The NLRB and Now the Seventh Circuit Appellate Court in Chicago, Threaten Arbitration Agreements That Prevent Class Action Lawsuits by Employees

May 2016

James B. Sherman, Esq.

The use of arbitration as a means to resolve disputes that otherwise would proceed in court, has grown exponentially over the past decade. Besides the cost savings over litigation (at least in theory), one of the biggest reasons employers have turned to arbitration is the ability to include “class waivers” in such agreements. A class waiver clause in an arbitration agreement requires the employee to take his or her dispute through arbitration alone, and forego class or collective claims with other employees.  These agreements have withstood challenges in court brought under the Federal Arbitration Act (FAA).  More recently, however, the National Labor Relations Board (NLRB) has decided to get involved. In its 2012 decision in D. R. Horton, the NLRB held that the right of employees to join together for mutual aid and protection – “concerted activities” protected by federal labor law - includes their right to pursue class-action arbitration or lawsuits outside the realm of the National Labor Relations Act (NLRA).  This far-reaching decision was promptly shot down by the U.S. Court of Appeals for the 5^th Circuit, in New Orleans.  However, on May 26, 2016, the 7^th Circuit Court of Appeals in Chicago, adopted the NLRB’s position in upholding its decision in Epic Systems Corp. In doing so, the 7^th Circuit gave broad deference to the NLRB’s opinion even though the Board was essentially straying far afield from labor matters.  For example, the decision would ban class waivers of everything from wage and hour to discrimination and harassment claims.

Now that a split exists on the issue between the 5^th and 7^th Circuits, a showdown in the Supreme Court seems likely. Management will no doubt support the 5^th Circuit’s position that the NLRB has exceed its authority under the NLRA. Of course unions, employees and perhaps most fervently, class-action plaintiff lawyers, will advocate strongly in favor of the recent decision of the 7^th Circuit. Both sides face uncertainty, given the vacancy left in the Supreme Court by the death of Justice Antonin Scalia and the political maneuvering over his replacement.  In the meantime, employers in Wisconsin, Illinois and Indiana are stuck with the 7^th Circuit’s decision upholding the NLRB’s position that class waiver clauses in arbitration agreements, violate federal labor law and therefore, are unlawful.  

NLRB Regional Director Says Misclassifying Employees As Independent Contractors Violates Federal Labor Law

May 2016
James B. Sherman, Esq.

Treating workers as non-employee, “independent contractors” can land employers in trouble with a wide variety of federal and state government agencies if the workers are determined to be employees under any number of laws, each with its own definition of who is an “employee.” Misclassifying employees as independent contractors typically means that no employment taxes are withheld, no unemployment taxes are remitted worker’s compensation and group health insurance is not provided, among other liabilities.  Consequently, when federal or state agencies such as the IRS or Minnesota Department of Employment and Economic Development challenge employers using independent contractors through an audit or in response to a worker’s complaint, the liability can be massive.

To make matters worse, thanks to a recent unfair labor practice, or ULP complaint issued by one of its Regional Directors in Los Angeles, CA, the National Labor Relations Board (NLRB) can be added to the list of agencies that may challenge an employer’s use of independent contractors and/or other contingency workers. The complaint is unique in that it alleges the employer, Intermodal Bridge Transport, misclassified its drivers as independent contractors and, in doing so, interfered with the protections employees are to enjoy under federal labor law.  This complaint follows a directive from the NLRB’s General Counsel in Washington, D.C., Richard Griffin, for the Board’s Regional Directors to explore issues involving “the employment status of workers in the on-demand economy.”  It also is consistent with the NLRB’s ongoing efforts to expand the agency’s reach into non-union workplaces.

The rationale used by the NLRB’s Regional Director, is that treating workers as independent contractors or other non-employee contingency workers necessarily inhibits rights specifically granted to employees under the National Labor Relations Act, as they are enforced by the NLRB.  Among other things these protected rights include the right to engage in forming or joining a union, as well as other “concerted activities” for their mutual aid and protection.  Workers not identified as employees would not be inclined to understand that they have these rights, according to the Board’s presumed theory.

Independent contractors and other non-employee contingent workers are widely used by American businesses and can form a very beneficial relationship for both parties. However, now more than ever it is essential that businesses take great care to ensure that these relationships are truly independent and do not cross the sometimes nebulous “line” into an employer/employee relationship. It is a fine line that shifts, depending on which federal or state agency is defining it.  Businesses must now add the NLRB to this list of agencies that may question the status of workers.

Given the stakes, where a ruling that workers have been misclassified can threaten a business’ very existence, employers are well-advised to seek advice from an expert in this area of the law before engaging independent contractors. Obviously an audit or complaint should be taken very seriously. 

Questions? Contact Attorney James B. Sherman at (952) 746-1700 or email jasherman@wesselssherman.com. 

NLRB Judge Rules that Employer Violated Federal Labor Law by Firing Employee for Profanity-Laced Derogatory Comment about a Customer

March 2016
By James B. Sherman, Esq.

Employers are likely to put this recent decision in the ever growing category of unthinkable rulings coming from the National Labor Relations Board (NLRB) these days. An employee of Quicken Loans commented to a co-worker during a conversation that took place in a restroom, that a customer needed to “call a client care specialist and stop wasting my [f-ing] time.” When a manager later learned of this the employee believed to have made the comment, was summarily discharged. Management declared that the offending employee was terminated to uphold a company culture where all employees are expected at all times to display the utmost degree of professionalism and integrity. However, as is becoming more and more common these days, even for those who are not represented by a union, the employee went to the NLRB to file an “unfair labor practice,” or ULP charge. Following an investigation the NLRB’s General Counsel issued a complaint against Quicken Loans and the matter went to a full evidentiary hearing. Following the hearing, Administrative Law Judge (ALJ) Dickie Montemayor ruled in the employee’s favor. Notwithstanding the employee’s use of a vulgarity in reference to a customer, the ALJ determined the profane comment nevertheless amounted to “concerted activity” worthy of protection under Section 7 of the National Labor Relations Act. The ALJ therefore ruled that Quicken Loans violated federal labor law and ordered the firm to: (1) rehire the employee; (2) pay him for all lost earnings and otherwise make him “whole”; and (3) eliminate any work rules that “unlawfully restrain … employees’ rights to discuss working conditions.” In other words, Quicken Loans’ expectations for employees to at all times display professionalism, integrity, etc. interfered with this employee’s “protected right” to refer to its customer using profanity and, therefore, was deemed an unlawful policy that could not be maintained!

Section 7 of the NLRA prohibits employers from unlawfully interfering with or restraining employees’ rights to engage in “concerted activity” for the purpose of “mutual aid and protection” in regards to terms and conditions of employment. For decades in the past, in order for conduct to be protected as “concerted” the NLRB has required that an employee must have acted on behalf of more employees than just himself or herself. However, in the Quicken Loans case the employee’s comment clearly was directed to a co-worker, complaining about a customer. How, you ask, can this have been found to involve mutual aid and protection for others? The ALJ somehow concluded that the employee’s profanity was a “preliminary action” necessary to “lay the groundwork for group activity.” Really? The ALJ appears to have used pure speculation to conclude that the employee’s f-bomb was used to cause the other employee to voice support for his complaints. Again, really?

The ALJ’s decision in Quicken Loans, if it stands, drastically broadens the scope of protected concerted activity to include individual actions or comments that do not involve other employees, and have little or nothing to do with mutual aid or protection. Many employers will no doubt be deeply troubled that this decision found that disciplining an employee for derogatory and vulgar comments aimed at his employer’s customers, was against federal labor law. However, the Quicken Loans decision could be opening a much larger “Pandora’s Box” of problems for employers. By defining concerted/group activities to include individual comments based on an NLRB judge’s unproven assumptions that an employee appearing to be acting alone, may have been “laying the groundwork” for concerted activities at some future point in time, concerted employee activities protected by federal labor law effectively would be without limitation.

Quite understandably, a spokesperson for Quicken Loans called the decision “ridiculous.”

Questions? Contact Attorney James Sherman in our Minneapolis office at (952) 746-1700 or jasherman@wesselssherman.com.

Unionized Employers, Particularly Those that are Newly Organized, Must Know When it is Necessary to Bargain over Layoffs/Closings/Other Business Actions

Recently, the U.S. Court of Appeals in Chicago enforced a decision by the National Labor Relations Board (NLRB) which had found AutoNation, Inc. unlawfully laid off some of its unionized technicians in Florida.  What made the company’s actions unlawful (besides the fact that the employees had recently joined a union) was that the layoffs were done without first bargaining with the employees’ union. The company claimed that dire economic circumstances during the Great Recession, made the layoffs inevitable and, thus, negotiating with the union would have been a waste of time.  The NLRB disagreed, finding that AutoNation was required to negotiate with the International Association of Machinists (IAM) before it could lay off any employees. Because the layoffs were found to be unlawful and the court has now enforced the Board’s findings, the next step will be for the NLRB to fashion a standard “make whole” remedy for the laid off workers. Ultimately, back pay for the employees may be huge since the case is many years old due to the fact that prior rulings of the NLRB were invalidated as a result of the Supreme Court’s ruling in Noel Canning, which found that President Obama’s interim appointments were unlawful.

This case serves as a reminder to employers with unions: negotiating a contract, or “collective bargaining agreement” (CBA) may not be the only occasion where union negotiations are mandated by federal labor law. This may be so even where management has reserved decision-making authority in a CBA (e.g. a well written management’s rights clause providing that management has discretion to decide layoffs, etc.).  Depending on the circumstances, there still may be an obligation to negotiate “effects” of some decisions if not the decisions themselves.  The stakes can be quite high.  Failing to negotiate with a union where required by law, can result in an employer being ordered to pay back pay or in some instances, to reopen a closed facility.

For guidance on issues of “effects bargaining,” “decision bargaining,” and other union negotiation issues, contact Attorney James Sherman at (952) 746-1700 or email jasherman@wesselssherman.com. 

8th Circuit Court of Appeals Approves of NLRB’s Micro Unit Analysis

In FedEx Freight v. NLRB, the 8^th Circuit Court of Appeals (which covers Minnesota, Iowa, and a handful of other nearby states) weighed in for the first time and determined that the analysis under the NLRB’s controversial 2011 Specialty Healthcare decision is acceptable under the National Labor Relations Act.  Under this analysis, unions have the ability to organize small “micro units,” rather than larger bargaining units encompassing all or a large portion of an employer’s workforce.  For example, if the unit meets the test in the Specialty Healthcare decision, a union could organize a small unit of 6 out of an employer’s 106 employees—or multiple unions could each organize units of 6 employees each, and cause the employer to bargain individually with each bargaining unit!  Unions like these micro units because they are often easier to organize, and provide a way to divide and conquer a larger workforce, while employers are more likely to prefer to deal with an entire workforce as a whole or, a large segment thereof. 

Based on this analysis, the NLRB will first determine whether a bargaining unit proposed by the union is appropriate because it consists of employees who are “readily identifiable as a group (based on job classifications, departments, functions, work locations, skills, or similar factors)” and who “share a community of interest.”  Then, if the proposed unit is appropriate under this test, the employer can challenge the unit by showing that there are additional employees who need to be included in the unit to be appropriate—this is a high standard, and merely showing that another unit would be more appropriate is not sufficient.

This analysis is problematic for employers, because it gives unions the ability to pick and choose small groups of supporters to organize, and get a foot in the door to non-unionized employers, and then use these “insiders” to organize another group, and so on.  Additionally, bargaining with multiple different groups of employees is time consuming and leads to inconsistent labor relations.  However, the NLRB is already using this 8^th Circuit decision to support extending its analysis to other circuits.  For assistance in dealing with a union organizing campaign in your workplace, contact Wessels Sherman attorneys at (952) 746-1700 or email

jasherman@wesselssherman.com.

NLRB Judge Rules that Employer Violated Federal Labor Law by Firing Employee for Profanity-Laced Derogatory Comment about a Customer

Employers are likely to put this recent decision in the ever growing category of unthinkable rulings coming from the National Labor Relations Board (NLRB) these days.  An employee of Quicken Loans commented to a co-worker during a conversation that took place in a restroom, that a customer needed to “call a client care specialist and stop wasting my [f-ing] time.” When a manager later learned of this, the employee believed to have made the comment was summarily discharged.  Management declared that the offending employee was terminated to uphold a company culture where all employees are expected at all times to display the utmost degree of professionalism and integrity.  However, as is becoming more and more common these days, even for those who are not represented by a union, the employee went to the NLRB to file an “unfair labor practice,” or ULP charge. Following an investigation the NLRB’s General Counsel issued a complaint against Quicken Loans and the matter went to a full evidentiary hearing. Following the hearing, Administrative Law Judge (ALJ) Dickie Montemayor ruled in the employee’s favor. Notwithstanding the employee’s use of a vulgarity in reference to a customer, the ALJ determined the profane comment nevertheless amounted to “concerted activity” worthy of protection under Section 7 of the National Labor Relations Act.  The ALJ therefore ruled that Quicken Loans violated federal labor law and ordered the firm to: (1) rehire the employee; (2) pay him for all lost earnings and otherwise make him “whole”; and (3) eliminate any work rules that “unlawfully restrain … employees’ rights to discuss working conditions.”  In other words, Quicken Loans’ expectations for employees to at all times display professionalism, integrity, etc. interfered with this employee’s “protected right” to refer to its customer using profanity and, therefore, was deemed an unlawful policy that could not be maintained!

Section 7 of the NLRA prohibits employers from unlawfully interfering with or restraining employees’ rights to engage in “concerted activity” for the purpose of “mutual aid and protection” in regards to terms and conditions of employment. For decades in the past, in order for conduct to be protected as “concerted” the NLRB has required that an employee must have acted on behalf of more employees than just himself or herself. However, in the Quicken Loans case the employee’s comment clearly was directed to a co-worker, complaining about a customer.  How, you ask, can this have been found to involve mutual aid and protection for others?  The ALJ somehow concluded that the employee’s profanity was a “preliminary action” necessary to “lay the groundwork for group activity.” Really? The ALJ appears to have used pure speculation to conclude that the employee’s f-bomb was used to cause the other employee to voice support for his complaints. Again, really? 

The ALJ’s decision in Quicken Loans, if it stands, drastically broadens the scope of protected concerted activity to include individual actions or comments that do not involve other employees, and have little or nothing to do with mutual aid or protection.  Many employers will no doubt be deeply troubled that this decision found that disciplining an employee for derogatory and vulgar comments aimed at his employer’s customers, was against federal labor law.  However, the Quicken Loans decision could be opening a much larger “Pandora’s Box” of problems for employers. By defining concerted/group activities to include individual comments based on an NLRB judge’s unproven assumptions that an employee appearing to be acting alone, may have been “laying the groundwork” for concerted activities at some future point in time, concerted employee activities protected by federal labor law effectively would be without limitation. 

Quite understandably, a spokesperson for Quicken Loans called the decision “ridiculous.”

Questions? Contact Attorney James Sherman in our Minneapolis office at (952) 746-1700 or jasherman@wesselssherman.com.

Court of Appeals Upholds NLRB Decision Backing Employee Posters Aimed at Damaging their Employer’s Business During Union Organizing

The Eighth Circuit Court of Appeals has upheld a determination by the National Labor Relations Board which held that a Minnesota Jimmy John’s franchise violated federal labor law during a union attempt to organize its employees.  What did the employer do to get in such trouble with the NLRB, you ask?  MikLin Enterprises Inc., the franchisee, was found guilty of removing posters placed near its restaurant entrances by certain pro-union employees and terminating the employees responsible for the postings.  Why would an employer get so upset about a poster, you ask?  The posters in this case complained that employees were not paid sick leave and, therefore, implied that Jimmy John’s sandwiches were being prepared by sick employees who might get customers sick.  Specifically, the posters stated to potential customers approaching the restaurant: “We Hope Your Immune System Is Ready Because You’re About To Take the Sandwich Test ...” Clearly, the posters were deliberately designed to drive customers away and harm the Jimmy John’s franchise’s reputation and business.  The case raises the question: Just how far can employees go in the name of promoting a union?  The answer from the NLRB and, on appeal, the 8^th Circuit?  Pretty far!  At least one appellate judge dissented, arguing that such “damaging disparagement” crossed the line of what federal labor law ought to protect as “concerted activity” in support of a union.  Many employers and people in general, probably agree with the dissenting judge!

Questions? Contact Attorney James Sherman at (952) 746-1700 or jasherman@wesselssherman.com. 

February 2016 Was Largely Unkind to the NLRB in Minnesota and Nearby States

Like Punxsutawney Phil, the National Labor Relations Board (NLRB) emerged from the comfort of that agency’s “den,” in February 2016, only to see some of its decisions “overshadowed” by the U.S. Court of Appeals for the 8^th Circuit when the court refused to enforce them on appeal.  In one case the appellate court reversed a Board decision that had found an employer unlawfully disciplined an employee for soliciting union support from co-workers while they were working.  In another case involving an employer in the construction industry, the court determined that the NLRB had issued an “unlawful order” when it tried to enforce an operating engineers (IUOE Local 150) collective bargaining agreement for employees already covered by an agreement with the Laborer’s Union (LIUNA).  These were big victories for those involved as well as employers everywhere, yet it remains to be seen whether they signal an extended season of cold shoulder treatment for the NLRB in 2016.  If nothing else these recent court rulings signal that our federal appellate court in the 8^th Circuit will not rubber-stamp the Board’s growing list of aggressive decisions, many of which employers see as favoring unions and employees over employers.

Employers unlucky enough to land in the NLRB’s world often find it necessary to pursue their cases on to the federal courts of appeals in order to feel that they have a reasonable shot of prevailing.  A prime example that has gained national attention, is the Board’s ruling in its D.R. Horton case involving a non-union employer.  In that case the NLRB ruled that the employer unlawfully interfered with its employees’ protected right to engage in “concerted activities” by enforcing an arbitration agreement whereby employees waived their right to pursue class action claims in court.  The 5^th Circuit Court of Appeals, in Louisiana, refused to enforce the D.R. Horton decision, criticizing the Board’s attempt to equate lawsuits with strikes and other employee group activities that have long been protected by federal labor laws.  Undeterred, the NLRB has continued to make similar findings against employers outside the 5^th Circuit.  In fact, just as the 8^th Circuit Court of Appeals was rescuing two employers from unfavorable NLRB decisions the agency issued yet another “Horton-like” decision against a Minnesota Applebee’s restaurant franchisee.  As in the D.R. Horton case, the NLRB’s February 2016 Applebee’s ruling found that the employer’s handbook “Dispute Resolution Program” violated federal labor law by including a waiver provision on class-action lawsuits.  

There is no reason to think that the Applebee’s franchisee will not appeal the Board’s decision; after all, the NLRB lost on appeal in D.R. Horton and since then at least two other U.S. Courts of Appeals have criticized the Board’s rationale for declaring class-action lawsuits as a protected form of concerted employee activity under federal labor law.  If February 2016 is any indication the 8^th Circuit will be no less friendly to the NLRB in this appeal.  It is unfortunate, however, that employers must fight to within one step of the Supreme Court in order to win these cases.

Questions? Contact Minnesota attorney James Sherman at (952) 746-1700 or by email at jasherman@wesselssherman.com

Five Essential New Year Resolutions Every Employer Should Have for 2016 - 1

1.  Avoiding “joint employer” status and liability under newly adopted federal agency standards –

Last year, the National Labor Relations Board (NLRB) overhauled the test to determine whether two (or more) employers are “joint employers” for purposes of labor law, with its Browning-Ferris Industries decision.  The new test makes it much easier to establish joint employer status and is now being used to pursue claims against McDonald’s Corp. for the actions of its franchisees.  The NLRB’s test is being used to hold multiple employers liable for unfair labor practices committed by one, as in the case of McDonald’s Corp. as a joint employer with its franchisees.  Joint employer status may also be used to impose collective bargaining and union contract obligations, as well as determining whom can be subjected to picketing and other strike activity or economic pressure, from unions. 

The Department of Labor (DOL) recently issued its own definition of “joint employers,” amid allegations from some United States Congressmen of collusion between the two agencies.  Although some of the factors in the two tests are similar (the DOL definition is actually broader than that of the NLRB), the consequences of finding a joint employer relationship by the different agencies differ significantly.  The DOL’s guidance is relevant for the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).  Under these laws, the hours worked for joint employers will be aggregated for purposes of determining if an employee has worked overtime during a workweek.  In either case, both joint employers will be jointly liable for any violations under these laws.  

Because of the severe ramifications at stake and the current heightened focus on the issue, we highly recommend that employers make the New Year’s resolution of auditing any potential joint employment relationships with the help of someone knowledgeable in these areas.   

NLRB Gone Wild: Redefining Joint Employers, Confidentiality of Investigations, and Arbitration Agreements with Class Action Waivers

November 2015

The NLRB has been making headlines time and again for its radical departures from years of precedent, impacting unionized and non-union employers alike, from expanding the definition of who will be considered a “joint employer” to limiting employers’ ability to keep their investigations confidential, to preventing employers from entering into arbitration agreements with their employees that require settling disputes individually. The following are just some of the recent drastic actions taken by the NLRB and what they mean for employers.  

NLRB Expands Definition of “Joint Employer”: In a departure from its own decades-old precedent, the NLRB has redefined—with a much broader definition—who will be considered a “joint employer.” Under this new standard, it is sufficient that the employer has the right to control the terms and conditions of employment, even if the employer does not actually exercise that right. Further, this control can be exercised indirectly, such as through an intermediary. The Board’s newly articulated definition leaves its judges wide latitude to determine whether two business entities are “joint employers” based on theoretical hypotheses of potential control, rather than any demonstrated control as was required under past precedent.

What does this mean for employers? No doubt more employers will be considered as joint employers for purposes of collective bargaining, joint liability for unfair labor practices and breaches of collective bargaining agreements, and economic pressure, such as strikes, pickets, and boycotts.

NLRB Inhibits Employers’ Ability to Keep Investigations Confidential: In two separate decisions, the NLRB eroded the ability of employers to keep internal investigations of employee conduct, etc. confidential. In one decision, the NLRB reversed its long-standing precedent that an employer usually needn’t oblige a request that it share witness statements with a union representative. The new standard now, is that witness statements must be provided to a union upon request, unless the employer can demonstrate “a legitimate and substantial confidentiality interest” by showing that the “witness[es] need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, or there is need to prevent a cover up.” Even where an employer meets this high burden the NLRB will weigh the employer’s confidentiality interest against the union’s need for the information.

In the second, related decision the NLRB held that a general policy in an employee handbook or work rule requiring confidentiality in investigations, violates employees’ “Section 7 rights” to “engage in . . . concerted activities for the purpose of . . . mutual aid or protection . . . .” Specifically implicated in this case is the right of employees to discuss potential discipline among themselves and/or with a union or other representative. Under the new rule an employer may not maintain a broad policy, but may require confidentiality only on a case-by-case basis where it can show that “corruption of its investigation would likely occur without confidentiality.” Examples cited in the Board’s decision include circumstances where “witnesses need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, [or] there is a need to prevent a cover up.”

NLRB Continues to Invalidate Arbitral Class Action Waivers: The NLRB has continued to apply its controversial holding that arbitration agreements that waive the right to engage in class actions are illegal and unenforceable under the National Labor Relations Act. The Board’s rather questionable rationale, which thankfully has yet to be adopted by any court on appeal, essentially treats the right of employees to bring class-action lawsuits the same as the right to join together in a strike. In other words, suing is just another form of “concerted activity” protected by federal labor law.

The growing number of employers using arbitration agreements that require employees to pursue grievances individually and therefore prohibit class grievances, now face the NLRB declaring their agreements unlawful. The issue seems destined for ultimate determination by the U.S. Supreme Court.

For assistance with these or other NLRB issues, contact Jim Sherman (jasherman@wesselssherman.com)  in our Minneapolis office at (952) 756-1700.

NLRB Proclaims Confidentiality Requirements Unlawful

November 2015
By Alan E. Seneczko

Having reviewed countless employee handbooks over the past 30+ years, I have found that it is not uncommon for employers to maintain policies that require employees to keep investigations of complaints of sexual harassment and other disciplinary matters confidential. Although the reasons for doing so often vary, most employers contend that this requirement is necessary due to the sensitivity of the subject matter and to protect the identity of potential witnesses. According to the NLRB, such generalized concerns are not enough to prevent such a policy from unlawfully infringing on employees’ right to discuss the terms and conditions of their employment with their fellow employees.

In The Boeing Company, 382 NLRB No. 195 (Aug. 27, 2015), the Board reviewed Boeing’s requirement that all employees involved in human resources investigations not discuss the matter with any other employee, except company officials conducting the investigation or their union representative. The Board found that such a blanket confidentiality policy violated Section 8(a)(1) and unlawfully interfered with employees’ Section 7 right to engage in concerted activity. In doing so, it rejected Boeing’s contention that the policy was necessary to protect witnesses, victims or employees under investigation from retaliation or harassment; to prevent the spread of unfounded rumors; to ensure the integrity of the investigation; and, to encourage employees with complaints to come forward. The Board disagreed, holding that an employer may only prohibit employee discussion of an investigation when its need for confidentiality with respect to that specific investigation outweighed employees’ Section 7 rights. In other words, in order to maintain such a requirement, an employer must be able to demonstrate legitimate concerns about witness intimidation or harassment, the destruction of evidence or other misconduct that might compromise the integrity of its investigation.

With this and all of its other recent decisions concerning employee handbook provisions, “no gossip” policies, interpersonal relations, and social media postings, the NLRB is continuing its aggressive and expanding effort to regulate all aspects of the workplace – and an employer’s ability to manage it, regardless of whether it is a union or non-union environment. Although the NLRB may not be knocking on your door today, it would be prudent to keep these concepts in mind the next time you are reviewing your employee handbook and other policies.

Questions? Please contact Attorney Alan E. Seneczko at (262) 560-9696, or email alseneczko@wesselssherman.com.

Pro-Union NLRB Agenda: Stay Up to Date!!

July, 2015
By Richard H. Wessels, Esq.

Employers need to stay up-to-date on the NLRB’s pro-union agenda. Keep in mind –even though you are non-union and an unlikely union target, there still is a need to stay alert. A large percentage of NLRB cases these days involve “protected concerted activity”. In other words, there is no union involved at all. The NLRB is aggressive in asserting itself in non-union situations and stretching the law to create coverage for non-union employees! 
 
Here is a laundry list of areas where the NLRB is making it easier for unions who want to organize and for non-union employees who wish to challenge their employer: 

• Quickie elections – much shorter time frames.
• Specialty Healthcare types of cases – micro units which give a union almost any voting unit they want.
• E-mail policies – permits use of company e-mail for discussion of union activity.
• Social media policies – vulgar comments are protected activity!
• Employee handbooks – 30 page NLRB General Counsel memo perhaps more confusing than enlightening. The memorandum is, however, useful and must reading, if for no more than the modified rules in the Wendy’s settlement which the NLRB has ok’d.
• Rats, banners and street theater in the construction industry – tougher to get 8(b)(4) violations.
• Post-contract expiration obligations of the employer – reversal of long standing rule that check off does not survive contract expiration.
• Tougher independent contractor rules – easier for union to get independent contractors eligible to vote in union elections.
• Confidentiality agreements – can have a chilling effect on organizing and thus a ULP.
• Non-union arbitration agreements – NLRB says unlawful because it restricts collective action.
• Insubordinate conduct – previously unprotected activity such as profanity, disparagement and vulgarity is now protected.
• Joint employers – franchiser-franchisee relationship becomes joint-employer.
• Confidentiality of witness statements – casts doubt on ability to keep statements confidential in employment-related investigations.
• Wearing of buttons and stickers – employer attempts to control this are regularly struck down by the NLRB.
• Staffing company and host company employees in the same appropriate unit –NLRB has issued a notice to the public inviting briefs on a pending case. This is a clear signal that the NLRB is about to reverse existing case law that forbids inclusion in the same unit without the consent of both employers.

These are all complicated and fact-sensitive areas. As but one example, you might want to consider a disclaimer in your employee handbook to undercut a strained interpretation that it violates Section 7 rights. If you want to talk about any of this, contact me at (630) 377-1554 or by email at riwessels@wesselssherman.com.

NLRB Judge Finds Employer Committed an Unfair Labor Practice When it Fired Worker for Making Racist Remarks While Picketing

An Administrative Law Judge (ALJ) for the National Labor Relations Board recently held that an employee was engaging in “protected activity” when he made racist remarks toward African American replacement workers as they entered a plant to work during a labor dispute.  An arbitrator had ruled in a separate proceeding that the employer was justified in terminating this individual for racial harassment.  However, the Board’s ALJ determined that because the racially offensive comments were made during the course of union picketing at the plant’s entrance, in opposition to workers who were replacing the picketers, his actions were protected by federal labor law. 

During the labor dispute, as is often the case picketers regularly yelled and gestured at the replacement workers as they entered and departed from working in the plant.  After vans carrying several African American replacement workers passed through the picket line, the employee in question made the following racially offensive remarks: “Hey, did you bring enough KFC for everyone?” and “Hey, anybody smell that?  I smell fried chicken and watermelon.”  Based on these comments, the employer determined that the employee violated its harassment policy and terminated the employee.  The union grieved the termination, and an arbitrator sided with the employer, finding that there was just cause to terminate the employee.

In separate proceedings before the NLRB, however, an ALJ determined that the employer acted unlawfully in terminating this employee for making these racial remarks.  According to the ALJ’s decision, an employer can only deny reinstatement to a picketer if the misconduct “may reasonably tend to coerce or intimidate employees in the rights protected under the Act,” or if the employee’s actions raised a reasonable likelihood of an imminent physical confrontation.  The ALJ determined that, although reprehensible, the employee’s actions did not meet either of these standards. 

The ALJ indicated, however, that this highly protective standard for behavior on a picket line does not apply to behavior in the everyday workplace, such as on the shop floor.  Therefore, this decision does not mean that an employer would have to put up with racist comments in the workplace.  In fact, an employer has an obligation to appropriately respond to these sorts of comments, which could create a racially hostile workplace.  Under this ALJ decision, however, the employer would find itself in a Catch-22: if it terminates the picketing employee, the NLRB says it violates labor law; however, if it takes no action against the employee, it could face a race harassment claim.

Questions? Contact the attorneys in Wessels Sherman’s Minneapolis office at (952) 746-1700.

Minnesota Federal Court Decision Sheds Light on Importance of Union Authorization Cards

May 2015

By: James B. Sherman, Esq.

The National Labor Relations Board’s (NLRB) Minneapolis Regional Office recently sued an employer in federal district court in Minnesota, seeking to force an employer to recognize and bargain with a union that had lost an election among its employees.  The court denied the NLRB’s request for injunctive relief, but the case holds important lessons for employers.  The first lesson is that employers can be saddled with a union in certain circumstances even where no election has taken place, or where the union has actually lost an election.  Another lesson is that a more aggressive NLRB (and regional office #18 in Minnesota) will not hesitate to sue in court if it determines an election was tainted by “unfair labor practices.”  A more subtle but perhaps more important lesson is that employee “authorization cards” solicited by unions are legally significant and binding in the eyes of the NLRB, as the facts of this particular case clearly demonstrate. 

Usually the only way that an employer becomes obligated to recognize and bargain with a union is if a majority of the employees elect that union as their exclusive bargaining representative in an election conducted by the NLRB.  While the NLRB’s procedures changed drastically as of April 14, 2015 with the implementation of its highly controversial new so-called “Ambush Election Rules,” the process continues to begin with union organizers or supporters soliciting support from employees in the form of a signed authorization card.  These cards vary somewhat depending on the union, but they generally state in writing that the signing employee hereby “authorizes,” “selects,” or otherwise “designates” a particular union to act as her or his “exclusive bargaining representative with respect to wages, hours and other terms and conditions of employment.” 

Despite what clearly is very legal and binding language, employees are often told to sign union authorization cards purely to allow an election to take place; in other words, union advocates frequently tell employees the cards are meaningless and serve only to allow the NLRB to conduct an election, where employees are then free to vote as they choose.  While a pitch for “Democracy” may sound appealing, in truth (and not surprisingly) the NLRB interprets signed authorization cards to mean what they say – that the person who signed the card actually designates the union to act as her or his exclusive bargaining representative, for all terms and conditions of employment!

The case, Osthus v. A.S.V., Inc., involved an election which the employer won by a majority vote of 26-15.  However, the union alleged that the vote was tainted by a number of allegedly very egregious labor law violations.  Based on these allegations, coupled with the fact that a majority of employees had signed union authorization cards well prior to the election, the NLRB’s Regional Director in Minneapolis sued in federal court to order the employer to recognize the union.

In the week leading up to the election, several members of management allegedly made comments suggesting that if the employees chose to unionize, production would shift from their location to a different, non-unionized location.  Prior to these statements, a majority of the bargaining unit signed authorization cards.  However, after the comments were allegedly made, the employees voted down the union by a 26-15 vote.  The NLRB used this as evidence of a sharp decline in support for the union after the employer allegedly made unlawful comments.  However, authorization cards do not necessarily show support for a union.  When soliciting authorization cards, unions will frequently tell employees that the cards will only be used to get an election, and at that time, the employees will vote whether or not they want the union.  However, this case highlights how the cards can be used in other ways—in this case the NLRB used the cards as evidence that at one time, the union had the support of the majority of the bargaining unit employees, and tried to force the employer to bargain with the union on this basis.

Many employers are unprepared when faced with a union organizing drive, and find themselves in trouble after saying something that is construed as an improper threat, promise, or interrogation.  Employers should have a plan in place so they are trained in what they can and cannot say or do to oppose union organizing. 

For help in responding to a current union organizing campaign, or to be proactive in case of any future organizing, contact Jim Sherman at (952) 746-1700 or by email at jasherman@wesselssherman.com. 

Ambush Election Countdown – April 14, 2015

March 2015
By Richard H. Wessels, Esq.

The Ambush election countdown is on. The new pro-union NLRB quickie election rules are slated to go into effect April 14, 2014. We remain hopeful that the on-going challenge in the US Congress and/or legal challenges in Federal Courts in Texas and in Washington, DC will stall this big advantage which will be given to labor unions. But, one never knows. Here are the key elements of the new rules:

•  Fast track elections (10-21 days)
• Tough procedural changes limiting employer rights
• Detailed requirements on employee information the employer must provide to the union  early in the process – name, home address, personal phone number, email address

What should an employer do? Our best answer is assume the worst and be prepared. At a minimum, this should include:

•  Basic skills training for front-line supervisors. Front-line supervisors are your best defense. We can accomplish this in a supervisor training session of about an hour and a half.
• Review our updated ABCs of Staying Union Free. My legal assistant Lisa Narug has just completed the update and you can receive a complimentary copy by contacting her at linarug@wesselssherman.com
• Be ready to react immediately. It’s comparable to a 911 situation! If you are hit with a petition, contact a skilled labor lawyer immediately. This is not something for someone who has not had vast experience in union election campaigns. We stand ready to react on a moment’s notice. My email address is riwessels@wesselsherman.com. My office phone is 630-377-1554 and my cellphone is 312-401-7444.

Stand by for updates on this dangerous situation. As I said in one of my recent updates, our guess is that one of these challenges will be successful and the ambush rules will be stalled. However, you need to be prepared in the event that they are implemented on April 14^th.

Questions? Call Attorney Dick Wessels of Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email him at riwessels@wesselssherman.com.