Unfair Labor Practices

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

Noel Canning

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

The Impact of SW General

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

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

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

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

What This Means for Employers

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

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

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

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

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

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

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

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

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

What’s Next?

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

While we have been reminding readers of the fact that  the National Labor Relations Act (the “Act”) protects employees regardless of whether they are represented by a union and the Act applies to non-unionized workforces, too, recently  a National Labor Relations Board (the “NLRB”) Administrative Law Judge issued a decision following an unfair labor practice (“ULP”)  hearing based on a charge filed by a teacher at New York City’s prestigious Dalton School that should serve as an object lesson for employers in all non-union businesses.

The case, Dalton School, Inc., involved a series of emails concerning a school musical. The case arises out of a doomed production of a middle school rendition of Thoroughly Modern Millie. The Charging Party, David Brune, was one of five teachers in the theater department at the Manhattan private school. In late 2013, the theater department starting putting together the Millie production, including assigning roles, rehearsing lines and songs and preparing sets and costumes. In early January 2014, just weeks before opening night, complaints regarding Asian ethnic stereotypes in the play by parents and faculty were received by the school’s administration.  . The school ordered Brune to discontinue all work on the production two weeks prior to the opening; and eventually, certain offending parts of the play were re-written. Brune only learned that the revamped production would open on schedule three days prior to the opening. Despite the short notice, and with a lot of work in that short period, the production was successful.

Afterwards, Brune shared his views with how the school’s administration handled the concerns and the changes in the play with the other faculty members in the school’s theater department. Through a series of drafted letters to school management, and e-mails within the department, Brune and the others spoke of the redress they felt they should receive for the mishaps with Millie and their views as to how to avoid a repeat in the future. In one of these emails, Brune accused school management of lying to the theater department.

A month after he sent the emails, Brune was called into a meeting with the school management, where they debriefed on the Millie situation. The head of the school asked Brune if he ever said anything negative about the school administration, such as accusing it of lying. He denied saying anything negative. On April 17, 2014, Brune was again summoned to a meeting with School management, but this time, he was presented with a copy of an email he had sent to other teachers during February, in which he wrote that  that management had lied to the theater department and the students. At this meeting, Brune was told his contract would not be renewed for the next year and that he could leave immediately or finish out the school year.

Rather than going quietly into the good night, Brune filed a ULP charge with the New York regional office of the NLRB claiming that he had been terminated for engaging in protected concerted activity, that is his communications with his fellow teachers. Following an investigation, the Board’s Regional Director issued a complaint and the matter was tried before ALJ Arthur J. Amchan.

In defending against the claims, Dalton denied that the decision not to renew Brune’s contract for the following year was not related to any concerted, protected activity.  Rather, the school asserted that the decision not to renew Brune’s contract was based on the fact that he had been dishonest in the March meeting when asked whether he ever stated that School management lied about the Millie production.

The ALJ found otherwise, and concluded that Dalton rescinded his employment contract because he had engaged in protected, concerted activity when he communicated with his fellow teachers about how the school’s administration had handled the matters. Specifically, the ALJ concluded that the e-mails between the theater department members discussing how to address concerns about the Millie production with school management were concerted protected activity. The Judge reasoned that since the e-mails clearly identified each employee who was involved in the e-mail chain, Dalton was aware that there was more than one employee involved in the communications, putting it on notice that the activities were concerted. The ALJ further found that the school’s actions in the March meeting violated the Act because they were designed to “trap” or catch Brune in a lie about the February e-mail.

This case is a vivid illustration of how employee actions about a wide range of work related matters, including in non-unionized workplaces, can rise to the level of protected activity, even if the actions are as simple as the exchange of emails among co-workers.

By Maxine Neuhauser

For retail and hospitality industries especially,  it is turning out to be a long, hot summer as franchises continue to be in the employment law spotlight.

On July 29, 2014 the NLRB’s General Counsel announced a decision to treat McDonald’s, USA, LLC as a joint employer, along with its franchisees, of workers  43 McDonald’s franchised restaurants with regard to unfair labor practices charges filed by unions on behalf of the workers and authorized charges against of both the franchisees and McDonalds. (See our July 30 blog post  and Aug. 14 blog post)

Then, on August 5, 2014 New Jersey U.S. District Court Judge Rene Bumb,  ruled in Naik v. 7-Eleven that four franchise owner-operators of Indian descent may pursue overtime and minimum wage claims against franchisor 7-Eleven under both the federal Fair Labor Standards Act (“FLSA”) and the New Jersey Wage and Hour Law (“NJWHL”). In deciding 7-Eleven’s motion to dismiss plaintiffs’ wage claims, the court held that the complaint asserted sufficient factual allegations to establish, if proved, that the plaintiffs are employees of 7-Eleven, and not independent franchisees.  The decision has potential wide-ranging implications regarding the coverage and application of host of employment law statutes, as well as potential joint employment and labor-management issues.

The plaintiffs each entered into a 7-Eleven Store Franchise Agreement (“FA”) which characterizes the parties’ relationship as that of franchisor/independent contractor. Plaintiffs allege, however, that, they are they are actually 7-Eleven employees and entitled to overtime and minimum wage.

The court ruled that the language of the FA characterizing plaintiffs as independent contractors  was not alone sufficient to carry the day for 7-Eleven and instead applied a weighing of the factors and economic realities analysis, used when classifying individuals working directly for a business.

The court found that the factors weighed in favor of plaintiffs being characterized as employees, including the factor asking whether the services rendered by plaintiffs are integral to the defendant’s business. As to that element, the court stated, “It is unclear how Defendant could run their business at all without its franchisees [,]” this, despite the fact that franchisees are integral to a franchise business by the very nature of the business model.

The court did not accept that 7-Eleven’s alleged regulation of vendors, equipment maintenance, product supply, uniforms, and implementing a standardized store environment constitute mere quality control measures to ensure uniformity. Rather, it found that the plaintiffs’ allegations, “depict an economic reality of dependence” on 7-Eleven, which supported their classification as employees.

The motion to dismiss comes at an early stage of the ligation and the court’s decision to let  the cases proceed is not a decision on the merits.  Nevertheless the court’s legal analysis in deciding the motion, has certainly raised questions regarding intersection of franchise law and employment law that bear watching – both in terms of application of employment law statutes  and with regard to joint employment.

As a side note, the court dismissed plaintiffs’ claims alleging national origin discrimination and harassment in violation of the New Jersey Law Against Discrimination, but on reasons unrelated to the plaintiffs’ status as employees or independent contractors.

NLRB General Counsel Richard Griffin announced on Tuesday July 29th   that he has authorized issuance of Unfair Labor Practice Complaints based on 43 of 181 charges pending against McDonald’s, USA, LLC and various of its franchisees, in which the Board will allege that the company and its franchisees are joint-employers. If the General Counsel prevails on his theory that McDonalds is a joint employer with its franchisees, the result would be not only a finding of shared responsibility for unfair labor practices, but could also mean that the franchisor would share in the responsibilities of collective bargaining if unions are successful in organizing franchisors’ workers.  The news, which comes as Fast Food Forward, which is affiliated with the Service Employees International Union (“SEIU”) wraps up its convention in Illinois.

In May of this  this year, General Counsel Griffin signaled his intent to ask the Board to revisit the standards for determining when and in what circumstances two or more employers could be found to be joint employers.  At that time the General Counsel invited the filing of amicus briefs in Browning-Ferris, the General Counsel asked interested parties to share their views on the following questions:

  • Should the Board adhere to its existing joint-employer standard or adopt a new standard?
  • What considerations should influence the Board’s decision in this regard?
  • And If the Board adopts a new standard for determining joint-employer status, what should that standard be?
  • If it involves the application of a multifactor test, what factors should be examined? What should be the basis or rationale for such a standard?

While submissions in Browning-Ferris on these questions were to be received by June 26, 2014, it would appear that the General Counsel has reached his decision that a new standard should be adopted and that it should be a much broader one than has been applied in the past.

Under the Board’s practices, the Advice Memorandum issued in the McDonald’s cases has not yet been made available to the public.  While the General Counsel has indicated that absent settlement in the 43 cases that he finds to have merit the Board’s regional directors are directed to issue unfair labor practice complaints and to try the cases before the Board’s Administrative Law Judges, it has been reported that McDonald’s will contest the matters, noting that it does not direct hirings, terminations or the setting of hours and wages by its franchisees and that it has never been found to be a joint employer with them in the past.

Adoption of a new standard for determining whether a joint employer relationship exists between companies in these and other circumstances, such as between companies and those to whom they outsource work and functions could have far broader implications beyond the franchise setting.

By Steven M. Swirsky and Peter M. Panken

NLRB General Counsel Richard Griffin has declared in an April 30, 2014 General Counsel Memorandum. that his office will continue and expand the increasingly aggressive pursuit of injunctions in Federal Court against employers in connection with union organizing and bargaining for initial collective bargaining agreements.

In GC Memorandum GC 14-30, the Board’s regional offices have been directed that they should aggressively consider requesting authorization from the General Counsel and the Board to pursue Section 10(j) injunctions in the following types  of cases :

  1. Those alleging Unfair Labor Practice violations involving contract negotiations  that occur during the period after a Union is first  certified to represent employees  when the parties are or should be bargaining for a first collective bargaining agreement;
  2. charges involving claims of employee terminations during campaigns for union recognition;
  3. employee terminations occurring during the bargaining for an initial collective bargaining agreement;
  4. cases involving successor employers refusal to bargain, which involve claims of conduct that  “undermines [the union which will] lead to disaffection, concomitant loss of bargaining power and loss of benefits that cannot be restored by final Board order”; and
  5. “cases where a successor employer refuses to hire employees to avoid bargaining with an incumbent union, the potential scattering of those employees creates an even greater risk that a final Board order will not effectively restore the parties to establish a good faith bargaining relationship.”

The reasoning behind the aggressive use of this extraordinary relief is the General Counsel’s view that in cases of these types the passage of time between the filing of the ULP charges and any relief that the Board may ultimately render following an investigation of the charges, the litigation of the issues before an Administrative Law Judge and the issuance and enforcement of a final Board Order, will often render any ultimate findings meaningless.

NLRA Section 10(j), 29 U.S.C. § 160, permits the NLRB to seek injunctive relief in Federal Court if they issue an unfair labor practice complaint “for appropriate temporary relief or restraining order.”  From 2002 through 2010, the NLRB sought between 11 and 23 such injunctions each year.  However, in 2012 and 2013 the NLRB brought 55 such actions and recovered over $5,000,000 in backpay before the unfair labor practice charges were litigated by Administrative law Judges.

By Kara M. Maciel and Lindsay A. Smith

On March 12, 2014, the National Labor Relations Board (“the Board”) concluded that a beef processing company committed an unfair labor practice in violation of the National Labor Relations Act (“NLRA”) when it terminated three workers for striking in protest of their working conditions (“Greater Omaha Packing Co.”).  More significant, however, was the Board’s decision to reverse an Administrative Law Judge’s finding concerning the employer’s questioning of an employee.  Prior to the strike, one of the terminated employees’ supervisors requested that the employee come to his office, at which point the supervisor asked the employee what he wanted.  The employee responded that he wanted “an increase” and was immediately terminated by the supervisor.  On these facts, the NLRB found a separate violation of the NLRA under Section 8(a)(1) because it determined that the questioning was coercive, separate and apart from the actual termination of the employee.

Board case law surrounding the unfair labor practice of coercive questioning/solicitation became revitalized this past July when the Board reversed almost 30 years of precedent with its decision in Albertson’s, LLC.  Under Section 8(a)(1) of the NLRA, an employer is not allowed to interfere with, restrain, or coerce employees in the exercise of their rights.  The Board has found that an employer’s solicitation of employee grievances can be considered coercive because it “raises an inference that the employer is promising to remedy the grievances” and/or may convey the employer’s displeasure with the employee, as was the case in Greater Omaha Packing, Co.  This treatment of employer questioning has a long-standing basis in Board precedent, however, the Board reversed its precedent in Albertson’s, LLC by finding that such questioning violates the NLRA even if an employee fails to state a grievance or remains silent.  Therefore, the Board in Greater Omaha Packing, Co, reinforced its treatment of grievance solicitation and expanded the possible bases for a violation of Section 8(a)(1).

Although the affected employee in Greater Omaha Packing, Co. did express a grievance in response to his supervisor’s solicitation, the decision is significant in its warning to the Board.  Member Johnson concurred in the decision, but warned that the Board should not take this so far as to adopt a “gag rule” that would discourage employers from discussing the merits of workplace complaints with an aggrieved employee, specifically where those employees are unrepresented.  He asserted that there is actually nothing “more conducive to labor peace” than an employer and aggrieved employee being able to meet and discuss their views as to what is fair and to determine what the employees want.

Management Missives

These recent cases are important because employers must be aware that their ability to solicit grievances directly from an employee is limited by Section 8(a)(1) of the NLRA.  Even straightforward questions such as “what do you want,” may be interpreted by the Board as coercive based on the context of the question and its implications from the perspective of the employee. 

An employer may avoid being perceived as using coercion if they:

  • Establish a policy and practice of open dialogue with employees before and unrelated to union or other protected activity;
  • make certain participation by an employee is completely voluntary;
  • engage in a real discussion with the employee about the opposing views and possible solutions;
  • inform the employee there will be no reprisal based on the employee’s participation in the discussion;
  • avoid linking any discussion with current union or other protected activity, and
  • take steps to address some of the concerns raised by the employee as a part of the regular open dialogue practice. 

By Maxine Neuhauser

As we have discussed on a number of prior occasions (Fifth Circuit Rejects The NLRB’s D.R. Horton Decision On Arbitration Waivers; Obama’s Labor Agenda Continues to Advance – Griffin Confirmed as NLRB GC; NLRB Administrative Law Judge Finds Medical Center’s Technology Usage Policies Violated Employees Rights Under the National Labor Relations Act. and Labor Law vs. Common Sense – NLRB Continues Targeting Non-Union Employers and Common Sense) the National Labor Relations Board (“NLRB” ) and its Administrative Law Judges continue to find that employment policies designed to provide protection to employers and employees may be unfair labor practices (ULPs) under the Act.

In Boch Imports, Inc. d.b.a. Boch Honda and International Ass’n of Machinists, Case No. 1-CA-83551 (Jan. 13, 2014), the ALJ ruled that multiple provisions in the employee handbook of a retail automobile dealership (“Boch” or “Company”) constituted ULPs in violation of of the National Labor Relations Act (“Act”) because they impinged on the employees’ rights to discuss their conditions of employment and to engage in concerted activities.  The ALJ targeted the following policies:

  • Confidential  and Proprietary Information. This provision included a prohibition barring employees “from disclosing or authorizing the disclosure or use of any “Confidential Information,” including “compensation structures and incentive programs.”
  • Discourtesy. This provision included a prohibition of employees ,“use of profanity or disrespect to a … co-worker  or engaging in any activity which could harm the image of the Company. . .      .”
  • Inquiries Concerning Employees. This provision included a  prohibition barring employees from providing, “personal information of any      nature concerning another employee (including references) to any outside      source unless approved by the Human Resources Department and authorized,      in writing by the employee . . . .”
  • Social Media Policy.This policy included provisions  that:
    •  prohibited employees from disclosing any information about the Company’s employees or customers;
    •  required employees to identify themselves when posting comments about the Company or its business;
    •  prohibited employees from referring to the Company in postings that would negatively impact the Company’s reputation or brand;
    •  prohibited employees from engaging in activities that could have a negative effect on the Company, even if occurring off Company property or off the clock;
    •  prohibited employees from using the Company’s logos for any reason;
    •  prohibited employees from posting videos or photos recorded in the workplace;
    •  required employees to contact the Company’s Vice President of Operations before making statements to the media;
    •  required employees to provide the Company with access to any commentary posted by employees on social media sites; and
    •  required employees to write and post respectfully.
  • Solicitation and Distribution. This provision restricted non-employees from soliciting and distributing literature or other materials at any time on property adjacent to the Company’s premises.
  • Dress Code and Personnel Hygiene. This provision barred, “Employees who have contact with the public” from wearing “pins, insignias, or other message clothing which are not provided to them by the Company . . . .”

The ALJ upheld the ban on the wearing of pins because of the potential for pins to cause accidental damage to vehicles (e.g., by falling into an engine or scratching a vehicle’s interior or exterior). The ALJ ruled, however, that the blanket prohibition to insignias on clothing constituted a ULP because customer exposure to insignias, “alone, is not a special circumstance allowing the employer to prohibit the display.” Rather, “There are numerous factors that need to be weighed to determine whether a displayed item constitutes special circumstances and should be permitted, including size and the message thereon.”

The Boch decision addresses many, but not all, of the employer policies that the NLRB has been targeting recently. In December 2013, for example, an ALJ found that an employer’s “No Gossip Policy” constituted a ULP. In Laurus Technical Institute and Joslyn Henderson, Case 10-CA-093934 (Dec. 11, 2013). The employer, a school, had fired an employee for violating the school’s no-gossip policy, which defined “gossip” as including:

  • talking about a person’s professional life without his/her supervisor present;
  • negative, or untrue, or disparaging comments or criticisms of another person or persons; and
  • creating, sharing, or repeating a rumor about another person.

The ALJ in that case had no difficulty in finding that the no-gossip policy was overbroad and that the employee’s discharge for violating the policy likewise violated the Act.

The Boch and Laurus decisions illustrate the increased scrutiny that the NLRB has been giving to employee handbooks over the past few years. These and other recent cases show that the NLRB is taking aim at employee handbooks and broadly interpreting whether an employer’s policies and prohibitions would reasonably tend to chill employees in the exercise of their statutory rights under the Act. Accordingly, employers that have not done so recently may wish to consider a handbook review.

 

 

By : Lisa M. Watanabe

On December 3, 2013, the Fifth Circuit issued its much anticipated decision overturning the National Labor Relations Board’s (“NLRB”) controversial D.R. Horton, Inc. decision invalidating class action waivers and holding that requiring employees to sign such waivers violated employees’ rights under the National Labor Relations Act (the “Act”).  As previously reported in our earlier Act Now Advisory, the NLRB’s January 3, 2012 decision held that home builder D.R. Horton, Inc. (“D.R. Horton”) unlawfully interfered with  employees’ Section 7 right to engage in concerted action for mutual aid or protection by requiring them to sign an arbitration agreement that prohibited class or collective claims in a judicial or arbitral forum.  Specifically, a two member NLRB panel held that the arbitration agreement violated the Act by (1) implicitly interfering with an employee’s right to file charges with the NLRB; and (2) by requiring employees to waive their right to joint, class or collective employment related actions.  

Since then, several federal district courts as well as an Administrative Law Judge have refused to follow the NLRB’s decision in D.R. Horton.

The Fifth Circuit has followed their lead and rejected the NLRB’s ban on class action waivers but nevertheless enforced the NLRB’s order for D.R. Horton to revise the agreement to clarify it does not preclude employees from filing unfair labor practice charges with the NLRB when they believe their Section 7 rights have been violated. Here is a breakdown of the Fifth Circuit’s 30-page decision:

Fifth Circuit Punts On Issues Regarding NLRB Composition

The Fifth Circuit’s opinion began by rejecting D.R. Horton’s argument that the NLRB lacked a quorum for its January 2012 decision, essentially punting on the issue finding D.R. Horton did not timely challenge the appointment of former NLRB Member Craig Becker.

An Arbitration Agreement Which Implies An Employee Cannot File A Charge Violates Section 8(a)(1)

As noted above, the NLRB previously ruled that D.R. Horton’s mandatory arbitration agreement violated Section 8(a)(1) of the Act because its arbitration provision included language that could lead an employee to reasonably believe he/she was prohibited from filing unfair labor practices claims with the NLRB.  The Fifth Circuit concluded that the agreement could be reasonably misconstrued in this manner.  Among other things, D.R. Horton’s agreement did not identify unfair labor practice claims as an exception to arbitration and used ambiguous and inconsistent language that referred to court actions in one sentence and agency actions in another.  Therefore, the Fifth Circuit affirmed the finding that requiring employees to sign the agreement violated their Section 7 rights and Section 8(a)(1) of the Act in this limited regard and, therefore, the NLRB was entitled to order D.R. Horton to revise its agreement to make this clear.

The Act Does Not Prohibit An Employer From Having Employees Sign Class Waivers

According to the NLRB, D.R. Horton’s mandatory arbitration agreement also interfered with an employee’s substantive right under Section 7 of the Act to engage in “concerted” action for “mutual aid or protection” by finding the agreement separately violated Section 8(a)(1) by requiring employees to waive their right to pursue class or collective actions.  The Fifth Circuit, however, rejected the NLRB’s aggressive interpretation and recognized the absence of any authority to support a finding that Section 7 prohibited class action waivers. 

Moreover, the Fifth Circuit disagreed with the NLRB’s conclusion that invaliding class action waivers would not conflict with the Federal Arbitration Act (“FAA”).  The NLRB took the position that the “policy behind the [the Act] trumpeted the different policy considerations in the FAA that supported enforcement of arbitration agreements.” The Fifth Circuit evaluated the NLRB’s position by analyzing the following two exceptions to the FAA’s general rule that arbitration agreements must be enforced according to their own terms: (a) the FAA’s “savings” clause which invalidates arbitration agreements only “upon such grounds as exist at law or in equity for the revocation of any contract;” and (b) a “congressional command” to override the FAA.   The Fifth Circuit concluded that the “savings” clause was inapplicable in this case based on public policy considerations discussed by the U.S. Supreme Court in AT&T Mobility v. Concepcion, i.e., a ban on class action waivers would discourage individual arbitration and necessitate class action court procedures that would be inconsistent with the FAA.  The Fifth Court further held there was no text or legislative history in the Act that contained a “congressional demand” to override the FAA.

Management Missives

  • Employers should feel more comfortable in adopting and enforcing class action waivers based on the Fifth Circuit and other circuit courts’ decisions. 
  • Despite this recent decision, employers should be aware that the NLRB is not likely to change its position on class action waivers any time soon based on the doctrine of non-acquiescence.  Under this doctrine, the NLRB does not have to “acquiesce” to circuit or district court decisions because it exercises national jurisdiction over the application and enforcement of the Act. Rather, the NLRB is likely to argue that D.R. Horton is good law until the U.S. Supreme Court holds otherwise.
  • An agreement that prohibits class or collective claims may be enforceable; however, the language of the agreement may violate Section 7, and constitute an unfair labor practice under Section 8(a)(1), if it’s not clear that it does not constitute a waiver of an employee’s right to file unfair labor practices claims.  For this reason, employers should review the precise wording of their agreements to ensure they do not infringe upon an employee’s Section 7 rights.
  • Employers should contact counsel to determine whether their jurisdiction permits them to revise their arbitration agreements without consideration.

By Adam C. Abrahms, Steven M. Swirsky, and D. Martin Stanberry

On Tuesday, August 20th, in an opinion that follows in the wake of Noel Canning, United States District Judge Benjamin H. Settle dismissed an injunction petition filed by Ronald Hooks, a Regional Director  of the National Labor Relations Board, on the grounds that he was “without power” to issue the underlying unfair labor practice complaint.

The Regional Director had initially filed the petition with the District Court in June in an effort to obtain a temporary injunction that would, among other things, have prevented Kitsap Tenant Support Services, a home healthcare provider, from disciplining or terminating employees pending the resolution of complaint alleging a host of unfair labor practices.

The Court however, dismissed the Regional Director’s petition, ruling that the NLRB had no legal power to issue the underlying complaint alleging violations of the NLRA.  Not only did the Judge follow Noel Canning and its progeny by ruling the Board (as constituted at the time) lacked a properly constituted quorum but Judge Settle went even further by ruling the Board lacked a properly authorized General Counsel.

In a ruling which could potentially paralyze the NLRB, Judge Settle held that Acting General Counsel Lafe Solomon’s appointment to the post had been invalid, and consequently, that he could not have lawfully delegated the authority to request a temporary injunction to the Regional Director.  Specifically, Solomon was never confirmed by the Senate but was serving in the “Acting” capacity pursuant to President Obama’s appointment under the Federal Vacancies Reform Act (FVRA).  The Judge ruled, however, that this appointment was invalid because Solomon failed to meet the very specific requirements which would permit an appointment under the FVRA – namely he was not a first assistant to the departing General Counsel.

The decision is an exciting one because it raises interesting procedural questions affecting the operations of the Board. It remains to be seen what the administrative law judge tasked with adjudicating the dispute will do. Will he or she acknowledge that Regional Director Hooks lacked authority to issue the Complaint as dismiss it on such grounds? Or will the adjudication proceed as though Judge Settle’s decision does not affect agency operations? This issue is further complicated by the fact that the Board had already denied a motion to dismiss filed by Kitsap earlier this year on grounds similar to those relied upon by Judge Settle. If the administrative law judge refuses to proceed however, then it would seem that he or she would have no choice but to refuse to hear any complaints issued by the Regional Director during the period in which the Board lacked a valid quorum let alone all complaints issued under the authority of Solomon who has served as the Acting General Counsel since June 2010.

Beyond this case, the theory advanced in Kitsap could have wide-ranging implications that render the recent compromise to confirm a five member Board virtually meaningless.  Without a properly appointed General Counsel can the Agency continue to issue complaints?  Are the complaints issued under Solomon all invalid?  What about appeals authorized or being responded to under the direction of Solomon?  What about the appointment of Regional Directors – were those appointed under Solomon invalid and are the actions of such Regional Director’s similarly without authority?

Likewise, where does these leave the General Counsel’s office?  As noted here the President has appointed Robert Griffin to replace Solomon but Griffin likely would face stiff opposition in the Senate.  The prior conventional wisdom was Obama could use the FVRA to make Griffin the Acting General Counsel but under Kitsap Griffin also would not be qualified for such an interim appointment.  This could leave the Agency without “authority to act” until the Senate confirms a new General Counsel or the President appoints an Acting General Counsel that meets the FVRA criteria.

Certainly, this groundbreaking decision leaves many more questions than it provides answers.

And lest we forget, like every other decision which has relied upon Noel Canning, the impact of Judge Settle’s ruling may hang in the balance until the Supreme Court hears Noel Canning next term. Until that time however, rest assured that attorneys will be citing Kitsap at Board hearings and in court rooms across the country.

Management Missives

  • Employers facing unfair labor practice charges should consider preserving the issue that the NLRB is without authority to issue a complaint (seek an injunction or take other action which requires the General Counsel’s approval).
  • Stay tuned!