Management Memo

Management’s inside guide to labor relations

7-Eleven Franchise Operators’ Overtime & Minimum Wage Lawsuit Given Green Light by NJ District Court

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By Maxine Neuhauser

For retail and hospitality industries especially,  it is turning out to be a long, hot summer as franchises continue to be in the employment law spotlight.

On July 29, 2014 the NLRB’s General Counsel announced a decision to treat McDonald’s, USA, LLC as a joint employer, along with its franchisees, of workers  43 McDonald’s franchised restaurants with regard to unfair labor practices charges filed by unions on behalf of the workers and authorized charges against of both the franchisees and McDonalds. (See our July 30 blog post  and Aug. 14 blog post)

Then, on August 5, 2014 New Jersey U.S. District Court Judge Rene Bumb,  ruled in Naik v. 7-Eleven that four franchise owner-operators of Indian descent may pursue overtime and minimum wage claims against franchisor 7-Eleven under both the federal Fair Labor Standards Act (“FLSA”) and the New Jersey Wage and Hour Law (“NJWHL”). In deciding 7-Eleven’s motion to dismiss plaintiffs’ wage claims, the court held that the complaint asserted sufficient factual allegations to establish, if proved, that the plaintiffs are employees of 7-Eleven, and not independent franchisees.  The decision has potential wide-ranging implications regarding the coverage and application of host of employment law statutes, as well as potential joint employment and labor-management issues.

The plaintiffs each entered into a 7-Eleven Store Franchise Agreement (“FA”) which characterizes the parties’ relationship as that of franchisor/independent contractor. Plaintiffs allege, however, that, they are they are actually 7-Eleven employees and entitled to overtime and minimum wage.

The court ruled that the language of the FA characterizing plaintiffs as independent contractors  was not alone sufficient to carry the day for 7-Eleven and instead applied a weighing of the factors and economic realities analysis, used when classifying individuals working directly for a business.

The court found that the factors weighed in favor of plaintiffs being characterized as employees, including the factor asking whether the services rendered by plaintiffs are integral to the defendant’s business. As to that element, the court stated, “It is unclear how Defendant could run their business at all without its franchisees [,]” this, despite the fact that franchisees are integral to a franchise business by the very nature of the business model.

The court did not accept that 7-Eleven’s alleged regulation of vendors, equipment maintenance, product supply, uniforms, and implementing a standardized store environment constitute mere quality control measures to ensure uniformity. Rather, it found that the plaintiffs’ allegations, “depict an economic reality of dependence” on 7-Eleven, which supported their classification as employees.

The motion to dismiss comes at an early stage of the ligation and the court’s decision to let  the cases proceed is not a decision on the merits.  Nevertheless the court’s legal analysis in deciding the motion, has certainly raised questions regarding intersection of franchise law and employment law that bear watching – both in terms of application of employment law statutes  and with regard to joint employment.

As a side note, the court dismissed plaintiffs’ claims alleging national origin discrimination and harassment in violation of the New Jersey Law Against Discrimination, but on reasons unrelated to the plaintiffs’ status as employees or independent contractors.

NLRB Again Expands Its Definition of Protected Concerted Activity – One Hand Clapping May Be Concerted

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By Ian Gabriel Nanos

We have written about it before but a recent NLRB decision is yet another example of the NLRB’s expanding and expansive view of what constitutes protected, concerted activities, and is therefore protected under the National Labor Relations Act.  In Fresh & Easy Neighborhood Mkt, the NLRB (Chairman Pearce and Members Hirozawa and Schiffer) found that an employee engaged in protected, concerted activity when the employee spoke to co-workers about a single act of sexual harassment that was “seemingly directed at [the employee] alone.”   The majority noted that it did not matter whether she thought or believed that she was engaged in protected activity.

The dissenters (Members Johnson and Miscimarra), on the other hand, cautioned that the majority decision could have “limitless application” to myriad employee complaints falling outside the NLRB’s jurisdiction.  As Member Johnson noted in his dissent, with apologies to George Bernard Shaw, the Board at this point consists of “five Board Members divided by a common language,” when it comes to their views of how broadly protected concerted activity can be defined under the Act.

Here are the facts.  An employee walked into the break room and discovered that someone wrote a sexually degrading comment next to where her name appeared on a company whiteboard.  The employee, upset with the sexual statement that was directed at her, wanted to file a complaint of sexual harassment.  So far the NLRA is not yet implicated.  But here is where it gets interesting:  The employee then created a hand-copied reproduction of the offending material and asked three co-workers to sign the documentation.  The employee explained that she did this to document evidence in support of her claim of sex harassment.  She added that she thought the other female co-workers also found the material offensive.  She admitted that she did not intend, however, to create a joint-complaint with her co-workers.  In fact, the co-workers indicated that, by signing the documentation, they believed they were merely serving as witnesses to validate the accuracy of the documentation.  And some of the co-workers even went to far as to complain to the employer that they felt the employee “bull[ied]” them into signing the document.

After the employer received notification of the offending statement, the employer initiated an investigation, including review of video footage in the break room to identify the perpetrator.  The employer also spoke with the employee about her efforts to obtain signatures from her co-workers, inquired about the employee’s motivations for doing so and instructed the employee to refrain from obtaining any further witness statements so that the employer could conduct an investigation.  Significantly, the employer informed the employee that she could talk to other employees about the incident and/or request that they be witnesses.  The employee did not receive any discipline for her initial efforts to obtain the signatures.

Nevertheless, according to the NLRB, the employee engaged in “concerted activity” for the “mutual aid or protection.”  The NLRB reasoned that, even if the employee was pursuing her own claim with respect to conduct directed at her, “she wanted her co-workers to be witnesses to the incident, which she would then report to the [employer].”  The Board found that the personal element of the sexual harassment complaint and “selfish motivation” for speaking to her co-workers was not a bar to finding “concerted activity” because “concertedness is not dependent on a shared objective or on the agreement of one’s coworkers with what is proposed” – even if the co-workers disagreed with the complaint or did not want to sign the document.

The Board further concluded that this activity was for the “mutual aid or protection” because the employee’s efforts to obtain witnesses effectively invoked federal or state law protections that “implicated” the rights of other employees.  The Board surmised that, since it would be “unquestionably” protected to “join forces with another employee who likewise had been the victim of alleged sexual harassment,” the analysis should not change just because the offending conduct was “seemingly directed at [the employee] alone.”  The reason, is that in both cases the employee is still attempting to “’band together’ in solidarity to address their terms and conditions of employment with their employer.”

The Board then explicitly overruled the Board’s divided decision in Holling Press, Inc., 343 NLRB 301 (2004), because that decision “effectively nullifie[d] the solidarity principle when it comes to claims of sexual harassment involving conduct directed at only one employee.”  In other words, as far as the majority of the current Board is concerned, solidarity need not be inconsistent with solitary.

This expansive approach to the notion of “concerted activity” is certainly not without precedent.  For example, we recently wrote, about an ALJ decision finding that a waiter at a restaurant who, acting alone, instituted a class action lawsuit claiming violation of state or federal wage and hour laws, engaged in concerted activity on behalf of himself and co-workers, even if none of those co-workers are aware of the filing.

There is, however, something of a saving grace.  The Board in Fresh & Easy found that the employer’s action – on these particular facts – was lawful.   The Board explained that the employer had a legitimate business interest in conducting its own investigation.  The employer’s instructions that the employee should not attempt to obtain any witness statements, moreover, was narrowly tailored to meet the employer’s need to conduct an impartial and thorough investigation and were found to comply with the standards enunciated by the Board in Banner Health  in 2012, when it considered when and in what circumstances requiring confidentiality in connection with investigations could itself interfere with employees’ rights under the Act.  Indeed, the Board acknowledged that the employer’s instruction did not prevent the employee from “from discussing the pending investigation with her coworkers, asking them to be witnesses for her, bringing subsequent complaints, or obtaining statements from coworkers in future complaints.”  In addition, the Board found that the employee’s inquiry as to the employee’s motivations for obtaining the signatures was narrowly tailored – again, on these facts – to the employer’s legitimate interest in conducting a legitimate investigation, including into the assertions that some of the co-workers felt “bull[ied]” into signing the documentation.

Unfortunately, this remains a cautionary tale: on a new set of facts, the Board may not find the employer’s instructions to be sufficiently narrowly tailored and the employer may not come out as relatively unscathed.


Where’s the Beef? McDonald’s, Joint Employers and the NLRB II: What “Labor” Says it Means

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Following the NLRB’s announcement on July 29th of its position that McDonald’s and its franchisees are joint employers, commentators across the spectrum have been opining about this actually means for employers, unions and workers.

This week the AFL-CIO weighed in with its opinions in a post on its blog AFL-CIO NOW.  After recounting the background of the developments, in section called “What’s the Big Picture?” the author points out how organized labor intends to take advantage of the Board’s anticipated broadening of the standards for finding joint employer status:

“Even though this story has a long way to go, this is “pretty significant,” says AFL-CIO Legal Counsel Sarah Fox. What makes this case so interesting is that the joint employer doctrine can be applied not only to fast food franchises and franchise arrangements in other industries, but also to other practices companies use to avoid directly employing their workers, such as subcontracting, outsourcing and using temporary employment agencies. “Companies are increasingly using these kinds of arrangement to distance themselves from their workers and shield themselves from liability as employers,” says Fox. “These are the devices they use so that they can get the benefit of the work the employees do, but say ‘I’m not responsible’ for unfair labor practices, health and safety violations, paying proper employment taxes or complying with other legal responsibilities of an employer.”

The notion of the joint employer doctrine is an important concept for holding employers responsible, even if there’s a third party involved, when they are effectively exerting control over wages and working conditions.

As we have predicted, big labor and the NLRB both see these developments, under the rubric of the “economic realities” theory argued by the Board’s General Counsel in its brief to the Board in Browning-Ferris as calling for a new test for determining joint employer status – one which the AFL-CIO sees as allowing unions and workers to go after the companies that contract with other employers, through subcontracting, outsourcing and using temporary employment agencies,” in an effort to hold the customer responsible for its suppliers’ employment practices.

Expect to see these theories raised with ever increasing frequency in a broadening circle of relationships.

Increased NLRB Use of Section 10(j) Injunctions Interferes With Employer Rights In Collective Bargaining

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By Peter M. PankenSteven M. Swirsky, and Adam C. Abrahms

In May, we cautioned employers that the NLRB would be increasing its aggressive pursuit of injunctions under Section 10(j) of the Act to pressure employers in a range of unfair labor practice cases.  The Board’s aggression and apparent overreach is clearly revealed in one recent case in which the Board petitioned for and was granted an injunction to end a lockout, only to have the underlying unfair labor practice allegation dismissed eight days later when the Administrative Law Judge who heard the case found that the parties had indeed reached impasse as the employer claimed, and thus, that the lockout was lawful.

In NLRB v. Kellogg Company, No.14-2272, (W.D. Tenn. July 30, 2014), the General Counsel sought a Section 10(j) injunction in response to the union’s 8(a)(5)  charges alleging that there was not an impasse and the employer’s lockout of its employees was an unfair labor practice.  On July 30, 2014, U.S. District Judge Samuel H. Mays, Jr. in Memphis issued an injunction ordering Kellogg Company to reinstate over 200 employees at a plant who it had locked out on October 22, 2013, after their union rejected the employer’s “last, best and final offer,” in negotiations over a local supplement to the parties’ Master Agreement.

After investigating ULP charges filed by the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union, and Local Union 252-G, the NLRB’s Regional Director for Region 15 in Memphis, TN issued a Complaint alleging that the company had violated Section 8(a)(5) by declaring impasse unlawfully and then locking out the employees at the plant and by failing to provide the union with information that it had requested and needed to carry out its role as the bargaining representative.  The NLRB alleged that the employer was not bargaining in good faith but was instead seeking an interim change in wages in violation of a Master Agreement which had not expired.

On April 15, 2014, after the Complaint was issued but before a hearing was conducted on the merits, at which evidence would be presented and the Union, the employer and the Board’s General Counsel would be able to argue their positions to the Administrative Law Judge who would decide whether the General Counsel had proven that Kellogg had committed ULPs as alleged in the Complaint, the Regional Director for the NLRB’s Memphis Office filed an action in the District Court for an injunction under Section 10(j) of the Act.  In the petition for an injunction, the Regional Director asked the Court for an order directing Kellogg to end the lockout and to reinstate the employees, pending the outcome of the underlying ULP case.  Rather than holding an evidentiary hearing on the petition, Judge Mays waited for the ULP hearing, so that he could make his decision based upon his review of the record.

A five day hearing on the ULP Complaint was conducted from May 5-9, 2014 before ALJ Ira Sandron, and Kellogg, the Union and Counsel for the Board’s General Counsel submitted briefs to the ALJ in June 2014.  After the hearing closed, the record was submitted to the District Court, and on July 30, 2014, Judge Mays issued his Order, granting the Board its injunction and ordering Kellogg to end the lockout and reinstate the employees who had been out since October.

The Section 10(j) injunction was not based on findings that the employer had committed ULPs, that there was not an impasse or that the lockout was unlawful.   Rather, as the Order explained it was based on his finding that the NLRB as petitioner had met an extremely low standard necessary for it to secure the injunction.  Judge Mays found that the Regional Director, as the petitioner, had “reasonable cause” to believe that the company had violated the Act in the manner alleged in the charges filed by the union, and that an injunction was “just and proper” based on the facts as the Regional Director alleged.

To meet this burden, the Court noted that all the NLRB was required to do was to produce “some” evidence in support of the petition.  The Court noted that in seeking an injunction, the NLRB “need not even convince the Court of the validity of the Board’s theory.”  Instead, all it had to do was show that its theory was “substantial and not frivolous”.

To satisfy the requirement that issuance of an injunction was “just and proper,” the Court stated that all the Board had to show was that such relief was “necessary to return the parties to status quo pending the Board’s proceedings in order to protect the Board’s remedial powers under the Act.”

Indeed, the Judge even opined that in applying the reasonable cause/just and proper standard, “fact finding is inappropriate.” District Courts “should not resolve conflicting evidence or make credibility findings.”

Just 7 days later, the Administrative Law Judge issued his Decision and proposed order, in which he found that the allegations that Kellogg had illegally declared an impasse and locked out the employees should be dismissed.  He rejected the Board’s central premise and concluded that Kellogg had bargained to impasse over a mandatory term and condition of employment and therefore had the right to lock out its Memphis employees in support of its bargaining position.  (Kellogg Company and Bakery, Confectionary, Tobacco Workers & Grain Millers International Union and its Local 252. 15 CA 115259)

The Administrative Law Judge’s decision came after a full evidentiary hearing where factual evidence was presented and the NLRB’s evidence in support of the allegations could be heard and considered, and perhaps most importantly, the employer had the right to present its evidence and argue its case.

What is so unique and troubling about the Board’s pursuit of an injunction in this case is the fact that a full trial on the underlying ULP complaint was about to take place when the Board filed its petition, that trial had been completed by the time that the District Court considered the petition and granted the injunction and that the results were so diametrically opposed because of the undue deference commonly granted to the NLRB when it petitions for an injunction under Section 10(j).  When the Administrative Law Judge heard the case, evaluated the evidence and considered the employer’s legal theories and not just those of the NLRB, he quickly found that there was no violation and the employer had the right to lock its employees out in support of its bargaining position.  When the District Court considered the petition, it was essentially directed to simply take the Board’s word for it that ULPs had been committed and that an injunction was appropriate.

These contrasting results confirm the seriousness of the potential for an aggressive NLRB to over use and misuse discretionary injunctive relief under Section 10 (j) – a tool that has been used sparingly for most of the Board’s history.  The fact that many District Judges consider applications under Section 10(j) without a full or even partial evidentiary record and afford immense deference to the NLRB’s legal theories, however novel or misdirected they may be demonstrates the risks that employers face.

For these reasons employers facing the prospect of such injunction proceedings should not hesitate to urge the courts to require evidence to back up the NLRB’s claims and should point out when the legal theories underlying such cases are not based on well recognized principles and should therefore be weighed with appropriate skepticism.

The NLRB Goes to “Pot” – “The Board, Like Congress, Has the Authority to Regulate the Marijuana Industry”

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The NLRB’s General Counsel’s Office, in an Advice Memo dated October 25, 2013  (pdf) and released to the public on August 7, 2014, has taken the position that “an enterprise that grows, processes, and retails medical marijuana” is an employer subject to the National Labor Relations Act provided it meets the Board’s monetary jurisdictional standards and is an employer engaged in commerce and that “the Board should assert jurisdiction over this type of business enterprise.”   

Notably, the General Counsel’s office advocates the position that even though all of Maine Wellness’s growth and production takes place within the State of Maine and all of its products are shipped to dispensaries within the State, Maine Wellness is engaged in interstate commerce because of the company’s purchases of equipment and supplies from enterprises in other states. At page 8 of the Advice Memorandum the Division of Advice makes the remarkable statement that “the Board, like Congress, has the authority to regulate the marijuana industry, even where production and consumption is intended to be wholly intrastate.”

Having reached that conclusion, the Division of Advice next examined the question of whether the Maine Wellness Connection’s  “productions assistants,” who are primarily responsible for performing the tasks associated with growing marijuana during growing cycle and  its “processing assistants who  are primarily responsible for tasks performed during the processing stage,” Associate General Counsel Barry J. Kearney of the Division of Advice concludes that Maine Wellness’s workers “who are primarily involved in what are referred to as marijuana processing activities that are not agricultural are employees under the Act.”  The Board notes what it considers to be the similarity of their work to those who work in sugar refineries and tobacco processing who have been held not to be engaged in agricultural employment.

The Advice Memorandum’s in depth description of the processes and procedures employed to process and ready the plants’ buds for placement in inventory and shipment to dispensaries across the State of Maine, and the processing of what are referred to as the “byproducts” of that process into a baker’s mix of finely ground leaves and flowers used to create “edibles, which are sweet or savory foods and beverage products” that include the baker’s mix as their active ingredient, reads like a 2014 update of the 1974 classic A Child’s Garden of Grass (The Official Handbook for Marijuana Users)

The Board’s intention to assert its jurisdiction over this industry comes at a time when the legalization and decriminalization of marijuana is rapidly expanding across the country and the growth, processing and distribution of cannabis products is becoming a big business (“some estimate that marijuana is now the highest value cash crop industry in Maine, surpassing the size of Maine’s wild blueberry industry at a value of approximately $78 million.”)

The Advice Memorandum reveals the fact that this fast growing industry is one in which organized labor is active and will likely continue to be given the General Counsel’s analysis and conclusions.  First although it is not mentioned in the Advice Memorandum, the unfair labor practice charges that are at the base of these issues were filed by United Food & Commercial Workers International Union, AFL-CIO, CLC. As the General Counsel notes, the UFCW and other unions, including the Teamsters are already engaged in organizing and representing workers in the marijuana industry.  In fact the UFCW has gone so far as to establish a distinct Medical Cannabis and Hemp Division within the union.  In what is no doubt a case of background being destiny, the Director of the Division is named Dan Rush.   You cannot make this stuff up.

NLRB Acts in Response to Supreme Court’s Noel Canning Decision

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The National Labor Relations Board has been busy since the Supreme Court’s June 26th Noel Canning decision trying to address the issues and uncertainty resulting from the Court’s holding that recess appointments of Board members on January 4, 2012, were invalid because the Senate was not actually in recess.  As we pointed out in our earlier post, this meant that numerous Board decisions from January 4, 2012 until August 5, 2013, because the Board lacked a quorum at the time that the cases were decided and many administrative actions, including appointments of Regional Directors, were also invalid.

The decisions in question included not only decisions in representation and unfair labor practice cases but many of the personnel and administrative actions that are the responsibility of the Board.

The Board announced yesterday that by unanimous decision it has took  “administrative action” on July 18, 2014, to “confirm, adopt and ratify nunc pro tunc all administrative, personnel and procurement matter approved by the Board or taken by or on behalf of the Board from January 4, 2012 to August 5, 2013, inclusive.”  The Board explains in the Minute of Board Action (pdf) that its purpose in so doing was “to remove any question that may arise concerning the validity of the administrative, personnel and procurement matters undertaken during that period.”

While the Board action does not relate to substantive decisions in cases, it includes the appointment of Regional Directors for the NLRB’s Regional Offices in Philadelphia, Tampa and Los Angeles, the appointments of 5 Administrative Law Judges and numerous internal agency restructuring decisions.

Still to come are the Board’s actions with respect to the numerous cases decided between January 5, 2012 and the Board’s achievement of a valid quorum in August 2013.  It will be interesting to see whether the Board shows the same level of unanimity when it is faced with the substantive labor law questions cast into doubt by Noel Canning.

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.