Vorys on Labor

Vorys on Labor

Insights for the Labor Relations Professional

NLRB General Counsel Releases New Guidance on Employee Handbooks

Posted in Employee Discipline, NLRB

Last week, NLRB General Counsel (GC) Richard F. Griffin, Jr. released a new report addressing problematic employee handbook provisions which could be “reasonably construed” as having a chilling effect on employees’ Section 7 activity.  Similar to the three reports previously issued by predecessor Lafe Solomon on social media cases, Griffin offers the report as guidance on his views of “this evolving area of labor law,” with hopes that it will motivate employers to review their handbooks and make any necessary changes.

The 30-page report is divided into two parts.  The first 20 pages offer a comparison of various handbook rules the GC has found unlawful and lawful, some of which the NLRB has likewise found to be lawful and unlawful, with an explanation of the GC’s reasoning.  The last 10 pages of the report analyze a large employer’s handbook rules which the GC recently found unlawful in an unfair labor practice investigation, along with the revised rules implemented by the employer in settlement of the charge.

This report is a good summary and reminder that it is not just an employer’s social media policy that the NLRB is concerned about.  The first part of Griffin’s report identifies eight other types of policies frequently held to chill Section 7 rights, including:  (1) confidentiality; (2) employee conduct toward the company and/or supervisors; (3) employee conduct toward other employees; (4) interactions with third parties; (5) protection of employer logos, copyrights and trademarks; (6) photography and recording; (7) leaving work; and (8) conflicts of interest.

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UPDATE: Challenges Mount, But Obama Administration Stands Firm on Quickie Election Rule

Posted in Elections, NLRB, Union Organizing

Regular readers of this blog are already aware of the uproar over the NLRB’s release of its “quickie” or “ambush” union election rule and the litigation it has spawned in both D.C. and Texas federal courts.  The rule will bring a major overhaul to the manner and timeframe in which union elections are held.

As litigation has heated up, so has the political infighting:  the NLRB and the Obama administration face resistance in both houses of Congress.  On March 4, the Senate passed a Congressional Review Act resolution that would stop the NLRB from implementing their rule by a 53 to 46 vote, split largely down party lines.  Just yesterday, the House passed the same measure by a vote of 232 to 186.  The only break from party line voting were three Republican representatives who joined all Democrats to oppose the resolution.  The President is expected to veto the resolution, which Congress is unlikely to have the votes to overturn.

Meanwhile, back in court, the parties in both lawsuits have filed motions for summary judgment and/or dismissal.  The NLRB argues that its rulemaking is entitled to extraordinary deference, that its rules need only be rational and well-explained, and that all of the new rule’s changes are lawful.  Representatives of employers in both cases argue the opposite, saying that the rule exceeds the NLRB’s statutory authority and calling it “arbitrary and capricious” and “an abuse of agency discretion.”

Lawyers representing management-side interests in both cases are particularly incensed by the NLRB’s requests for extensions of time to answer their summary judgment motions, calling it nothing more than a stalling tactic designed to delay any decision on the merits of the rule until after its April 14 effective date.  The NLRB has in the past voluntarily delayed the effective date of a rule when faced with a substantive court challenge.  But here, it chose not to.   Both courts granted these extensions in mid-February.

Finally, at the NLRB, it remains full steam ahead with the rule.  Training of regional office staff is or soon will be underway.  Various regional offices are offering sessions to labor professionals as well.  For those of you in Ohio, Region 9 is holding its information meeting on April 8 in Cincinnati and Region 8’s meeting will take place on April 6 in Cleveland.

Suffice it to say, this issue will be coming to a head sometime very soon.  The political opposition will likely go nowhere, given the President’s expected veto.  The litigation may not yield the same victory that employers saw with the rejection of the NLRB’s prior effort to revise its election rule.  Thus, labor professionals should consider continuing to prepare for April 14.  Stay tuned to vorysonlabor.com for further developments on this issue.

Wisconsin Becomes 25th State to Adopt Right-to-Work Law

Posted in Legislation, Union Membership

Two of my colleagues published an alert earlier today on the new Wisconsin right-to-work statute, signed into law this morning by Gov. Scott Walker (R).  Labor professionals with unionized operations in Wisconsin will want to pay special attention to how the law interacts with current collective bargaining agreements.

Prepare for a New Issue at the Bargaining Table: The 2018 Cadillac Excise Tax

Posted in Benefits, Negotiations

One of the significant revenue raisers under the Affordable Care Act is the so-called Cadillac excise tax – a non-deductible 40% excise tax on high-cost health plans starting in 2018. The excise tax will apply to health plans that cost more than $10,200 for individual coverage or $27,500 for family coverage. The cost of a health plan will be based its COBRA premium. The $10,200 and $27,500 thresholds will be indexed but at a rate below medical inflation so that, over time, more and more health plans will – if no action is taken – exceed the thresholds.Caddilac Tailfin

Many of these “Cadillac plans” are found in union contracts, where unions may have emphasized health care benefits more heavily than wage increases in past negotiations. For that reason, labor professionals will want a projection of when their employers’ health benefits might reach the thresholds. That projection may need to be a factor in negotiations.

The Congressional Budget Office (CBO) projected that the excise tax will raise $5 billion in 2018 and a total of $149 billion between 2018 and 2015. However, most of this revenue is not from payment of the excise tax. Rather, the CBO expects employers to cut back on (non-taxable) health benefits so as to avoid the excise tax and instead pay higher (taxable) wages. Most of the revenue projected by the CBO is a result of taxes on the higher (taxable) wages.

Health flexible spending accounts (FSAs), health reimbursement accounts (HRAs) and employer contributions to employees’ health savings accounts (HSAs) are aggregated with medical coverage. If an employer has an on-site health clinic providing routine care, the COBRA value of the clinic is also factored into the calculation. In fact, only insured dental and vision coverage are excluded from the calculation (although we hope that IRS will also exclude self-insured dental and vision coverage). Several special rules and adjustments will provide somewhat higher thresholds for retirees and certain other groups.

In preparing for this looming benefits issue, therefore, labor professionals should:

  • Keep in mind the potential application of the excise tax when negotiating health benefits in multi-year contracts.
  • Get an estimate of when the employer’s health benefits would, if not modified, reach the $10,200 and $27,500 excise tax thresholds.
  • Work with the employer’s benefits or HR team to develop options for modifying health benefits so as to postpone the application of the excise tax.

Supreme Court Cuts Down Yard-Man Inference in Retiree Health Benefit Disputes

Posted in Courts, Union Negotiations

On January 26, the U.S. Supreme Court handed down its opinion in M&G Polymers USA v. Tackett , providing guidance on one of the items on our 2015 to-do list a little earlier than expected.

At issue in M&G was a collective bargaining agreement (“CBA”) provision calling for “a full Company contribution towards the cost of [health care] benefits,” with a cross reference to another provision that described health benefits to be provided to employees “for the duration of the agreement.” When the agreement ended, M&G announced that it expected retirees to make contributions toward the cost of their health benefits. The retirees claimed that they had a vested right (guaranteed for life) to free health benefits and filed suit. Initially, the District Court dismissed the suit, but the U.S. Court of Appeals for the Sixth Circuit reversed this decision on the basis of another case called Yard-Man, and sent the case back to the District Court. It then found for the retirees, the Sixth Circuit affirmed, and M&G appealed to the U.S. Supreme Court.

Yard-Man is a case decided by the Sixth Circuit involving retiree insurance benefits where the CBA was ambiguous as to when—or if—the benefits terminated. Relying on three primary rationales, the Sixth Circuit in Yard-Man adopted an inference in favor of the vesting of retiree health benefits.

  1. First, the court looked to the presence of termination clauses in other parts of the agreement and inferred that the lack of one in the health benefits provision must mean the benefits were intended to vest.
  2. Second, it relied on a contract interpretation principle called the “illusory promises doctrine,” and said that if the benefits did not vest, they were an illusory promise for all workers who did not become eligible before the CBA expired.
  3. Finally, they used the “labor negotiations context” to infer that the benefits vested for life because benefits were not mandatory subjects of collective bargaining, are typically understood as a form of delayed compensation, and were keyed to the acquisition of retirement status.

Thus, after Yard-Man, employers had to negotiate very specific language in their agreements in order to avoid a lifetime grant of retiree health insurance coverage.

The Supreme Court did not agree with Yard-Man’s approach. Noting that Yard-Man “places a thumb on the scale in favor of vested retiree benefits in all collective-bargaining agreements,” the Court said that it distorted the attempt to figure out the intentions of the parties to the contract—the guiding light of contract interpretation.  Yard-Man’s inferences were too speculative to be of use, and the Court said that the Sixth Circuit’s decision here rested these speculative inferences on “a shaky factual foundation” and failed to apply ordinary contract law. Because of this, the Court vacated the decision and sent the case back to the Sixth Circuit for reconsideration, along with instructions “to apply ordinary principles of contract law.”

For labor professionals dealing with collective bargaining issues, this is an important decision. The decision reemphasizes the need for clarity in drafting union contract language. Before this case, if the parties were not clear in the contract, it was almost always a “win” for retirees – they received vested benefits. With the Yardman inference gone, there will be an equal burden on both management and the union to be clear with their contract language. In addition, for employers that currently extend retiree health coverage, but have been considering whether to modify or terminate that coverage for union-represented workforces, the case provides fresh guidance to determine whether the employer may do so.

D.C. Circuit Caps NLRB’s Overly Zealous Policing of Section 7 Rights

Posted in Courts, NLRB

On January 16, the U.S. Court of Appeals for the D.C. Circuit gave a victory, of sorts, to an employer concerning company hats and uniforms. The Court of Appeals found that an employer might be able to lawfully enforce a uniform policy that requires employees to wear company hats, as long as the employer’s policy permits employees to put union patches, pins or other logos on the company hats. With its ruling, the Court of Appeals sent the case back to the NLRB for reconsideration.

The case involved a World Color Corp. printing facility in Nevada. The company maintained a safety policy that required workers’ hair hanging past their collar be secured to their head while in production areas. The employer’s policy also prohibited baseball caps, except company baseball caps worn with the bill facing forward. The company also maintained a general uniform policy, which allowed workers to accessorize their uniforms, provided they did so in good taste.

The Graphic Communications Conference of the International Brotherhood of Teamsters filed an unfair labor practice charge before the NLRB, arguing that the hat policy interfered with workers’ Section 7 rights insofar as it prevented them from wearing Teamsters’ hats at work. The company argued that the policy was justified by special circumstances involving the safety of press operators, employee presentation, and concerns about gang activity.

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Update: Second Lawsuit Filed Challenging NLRB Ambush Election Rule

Posted in NLRB, Rulemaking

Updating our previous post, a second group filed suit (pdf) against the NLRB last week, challenging its ambush election rule.  This time, the challenge comes from The Associated Builders and Contractors of Texas Inc., who are joined by the same organization’s Central Texas Chapter and the National Federation of Independent Business/Texas.  They have asked the U.S. District Court for the Western District of Texas to enjoin the NLRB from implementing the final rule changes, which we summarize here.  The groups claim the NLRB exceeded its statutory authority in enacting the rule.

Stay tuned to vorysonlabor.com for further developments on this issue.

Five Most Important Labor Issues for Your 2015 “To Do” List

Posted in NLRB

Looking at the developments in the labor law field during 2014, a few stand out as worthy enough to find a place on a labor professional’s “to do” list for 2015.  Here are the five that I would suggest should be on the list of every management representative:

  1. Prepare for the quickie election.  The changes to the election procedures that the NLRB adopted at the end of last year will clearly shorten the time between petition filing and secret ballot election.  Today, there is usually 35-42 days between those two events.  Under the rule, the time could drop to as few as 14 days, but probably more likely around 21 days.  If an employer is not ready for an election petition the moment it is filed, it will present significant tactical and strategic challenges for the employer.  While there will be litigation over these changes, the NLRB has given no indication that it will delay the implementation of the rule pending the outcome of those lawsuits.
  2. Assess the impact of “micro-units” in your workforce.  Have you read (or read about) the NLRB’s Specialty Healthcare, Macy’s, and Neiman Marcus decisions?  If not, you are already behind on this issue.  These decisions provide unions a tool to subdivide an employer’s workforce into smaller pieces and either (a) organize small pieces at a time; or (b) permit multiple unions to represent various parts of your workforce.  Every employer should be looking at what impact this has on their workforce, and whether any proactive steps are available to  respond.
  3. Review your handbook.  Regular readers of this blog know that the NLRB has been on a rampage when it comes to rules that govern the conduct of employees.  The NLRB has a keen interest in striking down rules that it believes, from a very employer unfriendly point of view, limit employee exercise of rights under the NLRA.  Revisions to the handbook, or adopting a disclaimer, are possible approaches to compliance for employers to consider in 2015.
  4. Prepare for the NLRB’s new deferral standard.  In Babcock & Wilcox Construction Co., Inc., 361 N.L.R.B. No. 132 (Dec. 15, 2014) (pdf), the NLRB altered the circumstances under which it would defer to a labor arbitrator’s resolution of a statutory issue.  Specifically, it held that it would only defer on an issue under Section 8(a)(1) or (3) of the NLRA if the party advocating deferral (usually the employer) could prove that the arbitrator was (a) explicitly authorized to decide the unfair labor practice issue; (b) the arbitrator was presented with and considered the statutory issue; and (c) NLRB law would reasonably permit the award.  Clearly, this new approach will require employers with union-represented workforces in 2015 to reconsider not only their labor arbitration strategies in individual cases, but perhaps also the language of their union contracts themselves.
  5. Watch for the Supreme Court’s decision in M&G Polymers.  This is also a development for employers with existing unionized workforces, especially those for whom retiree health care benefits are a significant bargaining issue.  The Court’s decision will, hopefully, provide guidance on the language that must be used and where that language must appear to establish a “vested,” i.e., unchangeable, right to receive health care benefits into retirement.  These issues can have significant cost implications for employers with large numbers of retirees.

So, there you have it.  Given the NLRB’s activism, the list could be easily be longer.  But, if you are looking for a few changes where you can have the greatest impact, these are the places you should start.

Business Groups Sue NLRB Over “Ambush Election” Rule

Posted in NLRB, Union Organizing

As we predicted here, several business trade groups filed suit earlier this week challenging the NLRB’s new “ambush election” rule.  The rule, also discussed here, was issued in a 3-2 party line decision on December 12, 2014 and is due to take effect April 14, 2015.  Its primary effect is to streamline the union election process in the workplace by significantly decreasing the time between the filing of an election petition and when the election is held.

Five groups are challenging the rule:  the U.S. Chamber of Commerce, the Coalition for a Democratic Workplace, the National Association of Manufacturers, the National Retail Federation, and the Society for Human Resource Management.  They argue that the shorter timeframe between election petition filing and the election itself  both (1) violates employers’ First Amendment rights by making it more difficult for employers to communicate with their employees, and (2) impermissibly restricts employers’ ability to litigate crucial election issues.

In the complaint (pdf), plaintiffs refer to the new rule as “arbitrary and capricious,” the magic words when challenging agency rulemaking.  Labor professionals should keep an eye on the progress of the lawsuit.  While a suit against an earlier version of this rule was successful, that win rested on a procedural defect in the voting on the rule.  The NLRB remedied this defect with its most recent adoption. 

In addition, the last time the election rule was challenged, the NLRB did not suspend the rule until after a federal judge held that it was invalid.  Indeed, about 150 petitions were filed under the new rule before the NLRB acted.  Whether the NLRB will take the same approach this time is unknown, but likely.  Whether the federal court will rule prior to the effective date of the regulation is also unknown. 

New Rule on Election Procedures will Speed Up Union Elections

Posted in NLRB, Union Organizing

The NLRB has, after much anticipation, issued its “ambush election” or “quickie election” final rule.  A summary of the major provision in the rules can be found here.   The rulemaking, which followed a long and tortured procedural path, is a major overhaul of the procedures used to conduct secret Ballot Boxballot, union elections. These elections are an important path to union representation, and they will now occur more quickly after the election petition is filed. The result is not only harmful to employer interests, but to those of employees as well.

In commenting on the changes, the NLRB majority state that they “will streamline Board procedures, increase transparency and uniformity across regions, eliminate or reduce unnecessary litigation, duplication and delay, and update the Board’s rules on documents and communications in light of modern communications technology.”

Two NLRB members, Miscimarra (R) and Johnson (R), however, dissented from the final rule.  Their lengthy dissent begins with an introduction that captures many of the issues that the rules will likely raise, especially for employers.  The dissenting members believe that, among other things, the rule:

  1. Has the “primary purpose and effect” to conduct union elections as quickly as possible;
  2. Impermissibly conducts elections now, and hearings later, an approach twice rejected by Congress;
  3. Requires employees to “vote now, understand later,” by shortening the time for employees to understand relevant issues;
  4. Curtails the right of employers, unions and employees to engage in protected speech;
  5. Fails to demonstrate that there is a need for the rule given that substantially more than 90% of all elections currently occur within 56 days of election petition filing; and
  6. Improperly diminishes the NLRB’s role in the election process.

For the labor professional, the substantial changes from current practice found in the rule will have a decided impact on how employers prepare for and lawfully respond to union organizing activity. For example, the rule requires employers to provide significantly more information to a union and to do so earlier in the process than was ever the case before. Moreover, handling the question of who gets to vote in the election, and thus who will be represented by the union, is one that should get attention even before union organizing activity begins. These are just two of the parts of the rule that employers would be well-advised to consider addressing proactively.