National Labor Relations Act

In a three to one decision issued on January 25, 2019, the National Labor Relations Board (“NLRB” or the “Board”) in SuperShuttle DFW, Inc., 367 NLRB No.75 (2019), the Board announced it was rejecting the test adopted in 2014 in FedEx Home Delivery, 361 NLRB 610 (2014) for determining whether a worker was an employee or an independent contractor and returning to the test it used prior to the FedEx Home decision.

As the decision in SuperShuttle makes clear, the determination of whether a worker is an employee entitled to the protections of the National Labor Relations Act (the “Act”), or an independent contractor will continue to be based on a case by case examination of the specific facts. Under Section 2(3) of Act, only employees and not independent contractors are entitled to the Act’s protections.

SuperShuttle involved a union petition for an election among a group of franchisees operating SuperShuttle airport vans at Dallas-Fort Worth Airport. In response to the petition, SuperShuttle, the franchisor, argued that the franchisees who were seeking representation were not employees but rather independent contractors and as such were not entitled to vote in an NLRB election or to exercise the rights granted to employees, but not independent contractors, under the Act.

The Board’s Acting Regional Director (“ARD”) based on the facts of the case, found that the franchisees were independent contractors and not employees, and dismissed the petition. The petitioner, Amalgamated Transit Union Local 338, appealed the ARD’s decision, arguing that based on the degree of control exercised by the franchisor’s operations and terms and conditions, they were employees and not independent contractors.

As the Board explained in its Press Release, the decision to affirm the ARD’s conclusion that the drivers in the case were not employees turned on the facts of their franchise agreements with SuperShuttle:

The Board found that the franchisees’ leasing or ownership of their work vans, their method of compensation, and their nearly unfettered control over their daily work schedules and working conditions provided the franchisees with significant entrepreneurial opportunity for economic gain. These factors, along with the absence of supervision and the parties’ understanding that the franchisees are independent contractors, resulted in the Board’s finding that the franchisees are not employees under the Act. The decision affirms the Acting Regional Director’s finding that the franchisees are independent contractors.

The Board Returns to its pre-2014 Standards for Distinguishing between Employees and Independent Contractors

 As the majority in SuperShuttle DFW explained, under the standard adopted in 2014 in FedEx Home Delivery, the Board had essentially created a new requirement for finding workers to be independent contractors and not employees.

The Board majority’s decision in FedEx did far more than merely “refine” the common-law independent contractor test – it “fundamentally shifted the independent contractor analysis, for implicit policy-based reasons to one of economic realities, i.e., a test that greatly diminishes the significance of entrepreneurial opportunity and selectively overemphasizes the significance of “right to control” factors relevant to perceived economic dependency. (citations omitted). Today, we overrule this purported “refinement.”
(emphasis added)

The majority opinion in SuperShuttle DFW, joined by Chairman Ring, Member Kaplan and Member Emanuel returned to the Board’s longstanding prior practice of considering “all of the common-law factors as described in the Restatement (Second) of Agency:”

a) The extent of control which, by the agreement, the master may exercise over the details of the work.
b) Whether or not the one employed is engaged in a distinct occupation or business.
c) The kind of occupation, with reference to whether in the locality, the work is usually done under the direction of the employer or by a specialist without supervision.
d) The skills required in the particular occupation.
e) Whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work.
f) The length of time for which the person is employed.
g) The method of payment, whether by the time or by the job.
h) Whether or not the work is part of the regular business of the employer.
i) Whether or not the parties believe they are creating the relation of master and servant.
j) Whether the principal is or is not in business.

As the majority in SuperShuttle explained, citing to the US Supreme Court’s 1968 decision in NLRB v. United Insurance Co. of America, 390 U.S. 254 “there is no shorthand formula” and “all the incidents of the relationship must be assessed and weighed with no one factor being decisive,” and that what is important is that the total factual context is assessed in light of the pertinent common law principles.” Id. at 258.

In FedEx Home Delivery the Board had adopted a test that made it more difficult to prove an independent contractor relationship

In FedEx Home Delivery, a Board majority composed of appointees of President Obama had adopted a test that moved beyond the traditional common law standards for determining whether a worker was an employee or an independent contractor “by creating a new factor (‘rendering services as part of an independent business’) and then making entrepreneurial opportunity merely ‘one aspect’ of that factor.” 367 NLRB No. 75 at page 1.

As the majority in SuperShuttle explained, the Board majority in FedEx was no “mere refinement,” but rather a shift of the independent-contractor test to “one of ‘economic dependency,’ a test that was specifically rejected by Congress.” 367 NLRB N0. 75, at p. 8-9.

What Happens Now?

It is notable that although the Board announced its return to the former test for determining whether workers are independent contractors or employees, the ARD had reached the conclusion that the SuperShuttle drivers were independent contractors under the test adopted in FedEx Home.

The modification of the test for making this determination by discarding “the undue significance of a worker’s entrepreneurial opportunity for economic gain” is likely to mean that workers who traditionally would have been found to be independent contractors and outside the Act’s protections, will be found independent contractors in the future once again.

It is clear that detailed factual analysis will be required in all cases. It would be appropriate, given the reliance on the terms of the franchise agreements in SuperShuttle and the fact that those agreements did demonstrate that the drivers retained significant discretion to run their businesses and knew they would be independent contractors and not employees when they entered into those agreements, for businesses that rely on independent contractor and other such arrangements to review and where appropriate update their agreements and other operating documents.

Last week, the National Labor Relations Board (the “Board”) issued a decision that “begins the process of restoring” a decades-old definition of “concerted activity” under Section 7 of the National Labor Relations Act (“NLRA” or the “Act”) – a definition that, in the Board’s view, had become muddled and unduly expanded as recent decisions “blurred the distinction between protected group action and unprotected individual action.”

In a 3-1 decision, with Member McFerran dissenting, the Board in Alstate Maintenance, LLC upheld an administrative law judge’s dismissal of a complaint issued by the Board’s previous General Counsel, which alleged that Alstate Maintenance, LLC committed unfair labor practices when it discharged Trevor Greenidge, a skycap who worked at JFK airport. As a skycap, Greenidge’s primary job responsibility was to assist arriving airline passengers with their luggage outside of the airport terminal. Greenidge’s supervisor instructed him (and three other skycaps) to assist with moving a soccer team’s equipment. In response, Greenidge commented: “We did a similar job a year prior and we didn’t receive a tip for it.” When the equipment arrived, all four skycaps walked away. The managers sought assistance from baggage handlers inside the terminal; after those baggage handlers completed a significant share of the work, Greenidge and the other three skycaps returned to help complete the assignment. The skycaps were subsequently discharged. The only issue before the Board was whether Greenidge’s comment and actions constituted protected concerted activity and was therefore protected by the Act.

In the Complaint issued on behalf of the Board’s General Counsel following an investigation of Greenidge’s charge, the General Counsel alleged that the actions and comments were protected by the Act because Greenidge was acting with respect to his terms and conditions of employment, and those of his co-workers, the other skycaps who he spoke to about his experience with the soccer team not tipping in the past.

The standards for determining whether an employee has engaged in “concerted activity” was first articulated in two Board decisions from the mid-1980’s, known as Meyers Industries. In Alstate Maintenance, LLC, the Board reiterated that under the Meyers standards, an individual employee engages in concerted activity when he or she does either one of the following:

  1. Seeks to initiate, induce, or prepare for group action. An employee’s “mere talk” must “be talk looking toward group action” – otherwise, it will simply constitute “mere griping.”
  2. Brings “truly group complaints” (as opposed to personal grievances) to management’s attention and can point to record evidence that demonstrates “group activities” (such as prior or contemporaneous discussion of the concern among members of the workforce).

As part of its analysis, the Board overruled its 2011 decision in WorldMark by Wyndham because that decision could not be reconciled with the Meyers standard, and the Board majority found that it erroneously shielded certain unprotected individual action. The Board found that WorldMark improperly deviated from Meyers by holding that any employee who protests publicly in a group meeting automatically engages in protected activity per se – and that such a rule obviated any fact-based analysis as to whether the employee had protested on the authority of other employees (which would be concerted activity) or solely on the employee’s own behalf (which would not be concerted activity).

Applying the Meyers standard in the Alstate case, the Board “easily” concluded that Greenidge’s comment did not constitute concerted activity. First, the comment did not seek to initiate, induce, or prepare for group action. The majority concluded that Greenidge’s comment itself (i.e., “[w]e did a similar job a year prior and we didn’t receive a tip from it”) did not demonstrate that he was seeking to initiate or induce group action, and Greenidge had credibly testified during the hearing that his remark was “just a comment” that was not aimed at changing his employer’s policies or practices. Second, the General Counsel did not contend that Greenidge was bringing a “truly group complaint” to management’s attention. In any event, there was no record evidence of “group activities” – such as evidence that tipping habits had been discussed amongst the skycaps prior to Greenidge’s comment – and the Board concluded that Greenidge’s mere use of the word “we” in his comment did not supply the required evidence of “group activities.”

The Board articulated several factors that might support a reasonable inference that, in making a statement or comment, an individual employee engaged in concerted activity – either by bringing a “truly group concern” to management’s attention or by initiating, inciting, or preparing for group action:

  • The statement was made during an employee meeting called by the employer to announce a decision affecting wages, hours, or some other term or condition of employment,
  • The decision affects multiple employees attending the meeting,
  • The employee who makes a comment in response to such an announcement does so to protest or complain about the decision – not merely to ask questions about how the decision will be implemented,
  • The employee protests or complains about the decision’s effect on the work force generally (or some portion of the work force), not solely about the decision’s effect on the employee himself,
  • The meeting presented the first opportunity for employees to address the decision, so the speaker had no opportunity to discuss the issue with other employee’s beforehand, and
  • Other evidence that a statement made in the presence of coworkers was made to initiate, induce, or prepare for group action – such as an express call for employees to act collectively.

As part of its observation that more recent decisions by the Board had improperly deviated from the Meyers standard, the Board pointed to several cases that concluded that an employee’s statements about certain subjects (such as wages, work schedules, and job security) were “inherently” concerted. As part of its effort to “restor[e]” the Meyers standard, the Board expressed its “interest[ ] in reconsidering this line of precedent in a future appropriate case.”

What Does this Mean for Employers?

 It is important not to over read the application of the Alstate decision. While the Board’s decision concluded that in the context of this statement by an employee to co-workers that he was not calling for group action or expressing a position on behalf of employees collectively, a careful fact based analysis remains critical in all cases.

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.

On February 26, 2018, in a unanimous decision by Chairman Marvin Kaplan and Members Mark Pearce and Lauren McFerren, the National Labor Relations Board (“NLRB” or the “Board”) reversed and vacated its December 2017 decision in Hy-Brand Industrial Contractors, Ltd. (“Hy-Brand”), which had overruled the joint-employer standard set forth in the 2015 Browning-Ferris Industries (“Browning-Ferris”) decision. The decision followed the release of a finding that a potential conflict-of-interest had tainted the Board’s 3-2 vote. What this means, at least for the moment, is that the lower standard for determining joint-employer status in Browning-Ferris is the law once again.

What Is The Browning-Ferris Standard?

As we previously reported, under the Browning-Ferris standard, “[t]he Board may find that two or more entities are joint employers of a single work force if they are both employers within the meaning of the common law, and if they share or codetermine those matters governing the essential terms and conditions of employment.”  Under Browning-Ferris, the primary inquiry is whether the purported joint-employer possesses the actual or potential authority to exercise control over the primary employer’s employees, regardless of whether the company has in fact exercised such authority.  This standard is viewed as employee and union-friendly, and led to the issuance of complaints alleging joint-employer status in an increased number of circumstances.

What Did Hy-Brand Set As the Test for Joint-Employer Status?

Later, in Hy-Brand, as we noted, the Board rejected the Browning-Ferris standard and returned to a more employer-friendly standard, based on the common law test for determining whether an employer-employee relationship exists as a predicate to finding a joint-employer relationship and adding more than just the right to exercise control.  Under Hy-Brand, a finding of joint-employer status would require proof that putative joint employer entities have actually 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.”  This decision had stopped at least some cases relying on Browning-Ferris in their tracks.

What Happens Next?

While Hy-Brand has been reversed for the time being, we expect the Board, once the Senate acts on President Trump’s nomination of John Ring to fill the seat vacated this past December by then Chairman Philip Miscimarra, to reinstate the joint-employment standard articulated in Hy-Brand or a similar standard.

As noted above, the reversal of Hy-Brand follows the ethics memo published by NLRB Inspector General David Berry finding that Member William Emanuel should have abstained from the decision in Hy-Brand because of the fact that the law firm of which he was a member was involved in the case.  There are a number of other cases in which similar conflict issues have arisen, also arguing that Member Emanuel should recuse himself.

Congress May Act

Separate and part from a future Board decision, as we noted in November, the House of Representatives passed the Save Local Business Act (H.R. 3441) which, if enacted, would amend the National Labor Relations Act and the Fair Labor Standards Act to establish a Hy-Brand-like direct control standard for joint employer liability.  The reversal of Hy-Brand may now put increased pressure on the Senate to pass the bill.

What Should Employers Do Now?

Employers and other parties with matters before the Board involving joint-employer issues now, whether in the context of unfair labor practice cases or representation cases, now will need to focus on both the Browning-Ferris standard and the Hy-Brand test to ensure that they preserve all arguments and issues recognizing the likelihood that sooner rather than later the Board will adopt a test that requires more than is required under Browning-Ferris to establish the existence of a joint-employer relationship, with all of the attendant responsibilities.  We will continue to follow this issue and report on developments.

As we have previously reported, Unions currently face a serious existential threat as the unionized workforce in America continuously declines and the looming threat of a National Right to Work law steadily grows.  Recognizing that when employees have a choice, they are losing the battle for the hearts and minds, Unions have not taken these deleterious developments lying down and have deployed numerous countermeasures designed to increase their dues paying membership, including unprecedented forays into previously untouched industries and membership pools.  These efforts extend beyond “employees” as unions now are also targeting independent contractors, with one of the most notable being the robust ridesharing industry made popular by apps like Uber and Lyft.

Uber and Lyft have become synonymous with affordable, on-demand transportation throughout the world.  Their innovative business model has reinvigorated the for-hire transportation market –historically dominated by powerful unions and restrictive legislation – with some much needed competition.  These apps have created an inexpensive and efficient alternative in on-demand transportation while giving entrepreneurial drivers an opportunity to earn extra income on their own schedule and their own terms.  This could all change, though, if unions successfully infiltrate the rideshare market:  drivers could lose the flexibility they enjoy, consumers could see a sharp rise in costs and the rideshare market could lose its competitive ability to dynamically adjust to consumer demands.

A Federal District Court Rejects The U.S. Chamber of Commerce’s Motion For Injunction Relief Pending Appeal Of the Court’s Finding That Seattle’s Ordinance Is Not Preempted By The National Labor Relations Act. 

Rideshare drivers utilizing apps like Uber and Lyft are independent contractors and, therefore, are expressly excluded from the collective bargaining rights granted by the National Labor Relations Act (“Act”).  In December 2015, Seattle passed Ordinance 124968, which conferred collective bargaining rights on rideshare drivers.  The U.S. Chamber of Commerce subsequently filed an action in the U.S. District Court of Washington, Western District, claiming, among other things, that the Ordinance was preempted by the Act.  On April 7, 2017, the District Court temporarily enjoyed enforcement of the Ordinance pending the outcome of the litigation.

However, on August 1, 2017, the District Court lifted the injunction after it granted Seattle’s motion to dismiss, finding that the Act’s independent contractor exclusion did not preempt state law. The Court likened the independent contractor exclusion to other exclusions in the Act, such as the agricultural laborer and domestic service worker exclusions, which have long been held not to preempt state law.

In doing so, the District Court rejected the Chamber’s attempt to analogize the independent contractor exclusion to the Act’s supervisor exclusion, which decidedly preempts state law.  Citing to the legislative history of the supervisor exclusion, the District Court reasoned that Congress deemed the unionization of supervisors “a threat to the very purposes of the Act as well as the interests of both labor and management,” and these destructive consequences “would arise regardless of whether supervisors unionized under NLRA or under state law.”  By contrast, the District Court concluded, Congress did not identify unionization of independent contractors “as a threat to the free flow of goods, nor is there any indication that allowing them to participate in the collective action would threaten the independence of labor organizations or the rights of management.”

As further support for its holding, the District Court cited Section 14(a) of the Act, which allows supervisors to organize, but precludes the Board from compelling employers to recognize such unions.  No similar provision exists for independent contractors, agricultural laborers, or domestic workers, so the Court concluded the Act treated these groups alike.

Interestingly, the District Court did not engage in a deep analysis of Congress’ purpose for excluding independent contractors or whether, like the supervisor exclusion, those reasons justified preemption of state law, let alone did it examine whether the Act’s purpose in regulating the free flow of commerce constituted preemption.  It merely concluded that the justifications behind the independent contractor exclusion were different than those driving the supervisor exclusion and, because there was no express exemption specifically applicable to independent contractors like there was for supervisors, independent contractors were intended to be treated “more like the other excluded groups who have long been the subject of state regulation.”

On August 24, 2017, the Chamber filed a motion for injunction relief pending appeal of the District Court’s Order.  The same federal judge that granted Seattle’s motion to dismiss denied the Chamber’s motion for preliminary injunction, thereby permitting the Union to commence its organizing drive of Uber and Lyft drivers.

Ninth Circuit Temporarily Grants The Chambers’ Emergency Motion For Injunction Relief While It Considers The Merits Of The Motion

On August 29, 2017, the Chamber filed an emergency motion for injunctive relief with the Ninth Circuit Court of Appeal.  The Ninth Circuit temporarily granted the motion while the Court considered the merits of the motion.  Seattle filed its opposition to the Motion on September 5, 2017, and the Chamber’s filed its reply September 7, 2017.  Importantly, this truly could only be a temporary reprieve for rideshare companies as the Ninth Circuit Provided no indication one way or the other as to its leaning on the merits.

The Fate Of Unionization of Rideshare Drivers

Ninth Circuit’s ruling effectively stayed the Union’s right to begin its efforts to unionize Uber and Lyft drivers, but this reprieve may only be temporary.  If the Ninth Circuit denies the emergency motion, it will clear the way for Teamsters, Local 117 to begin its organizing drive while the Chamber appeals the dismissal of its lawsuit to block the Ordinance.  However, even if the Court denies injunctive relief and Teamsters successfully organizes the drivers, the Ninth Circuit could still decide the Act preempts Seattle’s unprecedented ordinance and reverse the Union’s gain.  If Ninth Circuit sides with Seattle, though, and permits the Ordinance to stand, this scenario will likely be repeated in other cities across the nation as Unions, with the aid of the members of city councils and legislatures they funded and elected, desperately seek to reverse the long running trend of declining membership by targeting new industries.  And if this occurs, the rideshare industry will likely be dramatically transformed in fundamental ways – ways that may destroy the flexibility and affordability that made this industry so popular in the first place.

In NLRB v. Pier Sixty, LLC, the Second Circuit held that an employee’s expletive-laden Facebook post – which hurled vulgar attacks at his manager, his manager’s mother and his family – did not result in the employee losing the protection of the National Labor Relations Act (“Act”).  But even though the Second Circuit conferred protected status on this unquestionably obscene post, it did not create a protected right to level profane verbal assaults on management when discussing union business.  Such conduct has been, and will continue to be, unprotected in most circumstances.  Nevertheless, this case acts as an important reminder for employers:  if they choose to allow vulgar conduct in the workplace when it does not pertain to union activity, they must also allow it when it does.

A Pier Sixty Employee Posted an Obscene, Pro-Union Facebook Message in Response to Management’s Alleged Disrespect

Pier Sixty operates a catering company in New York, New York. In 2011, its employees embarked on a tense organizing campaign during which management allegedly threatened employees with discipline for union activity, disparately enforced a no-talk rule and told employees “bargaining would start from scratch” if they voted to unionize.  Two days before the election, Hernan Perez, a server employed by Pier Sixty, posted a vulgar Facebook message after his supervisor gave him instructions in a tone that Perez perceived to be disrespectful.  That post read:

Bob is such a NASTY [expletive] don’t know how to talk to people!!!  [Expletive] his mother and his entire [expletive] family!!!!  What a LOSER!!!  Vote YES for the UNION.

The Facebook post was accessible by Perez’s Facebook friends, which included 10 coworkers, and by the public, although Perez insisted he did not know that at the time. Perez deleted the post three days later, but Pier Sixty management had already learned about it and, after conducting an investigation, terminated Perez.

Perez’s Facebook Post Constituted Protected Activity Because Pier Sixty Routinely Tolerated Similarly Profane Outbursts from Employees

The Second Circuit ultimately concluded that Perez’s Facebook post constituted protected activity because Pier Sixty routinely permitted vulgarities in the workplace. Notwithstanding the profane language, Perez’s post “explicitly protested” management’s mistreatment and “exhorted employees to ‘Vote YES,’” while Pier Sixty’s anti-union animus was uncontested.  Given these circumstances, “the Board could reasonably determine that Perez’s outburst was not an idiosyncratic reaction to a manager’s request but part of a tense debate over managerial mistreatment in the period before the representation election.”  Moreover, Pier Sixty consistently tolerated “widespread profanity in the workplace,” and both management and employees used “daily obscenities” without consequence.  In the six years preceding Perez’s termination, there had only been five written warnings issued for such language and no terminations – until Perez. The Second Circuit noted that “it is striking that Perez – who had been a server at Pier Sixty for thirteen years – was fired for profanities two days before the Union election when no employee had ever before been sanctioned (much less fired) for profanity.”

The Second Circuit also found the manner in which Perez communicated his ire to be significant. Social media is a “key medium of communication among coworkers and a tool for organization in modern era,” and, despite publicly posting the message, Perez’s outburst did not occur “in the immediate presence of customers nor did it disrupt the catering event.” Thus, the Court found the post to be distinguishable from other “opprobrious conduct” cases it had considered.

Notably, although the Second Circuit deemed Perez’s post to be protected under the Act, it also cautioned, “this case seems to us to sit at the outer-bounds of protected, union-related comments, and any test for evaluating ‘opprobrious conduct’ must be sufficiently sensitive to employers’ legitimate disciplinary interests.”

Court Questioned the Validity of the Board’s “Totality of the Circumstances” Test

In 2012, the Second Circuit, in NLRB v. Starbucks, 679 F.3d 70 (2012), concluded that the test traditionally employed by the Board to assess whether obscenities uttered in the workplace constitute protected activity – the Atlantic Steel test – did not sufficiently accommodate employers’ legitimate interest in preventing employees’ public outbursts in the presence of customers and remanded the case to the Board to develop “more balanced standards for evaluating ‘opprobrious’ conduct in that context.”  The Office of the General Counsel subsequently issued Memorandum OM 12-59, which set forth a nine-factor “totality of the circumstances” test to assess the protected nature of employees’ social media communications, which the Second Circuit characterized as “more employee-friendly.”  The Board employed this test in Pier Sixty, LLC, but the Second Circuit questioned the test’s legitimacy, stating that “we are not convinced the amorphous ‘totality of the circumstances’ test adequately balances an employer’s interests…”  Ultimately, though, because Pier Sixty did not object to it the Second Circuit applied the test – without sanctioning its validity.

Lessons Learned From Pier Sixty

This case serves as a reminder that employers must take the long view when deciding whether to discipline employees for workplace conduct that is inappropriate but not particularly offensive to the employer. Here, Perez’s posting would have likely fallen outside the bounds of protected activity had Pier Sixty disciplined employees for similar vulgarities in the workplace.  However, because Pier Sixty routinely tolerated such conduct from management and employees alike, the Second Circuit could not find that Perez’s conduct was “so egregious as to exceed the NLRA’s protection.”

This case also signals that the Second Circuit, and perhaps other courts, may be willing to abandon the Board’s “totality of the circumstances” test in favor of a standard that better protects employer’s legitimate interests in regulating employees’ workplace conduct. Employers defending cases in which the Board employs this test should vigorously argue that this standard improperly intrudes upon their legitimate business interests.

Featured on Employment Law This Week – Philip Miscimarra, Acting Chairman of the National Labor Relations Board (NLRB), has given a strong indication of the changes likely to come once President Trump fills vacant seats on the NLRB.

In a sharply worded dissent, Miscimarra doubled down on his disagreement with the NLRB’s controversial 2014 rule on union representation elections. Miscimarra argues that the rule’s heavy emphasis on election speed interferes with an employee’s right to make informed decisions on union representation and is inconsistent with the requirements of the statute. In another dissent, he argues that the NLRB’s current standard for reviewing employee handbook provisions “defies common sense” and should be replaced with a test balancing competing interests.

Watch the segment below and see our recent post.

On February 16, 2017, tens of thousands of individuals across the country stayed home from work as part of the “Day Without Immigrants,” a social activism campaign organized in response to President Donald Trump’s recent executive orders concerning immigration and increased enforcement, deportation actions, and raids by Immigration and Customs Enforcement. The “Day Without Immigrants” action was apparently not coordinated by any centralized organization, but was promoted on social media and by word-of-mouth just days before.

Now, the same groups that organized the January 21, 2017 Women’s March on Washington – an action participated in by millions of individuals across the county – has called for a “Day Without Women” to be held on Wednesday, March 8, 2017. Organizers are encouraging women to participate by taking the day off from paid and unpaid labor, and by wearing red – which the organizers note “may be a great act of defiance for some uniformed workers.”

Employers should be prepared to address any difficult questions that might arise in connection with the upcoming “Day Without Women” strike: Do I have to give my employees time off to participate in Day Without events? Can I still enforce the company dress code – or do I need to permit employees to wear red? Can I discipline an employee who is “no call, no show” to work that day? Am I required to approve requests for the day off by employees who want to participate? As we explained in our prior blog post, guidance from the National Labor Relations Board’s General Counsel suggests that an employer can rely on its “lawful and neutrally-applied work rules” to make decisions about granting requests for time off, enforcing its dress code, and disciplining employees for attendance rule violations. An employer’s response, however, to a given employee’s request for time off or for an exception to the dress code, may vary widely based upon the individual facts and circumstances of each case.

As we previously noted, participation in events such as these may be protected concerted activity under the National Labor Relations Act (the “Act”). When employees take action to “improve their lot as employees through channels outside the immediate employee-employer relationship,” that activity is protected concerted activity under Section 7 of the Act so long as it has a direct connection to the employees’ working conditions. GC Memorandum 08-10 (2008), pgs. 1, 10 (citing Eastex, Inc. v. NLRB, 437 U.S. 556, 565 (1978)). There are, of course, some limitations on employees’ right to engage in concerted political activity. In GC Memo 08-10, issued in 2008, the Board’s General Counsel concluded that under existing Supreme Court and Board precedent, when employees exert economic pressure on their employer by leaving work to support a political cause, that activity may not be protected if the employer has “no control over the outcome of that dispute.” GC Memo 08-10, pg. 10.

However, even if employees’ participation in these mass demonstrations and strikes is considered protected concerted activity (as it concerns a specific issue directly connected to their work conditions and terms), an employer may still regulate that activity through its “lawful and neutrally-applied work rules.” GC Memo 08-10, pg. 13.

Similarly, an employer can rely on its lawful, uniformly-applied policies to evaluate whether to grant a request for time off to participate in Day Without Women activities – by asking, for example, whether the employee has sufficient accrued time, or has given enough advance notice, or has found someone to cover his work shift if that is ordinarily required. An employer may also apply its neutral attendance policy (which complies with all applicable leave laws, including local paid sick leave laws) to discipline an employee who simply fails to report to work without calling out.

What Employers Should Do Now

All employers should be prepared to address these issues as they arise – if not this week, then in the coming weeks and months if these types of mass protests continue. As described above, an employer’s reaction to its employees’ expressed desire to participate in these events will vary widely based on the individual circumstances at issue.

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.

 

Steven M. Swirsky
Steven M. Swirsky

In a further incursion into the area of the gig and new age economy, the Regional Director for the National Labor Relations Board’s Los Angeles office has issued an unfair labor practice complaint alleging that it is a violation of the National Labor Relations Act (the “Act”) for an employer to misclassify an employee as an independent contractor.

The Complaint, which is based on a charge filed by the International Brotherhood of Teamsters, through its’ Justice For Port Truck Drivers  campaign, asserts that Intermodal Bridge Transport (“IBT”) “has misclassified its employee drivers as independent contractors, thereby inhibiting them from engaging in Section 7 activity and depriving them of the protections of the Act. The theory behind the ULP charge and complaint is that the Act gives employees the right to unionize and engage in other protected, concerted activity, and that if an employer misclassifies a worker as an independent contractor, it unlawfully deprives the worker of those rights.

The issuance of the complaint in this case comes less than a month after the Board’s General Counsel issued General Counsel Memorandum 16-01, Mandatory Submissions to Advice, identifying the types of cases that reflected “matters that involve General Counsel initiatives and/or priority areas of the law and labor policy.”  Among the top priorities are “Cases involving the employment status of workers in the on-demand economy,” and “Cases involving the question of whether the misclassification of employees as independent contractors,” which as reflected in the IBT complaint the General Counsel contends violates Section 8(a)(1) of the Act.

Clearly organized labor is using the General Counsel Memorandum as an invitation to present cases raising the issues the General Counsel is seeking to litigate.  We will continue to report as additional cases emerge from the General Counsel’s wish list of priorities and initiatives.