Vorys on Labor

Vorys on Labor

Insights for the Labor Relations Professional

Federal Court Permanently Blocks Persuader Rule

Posted in Courts, Department of Labor, Union Organizing

In welcome news to employers, a federal district judge in Texas earlier this week permanently blocked the Department of Labor’s (“DOL”) persuader rule. The court’s order makes permanent its June decision temporarily blocking the rule.  The temporary order is on appeal to the Fifth Circuit Court of Appeals.  Nonetheless, the court decided that the persuader rule “should be held unlawful and set aside…and the Court’s preliminary injunction preventing the implementation of that Rule should be converted into a permanent injunction with nationwide effect.”  To explain its decision, the court incorporated its June order, which, in part, found that DOL did not have the authority to issue the rule.

The persuader rule, which took effect April 25, 2016, radically alters the interpretation of the Labor-Management Reporting and Disclosure Act (“LMRDA”). These prior posts contain more information about the rule.

Given the DOL’s appeal of the temporary order issued in June, an appeal of the permanent order is sure to come. The Court of Appeals could overturn the district court’s decision.  And there are at least two other lawsuits challenging the rule that could result in a conflict in the courts.

The more practical question, however, is what President-elect Trump’s administration may do. The appeal is still in the briefing process and thus it is unlikely that we will have a decision from the court of appeals prior to the inauguration of the new administration.  Notifying the court that the DOL is withdrawing its appeal, thus allowing the permanent injunction to stand, would be a relatively simple way for the DOL to provide immediate relief from the rule.

The NLRB After a Trump Victory: What to Expect When the Trump NLRB Arrives

Posted in NLRB, Rulemaking

With the dust still settling from our national election this week, I’ve been digesting what it means for the NLRB. So, here are some initial thoughts.

Two of the five NLRB positions are vacant now.  But, the details on the appointment process are messy.  The NLRB members President Obama selected have staggered terms that will carry over into President-elect Trump’s administration.  Moreover, the General Counsel (the “prosecutor” of unfair labor practice complaints) is also appointed with a different term.

The two vacancies should go to Republicans because the NLRB is always controlled by the political party that holds the White House. But, that could take some time.  Here is a good explanation of the details, including discussion of one scenario in which Trump doesn’t appoint anyone to take the place of Member Miscimarra.

Perhaps the more interesting question for labor professionals is what will happen when the Trump NLRB is up and running? Well, Republican members typically are more sympathetic to employer concerns.  And, there is no shortage of issues that employers would have liked to see come out differently.

One development from Obama’s NLRB is a good example. Substantial amounts of ink have been spilled (including on this blog) on the NLRB’s election rule, sometimes called the “quickie” or “ambush” election rule.  The Trump NLRB could undertake an effort to repeal that rule, but that would consume a lot of the NLRB’s resources.  Continue Reading

Disputes Between Volkswagen and UAW Continue

Posted in Elections, Union Organizing, Unions

Earlier this month, Volkswagen appealed to the U.S. Court of Appeals in Washington, D.C., in an effort to overturn the NLRB’s decision upholding the UAW’s election win to represent about 165 skilled maintenance workers within VW’s Chattanooga plant.

VW contends that the UAW should not be permitted to represent a small segment of the production and maintenance workers within a plant of about 1,800.  The NLRB has consistently ruled in the UAW’s favor, first by allowing the election within such a small segment of the whole plant and then by ruling that VW has refused to bargain with the UAW over the wages, hours and working conditions of the 165 maintenance workers.  The NLRB’s order that VW must bargain with the UAW gave VW the right to appeal.  And, now the dispute has reached the U.S Court of Appeals. The U.S. Court of Appeals will likely decide the case within the next 9 to 12 months.

In addition to its appeal, VW also announced that it would no longer recognize the American Council of Employees (ACE) under its Community Organization Engagement Policy.  VW instituted the Policy to voluntarily recognize unions and other organizations as representatives of groups of employees. Once recognized by VW, the organization would have certain specified rights to meet with VW’s management and discuss plant issues. For an organization to be recognized under the Policy, it must represent at least 15 percent of the workers in the plant.  According to VW, ACE no longer met the 15 percent threshold.

ACE was formed to counter the UAW during the UAW’s 2014 campaign to represent all of VW’s production and maintenance workers.  UAW contends that it now represents a majority of the VW workers, but it has not yet filed for another secret ballot election with the NLRB.

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Successor Must Bargain with Union Over Initial Terms and Conditions of Employment

Posted in Mergers and Acquisitions, Negotiations

Hiring the workforce or purchasing the assets of an employer with union-represented employees is a transaction with a lot of labor-related risks.  A recent decision from the NLRB provides an example of how it can go wrong for an employer that fails to plan.  In so doing, it offers a good contrast to a case discussed on this blog last year.

A waste disposal company used “hoppers” on its garbage trucks.  The hoppers were provided by a labor supply company with whom the waste disposal company became dissatisfied.  A relative of the waste company’s owner formed a new labor supply company and set out to hire hoppers to provide to the waste company.

The source of hires for the new company was the prior labor supplier’s workers.  These workers were represented by a union.  The new company didn’t look elsewhere for employees.  The new company’s owner communicated directly with a number of the hoppers, letting them know that he would hire them if they submitted an application, and also advising them what he would pay and a few other terms and conditions of their employment.

The owner of the new company,  however, also gave out applications to one of the hoppers and asked him to assist in passing them out.  The owner didn’t tell this hopper about the new terms and conditions of employment.  Thus, this hopper didn’t pass along any such information to the other workers to whom he handed out applications.  Thus, of the 70 or so hoppers ultimately hired, only 20 heard directly from the new company that employment conditions would change.

The NLRB held that the new company did not have the right to set the initial terms and conditions.  Rather, it had to bargain with the union that had previously represented the hoppers.  The NLRB applied the “perfectly clear” rule, a rule that has existed for several decades.  When a new employer, hiring employees of a unionized predecessor, fails to clearly announce its intent to establish a new set of employment conditions prior to or simultaneously with inviting employees to apply for employment, the new employer will be required to consult with the union representing the employees prior to setting employment terms.

In this case, the NLRB held that the new company promised to hire anyone who submitted an application.  It also did not communicate to all employees the employment conditions it expected upon hire.  Rather, it only did so on the day that the employees first gathered to work for the new company, but the NLRB found that this was too late in the process.

Member Miscimarra (R) disagreed with the majority’s approach.  Among other things, he reasoned that the communication on the first day the employees reported for work was sufficient to satisfy the “perfectly clear” rule.  He also noted that the union didn’t make a demand for bargaining until a few days after the employees had started working for the new company.

This decision highlights an important lesson from the NLRB’s cases in this area:  an employer contemplating an acquisition of a unionized business that fails to plan for the hiring process makes a costly mistake.  That plan should include not just what will be said to applicants, but also when it will be said.  Both things are vital if the new employer wants to retain the unilateral right to set the initial terms of employment.

Student Assistants at Private Colleges and Universities Can Unionize

Posted in Union Organizing

Last week, the NLRB majority ruled that undergraduate and graduate students providing services as teaching or research assistants at private colleges and universitieUnion Badges could be “employees” of their school within the meaning of the National Labor Relations Act. Therefore, these students could collectively bargain with their school.  The NLRB’s holding marks another chapter in the story of organizing rights in academia, which has seen the NLRB bounce between positions for the better part of three decades.

The saga begins in 1974, when the NLRB ruled that certain university research assistants were “primarily students” and thus could not unionize.  This remained the law until 2000, when a divided NLRB overruled that decision, and held that graduate assistants were employees in a case involving New York University.  But then, in 2004, the NLRB ruled in Brown University that the 2000 decision was wrongly decided, and returned to the rule that was first in effect in 1974, holding that a student assistant’s relationship with their university was primarily educational, not economic, in character.

In the most recent decision, the NLRB confronted a union representation petition from a group of undergraduate and graduate students at Columbia University working as either research or teaching assistants.  The NLRB rejected the “primarily economic in character” test from Brown, instead holding that the common law test of agency is the correct way to determine whether an employment relationship exists under the NLRA.  That test establishes that an employment “relationship exists when a servant performs services for another, under the other’s control or right of control, and in return for payment.” Continue Reading

NLRB Decision Provides Example of New Joint Employer Standard in Action

Posted in Elections, Union Organizing

Last week, the NLRB released an opinion finding joint employment status under the standard it retooled in the Browning-Ferris Industries (“BFI”) case in 2015.  At issue was a petition from the Laborer’s Union to hold an election to form a bargaining unit covering asbestos removal workers.  The Union argued that these workers were jointly employed by Retro Environmental (“Retro”), an asbestos removal company, and Green JobWorks (“Green”), a staffing agency which provided workers to Retro.  The NLRB majority agreed.

As we previously discussed, the new standard is far more expansive than anything from the three decades of settled case law that preceded BFI and focused on the question of control—even indirect or potential control—over a work force.  The importance of this retooling cannot be overstated; in fact, a previous blog post named it as one of the most important developments in 2015 and suggested that employers add an analysis of the new standard’s potential impact to their 2016 “To Do” list.  We predicted that it would not be long before it was felt, and we now have the clearest example yet of how the NLRB will apply the new standard.

First, the NLRB described the factors it would consider in determining whether alleged joint employers “‘share’ control over terms and conditions of employment or ‘codetermine’ them.” It reemphasized that, under the new test, the question was not just whether the joint employer actually exercised the authority to control employee’s terms and conditions of employment, but also whether the joint employer possessed that authority.

In making that determination, the NLRB indicated that it considers such things as hiring, firing, discipline, supervision, direction, and wages/hours. The NLRB also indicated that it considers whether the alleged joint employer could dictate the number of workers to be supplied, control scheduling, seniority, and overtime, assign work, and generally determine the manner and method of day-to-day work performance.

In this case, the NLRB first considered an expired lease of services agreement between the parties under which Retro and Green continued to operate. In finding that Retro and Green were joint employers of the employees in the petitioned-for unit, it noted that although Green was primarily responsible for hiring, assigning, disciplining, and terminating employees, Retro played a role in “codetermining the outcome of the hiring process.” Specifically, the agreement imposed conditions on Green’s hires, including prescreening, physical examination and drug-testing requirements, as well as various job qualifications and certifications.

Further, the NLRB found that—just like the relationship in BFI—Retro had the right to request that Green remove and replace any worker it found to be unsatisfactory.  Crucially, though Retro had not exercised this right within the six months preceding the hearing, Green’s president admitted that he could not imagine a situation in which Green would not agree to such a request.

The NLRB then considered the practical realities of the employers’ relationship. Green determined employees’ rates of pay, paid their wages, and provided benefits.  Retro’s foremen set hours and schedules, and also supervised the sequence and nature of day-to-day work.  Green’s on-site supervisor managed injuries and near misses, ensured employees were present, and handled specific employee concerns.  Retro made the core staffing and operational decisions that defined the work day, determined the start and end time for breaks, and tracked employee hours.  The NLRB noted, simply put, that “[b]etween them, [Retro and Green] control all of the employee’s employment terms.”

This case represents a good example of what employers can expect BFI’s new joint employer test to look like in practice, especially in the context of a staffing agency providing workers for a temporary project.  Employers should consider a review of their agreements and working relationships with such companies to evaluate the extent to which they could—as well as do—share “control,” as currently defined by the NLRB.

NLRB Reverses Course (Again) on Bargaining Units that Include Temporary Employees

Posted in Union Organizing

Last week, the NLRB issued a widely anticipated decision reversing the existing rule on collective bargaining units including temporary employees. Now, regular employees of the employer and temporary staffing agency employees working for the same employer could be combined in the same bargaining unit without either the employer’s or the staffing agency’s consent. The decision is another in a line of cases from the current NLRB that is friendly to unions, and not so friendly to employers.

The NLRB has changed its thinking on this issue multiple times in recent memory. From the 1970s until 2000, the NLRB consistently held that both employer and staffing agency consent was required to create bargaining units that contained both an employer’s regular employees and the temporary employees supplied by the staffing agency.

In 2000, a Clinton-appointed NLRB changed its position with the M.B. Sturgis decision.  It held that temporary employees supplied by a staffing agency could be included in a single bargaining unit with an employer’s regular employees without the consent of both employers. Under M.B. Sturgis, temporary employees could be included in a single bargaining unit with regular employees if: (1) the staffing agency and the employer were determined to be joint employers, and (2) the temporary employees shared a community of interest with the regular employees.

The M.B. Sturgis decision did not last long. In 2004, a Bush-appointed NLRB overturned M.B. Sturgis, returning to the traditional joint-consent standard. Oakwood Care Center, 343 N.L.R.B. 659 (2004).

The NLRB’s reversal came in the Miller & Anderson, Inc. case.  The NLRB held that Oakwood Care Center was wrongly decided and, at least according to the majority, reinstated the rule from M.B. Sturgis.

The NLRB determined that the broad language of the term “employer unit” in the NLRA necessarily included both sets of employees who, according to the NLRB, are “working side by side, as part of a common enterprise.”  The NLRB also reasoned that the M.B. Sturgis rule better effectuated the policies of the NLRA by affording employees the “fullest freedom” to “choose the unit they wish to organize.”

Member Miscimarra (R) wrote a lengthy dissent, criticizing the majority’s decision in various respects. Most significantly, however, he noted that with the NLRB’s substantial expansion of the joint employer standard in the BFI decision, the NLRB is not returning to a standard that previously existed.  Rather, it has opened up an entirely new and vastly expanded set of bargaining relationships that could surpass what existed under M.B. Sturgis.

For the labor professional, the decision is important for at least three reasons:

  1. It underscores the importance of examining existing agreements with temporary agency providers to address the joint employment question.
  2. It raises important questions about how employers utilize temporary agency employees in their workplace. How those employees are used (e.g., supervised, disciplined, retained, etc.) will impact the “community of interest” test and thus whether the employees should be included in the same bargaining unit as regular employees.
  3. It could complicate the collective bargaining process by requiring both the employer and the staffing agency to bargain with the union and pursue a single collective bargaining agreement.  When combined with the uncertainties of the BFI decision, the bargaining obligation could be quite expansive for both employers.

Federal Court Issues Nationwide Injunction Against DOL’s Persuader Rule

Posted in Rulemaking, Union Organizing

A federal district judge in Texas today issued a nationwide injunction prohibiting enforcement of the Department of Labor’s (“DOL”) persuader rule, saying it threatens employers’ rights to secure legal advice about union organization. The Texas court is the first court to block enforcement of the rule.  In a contrary ruling just last week, a Minnesota federal judge refused to block the rule.  A third lawsuit is pending in Arkansas federal court.

The persuader rule, if enforced, greatly expands the reporting requirements under the Labor-Management Reporting and Disclosure Act. The rule took effect April 25, 2016, and applies to any persuader agreement entered into on or after July 1, 2016. It is important to note that these recent rulings are preliminary in nature and not a final determination about the enforceability of the rule.

The different rulings from the Texas and Minnesota courts highlight the uncertainty surrounding DOL’s controversial rule.  We previously wrote that DOL has interpreted its persuader rule to exclude certain indirect activities, provided there is an agreement or arrangement in place, signed before July 1, 2016 (even if the services and payments occur after July 1).  Despite this ruling from Texas, employers would still be prudent to explore the multi-year agreement route as a protective measure.  It rests upon the DOL’s own interpretation of the rule, and doesn’t rely upon the uncertainty of court challenges to the rule.

Big News on the Persuader Rule: Agreement Prior to July 1 Could Limit Future Reporting Obligation

Posted in Rulemaking, Union Organizing

The DOL has recently interpreted its new Persuader Rule to exclude an agreement or arrangement signed before July 1, 2016, even if the services and payments occur after July 1.  In an email exchange between the U.S. Chamber of Commerce and the DOL, the DOL said:  “Services and payments made pursuant to a multi-year agreement, even if they occur after July 1, are not required to be reported on the new Form LM-20, so long as the agreement was signed prior to July 1.  The prior form applies.”

The DOL published the final rule in March 2016, imposing substantial reporting obligations on employers.  The old rule required reporting if the consultant engaged in direct persuader activity (e.g., the consultant directly communicates with employees about union representation).  The new rule adds reporting for indirect persuader activities (e.g., providing communication materials to employer to handout to employees).  These activities typically, but not exclusively, arise in the context of a union organizing drive.

The final rule announced that it would become “applicable” on July 1, 2016.  Specifically, the DOL’s rule provided that the rule applies to “arrangements and agreements as well as payments (including reimbursed expenses) made on or after” that date. The latest development arises out of one of the three lawsuits that have been filed challenging the rule.  In a series of communications, starting with a status report filed in that case and culminating in the email exchange referenced above, the DOL has further explained its position on the “applicable” date language.  We reported a few days ago on the then-current status of those suits.

As a result, the DOL’s position now is that if the employer and consultant/attorney sign the agreement by July 1, then all payments made pursuant to that agreement are not reportable on the new forms and pursuant to the new instructions, regardless of when the indirect persuader services are performed.  It is important to note that direct persuader activity (e.g., directly communicating with employees about union representation) has always been reportable, and remains reportable notwithstanding this development.

This revelation has substantial implications for all employers.  Regardless of whether any segment of an employer’s workforce is unionized, and whether the employer has ever been through a union organizing effort, an employer should immediately explore entering into an agreement for indirect persuader services and advice.   Indeed, even if an employer never thinks it will be subject to union organizing activity, having an agreement of the type contemplated in the DOL’s most recent communications is vitally important to ensure the privacy of the employer’s communications in the event of such activity.

Parties Attempt to Persuade Courts on Legality of New Persuader Rule as July 1st Application Date Approaches

Posted in Courts, Rulemaking, Union Organizing

Challenges to the Department of Labor’s (“DOL”) new persuader rule have reached a critical stage.  Parties opposing the rule, including industry associations and law firms, have asked courts in three separate lawsuits to stop the DOL from enforcing the rule while the courts determine whether the rule is invalid.  Several states, as well as the U.S. Chamber of Commerce, Employment Law Alliance, and Washington Legal Foundation, have filed supporting briefs urging the courts to stop enforcement of the rule.  DOL responded, making arguments that largely mirror its positions set forth in the final rule.

Courts in Minnesota and Arkansas have held hearings on the parties’ arguments of whether enforcement of the rule should be delayed.  Another hearing is scheduled in Texas federal court for June 20, 2016.

If the challenges are unsuccessful, all employer-consultant agreements and arrangements for so called “persuader activities” entered into on or after July 1, 2016, will be subject to the new disclosure requirements under the Labor-Management Reporting and Disclosure Act (“LMRDA”).  It is possible that the courts could issue opposite rulings, resulting in the LMRDA being enforceable in some jurisdictions and delayed in others.  Regardless of how the courts rule, we can expect further legal challenges to this controversial rule.

Stay tuned to this blog for additional developments on this and other topics.