United States: Other NLRB Developments – Summer 2017

Last Updated: October 4 2017
Article by Ogletree Deakins

Here is a brief summary of other noteworthy developments in recent months:

Circuit court decisions

Revised successor bar doctrine upheld. The National Labor Relations Board (NLRB) had a rational basis for revising the so-called successor bar doctrine in its 2011 UGL-UNICCO Service Co. decision, the U.S. Court of Appeals for the First Circuit held, noting that the agency explained its reason for doing so and "marshalled new factual support for its doctrinal move." The Board also properly applied the doctrine in finding an employer that took over a bankrupt company unlawfully refused to bargain with the union that represented a group of truck drivers at the acquired business. In UGL, the Board overruled MV Transportation—a Bush-era case that had created an immediate window, following a sale or merger, during which a union's representative status could be challenged by 30 percent of employees, the employer, or a rival union. UGL marked a return to the doctrine established in the Board's 1999 St. Elizabeth Manor, Inc. decision, which held a new bargaining relationship between an incumbent union and a new employer was protected for a reasonable period of time and not subject to any challenge to the union's representative status. Under UGL, an incumbent union is entitled to represent a successor's employees for a reasonable period of not less than six months before its majority status can lawfully be questioned.

The appeals court rejected the employer's contention that the UGL standard did not merit Chevron deference given the Board's flip-flopping over the years, noting that an agency "is not forever bound by an earlier resolution of an interpretive issue." It must, however, offer a "reasoned explanation" when it does change direction, and expressly articulate that it is parting with precedent, which the Board did here. Specifically, there was a sharp uptick in the number of corporate mergers and acquisitions and, as a result, a corresponding increase in successorship situations. This led the Board to conclude that, rather than a rebuttable presumption of continuing majority support, the successor bar better effectuated the policies of the National Labor Relations Act (NLRA) "in the context of today's economy." This reasoning was sound and, in the view of the appeals court, the Board had "brought up to date the commercial reality ignored by the MV Transportation majority" (NLRB v. Lily Transportation Corp., March 31, 2017).

Weingarten rights—a lawful response when a union rep cannot be found. The District of Columbia Circuit rejected the NLRB's conclusion that an employer acted unlawfully when a supervisor asked an employee to fill out a written statement after he had requested a union representative. The appeals court concluded the Board's finding was inconsistent with established precedent and not supported by substantial evidence. In assessing a situation to determine whether an employee's Weingarten rights have been violated, the Board must take into account the context in which a request for union representation has been made, said the court, and the mere fact an employee's request for union representation cannot be met does not mean the employer can do nothing further, and does not, without more, mean the employer has committed an unfair labor practice.

In this case, a hotel bellman was summoned to meet with supervisors after a guest complained about him. Informed that the meeting could result in discipline, the bellman declined to provide a statement without a union representative present. When a union representative could not be located, the bellman again refused to provide a statement. Following the refusal, the hotel placed him on leave with pay pending further investigation and instructed him to leave the premises.

The Board found that the hotel violated the NLRA. The appeals court, however, disagreed, concluding that the supervisors' actions were fair, reasonable, and entirely consistent with Weingarten. After the bellman asked for a union representative, they worked diligently to comply with his request. Before ending the interview, they gave him the option to fill out a written statement, which he refused to do. It was clear that the employer never resisted or undermined the employee's invocation of his right to seek union representation. There was no suggestion that the supervisors threatened or intimidated him, and they stopped asking questions after he requested a union representative (Bellagio, LLC v. NLRB, April 25, 2017).

Employer must bargain over noncompete. A unionized employer unlawfully implemented a mandatory confidentiality and noncompete agreement for new hires without giving the union notice and an opportunity to bargain, the D.C. Circuit held, upholding an NLRB finding that the employer violated Section 8(a)(5) of the NLRA. The appeals court also affirmed the Board's holding that two specific provisions of the agreement—an at-will clause and a prohibition on "Interference with Relationships"—independently violated Section 8(a)(1) of the Act. The employer argued it had the right to impose the new agreement because it was at "the core of entrepreneurial control" and had "only an indirect and attenuated impact on the employment relationship." The Board, however, had found the agreement did have a direct economic impact on employees since it imposed a cost on them in the form of lost employment opportunities and also imposed "costs on employees by broadly restricting their ability to benefit from their discoveries, inventions, and acquired knowledge" obtained by working for the company. Consequently, the agreement was precisely the kind of matter that was suitable for bargaining, the appeals court said (Minteq International, Inc. v. NLRB, April 28, 2017).

Another circuit rejects class action waivers. Adding its voice to the debate, a divided Sixth Circuit agreed with the NLRB that an employer violated the NLRA by barring employees from pursuing class or collective workplace legal claims. The appeals court joined the reasoning of the Seventh and Ninth Circuits, holding that arbitration provisions that mandate individual arbitration of employment-related claims violate the NLRA and fall within the savings clause of the Federal Arbitration Act (FAA). The appeals court also found that the Fifth Circuit reached the incorrect conclusion in D.R. Horton, Inc. v. NLRB, which held that arbitration provisions mandating individual arbitration of employment- related claims do not violate the NLRA and are enforceable under the FAA. Of course, the final word on the matter will come from the Supreme Court of the United States, which, when it reconvenes in October, will take up the question of whether class and collective action waivers in employment arbitration agreements violate the NLRA and whether the FAA, in any case, trumps the NLRA (NLRB v. Alternative Entertainment, Inc., May 26, 2017).

Order to turn over witness statement enforced. The D.C. Circuit affirmed a controversial 3–2 NLRB decision finding an employer violated the NLRA when it refused to provide a union with a witness statement from a charge nurse who had seen a nurse's aide sleeping on duty. Leaving aside the larger issue, however, the appeals court did not address the Board's decision to overrule its blanket exemption protecting confidential witness statements from disclosure. The employer lacked standing to challenge the Board's new rule, the appeals court held, since the Board did not apply the rule in the case at hand (American Baptist Homes of the West d/b/a Piedmont Gardens v. NLRB, June 6, 2017).

King Soopers affirmed. One of many Board rulings that caused concern among employers was the NLRB's modification of its make-whole remedy to require employers to fully compensate discriminatees for search-for-work and work-related expenses incurred in connection with interim employment. Upholding the Board's action, the D.C. Circuit found the agency's change to its remedial framework was lawful, reasonable, and fully justified. In the past, the Board had declined to award search-for-work and interim employment expenses that exceeded a complainant's interim earnings, but it acknowledged it had never explained or justified its approach. In this case, the Board found its traditional approach not only failed to make victims of unlawful discrimination whole, but also likely discouraged complainants in their job search efforts. Its new remedial framework was necessary, the Board explained, to ensure that make-whole remedies fully compensated unlawfully-discharged employees for losses incurred, and deterred further violations of the Act (King Soopers, Inc. v. NLRB, June 9, 2017).

Claim that sandwiches "contaminated" not protected. In an en banc decision, the Eighth Circuit declined to enforce the NLRB's determination that a Jimmy John's franchisee violated the NLRA by disciplining and firing employees who used posters to disparage the employer's sandwiches. The court reasoned that the posters, which implied that Jimmy John's sandwiches posed a health threat to consumers, were so disloyal as to exceed the protections of the Act, under the Supreme Court's controlling Jefferson Standard (NLRB v. Local Union No. 1229, IBEW) test. The appeals court rejected the Board's apparently dispositive reliance on its finding that the posters were not "maliciously untrue." The court did, however, enforce a separate portion of the Board's order finding that the employer acted unlawfully when its managers used Facebook postings to disparage and harass a leading union supporter for his protected activities (MikLin Enterprises, Inc. d/b/a Jimmy John's v. NLRB, July 3, 2017).

Casino surveillance technicians are "guards." The day-to-day duties of surveillance technicians at two Las Vegas casinos included enforcing rules against coworkers, the D.C. Circuit concluded. As such, they were "guards" as defined by the NLRA. Section 9(b)(3) of the Act, in part, defines guards as individuals who "enforce ... rules to protect property of the employer or to protect the safety of persons on the employer's premises." Most significantly, Section 9(b)(3) prohibits the Board from certifying any union to represent guards if the union also admits as members individuals who are not guards. Since the union involved in this case concededly admitted nonguards as members, the appeals court refused to enforce the Board's order directing the casinos to recognize and bargain with the union in a bargaining unit comprised of the surveillance technicians.

In finding the techs to be statutory guards, the court noted that they control the casinos' surveillance, access, and alarm systems and help investigate errant employee behavior. The casinos rely on a sophisticated network of cameras, locks, alarms, and computers in safeguarding property and deterring, detecting, and prosecuting criminal acts. Surveillance techs work with both the surveillance and security departments and have wide-ranging duties installing the systems, as well as using hidden cameras in targeted investigations of other employees suspected of wrongdoing. Techs do not confront or interview the targeted employee; their role is limited to ensuring proper coverage and retrieving surveillance footage. But the techs' participation is crucial because no other employees can install secret cameras. Moreover, the techs are "key employees" under Nevada gaming regulations, and therefore, they are subject to special restrictions and background checks. The record as a whole demonstrated that the techs performed "an essential step in the procedure for enforcement" of rules to protect the casinos' property and patrons, including enforcement against their fellow employees, the appeals court concluded. Consequently, the techs were guards, and it was improper to certify the union as their bargaining representative (Bellagio, LLC d/b/a Bellagio Las Vegas v. NLRB, July 18, 2017).

Joint-employer analysis rejected. The D.C. Circuit found that the NLRB, in a pre-Browning-Ferris decision, had inexplicably departed from precedent when it held that CNN America was a joint employer along with the unionized outside contractors that provided staffing for the network's technical operations. The matter arose after CNN brought those technical functions in-house and then refused to recognize and bargain with the union that had represented the contractors' employees. The appeals court held the NLRB's joint-employer determination could not be sustained because its analysis was inconsistent with its own precedent—specifically, with two 1984 decisions that set the governing standard for determining joint- employer status. The court held that without addressing that precedent or explaining why it did not control the outcome, the Board's decision could not be sustained. In contrast, the court pointed to the Board's later decision in Browning- Ferris, which is also pending in the D.C. Circuit, but where the Board carefully examined three decades of precedent and articulated a specific and reasonable justification for overruling that precedent. Because the Board failed to either overrule or adequately distinguish or modify its own precedent in the CNN decision, the court rejected its joint- employer determination. However, the court went on to note: "Our conclusion does not bar the Board from finding CNN to be a joint employer by applying a different standard or sufficiently explaining the one it did apply." While the court held that the Board's finding of joint-employer status could not be affirmed, it further concluded that the Board's decision finding CNN to be a legal successor could be, and was, sustained (NLRB v. CNN America, Inc., August 4, 2017).

Board rulings

More Election Rule problems. The NLRB found that the results of a Board election must be set aside where 90 percent of the addresses on the voter list provided by the employer were inaccurate, the names of at least 15 eligible employees were omitted, and the list did not provide phone numbers for any of the employees. In a partial dissent, Chairman Miscimarra observed that the decision illustrated the downside of the Election Rule's preoccupation with speed between petition-filing and the election. Moreover, he asserted, the expanded voter-list disclosure requirements inappropriately failed to accommodate employees' privacy interests. While he agreed with the Board that the election should be set aside because the bulk of the addresses were incorrect, he would not decide whether the omission of 15 employees from the list independently required a new election. Separately, the Board found that a string of text messages between a supervisor and an employee that included asking whether the employee was working for the employer or the union constituted unlawful interrogation (RHCG Safety Corp., June 7, 2017).

Employee unlawfully barred after filing suit. An employer acted unlawfully by denying a former employee access to its hotel/casino facility after she and another employee filed a collective action. The employer routinely allowed former employees to patronize its facility and attend social functions, but denied the employee in question based on her protected activity, said the Board majority, concluding that Section 7 of the NLRA prohibits such retaliatory action. In dissent, Member Miscimarra argued that when enacting the NLRA, Congress did not intend to guarantee that all former employees would have a right of access to the private property of their former employers whenever they joined other employees in a non-NLRA lawsuit against their former employers. While the employer's action may have constituted retaliation for the worker's pursuit of the FLSA claim, the NLRB is not statutorily empowered to police the nonretaliation provisions of statutes other than the NLRA (MEI-GSR Holdings, LLC, May 16, 2017).

Small company was successor of national company. A school district terminated the special education portion of its bus transportation contract with a large unionized transit company and awarded it to a small company specializing in transport services for special needs students. A divided NLRB determined that the small company became a legal "successor" to the larger unionized company and that it violated the NLRA by failing to recognize and bargain with the union as the exclusive bargaining representative of the drivers and monitors. Arguing that the majority disregarded and misapplied a fundamental aspect of successorship law, Member Miscimarra dissented. While both entities engaged in the business of transporting certain students from point A to point B, the essential part of the smaller company's business was unique and involved particularized transport needs associated with special education students. Further, it did not take over any of the larger company's facilities or purchase any of its buses or equipment. Further still, the smaller company did not take over its operations; rather, it merely took over the contract for special education children. It also configured new routes and increased the number of routes, and, although it hired some of the larger company's employees, it conducted a genuine application and hiring process. Thus, Member Miscimarra argued, the Board could not reasonably find that the essential successorship element of a substantial continuity of the business existed (Allways East Transportation, Inc., May 11, 2017).

Unlawful solicitation of grievances. During the course of a union organizing campaign at a nursing home the chief operating officer (COO) of the home's parent corporation paid an infrequent visit to the facility. He was aware that there had been complaints about the home's interim director. During his visit he approached one of the employees who had complained and asked her "how things were going." The employee repeated her concerns about the interim director of nursing, and the COO told the employee that he would "follow up and look into" it. He also discussed the employee's union activities.

Over the dissent of Member Miscimarra, a Board majority found the exchange to constitute an unlawful solicitation of grievances and implied promise to remedy them. Because the employer had not previously addressed employee complaints in quite this manner, it failed to rebut an inference of illegality under the NLRB's Maple Grove Health Care Center framework, according to the majority (Mek Arden, LLC d/b/a Arden Post Acute Rehab, July 25, 2017).

Legislative activity

Undoing Obama Board actions. On June 14, Sen. Lamar Alexander (R-TN) introduced the Workforce Democracy and Fairness Act, which would amend the NLRA to roll back the Obama-era's so-called "quickie election" rule. The Senate bill, S. 1350, would undo the revised election rule's problematic features, which sharply curtailed the time in which employers can respond to a union organizing campaign and the extent to which they can raise pre-election challenges. Specifically, the legislation would mandate that union elections not be held in fewer than 35 days; provide employers at least 14 days to prepare their cases to present before an NLRB election officer and protect their right to raise additional concerns throughout the pre-election hearing; require the NLRB to determine the appropriate bargaining unit and address any questions of voter eligibility before the union is certified; and give employers at least seven days to provide a list of employee names and one additional piece of contact information chosen by each individual employee in order to protect his or her privacy. The House Committee on Education and the Workforce cleared H.R. 2776, the House version of the bill, on June 29. The measure also rolls back the NLRB's controversial standard for recognizing "micro" bargaining units.

On June 29, the House advanced two other legislative proposals to reform the NLRA, passing each of them out of committee on a 22–16 party-line vote. The Employee Privacy Protection Act (H.R. 2775), introduced by Rep. Joe Wilson (R-SC), "[e]mpowers workers to control the disclosure of their personal information" by reversing policies ushered in by the Obama NLRB that afford labor unions greater access to employee contact information during union organizing campaigns. The Tribal Labor Sovereignty Act of 2017 (H.R. 986) would, according to the bill's sponsor, Rep. Todd Rokita (R-IN), protect the sovereignty of Native American tribes from bureaucratic overreach and ensure tribes have control over their labor relations by exempting tribal enterprises from NLRB jurisdiction.

Disarming the NLRB. On July 20, Senator Mike Lee (R-UT) introduced legislation that would effectively strip the NLRB of its power to prosecute and adjudicate labor disputes. Instead, that power would be transferred to federal courts. Under the Protecting American Jobs Act (S. 1594), the NLRB would continue to conduct investigations, but the Board would be unable to prosecute any alleged violations. The bill is cosponsored by Sens. Ted Cruz (R-TX), James Lankford (R-OK), Tom Cotton (R-AR), Luther Strange (R-AL), and Marco Rubio (R-FL).

The measure also would limit the NLRB's rulemaking authority to rules concerning the internal functions of the Board. The agency would be barred from "promulgating rules or regulations that affect the substantive or procedural rights of any person, employer, employee, or labor organization, including rules and regulations concerning unfair labor practices and representation elections." Conforming amendments would be made to the NLRA.

According to Lee, "the NLRB has acted as judge, jury, and executioner for labor disputes in this country." The Protecting American Jobs Act would restore "fairness and accountability" to federal labor laws. Lee introduced similar bills in the last two Congresses, but they never even received committee consideration. However, the legislation may have better odds given the current Republican majority in both houses of Congress.

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