Vorys on Labor

Vorys on Labor

Insights for the Labor Relations Professional

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.

Federal Court Upholds NLRB Position on Class Action Waivers

Posted in Courts, NLRB

A federal court of appeals with jurisdiction over cases arising from Illinois, Indiana, and Wisconsin has sided with the NLRB in the running dispute over the enforceability of class action waivers.  Many employers have adopted these waivers as a way to manage risks associated with the every rising tide of wage/hour litigation.

As readers of this blog know, the NLRB lost on this issue in the Fifth Circuit Court of Appeals.  The NLRB has also lost on this issue in other courts of appeals.  As a result of this split of authority in the circuit courts, it is far more likely that the U.S. Supreme Court will be called upon to decide the question.

A great article authored by two of my colleagues, Mark Knueve and Mike O’Brien, describes the most recent decision in greater detail.  A link to their piece can be found here.

As a result of this development, employers who use class action waivers should evaluate the decision closely.  Those with employees in one or more of the three states above should be aware that, unless the Supreme Court steps in with a contrary ruling or the makeup of the NLRB changes, such agreements will not be enforceable for those employees.

The “Ambush” Election Rule, One Year Later: An Interview

Posted in Elections, Union Organizing

The NLRB’s so-called “ambush” election rule turned one year old last month.  To commemorate the birthday, I decided to turn to Susan Connelly, the Executive Director at PTI Labor Research, and prior contributor to this blog, to ask what she is seeing in the election data.

Nelson: Looking back at the first year of the NLRB’s “ambush” election rule, did we see the uptick in the number of election petitions filed that many predicted?
Susan: No. The NLRB released a summary of the first year of activity since the new election rules went into effect on April 14, 2015. Surprisingly, the NLRB reported only three more union representation petitions filed in the first year of the new rules versus the previous 12 months (2,144 RC petitions versus 2,141 RC petitions).
N: Some commentators also predicted an increase in the union win rate as a result of a quicker election cycle. Does the data suggest that the win rate has actually increased as compared to prior year periods?
S: Surprisingly again, the union win rate percentage for union certification petitions actually decreased in comparison to the previous 12 months. Unions won 70% of certification elections the first year that the new election rules were in effect. The year prior to that, the union win rate for certification petitions was just above that at 71%.
N: Has the election rule done what it intended to do: reduce the time an election is pending?
S: This was accomplished with the median number of days from petition to election going from 38 days to 24. Although this loss of two weeks during a typical campaign has not helped unions win more elections, it has put more of a burden on employers with compressed timescales to campaign with their employees.

Here at PTI Labor Research, we track all union petitions and elections nationally.  I think it is important to note that although the median number of campaign days is now at 24, we have seen numerous cases where the elections were held in under two weeks from the date the petition was filed.

N: Any suggestions for employers now that we are into the second year of the “ambush” election rule?
S: I would predict that as the process becomes more and more streamlined under the new rules, the timeframe from petition to election could be further reduced within the next year. Now more than ever, employers must be proactive in order to not be caught with a surprise petition and find themselves with very little time to react. Employers may want to consider, among other things, training for supervisors and managers, preparation of a “campaign ready” Steering/Campaign Committee, conducting a bargaining unit analysis, and preparing an initial strategy for card signing or petition activity.

VW to Continue Micro-Unit Fight with UAW

Posted in Union Organizing, Unions

The NRLB recently gave the UAW an expected victory. As readers of this blog will recall, the UAW is seeking to represent about 165 skilled maintenance workers at the VW plant in Chattanooga. VW contended that the UAW should not be permitted to represent a micro-unit of 165 skilled maintenance workers in a manufacturing facility with over 1,500 production and maintenance workers. On April 13, 2016, the NLRB formally ruled in the UAW’s favor by denying VW’s appeal of the micro-unit question.

But, the legal battle is not over. Under the NLRA’s Byzantine procedures, the matter can only get to the federal court of appeals after the NLRB has ruled that VW has committed an unfair labor practice by refusing to bargain with the UAW as the representative of the 165 maintenance workers. So far, VW has refused to bargain, and the UAW has filed unfair labor practice charges with the NLRB. That unfair labor practice proceeding, however, is still in its early stages before the NLRB. Unless VW relents, that legal process will take about another two years before a federal appeals court rules on the micro-unit question.

Amid Legal and Political Challenges, DOL Issues Enforcement Policy for Its New Persuader Rule

Posted in Rulemaking, Union Organizing

On March 24, 2016, the Department of Labor issued its long-anticipated final rule regarding the advice exemption to the persuader rule in the Labor-Management Reporting and Disclosure Act (“LMRDA”). The new rule changes the test that has been in place for more than 50 years and significantly expands the types of activities and information that must be disclosed under the LMRDA.  More information about the new rule and its disclosure requirements can be found in our prior post.

Challenges to the Rule

In a swift response, industry associations and law firms filed three separate lawsuits in Arkansas, Minnesota, and Texas federal courts challenging the legality of the rule. The suits include parties such as the National Association of Manufacturers and National Federation of Independent Business, as well as law firms and law firm associations.

The three lawsuits assert similar claims, including violations of:

  • The Administrative Procedure Act;
  • The First and Fifth Amendments of the United States Constitution;
  • The National Labor Relations Act; and
  • The Regulatory Flexibility Act

A central argument to each complaint is that the new rule infringes on the confidentiality of the attorney-client communications between employers and their legal counsel. Each suit seeks to declare the rule invalid and enjoin DOL from implementing it.

The new rule faces political opposition, as well. On April 13, 2016, Representative Bradley Byrne (R-Alabama) introduced a Joint Resolution stating “[t]hat Congress disapproves the rule…and such rule shall have no force or effect.”  In light of the current political climate, however, labor professionals should not expect this legislative action to produce any actual reprieve from the DOL’s rule.

So, unless the court challenges are successful, the disclosure requirements will apply to employer-consultant agreements and arrangements entered into on or after July 1, 2016.

DOL Will Not Enforce Certain Disclosure Requirements

Perhaps recognizing the implications of the challenge to the persuader rule based on the attorney/client privilege, the DOL announced last week a “special enforcement policy” that becomes effective immediately. This policy applies to a different form, the LM-21 Receipts and Disbursements Report, which requires reporting of any payments the persuader made or received during the fiscal year as a result of arrangements of the kind requiring a Form LM-20 disclosure.

The LM-21 form is the subject of a separate DOL rulemaking process.  In its response to comments on the persuader rule, the DOL refused to delay the persuader rulemaking until the LM-21 rulemaking “caught up” to it.

Under the new special enforcement policy, those required to file a Form LM-20 (including attorneys) who must also file a Form LM-21 will not be required to complete two parts of the LM-21. Specifically, the DOL will not take enforcement action based upon a failure to complete the following Parts of Form LM-21:

  • Part B (Statement of Receipts), which ordinarily requires the filer to report all receipts from employers in connection with labor relations advice or services regardless of the purposes of the advice or services, and/or
  • Part C (Statement of Disbursements), which ordinarily requires the filer to report all disbursements made by the reporting organization in connection with labor relations advice or services rendered to the employers listed in Part B.

Additionally, consultants/attorneys are not required to maintain records solely relating to Part B and Part C. It appears that the persuader will still be required to complete Part D, which is a “Schedule of Disbursements for Reportable Activity.”

Importantly, this special enforcement policy is not permanent and may be changed/revoked upon 90 days notice. Therefore, there is no guarantee that the DOL will not require disclosure of such information in the future.

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

Mandatory Union Fees Preserved By Supreme Court’s Deadlock

Posted in Courts, Union Membership

Today the Supreme Court issued a decision in the closely watched case of Friedrichs v. California Teachers Association, which keeps mandatory union fees for public employees alive.  In a one-sentence opinion, an equally divided Supreme Court simply affirmed the Ninth Circuit’s decision in favor of charging school teachers mandatory union fees.  The decision doesn’t apply to compulsory union membership in the private sector.

The Ninth Circuit based its brief decision on the Supreme Court’s 1977 decision in Abood v. Detroit Board of Education. Abood allows public employers to require all employees – both union and nonunion members – to pay union fees, so long as workers are not forced to pay a portion of the fees that covers political or ideological activities.

Following oral arguments on January 11, 2016, many predicted the Supreme Court would issue a 5-4 opinion against mandatory union fees for public employees, overturning the Abood precedent.  Justice Antonin Scalia’s questions appeared to indicate that he sided with the challengers.  With Justice Scalia’s passing, however, the justices emerged in a 4-4 deadlock.

The case was a very important one for organized labor.  In light of the split decision, it is likely this issue will arise again.  This opinion makes clear that the outcome will depend on the new justice.