United States: The Changing Labor Landscape: What Every Employer Should Know About The NLRB’s August Decisions

While labor law legislation such as the Employee Free Choice Act has stalled in Congress, unions continue to push for labor law reform through the NLRB. In this forum, they may have found a receptive audience. The NLRB has a three-vote majority of former union lawyers and a former NLRB attorney in the role of Acting General Counsel. Moreover, after announcing that it would reconsider nearly 100 decisions pending in the appeals court in the wake of the U.S. Supreme Court's decision in New Process Steel, the NLRB has begun to decide cases raising significant labor policy issues. In August alone, the Board issued 118 decisions. While employers should continue to monitor legislative developments, more rapid change is likely to take place at the NLRB in the form of new decisions and rulemaking favorable to unions. Employers will need to revisit their labor strategies and policies in light of these decisions, which impact both union and non-union employers.

Composition of the NLRB

The composition of the National Labor Relations Board (NLRB) can dramatically impact the labor landscape for employers. Traditionally, the NLRB is comprised of five members -- three members from the President's political party and two from the opposing party. However, from December 2007 to March 2010, only two of the five seats were occupied – one by Chairman Wilma Liebman (D), and the other by Member Peter Schaumber (R). The empty seats were due to expired terms and political wrangling that made it impossible for either party to confirm new candidates. Since the NLRB could only act if both members agreed, most of the cases involving significant labor policy questions were deferred. By practice and tradition, the NLRB generally does not establish new law or reverse prior precedent without three affirmative votes and typically does so only when there is a Board of four or five members. Over the next several months, the NLRB returned to its full complement of five members.

In March 2010, President Obama exercised his power to make recess appointments by appointing Democrats Craig Becker and Mark Pearce to the NLRB. The Senate subsequently confirmed Member Pearce and, in June, a Republican, Brian Hayes. In the meantime, the U.S. Supreme Court invalidated all of the decisions issued by the two-member NLRB, finding that a quorum of at least three members is required for NLRB decisions. The five-member NLRB then had to decide how to handle the several hundred cases potentially affected by New Process Steel and make a final push to issue decisions before Member Schaumber's term expired in August – which would require the NLRB to reassign all cases involving Member Schaumber to a new three-member panel. As a result, the NLRB issued 118 decisions during the month of August. These decisions have expanded labor law in ways favorable to unions, particularly when it comes to union organizing and election conduct. Some of the most significant decisions are discussed below.

The NLRB's Decisions of August

Union Organizing and Election Conduct

The NLRB's recent decisions reflect increased scrutiny of employer conduct during union organizing campaigns. In several cases, the NLRB overturned the results of the election based on the union's objections and ordered a rerun election. For example, in Mandalay Corp. d/b/a Mandalay Bay Resort & Casino, 355 NLRB No. 92 (August 17, 2010), the NLRB held that the employer unlawfully solicited grievances with the express or implied promise to remedy the grievances when it held a series of "focus meetings" with security officers shortly after the union filed a petition to represent the officers. During these meetings, the employer discussed the union campaign and asked officers about work-related concerns. The employer also reinstated overtime opportunities for full-time officers after the officers raised concerns to the CEO during one meeting. While the record was unclear whether this occurred prior to the election, the NLRB determined that the employer's conduct violated the Act and directed a new election. The NLRB further found that there was no evidence that the employer had a past practice of soliciting grievances as it had done before the union election. In doing so, the NLRB dismissed evidence that the employer had an established practice of holding regular shift meetings during which employees raised employment concerns with management.

The NLRB similarly directed a second election in Stabilus, Inc., 355 NLRB No. 161 (August 27, 2010), based in part on its finding that the company unlawfully prohibited employees from wearing pro-union T-shirts during an election campaign. While the employer had a pre-existing uniform policy, the NLRB determined that the company selectively enforced its policy against union supporters and applied it in a disparate manner to Section 7 activity relative to comparable, non-Section 7 activity because the employer had permitted isolated exceptions (i.e., allowing employees to wear Carolina Panthers T-shirts before the Super Bowl, costumes during the Halloween period).

Employer Property Rights

The NLRB also ordered a rerun election in Research Foundation of the State University of New York at Buffalo, 355 NLRB No. 170 (August 27, 2010), based on its holding that a SUNY official acted unlawfully when he insisted that a union representative meeting with an associate in that associate's office leave the building or he would call the police. According to the NLRB, SUNY's conduct, which occurred on state property and was witnessed by a potentially determinative voter, reasonably tended to interfere with employee free choice in the election for union representation.

Employee Discipline and Misconduct

The NLRB's August decisions also reflect an increased scrutiny of employer discipline of employees during union organizing campaigns as well as a more expansive view of protected activity. In Altercare of Wadsworth Center for Rehabilitation & Nursing Care, Inc., 355 NLRB No. 96 (August 19, 2010), the NLRB held that the employer's verbal warnings to employees that they must refrain from discussing union matters during work hours were unlawful because verbal warnings were the first step in the employer's progressive disciplinary system. It did not matter that the employer did not take adverse action or memorialize the verbal warnings in the employees' personnel files. See also Faurecia Exhaust Systems, Inc. 355 NLRB No. 124 (August 26, 2010) (employee's suspension for asking for unit employees' contact information in violation of employer's personnel privacy policies was unlawful because the employee only asked for the information – he did not actually receive it).

In Plaza Auto Center, Inc., 355 NLRB No. 85 (August 16, 2010), the NLRB held that the employer unlawfully terminated an employee for communications in the course of protected activity notwithstanding the employee's use of obscenities and threatening language. In Plaza Auto, an employee began questioning his employer's policies concerning breaks, restroom facilities, and compensation. In response, his supervisor told him that he did not need to work at Plaza if he did not like the policies. The employee then began calling the supervisor obscene names, stood up and pushed his chair aside, and said that, if he was fired, the employer would regret it. Following this outburst, Plaza Auto terminated the employee for misconduct. While the administrative law judge determined that the employee's conduct and profanity were physically threatening, if not menacing, and thus not protected by the NLRA, the NLRB dismissed this finding. According to the NLRB, the employee's conduct was not "so violent or of such serious character as to render the employee unfit for further service." See also Kiewit Power Constructors Co., 355 NLRB No. 150 (August 27, 2010) (employer unlawfully terminated two employees for misconduct; threats that "it was going to get ugly" if they were terminated and that the supervisor "better bring his boxing gloves" were protected).

Union Conduct During An Organizing Campaign

The NLRB's recent decisions also suggest that it is less eager to sustain unfair labor practice charges against unions or to overturn union election victories based on the employer's objections. In Affiliated Computer Services, Inc., 355 NLRB No. 163 (August 27, 2010), the NLRB held that pro-union letters sent from a U.S. Congressman and a New York State Senator to the employer's employees did not improperly interfere with the election. The NLRB dismissed the employer's argument that the letters could have improperly led employees to believe that the government supported the union's bid for election.

Court Actions Challenging Employee Conduct

In DHL Express, Inc., 355 NLRB No. 144 (August 27, 2010), the NLRB held that both DHL and its consultant unlawfully threatened to sue an employee in court for defamation based on an article in the Union's newsletter. Notwithstanding the lack of a factual basis for the employee's claim that a partner consultant had admitted to "misrepresenting union members and lying to them about 'stealing' their money," the Board found that the statement was protected. It further noted that while the consultant discussed the matter with more than one attorney, no lawsuit was ever filed.

Bargaining and Unilateral Changes

An employer's bargaining obligations frequently are the subject of litigation. In E.I. DuPont de Nemours and Company, 355 NLRB No. 177 (August 27, 2010), the NLRB found that the employer's unilateral changes to employee benefit plans after the expiration of the collective bargaining agreement were unlawful because the employer had failed to negotiate with the union to impasse. According to the Board, while the employer had established a past practice of making unilateral changes, it had not done so during the hiatus periods between labor contracts.

In Stella D'oro Biscuit Company, Inc., 355 NLRB No. 158 (August 27, 2010), the NLRB found an employer's offer to allow a union to view an audited financial statement was not a valid accommodation of a union's lawful information request. Instead, when an employer claims an inability to pay, the employer must provide an actual copy of the financial statement to the union (particularly if the union agrees to keep the information confidential).

Union Conduct Against Third Parties

In United Brotherhood of Carpenters and Joiners of America, Local Union No. 1506 (Eliason & Knuth of Arizona, Inc.), 355 NLRB No. 159 (Aug. 27, 2010), the NLRB found that the Union's display of large stationary banners did not violate the Act, which makes it an unfair labor practice for unions or their agents "to threaten, coerce, or restrain" persons or industries engaged in commerce with an object of "forcing or requiring any person to . . . cease doing business with any other person." While the banners announced a "labor dispute" and sought to elicit "shame on" the employer or persuade customers not to patronize the employer, the NLRB found that the display did not constitute picketing or coercive nonpicketing.

Overruling Prior Precedent

Some of the most controversial cases have yet to be decided. This past August, the NLRB granted review and requested public comment through the filing of amicus curiae ("friend of the court") briefs on whether the NLRB should modify or overrule its decisions in two key cases that address the issue of when a labor union's support among employees can be challenged. In Rite Aid Store #6473 and Lamons Gasket Co., the Board will reconsider its 2007 decision in Dana Corp., 351 NLRB 434, holding that when a union is voluntarily recognized, whether or not a card-check or neutrality agreement existed, no election bar will be imposed after a card-based recognition unless (1) employees in the bargaining unit receive notice of the recognition and of their right, within 45 days of the notice, to file a decertification petition or to support the filing of a petition by a rival union, and (2) 45 days pass from the date of notice without the filing of a valid petition.

In UGL-UNICCO Service Company and Grocery Haulers, Inc., the Board will review its 2002 decision in MV Transportation, 337 NLRB 770, concerning the duties of a successor employer to an incumbent union. Before MV Transportation, under the successor bar doctrine, if a successor employed a majority of predecessor employees represented by a union, then the union's majority status could not be challenged for a reasonable period to allow the new company and union a period to negotiate. MV Transportation overruled the successor bar doctrine and instead made the presumption of majority status rebuttable and open to challenge by the employer, employees, or a rival union.

As the above summaries demonstrate, the NLRB is taking an active role in reshaping labor law and issuing decisions that reverse prior precedent and expand labor law in ways favorable to unions. Both union and non-union employers should carefully monitor NLRB developments. Those who don't risk NLRB charges and the threat of a re-run election in those cases where employees rejected union representation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.