Philip Miscimarra. Credit: NLRB.gov.

On April 24, 2017 President Trump designated Philip Miscimarra as Chairman of the National Labor Relations Board (NLRB or Board). The move follows the President’s late January designation of Board Member Miscimarra as Acting Chairman.

A Republican Chair

Miscimarra, a management-side labor lawyer and a Republican, was nominated to serve on the Board by then President Obama in 2013 and was confirmed by the Senate for a four year term that continues through December 16, 2017.  President Trump can nominate Chairman Miscimarra for another term if he should wish to do so. While Board Members are subject to Senate confirmation, the President may, in his discretion, designate a Member of the NLRB to serve as Chair at his pleasure.

Two Vacancies Remain On the NLRB

The Board is composed of five Members and at this time two of the seats on the Board are vacant. The vacant seats are reserved for Republicans.  The Board is generally composed of three Members of the President’s party and two from the other party.  Board Members Mark Pearce and Lauren McFerran are both Democrats.

What Is Likely To Change With a New Majority

Notably, Chairman Miscimarra, through a series of dissenting opinions taking issue with decisions of the Obama Board’s Democratic majority has offered a significant overview of issues as to which, once there is a new Republican majority on the NLRB, employers, unions and other advocates can expect the Board to likely move, as cases presenting the issues come before it for decision. These include such issues as the NLRB’s test for determining whether joint employer relationships exist, the standards for evaluating whether handbooks and work rules interfere with employees’ rights under the National Labor Relations Act (NLRA), appropriate units for collective bargaining, the question of whether graduate students and research assistants are employees under the NLRA with the right to collective bargaining and a host of other decisions from the past eight years that more expansively interpreted the NLRA.

Election Rules and Procedures

Also notable is the fact that Chairman Miscimarra was a dissenter when the Board adopted its Amended Representation Election Rules that took effect in May 2015. Those rules, often referred to as the “ambush” or ”quickie” election rules that have not only cut the time between the filing of a representation petition and a vote from an average of 40-45 days to approximately 25 days. Since the Amended Rules took effect, Mr. Miscimarra has pointed out that they have placed an undue priority on speed, compromising the rights of employees to make informed decisions when they vote and the right of employers to meaningfully communicate with employees before an election.

Because the Amended Rules were adopted under the Board’s rulemaking authority, any further revisions in the election rules must also be made either through the same lengthy process or by Congress through legislation. For the Board to do so will require a new majority that agrees that change is needed. While various sources have suggested that the new administration is considering who it will nominate for the vacant seats on the Board, only time will tell when the President will submit his nominations and the Senate will consider them.

A recent decision of the United States Court of Appeals for the District of Columbia Circuit in connection with an employer’s challenge to a National Labor Relations Board (“NLRB” of “Board”) representation election in which the Board certified a “wall to wall” bargaining unit provided clear evidence of just how critical it is for employers to make detailed “offers of proof” concerning issues the Board will not allow them to litigate under the amended election rules which took effect in April 2015.

While this case involved a representation petition filed before the new election rules took effect, its lessons concerning the importance of offers of proof concerning issues that the Board will not permit a party to litigate in a representation case under the amended rules are even more important now.

Judicial Review of the Board’s Representation Case Findings

After the union won the election and the employer challenged the Board’s unit determination by refusing to bargain, the Court recently held that the Board erred in finding that a “wall to wall” bargaining was appropriate because it ignored the facts the employer presented, without challenge, in an “offer of proof” offered at a Board conducted representation hearing.  The Court held that the offer of proof contained facts that supported the employer’s contention that the employees in the unit  the union sought to represent did not share a community of interest, which under the National Labor Relations Act (the “Act”) is necessary. See, NLRB v. Tito Contractors, Inc. (No. 15-1217, D.C. Circuit, February 3, 2017).

The Union Sought a Wall To Wall Unit

The union in this case petitioned for an election in in a single “wall to wall” unit, including workers in diverse job classifications at multiple facilities..  The employer argued that the proposed unit was not an appropriate unit under the Board’s unit determination standards and asked for a hearing on the issue.  The employer argued that a hearing was necessary because the  petitioned for unit was inappropriate because the employees performed different jobs at different locations and under different terms and conditions of employment and sought a hearing on that issue. While the Regional Director scheduled a hearing, the Hearing Officer refused to permit the employer to call witnesses and present its evidence on the issue. The Region instead directed the employer to make an offer of proof, describing what its witnesses and evidence would show, if it were permitted to present its evidence, to rebut the presumption under Board law that an employer wide unit was an appropriate unit.

The Hearing Officer’s Refual to Accept the Employer’s Offer of Proof Into Evidence

The employer made a detailed offer of proof showing that it operates a diverse contracting business comprising “two discrete halves”- one side that involves labor, and a second side that involves recycling. It explained that (1) the labor side employed painters, tile installers, masons and carpenters who performed work for customers, (2) the recycling business involved three separate recycling contracts with a different customer and (3) the recycling work is performed at multiple sites, located many miles from each other and under differing working conditions.

Upon the employer made its offer of proof, the Hearing Officer went off the record and consulted with the Acting Regional Director, and then summarily rejected the employer’s offer of proof and denied any hearing on the issue. An election was then directed in the wall to wall unit the union requested.

While the employer requested review of the Decision and Direction of Election (“D&DE”) and the Hearing Officer’s ruling on the offer of proof, the Board affirmed the Hearing Officer’s rulings including the refusal to accept the offer of proof into evidence and denied the employer’s request for review of the Acting Regional Director’s decision directing an election in the unit the union had requested in a perfunctory two line denial.

The Court’s Decision

After the election, the employer sought review by the Court of Appeals and the Board sought to have its findings affirmed and the order directing the employer to bargain with the union enforced.

The Court rejected the Board’s decision. The Court held that the requirement that the Board’s decision be supported by substantial evidence included a requirement that the Board consider and analyze contrary evidence as well.  The Court concluded that the offer of proof plainly showed evidence that countered the conclusion of a community of interest for three reasons.  First, neither the union nor the Board challenged the employer’s assertion that its business was comprised of two separate and discrete operations—labor and recycling – performing different types of work at different facilities.  Second, the Court concluded the Board erred when it ignored the facts contained in the employer’s offer of proof, which evidenced a lack of interchange among the employees in the two operations, a fact the Acting Regional Director acknowledged and cited as a justification for a mail ballot election.  Third, the Board ignored the significant differences among the employees’ wages, hours and working conditions.  Based on the Board’s failure to address the contrary evidence, the Court granted the employer’s Request for Review and remanded the case to the Board for further proceedings.

Judge Karen L. Croft Henderson, who authored the decision, added a separate concurrence in which she admonished the Board for issuing a two sentence order which, like the Region, failed to adequately consider the evidence outlined in the Offer of Proof.

What This Case Means For Employers

Although this case was decided under the Board’s pre-2015 expedited election rules, it offers a number of important lessons for cases under the new expedited rules which include increased reliance on offers of proof to avoid lengthy hearings.

First, the Court of Appeals held that the Board’s responsibility to base findings on substantial evidence included the responsibility to review and analyze contrary evidence, even if that evidence is only in an offer of proof that is rejected.

Second, employers, faced with the requirement of presenting an offer of proof, should include in such offer as much specific factual detail as necessary to support its arguments. By so doing, the employer may be able to establish a sufficient record for an appellate court to determine whether the Region and the Board gave the offer adequate consideration.

Finally, under the new election rules, the Board takes the position that an employer waives any issues that it does not raise in the Statement of Position that must be filed with the Regional Director and served on all other parties by noon on the business day prior to the eighth day after the petition is filed.  For that reason it is critical that an employer identify with as much particularity as possible all issues that it intends to raise at the hearing including all issues as to which it may seek to make offers of proof.

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.