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Key 2017 NLRB Rulings and Reversals
Impacting Non-Union and Union EmployersHandbook Policy Review, Mandatory Arbitration Agreements, Unilateral
Implementation of Consistent Changes, Joint-Employer Status
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THURSDAY, JUNE 7, 2018
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 2017 NLRB RULINGS AND REVERSALS 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)
OVERVIEW1. Composition of Trump’s Board
2. Purple Communications Update
3. New Standard for Evaluating Employer Policies
4. Supreme Court Decision on Class Action Waivers
5. Joint Employment Update
6. Return to Traditional Unit Test
7. Quickie Election Rules Revisited
8. Misclassification of Employees
9. Past Practice
10. Questions?
5
BOARD COMPOSITION
•John F. Ring, Chairman (Dec 16, 2022)
•Mark Gaston Pearce (Aug 27, 2018)
•Lauren McFerran (Dec 16, 2019)
•Marvin E. Kaplan (Aug 27, 2020)
•William J. Emanuel (Aug 27, 2021)
6
Purple Communications, Inc. Update
7
Purple Communications, Inc., 361 NLRB NO. 126 (2014)
▪ Overruled Register Guard which held that employers own the corporate e-mail system and has the right to ban or regulate employee’s non-business use of the e-mail system, as long as it is done in a nondiscriminatory manner.
Significance of Purple Communications:
▪ Does not allow regulation of work communications systems absent a showing of need to do so.
8
Rule Promulgated by Purple Communications, Inc.
▪ Applicable to any employer who provides e-mail access to employee in the course of their work – Presumption that employees are entitled to use work e-mail to engage in statutorily protected discussions about employment terms and conditions while on non-working time UNLESS:
Employers show specific circumstances that justify specific restrictions
9
Effects of Purple Communications, Inc.
▪ While the Board in Purple Communications limited the holding to e-mail use, employers may need to determine whether other employment communications systems, such as text messaging, skype, or internal social media, must abide by Purple Communications.
▪ Employers are not required to open their e-mail system to unions.
▪ Employers are not required to give employees who do not use corporate e-mails to do their jobs, access to e-mails for personal use.
▪ Sales people at Radio Shack, the fry cook at In-N-Out Burger, etc.
▪ In 2017, Purple Communications appealed the Board’s decision, and the case is currently pending in the Ninth Circuit Court of Appeals.
10
Trump Era Created a Republican Majority on the Board
▪ Before April 2018, there was a 2-2 split between Republicans and Democrats with one vacant seat.
▪ In April 2018, Trump’s nomination was confirmed, creating a Republican majority on the National Labor Relations Board.
11
New Board Case May Be the Vehicle to Overrule Purple Communications
▪ Since Purple Communications is currently within the Ninth Circuit’s jurisdiction rather than the Board’s, a new case called Newmark Grubb Knight Frank may allow the Board to undo Purple Communications.
▪ While that Administrative Law Judge found that Newmark violated the NLRA under Purple Communications, the company appealed and specifically asked the Board to overrule Purple Communications and revert to prior precedent.
12
The New Standard for Evaluating Employer
Policies
13
The Boeing Company, 365 NLRB NO. 154 (DEC. 2017)
▪ Overruled prong one of Lutheran Heritage’s facially neutral work rules assessment.
‒ Replaced the “reasonably construe” test with a “reasonable interpretation test.”
▪ Overruled Lutheran Heritage, because the Board used the
“reasonably construe” test to invalidate innocuous work rules.
‒ e.g., those requiring “civility” in the work place.
▪ Overruled the practice of requiring linguistic precision and NLRB carve-outs for all potential overlap with possible Section 7 activity.
▪ Boeing stated that requiring linguistic precision and NLRA carve-outs was “literally the enemy of good.”
14
Boeing’s New Rule
New Rule:
When reviewing a facially neutral rule that when reasonably interpreted would potentially interfere with the exercise of employee rights, the Board will evaluate (i) the nature and extent of the potential impact on those rights; (ii) legitimate justifications associated with the rule.
‒ Introduces two concepts:
➢ What reasonably interpreted means
➢ Balances a rule’s justifications with its potential impact on Sec. 7 rights before invalidating a work rule.
Member Kaplan emphasized: Reasonably interpreted means from the viewpoint of an objectively reasonable employee “who is aware of his legal rights but who also interprets work rules as they apply to the everydayness of his job.”
15
Three Categories: Classification of Results
Category One:
(a) When reasonably interpreted, work rules have no tendency to interfere with Section 7 rights and no balancing of rights and justifications is warranted, or
(b) Although the work rule has a reasonable tendency to interfere with Section 7 rights, the risk of interference is outweighed by the justifications associated with the rules.
Category Two: Lawful, but requires individual scrutiny to assess whether the rule would prohibit or interfere with NLRA rights and assess whether the adverse impacts are outweighed by legitimate justifications.
Category Three: Rules that are unlawful because the adverse impact on Section 7 rights is not outweighed by justifications associated with the rule.
16
Impact of Boeing▪ The new standard will likely expand the scope of rules the Board
will find lawful.
▪ A more even-handed assessment will be applied to workplace rules.
▪ The Employer will need to clearly identify legitimate justifications to support policies that may infringe on Section 7 rights (e.g., civility policies).
▪ The Employer will want to review policies regarding social media, restrictions on cameras, and protecting the company’s reputation and ensure supported by reasonable business justifications.
▪ The mere maintenance of neutral work rules can still be found to interfere, restrain and coerce employees in the exercise of their Section 7 rights.
17
U.S. Supreme Court Deems That Class
Action Waivers Are Valid
18
Epic Systems Corp. v. Lewis▪ The Supreme Court in a 5-4 decision penned by Justice Gorsuch
reversed the decisions of the 7th and 9th Circuits that had held that the National Labor Relations Act rendered any sort of collective litigation waiver in an employment arbitration agreement unenforceable.
▪ Justice Gorsuch performs a useful service of walking through the line of precedents that the Court has issued over the last 30 years addressing enforcement of arbitration agreements.
▪ In doing so, he persuasively explains how those precedents are simply inconsistent with the notion that the National Labor Relations Act—which makes no mention of class or collective actions— rendered agreements to individually arbitrate labor and employment disputes unenforceable.
19
Epic Systems Corp. v. Lewis▪ Supreme Court held that contrary to NLRB claims that class action
waivers are invalid under the NLRA, class action waivers are valid, and enforceable.
▪ Justice Gorsuch points out that in 2010 the GC of the NLRA issued guidance that stated that the NLRA did not speak to the enforceability of class action waivers because such waivers “do[] not involve consideration of the policies of the National Labor Relations Act.”
▪ Even where the NLRB reversed that position and adopted the DR Horton rule in 2012, multiple court decisions between 2010-2014, including those arising in California (Iskanian) rejected DR Horton and the notion that the NLRA makes class action waivers unenforceable.
20
Epic Systems Corp. v. Lewis▪ It was only in the last two years that court decisions resurrected
the argument, implicitly as an exercise in political power by courts more sympathetic to the DR Horton doctrine, who apparently felt that there was an impending change in the political orientation of the courts developing with regard to class action waivers.
▪ This is a good backdrop for Justice Gorsuch’s overarching argument that the 7th and 9th Circuit decisions were really more about rejecting the Supreme Court’s arbitration precedent than analyzing the issue fairly against the backdrop of that precedent.
21
Epic Systems Corp. v. Lewis▪ Justice Gorsuch set forth five main reasons why class action waivers
in arbitration agreements are not invalidated by the NLRA:
‒ (1) The majority rejects the argument that the FAA’s savings clause, which invalidates arbitration agreements on grounds that would invalidate contracts generally, supports the notion that class action waivers in arbitration agreements are invalid.
‒ (2) The majority rejects the notion that the NLRA effectively created an exception to the FAA for mandatory individual arbitration of employment disputes because a federal statute can outlaw arbitration of certain kinds of disputes only where Congress makes its command explicit and unmistakable.
22
Epic Systems Corp. v. Lewis
▪ Things to Consider:
‒ Class and collective action waivers will no longer be common, it will become the norm.
‒ Encourage clients to review arbitration agreements to ensure there are no issues regarding unconscionability or duress.
‒ Encourage clients to review arbitration agreements regarding delegation provisions.
‒ Encourage clients to review arbitration agreements regarding opt-out provisions.
‒ States may respond by passing legislation regarding “bounty hunter” statutes.
23
Joint Employer
The Legal Concept
• Two employers co-employ common workers
• Adopted by courts under Employment Laws
‒ E.g. Love v. J.P. Cullen & Sons, 779 F.3d 697 (7th Cir. 2015)
▪ A Title VII case
▪ J.P. Cullen barred Love, a subcontractor’s employee, from work site
▪ Adopted a five-factor test
▪ Found not joint employers
24
Evolution of NLRB Test
Browning Ferris, Newby Island, 362 NLRB #186 (Aug. 27, 2015)
▪ “Where two or more employers exert significant control over the same employees”
▪ “When from the evidence it can be shown that they share or codetermine those matters governing essential terms and conditions of employment”
Laerco Transportation, 269 NLRB 324 (1984)
TLI Transport, 271 NLRB 798 (1984)
▪ Direct & immediate control
▪ Board’s joint employer test for thirty years
25
Evolution of NLRB Test CONT.
Browning Ferris, Newby Island, 362 NLRB #186 (Aug 27, 2015)
▪ Indirect control test adopted▪ Right to terminate subcontract on short notice▪ Cost plus contract ▪ Banning employees from site
Hy-Brand Industrial Contractors, 365 NLRB #156 (2017)
▪ Revert to TLI Transport (direct and immediate control)
• NLRB’s OIG Report “improper participation”
• Hy-Brand decision withdrawn (without consultation)
• Court of Appeals recalled mandate of petition for review
• NLRB announces using rule making to resolve issue
26
Intervening Decisions
CNN, 361 NLRB #47 (2014), enf’d denied (D.C. Cir. 2017)
▪ Joint Employer, consequently bargaining required over decision to terminate subcontractor
Computer Associates v. NLRB, 282 F.3d 849 (D.C. Cir. 2002)
▪ Contractor terminated subcontractor with impunity: not a joint employer
27
Action by General Counsel
Securitas Security Services, USA, GC Advice Memo (Sept. 5, 2017)
THE FACTS:
▪ Representation Petition named employer as Securitas. Bechtel was General Contractor at work site
▪ Securitas provided security guards for site
▪ Subcontract contained provisions related to terms and conditions of employment
▪ Bechtel reduced staffing at site
▪ Union demanded Bechtel bargain
28
Securitas
GC’s Reasoning:
▪ Waiver of right to bargain must be clear and unmistakable
▪ Here Union unaware of subcontract’s terms
▪ Furthermore Union did not understand significance of Bechtel’s control
▪ Distinguished prior NLRB decisions because unions had been aware of joint employer relationship
▪ Rejects position of Seventh and Ninth Circuits that no joint employer liability exists unless either:
(a) Joint Employer named in RC petition
(b) Union files AC petition
29
Securitas CONT.
Order to Region:
▪ Instruct union to file AC petition;
▪ Once AC petition received, issue unfair labor practice complaint
• General Counsel’s position smacks of ex post facto liability
• Also finds: Joint Employer status can be found in 8(a)(1) cases even if not joint employer for 8(a)(5) purposes
30
RETURN TO TRADITIONAL UNIT TESTPCC Structurals, Inc. (Dec. 15, 2017)
▪ Overrules Specialty Healthcare
▪ Restores the traditional community of interest standard for determining the “appropriate unit”
▪ Even if the petitioned-for unit constitutes a “readily identifiable group”
▪ Do the additional employees share a sufficient community of interest with the petitioned-for group to warrant their inclusion for bargaining purposes?
▪ At no point does the burden ever shift to the employer to show an “overwhelming” community of interest between the excluded and petitioned-for employees
31
RETURN TO TRADITIONAL UNIT TEST CONT.
▪ See Memorandum OM 18-05, Representation Case Procedures in Light of PCC Structurals, Inc.
▪ General Counsel guidance for currently active cases (not already before the Board)
▪ Employers and Regional Directors can revisit prior unit determinations
▪ Reminds Regional Directors that that they have discretion to postpone hearings and due date for position statement, and extend the date for holding an election (notwithstanding the “quickie” election rules)
32
QUICKIE ELECTION RULES REVISITED
▪NLRB’s election rules changed dramatically in 2015
▪ “Quickie” election rules significantly increased the speed at which the NLRB election process moved
▪ Despite multiple legal challenges, courts upheld rule
33
QUICKIE ELECTION RULES REVISITED CONT.
▪NLRB published a Request for Information on December 14, 2017 asking for public feedback and comments on controversial election rules
▪ Should rules be retained without change?
▪ Should rules be retained, but with modifications?
▪ Should the rules be rescinded?
▪ Comment period closed on April 18, 2018
34
MISCLASSIFICATION OF EMPLOYEESVelox Express, Inc., Case 15-CA-184006
▪ On September 25, 2017, ALJ Arthur Amchan held that respondent violated Section 8(a)(1) of the Act by classifying drivers who are employees as independent contractors
▪ NLRB issued a Notice and Invitation to File Briefs regarding the following issue: “Under what circumstances, if any, should the Board deem an employer’s act of misclassifying statutory employees as independent contractors a violation of Section 8(a)(1) of the Act?”▪ Comment period closed on April 30, 2018
▪ In December 2017, new NLRB General Counsel Peter Robb rescinded prior Advice memo which held that mere misclassification was a ULP
35
RETURN TO COMMON-SENSE APPROACH TO “PAST PRACTICE”
Raytheon Network Centric Systems, 365 NLRB No. 161 (Dec. 15, 2017)
▪ Board held that employer’s continuation of past practice did not constitute “change” requiring notice and bargaining with union in between contracts▪ Employer had made modifications to healthcare plan at the
same time every year
▪ Actions were similar in kind and degree to established past practice – company did what it had always done
▪ Overruled Board’s 2010 DuPont decision, which effectively held that an employer could not rely on past practice to act unilaterally post-contract expiration
36
RETURN TO COMMON-SENSE APPROACH TO “PAST PRACTICE” CONT.
▪Gives employer more flexibility between contracts
▪ Limits union’s ability to hold employer “hostage” during successor contract negotiations
▪Must still bargain over modifications, but cannot be prevented from implementation
37
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)
38
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 U.S. 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.
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 employeedisciplinary 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.
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.
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.
