including the internal discussions) and in following up with Manning to give her an opportunity to propose alternative accommodations for her diabetes.  Thus, even though the store manager never conveyed an offer of “no swing shifts,” the First Circuit was able to find that Kohl’s made real efforts to work with Manning and that Manning unreasonably refused to continue the dialogue with Kohl’s.  And Kohl’s succeeded in winning dismissal of the ADA claim.  Employers who follow this course of conduct ensure their compliance with the ADA and, in the event an employee refuses to reciprocate discussions, may establish a defense to liability in a failure to accommodate lawsuit.

ERISA at 40: A Time to Assess Multiemployer Defined Benefit Pension Plans

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As the 40th anniversary of the landmark Employee Retirement Income Security Act (ERISA) is noted, an article by Allen B. Roberts featured in the Winter 2014 Benefits Law Journal observes that participating employees and contributing employers – as the primary stakeholders in the fortunes of multiemployer defined benefit pension plans – may not be among the celebrants. Employees who should benefit from retirement contributions and the employers who fund the payments are encountering a world different from that anticipated with the passage of ERISA. 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. While some employers have avoided, or moved away from, the defined benefit plan model – favoring defined contribution plans or other retirement programs – those having ongoing commitments must face the current and prospective realities of the multiemployer defined benefit plans to which they are obligated to contribute.

When ERISA was enacted, Congress did not foresee certain dramatic shifts that have come to affect the fortunes and allure of the multiemployer defined benefit pension plans for which unions negotiate in collective bargaining. Some iconic companies that once were bedrock industry participants collapsed and disappeared as their fortunes reversed, or they relocated or outsourced previously unionized operations or lost market share (and opportunities to maintain and create jobs) to nonunion domestic and offshore competitors. As a consequence of these and other factors, private sector union membership — on which multiemployer pension plans depend for a sustaining flow of participants — plummeted from 23.4 percent in 1974 to 6.6 percent in 2014. All the while, employers in growth sectors that remain relatively union-free have designed benefits packages that appeal to the different demographics of a workforce favoring individual elections, geographic and upward mobility, and portability. For many multiemployer defined benefit pension plans, the result has been inversion of a model that should be a broad-based pyramid in which active participants outnumber retirees; there are fewer dollars flowing in from fewer employers and for fewer active employees, while the number of individuals having vested benefits for themselves and their spouses swells.

At the start of ERISA’s fifth decade, multiemployer defined benefit pension plan trustees and actuaries, investment managers, attorneys, and the negotiators on both sides of labor-management relations face a dramatically different future to provide promised retirement security at a cost and value that makes sense for the workforce of today and tomorrow. The Benefits Law Journal article addresses the following topics:

  • The shift in fundamentals for multiemployer defined benefit pension plans
  • The value of plans relative to dollars contributed
  • The actuarial assumptions that drive the substance and appearance of plan soundness
  • Fiduciary responsibilities in the current circumstances of plans
  • Plans in “critical” or “endangered” status
  • Employer options to continue plan contributions or withdraw
  • Plan self-help and other intervention to separate historic participants, employers, and experience from the future
  • Whether an independent presence is necessary to address acute plan problems

A link to an update of the Benefits Law Journal article is available here.