Vorys on Labor

What a Week! An Update on the NLRB Appointments

Nelson Cary — Mon, 20 May 2013 10:00:00 -0500

Hobbled by controversy over the political appointees that run the NLRB, last week brought news that the agency may not be on the road to recovery anytime soon. In twin developments, occuring on the same day last week, actions by the courts and the Congress demonstrated the tough political road ahead for the NLRB.

In the courtroom, the U.S. Court of Appeals for the Third Circuit, which hears cases arising from Pennsylvania, New Jersey, and Delaware, confronted a recess appointment question similar to the one that the D.C. Circuit Court of Appeals addressed in Noel Canning. The court examined a case that former Member Craig Becker (D) participated in deciding. Member Becker began a recess appointment to the NLRB on March 27, 2010, prior to the recess appointments of Members Griffin and Block, which were at issue in Noel Canning. After a lengthy discussion analyzing the meaning of the term "recess," as used in the Constitution, the court in NLRB v. New Vista Nursing and Rehabilitation (pdf) held that the recess appointment of former Member Becker was unconstitutional.

In Congress, the Senate held a hearing on President Obama's appointments to the NLRB. Currently, there are five nominations pending:

Chairman Pearce (D) (the only Senate-confirmed member currently serving on the NLRB) holds a term that expires in August 2013. The President has renominated him for another term, and to continue as Chairman.
Member Griffin (D) holds one of the recess appointments the D.C. Circuit found unconstitutional in Noel Canning.
Member Block (D) holds the other recess appointment at issue in Noel Canning.
Harry Johnson (R), recently nominated, currently a labor and employment attorney representing management at the Arent Fox firm.
Philip Miscimarra (R), recently nominated, currently a labor and employment attorney representing management at the Morgan, Lewis & Bockius firm. Mr. Miscimarra is also affiliated with the Center for Human Resources at the University of Pennsylvania's Wharton Business School.

The Senate committee posted video to its website of the confirmation hearing, as well as the nominees prepared statements to the committee.

The most interesting development to come out of this hearing was Senator Lamar Alexander's (R-Tenn.) position on the nominees. Senator Alexander is the ranking Republican member of the Senate committee. He announced that, because of the ruling in Noel Canning, he will not support the nominations of Members Griffin and Block and called on the President to nominate two other individuals. If the President did so, Senator Alexander "pledge[d]" to work towards their "speedy confirmation."

These twin developments are significant to labor professionals for at least five reasons:

Acting together, they increase the likelihood that there will be no action on the President's nominees anytime soon. The Third Circuit's decision strengthens the hand of those opposed to the current nominees. Senator Alexander's position suggests that all five of the nominees will not be confirmed.
Expect calls by unions for the exercise of the "nuclear option" -- that is, elimination of the filibuster rule in the Senate -- to increase. Senate Majority Leader Harry Reid (D-Nv.) suggests that he may move in this direction in July.
While the additional circuit court decision against recess appointments is significant, do not expect that it will change the NLRB's position. It will likely continue to operate on a "business as usual" basis.
For those hoping for a Republican majority on the NLRB during a Democratic administration, don't hold your breath. While this could be the outcome if the Senate confirmed only Chairman Pearce and Messrs. Johnson and Miscimarra, that is unlikely. Among other reasons, the NLRB's majority has historically been from the political party of the President.
Finally, remember that, absent the "nuclear option," time is on the side of those who would prefer to see the NLRB "inoperable." Chairman Pearce's term will end in just a few months. If Chairman Pearce's term expires without the Senate acting on the pending nominations, the NLRB will fall to just two members. Whether those members are recess appointees or not, the NLRB will lack a quorum and be unable to act.

Guidance on Legality of Employer Policies Regarding Confidentiality During Investigation of Workplace Misconduct

Nelson Cary — Fri, 10 May 2013 13:45:11 -0500

By Nelson Cary and Natalie McLaughlin

Last year, the NLRB issued a controversial decision in Banner Health System, 358 N.L.R.B. No. 93 (2012), finding that an employer violated the NLRA by prohibiting employees from discussing ongoing investigations of employee misconduct. The NLRB found that “[t]o justify a prohibition on an employee discussion of on-going investigations, an employer must show that it has a legitimate business justification that outweighs employees’ Section 7 rights.” Section 7 rights are those that entitle employees to engage in, or refrain from engaging in, protected, concerted activity, like union organizing.

In the wake of this decision, the NLRB’s Division of Advice recently released a memorandum (pdf), issued earlier this year, regarding whether an employer’s confidentiality rule precluding employee disclosure of information about ongoing investigations unlawfully interferes with employees’ Section 7 rights. In Verso Paper, No. 30-CA-089350 (2013), the employer had a Code of Conduct that prohibited employees from discussing ongoing investigations. The confidentiality provision stated:

Verso has a compelling interest in protecting the integrity of its investigations. In every investigation, Verso has a strong desire to protect witnesses from harassment, intimidation and retaliation, to keep evidence from being destroyed, to ensure that testimony is not fabricated, and to prevent a cover-up. To assist Verso in achieving these objectives, we must maintain the investigation and our role in it in strict confidence. If we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

Consistent with Banner Health, the Division of Advice found that an employer violates the NLRA when it maintains a blanket rule regarding the confidentiality of employee investigations. An employer may only prohibit employees’ discussions during an investigation if it demonstrates that it has a legitimate and substantial business justification that outweighs the Section 7 right.

The Division of Advice instructed that the employer could comply with the NLRA by deleting the last two sentences of the above provision and replacing them with the following language:

Verso may decide in some circumstances that in order to achieve these objectives, we must maintain the investigation and our role in it in strict confidence. If Verso reasonably imposes such a requirement and we do not maintain such confidentiality, we may be subject to disciplinary action up to and including immediate termination.

Labor professionals should examine their existing policies and, if those policies could be interpreted as imposing a blanket prohibition on disclosure, consider whether language similar to the above is appropriate in their circumstances.

Court of Appeals Finds Notice Posting Rule Invalid; Violates Employer Speech Rights

Nelson Cary — Thu, 09 May 2013 07:00:00 -0500

The federal courts have dealt the NLRB’s notice posting rule another setback. In a ruling Tuesday, the court of appeals in Washington, D.C., the same court that earlier this year held President Obama’s recess appointments to the NLRB unconstitutional, vacated the NLRB’s notice posting rule. The court concluded that the rule violated an employer’s right to freedom of speech.

For those readers who may have forgotten what the controversy is about, a brief refresher. In 2011, just before former Chairman Liebman’s (D) term was to expire, the NLRB approved, by a vote of 3-1, a rule that required employers covered by the NLRA to post a notice in the workplace advising employees of various rights. Never before in the history of the NLRB has such a notice been required, and no provision of the NLRA explicitly requires a notice posting.

The final rule enforced the notice posting requirement using three different remedies. First, it declared that an employer’s failure to post the notice would be an unfair labor practice. Second, it provided that the failure to post the notice could be used as evidence of an employer’s anti-union motivation. Finally, it purported to suspend the running of the applicable statute of limitations for filing an unfair labor practice charge for the period of time during which the notice was not posted.

District courts in Washington, D.C. and South Carolina came to differing conclusions on the validity of the rule.

The court of appeals, in a unanimous 3-0 decision (pdf), found the NLRB’s notice posting rule violated an employer’s right to freedom of speech. The NLRA contains a provision, known as Section 8(c), that guarantees the right to express and disseminate views, arguments and opinions about unions so long as such expression contains no threat of reprisal or force, or promise of any benefit.

Relying upon Supreme Court precedent interpreting the First Amendment, the court held that the first two remedies in the NLRB’s regulation violated Section 8(c). Although this section “precludes the [NLRB] from finding noncoercive speech to be an unfair labor practice, or evidence of an unfair labor practice, the [NLRB’s] rule does both.” The notice posting rule required the employer to speak on the issue of unions, and purported to control the content of that message, under the threat of an unfair labor practice charge, in contravention of the right to freedom of speech contained in the NLRA.

The court found that the third remedy for failing to post the notice was also invalid. Tolling of the statute of limitations was not permissible because the NLRB failed to demonstrate that Congress intended such an exception when it adopted the NLRA over 60 years ago. Because all three enforcement tools were invalid, and because the notice requirement could not be separated from these remedies, the entire notice requirement was struck down.

Two of the three judges on the court would have gone even further. In a concurring opinion, these judges explained that the rule was invalid because the NLRB had no statutory authority to issue it.

In an interesting side note, the court also held that the recess appointment of former Member Becker (D), which has since expired, was not permissible under Noel Canning. But, there were still three, Senate-confirmed appointees who voted on the final rule, a majority of those members voted in favor, and all three of them were serving under valid appointments at the time the final rule was filed. Thus, the regulation did not fail for lack of a valid quorum on the NLRB.

For the labor professional, three significant items should be noted:

Since the litigation surrounding the rule began, the NLRB has declined to enforce the rule pending conclusion of that litigation. Given the court’s holding that the rule was “vacated,” it would be quite surprising if this position changed. At the time of this post, however, the NLRB has not formally announced its reaction to the ruling.
No court has sustained all parts of the NLRB’s rule. The rule has either been invalidated in its entirety, as the Washington, D.C. court of appeals and the district court in South Carolina did, or some of the enforcement provisions have been invalidated, like the district court in Washington, D.C. did. Thus, the rule doesn’t have a good track record so far.
The decision in the South Carolina case is still on appeal to a different court of appeals. Assuming the NLRB continues to fight for its rule, this ruling should come later this year. If that ruling comes out differently, the likelihood increases that the Supreme Court will ultimately decide this issue.

Court of Appeals "Baffled" By NLRB's Finding Of Unlawful Union Remark by Employer's President

Nelson Cary — Sun, 05 May 2013 12:28:26 -0500

By Nelson Cary and Ashley Manfull

Recently, the District of Columbia Circuit Court of Appeals reigned in a union-friendly NLRB decision involving comments made during a union organizing drive. In Flagstaff Medical Center, Inc., the NLRB held, among other things, that Flagstaff’s President violated the NLRA during a meeting with food services employees during a union campaign.

At the outset of the meeting, the President indicated he was there to learn about the employees’ issues, concerns, and problems. After discussing various issues raised by the employees, the President made a comment to the effect that if there was a union, “I would not be negotiating with the union,” or “you won’t be negotiating with me.” The NLRB found that the remark was unlawful because it could have been reasonably construed as indicating that the Company would not bargain with the Union or that negotiations with the Union would be futile.

Rejecting the NLRB’s finding, the Court expressed that it was “baffled by the Board’s interpretation of [the President’s] first-person-singular statement about negotiations as a comment about Flagstaff’s willingness to negotiate—rather than as a statement about his own attendance at whatever meetings occur.” The Court found that the NLRB made an interpretive leap that could not be justified based on the facts of the case.

In support of its decision, the Court cited NLRB precedent allowing employers to explain the advantages and disadvantages of collective bargaining to their employees in an effort to convince them that they would be better off without a union, provided such statements do not threaten or promise certain benefits to the employees. The Court found that this was the most plausible basis for the President’s comment to the employees, as the purpose of the meeting was to show the value in addressing employee concerns directly with the employees, instead of working through a union representative. Therefore, the Court found that there was insufficient evidence for a reasonable mind to accept the conclusion that the Flagstaff employees had been coerced or threatened with respect to their right to unionize.

For the labor professional, the Court’s decision is significant for at least two reasons:

The NLRB’s view on how employees will interpret an employer’s remarks, which can oftentimes make employers scratch their heads in puzzlement, is not absolute, and may be reversed on appeal.
Careful legal review and consideration of supervisors’ and managers’ remarks, particularly senior level leaders in any organization, is very important during union organizing activity.

Video Interview: Discussing the Three NLRB Nominees with LXBN TV

Nelson Cary — Tue, 16 Apr 2013 11:00:00 -0500

Following up on my post on the story, I had the opportunity to speak with Colin O'Keefe of LXBN regarding the three new NLRB nominees. In the brief interview, I explain each of their backgrounds, share some insight on what we can expect from them, and offer my thoughts on whether they will be confirmed.

President Obama Announces NLRB Nominations

Nelson Cary — Tue, 09 Apr 2013 17:40:00 -0500

President Obama announced his intention today to nominate three individuals to the NLRB. The President's action comes at a time when the authority of the NLRB to act in cases and rulemaking activities is on appeal to the U.S. Supreme Court and when only one of the sitting NLRB members has been confirmed by the U.S. Senate.

The three individuals nominated are Mark Pearce (D), Harry Johnson, III (R), and Philip Miscimarra (R). Mr. Pearce currently serves as the NLRB Chairman, and is the only Senate-confirmed member of the NLRB. His term, however, ends in August 2013. If he is not renominated, and confirmed, the NLRB will fall below three members and be unable to carry out its statutory duties. President Obama's nomination intends for Mr. Pearce to continue as Chairman.

Mr. Johnson is a partner with the firm of Arent Fox, and is a labor and employment law attorney representing employers. Mr. Miscimarra is a partner with the firm of Morgan, Lewis, and Bockius, and is also a labor and employment law attorney representing employers. Additional information about Messrs. Johnson and Miscimarra can be found in the NLRB's press release.

Already pending are the nominations of Richard Griffin (D) and Sharon Block (D). Unlike Messrs. Johnson and Miscimarra, however, Mr. Griffin and Ms. Block already serve on the NLRB as a result of recess appointments President Obama made at the beginning of 2012. Whether those appointments are constitutional is the issue currently on appeal to the Supreme Court in Noel Canning.

For the labor professional, the President's action today holds the possibility that an agreement can be reached on the membership of the NLRB. The nominees for the NLRB now at least reflect the traditional bipartisan make-up of the five-member board, with the majority of members being of the President's party.

Given the divisiveness of some of the NLRB's decisions and rulemaking efforts in the last few years, however, prompt Senate action is not at all guaranteed. In fact, some may view it as a positive for employers if the NLRB is unable to decide cases and issue new administrative rules. Inaction by the Senate ensures this outcome by August 2013 at the latest, when Chairman Pearce's term expires.

Court Overturns NLRB Decision Regarding Failure to Provide Information During Bargaining

Nelson Cary — Wed, 03 Apr 2013 07:00:00 -0500

During labor negotiations, an employer is obligated to provide certain information to the union. When that information implicates the employer’s financial performance, some employers are reluctant to disclose the information. A recent decision from the United States Court of Appeals for the Second Circuit helps define when an employer must provide that information, and does so in a narrow fashion.

The employer in SDBC Holdings, Inc. operated a bakery plant where a union represented employees. During negotiations for a new CBA, the employer highlighted for the union falling sales, rising expenses, and operating losses. The union asked to review financial statements that would support the employer’s assertion of operating losses.

In response to this request, the employer brought its most recent financial statement to the negotiations, showed it to the union, and advised the union that the bargaining committee could inspect and take notes on the statement all day at the location where the negotiations were occurring. The employer declined, however, to provide a photocopy of the financial statement to the union. The employer also rejected a confidentiality agreement the union offered, expressing concerns about the difficulty of enforcing such agreements.

In subsequent bargaining sessions, the employer again brought the financial statement, repeatedly inviting the union to examine it and take notes. The employer also informed the union that the statement was available at the employer’s attorney’s office where the union’s attorney or accountant could examine and take notes on it. The union’s spokesperson at the negotiations agreed to this arrangement. Later, however, the union reversed its position and demanded a photocopy.

On these facts, the NLRB found a violation. The NLRB reasoned that the employer had asserted an inability to pay wages to the employees, rather than an unwillingness to pay wages. Under established law, therefore, the employer was obligated to provide the information. The NLRB further held that the employer’s failure to provide a photocopy of the document to the union was unlawful. One NLRB member dissented from these conclusions.

The Court found that the employer’s position was not that it was unable to pay the union’s wage demands, but rather that it was not willing to do so. The Court emphasized the need to look at the entire context of the negotiations, and in that context the employer had expressed willingness to invest money in equipment, expend significant sums extricating itself from a union pension plan, and sustain operating losses as an “investment” in the plant in order to return it to greater profitability. When viewed in the context of these statements, the Court concluded that the employer did not plead an inability to pay. Thus, it was not obligated to provide its financial statement.

Moreover, the Court found that the NLRB was wrong when it concluded that the access to the financial statements was insufficient. The NLRB did not adequately take into account all of the evidence that demonstrated the multiple venues the employer made available for the union to examine the financial statement and take notes.

One of the judges on the Court wrote a concurring opinion. In it, he provided a roadmap for the NLRB to explain that “an employer claims an ‘inability to pay’ for particular labor costs, …when the employer asserts in the course of bargaining that its operations are unprofitable given those costs.”

Labor professionals can takeaway three key points from the case:

A further explanation of the distinction between an inability to pay and an unwillingness to pay bargaining position.
An important reminder that information sharing during negotiations will often be required, but need not necessarily occur in precisely the format or fashion in which the union has requested.
The possibility of an expanded employer obligation to provide information, should the NLRB adopt the concurring opinion's formulation of the duty to provide information.

AGC Memorandum Contains Answers to Questions from Practitioners

Nelson Cary — Mon, 01 Apr 2013 09:00:00 -0500

Earlier this year, the Acting General Counsel met with the Practice and Procedure Committee of the American Bar Association's Labor and Employment Law Section. This meeting is an annual undertaking. The AGC answered questions the Committee collected from labor law practitioners around the country.

Earlier this month, the AGC released a memorandum (pdf) summarizing the questions that were posed to him and the answers he provided. The memorandum covers a broad range of topics, far too broad to cover effectively in this post. Labor professionals with a particular interest in practice and procedure issues in front of the NLRB will want to review the memorandum in detail.

Some of the more noteworthy topics covered in the memorandum are listed below. The parenthetical reference is to the page(s) in the memorandum on which the discussion appears:

The only additional rulemaking activity under review at this time are the portions of the election rule that were originally proposed, but which were not included in the final rule when published in December 2011 (pp. 22, 26);
The AGC has no plan to issue any further guidance on social media policies (as he has done three previous times), but cases involving rules for use of an employer's computer or e-mail systems must be submitted to Washington, D.C. for advice (pp. 16-17);
A statistical summary of the use, and outcomes of, subpoenas issued by the regional offices in the course of investigating unfair labor practice charges (pp. 6-9);
An extensive discussion of the routine use of default language in settlement agreements with the NLRB (pp. 10-16), including a discussion of the cases where the use of this language has been litigated (p. 10-11) as well as cases where regional directors have agreed to modify the default language (p. 12);
A review of bargaining unit decisions under Specialty Healthcare (pp. 22-23); and
A discussion of the use of mail ballots in union elections and holding such elections someplace other than the employer's place of business (pp. 19-20).

NLRB Announces Appeal of Recess Appointments Decision

Nelson Cary — Tue, 12 Mar 2013 16:39:24 -0500

Earlier this afternoon, the NLRB announced that it will appeal the Noel Canning decision to the U.S. Supreme Court. Noel Canning is the case from the federal appeals court in the District of Columbia holding that President Obama's recess appointments to the NLRB were unconstitutional. The NLRB's announcement comes after, among other things, the court of appeals delayed oral argument in an a case involving the NLRB's election rule and after the AFL-CIO called on the NLRB to appeal the Noel Canning decision to the Supreme Court.

The NLRB's decision to appeal could bring certainty for labor professionals. The Supreme Court does not have to accept the appeal, but if it does, its decision on the merits will resolve with finality whether the NLRB has the authority to act without Senate confirmed members.

Unions Speak Out on NLRB Recess Appointment Ruling

Nelson Cary — Fri, 01 Mar 2013 10:00:00 -0500

In case you were wondering what unions thought about the Noel Canning decision, which held that President Obama's recess appointments to the NLRB were unlawful, your wait is now over. Earlier this week, at its Executive Council meeting, the AFL-CIO let its views be known. In a statement adopted by the Council, the AFL-CIO decried the "sustained and vicious campaign" to "derail" the NLRB. The tools of this campaign, according to the statement, are "arcane Senate rules" used to block nominees and legislative reform and "nine oversight hearings" intended to "intimidate" the NLRB. The statement goes on to describe the Noel Canning decision as "radical" and "sweeping," not to mention "shocking and far reaching."

What is to be done, according to the AFL-CIO? The statement mentions six different actions:

The NLRB should "quickly seek review" and reversal of the Noel Canning decision by the U.S. Supreme Court.
The labor movement must "mobilize, demonstrate, and take direct action" against those who are "exploiting" the Noel Canning decision.
President Obama must immediately nominate, and the Senate confirm, a package of nominees to the NLRB, including current Chairman Pearce (D) and recess appointees Sharon Block (D) and Richard Griffin (D), two Republican members, and Acting General Counsel Lafe Solomon.
The labor movement must "mobilize" itself to demand action from the Senate to confirm this package of nominees. "We will hold senators of both parties accountable if they stand in the way or fail to act."
Senate Majority Leader Harry Reid (D) must lead the effort to confirm the package, overcome any Republican filibuster, and if not successful, "lead an effort to change Senate rules" so that the appointments cannot be blocked.
The Obama administration must also continue to talk about collective bargaining rights, defend the NLRB from congressional "attacks," and "work aggressively" to win confirmation of the President's appointees.

Putting aside its rhetoric, the statement is nonetheless significant for the labor professional. Initially, it would seem to increase the likelihood that the NLRB will appeal the Noel Canning decision. Moreover, it is a clear and public marker from the AFL-CIO that even some Senators in the Democratic Party who do not act with what the AFL-CIO might view as sufficient earnestness on this issue could face some fall out. What that might mean in terms of campaign contributions or other political support is not clear from the statement.

Whether this statement, or any accompanying AFL-CIO lobbying, will ultimately change the situation, however, is yet to be seen. The only nominees the President sent to the Senate were the recess appointed Members Block and Griffin, but no Republican nominees. The NLRB has also not announced its decision on whether to appeal Noel Canning. One thing remains certain: until the Supreme Court decides on the validity of the recess appointments, or the President and Senate act to confirm a full, five-member NLRB, all of those who deal with the NLRB, whether employers, unions, or employees, will continue to confront the uncertainty that flows from Noel Canning.

Court of Appeals Delays Argument on NLRB's Election Rule

Nelson Cary — Fri, 22 Feb 2013 14:03:25 -0500

Last year, a federal district court judge found that the NLRB's election rule was invalid. The NLRB appealed that ruling, and announced that it would delay implementation of the rule pending the outcome of the appeal.

Earlier this year, the Court of Appeals set oral argument in the appeal for April 4. After setting this date, however, the Court issued its decision in Noel Canning, invalidating the recess appointments President Obama made to the NLRB after it voted on the election rule.

In a significant development earlier this week, the Court, referring to the Noel Canning decision, issued an order (pdf) removing the case from the oral argument schedule for April 4 and placing the case on hold pending further order of the Court. Significantly, the Court took this step on its own and after the U.S. Chamber of Commerce, which is a party to the appeal, drew the Court's attention to the Noel Canning case. The Chamber argued that the Court's holding on recess appointments provides an additional ground to invalidate the NLRB's election rule. When the NLRB voted on this rule, there were only two, Senate-confirmed appointees.

For the labor professional, the Court's decision has some significant implications:

A decision on the election rule will be delayed, thus likely leading to a delay in any potential implementation of the election rule (assuming the NLRB ultimately succeeds in its appeal).
It suggests the potential breadth of Noel Canning, making clear that it could impact numerous decisions and NLRB actions that predate the current recess appointees serving on the NLRB (Members Griffin and Block).
It increases the pressure on the NLRB to appeal the Noel Canning decision to the Supreme Court, so as to remove (or confirm, depending on the outcome) the uncertainty over the NLRB's ability to act.

President Obama Renominates Griffin and Block to NLRB

Nelson Cary — Thu, 21 Feb 2013 07:00:00 -0500

Less than three weeks after the U.S. Court of Appeals for the District of Columbia declared their recess appointments invalid, President Obama has again nominated Richard Griffin (D) and Sharon Block (D) to serve on the NLRB. In the names he sent to the Senate last week, however, President Obama did not include any Republicans for two other vacancies that exist at the NLRB. Historically, the NLRB's membership has included three members of the President's party and two members from the other party. Currently, the three members of the NLRB are all Democrats.

Given the lack of Republican nominees, it seems unlikely that the President's nominations will be acted upon by the Senate anytime soon. Without Senate action, the cloud of uncertainty the Court of Appeals ruling created will continue to hang over the NLRB's actions. Indeed, the Supreme Court has declined to get involved in the recess appointment question since the Court of Appeals' decision, although the Supreme Court's actions occurred in different cases and in different contexts.

What is a labor professional to do? One thing is for certain, the NLRB believes it is business as usual.

Union Membership Declines (Again)

Nelson Cary — Tue, 12 Feb 2013 16:11:08 -0500

Given the level of union representation petitions at the NLRB, it was in fact no surprise when the Bureau of Labor Statistics issued its report last month revealing further declines in union membership. The BLS reported that the overall union representation rate fell from 11.8% to 11.3%. Looking at just private sector employment, the rate is even lower, at 6.6%.

Some of the other interesting data points in the BLS survey include:

Jobs in the public sector that are most likely to be unionized include teachers, firefighters, and police officers.
Industries in the private sector that are most likely to be unionized include construction and transportation/utilities.
Union membership rates for men were higher (12%) than for women (10.5%), although this gap has narrowed considerably since 1983, according to the BLS.
Full-time workers were more likely to be union members than part-time workers.
Union membership was the highest for workers ages 55 to 64 (14.9%) and the lowest for workers ages 16 to 24 (4.2%).
The manufacturing sector continues to lose union members, with the total number falling by 86,000.
Union membership losses were even more significant in the health care and social assistance sector, with union membership declining by 223,000.
In California, a state that tied New York for the most representation petitions filed in 2012, union membership increased by 110,000.

Court Declares NLRB Recess Appointments Unconstitutional

Nelson Cary — Fri, 25 Jan 2013 16:53:00 -0500

In what will likely be one of the more significant labor law developments in 2013, a federal court of appeals in Washington, D.C. ruled today that President Obama's recess appointments to the NLRB were unconstitutional. On January 4, 2012, three individuals received recess appointments to the NLRB: Members Flynn (R), Block (D), and Griffin (D). At the time, they joined Chairman Pearce (D) and Member Hayes (R), both of whom had been confirmed by the U.S. Senate.

After those appointments, a three-member panel made up of Flynn, Hayes, and Block issued a decision finding that a company, Noel Canning, engaged in an unfair labor practice. The company appealed that decision to the D.C. Circuit Court of Appeals arguing, among other things, that the recess appointments were not constitutionally valid. The company argued that, on January 4, 2012, the U.S. Senate was not actually in a "recess" and thus the President had no authority to make recess appointments. The court agreed (pdf) with the company.

In a statement issued this afternoon, Chairman Pearce said that the NLRB disagreed with the ruling. He did not state, however, that the NLRB would appeal. Rather, he noted his belief that the President's position on the appointments (that they were constitutional) would "ultimately be upheld" and observed that the same issue was pending in a number of different cases.

For labor professionals, the decision is significant for four reasons:

It casts doubt on all of the NLRB's decisions since January 4, 2012, the date on which the recess appointments were made. These include a number of significant decisions, including continuing union dues deductions after a contract expires and the NLRB's first Facebook decision.
It does not mean, however, that all of these decisions are invalid. Only if this issue makes it to the U.S. Supreme Court, and the Court agrees with the decision, would those decisions be invalid.
Don't expect the decision to slow down the NLRB. Until the Supreme Court affirms the reasoning of the court of appeals, there is no legal requirement that the NLRB must stop issuing decisions or take the court's reasoning into account in other cases. In fact, the NLRB has historically not considered itself bound, in other cases, by a court of appeals decision with which it disagrees in a different case. Moreover, Chairman Pearce's statement states that "we will continue to perform our statutory duties and issue decisions."
Watch for the NLRB's decision on whether to appeal. An appeal would certainly be useful to labor professionals so as to resolve the uncertainty this decision creates surrounding the NLRB's authority to act.

NLRB Exposes Union Employees Who Submit Statements About Their Co-workers' Conduct to Bullying, Harassment and Intimidation

Nelson Cary — Mon, 21 Jan 2013 08:00:00 -0500

When employers investigate workplace misconduct, they often interview employees. Indeed, some investigations begin because of information provided by an employee. To help document its investigation, the employer will sometimes ask employees to provide written statements about the misconduct of other employees, and the employer might promise confidentiality of those statements. It is unfortunate, but also true, that employees can be subject to harassment and intimidation based on their cooperation with the employer in the investigation of workplace misconduct, including providing written statements.

Recognizing this unfortunate fact, in 1978, the NLRB established a “bright line” rule that protected employees’ witness statements from disclosure to a union representing the employer’s employees. Anheuser-Busch, 237 N.L.R.B. 982 (1978). Thus, for the last 34 years, when a union filed a grievance over discipline given to an employee, the employer might have to provide the union with the name and position title of employees whom the employer interviewed during its investigation, but not the employees’ statements. The NLRB has explained over the years that this rule properly balances the interests of the employer and of the union in situations involving the discipline of an employee for workplace misconduct.

Last month, the NLRB erased the 34-year-old, bright line rule of Anheuser-Busch. In its place, the NLRB substituted a case-by-case “balancing” test regarding the disclosure of witness statements. In American Baptist Homes, 359 N.L.R.B. No. 46 (2012), the NLRB held that the party asserting that a witness statement should remain confidential (almost always the employer) must prove that its interest in confidentiality outweighs the union’s interest in having sufficient information to process its grievance under the applicable union contract. Rather than extending the Anheuser-Busch rule to the names of employees, however, the NLRB majority used the fact that employee names are subject to disclosure to support its conclusion that any witness statements from those employees should likewise be given to the union.

When the employer’s confidentiality interest will prevail over the union’s interest is murky at best. The majority cited some prior NLRB decisions suggesting that the employer’s confidentiality interest might be stronger in cases where the disciplinary infraction being investigated is more severe. For example, misconduct involving drug use might justify confidentiality, but misconduct involving “petty theft” may not. Employers, and in particular the labor professionals who work for them, will be left to sort this out in the future.

Then-Member Hayes (R) dissented from the majority’s decision. In one of the last dissents he wrote before leaving the NLRB, Member Hayes roundly criticized the majority for departing from Anheuser-Busch. He cited the pressure employee witnesses may face to change their testimony, or not testify at all, if their statements are revealed before an arbitration hearing. He also noted that the old rule protected employees who participated in workplace investigations from coercion, intimidation and retaliation by the union or coworkers, while protecting the union’s interest by permitting, in some cases, the disclosure of the employee’s name. Finally, he criticized the replacement of the certainty of a bright line rule for the doubt and “case-by-case guessing game” that arises from the majority’s balancing test.

The case has significant implications for the labor professional in unionized workplace:

Expect unions to make information requests for witness statements on a more frequent basis;
The labor arbitration process, traditionally one with no prehearing discovery, now has a quasi-discovery component to it;
Rather than quick and efficient resolution of disputes over disciplinary actions, disputes over production of witness statements could lead to protracted NLRB proceedings;
Union employees will likely become more reluctant to report work rule violations or cooperate with an employer’s investigation, and as a consequence, employers may find it harder to enforce rules against misconduct.

* Special thanks to my partner, Al Kinzer, for his comments on a draft of this post.

Union Organizing 2012 Year End Review, By the Numbers

Nelson Cary — Wed, 16 Jan 2013 00:05:00 -0500

By Susan Connelly, of PTI Labor Research, Guest Blogger*

We’re already two weeks into 2013. And yet, a look back at the year that passed is a good way to help anticipate union activity in the coming months.

Union organizing in 2012 was relatively slow thanks to the distraction of the presidential campaign. In addition, unions had been waiting for expedited elections and notice postings, for which they are still waiting.

But with the presidential campaign behind us, and private-sector union membership at record lows, the stage might be set for unions to begin bolstering their memberships in 2013.

Union representation petitions have been on a downward slope for the past fifteen years, since a high in 1997 when more than 5,000 petitions (RC) were filed nationally. In 2012, the number of petitions was down to 1,986.

Maps help tell the 2012 story as well. High concentrations of petitions were filed in California, New York, Pennsylvania, Illinois, New Jersey, Michigan, Ohio, Missouri, Massachusetts and Washington. None were “right to work” states in 2012 (a new Michigan “right to work” law passed in December). By contrast, Wyoming had zero filings last year. Wyoming and 23 other states are “right to work” states.

The National Labor Relations Board (NLRB) offices that received the most representation petition filings in 2012 were Philadelphia, Brooklyn, Baltimore, Chicago and Boston.

As usual, the Teamsters topped the list of unions with the most petitions in 2012 with 424 petitions. Behind the Teamsters was the SEIU with 186 petitions followed by the UFCW, IAM and IUOE.

Unions most frequently targeted the following industries in 2012: Business Services, Health Services, Passenger Transportation, Construction and Electric, Gas & Sanitary Services. This is consistent with organizing trends over the past several decades -- moving towards service sector jobs and away from manufacturing.

With the introduction of “micro units” in 2012, it is noteworthy that the average bargaining unit size has remained relatively unchanged over the past two decades. The average bargaining unit size for certification petitions in 2012 was 62 employees.

Finally, although the anticipated expedited elections have not yet become a reality, the average number of days between petition filing and election is down slightly. According to the 2012 NLRB Performance and Accountability Report, initial union representation cases were conducted in a median of 38 calendar days from the filing of a petition -- down from 42 days in previous years.

Starting off 2013 with the presidential election behind us and a National Labor Relations Board comprised of all Democratic appointees, it will be interesting to see if unions are able to seize the opportunity, launch organizing drives and reverse the downward trend in petition filings.

The data points above are more than just numbers. For the labor relations professional, they mean:

Those within service sectors and non-right to work states are more vulnerable to union organizing.
With bargaining unit sizes ranging drastically, the size of the potential bargaining unit does not seem to have an impact on the likelihood of vulnerability to a petition being filed.
Especially with elections occurring more quickly in 2012, it is always advantageous to be proactive in your union organizing counter campaign plan and communications with management and employees.
Information that can be shared in updates with executives, management and employees (if appropriate).

* Ms. Connelly is not an attorney. Neither she nor her firm is affiliated with Vorys, Sater, Seymour and Pease, LLP. The opinions and views expressed in this post are her own and not intended to convey legal advice.

Acting General Counsel Releases Report on FY 2012 Operations

Nelson Cary — Mon, 14 Jan 2013 00:05:00 -0500

Last week, the NLRB's Acting General Counsel Lafe Solomon released his annual Summary of Operations (pdf). The memorandum summarizes the activities of the General Counsel's office, which is responsible for the investigation and prosecution of unfair labor practice charges and the handling of representation cases. Representation cases are requests from a union, employee, or employer to conduct a secret ballot election to determine whether employees desire union representation.

As was the case last year, the AGC's report seems to undermine the case for the NLRB's continued focus on rulemaking that would speed up the election process. The median number of days it takes from filing of an election petition to conducting the secret ballot election was 38, the same as FY 2011, and "well below" the AGC's target of 42 days. Moreover, there were only 169 contested representation cases, out of total representation case intake of 2,646 cases. Finally, the number of representation elections conducted within 56 days of the filing of the petition increased in FY 2012 to 93.9%, again above the AGC's target of 90%.

Another striking statistic in the AGC's report is that representation case intake declined again in FY 2012. Following a 12.2% decline in FY 2011, the total number of representation cases filed in FY 2012 declined another 6.5%. The U.S. Bureau of Labor Statistics is scheduled to issue its report on union membership on January 23, 2013. With fewer representation cases at the NLRB, it would be surprising to see a significant increase in the number of union members in the private sector.

Other notable pieces of information in the report for the labor professional include:

Fewer unfair labor practice charges were filed in FY 2012, with case intake declining 3%;
If your employer was the subject of an unfair labor practice charge, there was a slightly better than 1 in 3 chance that the NLRB regional office found merit in the allegation, down slightly from FY 2011;
When the regional offices find merit in the charge, the party alleged to have violated the NLRA settled the charge in 91% of all cases in FY 2012; and
Recoveries by the NLRB on behalf of employees fell to approximately $44.3 million, down from over $60 million in FY 2011, and the number of employees for whom reinstatement was obtained likewise fell to 1,241 from 1,644.

Employers Must Bargain Over Discretionary Discipline Before Agreement on First Contract

Nelson Cary — Tue, 08 Jan 2013 05:00:00 -0500

By Nelson Cary and James Patrick

In Alan Ritchey, Inc., the NLRB recently adopted a new rule that will have an immediate impact on any employer attempting to negotiate an initial contract with a newly organized bargaining unit. Specifically, after a union becomes the employees’ bargaining representative, but before the parties have agreed to their first contract, employers must bargain with the union prior to imposing discretionary discipline.

The NLRB reasoned that employers cannot continue to act unilaterally with respect to terms and conditions of employment once employees choose to be represented. Further, discretionary discipline, like other terms and conditions of employment, is a mandatory subject of bargaining. An employer must, therefore, provide the union with notice and an opportunity to bargain before the employer can exercise its discretion to impose discipline on individual employees. The employer must also provide the union with relevant information, if a timely request is made, about the discretionary aspects of the proposed disciplinary action.

Although it announced this new rule, the NLRB immediately qualified it in several respects:

First, employers are only required to bargain over the discretionary aspects of their decision. Non-discretionary aspects of the disciplinary decision, as well as those that are consistent with past practice, need not be a subject of bargaining.
Second, the duty to provide the union with notice and an opportunity to bargain prior to imposing discipline is limited to certain types of discipline that have an immediate impact on the employees’ terms and conditions of employment, like suspensions, demotions, and discharges. In situations involving lesser disciplinary action, an employer may defer bargaining to after the lesser sanctions are imposed. But the NLRB limited even this exception, noting that the exception applies only so long as that lesser discipline does not “automatically result” in additional discipline, under the employer’s progressive disciplinary system, that “would itself require” bargaining.
Third, the bargaining obligation may be deferred until after a disciplinary action is taken where exigent circumstances exist. In such a situation, employers may act immediately as long as afterwords they promptly “provide[] the union with notice and an opportunity to bargain about the disciplinary decision and its effects.” Not surprisingly, the NLRB narrowly limited the concept of “exigent circumstances” to situations “where an employer has a reasonable, good-faith belief that an employee’s continued presence on the job presents a serious, imminent danger to the employer’s business or personnel.”
Finally, where the employer is required to bargain with the union prior to imposing discipline, the employer is not required to bargain to agreement or impasse prior to implementing the discipline as long as: (1) it does so afterward; and (2) it exercises its discretion within existing standards. Further, in any situation where an employer properly implements discipline without reaching agreement or impasse, “the employer must bargain with the union to agreement or impasse after imposing discipline.”

For labor professionals, the NLRB’s decision is significant for a number of reasons:

It threatens to bog down negotiations over a comprehensive agreement with negotiations over a series of discrete disciplinary actions and events.
It creates another potential area of legal exposure for a newly unionized employer in connection with disciplinary actions.
Given the NLRB’s suggestion that an employer and union could negotiate an “interim grievance process” that would address the employer’s obligation to bargain over disciplinary action, the decision could lead to piecemeal discussions over significant issues during negotiations.
It tilts the playing field during negotiations in the union’s favor, by imposing a substantial limitation on a core management right – the control and direction of employees – that management must bargain to retain.

The NLRB’s decision will be applied prospectively. Member Hayes (R) did not participate.

Chicago Charter School is Subject to NLRB Jurisdiction

Nelson Cary — Mon, 31 Dec 2012 10:06:19 -0500

By Nelson Cary and James Patrick

In Chicago Mathematics & Science Academy Charter School, Inc. (“CMSA”), the NLRB unanimously concluded that the CMSA was not a political subdivision exempt from the NLRB’s jurisdiction. In reaching this conclusion, the NLRB applied the two-part test established in NLRB v. Natural Gas Utility District of Hawkins County, 402 U.S. 600 (1971). Under this test, an entity is considered a political subdivision if it is either: “(1) created directly by the state so as to constitute a department or administrative arm of the government, or (2) administered by individuals who are responsible to public officials or to the general electorate.”

With respect to the first part of the test, the NLRB concluded that CMSA was not created directly by the state, but instead was created by private individuals who incorporated a non-profit corporation pursuant to Illinois law. The NLRB emphasized that Illinois’ charter school laws merely provided the authorization or framework for creating charter schools as opposed to directly creating them. The NLRB also noted that receiving public funding or operating pursuant to a contract with a governmental entity does not, in and of itself, result in an entity being exempt as a political subdivision.

With respect to the second aspect of the test, the NLRB concluded that CMSA was not a political subdivision because it is not administered by individuals who are responsible to public officials or to the general electorate. The NLRB noted that CMSA’s board of directors was selected in accordance with its bylaws rather than pursuant to any law. Moreover, the bylaws provided that only sitting members may appoint and remove other CMSA board members, and not a government official. The NLRB also noted that CMSA hired its own employees and developed its own personnel handbook, which supported its decision that CMSA is not a political subdivision.

Despite concurring that CMSA was not a political subdivision and that there should not be a universal rule with respect to charter schools, Member Hayes (R) would have exercised discretion and declined jurisdiction. The NLRB has the discretion to decline jurisdiction over any type of employer whose labor disputes would not have a substantial effect on commerce. Relying on principles established in prior decisions, Member Hayes would have declined jurisdiction because CMSA, in providing services that are public and local in nature, is closely intertwined with and defined by the State of Illinois and the City of Chicago.

Labor professionals should note that the NLRB did not establish a bright-line rule that it has jurisdiction over charter schools. The NLRB’s jurisdiction is determined by looking at how charter schools are created, designed, regulated, and operated in the applicable state.

It's Official: NLRB Confirms Protection for Employees Involved in Facebook Rants Against Coworkers

Nelson Cary — Sun, 23 Dec 2012 11:56:31 -0500

By Nelson Cary and Ashley Manfull

As readers of this blog know, in September 2011, Administrative Law Judge Arthur Amchan was the first NLRB judge to issue a ruling on a Facebook-related termination. In Hispanics United of Buffalo, Inc., ALJ Case No. 3-CA-27872, ALJ Amchan ruled that five employees of a non-profit organization were unlawfully terminated for engaging in protected concerted activity based on a series of Facebook posts which were made outside the workplace during non-working time.

Specifically, a coworker spoke critically of the work performance of several employees, including Marianna Cole-Rivera. The coworker then sent a text to Ms. Cole-Rivera, indicating she intended to discuss her concerns with the Executive Director. Angered by the text message, Ms. Cole-Rivera posted on Facebook that the coworker claimed the employees were not doing their jobs, she had enough of it, and wanted to know how the other employees felt. Four other employees then posted comments responding to the criticisms. After the coworker read the comments and complained, Hispanics United terminated all five employees who posted the Facebook comments, finding the remarks constituted bullying and harassment.

In a 3-1 decision issued December 14, 2012, but released a few days later, the NLRB affirmed the ALJ’s finding that the employer violated the NLRA when it terminated the five employees based on their Facebook comments. While the NLRB commented that the employees’ mode of communicating workplace concerns “might be novel,” long-established precedent applicable to cases involving discharge for protected, concerted activity was applicable.

Interestingly, in applying that precedent, the NLRB ruled that the group’s comments were concerted protected activity undertaken for their mutual aid and protection even though Ms. Cole-Rivera never told the other employees that their coworker planned to voice her criticisms to the Executive Director. Disagreeing with dissenting Member Brian Hayes (R), whose term has since expired, the NLRB held that the goal of initiating or preparing for group action does not have to be stated explicitly when employees communicate. In this case, the NLRB determined that Ms. Cole-Rivera had the clear objective of enlisting mutual aid to prepare a group defense when she made the Facebook posting, even if that was not communicated to her coworkers.

Finally, the NLRB acknowledged that employers have legitimate concerns to prevent harassment in the workplace. It held, however, that those concerns do not justify policies that discourage the free exercise of Section 7 rights. This is particularly the case, the NLRB majority reasoned, when employees are reacting to criticisms regarding their job performance which could have an impact on their employment.

Labor professionals should be aware that the NLRB is likely to continue looking for cases in which to extend existing precedent to employer actions involving employee social media use. As other ALJ decisions involving social media issued earlier this year begin reaching the NLRB, it will have plenty of opportunity to do so. Before addressing any issue with an employee regarding the use of social media, therefore, labor relations professionals should keep the Hispanics United decision in mind and thoroughly analyze the possibility of protected, concerted activity challenges to employee discipline.