A featured story on Employment Law This Week is the NLRB’s crackdown on employers restricting the content of personal emails sent through the employer’s email system.

In 2014, the NLRB ruled that employees who have email through their employers can use that email to communicate about union-related issues. In a recent election at Blommer Chocolate Company, the union claimed that company email rules interfered with the voting process. Employees were allowed to use the company’s email system for personal emails, but were prohibited from expressing personal opinions in their emails to coworkers. The NLRB found that this rule interfered with elections and that a second election should occur. One of the questions that arises from this ruling is the issue of where the line is between what employers can prohibit – harassment, for example – and what they cannot.

View the episode below or read more about the NLRB’s ruling in an earlier blog post.

Unions no longer will need to gather employees’ signatures on authorization cards before they can file a petition with the National Labor Relations Board (“NLRB” or “Board”) for a representation election.  General Counsel Richard F. Griffin, Jr. has issued Memorandum 15-08 (pdf) announcing that effective immediately unions filing petitions will be allowed to submit and the Board will “accept electronic signatures in support of a showing of interest if the Board’s traditional evidentiary standards are satisfied.”

Acceptance of Electronic Signatures Flows from the Amended Election Rules

As the General Counsel points out, when the Board voted to adopt its Amended Election Rules in December 2014, it made clear that additional changes to the election procedures and rules were likely.  The Board held at that time that its regulations, as they then existed, were “sufficient to permit the use of electronic signatures” to form the basis for the 30% showing of interest required when a petition for an election is filed.  At that time the Board assigned to the General Counsel the responsibility “to determine whether, when and how electronic signatures can be practically accepted” and to “issue guidance on the matter.”

The Minimum Requirements for Electronic Signatures

For an electronic signature to be acceptable and considered authentic and reliable by the Board’s Regional Offices, the General Counsel has ruled that it must include the following information

  1. the signer’s name;
  2. the signer’s email address or other known contact information (e.g., social media account);
  3. the signer’s telephone number;
  4. the language to which the signer has agreed (e.g., that the signer wishes to be represented by ABC Union for purposes of collective bargaining or no longer wishes to be represented by ABC Union for purposes of collective bargaining);
  5. the date the electronic signature was submitted; and,
  6. the name of the employer of the employee

The Memorandum also explains the procedures for submission of a showing of interest based on electronic signatures as follows:

A party submitting electronic digital signatures must submit a declaration (1) identifying what electronic signature technology was used and explaining how its controls ensure: (i) that the electronic signature is that of the signatory employee, and (ii) that the employee herself signed the document; and (2) that the electronically transmitted information regarding what and when the employees signed is the same information seen and signed by the employees.3

When the electronic signature technology being used does not support digital signatures that lend itself to verification as described in paragraph 2, above, the submitting party must submit evidence that, after the electronic signature was obtained, the submitting party promptly transmitted a communication stating and confirming all the information listed in la through lf above (the “Confirmation Transmission”).

  1. The Confirmation Transmission must be sent to an individual account (i.e., email address, text message via mobile phone, social media account, etc.) provided by the signer.
  2. If any responses to the Confirmation Transmission are received by the time of submission to the NLRB of the showing of interest to support a petition, those responses must also be provided to the NLRB.
  3. Submissions supported by electronic signature may include other information such as work location, classification, home address, and additional telephone numbers, but may not contain dates of birth, social security numbers, or other sensitive personal identifiers. Submissions with sensitive personal identifiers will not be accepted and will be returned to the petitioner. They will not be accepted until personal identifiers are redacted

Questions Remain About Authentication

GC Memorandum 15-08 lays out the General Counsel’s instructions to the Board’s Regional Offices and to unions seeking to file elections under the new rules as to the nuts and bolts of collecting and verifying electronic signatures in place of actual signatures on cards that have been the norm since the NLRB began conducting elections 80 years ago and appears on its face to establish procedures for the agency’s employees to follow to verify the authenticity of electronic signatures submitted in support of a petition for an election, as anyone who has had even cursory experience with the Board’s handling of a union’s showing of interest knows, employers have little if any opportunity to meaningfully challenge a showing of interest even where it has substantial doubts as to its authenticity.  While the processes described in the Memorandum appear robust on their face, the fact remains that an employer or other interested party will never really know whether and to what degree the processes are being followed.

What Allowing Electronic Signatures Means

Although the General Counsel and the Board suggest that the decision to allow use of electronic signatures for a showing of interest is not significant and is consistent with the Board’s opinion that it is Congress’s intent that “that Federal agencies, including the Board, accept and use electronic forms and signatures, when practicable—i.e., when there is a cost-effective way of ensuring the authenticity of the electronic form and electronic signature given the sensitivity of the activity at issue, here the showing of interest,” it would be a mistake to view this development in isolation.

Rather, it should be seen as yet another demonstration of the fact that the Board and the General Counsel share the view that the purpose of the Act and the agency is to encourage and promote collective bargaining and make it easier for employees to unionize. The decision to allow electronic signatures should be viewed alongside the Board’s decision last week in Browning Ferris Industries jettisoning its long standing test for determining joint employer status for a that looked to whether the entity claimed to be a joint employer had exercised direct and immediate control over the terms and conditions of employment of the workers in question, for a new far looser test that simply  asks whether the purported joint-employer possesses the authority to control the terms and conditions of employment, either directly or indirectly.”. As the Board puts it, “reserved authority to control terms and conditions of employment, even if not exercised, is clearly relevant to the joint-employment inquiry.”

Given the lowering of the bar for a union to obtain an election that is augured by the move to accept electronic signatures, effective immediately, we can certainly expect a continued increase in organizing and the filing of petitions, followed by ever faster elections.

Evidence continues to mount as to how much more quickly representation elections are being held since the National Labor Relations Board’s (“NLRB” or “Board”) Amended Representation Election Rules that took effect on April 14, 2015. Melanie Trottman of The Wall Street Journal has crunched the data and reports today that the median number of days between the filing of a representation petition and the day on which employees vote has fallen to 23 days in uncontested elections where the employer and union stipulated to the terms for the vote, and 25 days in the 20 contested cases in which the election was directed by the Board after a hearing.  In comparison, during the Board’s 2014 fiscal year, the last full year before the new rules took effect, the median time was 38 days for all elections and 59 days in contested elections.

While challenges were filed to the Amended Election Rules by business groups, the two District Courts that have considered arguments that the NLRB exceeded its authority when it adopted the new Rules last December in each case the challenge was dismissed.   Both cases are being appealed.

Meanwhile, employers and unions alike continue to await the Board’s decisions in two other cases likely to have major impacts on organizing and representation case law. In Browning-Ferris, the Board is considering whether to adopt standard for determining joint-employer status that would make it much easier for unions to claim that separate businesses are joint employers.  In Miller & Anderson  the Board will decide whether it will continue to follow its decision in Oakwood Care Center (pdf), which disallowed inclusion of solely employed employees and jointly employed employees in the same unit absent consent of both employers, and if not, whether the Board should return to the holding of M.B. Sturgis, Inc. (pdf), which permits the inclusion of both solely and jointly employed employees in the same unit without the consent of the employers.

While most Americans were preparing for their Thanksgiving Feast, President Obama showed his thanks last week to Big Labor and its hundreds of millions in campaign contributions by ignominiously allowing his recently confirmed Labor Secretary to move forward his DOL’s long pending radical proposal to dramatically change the decades old “Persuader Regulations”.  The Proposed Rule is designed to give unions both an organizing and bargaining advantage by significantly restricting the right and ability of employers to obtain legal counsel and lawfully communicate with employees about labor matters.

Unbalance the Playing Field – Silence the Lawyers 

As anyone with a cursory familiarity with Dick the Butcher’s famous quote “The first thing we do, let’s kill all the lawyers,” from Shakespeare’s ”Henry VI,” is aware, the true expression behind the statement was that in order to destroy liberty and conquer the opposition, one must first deprive the opposition of their legal rights, including their ability to obtain the advice and support of lawyers.   Playing the role of Dick, the DOL seeks to butcher the rights of employers by revising the regulations to substantially interfere with their attorney-client relationships.

The proposed regulations drew the immediate criticism of everyone from Senators, to both employer and employee rights groups, to the American Bar Association raising serious ethical, economic and practical concerns.

Although the regulations were originally proposed in June 2011 with an extended comment period closing in September 2011, they were seemingly on the back burner as the President focused on reelection, an aggressive yet embattled NLRB and the launch of Obamacare.  However, now with his NLRB at full strength , without any fanfare, while America was distracted last Tuesday, the DOL released its Fall Rule List where for the first time it disclosed that the controversial regulations will be moving forward and a Final Rule will be released in March 2014.

The Proper Historic Advice Exemption

The Rule radically alters the regulations implementing the “Advice Exemption” to the Labor Management Reporting and Disclosure Act of 1959 (“LMRDA.”).  The LMRDA requires disclosure of an employer’s use of professional persuaders or middlemen who would communicate with employees on their behalf and attempt to persuade them against unionization or otherwise to support the employer’s position. Recognizing the proper  role for labor counsel and the attorney-client privilege, Section 203(c) of the LMRDA provided a broad “Advice Exemption” from the disclosure requirements.

For over 50 years this Advice Exemption has been properly, effectively and simply administered by distinguishing direct communications with employees from an attorney’s counsel to an employer-client with communications, drafting, rewrites or recommendations concerning such communications being exempt from LMRDA’s disclosure requirements and recognized as protected attorney-client communications and attorney work product.  The existing regulations have provided a clear line of demarkation; as long an employer’s lawyer or consultant did not communicate directly with employees and as long as the employer remained free to accept or reject any draft materials prepared  by them (speeches, letters, written communications, etc.), they were covered by the Advice Exemption and not subject to disclosure or reporting by the employer or the counselor.

The Proposed Rule Would Eviscerate the Advice Exemption

The new Proposed Rule intentionally eviscerates any meaningful use of the Advice Exemption.  As proposed the rule provides:

In contrast to advice, “persuader activity” refers to a consultant’s providing material or communications to, or engaging in other actions, conduct or communications on behalf of an employer that, in whole or in part, have the object directly or indirectly to persuade employees concerning their rights to organize or bargain collectively.

76 Fed. Reg. 36182 (emphasis added).

The bolded sections above make it clear that the Advice Exemption would be swallowed up by the new expansive definition of  persuader activity as now “other actions” could include discussion regarding strategy, reviews of employer drafts and myriad other ways labor attorneys currently aid their clients.  Likewise, the “in part’ and “indirectly” aspects of the definition may apply to essentially any meaningful advice or counsel provided by labor counsel as a labor counsel is typically not doing his/her job well if they are not considering both the legal and practical implications of their advice.

Moreover, if even only a portion of what an employer has its labor attorney working on in part and indirectly concerns this new expansive definition of persuader activity the Proposed Rule would require disclosure of who their advisors are, how much they paid them, the area(s) they obtained their assistance on and a specific description of each task they obtained assistance on.

Final Rule Could Interfere With Employer’s Standard Labor Needs

If the Final Rule does not deviate from the Proposed Rule it could mean the following typical areas of labor attorney assistance may lose the attorney-client confidentiality employers have become accustom to rely on:

  • Advice on union avoidance strategy
  • Supervisory training on the NLRA
  • Advice on or draft pre-election communications
  • Advice on or draft pre-election speeches
  • Advice on or draft communications about union negotiations
  • Advice on or draft strike communications
  • Advice on or draft communications to unions or employees regarding grievances, information requests, and other contract administration issues
  • Review of or draft Employee Handbooks, Policies and Agreement (whether or not the employer is unionized)
  • Review of or draft employee communications on any issues (bonuses, policies, etc)

The Proposed Rule may not kill lawyers but it certainly is aimed at killing the attorney-client privilege and chilling employers’ ability to communicate lawfully with their employees.  This is expected spawn numerous legal challenges from a wide range of groups  but also vex employers as those challenges are litigated.

Management Memo will keep readers updated as the Final Rule comes closer and will provide Management Missives on how to cope should the Final Rule resemble the Proposed Rule.

 

 

by: Adam C. Abrahms, Kara M. MacielEvan J. Spelfogel and Steven M. Swirsky

In a time when employers do not receive much good news out of Washington D.C., the U.S. Court of Appeals for the D.C. Circuit may have given some very welcome relief to employers facing issues before the National Labor Relations Board (“NLRB” or “the Board”) in light of recent precedent reversing NLRB decisions.  Quoting from early Constitutional authority including The Federalist Papers and Marbury v. Madison, the D.C. Circuit ruled today that President Obama’s “Recess Appointments” of three new NLRB members in January 2012 were unconstitutional and as a result the Board lacked any constitutional authority to act since that time.  Noel Canning v. NLRB

In a unanimous panel decision written by Chief Judge Sentelle that The New York Times called “an embarrassing setback for the President,” the Court analyzed two constitutional questions, both focusing on whether the Board lacked authority to act because three Board members were never validly appointed. The first issue examined whether the Senate was “in Recess” when the appointments were made, and the second whether the vacancies these three members purportedly filled “happen[ed] during the Recess of the Senate,” as required for recess appointments under the Constitution.

As to the first issue, after dissecting the Board’s arguments, the Court ruled that “the Recess” referred to in the Constitution to permit a presidential recess appointment is limited to the Recess between Sessions of the Senate and does not include brief adjournments or other intrasession recesses.  Likewise, the Court ruled that the power to appoint during the Recess was limited and could only be issued if the vacancy both first arises (i.e, “happened”) during the Recess and also was filled during that Recess.

Noting that the Board conceded on appeal that the appointments at issue were not made during the intersession Recess because the President made them on January 4, 2012, after Congress began a new Session on January 3, 2012 and while that new Session continued, the Court held that “[c]onsidering the text, history and structure of the Constitution, these appointments were invalid from their inception.”

The Court also found, and the parties did not dispute, that based on the Supreme Court’s ruling in New Process Steel, L.P. v. NLRB, if the vacancies were not properly and lawfully filled, the Board would only be left with two valid members and would therefore be left without a quorum to act.  Consequently, the Court ruled conclusively that the Board’s order in the underlying case was “outside the orbit of the authority of the Board because the Board had no authority to issue any order [because] it had no quorum,” stating that the “lack of quorum raise questions that go to the very power of the Board to act and implicate[s] fundamental separation of powers concerns.”

The Court further rejected any argument that its ruling otherwise would make government inefficient through an ineffectual federal agency, stating: “The power of a written constitution lies in its words. It is those words that were adopted by the people.  When those words speak clearly, it is not up to us to depart from their meaning in favor of our own concept of efficiency, convenience, or facilitation of the functions of government.”

In short, the Court vacated the Board’s order, finding that the company’s “understanding of the constitutional provision is correct, and the Board’s is wrong. The Board had no quorum, and its order is void.”

This decision, which certainly will be appealed to the U.S. Supreme Court, provides much anticipated relief to business groups and employers who have been struggling with the aggressive, pro-labor agenda of the current Board. It also leaves the Board with only one validly appointed member, Chairman Mark Pearce, whose term is set to expire in August 2013, effectively shutting the Board down with respect to any ongoing activity. That’s good news for employers who were anticipating new regulations on the speedy election rule or the notice posting requirement. In addition, for those Board rulings that have been issued since January 4, 2012, there is a strong argument that those decisions are similarly invalid, certainly if those cases are pending within the jurisdiction of the D.C. Circuit.

WHAT EMPLOYERS SHOULD DO NOW

All employers with cases pending before the Board or on appeal should review this decision closely with legal counsel to examine its impact on current cases and potentially cases recently decided but yet appealed. NLRB Chairman Mark Pearce issued a statement today in response to and disagreeing with the Court’s decision, “the Board will continue to perform our statutory duties and issue decisions.”

Epstein Becker Green will follow future developments.

The White House has announced that John Ring, co-chair of the Labor & Employment Law practice at a management side law firm, is the President’s choice for the vacancy on the National Labor Relations Board created last month when Board Chairman Phillip Miscimarra completed his term on December 16, 2017. Mr. Ring’s nomination to the Board is subject to Senate confirmation. No date has been set for hearings on the nomination.

The Board is Now Split 2-2

Since Mr. Miscimarra’s departure from the Board, where he was part of a 3-2 Republican majority following the confirmation of Marvin Kaplan, who has now been named Chairman, and William Emanuel, the Board has been composed of 2 Republicans and 2 Democrats, Members Mark Pearce and Lauren McFerran, both appointed by President Obama.

When Mr. Ring is Confirmed A New Republican Majority is Expected to Continue to Revisit Obama Era Decisions Overruling Long Standing Precedents  

During December 2017, the Board issued a number of significant decisions, overruling Obama-era decisions including overturning Browning-Ferris Industries and returning to a more traditional test for determining whether two businesses are joint-employers, adopting new standards for determining whether facially neutral employer policies and handbooks unlawfully interfere with employees’ Section 7 rights, overturning  which opened the doors to organizing in so-called micro-units, and other decisions seen as tilting the Board’s administration and interpretation of the National Labor Relations Act in favor of unions.  Since Member Miscimarra’s departure however, the Board has been split between 2 Democrats and 2 Republicans, resulting in an inability to form a majority to reverse Obama era holdings.  Provided Mr. Ring is confirmed, the Board will once again return to a 3-2 Republican majority.

There Are a Significant Number of Important Issues the Board’s General Counsel Plans to Ask the Board to Reexamine Once Member Ring Is Confirmed and a Republican Majority Is in Place

In December, General Counsel Peter B. Robb issued GC Memorandum 18-02, Mandatory Submissions to Advice, identifying those issues that he had identified as ones the Board’s Regional Offices should refer to the Division of Advice in the Office of the General Counsel.  These include “cases that involve significant legal issues,” including “cases over the last eight years that overruled precedent and involved one or more dissents, cases involving issues that the Board has not decided, and any other cases that the Region believes will be of importance to the General Counsel.”

The Mandatory Submissions Memo identifies a broad swath of recent Board precedents and topics that must be submitted to Advice, where there is a good chance the new General Counsel will ask the Board to return to pre-Obama Board interpretations of the Act and practices.  These include:

  • Joint –Employer – Browning-Ferris Industries’ holding that joint-employer relationships can be found based on “evidence of indirect or potential control over the working conditions of another employer’s employees.
  • Use of Employer’s Email Systems for Union Activity– The Mandatory Submission Memo calls for the submission to Advice of all cases involving claims based on Purple Communications’ holding that “employees have a presumptive right to use their employer’s email systems to engage in Section 7 activities. The Memo also explains that the new General Counsel is effectively overruling prior Advice Memoranda in which his predecessor noted his initiative “to extend Purple Communications to other [employer owned] electronic systems,” such as the internet, phones and instant messaging systems that employees regularly use in the course of their work.
  • Cases In Which Policies in Employee Handbooks Were Found to Interfere With Section 7 Rights – The Mandatory Submissions Memo indicates the General Counsel will likely be asking the Board to reexamine a broad range of holdings in which policies and conduct standards contained in handbooks and work rules were found to interfere with employees Section 7 rights, in many cases in non-union workplaces. These will include cases finding prohibiting “’disrespectful’ conduct,’ rules prohibiting the use of cameras and recording devices in the workplace, and policies concerning confidentiality in investigations.
  • Cases Involving the Standard For Determining Whether Employees Would Find a Work Rule or Policy to Unlawfully Interfere With Section 7 Rights – Which Board Member Miscimarra – One of the areas in which (then) NLRB Chairman Philip Miscimarra most frequently disagreed with his colleagues on the Obama Board was over the Board’s use of the Lutheran Heritage test, which he repeatedly described as a test that “defies common sense.” Look for the new General Counsel to ask the Board to adopt the standard which (then) Chairman Miscimarra proposed in his now legendary dissent in William Beaumont Hospital.
  • Cases in Which The Obama Board Expanded the Definition of Concerted Activity For Mutual Aid and Protection – In cases such as Fresh & Easy Neighborhood Market the Obama Board expanded the circumstances in which it would find an employee’s actions to be protected, holding that an employee’s actions involving a matter in which “only one employee had an immediate stake in the outcome to be protected.” Such cases must now be referred to Advice and it can be anticipated the General Counsel will ask the Board to reexamine.
  • Cases involving “Obscene, Vulgar or Other Highly Inappropriate Conduct”- The new General Counsel will be considering whether the Board went too far in holding in cases such as Pier Sixty, LLC that even where employees engaged in expletive-laden Facebook post – which hurled vulgar attacks at his manager, his manager’s mother and his family, the employee’s actions remained protected by the Act.

The Mandatory Submissions Memo also identifies each of the following as issues that must be submitted to Advice:

  • Work stoppages on employer premises;
  • The circumstances in which employers may restrict access to employer property at times when employees are off duty;
  • The recent expansion of Weingarten rights in the context of employer-mandated drug testing;
  • Employer obligations and rights with respect to wage increases during bargaining, where the increases are provided to unrepresented employees but not the employees whose wages and increases are being bargained;
  • Claims by unions that employers are successors by virtue of their hiring a predecessor’s employees as required by local laws;
  • The circumstances in which a new employer will be found to be a “perfectly clear successor” obligated to follow its predecessor’s terms and conditions rather than being free to set new terms and conditions for those it hires from a predecessor’s workforce;
  • Whether an employer must disclose and produce witness statements prior to arbitrations; and
  • Whether employers will be required to continue to honor contractual dues check off provisions after a collective bargaining agreement expires.

The New Majority Can Be Expected to Examine these and Other Questions

It is expected that once Mr. Ring is confirmed and the new majority is in place, the Board will be reconsidering existing precedents concerning these and other issues and looking at the 2014 Amended Election Rules adopted by the Obama Board

In footnotes to two recent unpublished NLRB decisions,  NLRB Chairman Marvin Kaplan, who was named to that role by the President following the December 16, 2017 conclusion of Philip Miscimarra’s term, and Member William Emanuel offered interested observers an indication of two additional areas of Board law that they believe warrant reconsideration once Mr. Miscimarra’s replacement is nominated and confirmed, and the Board returns to a 3-2 Republican majority.

While unpublished Board decisions “are not intended or appropriate for publication and are not binding precedent, except with respect to the parties in the specific case,” as in the two cases discussed below, can offer important insights into what Board members are thinking about significant matters, and therefore can give readers an idea what to expect when particular issues come before the Board in future cases. In this regard, they, like the General Counsel’s recent Memorandum on Mandatory Submissions to Advice, give meaningful guidance to employers and advocates.

The Board is Likely to Revisit and Move Away from Obama Era Holdings re Confidentiality in Settlement Agreements

During the past eight years, one of the signatures of the Obama Board was its effort to expand the application of the National Labor Relations Act’s relevance to non-union workplaces. One aspect of this was a series of Board decisions finding that when employers sought to include broad confidentiality provisions in private settlement and separation agreements with employees that restricted the employees’ ability to disclose the terms of such settlements to others, including employees, they were impermissibly restricting employees’ ability to act together with other employees concerning terms and conditions of employment.

In a footnote to a December 27, 2017 unpublished decision denying a motion for summary judgment in an unfair labor practice complaint issued against Baylor University School of Medicine, Chairman Kaplan and Member Emanuel wrote as follows:

Members Emanuel and Kaplan agree that there are genuine issues of material fact warranting a hearing and that the Respondent is not entitled to judgment as a matter of law.

However, they believe that, to the extent not already permitted under Board precedent, the legality of confidential severance agreements for former employees should be reconsidered

While the Baylor University decision does not answer the question of when and in what circumstances the Board will recognize an employer’s right to lawfully require confidentiality in settlement agreements and other agreements that where they would have been found to interfere with employees’ Section 7 rights, the tea leaves more than suggest a change in Board law as soon as the Board returns to five members and an appropriate case is before the new majority.

The Board is Likely to Change How It Interprets and Applies the Blocking Charge Rule

Another important area that Chairman Kaplan and Member Emanuel indicated they want to see the Board re-examine is a Board doctrine commonly referred to as the Blocking Charge Rule.

Under the Board’s 2014 Amended Election Rules, the NLRB holds that when an unfair labor practice charge is filed during the pendency of an representation petition, the Board will not conduct the election if the party that has filed the charge, typically the petitioning union, or in the case of a decertification petition, the incumbent union facing a vote to decertify it as the representative, if the charge alleges actions by the employer that the union claims prevent or interfere with a fair election. Many observers believe that such blocking charges are used tactically by unions that are concerned they face defeat at the polls.

Under the 2014 Amended Election Rules, it is quite easy for a union to use such a charge to block an election:

Section 103.20 of the final rule requires that a party wishing to block processing of the petition must file a request to block and simultaneously file a written offer of proof in support of its unfair labor practice charge. If the Region believes the charge precludes a question concerning representation and no request is filed, the Region may ask the Charging Party if they wish to request to block.  If so, the Charging Party should be informed that they must file a request to block and an offer of proof, including the names of witnesses who will testify in support of the charge and a summary of each witness’s anticipated testimony. In addition, the Charging Party must promptly make the witnesses available to the Region.

In a December 20, 2017 unpublished decision in a case involving a decertification petition filed by an employee of ADT, in which the incumbent union filed ULP charges, to prevent an election:

Member Kaplan agrees with the decision to deny review here. He notes, however, that, consistent with the Petitioner’s suggestion, he would consider revisiting the Board’s blocking charge policy in a future appropriate case. Member Emanuel agrees that the determination to hold the petition in abeyance in this case was permissible under the Board’s current blocking charge policy, but he believes that the policy should be changed. Specifically, he believes that an employee’s petition for an election should generally not be dismissed based on contested and unproven allegations of unfair labor practices.

One of the more interesting aspects of this decision and footnote is that both Chairman Kaplan and Member Emanuel, although not disagreeing with the Regional Director’s application of the rule in the case before them, each expressed their view that the Blocking Charge Rule, which is not a rule at all but rather a Board-created doctrine or policy “should be changed.”

Last Friday – the day the Star Wars movie Episode VIII hit theaters and the last working day of National Labor Relations Board Chairman Philip A. Miscimarra’s term – the Board continued its efforts to undo some of the most controversial and problematic decisions rendered by the Obama Board before the Republicans temporarily lose their majority.  As we previously reported, recent days have seen a stream of significant decisions and other actions from the National Labor Relations Board.  Most notably, the Board discarded the much criticized indirect control test for determining joint-employer status adopted in Browning Ferris joint employer test and returned to its traditional joint employer standard; it established a new, more reasonable standard under which the legality of employer policies and handbooks will be assessed which, unlike the former test, actually gives weight to an employer’s legitimate interests in promulgating the rule; and it opened public comment on the expedited election rules and procedures, the first critical step to amending those rules.

Notably, these and the other decisions discussed in this article involve issues which the Board’s new General Counsel identified as being among those subject to mandatory submission to the Division of Advice, i.e, “Cases that involve issues over the last eight years that overruled precedent and involved one or more dissents.”

The Board continued its own reconsideration of cases in which the Obama Board had overruled precedent, often over the dissent of Chairman Miscimarra, on Friday with two more significant decisions:  PCC Structurals, which overturned the “overwhelming community of interest” test that the Board has adopted in Specialty Healthcare, which has been seen as leading to the proliferation of “micro bargaining units,” and Raytheon Network, which reinstated employers’ right to unilaterally implement changes when there is not a collective bargaining agreement in effect, where such changes are consistent with established past practice.  As discussed below, collectively these decisions are beginning to restore balance to labor relations after nearly a decade of pro-union decisions that discarded long standing Board precedents.

PCC Structurals Restores the Traditional Community-of-Interest Standard – Overturns Specialty Healthcare’s “Overwhelming Community of Interest” Test

In 2011, the Board in Specialty Healthcare materially changed the test that it would use to assess how it will address the scope of a unit for a representation election and collective bargaining when a union petitioned for an election in a bargaining unit that the employer argued was too narrowly drawn because it  improperly excluded similarly situated employees who shared a community of interest with the petitioned-for workers.  Rather than evaluating whether it was a “sufficiently distinct” community of interest between the petitioned-for unit and excluded employees, as long-standing precedent required, in Specialty Healthcare, the Board held that a petitioned-for unit would be deemed appropriate unless, as the PCC Structurals decision points out, the employer proved “the next-to impossible burden . . . that ‘employees inside and outside [the] proposed unit share an overwhelming community of interest’ . . . .”  Under the Specialty Healthcare standard, employers contesting a union’s petitioned-for unit had the herculean burden of showing that other employees’ interests “overlap almost completely” with the union’s desired group.

As the majority in PCC Structurals pointed out, Specialty Healthcare afforded “extraordinary deference” to the union’s petitioned-for unit and led to the rise of fractured “micro-bargaining” units that defy well-established industry rules.  For example, under Specialty Healthcare, the Board has approved units limited to individual sales departments within a department  store, “notwithstanding the Board’s longstanding rule that favors storewide units within the retail industry,”  and units of prepress employees that exclude press employees in contravention of “the Board’s ‘traditional’ rule that press and prepress employees should ordinarily be included in the same ‘lithographic unit.’”  In PCC Structurals, the Board observed these results ignored the substantial interests of excluded employees and interfered with their rights under the Act.

To rectify these problematic results and better effectuate the Act’s goal of assuring “employees their fullest freedom in exercising their rights under the Act,” the Board in PCC Structurals overturned Specialty Healthcare and returned to the standard that governed the assessment of petitioned-for units for nearly all of the Act’s history prior to Specialty Healthcare.  Under the reinstated standard, the Board will evaluate whether the excluded employees also share a community of interest with the petitioned-for unit and, if so, will include them in the unit.

Specifically, as it had for decades prior to Specialty Healthcare, the Board will return to the traditional community-of-interest multi-factor test which examines:

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

As the majority observed, in ensuring the Board examines the interests of all employees (both included and excluded), it “corrects the imbalance created by Specialty Healthcare…”

Raytheon Network Reinstates Employers’ Right To Implement Unilateral Changes Pursuant to Past Practice After the Collective Bargaining Agreement Expires

In 2016, the Board majority in E.I. Du Pont De Nemours held that, after a collective bargaining agreement expires, unilateral changes implemented by an employer pursuant to established past practice were unlawful if the change involved managerial discretion.    Then-member Miscimarra vigorously dissented, arguing that the majority’s decision created an untenable definition of “change” that defies common sense and encompasses any action that involves the slightest managerial discretion, despite being materially indistinguishable in kind or degree from the employer’s customary past actions.

In Raytheon Network, the Board reversed E.I. Du Pont and adopted Chairman Miscimarra’s reasoning in his Du Pont dissent.  The Board majority noted that, under Du Pont, an employer would be found to have made an unlawful unilateral change in violation of Section 8(a)(5) of the Act, even though the employer merely “continues to do precisely what it had done many times previously – for years or even decades…”  The majority held this “fundamentally flawed” position “is inconsistent with Section 8(a)(5), it distorts the long-understood, commonsense understanding of what constitutes a change, and it contradicts well-established Board and court precedent.”  The Board also pointed out that the Du Pont extreme view of “change” was contrary to the guidance of the Supreme Court in NLRB v. Katz, on which the Board’s pre-Du Pont decisions were based. The Board concluded that continuing adherence to the Du Pont change standard could not be reconciled with the Board’s responsibility to foster stable bargaining relationships.  Accordingly, the majority overruled Du Pont and reinstated the rule that an employer may lawfully take unilateral actions “that do not materially vary in kind or degree from what has been customary in the past,” even though such actions may involve some managerial discretion.

With Miscimarra’s Exit, Dismantling The Obama Board’s Legacy Will Likely Stall

The Obama Board frequently broke with longstanding precedent and ushered in new rules that arguably favored labor unions while disregarding the legitimate business concerns of employers.  These decisions were often met with vigorous dissents warning that such decisions would cause unpredictable, unfair, and unsustainable results in labor-management relations.  The most prominent and vocal of these dissenters was Chairman Miscimarra.  Since attaining a Republican majority, the Board has implemented many of the rules and principles articulated in Miscimarra’s dissents, overturning some of the most controversial decisions rendered by the Obama Board and this past week’s decisions have certainly helped cement Chairman Miscimarra’s legacy of pragmatic adherence to the traditional principles of the Act.  However, with the expiration of Chairman Miscimarra’s term on December 16, 2017, the Board returns to 2 Republicans and 2 Obama-era holdover Democrats.  While various names have circulated as possible candidates for the now vacant seat, as of yet the President has not yet sent a name to Congress, nor has he indicated who he plans to nominate.  Thus, at least for now, the recent progress in reexamining and moving away from the Obama Board’s legacy remains on hold, at least at the Board level.  However, given the General Counsel’s recent announcement of issues targeted for submission to the Division of Advice, including all “Cases that involve issues over the last eight years that overruled precedent and involved one or more dissents,” there is every reason to believe that once a new majority is in place, the Board will, as the Jedi say, seek to bring balance to the Act.

Philip Miscimarra. Credit: NLRB.gov.

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

A Republican Chair

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

Two Vacancies Remain On the NLRB

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

What Is Likely To Change With a New Majority

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

Election Rules and Procedures

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

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

In 2016 private sector union membership dropped to its lowest level in history – a dismal 6.4%. Given the laws and systems in place related to union membership, this means that at least 94.6% of all American private sector workers currently choose not to be union members. The drop, recently reported in a routine annual report issued by the U.S. Department of Labor’s Bureau of Labor Statistics, also was the largest year over year percentage drop in recent years, dropping 0.3%, from 6.7% in 2015.

While the percentage of union members as a portion of the total workforce saw a steep drop, possibly more disturbing to union bosses is the fact that the actual raw numbers of union members also dropped over 100,000 members from 7.554 million to 7.435 million dues paying members. This loss of dues revenue could hurt unions’ efforts to organize members as well as lobby and elect politicians.

Report reveals employees choosing to reject unions.

What is remarkable about these numbers is what is behind them. All of the above numbers are based on union membership, individuals who are dues paying members either by choice or as a result of a compulsory union security clause in a non-right-to-work state. What the above numbers do not show is the numbers and percentages of the employees represented by unions.

The percentage represented remained relatively stable, only dropping 0.1% from 7.4% to 7.3% of all private sector employees. More striking, the raw number of employees represented actually slightly increased from 8.411 million to 8.437 million. The fact that there are actually more total employees represented by the unions but less total employees who are union member may be the biggest news of the recent report. It indicates that more employees are choosing to reject joining a union, even though the union represents them.

This fact has import not only in analyzing how union membership fell to a record low, but also what could be on the horizon for unions. Specifically, this drop seems caused by the growing support for the “Right-to-Work” movement.

The Right-to-Work resurgence.

 Right-to-Work refers to statutes which are adopted for the express purpose of allowing employees the right to choose to join and pay dues to a union or choose not to be a union member. At their heart is employee choice – employees having the choice to decide whether they want to be a member of the union or decide they want to keep their job but not be a union member.

While the movement is far from new, it has enjoyed a resurgence in the recent years. This resurgence did not start in the typical Right-to-Work strongholds of the South, but bubbled up from historically union strongholds in the Rust Belt; possibly getting its genesis with the very public brouhaha over the 2011 Wisconsin public sector reforms instituted following the election of Governor Scott Walker.   Shortly thereafter the Right-to-Work movement’s renaissance began as in 2012 Michigan and Indiana became Right-to-Work states; shocking the labor community and freeing private employees in those states from compulsory union membership. Wisconsin followed, extending Right-to-Work to its private sector employees in 2015. West Virginia passed Right-to-Work in 2016 and already this year both Missouri and Kentucky have joined the ranks for a total of 28 states now guaranteeing private sector employees the right to choose whether or not to become dues paying union members. New Hampshire seems poised to join the others as the 29th state soon. Add to this the counties and municipalities which have recently passed local Right-to-Work laws; a practice under dispute but sanctioned in late 2016 by the 6th Circuit Court of Appeals in UAW v. Hardin. Together, the Right-to-Work movement is experiencing its greatest success since the 1950s.

The new BLS report shows this resurgence has had real impact on the labor movement. Not just in the loss in the national percentage or even in the loss in raw number of members; rather by delving into the report, the true scope and possibly future can be ascertained. For example, Wisconsin, in its first year following giving employees the Right-to-Work, saw its total (public and private, BLS does not separate on a statewide basis) union membership dropped from 8.3% down to 8.1%.   Michigan dropped from 15.2% down to 14.4%. Moreover, when you look all the way back to 2011, the year before Michigan passed Right-to-Work, Michigan’s union membership rate was 17.5%. In just 5 years, Michigan unions have lost 3.1% and dropped from 671,000 down to 605,000 dues paying members. This is a remarkable 10% plus loss in their ranks. Indiana likewise as dropped from 11.3% in 2011 down to 10.4% in 2016 despite tremendous job growth in traditionally unionized industries. Obviously, it is too soon to understand the true impact of Wisconsin, let alone West Virginia, Missouri and Kentucky, but if their precursor states are an indication, 6.4% may not be the historic low for long.

What this analysis also suggests is that 6.4% is not lily fully reflective of the percentage of American private sector workers who want to be dues paying members. With 22 states still allowing compulsory union membership through union security clauses and with those states actually having the majority of remaining union members, the true number of individuals who actually want to be union members is possibly far less.

National Right-to-Work, a real possibility?

This currently trapped group of American forced union members and their potential liberation is what could be even more concerning for unions and their coffers than the recent report of the historic low. Until very recently the Right-to-Work movement had realistically only been a state by state movement. For the first time, however, there is a real possibility that national Right-to-Work legislation could pass. In January Representatives Steve King of Iowa and Joe Wilson of South Carolina introduced the National Right-to-Work Act which would prohibit compulsory union membership for private sector employees covered by the National Labor Relations Act and the Railway Labor Act. While similar legislation has been proposed consistently in years passed, President Trump has stated he is a supporter of Right-to-Work (while President Obama would have swiftly vetoed it). With majorities in both the House and Senate, potentially the only thing stopping the Act would be a Democrat filibuster in the Senate. If Republicans held firm and could convince 8 Democrat Senators to join with them to break a filibuster and allow a vote, the US could have a national Right-to-Work law. Given the current division in Washington this may seem unlikely but 25 Democrat face election next year and 9 of those are from Right-to-Work states, including Michigan, Indiana, Wisconsin, Missouri and West Virginia plus another one from the teetering state of New Hampshire. Certainly it is possible.

As if these legislative threats were not enough, the battle over employee choice is being fought in the courts as well. Unions sighed collectively in relief last year when the Supreme Court deadlocked on the issue of whether compulsory dues collection from public sector employees was constitutional in Friedrichs v. California Teachers Association allowing the pro-union decision of the 9th Circuit to stand. However, in February the same lawyers who brought the Friedrichs case filed a new, virtually identical, suit in Yoon v. California Teachers Association. Likewise the case of Illinois public sector workers rights to choose to be union free is currently pending before the 7th Circuit in Rauner v. American Federation of State, County and Municipal Employees, Council 31. While these cases deal with public sector employees, many labor unions fear that an adverse ruling could be the first step towards a judicial determination that the NLRA’s sanctioning of union security clauses unconstitutionally violates individual employees’ free speech and freedom of association rights. Such a ruling would effectively make a national Right-to-Work law by judicial declaration.

Unions will not go quietly into the night.

Union’s will not take this existential threat without a counter offensive. Not only will they fight in Congress, the state houses and the courts, spending millions on lawyers and politicians, but they will fight in the workplace as well. With their backs to the wall employers should expect unions to be aggressively organizing, trying to use the Obama era gains they got through the Ambush Election rules and scores of pro-union NLRB decisions as the foundation for organizing drives. Unions will continue to try to grow their ranks in already heavily Democratic and more unionized states like New York (23.6%), California (15.9%), New Jersey (16.1%) and elsewhere where they can use their ranks, dues base and political clout to target employers. They will also continue to target industries where they have had more success like hospitals and other healthcare providers as well as industries where they are actually currently gaining like hospitality/accommodations (where membership is up from 7.4% to 7.6%) and telecommunications(where membership is up from 13.3% to 14.6%). They also will continue to push the traditional boundaries of the employment relationship, targeting franchisors in the fast food and other industries as well as the gig economy and companies such as Uber and Lyft utilizing independent contractors.

While the impact of the Right-to-Work resurgence and recent union membership reporting certainly indicates that giving employees a choice is a threat to labor unions; equally certain is that this threat is likely to cause more activity and challenges for employers who may be a target of unions seeking to replace lost revenue.