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

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

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

The Law Applies to Employees Covered by a CBA

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

What Does Janus Mean for Public Sector Employers and Workers?

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

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

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

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

What Does Janus Mean for Public Sector Unions?

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

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

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

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

What Does Janus Mean in the Private Sector?

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

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

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

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

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

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

NLRB Curtails Employers’ Right to Hire Permanent Replacements for Strikers – Bolsters Unions’ Ability to Use Intermittent Strikes

The National Labor Relations Board, in a 2-1 decision by Chairman Mark Pearce and Member Kent Hirozawa, in American Baptist Homes of the West, 364 NLRB No. 13, has adopted a new standard for considering the legality of an employer’s hiring of permanent replacements in response to economic strikes. The decision, in the words of Member Philip Miscimarra’s dissent, is not only a “deformation of Board precedent,” but “a substantial rearrangement of the competing interests balanced by Congress when it chose to protect various economic weapons, including the hiring of permanent replacements.”

The Board Has Curtailed the Right to Hire Permanent Striker Replacements

In short, the Board in American Baptist Home of the West, severely casts doubt on the right of an employer to hire permanent replacements for striking workers. Under longstanding precedents, the Board would not look into the motivation when an employer decided to hire permanent replacements for strikers.

In this case, the General Counsel asked the Board to adopt a new standard and to hold that an employer may not hire permanent replacements where the Board finds that the employer has “an intent to encroach upon protected rights,” namely the right to strike.  The Board has now held, for the first time, that it will find an employer’s hiring of permanent replacements to be an unfair labor practice where it concludes “the hiring of permanent replacements was motivated by a purpose prohibited by the Act,” and that it will no longer require proof that of “the existence of an unlawful purpose extrinsic to the strike.”

The Board Holds That Attempts to Discourage Future Strikes Unlawfully Interferes with Employees’ Section 7 Rights

In the case at issue, the Board majority found that a prohibited purpose existed based on statements by an employer who had been subjected to a series of intermittent strikes that had caused it to incur significant expense in arranging for temporary replacements and wanted to “avoid any future strikes” and “teach the strikers and the Union a lesson.”

In so doing, the Board has undercut the right of employers, well recognized for almost 80 years, to hire permanent replacements as an “economic weapon” when faced with an economic strike, labor’s ultimate economic weapon. Relying on an obscure phrase in the Board’s 1961 decision in Hot Shoppes, Inc.,  a decision in which as Member Miscimarra points out, “the Board adopted a rule disallowing any scrutiny into an employer’s motive for hiring permanent replacements” in response to an economic strike (emphasis in original).

The Supreme Court Has Recognized Employers’ Right Since 1938

Since the Supreme Court’s 1938 decision in National Labor Relations Board v. McKay Radio & Telegraph Co., 304 U.S. 333, it has been undisputed that an employer faced with an economic strike by its employees has had the right to hire permanent replacements to continue the operation of its business and to respond to the union’s use of labor’s ultimate economic weapon. Notably, the Board and the Courts have viewed labor’s right to strike and an employer’s right to hire replacements or lock out employees as countervailing forces, and that employers and unions in collective bargaining “proceed from contrary and to an extent antagonistic viewpoints and concepts of self-interest” and that the “presence of economic weapons in reserve, and their actual exercise on occasion by the parties, is part and parcel of the system that the Wagner and Taft-Hartley Acts have recognized.” NLRB v. Insurance Agents’ International Union, 361 U.S. 477, 478-479 (1960).

In other words, our system of labor management relations and collective bargaining has historically granted labor and management tools that they have had a legal right to threatened to wield or to actually use to help prevail in bargaining.   This has been a fundamental element of the system of collective bargaining in the United States since the NLRA was enacted in 1935.

The Board Is Attempting to Change Bargaining by Cutting Employers’ Rights

The unfair labor practice charges that the Board considered in American Baptist Homes of the West arose out of contract negotiations between the operator of a continuing care facility in Oakland, CA, and Service Employees International Union, United Healthcare Workers-West (SEIU) in 2010 for a successor collective bargaining Agreement. In order to press its bargaining demands, the SEIU engaged in informational picketing of the employer’s facilities.  In order to ramp up the pressure, on July 9, 2010, the SEIU then gave the employer notice that it would strike on Monday August 2nd if there was not a new contract.  The SEIU also notified the employer that same day, in a second letter, that the strikers would return to work on Saturday August 7th.  In other words the union threatened to conduct an “intermittent strike,” something that has become a common tool, particularly in health care.  The website Labor Notes  stated as follows concerning this tactic: “A short-term strike sends a powerful message to management, dramatizing workers’ anger and determination.”

Faced with the need to maintain operations and care for its patients, the employer engaged a staffing agency and incurred expenses of at least $350,000 to ensure that the necessary personnel would be available.  When the union struck, the employer made offers of permanent employment to 44 of the replacements for the 80 employees who went on strike.

The Board, in finding that the employer in Baptist Home of the West did not have the right in these circumstances to hire permanent replacements pointed to evidence that “the decision to hire permanent replacements was admittedly motivated by her desire to avoid a future strike at the facility,” and the Board’s finding that it would have cost the employer a “lesser amount  . . . over the 3-year life of the contract to fully implement the Union’s” economic proposals than it cost to retain the replacements.

In essence, the Board concluded that what made the hiring of permanent understudies a ULP and unlawful in this case was that the employer was seeking to dissuade employees from striking in the future.  However, what the majority ignores is that every time an employer and a union bargain for a contract, at the end of the day each side tries to convince the other to compromise through the threat of wielding the rights the law gives them: the right to strike and the right to hire replacements and/or lock out employees.

What Does This Mean for Employers Going Forward?

There can be no question that the Board and the General Counsel are trying to affect the relative strength of employers and unions in bargaining.  For those who read this blog and follow the pronouncements of the Board’s General Counsel, this should come as no surprise.  As we reported in April, when the General Counsel issued his latest memo identifying issues on which the NLRB’s Regional Offices must consult with the Division of Advice, cases involving an allegation that an employer’s permanent replacement of economic strikers had an unlawful motive, were near the top of the list.

While the views of the Board and the General Counsel are reflected in American Baptist Homes of the West, as the dissent observes, the decision is clearly inconsistent with almost 80 years of judicial and Board interpretation of the Act.  Undoubtedly, the issue will make its way back into the courts as the Board seeks to enforce the decision and this and/or other employers and advocates seek judicial review.

While at the end of the day, the Courts are likely to restore the longstanding interpretation of the Act which has held that as the Board held in Mrs. Natt’s Bakery in 1942, “since an employer may” when faced with the prospect of an economic strike “replace striking workers with impunity, it is not unlawful for him to state such an intention.”

In the meantime, employers facing strike threats and considering when and whether to hire permanent replacements, will no doubt face unions and workers that will feel an unwarranted sense of protection against the possibility of their employers wielding this rarely deployed tool.

Our colleague Allen B. Roberts recently wrote a client advisory entitled “Unions Swim Against the Tide as Pension Issues Surface for Negotiations and Organizing,” which appears on Epstein Becker Green’s website.

Following is an excerpt:

Contributions to multiemployer defined benefit pension plans have been a mainstay, legacy feature of union negotiations in many industries. But the fabric of such staples may be tearing apart as employers contemplate the potential of escalating contributions to amortize unfunded liabilities that increase costs but may have imperceptible value for their own employees. Increasingly, employers and their employees are questioning whether the promise of retirement security can be delivered cost effectively—or at all—by defined benefit pension plans maintained under union contracts.

With private sector union membership standing at 6.7 percent nationally in 2013, major sectors of the economy and geographic areas are not affected significantly by either current unionization or successful organizing efforts.

Read the full article here.

Evan Rosen and Mark M. Trapp of the Labor and Employment practice co-wrote an article titled “What To Know About ACA Collective Bargaining”

Following is an excerpt:

For the unionized employer, the advent of the Affordable Care Act requires careful strategic thought about its impact on upcoming collective bargaining negotiations. Indeed, for companies with a unionized workforce, the ACA poses additional challenges and strategic considerations above and beyond those confronting nonunionized workforces.

Click here to read the full article.