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

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

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

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

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

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

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

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

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

What Happens Next

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

The rulemaking priorities of the National Labor Relations Board (“NLRB” or “Board”) have been released, signaling what Board Chairman John F. Ring described as “the Board majority’s strong interest in continued rulemaking.” The announcement was contained in the Unified Agenda of Federal Regulatory and Deregulatory Actions, published by the Office of Management and Budget’s Office of Information and Regulatory Affairs.

Issues Identified by the Board for Further Rulemaking

The Board majority has identified the following as areas in which it intends to engage in additional rulemaking:

  • The Board’s current representation-case procedures.
  • The Board’s current standards for blocking charges, voluntary recognition, and the formation of Section 9(a) bargaining relationships in the construction industry.
  • The standard for determining whether students who perform services at private colleges or universities in connection with their studies [including student athletes on a scholarship] are “employees” within the meaning of Section 2(3) of the National Labor Relations Act (29 U.S.C. Sec. 153(3)).
  • Standards for access to an employer’s private property.

The Board noted that, in addition to these areas, it is “proceeding with its rulemaking regarding the joint-employer standard.”

Notably, each of the identified issues is one that the current Board majority has identified as an area in which it questions Obama-era Board rulemaking (in the case of representation case and election procedures) or Board decisions that have been seen as advancing the agenda of organized labor and its supporters.

The Board’s Representation Election Rules

One of the Obama Board’s most controversial actions was its own exercise in rulemaking, which resulted in the 2015 implementation of expedited election rules that not only reduced the average time between the filing of a representation petition and the holding of a vote from approximately 45 days to something in the 25-day range, but also limited employer rights to resolve legal issues at a pre-election hearing and increased union rights to information about employees at an earlier stage.

In December 2107, the then-new Republican majority announced that it was seeking comment from interested parties concerning the impact of the changes in the representation case rules that took effect two years earlier. Specifically, the Board posed three question in its Request for Comments:

  • Should the 2014 Election Rule be retained without change?
  • Should the 2014 Election Rule be retained with modifications? (If so, what should be modified?)
  • Should the 2014 Election Rule be rescinded? (If so, should the Board revert to the Election Regulations that were in effect prior to the 2014 Election Rule’s adoption, or should the Board make changes to the prior Election Regulations? If the Board should make changes to the prior Election Regulations, what should be changed?)

In explaining its decision to issue the Request for Comments, the Board majority made clear that it is seeking the views of all interested parties, including labor and management, those in government and the Board’s General Counsel. The Board has also made clear that while it is possible that it may engage in rulemaking to further amend the election rules and procedures, it may maintain the 2014 Election Rules without change, noting that “the Board merely poses three questions, two of which contemplate the possible retention of the 2014 Election Rule.”

While the Board has not yet released the results of its Request for Comments, it is likely that they will be reflected in any new proposed rulemaking in connection with the processing of representation petitions and the holding of elections.

The “Blocking Charge Rule”

The Blocking Charge Rule, which holds that in many circumstances the Board will not conduct a representation election while there are pending unfair labor practice (“ULP”) charges, is another area in which members of the current Board majority indicated an interest in changing and is also identified in the Rulemaking Agenda.

Under the Board’s 2014 Amended Election Rules, the NLRB holds that, when a ULP charge is filed during the pendency of a 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—asks that the election be deferred until after the charges are resolved, provided that the charges allege 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 that they will face defeat at the polls.

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 December 2017, in two decisions, one unpublished, Board Members Kaplan and Emanuel, who both participated in the Rulemaking Agenda, indicated that they believed that the Board should reexamine the Blocking Charge Rule.

The Board Intends to Engage in Rulemaking on the Issue of Whether Graduate Teaching Assistants Are Employees for Purposes of the Act

Another legacy of the Obama Board that the Rulemaking Agenda indicates is likely to be reversed is the Board’s holding in Columbia University that graduate teaching assistants and research assistants are employees under the National Labor Relations Act (“Act”), with the rights to organize and engage in collective bargaining.

In deciding Columbia University, the Board jettisoned its 2004 decision in Brown University in which graduate teaching assistants were held not to be employees for purposes of the Act. The Columbia University majority concluded that the Brown University majority “failed to acknowledge that the Act does not speak directly to the issue posed here, which calls on the Board to interpret the language of the statute in light of its policies.” The Columbia University majority noted that “the Brown University decision, in turn, deprived an entire category of workers of the protection of the Act, without a convincing justification in either the statutory language of the Act or the policies of the Act.”

The Agenda Suggests the Board Will Likely Increase Its Use of Its Rulemaking Authority

Commenting on the Rulemaking Agenda, Chairman Ring noted, “Addressing these important topics through rulemaking allows the Board to consider and issue guidance in a clear and more comprehensive manner.”

It should come as no surprise that recent days have seen a stream of significant decisions and other actions from the National Labor Relations Board as Board Chairman Philip A. Miscimarra’s term moves towards its December 16, 2017 conclusion and as a new majority has recently taken shape with the confirmation of Members Marvin Kaplan and William Emanuel.  Chairman Miscimarra, while he was in a minority of Republican appointees from his confirmation during July 2013 until last month, has clearly and consistently explained why he disagreed with the standard adopted in Lutheran Heritage Village for determining whether a work rule or policy, whether in a handbook or elsewhere would be found to unlawfully interfere with employees’ rights under Section 7 of the National Labor Relations Act to engage concerted action with respect to their terms and conditions of employment as we as  the actions  of the Obama Board in a range of areas, including the 2015 adoption of a much relaxed standard for determining joint-employer status in Browning-Ferris Industries, and his disagreement with the expedited election rules that the Board adopted through amendments to the Board’s election rules.

The Board’s New Standard for Determining Joint Employer Status

In Hy-Brand Industrial Contractors Ltd. and Brandt Construction Co., decided on December 14, 2017, in a 3-2 decision, the Board has discarded the standard adopted in Browning-Ferris, and announced that it was returning to the previous standard and test for determining joint-employer status and returning to its earlier “direct and  immediate control standard.” Under this standard, “A finding of joint-employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine,’” and once again adopting a test that requires a showing that a putative joint –employer possesses “direct and immediate” control over the terms and conditions of employment of the employees of another employer.

In rejecting Browning-Ferris, the majority returns to a standard based on the common law test for determining whether an employer-employee relationship exists as a predicate to finding a joint-employer relationship.  Under Hy-Brand, a finding of joint-employer will require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’”

The majority, consisting of Chairman Miscimarra and Members Kaplan and Emanuel explained why they were rejecting Browning-Ferris:

We think that the Browning-Ferris standard is a distortion of common law as interpreted by the board and the courts, it is contrary to the [National Labor Relations Act,] it is ill-advised as a matter of policy, and its application would prevent the board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations.

The Board’s New Standard Governing Workplace Policies

In The Boeing Company, also decided on December 14, 2017, the Board adopted new standards for determining whether “facially neutral workplace rules, policies and employee handbook standards unlawfully interfere with the exercise” of employees rights protected by the NLRA.

In Boeing, the Board establishes the following new test:

when evaluating a facially neutral policy, rule or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of NLRA rights, the Board will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.”

Boeing offers assistance to employers and others who wish to evaluate the legality of any particular rule or policy, by creating three categories of rules for this purpose:

Category 1 will include rules that the Board designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule.  Examples of Category 1 rules are the no-camera requirement maintained by Boeing, and rules requiring employees to abide by basic standards of civility.  Thus, the Board overruled past cases in which the Board held that employers violated the NLRA by maintaining rules requiring employees to foster “harmonious interactions and relationships” or to maintain basic standards of civility in the workplace.

Category 2 will include rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.

Category 3 will include rules that the Board will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule.  An example would be a rule that prohibits employees from discussing wages or benefits with one another.

While the Board’s setting of these categories offers guidance, it will remain critical for employers and others to carefully assess each proposed rule and policy since the potential for substantial overlap between the categories will exist.

Equally important will be the application of rules and policies that may be facially lawful but subject to unlawful or inconsistent application.

An Assessment of the 2014 Expedited Election Rules

Because the expedited election rules were adopted through administrative rule making under the Administrative Procedures Act, the Board cannot simply discard or revise the 2015 amendments.

Noting that the 2014 Election Rules were adopted over the dissent of Chairman Miscimarra and then Member Harry Johnson, and the fact that these rules have now been effect for more than two years, on December 14th, the Board, over the dissents of Members Mark Pearce and Lauren McFerren, both of who were appointed by President Obama, published a Request for Information, seeking comment on the following three questions:

  1. Should the 2014 Election Rule be retained without change?
  2. Should the 2014 Election Rule be retained with modifications? If so, what should be modified?
  3. Should the 2014 Election Rule be rescinded? If so, should the Board revert to the Election Regulations that were in effect prior to the 2014 Election Rule’s adoption, or should the Board make changes to the prior Election Regulations? If the Board should make changes to the prior Election Regulations, what should be changed?

In explaining its decision to issue the Request, the Board majority has made clear that it is seeking the views of all interested parties, including labor and management, those in government and the Board’s General Counsel.  It has also made clear that while it is possible that it may engage in rulemaking to further amend the election rules and procedures, it may maintain the 2014 Election Rules without change, noting that “the Board merely poses three questions, two of which contemplate the possible retention of the 2014 Election Rule.”

NLRB Acting Chair Philip Miscimarra has given the clearest indication to date of what steps a new Republican majority is likely to take to reverse key elements of the Labor Board’s hallmark actions of the Obama administration once President Trump nominates candidates for the Board’s two open seats and the Senate confirms. In each of these cases, Miscimarra highlighted his earlier opposition to the majority’s changes in long standing precedents and practices.

The Acting Chair’s Position On the Board’s 2014 Amended Election Rules – The Emphasis On “Speed Above All Else” is Inconsistent With the Law

In a strongly worded dissent in European Imports, Inc., 365 NLRB No. 41 (February 23, 2017), the Acting Chair took issue the majority’s decision to deny an Employer’s Emergency Request for Review, that sought to postpone and reschedule a representation election scheduled to take place only three days after a significant number of the employees who would be eligible to vote approximately 25%, learned that they were included in the bargaining unit, and would be affected by the outcome of the vote.

In its Emergency Request, the employer urged the Board to postpone the election by a week, to endure that the employees would know whether they would be eligible to vote and if they were, to allow them to get the facts and make an informed decision when they voted. It also argued that holding the election so soon after the issuance of the Direction of Election “would deprive many employees of sufficient notice that they would be voting in election that would dictate whether they would have union representation.”

Disagreeing with the decision of Members Mark Pearce and Lauren McFerran to deny the employer’s Emergency Request without comment, Miscimarra took issue not only with the denial of this Request, but more broadly, with the Board’s 2014 Amended Election Rule (the “Rule”) and its “preoccupation with speed between petition-filing and the election,” the Rule’s “single-minded standard” calling for “every election (to be) scheduled for ‘the earliest date practicable . . .”

Miscimarra reiterated his position, as expressed in his dissent to the Board’s adoption of the amended Election Rule in 2014, that such an emphasis on speed above all else is inconsistent with the Board’s duty under the National Labor Relations Act “to assure to employees the fullest freedom in exercising the rights guaranteed” by the Act.

The Acting Chair again called for the Board to establish “concrete parameters” for the scheduling of elections that would ensure “reasonable minimum and maximum times between the filing of a representation petition and the holding of an election.”

In addition to addressing issues of timing, Miscimarra also took issue with the fact that during the representation hearing preceding the Direction of Election. The Board’s Regional Director had refused to permit the employer to present evidence and develop a record as to why it was being prejudiced in this case by the 2014 Amended Election Rule. The Regional Director ruled that because earlier judicial challenges to the facial validity of the Election Rule had been dismissed, the employer could not litigate the actual prejudice the Rule caused in this case.

Miscimarra made clear that in his view, the fact that earlier facial challenges to the Amended Election Rule had been dismissed, questions as to the validity of the Rule, when applied to specific facts remains open and that it is a “clear error and an abuse of discretion” to deny an employer the opportunity to litigate such issues when they arise.

The Acting Chair’s Position On the Obama Board’s Handbook and E-Mail Decisions

In another dissent in Verizon Wireless Inc., 365 NLRB No. 38 (February 24, 2017)  Miscimarra reiterated his strong dispute with the way in which the Obama Board has analyzed and decided cases challenging employee handbooks and policies, writing that Board’s current standard for deciding such cases “defies common sense.”

Under the Board’s 2004 Lutheran Heritage standard, the Board will find a handbook provision or policy to violate the Act and unlawfully interfere with employees’ rights to engage in concerted, protected activity if which in part rendered work rules and handbook provisions unlawful if employees “would reasonably construe” them to prohibit protected activities under Section 7 of the Act.

The Acting Chair reiterated his view, as explained in his lengthy 2016, dissent in William Beaumont Hospital, 363 NLRB No. 162, that the Board’s current test is unworkable, and fails to adequately recognize employer’s legitimate needs of employers. Calling on the Board and the Courts to overturn and reject the Lutheran Heritage standard, Miscimarra urged the adoption in its place of a new balancing test that would not only focus on employees’ rights under the Act, but that would also take into account employers’ legitimate justifications for a particular policy or rule, such as attempting to avoid potentially fatal accidents, reduce the risk of workplace violence or prevent unlawful harassment.

Miscimarra also took direct aim in his dissent at the He also wrote that he believes the Board should overturn its Purple Communication decision allowing employee virtually unfettered use of employer email systems and return to the former standard in Register Guard, which recognized that such systems are employer property and should be recognized as such. The dissent described the standard under Purple Communications as “incorrect and unworkable,” and called for a standard that would once again recognize “the right of employers to control the uses of their own property, including their email systems, provided they do not discriminate against NLRA-protected communications by distinguishing between permitted and prohibited uses along Section 7 lines.”

What This Means for Employers

As we noted when the President appointed then Member Miscimarra to serve as Acting Chair of the Board, meaningful change in how the Board interprets and applies the Act will not come until the two vacant seats are filled and a new majority is able to act. Additionally, current General Counsel Richard F. Griffin, Jr.’s term runs through August 4, 2017.

We expect change to come as ULP issues get before the Board. It is to be expected that any new Members appointed by the President will almost certainly share Acting Chair Miscimarra’s views on such issues as use of employer email systems and the review and enforcement of workplace rules, handbooks and the like.  A new balancing test such as that proposed in the Beaumont Hospital dissent is quite foreseeable.

Concerning the Amended Election Rule, things are a bit trickier. The Rule itself was the result of formal rule making, with public comment and input after the Board published its proposed Rule in the Federal Register.  Major changes in the Rule itself would require a new Board to follow the same processes, which are quite lengthy. However, there is certainly room, as Miscimarra’s dissent in European Imports demonstrates, for the Board to make changes in how it administers and processes cases even under this Rule, before any change to the Rule itself becomes effective.  The Acting Chair’s comments concerning the right of employers and other parties to due process, including the right to develop a complete factual record on disputed, material issues is something that can be changed through the administration and application of the Rule even without formal change.  So to, it would not be surprising for a new General Counsel to give guidance to the Board’s Regional Offices calling for them to apply their discretion to avoid circumstances like those that triggered the Emergency Request in European Imports to make sure that there are no more “three day elections.”

Periods such as this, where there is transition in interpretation and enforcement, are challenging but in reality they have been a part of the history of the enforcement and application of the Act for more than 80 years.  Students of the Board often speak of a pendulum and the need for those with business before the Board to try to anticipate its swings.  Careful consideration of not just what the “law” is now, but also what it is likely to be going forward will now once again be the watchword.

 

A recent decision of the United States Court of Appeals for the District of Columbia Circuit in connection with an employer’s challenge to a National Labor Relations Board (“NLRB” of “Board”) representation election in which the Board certified a “wall to wall” bargaining unit provided clear evidence of just how critical it is for employers to make detailed “offers of proof” concerning issues the Board will not allow them to litigate under the amended election rules which took effect in April 2015.

While this case involved a representation petition filed before the new election rules took effect, its lessons concerning the importance of offers of proof concerning issues that the Board will not permit a party to litigate in a representation case under the amended rules are even more important now.

Judicial Review of the Board’s Representation Case Findings

After the union won the election and the employer challenged the Board’s unit determination by refusing to bargain, the Court recently held that the Board erred in finding that a “wall to wall” bargaining was appropriate because it ignored the facts the employer presented, without challenge, in an “offer of proof” offered at a Board conducted representation hearing.  The Court held that the offer of proof contained facts that supported the employer’s contention that the employees in the unit  the union sought to represent did not share a community of interest, which under the National Labor Relations Act (the “Act”) is necessary. See, NLRB v. Tito Contractors, Inc. (No. 15-1217, D.C. Circuit, February 3, 2017).

The Union Sought a Wall To Wall Unit

The union in this case petitioned for an election in in a single “wall to wall” unit, including workers in diverse job classifications at multiple facilities..  The employer argued that the proposed unit was not an appropriate unit under the Board’s unit determination standards and asked for a hearing on the issue.  The employer argued that a hearing was necessary because the  petitioned for unit was inappropriate because the employees performed different jobs at different locations and under different terms and conditions of employment and sought a hearing on that issue. While the Regional Director scheduled a hearing, the Hearing Officer refused to permit the employer to call witnesses and present its evidence on the issue. The Region instead directed the employer to make an offer of proof, describing what its witnesses and evidence would show, if it were permitted to present its evidence, to rebut the presumption under Board law that an employer wide unit was an appropriate unit.

The Hearing Officer’s Refual to Accept the Employer’s Offer of Proof Into Evidence

The employer made a detailed offer of proof showing that it operates a diverse contracting business comprising “two discrete halves”- one side that involves labor, and a second side that involves recycling. It explained that (1) the labor side employed painters, tile installers, masons and carpenters who performed work for customers, (2) the recycling business involved three separate recycling contracts with a different customer and (3) the recycling work is performed at multiple sites, located many miles from each other and under differing working conditions.

Upon the employer made its offer of proof, the Hearing Officer went off the record and consulted with the Acting Regional Director, and then summarily rejected the employer’s offer of proof and denied any hearing on the issue. An election was then directed in the wall to wall unit the union requested.

While the employer requested review of the Decision and Direction of Election (“D&DE”) and the Hearing Officer’s ruling on the offer of proof, the Board affirmed the Hearing Officer’s rulings including the refusal to accept the offer of proof into evidence and denied the employer’s request for review of the Acting Regional Director’s decision directing an election in the unit the union had requested in a perfunctory two line denial.

The Court’s Decision

After the election, the employer sought review by the Court of Appeals and the Board sought to have its findings affirmed and the order directing the employer to bargain with the union enforced.

The Court rejected the Board’s decision. The Court held that the requirement that the Board’s decision be supported by substantial evidence included a requirement that the Board consider and analyze contrary evidence as well.  The Court concluded that the offer of proof plainly showed evidence that countered the conclusion of a community of interest for three reasons.  First, neither the union nor the Board challenged the employer’s assertion that its business was comprised of two separate and discrete operations—labor and recycling – performing different types of work at different facilities.  Second, the Court concluded the Board erred when it ignored the facts contained in the employer’s offer of proof, which evidenced a lack of interchange among the employees in the two operations, a fact the Acting Regional Director acknowledged and cited as a justification for a mail ballot election.  Third, the Board ignored the significant differences among the employees’ wages, hours and working conditions.  Based on the Board’s failure to address the contrary evidence, the Court granted the employer’s Request for Review and remanded the case to the Board for further proceedings.

Judge Karen L. Croft Henderson, who authored the decision, added a separate concurrence in which she admonished the Board for issuing a two sentence order which, like the Region, failed to adequately consider the evidence outlined in the Offer of Proof.

What This Case Means For Employers

Although this case was decided under the Board’s pre-2015 expedited election rules, it offers a number of important lessons for cases under the new expedited rules which include increased reliance on offers of proof to avoid lengthy hearings.

First, the Court of Appeals held that the Board’s responsibility to base findings on substantial evidence included the responsibility to review and analyze contrary evidence, even if that evidence is only in an offer of proof that is rejected.

Second, employers, faced with the requirement of presenting an offer of proof, should include in such offer as much specific factual detail as necessary to support its arguments. By so doing, the employer may be able to establish a sufficient record for an appellate court to determine whether the Region and the Board gave the offer adequate consideration.

Finally, under the new election rules, the Board takes the position that an employer waives any issues that it does not raise in the Statement of Position that must be filed with the Regional Director and served on all other parties by noon on the business day prior to the eighth day after the petition is filed.  For that reason it is critical that an employer identify with as much particularity as possible all issues that it intends to raise at the hearing including all issues as to which it may seek to make offers of proof.

U.S. District Court Judge Amy Berman Jackson on Wednesday issued a 72 page opinion (PDF) rejecting each of the arguments raised by the U.S. Chamber of Commerce, the National Retail Federation and other business groups and found that the Amended Election Rules adopted by the National Labor Relations Board in December 2014, which took effect in April 2015, in an action that argued that the Board had exceeded its authority, violated the Administrative Procedures Act and that the Amended Rules were unconstitutional.

This is the second district court decision to reject such challenges to the Amended Election Rules. In April, Judge Robert L. Pitman of the U.S. District Court for the Western District of Texas rejected a similar challenge brought by the Associated Home Builders of Texas and the National Federation of Independent Businessmen.

Since the Amended Election Rules took effect in April, there has continued to be a dramatic increase in the number of petitions filed by unions across the county.

Clearly the dismissal of these challenges will not be the final answer to the questions surrounding the election rules.  Not only is it almost certain that these decisions will be reviewed on appeal, but Congressional oversight and, potentially, legislative action to reverse the Board’s rulemaking remains a possibility.

One of two lawsuits challenging the National Labor Relations Board’s authority to issue the expedited election rules that took effect on April 14, 2015, has now been dismissed by Judge Robert L. Pitman of the United States District Court for the Western District of Texas in Austin.  In his 27 page decision, Judge Pitman that the plaintiffs, including Associated Builders and Contractors of Texas and the National Federation of Independent Businessmen, could not establish that the NLRB’s December 14, 2014 rule “Representation – Case Procedures; Final Rule,” (the “New Rule”) should be declared by the Court to be invalid under the Administrative Procedures Act, that the New Rule violated employers’ rights under the National Labor Relations Act (the “Act”) by compelling them to provide unions with employees’ names and information before an election is directed or agreed to, by denying employers of their rights to a hearing prior to an election and by interfering with employers’ rights to free speech as provided for in Section 8(c) of the Act.

Rather than attacking the application of the New Rule in any particular case or circumstances, the plaintiffs argued that the changes cumulatively were such that the New Rule violated the Act and the rights of employers and employees under the Act and thus the New Rule should be found to be invalid in its entirety and in all circumstances.   The decision methodically addressed and rejected each of these claims and granted the Board’s Motion to Dismiss and for Summary Judgment. While the Court rejected the Board’s argument that the claims asserted in the challenge should be dismissed because they were not ripe, noting that the filing and processing of more than 141 Representation Petitions (as noted yesterday that number was up to 280 within 30 days) under the New Rule, the Court explained that because the lawsuit challenged the very existence and adoption of the New Rule and not the way that it had been applied by the NLRB in any particular circumstances, the challenge  was one that needed to be analyzed as a “facial challenge,” not an “as-applied challenge.”  This meant that the plaintiffs has the burden, in their purely legal attack, of establishing that the New Rule “could never be applied in a constitutional manner.”

With respect to the plaintiffs’ claim that in almost every case an employer would be denied a hearing in circumstances in which they would have been afforded the right to one,  the Court explained, to succeed the plaintiffs were obligated “to establish there is ‘no set of circumstances exists’ (sic) under which the New Rule would be valid,” and that “even if the New Rule ordinarily limits the scope and timing of the pre-election process, the deference granted a Regional Director to extend and expand” on the limits concerning the content and scheduling of representation hearings “renders Plaintiffs’ challenge unavailing.”

While the District Court’s decision is disheartening for employers hoping for a quick end to the Ambush Election rules, as we have reported another challenge to the New Rule remains pending before the District Court for the District of Columbia. Moreover, an appeal from the Associated Builders and Contractors of Texas decision to the 5th Circuit is all but inevitable.  Meanwhile, the New Rule continues in effect with a steady flow of new petitions.  As these cases proceed, we can expect that in addition to the early cases challenging the New Rule on its face, cases will emerge challenging the actual application in the real world presenting examples of the actual impact on the rights of employers and employees that the plaintiffs in the facial challenges anticipated.

A couple weeks ago we provided anecdotal reports from several NLRB Regional Directors that after one month the new Ambush Election Rules union elections were being held in considerably less time, with the Regional Directors claiming elections were being scheduled between 25-30 days.  Last week, according to BNA’s Daily Labor Report and Law360, the NLRB released national results of the first month showing that the impact was worse than anticipated.

More Union Petitions Under Ambush Elections Rule

Between April 14 (the day the rules when into effect) and May 14, 280 representation cases were filed.  This was a 17% increase in filings over the same period in 2014 and a 32% increase from the last month under the old rules.  While some of the increase is likely attributable to unions strategically waiting for the new rules to go into effect, employers can certainly expect increased union activities and more petitions.

Election Period Cut by Over 40% – Just 23 Days

Even more troubling than the increase in petitions is the dramatic decrease in time to respond to the petitions.  According to the NLRB’s first month results the median time between the filing of a petition and an election date has been cut down to only 23 days.  This is over 40% less time than the prior median of 38 days and provides employers just over three weeks to respond to the petition and mount a campaign.  Of course one third of this median time would be spent preparing for a hearing and collecting/providing the information now required by the Board.

The additional information, requirements, and restrictions of the new rules may be a reason that almost all of the petitions have resulted in stipulated election agreements where employers agree to forgo a hearing and stipulate to the election issues, including date.  In fact, the NLRB reported that of the 280 petitions only 4 went to a hearing.  That means in an astonishing 98.5% of all petitions the employer forwent their rights to a hearing and agreed to election issues with the union.  This is a considerably higher percentage than the typical 80% or so of petitions that historically have resulted in stipulated election agreements and suggests that employers are either apprehensive about hearings under the new rules and/or being threatened with even shorter election times if they proceed to a hearing.

In the 4 cases where a petition went to a hearing two of the cases resulted in a directed election in 23 days from petition filing, with one election directed in 26 days and the other 30 days.  These election dates are far sooner than the median length of 59 days under the old rules.

It should not be over looked that 23 days is a median time frame and, as noted, where cases went to a hearing, 23 days was the earliest date ordered.  This means that of the 276 petitions which resulted in stipulated election agreements many had elections in less than 23 days.

Again, the official results after the first month seem even worse than expected for employers, as the increasing number of them that are the target of union organizing will have very little time to prepare.

Management Missives

As we have advised, we recommend employers concerned about union organizing prepare now:

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

May 14th marked the one-month anniversary of the effective date of the NLRB’s Amended Representation Election Rules (“amended rules”).  That day, the Regional Directors for NLRB Regions 2 (New York, NY), 22 (Newark, NJ), and 29 (Brooklyn, NY) discussed their offices’ experiences processing representation petitions filed since the amended rules took effect on April 14th.

With respect to the questions of how the amended rules are actually affecting representation petitions and elections, while one month may not be representative, the data to date does offer some insights that will be of interest to employers, unions, and practitioners.  Perhaps the most interesting fact is that in these three Regional Offices, there were NO hearings held on petitions filed since the amended rules took effect.  In every case, the parties entered into a stipulated election agreement or a consent agreement, or the union withdrew its petition. Out of a total of 32 petitions filed in these regions during the one-month period, eight went to an election and 24 were withdrawn without an election.

What is not clear at this point is how many of the petitions were withdrawn after employers filed Statements of Position challenging the proposed units as inappropriate.  Under the amended rules, if an employer contends that the petitioned-for unit is not appropriate and should include additional classifications and/or locations, the employer must provide both the Regional Office and the petitioning union with the names, classifications, work locations, and shifts of the employees whom the employer believes must be included in the unit. Once a union receives that employee data, it may very well choose to withdraw its petition and then expand its organizing to include the additional employees. It is foreseeable that, in at least some cases, unions may be filing petitions with the expectation that the units will be challenged, in order to get such valuable data.

With respect to the question of how quickly votes are taking place under the amended rules, Regional Directors Karen Fernbach (Region 2), David Leach (Region 22), and James Paulsen (Region 29) reported that the elections based on petitions filed after the amended rules took effect were scheduled for between 25 and 30 days from the petition date.  This data confirms the expectation that the amended rules would result in faster elections than under the long-standing rules that they replaced.  Under the former rules, elections typically took place between 36 and 42 days after the filing of a petition.

The Regional Directors also reviewed the procedures under the amended rules, which were recently summarized in General Counsel Memorandum 15-04 issued by the Board’s General Counsel Richard F. Griffin, Jr.  Under the amended rules, employers not only must post a notice informing employees of the filing of a petition within two days but also must provide the Board and the petitioning union with a list of the names and job titles/classifications of all employees in the petitioned-for unit and all other employees whom the employer believes should be included in the unit.

The fact that there have not been any hearings in these three Regional Offices in the first month of the amended rules is probably a reflection of the fact that the amended rules make it much harder for an employer to have a hearing. The Regional Directors confirmed the fact that employers that want to raise issues, whether about unit composition, supervisory status, or other issues, are generally being told that they may not call witnesses but rather should make offers of proof to establish a record and basis for future appeals and challenges to the Board’s findings.

The Regional Directors acknowledged that, even where employers wish to make offers of proof at pre-election representation hearings, hearing officers are under instructions not to burden the R case record with protracted offers of proof and not to allow parties to delay the hearing “unnecessarily.”  Further, the Regional Directors stated that they were under orders not to allow hearings to go on for too long or permit any post-hearing briefs.  All argument would have to be made orally at a hearing.

According to the three New York area Regional Directors, unless the employer has raised eligibility issues as to more than 20% of the total voter complement, all unit placement and eligibility issues will be reserved for the challenged ballot process at the election or for a post-election hearing.  Obviously, if the challenged ballots are not determinative, issues as to those voters will never be heard. While this benchmark is not included in the amended rules, it has been mentioned on a number of occasions by representatives of the NLRB at various training programs conducted for the labor and management bars throughout the country.  It appears that this 20% standard has now replaced the 10% threshold that the Board relied upon under the prior rules and procedures.

The employer’s Statement of Position must be filed and served on the union within seven days of the filing of the petition and not later than noon on the day before the hearing is scheduled. Any issues not so raised will be waived.

On Friday, May 15, the day after the Regional Directors spoke, U.S. District Court Judge Amy Berman Jackson in Washington, D.C., heard argument on plaintiffs’ motion for summary judgment in the lawsuit brought by the U.S. Chamber of Commerce and other business groups challenging the validity of the amended rules under the National Labor Relations Act (“NLRA”). The hearing focused on the plaintiffs’ claims that the amended rules violate the NLRA and the Administrative Procedures Act. While it is generally not possible to predict from argument how the court will rule, Judge Jackson appeared skeptical that the plaintiffs had established that they were entitled to summary judgment at this stage, suggesting that the litigation is likely to continue.

The amended rules will present significant challenges for employers and their counsel.  More importantly, all of this will be layered onto the much shorter period between the petition and the actual voting, requiring employers to focus year round on appropriate practices and communications to their employees concerning the benefits of maintaining a non-union status.

We will continue to monitor and share data concerning the impact of the amended rules.

On January 5, 2015, less than one month after the National Labor Relations Board (NLRB) voted to adopt a Final Rule to amend its rules and procedures for representation elections, a lawsuit has been filed in the US District Court for the District of Columbia, asserting that the Board exceeded its authority under the National Labor Relations Act (Act) when it amended its rules for votes on union representation and that the new rule in unconstitutional and violates the First and Fifth Amendments of the US Constitution.

The suit was filed by the Chamber of Commerce of the United States, Coalition for a Democratic Workplace, National Association of Manufacturers, the National Retail Federation and the Society for Human Resources Management.  It seeks an order vacating the Final Rule, declaring the Final Rule to be contrary to the Act and in excess of the Board’s statutory jurisdiction and authority and to violate the First and Fifth Amendments.

The claims raised in the suit are essentially the same as those which were raised by in an action filed in the same court in 2012, in response to the NLRB’s December 2011 adoption of a very similar set of changes to its representation election procedures.  That action also challenged the Board’s action based on what it found to be the Board’s lack of a quorum at the time it adopted those rule changes in 2011. Because the Court found that the Board lacked a quorum at that time, it found it unnecessary to address the substantive arguments about the changes in the election rules that are the essence of the new lawsuit.

While the Complaint does not indicate that the plaintiffs are seeking an order enjoining the Board from implementing the new election procedures under the Final Rule while the case is litigated, the plaintiffs are likely to request such an order as the Final Rule’s effective date of April 15th nears.  In the earlier challenge to the Board’s 2011 rulemaking, the Court granted an injunction in April 2012 enjoining the Board from putting the new rules and procedures into effect, while it considered the merits of the challenge.

While Republican members of Congress have with increasing frequency indicated their desire to reign in the Board in a variety of areas where they have seen it as exceeding its mandate or moving in directions that they do not agree with, it is almost certain that President Obama would veto such legislation and it is not likely that the sufficient support would be present to override a veto. Thus as the New York Times observed  earlier this week, those who oppose administrative actions such as this are turning increasingly to the courts in hopes of relief.

We will continue to monitor and report on developments in this closely watched case.