Practices and Procedures

The National Labor Relations Board (“NLRB”) unfair labor practice hearing  against McDonald’s, USA, LLC (“McDonald’s) and numerous franchisees opened in New York City on Monday March 30, 2015, before Administrative Law Judge (“ALJ”) Lauren Esposito. (“ALJ”), a former NLRB field attorney and union lawyer. Also this week, the Service Employees International Union (“SEIU”) announced that it was investing an additional Fifteen Million Dollars in the Fight For Fifteen campaign, which seeks to organize fast food workers nationwide and that a series of events would take place across the country on April 15th as part of that effort.

In the McDonald’s cases, under the terms of a Case Management Order issued by ALJ Esposito on March 3, 2015, the ULP hearings are scheduled to take place in three phases, with adjournments between each phase.  The hearing which began this week in Manhattan will start with the closely watched claims by the Board’s General Counsel that McDonald’s and its franchisees are joint employers.  The General Counsel will produce witnesses who will offer testimony and evidence on the nationwide joint employer issue and will continue with evidence of joint employer status and evidence on specific violations allegedly committed by the franchisees in New York and Philadelphia.  The hearing will then move to Chicago and will conclude in Los Angeles with the presentation of evidence of joint employer status and evidence regarding specific violations alleged to have occurred in the Midwest and California, respectively.

As we previously reported, on December 19, 2014, the General Counsel of the NLRB issued 13 Consolidated Complaints in Regional Offices across the country charging that McDonald’s and franchisees are joint employers and seeking to hold McDonald’s liable for unfair labor practices allegedly committed by its franchisees. The NLRB’s press release broadly outlined the basis for its decision to issue the Complaints:

“Our investigation found that McDonald’s, USA, LLC, through its franchise relationship and its use of tools, resources and technology, engages in sufficient control over its franchisees’ operations, beyond protection of the brand, to make it a putative joint employer with its franchisees, sharing liability for violations of our Act.  This finding is further supported by McDonald’s, USA, LLC’s nationwide response to franchise employee activities while participating in fast food worker protests to improve their wages and working conditions.”

As a result of the interest generated by these cases, the NLRB has created a separate webpage entitled “McDonald’s Fact Sheet” with links the Complaints and the docket of proceedings.

At recent public appearances, including at the section meeting of the American Bar Association’s Committee on Developments Under the National Labor Relations Act, General Counsel Griffin addressed the legal theories he relied upon in authorizing the issuance of the Complaints alleging joint-employer status.  He noted that it was the General Counsel’s position that the facts (he did not say which ones) would support a finding of joint-employer status under the Board’s existing legal standards and were not dependent upon the Board adopting a new standard such as the one the General Counsel advocated in the amicus brief filed in the still pending Browning Ferris case in which the Board is considering adopting a new more lenient standard for determining whether a joint-employer relationship.

The General Counsel’s  Consolidated Complaints each contain three identical bare bones allegations with respect to the claim that franchisor and franchisees are joint employers: -“(1) McDonald’s and its franchisees are parties to a franchise agreement, (2) McDonald’s possesses and/or exercised control over the labor relations policies of each franchisee, and (3) McDonald’s and the franchisees are joint employers.”

On January 5, 2015, the General Counsel transferred the cases from Regions 4, 13, 20, 25 and 31 to the Regional Director from Region 2.  On January 6, 2015, the Director of Region 2 issued an Order Consolidating the Consolidated Complaints from Regions 2, 4, 13, 20, 25 and 31 with the already-consolidated cases from Region 2, and set the March 30, 2015 hearing date.

McDonald’s filed its Answer to the Consolidated Complaints and a “Motion for a Bill of Particulars or, the alternative, Motion to Strike Joint Employer Allegations and Dismiss the Complaint” alleging that the General Counsel’s consolidated complaint failed to provide it with sufficient notice of the basis for the joint employer status in violation of fundamental due process, the Administrative Procedure Act, and the Board’s own internal manuals and guidelines.  The franchisees also filed similar answers.  The General Counsel opposed McDonald’s Motion for a Bill of Particulars, arguing that the allegation of a franchising relationship between McDonald’s and the franchisees provides sufficient notice of the allegations.  The ALJ denied McDonald’s motion.  McDonald’s also filed a Request For Special Appeal with the NLRB seeking permission to file an appeal to reverse the ALJ’ Order denying its Motion for a Bill of Particulars.  That too was denied.

McDonald’s also filed a “Motion To Sever” the Consolidated Complaints, to allow for separate hearings for the charges from the six regional offices that had been consolidated for trial in New York.  While the Board’s Rules and Regulations give the General Counsel discretion to consolidate cases the General Counsel’s discretion is not unlimited.  Where the cases involve different factual issues, different backgrounds and different complaints or legal theories, the Board has held that consolidation was not proper.  McDonald’s argued in these cases that consolidation is improper because the cases  consolidated in Region 2 involve 61 charges, and perhaps most importantly, 22 separate distinct and unrelated employers, as well as 181 unrelated allegations and 30 individual restaurants.  McDonald’s urged the judge to sever the complaints so that each individual franchisee will have his or her case heard by a separate Administrative Law Judge in the region where the case arose.

McDonald’s requested oral argument on its Motion to Sever. On February 11, 2015, the ALJ held a telephone conference with McDonald’s and all of the franchisees and their separate attorneys to address McDonald’s motion as well as scheduling issues.  Given the number of parties and significant issues involved, McDonald’s counsel requested that the teleconference be transcribed by a court reporter, which the ALJ denied.  Not surprisingly, the ALJ  denied McDonald’s Motion to Sever.

On March 3, 2015, the ALJ issued a Case Management Order which the General Counsel had requested.  The Order provides that the issue of whether McDonald’s can be held liable as a joint-employer for the unfair labor practices of its franchisees will be heard before trying the merits of the underlying unfair labor practice allegation.  The Order further requires McDonald’s to present its evidence on the joint employer status specific to a franchisee immediately after the General Counsel and the Charging Parties present their evidence specific to the franchisee which allows the General Counsel and Charging Party multiple opportunities to hear and respond to McDonald’s evidence before resting their cases.  McDonald’s filed a Request for Special Appeal seeking to reverse the ALJ’s Order, arguing that its alleged status as a joint-employer is a remedial issue that should be tried only after the General Counsel has proven the merits of the underlying charges against the franchisees alleged to have committed unfair labor practices and arguing that the sequence of trial unfairly allows the General Counsel and Charging Party a preview of McDonald’s case before they rest their cases.

The pressure on McDonald’s by organized labor extends beyond the NLRB proceedings.  This week the New York Times reported that the Service Employees International Union (“SEIU”) has pumped more than $15 million into the Fight for Fifteen movement which seeks to raise the wages at McDonald’s and other fast food restaurants and  retailers to a minimum of $15 per hour and helped persuade the NLRB to go after McDonald’s on a joint-employer theory.

In addition to their NLRB claims, workers at McDonald’s restaurants  in at least 19 cities have also filed workplace health and safety complaints with the Occupational Safety and Health Administration (“OSHA”), alleging that they had been injured and placed in danger on the job because of a lack of adequate training and protective equipment.

The SEIU has arranged for a coalition of European and American unions to accuse McDonald’s of improper tax practices.  Moreover, Organizers for the Fight for Fifteen will hold rallies in New York, Chicago and Los Angeles on April 15, 2015 in which they expect upwards of 10,000 protestors.

The McDonald’s case along with a pending NLRB case involving Browning-Ferris, are significant high stakes litigation which have the potential to fundamentally alter the way employers conduct business with franchisees and third-party contractors.  Last week, the U.S. Chamber of Commerce’s Workforce Freedom Initiative (WFI) issued a 40 page report, “Opportunity at Risk: A New Joint-Employer Standard and the Threat to Small Business.”  The report highlights the administration’s ongoing effort to redefine the concept of “joint-employment” relationships, and how these efforts “threaten to disrupt major sectors of the economy such as franchising and subcontracting.”   The report is essential reading for employers, attorneys and anyone else interested in what the impact would be on the economy and employer-employee relations if the legal standards for determining joint-employer status change in the way that the Board’s General Counsel and the SEIU and other unions are urging in the McDonald’s cases and elsewhere.

We will continue to monitor these case closely and keep you appraised of new developments.

On March 18, 2015, NLRB General Counsel Richard F. Griffin, Jr. issued General Counsel Memorandum GC 15-04 containing extensive guidance as to the General Counsel’s views as to what types employer polices and rules, in handbooks and otherwise, will be considered by the NLRB investigators and regional offices to be lawful and which are likely to be found to unlawfully interfere with employees’ rights under the National Labor Relations Act (“NLRA” or the Act”).

This GC Memo is highly relevant to all employers in all industries that are under the jurisdiction of the National Labor Relations Board, regardless of whether they have union represented employees.

Because the Office of the General Counsel investigates unfair labor practice charges and the NLRB’s Regional Directors act on behalf of the General Counsel when they determine whether a charge has legal merit, the memo is meaningful to all employers and offers important guidance as to what language and policies are likely to be found to interfere with employees’ rights under the Act, and what type of language the NLRB will find does not interfere and may be lawfully maintained, so long as it is consistently and non-discriminatorily applied and enforced.

As explained in the Memorandum, the Board’s legal standard for deciding whether an employer policy unlawfully interferes with employees’ rights under the Act is generally whether “employees would reasonably construe the rules to prohibit Section 7 activity” – that is action of a concerted nature intended to address issues with respect to employees’ terms and conditions of employment. As we have noted previously, this General Counsel and Board have consistently given these terms broad interpretations and have found many employer policies and procedures, in handbooks and elsewhere, that appear neutral and appropriate on their face, to violate the Act and interfere with employee rights.  Many of these cases have involved non-union workplaces where there is not a union present and there is no union activity in progress.

There are two sections to the Memo. Part 1 of the Memorandum, which begins at page 2 and runs to page 20, offers a recap of NLRB decisions concerning 8 broad categories of policies, with summaries of the Board’s holdings and examples of policy language that the NLRB has found to unlawfully interfere with employees’ Section 7 rights and policy language that the Board has found did not unlawfully interfere with employees’ rights.  Section 2 reports on the General Counsel’s settlement with Wendy’s International LLC following an investigation of charges in which the General Counsel found portions of Wendy’s employee handbook unlawfully overbroad, with an explanation as to why the General Counsel found the policies in question to interfere with employees’ rights under the Act and a description of the language Wendy’s adopted to replace the problematic policies as part of its settlement of the charges. Both parts of the Memorandum will be of interest to employers and attorneys who draft, apply and enforce handbooks and other workplace policy documents.

Part 1: Examples of Handbook Rules found by the Board to be Lawful and Unlawful in recent decisions

  • Employer Handbooks Rules Regarding Confidentiality – The Memorandum reviews the Board’s precedents holding that “Employees have a Section 7 right to discuss wages, hours, and other terms and conditions of employment with fellow employees, as well as nonemployees such as union representatives.” Interestingly, the Memorandum also states that “broad prohibitions on disclosing ‘confidential’ information are lawful so long as they do not reference information regarding employees or anything that would reasonably be considered a term or condition of employment, because employers have a substantial and legitimate interest in maintaining the privacy of certain business information.”  The Memorandum further “clarifies” by advising that “an otherwise unlawful confidentiality rule will be found lawful if, when viewed in context, employees would not reasonably understand the rule to prohibit Section 7 protected activity.”
  • Employer Handbooks Rules Regarding Employee Conduct toward the Company and Supervisors – As explained in the Memorandum, “Employees also have the Section 7 right to criticize or protest their employer’s labor policies or treatment of employees.”  The Memorandum offers an overview of decisional law, with particular attention to cases involving rules that “prohibit employees “from engaging in ‘disrespectful,’ ’negative,’ ‘inappropriate,’ or ‘rude’ conduct towards the employer or management, absent sufficient clarification or context.”  As further noted, employee criticism of the employer “will not lose the Act’s protection simply because the criticism is false or defamatory.”
  • Employer Handbooks Rules Regulating Conduct Towards Fellow Employees – This section of the Memorandum focusses on language and policies that the Board has found to interfere with the Section 7 right employees have ‘to argue and debate with each other  about unions, management, and their terms and conditions of employment,” which the General Counsel explains the Board has held will not lose their protection under the Act, “even if it includes ‘intemperate, abusive and inaccurate statements.” Of particular interest in this portion of the Memorandum is the examination of policies concerning harassment.  The Memorandum notes that “although employers have a legitimate and substantial interest in maintaining a harassment-free workplace, anti-harassment rules cannot be so broad that employees would reasonably read them as prohibiting vigorous debate or intemperate comments regarding Section 7 protected subjects.”
  • Employer Handbooks Rules Regarding Employee Interaction With Third Parties – This section of the Memorandum focuses on employer policies and provisions that seek to regulate and restrict employee contact with and communications to the media relating to their employment.  The General Counsel notes that “(A)nother right employees have under Section 7 is the right to communicate with the new media, government agencies, and other third parties about wages, benefits, and other terms and conditions of employment,” and that rules “that reasonably would be read to restrict such communications are unlawful.” The General Counsel acknowledges however that “employers may lawfully control who makes official statements for the company,” any such rules must be drafted so as “to ensure that their rules would not reasonably be read to ban employees from speaking to the media or third parties on their own (or other employees”) behalf.
  • Employer Handbooks Rules Restricting Use of Company Logos, Copyrights and Trademarks – The Board has found many employer policies, whether contained in employee handbooks or elsewhere, that broadly prohibit employees from using logos, copyrights and  trademarks to unlawfully interfere with employees’ Section 7 rights.  While the General Counsel acknowledges that “copyright holders have a clear interest in protecting their intellectual property,” the Board has found, with the approval of such courts as the Fourth Circuit Court of Appeals, that “handbook rules cannot prohibit employees’ fair protected use of that property.”  In this regard the General Counsel states in the Memorandum that it is his office’s position that “employees have a right to use the name and logo on picket signs’ leaflets, and other protected materials,” and that “Employers’ proprietary interests are not implicated by employees’ non-commercial use of a name, logo, or other trademark to identify the employer in the course of Section 7 activity.”
  • Employer Handbooks Rules Restricting Photography and Recording – While many handbooks and policies prohibit or seek to restrict employees from taking photographs or making recordings in the workplace and on employer policy, the Memorandum states that “Employees have Section 7 right to photograph and make recordings in furtherance of their protected concerted activity, including the right to use personal devices to take such pictures make recordings.”  The Memorandum further notes that such policies will be found to be overbroad “where they would reasonably be read to prohibit the taking of pictures or recordings on non-work time.”
  • Employer Handbooks Rules Restricting Employees from Leaving Work – With respect to handbook or other policies that restrict employees from leaving the workplace or from failing to report when scheduled, the Memorandum notes that “one of the most fundamental rights employees have under Section 7 of the Act is the right to go on strike,” and therefore “rules that regulate when an employee can leave work are unlawful if employees reasonably would read them to forbid protected strike actions and walkouts.”  Not all rules concerning absences and leaving the workstations are unlawful.  A rule would be lawful if “such a rule makes no mention of ‘strikes,’ ‘walkouts,’ ‘disruptions’ or the like” since employees should “reasonably understand the rule to pertain to employees leaving their posts for reasons unrelated to protected concerted activity.”
  • Employer Conflict of Interest Rules – The Memorandum states that under Section 7 of the Act, employees have the right to engage in concerted activity to improve their terms and conditions of employment, even if that activity is in conflict with the employer’s interests.  It cites as examples of such activities that could arguably be in violation of broad conflict of interest policies as protests outside the employer’s business, organizing a boycott of the employer’s products and services and solicitation of support for a union while on non-work time.  The Memorandum notes that when a conflict of interest policy “includes examples of otherwise clarifies that it limited to legitimate business interests (note: as that term is defined by the General Counsel and the Board) employees will reasonably understand the rule to prohibit only unprotected activity.”

Part 2: The Wendy’s International LLC Handbook Cases

The second part of the Memorandum relates to the Board’s settlement of a series of unfair labor practice charges against Wendy’s International LLC (Wendy’s) alleging that various provisions of the handbook were overbroad and unlawfully interfered with employees’ rights under the NLRA.  The company entered into an “informal, bilateral Board settlement agreement.  In this section, the GC explains why various provisions were found unlawful and then sets forth negotiated replacement policies that the GC found did not violate the Act.  While not a formal “safe harbor” since this is the position of the General Counsel and not the Board, it offers very good advice for employers and attorneys in this area.  The Wendy’s policies that the General Counsel argued violated employees’ Section 7 rights and the replacements that the General Counsel found acceptable concerned the following areas:

  • Handbook Disclosure Provision – The handbook in issue contained a broad prohibition against disclosure of the handbook and the information it contained without the company’s express prior written permission.  The General Counsel found this to be unlawful because it prohibited disclosure of employment practices to third parties such as a union or the NLRB.
  • Social Media Policy – While the General Counsel acknowledged that employers have “a legitimate interest in ensuring that employee communications are not construed as representing the employer’s official position,” the General Counsel found the company’s rule to be overbroad since it prohibited a much broader range of communications that would be protected by Section 7.  This included photography and recording and no retaliation provisions.
  • Conflict of Interest Policy
  • Company Confidential Information Provision
  • Employee Conduct
  • Walking Off the Job Without Authorization
  • No Distribution/No Solicitation Provision
  • Restaurant Telephone; Cell Phone; Camera Phone/Recording Devices Provision

While Memorandum GC 15-04 arguably does not contain “new” information or changes in policy or case law, it should be useful for employers and practitioners (and employees) in that it provides a concise summary of the General Counsel’s views on this wide range of matters and examples of language that is likely to be found lawful in future proceedings.  Of course it is important to note that each charge is decided on its own facts and the actions and statements of employers and their supervisors in connection with the application and enforcement of the particular provision will almost always be relevant to the determination of whether the Board will issue a complaint on a particular ULP Charge.

New Union Rules and Rulings: Proactive Strategies for Employers Facing Today’s Aggressive National Labor Relations Board and New Expedited Representation Elections

April 14, 2015 – Hilton Westchester, Rye Brook, New York

May 7, 2015 – The L.A. Hotel Downtown, Los Angeles, California

The National Labor Relations Board (NLRB) has adopted dramatic new rules and processes for union representation elections scheduled to take effect on April 14, 2015. The NLRB has also changed many of its standards concerning workplace rules, handbooks and policies affecting ALL EMPLOYERS, not only unionized workplaces.

This interactive workshop will address critical headline issues developing from today’s aggressive, union-friendly NLRB and provide innovative techniques and proactive and preventive strategies to prepare and respond to these developments. Specifically, our speakers will explain and offer tactics on:

  • New election rules that will bring fast elections in small units, with limited opportunity for employers to present both sides to employees and resolve key questions before a vote
  • NLRB’s evolving and expansive definition of joint employers including franchisors and franchisees
  • Developing and enforcing handbooks, policies, practices and work rules, including use of email, social media, and protection of confidential information that will withstand the NLRB’s increasing scrutiny
  • NLRB’s expanding view of protected concerted activity, including social media, workplace confrontations, class action waivers and other recent NLRB decisions

To review locations and a briefing agenda, please click here.  To register, please click here.

The fee to attend this briefing is $50 for the first person and $25 for each additional person from the same organization. The fee includes breakfast, workshop materials, and lunch. Overnight accommodations can be arranged directly with the hotel.

For additional information, please contact Elizabeth Lynch Gannon at egannon@ebglaw.com or 202/861-1850.

In a case emphasizing the importance of acting in good faith in the interactive process and how an employer can do it right, on February 13, 2015, the First Circuit denied the EEOC’s petition for a rehearing en banc of the court’s decision to dismiss a lawsuit brought against Kohl’s Department Stores, Inc. by a diabetic former employee who claimed that her erratic working hours were exacerbating her condition.  EEOC v. Kohl’s Dep’t Stores, Inc., 774 F.3d 127 (1st Cir. 2014), reh’g en banc denied (Feb. 13, 2015).

Pamela Manning, a former sales associate at Kohl’s, had type I diabetes.  For two years, she worked predictable shifts as a full-time sales associate.  Following a restructuring of the staffing system nationwide in January 2010, however, Manning began working a schedule with unpredictable shifts, including some night shifts followed by day shifts (in Kohl’s parlance, “swing shifts”).  Manning alleged that the new schedule aggravated her diabetes.

After informing her supervisor that working erratic shifts was endangering her health, Manning obtained a doctor’s note requesting that she be scheduled to work “a predictable day shift.”  Manning’s store manager contacted human resources to discuss Manning’s request.  Kohl’s determined that it could not provide Manning’s preferred schedule of day-time hours only, but authorized the store manager to offer a schedule with no swing shifts.

On March 31, 2010, during a meeting with her store manager and immediate supervisor, Manning again requested a “steady shift” with mid-day hours, but was told that she could not be given a consistent schedule.  Manning stormed out of the meeting, saying that she had no choice but to quit.  Her supervisor followed her and asked what she could do to help, but she could not convince Manning to reconsider her resignation or to discuss any alternative accommodations.

Two days later, Manning contacted the EEOC to file a charge of discrimination.  On April 9, 2010, the store manager called Manning and asked that she rethink her resignation and consider alternative accommodations for both part-time and full-time work.  Manning ignored this overture and got off the phone as quickly as possible.  A week later, after hearing nothing further Manning, Kohl’s treated her departure as voluntary and terminated her employment.

Based on this record, on December 19, 2014, the First Circuit concluded that Kohl’s made earnest attempts to discuss potential reasonable accommodations.  By contrast, Manning’s conduct constituted a refusal to participate in the interactive process in good faith, warranting summary judgment in favor of Kohl’s.  In addition, the First Circuit ruled against the EEOC on Manning’s constructive discharge claim, finding that a reasonable person would not have felt compelled to resign when her employer offered to discuss other potential work arrangements with her.

In reaching its decision, the First Circuit emphasized that both the employer and the employee have a duty to engage in good faith, and that empty gestures by the employer will not satisfy this duty.  But if an employer does engage in the interactive process in good faith, and the employee refuses or fails to cooperate in the process, the employer cannot be held liable for a failure to provide a reasonable accommodation.

Employers addressing reasonable accommodation requests from their employees can learn from Kohl’s actions in this case.  Kohl’s benefited from its representatives’ diligence in documenting their response to Manning’s request (including the internal discussions) and in following up with Manning to give her an opportunity to propose alternative accommodations for her diabetes.  Thus, even though the store manager never conveyed an offer of “no swing shifts,” the First Circuit was able to find that Kohl’s made real efforts to work with Manning and that Manning unreasonably refused to continue the dialogue with Kohl’s.  And Kohl’s succeeded in winning dismissal of the ADA claim.  Employers who follow this course of conduct ensure their compliance with the ADA and, in the event an employee refuses to reciprocate discussions, may establish a defense to liability in a failure to accommodate lawsuit.

Very often OSHA complaints go hand in hand with union organizing campaigns and other concerted activity protected under the National Labor Relations Act, at union and nonunion operations.

Our colleague Valerie Butera has prepared a thoughtful analysis concerning OSHA’s revised recordkeeping and reporting requirements in retail: “What Do OSHA’s Revised Recordkeeping and Reporting Rules Really Mean for Retailers?”

Below is an excerpt of Valerie’s tips for retail employers:

  • Train your safety and human resource professionals and your managers on the new reporting requirements.  Again, all retailers must promptly report to OSHA any fatalities, amputations, loss of eye incidents, or in-patient hospitalizations.
  • Be aware that you can report to OSHA by:
  1. Calling OSHA’s free and confidential number: 1-800-321-OSHA (6742)
  2. Calling your closest Area Office during normal business hours
  3. Using the new online form that will soon be available on OSHA’s website
  • If you have retail establishments in one or more of the jurisdictions with a state plan, contact the state plan’s office to determine when you must comply with the rule and if the state plans’ reporting rules have additional requirements.  OSHA has encouraged state plans to require compliance by January 1 but recognizes that not all plans will be able to do so.
  • Contact counsel for advice on how to best navigate an OSHA inspection to ensure your preparedness should OSHA decide to investigate the circumstances leading to a reportable injury or illness.
  • To the extent that any of these newly reportable incidents have taken place at any of your retail establishments in the past, review the details of the incident and audit that facility and others that you believe may pose safety concerns.  Identify safety hazards and address any possible health or safety hazards that you discover.
  • If you are among the newly identified retail industries required to complete OSHA’s injury and illness recordkeeping, seek assistance from counsel in navigating these very complex requirements.  Ensure that safety and human resource professionals in your organization are properly trained and fully understand how and when to record an occupational illness or injury in your OSHA logs.
  • Retailers that have already been subject to the recordkeeping standard should review their logs to spot potential trouble spots, and provide refresher training to safety and human resource professionals in order to help ensure full compliance with the rules.

Regarding the Supreme Court’s Integrity Staffing Solutions v. Busk opinion, issued yesterday, our colleague Michael Kun at Epstein Becker Green has posted “Supreme Court Holds That Time Spent in Security Screening Is Not Compensable Time” on one of our sister blogs, Wage & Hour Defense.

Following is an excerpt:

In order to prevent employee theft, some employers require their employees to undergo security screenings before leaving the employers’ facilities. That is particularly so with employers involved in manufacturing and retail sales, who must be concerned with valuable merchandise being removed in bags, purses or jacket pockets.

Often in the context of high-stakes class actions and collective actions, parties have litigated whether time spent undergoing a security screening must be compensated under the Fair Labor Standards Act (“FLSA”). On December 9, 2014, a unanimous United States Supreme Court answered that question – no.

The Court’s decision in Integrity Staffing Solutions v. Busk may have a far-reaching practical and legal impact. Not only may it make more employers comfortable conducting security screenings of their employees, but it may bring an end to most class actions and collective actions filed against employers seeking compensation for employees’ time spent in such screenings.

WHEN: November 17, 2014

TIME:    2:00pm – 3:30pm EST

To register for this webinar, please click here.

Please join us for a complimentary webinar addressing the professional and business challenges encountered by health care providers dealing with Ebola and other infectious diseases. This webinar will offer a clinical overview as well as a review of the guidelines which offer protocols for addressing concerns over Ebola and similar diseases, the health regulatory and risk management issues providers might consider in developing a response strategy, and the resulting labor and employment considerations facing health care employers. A question and answer period will follow the program.

Topics will include:

  • Clinical Overview and Emergency Management Issues
  • Health Regulatory Considerations for Providers
  • Risk Management Concerns
  • Employment Issues Confronting the Health Care Industry including Labor Management Relations

Speakers:

  • Bruno Petinaux, M.D. – Associate Professor, Co-Chief of the Emergency Management Section, Department of Emergency Medicine, George Washington University Medical Faculty Associates
  • George B. Breen – Member, Epstein Becker Green, Chair, Health Care and Life Sciences Practice Steering Committee
  • Frank C. Morris, Jr. – Member, Epstein Becker Green, Employment, Labor and Workforce Management Practice
  • Amy F. Lerman – Associate, Epstein Becker Green, Health Care and Life Sciences Practice

To register for this webinar, please click here.

If you have questions regarding this event, please contact Whitney Krebs at (202) 861-0900, or wkrebs@ebglaw.com.

By Stuart M. Gerson

While by most accounts the current term of the Supreme Court is generally uninteresting, lacking anything that the popular media deem to be a blockbuster (the media’s choice being same-sex marriage or Affordable Care Act cases), the docket is heavily weighted towards labor and employment cases that potentially affect employers in all industries including  retail, health care, financial services, hospitality, and manufacturing.  In chronological order of argument they are as follows.

The Court already has heard argument in Integrity Staffing Solutions, Inc. v. Busk, No. 13-433, which concerns whether the Portal-to-Portal Act, which amends the Fair Labor Standards Act, requires employers to pay warehouse employees for the time they spend, which in this case runs up to 25 minutes, going through post-shift anti-theft screening. Integrity is a contractor to Amazon.com, and the 9th Circuit had ruled in against it, holding that the activity was part of the shift and not non-compensable postliminary activity. Interestingly, DOL is on the side of the employer, fearing a flood of FLSA cases generated from any activity in which employees are on the employers’ premises.  This case will affect many of our clients and should be monitored carefully.

On November 10th, the Court will hear argument in M&G Polymers USA,  LLC v. Tackett, No. 13-1010, which I see as an important case, though most commentators don’t seem to realize it. The question involves the so-called “Yard-Man Presumption” in the context of whether the courts should infer that silence as to the duration of retirement health insurance benefits established under a CBA are meant to apply for the lifetimes of covered retirees.

In two other cases involving an issue of discretion and judicial review set for argument on December 1st, Perez v. Mortgage Bankers Ass’n, No. 13-1041; and Nichols v. Mortgage Bankers Ass’n, No. 13-1052, the Court will decide whether DOL violated the Administrative Procedure Act by not affording notice-and-comment rulemaking to a reversal of a wage and hour opinion letter issued in 2006.  The DC Circuit ruled against DOL in both cases (one in which DOL is the petitioner; another in which affected loan officers are petitioners), rejecting DOL’s contention that the policy change was an “interpretive rule” not subject to APA notice-and-comment strictures. The case at bar itself doesn’t involve much, but as a precedent concerning how free agencies like DOL (a particular worry to employers during this administration), are to regulate unilaterally, free of judicial oversight it will be important, especially in the DC Circuit where there are so many agency cases.

On December 3rd, the Court will hear argument in Young v. United Parcel Service, Inc., No. 12-1226, which poses whether the Pregnancy Discrimination Act requires an employer to accommodate a pregnant woman with work restrictions related to pregnancy in the same manner as it accommodates a non-pregnant employee with the same restrictions, but not related to pregnancy. The 4th Circuit had ruled in favor of the company, which offered a “light duty program” held to be pregnancy blind to persons who have a disability cognizable under the ADA, who are injured on the job or are temporarily ineligible for DOT certification. Ms. Young objects to being considered in the same category as workers who are injured off the job. This case, too, will create a precedent of interest to at least some of our clients. Of  note, last week United Parcel Service sent a memo to employees announcing a change in policy for pregnant workers advising that starting January 1, the company will offer temporary light duty positions not just to workers injured on the job, which is current policy, but to pregnant workers who need it as well. In its brief UPS states “While UPS’s denial of [Young’s] accommodation request was lawful at the time it was made (and thus cannot give rise to a claim for damages), pregnant UPS employees will prospectively be eligible for light-duty assignments.”  The change in policy, UPS states, is the result of new pregnancy accommodation guidelines issued by the Equal Employment Opportunity Commission, and a growing number of states passing laws mandating reasonable accommodation of pregnant workers.

In a case not yet fully briefed or set for argument, Mach Mining LLC v. EEOC, No.13-1019, the Court will  decide whether the EEOC’s pre-suit conciliation efforts are subject to judicial review or whether the agency has unreviewable discretion to decide the reasonableness of settlement offers. The Seventh Circuit has ruled in favor of the EEOC in the instant case, but every other Circuit that has considered the matter has imposed a good-faith-effort standard upon the EEOC.

On October 2nd, the Supreme Court granted cert. in a Title VII religious accommodation case, EEOC v. Abercrombie & Fitch Stores, Inc., No. 14-86. The case concerns whether an employer is entitled to specific notice, in this case  of a religious practice – the wearing of a head scarf —  from a prospective employee before having the obligation to accommodate her.  In this case, the employer did not hire a Muslim applicant. The Tenth Circuit ruled that the employer was entitled to rely upon its “look” policy and would not presume religious bias where the employee did not raise the underlying issue. Retail clients and others will be affected by the outcome.

Finally, also on October 2nd, the Supreme Court granted cert. in Tibble v. Edison Int’l, which raises the issue of whether retirement plan fiduciaries breach their duties under ERISA by offering higher-cost retail-class mutual funds when identical lower-cost institutional class funds are available and the plan fiduciaries initially chose the higher-cost funds as plan investments more than six years (the notional statute of limitations) before the claim was filed. This issue has been around for years and the Court finally will resolve it.   The dueling rationales have been discussed in depth on many financial pages, for example recently in the New York Times. The potential importance of the case relates to whether trustees have a separate duty to reconsider their past decisions under a continuing violation theory that would supersede ERISA’s statute of limitations. The Solicitor General, in an amicus brief, argued on behalf of the United States that trustees of ERISA plans owed a continuing duty of prudence, which they breach by failing to research fund options and offer available lower-cost institutional-class investments during the six-year period prior to the filing of the complaint. The Court apparently took the case on the SG’s recommendation that noted the unresolved split on the issue in the Circuits.  If the Solicitor General proves correct, and the Petitioner prevails, fiduciaries all across the employment spectrum will be exposed to greater risk of scrutiny for their past actions.

More will follow as developments warrant.

By Kara M. Maciel

Today, EBG client, National Grocers Association (“NGA”), filed a request to speak at the National Labor Relations Board’s public meeting, scheduled for April 10-11, 2014 regarding the Notice of Proposed Rulemaking (“NPRM”) on the “ambush election” representation procedures.

NGA is the national trade association representing retail and wholesale grocers that comprise the independent sector of the food distribution industry.  NGA requested to speak on 4 key issues being contemplated by the NLRB:

  1. Timing of the Election.  NGA opposes any reduction in the scheduling of the election because hasty decisions don’t make good decisions.  Free speech is the cornerstone of the Act’s statutory protections, and the NPRM eviscerates an employee’s opportunity to become fully informed.  Instead of deliberately evaluating all relevant information, employees will be rushed into voting without a full opportunity to receive facts, contemplate the consequence of their decision, and make an informed choice whether to be represented by a union.  By the filing of a petition, a union has had ample time to have convinced 30% of the proposed unit to sign cards; how can the other 70% be expected to make an informed decision in a few days?  Employees faced with making such an important workplace decision should be able to do so in an environment conducive to reflection and thought, not one that sacrifices deliberation for speed.  The NPRM forces employees to act in haste and repent at leisure.  There is no legitimate analysis supporting a need to hasten the time before an election and certainly nothing supported by empirical evidence from the Board, especially when its own data confirms that the median time between a petition and election was 38 days.
  2. Compulsory Disclosure of Private Email and Phone Numbers.  NGA is concerned about the NPRM’s proposal of compulsory disclosure on voter lists to include personal and confidential e-mail accounts and phone numbers.  This non-consensual disclosure constitutes a gross invasion of employees’ privacy.  To require employers to collect that information after the direction of an election and share it with third parties without any safeguards on how that information is handled would be unduly burdensome and intrude on employees’ privacy rights.  At a minimum, employees must be allowed to opt-in to share private information with outsiders.  Only with their specific consent can the Board not place at risk the privacy interests of workers. Even more disconcerting to employees’ privacy interests is how the information could be used.  It is not inconceivable that individual organizers could abuse this information, causing irreparable harm to employees.  As security breaches become widespread with identify theft as the fastest growing white collar crime, companies must be ever vigilant in protecting their employee’s personal information.  There are no safeguards contemplated by the NPRM to protect against unforeseen abuses with this private information.  Identity theft, harassment or other abuse of personal information can happen without the union’s knowledge, and there is no mechanism for the Board or anyone else to effectively sanction individuals against misuse.  Disclosing private email and phone numbers to labor unions within 2 days after direction of an election does not further the Act’s statutory purposes.
  3. Changes to Litigated Issued During Pre-Election Hearing.  There are due process problems contemplated by the NPRM’s changes to the litigated issues during the pre-election hearing.  The heart of a representation petition is whether there is a question concerning representation.  The Board must determine if 30% of the unit has made a showing of interest, and the Board cannot fulfill this statutory function without knowing the unit’s composition.  To direct an election when disputes exist over voter eligibility of less than 20 percent of the unit would create vast uncertainty and confusion.  Ultimately, an election would occur that conceivably could include supervisors, who are statutorily excluded.  If the individuals in dispute did not reach the 20 percent threshold, and the union won, the result would find supervisors represented by a labor union.  How can employees make an informed decision about representation when they are confused about who else will be in the unit?  The prejudice created by postponing voter eligibility challenges until post-election is akin to a litigant not being able to disqualify a juror until after the verdict is rendered.  The NPRM fails to consider the potential impact that the Board’s ruling in Specialty Healthcare will have on determining who should be included or excluded from a petitioned-for unit, and creates more questions than answers for employers and confusion during the election process as to who is eligible to vote.
  4. Waiver of Issues at Pre-Election Hearing.  One of the main changes contemplated by the Board would require the parties to raise every possible argument at the initial election hearing, or risk waiving those arguments.  Accordingly, within days of the union filing a petition, the employer must get a handle on the organizing drive, including who is being proposed to be included in the unit (and whether such a unit is proper) and make an informed decision as to what issues to raise at the hearing, just a few days later.  Small business owners are not armed with legal staff and it would necessarily take time to locate, retain and consult appropriate labor counsel on the significant business and operational issues posed by the union’s petition.  By requiring employers to put everything in a statement of position at a pre-election hearing or be subject to a waiver increases the adversarial nature of the proceeding and makes it even less likely that the parties will resolve disputes early in the process.  Fearing that they may waive issues not set forth in writing, employers may be less inclined to enter into stipulated or consented to elections.    Accordingly, employers should be able to supplement or amend their statement of position as facts and the election process develops.

Management Missives

As previously reported, it is with intention that the Board’s proposed rules will significantly alter the entire union representation election process in favor of unions. Although it is a proposed rule at this point, and the Board will be accepting public comment through April 7, 2014, with a public hearing that same week, it is likely that the final rule will be issued not long thereafter. To prepare for the Board’s “ambush” election rules, employers should promptly adopt any or all of the following strategies:

  • Examine your workforce for potential vulnerability to union organizing, including wage and hour violations or uncompetitive wages or benefits.
  • Review and update workplace policies that become relevant during union organizing such as solicitation/distribution, electronic communications, and social media.
  • Assess your workforce for potential bargaining unit issues like identifying who are supervisors and which employees share a “community of interest.”
  • Train your managers and supervisors on recognizing early warning signs of union organizing and responding lawfully to union campaigns.
  • Contact legal counsel with any questions or for any assistance with ensuring you are prepared to respond to an organizing campaign consistent with the proposed rules.

By Steven M. Swirsky, Adam C. Abrahms, Kara M. Maciel, and Casey M. Cosentino

As previously predicted by the Management Memo on August 1, 2013 and October 30, 2013, the National Labor Relations Board (the “Board”) issued a second Notice of Proposed Rulemaking (“NPRM”) to amend its existing rules and regulations governing union elections procedures. If they look familiar when you see them, there is a good reason for that: you have seen them before.

As readers of the Management Memo are well aware, the NPRM is the latest development in the long saga of organized labor’s attempts to “fix” the representation election process in its favor. Most significantly, the Board’s current attempt only comes after having its more modest 2011 attempt struck down by a federal judge.

The present proposal is identical “in substance” to the Board’s original proposals first contemplated on June 22, 2011, and as such are more aggressive than the Rules ultimately adopted on December 21, 2011, and later struck down. The Board claims the proposed amendments are necessary to, among other things, facilitate the swift resolutions of questions concerning representation, simplify representation-case procedures, eliminate needless litigation, and consolidate all requests for review of regional directors’ determinations into one post-election request. However, if adopted as written, the proposed rules will radically up-end 75 years of Board practice and make it considerably easier for unions to organize employees and win elections.

History of Proposed Rule

The Board first contemplated the proposed amendments in a notice of proposed rulemaking on June 22, 2011. Following a period of public comment, the Board issued a final rule on December 22, 2011, that adopted some of the proposed amendments but deferred other more controversial aspects of the proposed amendments for further consideration. The final rule was immediately challenged in federal court. See Chamber of Commerce of the U.S. v. NLRB, 879 F. Supp. 2d 18, 21, 24 (D.D.C. 2012). In May 2012, the D.C. District Court struck down the final rule on procedural grounds. In response, the Board suspended the implementation of changes to its election representation case process.

Proposed Amendments to the Election Procedure

To the favor of unions, the proposed amendments announced this week would significantly change the existing procedures for union elections in the following ways:

  • Permit electronic filing of election petitions.
  • Require pre-election hearings to be held within 7 days after a hearing notice is served, shortening the time period between the petition and election.
  • Require employers to file a detailed statement of position on any and all issues involved in the petition before the hearing commences (i.e., within 7 days of first receiving notice of the petition). Failure to present an issue in the statement would constitute waiver of the issue in all future proceedings.
  • Grant hearing officers the authority to limit the issues to be heard at the hearing, depriving employers of their ability to litigate valid legal/factual positions prior to an election.
  • Defer resolution of voter-eligibility issues to post-election challenges until after an election, replacing the longstanding practice of having a pre-election hearing to determine such issues. This will allow unions to claim that some supervisors should be included in the bargaining unit, which could prevent an employer from utilizing them in the campaign to communicate its own position to the employees they supervise.
  • Grant hearing officers the authority to deny an employer the ability to file a post-hearing brief.
  • Eliminate an employer’s ability to seek Board review of a Regional Director’s rulings, which would also reduce the time between the petition and election.
  • Shorten the time for holding an election to as early as 10 days after the Regional Director’s direction of election (down from the typical 25 to 30 day minimum that now exists)
  • Require an employer to provide the NLRB with the list of voters’ names and addresses within 2 days after the Regional Director’s direction of an election instead of 7 days.
  • Require employers to provide the phone numbers and email addresses of all eligible voters as well as specifying each employee’s work location, shift, and classification. Currently, employers must only provide name and mailing address to the NLRB, which it then provides to the union. Since unions will use be able to use this information during the days before the election, it is feared that instances of organizers harassing and coercing employees will significantly increase.
  • Grant the Board discretion to deny review of post-election rulings. Currently, the Board is required to decide post-election disputes.

The Board’s False Pretenses and True Intended Harm of “Ambush” Elections

The Board asserts these election “fixes” are necessary to address alleged long delays in the representation process; however, such delays are rare. To the extent that the NPRM seeks to address election delays, objective data of NLRB elections conducted between 2008 and 2010 shows that such delays occurred less than 10 percent of the time. In fact, currently median time between petition and election is only 38 days and almost all elections occur within 56 days. The Board’s current proposal, however, could shorten that period to 10 to 21 days, which essentially eliminates the ability for employers to make a full and meaningful presentation of their position or employees to make a truly informed choice.

Typically, union organizers campaign under the radar for months before a petition is filed and unions wait until they believe that they have the support of the majority of the employees in a unit before they file a petition. Shortening the election period so drastically will erode an employer’s ability to respond to the union’s propaganda and communicate its position on union representation. Employees will vote without having the benefit of hearing the employer’s position. This contravenes the express purpose of the Act, which is to protect employee rights— not union rights and would gut the right that employers are granted by the Act to communicate their positions to employees. This one-sided campaign will almost certainly result in more election victories for unions and less real choice for employees.

Management Missives

It is with intention that the Board’s proposed rules will significantly alter the entire union representation election process in favor of unions. Although it is a proposed rule at this point, and the Board will be accepting public comment through April 7, 2014, with a public hearing that same week, it is likely that the final rule will be issued not long thereafter. To prepare for the Board’s “ambush” election rules, employers should promptly adopt any or all of the following strategies:

  • Examine your workforce for potential vulnerability to union organizing, including wage and hour violations or uncompetitive wages or benefits.
  • Review and update workplace policies that become relevant during union organizing such as solicitation/distribution, electronic communications, and social media.
  • Assess your workforce for potential bargaining unit issues like identifying who are supervisors and which employees share a “community of interest.”
  • Train your managers and supervisors on recognizing early warning signs of union organizing and responding lawfully to union campaigns.
  • Contact legal counsel with any questions or for any assistance with ensuring you are prepared to respond to an organizing campaign consistent with the proposed rules.