NLRB Archives - Page 9 of 12

The New National Labor Relations Board: Will It Be More of the Same — Or Worse?

For the first time in more than ten years, the National Labor Relations Board will have five Senate-confirmed board members and no battles over recess appointments. However, the new Board will continue to be dominated by pro-union members selected by President Obama. The three Democratic members are: current Chairman Mark Pearce; Nancy Schiffer, associate general counsel for AFL-CIO; and Kent Hirozawa, chief counsel to Pearce. The two Republican members are seasoned management-side labor lawyers Philip Miscimarra and Harry Johnson III.

The confirmation of these Board members ends, at least moving forward, the uncertainty caused by the President’s recess appointments which were ruled invalid by the U.S. Court of Appeals for the D.C. Circuit. For employers, this new Board is not likely to behave much differently than the Board has since the President was elected. In fact, employers can expect this Board to continue to issue decisions that favor unions and employees. In addition, the Board may well exercise its rulemaking power with greater vigor than before.

Here is what employers may see from this new Board:

1. The Resurrection of the “Quickie/Ambush” Election Rule

In December 2011, the Board adopted a final rule that made numerous and substantial changes in how union election would be handled. The rule was not implemented because a federal court decided that the Board’s vote to adopt the rule was improper. Significantly, the court did not object to the substance of the rule and its changes. The new Board could reconsider the rule and take another vote and employers can expect the 3-2 Democratic majority to approve it. It is also conceivable that this Board could propose a rule that calls for additional changes to the election procedures that would assist unions in winning elections, such as making voting by mail the preferred method of casting ballots; Chairman Pearce has previously indicated his interest in taking a fresh look at the rule.

2. Take a Hard Look at Bush-Era Board Decisions

As the Board composition changes with each change in the Presidency, it is common for Boards to re-examine decisions issued under a prior Administration of the other political party. The Board under George W. Bush was accused of wholesale reversal of rulings under the Clinton Administration. This new Obama Board can be expected to continue its reversal of Bush-era Board decisions. By way of example:

Many have expected the Board to overrule a 2007 decision in Register-Guard, in which the Bush-era Board held that an employer can maintain a policy that prohibits employees from using its email system for non-job related solicitation including union organizing. Current Board law gives unionized employees the right to a union representative at an investigatory interview the employee reasonably believes may lead to discipline. During the Clinton administration, the Board extended this right to representation to non-union employees. That extension was reversed by the Board during the Bush administration, by a 3-2 vote. It would not be a surprise for the new Obama Board to extend representation rights to non-union employees again.

3. Continued Focus on Non-Union Employers’ Policies

Under the Obama administration, the Board has aggressively focused on policies and practices of employers who have no unionized employees. The Board has examined at-will statements, social media policies, confidentiality clauses, dress code policies, premises access policies and disciplinary action based on these policies and practices. Employers should expect the Board to continue its examination of any policy or practice that could interfere with employees’ ability to engage in union organizing or other activity protected by the National Labor Relations Act.

4. Micro Bargaining Units

In August 2011, the Board ruled in Specialty Healthcare that the Board will approve the bargaining unit requested by a union unless the employer can prove the unit improperly excludes employees who share “an overwhelming community of interest” with the employees in the proposed unit. Under Specialty Healthcare, the Board has issued numerous decisions finding that small units are appropriate; those units would not have been approved before Specialty Healthcare became law. Employers can expect the Board to continue to abide by its decision and can hope the Board will provide greater guidance and clarity on how this new standard will be used.

Will the new Board be the same as the old Board? Time will tell. It is unlikely the new Board will be more employer-friendly and it is distinctly possible it will be even more aggressive in issuing decisions and rules to enhance unions’ ability to organize employees.

NLRB Rules That Policy Requiring Employees to Individually Arbitrate Employment Disputes Violates the National Labor Relations Act

On June 3, 2013 an National Labor Relations Board (NLRB) Administrative Law Judge (ALJ) reached a decision in which it found that MasTec Services’ Company’s policy that required employees to individually arbitrate employment disputes violated Section 8(a)(1) of the National Labor Relations Act (NLRA). In so holding, the ALJ radically expanded the NLRB’s previous decision in D. R. Horton, Inc. (1/3/12). As D.R. Horton itself has been rejected by almost all federal courts which have considered it, the MasTec decision is bound to create a firestorm of criticism.

In D.R. Horton, the NLRB ruled that requiring employees to sign a blanket waiver of rights to pursue their employment claims through class actions violated Section 8(a)(1) of the NLRA. The specific agreement at issue in D.R. Horton (1) contained a mandatory arbitration provision, and (2) required employees to bring all employment-related claims to an arbitrator on an individual basis, as opposed to as a potential class action. The D.R. Horton decision generated significant criticism, and many commentators noted that it appeared to conflict with U.S. Supreme Court precedent, specifically AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). Concepcion held that the Federal Arbitration Act preempts state laws that prohibit contracts from disallowing class-wide arbitration, and that companies can enforce contract provisions that require customers to arbitrate their disputes individually. Concepcion, which involved a consumer contract, was thought to make it much harder for individuals – not only consumers, but also employees who had signed arbitration agreements – to file class action lawsuits.

Although D.R. Horton initially caused great concern among employers, as it seemed to eliminate the possibility of preventing class suits through mandatory arbitration agreements, this concern has been tempered by the fact that an overwhelming number of federal courts that have considered the issue have refused to follow the decision, including the Eighth Circuit Court of Appeals. See e.g., Owen v. Bristol Care, Inc., 702 F.3d 1050 (8th Cir. 2013); Delock v. Securitas Security Servs. USA, Inc., 883 F. Supp. 2d 784 (E.D. Ark. 2012); Morvant v P F Chang’s China Bistro Inc., 2012 WL 1604851 (N.D. Cal. 2012); De Oliveira v. Citicorp North America, Inc. (M.D. Fla. 2012); Tenet Healthsystem Philadelphia, Inc. v. Rooney (E.D. Pa. 2012); Lavoice v. UBS Wealth Management Americas (S.D.N.Y. 2011); Johnmohammadi v. Bloomingdales, Inc. (C.D. Cal. 2012); Sanders v. Swift Transp. Co. of Ariz., 843 F Supp. 2d 1033, (N.D. Cal. 2012); Palmer v. Convergys Corp., 2012 WL 425256 (M.D. Ga. 2012).

MasTec is sure to be controversial because, despite the courts’ hostile reaction to D.R. Horton, MasTec expands its holding. The arbitration provision at issue in MasTech was less restrictive than that in D.R. Horton, in that it (1) permitted the employee to opt out within 30 days, and (2) explicitly authorized employees to bring claims to administrative agencies. Nonetheless, even with these safeguards in place, the ALJ found the provision to violate Section 8(a)(1). The ALJ gave three independent reasons for reaching this conclusion. First, given that the NLRA grants employees the right to engage in protected concerted activities without interference, an employer may not require its employees to affirmatively act (through the opt-out) in order to obtain or maintain those rights. Second, employees who opt out still would be unable to engage in and cooperate in concerted activities with those who did not opt out, disadvantaging them in their attempts at concerted action. Third, some employees may be reluctant to exercise the opt-out option for fear of angering their employers. Under the reasoning of the Mas Tec opinion, it would be virtually impossible for any employer to include a class action waiver in arbitration agreements with individual employees.

D.R. Horton itself is currently on appeal before the U.S. Court of Appeals for the Fifth Circuit. Should the NLRB and Federal Court decisions continue to diverge, the stage may be set for a reversal of D.R. Horton (or perhaps a Supreme Court decision). We will continue to monitor D.R. Horton and its progeny, given the case’s broad implications for employers potentially subject to employee class actions.

Federal Appeals Court Rejects NLRB Union Poster Rule

The U.S. Court of Appeals for the D.C. Circuit recently held that the National Labor Relations Board’s (Board) rule that required employers to post a new notice that promoted the right to unionize (sometimes referred to as the NLRB union poster rule) violated employers’ free speech rights under Section 8 (c) of the National Labor Relations Act.

The Board issued the highly controversial rule in August of 2011 that required employers to post the new notice. Employer groups soon challenged the rule, arguing that the rule exceeded the Board’s authority to enforce the Act.

The Court noted that Section 8(c) of the Act gives employers the right to communicate with employees about union representation as long no threats or promises of benefits are made. The right of free speech, the Court stated, also includes the right to be silent. The Board’s notice posting rule forced employers to communicate with employees about union representation and made it an unfair labor practice if an employer did not comply, which the Board cannot do.

The Court also rejected the Board’s rule because the Act’s six-month statute of limitations on unfair labor practices would not apply to an employer’s failure to post the notice. It remains to be seen what the Board will do in response to the Court’s decision.

NLRB Issues Guidance on Lawful Confidentiality Language

On July 30, 2012, the NLRB (“Board”) issued a decision in Banner Health System dba Estrella Medical Center, 358 NLRB No. 93 holding, among other things, that the employer violated Section 8(a)(1) (which prohibits employers from interfering, restraining or coercing employees in the exercise of their rights), by restricting employees from discussing any complaint that was then the subject of an ongoing internal investigation.

To minimize the impact of such a confidentiality mandate on employees’ Section 7 rights, the Board found that an employer must make an individualized determination in each case that its “legitimate business justification” outweighed the employee’s rights to protected concerted activity in discussing workplace issues. In Banner Health, the employer did not carry its burden to show a legitimate business justification because it failed to make a particularized showing that:

Witnesses were in need of protection;
Evidence was in danger of being destroyed;
Testimony was in danger of being fabricated; or
A cover-up must be prevented.

The Board concluded that the employer’s one-size-fits-all rule, prohibiting employees from engaging in any discussion of ongoing internal investigations, clearly failed to meet these requirements.

More recently, the NLRB’s Office of the General Counsel clarified the limits of how such policies could be drafted without running afoul of Section 7 in an advice memorandum released on April 24, 2013 (dated January 29, 2013). The Region had submitted Verso Paper, Case 30-CA-089350 (January 29, 2013) to the Office of the General Counsel for advice regarding the confidentiality rule at issue and whether it unlawfully interfered with employees’ Section 7 rights. Specifically, the Verso Code of Conduct contained this provision prohibiting employees from discussing ongoing internal investigations:

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

Reiterating that employees have a Section 7 right to discuss disciplinary investigations of their co-workers, the General Counsel’s Office found that the Verso Paper provision did not allow for a case-by-case analysis of whether or not the employer’s business justification for the restriction outweighed the employees’ Section 7 rights as required by Banner Health. According to the General Counsel’s Office, the employer may establish this by presenting facts specific to a given investigation that give rise to a legitimate and substantial business justification for imposing confidentiality restrictions.

However, in footnote 7 of its advice, the General Counsel’s Office, after noting that the first two sentences of the Verso Paper rule lawfully set forth the employer’s interest in protecting the integrity of its investigations, surprisingly put forward a modified version of the remainder of the Verso Paper provision that it said would pass muster under Banner Health:

Verso may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence. If Verso reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

Although this guidance is not binding, combining this language above with the first two sentences of the Verso Paper provision could certainly strengthen an employer’s argument that its intent was not to violate an employee’s Section 7 rights, but rather, to lawfully put employees on notice that if the employer “reasonably” imposes a confidentiality requirement, they must abide by it or face discipline. However, employers must remain mindful that using a provision like this suggested does not obviate the need for the employer to engage in the particularized case-by-case determination of its substantial and legitimate business need that would permit it to impose confidentiality restrictions on the investigation.

NLRB Acting General Counsel Gets One Right

The NLRB’s Acting General Counsel has finally recognized that employees do not read every employer policy through a Section 7 lens. In a Memorandum from the General Counsel’s Division of Advice dated February 28, 2013, the Acting GC found that Boeing Company did not interfere with or restrain Section 7 activity by maintaining an ethics policy Code of Conduct which prohibits employees from questioning the company’s honesty, morality or reputation. Instead, the Memorandum concludes that reasonable employees would understand that the company’s Ethical Guidelines are aimed at matters of business ethics, not protected concerted activity.

While recent Board decisions give lip service to the requirements that phrases not be read in isolation, and that policies are unlawful only if employees “would reasonably construe” them as prohibiting Section 7 activity, all too often the opinions read as if the analysis was simply an academic exercise for labor lawyers to decide if the language could be construed as interfering with protected rights irrespective of the context in which they are found. Refreshingly, that is not the case in the Boeing Company Memorandum.

Boeing’s Ethical Guidelines is a forty-three page statement of the company’s business ethics, and sets forth the policies and standards by which the company and its employees are expected to conduct themselves as a government contractor. In the one-page Code of Conduct preamble, the company sets forth its own expectation for conducting business with highest standard of ethics and integrity, and mandates that employees meet that standard: “Employees will not engage in conduct or activity that may raise questions as to the company’s honesty, impartiality, reputation or otherwise cause embarrassment to the company.” The preamble Code of Conduct does not contain any limiting disclaimers or clarifying examples to explain that it is not intended to interfere with or restrict Section 7 rights. Nevertheless, the Acting GC determined that employees would understand that the Code does not interfere with their rights because the “broader framework” of the forty-three page Guidelines contains examples of the type of conduct – such as bribery or insider trading – that would undermine the company’s reputation for integrity. In other words, context matters even where the context requires reading the policy as a whole, and even where there are no clarifying examples or disclaimers connected with the prohibitions at issue. We can only hope the Acting General Counsel continues to apply the rule that policy statements should not be read in isolation, and continues to recognize that employees “would reasonably” understand the context in which prohibitions are contained.

Noel Canning: Where do we go from here?

The U.S. Court of Appeals for the D.C. Circuit determined last week in Noel Canning v. NLRB that the recess appointments of Board Members Flynn, Block and Griffin were unconstitutional because the Senate was not technically in “recess” when they were appointed in January 2012. That decision does not mean – as some have insisted – that the Board must stop all proceedings until new members are confirmed. Quite the contrary.

With respect to internal Board proceedings, the decision will have no impact on the work of either the General Counsel’s Office or the Regional Offices in conducting investigations or issuing complaints. Indeed, we should fully expect the Acting General Counsel to continue to pursue his ambitious and controversial agenda.

As recently made clear by Board Chairman Mark Gaston Pearce, the Board takes the view that the D.C. Circuit opinion applies only to invalidate the specific decision in the Noel Canning case, and it has historically viewed circuit court opinions as non-binding beyond the specific case at issue. Accordingly, the NLRB, as constituted, will continue to issue decisions until the recess appointment question is resolved by the Supreme Court. In this regard, the D.C. Circuit opinion is already in conflict with an earlier decision of the Eleventh Circuit in Evans v. Stephens, and the issue has been raised in more than a dozen cases pending review in other circuits. The validity of recess appointments will be raised first at the February 5 oral argument before the Fifth Circuit in D.R. Horton v. NLRB, which concerns the similar recess appointment of Former Member Becker in 2010, and then again in March when the question concerning the appointments of Members Block and Griffin will be addressed at oral argument before the Third Circuit in New Vista Nursing and Rehabilitation v. NLRB.　 Other cases are pending throughout the circuits.

Nevertheless, the appeal process may take longer than expected because the recess appointment question may not be addressed in some or all of the cases pending on appeal. That is because of the established principle of constitutional law that a court will not consider a constitutional challenge if the case can be disposed of on other grounds. So, for example, the Fifth Circuit will not address the constitutional question in D.R. Horton unless it first determines that the Board was correct in deciding that class action waivers in arbitration agreements violate Section 8(a)(1) of the Act. If, as anticipated, the Fifth Circuit rejects the Board’s legal analysis, it will have no reason to address the challenge to the recess appointments. The same will hold true going forward with respect to many of the highly controversial Board decisions issued in the last year which are pending review in the circuit courts.

Even though the recess appointment issue has apparently been resolved in the D.C. Circuit, the future of cases pending there remains unclear. First, the Board has until March 11 to file a petition for rehearing in banc, or until late April to file a petition for certiorari to the Supreme Court. In the interim, the Circuit Court issued an order holding many of its the pending NLRB cases – including the appeal of the Banner Health decision – in abeyance for the foreseeable future. That order may have a substantial impact on the appeals process inasmuch as Section 10(f) of the Act permits any aggrieved party to file an appeal in the D.C. Circuit irrespective of where the events in question took place. While employers would naturally want to appeal to the court that has already ruled that otherwise enforceable Board decisions involving Members Block and Griffin are invalid, doing so may result in their cases not being heard on any grounds until after the recess appointments issue has been resolved.