Hunton Employment & Labor Law Perspectives : Employment Lawyers & Attorneys : Hunton & Williams Law Firm : Labor Law Legislative Updates

Currently, the NLRB has four sitting members.  This number will reduce to three when Republican Member Schaumber's term runs out in August, 2010.   All three remaining Board members are Democratic appointees. Typically, a fully constituted Board decides 300 to 400 cases per year and there was already a backlog of several hundred cases to be decided prior to the re-arrival of the 600 cases affected by the Supreme Court's decision.  Thus, the log jam of cases at the Board may continue as the Members wrestle with re-deciding the remanded cases.  It is unlikely that the current Board will overturn those decisions which favored unions or employees and there may be occasion for the new Board to change the law or Board's policy in the reconsideration of some of the cases.

We previously predicted that the new Board will overturn a significant number of decisions rendered in favor of employers during the preceding administration.  The agenda to consider those cases will be directed by the NLRB's General Counsel who has the authority to prioritize the cases coming before the Board.  With the departure of General Counsel Ron Meisburg, the President now has the opportunity to appoint his replacement.  However, even with the appointment of a new general counsel, the remand of these 600 cases may affect the Board's timetable in working through the predicted pro-labor agenda.

DOL’s Office of Labor-Management Standards (“OLMS”) held a public meeting on May 24th in Washington, D.C. regarding DOL’s new proposal.  The purpose of the meeting was to receive comments on the planned rulemaking, and the meeting was considered a “listening session” for DOL.  Following a brief introduction to the issues, the floor was opened to those wishing to provide related comments, which became part of the record for the planned rulemaking.

A number of labor-affiliated attendees at the meeting, including the AFL-CIO and the Mine Workers of America, and spoke in favor of the new regulatory initiative.  On the other side of the aisle, attendees from the business community, such as the U.S. Chamber of Commerce and the National Association of Manufacturers, opined that narrowing section 203(c)’s advice exception would adversely impact attorney-client communications and would hinder the free speech rights of employers.

Speaking on behalf of the U.S. Chamber of Commerce, Michael Eastman, Executive Director of Labor Law Policy, expressed concern that narrowing the advice exception will make it more difficult for employers to obtain legal advice regarding labor relations and the National Labor Relations Act (“NLRA”).  Eastman also stated that the LMRDA is designed to provide disclosure when employers engage third parties to interact with and persuade employees, “because employees may not otherwise know such individuals are agents of the employer,” but that “this is not true in the case of the employer’s supervisors, managers, and officers.” 

The rulemaking process takes some time, and we will let you know as soon as DOL publishes a formal Notice of Proposed Rulemaking, at which time comments on the proposed rule can and should be submitted.

Background

Executive Order 13496 was signed by President Obama on January 30, 2009.  It revokes Executive Order 13201, which required posting of the “Beck Poster” (the Beck Poster advised employees they could not be compelled to join a union or maintain a union membership to keep their jobs, and could restrict the use of their union dues for certain purposes).  The goal of the Order is to ensure federal contracts will not be interrupted by labor unrest.  It is premised on the idea that industrial peace is best achieved by informing workers of their rights under Federal labor law.

After almost a year and a half of rulemaking, the form of the new notice has been finalized.  Hard copies can be obtained from the DOL’s Office of Labor-Management Standards (OLMS) at (202) 693-0123 or by email request at olms-public@dol.gov. 

What The Notice Does 

The new notice informs employees of their rights to organize, join a union, bargain collectively, and engage in other protected concerted activity under the NLRA.  It also gives examples of illegal conduct by employers and unions, and gives contact information for National Labor Relations Board.

Is Your Company Affected?

Companies should carefully scrutinize any federal contracts or subcontracts that are signed or modified after June 21, 2010.  The new posting obligation is triggered by the government agency or department’s inclusion of a notice clause in the government contract.  The  clause may not be included in full, however, so also look for inclusion by reference to “29 CFR Part 471, Appendix A to Subpart A.” 

Exceptions to the posting requirement include federal contracts under $100,000, subcontracts below $10,000, and contracts/subcontracts for work to be performed exclusively outside the territorial U.S.  Also, employers who exclusively employ workers excluded from coverage under the NLRA are not covered.

What Should You Do To Comply?

If the notice clause is present in your contract, the company must conspicuously post the prescribed notice wherever employees covered by the NLRA are engaged in activities related to performance of the contract.  The notice must be posted in all places where notices to employees are customarily posted, both electronically and physically.  Physical postings must be on 11x17 size paper.  For electronic postings, the employer must provide an electronic link to the actual notice.  If a large portion of the company’s workforce is not proficient in English, a translated notice must be provided.  Translations can be obtained from the OLMS.  
 
In addition, the contractor must include provisions requiring posting of the same notice in all subcontracts entered into in connection with the contract.

Penalties and Enforcement

The Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) will conduct evaluations to determine compliance with the new requirement.  It is thus particularly important for any company undergoing audit by the OFCCP to ensure the new notice is posted by June 21, 2010.  The OFCCP has issued a Powerpoint Presentation of guidance to federal contractors.  Employees also may file complaints about noncompliance.

Failure to comply with the notice and posting obligation can result in cancellation, termination or suspension of the government contract, in whole or in part.  The contractor may also be declared ineligible for further government contracts.  In addition, the Secretary of Labor may publish the names of any contractors that have failed to comply. 

The Department’s current policy is to construe the “advice exception” broadly to exclude arrangements where the consultant has no direct contact with employees.  This excludes, for instance, situations where the consultant coordinates a campaign to defeat a union organizing effort, so long as the consultant does not contact employees directly.

The Department now views this policy as overly broad.  It intends to publish notice and comment rulemaking to consider a narrower interpretation of the “advice exception” that more closely implements the Department’s new interpretation of the intent of the LMRDA.  The Department’s goal is twofold:  to provide greater labor-management transparency for the public, and more information to workers to ensure effective participation in the workforce. 
 
The Department has announced a Notice of Public Meeting where interested persons can provide comments, to be held May 24, 2010 in Washington, D.C.    Interested participants can register by calling 202-693-0123 or sending an email to olms-public@dol.gov.  At the same time, the Department will seek comments on whether electronic filing should be mandatory for the Form LM-10 and LM-20 reports.

The rulemaking process takes some time, so new regulations are not likely to be finalized for several months.  However, if the Department narrows the “advice exception” as planned, the impact on employers could be significant.  Employers will no longer be able to shield third-party arrangements from reporting simply by isolating consultants from direct employee contact.  A wider range of consulting arrangements will be open to public scrutiny.  Rather than face increased public reporting, employers may elect to perform in-house more of the activities designed to persuade employees as to their bargaining rights.  Employers will have to weigh the benefit of experienced third-party assistance against the cost of public disclosure.

The final rule was issued by the NMB after several months of discussion.  It will take effect 30 days from its publication in the Federal Register on May 11 and its impact will likely be felt immediately in the airline industry.  The Association of Flight Attendants (“AFA”) has already indicated that it will file for an election at Delta Air Lines once the rule becomes effective.  Unions had previously failed to obtain a majority vote at Delta, but Delta’s composition of union and non-union workers has shifted since 2008 when it merged with a heavily unionized NorthWest Airlines.  The Air Transport Association (“ATA”), which represents most airlines, has also responded to the new rule arguing that the NMB does not have authority to implement the rule.  The ATA is expected to file a lawsuit challenging the validity of rule. 

Although the NMB’s action is specific to the airline and railroad industries, it is notable because it continues the trend of recent pro labor actions.  The rule was proposed by the AFL-CIO after President Obama named Linda Puchala to the NMB.  Puchala was the former head of a flight attendant union and as with the recent appointments to the National Labor Relations Board, her appointment shifted the balance of the NMB in a pro labor direction.  The rule was approved by a 2-1 vote with a dissent by Elizabeth Dougherty who explained that the new rule is “an unprecedented departure for the NMB and represents the most dramatic policy shift in the history of the agency.”

Under Register Guard, employers may prohibit employees from sending non-job related solicitations using the employer’s email system, including union-related communications.  Register Guard established that employers may prohibit this type of email even if the employer permits employees to send personal messages via email, such as an announcement of someone’s birthday, as long as the employer did not discriminate between union and nonunion communications of a similar nature.   

In Oakwood, the Board broadly defined a “supervisor” under the National Labor Relations Act (“NLRA”) as a person who assigns work to other employees using independent judgment and discretion.  Supervisors are not protected under the NLRA and can be ordered to assist the employer in its anti-union activities or discharged for assisting a union.  The Board stated that an individual’s judgment is independent where it is not dictated or controlled by instructions, such as employer policies or rules. 

Should the Board revisit the holding of either case, the result will most likely be employee- and union-friendly. 

In her Register Guard dissent, Board Member Liebman (now Chairman) would have found that “banning all nonwork-related ‘solicitations’ is presumptively unlawful absent special circumstances.”  When considering Register Guard on remand from the D.C. Circuit, the Board may now follow Liebman’s lead.  It will likely hold that the employer cannot preclude employees from using the email system for union-related matters. 

• What can employers do?  Employers should try to prohibit union-related solicitations by strictly prohibiting any personal use of their email systems.  Circuit courts may uphold such a policy even if Register Guard is reversed along Liebman’s interpretive lines.

In the Oakwood dissent, Liebman wrote that an individual should not be classified as a supervisor if the only supervisory duty performed is simply designating a task or tasks. If Oakwood is revisited, the Board will likely interpret “supervisor” less broadly.  This would make it more difficult for employers to classify lead persons who assign duties on a daily basis as supervisors.  Thus, in a union organizing drive, lead persons would be part of the bargaining unit and could advocate unionization to the workers they oversee. 

• What can employers do?  To ensure that lead persons can be classified as supervisors, employers should make sure that they do more than merely assign tasks (e.g. evaluate employees for raises, hire subordinates, make effective recommendations for hire, or authorize time off or overtime).

The recent revisions could signal an increased focus on several particular topics.  For example, a number of the revisions address issues relating to undocumented witnesses, bilingual or non-English speaking witnesses, and posting of notices in languages other than English.  These provisions likely highlight an increased focus on workplaces with high concentrations of workers from other countries.  Significantly, investigators and field agents are told to inform undocumented witnesses that the NLRB is not associated with the U.S. Immigration and Customs Enforcement, but that they cannot guarantee that action will not be taken against the witness due to immigration status. 

Several of the revisions relate to the issuance of investigative subpoenas and procedures for opposing petitions to revoke subpoenas, including a new section on recovery of attorneys’ fees and costs in subpoena enforcement proceedings.  One section adds as considerations for issuing a subpoena “the possible derivative liability of additional parties” and the possible need “to obtain a protective order or other pendente lite relief.”  Another section clarifies language regarding notice to attorneys, emphasizing that the agency is not required to notify a party or its counsel if the agency subpoenas a witness who is not a supervisor or agent of the party.  This may forebode an increased emphasis on the use of subpoenas in Board investigations and proceedings.  The Regional Director has broad discretion to issue pre-complaint investigative subpoenas whenever evidence cannot be obtained by reasonable voluntary means.

Other sections with revisions include guidance on procedures when attorney misconduct is alleged in agency proceedings, guidance on introducing evidence regarding the appropriateness of particular remedies, and guidance on processing representation petitions that are blocked by ULP charges that are otherwise appropriate for deferral to grievance and arbitration.  Significantly, even if such a ULP charge is appropriate for deferral, the Manual states that Regional Offices should proceed with pre-complaint investigations and reach determinations on the merits (but not proceed to a complaint), so as to unblock the representation case.  In addition, the revised Manual also contains a new section with guidance on alternative dispute resolution of cases pending before the Board.  These changes might suggest a heightened aggressiveness on the part of the agency to pursue enforcement and obtain settlements in a more efficient manner.

Although to some extent the revisions to the Manual might simply reflect the need to update procedures in light of issues encountered over the past several years, they also constitute tangible evidence that the NLRB is taking steps to improve its enforcement procedures so they may be put to better use.

Becker’s nomination was returned by the Senate in accordance with its operating rules because at least one Senator objected to having the nomination held over for consideration during the 2010 session.  Earlier this year Senator McCain (R, Ariz.) expressed his opposition to Becker’s nomination, referring to the nomination as one of the most controversial that he had seen in a long time and placing a hold on the nomination after his request for a public hearing was denied.

Whether Becker’s nomination will survive is unclear.  Because it has been returned, the President must resubmit the nomination in order for the Senate to consider Mr. Becker.  If he is re-nominated, the process could coincide with debate over the Employee Free Choice Act (EFCA), bringing into stark focus some of the most controversial aspects of organized labor’s agenda. 

This scenario may also create room for compromise, or at least the illusion of one.  To get EFCA passed and push Becker through to confirmation, proponents might be willing to modify the provision that would eliminate the right to call for a secret ballot union election.  However, with Becker on the NLRB, pro-union rules and decisions are more likely to predominate.  Among Mr. Becker’s most controversial views are:  (a) that employers should play no role whatsoever in the union selection process; and (b) that many of the NLRB’s current rules regarding the union selection process can be changed by rulemaking without legislation.

A compromise which defeats EFCA in its current form but allows Mr. Becker to be confirmed could, in the eyes of employers opposing EFCA’s passage, turn out to be a pyrrhic victory.
 

A settlement of this magnitude in a case that did not involve strike misconduct, plant closure, or wholesale discharges reflects the Board's clear intent to put real teeth into its enforcement process, particularly with regard to the obligation to bargain for contracts in good faith.  This settlement may be raised by opponents of the Employee Free Choice Act as evidence that the Board already has sufficient ability under existing law (the National Labor Relations Act) to aggressively enforce collective bargaining obligations, which obviates any need for remedies such as mandatory arbitration.

Since January 1, 2008, the Board has operated with three vacancies, leaving only two members to make decisions regarding labor-management disputes in the workplace.  In the past 16 months, Chairman Wilma Liebman and Member Peter Schaumber have issued more than 400 decisions—all of which could be invalidated based on the Supreme Court’s ruling.  Dozens of these decisions were appealed to federal courts of appeal on the two-member question, and the appellate decisions have been mixed.  The U.S. Courts of Appeal for the First, Second, and Seventh Circuits have upheld the decisions as valid, while the D.C. Circuit took the opposite position. 

Resolution of the issue turns on interpretation of the National Labor Relations Act’s quorum provision, 29 U.S.C. § 153(b).  In arguing for rejection of the Board’s ruling, New Process Steel relies on the Act’s statement that “three members of the Board shall, at all times, constitute a quorum of the Board.”  The Board’s contrary position is based on statutory language that indicates that two members may constitute a quorum when an appropriate designation has been made.

Until the issue is resolved by the Supreme Court, the precedential value of the two-member decisions will remain uncertain.