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.

On April 25, 2017, Dorothy Dougherty, Deputy Assistant Secretary of the Occupational Safety and Health Administration (“OSHA”) and Thomas Galassi, Director of OSHA’s Directorate of Enforcement Programs, issued a Memorandum to the agency’s Regional Administrators notifying them of the withdrawal of its previous guidance, commonly referred to as the Fairfax Memorandum, permitting “workers at a worksite without a collective bargaining agreement” to designate “a person affiliated with a union or community organization to act on their behalf as a walkaround representative” during an OSHA workplace investigation.

The Lawsuit Challenging the Participation of Union Representatives in OSHA Inspections

Two days later, on April 27, 2017, the National Federation of Independent Business filed a  with the United States District Court for the Northern District of Texas, effectively declaring victory in their lawsuit challenging the issuance of the Fairfax Memorandum as being inconsistent with and unsupported by the Occupational Safety and Health Act, and the regulations issued under it allowing for the limited participation of third party experts during OSHA conducted workplace safety inspections.

For readers who have been following this issue and the litigation, the withdrawal of the Fairfax Memorandum and the plaintiff’s decision to discontinue their law suit should come as no surprise. This past February, the court denied OSHA’s motion to dismiss the lawsuit challenging the Fairfax Memorandum and OSHA’s decision to allow the participation of union representatives in non-union workplaces, finding that the plaintiff had “stated a claim upon which relief can be granted,” and that “the [Fairfax Memorandum] flatly contradicts a prior legislative rule as to whether the employee representative” in such a walk-around inspection “must himself be an employee.”

OSHA and the DOL’s Decision to Withdraw the Fairfax Memorandum

Less than a week later, OSHA filed an Unopposed Motion For Extension of time to answer the complaint in the Federation’s lawsuit, explaining to the Court that “the extension of the deadline for defendants to answer is necessary to allow incoming leadership personnel at the United States Department of Labor adequate time to consider the issues.”

The Memorandum withdrawing the Fairfax Memorandum reiterates the requirements of 29 CFR 1903.8 (c) that an employee representative who accompanies an OSHA representative during a walkaround workplace inspection “shall be an employee of the employer,” and that the only exceptions in which a non-employee may participate is “where good cause is shown” and the participation of a non-employee, such as an industrial hygienist or a safety engineer” is “reasonably necessary to the conduct of an effective and thorough inspection of the workplace” in the judgment of the OSHA Compliance and Safety Health Officer conducting the examination. Notably, however, rather than actually stating that the Fairfax Memorandum was inconsistent with the provisions of the statute or the OSHA regulations, the April 25th memorandum simply refers to it as “unnecessary.”

What this Means for Employers

First and foremost, OSHA’s issuance of the April 25th memorandum makes clear that union representatives who are not the certified or recognized bargaining representative of the employees at a facility to be inspected by OSHA have no legal right to participate in such inspections.  Accordingly, it is equally clear that an employer faced with such an inspection at a facility that a union is seeking to organize should understand that the union’s representatives have no right to participate.

An important effect of the withdrawal of the Fairfax Memorandum will be to deny unions a potentially potent tool for organizing. As Judge Fitzwater described in his Memorandum and Order denying OSHA’s motion to dismiss the Federation’s lawsuit in February, unions such as the UAW in its ongoing organizing campaign at Nissan in Tennessee have come to rely upon participation in OSHA inspections as a valuable tool.

No doubt with the confirmation of Secretary Acosta, leadership of the Department of Labor will continue to review and reassess positions and actions taken during the past eight years.

Featured on Employment Law This Week:  An employee’s Facebook rant was protected activity, says the Second Circuit.

In the midst of a tense union campaign, a catering company employee posted a profanity-laced message on Facebook. The post insulted his supervisor and encouraged colleagues to vote for unionization. The employee was subsequently fired. Upholding an NLRB ruling, a panel for the Second Circuit found that the post was protected under the NLRA and the employee should not have been terminated. The Court noted that Facebook is a modern tool used for organizing. Our colleague Ian Carleton Schaefer is interviewed.

Watch the segment below and read our recent post about the ruling.

The National Labor Relations Board (“NLRB” or “Board”) has reversed the findings of an Administrative Law Judge (“ALJ”) who found that an employee who was told he was fired and then almost instantly told by the owner of the company he worked for that he was not fired and continued to work without any loss of compensation or working time had in fact been unlawfully discharged in violation of the National Labor Relations Act (“NLRA” or the “Act”). It would seem that if “discharge is the ‘capital punishment’ of employment,” this case presents a rare example, in the Board’s eyes of an out of body after death experience, in which the executioner is held liable for killing someone who is unquestionably still alive.

Complaints About a Supervisor of Non-Union Employees: Concerted Protected Activity

The case involved employees who were neither represented by a union nor seeking to become represented who did paving and related work for a paving contractor that was performing work at the University of Arizona’s Tech Park location. Over time the employees had a number of complaints about what they considered to be rude, demeaning and unprofessional remarks and treatment by the supervisor of their crew. They sought out the owner and met with him to express their concerns and to ask him to reign in or replace the supervisor. Under the Act, this was deemed to be concerted and protected activity concerning their terms and conditions of employment.

The Board Reversed Its Own Administrative Law Judge

In Bates Paving & Sealing, Inc., 364 NLRB No. 46 (2016), Chairman Mark Pearce and Member Kent Hirozawa, acting on Exceptions filed on behalf of the Board’s General Counsel reversed the decision of ALJ Amita Baman Tracy who had found, based on her review of the evidence including the credibility of witnesses including employee Juan Marana (“Marana”), that the evidence did not support the General Counsel’s claim that Bates Paving had discharged Marana in a heated meeting between employees and the owner of the company about concerns the employees had expressed about their treatment at the hands of their immediate supervisor, Robert Padilla (“Padilla”) and what the owner told the workers were problems with their work on a recent paving project. Marana claimed that as tempers rose in the meeting, the owner told him he was “f***ing fired,” and that he should leave.   The ALJ found that Marana’s testimony was not credible and was in fact contradicted by the sworn affidavit he provided to the NLRB during the investigation of the unfair labor practice charge. In fact, the ALJ pointed out in her decision that in his affidavit, the owner “told him that he was not fired,” and that Marana’s “responses changed throughout his testimony.”

Marana admitted that after the meeting where he exchanged words with the owner, the owner made it clear to him that he was not fired and that he should work the next day as scheduled. Marana also admitted, as both the ALJ and the Board found, that he did not lose even a single hour’s pay.

The ALJ did not however give the company a clean pass on its actions at this and found that the owner had in fact told Marana to leave and to stop his statements about the supervisor. However while she that the owner’s statements about firing Marana “would tend to restrain or interfere with employees in the exercise of their Section 7 rights.” Because she concluded that Marana was not discharged, whatever the employer may have said, the employer could not be found to have unlawfully discharged him because he did not lose his job.

Why The Board Disagreed With the ALJ

Although the Board did not expressly overrule the ALJ on the facts, in reality they did just that. While the ALJ found Marana not to be credible, essentially because she concluded that he knew he was not fired and in reality never lost even an hour’s worth of pay, the Board took what can be described as an absolutist view of the facts, and concluded, perhaps in a subconscious channeling of Donald Trump’s trademark line from The Apprentice (“You’re fired!”), that the very act of saying the words constitutes a discharge, the “capital punishment” of employment. However it seems that at most what the employer here did was threaten to invoke the industrial death penalty, and not the act of execution.

The Board tried to justify its overriding of the ALJ’s credibility determination, i.e. her finding that Marana did not really believe he was actually fired, by focusing not on what he thought but on what message the other employees who were present in the meeting or heard of it later would take away. In this regard the majority wrote

An employer cannot avoid Board sanction simply by reversing the discharge before an employee suffers financial costs. The message has been sent that the employer is willing to take this extreme action and the employee victim is likely to understand that a “change of heart” may not come so quickly, if at all, if he again engages in protected concerted activity.

What Does This Mean For Employers

There are a number of important takeaways in the Board’s decision in Bates Paving & Sealing. They include not only a reminder that the Act applies and employees are protected in a wide range of circumstances where there is neither union representation in the picture nor any suggestion that employees may be seeking to bargain or to designate a union to bargain on their behalf.

The decision clearly demonstrates that the Board is continuing to aggressively apply the concept of protected concerted activity. It also delivers the message that the adage “No Harm, No Foul,” does not apply in labor law. Innocent or momentary lapses in judgment are likely not to be excused even where an employer quickly undoes any potential harm, if the matter gets to the Board’s attention.

The National Labor Relations Board (“NLRB” or “Board”) announced in its 3-1 decision in Miller & Anderson, 364 NLRB #39 (2016) that it will now conduct representation elections and require collective bargaining in single combined units composed of what it refers to as “solely employed employees” and “jointly employed employees,” meaning that two separate employers will be required to join together to bargain over such employees’ terms and conditions of employment.” To understand the significance of Miller & Anderson, one must consider the Board’s August 2015 decision in Browning Ferris Industries (“BFI”), in which the Board adopted a new and far more relaxed standard for holding two entities to be joint employers.

As the Board explained in its press release trumpeting the Miller & Anderson decision, it will now hold elections and require bargaining in “petitioned-for units combining solely and jointly employed workers of a single user employer,” in those cases in which a union asks for such a mixed employer unit so long as the Board finds the jointly and solely employed workers “share a community of interest,” under the Board’s “traditional community of interest factors for determining unit appropriateness.”

Oakwood Care Center Overruled – Employers’ Consent No Longer Required

Board has overturned its 2004 decision in Oakwood Care Center, 343 NLRB 659 and held that when a union petitions for a representation election in a unit that includes both “solely employed” and jointly employed employees of a single “user employer” the Board will no longer require the consent of the employer or employers before directing such an election and certifying a union to represent such a unit. What this means essentially is that unions alone will now have the right to decide when and where they will require such mixed units.

Like it did in BFI, the Board again justified overruling precedent in part based on “changes in the American economy,” finding “Oakwood imposes additional requirement that are disconnected from the reality of today’s workforce and are not compelled by the Act.”

“User Employers” and “Supplier Employers” Will Be Required to Bargain Together

In BFI, the Board held that a business will be held to be a joint employer of another employer’s employees where it has the ability to impact the terms and conditions of the other employer’s employees even if it never exercises that right. Under the new standard enunciated by the Board majority in that case, “[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.”

Now, under Miller & Anderson, such a user employer will be required to bargain over the terms and conditions of a supplier employer’s employees as to whom the Board finds it to be a joint employer.  Additionally, the supplier employer will also have to bargain over the jointly employed employees’ terms and conditions.  In overruling precedent and imposing a new combined unit bargaining obligation, the Board reasoned that requiring consent of both employers for a combined unit of jointly and non-jointly employed employees did not afford employees “the fullest freedom” to “self-organization.”  However, as Member Miscimarra’s dissent points out, the Board majority attempts to explain away the specific language of Section 9(b) of the NLRA and applicable legislative history limiting the broadest units the Board can impose to “employer units” as opposed to multi-employer units.

The potential for confusion and uncertainty is enormous. In an attempt to minimize these concerns, the Board majority stated that the so-called user employer’s bargaining obligations will be limited to those of such workers’ terms and conditions that it possesses “the authority to control.”

What Does All of This Mean?

As we pointed out, the Board’s decision in Miller & Anderson, which has been anticipated for more than one year, is another critical link in the current Board’s efforts to make it easier for unions to successfully organize and obtain bargaining rights.  It should be seen as the next step in the progression that began with the Board’s change in its representation election rules that were designed for quicker elections and representation proceedings in which employers lost their right to litigate critical unit and supervisory status issues before an election is directed, and to appeal of a Regional Director’s decision and direction of election before an election is conducted, and the time they have traditionally had to communicate with employees before they vote in an election.

When employers voiced their concern that the new election rules would mean that they would in many instances not have any meaningful opportunity to present counterarguments to a union’s promises before a vote took place, the Board and other advocates for the expedited rules countered that this was an empty argument and that employers were almost always aware of union activity long before a petition was filed. That argument now looks particularly empty given Miller & Anderson’s dictates allowing petitions for user and supplier employers’ employees in the same unit, where at least one of the two joint employers will likely be totally aware of what is occurring among a group of another employer’s employees.

Similarly, while the Board suggests that the supplier and user employer will only have an obligation to bargain over those terms and conditions they possess the authority to control, the fact is that this is an invitation to extensive litigation and disagreement over which entity has the “authority” to control which terms and conditions.

What Should Employers Do Now?

At a minimum, a detailed risk assessment of an employer’s workforce and its reliance upon its own employees and temporaries, leased and contract labor employed and controlled, in whole or in part, by so-called supplier employers is in order. “User” employers should determine the goals and risks associated with a relationship and determine whether it is possible and/or desirable to avoid a joint employer relationship or embrace it but attempt to control liability.  Both “supplier” and “user” employers should look for contractual provisions regarding defining the relationship, including who controls and does not control certain aspects, indemnification provisions, provisions related to responses and responsibilities related to union organizing and collective bargaining and similar concerns.  Experienced labor counsel should be consulted to assist in these issues.

Last week we reported on the June 3rd vote by Gawker media’s employees for union representation and speculated what it meant in the broader context of union organizing among Millennials.

Today, Rachel L. Swarns of the New York Times provided some insight based on interviews and reporting with Gawker workers.

The article notes a recent study by the Pew Research Center finding that those in the 18-29 age group view unions more favorably than those in other age groups, with almost twice as many having a favorable view of unions than those who don’t.

Swarns also points out the issues that organizers from the Writers Guild concentrated on during the organizing drive: severance, set minimum salaries for every job, annual meetings with supervisors to discuss performance, salaries and promotions, and contractual restrictions on the company’s ability to make changes to medical coverage without the union’s agreement.

As the article concludes, while both sides may have treated the union drive in a less adversarial manner than is typical, negotiations for a contract will be the hard part.  That comes next.

Updated, 12/12/14 — In its Purple Communications, Inc., decision, the National Labor Relations Board (“NLRB” or “Board”) has ruled that “employee use of email for statutorily protected communications on nonworking time must presumptively be permitted” by employers that provide employees with access to email at work.  While the majority in Purple Communications characterized the decision as “carefully limited,” in reality, it appears to be a major game changer.  This decision applies to all employers, not only those that have union-represented employees or that are in the midst of union organizing campaigns.

Under this decision, which applies to both unionized and non-union workplaces alike, if an employer allows employees to use its email system at work, use of the email system “for statutorily protected communications on nonworking time must presumptively be permitted . . . .” In other words, if an employee has access to email at work and is ever allowed to use it to send or receive nonwork emails, the employee is permitted to use his or her work email to communicate with coworkers about union-related issues.

In Purple Communications, the NLRB rejects its analysis in its 2007 decision in Register Guard, which the Board now finds “was clearly incorrect.” In Register Guard, the Board held that “employees have no statutory right to use the[ir] [employer’s] e-mail system” to participate in pro- or anti-union activity protected under the National Labor Relations Act (“Act”) (emphasis added).

Register Guard’s reasoning was based on principles respecting the right of employers to control access to, and use of, their property.  In Purple Communications, the Board majority not only argues that the use of email systems is not a matter of property but  goes on to say that Register Guard gave “too much weight to employers’ property rights” and “undervalued employees’ core Section 7 right to communicate in the workplace about their terms and conditions of employment.”

Purple Communications establishes a new presumption that employees who have access to email at work must be permitted to utilize the systems for communication about terms and conditions and otherwise exercise their Section 7 rights during “nonworking” times. This presumption, however, ignores the likelihood that such emails, which may have been written or sent outside of working time, will likely be opened or read during working time.  The decision also suggests that if employees are allowed to use their employers’ email systems for nonwork emails during working time, they must be able to use the systems for communication about unions and the terms and conditions during working times as well.  Further, if an employer is inconsistent in the application of such policies (e.g., permits other nonwork emails to be sent during working time, but does not permit union-related emails to be sent during this time), it is likely to be found to have violated employees’ rights under the Act and have committed an unfair labor practice.

The decision is also a major departure from established Board law that considered, on the one hand, employees’ need for access to or use of employer property (whether real property or business equipment) for the exercise of their Section 7 rights, against, on the other hand, the employer’s right to limit access to or use of its property.  Not only does the decision hold that employees are presumptively permitted to use their employers’ email systems to communicate in a union organizing campaign or concerning terms and conditions, it allows employees, in most circumstances, to use company email systems to send documents—such as authorization cards, videos, flyers, and other attachments—in most circumstances.

While the majority opinion in Purple Communications states that employers may be able, in certain circumstances, to restrict or prohibit the use of the systems for communications concerning terms and conditions where such a restriction is necessary to “maintain production and discipline,” the burden will be on an employer to establish why such a prohibition or restriction is necessary.  That burden is likely to be a heavy one.

As the Board has stated, while an employer may rebut the presumption (of the right to use the email systems) “by demonstrating special circumstances necessary to maintain production or discipline justify restricting its employees’ rights,” the burden will be steep.  “It will be the rare case where special circumstances justify a total ban on nonwork email use by employees,” and an employer seeking to meet that burden “must demonstrate the connection between the interest it asserts and the restriction.”

The Board has declared today’s email systems to be “the primary means of workplace discourse,” and that Register Guard “undervalued employees’ core Section 7 right to communicate in the workplace about their terms and conditions of employment, while giving too much weight to employers’ property interests.”  Although the Purple Communications decision appears to try and explain why the holding in Register Guard was “wrong,” the majority’s reasoning is actually based on the notion that “everyone uses email.” Further, emailing at work is an important means of communication for workers to communicate with one another and, therefore, the Board members think that they should be allowed to use it to “talk” about their terms and conditions of employment, including union organizing and a broad range of other topics.

As the decision points out, an important challenge that employers will now face is the balancing of, on one hand, their responsibilities for monitoring content and usage of their systems to ensure adherence to workplace rules and policies concerning compliance matters and inappropriate and prohibited uses of the email system with, on the other hand, possible claims of unlawful surveillance stemming from efforts to ensure that employees do not violate legitimate rules and standards relating to their use of the email systems.

In this regard, the Board states that the “decision does not prevent employers from continuing, as many already do, to monitor their computers and email systems for legitimate management reasons, such as ensuring productivity and preventing email use for purposes of harassment or other activities that could give rise to employer liability.”  While the Purple Communications decision states that “an employer’s monitoring of electronic communications on its email system will . . . be lawful so long as the employer does nothing out of the ordinary, such as increasing its monitoring during an organizational campaign or focusing its monitoring efforts on protected conduct or union activists,” it is easy to foresee the burdens that employers are likely to face in defending against unfair labor practice charges alleging such discriminatory monitoring.

At least the Board still recognizes that an employer is not “ordinarily prevented from notifying its employees, as many employers also do already, that it monitors (or reserves the right to monitor) computer and email use for legitimate management reasons and that employees may have no expectation of privacy in their use of the employer’s email system.”

While the majority in Purple Communications noted that the rule only applies to email systems at this time and that they are not addressing other systems and means of communication, it is almost certain that when the Board looks at instant messaging and other electronic communications systems in the workplace, it will reach the same conclusion.  If employees are given access to instant messaging and other tools, such as Microsoft Lync and the like and they are allowed to send nonwork related messages, then the Board will likely apply its Purple Communications rationale to those modes of communication as well.

One thing that is obvious is that every employer that uses and allows its employees to use email at work will now need to review its policies and practices concerning access to and use of email systems and the manner in which it carries out such policies.

What Employers Should Do Now

The Purple Communications decision will be applied retroactively to pending charges and representation cases involving issues of employee email use.  The ruling means changes for every company that uses email.  There are a number of steps that employers should take now:

  • Review all existing policies and practices concerning use of and access to email, and revise as necessary to conform to the new realities.
  • Determine not only what the policies and practices say but how they are being applied and enforced throughout the company.
  • Review and consider all policies and practices that involve the monitoring and preservation of email and other electronic communication.
  • Confirm that the company’s policies and practices clearly notify all employees that the company reserves and exercises its right to monitor and review all communications and attachments that are sent from or received on its email systems both internally and externally.
  • Make sure that employees are on notice and understand that they do not have a right to privacy with respect to emails and attachments and that they understand what this means.
  • Consider what the company’s policy should be on limiting the sending, receiving, and reading of nonwork messages during “work time.”
  • Determine whether there are positions within the company where restrictions on the use of email for nonwork purposes is necessary to maintain productivity and discipline.  If such positions exist, consider what restrictions are truly needed, how broad they really need to be, and, perhaps most importantly, how the company would meet its burden to prove that the restrictions are truly necessary and as narrowly drawn as they can be.
  • Train supervisors and managers about these policies and practices and how to communicate with employees about them.

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

Unbalance the Playing Field – Silence the Lawyers 

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

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

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

The Proper Historic Advice Exemption

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

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

The Proposed Rule Would Eviscerate the Advice Exemption

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

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

76 Fed. Reg. 36182 (emphasis added).

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

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

Final Rule Could Interfere With Employer’s Standard Labor Needs

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

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

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

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

 

 

On August 1st President Obama made a bold statement by appointing Richard Griffin to serve as the NLRB’s General Counsel only three days after the former union lawyer vacated his unconstitutional recess appointment as a NLRB Board Member. The President statement by appointment made at least two things clear –

  1. The President wants an aggressive pro-labor General Counsel and NLRB, and
  2. The President values advancing the labor agenda over cooperation with the US Senate.

As we discussed here on July 30th the Senate confirmed a full Board for the first time in a decade as a result of a “deal” in which Senate Republicans capitulated to a threat from Senate Democrats to change the rules on filibusters. We noted last week that this deal was likely not a good deal at all for employers as it resulted in three former union lawyers appointed as the controlling majority of the Board.

For employers, one of the only concessions of the “deal” was that it resulted in the withdrawal of the pending nominations of Griffin and Sharon Block to the Board. Griffin and Block of course had served as unconstitutionally appointed recess appointments since January 2012. During their period on the Board they issued a number of controversial pro-labor decisions and were generally viewed as activist Board members. To the chagrin of employers and Congressional Republicans they also continued to issue decisions even after multiple Courts of Appeals ruled they were unconstitutionally appointed and had no authority to act. In May Senator Lamar Alexander (R-Tenn.) encapsulated the view of many noting:

My problem is that they continued to decide cases after the federal appellate court unanimously decided they were unconstitutionally appointed. Not only has the President shown a lack of respect for the Constitutional role of the separation of powers… but I believe [Griffin and Block] have as well.

The President’s withdrawal of their nominations was a symbolic, if not substantive victory.

By nominating Griffin to serve as the agency’s top lawyer and prosecutor, the President has both symbolically and substantively thumbed his nose at the Senate Republicans and employers.

In fact, rather than removing Griffin’s influence from the Board by the deal, it seems that the President may have actually enhanced that influence. As the General Counsel Griffin will serve an important policy role in deciding where the prosecutorial direction of the Board. The General Counsel has the final say in whether the Board pursues cases which reverse existing Board precedent, continue recent expansions of Section 7 rights or create entire new theories of employer liability. The recent Boeing controversy as well as the assault on “at-will” agreements, social media policies and similar common sense employer policies are all the result of an aggressive NLRB General Counsel flexing his muscles.

With Griffin’s appointment to such an important position, employers have reason for concern. As if not borne out by the decisions of the Board since he was appointed, Griffin has a long history as a union advocate. For nearly twenty years prior to his 2012 recess appointment to Griffin was employed by the International Union of Operating Engineers as its counsel, rising to serve as the union’s General Counsel and to serve as on the board of directors of the AFL-CIO Lawyers Coordinating Committee. Griffin will now serve as the top prosecutor bringing cases before a Board, the majority of which is comprised of his former union lawyer colleagues.

While Griffin technically needs to be confirmed by the Senate to be General Counsel, in the absence of a confirmation, the Act permits the President to appoint Griffin as Acting General Counsel at any time, and to serve in that role the full powers of a confirmed General Counsel. In fact, Lafe Solomon, the current Acting General Counsel, has been serving in that capacity sine June 2010 without confirmation. So in essence, as soon as the President wants Solomon to pass the baton to Griffin, Griffin will start serving in his new role.

Management Missives

  • Employers should not expect a reversal of course for the Office of the General Counsel as Griffin is likely to continue, if not expand the efforts of Solomon to broaden the Board’s role in non-union workplaces.
  • Union-free employers should dust off their union avoidance programs and redouble their efforts.
  • Unionized employers should be prepared for more strident and aggressive unions.
  • All employers should review their policies and procedures to ensure they are not susceptible to challenge under the Board’s recent pronouncements.

In the past week media reports abound regarding a controversial allegedly “anti-union” statement made by a high level executive associated with the iconic snack cake Twinkies.  As widely reported late last year, the original Twinkie maker, Hostess Brands, Inc.,  was forced to close, liquidate and lay off its entire unionized workforce, publicly blaming the recalcitrance of its unions for the company’s downfall.  However, these statements did not cause this most recent controversy.  Rather, it was comments from an executive connected with Hostess Brands LLC, the newly formed company which acquired many of the assets of the bankrupt predecessor, including the rights to make Twinkies, which spurred public attention.

As the snack cake savior prepares to reopen plants and hire a new workforce, interest has swirled as to when and how the new company would operate.  Specifically, in an April 24th Wall Street Journal article the executive opined of the new Twinkie maker that “We do not expect to be involved in the union going forward.”

This comment sparked controversy causing Hostess Brands LLC to walk back or clarify the statements and leading to some to opine that executives should not comment on labor matters.  In fact, the headline of a May 2nd Law360 article asserted that “Silence Can Be Golden.”  This is not the first labor or union related comment by a high level executive of a company to generate controversy and it was met with predictable attention.  The question is it advisable or practical to attempt to silence executives on labor matters?

Each situation will be different and certainly there will be times where public comment is not advisable, however, there are other times where the opinion or position of the company, announced from the highest levels, can advance an employer’s labor goals or even support corporate or marketing efforts.  For example, allowing employees, investors, customers and/or suppliers know what a company intends or is prepared for can be reassuring and yield positive results.  Informing employees of the realities or risks associated with union may even be considered the ethical or honest thing to do.  When crafted and used properly such comments can be a powerful weapon, both in communicating to employees and the market.  In recognition of this, and acknowledging that unions are rarely silent, self-imposed unilateral disarmament is not always the best option.

To be clear, compliance with the National Labor Relations Act is full of pitfalls, especially under the current aggressively pro-union Board, and comments can result in legal and PR issues.  That said, employers and their executives should start by understanding they too have rights and that Section 8(c) of the Act protects the privilege of every employer to engage in free speech.  Specifically, Section 8(c) guarantees employers to right to communicate establishing:

The expressing of any views, argument, or opinion, or the dissemination thereof, whether in written, printed, graphic, or visual form, shall not constitute or be evidence of an unfair labor practice under any of the provisions of this Act, if such expression contains no threat of reprisal or force or promise of benefit.

This allows employers and executives to, among other things, lawfully communicate in the following ways:

  • Assert facts such as “the employees did not get paid during the strike and ended up losing their jobs after listening to union leaders.
  • Express opinions, any thing from “I think the unions resulted in the closure of our predecessor’s plants and lay off their employees” to “I think the unions sucked the filling out of the Twinkies and left nothing for the employee’s future.
  • Share their experiences, for example, “We sat through the discussions with the union during the bankruptcy and let them know we would be forced to lay off employees without concessions but the union refused to agree to a reasonable compromise and the employees all lost their jobs.”

Moreover, the law permits employers to have an affirmative position and policy disfavoring union involvement in their business or asserting a tough line bargaining philosophy.  For example, it is lawful for any employer, or executive, to assert in policy or comment:

  • The Company’s position is that while people should be free to join or not join a union, we believe we are the kind of company where employees will decide they do not need a union to speak for them.  We are committed to informing our employees of the reasons we are opposed to third party interference and taking all appropriate actions to lawfully maintain our union free status.

Given the law, certainly establishing a policy to gag executives on labor issues is an a option, but a more realistic and effective approach is to involve and (sparingly) utilize the top executives in labor relations.  In doing so executives should be guided by established corporate policy, educated and prepared on not only what and when to communicate but the process to make sure communications are both legally and strategically appropriate.

 Management Missives

  • Executives and management alike should feel empowered by labor relations communications, not stifled. This is possible with proper legal oversight and preparation.
  • The cornerstone of any labor relations communications strategy should be a written and established policy detailing the corporate position on labor issues.  Such policies can be phrases as Labor Relations, Third Party Interference, Union Free Status or another similar policy which best encapsulates the corporate position.  In developing the policy is it important both to make sure that it is in compliance with the NLRA and also that it has the approval of the highest levels of executive leadership.  Their buy in can be of paramount importance when and if the policy comes in to play.
  • Executives should not only approve of the policy before it is adopted but time should be invested in making sure they understand the policy and how it can be used by them as a guide and tool to advance the company’s objectives.
  • Executives should be educated, beyond the policy, on the do’s and don’ts related to labor related communications.  Obviously, time constraints will typically not permit a full training but quick instruction during a board or management meeting and refresher emails or notices when labor issues are heating up not only guard against potential liability but provide executives needed tools.
  • As any labor related communication has the potential to lead to an unfair labor practice charge, executives should be advised to work with labor counsel, as well as labor relations and public relations, prior to communicating.  This includes any type of communication, whether it be about an intent to operate non-union, responses to union organizing, issues involved in union negotiations, strike related comments or merely general comment of unions.
  • Remember, no two situations are identical.  Employers and their executives need to think strategically about using their Executive Privilege to communicate lawfully about labor matters.