Unfair Labor Practices

Steven M. SwirskyOver the past week the U.S. Court of Appeals for the District of Columbia Circuit weighed in on two separate related efforts by the Obama-Board to expand the protections of the National Labor Relations Act (the “Act”) to workers who are not in traditional employer-employee relationships.

One Court – Two Cases

In a March 3, 2017 decision, the Court rejected the National Labor Relations Board’s (“NLRB”) finding that FedEx Home Delivery drivers were employees and agreed with the company that the drivers were independent contractors and therefore did not have the right to union representation under the Act.   On March 9th, the Court heard the much anticipated argument on the challenge by Browning –Ferris Industries of California Inc., to the Board’s 2015 decision adopting a new and much looser standard for determining joint employer status. While it is not certain when the Court’s decision will be released, the questions asked by the judges who heard the appeal suggested that they are by no means convinced that the new test articulated in Browning-Ferris is the correct one and consistent with what Congress intended when it passed the Act.

The Court Found FedEx Ground Drivers Are Independent Contractors, Not Employees

A key question in the gig economy is the relationship between a worker and the company for whom they provide services. Those workers who are employees under the Act have the right to join and be represented by unions; independent contractors do not.  The NLRB has gone so far in its efforts as to hold that misclassification of a worker the Board considers to be an independent contractor commits an unfair labor practice when it does so.  The Board has also argued before the Courts that its views on whether a worker is an employee or an independent contractor should be afforded deference by the Courts.

The D.C. Circuit’s decision in the FedEx case is of particular interest with regard to each of these propositions. First, the Court noted that under the Supreme Court’s 1968 decision in NLRB v. United Insurance Company of America, the “determination of whether a worker is a statutorily protected ‘employee’ or a statutorily exempt ‘independent contractor’ is governed by common law” and “there is no shorthand formula or magic phrase that can be applied to find the answer.” Thus, while the Board argued that the Court should afford great weight to its application and analysis of the common law test for determining whether the drivers were employees or independent contractors, because the question is “a question of pure common law agency principles ‘involv[ing] no special administrative expertise that a court does not possess,” the Court found that deference to the Board’s views was neither appropriate nor required.

The Court in its analysis and application of the common law test found that the NLRB was wrong to place greater weight on certain factors than others. Because the facts in the FedEx case were virtually identical to an earlier case the Court had considered with the same parties in 2009, the Court held the Board was not entitled to the deference that would be due “between two fairly conflicting view,” because the Court had previously considered and decided the issue.

The Board’s Browning-Ferris Joint Employer Test

The Board’s 2015 Browning-Ferris decision held that an employer could be deemed a joint-employer of another employer’s employees if it was found to exercise or even just has the right to exercise “indirect control” over the other employer’s employees. The D.C. Circuit heard argument on March 9th on the company’s challenge to this standard.  While it is too early to say whether the Court will defer to the Board in this case, the Court’s questions suggested that it at least has doubt as to the Board’s new standard.  For example, Judge Patricia Millet questioned the practicality and future application of the indirect control standard, asking the Board’s attorney “What assurance do we have that this test and particularly indirect control is going to continue to police the line properly between genuine joint employers and [contractors]?

As in the FedEx decision, the application of the common law standards was before the Court, this time in connection with the common law test for determining the existence of an employer-employee relationship, which is one of the requirements of the Browning-Ferris standard. Counsel for Browning-Ferris argued that “the notion of exertion control dovetails with Congress’ understanding of the essence of a common-law employment relationship as direct supervision.” If the Court agrees with this proposition, then it would seem questionable that the Court will accept the Board’s view that possession, without exercise, of indirect control is sufficient to find a joint-employment relationship.

What Do These Cases Tell Us?

Since last November’s election, there has been a great deal written and said about what a Trump Labor Board will likely mean for the legacy of the Obama Board. However, in examining that legacy it is important not to lose sight of the fact that the Board’s decisions are not self-enforcing and are subject to review and enforcement by the Courts of Appeal.  While the Board continues to follow its Doctrine of Non-Acquiescence, meaning it will not accept the holdings of any court other than the United States Supreme Court as binding upon it if it disagrees with the Court’s interpretation of or views concerning the application of the Act, the D.C. Circuit and other Courts have continued to take serious issue with the Board’s position.

It will be interesting to see, once a new Board with a majority of members is appointed by the new President, not only how it addresses the myriad of representation and unfair labor practice precedents that are the product of the Obama Board, but also whether it continues to stand by the Doctrine of Non-Acquiescence and how this shapes its relationship with the judiciary.

NLRB Acting Chair Philip Miscimarra has given the clearest indication to date of what steps a new Republican majority is likely to take to reverse key elements of the Labor Board’s hallmark actions of the Obama administration once President Trump nominates candidates for the Board’s two open seats and the Senate confirms. In each of these cases, Miscimarra highlighted his earlier opposition to the majority’s changes in long standing precedents and practices.

The Acting Chair’s Position On the Board’s 2014 Amended Election Rules – The Emphasis On “Speed Above All Else” is Inconsistent With the Law

In a strongly worded dissent in European Imports, Inc., 365 NLRB No. 41 (February 23, 2017), the Acting Chair took issue the majority’s decision to deny an Employer’s Emergency Request for Review, that sought to postpone and reschedule a representation election scheduled to take place only three days after a significant number of the employees who would be eligible to vote approximately 25%, learned that they were included in the bargaining unit, and would be affected by the outcome of the vote.

In its Emergency Request, the employer urged the Board to postpone the election by a week, to endure that the employees would know whether they would be eligible to vote and if they were, to allow them to get the facts and make an informed decision when they voted. It also argued that holding the election so soon after the issuance of the Direction of Election “would deprive many employees of sufficient notice that they would be voting in election that would dictate whether they would have union representation.”

Disagreeing with the decision of Members Mark Pearce and Lauren McFerran to deny the employer’s Emergency Request without comment, Miscimarra took issue not only with the denial of this Request, but more broadly, with the Board’s 2014 Amended Election Rule (the “Rule”) and its “preoccupation with speed between petition-filing and the election,” the Rule’s “single-minded standard” calling for “every election (to be) scheduled for ‘the earliest date practicable . . .”

Miscimarra reiterated his position, as expressed in his dissent to the Board’s adoption of the amended Election Rule in 2014, that such an emphasis on speed above all else is inconsistent with the Board’s duty under the National Labor Relations Act “to assure to employees the fullest freedom in exercising the rights guaranteed” by the Act.

The Acting Chair again called for the Board to establish “concrete parameters” for the scheduling of elections that would ensure “reasonable minimum and maximum times between the filing of a representation petition and the holding of an election.”

In addition to addressing issues of timing, Miscimarra also took issue with the fact that during the representation hearing preceding the Direction of Election. The Board’s Regional Director had refused to permit the employer to present evidence and develop a record as to why it was being prejudiced in this case by the 2014 Amended Election Rule. The Regional Director ruled that because earlier judicial challenges to the facial validity of the Election Rule had been dismissed, the employer could not litigate the actual prejudice the Rule caused in this case.

Miscimarra made clear that in his view, the fact that earlier facial challenges to the Amended Election Rule had been dismissed, questions as to the validity of the Rule, when applied to specific facts remains open and that it is a “clear error and an abuse of discretion” to deny an employer the opportunity to litigate such issues when they arise.

The Acting Chair’s Position On the Obama Board’s Handbook and E-Mail Decisions

In another dissent in Verizon Wireless Inc., 365 NLRB No. 38 (February 24, 2017)  Miscimarra reiterated his strong dispute with the way in which the Obama Board has analyzed and decided cases challenging employee handbooks and policies, writing that Board’s current standard for deciding such cases “defies common sense.”

Under the Board’s 2004 Lutheran Heritage standard, the Board will find a handbook provision or policy to violate the Act and unlawfully interfere with employees’ rights to engage in concerted, protected activity if which in part rendered work rules and handbook provisions unlawful if employees “would reasonably construe” them to prohibit protected activities under Section 7 of the Act.

The Acting Chair reiterated his view, as explained in his lengthy 2016, dissent in William Beaumont Hospital, 363 NLRB No. 162, that the Board’s current test is unworkable, and fails to adequately recognize employer’s legitimate needs of employers. Calling on the Board and the Courts to overturn and reject the Lutheran Heritage standard, Miscimarra urged the adoption in its place of a new balancing test that would not only focus on employees’ rights under the Act, but that would also take into account employers’ legitimate justifications for a particular policy or rule, such as attempting to avoid potentially fatal accidents, reduce the risk of workplace violence or prevent unlawful harassment.

Miscimarra also took direct aim in his dissent at the He also wrote that he believes the Board should overturn its Purple Communication decision allowing employee virtually unfettered use of employer email systems and return to the former standard in Register Guard, which recognized that such systems are employer property and should be recognized as such. The dissent described the standard under Purple Communications as “incorrect and unworkable,” and called for a standard that would once again recognize “the right of employers to control the uses of their own property, including their email systems, provided they do not discriminate against NLRA-protected communications by distinguishing between permitted and prohibited uses along Section 7 lines.”

What This Means for Employers

As we noted when the President appointed then Member Miscimarra to serve as Acting Chair of the Board, meaningful change in how the Board interprets and applies the Act will not come until the two vacant seats are filled and a new majority is able to act. Additionally, current General Counsel Richard F. Griffin, Jr.’s term runs through August 4, 2017.

We expect change to come as ULP issues get before the Board. It is to be expected that any new Members appointed by the President will almost certainly share Acting Chair Miscimarra’s views on such issues as use of employer email systems and the review and enforcement of workplace rules, handbooks and the like.  A new balancing test such as that proposed in the Beaumont Hospital dissent is quite foreseeable.

Concerning the Amended Election Rule, things are a bit trickier. The Rule itself was the result of formal rule making, with public comment and input after the Board published its proposed Rule in the Federal Register.  Major changes in the Rule itself would require a new Board to follow the same processes, which are quite lengthy. However, there is certainly room, as Miscimarra’s dissent in European Imports demonstrates, for the Board to make changes in how it administers and processes cases even under this Rule, before any change to the Rule itself becomes effective.  The Acting Chair’s comments concerning the right of employers and other parties to due process, including the right to develop a complete factual record on disputed, material issues is something that can be changed through the administration and application of the Rule even without formal change.  So to, it would not be surprising for a new General Counsel to give guidance to the Board’s Regional Offices calling for them to apply their discretion to avoid circumstances like those that triggered the Emergency Request in European Imports to make sure that there are no more “three day elections.”

Periods such as this, where there is transition in interpretation and enforcement, are challenging but in reality they have been a part of the history of the enforcement and application of the Act for more than 80 years.  Students of the Board often speak of a pendulum and the need for those with business before the Board to try to anticipate its swings.  Careful consideration of not just what the “law” is now, but also what it is likely to be going forward will now once again be the watchword.

 

In yet another decision that exhibits the current Board’s overreaching and expansive view of its jurisdiction, the Board recently ruled that nurses who supervise and assign other hospital staff are not statutory supervisors.

A Position Expressly Created to be Supervisory is Not Supervisory, According to the Board

In 2016, Lakewood Health Center (“Lakewood”) restructured its staffing system and replaced charge nurses with a newly created position, Patient Care Coordinator (“PCC”). According to the uncontradicted testimony of Lakewood Vice-President of Patient Care Danielle Abel, the hospital created this new position for one specific reason – “to ensure accountability for shift-by-shift work flow of the department….in addition to supervising the employees on their shift.” According to the job description, a PCC “provides overall supervision of staff and patient care,” is “responsible for daily nursing assignments,” and “retains overall accountability for the work flow for their shift, and remains accountable if duties are delegated to another qualified staff member.” Abel testified, without contradiction, that PCCs must assess the patient’s needs and the nurses’ skills when assigning nurses to patient care tasks and are accountable for the nurses’ performance.  The undisputed evidence further showed that PCCs were the highest ranking authority present evenings, nights and weekends and, for the majority of the time, the only person present with the authority to assign and direct nurses.  The Minnesota Nurses Association filed an election petition asserting that the PCCs should be included in the bargaining unit, thereby adding one more dues-paying classification to the potential bargaining unit.

In a terse one-page decision, the Board characterized the undisputed evidence as vague and conclusory and found that Lakewood failed to provide tangible examples demonstrating the PCCs’ supervisory authority. Although Abel testified that PCCs were accountable for assigning and supervising nurses, the Board dismissed her testimony as “simply a conclusion without evidentiary value.”  The Board likewise discounted Abel’s testimony that PCCs exercise independent judgment when assigning nurses because no one testified that the nurses have differing levels of skill and ability and, for most of the shifts in evidence, there was only one nurse available, stating that independent judgment cannot be established if there is “only one obvious choice.”

Miscimarra’s Scathing Dissent Exposes the Flaws in the Board’s Decision

Board member Miscimarra’s dissent harshly rebuked the majority’s decision as abstract, thinly supported and inconsistent with the undisputed evidence. Miscimarra noted that both the PCC job description and Abel’s testimony established, without contradiction, that PCCs were accountable for assigning and responsibly directing subordinate nurses.  In fact, according to Abel’s unrefuted testimony, the very reason that Lakewood created this new position was to impose accountability for patient care and staffing issues on a single person.  Miscimarra strongly criticized the majority for “disregard[ing] unrebutted evidence merely because it could have been stronger, more detailed, or supported by more specific examples,” particularly given that the PCC position was created a mere four months prior to the hearing.  He also noted that the Board apparently and unreasonably wanted specific testimony “to establish the commonsense fact that some employees are more skilled than others” and chastised the majority for ignoring the practical reality that the PCC is often the highest ranking person present at Lakewood, explaining that “[s]omeone has to be in charge at this facility at all times.”  Miscimarra ended his dissent with a biting, but particularly apt, reproach that “the finding that PCCs are not supervisors under Section 2(11) provides yet another illustration of the principle that ‘common sense’ is not so common.”

Employers Must Be Prepared

This decision stands as a stark reminder that employers must be prepared with documentation, examples and other specific evidence supporting supervisory determinations to combat the hostile and skeptical review of the current Board. This decision also signals that 2017 will be no different than 2016 for the Board – it will continue to issue decisions that assail employer’s rights and bolster its relevancy even when it flies in the face of common sense and basic workplace practicalities.

As we previously reported, the ambush election rules implemented by the National Labor Relations Board (“Board”) last year tilted the scales of union elections in labor’s favor by expediting the election process and eliminating many of the steps employers have relied upon to protect their rights and those of employees who may not want a union. We warned that in addition to rapidly expediting election timeframe, the regulations were full of technical and burdensome procedural mandates on employers.  The Board further emphasized the pro-union impact of these requirements in a Decision last week when it overturned the results of an election that a union overwhelming lost based on a hyper-technicality.  Even though there was no prejudice to the union, the Board gave the union another bite at the apple despite the employees’ resounding rejection of union representation; effectively denying the employees their voice and imposing even more burdens on the employer.

New Regulations require service of Excelsior List on union

Section 102.62(d) of the Board’s New Rules and Regulations provides that an employer “shall provide to the regional director and the parties…a list of the full names [and other information] of all eligible voters… within 2 business days after the approval” of the Stipulated Election Agreement. This list of eligible voters is commonly referred to as an “Excelsior list.”   Section 102.62(d) further provides that the Employer’s failure to follow these procedural mandates “shall be grounds for setting aside the election whenever proper and timely objections are filed.”

The Petition and Election at issue

On Thursday, March 3, 2016, URS Federal Services, Inc. (“Employer”) and the International Association of Machinists and Aerospace Works, District Lodge 725 (“Union”) entered into a Stipulated Election Agreement. The Employer filed the list of eligible voters, commonly referred to as an “Excelsior list,” with the Region on Saturday, March 5, but failed to serve the list on the Union.  While the Board’s Decision noted the Employer never offered any explanation for its oversight, the fact is that under the prior regulations an employer need only file the list with the Region; the requirement to serve the union is new.  While the Employer did not directly send it, the Region forwarded the list to the Union on Monday, March 7, thus the Union timely received the list within two business days of the approval of the Stipulated Election Agreement.

The Union lost the election 91 to 54. After its crushing defeat, the Union filed objections, seeking to overturn the election because of the Employer’s deficient service, even though it had timely received the list and never complained of service issue before.

Regional Director finds no harm, no foul

The Acting Regional Director for Region 20 acknowledged that the Employer failed to serve the Union, but declined to set the election aside because the Union had suffered no prejudice since it received the list within two business days of the approval of the Stipulated Election Agreement as required by the Election Rules. The Regional Director explained that “[t]o hold otherwise would exalt form over substance.”  Relying on well-established Board precedent, the Regional Director also concluded that the employer’s technical violation did not frustrate the purpose of the Excelsior rule, which was to ensure that employees are provided a “full opportunity to be informed of the arguments concerning representation.” Bon Appetit Management Co., 334 NLRB 1042, 1043 (2001).

Board puts form over substance to favor Union

The Board rejected the Regional Director’s decision, reasoning that “[t]o allow parties to ignore the service requirements set forth in Section 102.62(d) without any explanation or excuse would undermine the purpose of those provisions.” The Board never articulated what purpose it was referring to, other than to insinuate that strict enforcement was necessary to ensure “all parties take their obligations seriously under the amended Rules.”  (italics in original).  Notably, the primary purpose of the service requirements – to ensure employees are fully apprised of the arguments concerning representation – had not been undermined since the Union timely received the list from the Region.

Dissent detail Board’s pro-union hypocrisy

As dissenting Board Member Philip A. Miscimarra (“Miscimarra”) explained, the Board’s decision is troubling for several reasons. Not only does the holding elevate form over substance, but it contravenes longstanding precedent that the Board should not overturn election results lightly “unless presented with clear evidence that the results may not reflect the will of the voters.”  In furtherance of this principle, the Board has previously declined to overturn elections despite allegations of death threats or widespread voter fraud.  In stark contrast, the Board here accepted the Union’s contention that a “purely technical violation of a service requirement, timely cured by the Region, warrants overturning election results that overwhelmingly disfavored” the Union.

Equally, and perhaps more, concerning is that the Board has effectively created a double standard for unions and employers. In Brunswick Bowling Products, LLC, 364 NLRB No. 96 (2016), a decision issued a mere three months earlier, the Board unanimously upheld the Regional Director’s decision to excuse the union’s untimely service of its Statement of Position.  As Miscimarra aptly pointed out, although the Board has long tolerated minor deviations from the Excelsior list requirements, no such “history of leniency” exists with respect to the service requirements for Statements of Position.   Yet, when a union violated the historically inflexible service requirements for Statements of Position, the Board excused the union’s noncompliance, but refused to do the same for an employer who failed to comply with rules that have traditionally permitted slight deviations, “even though the service error could not have affected the election results because the Union received the voter list on the same day it would have received the list had no service error been committed.”

Employers are advised to continue to adhere to Obama Board’s Regulations and Decisions

During the last eight years, the Obama Board has overturned longstanding Board precedent and expanded the rights of unions far and wide. Many employers may anticipate some relief from the onerous burdens imposed by the Board during the last eight years as a new administration comes to DC.  However, this case is a sober reminder that the Board intends to enforce the rules it has promulgated during the last eight years, and employers cannot afford to become lax in their obligations under these rules and must remember the Decisions rendered remain the standards to which they will be held.

Employers Under the Microscope: Is Change on the Horizon?

When: Tuesday, October 18, 2016 8:00 a.m. – 4:00 p.m.

Where: New York Hilton Midtown, 1335 Avenue of the Americas, New York, NY 10019

Epstein Becker Green’s Annual Workforce Management Briefing will focus on the latest developments in labor and employment law, including:

  • Latest Developments from the NLRB
  • Attracting and Retaining a Diverse Workforce
  • ADA Website Compliance
  • Trade Secrets and Non-Competes
  • Managing and Administering Leave Policies
  • New Overtime Rules
  • Workplace Violence and Active-Shooter Situations
  • Recordings in the Workplace
  • Instilling Corporate Ethics

This year, we welcome Marc Freedman and Jim Plunkett from the U.S. Chamber of Commerce. Marc and Jim will speak at the first plenary session on the latest developments in Washington, D.C., that impact employers nationwide.

We are also excited to have Dr. David Weil, Administrator of the U.S. Department of Labor’s Wage and Hour Division, serve as the guest speaker at the second plenary session. David will discuss the areas on which the Wage and Hour Division is focusing, including the new overtime rules.

In addition to workshop sessions led by attorneys at Epstein Becker Green – including some contributors to this blog! – we are also looking forward to hearing from our keynote speaker, Former New York City Police Commissioner William J. Bratton.

View the full briefing agenda here.

Visit the briefing website for more information and to register, and contact Sylwia Faszczewska or Elizabeth Gannon with questions. Seating is limited.

The National Labor Relations Board (NLRB or Board), which continues to apply an ever expanding standard for determining whether a company that contracts with another business to supply contract labor or services in support of its operations should be treated as a joint employer of the supplier or contractor’s employees, is now considering whether a company’s requirement that its suppliers and contractors comply with its Corporate Social Responsibility (CSR) Policy, which includes minimum standards for the contractor or supplier’s practices with its own employees can support a claim that the customer is a joint employer.

Unions are Pursuing Joint Employer Claims Based On CSR Policies

My colleague Dan Green and I recently examined a case  in an article published in Epstein Becker Green’s most recent Take Five in which the Temporary Workers Of America, (TWOA) argued just that, seeking to require the client of the Lionbridge Technologies, the company that actually employs the workers it represents, to participate in negotiations for an initial collective bargaining agreement after the TWOA was certified by the NLRB as the representative of a unit of agency temporaries. Notably, TWOA describes itself as “a start up union devoted to defend and promote the interests of workers classified as ‘temporary.’” Notably, when the TWOA filed its petition for a representation election, it did not claim at that time that the temporary employer’s client was a joint employer with it and only did so after it won the election and was certified.

When the client declined the union’s request to participate because it was not an employer, the TWOA filed unfair labor practice (ULP) charges alleging that the client was unlawfully refusing to bargain. The Board has been aggressively investigating that assertion, including issuing investigative subpoenas to the alleged joint employer demanding extensive documentation and information from it concerning its business relationship with its supplier.

The NLRB Is Aggressively Using Its Subpoena Power to Investigate Joint Employer Allegations

While the customer moved to revoke the investigative subpoenas, the Board denied its motion to revoke the investigative subpoena, noting its “broad investigative authority, which extends not only to substantive allegations of a charge, but to ‘any matter under investigation or in question’ in the proceeding.” (emphasis in original).  Referring to its broad investigative powers, Members Hirozawa and McFarren went on to say that nothing in the Board’s Rules “can be read to impose a requirement that the Regional Director articulate ‘an objective factual basis’ in order to compel the production of information that is necessary to investigate” a pending ULP charge.

Dissenting, Member Miscimarra challenged the use of investigative subpoenas by the Regional Director to pursue the TWOA’s bare faced assertion that the contractor-employer’s client was a joint employer of its personnel. “I believe that a subpoena seeking documents pertaining to an alleged joint-employer and/or single employer status of a charged party requires ‘more . . . .than merely stating the name of a possible single or joint employer on the face of the charge,’” and that, as Section 10054.4 of the Board’s own Casehandling Manual holds, documentary evidence such as that which the Board’s subpoena called for should only be pursued if “consideration of the charging party’s evidence and the preliminary information from the charged party suggests a prima facie case.” (emphasis in original).  Here Member Miscimarra points out the TWOA merely claimed Lionbridge Technologies and its client were a “’joint employer’ without additional factual information about the joint employer allegation.”

What This Means For Employers Now

Since the Board issued its decision in Browning Ferris Industries last August, lowering the threshold for finding a joint employer relationship, it has continued to open the gates for increased organizing and union activity, including announcing it will hold elections and certify unions to represent units made up of both directly employed and secondarily employed employees in its Miller & Anderson, Inc. decision this past June.

As with the TWOA and its pursuit of Lionbridge and its client as joint employers, unions are now taking advantage of these opportunities in a number of ways, both in representation cases and by demanding that putative joint employers come to the table for bargaining.

Employers are well advised to review the full range of their operations and personnel decisions, including their use of contingent and temporaries and personnel supplied by temporary and other staffing agencies to assess their vulnerability to such action and to determine what steps they make take to better position themselves for the challenges that are surely coming.

Featured on Employment Law This Week: The National Labor Relations Board (NLRB) finds the hiring of permanent replacements for strikers to be an unfair labor practice.

In a 2-1 decision that could benefit unions during contract negotiations, the NLRB found that a continuing care facility in California violated federal labor law when it hired permanent replacements after a series of intermittent strikes. While the NLRB and courts have long held that an employer’s motivation for hiring permanent replacements is irrelevant, in this case, the board held that if the hiring is motivated by an intent to discourage future strikes, it interferes with employees’ rights under the National Labor Relations Act (NLRA). The employer in this case will likely seek judicial review. However, in the meantime, the decision adds new risks for employers that may wish to hire permanent striker replacements.

View the episode below or read more about this story in a previous blog post, written by frequent contributor Steven M. Swirsky.

Steven M. Swirsky
Steven M. Swirsky

National Labor Relations Board (NLRB) General Counsel Richard F. Griffin, Jr., has announced in a newly issued Memorandum Regional Directors in the agency’s offices across the country that he is seeking a change in law that would make it much more difficult for employees who no longer wish to be represented by a union to do so.  Under long standing case law, an employer has had the right to unilaterally withdraw recognition from a union when there is objective evidence that a majority of the employees in a bargaining unit no longer want the union to represent them.

The General Counsel Wants the Board to Change the Law

If the General Counsel’s position is agreed to by a majority of the members of the Board, it would be an unfair labor practice for an employer to withdraw recognition from a union, no matter how strong the evidence is that employees do not want to be represented unless and until the employees or the employer petition for a decertification election, a majority of the employees vote against continued representation and the results of the vote are certified.  This would mean that the employer would be required to continue to recognize the union and bargain with it for a new contract even where it knows that a majority of the employees do not want the union to continue to represent them.

Levitz Furniture Allows Employers to Withdraw Recognition Based on Objective Evidence That a Majority Of Employees No Longer Want the Union to Represent Them

Fifteen years ago, in Levitz Furniture Co. of the Pacific, the Board’s then General Counsel made a similar argument to the Board, which it rejected.  While the Board in Levitz held that an employer needed more than an objective good faith belief that a union was no longer supported by the majority, and in essence set a rule that an employer would act at its peril when withdrawing recognition, it rejected the notion that employees who no longer wanted to be represented by a union could only make such a decision in an NLRB election.

The General Counsel Directs Regions to Ignore Existing Law Under Levitz Furniture

In GC Memo 16-03, the General Counsel has directed the Regional Offices to issue an unfair labor practice (ULP) complaint any time a union files a charge in response to an employer’s decision to act in accordance with existing law and withdraw recognition of a union that is no longer supported by the majority of the employees in a unit.  As the Memo states, the Regional Directors are instructed to unilaterally withdraw recognition “under extant law.”  In other words, complaints will be issued in those cases where employers are taking action that the existing law allows, in the hope that the Board will change the law and find the employer guilty of a ULP for taking action that the law allows it to, and respecting the wishes of its employees.

What Happens Next?

An employer faced with evidence that a majority of its employees no longer want to be represented at the end of a contract, has until now had several options.  It could file an RM petition, asking the Board to hold a secret ballot vote to allow the employees to vote on continued representation or it could, if it concluded the evidence that the union had lost majority support was clear, it could inform the union of that fact and therefore that it was withdrawing recognition and would not bargain for a new contract.  Often, such employer action was met with ULP charges by the union and a union effort to convince the employees to stick with it.  If the employer, or for that matter an employee, filed a petition for a decertification election, a common union response has been to fight on and do whatever it could to delay the election and if possible deny the employees of their right to make the decision.  Unions can easily accomplish this desired delay by filing any garden variety unfair labor practice charge which, under NLRB procedures, act to “block” the election until they are fully investigate, litigated and resolved.  Union’s often file multiple and successive blocking charges” to continually delay employees’ ability to exercise their right to become union free.

If the General Counsel is able to convince the Board to overturn Levitz Furniture the result will likely be a serious impairment of the right of employees to decide whether or not they want to continue to be represented.  The General Counsel’s decision to seek to overturn Levitz Furniture should not come as a surprise to those who have read his last GC Memo, 16-01, in which he notified the agency’s Regional Offices of the issues that they must submit to the Division of Advice in the General Counsel’s Office for guidance.  In that memo, issued last month, the General Counsel laid out the road map of his “initiatives and/or priority areas of the law and/or labor policy” and where in his view “there is no governing precedent or the law is in flux.”

Reading the model language included in GC Memo 16-03, it is clear that the General Counsel sees the question of what must happen before an employer may lawfully withdraw recognition to be such an area in “flux” as he references statements in the Levitz Furniture decision in 2001 that if “experience proved” to a future Board that employers were unilaterally withdrawing recognition in the absence of “evidence” clearly indicating that a union had lost majority support, the Board would revisit this question.  While the General Counsel implies that this is why he now wants the Board to revisit the question, GC Memo 16-03 and the model brief language does not point to such evidence.

What Does This Mean for Employers and Employees?

An employer faced with evidence that a majority of its employees no longer wish to be represented by their union has always faced a difficult choice – whether to petition for an election or to respect its employees’ request and take the risk of charges and litigation by immediately withdrawing recognition. Clear understanding of the law and facts, as well as the potential consequences of each course of action has always been critical.  By issuing this Memo and announcing his goal, the stakes have clearly been raised, and the right of employees to decide—perhaps the ultimate purpose of the National Labor Relations Act—has been placed at serious risk.

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

Noel Canning

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

The Impact of SW General

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

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

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

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

What This Means for Employers

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

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

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

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

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

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

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

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

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

What’s Next?

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