Collective Bargaining Agreements

The New York City Temporary Schedule Change Law (“Law”), which became effective on July 18, 2018, raises new issues that employers with union represented employees will need to address as their existing collective bargaining agreements (“CBA”) come up for renewal.

The Law allows most New York City employees up to two temporary schedule changes (or permission to take unpaid time off) per calendar year when such changes are needed due to a “personal event.” The Law also prohibits retaliation against workers who request temporary schedule changes. Additional detailed information concerning the Law and employers’ obligations can be found in our August 2, 2018 Client Advisory.

What Does the Law Mean for Employers with Union-Represented Employees?

The Law Applies to Employees Covered by a CBA

The Law, as written, applies to employees represented by a union and covered by a CBA. However, the Law contains a qualified exemption for employees covered by a CBA, which specifies that the Law does not apply to any employee who:

[i]s covered by a valid collective bargaining agreement if such agreement waives the provisions of this subchapter and addresses temporary changes to work schedules[.]

The text of the Law also addresses, in very general terms, the question of whether the Law is preempted by the National Labor Relations Act when it comes to interpreting a CBA for purposes of determining whether it contains a “waiver” of the applicable provisions of the Law or addresses changes to work schedules. That provision states that the Law does not:

[p]reempt, limit or otherwise affect the applicability of any provisions of any other law, regulation, requirement, policy or standard, other than a collective bargaining agreement, that provides comparable or superior benefits for employees to those required herein.

What Does This Mean to Employers Whose Employees Are Represented by a Union?

Employers will want to negotiate for express waiver language as well as language stating that the employer and the union agree that their CBA provides employees with scheduling change rights (as well as sick and safety time rights) that are comparable or superior to those mandated by the Law and the City’s Earned Safe and Sick Time Act (“ESSTA”).

While the quoted language from the Law may seem confusing, it appears that the City Council and the New York City Department of Consumer Affairs, Office of Labor & Policy Standards (“DCA”), are taking an approach similar to that followed under ESSTA. ESSTA provided for an exemption from compliance with that statute in cases where (a) employees are covered by a CBA, (b) the CBA contains an “express waiver” of ESSTA’s paid safe and sick time requirements, and (c) the paid safe and sick time benefits under the CBA are substantially comparable to those mandated by ESSTA.[1]

Significantly, in the case of ESSTA, the text of the statute only calls for a waiver and comparable benefits—the requirement that the waiver be an “express waiver” is one that was created by the DCA in its administration of ESSTA. It is foreseeable that the DCA will follow the same approach in its administration and enforcement of the Law. To date, in its enforcement of ESSTA, the DCA has demonstrated an unwillingness to defer to the agreement of an employer and its employees’ bargaining representative or acknowledge that the sick leave or paid time off under a CBA is comparable or superior to such leave or time off under ESSTA.

Accordingly, employers that employ union-represented employees will need to ensure that, as they renegotiate their CBAs and/or negotiate first contracts, the CBAs contain clear and unequivocal language confirming that the employer and the union have agreed to “expressly waive” the provisions of the Law and the provisions of the CBA concerning taking and scheduling time off and temporary schedule changes provide employees with benefits that are “comparable or superior” to those mandated by the Law.

What Happens with CBAs That Were Negotiated Before the Law Took Effect?

While the Law is, in most instances, effective as of July 18, 2018, the 180th day after its enactment, this is not the case for employees covered by a CBA that was in effect on that date. The Law provides that:

in the case of employees covered by a valid collective bargaining agreement … this local law takes effect on the date of termination of such agreement . . .

Accordingly, employees covered by an existing CBA are not covered by the Law until the expiration of the CBA. Upon the expiration of an existing CBA, employers will need to ensure that they propose and secure the necessary express waivers and agreements for comparable benefits in all new or renewal CBAs from this point forward.

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[1] ESSTA also waived the requirement of substantially comparable benefits in the case of employers in the grocery and construction industries whose employees are covered by a CBA containing an express waiver of ESSTA’s requirements.

In its long awaited decision in Mark Janus v. American Federation of State, County and Municipal Employees, the United States Supreme Court clearly and unequivocally held that it is a violation of public employees’ First Amendment rights to require that they pay an “agency fee” to the union that is their collective bargaining representative, to cover their “fair share” of their union representative’s bargaining and contract enforcement expenses. The Janus decision overturns the Court’s own 1977 decision in Abood v. Detroit Board of Education, which had found state and local laws requiring public sector employees to pay such fees to be lawful and constitutional. Commentators expect the decision to have serious economic consequences for unions in the heavily organized public sector.

While the Court in Abood had previously found that such laws requiring employees to pay representation or agency fees if they elected not to become dues paying members were permissible justified and to be upheld on the grounds that (1) they “promoted labor peace” and (2) that the effect of “free riders,” that is workers who benefitted from a union’s efforts but did not contribute to its efforts on their behalf justified mandating employees contribute, the Janus majority rejected both of these legal underpinnings in finding Abood had been improperly decided.

In Janus, Justice Samuel Alito concluded that the fears of interference with labor peace were unfounded based on the experience since 1977, and in any case, that these concerns, even if supported by evidence, could not satisfy the Court’s “exacting scrutiny” test that the majority held should be applied to circumstances such as these, where a state or local government entity sought to compel employees to subsidize the speech of others, i.e. their union representative and union member co-workers, who may endorse or support a union’s goals and objectives in collective bargaining and in its dealings with the employer. Notably, the analysis made clear that the speech in question was not political speech or campaign activity by unions, but rather speech in connection with positions taken in collective bargaining and labor relations. The Court also found that even if the agency fee statutes were evaluated under the less rigorous “strict scrutiny” test, it would have concluded that they were unconstitutional under that test as well.

What Does Janus Mean for Public Sector Employers and Workers?

At this time there are some 22 states in which agency fees are permitted by state or local law and an additional 28 states where they are not authorized. Under federal sector labor laws, the unions that represent employees of federal agencies and entities are not permitted to require employees to pay agency fees or become union members as a condition of continued employment.

With the Janus decision, simply put, provisions in collective bargaining agreements that require public employees to become union members, pay union dues or pay agency or representation fees as a condition of continued employment have been found to be unconstitutional and to impermissibly interfere with public employees’ freedoms of speech and assembly.

What is not yet clear is precisely how and when public sector employers and unions will be applying the decision. However, it is likely that as public employees who object to paying representation fees or paying union dues learn of this decision and the fact that they can no longer be compelled to pay agency fees or dues, employees will tell their employers to discontinue withholding fees and dues and paying them over to unions.

What is also already apparent is that there is likely to be resistance. Already, within hours of the release of the Janus decision, New York’s Governor Andrew Cuomo issued his own statement signaling his views and opposition to the decision. He also announced his intention to issue an executive order shielding the addresses and phone numbers of public employees to make it more difficult for advocates to reach out to state employees and notify them of their options.

What Does Janus Mean for Public Sector Unions?

Simply put, if public employees exercise their right to stop paying agency fees to the unions that represent them, the unions will feel an immediate and substantial hit in their revenue and all that comes with that. The amounts at stake are substantial. According to a report by the Empire Center for New York State Policy, approximately 200,000 public workers in New York State alone are presently paying agency fees of more than $110 million dollars annually.

The Court was not unmindful of the financial and other impacts that the decision will have on unions that represent public employees. As Justice Alito wrote

We recognize that the loss of payments from nonmembers may cause unions to experience unpleasant transition costs in the short term, and may require unions to make adjustments in order to attract and retain members. . . “But we must weigh these disadvantages against the considerable windfall that unions have received” until now.

The impact in other states like California, Illinois (where the plaintiff in Janus is employed) and other states will clearly be substantial.

What Does Janus Mean in the Private Sector?

The Court’s decision in Janus is limited in its direct and immediate impact to public sector and does not apply to private sector employees who are covered by collective bargaining agreements containing union security clauses. Those clauses, which are only found in contracts in states that are not right to work states, require employees to become union members or pay agency or representation fees as a condition of continued employments.

That said, it is highly likely that the Janus decision will have spill-over effects in the private sector. As we reported last year, unions have a duty to make clear to employees who they represent under contracts containing union security clauses, that employees have rights and are not required to pay the same amount as agency fees as those who are members.

Additionally, the past few years have seen a resurgence in states passing laws to become right to work states and outlaw mandatory membership and/or agency fees. It can be anticipated that the Janus decision will likely result in more states and advocacy groups considering such legislation.

Resolving a split between circuits, this week the United States Supreme Court, in CNH Industrial v. Reese rejected what has come to be known as the Yard-Man standard, and reaffirmed that collective bargaining agreements must be interpreted according ordinary contract principles.  Although the Supreme Court has long held ordinary cannons of contract construction apply to collective bargaining agreements, some federal courts developed a specialized set of inferences, known as the Yard-Man inferences, which allowed them to read beyond the actual contract terms, to reach what in some cases have been more employee-friendly results when ordinary interpretation principles would not.

The Supreme Court’s first attempt rein this concept was in 2015,  in M&G Polymers USA, LLC v. Tackett.  There, the Sixth Circuit had applied the Yard-Man inferences to read into collective bargaining agreement language an intention on the part of the employer and union that retiree medical benefits vest for life because the contract did not expressly hold that the retiree benefits were not ongoing beyond the contract term.   The Supreme Court disagreed with the Sixth Circuit, holding that the collective bargaining agreement’s silence on the question could not be construed as  evidencing  a presumptive intent.   Rather, it opined that ordinary construction rules supported a finding that the obligation to provide retiree medical benefits would not continue beyond the term of the agreement unless the contract expressly states otherwise.    

In Reese, the Sixth Circuit in essence repackaged and repurposed the Yard-Man inferences to again hold that the obligation continued beyond the term of the contract notwithstanding the absence of express language.  Here, the Sixth Circuit pointed to the collective bargaining agreement’s silence to find “ambiguity” rather than “intent.”   After concluding that there was such an ambiguity, the Sixth Circuit concluded that it was appropriate to consider extrinsic evidence to resolve the ambiguity.  The extrinsic evidence, according to the Sixth Circuit, supported lifetime vesting of retiree medical benefits.

In Reese, in a Per Curiam opinion, the Supreme Court resoundingly rejected this approach and remanded the case to the Sixth Circuit.  It admonished the Yard-Men inferences “are not a valid way to read a contract” and “cannot be used to create a reasonable interpretation any more than they can be used to create a presumptive one.”  Rather, pursuant to ordinary interpretation rules, the contract’s silence on vesting meant that retiree benefits, like other benefits, do not survive the contract.      

On a micro level, this decision ensures that, at least in the case of contracts that do not expressly establish a lifetime retiree medical benefit for covered employees, employers will not be saddled with  substantial financial burdens they neither bargained for nor anticipated, and preserves the flexibility needed to bargain over such benefits going forward. On a macro level, though, this decision has far more reaching implications – it ensures uniformity across the judicial landscape and stands a bulwark against interpretist judges attempting to rewrite non-ambiguous collective bargaining agreements, substituting their own judgment for those of the contracting parties, because they may think it is “fair” to employees to do so.

Featured on Employment Law This Week® – New York City is trying to force certain employers to sign “labor peace” agreements with unions.

Mayor Bill de Blasio has signed an executive order mandating that a property developer receiving at least $1 million in “Financial Assistance” require its large retail and food service tenants to accept “Labor Peace Agreements.” These agreements would prohibit the companies from opposing union organization and provide what some consider to be affirmative support and assistance to unions. City Development Projects that were authorized or received “Financial Assistance” before July 14, 2016, are exempt from this order.

See the episode below and a recent Act Now Advisory on this topic.

 

A new Act Now Advisory will be of interest to many of our readers in the retail and food service industries: “Union Organizing at Retail and Food Service Businesses Gets Boost from New York City ‘Labor Peace’ Executive Order,” by our colleagues Allen B. Roberts, Steven M. Swirsky, Donald S. Krueger, and Kristopher D. Reichardt from Epstein Becker Green.

Following is an excerpt:

New York City retail and food service unions got a boost recently when Mayor Bill de Blasio signed an Executive Order titled “Labor Peace for Retail Establishments at City Development Projects.” Subject to some thresholds for the size and type of project and the amount of “Financial Assistance” received for a “City Development Project,” Executive Order No. 19 mandates that developers agree to a “labor peace clause.” In turn, the labor peace clause will compel the developer to require certain large retail and food service tenants to enter into a “Labor Peace Agreement” prohibiting their opposition to a “Labor Organization” that seeks to represent their employees. …

If the objective of the Executive Order is to assure labor peace by way of insulation from picketing, work stoppages, boycotts, or other economic interference, it is not clear how its selective targeting of retail and food service tenants occupying more than 15,000 square feet of space—and the exclusion of other tenants and union relations—delivers on its promise. There are multiple non-covered tenants and events that could occasion such on-site disruptions as picketing, work stoppages, off-site boycotts, or other economic interference.

As a threshold matter, there is no particular reason why a labor dispute with a tenant occupying space shy of 15,000 square feet—among them high-profile national businesses—somehow is less disruptive to the tranquility of a City Development Project than one directed at a tenant whose business model requires larger space.

Also, the Executive Order does not address the rights or responsibilities of either landlords or their tenants that are Covered Employers bound to accept a Labor Peace Agreement when faced with union demands for neutrality that go beyond the Executive Order’s “minimum” neutrality requirements. There could be a dispute over initial labor peace terms if a union, dissatisfied that the Executive Order’s Labor Peace Agreement secured only a Covered Employer’s “neutral posture” concerning representation efforts, were to protest to obtain more ambitious and advantageous commitments that are coveted objectives of union neutrality demands, such as …

Read the full Advisory here.

Featured on the new episode of Employment Law This Week: Employers must have specific waivers to make unilateral policy changes when bargaining with a union.

That’s according to the NLRB, which once again clarified its “clear and unmistakable” waiver standard to restrict employers’ midterm changes. In this case, an employer relied on a broad management rights clause in its contract with the union to make unilateral changes to specific policies. The NLRB found that the union had not waived its right to bargain over those changes because the contract did not refer to the policies with sufficient clarity.

See the episode below and read Mark Trapp’s blog post on this topic.

The National Labor Relations Board (“NLRB” or “Board”), in its recent decision in Graymont PA, Inc., 364 NLRB No. 37 (June 29, 2016), has fired the latest salvo in its long running dispute with the United States Court of Appeals for the District of Columbia Circuit concerning the issue of what legal standard should be applied when a union claims that an employer has made a unilateral change in terms and conditions of employment during the term of a collective bargaining agreement and the employer claims that the union waived its right to bargain over the topic in question in a management rights clause or a “complete agreement” clause.

In Graymont, the Board adhered to its “clear-and-unmistakable” waiver approach to analyzing claims under Section 8(a)(5) where the employer claims that the union waived its right to bargain over a particular matter during the term of a collective bargaining agreement (“CBA”). The three-member majority rejected  the employer’s argument that the  “contract coverage” standard applied by the D.C. Circuit and several other Courts of Appeal was the correct standard for assessing such claims.

This decision comes on the heels of an unpublished decision by the D.C. Circuit in which that court again rejected the Board’s “clear and unmistakable” waiver standard as being applicable to such disputes. In Heartland Plymouth Court MI LLC v. NLRB, No. 15-1034 (May 3, 2016), the D.C. Circuit laid out its disagreement with the NLRB concerning the so-called “contract coverage rule”:

As we have noted several times, there is a “fundamental and long-running disagreement” between this court and the Board as to the appropriate approach by which to determine “whether an employer has violated Section 8(a)(5) of the National Labor Relations Act when it refuses to bargain with its union over a subject allegedly contained in a collective bargaining agreement.” The Board insists such questions turn on whether the Union “clearly and unmistakably” waived its bargaining rights on the subject through the CBA, but we have repeatedly held “the proper inquiry is simply whether the subject that is the focus of the dispute is ‘covered by’ the agreement.” Under our precedent, if a subject is covered by the contract, then the employer generally has no ongoing obligation to bargain with its employees about that subject during the life of the agreement.

The dispute regarding the appropriate standard made all the difference in the Graymont decision. There, a Board majority held that the Union did not clearly and unmistakably waive its right to bargain over unilateral changes made by the Employer to its work rules, absenteeism policy, and progressive discipline schedule.

In Graymont the employer unilaterally implemented various changes to its work rules, absenteeism policy and progressive discipline schedule; believing it had the management right to do so under it CBA.  There the employer sought to rely  on a negotiated management rights clause under which it retained “the sole and exclusive rights to manage; to direct its employees; … to evaluate performance, … to discipline and discharge for just cause, to adopt and enforce rules and regulations and policies and procedures; [and] to set and establish standards of performance for employees.” . The union initially filed a grievance, but then withdrew it and filed an unfair labor practice charge with the NLRB alleging that the employer had made unilateral changes and failed to bargain.

The Board applied its “clear and unmistakable” waiver standard, and found that the Union did not waive its rights to bargain when it entered into the CBA, because the Board concluded that the CBA’s management rights clause did not “specifically reference” the rules and policies changed – i.e., the work rules, absenteeism policy and progressive discipline policy.

The majority ruling is just the latest example of how the Board’s waiver analysis operates to deprive employers of the benefits of their negotiated agreements – particularly in management rights clauses – and force further bargaining over rights employers understandably believe they have already secured, often in return for other concessions, at the bargaining table. In bargaining with the Union, the employer in Graymont secured the clear right “to adopt and enforce rules and regulations and policies and procedures.” Yet the majority found this language insufficiently clear to constitute a “clear and unmistakable” waiver by the union of its right to bargain, during the term of the CBA, over such changes.

Dissenting, Member Miscimarra noted that “Management-rights language may be general and, at the same time, clear and unmistakable.” Thus, in agreeing to the broad language, “the Union clearly and unmistakably waived its right to bargain over the changes.” He also agreed that therefore the union “had already bargained and agreed that Graymont had the right to make these changes unilaterally.”

The NLRB’s Graymont decision once again demonstrates the uphill battle employers face in asserting their rights, even those secured in writing after bargaining. In effect, the Board’s waiver approach can ignore even clear language, and render rights secured at the bargaining table illusory.  We often encounter employers who believe they have negotiated a strong broad management rights clause only to feel they are victims to a bait-and-switch type attack from a union filing an unfair labor practice charge based on the employer exercising the very rights it thought it had secured.

Combined with the its recent disinclination to defer such matters to arbitration, where they belong, the Board’s decision highlights the danger of an employer acting unilaterally, even with what may appear to be clearly-established rights. Employers should bear this in mind when negotiating, and seek to make management rights clauses as specific as possible. Employers should also bear in mind the Board’s approach to such actions when contemplating unilateral moves, and plan accordingly.

Featured on Employment Law This Week: The NLRB reverses its mixed-guard unit recognition rule. If a union represents both security guards and other employee groups, then an employer’s decision to recognize the union is voluntary. Before this decision, employers could also withdraw their recognition if no collective bargaining agreement was reached.  Now, employers must continue to recognize the union unless and until the employees vote to decertify it in an NLRB election.

View the episode below or read more about this story in a previous blog post, written by Steven M. Swirsky, co-editor of this blog.

One of the top stories featured on Employment Law This Week: The U.S. Court of Appeals for the Seventh Circuit has joined the National Labor Relations Board in finding that arbitration agreements containing class action waivers violate the National Labor Relations Act (NLRA).

At issue is a collective and class action by employees of Epic Systems about overtime pay. The company was seeking to dismiss the case based on a mandatory arbitration agreement that waived an employee’s right to participate in a collective or class action. Unlike the Fifth Circuit, the Seventh Circuit found that a class-action waiver like this one violates the NLRA and, because the contract is unlawful, its enforcement is not required by the Federal Arbitration Act. The Seventh Circuit’s decision creates a split in the federal circuits that means that the U.S. Supreme Court will likely weigh in on the issue.

View the episode below or read more about this story in a previous blog post by Steve Swirsky.

https://www.youtube.com/watch?v=_Eooxpk6vNs&feature=youtu.be&t=1m45s

Steve Swirsky, one of the co-editors of this blog, is featured on Employment Law This Week. He discusses the NLRB’s General Counsel memo that outlines the agency’s top enforcement priorities for 2016.

The General Counsel for the National Labor Relations Board has issued an internal memo that offers employers insight into his office’s initiatives and emphasis this year. The memo describes the types of cases that must be submitted to the Division of Advice for review, rather than decided by the Regional Office where the charge was filed. Among other priorities, the General Counsel wants to expand employees’ rights to organize and communicate using company resources, cut back on employer rights in bargaining, and grant significant new rights to nonunion employees.

View the episode below.