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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.

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.

The move is attracting political heat for two reasons.

First, President Obama did not allow much time for the confirmation process considering that Griffin and Block were nominated only weeks ago.  Flynn, on the other hand, was nominated in January 2011 but his confirmation has stalled.

Second, the recess appointments were made while the Senate was not technically in recess.  To avoid recessing, the Senate has been holding pro forma sessions, many of which last only seconds.  Making recess appointments while the Senate is not technically in recess has never been done.  Such a move will unquestionably cast doubt over the validity of the Board’s actions in the coming year and is likely to face legal scrutiny.

The appointments come days after the expiration of former NLRB Board Member Craig Becker’s recess appointment, which was expected to lead to a Board shutdown given that the Board lacks the three members required to reach a quorum.  Once the appointments are finalized, the Board will be restored to five members for the first time since August 2010. 

In a press release accompanying the appointments, President Obama stated, “We can’t wait to act to strengthen the economy and restore security for our middle class and those trying to get in it, and that’s why I am proud to appoint these fine individuals to get to work for the American people.”
 
The recess appointments are likely to cause a political firestorm considering that, two weeks ago, Senate Republicans wrote a joint letter to President Obama urging him “not to undermine the Senate’s advice and consent role” by making recess appointments.  “[W]e urge [you] to instead allow for a full and thorough review of their qualifications through regular order in the Senate,” wrote the Senate Republicans.

The appointees’ complete biographies, courtesy of the NLRB website, are as follows:

Sharon Block, Deputy Assistant Secretary for Congressional Affairs at the U.S. Department of Labor.  Between 2006 and 2009, Ms. Block was Senior Labor and Employment Counsel for the Senate HELP Committee, where she worked for Senator Edward M. Kennedy. Ms. Block previously served at the National Labor Relations Board as senior attorney to Chairman Robert Battista from 2003 to 2006 and as an attorney in the appellate court branch from 1996 to 2003.  From 1994 to 1996, she was Assistant General Counsel at the National Endowment for the Humanities, and from 1991 to 1993, she was an associate at Steptoe & Johnson.  She received a B.A. in History from Columbia University and a J.D. from Georgetown University Law Center where she received the John F. Kennedy Labor Law Award.

Terence F. Flynn, currently detailed to serve as Chief Counsel to NLRB Board Member Brian Hayes.  Mr. Flynn was previously Chief Counsel to former NLRB Board Member Peter Schaumber, where he oversaw a variety of legal and policy issues in cases arising under the National Labor Relations Act.  From 1996 to 2003, Mr. Flynn was Counsel in the Labor and Employment Group of Crowell & Moring, LLP, where he handled a wide range of labor and employment issues, including collective bargaining negotiations, litigation of unfair labor practices, defense of ERISA claims, and wage and hour disputes, among other matters.  From 1992 to 1995, he was a litigation associate at the law firm David, Hager, Kuney & Krupin, where he counseled clients on federal, state, and local employment and wage hour laws, NLRB arbitrations, and other labor relations disputes.  Mr. Flynn started his law career at the firm Reid & Priest, handling labor and immigration matters from 1990 to 1992.  He holds a B.A. degree from University of Maryland, College Park and a J.D. from Washington & Lee University School of Law. 

Richard Griffin, General Counsel for International Union of Operating Engineers (IUOE).  He also serves on the board of directors for the AFL-CIO Lawyers Coordinating Committee, a position he has held since 1994.  Since 1983, he has held a number of leadership positions with IUOE from Assistant House Counsel to Associate General Counsel.   From 1985 to 1994, Mr. Griffin served as a member of the board of trustees of the IUOE’s central pension fund.  From 1981 to 1983, he served as a Counsel to NLRB Board Members.  Mr. Griffin holds a B.A. from Yale University and a J.D. from Northeastern University School of Law.

The Board is currently comprised of two Democrats and a Republican, with its other two seats unfilled.  The board’s membership will soon decrease to two when Craig Becker’s term expires at the end of this year.  Becker is a Democrat who previously worked for the AFL-CIO and the Service Employee International Union.  With only two members on the board, the NLRB would be unable to reach its three-member quorum requirement and would be prevented from rendering case decisions or issuing new rules.

Despite the possibility of an idle board, Democrats will face difficulty in obtaining the necessary votes to secure the nominees’ confirmation.  Democrats maintain a slight edge in the Senate, but they are bound to confront strong resistance from the Republicans on the nominations because of the NLRB’s recent action against Boeing.  Boeing opened a non-union plant in South Carolina, a right-to-work state, that was projected to create a significant number of jobs for the surrounding area.  The NLRB brought a lawsuit against Boeing arguing that Boeing relocated its aircraft assembly lines out of Washington state in retaliation to union disputes that disrupted production of its 787 planes.  The NLRB recently dropped its action, but Representative Darrell Issa, the chairman of the House Oversight and Government Reform Committee, has stated that he will continue an investigation into the NLRB’s handling of its lawsuit against Boeing.

A previous Republican nominee, Terrence Flynn, is still awaiting Senate confirmation.  Block and Griffin’s confirmation may hinge on a Senate compromise to seat all three nominees.  Without bipartisan approval, it is unclear whether any nominees will be confirmed by the end of the year, leaving the NLRB procedurally powerless.

In the wake of the judge's comments, the Board announced that it has agreed to delay implementation of the rule until April 30, 2012 in order to "facilitate the resolution of the legal challenges that have been filed with respect to the rule."  Obviously, whether this new implementation date holds will depend in part on developments in the litigation.  We will keep you informed as the situation unfolds.

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.

• To limit pre-election hearings to the issue of whether a genuine question concerning representation exists that would prevent the need for an election (an extremely rare occurrence);
• To authorize the hearing officer in pre-election litigation to refuse to allow parties to file post-hearing briefs;
• To eliminate the parties' right to seek full Board review of regional directors' pre-election rulings and to delay Board review of these issues until after the election (and then, only if they have not been rendered moot by the election result); and 
• To eliminate the portion of the rules that prevents regional directors from scheduling elections until at least 25 days after the direction of an election (this rule existed in order to allow the full Board time to rule on appeals of pre-election litigation, so the elimination of the parties' right to seek full Board review of pre-election rulings renders the 25-day rule moot).

The resolution passed over the strong objection of Member Hayes, the lone Republican on the Board.  Some had speculated that Member Hayes would resign prior to the meeting in order to deprive the Board of the quorum needed to pass Chairman Pearce's proposed resolution.  He did not, and instead attended today's meeting to voice his concern about Chairman Pearce's proposal.  Among other things, Member Hayes described the proposal as a “flawed rule” that was the product of “a flawed process.”  In response, Chairman Pearce described the process as “the most open and most participatory rulemaking process the Board has ever engaged in.”

Passage of the resolution paves the way for more sweeping changes such as electronic voting and requirements that regional directors schedule elections as soon as 10 days after receiving a petition for representation.  These more drastic proposals, while not included in today's resolution, were featured in Chairman Pearce's original rulemaking proposals in June of this year and clearly remain on his agenda.  Indeed, the Board's own Q&A on today's resolution states that the remainder of Chairman Pearce's original proposal is open "for continued consideration by the Board."  

The text of the final rule must still be finalized, and another vote taken, before these proposed changes officially become Board procedure.  Several rounds of negotiation between Member Hayes and the Democratic Board majority are likely, and it is possible that today's resolution will be the subject of a court challenge.  It therefore is unclear when this round of changes will become final.  At a minimum, however, today's vote signals a significant step towards eliminating the procedural safeguards that permit employers to challenge the appropriateness of proposed bargaining units before an election takes place.  It also is a major step in the direction of shrinking the window of time between a union petition and the actual election.  As we have recommended before in this space, employers are well served to consult with their labor counsel and advisors now, to begin making 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. 

After receiving more than 65,000 written comments on the proposal and hearing testimony from 66 speakers at a two-day hearing in July, last week, the NLRB announced it will vote November 30  “on whether to adopt a small number of the amendments to its election procedures that the Board proposed earlier this year.”  Currently there are only three sitting NLRB members.  Although the NLRB’s press release regarding this vote does not state the proposed amendments to the election procedures on which it intends to vote, it is believed that the final “rule” to be offered by Member Pearce will only relate to limiting pre-election litigation. However, given the current NLRB’s composition, the upcoming expiration of Member Becker’s recess appointment at the end of the year and the fact that the Board cannot issue rules or adjudicate cases with only two sitting members, it is  possible that the NLRB will also consider a vote to shorten the election timetable to as little as 10 days from the filing of the petition to the day of the election.

The meeting of the NLRB’s three members, two Democrats and one Republican, will be held at the NLRB’s headquarters in Washington and will be open to the public, although the public may not participate.  At this meeting, members will discuss and vote on a resolution to accept the Chairman’s proposals, proceed to draft a final rule limited to those proposals, and defer the remainder of the proposed rule for further consideration.

We plan to keep a close eye on the NLRB’s vote and will report back following the vote.  It is likely that a court challenge will follow the adoption by the Board of any rule which would have the effect of speeding up the election process.  In the meantime, employers should be making plans as to how to handle organizing and election issues under a condensed timeframe including being pro-active with incumbent employees before organizing begins.

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.

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.

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.

In a 3-to-1 decision, the NLRB held that the use of giant inflatable rats is not, in and of itself, a “coercive,” “intimidating,” or picketing act, and thus is not  proscribed by Section 8(b)(4)(ii)(B) of the Unfair Labor Practices Act (28 U.S.C. 158).  The NLRB held that they “perceive[d] nothing in the location, size or features of the balloon that were likely to frighten those entering the hospital, disturb patients or their families, or otherwise interfere with the business of the hospital in a manner […] proscribed by Section 8(b)(4)(ii)(B).”  This makes use of giant inflatable rats a legal form of protest even when placed near the customers or suppliers of a labor dispute’s target company.  This case comes on the heels of another NLRB decision in Carpenters Local 1506 (Eliason & Knuth of Arizona, Inc.), 355 NLRB No. 159 (2010) that expanded union rights in posting large banners near neutral companies’ worksites.  The NLRB justified that decision with reasoning similar to the one in this case.  

The sole Republican board member, Brian Hayes, stated in his dissent that his colleagues had, “quite literally expanded the physical mass that unions may erect to confront and deter customers from entering a neutral employer’s premises[.]” Mr. Hayes argues that allowing unions to use things such as giant inflatable rats (which he termed, “rat colossi”) should be illegal.  In hopes of coercing a neutral employer to cease doing business with the labor dispute’s target employer, rat colossi confront and deter customers from doing business with the neutral employers.  In the opinion, the majority states that Hayes’ contention that the rat is coercive is unsupported by the arguments made during the proceedings, and that Hayes’ argument is insensitive to First Amendment concerns.

For many years, the Department of Labor has interpreted the “advice exception” broadly to exclude arrangements where the consultant has no direct contact with employees.  However, as we reported last spring and summer, the DOL has decided to move away from a broad interpretation of the advice exception and, as a result, held public meetings regarding its desire to narrow the advice exception.

The DOL has now taken the next step in its efforts to narrow the advice exception.  Specifically, on Tuesday June 21, 2011, the DOL issued a Notice of Proposed Rulemaking, which attempts to remedy what the DOL refers to as a “significant underreporting” problem.  According to the proposed rule, the term “advice” would be limited to “an oral or written recommendation regarding a decision or course of conduct.”  Under this narrower definition, if a consultant engages in actions or communications that would indirectly or directly persuade employees regarding organizing, such activity is reportable under section 203 notwithstanding the fact that the consultant did not have direct contact with the workers.  Thus, for example, when a consultant prepares or provides a persuasive script, letter, or videotape for use by an employer in communicating with employees, or if the consultant makes revisions to such items to enhance their persuasive message, the advice exception may not apply, and the duty to report could be triggered.

The impact of this proposed rule will be significant if it is adopted.  Employers may no longer be able to shield third-party arrangements from reporting simply by isolating consultants from direct employee contact.  Moreover, the rule may interfere with employers’ ability to obtain legal advice from law firms out of fear that both the employer and the law firm may incur reporting obligations as a result. 

Comments to the proposed rule are due no later than August 22, 2011.  We encourage all employers potentially affected by the proposed rule to review the rule closely and submit comments to the rule. 

Signaling the NLRB’s intent to continue to closely probe other employers’ disciplinary actions against employees for work-related complaints on social media, on April 12, the NLRB’s Office of the General Counsel issued a memorandum to its regional offices adding social media disputes to the list of matters that the regional offices must submit to the NLRB’s Division of Advice for a decision on how to proceed.  The Division of Advice is responsible for issuing opinions on difficult or novel labor issues.

Two unfair labor practice complaints recently issued by NLRB regional offices against employers illustrate the close scrutiny the NLRB is giving to employers’ termination decisions when presented with allegations that an employer terminated one or more employees for statements made on social media.  On May 9, the NLRB Regional Office in Buffalo, New York filed a complaint against an employer alleging that it illegally fired five employees for posting critical comments about working conditions on an employee’s Facebook page in response to a coworker’s allegation that the employees failed to do enough to help the organization’s clients.  Less than two weeks following the issuance of this complaint, the NLRB Regional Office in Chicago issued a complaint against a local car dealership alleging unlawful termination of an employee for posting comments on his Facebook page that were critical of the dealership for serving only hot dogs and bottled water during a customer event. 

Although it is unclear whether either of these employers will ultimately be adjudged to have committed an unfair labor practice for the employee terminations at issue, these recent complaints underscore the NLRB’s growing alertness to the topic of social media and its role in the workplace.   Further, these complaints counsel employers to carefully consider their social media policies and the legal risks associated with terminating employees for criticizing the company on social media forums such as Facebook and Twitter. 

In the recent New Star case, the Unions initiated a strike against two general contractors -- the so-called “primary” employers. During the strike, the Unions displayed banners referencing its “labor dispute” with the two general contractors at 19 different construction worksites associated with “secondary” employers, i.e., worksites that were using the general contractors being struck by the Unions. At two non-public job sites, the Unions did not confine their banners to the immediate proximity of the entry gates that were reserved for non-neutral employees. Instead, at one worksite, the banners were displayed 10-15 feet from the gate reserved for neutral employees, and at a second worksite, the banners were 300-350 feet away from the neutral employee gate. At the work sites, the Unions also distributed handbills that explained the connection between the “secondary” employer and the two general contractors (or “primary” employers) with which the Unions had a dispute.
 
Siding with management, the NLRB’s General Counsel had argued that the banners constituted unlawful common situs picketing and that the term “labor dispute” on the banners impermissibly signaled to employees of the “secondary” employers that they should cease working. Disagreeing with the General Counsel, the NLRB pointed out that:

(i) it has considered ten cases involving bannering at fifty-four locations; 

(ii) in each case, the General Counsel argued that the banners were in actuality a “signal” to employees of the “secondary” employer to cease work; and 

(iii) yet, there was no evidence in any case that “any employee [of the “secondary” employer], in fact, ceased work.” 

The Board ruled that, for conduct to be in violation of the secondary boycott provisions of federal labor law, two key elements must be satisfied:

(1) the Union’s activity induced or encouraged the “secondary” employer’s workers to cease working; and

(2) one of the goals of the Union’s activity was to in fact compel the “secondary” employer to cease doing business with the struck or “primary” employer. 

Ultimately, the NLRB found “no evidence” to suggest that the Unions’ banners were a “‘prearranged or generally understood signal’ to any employees to cease work.” The Board also noted that:

(i) the Unions did not discuss their protest with passersby; 

(ii) the banners were not timed to coincide with the “secondary” employees’ reporting times; 

(iii) handbills explicitly stated that the Unions were not urging anyone to refuse to work or deliver goods; and 

(iv) the banners faced well-traveled public roads and could be observed by the public.

Dissenting Board Member Brian E. Hayes, the only Republican NLRB member, observed the lack of a practical difference between picketing and bannering and pointed out that “‘every form of influence and persuasion’ is equally prohibited, regardless of the method used.” Hayes accused the majority of the NLRB of “undoing through administrative adjudication the restrictions imposed by Congress on unions’ ability to involve neutral employers and employees in a labor dispute.” Hayes opined that the display of a banner announcing a “labor dispute” at a neutral gate to a non-public job site “plainly sought to ‘create the impression that this was an unfair job, and that the Union was requesting neutral employees . . . not to enter the site.’” 

While the Democratic NLRB majority seems to remain consistent in its stance that bannering is distinguishable from unlawful picketing, it is still unclear how a federal appellate court will view the issue. Unless and until a federal appellate court reverses the NLRB’s determinations on this issue, employers may find themselves stuck enduring this type of activity. In order to ensure that business is not disrupted and that Union activity is contained as much as possible, employers should continue to use the reserved gate system. 

Becker, former associate general counsel for the SEIU and the AFL-CIO, two of the largest unions in the U.S., drew a flood of criticism for his labor ties when President Obama first nominated him.  In their February 1 letter, the Senators express their disappointment in Mr. Obama’s recess appointment of Becker and explain that during his ten month tenure, Becker has not alleviated their concerns about his record of supporting an expanded role for the Board without Congressional authorization and his numerous conflicts of interest. 

The Senators allege that the Board has adopted a clearly pro-union stance since Becker’s recess appointment, and that Becker has led the Board to “re-open and reverse settled decisions.”  The Senators also point out that under Becker’s leadership, the Board has threatened four states (Arizona, South Carolina, South Dakota and Utah) with lawsuits over constitutional provisions protecting secret ballot union elections that were adopted by the voters of those states, but has ignored provisions in other states that conflict with federal law but benefit unions over employers. 

The Senators also express their dismay that, although Becker promised during his confirmation hearing to recuse himself for at least two years from any Board matter in which his previous union employers were a party, he has refused to recuse himself in twelve of thirteen such cases over the past ten months.  The Senators opined that the Board’s actions under Becker’s leadership will ensure conflict with Congress, entangle the Board in legal challenges for many years, and result in an even more polarized and unworkable Board.  The Senators conclude their letter by expressing their willingness to work with President Obama to identify a replacement nominee. 

The Board currently has a 3-1 Democratic majority, which includes Becker, but on January 5, President Obama nominated Board lawyer Terence Flynn (R) to fill the fifth spot on the Board.  According to Mike Enzi (R-Wyo.), Senate Republicans are not planning to back down from their opposition to Becker, and with forty-seven seats in the Senate, they have the votes to filibuster his confirmation vote.  Stay tuned for what is likely to be an interesting showdown.
 

The General Counsel is appointed for a four year term by the President with the consent of the Senate and is independent from the Board.  According to the NLRB’s News Release, Mr. Solomon, a native of Helena, Arkansas, who received a B.A. in economics from Brown University in 1970 and a law degree from Tulane University in 1976, has served as a career attorney at the NLRB.  He began his NLRB career in 1972 as a field examiner, and after earning his J.D., he joined the NLRB Office of Appeals.  He transferred to the Appellate Court Branch in 1979 and later worked for various board members.  President Obama named him Acting General Counsel of the NLRB as of June 21, 2010 under the Federal Vacancies Reform Act of 1998, after the previous General Counsel, Ronald Meisburg, resigned.  The News Release describes the General Counsel as the NLRB’s top investigative and prosecutorial officer, who has supervisory authority over all Regional Offices, guides policy on issuing complaints, seeking injunctions, and enforcing the Board’s decisions.  Among the steps he has taken as acting General Counsel, Mr. Solomon has issued an NLRB memorandum calling for priority action in unfair labor practice cases alleging retaliatory discharge during union organizing efforts.  He also recently authored a memorandum identifying “the protection of employee free choice regarding unionization” as the “keystone” of the NLRB’s mission, stating that he is “committed to making the principle of employee free choice meaningful.”  His language suggests that under his direction, the NLRB would continue to pursue the aims of the Employee Free Choice Act.

President Obama’s other NLRB nominee, Terence F. Flynn, received a B.A. from the University of Maryland, College Park and a J.D. from Washington & Lee University School of Law.  The NLRB’s News Release says that Mr. Flynn worked at various law firms from 1990 until 2003, working on a range of labor and employment and immigration matters.  He is currently Chief Counsel to NLRB Board Member Brian Hayes (the only Republican currently on the Board) and was previously Chief Counsel to former NLRB Board Member Peter Schaumber, also a Republican.

Right to Know Under the FLSA (RIN: 1235-AA04):  According to the DOL, this regulation was designed to “update the recordkeeping regulations under the Fair Labor Standards Act in order to enhance the transparency and disclosure to workers.” This proposed regulation would require any business that claims employees are exempt from FLSA coverage to perform a classification analysis and provide the analysis to the covered employees.  Employers would also be required to maintain records of the analysis for potential review by the DOL. The “Right To Know” amendment is set for proposed rulemaking in April 2011. The potential economic impact on private sector employers is serious in that the required analysis, whether performed in house or by an outside source, will be extremely expensive. Moreover, increased litigation under the FLSA is likely should the rule be implemented.

Injury and Illness Prevention Programs: As part of the DOL’s “Plan/Prevent/Protect” enforcement strategy, OSHA is seeking to establish a rule on Injury and Illness Prevention Programs, or the “I2P2” rule. The aim of the proposed rule will be to address all workplace hazards, an extreme broadening of OSHA’s typical standards which focus on specific hazards in the workplace. Some states such as California have already implemented this type of heightened standard. Employers should be concerned about the enforcement of the I2P2 standard, which may result in employer liability for failing to predict even the most rare or unlikely workplace accident.

Employer and Labor Relations Consultant Reporting under the LMRDA (RIN: 1245-AA03): This June, the DOL will seek to revise the section of the LMRDA that provides for an “advice exemption” to the reporting requirements for individuals and employers who attempt to influence workers’ decisions regarding union organizing or collective bargaining. The DOL’s position is that the current interpretation of the exemption is too broad. The concern for labor attorneys in particular is that the new rule will limit the exemption in such a way that several previously-exempt entities, including attorneys, may be required to report any labor advice provided or services performed in relation to so-called “Persuader Agreements.”         

Employment Nondiscrimination Act: Now that the Obama Administration has secured the repeal of “Don’t Ask, Don’t Tell,” proponents of ENDA are likely to ramp up efforts to get a bill through Congress and on to President Obama. One version of the law prohibits discrimination against individuals based on sexual orientation or gender identity, while a more conservative version protects only against discrimination based on sexual orientation. President Obama has expressed his support for the broader version of the law. While the new Congress has not indicated whether it intends to take up the issue, the recent DADT repeal has placed this issue squarely at the forefront of voters’ minds and House and Senate members are likely to reopen the ENDA discussion at some point during the current term.

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.
 

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.

In short, the General Counsel’s office is now considering seeking a federal injunction that will compel an employer to offer reinstatement to the fired workers pending litigation of the underlying unfair labor practice case in all cases found to be meritorious.  And, it will do it as quickly as possible. Regional Directors are required immediately to investigate allegations of unlawful firings in organizing cases and, if merit is found, to submit them to the General Counsel’s office with a short memo, ideally within a week of their findings.  Solomon says he will personally review each case upon recommendation, and the injunctions will be sought under Section 10(j) of the National Labor Relations Act once authorized by the Board.

On October 5, the NLRB began posting case names and status updates for all 10(j) injunction cases authorized by the Board on its website.

Employers should consider seeking counsel when considering employee terminations while a union organizing campaign is taking place.  Not only should the grounds for termination be reviewed carefully as always, but the employer should be prepared for the possibility of enhanced attention and expedited action by the NLRB.

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.

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. 

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.

In the recently issued decision, consolidated cases Rite Aid Store #6473 and Lamons Gasket Company, 355 NLRB 157 (2010), the Board announced that it will revisit its holding in Dana Corp., 351 NLRB 434 (2007).  In Dana, the Board acknowledged the need to protect employees’ freedom of choice and established an employee’s right to challenge immediately their employer’s voluntary card-based union recognition by demanding a secret ballot election.  Specifically, the Board held in Dana that when an employer voluntarily recognizes a union based on card-check, it must post a notice advising its employees that they have the right to file a petition for an election to decertify the union or in support of a rival union within 45 days of the notice.  Prior to Dana, an employer’s voluntary card-based recognition of a union barred an election petition filed by an employee or a rival union for a “reasonable period of time,” which could be up to one year (or up to 3 years in the event a collective bargaining contract had been reached). 

The Board in Rite Aid and Lamons Gasket  found “substantial issues concerning voluntary recognition arising under the Board’s decision in Dana.”  The Board also issued a Notice and Invitation to File Briefs, inviting interested parties to file briefs by November 1, 2010, to address “the issues raised in these cases, including whether the Board should modify or overrule Dana.”  Specifically, the Board stated that parties and amici should answer some or all of the following questions in their briefs:

(1) What has been their experience under Dana and what have other parties to voluntary recognition agreements experienced under Dana?
(2) In what ways has the application of Dana furthered or hindered employees’ choice of whether to be represented?
(3) In what ways has the application of Dana destabilized or furthered collective bargaining? (4) What is the appropriate scope of application of the rule announced in Dana, specifically, should the rule apply in situations governed by the Board’s decision regarding after-acquired clauses in Kroger Co., 219 NLRB 388 (1975), or in mergers such as the one presented in Green-Wood Cemetery, 280 NLRB 1359 (1986)?
(5) Under what circumstances should substantial compliance be sufficient to satisfy the notice-posting requirements established in Dana?
(6) If the Board modifies or overrules Dana, should it do so retroactively or prospectively only?

The Board further invited the parties and amici to “submit empirical data and factual descriptions of their experience under Dana.”  However, the dissent, consisting of Members Schaumber and Hayes, argued that the Board already possesses the only relevant, and also telling, empirical evidence.  The dissent noted that since the Board’s decision in Dana, the Agency has received 1,111 requests for voluntary recognition, resulting in 54 secret ballot elections.  In approximately 25% of these elections, the employees have voted to reject the union.  Citing these statistics, the dissent asserted that “Dana has served its purpose of protecting employees’ free choice without discouraging voluntary recognition or the overall process of collective bargaining.”  The dissent further predicted that the Board’s action in Rite Aid and Lamons Gasket  is a “prelude to what will most likely result in the overruling of Dana, in derogation of employees’ Section 7 free choice rights.”

It takes only a moment's reflection to understand that the use of electronic voting is virtually identical to the card check proposal that the American public and many in Congress would not support during the debate over the so-called Employee Free Choice Act (EFCA).  What is the difference?  The opportunity for coercion, threats and other misconduct interfering with employee free choice is apparent in both "voting" methods.  The only variation is that instead of the union representative having to lug the cards all the way down to the NLRB's office, the union representative can push the electronic voting button for the employee.  The fact that EFCA is virtually dead lends credence to the view that this is nothing more than an end run around the legislative process that defeated EFCA.
 
Employers and other groups that spent so much time and effort exposing EFCA as a thinly veiled mechanism to deny American workers the freedom of choice had better not sit on the sidelines for this either.  Otherwise, they will find that the most heinous part of EFCA was slipped in right under their noses.

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

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

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

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

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

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

Background

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

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

What The Notice Does 

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

Is Your Company Affected?

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

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

What Should You Do To Comply?

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

Penalties and Enforcement

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

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

Currently, there are two NLRB members sitting by virtue of Senate confirmation, including Member Schaumber, a Republican appointee whose term expires in August.  Members Pearce and Becker are recess appointees appointed by the President in March, 2010.  A procedural maneuver by Senator Harkin to slip Member Becker, the most controversial of the Obama appointees, into a full term was blocked on the Senate floor late last week.  Republican Brian Hayes, who had been nominated by the administration for a full term, failed to receive a recess appointment from the President when he gave such appointments to Democrats Pearce and Becker.  Thus, without additional Board appointments or confirmations, there will be three sitting Democrats and no Republicans on the five-member NLRB by September 1, as well as a new General Counsel appointed by the White House.  Meisburg's resignation is also likely to fuel speculation that some sort of deal can be worked out between Democrats and Republicans to re-staff the full Board and the General Counsel's office at the same time. From the employer's perspective, such an agreement is hoped for but difficult to envision.

The employer community is expecting a shift in Board policy, rules and decisions toward the interests of labor. The fact that at or about the time of the recess appointments the Board hired an outside expert in the field of "rulemaking" has lead to enormous speculation that the NLRB intends to actively change its rules going forward. Many have also recognized that the Board does not have to undertake a formal process to change many of its current rules relating to elections.
 
The General Counsel can heavily influence the agenda and timing of cases that come before the full Board. There are a host of cases that can be lined up for decision, many of which can serve to overturn Bush era precedents unpopular with organized labor. One can expect the Board to revisit issues relating to the definitions of supervisors and independent contractors; whether employees have the right to call for an election after voluntary card check recognition; whether temporary employees can be organized; the use of email; whether non-union employees have Weingarten rights; pre-recognition bargaining; bannering; cessation of dues checkoff after contract expiration; whether "salts" must have a genuine interest in the job, and many more issues.

Even without the Employee Free Choice Act, the passage of which now appears unlikely, these developments should create greater opportunities for labor and a more challenging environment for business.

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

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

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

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

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

Henry’s pledge to heal internal union rifts and to settle disputes with other labor unions, such as UNITE HERE, caused in part by Stern’s penchant for organizing workers in industries traditionally organized by other labor unions, suggests that she may indeed want to change the dynamics at SEIU.  However, Henry simultaneously has announced that she intends to redouble SEIU’s organizing efforts and unveiled a new multi-million dollar “innovation fund” to facilitate private-sector organizing.  According to Henry, this new fund, which will supplement the hundreds of millions of dollars SEIU already spends annually on organizing campaigns, will be used to organize industries that have not traditionally had employee representation, such as banks and biotechnology companies.  We have opined several times in this space that the financial services industry is particularly vulnerable to union organizing and noted that Stern’s SEIU was spearheading the effort to make inroads with the rank-and-file banking employees.  Henry’s new “innovation fund” suggests that she has no intention of altering Stern’s vision of an organized financial services sector. 

Henry also claims that SEIU will continue to be politically active and will seek to hold “bad actors” in government accountable in the upcoming November elections.  Henry singled out Arizona Governor Jan Brewer for her part in that state’s recent passage of immigration legislation that was bitterly opposed by big labor, including SEIU.  Henry also plans to support Arkansas’ Lieutenant Governor, Bill Halter, in a primary challenge to Senator Blanche Lincoln, who opposed certain aspects of the President’s health care reform package that were favored by unions.  Henry also said that SEIU will focus on governors’ races in Connecticut, Florida and Ohio.  Henry’s political agenda does not sound all that different from what Stern’s agenda likely would have been had he continued at SEIU’s helm.
 
Speculation about Henry’s intentions is all the more fascinating in light of the intense debate about the legacy Andy Stern will leave behind: is he leaving the SEIU at a time when it needs him most, or is he actually leaving just in time?  To many, Stern has been at the peak of his game, as evidenced by SEIU’s recent $1.5 million jury verdict against California breakaway union − and bitter rival − National Union of Healthcare Workers, President Obama’s recess appointment to the National Labor Relations Board of SEIU-attorney Craig Becker, and Congress’ passage of landmark healthcare reform using the strategy articulated by Stern himself after the special election of Massachusetts Senator Brown threatened the survival of President Obama’s highest legislative priority.  To others, Stern’s departure could not have come any sooner for SEIU.  His perceived over-emphasis on politics, apparent loss of interest in traditional union organizing, and attempts to raid the ranks of other major unions polarized his presidency and to some degree isolated SEIU from the rest of the labor world.  In addition, and despite emptying SEIU’s coffers to help elect President Obama, Stern failed to deliver on EFCA and could not get Becker through the Senate confirmation process.  Some have even speculated that Stern may be implicated in former Illinois Governor Rod Blagojevich’s criminal corruption trial, and that his departure was timed to avoid unnecessary collateral damage to SEIU.

Whatever Stern’s reasons for leaving, or whether his resignation is a positive or negative development for SEIU, employers and labor leaders alike will be keeping a keen eye on Henry and the path she chooses for her union.  If her first few days at the helm are any indication, employers should not expect to see wholesale changes from SEIU any time soon.  Practically speaking, this likely means that SEIU will continue to be politically active, backing candidates who support its legislative and social agenda, and will continue to aggressively organize new employees using both traditional means and pressure tactics such as corporate pressure campaigns.  The tale of Henry’s leadership will not be told in the coming weeks, but over the next several years.  Like most in the world of labor, we will be watching closely.

So why is Craig Becker such a controversial figure?  Much of the controversy stems from a 1993 Minnesota Law Review article Becker wrote, entitled “Democracy in the Workplace: Union Representation Elections and Federal Labor Law,” while Becker was a UCLA law professor.  In his article, Becker argued that current standards governing union elections should be scrapped in order to severely limit the role of employers in the union representation election process.

Under existing Board standards, employers are afforded certain “free speech” and procedural rights in the union election process.  For instance, an employer may insist upon a secret ballot election.  An employer may participate as a party in pre-election and post-election hearings to determine such issues as who is entitled to vote, the size of the bargaining unit, and when and where the election will be held.  During an election campaign, an employer has the right to speak freely about unionism in general, and about the union in particular, even in strong negative terms, as long as the speech does not include any threat of reprisal or promise of benefit.  Following an election, an employer may challenge the election result before the Board and the courts.

None of this sits well with Becker.  According to his law review article, Becker would like to see strict limitations placed on each of these employer rights, essentially removing employer participation and free speech from the union election process.

In justifying his proposed reforms, Becker distinguishes union elections from political elections, and employers from political candidates, based on what he sees as an economic inequality between employers and workers.  According to Becker, completely removing employer influence in union elections is critical to restoring what he calls “industrial democracy” in the workplace.

Some caution that Becker’s article was published nearly two decades ago as a young law professor, and his view may have tempered over time.  Nonetheless, employers should take heed from his views.  Becker was appointed to the Board on March 27, 2010, and will remain in his position at least through 2011.  The Board now consists of three pro-labor members and just one pro-business member.  With majority control of the Board, Becker and his pro-labor colleagues can easily reshape the existing election standards with little effort.

When he appeared for his confirmation before the Senate, Becker tried to calm critics by stating that his views as an academic would not be the same as his views as a member of the Board.  Skeptics, however, fear that Becker’s law review article, as well as his extensive experience vigorously representing organized labor, suggests a more realistic assessment that “what you see is what you get” with Becker.  Accordingly, employers should be aware that democracy in the workplace may well be on the way − “union style.”

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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).

Becker Appointed To NLRB

The President filled two of the three vacant seats on the NLRB with Democratic nominees Craig Becker and Mark Pearce.  The President cited the need to promote "the basic functioning of government" as the reason for issuing the appointments.  However, he chose not to appoint Republican Brian Hayes, whose uncontroversial nomination has been pending along with those of Becker and Pearce, to fill the remaining vacancy.  As a result, the NLRB is still not fully constituted.
 
By statute the NLRB is to have five members.  Traditionally, three of the members come from the sitting president's political party and the other two are from the other party.  However, the Board has been functioning for more than two years with only two members--its Chairperson Wilma Liebman (Democrat) and member Peter Schaumber (Republican).  The two have decided more than 500 cases.  The authority of the NLRB to decide cases with only two members was the subject of an argument before the U.S. Supreme Court just last week.  All parties to the case agreed that the Board had the statutory authority to act if it had three or more sitting members.

Before leaving Washington for a two-week, post-healthcare debate recess, 41 Senators, all Republicans, wrote the President requesting that he not issue a recess appointment to Mr. Becker.  Twenty business groups, including the U.S. Chamber of Commerce, echoed the sentiments of the Senate Republicans.

Becker's nomination has been hotly contested since it was announced last fall, as a result of what some call his "extreme" views about the union selection process.  Because of that controversy, just before the Christmas 2009 recess, Senator McCain exercised his Senatorial privilege to put Becker's nomination on hold, although Republicans and Democrats indicated that the nominations of both Pearce and Hayes would be approved without significant debate.  However, the President did not seek a vote on Pearce or Hayes at that time.

Mr. Becker will leave his post as counsel for the Service Employees International Union (“SEIU”) to take his seat on the NLRB; he will remain a Board member until his recess appointment runs out at the end of 2011. With a 3-to-1 pro-labor majority and with no particular timetable for action on Mr. Hayes' nomination, the NLRB is poised to reverse numerous decisions made by the Bush appointed Board on a number of controversial issues.

As we have written in this column on several occasions, Mr. Becker's views are of grave concern to many in the business community.  For example, Mr. Becker opposes participation by employers in the process by which employees decide whether to choose union representation.  Becker does not believe that employers should be allowed to express an opinion, provide any relevant information to their employees, or otherwise participate in the process in any way.

It is difficult to tell whether Becker's appointment signals the President's intent to defer action on the so-called Employee Free Choice Act (“EFCA”).  Some will speculate that the appointment indicates a compromise between the President and Andy Stern, who runs the SEIU and has visited the White House more than anyone else in the last year.  Stern is a staunch supporter of both EFCA and his employee, Mr. Becker.  The President and Secretary of Labor Hilda Solis have repeated their support for passage of EFCA.  However, the proposed law, which would eliminate the right of employees to vote on the question of union representation, has been mired in controversy since the President took office.  Like health care reform legislation, it may require the President to muster all forces at his command to get it passed.

Becker has made clear his view that the NLRB can engage in both rule making and rule changing, which could accomplish much of what EFCA is designed to do without Congressional action.  By failing to appoint Hayes, the NLRB now has a decidedly pro-labor majority which could enact sufficient changes to the union selection process to allow the President to avoid the firestorm which would accompany the debate over EFCA. 

Feldblum Appointed To EEOC

The President also announced that he would use recess appointments to fill slots on the EEOC with controversial Georgetown University law professor Chai Feldblum, Jacqueline A. Berrien, Victoria A. Lipnic, and David Lopez. 

The appointment of Feldblum drew immediate criticism from conservative Republicans.  Feldblum, who will be the first openly gay member of the EEOC, is best known for her support of the rights movement for lesbian, gay, bisexual, and transgender (“LGBT”) persons.  She helped craft the Employment Non-Discrimination Act (“ENDA”), which would prohibit discrimination against employees on the basis of sexual orientation or gender identity by civilian non-religious employers with 15 or more employees. 

The EEOC nominees were approved by a Senate committee in early December, but their confirmation vote was put on indefinite hold by Senate Republicans who viewed Feldblum and other Obama nominees as too extreme.  Supporters of the President’s move to exercise the recess appointment option cite the EEOC’s backlog of discrimination claims and the current absence of a quorum needed to effectively address claims.  In a statement issued with the recess appointments, President Obama said, “The United States Senate has the responsibility to approve or disapprove of my nominees.  But if, in the interest of scoring political points, Republicans in the Senate refuse to exercise that responsibility, I must act in the interest of the American people and exercise my authority to fill these positions on an interim basis.”

Recess appointments last until the end of the next session of Congress.  The White House announced, however, that the nominees will remain in the Senate for confirmation by regular procedures. 

AFL-CIO boss Richard Trumka claims that the campaign will send a message to the banks:  “Stop refusing to pay your fair share to restore the jobs you destroyed, stop fighting financial reform and start lending to your communities, small businesses and others starved for credit.”   Demonstrations kicked off last week and may reach 200 locations.  Flyers will urge observers to "Tell the banks to PAY UP!"

The campaign is not limited to painting financial institutions in a negative light.  Through the participation of advocacy group Americans for Financial Reform (AFR), the campaign will push Congress to pass a set of "financial speculation taxes" which would place a tax on certain securities transactions.  The campaign speculates that this tax would raise over $100 billion per year.

The AFL-CIO claims that its partnership with AFR is not about labor organizing but instead is about “holding banks accountable” and pushing for financial reform.  However, a look below the surface reveals AFR’s extensive ties to organized labor and other anti-business groups.  Stephen Abrecht, the current director of the Service Employees International Union's (SEIU) pension funds, is a member of AFR's Executive Committee.  AFR's Steering Committee includes representatives from MoveOn, AFL-CIO, and USAction--a group that was instrumental in the formation of Health Care for America Now (HCAN).

HCAN was a central participant along with SEIU in a major demonstration recently against the insurance industry in Washington.  HCAN and SEIU also were heavily involved in the effort to disrupt citizen protests at Congressional town hall meetings last summer.  (HCAN circulated instructions on how to confront and disrupt those who tried to speak out at town hall meetings.  The group’s memo was circulated just two days before Missouri Democrat Russ Carnahan's town hall meeting, during which protestor Kenneth Gladney was assaulted by SEIU members.)  In addition, Khalid Pitts, one of USAction's board members, is SEIU's director for political accountability.  Tax records reveal that SEIU has contributed hundreds of thousands of dollars to USAction in recent years.

We observed in this space several months ago that the current economic climate provided organized labor with ideal cover to begin organizing America's largest banks, a view shared by others who are monitoring the unions' progress.  Whether the AFL-CIO's campaign is an indication that big labor is taking this effort to the next level, or simply trying to portray itself as a relevant player in the national debate around issues like “corporate accountability,” remains to be seen.  But the participation and assistance of grassroots NGO's and other anti-corporate organizations suggests that campaign events may become more aggressive in nature.  By escalating hostilities and more aggressively lobbying for financial reforms adverse to the business interests of private financial institutions, unions may be hoping to increase outside pressures on the banks and render them less resistant to  attempts to organize their employees. 

In this regard, SEIU announced plans to pressure the Maryland state legislature to move the state’s money out of “big Wall Street banks.”  The union has already had some success with this pressure strategy, as it claimed credit for convincing the Los Angeles City Council to adopt a similar resolution last month.  
 
Whether the AFL-CIO is acting in league with SEIU, or competing against it -- both for national attention and for new union members -- most financial services institutions should be aware by now that they are directly in the crosshairs of several major union corporate campaigns.  We recommended in December that the banking industry prepare for these attacks by addressing workplace concerns and potentially controversial business practices, and by preparing a strategic public relations response.  The AFL-CIO's new push suggests that time may be running out to take these steps effectively.

An employer that waits until a union organizing campaign has commenced to make major workplace changes risks violating federal labor laws.  Likewise, waiting until a corporate campaign has fully materialized before taking strategic action could place the employer in a disadvantageous, reactionary posture.  As union attacks on the financial services industry build toward a crescendo, banks that have not formed a comprehensive strategy for addressing these new challenges should wait no longer.

Becker could still be appointed to the NLRB if the President makes a recess appointment. Currently, the Board has only two of its five seats filled, and requires a third to meet the quorum requirement.  However, given the controversy surrounding the Becker nomination, it would be a bold move for the President to fill the quorum by giving Becker the seat.  Two other current nominees, Mark Gaston Pearce (D.) and Brian Hayes (R.) are less controversial than Becker and their nominations are also before the Senate for consideration. The controversy surrounding the Becker nomination is due principally to Becker’s background, which many believe displays an anti-free-market and pro-union bent.  Becker is a labor lawyer who has served as associate general counsel to the Service Employees International Union (SEIU) and the AFL-CIO.  For the past 27 years, Becker has taught and practiced labor law and written articles expressing extremely pro-union, anti-business views.

It appears that the Senate can confirm both Pearce and Hayes at any time. However, should  the Senate attempt  to confirm Pearce (the Democrat) without Hayes (the Republican), it is predicted that Senate Republicans will object or resist.
  
As for a recess appointment, it is unclear whether there will be a recess next week, given the blizzards this week that have resulted in snow days in Washington, D.C.  If the Senate takes off three (3) days or more next week, as originally planned, the President will have the opportunity to use his recess appointment power.  If so, the President could appoint Becker, Pearce, or Hayes, or any combination, including all three nominees to the NLRB.  If any of them receives the recess appointment, the appointment must be approved by the Senate by the end of the next session (which in current practice would likely be some time in December of 2011, although it is not certain), or the position becomes vacant again.
 
It is not clear why Senate Majority Leader Reid pushed the cloture vote when he knew last week that it would fail after Senators Enzi (R. Wyo.) and Murkowski (R. Alaska) of the Senate Health, Education, Labor, and Pensions Committee changed their votes to oppose Becker’s nomination. However, after the cloture vote, labor organizations are now more informed about who it should support, with Senators Lincoln and Nelson likely no longer on its list of supportive candidates.

Although the Committee approved his nomination again, it did so with a 13-10 party line vote. The confirmation vote could take place as early as next week.

Anticipating another hold would be placed on Becker’s nomination,  proponents were pushing hard for a cloture vote before Massachusetts Senator-elect Scott Brown took his seat. However, Brown was sworn in by Vice President Biden shortly after 5 p.m. ET yesterday, ending the Democrats' supermajority and becoming the Republican's "41st vote" on health care.  Late yesterday, a cloture vote petition with seventeen (17) signatures was filed on Becker, and the vote will take place Monday evening. With Brown seated, Becker’s proponents are unlikely to obtain the 60 votes need to override any hold placed on the nomination.

The controversy surrounding the nomination is due principally to Becker’s background, which many believe displays an anti-free-market and pro-union bent. Becker is a labor lawyer who has served as associate general counsel to the Service Employees International Union (SEIU) and the AFL-CIO.  For the past 27 years, Becker has taught and practiced labor law and written articles expressing extremely pro-union, anti-business views.

The Senate HELP Committee received a letter from 23 major trade organizations last week expressing concern that the NLRB would be able to “radically interpret existing labor law should Becker be confirmed.” The Committee received a separate letter from 600 manufacturing employers urging members to oppose the confirmation.

Senator Johnny Isakson (R., Ga.) expressed concern that Becker's writings "have indicated a belief that the NLRB has the power to make some of the dramatic changes in the card-check bill." This legislation would permit unions to bypass secret-ballot elections and instead organize in workplaces by collecting signed cards from workers.

In an attempt to distance himself from his writings, during Tuesday’s hearing, Becker suggested that he doesn't believe the Board could take such a step. "The law is clear that the decision...(of) an alternative route to certification rests with Congress and not the board," Becker said, adding that his writings were "intended to be provocative and to ask fundamental questions in order for scholars and others to re-evaluate."

In a Huffington Post article posted Thursday, February 4, Stewart Acuff, Chief of Staff and Assistant to the President of the Utility Workers Union of America, illustrates these concerns as he states:

The Employee Free Choice Act has the support of a majority of the US Senate. But under the current rules in the Senate you need not a majority -- 50 votes-- but a super-majority of 60 votes to move legislation to where a vote to pass it can even take place. We are very close to the 60 votes we need. If we aren't able to pass the Employee Free Choice Act, we will work with President Obama and Vice President Biden and their appointees to the National Labor Relations Board to change the rules governing forming a union through administrative action… 

(emphasis added). 

At Tuesday’s hearing, Senator McCain grilled Becker over whether he would recuse himself from cases before the NLRB involving the SEIU, where Becker most recently worked. Becker said he would recuse himself from cases involving the SEIU for two years; however, he would not commit to doing so in a case mentioned by McCain involving a local chapter of the union.