Unions & Labor Law Reform Blog : Unions Lawyer & Attorney : Jackson Lewis Law Firm : Employee Free Choice Act, Collective Bargaining

As if proliferating collective actions, class actions and Department of Labor investigations and enforcement actions for wage-hour and Family and Medical Leave Act violations weren’t enough, American businesses may now face even more legal challenges from employees.  The 400,000-member American Bar Association has agreed to partner with the U.S. Department of Labor to establish an attorney-referral service to facilitate workers’ complaints under the Fair Labor Standards Act and FMLA.
 
Vice President Joe Biden, Attorney General Eric Holder, and Secretary of Labor Hilda Solis were among the dignitaries at the White House ceremony on November 19 announcing the new alliance.  They were joined by ABA President-elect Wm. T. (Bill) Robinson III and current ABA President Stephen Zack, who said, “A significant number of Americans lack meaningful access to our justice system.  Even for moderate-income working people, this barrier to access is primarily financial in nature.  Too many simply cannot afford the cost of counsel to help them resolve their legal problems.”  According to the partners, the new arrangement will give more employees access to the justice system.
 
And what of employers – the prospective defendants in all this?  The prospect of more claims and lawsuits means an even greater emphasis must be placed on self-analysis and corrective action.  Employers must audit their wage and hour practices, looking at such issues as purported independent contractor status, the proper classification of employees (exempt or non-exempt), overtime calculations, breaks, payroll procedures, donning and doffing, and recordkeeping, among others.  In the FMLA context, proper notifications to employees, determinations of eligibility for and duration of leaves, handling of intermittent leave issues, coordination of worker’s compensation leave, leave relating to military service, and refining policies and procedures to address abuse of leave, are among the concerns to be considered.  State law issues also must be considered, even if technically ancillary to the federal-ABA initiative.  (A number of states are cracking down on supposed misclassification of employees; several boast their own leave statutes.) 

Once a self-analysis is completed, management must decide what deficiencies, if any, are present.  It must then undertake steps to bring the business into compliance with these laws and related DOL regulations.  Correction is essential, but may give rise to new difficulties as employees gain increased awareness of their rights.  Expect questions.  Be prepared with answers.  Where significant numbers are involved, budgeting may have to be adjusted to reflect additional, unanticipated wage costs.  Staffing may have to be modified.  These dislocations, in turn, may prompt employers to look at ways in which cost savings may be effected, such as by outsourcing, subcontracting, or introducing labor-saving equipment.  There could be a downside for employees from a surfeit of wage-hour and FMLA lawsuits.

The ABA leadership may have been motivated by the most exalted of reasons.  But we wonder if it consulted its member-corporate counsel, and their clients who face legal attacks all too often, before signing on as the employers’ adversary at the government’s behest.

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Having argued for the need to address through federal court injunctions alleged employer misconduct that can “nip union organizing conduct in the bud” (see NLRB to Weigh Injunctions Routinely for Unlawful Discharges in Organizing Campaigns, Plans Acting GC) — in particular, firing employee organizers and activists — the General Counsel now wants to accord the same treatment to alleged discrimination that takes place before the union arrives on the scene and after it has folded its tent and gone away in defeat.  He reasons that discriminatory actions taking place outside the period of union organizing can inhibit union organizing also — in the future.  He wants “pre-nip” and “post-nip” injunctions for this conduct, too. 

It is all catnip, however, for misbehaving employees who are about to be fired for cause.  They need only draw around them the mantle of claimed union activity and they may act with impunity.  They will not resist the General Counsel’s tempting offer to tie their misconduct to protected union activity, however tenuous.

Unionization?  If the union has never been at the employer or it has been there and gone, where is the connection deserving immediate protection?  If these discharges require judicial intervention before the Board has heard and decided the claims of misconduct, it is difficult to envisage what discharge (by a union-free employer, at least) wouldn’t qualify for injunctive relief. 

The General Counsel, as a practical matter, seems to be trying to have all these cases determined on an expedited basis in federal court, where, if successful, he can get an immediate order punishable by contempt. Once the district court accords relief and reinstates the employee, the Board will be in no hurry to complete its proceedings.  Many of these cases, we suspect, will become anti-climactic. As for the reinstated employee, he enjoys the insulation offered by the employer’s fear of a contempt or retaliation charge.  An employer will be most reluctant to terminate this employee again if he faces additional litigation or sanctions. 

Adding insult to injury, the General Counsel will probably ask the court for a back pay award, including the newly suggested minimums, and even compound interest, while the employee is “provisionally” reinstated.

With all this new litigation who needs EFCA?

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Adding to the troubles employers are beginning to face with the new National Labor Relations Board is a report that the agency’s General Counsel (GC) has some new ideas to ratchet up employers’ costs of litigation, and even settlement.  The GC, the Board’s chief prosecutor, professes fears that victims of alleged discrimination on account of union activity may think the Board lacks teeth in remedying claimed violations. He is weighing a requirement that employers pay alleged discriminatees at least three months’ back pay where the employer settles a discrimination case before litigation, and at least one year’s worth of back pay after litigation – whether or not the victim has suffered any actual loss of pay!

The General Counsel, we are told, thinks the National Labor Relations Act does not forbid this remedy.  We strongly disagree.  This is a punitive measure by any standard.  It is unrelated to actual losses suffered by the employees involved; indeed, it would constitute a windfall for them.  No employee reasonably should expect “a big payday” merely for complaining of discrimination to the Board, even persuasively, yet that’s precisely what is promised.  In fact, it seems the aggrieved employee has only to convince some regional Board officials to move forward with an agency complaint and the employer will have to pay a minimum of three months’ wages just to settle.  If the employer exercises its right to contest the accusation before a judge, it risks getting tagged with even more onerous damages.

The current Act contains no provision for punitive damages.  It speaks of “reinstatement of employees, with or without back pay.”  The Board, to our knowledge, has never construed the Act to allow the kind of remedy considered here.  The General Counsel’s proposal seems to be just the latest assault on employers by an agency unconstrained even by its own statute.

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Jackson Lewis has filed a “friend-of–the-court” brief on behalf of the U.S. Chamber of Commerce, urging the National Labor Relations Board to adhere to its three-year-old decision in Dana Corporation, 351 NLRB 434 (2007) (originally known as Dana/Metaldyne).  That decision allows employees to test immediately through a decertification petition and Board-conducted election their employer’s extension of voluntary recognition to a union based on a card check or similar evidence of majority preference.  The filing came in Lamons Gasket, Case No. 16-RD-1597, where the agency is preparing to revisit the issue amidst much controversy.  James Stone and Kelli Webb Michaud in our Cleveland office wrote the amicus brief, with valuable assistance from Michael Lotito, Phil Rosen, and Harold Weinrich.  Mr. Stone had been lead counsel for Metaldyne in the earlier case.

Prior to Dana, in a rule first announced in Keller Plastics, 157 NLRB 583 (1966),the NLRB observed a strict bar, usually for a year, during which it would not consider a NLRB decertification petition or other attempt to oust the union following an employer’s granting of voluntary recognition. As a result, employees in many cases were prevented for a year from obtaining a secret ballot election to decide freely whether to have union representation (or to change unions) while the recognized union and company negotiated a contract.

This rule developed in a different era. When voluntary recognition was relatively rare and an inflexible rule of this sort might be justified in order to preserve labor peace.  A secret ballot election was generally regarded as a preferred and more reliable indicator of employee free choice, but in a few cases allowances could be made. 

Card-check-based voluntary recognition agreements grew increasingly common in recent decades, however, often based on neutrality agreements.  The safeguards of Board-conducted balloting became harder to secure for employees.

The Board in Dana attempted to harmonize voluntary recognition arrangements made by employers and unions with the need to protect employees’ fundamental right of free choice in choosing (or not choosing) a collective bargaining representative.

It required an employer who voluntarily recognized a union to notify employees in a posting that voluntary recognition had been granted, but that the NLRB would accept, for a limited time (45 days following posting), a request to vote on keeping that recognition (or for a  rival union).  At least 30 percent of the unit employees had to back the move for the Board to hold an election.

Approximately 54 elections have been held under Dana. In 15 cases (approximately 28 percent), employees rejected the recognized union. In two of those elections, employees voted to replace the recognized union with a rival.

Now, however, pro-union members have been appointed to the NLRB.  To no one’s surprise, the new Board has decided to re-examine Dana. When the United Steelworkers (“USW”) challenged the direction of a Dana election following a decertification petition contesting Lamons Gasket’s recognition of the USW, the Board seized its opportunity. Over a vigorous dissent by its Republican members, the Board majority directed reassessment, indicating Dana, in its view, likely was unnecessary, burdensome, and contrary to NLRB precedent.

The U.S. Chamber of Commerce, like many employer groups, is concerned that the Board will sacrifice employee free choice in order to help unions organize. The Chamber assisted Jackson Lewis in preparing the amicus brief supporting the Dana rule.

It is axiomatic that NLRB-conducted elections are the preferred form of ascertaining employee choice as to union representation (or the lack thereof). The U.S. Supreme Court, the NLRB, employers, employee groups and even unions all have so concluded. We argue in our brief that Dana helps assure employee free choice and offers valuable safeguards against the abuses of voluntary recognition through card check and neutrality agreements. We reject the current Board’s suggestion that the relatively few instances where recognition has been rescinded under Dana means that the rule is unimportant. This experience may signal just the opposite: that mindful of Dana, parties to such agreements are careful not to overreach.  Remove the shadow of Dana, and the old abuses will return.

As a form of “consumer protection” for employees, we believe the rule critical to vindicating employee rights under the NLRA.

Briefing in the case will be completed in November, and a decision by the NLRB is expected early next year.
 

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In J&R Flooring, Inc., dba J. Picini Flooring, 356 NLRB No. 9 (Oct. 22, 2010), the “full” four-member National Labor Relations Board held, “[E]mployers and unions that are found to have violated the Act should be required to distribute remedial notices electronically, such as by e-mail and/or posting on an intranet or the internet, in addition to the traditional posting of a paper notice on a bulletin board.”  The ruling applies to all pending and future cases.  Member Brian Hayes, the lone Republican on the Board, dissented, arguing that the Board should not have turned an extraordinary remedy into a routine one.

The NLRB’s decision is flawed.  It assumes that if an employer uses electronic communications for any purpose, it uses them for all purposes.  Employers communicate different kinds of information differently.  Employees are familiar with these choices and adjust their expectations for getting information accordingly.  Official government notices to employees (e.g., minimum wage, fair employment practices, OSHA) are communicated to workers in many workplaces by physical postings; if other government notices are not communicated by intranet or e-mail, why should NLRB settlement agreements have to be handled uniquely?  If employees are used to seeing such notices on lunchroom bulletin boards (where they go for coffee, vending, etc. and can talk to each other on non-work time), why is such a posting suddenly ineffectual for Board notices/settlements?  Shouldn’t the NLRB have to prove that such postings don’t work, rather than assume the contrary as a matter of law? 

Some NLRA cases find interference with employee rights only where employers treat other union solicitations differently, rather than other solicitations in general.  Why doesn’t the Board look for comparisons here?  Is it laying the groundwork for overruling its 2007 Register-Guard decision (which restricted the use of employer electronic communications systems for union organizing) by establishing here that electronic communications are the only effective ways of transmitting important information in the workplace?

Now the Board’s regional directors seem to be compounding J. Picini’s error.  These officials serve as the NLRB General Counsel’s field prosecutors. Reports are reaching us that some of them are insisting that electronic notification now apply to all NLRB settlement agreements.  Most unfair labor practice cases are settled before hearing, rather than litigated.  Thus, a far greater number of cases could become subject to the new requirement than was contemplated by the decision itself.   J. Picini offers no support for this expansive application; as the Board, itself, framed the issue, the decision would apply only to (a) violation findings (b) made by the Board.

The problem with the regional directors’ demands is that they may involve “prosecutorial discretion.”  Unless they are instructed otherwise, these officials can seek electronic notification of an agreement as a condition of settling a case, even if the Board’s decision does not say so.  Settlement is a negotiation.  “If you don’t like the terms offered, you can litigate,” they will say.   Litigation, though, is not practical in many cases.

That is why the NLRB General Counsel should bar such requirements in agency settlements, or reserve them for special cases.  Whether the present General Counsel would be inclined to do so, however, is doubtful.   Of course, if the Board’s litigation caseload spiked because of respondents’ refusals to settle with such requirements, or if Members of Congress started questioning the justification for such notification, things might change. 

But I wouldn’t hold my breath.

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