Bye-Bye, Big Labor? What Michigan’s “Right to Work” Law Means for Employers

Michigan’s new right to work law, which endorses the right to engage in or refrain from collective action and prohibits the closed shop, analogous to right to work laws in many other states, is not well received by labor unions.  Why do unions hate right to work laws, particularly when they change the way things have been for decades?  Because unions lose – they lose revenue because employees can no longer be forced to pay dues or agency fees to the union in order to keep their jobs.  Unions also lose power – they can no longer fine employees who violate the union’s rules.  The union continues to have the obligation to represent all employees in the bargaining unit equally, but will likely get paid less (in dues) for doing so.

The Michigan right to work law will not be effective immediately for everyone.  The new right to work law only applies to an agreement, contract, understanding or practice that takes effect or is extended or renewed after the effective date, approximately March 28, 2013.

On December 11, 2012 Michigan enacted a right to work law.  Governor Snyder signed House Bill 4003, which applies to the public sector, and Senate Bill 116, which applies to the private sector, into laws.  This legislation will prohibit an individual from being required as a condition of obtaining or continuing employment to do any of the following:

  1. Refrain or resign from membership in, voluntary affiliation with, or voluntary financial support of a labor organization.
  2. Become or remain a member of a labor organization.
  3. Pay any dues, fees, assessments, or other charges or expenses of any kind or amount or provide anything of value to a labor organization.
  4. Pay to any charitable organization or third party an amount that is in lieu of, equivalent to, or any portion of dues, fees, assessments, or other charges or expenses required of members of or employees represented by a labor organization.

If an agreement, contract, understanding or practice between or involving an employer and a labor organization violates the above provisions it is unlawful and unenforceable.  Therefore, Michigan private sector employees will retain all of their existing rights under the National Labor Relations Act and any collective bargaining agreement between their employer and union representative, should they choose to retain their union representation.  The new law will prohibit agreements from binding employees to the different facets of union membership including payment of union dues and assessments, union rules, or union fines, penalties or punishment, including union discipline or fines for working during a strike or crossing picket lines.  Ultimately, the employee will now have the ability to decide whether to join a union.

Current collective bargaining agreements are “grandfathered” and this prohibition only applies to an agreement, contract, understanding or practice that takes effect or is extended or renewed after the effective date, approximately March 28, 2013.  Therefore, employees have to abide by the current contracts until they expire.  A recent NLRB decision stated that an employer’s obligation to check off union dues continues after the expiration of a union contract establishing such arrangement.  In light of this decision, it would be prudent for employers, if a current agreement expires or is extended after March 28, 2013, to tread carefully when providing employees an opportunity to opt out of the union or payment of union dues.  Employers should ensure they are lawfully communicating with their employees whose contracts expire after March 28, 2013 when providing information or resources to them about how to opt out.

The future of big labor is uncertain.  Unions stand to lose massive numbers of members and large sums of money when employees are given a choice to decline membership.  This isn’t the entire story, though.  The National Labor Relations Board has in recent years been heavily pro-union and only stands to get stronger through appointments from President Obama.

Board Reverses 34-year Rule and Requires Employers to Give Unions Actual Witness Statements

Since 1978, the National Labor Relations Board has allowed employers to refuse to provide unions with copies of witness statements obtained during an investigation of employee misconduct.  In Anheuser-Busch, 237 NLRB 982 (1978), the Board agreed with a U.S. Supreme Court ruling that disclosure of witness statements to a union would create a risk of coercion and intimidation and could well cause witnesses to be reluctant to provide truthful statements or participate in Board investigations.  Recognizing that a union may have a legitimate need for information related to the investigation, the Board required employers to provide summaries of the witness statements to the union.  This requirement balanced the confidentiality rights of the employees providing the statements with the union’s interest in relevant information.

The Board has rejected this “bright-line” rule and replaced it with a “balancing test” to decide when and under what circumstances an employer must give the union actual witness statements.  Under this new approach, articulated in American Baptist Homes of the West, d/b/a Piedmont Gardens, 359 NLRB No. 46 (2012), employers must produce witness statements to a union upon request unless the employer can prove its confidentiality interest outweighs the union’s need for the information.

In Piedmont Gardens, the employer operated a continuing care facility that offered independent living, assisted living and skilled nursing care level options to its residents.  In June 2011, a charge nurse informed the Human Resources Director that she had seen two certified nursing assistants sleeping on the job.  The HR Director asked the charge nurse to prepare a written statement and assured her it would be kept confidential.  Another charge nurse who witnessed the sleeping employees prepared a written statement after learning that her fellow charge nurse had done so, but without an assurance of confidentiality.  Based on the witness statements, one of the sleeping employees was terminated.

The union requested all written statements relied on in making the termination decision and the names and job titles of everyone who was involved in the investigation.  The employer refused to provide any of the requested information, but it offered to work with the union to reach an “accommodation to disclosure.”  No information was provided to the union, and it filed an unfair labor practice charge.

The Board majority held that the employer was required to provide the witnesses’ names and job titles, along with the witness statement from the charge nurse who was not assured of confidentiality.  However, the Board stated it would not apply its new standard in this case because it would cause a “manifest injustice” to the employer who was guided by the Anheuser-Busch standard.  Thus, the employer did not have to provide the witness statements of employees who were told their statements would remain confidential.

The discarded Anheuser-Busch standard provided employers and unions certainty about their respective rights and obligations regarding disclosure of witness statements given during an employer’s investigation of possible wrongdoing.  The new standard eviscerates certainty and creates a standard that is vague, subjective and outcomes will be unpredictable because each situation will be based on its unique and nuanced facts.  As noted by dissenting Board Member Hayes, the new standard “will often put human relations officials…in the position of making a legal assessment whether their employer’s confidentiality interests are legitimate, substantial, and superior to the interest of the union requesting witness statements.”

This ruling follows another recent Board decision that ruled employers can no longer, as a matter of human resource practice or policy, require employees to maintain confidentiality of investigatory interviews.  Banner Health System, d/b/a Banner Estrella Medical Center, 358 NLRB No. 93 (2012). Unionized employers now must consider when and how they can give confidentiality assurances to employees who provide witness statements and under what parameters the employer’s confidentiality interests are more important than the union’s right to obtain witness statements. Employers should analyze their investigatory practices and policies in light of these two rulings.

The likely real-world implications for unionized employers is that unions will demand witness statements with regularity and, if the employer refuses, file unfair labor practice charges.  More frequent involvement of legal counsel may well be necessary because of the vague and fact-specific balancing act employers are now required to make.

Facebook Firings – An Old Approach to the New Issue of the Virtual Water Cooler

The National Labor Relations Board (“Board”) issued its second decision on a firing over Facebook posts on Wednesday, December 19, 2012.  The Board, avowing its commitment to the idea that speech on a personal, non-work-related social media outlet should be treated the same way as discussions on work premises, ordered a non-profit organization to reinstate five employees who were fired over Facebook posts.  In a 3-1 decision in Hispanics United of Buffalo, Inc., 359 NLRB No. 37, 12/14/12 [released 12/19/12], the Board affirmed the administrative law judge’s ruling that the employer violated the National Labor Relations Act (“NLRA”) when it terminated five employees for posting Facebook comments in response to a co-worker’s criticism of their job performance.

While noting that at issue was a novel mode of employee communication, the Board agreed with the ALJ that the appropriate analytical framework for resolving the discharge dispute had long been settled under Meyers Industries and its progeny.[1]  Under the Meyers Industries analysis, an employee’s discipline or discharge is unlawful if it is motivated by an employee’s concerted, NLRA-protected activity and if the employer knows the activity was concerted.  The underlying ALJ ruling in Ortiz v. Hispanics United of Buffalo, Inc., Case No. 3-CA-27872 (NLRB Sept. 2, 2011) issued a landmark decision when it marked the first time a Board judge had ruled on a social media-related employment decision.

Member Brian E. Hayes, the sole dissenter and Republican board member, disagreed with the majority view that the employees’ comments were made for mutual aid and protection.  However, writing shortly before his term on the board ended Dec. 16, he agreed that the Meyers Industries framework was the right analysis to use for evaluating whether the activity on Facebook is protected and concerted.  In light of this decision, it is clear that concerted activity is protected whether spoken in the workplace or via the virtual water cooler.  Even with the difference in type and style of communication used in social media outlets, the Board is not adopting any new rules or framework within which to evaluate the speech.

Additionally, this decision serves as a warning to employers who have been using their policies to justify adverse employment actions when faced with potentially protected activity.  The Board majority in this case rejected the employer’s defense that these five employees had violated its zero-tolerance policy on bullying and harassment when they disagreed with another co-worker that the company was not doing enough to help its clients.  The Board held that the employees were taking a first step toward group action to defend themselves against another co-worker’s accusations made to management and hence, was protected, concerted activity.  Employers who seek to discipline an employee for comments he or she makes on social media sources must therefore not merely rely on their policy, but they must also ensure that their policy is valid in that, among other things, it does not discourage protected, concerted activity.

[1]  Meyers Industries, 268 NLRB 493 (1983), remanded sub nom.  Prill v. NLRB, 755 F.2d 941 (D.C. Cir. 1985), cert denied 474 U.S. 948 (1985), supplemented 281 NLRB 882 (1986), affd. sub nom.  Prill v. NLRB, 835 F.2d 1481 (D.C. Cir. 1987), cert. denied 487 U.S. 1205 (1988).

Court of Appeals Refuses to Enforce NLRB Ban on Offensive Employee Clothing

Many employers have dress codes that regulate what employees can wear, particularly employees who have contact with customers, clients, patients and business partners, in order to convey the organization’s image, brand, values and mission.  The National Labor Relations Board issued a decision striking down an employer’s discipline of an employee for wearing a t-shirt that ridiculed its employee recognition program.  On appeal, the U.S. Court of Appeals for the D.C. Circuit took the Board to task for its ruling.  According to the Court, the Board held this employer to a higher standard than it imposed on employers in the past and the Board provided no justification for the new standard.  Medco Health Solutions of Las Vegas, Inc., v. NLRB, No. 11-1282 (D.C. Cir. Dec. 14, 2012)

To encourage excellent performance by employees, the employer introduced an employee recognition program—the WOW program. The program did not offer monetary rewards nor did they influence promotions or wage increases. The employer believed the program showed its commitment to excellence, and customers were regularly shown the wall of recognition when they came to the employer’s facility.

One day an employee wore a t-shirt to work that had the union logo on the front and on the back it read: “I don’t need a WOW to do my job.” That same day representatives of a customer were scheduled to tour the facility and the employee was instructed to remove the “insulting” t-shirt. The employee was told that if he did not feel he could support the WOW program, “there are plenty of jobs out there.” The employee changed shirts before the customers arrived, and he did not wear the t-shirt again.

The union filed an unfair labor practice charge alleging that the employer’s dress code policy was too broad and that instructing the employee not to wear the t-shirt violated the National Labor Relations Act.

The Board ruled that the employee had the right to wear the t-shirt and the employer’s ban on “phrases, words, statements, pictures, cartoons or drawings that are confrontational, slanderous, insulting or provocative” was too broad and interfered with employee rights to engage in protected concerted activity, which includes the right to criticize work rules and working conditions.

The Court of Appeals disagreed.  The Court was troubled by the fact that in the past the Board upheld discipline of union employees at a grocery store for wearing shirts that read “Don’t Cheat About the Meat!” or bagel shop employees’ shirts that stated “If its not Union, its not Kosher.” (grammatical error was in the slogan).  In neither case did the employer provide, nor did the Board require, evidence that the slogan “reasonably raised the genuine possibility of harm to the customer relationship.”  In the Court’s view, the Board failed to offer any explanation as to why the slogan about the WOW program was different from these other two cases.

The Court noted that Board decisions are entitled to deference and that the Board has a “fund of knowledge and expertise all its own.”  But the Court further observed that “this expertise is surely not at its peak in the realm of employer-customer relations.”  In chastising the Board for its ban on “provocative and confrontational” slogans worn by an employee in a workplace visited by customers, the Court stated that “such expressions are seldom found in civil and decent places of employment.”  The Court sent the case back to the Board to reconsider its ruling in light of the flaws cited by the Court.

On remand, the Board may be able to explain to the Court’s satisfaction why it has ignored its own prior rulings on provocative and confrontational anti-employer statements on clothing worn at work.  The Court’s opinion conveys skepticism that the Board will be able to do so.  In the meantime, employers should recognize that  the Board is likely to continue to substantially limit an employer’s ability to prohibit employees from wearing clothing to work with provocative or confrontational messages that could harm customer or client relationships.

Deconstructing Costco

Much has been written about the NLRB’s recent holding in the seminal Costco case that the company’s facially neutral social media policy prohibiting postings on the Internet that damage the Company or any person’s reputation violates Section 8(a)(1) of the Act.  But it is also important to understand how the Board came to decide that case in order to better evaluate the appropriate employer response.

The controlling law concerning the validity of facially neutral work rules was established in the 2004 decision in Lutheran Heritage Village in which the Board held that in evaluating such rules it must determine whether employees “would reasonably construe” the language as restricting their Section 7 to engage in protected discussions of their terms and conditions of employment, and recognized that the mere fact that a rule could be read as inhibiting employee rights is insufficient to support a finding that the rule is unlawful.  The Board also observed that it should apply a “reasonable” interpretation to such rules without “reading particular phrases in isolation” and without assuming the employer intended to interfere with protected rights.

When the Costco case was tried before an Administrative Law Judge in 2010, the Acting General Counsel charged the employer with violating Section 8(a)(1) with respect to a number of provisions in its Electronic Communications and Technology Policy, including the requirement that employees use “appropriate business decorum” on social media sites and the prohibition of postings that “damage” the company or anyone’s reputation, because there was no limiting disclaimer to advise the employees that the rule was not intended to restrict their protected rights.  In this respect, the Acting General Counsel argued that the ALJ should reject the Lutheran Heritage Villagewould reasonably construe” standard and apply instead the standard from the dissenting opinion in that case by former Members Liebman and Walsh – that an ambiguous rule that does not include a disclaimer is unlawful if it could be perceived as inhibiting Section 7 rights – because the dissenting opinion would likely be accepted by the majority of the newly composed Board.  The ALJ  rightly rejected that proposition, and specifically recognized that under the controlling Lutheran Heritage Village standard the Board “will not conclude that a reasonable employee would read the rule to [prohibit protected] activity simply because the rule could be interpreted that way  . . . [or] could conceivably be read to” encompass protected conduct.  The ALJ then determined that neither Costco rule was unlawful under the applicable “would reasonably construe” standard because reasonable employees would understand that the rules were intended to promote civility rather than restrict Section 7 activity.

In its decision on appeal, the newly composed Board majority adopted the ALJ’s reasoning that Costco’s “appropriate business decorum” rule was lawful, but found the rule prohibiting comments damaging to the company to be unlawful.  In so finding, the Board purports to recognize the continued validity of Lutheran Heritage Village, and gives lip service to the “would reasonably construe” standard, but tacitly applied the “could be read” standard advocated by the Acting General Counsel.  In this regard, the Board adopted the approach of the Liebman-Walsh dissent by holding that in the absence of a limiting disclaimer the rule “allows employees to reasonably assume that it pertains to” protected comments critical of the company’s management.  It is significant that the Board did not engage in any analysis to determine whether the company’s employees “would reasonably construe” the language of the rule as restricting or prohibiting protected communications, but held the rule to be unlawful only because employees could assume it would in the absence of a limiting disclosure.

The Board has applied the “could be” read standard in two more recent cases.  First, in Flex Frac Logistics, LLC, the Board specifically referred to ambiguous work rules as “rules that reasonably could be read to” inhibit Section 7 rights.  Then in Karl Knauz Motors, Inc., the Board rejected the employer’s Courtesy Rule, which required employees to be courteous in their interactions with customers and coworkers, because it also prohibited employees from being disrespectful or using profanity.  Again giving lip service to Lutheran Heritage Village but applying the standard of the Liebman-Walsh dissent, the Board focused on the “disrespectful” language in isolation and held that in the absence of a limiting disclaimer the rule was unlawful because employees “would reasonably assume” that the employer would punish them for being disrespectful if they raised questions about their terms or conditions of employment.  That approach ignores the requirement that rules should be looked at from the perspective of whether employees would reasonably read the entire rule, in context, as restricting their right to discuss terms and conditions of employment, not whether someone – members of the Acting General Counsel’s staff or Board Members – could theoretically reach that conclusion as an academic legal exercise.

In light of these opinions and the Acting General Counsel’s continued focus on non-union social media policies, employers should expect that the Board will continue to take an expansive approach in holding such policies unlawful if they could be read as restricting protected communications.  Because the Costco majority adopted the Liebman-Walsh reasoning that it is the absence of an accompanying disclaimer that permits employees to assume that facially neutral rules could be applied to restrict their right to engage in protected activity, employers should at a minimum consider including specific limiting disclaimers in those sections of their policies to make clear that the prohibitions are not intended to restrict or interfere with protected communications.

NLRB Signals Intent To Scrutinize Facially Neutral Handbook Policies

The Acting General Counsel of the NLRB is apparently rummaging through handbooks and policy statements to charge nonunion employers with unfair labor practices for enacting seemingly innocuous rules that could conceivably be read as interfering with the right of employees to engage in protected concerted activity.  And as can be seen from the Board’s recent opinion in Karl Knauz Motors, Inc., 358 NLRB No. 164 (2012), the current Board majority has apparently bought into that misguided theory.

Under existing Board law, employers violate Section 8(a)(1) of the Act by maintaining work rules or policies that “would reasonably” be construed by employees as prohibiting or chilling their right to discuss or object to the terms and conditions of their employment.  In this case, the car dealership had a seemingly innocuous and facially neutral “Courtesy” Rule in its employee handbook requiring employees to be “courteous” and “polite” to customers, suppliers and co-workers:

(b) Courtesy: Courtesy is the responsibility of every employee.  Everyone is expected to be courteous, polite and friendly to our customers, vendors and suppliers, as well as their fellow employees.  No one should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership.

The rule would reasonably appear to require employees to refrain from being disrespectful and from using language which would reflect poorly on the Dealership when interacting with customers and suppliers, or with one another in the presence of customers and suppliers.

Although the rule was not applied to discipline or discharge any employee, the Acting General Counsel nevertheless charged the employer with an unfair labor practice for maintaining the rule, and the Board majority agreed.  Citing its recent social media policy decision in Costco Wholesale Corp., the Board noted that there was no protected activity disclaimer in the handbook and held that the “Courtesy” Rule is unlawful based on the strained conclusion that the Dealership’s employees would reasonably assume that they had been disrespectful in violation of the rule if they objected to or criticized anything concerning their working conditions.  The reliance on Costco would appear to be misplaced, however, as that case involved a rule prohibiting employees from posting disparaging comments about the employer on the Internet.  In this case, the Board’s majority improperly reads the “Courtesy” Rule as if the sentence prohibiting disrespectful conduct and profanity was a stand-alone requirement as in Costco, ignoring completely the context in which that sentence is part of the overall expectation that employees be courteous to customers and one another in order to maintain the Dealership’s good reputation and image.  Context matters, however, and in this context it appears the Board will find rules to be unlawful if they “could conceivably” be read as chilling protected rights, as it strains credulity to think that employees “would reasonably” read a rule addressed to courteous behavior towards customers as interfering with their right to object to working conditions.  Because the Acting General Counsel will continue to prosecute nonunion employers for handbook policies that “could conceivably” be read as chilling protected activity, employers need to review and modify their policies to avoid facing unfair labor practice charges.

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