Hunton Profile

Administrative Law Task Force

The Administrative Task Force plays a critical role in keeping our OSHA practice current and vibrant.  We follow developments daily and we work together to analyze the impact that proposed and actual changes will have on the law in general and specifically on our client’s industries. Employers today face an unprecedented range of workplace safety and OSHA legal issues as government increases worker safety and health regulation and demands meticulous reviews by its OSHA inspection force.

Read More...

Fifth Circuit Delivers Some Bad News For Employer Confidentiality Policies

We have been reporting in this space for the better part of a year about the uptick in NLRB enforcement activity in non-union workplaces.  One of the Board’s most noteworthy – and controversial – areas of focus has been on the question whether employer confidentiality rules unlawfully chill protected concerted employee activity under the National Labor Relations Act.  Last week, for the first time, a U.S. Court of Appeals agreed with the Board that certain confidentiality restrictions can have such an effect.

The case involved Flex Frac Logistics, LLC, a non-union trucking company based in Fort Worth, Texas.  The company had required its employees to sign a confidentiality policy that prohibited them from sharing or copying “confidential information,” including “personnel information and documents,” without prior approval from company management.  Violations of the policy were punishable by disciplinary action up to, and including, termination.  An employee discharged for violating the policy filed an unfair labor practice with the Board, which ruled in 2012 that the policy was overly broad and contained language employees could reasonably interpret as restricting their exercise of Section 7 rights.  The company petitioned the Fifth Circuit for review, and the Board filed a cross-petition for enforcement.

On review, the Fifth Circuit upheld the Board’s ruling.  Despite acknowledging that the rule did not expressly prohibit Section 7 activity, the Court reasoned that the company’s ban on discussing “personnel information and documents” could reasonably be construed by employees to prohibit discussion of their wages.  The Court noted the rule “gives no indication that some personnel information, such as wages, is not included within its scope.”  The Court also rejected the employer’s argument that its employees did not actually read the rule as the Board suggested it could be read, ruling that “the actual practice of employees is not determinative” to its ruling whether the policy ran afoul of the NLRA.

The Fifth Circuit’s Flex Frac decision is troubling news for employers.  It validates the Board’s view that an employer confidentiality policy can violate the NLRA even if it does not expressly prohibit employees from engaging in Section 7 activity.  Perhaps the good news is that the Court’s decision was based on the limited facts presented in the case and its reach is limited to employers in the Fifth Circuit.  It remains to be seen whether other federal courts will take a different view.  Nonetheless, Flex Frac is a reminder to employers to review (and, possibly, revise) their employee confidentiality policy sooner rather than later.

Federal Court: Non-Public Facebook Wall Posts Are Protected Under The Federal Stored Communications Act

The U.S. District Court for the District of New Jersey recently ruled that non-public Facebook wall posts are protected under the Federal Stored Communications Act (the “SCA”) in Ehling v. Monmouth-Ocean Hospital Service Corp., No. 2:11-CV-3305 (WMJ) (D.N.J. Aug. 20, 2013).  The plaintiff was a registered nurse and paramedic at Monmouth-Ocean Hospital Service Corp. (“MONOC”).  She maintained a personal Facebook profile and was “Facebook friends” with many of her coworkers but none of the MONOC managers.  She adjusted her privacy preferences so only her “Facebook friends” could view the messages she posted onto her Facebook wall.  Unbeknownst to the plaintiff, a coworker who was also a “Facebook friend” took screenshots of the plaintiff’s wall posts and sent them to a MONOC manager.  When the manager learned of a wall post in which the plaintiff criticized Washington, D.C. paramedics in their response to a museum shooting, MONOC temporarily suspended the plaintiff with pay and delivered a memo warning her that the wall post reflected a “deliberate disregard for patient safety.”  The plaintiff subsequently filed suit alleging violations of the SCA, among other claims.

Passed in 1986, the SCA provides protection to electronic communications that are configured to be private.  The statutory language was drafted to address the potential privacy issues that could occur in the technology that existed in 1986, and the courts are tasked with adapting the language to modern technology.  The District Court determined from the statutory language that the SCA protects: “(1) electronic communications, (2) that were transmitted via an electronic communication service, (3) that are in electronic storage, and (4) that are not public.” 
 
Although MONOC management never solicited or had direct access to the plaintiff’s wall posts in any way, the District Court ruled that the wall posts were covered under the SCA.  Addressing each criterion in turn, the District Court ruled that Facebook wall posts configured to be private are protected under the SCA.  First, wall posts are electronic communications because Facebook users transmit data to Facebook servers when making a wall post.  Second, the data from the wall post is transmitted via an electronic communication service because Facebook provides a service where users can send or receive electronic communications.  Third, wall posts are in electronic storage because Facebook saves the information on a server immediately after the posting, and older posts are archived on separate pages that are still accessible to the user.  Fourth, wall posts that are configured to be inaccessible to the general public are, by definition, not public.   

Although Facebook wall posts are covered under the SCA, the statute provides two exceptions:  the SCA “does not apply with respect to conduct authorized (1) by the person or entity providing a wire or electronic communications service; [or] (2) by a user of that service with respect to a communication intended for that user.”  The District Court determined that the second exception applied because MONOC management was authorized to access the wall posts because the coworker volunteered the information without being coerced or pressured, and the coworker was a Facebook user whom the plaintiff intended to view her wall posts by virtue of her privacy settings. 

Very few courts have addressed the specific issue in this case, so it has been unclear whether Facebook posts are protected under the SCA.  With the amount of information the modern person places onto social media, employers may find it convenient to use such information to make employment-related decisions.  The federal court here, however, has made clear that non-public Facebook wall posts are indeed protected by the SCA, and employers may be held liable if they access such information without authorization.  It is unclear whether the overall damages scheme has been altered considering the employer prevailed on the SCA claim, but the statute provides for a recovery floor of $1,000 consisting of the plaintiff’s actual damages and the violator’s profit, as well as costs and fees.  Punitive damages may also be assessed for a willful or intentional violation.  Although the company prevailed here because of the facts, employers should consider the SCA and other privacy issues when managing employees’ social media use.  Also, as discussed here in previous articles, employers should be cognizant of the National Labor Relations Board’s expansive rulings asserting that communications between employees addressing the terms and conditions of employment may be protected under the National Labor Relations Act.

Key United States Supreme Court Decisions Affecting Labor and Employment for the 2012-2013 Term

EMPLOYMENT DECISIONS

Vance v. Ball State University: Narrow Definition of Supervisor in Harassment Suits
In Vance, the Supreme Court announced a narrow standard for determining which employees constitute “supervisors” for purposes of establishing vicarious liability under Title VII. In a 5-4 decision, the Court decided that a supervisor is a person authorized to take “tangible employment actions,” such as hiring, firing, promoting, demoting or reassigning employees to significantly different responsibilities. The majority opinion rejected the EEOC’s long-advanced definition that a supervisor is a person who could either make tangible employment actions or direct an employee’s daily work activities. In making this ruling, Justice Alito called the EEOC’s definition a “study in ambiguity.”

Continue Reading...

Supreme Court Delivers Another Arbitration Victory For Employers But Challenges Remain

Last week, in American Express Co. v. Italian Colors Restaurant, the United States Supreme Court, in a 5-3 ruling, reversed the Second Circuit and held that a contractual waiver of class arbitration is enforceable under the Federal Arbitration Act (FAA) even if the cost of proving an individual claim in arbitration exceeds the potential recovery.  In holding that a class action waiver in an arbitration agreement is enforceable, even as to federal anti-trust claims, this decision builds upon the trend set in Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 (2010), AT & T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), and CompuCredit Corp. v. Greenwood, 132 S. Ct. 665 (2012) – that arbitration agreements should be enforced according to their terms even for claims under federal statutes.

The Decision

The case arose from an antitrust claim brought by Italian Colors Restaurant and other merchants against American Express.  The merchants alleged that American Express violated federal laws by charging inflated fees through the use of an illegal tying arrangement.  Though the merchants’ agreement with American Express contained an express arbitration clause which required all disputes to be mediated through bi-lateral arbitration, and not on a class basis, the merchants argued that it would not be economically feasible to vindicate their federal statutory rights in individual proceedings, and that they required class representation to pursue their claims.  Despite the intervening Concepcion decision holding that a state law invalidating class action waivers in consumer arbitration agreements were preempted by the FAA and unenforceable, the Second Circuit agreed with the merchants, and refused to uphold the arbitration agreement.

The Supreme Court’s decision reversing the Second Circuit reaffirms how sweeping the Supreme Court majority intended the Concepcion decision to be.  In American Express, the Court squarely rejected the interpretation by the Second Circuit and other lower courts that Concepcion was predicated solely on the FAA’s preemption of state law, and held that even for federal laws, the FAA requires that courts enforce the terms of an arbitration agreement as they have been written absent “contrary congressional command.” 

The Court also considered and rejected the merchants’ “effective vindication” argument that the class action waiver prevents them from vindicating their rights because they would have no economic incentive to do so due to the high litigation costs.  The Court concluded that the costs of litigation did not prevent the parties from pursuing relief under the antitrust laws but rather prevented them from proving a statutory remedy.  The Court emphasized this critical distinction and reasoned that “the fact that it is not worth the expense involved in proving a statutory remedy does not constitute the elimination of the right to pursue that remedy.”

Practical Implications
 
The American Express decision is clearly a win for employers and corporations seeking to avoid costly and time-consuming class action litigation, especially in matters where courts have previously found that class action waivers conflict with federal or state statutes.  The decision removes a judicially-created hurdle to the enforcement of class action waiver provisions, and going forward, it is unlikely that arbitration agreements will be overturned on an “effective vindication” theory.

Moreover, the decision further calls into question the viability of the National Labor Relations Board’s ruling in D.R. Horton Inc. v. NLRB.  In D.R. Horton, the NLRB ruled that class action waivers in arbitration agreements violate section 7 of the National Labor Relations Act because such waivers interfere with employees’ right to engage in concerted activity.  This ruling is now under review in the Fifth Circuit.  The American Express decision, and specifically the principle that arbitration agreements should be enforced according to their terms even for claims under federal statutes unless the FAA’s mandate has been overridden by a contrary congressional command, cuts against the NLRB’s position because nothing in the NLRA creates an exception to arbitration or overrides the FAA.  That said, the NLRB has and likely will continue to actively challenge mandatory arbitration programs until ordered otherwise.  As such, the D.R. Horton ruling and NLRB enforcement are still obstacles that employers need to consider even post-American Express.

In addition to the outcome of D.R. Horton, other challenges to enforcing arbitration provisions remain as the decision does not affect lower courts’ use of general contract principles such as unconscionability and confusion to invalidate arbitration agreements.  Lower courts have relied on contract defenses to get around Concepcion and likely will continue doing so after American Express.  Given the opportunities presented by American Express and the remaining challenges, this decision reinforces the need for employers to reevaluate their arbitration agreements in light of their risk tolerance, docket composition, and other specific circumstances, weigh the various benefits of an arbitration program against the costs – which includes continued risk of enforcement by the NLRB – and develop a comprehensive dispute resolution strategy. 
 

D.C. Circuit Strikes Down NLRB Union Posting Rule -- Silence Is Golden, At Least For Now

On May 7, 2013, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit invalidated a rule promulgated by the NLRB that would have required employers to post notices of employee’s rights under the National Labor Relations Act (“NLRA”) in the workplace.  According to the Court, employers have the right not to speak, and thus can be silent, on these issues.  Another case regarding the same issue is currently pending on appeal in the Fourth Circuit.

The NLRB’s posting rule, which was issued in August 2011, caused a great deal of concern among employers.  The rule would have required all employers to post notices informing employees of their rights under the NLRA, the NLRB’s contact information, and basic enforcement procedures under the NLRA.  The rule also contained three enforcement mechanisms: (1) that an employer’s failure to post the required notice would automatically constitute an “unfair labor practice” in violation of the NLRA; (2) that an employer’s refusal to post the notice could be considered by the NLRB as evidence of unlawful motive in cases where motive is an issue; and (3) that the NLRB could toll the 6-month limitations period for filing an unfair labor practices charge if the employer failed to post the required notice.
 
For employers, at least for now, silence is golden.  In striking down the rule, the Court of Appeals largely based its decision on the concept that employers have the right “not to speak” on certain labor issues.  Section 8(c) of the NLRA provides that the expression or dissemination of views, arguments, or opinions cannot constitute an unfair labor practice, as long as the expression contains no threat of reprisal or promise of benefit.  The Court reasoned that employers’ right to express and disseminate non-coercive speech under § 8(c) necessarily includes “the right of employers (and unions) not to speak.”  Thus, the Court held that the NLRB’s posting rule violated § 8(c) because it made an employer’s silence an unfair labor practice or evidence of an unfair labor practice.  The Court also struck down the third enforcement mechanism -- the tolling provision -- as a modification of the statute that was beyond the NLRB’s powers.

Having ruled that all three enforcement mechanisms of the posting rule were invalid, the Court of Appeals held that the posting rule itself was invalid because it was not severable from the enforcement mechanisms.  (The NLRB had stated during its rule-making process that it would not have issued the posting rule depending solely on voluntary compliance.)

NLRB Releases Guidance On Workplace Investigation Confidentiality Policies

Furthering its controversial ruling in Banner Health System d/b/a Banner Estrella Medical Center, 358 NLRB No. 93 (July 30, 2012), the National Labor Relations Board’s Office of the General Counsel recently released a memorandum providing additional guidance on the confidentiality of internal workplace investigations.  Banner Health held that to require confidentiality of investigations, an employer must show more than a generalized concern with protecting the integrity of its investigations.  Rather, an employer must “determine whether in any give[n] investigation witnesses need[ed] protection, evidence [was] in danger of being destroyed, testimony [was] in danger of being fabricated, and there [was] a need to prevent a cover up.”

The memorandum, dated January 29, 2013, addressed a policy of Verso Paper, an employer operating paper mills across the country.  Verso Paper’s Code of Conduct prohibited employees from discussing ongoing investigations.  The provision stated:

Verso has a compelling interest in protecting the integrity of its investigations. In every investigation, Verso has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up. To assist Verso in achieving these objectives, we must maintain the investigation and our role in it in strict confidence. If we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination. 

 The NLRB found the rule to be overbroad “because the Employer cannot maintain a blanket rule regarding the confidentiality of employee investigations, but must demonstrate its need for confidentiality on a case-by-case basis.”

Relying in part on Banner Health, the NLRB stated that an employer violates Section 8(a)(1) of the National Labor Relations Act when it maintains a work rule that reasonably chills employees in the exercise of their Section 7 rights, including the right to discuss discipline or disciplinary investigations involving their fellow employees.  The Board stated that an employer may only prohibit employees’ discussions during an investigation if it demonstrates that it has a legitimate and substantial business justification that outweighs the Section 7 right. 

The Board found that Verso Paper’s policy violated Section 8(a)(1) because it did not take into account the employer’s burden to show in each particular situation that a business justification for confidentiality outweighed employees’ Section 7 rights.  Further, “[t]he Employer may not avoid this burden by asserting its need to protect the integrity of every investigation, but rather must establish this need in the context of a particular investigation that presents specific facts giving rise to a legitimate and substantial business justification for interference with the employees’ Section 7 right.”

The Board’s holding and guidance leave employers in an untenable position.  On one hand, according to the NLRB, employers may not have a blanket requirement of confidentiality for investigations.  On the other hand, their obligation to prevent harassment or other violations of Title VII (for example), acknowledged in cases such as Faragher v. City of Boca Raton, 524 U.S. 775 (1998), could be hindered by the inability to require confidentiality of investigations.  For example, without a requirement of confidentiality, some employees may be uncomfortable reporting instances of discrimination or harassment or truthfully participating in an investigation. 

Regardless of the wisdom of the NLRB’s guidance, employers should consider and document the Banner Health factors, including the basis for confidentiality, in every workplace investigation.

NLRB Reverses 50-Year-Old Precedent; Strips Employers of Longstanding Economic Leverage During Contract Negotiations

In numerous prior posts, we have reported about the pro-labor decisions and regulatory changes by the Democratic-majority National Labor Relation Board.  Unfortunately, the Board is at it again, this time in WKYC-TV, Inc., 359 NLRB No. 30 (2012) , reversing a fifty-year-old precedent regarding the effect of contract expiration on a dues checkoff clause contained in the expired contract.

Under the Board’s longstanding and uniformly enforced 1962 decision in Bethlehem Steel Co., 136 NLRB 1500 (1962), the Board held that an employer does not violate the National Labor Relations Act by refusing to honor a union dues checkoff clause upon expiration of the contract.  A union dues checkoff clause is a provision that obligates the signatory employer to deduct union dues from employees’ paychecks and revert the dues to the union, thus essentially making the employer the union’s dues collector and providing the union with a steady flow of operating revenue.  According to the Board in Bethlehem Steel Co., such clauses (as well as union security clauses) become “inoperative” as a matter of law upon contract expiration.

The Bethlehem Steel Co. decision gave employers economic leverage during negotiations for a new contract.  The mere threat of contract expiration and the corresponding cutoff of dues to the union brought pressure upon the union to agree to a successor contract, even if it meant yielding to some of the employer’s bargaining demands.   

The Board’s recent decision in WKYC-TV, Inc. overturned the portion of Bethlehem Steel Co. related to dues checkoff and thus has stripped employers of one of the very few pieces of economic leverage available during negotiations for a successor agreement.  According to the Democratic Board majority in WKYC-TV, Inc., the Bethlehem Steel Co. holding was based on “questionable reasoning” and “is inconsistent with established policy generally condemning unilateral changes in terms and conditions of employment.” 

Writing in dissent, Republican Member Hayes aptly described the unfairness of the majority’s holding:

[M]y colleagues know well that an employer’s ability to cease dues checkoff upon contract expiration has long been recognized as a legitimate economic weapon in bargaining for a successor agreement. . . .  To strip employers of that opportunity would significantly alter the playing field that labor and management have come to know and rely on.  Indeed, even in times of union boycott and other economic actions in opposition to an employer’s legitimate bargaining position, the employer will be forced to act as the collection agent for the dues to finance this opposition.  This is the unspoken object of today’s decision.

Whether the Board’s decision will be appealed, and whether such an appeal would be successful, is not clear at this time.  What is clear, however, is that the current Board will continue to take every opportunity to remove any perceived impediment to union success, even at the cost of overturning longstanding precedent.

NLRB Finds At-Will Clauses In Two Employee Handbooks Are Lawful

The National Labor Relations Board’s (“NLRB”) General Counsel recently released an analysis of contested at-will employment clauses in two employment handbooks and ultimately concluded that neither violated the National Labor Relations Act (“NLRA”).

Employees had filed charges with the NLRB alleging that the at-will employment clauses contained in the employee handbooks distributed by Rocha Transportation, a California trucking company, and SWH Corporation d/b/a Mimi’s Café, a restaurant in Arizona, defined at-will employment so broadly that employees would reasonably think that they could not engage in activity protected by the NLRA.  The clause contained in Rocha Transportation’s handbook advised its employees that their employment is at-will and may be terminated at any time.  It also stated that “No manager, supervisor, or employee of Rocha Transportation has any authority to enter into an agreement for employment for any specified period of time or to make an agreement for employment other than at-will.  Only the president of the Company has the authority to make any such agreement and then only in writing.”  Mimi’s Café’s description of at-will employment in its handbook included the sentence: “No representative of the Company has authority to enter into any agreement contrary to the foregoing “employment at will” relationship.”  The NLRB’s Division of Advice prepared two memos which found that each of the clauses described above were lawful.

In reviewing these clauses, the NLRB explained that an employer violates the NLRA by maintaining work rules or policies that explicitly prohibit NLRA-protected union or concerted activity, such as joining a union or discussing terms and conditions of employment with coworkers.  If the rule does not explicitly restrict protected activities, an employer will nonetheless violate the NLRA if its employees would reasonably construe the language to prohibit such activity.  

Accordingly, the NLRB concluded that each company’s at-will employment clause was not overly broad.  The Division of Advice memo reasoned that Rocha Transportation’s at-will employment clause explicitly stated that the relationship can be changed, and thus, employees would not reasonably assume that their NLRA rights are prohibited.  The second advice memo found that the language contained in Mimi’s Café’s at-will employment clause was not unlawfully broad because the clause did not require employees to refrain from seeking to change their at-will status or to agree that the employment relationship could not be changed in any way.  Rather, it merely highlighted that the employer’s representatives are not authorized to change it. 

Furthermore, the advice memos distinguished these two clauses from one found in the American Red Cross Arizona Blood Services Region’s handbook.  In the latter, an NLRB administrative law judge found that an at-will employment clause contained in the American Red Cross Arizona Blood Services Region’s handbook which included the statement “I further agree that the at-will employment relationship cannot be amended, modified, or altered in any way” was unlawfully overbroad because it was essentially a waiver of the employee’s right to advocate concertedly to change his or her at-will employment status.  However, an advice memo was not issued on this case because it was settled before the Board had a chance to review it.

The NLRB’s Division of Advice memos are provided as guidance for employers and human resources professionals in a developing area that has recently drawn considerable attention.  Because this area of law remains somewhat unsettled, the NLRB has asked its Regional Offices to submit cases involving employer handbook provisions that restrict the future modification of an employee’s at will status for further analysis.

NLRB Judge Invalidates "Chilling" Social Media Policy Despite Savings Clause

On September 20, 2012, Administrative Law Judge Clifford H. Anderson struck down telecommunications company EchoStar Corp.’s policy prohibiting employees from making disparaging comments about it on social media sites. The NLRB judge found that the prohibition, as well as a ban on employees using social media sites with company resources or on company time, chilled employees’ exercise of their rights under Section 7 of the National Labor Relations Act (“NLRA”). The EchoStar decision comes on the heels of the NLRB’s recent ruling striking down Costco Wholesale Corp.’s policy barring employees from posting statements online that were harmful to the company’s reputation.

In EchoStar, the judge held that the clause prohibiting “disparaging” comments was overbroad and failed to include exceptions for speech that may be critical of the company but is nonetheless protected by Section 7 of the NLRA. In doing so, he rejected the company’s argument that the challenged provision was not overbroad when read in the context of the entire social media policy and an accompanying employee handbook, which included a savings clause stating that in the event of a conflict between EchoStar policy and the law, “the appropriate law shall be applied and interpreted so as to make the policy lawful.” The judge found that a reasonable employee would not react to the savings clause by “losing the chill that the rule under challenge causes.” That the policy went on to tell employees to “remember to use good judgment” in deciding what types of comments to post to social media sites was found to be similarly ineffective at convincing a reasonable employee that the exercise of his or her Section 7 rights remained uninhibited.

The EchoStar decision echoes the reasoning of the Costco decision, and indicates that the NLRB will continue to subject broad social media policies that restrict employee speech without any specific limitations to harsh scrutiny. The case also reinforces the guidance in NLRB Acting General Counsel Lafe Solomon’s three memoranda issued earlier this year stating that restrictions on the usage of social media must be narrowly tailored and clear, and vague policies will be found to be overbroad even if they contain a general savings clause.

NLRB Finds That Requesting Confidentiality In An On-Going Workplace Investigation Violates NLRA

The NLRB has again asserted its willingness to encroach upon employers’ long standing legitimate employment policies in a non-unionized workforce.  In Banner Health System, 358 NLRB No. 93 (July 30, 2012), the Board held that a blanket policy prohibiting an employee from discussing an ongoing investigation violates section 8(a)(1) of the National Labor Relations Act.

Employers typically request, and some in fact require, confidentiality among its employees when conducting workplace investigations.  After all, employers have a duty under many laws to investigate certain types of workplace issues and these investigations are only as effective as the integrity with which they are conducted.  Thus, up until now, it was deemed reasonable, if not essential, for employers to direct employees not to discuss an ongoing investigation with other employees so as to prevent compromised evidence.  Not so fast, the NLRB has now said in its Banner decision.

In Banner, the employer’s human resource consultant routinely asked employees making a complaint not to discuss the matter with their coworkers while the investigation was on-going.  The ALJ, finding no 8(a)(1) violation occurred, stated that the “suggestion is for the purpose of protecting the integrity of the investigation” and thus the employer had a legitimate reason for making the request for confidentiality.  The Board overruled the ALJ’s finding stating that “[t]o justify a prohibition on employee discussion of ongoing investigations, an employer must show that it has a legitimate business justification that outweighs employees’ Section 7 rights.”  While an employer would presumably rely on their need to preserve the integrity of the investigation, such a blanket concern is insufficient to justify the requirement for confidentiality said the Board.  Instead, the Board has held that an employer must make an individualized analysis and “first determine whether in any give[n] investigation witnesses need[ed] protection, evidence [was] in danger of being destroyed, testimony [was] in danger of being fabricated, or there [was] a need to prevent a cover up.”

The Banner dissent argued that it would have found no violation because the company did not promulgate an actual work rule but instead offered a mere “suggestion” that the employee not discuss the matter under investigation.  The Board rejected this argument stating that “the law does not require that a rule contain a direct or specific threat of discipline in order to be found unlawful.”

It is too soon to predict whether the Board’s decision will be upheld should the employer appeal to the federal appeals court.  In the meantime, employers, in unionized and non-unionized workforces alike, should be mindful that if they continue to require, or even suggest, confidentiality during workplace investigations, the Board may require them to make an individualized showing that confidentiality was necessary to preserve the integrity of the investigation in that particular circumstance.

NLRB On A Mission To Curb Anti-Social Media Policies In The Workplace

In recent years, the National Labor Relations Board (NLRB) and unions have placed a growing emphasis on extending the application of labor law into the social media arena.  As part of this initiative, the NLRB has adopted a strong stance against social media policies that it believes pose a threat to employees’ right to engage in protected activities under Section 7 of the National Labor Relations Act (NLRA).

Section 7 of the NLRA protects, among other things, an employee’s right to self-organization; to form, join, or assist labor organizations; to bargain collectively through representatives of their own choosing; to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection; and to disclose, expose, debate and disclose terms and conditions of employment.  29 U.S.C. § 157.  Employer policies regulating social media use will be held to violate Section 8(a)(1) of the NLRA if it “interfere[s] with, restrain[s], or coerce[s] employees in the exercise of the rights guaranteed in section 7.”  29 U.S.C. § 158. 

In the last ten months, Lafe E. Solomon, the acting general counsel for the NLRB, has issued three reports discussing how the agency has handled the increase in the number of charges being brought against employers for allegedly unlawful social media policies.  According to Solomon,

[An employer’s policy] is clearly unlawful if it explicitly restricts Section 7 protected activities.  If the rule does not explicitly restrict protected activities, it will only violate Section 8(a)(1) upon a showing that: (1) employees would reasonably construe the language to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity; or (3) the rule has been applied to restrict the exercise of Section 7 rights.

Memorandum OM 12-59.  Also according to Solomon, “[r]ules that are ambiguous as to their application to Section 7 activity, and contain no limiting language or context that would clarify to employees that the rule does not restrict Section 7 rights, are unlawful.”  Memorandum OM 12-59.

The most recent May 30, 2012 report provides specific examples of policies that the General Counsel’s office believes are acceptable policies. This latest report has been garnering criticism for what some are calling a heavy-handed approach.  Based on this recent report, the general take-away points for employers are that broad and general social media policies will most likely be invalid, including but not limited to those that use broad terms like “appropriate” or “inappropriate” without the use of limiting language or examples of what would be considered “inappropriate,” those that prohibit posting photos that include company logos without any limiting language, or those that prohibit disclosing confidential information without any guidance as to what the employer considers confidential.  For example, the following types of social media provisions will likely not pass muster -- broad restrictions on releasing confidential information about the company or coworkers; broad restrictions on sharing confidential information with coworkers; instructions that an employee must ensure that posts are completely accurate and not misleading and that they do not reveal non-public information on any public site; prohibitions against posting personal information about other employees and contingent workers, commenting on “legal matters,” picking fights, engaging in controversial discussions, and airing complaints online; or a requirement that an employee obtain permission prior to posting questionable material.  Furthermore, global savings clauses in social media policies that state something to the effect that nothing in the policy is intended to infringe upon an employee’s NLRA rights will not fix invalid provisions within the policies; instead, each provision will be assessed on its own.

The obvious challenges to employers, both with unionized and nonunionized workforces, is how to have a broad enough social media policy to protect against, among other things, possible damage to the company’s reputation, business relationships, and competitive advantage, possible loss of company trade secrets or intellectual property, possible liability associated with employees posting harassing, confidential, and/or other inappropriate material on other employees, and possible violations of Federal Trade Commission regulations which place restrictions on employee endorsement of employer products or services, while still trying to comply with the NLRB’s restrictive positions on social media policies.  Nevertheless, given the growing business concerns associated with employees’ increased use of social media and the NLRB’s focus on employer social media policies, employers should consider reviewing and updating their social media policies and any other related policies, like non-harassment policies, that may also have social media implications.

Aiming To Narrow The Definition Of Supervisor Under The NLRA, Senate Democrats Ask For A Little RESPECT

While “employees” have the right to form, join, or assist labor organizations under the National Labor Relations Act (NLRA), supervisors are not employees under the statute and do not have the same rights.  Under current case law, “supervisor” is interpreted broadly and employees who merely assign duties to other employees on a daily basis are statutory supervisors under the Act.  As expected and as we previewed in a prior posting, Senate Democrats recently announced new legislation that would narrow the definition of “supervisor” under the NLRA, increasing the number of workers eligible to join unions.

The bill is known as the Re-Empowerment of Skilled and Professional Employees and Construction Tradeworkers Act, or RESPECT Act.  It was first introduced in 2006 when there were a series of NLRB decisions, collectively known as the Kentucky River cases, which expanded the definition of supervisory employees.  The current leading precedent on the definition of “supervisor” is Oakwood Healthcare, Inc., a 2006 decision in which the NLRB clarified the definition of “supervisor,” and defined previously ambiguous terms such as “assign” and “responsibly to direct” as used in Section 2(11) of the NLRA.  Using these new definitions, the NLRB found that permanent charge nurses were supervisors under the meaning of Section 2(11) and, therefore, not included within the protection of the Act.

The latest version of the RESPECT Act however would remove the terms “assign” and “responsibility to direct” from Section 2(11) and would also insert language requiring employees to spend a majority of their time on supervisory duties in order to be considered supervisors. 

To prepare for the passage of this bill, employers should review the job duties and responsibilities of lead persons at locations particularly at risk to union organizing efforts and ensure that these employees are spending the majority of their time on supervisory duties, and are doing more than merely assigning tasks (e.g., evaluating employees for raises, hiring subordinates, making effective recommendations for hire, and authorizing time off or overtime).  This will ensure that those individuals will be classified as supervisors in future organizing campaigns and elections even in the event the RESPECT Act becomes law.

NLRB New Posting Still Effective April 30, 2012

In several prior blog entries, we told you about the NLRB’s new requirement that employers post a notice regarding employee rights under the NLRA.  Employers have been following the story with interest.

Initially proposed by the NLRB in December 2010, the new posting tells employees about their rights under the National Labor Relations Act (“NLRA”).  The new requirement initially had an effective date of November 14, 2011, but it has been delayed several times.  The NLRB first delayed implementation until January 31, 2012, to allow “for further education and outreach.”  Then, several industry groups and businesses filed federal lawsuits in South Carolina and Washington, D.C., challenging the NLRB’s Final Rule.  The groups argued the NLRB did not have statutory authority to issue the notice requirement.  While the lawsuits were pending, in the District of Columbia and South Carolina, the NLRB agreed to further delay implementation until April 30, 2012.

On March 2, 2012, the U.S. District Court for the District of Columbia upheld the NLRB’s authority to issue the notice requirement. The Court did strike down two parts of the NLRB’s Final Rule, however:  that which would have treated a failure to post as an unfair labor practice, and that which would toll the statute of limitations for any unfair labor charge against an employer who was not in compliance. 

On March 5, 2012, the plaintiffs in that lawsuit (including the National Association of Manufacturers) filed an appeal to the U.S. Court of Appeals to the District of Columbia Circuit.  The District Court denied a request to enjoin the NLRB from enforcing the rule while the appeal is pending.  The District Court stated that it was not convinced any irreparable harm would befall employers if they are required to post the NLRB’s notice while the Circuit Court considers the case. The Court noted that, if the notice requirement is later invalidated, employers will simply take down the notice.

No ruling has been issued in the South Carolina case; the Court is considering motions for summary judgment.

What This Means For Employers

This new notice requirement applies to all private-sector employers covered by the NLRA, which is the vast majority of companies.  Except for federal contractors and subcontractors, which are already required by the Department of Labor to post a very similar notice, this will be a totally new posting obligation. 

Unless a company already posts the DOL’s comparable notice, employers should obtain a copy of the notice from the NLRB via its website, or a Regional Office.  The notice should be posted, both physically and electronically, in all places that other employee notices are posted.  Additional details about how to fully comply with this posting requirement are discussed in our August entry, and in the NLRB’s frequently asked questions

Companies should ensure they are compliant with this requirement by no later than April 30, 2012

It remains to be seen whether the new posting will have any impact on labor relations within a given company.  Non-unionized employees may have a new or increased interest in union representation as a result of this poster.

Quickie Union Elections With Less Supervision: Let The Games Begin

In prior postings, we have reported about the potential effects that the National Labor Relations Board’s (“NLRB”) recent pro-labor composition could have on non-union employers and how it will become increasingly easier for unions to organize employees as a result of the NLRB’s recent decisions and procedural changes.  This posting focuses on the convergence of two potential developments – the likely change in the definition of “supervisor” under the National Labor Relations Act (the “Act”) and the NLRB’s recent proposal to expedite the procedures for union elections – and how these two developments combined could hamper an employer’s ability to effectively oppose a union-organizing campaign.

Supervisor Status Under the Act

The Act defines the term “supervisor” as “any individual having authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action, if in connection with the foregoing the exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment.”  The definition is significant because supervisors are not protected under the Act and cannot be part of a bargaining unit.  They are the employer’s agents and, should employees elect a union and some day go on strike, the supervisors would be the core group left to operate the business.  Supervisors can be ordered to assist the employer in responding to organizing campaigns and are many times an employer’s most important asset in mounting an effective opposition.  It is often, though not always, in the best interests of employers to have the supervisor term interpreted as broadly as possible so as to narrow the number of employees covered by the Act.

The current leading precedent on the definition of “supervisor” is Oakwood Healthcare, Inc., a 2006 decision in which the NLRB interpreted the supervisor definition broadly and held that lead employees who merely assign duties to other employees on a daily basis are statutory supervisors under the Act.  The supervisor definition outlined in Oakwood Healthcare was a major victory for employers, and organized labor has made it clear that this is a case it would like to see the NLRB revisit and reverse. 

The Oakwood Healthcare decision was decided by 3-2 margin and a Republican majority NLRB.  Former Board Member Wilma Liebman issued a scathing dissent in Oakwood, opining 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 current composition of the NLRB would likely adopt Liebman’s dissent, thus resulting in a narrower interpretation of “supervisor.”  This would make it more difficult for employers to classify lead employees who merely assign duties on a daily basis as supervisors.  Thus, in a union organizing drive, these individuals could be part of the bargaining unit, could advocate unionization to the workers they oversee, and could not be used by the employer in its response to organizing efforts. 

The NLRB’s “Quickie Election” Proposals

The impact of a potentially narrower definition of supervisor is compounded by the NLRB’s proposed rules to expedite the union election process – commonly referred to as a “quickie election” process.  These proposed changes have been discussed in detail in our prior postings and are scheduled to take effect on April 30, 2012.  One of the most notable proposed changes will give the hearing officer authority to limit pre-election hearings to genuine questions concerning representation, an extremely rare occurrence and a standard not typically met when employers raise issues about whether a particular employee is a supervisor under the Act and thus not entitled to vote in the election.    

The problem this change creates for employers as it relates to the statutory supervisor issue is significant and will no doubt lead to significant union gamesmanship during the petition and election process.  Among other things, a union’s election petition could seek a proposed bargaining unit that includes lead employees who are potentially on the borderline between supervisory and employee status.  Though an employer may want to challenge their inclusion in the proposed bargaining unit prior to the election, the NLRB hearing officer can exclude such the issue from the pre-election hearing if it does not create a genuine question concerning representation.  And even if the hearing does focus on the issue, the hearing officer may be able to avoid ruling on the challenge until after the election is conducted.  The employer could thus be handcuffed in its use of these arguable supervisors in opposing the union’s organizing efforts prior to the election due to the risk that the hearing officer could retroactively rule after the election that the individuals were not supervisors and thus were protected under the Act.  The net effect is that the employer has no choice but to rely only on upper-level management employees who clearly fall within the supervisor definition.

What Can Employers Do?
In anticipation of the likely reversal of Oakwood and the corresponding effect that the NLRB’s quickie election rules would have on the supervisor issue, employers should review the job duties and responsibilities of lead persons at locations particularly at risk to union organizing efforts and ensure that these employees are doing more than merely assigning tasks (e.g., evaluating employees for raises, hiring subordinates, making effective recommendations for hire, and authorizing time off or overtime) to ensure that those individuals will be classified as supervisors in future organizing campaigns and elections.  To the extent additional supervisory responsibilities can be assigned to these individuals, such changes should be made to remove any doubt about the supervisory status of these key employees.  Without such certainty, employers may have to forego using one of their most effective campaign tools, while at the same time operating under a much more expedited election process that gives the employer less time to respond to the campaign and educate its employees regarding their voting decision.

New York Case Challenges President Obama's NLRB Appointments

Several of our recent posts have addressed the sharp criticism directed towards President Obama in response to his recent recess appointments to the NLRB.  A new case filed in the Eastern District of New York may result in one of the first court rulings involving a challenge to the President’s authority to have made the appointments.  In Paulsen v. Renaissance Equity Holdings, LLC, No. 1:12-cv-00350-BMC, a case in which the NLRB is seeking a federal court injunction to declare an end to an employer lockout, the Defendant is contesting the action on the grounds that because three of the Board’s five members have not been validly appointed, the Board has no authority to act.

Paulsen v. Renaissance Equity Holdings, LLC

In Paulsen, the Board filed a petition for a Section 10(j) injunction seeking to end a lockout imposed by Renaissance Equity Holdings (which does business as Flatbush Gardens) after failing to reach a collective bargaining agreement with the union representing its employees.  Renaissance responded to the Board’s petition by filing a Motion to Dismiss for lack of subject matter jurisdiction and failure to state a claim.  Its primary argument is that the Board lacked the statutorily required quorum of three members necessary to authorize the filing of the petition in the first place.  To support its position, Renaissance cites to the Supreme Court’s recent decision in New Process Steel, L.P. v. NLRB, 130 S.Ct. 2635 (2010), in which the Court held that the Board is not empowered to act without a three member quorum.  Drawing on this principle, Renaissance contends that the Board lacked the quorum required to act here because President Obama’s “recess appointment” of three of the Board’s current members did not occur while the Senate was actually in recess and therefore the appointments were invalid.  Typically, members of the Board are appointed by the President “with the advice and the consent of the Senate.”  29 U.S.C. § 153(a).  However, the President may appoint members without Senate approval if the Senate is in recess.

Recess Appointments?    

On January 4, 2012, acting without Senate confirmation, President Obama announced that he would be appointing three members to the Board.  These members were sworn into office on January 9, 2012.   The legality of these appointments turns on whether the Senate was in recess at this time.  Early on, the Department of Justice issued a memorandum supporting the appointments stating that a president can make recess appointments when lawmakers hold pro forma sessions without conducting business.  
 
In the Paulsen case, Renaissance argues that the Senate agreed to continue its 111th Session from December 20, 2011 through January 3, 2012 and begin its 112th Session on January 3, 2012 and therefore was in session at the time of the appointments.  Additionally, as evidence that the Senate was in session, Flatbush Gardens notes that the Constitution prohibits the Senate from adjourning for more than three days without the consent of the House of Representatives and the House of Representatives never consented to the Senate’s adjournment.  Finally, Flatbush Gardens argues that the Senate’s sessions were not simply formalism because it conducted business during these sessions, passing the Temporary Payroll Tax Cut Continuation Act of 2011 by unanimous consent. 

How to Respond to Action by the Board

If the President’s appointments ultimately are ruled to be invalid, the Board may indeed lack a quorum.  In that instance, Board decisions and actions taken in the interim (such as pursuing an injunction to end an employer lockout) may be rendered invalid.  Thus, until the Board’s authority is clarified, employers are stuck between a rock and a hard place.  So what should an employer do when faced with Board action in the interim?  It is probably not advisable as a general matter to refuse to comply with Board decisions based solely on the premise that the President’s appointments may turn out to be invalid; such action would risk additional violations of the NLRA.  That said, compliance with some Board orders could have irreversible consequences notwithstanding any later decision that the order was void as a result of the invalid appointments.  While each situation will likely require its own strategic response, employers facing Board action may at least consider raising a challenge such as the one asserted in the Paulsen case.  We will continue to closely monitor all legal challenges to the President’s new Board appointments and to assist those of our clients facing imminent Board action to develop appropriate responses based on the unique circumstances of each situation.

NLRB Releases Second Round Of Guidance For Social Media Cases

Last week, the NLRB’s Acting General Counsel, Lafe Solomon, released a second report containing guidance relating to employees’ use of social media.  This report comes less than six months after the release of the NLRB’s first report on the subject in August 2011.  Like the August report, the new release summarizes a number of recent cases decided by the NLRB in which an employee was terminated, at least in part, because of his or her comments on social media websites.

In his preamble to the report, Solomon notes that employers’ social media policies and employees’ online postings, as well as the NLRB’s approach to these emerging issues, are a “hot topic” not just in legal and human resources circles, but also in the media and among the general public.  Thus, according to Solomon, the purpose of the latest report is to “provide guidance as this area of the law develops.”

A few key themes emerge from the cases presented in the report:

  • Seven of the fourteen cases summarized in the report deal with whether the employers’ social media policies were so “overbroad” that they interfered with employees’ Section 7 right to engage in protected concerted activity. 
  • In scrutinizing whether a social media policy was overbroad, the Board considered whether the policy could be reasonably construed by an employee to limit activities protected under Section 7, such as discussions about wages and other terms and conditions of employment.  As a result, the Board struck down policies that used terms such as “appropriate” or “professional” to describe what kind of social media posts the employer allowed without doing more to define those terms or to clarify that concerted activity protected under Section 7 was not restricted.
  • The Board also considered whether the employers’ social media policies contained “limiting language excluding Section 7 activity from its” restrictions and whether the examples of prohibited conduct used in those policies could be “reasonably read” to include protected conduct. 
  • The Board also looked at industry and employer-specific context in evaluating social media policies.  For example, a drugstore operator’s social media policy, which restricted employees from discussing matters related to the company on social media sites, was considered lawful by the Board.  According to the NLRB, when interpreted in context, the drugstore operator’s employees would understand the policy to only restrict those communications that might implicate SEC or FTC regulations and not those communications protected under Section 7.
  • Terminations that occurred under social media policies the NLRB considers unlawfully overbroad are not unlawful by default.  For a termination to be unlawful, the comments made by the employee giving rise to his or her termination must qualify as protected concerted activity under Section 7.  Thus, an employer must carefully consider whether the employee’s posting is merely unprotected “venting” about a matter of individual concern or whether the comments were intended to (or actually did) initiate a collective discussion or group action.

NLRB Finds That D.R. Horton Engaged In Unfair Labor Practice By Including Class Action Waiver In Mandatory Arbitration Agreement

Two members of the National Labor Relations Board recently held that employers may not require employees to enter into arbitration agreements, as a condition of employment, that waive the ability to pursue class or collective claims. The Board’s ruling does not sound the death knell for class action waivers, however, as many Plaintiff’s lawyers have touted.

The Board’s decision likely will be reviewed by an appellate court since the NLRA allows D.R. Horton to appeal Board decisions in the District of Columbia Circuit, or in any circuit where the unfair labor practice arose or where the company does business.  The decision is almost surely to be challenged on grounds that it is at odds with the United States Supreme Court’s decision in AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011), where the Court held that a California law prohibiting class action waivers in consumer arbitration agreements was preempted by the Federal Arbitration Act, meaning that class action waivers in consumer arbitration agreements may be enforceable.  The Board’s decision also is likely to be challenged based on the fact that it was issued by only two Board members, potentially in violation of the Supreme Court’s decision in New Process Steel v. NLRB.

In D. R. Horton, Inc., 357 NLRB No. 184 (January 3, 2012), a plurality of the Board held that D.R. Horton’s class/collective action waivers in its arbitration agreements - which employees were required to sign as a condition of employment - constituted an unfair labor practice under the National Labor Relations Act. 

This case started innocuously enough, as the charging party alleged that he was misclassified as an exempt employee under the FLSA, and initiated arbitration on behalf of himself and similarly situated employees.  After D.R. Horton asserted that arbitration of collective claims was prohibited under his arbitration agreement, the charging party brought a ULP charge against the company.  With only two members participating in the decision (as the third and only other Board member recused himself), the Board held that D.R. Horton engaged in an unfair labor practice by including waivers of class or collective claims in arbitration agreements that its employees were required to sign. 

The basis for the Board’s plurality opinion is Section 7 of the NLRA, which provides employees with the right “to engage in . . . concerted activities for the purpose of collective bargaining or other mutual aid or protection . . . .”  29 U.S.C. § 157.  “The Board has long held, with uniform judicial approval, that the NLRA protects employees’ ability to join together to pursue workplace grievances, including through litigation,” and “that concerted legal action addressing wages, hours or working conditions is protected by Section 7.”  Thus, D.R. Horton’s mandatory arbitration agreement, which precludes employees from pursuing class or collective claims in any forum (judicial or arbitral) “clearly and expressly bars employees from exercising substantive rights that have long been held protected by Section 7 of the NLRA,” and constitutes an unfair labor practice.

The Board’s decision expressly dealt with the Supreme Court’s ruling in Concepcion, distinguishing that case because it did not involve “the waiver of rights protected by the NLRA or even employment agreements.”  Likewise, the Board noted that Concepcion dealt with a conflict between California state law and federal law (the FAA), which implicated the Supremacy Clause, while the D.R. Horton case addressed alleged conflicts between two federal laws - the NLRA and FAA.  To the extent a conflict does exist between the two federal laws, the Board stated that the FAA would yield to the NLRA and its protections on the right to engage in concerted activity.


While the NLRB usually decides cases involving unionized workforces, this decision based on Section 7 of the NLRA would apply to union and nonunion employees, so long as the employer meets the jurisdictional requirements of the NLRA.

Even the Board’s ruling has some limitations, of which employers should be aware:

  • The class waiver prohibition is limited to statutorily defined “employees” under the NLRA, meaning it does not apply to managerial employees or supervisors. 
  • Employers may still insist that any arbitration proceedings be on an individual basis “[s]o long as the employer leaves open a judicial forum for class and collective claims.” 
  • The Board does acknowledge that a union is still free to collectively bargain away its members’ ability to pursue class or collective claims, just as it may agree to arbitration provisions that waive other actions.  The key is that the union negotiates this, not an employer unilaterally imposing such waivers.

NLRB Publishes New Ambush Election Rule In Time For Christmas; Faces Court Challenge From Business Groups

On December 20, 2011, the National Labor Relations Board (the “Board”) finalized what is being referred to by some critics as the “ambush election rule,” following its contentious November 30, 2011 2-1 vote in favor of its proposed revisions to the procedures by which it conducts workplace elections to determine whether employees do or do not wish to unionize.

The new regulations, which are set to be published in the Federal Register today, alter pre-election litigation procedures that will invariably pave the way for quicker elections in representation cases and likely result in more union victories in elections.  For a detailed summary of these regulations, see our previous post following the Board’s vote on the proposed revisions.  The Board has also provided a short summary of the new regulations.

In response to this week’s developments, two business organizations, the U.S. Chamber of Commerce and the Coalition for a Democratic Workplace, filed a lawsuit against the Board seeking to stop the implementation of these new regulations.  The suit, filed in the District Court for the District of Columbia, seeks an injunction preventing the Board from enforcing the new regulations and a declaratory judgment holding that the rules are contrary to the National Labor Relations Act and the First and Fifth Amendments to the U.S. Constitution.  The suit also alleges that the manner in which the Board rushed through the rule violated the Administrative Procedures Act and the Regulatory Flexibility Act.

Absent court intervention, the new regulations are due to take effect on April 30, 2012.  Regardless of whether the lawsuit ultimately succeeds in preventing the implementation of the new rules, the Board’s actions continue to signal a significant step towards eliminating the procedural safeguards that permit employers to challenge the appropriateness of proposed bargaining units before an election takes place.  The Board’s actions are also a major step in the direction of shrinking the window of time between a union petition and the actual election.  As we previously have recommended, employers are well served to consult with their labor counsel and advisors, so that they may now begin to make preparations for a labor relations arena in which they may have little to virtually no advance notice of a pending union election and little to no ability to challenge the union’s proposed bargaining unit until after the voting has taken place.

Employers Take Note: NLRB Provides Guidance For Social Media Cases

The focus on social media by the National Labor Relations Board (“NLRB” or the “Board”) continues as evidenced by its recent report issued by Acting General Counsel Lafe Solomon.  The report discusses fourteen social media cases that were decided by the Board after Regional Directors submitted requests for advice to the Board’s Division of Advice.  The cases highlighted by Solomon give some insight to how the NLRB will handle various social media issues in the future.

The guidance provided by the NLRB indicates that employers should be conscious of protected concerted activity when responding to employees’ social media posts and should additionally ensure that social media policies are drafted narrowly so as not to infringe on employees’ rights protected by the National Labor Relations Act (“NLRA” or the “Act”).  Solomon explains that he offers the case summaries in the NLRB report in an effort to assist practitioners and human resources professionals and to “encourage compliance with the Act and cooperation with Agency personnel.”  Several of the cases in the NLRB’s report are discussed below.

Facebook postings determined to be protected concerted activity

  • In preparation for a meeting at work to discuss job performance, an employee posted on Facebook that her coworkers did not help the employer’s clients enough and asked her coworkers how they felt.  Several coworkers responded to the Facebook post.  The NLRB explained that such actions were protected concerted activity because the employee was acting with or on the authority of other employees; the posts commented on staffing and job performance and therefore implicated the terms and conditions of employment; and the posting was initiated in preparation for a meeting with the employer.
  • A sales person posted pictures on Facebook from a work event and included comments criticizing the employer for its hosting of the event and providing inexpensive food and beverages.  The sales person’s activities were protected concerted activity because he had been complaining with coworkers about the food for the event and the sales person had told his coworkers that he would be placing the pictures on Facebook.  As a result, the sales person was vocalizing the sentiment of his coworkers.  Additionally, the post was related to the terms and conditions of employment since the choice of refreshments could impact the employee’s commission.

Facebook posts and tweets that were not protected concerted activity

  • The Board advised that an employer’s termination of an employee who tweeted inappropriate tweets from a work-related Twitter account was not unlawful.  The employee’s tweets included a tweet critical of the paper’s copy editors, tweets about homicides in the city where the paper was published and several tweets with sexual content.  The employer did not have a social media policy but instructed the employee not to tweet about anything work related.  Because the employee was terminated for writing inappropriate and offensive comments, which did not involve protected concerted activity, his termination did not violate the Act.
  • An employee did not engage in protected concerted activity when he posted on Facebook complaining about his employer’s tipping policy.  The employee, a bartender, never raised the issue with management and no other employees commented or responded on his Facebook posts nor was the issue ever raised with his coworkers.  The NLRB determined that the employee was acting solely on behalf of himself and there was no concerted activity.
  • The NLRB found that an employee who had posted on Facebook about an individual gripe was not engaged in protected concerted activity.  The employee had posted on Facebook after an interaction with a new assistant manager and commented about the “tyranny” at the store, noting that a lot of the employees are about to quit.  Although other coworkers posted supportive comments, the Board advised that there was no concerted activity because the posting did not include any language indicating that the employee sought to initiate or induce coworkers to engage in action.

Violations of Section 8(a)(1) for threatening to sue

  • Employer violated Section 8(a)(1) when the employer’s attorney sent a letter to employee who had posted comments on Facebook expressing her dissatisfaction with the employer for not withholding state taxes and stating that the employer did not know how to do paperwork.  The letter stated that legal action would be taken unless the employee retracted her “defamatory” statements.  The NLRB advised that the letter was unlawful even if there was a reasonable basis for the potential legal action because the letter would reasonably tend to interfere with the employee’s Section 7 rights.

Union’s video on Facebook could coerce or restrain individuals’ right to work for a non-union employer

  • The Union violated Section 8(b)(1)(A) by posting an interrogation videotape on YouTube and Facebook.  A union business agent and several organizers went to a nonunion jobsite with a video camera and told the employees that they were inspecting the job and had received reports of illegal workers.  The individuals did not identify themselves or reveal their union affiliation but proceeded to question the employees about their immigration status, forcing the employees to respond when they resisted.  After videotaping the interrogations, the union then edited the video and posted it on YouTube and Facebook.  The Board explained that the union’s conduct violated the Act because it had a reasonable tendency to restrain or coerce employees in the exercise of their Section 7 rights, which includes the right to work for a nonunion employer.

Overbroad social media policies

  • An employer had a policy that 1) prohibited employees from using any social media that may violate, compromise or disregard the rights and reasonable expectations of privacy or confidentiality of any person or entity; 2) prohibited any communication or post that constitutes embarrassment, harassment or defamation of the employer, its employees, officer board member, representative or staff member; and 3) prohibited statements that lack truthfulness or that might damage the reputation or goodwill of the employer, its staff, or employees.  Because the policy prohibiting the use of social media in regards to confidentiality did not have any limits, did not explain what was confidential and was used to terminate an employee for posting on Facebook about working conditions which would be protected by the Act, the Board advised that the policy was overbroad.  Additionally, the Board found the other policies overbroad as well because they would apply to protected criticism of the employer’s labor policies or treatment of employees and the policies did not define its broad terms to limit them to exclude Section 7 activity.

Lawful social media policy

  • The NLRB determined that an employer’s social media policy that precluded employees from pressuring their coworkers to connect or communicate with them via social media could not reasonably be read to restrict Section 7 activity and was sufficiently specific in its prohibition against pressuring coworkers and applied only to harassing conduct.  The Board also considered several of the employer’s other social media guidelines and found them to be overbroad because they could be interpreted to restrict Section 7 rights.

NLRB Mandates Posting Of NLRA Rights

The NLRB announced today it has issued a Final Rule requiring employers to notify employees of their rights under the National Labor Relations Act (“NLRA”). A Fact Sheet  is also available. The rule is scheduled to be published in the Federal Register on August 30, 2011. It is effective November 14, 2011.

As we reported on December 23, 2010, the NLRB had issued a proposed rule regarding the notice on December 22, 2010. The NLRB received more than 7,000 comments in the six-month comment period that followed. The NLRB appears to have made minor adjustments based on comments received, but the Final Rule is substantially as proposed.

The Final Rule requires private-sector employers who are covered by the NLRA (which is most companies) to post the designated 11x17 employee rights notice wherever other workplace notices are typically posted. If employers regularly post rules or policies on an intranet or internet site, the Board’s notice must also be posted there. Translated versions must be posted where at least 20% of the workforce is not proficient in English. 

The notice tells employees of their unionizing rights, gives examples of unlawful employer and union conduct, and tells employees how to contact the NLRB with questions and complaints. The NLRB describes the notice as “similar” to the notice required for federal contractors by the U.S. Department of Labor (“DOL”). The NLRB will deem a contractor in compliance with this requirement if it posts the DOL’s notice.

Failure to post the notice may be treated as an unfair labor practice (“ULP”).

What This Means For Employers

Unless a company already posts the DOL’s comparable notice, employers should obtain a copy of the notice from the NLRB (via its website or a Regional Office), once it is published around August 30, 2011. The notice should be posted, both physically and electronically, in all places that other employee notices are posted. Companies should ensure they are in compliance with this requirement by no later than November 14, 2011.

NLRB's Quickie Election is Back - Submit Your Comments Now!

First introduced in the Employee Free Choice Act as an alternative to card check, the quickie election has been brought back as part of the National Labor Relations Board’s (“NLRB”) rulemaking process.  On June 21, 2011, the NLRB, with Board Member Brian Hayes dissenting, issued a Notice of Proposed Rulemaking suggesting numerous changes to the procedures governing union elections.  These proposed changes are significant and if accepted would both alter the landscape of secret ballot elections and place employers at a severe disadvantage.

Proposed Changes

Timing of Elections.  As indicated, one of the most notable proposed changes is the timing of the election itself.  The Board’s proposed amendments would reduce the time between the filing of a petition and the election, with elections being held as early as 10 days after a petition is filed.  In 2010 the median timing of an election was 38 days after the filing of a petition.

Litigation Limitations.  One reason quickie elections would be possible is because of the numerous proposals made regarding litigation related to elections.  First, the amendments would require that any pre-election hearing disputing the right of the union to hold the election, be held within seven days of when the hearing notice is served.  Currently, Regional Directors have flexibility in scheduling the pre-election hearing and can consider special circumstances.  Second, at the hearing employers would be required to file a Statement of Position explaining all of their legal objections to the elections.  Notably, failure to object to an issue would be fatal because the objection would be deemed waived.  Third, prior to an election the hearing officer will only rule on disputes that would affect more than twenty percent of the bargaining unit.  Fourth, if the hearing officer does rule prior to the election, parties cannot request review of the ruling by the NLRB until after the election. 

Access to Employee Information.  The changes would require employers to provide unions access to employee information within two days of approval of an election agreement or issuance of a direction of election.  Currently employers have seven days to provide this information.  The proposals would also require employers to provide employees’ available phone numbers and email addresses, information employers do not currently provide.  Finally, the amendments further propose that employers must provide this information electronically.

Potential Impact

In its fact sheet that compares its proposals to the current procedures in place, the NLRB claims that it periodically reviews and revises its procedures to improve its service to the public and that the proposed amendments would help it carry out its duties under the National Labor Relations Act (“NLRA”).  Furthermore, the NLRB claims that the motivation for the proposed rules is to streamline the election process, reduce unnecessary litigation and facilitate the use of electronic communications and document fillings.  Unfortunately, while the proposed amendments may do exactly that, they do so to the detriment of employers. 

The Board’s proposed changes will clearly provide significant benefits to unions and as noted by former NLRB Chairman Peter Schaumber, hurt employers and lead to uninformed voters.  Because of the quickie elections, employers will have less time to respond to organizing campaigns.  Employers will have a short amount of time to educate employees about their views on unionization and additionally limited time to review and determine their legal positions on the elections.  Calling it “a seismic shift in Board law and procedures,” Schaumber explains that the proposals will “eviscerate employers’ chance to respond” and “employees will only hear one side of the story.” 

What You Can Do

The Board is accepting comments on its proposed rules through August 22, 2011.  Your comments can be submitted through regulations.gov.  In addition to commenting on these proposals, one strategy is for employers to be proactive regarding unions.  If the amendments are accepted, employers will clearly be facing an uphill battle when elections occur.  As a result, employers should educate employees about unionization as soon as they are aware of the potential of any election.

NLRB To Require "Union Rights" Poster

On December 21, 2010, the NLRB issued a press release and fact sheet announcing its intention to publish in the Federal Register a proposed “rule” requiring virtually all private sector employers to post in the workplace a Notice to employees outlining their rights under the National Labor Relations Act. The proposed poster was published in the Federal Register on December 22, 2010.   Interested parties will have sixty (60) days from December 22nd to respond with comments regarding the proposed rule.

The poster entitled, “EMPLOYEE RIGHTS”, lists seven bullet points which, repetitively, state that employees have the right to organize, form or join a labor union and, again repetitively, state that they have the right to negotiate their wages, benefits and working conditions with their employer.  A separate bullet point also explains that employees have the right to act with each other to improve working conditions, raise work related complaints “directly” with the employer or with a government agency and, again, to form a union.  Another bullet states that employees have the right “to strike and picket.”  The last bullet advises that employees can, “Choose not to do any of these activities…”

Also included on the poster is a descriptive summary of seven types of illegal activity by employers and five types by unions.  The poster concludes with the warning that, “Illegal conduct will not be permitted,” along with a description of the NLRB’s authority and possible remedies which the Board can order.  Finally, it provides employees with contact information for the NLRB.

We encourage our readers to carefully review the broad and repetitive poster and consider making comments.  We are in a position to assist our clients and others who may wish to submit comments.
 

Are Social Networking Sites The New Company Water Cooler? The NLRB's Acting General Counsel Thinks So.

Employees are increasingly talking about supervisors and other employees on social networking sites, and sometimes the talk can get nasty.  Complaining about co-workers and supervisors is not new.  However, distributing those complaints via the internet is.  Employers often seek to crack down on such negative talk via policies and disciplinary action.  However, Lafe Solomon, the NLRB’s acting general counsel, has publicly stated that employees have the right to communicate jointly about working conditions, regardless of whether those communications are made on social networking sites or at the company water cooler.  The NLRB will decide the validity of Mr. Solomon’s statement in connection with a recently-issued complaint.

The NLRB’s Complaint

On October 27, 2010, the NLRB’s Connecticut Regional Office (Region 34) issued a complaint alleging that American Medical Response of Connecticut illegally terminated an employee for, among other things, violating the Company’s social media policy.  At issue is whether an employee’s unflattering and critical social media  posts about her supervisor, which triggered co-workers to post supportive messages, constitute a protected concerted action under the National Labor Relations Act (the “Act”).   The NLRB also alleges that the Company’s social media policy, which prohibits such conduct, violates the Act because it tends to chill employees from exercising their protected right to protest working conditions.  This despite a prior guidance that permitted such a policy.  A hearing on the complaint has been set for January 25, 2011.
 
Factual Background

In November 2009, the Company received a customer complaint regarding bargaining unit member Dawnmarie Souza’s (“Souza”) rude and discourteous service.  Souza, who was requested by her supervisor to prepare a response to the customer’s complaint, asked her supervisor to allow a union representative to assist in preparing the response.  A few hours after her supervisor denied this request, Souza posted comments on her personal social networking page mocking her supervisor.  In addition to using vulgar language to characterize her supervisor, Souza also referred to her supervisor as a “17”— company-speak for a psychiatric patient.  Souza’s postings drew supportive comments from her co-workers, which, in turn, led Souza to post further negative comments about her supervisor.  Souza was eventually terminated.

At all material times during Souza’s employment, the Company maintained a Blogging and Internet Posting Policy which prohibited employees from, among other things, making “disparaging, discriminatory or defamatory comments when discussing the Company or the employee’s superiors, co-workers….”

The Bottom Line

The NLRB’s complaint against American Medical Response, in tandem with Mr. Solomon’s publicly-expressed sentiment, represent a troubling departure by the Board on prior advice it issued regarding social networking policies. It is unclear whether the Board will ultimately agree with Mr. Solomon that an employee’s comments made on a social networking site are analogous to those made around a company water cooler, particularly since such view would require overlooking the reality that the recipients of such communications will necessarily include both employees and non-employees alike.  What is clear, however, is that the Board is actively challenging social networking and other workplace policies.  For this reason, all employers are encouraged to carefully review their social networking and other policies that may get the attention of the NLRB.

Non-Union Employee Has Standing to Seek Injunction Against Employer and Union Under Labor Management Relations Act

The Eleventh Circuit recently ruled that an employee had standing to seek an injunction against his employer and a labor union over alleged violations of the Labor Management Relations Act (“LMRA”) in the union organizing context.  In Mulhall v. UNITE HERE Local 355, Hollywood Greyhound Track, Inc., d.b.a. Mardi Gras Gaming, (No. 09-12683, September 10, 2010), the Eleventh Circuit reversed the lower court’s dismissal of the case, overruling its decision that the employee lacked a cognizable injury, and remanded the case for further proceedings.

Jerry Mulhall was an employee of Hollywood Greyhound Track, Inc., operating as Mardi Gras Gaming (“Mardi Gras” or the “Company”), in Hallandale Beach, Florida.  Mardi Gras’ workforce was non-union—and that is how Mulhall wanted it to stay.  A vehement opponent of unionization, Mulhall filed suit to block enforcement of a Memorandum of Agreement (“MOA”) entered into by his employer and UNITE HERE which, according to Mulhall, would illegally thrust unionized status upon the employees. 

Under the MOA, which Mulhall characterized as “illegal and collusive,” UNITE agreed to financially support a casino gaming ballot initiative desired by Mardi Gras, and, if recognized as the exclusive bargaining agent for Mardi Gras’ employees, to refrain from picketing, boycotting, striking or undertaking “other economic activity” against the Company.  In exchange, Mardi Gras agreed to help UNITE organize the Company’s employees.  Specifically, Mardi Gras promised to:  (1) provide UNITE with complete employee rosters and home addresses; (2) allow UNITE to use Company property—including non-public areas—for organizing activities; (3) refrain from any anti-union speech or conduct; (4) waive its right to an NLRB-monitored secret ballot election and, instead, allow an informal “card check;” and (5) promise not to file unfair labor practice charges against UNITE for violating employees’ rights during the organizational campaign.

UNITE abided by the MOA and provided more than $100,000 toward the gaming-related ballot initiative favored by Mardi Gras.  When UNITE later demanded the promised assistance from the Company in organizing the workforce, Mardi Gras refused, claiming that the MOA was illegal, based on the advice of its new legal counsel. 

UNITE and Mardi Gras arbitrated the enforceability of the MOA, and an arbitrator ruled for UNITE.  At the same time, Mulhall filed an injunction action in federal court, claiming that the MOA was unlawful under Section 302 of the LMRA, which makes it illegal for an employer to deliver, or for a union to receive, any “thing of value.”  Essentially, the statute prohibits employer payments to any representative of its employees, with certain limited exceptions.  As the Court observed, one of the goals of Section 302 is to protect employees from the collusive effects of unions and employers attempting to “buy” labor peace. 

In holding that Mulhall had legal standing to bring such an action, the Eleventh Circuit found that Mulhall satisfied all three elements:  (1) he has suffered or imminently will suffer an injury-in-fact; (2) that his injury stems from the defendant’s conduct; and (3) that a favorable judgment is likely to redress the injury.  With regard to the “injury” prong, the Court held that Mulhall showed that he had a “legally cognizable interest” that was imminently at risk of being invaded:  his freedom of association under the First Amendment.  In other words, Mulhall had the right not to associate with a union, and the MOA substantially jeopardized that right.  Therefore, he faced imminent injury:  being forced to unionize against his will. 

The Court also found that the second and third prongs required to establish standing were satisfied because the potential injury was “fairly traceable” to Mardi Gras’ and UNITE’s conduct, and a favorable judgment—enjoining enforceability of the MOA—would eliminate the risk of forced unionization.  In finding that Mulhall had standing and could proceed with his legal action, the Court was clear to point out that it was not ruling on the merits.  Instead, in the Court’s words, “we say only that it is enough to allow him to get his ticket stamped for admission to the federal court.”      

Mulhall raises a host of interesting questions about the degree to which employers and unions can agree on the conditions that will govern an organizing campaign.  The lesson is that, while granting concessions like neutrality and card check probably do not violate § 302 (if for no other reason than the NLRA allows an employer to voluntarily agree to recognize a union on cards), agreeing to do things such as accept the union’s financial support in unrelated business endeavors in exchange for card check and neutrality raises significant § 302 concerns.  Therefore, employers should carefully consider such proposals and seek legal advice before going forward.

Unions May Turn To Facebook To Find Unfair Labor Practices

How would you handle the following situation?  You have recently learned that one of your employees “posted” on Facebook complaining about the company, specifically commenting on work conditions and wages.  Several other employees have made comments on this employee’s Facebook page and a discussion has ensued.  These comments and complaints are damaging to the company’s reputation and portray the company in a negative light. 

Your natural inclination may be to instruct the employee to take these comments down and prohibit him from continuing to use Facebook to discuss work issues.  Yet, unions may be looking for you to do exactly that so they can try to file an unfair labor practice charge with the National Labor Relations Board (“NLRB”).  Employers have the right to protect their reputations and to prevent the possible disclosure of confidential information.  But unions may try to construe the above situation and the employer’s reaction to it as interference with an employee’s right to engage in concerted activity, a violation of Section 8 of the National Labor Relations Act (“NLRA”).  Notably, such an argument by unions could apply to both unionized and non-unionized employers. 

Protected Concerted Activity 

Section 7 of the NLRA protects “the right . . . to form, join, or assist labor organizations . . . and to engage in other concerted activities for the purposes of collective bargaining or other mutual aid or protection.”  29 U.S.C. §  157.  “Concerted activity” is action taken in pursuit of a common goal by multiple employees or by a single employee where the employee is authorized by other employees to act on their behalf.  The concerted activity is protected if it is intended for mutual aid or protection (a lawful objective) and executed by a lawful method.  Many people think of strikes, group complaints, or honoring picket lines as typical activities protected by the NLRA.  However, an activity may fall under the protection of the NLRA even where it appears to have little or nothing to do with unions.  Employees have the right to engage in concerted activities even where no union activity is involved and in situations where the employees have not considered a collective bargaining agreement. 

Under Section 8 of the NLRA, employers may not interfere with, restrain, or coerce employees in their rights to engage in concerted activities.  29 U.S.C. §  158(a)(1).  Employers who take an adverse action toward, or retaliate against, employees because of protected concerted activities may violate the NLRA and possibly find themselves having to defend against an unfair labor practice charge.  As noted, this is the case for both unionized and non-unionized employers. 

Facebook, Blogs, Chat Rooms and More

When addressing employee use of social media, employers should be aware that unions and possibly the NLRB may construe employees’ use of social media as protected concerted activities.  Unions may argue that employees are exercising their Section 7 rights when they use Facebook, blogs, chat rooms, twitter and even email.  Because of its nature, social media provides the perfect opportunity for employees to interact with one another, and unions and the NLRB may try to classify such interactions as employees engaging in protected concerted activity.   

Social media, and employees’ use of it, presents considerable challenges to employers.  Misuses of social media can result in damage to the employer’s reputation, breach of confidentiality, and trade secret theft.  To minimize those risks, employers may implement a social media policy to provide some limitations on how social media may be used relating to the company.  Such policies may address employees’ use of social media both at the workplace, with company property, and outside of the workplace.  When constructing such a policy, employees’ Section 7 rights should be considered.   Employers must avoid any policy that may reasonably tend to “chill” employees in the exercise of their Section 7 rights, such as overly broad restraints that forbid employees from discussing work conditions with one another or from discussing the company on the Internet or other social forums. 

Other Possible NLRA Claims

With regard to social media, unions may also argue that employers violate the NLRA by monitoring employees’ use of social media because they are engaging in surveillance of union activities.  Employers generally may not use surveillance where employees are engaged in protected union activities, such as exercising their Section 7 rights.  Because surveillance tends to discourage employees from exercising their Section 7 rights, it is viewed as a violation of the NLRA.  Where unions assert surveillance concerns with social media, the matter will often turn on whether the social media is public or private (where there are passwords in place to limit access to the blog, chat room, Facebook page, etc.).  Employers also should treat both union and non-union use of social media in the same manner to avoid allegations of discrimination against union members and union interests. 

Because of the significant increase in its use, social media creates new challenges for employers in protecting their legitimate business interests.  Employers should be aware of the possibility that unions and the NLRB could seek to invoke the NLRA to protect employees’ use of social media in several respects. 

 

NLRB Issues Long-Awaited Secondary Boycott Decision

Pundits in the labor arena have speculated for months that the Administration’s recent appointment of union-friendly Board candidates like former SEIU Assistant General Counsel Craig Becker could have a significant impact on the state of Board precedent in future cases.  If the Board’s highly anticipated recent decision in United Brotherhood of Carpenters and Joiners of America, 355 NLRB No. 159 (“UBC”), is any indication, the pundits may be right.

In UBC, the full five-member Board -- which split along party lines -- held that a labor union’s use of stationary banners outside of the business establishment of a “secondary,” or neutral, employer does not violate the secondary boycott provisions of Section 8 of the National Labor Relations Act.  That Section makes it an unfair labor practice for a union to “threaten, coerce or restrain” a neutral employer if the union’s object is to force the neutral employer to cease doing business with another “primary” employer with whom the union has a labor dispute.  In UBC, the General Counsel pressed ULP charges against the Carpenters’ Union for setting up banners outside the premises of several neutral employers to protest their doing business with a group of construction firms with whom the Carpenters had a primary labor dispute.  At least some of the banners suggested that the Union had a dispute directly with the targeted neutral employers, indicating that the object of the Union’s conduct was indeed to force the neutrals to cease doing business with the primary employers in the case.  The parties however stipulated that the Union did not otherwise engage in picketing, patrolling or disruptive conduct, and as a result, the facts presented the Board with a perfect “test case” regarding the legality of union bannering activity directed at a secondary employer.
 
Departing from past Board cases broadly defining “picketing” under Section 8 of the Act, the UBC majority held that the Union’s conduct “lacked the confrontational aspect necessary to a finding of picketing proscribed as coercion or restraint within the meaning of Section 8[].”  The majority then announced a new standard for determining the lawfulness of non-picketing conduct directed at secondary employers:  secondary activity that falls short of picketing will violate Section 8 only if it “directly cause[s], or could reasonably be expected to directly cause, disruption of the secondary’s operations.”  In reaching this new and extremely narrow standard, the UBC majority noted that its holding was necessary in order to comply with the “Constitutional Avoidance” doctrine, which requires that statutes be construed in a manner that avoids conflict with the U.S. Constitution.  The UBC majority ruled that holding a banner is akin to “speech,” or at least is expressive conduct, and that to outlaw such activity would bring Section 8 of the Act directly into conflict with the First Amendment. 
 
Members Schaumber and Hayes issued a vigorous dissent “compelled by a serious concern that [the majority’s] standard will assuredly foster precisely the evil of secondary boycott activity and expanded industrial conflict that Congress intended to restrict by enacting [Section 8].”

It is difficult to predict the ultimate impact of the UBC decision.  In one sense, it is not an overly controversial decision because the facts of the case indicated that the Union’s conduct was limited to the peaceful display of stationary banners, without patrolling, picketing, name calling or other disruptive conduct.  However, the Democratic majority seized on the opportunity to announce their creation of a test that may have a much wider application.  Now, unions are likely to argue that they are free to engage in any type of conduct -- perhaps even picketing -- as long as they carry it out in a manner that does not “directly cause” disruptions to the secondary employer’s business.  In this regard, the dissent’s concerns are well taken.  We will be watching closely to see how this significant case plays out in the labor arena going forward.

Supreme Court Nullifies 600 NLRB Decisions; General Counsel Meisburg Leaves The Agency

Two significant developments last week affect the functioning of the country's federal agency in charge of overseeing union-management relations. The first is a decision by the US Supreme Court and the second is the resignation of the agency's general counsel effective June 18th.

As a result of political disagreements over nominations to fill vacancies on the National labor Relations Board, the Board operated with only two of its five members during 2008, 2009 and into 2010.  During that time, the two members decided almost 600 cases (though most were not particularly controversial from the standpoint of illuminating policy or setting precedent).  On June 17, the Supreme Court ruled in New Process Steel v. National Labor Relations Board, No. 08-1457, that the two members did not have the authority to decide those cases because they did not constitute a proper quorum under the National Labor Relations Act.  Instead, the Court ruled that at least three sitting Board members were required for the NLRB to act.  The ruling nullifies the decisions made in all 600 cases and effectively remands the cases back to the Board for re-adjudication.

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.

Update On DOL's Proposal To Narrow The "Advice Exception" To LMRDA Reporting Requirements

On May 21st, we reported on the newly-announced Department of Labor (“DOL”) proposal to narrow the “advice exception” to the reporting requirements of section 203 of the Labor-Management Reporting and Disclosure Act (“LMRDA”).  In a nutshell, section 203 requires employers to annually report any arrangement with a third-party consultant to persuade employees as to their rights to organize and bargain collectively or to obtain certain information concerning the activities of employees or a labor organization involved in a labor dispute with the employer.  The “advice exception” of section 203(c) provides that no annual report need be filed when a consultant gives “advice” to the employer.  DOL’s current policy is to construe this exception broadly to exclude arrangements where the consultant has no direct contact with employees, but DOL now views this policy as overbroad and seeks to narrow it through rulemaking, as outlined in its Spring 2010 Regulatory 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.

New Notice And Posting Obligation For Federal Contractors Effective June 21, 2010

The Secretary of Labor has finalized implementing regulations under Executive Order 13496, which requires federal contractors and subcontractors covered by the National Labor Relations Act (NLRA) to post a new notice advising employees of their rights under the Act.  Note that most employers in the private sector are covered by the NLRA; the Order is not limited to companies with union activity or representation.

The regulations are codified at Title 29, Part 471 of the Code of Federal Regulations.   The Department of Labor (DOL) also provides a helpful fact sheet about the new requirement.

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. 

Department Of Labor Proposes To Narrow "Advice Exception" To LMRDA Reporting Requirements

The Department of Labor has recently announced a regulatory initiative that would narrow the “advice exception” to the reporting requirements of section 203 of the Labor-Management Reporting and Disclosure Act (LMRDA).  Section 203 requires employers to annually report via Form LM-10 any agreement or arrangement with a third-party consultant to persuade employees as to the collective bargaining rights, or to obtain certain information about the activities of employees or a labor organization involved in a labor dispute with the employer.  The retained consultant must also file a report concerning the agreement or arrangement (Form LM-20).  However, one of the statutory exceptions in section 203(c) provides that no report need be filed when the consultant gives “advice” to the employer.

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.

New Rule Makes It Easier For Airline And Railroad Employees To Unionize

In yet another pro labor move under the Obama administration, the National Mediation Board (“NMB”), which oversees labor affairs of airlines and railroads, has issued a final rule that will make it easier for unions to organize airline and railroad employees.  Under the new rule, unions must obtain votes from a majority of all workers who cast ballots in order to be recognized.  This is a significant change from the old rule, which had governed these elections for the past 76 years.  In the past, unions had to obtain votes from a majority of all workers eligible to cast ballots in order to be recognized.  Essentially, the old rule allowed workers who did not cast a ballot to effectively count as a “no” vote.  As a result, in most cases the new rule will decrease the number of votes unions must obtain to win recognition.  Most companies, which are governed by the National Labor Relations Act, follow the same majority requirements as the new rule.

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.”

New NLRB: Employers Watch Out

President Obama’s recent recess appointments to the NLRB leave one Republican among three liberal Democrats.  Should the opportunity present itself, the Board’s new composition will likely result in the overturning of two employer-friendly cases, Register Guard (email policy) and Oakwood Healthcare, Inc. (supervisory status). Overturning either of these cases may produce highly unfavorable results for employers.  The Board already has such an opportunity in Register Guard.  The D.C. Circuit recently remanded Register Guard for reconsideration on a limited basis, but the Board may seize the opportunity to reverse its initial holding.

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).

Revisions to NLRB Case Handling Manual Hint at More Rigorous Enforcement

On December 24, 2009, the National Labor Relations Board ("NLRB") issued a revised version of its Case Handling Manual (Part One).  For those inside the NLRB, the Manual provides guidance on various internal policies and procedures for enforcement proceedings.  For those outside the NLRB, the Manual not only states how the agency is likely to deal with issues that arise during such proceedings, but also provides insight into the agency’s enforcement priorities.  Part One (the part recently revised) covers unfair labor practice (“ULP”) charges, but also includes sections that apply to representation elections and compliance proceedings as well.

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 To NLRB Delayed, Possibly Derailed; EFCA Debate Affected

On December 24, Craig Becker’s nomination to the NLRB ran into a significant obstacle when the Senate returned the nomination to the White House for reconsideration.

Becker, who works for the Service Employees International Union, was nominated by the President earlier this year to fill one of the two vacant Democratic seats on the NLRB.  There has been significant controversy surrounding his nomination due to what critics describe as his extreme, some say radical, pro-union views concerning possible changes to the nation’s labor laws.  The nominations of Democrat Mark Pierce and Republican Robert Hayes were both held over by the Senate for consideration during the next term, indicating that both are likely to be confirmed.  

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.
 

Union Election Win Rate Continues Upward In 2009 - 73% Win Rate Casts Further Doubt On Need For EFCA

According to data from BNA PLUS, unions have won more than 73% of the elections in which they participated in the first half of 2009. This is up from 66% for the same time period in 2008. The Teamsters led the way by participating in 164 elections and winning 70% of them, while the SEIU was second, winning 75% of 44 elections.  Although the number of elections conducted by the NLRB thus far in 2009 is down from the number in 2008, the union's win rate in each year of this decade has been over 50% and getting better as the decade progresses. The numbers out today indicate that currently unions are overwhelmingly successful when employees are allowed to vote on the question of union representation. Opponents of the Employee Free Choice Act will question why Congress needs to eliminate the secret ballot for employees in order to help unions succeed when unions are obviously faring very well under the current system.

NLRB Remedy Shows Agency Clout - $41 Million Settlement Unprecedented

In one of the largest back pay awards in the agency's history, the National Labor Relations Board (NLRB) concluded a settlement with five Michigan beer distributors that required the companies to pay $41 million in back pay to employees and the Teamsters. Findings from an ALJ, supported by the NLRB and the 6th Circuit Court of Appeals, concluded that the five companies colluded to systematically oust the union by separately engaging in bad faith bargaining, unlawfully declaring impasse, and then implementing their respective labor contracts with substantially lower wages and benefits.

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.

Supreme Court Will Decide Validity of NLRB's Two-Member Rulings

The Supreme Court agreed on November 2, 2009 to decide whether decisions of the National Labor Relations Board (NLRB) are valid if they were reached by only two members when other NLRB seats were vacant.  In New Process Steel, LP v. NLRB, the Seventh Circuit concluded that the NLRB’s two-member decision in that case was appropriate and binding.  The Supreme Court is expected to hold oral argument early next year and decide the case in June 2010. 

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.