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NLRB Ruling Alters Workplace Landscape

Posted by Michael Rudman on Aug 28, 2015 1:55:00 PM

The National Labor Relations Board (NLRB) has fundamentally altered the workplace landscape for companies that hire contractors to staff their facilities.

ManufacturingWorkerSmallThe NLRB ruled in a 3-to-2 decision yesterday that a company that hires a contractor to staff its facilities may be considered a joint employer of the workers at that facility, even if the company does not actively supervise them. A union representing those workers would therefore be legally entitled to bargain with the parent company, not just the contractor, under federal labor law.

The ruling, which is likely to be challenged in court, could also expose employers to regulatory and legal liability based upon the actions of contractors.

“The ruling is bad news for employers in many industries who use third-party labor providers. Companies use labor contractors to staff up during busy times or to permit themselves to concentrate on their core business, but the NLRB ruling may change that,” said Gary MacDonald, Executive Vice President of the Employers Resource Group at Associated Industries of Massachusetts.  

NLRB Chairman Mark Gaston Pearce was joined by fellow Democrat-appointed members Kent Y. Hirozawa and Lauren McFerran in the majority opinion; Republican members Philip A. Miscimarra and Harry I. Johnson III dissented.  

"The majority’s decision will have the effect of disturbing legitimate business relationships and cause businesses to become embroiled in the labor disputes of their commercial partners," said Rob Fisher, a labor lawyer for the Boston law firm Foley Hoag LLP and chair of the AIM Human Resources Committee.

"What is disingenuous about the decision is the majority’s repeated insistence that it merely restated the existing joint employer test.  As the dissent correctly points out, the majority’s approach removes all limits on the kind or degree of control necessary for joint employer status.  This a major shift in federal labor law."

The NLRB applied what it called long-established principles to find that two or more entities are joint employers of a single work force if (1) they are both employers within the meaning of the common law;  and (2) they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the NLRB said it will - among other factors - consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so. 

The consequences of the ruling could be far reaching. Here are a few examples:

  • A contractor that provides laborers to a distribution center is charged by the NLRB with an unfair labor practice. Any judgement could be entered against the distribution center operator as a joint employer.  That judgement could in very rare instrances include a so-called Giselle ruling against the third party requiring them to recognize a union in lieu of a vote.  The distribution center operator could be compelled to continue to use the third party employees even though they now may be no longer cost effective.
  • A union organizes a single unit of a franchised fast-food operator.  The parent company could be compelled to negotiate with the union and, by extension, provide financial support if the economic circumstances of the franchisee prohibit funding the new contract. If the corporate parent were to agree to pay higher wages or provide better benefits, it would apply only to that particular restaurant, in the same way that concessions granted to employees in a single unionized portion of a national company that is not franchised apply only to that portion. At the same time, however, the concessions may give unionized employees at other locations practical leverage in their negotiations with the company.

“This change will subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential joint liability for unfair labor practices and breaches of collective-bargaining agreements, and to economic protest activity, including what have heretofore been unlawful secondary strikes, boycotts, and picketing,” Miscimarra  and Johnson wrote in their dissent.

Employers believe they should not be required to bargain with employees of their contractors or franchisees, and should not be held liable for labor-law violations involving workers over whom they exert only indirect supervision. The NLRB rejected that logic.

“It is not the goal of joint-employer law to guarantee the freedom of employers to insulate themselves from their legal responsibility to workers, while maintaining control of the workplace,” the labor board majority wrote.

Fisher at Foley Hoag warns that businesses with existing contracts for the supply of workers or subcontracting arrangements should not assume that the decision is stayed pending the outcome of any court challenges.

"The NRLB’s position is usually the opposite, so we can assume that unions will now be asserting the new joint employer test and that the NLRB will be applying it.  I certainly encourage businesses to review their contractual relationships and to identify potential areas of risk.  However, the Board’s apparent emphasis on indirect control as being sufficient to establish joint employer status means that normal contractual demands relating to the timing, manner and quality of performance by a vendor may be enough," he said.     

Topics: Unions, National Labor Relations Board, NLRB

NLRB Will Force Employers to Notify Workers of Union Rights

Posted by Mike Rudman on Aug 25, 2011 8:47:00 PM

The National Labor Relations Board announced Thursday that it has issued a "final rule" that will require employers to notify workers of their right to join a union.

NLRB Union Notifcation RulePrivate-sector employers whose workplaces fall under the National Labor Relations Act will be required to post the employee rights notice where other workplace notices are typically posted. Also, employers who customarily post notices to employees regarding personnel rules or policies on an Internet or Intranet site will be required to post the union notice on those sites. Copies of the notice will be available from the NLRB's regional offices, and it may also be downloaded from the NLRB Web site.

The notice, which is similar to one required by the U.S. Department of Labor for federal contractors, states that employees have the right to act together to improve wages and working conditions, to form, join and assist a union, to bargain collectively with their employer, and to refrain from any of these activities. It provides examples of unlawful employer and union conduct and instructs employees how to contact the NLRB with questions or complaints.

Associated Industries of Massachusetts opposes the notification rule.

“AIM member employers are not pleased by the prospect of being forced to post an invitation to workers to join a union,” said Brian Gilmore, Executive Vice President of Public Affairs at AIM.

“The rule provides no value to companies or their hard-working employees. It merely creates an opportunity for organized labor to create stress in a healthy employer/employee relationship.”

NLRB Chairman Wilma B. Liebman and members Mark Gaston Pearce and Craig Becker approved the final rule, with member Brian Hayes dissenting. The rule will be published in the Federal Register on Friday will take effect 75 days later.

The NLRB says it modified several elements of the proposed rule after receiving more than 7,000 comments. Employers will not be required to distribute the notice via email, voice mail, text messaging or related electronic communications, even if they customarily communicate with their employees in that manner, and they may post notices in black and white as well as in color. The final rule also clarifies requirements for posting in foreign languages.

The rule would treat an employer's failure to post the statement of rights under the National Labor Relations Act as an unfair labor practice. The threat of an unfair labor practice charge is particularly troubling for employers since two members of the NLRB advocate using a 1969 court decision to resolve those charges by granting a union the right to represent workers without an election.

The possibility of the NLRB allowing a union to represent workers without an election  is based upon the Gissel Packing Company decision in which the U.S. Supreme Court  approved the use of authorization cards as a measure of union sentiment for the purpose of imposing a bargaining order as remedy for an employer’s unfair labor practices. While the Court also noted that authorization cards are “admittedly inferior to the election process...,”  both Liebman and Becker have stated that Giselle should be the rule, not the exception.

Topics: Employment Law, Organized Labor, National Labor Relations Board, NLRB

NLRB Rule Would Permit Multiple Bargaining Units at Same Company

Posted by Mike Rudman on Feb 22, 2011 8:59:00 AM

The National Labor Relations Board (NLRB) may use a narrow case involving nursing-home workers to establish rules allowing unions to organize small groups - as few as five to 10 employees - at individual workplaces.

NLRBThe Board’s decision in Specialty Healthcare and Rehabilitation Center of Mobile has the potential to alter how bargaining units are established in six million companies covered by the National Labor Relations Act.  At issue is whether the NLRB will create a presumption that a bargaining unit – the group of employees eligible to vote in a union election and ultimately represented by the union if it wins the election - is appropriate if it consists of all employees performing the same job.

AIM remains concerned that a presumption of an appropriate bargaining unit will allow organizers to create multiple “micro-unions” within the same workplace.  Those multiple bargaining units would create an administrative nightmare for employers who would have to negotiate separate contracts with each group while losing the ability to reassign employees to different jobs within the organization.

“The net effect of the proposal is that it would permit labor unions to carve out potential bargaining units simply on the basis of likely support and forego the current, universally accepted and democratic approach to organizing,” AIM Executive Vice President Brian R. Gilmore said in a letter to the NLRB  opposing the proposal.

“We urge you and your fellow members to take whatever action is necessary to prevent the Board from issuing a decision contrary to current practice, and to continue to evaluate the appropriateness of potential bargaining units on the facts of each individual case.”

The decision could make it easier for unions to organize by cherry picking a unit composed of the subset of employees most likely to organize, regardless of whether those employees constitute a practical unit. 

AIM recommends that employers who may be concerned about the implications of Specialty Healthcare and Rehabilitation Center of Mobile write directly to the NLRB and to elected officials to oppose the initiative. Letters to the NLRB should be directed to:

Hon. Wilma Liebman, Chairman
National Labor Relations Board
1099 14th Street NW
Washington, DC 20570-0001

Questions about the case may be directed to Gilmore at bgilmore@aimnet.org or 617.262.1180.

Topics: Associated Industries of Massachusetts, AIM, Organized Labor, Labor, NLRB

NLRB Seeks to Force Employers to Post Notice on Union Rights

Posted by Mike Rudman on Dec 22, 2010 2:29:00 PM

The National Labor Relations Board (NLRB) continued its aggressive reshaping of labor/management relations today by proposing rules that would require companies to notify workers – both through a workplace posting and by email - of their right to join a union.

NLRBThe rules would treat an employer's failure to post the statement of rights under the National Labor Relations Act as an unfair labor practice. The threat of an unfair labor practice charge is particularly troubling for employers since two members of the NLRB advocate using a 1969 court decision to resolve those charges by granting a union the right to represent workers without an election.

The Obama administration has already instituted a similar posting requirement for federal contractors. Employers may wish to review that poster to get a sense of what they may have to hang on their bulletin boards.

NLRB maintains in a fact sheet that the proposed rule is intended “to increase knowledge of the (National Labor Relations Act) among employees, to better enable the exercise of rights under the statute, and to promote statutory compliance by employers and unions.”

The new regulations come as unions frustrated by Congress’ decision not to pass labor priorities such as the Employee Free Choice Act or the Paycheck Fairness Act turn increasingly to the NLRB and other regulatory agencies to reverse what they view as a hostile atmosphere for organizing new members. Labor has suffered years of membership declines in the private sector, where just 7.2 percent of employees belong to a union.

Supporting the proposed posting rules were NLRB Chair Wilma Liebman, former counsel to the Teamsters, and recent board appointees Marc Pearce and Craig Becker, both of whom previously represented organized labor.  Brian Hayes, the lone Republican who serves on the board, dissented from the proposal, arguing that the NLRB lacks the authority to impose such a requirement on employers. Hayes contends NLRB can only require such a posting after a finding of an unfair labor practice by an employer.

The new rules - coupled with the Department of Labor’s stepped-up enforcement of employer misclassification of contract, temporary and exempt workers – will unquestionably aid unions as they launch an offensive to organize workers in the private sector. AIM has become aware of two local organizing campaigns just in the past two months that bear all classic hallmarks of aggressive union tactics.

AIM member employers are not pleased by the prospect of being forced to post an invitation to workers to join a union.

“I see this proposed rule as no value to the company or its associates and only an opportunity for organized labor to create stress in a healthy employer/employee relationship.  It could lead to an unwarranted distraction that could only negatively affect the wellbeing of the company and its associates,” said one employer who AIM asked to review the proposed rule.

The possibility of the NLRB allowing a union to represent workers without an election  is based upon the Gissel Packing Company decision in which the U.S. Supreme Court  approved the use of authorization cards as a measure of union sentiment for the purpose of imposing a bargaining order as remedy for an employer’s unfair labor practices. While the Court also noted that authorization cards are “admittedly inferior to the election process...,”  both Liebman and Becker have stated that Giselle should be the rule, not the exception.

Separately, the law firm Littler reports in its blog that the NLRB Acting General Counsel has announced a new initiative targeting employers during union election campaigns. In a memorandum sent to regional directors and officers, Acting General Counsel Lafe Solomon urges all NLRB regions to systematically seek additional remedies against employers charged with committing “serious” unfair labor practices during the initial phase of union organizing.

We welcome your comments below. You may also contact Brad MacDougall at AIM, bmacdougall@aimnet.org or 617.262.1180, if you have questions.

Topics: Organized Labor, Labor, NLRB

Senate OKs Two NLRB Nominations; Becker Does Not Win Approval

Posted by Christopher Geehern on Jun 22, 2010 1:59:00 PM

The U.S. Senate today confirmed union lawyer Mark Pearce and Republican policy director Brian Hayes to serve as commissioners of the National Labor Relations Board. Senators did not, however, confirm the controversial nomination of former Service Employees International Union Counsel Craig Becker.

President Obama placed Pearce and Becker on the NLRB through recess appointments March 27 despite furious opposition from business interests and Senate Republicans. The Washington Post reports today that the Senate vote to confirm only Pearce and Hayes could mean that Becker may have to step down in late 2011 when the recess appointment ends.

Associated Industries of Massachusetts opposed the Becker and Pearce nominations because of concerns that they might seek to implement the most troublesome sections of the proposed Employee Free Choice Act (EFCA) in an administrative manner. EFCA would deprive workers of the right to a secret ballot in union elections and replace it with a "card-check" system under which a union would gain bargaining authority by submitting card signed by more than 50 percent of workers.

The Senate vote came less than a week after the United States Supreme Court rules that the NLRB acted without statutory authority when it issued approximately 600 decisions during the period when vacancies left the Board with only two members. Please see yesterday's blog post by Martha Zackin Esq., for a discussion of the court decision.

Topics: Employment Law, Human Resources, NLRB

Supreme Court: NLRB Lacked Authority for 600 Labor Decisions

Posted by Martha Zackin, Esq. on Jun 21, 2010 2:27:00 PM

(Martha J. Zackin, Esq., is Of Counsel to the law firm Mintz, Levin, Cohn, Ferris, Glovsky &  Popeo, P.C.)

On June 17, the United States Supreme Court ruled, in New Process Steel v. National Labor Relations Board, No. 08-1457, that the National Labor Relations Board ("NLRB" or the "Board") acted without statutory authority when it issued approximately 600 decisions during the period when vacancies left the Board with only two members. 

The impact of the decision will likely be narrow, affecting only the New Process Steel parties and the parties to the other 74 case currently pending before the Supreme Court and the Courts of Appeals that challenged the authority of the Board to act with only two members. 

By way of background, under the National Labor Relations Act ("NLRA"), the NLRB has the authority to resolve labor disputes.  The Board is comprised of five members, each of whom must be appointed by the president and confirmed by Congress. By statute, the Board may delegate its powers to any group of three or more members.  The statute also provides that three members of the Board constitute a quorum, except that when the Board's powers have been delegated to a group of three or more members, two members may constitute a quorum.

In late 2007, the Board had only four members, two of whose terms were about to expire. Concerned that there might be vacancies for an extended period, the Board delegated its authority to three members.  The action, the Board believed, would permit the remaining two members to exercise the full powers of the Board because those two members would constitute a quorum of the three-member group. 

The vacancies remained unfilled for 27 months and from January 2008 until March 2010, the group of two issued decisions in almost 600 cases.  In two of these cases the NLRB sustained two unfair labor practice complaints against New Process Steel ("NPS").  NPS appealed both orders, challenging the authority of the two-member Board to issue the orders.  The Court of Appeals sustained the authority of the Board.

The Supreme Court ruled that the NLRA required at least a three-member Board, and, therefore, the two-member Board's rulings against NPS were invalid. The Supreme Court's decision will not only impact the New Process Steel parties, but also  the parties to the seventy-four cases now on appeal that have challenged the authority of the two-member Board.  The NLRB issued a press release saying it expects those cases to be returned to the NLRB to be adjudicated by a proper quorum of the Board, which now has four members as two of the vacancies have been filled.

But what of the more than 500 other cases, which were improperly adjudicated but not appealed?  Typically, final judgments are just that- final.  However, it may be argued that principles of finality do not apply where the judgment was issued by a body that lacked statutory authority to decide the case in the first instance. 

In any event, the NLRB will be quite busy now and for some time to come - perhaps even too busy to work towards implementing the Employee Free Choice Act by NLRB fiat, as has been advocated by new Board member Craig Becker.

Topics: Employment Law, U.S. Supreme Court, NLRB

Senator Brown Casts Vote for Workplace Fairness

Posted by Christopher Geehern on Feb 10, 2010 8:06:00 AM

Scott Brown's first major vote in the United States Senate made a clear statement about the importance of workplace fairness and economic growth.

Senator Brown joined Republicans and two Democrats last night in halting the nomination of labor-union lawyer Craig Becker to the National Labor Relations Board. The vote was 52-33, well short of the 60 senators needed to break a Republican filibuster of the nomination.

AIM asked Senator Brown on Monday to oppose the Becker nomination. The association believed that Mr. Becker, Associate General Counsel of the Service Employees International Union, would seek to impose administratively several troublesome elements of the Employee Free Choice Act, including one that would deprive workers of a secret ballot in union elections.

"Massachusetts employers applaud Senator Brown for a principled vote on a difficult issue. We appreciate his recognition of the fact that the best way to create opportunity for workers is to jump-start economic growth," said Richard C. Lord, President and Chief Executive Officer of AIM.

Senator Brown issued a statement following the vote:

"My first priority in coming to Washington is to create jobs and put people back to work. Craig Becker's theories about how the workplace should function, if ever put into practice, would impose new burdens on employers, hurt job creation, and slow down the recovery.''

The Employee Free Choice Act remains pending in the Congress. Employers throughout the country have labored furiously against the measure and remain uncertain about its prospects. My AIM colleague Kyle Pardo recently published a good summary of the bill.

Topics: AIM, Employment Law, Organized Labor, Senator Scott Brown, NLRB

AIM Urges Senator Brown to Oppose NLRB Nominee

Posted by Christopher Geehern on Feb 5, 2010 11:59:00 AM

Associated Industries of Massachusetts asked Senator Scott Brown today to oppose the nomination of Craig Becker to the National Labor Relations Board.

AIM says in a letter to Senator Brown that employers are troubled by the prospect that Mr. Becker, Associate General Counsel to the Service Employees International Union, might attempt to impose administratively some elements of the flawed Employee Free Choice Act. One of those provisions would deprive workers of the right to a secret ballot in union elections.

AIM and hundreds of other business organizations articulated their concerns about the nomination in a letter to senators last week.

The Senate Health, Education, Labor and Pensions Committee endorsed the Becker nomination Thursday by a 13-10 party line vote. The Senate has scheduled a floor vote for Monday at 5 p.m. The nomination will be one of the first significant votes cast by Mr. Brown and political observers say it will provide a signal about how his election has changed the political calculus in Washington.

Topics: Employment Law, U.S. Congress, Labor, NLRB

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