As we have noted in prior reports, the most significant developments in employment, labor and OSHA law have been driven by aggressive rulemaking and regulatory activity from federal agencies. The National Labor Relations Board ("NLRB" or "the Board"), in particular, prepared for its potential loss of quorum at the end of 2011 by issuing a number of controversial decisions and rules that have important implications for unionized and non-union employers alike. President Obama's eleventh-hour recess appointments have returned the Board to its full complement, but it is likely that these appointments, as well as the Board's recent holding in D.R. Horton, Inc., will be challenged. Two cases discussed below highlight some of the issues that employers will want to consider in preparing for the NLRB's new union-election rules, which are scheduled to take effect April 2012.

The Equal Employment Opportunity Commission (EEOC) has also warned that it will be targeting widespread patterns, practices, and policies of discrimination as a "top priority" in order to get the biggest bang for its buck.

Last quarter also saw increased regulatory activity by the Occupational Safety and Health Administration (OSHA) as it carries out its promise to step up enforcement of the 21 whistleblower laws that it is charged with administering. Finally, the implementation of safety and environmental requirements for oil and gas operators on the Outer Continental Shelf went into effect last quarter, raising questions regarding how the Department of the Interior's Bureau of Safety and Environmental Enforcement (BSEE) will carry out compliance audits in the coming year.

  • NLRB Invalidates Employment Arbitration Agreements Barring Class or Collective Actions
  • Deadline for Controversial NLRA-Rights Poster Postponed Again
  • NLRB Continues to Chip Away at Employers' Property Rights
  • NLRB Announces Final Rule Amending Union-Election Procedures
  • Non-Union Employers Should Ensure that Grievance Procedures Explicitly Apply to Group Grievances
  • SEMS Regulations in Effect for Oil and Gas Operators on the OCS
  • OSHA Steps Up Enforcement of Whistleblower Laws
  • EEOC Targets Systemic Discrimination in its 2012 Strategic Plan
  • Tax Credits for Hiring Veterans

NLRB Invalidates Employment Arbitration Agreements Barring Class or Collective Actions

In a decision that was one of the NLRB's last rulings before Member Craig Becker's recess appointment ended, the Board held that an agreement that prevents non-management employees from filing class, or collective actions ― whether in a court or in arbitration ― unlawfully restricts employees' rights under the National Labor Relations Act (NLRA) to engage in "concerted activity" for "mutual aid or protection." D.R. Horton, Inc., 357 NLRB No. 184 (January 3, 2012). In addition, the Board held that arbitration agreements that do not provide a clear and unambiguous exception to arbitration, allowing employees to file charges with the NLRB, also violate the NLRA. Notably for non-unionized employers, the Board's decision was not based on a collective bargaining agreement, but rather, a corporate-wide arbitration agreement that all employees were required to enter into as a condition of employment.

The Board's ruling in D.R. Horton will likely be challenged, as it appears to conflict with recent Supreme Court decisions that point to approval of employment arbitration agreements generally and class-action waivers specifically. In 14 Penn Plaza, LLC v. Pyett, 556 U.S. 247 (2009), the Court held that a union could validly agree in collective bargaining to an arbitration clause that waived employees' rights to bring employment discrimination claims in court. Similarly, in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011), decided last summer, the Court struck down a California law that prohibited class-action waivers as unconscionable, finding that the California law frustrated the purpose of the Federal Arbitration Act, which was to encourage arbitration.

Deadline for Controversial NLRA-Rights Poster Postponed Again

The NLRB agreed to postpone the January 31, 2012, implementation of its notice-posting rule to April 30, 2012. The notice-posting rule requires private sector employers that are subject to the NLRA to post, in a "conspicuous place," a notice informing employees of their rights under the NLRA. Originally, employers were expected to comply with the regulation by November 14, 2011, but the agency pushed this date back to January 31, 2012, in order "to allow for enhanced education and outreach to employers, particularly those who operate small and medium sized businesses." In the most recent postponement, the NLRB's decision was driven by the court that is considering whether the NLRB overstepped its authority when it promulgated the rule. During oral arguments, presiding Judge Amy Berman Jackson suggested that, due to the complexities of the issues, the agency delay the rule's effective date until the court was able to reach an opinion.

NLRB Continues to Chip Away at Employers' Property Rights

Earlier this year, in New York New York Hotel & Casino, 356 N.L.R.B. No. 119 (Mar. 25, 2011), the Board expanded the rights of labor organizers to handbill on private property by holding that a casino unlawfully prohibited the off-duty employees of its subcontractor ― a restaurant within the casino ― from distributing on the casino's property handbills in support of their organizing efforts. In direct opposition to a line of established Supreme Court cases, the NLRB's decision made little distinction between the employees of a property owner and non-employees. Moreover, it gave short shrift to a critical factor of the well-established property-access rule applicable to nonemployees ― whether the subcontractor's employees had any alternative means of communication. Under this new test, the rights of subcontractors' employees would trump property owners' rights for the foreseeable future.

A pair of NLRB decisions that were handed down on December 30, 2011, proves the truth of this conclusion. In Simon De Bartolo Group, 357 N.L.R.B. No. 157 (Dec. 30, 2011), the Board majority applied the analysis developed in New York New York and found that the owner of several shopping malls unlawfully interfered with the rights of the off-duty employees of its maintenance contractor by preventing the maintenance employees from distributing pro-union handbills, as part of an organizational effort, to customers outside the entrances of two of the shopping malls at which the handbillers regularly worked. This holding basically granted subcontractor's employees the same rights to handbill as the property owner's employees. In Reliant Energy aka Etiwanda LLC, 357 N.L.R.B. No. 172 (December 30, 2011), the Board went even further by holding that a property owner must permit a subcontractor's on-duty employee to engage in organizational solicitation of the property owner's own employees. Moreover, the handbiller was not regularly or exclusively employed at the property owner's site, but instead was a temporary employee of a second-tier contractor who was on the site specifically to do pressing, time-sensitive work.

This line of NLRB decisions substantially erodes the distinction between a property owner's employees and nonemployees and the relative rights of each to access private property to engage in activities potentially protected by the NLRA. Property owners with subcontractors will need to prepare for the inevitable increase in handbilling organizational activity by nonemployees working ― whether regularly, exclusively, or temporarily ― on their property.

NLRB Announces Final Rule Amending Union-Election Procedures

The NLRB has been considering the issue of comprehensive representation-election reform since it became clear that the Employee Free Choice Act (EFCA) would not become law due to bipartisan opposition. On December 21, 2011, the NLRB succeeded, at least for now, in finalizing new regulations that achieve many of the goals of EFCA ― speeding up elections, substantially reducing an employer's opportunity to litigate issues of voter eligibility or inclusion prior to an election, and restricting an employer's ability to communicate with employees during the shortened pre-election period. Not all of the original provisions proposed by the NLRB were included in the final rule, such as the requirement that employers' Excelsior lists supply unions with all employees' email addresses and telephone numbers in order to provide unions with easier access to employees. However, the amended rules, which are scheduled to take effect on April 30, 2012, will still accelerate campaign times and increase the likelihood of union success. Among the most significant changes is the elimination of the restriction on scheduling an election until at least 25 days after the decision and direction of election in order to allow for Board review. Also significant for employers are the amendments providing only discretionary review of Regional Director's resolutions of election-related issues and eliminating the right to file a pre-election request for review of a decision, instead deferring such requests for review until after the election.

As employers prepare for these new election rules, they should consider the impact of the following two cases. First, the Third Circuit held on appeal that a 34-31 vote by employees in favor of union representation was valid despite the employer's argument that the vote included five assistant managers who should not have been eligible. Mars Home for Youth v. National Labor Relations Board, No. 11-1250, National Labor Relations Board v. Mars Home for Youth, No. 11-1590 (3rd Cir. Oct 26, 2011). The appeals court reasoned that the assistant managers had limited powers, did not discipline other employees, were themselves subject to discipline, and thus could vote with the rank-and-file. Because the new rules will truncate the pre-election period, employers will want to examine their workforces now to determine which employees can properly be designated as supervisors under the NLRA. There will be little time for such analysis once the labor union seeks to represent workers.

Employers must also use caution when offering organizing assistance to, or entering into, neutrality agreements with a labor union. The Eleventh Circuit has now held that such assistance may constitute bribery in violation of the Labor Management Relations Act (LMRA), which makes it unlawful for an employer to give money or any other "thing of value" to a labor union that represents or seeks to represent its employees. Mulhall v. UNITE HERE Local 355, Hollywood Greyhound Track, Inc., d.b.a. Mardi Gras Gaming, No. 11-10594 (11th Cir. Jan. 18, 2012). This decision splits the Circuits regarding the interpretation of what constitutes a "thing of value" under the LMRA and will likely wind up before the U.S. Supreme Court. In Mulhall, the employer entered into an agreement with the union by which the employer would open its premises to union organizing meetings, provide the union with contact information and job classification of its employees, and remain neutral to the unionization of the employees. In exchange, the union promised to lend financial support to a ballot initiative on casino gaming and, if recognized, refrain from striking. The Eleventh Circuit reasoned that such assistance could be deemed a thing of value under the LMRA, especially in light of the union's agreement of financial support to the ballot initiative. This decision raises questions about the degree to which employers and unions can agree on the conditions that will govern an organizing campaign. Employers should carefully consider such proposals and seek legal advice before going forward.

Non-Union Employers Should Ensure that Grievance Procedures Explicitly Apply to Group Grievances

The D.C. Circuit court, in Fortuna Enters. LP v. NLRB, No. 10-1272 (D.C. Cir. Dec. 9, 2011), refused to enforce the NLRB's finding that an employer unlawfully suspended 77 workers who engaged in a work stoppage. While workers are entitled to exert pressure on employers through "on the job" work stoppages or "sit down" strikes, such actions should be balanced against the property rights of employers. The NLRB and courts apply a multi-factored test to make this determination, which includes: 1) the reason the employees have stopped working; 2) whether the work stoppage interfered with production, or deprived the employer access to its property; 3) whether employees had adequate opportunity to present grievances to management; and 4) whether employees were represented or had an established grievance procedure. In upholding the union's charge of an unfair labor practice, the NLRB noted that the employer lacked a formal grievance procedure for employees to raise their concerns. The D.C. Circuit disagreed, explaining that the hotel had an "open door" policy to handle employee complaints. The hotel's policy allowed a "team member" to seek assistance from a variety of supervisors, up to and including the general manager, and management had relied on this policy in the past to address group grievances regarding equipment, uniforms and other working conditions. This case underscores the importance of having established grievance and arbitration procedures that explicitly include group grievances.

SEMS Regulations in Effect for Oil and Gas Operators on the OCS

Final regulations requiring leaseholders and operators of oil and gas operations on the U.S. Outer Continental Shelf (OCS) to develop and implement safety and environmental management systems (SEMS) went into effect on November 15, 2011. Oil and gas companies operating on the OCS are required to ensure that they and their contractors have come to an agreement regarding safety and environmental policies that identify and manage offshore risks that can lead to serious accidents. This challenging task has been made more difficult by the reorganization of the agencies having jurisdiction on the OCS ― the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) was replaced by the Bureau of Safety and Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Management (BOEM). BSEE intends to launch compliance audits as quickly as possible after the November 15 deadline, but it remains to be seen exactly how the government will enforce the new requirements. BSEE has also indicated that the current civil penalties ($40,000 per violation, per day) are not an effective deterrent and that significantly higher penalties, as well as facility shutdown orders, are needed to encourage compliance. Moreover, the jurisdictional line between the operations regulated by BSEE and BOEM and operations regulated by the U.S. Coast Guard has become increasingly difficult to discern, leaving many vessel companies unsure as to which agency and which regulations govern their operations.

OSHA Steps Up Enforcement of Whistleblower Laws

True to its promise of strengthening enforcement of the 21 whistleblower laws it is charged with administering, the Occupational Safety and Health Administration (OSHA) has been actively investigating whistleblower retaliation claims and has issued several orders for reinstatement and payment of back wages. The most recent case involves AirTran Airways. In 2007, after reporting mechanical concerns, an AirTran pilot was removed from flight status pending an investigative hearing regarding a sudden increase in the pilot's reports of mechanical malfunctions. Ultimately, the pilot was terminated. OSHA found reasonable cause to believe that the pilot's termination was an act of retaliation for whistleblowing activity and ordered reinstatement. In addition, the agency ordered the company to pay over $1 million in back wages plus interest and compensatory damages. While OSHA's preliminary determination can be appealed to the Labor Department's Office of Administrative Law Judges, the initiation of an appeal does not stay the provisional reinstatement order.

The development of training programs to educate management about complaint policies and procedures, as well as prohibitions on retaliation, may reduce the risks associated with alleged whistleblowers. Also, reviewing termination decisions with Human Resources ― particularly when an employee has made a report of possible wrongdoing ― may help to avoid inadvertent violations of the whistleblower statutes.

EEOC Targets Systemic Discrimination in its 2012 Strategic Plan

The EEOC has released for public comment a draft of its Strategic Plan for 2012 through 2016. One area that the EEOC is targeting as a top priority is the investigation of companies suspected of committing systemic discrimination in the workplace. The agency has determined that focusing on widespread patterns and practices of discrimination and discriminatory company policies will allow it to use its limited resources most effectively. Employers will want to consider gaining a statistical understanding of their workforce composition before the EEOC determines that systemic discrimination may exist. This understanding is just as important for employers who are federal government contractors subject to the jurisdiction of the Office of Federal Contract Compliance Programs (OFCCP). Such statistical testing can reveal whether a company's practices or policies regarding hiring, promoting, and/or terminating are giving rise to disparities that a court might consider statistically significant. If disparities or areas of potential liability are found, statistical analysis may also assist in identifying non-discriminatory factors that could account for such disparities. Such reviews should be done under the direction of loyal counsel to attempt to protect the information under the attorney-client and attorney-work-product privilege.

Tax Credits for Hiring Veterans

On November 21, 2011, two tax credits rewarding employers that hire unemployed veterans were signed into law. Under the Returning Heroes Tax Credit, employers can receive a tax credit of up to $5,600 for hiring a veteran who has been unemployed for at least six months or a $2,400 credit for hiring a veteran who has been unemployed for more than four weeks, but less than six months. The Wounded Warrior Tax Credit provides employers that hire veterans who have service-related disabilities and have been unemployed for over six months with a credit up to $9,600 per veteran. The tax credits are currently in effect and apply to veterans who are hired after the law was enacted.

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