Key 2016 NLRB Rulings Impacting Non-Union

and Union Employers: Avoiding Pitfalls

in an Evolving Legal Environment Navigating Rulings on Management Rights Clauses, Email Prohibitions,

Joint Employer Liability, Overly-Broad Work Rules and More

Today’s faculty features:

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THURSDAY, MARCH 9, 2017

Presenting a live 90-minute webinar with interactive Q&A

Douglas Darch, Partner, Baker & McKenzie, Chicago

John S. Ferrer, Of Counsel, Ogletree Deakins Nash Smoak & Stewart, San Francisco

Jason W. Kearnaghan, Partner, Sheppard Mullin Richter & Hampton, Los Angeles

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FOR LIVE EVENT ONLY

KEY 2016 NLRB RULINGS IMPACTING NON-UNION AND UNION EMPLOYERS

Douglas A. Darch

Partner, Baker McKenzie (Chicago)

John S. Ferrer

Of Counsel, Ogletree Deakins (San Francisco)

Jason W. Kearnaghan

Partner, Sheppard Mullin (Los Angeles)

OVERVIEW

1. Composition of Trump’s Board

2. Class Action Waivers

3. Micro-Units

4. Employer Policies / Section 7 Rights

5. “Quickie Election” Rules

6. Joint Employment

7. Supervisory Status

8. Changes in Compensation/Terms and Conditions

9. Independent Contractors

10. Replacement Workers

11. Duty to Furnish

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BOARD COMPOSITION

The National Labor Relations Board has five seats

Democrats hold a 2-1 majority

Currently, there are two vacant positions

Term of Acting Chairman Miscimarra expires in December 2017

Term of General Counsel expires in November 2017

Trump appointees will likely reflect his pro-business labor priorities

6

BOARD COMPOSITION

Potential delay in Board change = No immediate relief for employers defending ULP charges

Board members require Senate confirmation

Board does not appear to be a Trump priority

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CLASS ACTION WAIVERS

D.R. Horton, Inc., 357 NLRB No. 184 (2012)

NLRB held that Section 7 of the NLRA—which protects the ability of employees to engage in “concerted activities”—supersedes the FAA and requires the employees be allowed to bring class actions.

Until recently, D.R. Horton was rejected by every appellate court to consider it—(the 2nd, 5th, and 8th Circuits + CA and NV Supreme Courts).

Last year, the 7th and 9th Circuits split with consensus and agreed with the Board.

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CLASS ACTION WAIVERS

Certiorari granted by the U.S. Supreme Court in a trio of cases.

Supreme Court will not hear case until 2017 term (begins in October).

Trump Board likely to reverse the Obama Board’s stance on D.R. Horton.

Reversal of the Board’s position may not impact Supreme Court review based on the Circuit Court split.

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MICRO-UNITS

Specialty Healthcare & Rehabilitation Center of Mobile, 257 NLRB 930 940 (2011)

NLRB infamously changed the standard for evaluating proposed bargaining units to more easily allow workers to organize into narrower groups called “micro-units.”

Specialty Healthcare allows unions to carve out a small segment of a work force and organize that group as a foothold in the employer’s overall work force.

The burden was placed on the employer to prove an “overwhelming community of interest” to expand the petitioned-for voting unit.

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MICRO-UNITS

In 2016, multiple U.S. Courts of Appeal upheld the Board’s new approach.

Philip Miscimarra—recently appointed by President Trump as acting chairman of the NLRB—has frequently criticized this decision.

New Board brings a potential for a reversion back to the Park Manor test which looked at:

The “community of interest”

Organizational structure of the work performed

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EMPLOYER POLICIES

Obama Board saw an increase in employer policies being deemed in violation of Section 7 rights: “protected and concerted activity”

Use of Employer Email

Non-compete clauses

Social media policies

Employee Speech Rights

Picketing

Work Stoppage and Protest

Employee Discipline

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EMPLOYER POLICIES

Trump Board could reassess the “chilling effect” of certain employer policies.

Trump Board could clear up grey area established in Lutheran Heritage regarding rules that might be “reasonably” construed to interfere with concerted activity.

Trump Board could allow employers increased discretion when promulgating handbook provisions/workplace rules.

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EMPLOYER POLICIES - USE OF EMPLOYER EMAIL

Purple Communications, 316 NLRB 126 (2014)

NLRB ruled that employees who have access to their employer’s email systems may use company email to communicate with each other for non-business purposes during non-working time.

NLRB overturned its earlier decision in Register Guard, which had held that employees had no statutory right to use their employer’s email systems.

Board has since expanded upon Purple Communications.

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EMPLOYER POLICIES - NON-COMPETE AGREEMENTS

Minteq International, Inc., 364 NLRB No. 63 (2016)

Non-compete agreement in employment agreement was found unlawful.

Rule: Employee could not solicit or encourage any present or future customer or supplier to terminate his relationship with the Company.

Reason: Prohibited asking customers to boycott employer during labor disputes.

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EMPLOYER POLICIES - SOCIAL NETWORKING

G4S Secure Solutions (USA), 364 NLRB No. 92 (2016)

Social networking policy unlawful notwithstanding a disclaimer.

Board: “This policy will not be construed or applied in a manner that interferes with employees’ rights under federal law”

Reason: “Rights under federal law” was vague as it did not state rights under Section 7.

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EMPLOYER POLICIES - SOCIAL NETWORKING

Chipotle Services LLC d/b/a Chipotle Mexican Grill, 364 NLRB No. 72 (2016)

Held: Employer violated Section 8(a)(1) by maintaining a social media policy that prohibited employees from “posting incomplete, confidential or inaccurate information and making disparaging, false or misleading statements.”

Employer may not prohibit employee postings that are merely false or misleading; in order to lose the Act’s protection, it must be shown that the employee had a malicious motive.

NLRA disclaimer insufficient to overcome unlawful provisions.

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EMPLOYER POLICIES - EMPLOYEE SPEECH RIGHTS

UniQue Personnel Consultants, Inc., 364. NLRB No. 112 (2016)

Discharge of employee for asking co-worker for advice as to proper response to discipline.

Reason: Conduct was protected and concerted rather than a personal grievance.

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EMPLOYER POLICIES - EMPLOYEE SPEECH RIGHTS

DirecTV, Inc. v. NLRB, 837 F.3d 25, (2016) Twenty-six employees who objected to employer’s new compensation participated in TV interview wherein they falsely accused employer of outrageous business practices.

Employees were then fired.

NLRB and DC Circuit found that employees had a protected right to criticize the employer.

Judge Brown Dissenting: “[this decision] indicts the unconstitutionally generous standards of review through which federal courts routinely cede statutory interpretation to biased administrative tribunals. This case, for example, demonstrates the lengths to which the Board will go to contort an evenhanded Act into an anti-employer manifesto.”

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EMPLOYER POLICIES - PICKETING

Capital Medical Center, 364 NLRB No. 69 (2016)

Prohibiting off-duty employees from picketing on employer’s property was illegal.

Reason: Republic Aviation allowed off-duty solicitation therefore allowed off-duty picketing.

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EMPLOYER POLICIES - WORK STOPPAGE AND PROTEST

Wal-Mart Stores, Inc., 364 NLRB No. 118 (2016)

Discharge of employees who engaged in an in-store work stoppage and protest with third parties was illegal.

Reason: Protest/work stoppage was of limited duration, was confined to small area, did not interfere with store operations, and strikers / protestors left store when ordered to leave by police.

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EMPLOYER POLICIES - EMPLOYEE DISCIPLINE

Total Security Management, 364 NLRB No. 106 (2016)

Discipline of employees following union’s certification but before CBA negotiated unlawful.

Reason: Discretionary and serious discipline must be negotiated before implemented.

Caveat: Not required to bargain to agreement or impasse.

In exigent circumstances, can terminate, if immediately negotiate thereafter.

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“QUICKIE ELECTION” RULES

On December 15, 2014, the NLRB published its final rule on “quickie elections.” (Effective 2015).

The new procedures expedite representation cases by substantially shortening the pre-election process, thereby allowing union elections to take place much more quickly than before.

As a result, employers now have far less time to campaign against unionization.

Median days between petition to election were reduced by two weeks From approximately 40 days to approximately 23 days

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“QUICKIE ELECTION” RULES

Other changes

Mandatory pre-election posting

Statement of position required within seven days following Notice of Hearing

Initial employee list to union required (with personal contact information)

Limited pre-election hearing

25-day waiting period for Direction of Election eliminated

Expedited post-election objections and hearing

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“QUICKIE ELECTION” RULES

Comparison of data pre and post-implementation

Same amount of representation petitions filed (approximately 2,150)

Same amount of stipulated election agreements (over 90%)

Same union win rate (approximately 70%)

Will Trump NLRB dispute involving his Las Vegas hotel cause an elimination or roll-back of the “Quickie Election” rules?

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JOINT EMPLOYMENT - BROWNING-FERRIS

Browning-Ferris (2015) decision

In 2017, U.S. Court of Appeal, D.C. Circuit, is expected to rule on

Browning-Ferris.

Staffing companies, subcontractors, distributors and franchisees

exposed to collective bargaining obligations, economic protests and

ULP charges.

Republican Congress may act to overturn this new standard.

Trump Board could re-define joint employer determinations.

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JOINT EMPLOYMENT - MILLER & ANDERSON

Miller & Anderson, Inc., 364 NLRB No. 39 (2016)

Decided by a 3-1 Board decision.

Held: Petitioners seeking to represent employees in bargaining units

that combine both solely and jointly employed employees of a

single user employer are no longer required to obtain employer

consent

Board abandoned Oakwood Care Center, 343 NLRB 659 (2004)

and returned to the rule established in M.B. Sturgis, Inc., 331 NLRB

1298 (2000).

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JOINT EMPLOYMENT - MILLER & ANDERSON

The Test

A bargaining unit that combines employees who are solely employed by a user employer and employees who are jointly employed by that same user employer and an employer supplying employees to the user, is appropriate if:

The two entities are joint employers (much more likely under the BFI standard).

The employees of the two entities share a sufficient “community of interest.”

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JOINT EMPLOYMENT - MILLER & ANDERSON

“Community of Interest” Traditional factors

Functional integration in the work of the employer

Similarity of the type of work performed

Interaction and interchange between employees

Similarity of working conditions

Similarity of wages/benefits

Common supervision

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JOINT EMPLOYMENT - RETRO

Retro Environmental, Inc./Green Jobworks LLC, 364 NLRB No. 70 (2016)

Decided by a 2-1 Board decision.

Board applied new standard articulated in BFI and confirmed that “the putative employer’s reserved authority to control terms and conditions of employment, even if not exercised, is probative of a joint-employer relationship, as is the actual exercise of that control.”

Held: Construction company (Retro) and temporary staffing agency that provided laborers to the company (Green JobWorks) were joint employers of the employees in the petitioned-for unit.

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JOINT EMPLOYMENT - RETRO

Each employer had primary areas of responsibility:

Staffing company screened, tested and hired employees, and assigned them to jobsites.

Construction company determined number of employees to be provided and exercised day-to-day supervision.

Contrary to Regional Director, Board majority found that employers failed to prove imminent cessation of their joint operations, although at the time of the hearing they had no current projects or bids for future projects together.

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SUPERVISORY STATUS

Veolia Transportation Services, Inc., 363 NLRB No. 188 (2016).

Veolia is just one of a number of NLRB decisions that established a recent Board trend narrowing the definition of a supervisor.

Because the NLRA does not cover supervisors, they are excluded from bargaining units. A finding of fewer supervisors will result in larger bargaining units and more potential dues-paying members for unions.

This trend has made it more difficult for employers to determine which of its employees satisfy the increasingly demanding interpretation of supervisory status.

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CHANGES IN COMPENSATION / TERMS AND CONDITIONS OF EMPLOYMENT

American National Red Cross, 364 NLRB No. 98 (2016)

• Local Red Cross organizations unlawfully unilaterally implemented changes in pension plans and 401(k) plans maintained by National Red Cross when National made changes after CBA expired.

• CBA provided “employees shall continue to participate in retirement program of National Red Cross on the same basis…or as…amended.”

Reason: Clause did not survive expiration of CBA. Clause equivalent of management rights clause.

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INDEPENDENT CONTRACTORS

FedEx Home Delivery, 361 NLRB No. 55 (2014)

Board held that actual, not theoretical, entrepreneurial opportunity

for gain or loss is a relevant consideration in the Board’s

independent contractor inquiry.

Rejected DC Circuit’s view in prior FedEx case finding drivers were employees that entrepreneurial opportunity should be the “animating principle” of the inquiry.

Board found that FedEx drivers were statutory employees, not independent contractors.

Overruled by DC Circuit March 3, 2017.

34

REPLACEMENT WORKERS

American Baptist Homes of the West, 364 NLRB No. 13 (2016)

Hiring of permanent replacement for economic strikers was illegal.

Reason: Employer motivated by a desire to punish employees.

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DUTY TO FURNISH

Public Service Company of NM, 364 NLRB No. 86 (2016)

Unlawful to fail to provide notes of interviews conducted into

physical altercation.

Unlawful to provide unredacted copies of memorandum

recommending discharge.

Reason: Did not demonstrate that employer’s confidentiality interests

outweighed the union’s need for information.

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QUESTIONS?

Douglas A. Darch

Partner, Baker McKenzie (Chicago)

John S. Ferrer

Of Counsel, Ogletree Deakins (San Francisco)

Jason W. Kearnaghan

Partner, Sheppard Mullin (Los Angeles)

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DOUGLAS DARCH

Douglas Darch represents and counsels management in the areas of Labor and Employment. He has extensive experience in union/labor relations, corporate restructurings, mergers, acquisitions and integration of work forces and personnel policy development. He has participated in over 150 hearings before the National Labor Relations Board, labor arbitrators, federal and state courts, and administrative agencies including landmark decisions under Title VII, ERISA, FMLA, and the National Labor Relations Act. Mr. Darch served as an Officer in the US Navy. He was recognized by Who’s Who Legal: Pensions & Benefits as a "top name" in Chicago for benefit plan modification and ERISA litigation.

Mr. Darch provides counsel in absenteeism and leave management, Family and Medical Leave Act (FMLA), sexual harassment, Title VII discrimination (race, age, sex, national origin, and retaliation), arbitration agreements, workforce reductions, severance plans, developing personnel policies, workplace investigations, wage and hour (FLSA) counseling and litigation, compliance with NLRB dictates for non-union employers, union negotiations and labor contract compliance. Mr. Darch also has experience with benefit plan modification, ERISA (retiree health and withdrawal) litigation, as well as labor and employment litigation. He is an experienced appellate court advocate, and provides clients with strategic and pragmatic solutions that help meet corporate objectives.

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JOHN S. FERRER

Mr. Ferrer counsels employers in a broad range of labor and employment matters. His practice focuses on traditional labor law, including all matters arising under the National Labor Relations Act (NLRA), labor arbitrations, collective bargaining and union organizing campaigns. He also regularly counsels clients regarding the labor and employment aspects of corporate transactions.

Mr. Ferrer's experience spans many industries, including manufacturing, warehousing, retail food, package delivery, transportation, hospitality, media and entertainment, beverage and alcohol, and construction.

Mr. Ferrer has successfully handled numerous unfair labor practice and representation cases before the National Labor Relations Board (NLRB) and in federal courts. He has successfully represented clients in labor arbitrations involving a variety of subjects, including just cause terminations, layoffs, bumping rights, job assignments, subcontracting, reduction in wages, and pay differentials.

Mr. Ferrer regularly counsels employers in a variety of labor and employment matters, including challenges to independent contractor status, single and joint employer issues, plant closings, relocations, outsourcing, double breasting, and employee disciplinary issues. He regularly provides training to managers and supervisors regarding union organizing campaigns, including the NLRB election process, corporate campaigns and strike preparations. Mr. Ferrer also has assisted clients with collective bargaining negotiations, including serving as chief spokesperson.

In addition to his labor law practice, Mr. Ferrer has represented clients before the Equal Employment Opportunity Commission, and he has also litigated single-plaintiff employment discrimination and whistleblower claims in federal and state courts.

Prior to joining Ogletree Deakins, Mr. Ferrer served as a labor and employment attorney for an international law firm for several years. He started his career as a trial attorney with the NLRB, first in Detroit, Michigan (Region 7), and then in Baltimore, Maryland (Region 5) and the Washington (DC) Resident Office. While with the NLRB, Mr. Ferrer served as lead counsel in numerous unfair labor practice trials and compliance proceedings, and handled complex representation proceedings.

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JASON KEARNAGHAN

Jason Kearnaghan is a Labor & Employment Partner in the downtown Los Angeles office of

Sheppard Mullin Richter & Hampton, LLP. Jason represents employers in state and federal courts

with respect to all facets of employment law including wrongful discharge, employment

discrimination, retaliation, sexual harassment, and hostile work environment. A significant portion of

his practice is devoted to the defense of complex wage and hour class action litigation. He also has

substantial experience representing employers in union negotiations, organizing campaigns,

elections, union grievance proceedings and unfair labor proceedings. Jason also represents clients

before state and federal administrative agencies, such as the Department of Labor, the Equal

Employment Opportunity Commission, the California Department of Fair Employment and Housing,

the Division of Labor Standards Enforcement, and the National Labor Relations Board.

Prior to joining Sheppard Mullin, Jason served in the United States Navy Judge Advocate General's

Corps as a trial attorney in criminal prosecution.

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LEGAL DISCLAIMER

This presentation is for general information only and is not to be considered legal advice or relied

upon as applicable to any specific employer or situation. These

materials may not be reproduced, copied, or distributed without prior

permission of the above.

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