The National Labor Relations Board (“Board” or “NLRB”) has announced that it is publishing proposed changes to its Rules and Regulations that will begin to reverse the Board’s 2014 changes, which took effect in 2015, to its representation election rules and procedures commonly referred to as the “ambush election rules.”  The proposed final rule is expected to be published in the Federal Register on December 18, 2019 and to become effective 120 days after publication.

Board Chairman John F.  Ring described the rule changes as “common sense changes to ensure expeditious elections that are fair and efficient. The new procedures will allow workers to be informed of their rights and will simplify the representation process to the benefit of all parties.” In December 2017, the Board had announced that it was seeking comments concerning parties’ experiences under the 2015 rule changes, to determine what, if any changes, would be beneficial.

The new final rule, which is over 300 pages in length, will, when it takes effect, change many of the most troublesome aspects of the 2014 rules.  The new rule will, among other things:

  • Extend the time between the filing of a representation petition from eight to 14 days,
  • Extend the time for employers to post the Notice of Petition from two to five days,
  • Extend the time for employers to file their the Statement of Position identifying any issues to be resolved before an election can be held eight days after an employer is served with the petition and confirm that the Board’s Regional Directors will have the discretion to allow additional time upon a showing of “good cause, and
  • Extend the time employers have to provide the petitioning union and the NLRB with the initial list of employees in the petitioned for unit from two days to five business days.

Significantly, the new final rule will extend the time for the holding of elections.  While the final rule continues to mandate that representation elections be conducted at “the earliest date possible,” the new final rule defines this as normally not “before the 20th business day after the day of the direction of election.”

The new final rule will add a requirement that a petitioning union also file a written Statement of Position, which will be due three days after the employer’s statement of petition which the Board explains will result in more orderly litigation by narrowing and focusing the issues to be litigated.”

Parties rights to file post-hearing briefs, which were severely curtailed under the 2014 rules are also substantially restored.  Under the 2014 rules, post-hearing briefs have only been permitted “only upon special permission of the regional director,” and only as to those issues allowed by the Regional Director.

A major change in the new final rule is that the Board will once again allow for the resolution of significant legal issues before an election will be directed, rather than after the vote is held.  Issues concerning the scope of the proposed bargaining unit, supervisory status and other issues will once again be “litigated at the pre-election hearing and resolved by the regional director before an election is directed.”  

Additionally, employers and unions will once again have the right to seek review of such issues by the Board before election results are certified by the Regional Director, who  “will no longer certify the results of an election if a request for review is pending” or before the deadline for filing a request for review.

What Happens Next

 The Board has also announced that it will be revising its Case Handling Manual, which provides guidance to the agency’s staff, to reflect the new final rule.   Litigation challenging the new rule remains a possibility.

The General Counsel for the National Labor Relations Board (“Board” or “NLRB”) has signaled what may be a major resetting of the law on the Board’s position concerning the legality of so called neutrality agreements, in which employers make concessions and accommodations to labor unions seeking to organize and represent their employees.  This occurred with the General Counsel’s consideration of an appeal by the National Right to Work Legal Defense Foundation, Inc. (the “Fund”) of a dismissal of an unfair labor practice charge had filed  against United Here! Local 8 (“Union”) and Embassy Suites by Hilton, Seattle Downtown Pioneer Square (“Employer”) on behalf of an employee who did not wish to be represented by the Union after the Employer had entered into an agreement with the Union that enabled the Union to gain recognition of employees of the Employer without having to win a secret ballot representation election conducted by the Board.

Challenges to Neutrality Agreements

The original charges alleged that the Employer unlawfully assisted the Union in numerous ways during the Union’s 2018 organizing campaign.  The charges alleged that one such way the Employer unlawfully assisted the Union was by entering into a “neutrality agreement” with the Union.  Under the neutrality agreement the Employer agreed to provide the Union with employees’ contact information to assist it in organizing, something it was not obligated to do under the National Labor Relations Act (the “Act”) and to recognize the Union, without an election if the Union presented cards signed by a majority of the employees in the proposed bargaining unit indicating the employees wished to be represented by the Union. The Fund arty alleged that the neutrality agreement, and various other actions on the part of the Employer constituted unlawful assistance and support to the Union and constituted things of value.  The Fund further alleged that these actions Union being granted and subsequently accepting recognition by the Employer even though the Union lacked uncoerced majority support, in violation of the Act and that the actions of the Employer and the Union unlawfully interfered with the right of the Employer’s employees to decide whether or not they wished to be represented by the Union.

Following an investigation of the ULP charges, the Board’s Regional Director in Seattle found that the allegations lacked legal merit, explaining that current Board law finds that such neutrality agreements are lawful and enforceable and do not interfere with employees’ rights under the Act.  Following the Regional Director’s dismissal of the ULP charges, the Fund requested review of the Regional Director’s decision by the General Counsel in Washington.

What Happens Next

Upon review of the appeal, the General Counsel agreed in part with the Fund and concluded that it was the view of the Office of the General Counsel that portions of the charge had legal merit and that a complaint should issue so that the General Counsel could ultimately ask the Board to hold that such neutrality agreements violated the Act.   In his letter partially sustaining the Fund’s request for review, the General Counsel opined that in his view the Employer appeared to have violated the Act by entering into and maintaining a neutrality agreement with the Union, because the neutrality agreement provided the Union with far more than “ministerial aid” during the Union’s organizing campaign.  For the same reasons the General Counsel opined that the Union violated the Act by accepting such aid from the Employer. Accordingly, the case was remanded to the Regional Director of Region 19 for further action.  Absent a settlement, it is expected that the Regional Director will issue a complaint, against the Employer and the Union, alleging that the Employer provided and the Union accepted unlawful assistance and presumably seeking an order directing the Employer to withdraw its recognition of the Union unless and until the Union is certified in a Board-conducted secret ballot election. While the hearing will be heard before an NLRB administrative law judge who will be bound to follow existing Board precedents, it can be expected that the General Counsel will ultimately seek to have the five member Board in Washington consider the issue and adopt a new standard for determining whether a neutrality agreement is lawful or goes too far.

What This Means

The significance of the General Counsel’s decision to challenge the existing standards surrounding neutrality agreements conclusions revolve around the fact that in many areas and industries unions have been shunning the use of NLRB secret ballot elections when they seek to organize employees and instead attempting to pressure employers to enter into broad neutrality and card check agreements.  In many localities where unions are strong, cities and counties are also seeking as a condition of various tax incentives and other benefits to force employers to agree to neutrality agreements and labor peace agreements.

The General Counsel’s actions described above are a clear signal that the Office of the General Counsel will be taking the position that many, if not all, such agreements constitute a form of unlawful assistance and interference with the rights of employees under the Act. It cannot be overstated how significant the impact would be of such a reversal in the law.

One of the matters of significance to employers and unions under the National Labor Relations Act that became a point of contention under the National Labor Relations Board (“NLRB” or “Board”) during the Obama Administration was the movement to allow representation elections in what were commonly referred to as “micro-units,” which many believed made it easier for unions to score victories and gain bargaining rights. The Board’s recent decision in Boeing Co. and International Association of Machinists and Aerospace Workers provides important guidance for employers regarding how the Board will assess the appropriateness of proposed bargaining units going forward, and is evidence of the NLRB’s repudiation of Specialty Healthcare.

The case came before the Board after the International Association of Machinists and Aerospace Engineers (the “IAM”) filed a representation petition to represent a bargaining unit that included certain Boeing aircraft engineers but excluded production and maintenance employees at the company’s South Carolina plant, a non-union facility. The NLRB Regional Director determined that the proposed bargaining unit was appropriate, directed an election and then certified the Union after its election win. In a split decision issued on September 9, 2019, the Board reversed the Regional Director’s approval of the petitioned-for unit, vacated the certification of the Union, and dismissed the petition. Explaining that the Regional Director had misapplied the PCC Structurals standard for evaluating the appropriateness of a petitioned-for unit, the Board’s Republican-appointed majority adopted a three-part test for analyzing the scope of proposed bargaining units under the traditional community-of-interest standard.

How We Got Here

The new three-part test is the latest evolution in the Board’s method for determining whether a petitioned-for unit is appropriate. In 2011, the Board upended nearly 20 years of precedent when it held in Specialty Healthcare that a petitioned-for unit would be appropriate unless the employees inside and outside the proposed unit share “an overwhelming community of interest.”  After Specialty Healthcare, Employers challenging the scope of a petitioned-for unit were tasked with the heavy burden of proving that the interests of excluded employees overlap almost completely with those in the unit proposed by the union.

Affording such extraordinary deference to the union’s proposed unit increased the risk of fractured bargaining units—otherwise known as “micro-units”—that frustrated employers, ignored the substantial interests and rights of excluded employees under the National Labor Relations Act, and often defied well-established industry norms. In 2017, the Board remedied these problematic results when it decided PCC Structurals, which overturned Specialty Healthcare and restored the traditional community-of-interest test the Board had previously applied. Under PCC Structurals, when an employer challenges the appropriateness of a petitioned-for unit, the Board must consider:

[W]hether the employees are organized into separate departments; have district skills and training; have distinct job functions and perform distinct work, including inquiry into the amount and type of job overlap between job classifications; are functionally integrated with the Employer’s other employees; have frequent contact with other employees; interchange with other employees; have distinct terms and conditions of employment and are separately supervised.

If after weighing these factors—a fact-based, case-by-case inquiry—the Board determines that excluded employees also share a community of interest with the petitioned-for unit, it will conclude that the petitioned-for unit is inappropriate due to the exclusion of employees with a shared community of interest and will not allow bargaining in such unit.

Although PCC Structurals is clear that both the shared and distinct interests of the employees included and excluded from the petitioned-for unit will be considered, the Board majority in Boeing acknowledged that there has been little clarity as to how those shared and distinct interests should be weighed.

The Boeing Case

Boeing operates a commercial 787 aircraft facility in North Charleston, S.C. For several years, the IAM had tried unsuccessfully to organize the approximately 2,700 production-and-maintenance employees who work at the facility. In its third attempt, the IAM successfully petitioned for an election involving a proposed bargaining unit consisting of only two employee classifications: Flight-Line Readiness Technicians (“FRTs”) and Flight-Line Readiness Technician Inspectors (“FRTIs”). Though the FRTs and FRTIs hold an additional license, receive higher pay, and work in a separate part of the North Charleston facility, these approximately 178 employees are in the same department and have meaningful similarities in their job functions as the other production and maintenance employees. Nonetheless, the Regional Director for the Board’s Atlanta Regional Office concluded that the Union’s petitioned-for unit excluding the production and maintenance employees was an appropriate unit under PCC Structurals. After the Union won an election among the FRTs and FRTIs, Boeing filed a request for review and the Board reversed.

The Three-Part Test

In disagreeing with the Regional Director’s decision, the majority noted that the community-of-interest analysis requires consideration of not only the shared interests of the employees in the petitioned-for unit, but also whether those shared interests are sufficiently distinct from the interests of employees excluded from the proposed unit. To facilitate future agency decisions, the Board announced a three-step process for analyzing challenges to the scope of proposed bargaining units under the PCC Structurals community-of-interest standard.

Under the Boeing decision, the NLRB will now consider whether:

  1. The employees in the proposed unit share a community of interest;
  2. The workers excluded from the unit “have meaningfully distinct interests in the context of collective bargaining that outweigh similarities” with the employees in the proposed unit; and
  3. There are already Board-established guidelines for determining an appropriate unit configuration for the employer’s industry.

The Board applied this three-step test and found that the FRTs and FRTIs themselves had interests that were too disparate to show that the two classifications shared a community of interest. Moreover, the majority held that the excluded production-and-maintenance employees generally had the same interests as FRTs and FRTIs in the context of collective bargaining, and therefore the interests of employees in the petitioned-for unit were not sufficiently distinct from the interests of excluded employees to allow a unit of only FRTs and FRTIs. The NLRB also noted the absence of any existing industry-specific guidelines applicable to Boeing’s operations.

The Board’s Commentary on Wall-to-Wall Units

In addition to providing and applying the new three-part test, the Board recognized prior NLRB precedent finding plant-wide or wall-to-wall units to be presumptively appropriate for integrated manufacturing facilities. However, the presumption does not mean that less-than-plant-wide units at functionally integrated facilities are inappropriate, nor does it place a heightened burden on unions seeking to organize smaller units at such locations. Rather, functional integration is only one factor in the community-of-interest analysis.

What Happens Next?

The Boeing decision supplies much-needed guidance as to how the NLRB will analyze the appropriateness of petitioned-for units. The Board’s clarified standard provides employers with a means for challenging the appropriateness of petitioned-for bargaining units of a limited number of classifications and/or defined solely by the extent of organizing, and potentially reduces the potential for proliferation of fractured units that exclude arbitrary portions of an employer’s workforce at a facility. Rather than force employers to expend significant time and resources in after-the-fact challenges to Regional Director directions of elections in micro or other units that may be composed of gerrymandered groups of employees or units that actually represent no more than the extent of organizing, the Board’s decision in Boeing affords better opportunities for employers to resolve unit appropriateness prior to elections taking place.

On October 24, 2019, Senator Mike Lee (R-UT) introduced the Protecting American Jobs Act.  The bill, cosponsored by Senators Tom Cotton (R-AR), Rand Paul (R-KY), Marsha Blackburn (R-TN), Ted Cruz (R-TX), and Marco Rubio (R-FL), would significantly amend the National Labor Relations Act (“NLRA”) by removing much of the authority currently held by the National Labor Relations Board (“NLRB” or “Board”).

Under the NLRA, the Board’s General Counsel is responsible for investigating unfair labor practice (“ULP”) charges, issuing complaints regarding ULP charges, and prosecuting those ULP complaints before NLRB administrative law judges.  Senator Lee’s bill would strip the Board of the authority to prosecute and adjudicate labor disputes, and limit the NLRB to investigating such disputes.  Instead of prosecution and adjudication by the NLRB, Senator Lee’s bill would provide individuals with the right to bring civil actions in the United States district court where the labor violation occurred or, at the parties’ option, the United States District Court for the District of Columbia.  The authority to adjudicate labor disputes would remain with the district courts.

The Protecting American Jobs Act would also significantly curb the NLRB’s rulemaking authority concerning matters other than the internal functions of the Board.  Senator Lee’s bill would prohibit the NLRB from promulgating “rules or regulations that affect the substantive or procedural rights of any person, employer, employee, or labor organization, including rules and regulations concerning unfair labor practices and representation elections.”  The bill would implement conforming amendments to the NLRA and require the NLRB to rescind or revise its regulations as necessary to conform with the amendments.

The Protecting American Jobs Act was referred to the Committee on Health, Education, Labor, and Pensions, which is where similar bills Senator Lee introduced in 2014 and 2015 also landed.  Neither of the previous versions of the bill ever proceeded beyond committee assignment.

“For far too long the NLRB has acted as judge, jury, and executioner, for labor disputes in this country, Senator Lee commented after introducing the bill.  “The havoc they have wrought by upsetting decades of established labor law has cost countless jobs.  This common sense legislation would finally restore fairness and accountability to our nation’s labor laws.”

Passage of the Protecting American Jobs Act would significantly alter the role of the NLRB and the adjudication of labor disputes.  Without significant Republican gains in the 2020 elections, however, the prospect of Senator Lee’s bill ever becoming law is remote.  While such a sea change is unlikely, the labor landscape continues to shift under the current Board.

As covered in previous blog posts, the NLRB is engaged in, or planning to initiate, rulemaking on a number of issues, including the standard for determining joint-employer status, whether students fall within the definition of “employee” under Section 2(3) of the NLRA, and election protection rules concerning the Board’s blocking charge policy, voluntary recognition bar, and Section 9(a) recognition in the construction industry.

At the same time, the Board continues to issue decisions concerning a number of important labor law issues. (See our previous posts: January 28, June 18, October 8, October 15).  In the last year alone, NLRB decisions have resulted in significant changes to the legality of work rules, employers’ ability to implement unilateral changes, union solicitation on employer property, and the status of independent contractors.  If anything can be predicted, it’s that change at the Board is nearly certain to continue through the 2020 elections.

As discussed in previous blog posts and articles, the National Labor Relations Board (NLRB), in Boeing Co., overruled past precedent that had resulted in the invalidation of “commonsense [workplace] rules and requirements that most people would reasonably expect every employer to maintain.”  Boeing sought to return the analysis to a more balanced approach in which workplace rules would no longer be struck down simply because such rules could have been more narrowly tailored or just because a hypothetical employee theoretically might construe them to conflict with the exercise of Section 7 rights.

On October 10, 2019, for the first time since Boeing was published, the Board had the opportunity to clarify and apply the analysis now required for facially neutral work rules in LA Specialty Product Company.   At issue in LA Specialty Produce Company was two workplace rules included in the employee manual for employer LA Specialty Produce Company.

The Importance of LA Specialty Produce Company

The true significance behind this decision is the Board’s clarification and application of the Boeing two-part balancing test.  The Board strongly reiterated and confirmed that under this test, the initial burden is on the General Counsel to prove that a facially neutral rule would in context be interpreted by a reasonable employee to potentially interfere with the exercise of his or her Section 7 rights.  This is an important change from pre-Boeing decisions where a workplace rule would be struck down if it “could” be interpreted to violate an employee’s Section 7 rights and where in application the Board seemingly placed the burden on the employer.  As the Board pointed out, this resulted in the Board viewing challenged rules not from the perspective of a reasonable employee, but rather from that of traditional labor lawyers who have devoted their careers toward interpreting and applying the NLRA.

This change is noteworthy because a workplace rule will no longer be found unlawful simply “because it could be interpreted, under some hypothetical scenario, as potentially limiting some type of Section 7 activity, or because the employer failed to eliminate all ambiguities from the rule, an all-but-impossible task.”  Accordingly, employers now can establish reasonable work rules without fear of them being overturned because of some outlandish hypothetical.

Additionally, even if it is determined that a facially neutral rule would (not just could) potentially interfere with the exercise of NLRA rights, the Board will then balance the nature and extent of the potential impact on the NLRA rights and the employer’s justification for the workplace rule.  The rule will only be considered to violate the Act if the employer’s justification for the rule is outweighed by the adverse impact on the rights protected by the Act.  Thus, there is yet another check against an employer’s workplace rule being deemed unlawful.

Lastly, but separate from the aforementioned analysis, Boeing provides a system for the Board to sort employer rules into three distinct categories in order to provide certainty and predictability regarding workplace rules.  Therefore, over time, Boeing will allow for greater clarity in this area of NLRB law.  In LA Specialty Produce Company the Board began that process.

Application of Boeing in LA Specialty Produce Company

The first rule at issue in LA Specialty Produce Company was a Confidentially Rule which stated that: “Every employee is responsible for protecting any and all information that is used, acquired or added to regarding matters that are confidential and proprietary of [employer] including but not limited to client/vendor lists . . . .”

The Board began by acknowledging that employees have a right to appeal to third parties, including customers of their employer, for support in labor disputes.  Nonetheless, the Board stated that it could not see how the Confidentiality rule here would interfere with this right as the rule only applied to the Respondent’s own nonpublic, proprietary records.  Moreover, the Board found that an objectively reasonable employee would not interpret this Confidentiality rule to prohibit or interfere with the exercise of their Section 7 Rights.  Accordingly, the rule was deemed lawful.

Importantly, the Board categorized rules that prohibit the disclosure of confidential and proprietary customer and vendor lists as Category 1(a) rules, which, in layman’s terms, means the Board has deemed such rules lawful, as, when reasonably interpreted, they do not prohibit or interfere with the exercise of NLRA rights.

The second rule at issue was a Media Contact rule that stated: “Employees approached for interview and/or comments by the news media, cannot provide them with any information.  Our President, Michael Glick, is the only person authorized and designated to comment on Company polices or any event that may affect our organization.”

Once again, the Board began by acknowledging the employees’ rights, which under the Act, generally protects employees when they speak with the media regarding working conditions, labor disputes, or other terms and conditions of employment.  Reading the Media Contact rule as a whole, the Board held that a reasonable employee would understand that under this Media Contact rule, he or she would only be precluded from speaking on behalf of the Respondent when approached by media for a comment.  Since employees do not have a right under the National Labor Relations Act to speak on behalf of their employers, the Board held that the rule did not potentially interfere with the exercise of employees’ rights.  Accordingly, the Board found the Media Contact rule lawful.

Again, as with the Confidentiality rule, the Board designated rules that prohibit employees from speaking to the media on behalf of their employees as Boeing Category 1(a) rules, and thus such rules are considered lawful.

Moving Forward

While the Board warned that it has not given all client/vendor confidentially rules or all media contacts rules a categorical stamp of approval, the significance of this decision is not the rules themselves but the Board’s reinforcement and application of Boeing.  This decision highlights that the Board will no longer allow commonsense rules to be struck down simply because they could have been more narrowly tailored or because of some far-fetched hypothetical in which a reasonable employee could interpret a rule as violating their rights under the Act.  Rather, workplace rules will only be found in violation of the NLRA if they fail both parts of the two-part test established in Boeing and clarified in LA Specialty Produce Company. 

As summer turned to fall, the National Labor Relations Board (“NLRB” or the “Board”) issued a steady stream of decisions with significant and favorable implications for employers.  In the flurry of recent decisions, the Board addressed misclassification of workers as independent contractors, employers’ rights to control access to private property (Tobin Center for Performing Arts, UPMC, and Kroger Mid-Atlantic), the right to impose class action waivers in the wake of employment lawsuits, withdrawal of union recognition, the appropriate scope of bargaining units, and management’s right to make unilateral changes to terms and conditions of employment that are “covered by” a collective bargaining agreement (“CBA”).

The decision with possibly the most significant impact for employers with unionized workforces is MV Transportation, Inc., 368 NLRB No. 66 (September 10, 2019).  In MV Transportation, a 3-1 Board majority changed the longstanding legal standard applied in cases where employers make unilateral changes to the terms and conditions of employment for bargaining unit employees during the term of a CBA but without first providing the union with notice and an opportunity to bargain in each instance.  Under the National Labor Relations Act (“NLRA” or the “Act”) employers whose employees are represented by a union are required to bargain with that union over changes “to wages, hours, and other terms and conditions of employment” (commonly referred to as “mandatory subjects” of bargaining).  In the typical scenario, employers and unions hammer out a CBA aimed to address issues that may arise concerning mandatory subjects of bargaining over the term of the contract, usually including some sort of “management rights” provision, reserving to the employer the exclusive authority and discretion to take certain actions, provided they do not violate other provisions of the CBA.  Typical among these management-reserved rights is to implement and/or revise reasonable work rules and policies, for example.

As employers experienced with unionized workforces are all too aware, however, before the decision in MV Transportation the Board applied a “clear and unmistakable waiver” standard with respect to changes in mandatory subjects of bargaining.  Under that standard, absent a specific showing that a union had expressly waived its right to bargain over a particular policy or change in a mandatory subject, then implementing such a change without first giving the union a reasonable opportunity to bargain over the same would constitute an unlawful unilateral change under the NLRA.  This was so despite language in the parties’ CBA, whether found in the management rights provision or elsewhere, that generally gave the employer the right to implement or modify policies during the term of the CBA without further bargaining with the union.

Specifically, the old “clear and unmistakable waiver” standard required the parties to include language in a CBA that “unequivocally and specifically express[es] their mutual intention to permit unilateral action with respect to a particular employment term, notwithstanding the statutory duty to bargain that would otherwise apply.” Provena St. Joseph Medical Center, 350 NLRB 808, 811 (2007).  Application of the “clear and unmistakable waiver” standard proved problematic even for employers that bargained for broad contractual language intended to permit management to reserve to it certain flexibility and discretion to adjust terms and conditions of employment during the term of a CBA, such as through the adoption of common sense changes to safety rules or attendance policies.

Although the Board reaffirmed adherence to the “clear and unmistakable waiver” standard in 2007, both arbitrators and the courts, including the D.C. Circuit, have often applied a different, less-stringent “contract coverage” standard to allegations of unlawful unilateral change by employers.  Under the “contract coverage” standard, arbitrators and the courts examine whether an employer’s change falls within the scope of a CBA provision that grants the employer the right to act unilaterally in the future.  If so, then the change is found to be covered by the parties’ CBA and, therefore, does not constitute a unilateral change in violation of the Act.  The reasoning is that because the change is “covered by” and does not violate the parties’ CBA, then the change is not one about which the union did not have the opportunity to bargain, but, instead, it is a change about which the parties did bargain previously to agreement. That agreement was to allow management the discretion going forward to implement certain changes on subjects that are “covered by” the CBA–without engaging in further bargaining with the union.

As the Board majority noted in MV Transportation, the view of the D.C. Circuit favoring “contract coverage” over the “clear and unmistakable waiver” standard carried particular weight as the D.C. Circuit has plenary jurisdiction over all Board decisions. Indeed, the Board majority observed that it has even been sanctioned by the D.C. Circuit for failing to abide by the Circuit’s prior decisions in this regard. See Heartland Plymouth Court MI, LLC v. NLRB, 838 F.3d 16, 19-20 (D.C. Cir. 2016) (granting employer’s motion for attorneys’ fees). Accordingly, the Board majority in MV Transportation found that continued adherence to the “clear and unmistakable waiver” standard in unilateral change cases during a CBA had simply “become indefensible.” The Board majority also explained that adherence to the “clear and unmistakable waiver” standard had the undesirable effect of undermining the provisions of CBAs, which rendered less effective clauses such as management rights provisions that parties specifically negotiated into their labor agreements.

In MV Transportation, the Board applied the contract coverage standard to find that the employer had not violated the Act when it implemented five policies affecting bargaining unit employees’ terms and conditions of employment without first bargaining with the union to impasse.  Specifically, the Board majority found the implemented policies at issue were covered by the “Management Rights” and “Discipline and Discharge Procedures” provisions in the parties’ CBA, which reserved to the employer the right “to adopt and enforce reasonable work rules” and “issue, amend and revise policies, rules, and regulations” without first having to bargain with the union to impasse or agreement.

The Board’s embrace of the contract coverage standard provides employers with greater flexibility to take action under such reservation of rights language, and not just in future contract negotiations. Significantly, the Board found “it appropriate to apply the contract coverage test retroactively,” which breathes new life into the language of existing management rights clauses in CBAs. Now, it will be incumbent on the unions to try and negotiate this sort of reservation of rights language out of CBAs.  Before the Board’s decision in MV Transportation, unions were less concerned about including such general reservation of rights language in CBAs. Under the “clear and unmistakable waiver” standard, the effect of such language was severely limited by the ability to file an unfair labor practice charge claiming that any implementation prior to agreement or impasse constituted an unlawful unilateral change.  That is no longer the case under MV Transportation, and employers no longer have to be committed to litigate such cases to the D.C. Circuit to prevail on the issue.

Henceforth, and retroactively, in unilateral change cases occurring during the term of a CBA, the NLRB will first seek to “give effect to the plain meaning of the relevant contractual language” by examining whether the parties’ CBA can be said to cover the employer’s disputed act.  If so, then there will not be a violation of the Act. Unions may, of course, still challenge such actions through the grievance and arbitration procedure to seek a final ruling on whether the employer or union’s interpretation of the applicable CBA language is correct, but the slanted field of the “clear and unmistakable waiver” standard in NLRB litigation will only come into play if and when the NLRB determines that an employer action is not “covered by” the parties’ CBA.

The MV Transportation decision underscores the imperative of negotiating (and taking advantage of) robust management rights provisions and other contractual language that provides greater flexibility for employers to exercise discretion and make reasonable adjustments to employees’ terms and conditions of employment over the life of a CBA. As Member McFerran, the Board’s current lone Democratic member, noted in her dissenting opinion: “The implication of the majority’s new standard is clear: If a management-rights provision in a collective-bargaining agreement is sufficiently general, it will permit an employer to act unilaterally with respect to any specific term or condition of employment that plausibly fits within the general subject matters of the provision.”  Whether Member McFerran’s prediction that the Board’s decision MV Transportation will ultimately lead to a destabilizing of collective bargaining remains to be seen.  What is clear, however, is that negotiating and preserving broad management rights provisions has moved to center stage. Particularly for employers seeking to preserve flexibility and exercise discretion in taking actions deemed good for the business without having to first bargain with a union to impasse or agreement, or potentially spend years litigating the issue through the NLRB and up to the courts of appeal.

The U.S. Department of Labor’s Wage and Hour Division (“WHD”) recently issued an opinion letter regarding the designation of FMLA leave in the context of employees covered by collective bargaining agreements (“CBA”) with a union.  This opinion letter provides helpful clarification on an issue that is often a source of confusion for employers (as well as for unions).

Overview

Earlier this year, the WHD advised that once an eligible employee communicates a need to take leave for a FMLA-qualifying reason, an employer may not delay the designation of FMLA-qualifying leave as FMLA leave (i.e., an employee cannot opt to preserve FMLA leave for future use).  See WHD Opinion Letter FMLA2019-1-A (Mar. 14, 2019).  In Opinion Letter FMLA2019-3-A, the WHD addressed whether an employer may delay designating paid leave as FMLA leave if the delay is permitted under the applicable CBA and is the employee’s preference.

The employer at issue was a local government public agency that provides CBA-protected accrued paid leave to its employees in accordance with the negotiated terms of the contract.  According to the employer, its employees prefer to take CBA-protected accrued paid leave because under the state civil service rules and the CBA, time during such a leave is treated as part of an employee’s period of continuous employment that does not affect an employee’s seniority status, unlike unpaid FMLA leave.

Starting with general principles, the WHD reiterated that an employer may require, or the employee may elect, to “substitute” accrued paid leave to cover any portion  of the of the unpaid FMLA entitlement period, meaning that any such paid leave will run concurrently with unpaid FMLA leave.  In terms of the accrual of benefits such as seniority, the WHD advised that an employer must treat the accrual of benefits during paid leave the same as the accrual of benefits during FMLA leave – i.e., allow the accrual of seniority and other benefits during an unpaid FMLA leave if permitted for paid leave.  While employers can adopt more generous leave programs by contract or policy, they must at a minimum comply with the FMLA and not reduce or deny FMLA benefits and protections.

The WHD ultimately concluded that based on the facts presented, the employer could not delay the designation of FMLA-qualifying leave even if the employer is obligated to provide job protection and other benefits equal to or greater than those required by the FMLA pursuant to a CBA or state civil service rules, and must treat the employee’s seniority accrual and status the same on FMLA leave that runs concurrently with CBA-protected accrued paid leave as it would if the employee took only protected accrued paid leave provided for by the CBA.

What This Means for Employers

Care should be taken in the negotiation and administration of collective bargaining agreements to ensure that employees’ leave rights are in accordance with the terms of the FMLA and other applicable leave laws.

This Employment Law This Week® Monthly Rundown discusses the most important developments for employers in July 2019. Both the video and the extended audio podcast are now available.

This episode includes:

  • State Legislation Heats Up
  • NLRB Overturns Another Long-Standing Precedent
  • SCOTUS October Term 2018 Wraps Up
  • Tip of the Week: How inclusion and trust can increase innovation in the workplace

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Last Friday, the National Labor Relations Board (“NLRB”) in UPMC overturned 38-year old precedent and held that employers may lawfully prohibit non-employee union solicitation in public spaces on their property absent evidence of discriminatory enforcement. This ruling may seem like common sense to many as employers have long been permitted to control what types of activities occur on their private property in other contexts.  However, for the past four decades, the NLRB has compelled employers to allow non-employee union organizers to engage in non-disruptive solicitation in areas, such as cafeterias and restaurants, where the Employer had opened its private property to the public.  The NLRB’s ruling in UPMC ends this compelled acquiesce and affirms employers’ property rights.

Although labor organizations will undoubtedly decry this decision as an unjustified departure from precedent, the holding in UPMC merely conforms Board law to Supreme Court precedent and eliminates an intrusion to employer property rights that has long been widely criticized and soundly rejected by federal courts.

The Facts in UPMC.  

In UPMC, security officers removed two nonemployee union representatives from the cafeteria at the University of Pittsburg Medical Center Presbyterian Shadyside.  At the time they were removed, the nonemployee union representatives were sitting at tables on which union pins and flyers were displayed and were discussing union organizational matters with employees.    Security informed the union representatives that the cafeteria was only for the use of patients, their families and visitors, and employees.  In response, the union representatives pointed out that there was at least one other nonemployee in the cafeteria waiting to eat lunch with a friend who worked at the Medical Center.  However, security did not remove that patron.

The NLRB Realigns the Standard with Supreme Court Precedent.

In NLRB v. Babcock & Wilcox Co., 351 U.S. 105 (1956), the United States Supreme Court held that an employer may deny access to its property by nonemployee union organizers, absent two limited exceptions: (1) inaccessibility (i.e., company towns and other situations where employees are largely otherwise secluded) and (2) activity-based discrimination (i.e., treating unions differently from other third parties engaged in similar activities).  The Board noted that the Supreme Court viewed both exceptions narrowly and imposed a heavy burden on the party attempting to establish either one.

However, in deciding cases in which union organizers sought access to a portion of private property open to the public, the Board created an additional exception that effectively disregarded Babcock’s limited exceptions to the general rule restricting nonemployee access.  Specifically, in Ameron Automotive Centers, 265 NLRB 511, 512 (1982), the Board stated that where an employer has opened up its property the “Babcock & Wilcox criteria need not be met, since nonemployees cannot in any event lawfully be barred from patronizing the restaurant as a general member of the public.”

This third Board-created exception, referred to as the “public space” exception, found discrimination based solely on the fact that nonemployee union organizers were denied access to areas of an employer’s private property where the employer has arguably permitted the public general access.  Under this exception, the Board did not consider “whether the employer permitted any other nonemployees to engage in the same solicitation or promotional activities engaged in by the union.”

As noted, federal courts, including the 4th, 6th, and 8th Circuits, soundly rejected this additional exception created in Ameron Automotive Centers. 

Accordingly, relying on Babcock and its progeny, the current Board has now overruled Ameron Automotive Centers and any decision which permitted nonemployee union solicitation based on the “public space” exception, explaining that to allow such an exception, absent inaccessibility or activity-based discrimination, was “irreconcilable with well-established Supreme Court precedent” as set forth in Babcock.  Importantly, the Board specifically noted:

[A]n employer does not have a duty to allow the use of its facility by nonemployees for promotional or organizational activity. The fact that a cafeteria located on the employer’s private property is open to the public does not mean that an employer must allow any nonemployee access for any purpose.

The Board further ruled that this new standard will be applied retroactively.

The Medical Center Was Within Its Rights to Eject the Nonemployee Union Organizers.

In applying this standard to the facts of the case, the Board held that there was no violation “because there is no evidence that the Respondent permitted any solicitation or promotional activity in its cafeteria.”  In fact, the employer had a practice of removing all nonemployees engaged in promotional or solicitation activities in or near the cafeteria.

Moreover, the Board rejected the argument that discrimination occurred because there was another nonemployee present in the cafeteria that day who was not ejected.  The Board reasoned that this individual was using the cafeteria consistent with the purposes authorized by the Medical Center, i.e., to eat lunch.  By contrast, the nonemployee union organizers sought to use the cafeteria in a manner that went well beyond eating lunch with friends.  Thus, they were rightfully ejected while the friend of the employee was permitted to remain.

Applying this Standard Moving Forward.

The core holding in UPMC recognizes employers’ property rights and employers’ rights to determine the use of their property.  Specifically, UPMC recognizes that an employer can invite members of the public to patronize its facilities or even rest or congregate in open spaces on the private property, such as tables and benches, without forfeiting its right to prohibit solicitation and other antagonistic activities.

Under UPMC, employers are no longer required to allow nonemployee union solicitation in areas of their property just because these areas are open to the public.  Rather, an employer can now prohibit such activities on its property without fear of violating the Act “so long as it applies the practice in a nondiscriminatory manner by prohibiting other nonemployees from engaging in similar activity.”  In other words, employers are again in control of what activities may take place in their own facilities.

In light of UPMC, employers should review their policies on access, solicitation, and distribution with labor counsel to ensure they are providing the desired protections.