By Christopher M. Cascino

Synopsis: On May 25, 2017, Seyfarth attorneys Chris DeGroff, Noah Finkel, and Brad Livingston presented their insights on how the Trump administration will affect employers.  Specifically, they discussed the effect the Trump administration is having and will have on the EEOC, the DOL’s Wage and Hour Division, and the NLRB.  All presenters agreed that, while the Trump administration will have an effect on these agencies, it will take time for the changes to take place.

The Presentation

Chris began the presentation by discussing the EEOC.  He observed that the new administration has not yet replaced the high-ranking EEOC officials who set EEOC policy.  He pointed out that the majority of the EEOC still consists of Democratic appointees, though observed that this will change around July 2017.  He further pointed out that the General Counsel position remains unfilled.  When that is filled, Chris thinks we should have a better idea about the direction the EEOC will head in the Trump administration.

Chris discussed the ways in which the Trump administration might affect the EEOC’s strategic enforcement priorities.  For example, Chris pointed out that the EEOC’s strategic priority of eliminating systemic barriers to hiring will likely be a focus of a Trump administration focused on job growth, while strategic priorities like eliminating pay disparities might be less of a focus to the administration.

Chris concluded by pointing out that the EEOC has shown itself to be resilient to changes in administrations.  In the past, it has been aggressive after changes from a Democratic to a Republican administration.  That trend appears to have continued, as the EEOC’s lawsuit filings are up 75% over this time last year.  Chris observed that this may be because the EEOC may be trying to justify continued funding from what could be a less friendly administration.

Noah then spoke about how the Trump administration will affect the DOL’s Wage and Hour Division.  Like Chris, Noah pointed out that Trump has not been able to fill the key DOL positions.  While the administration has put in place a Secretary of Labor, none of the three key policymaking positions in the Wage & Hour Division – the Administrator, Deputy Administrator, and Solicitor of Labor – have been filled by Trump’s administration.  In fact, the   Administrator and Deputy Administrator positions are vacant, and the current Solicitor of Labor is temporary.  Noah observed that, when the administration fills these positions, we will have a better idea about how the Wage and Hour Division will function under the Trump administration.

Noah stated that, though the DOL’s Wage and Hour Division grew under the Obama administration, there are no proposed changes to its funding in the Trump administration’s proposed budget.  As a result, like with the EEOC, while there could be a change in the focus of wage and hour investigations, the actual number of investigations will probably remain steady.

Noah pointed out that probably the biggest outstanding question is how the Trump DOL will handle the rule promulgated under the Obama administration raising the wage needed to qualify for the white collar exemption.  Currently, the rule is not in effect because a federal judge enjoined the DOL from enforcing it.  The injunction is on appeal and, to date, the Trump administration has not filed a brief on the appeal.  Noah said we should look for the Trump administration’s position on appeal to see where the law is heading on the wage needed for the white collar exemption.  For more information about Noah’s presentation, see link.

Brad  then presented on changes to expect from the NLRB.  As with the EEOC and the DOL’s Wage & Hour Division, Brad stated that change within the NLRB will take time because the Trump administration has not yet put its appointees into place.  At this point, there are two vacancies on the five member NLRB.  Its chair is a Republican appointee whose term ends this December, and its other two current members are Democratic appointees whose terms end in late 2018 and 2019.  Although Trump can create a Republican-appointed majority by filling the two vacancies, he has not done so.

Brad stated that even after Republican appointees are a majority of the NLRB, change will take time because the NLRB tends to interpret the law in decisions rather than through rulemaking.  As a result, it will have to wait for the right case to come before it before it can change its view of the law.

Brad argued that the Obama administration’s NLRB was the most aggressive in limiting the rights of employers and expanding the rights of individual employees and unions in history.  He emphasized that, while a Trump NLRB will likely take a different course and even overturn many of the recent decisions of the NLRB, it will take time before these changes are made.  For more information about Brad’s presentation, see link.

Implications For Employers

While the Trump administration will result in changes to the way government agencies interact with employers, these changes will occur gradually.  Further, employers should not expect a decrease in enforcement actions brought by government agencies against employers.  The latest budget proposal out of the Trump administration keeps funding for these agencies steady, which will allow them to continue to operate at the level they operated at in the prior administration.

 

By Michael W. Stevens

Seyfarth Synopsis:  With Justice Neil Gorsuch joining the Supreme Court in April, and the apparent re-emergence of a 5-4 split, we expect to see the Court issue more expansive opinions and be less reticent to grant certiorari.  The addition of Justice Neil Gorsuch is likely to have particular impact in the field of labor and employment law.

Since Justice Antonin Scalia’s death in February 2016, the lack of a ninth justice on the U.S. Supreme Court left the Court without a discernible majority of liberal or conservative justices. The four-four split between more liberal and more conservative justices led to two outcomes:  first, some opinions contained narrower holdings than they otherwise may have in order to command a majority.  Second, it appears the remaining eight justices voted more defensively on certiorari, as the outcome of cases may have been more difficult to predict.  The addition of Gorsuch could impact a number of labor and employment cases currently pending or awaiting certiorari from the Court.

The most important employment law case on the Court’s docket is Epic Systems Corp. v. Lewis, No. 16-285.  In Epic, the Seventh Circuit held that the inclusion of a class action waiver in an arbitration agreement violated the National Labor Relations Act, finding that participating in a class is a “concerted activity” protected by the NLRA.  This holding is directly contrary to other circuit courts, which have found that class action waivers are enforceable under the Federal Arbitration Act.

In deciding Epic, the Court may provide further guidance on its approach to statutory construction, and make a key ruling affecting employers’ ability to channel disputes with employees to arbitration on an individualized basis.  Although it is always difficult to prognosticate Supreme Court decisions, many observers believe that Justice Gorsuch is likely to favor arbitrability of disputes.

With other employment cases queueing up for Supreme Court review, Justice Gorsuch’s addition to the Court is likely to have an important impact on how cases are decided.   Gorsuch has taken a strictly textualist approach to resolving matters of statutory construction, and has called into question Chevron deference. See, e.g., Gutierrez-Brizuela v. Lynch, 834 F.3d 1142, 1152 (10th Cir. 2016) (Gorsuch, J., concurring) (describing Chevron deference as an “abdication of the judicial duty”).  For example, in TransAm Trucking, Inc. v. Administrative Review Board, 833 F.3d 1206 (10th Cir. 2016), then-Judge Gorsuch dissented from a finding that an employer trucking company impermissibly terminated an employee for operating a vehicle in contravention of the employer’s instructions, but who claimed to be doing so for his own safety.  Because the statutory phrase provided protection for employees who “refuse[] to operate a vehicle,” Gorsuch asserted that the statute did not protect an employee who operated a vehicle against the employer’s instructions.

This strictly textualist approach may have substantial ramifications in labor and employment cases. Just last month, the Seventh Circuit found that Title VII of the Civil Rights Act protects lesbian, gay, and bisexual (“LGB”) employees from discrimination based on sexual orientation. See Hively v. Ivy Tech Community College, 853 F.3d 339 (7th Cir. 2017).  In Hively, the Seventh Circuit reasoned that an LGB person who is discriminated against because of the gender of her partners (i.e., a female employee who has a female partner is terminated, but a male employee who also has a female partner is not) has experienced discrimination because of sex.  Although it appears that the employer in Hively is not planning to seek certiorari, there is a circuit split on this issue, and it is easy to imagine that this will soon be teed up for Supreme Court review.  It is unclear whether Justice Gorsuch’s strict textualism would support the Seventh Circuit’s decision, but that may be unlikely.

Justice Gorsuch’s addition to the Court will also have impact on employers in other areas of the law that intersect with employment issues. For example, Masterpiece Cakeshop v. Colorado Civil Rights Commission, No. 16-111, has been pending on the Supreme Court docket for an unusually long time, and certiorari has yet to be granted or denied.  In Masterpiece, a baker was found to have violated Colorado’s Anti-Discrimination Act by refusing to bake a wedding cake for a same sex couple.  The baker is seeking Supreme Court review, claiming that the anti-discrimination law violates the First Amendment and religious liberty protections.

While on the Tenth Circuit, Justice Gorsuch wrote a concurrence in Hobby Lobby in favor of expansive interpretations of religious liberty.  However, with Justice Kennedy routinely writing watershed opinions in favor of legal protections for LGBT people, it is unclear how a case like Masterpiece Cakeshop would be decided, and considering the conflicting issues, whether there are four votes in favor of certiorari.

Becoming the 101st Supreme Court Justice, Neil Gorsuch is likely to have a tremendous impact on labor and employment cases. Stay tuned to this blog as we examine new decisions as they are handed down.

FUN FACT: The photo of Justice Gorsuch is courtesy of Seyfarth Shaw L&E partner Kyle Peterson (second from right), who was recently sworn in before the US Supreme Court as part of a trip to Washington, DC, sponsored by the Women’s Bar Association of Illinois. 

 

 

By Karla E. Sanchez and Craig B. Simonsen

Seyfarth Synopsis: Employer must reinstate four employees after it terminated the employees for agreeing with a former coworker’s email that complained about their terms and conditions of employment.

Recently, a National Labor Relations Board Administrative Law Judge ruled that a restaurant unlawfully reprimanded and discharged several employees in violation of Section 8(a)(1) of the National Labor Relations ActMexican Radio Corp., Case No. 02-CA-168989 (April 26, 2017).

A series of disagreements between a new manager and several of the restaurant’s employees led to several employees reaching out to management to complain about the new manager and to one employee quitting her employment. After resigning, the employee sent management and several of her former coworkers a lengthy email that management described as “hurtful and mean spirited.”  The email went through the reasons why she had worked at the restaurant, why she had loved working with her coworkers, and how the new manager had changed that.  She complained about how the new manager treated them, how several coworkers had complained to other managers, who according to her, did nothing, and she alleged that the new manager was engaging in unlawful conduct. Four employees replied to the email in agreement with the sender and thanked her for sending the email.

Management, who also received the coworkers’ replies, viewed the replies as “deeply insubordinate.” As a result, management decided to meet with the four coworkers to ask them on an individual basis why they had supported their former coworker and agreed with the contents of the email. All four were discharged for, among other things, allegedly engaging in insubordination and agreeing with an email that contained “false accusations of management” and had used “inappropriate language,” including profanity.

The ALJ found that the restaurant unlawfully discharged the four employees for replying to the former coworkers’ email. The ALJ found that the employees’ conduct had been protected, concerted activity. The ALJ noted that these four employees had complained to management about the new manager and about their working conditions and that their replies to the email was an extension of this protected, concerted activity. The email itself also addressed their working conditions, and thus, responding to it was also protected, concerted activity.

The restaurant tried to argue that the email was “opprobrious conduct,” and therefore, lost the protections of the Act. The ALJ disagreed, finding:

  • The four employees did not add anything negative to the original email;
  • The email was a part of an ongoing dialogue between the restaurant and the workers;
  • The email contained little profanity and did not constitute insubordination, but rather, was “a critique of the management style” of the restaurant;
  • The email was distributed internally and did not cause a loss of reputation or business for the restaurant; and
  • The email did not cause a disruption of the business.

The ALJ ordered the restaurant to reinstate the four employees to their former positions, to make them whole for their lost earnings, to pay them for their job-search and interim employment expenses, to remove any reprimands from their files, and to post at the restaurant a standard NLRB notice.

The takeaway for employers:  Employers must be careful when confronted by employees’ criticisms, complaints, and allegations, whether in person, by email, or by posting on social media platforms.  While some “complaints” might not be protected by law and/or might constitute insubordination, an employer should discuss the particulars with an attorney before determining whether the conduct warrants discipline or termination.  Some “complaints,” even when profanity is used and even when they are hurtful to the reader, are protected under the NLRA or other laws, and adverse conduct taken against the employees will be found to be unlawful.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Social Media Team or the Workplace Policies and Handbooks Team.

Seyfarth Synopsis: The Second Circuit agrees with the Board that the use of profanity in a Facebook post was not “opprobrious enough” to lose the NLRA’s protections and justify the employer’s termination of the employee.

A server whose “conduct [sat] at the outer bounds of protected, union-related comments” when he posted that his manager is a “nasty mother f***er” and “f*** his mother and his entire f***ing family,” was not “opprobrious enough” to lose the protection of the NLRA, a three-judge panel for the Second Circuit Court of Appeals ruled in NLRB v. Pier Sixty, LLC, No. 15-1841 (2nd Cir. Apr. 21, 2017).

Pier Sixty operates a catering company in New York, NY. In early 2011, many of its service employees began seeking union representation.  Following a very contentious union organizing campaign, Pier Sixty employees voted to unionize on October 27, 2011.

Bob is such a NASTY MOTHER F***ER don’t know how to talk to people !!!!!! F*** his mother and his entire f***cking family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!!

The post was publicly accessible and Perez knew that his post would be visible to his coworkers. Perez removed the post three days later. Management, however, had already become aware of the post, and after an investigation, the employer terminated Perez on November 9, 2011.

Perez filed an NLRB charge alleging retaliation for engaging in protected concerted activities. On April 18, 2013, the ALJ issued a decision finding that Pier Sixty had violated sections 8(a)(1) and 8(a)(3) of the NLRA by discharging Perez in retaliation for his protected activity. Pier Sixty filed exceptions, and a three-member panel of the NLRB affirmed the ALJ’s decision on March 31, 2015.  The NLRB filed an application for enforcement, and Pier Sixty filed a cross-petition for review.

The Second Circuit affirmed the NLRB’s determination based on the deference afforded to the ALJ’s factual findings. The Court explained that in light of the General Counsel’s guidance for evaluating employees’ use of social media to post public criticisms of their employers and workplaces, a nine-factor “totality of the circumstances” test in social media cases had emerged.  The Court acknowledged that while the test the ALJ applied may not have “adequately balance[d] the employer’s interests, Pier Sixty did not object to the ALJ’s use of the test in evaluating Perez’s statements before the Board.”   Accordingly, the Court did not address the validity of the applied test.

Rather, Pier Sixty argued that the Board’s decision that the comments were not so egregious as to exceed the Act’s protection was not supported by “substantial evidence” in the record. The 2nd Circuit disagreed and found:

  • Although the post contained vulgar attacks, the subject matter of the message included workplace concerns.
  • Pier Sixty consistently tolerated widespread profanity amongst its workers, including supervisors, and had never before terminated any employees for such behavior until two days before the union election.
  • The location of the comments was an online mode of communication among coworkers and was not in the immediate presence of coworkers.

Accordingly, the Court found that the Board did not err in ruling that the post, while “vulgar and inappropriate,” was not so egregious as to exceed the NLRA’s protection.

Takeaways for Employers:

  • The Board will not apply the Atlantic Steel test to cases involving social media, even if the posts are public in nature, in light of the fact that the place of discussion is the internet and not face-to-face in the workplace.
  • Companies should ensure policies and handbooks comply with the NLRB’s current guidance on social media and do not interfere with employees engaging in protected concerted activity when off duty. However, while policies prohibiting vulgar and offensive comments need to be sensitive about infringing on NLRA-protected rights, employers should not hesitate to enforce those policies in appropriate circumstances.
  • Employee discipline should not be selectively enforced to prohibit behaviors that relate to union-related activities; discipline should be applied uniformly to all employees.

By Ashley Laken

Seyfarth Synopsis: NLRB affirms ALJ’s ruling finding that a union member’s criticisms on Facebook of the union that represented him were protected by the NLRA.

On February 7, 2017, in Laborers’ International Union of North America, Local Union No. 91, 365 NLRB No. 28, the National Labor Relations Board affirmed an NLRB administrative law judge’s ruling that found that the Laborer’s International Union of North America Local 91 violated the National Labor Relations Act by punishing one of its members for criticizing the union’s business manager on Facebook. We had previously blogged about the ALJ’s earlier decision.

The member’s Facebook posts criticized the union’s business manager for allowing a local politician to become a journeyman without first going through the union’s five year apprenticeship program, and the union punished the member by fining him $5,000, suspending his union membership for two years, and taking him off of its out-of-work referral list.

In finding that the union’s actions were unlawful, the Board observed that it is “elementary” that an employee’s right to engage in intraunion activities opposing the current leadership of his union is concerted activity protected by Section 7 of the NLRA, and therefore found that the member had engaged in protected concerted activity by posting his criticisms of the union’s business manager on Facebook.

The Board then examined whether the union’s interests outweighed the member’s Section 7 rights, and found that they did not. The Board reasoned that the member’s Section 7 right to press the union to change its policies outweighed the union’s vague claim that its reputation was damaged. The Board ordered the union to make the member whole for any loss of earnings he suffered as a result of the unlawful action taken against him, including backpay with interest compounded daily and his search-for-work expenses.

The decision highlights that not only are employee criticisms of their employers potentially protected by Section 7, employee criticisms of the labor unions that represent them may also be protected by Section 7.

For more information on this or any related topic please contact the author, your Seyfarth attorney, or any member of the Labor & Employee Relations Team.

 

By Marshall B. Babson, Katherine Mendez, and Bryan Bienias

Seyfarth Synopsis: Several organizations are planning nationwide strikes and boycott activities on February 16-17 to oppose Trump Administration and Republican policies. Employers impacted by these activities should be mindful of employees’ rights before responding.

Several labor and activist groups are calling for national general strikes and boycotts this week to protest policies enacted and proposed by the new Trump Administration and the Republican Congress.

Thursday, February 16: A Day Without Immigrants. The first action, “A Day Without Immigrants,” is currently scheduled for this Thursday, February 16.  The campaign, promoted in Spanish and English, has been spread through Facebook, fliers, and word of mouth and calls on immigrants and their supporters “not to go to work, open businesses, shop, eat in restaurants, buy gas, go to classes, or send children to school.” While the campaign originally focused on the Washington D.C. area, the campaign is expected to spread nationwide. A similar action in Milwaukee, Wisconsin this past Monday, February 13 drew thousands of protesters.

Friday, February 17: National General Strike. Then, on Friday, February 17, a group called Strike4Democracy has called for a national general strike and plans on “over 100 strike actions across the United States, and beyond.” The campaign calls for participants to forgo work on Friday and, instead “plan or take part in an event in your community” and “occupy public space with positive messages of resistance and solidarity.”

The organizers do not plan on stopping there. They intend to use Friday’s national general strike to “build towards a series of mass strikes,” with another mass strike planned on March 8, 2017, another on May 1, 2017 (May Day), and “a heightening resistance throughout the summer.”

So, what does this mean for employers?

While these general strikes and those planned for the future could wreak havoc on an employer’s operations — as employees fail to report to work or leave shifts early — the National Labor Relations Act provides protection for employees who engage in political advocacy that relates specifically to job concerns and to other workplace issues.

Employers have the right to enforce “neutrally applied work rules” to restrict employees from leaving work for political activities unrelated to workplace concerns. As discussed above, whether an employee’s actions are protected or unprotected turns on whether the employee’s absence relates to activity directed at “terms and conditions of employment” which the employer controls or to workplace concerns that affect all employees. If the absence is due to political activity totally unrelated to workplace concerns, employees could be subject to discipline, although discipline is not necessarily the prudent course to take.

Given the myriad issues to be addressed in these strikes, from immigration reform to minimum wage laws to worker’s rights, employers may be hard pressed to show that employees who participate in these strikes in lieu of working have engaged in unprotected activity. Employers could find themselves in further “hot water” with the NLRB if they discipline employees for absenteeism or tardiness related to the employees’ political activities.

If your company is affected by any of the strike activity this week or in the months ahead, contact the authors, your Seyfarth attorney, or any member of the Labor & Employee Relations Team.

By Bryan Bienias

Seyfarth Synopsis: The Court of Appeals for the First Circuit reversed the NLRB, holding that the Board lacked substantial evidence to find that the hospital group unfairly preferred nonunion workers when filling nonunion positions.

The National Labor Relations Board may not invalidate employment policies that accomplish legitimate goals in a nondiscriminatory manner “merely because the Board might see other ways to do it.” Such was the message the U.S. Court of Appeals for the First Circuit delivered to the Board last week in Southcoast Hospitals Group v. NLRB, No. 15-2146 (1st Cir. 2017).

The Court ruled that the Board lacked substantial evidence in finding that the hospital group discriminated against union members by giving nonunion workers a hiring preference for nonunion positions. The union’s contract granted union employees a similar preference when applying for union positions. According to Southcoast, the policy was intended to “level the playing field” and stave off staffing complaints by its nonunion workforce.

The Board argued that the policy tilted the playing field too far in favor of nonunion employees, claiming the number of nonunion positions “pales in comparison” to the number of positions covered by the union hiring policy and that nonunion hiring preference covered two facilities, as opposed to the single facility covered by the union policy.

This was not enough, the Court ruled. While the Court acknowledged that the nonunion policy covered more positions than the union hiring policy, union workers were not disproportionately harmed, given that the ratio of covered positions to covered employees was substantially the same under both policies. Likewise, nonunion employees had to compete with workers from two hospitals, as opposed to union workers’ need to compete only with workers from one hospital.

The Court also noted that the Board ignored other aspects of the hiring policies that still leave union members at a comparative advantage, namely that union seniority trumps qualifications for open union positions, while Southcoast is required to choose “the best qualified” candidate for a nonunion position, regardless of seniority.

Employer Takeaway

Employers must often walk a fine line in order to apply different policies to union and nonunion employees in a non-discriminatory manner. However, as the Court in Southcoast makes clear, this does not handcuff employers from attempting to “level the playing field” by giving certain advantages to nonunion employees, so long as the policy does not disproportionately harm union employees and is supported by a legitimate and substantial business justification.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Labor & Employee Relations Team.

By: Ashley K. Laken, Esq.

Seyfarth Synopsis: NLRB rules that the operators of the Detroit Masonic Temple unlawfully refused to bargain with a union that represented various engineers and maintenance workers at the temple, even though none of the remaining members of the bargaining unit were union members.

NLRB Chairman Pearce and Members Miscimarra and McFerran unanimously ruled that the Masonic Temple Association of Detroit and 450 Temple, Inc. violated the National Labor Relations Act by refusing to bargain with Local 324 of the International Union of Operating Engineers for a successor collective bargaining agreement. Masonic Temple Association of Detroit, 364 NLRB No. 150 (Nov. 29, 2016).

Facts

The Union had represented employees at the temple since approximately 1968. The most recent collective bargaining agreement covering the temple expired in early 2010, and the Association began operating the temple shortly thereafter.  At the time, there were approximately ten members in the bargaining unit, two of whom were dues-paying Union members.  In mid-December 2010, the Union sent the Association a written request to bargain over a new CBA.  The Association did not respond, and in January 2011, the Union filed an unfair labor practice charge against the Association for refusing to bargain in good faith.  The parties entered into a settlement agreement, with the Association agreeing to recognize the Union and bargain in good faith as a successor employer, and they met approximately once per month between January 2011 and May 2011.

After the last negotiation session in May 2011, the Union was told that a new unnamed entity would take over management of the temple and that the Union should wait until the changeover to negotiate a CBA with that entity. In the fall of 2011, the Detroit Masonic Temple Theater Company took over management of the Temple, and the Union held one negotiation session with that entity in January 2012.  The Association and the Theater Company ended their relationship in November 2012, and shortly thereafter, 450 Temple Inc. took over management of the temple.

From late 2012 until January 2015, the Union made multiple attempts to restart negotiation discussions, but in January 2015, the President of the Association and 450 allegedly told the Union that because Michigan had become a right-to-work state and there were no longer any Union members working for the temple, he did not feel it necessary to and would not bargain with the Union. In response, the Union filed the unfair labor practice charge at issue in this case.

Board’s Decision

An administrative law judge found that the Association and 450 were a single employer, in part because the Association had 100% ownership of 450 and they operated out of the same office, and no exceptions were filed in response to that ruling. Thus, the Board’s decision did not address this issue.

Regarding the merits of the charge, the Association and 450 argued that they did not violate the Act because the Union was not the exclusive representative of a majority of employees in the bargaining unit, pointing to the fact that none of the employees in the bargaining unit were Union members. The Administrative Law Judge (and the Board) disagreed, observing that an employer may rebut the continuing presumption of an incumbent union’s majority status and unilaterally withdraw recognition only on a showing that the union has in fact lost the support of a majority of the employees in the bargaining unit, and that bargaining unit employees’ union membership status is not determinative of the employer’s obligation to bargain.  In other words, evidence of a desire to withdraw from membership in the union is insufficient proof that the union has in fact lost the support of a majority of the unit.

The Board found that there was no evidence of any action taken by the bargaining unit employees to express their lack of support for the Union, such as a petition to decertify the Union or statements by the employees that they no longer wanted to be represented by the Union. The Board ordered the Association and 450 to bargain with the Union on request and to post a notice to employees.

Employer Takeaway

The decision highlights the fact that there is a distinction between an employee’s desire to be a member of a union and his or her desire to be represented by a union.  Even if the majority of employees in a bargaining unit are not union members, that does not necessarily mean the union has lost its majority support.  Employers that have questions about the status of an incumbent union’s support should connect with their labor attorney to ensure they do not engage in conduct that would run afoul of the Act.

By Annette Tyman, Lawrence Z. Lorber, Jaclyn W. Hamlin, and Brent I. Clark

 

Seyfarth Synopsis: The first of several anticipated challenges to Executive Order 13673, “Fair Pay and Safe Workplaces,” has resulted in a preliminary injunction staying the implementation of some – but not all – aspects of the Executive Order and its implementing regulations. In a significant victory for the government contracting community, the Associated Builders and Contractors of Southeast Texas won an injunction staying the application of the reporting and disclosure requirements, as well as the prohibition on entering into mandatory pre-dispute arbitration agreements.  The Judge left the paycheck transparency provisions in effect, however, and as a result, government contractors must still plan for compliance with those requirements.

Introduction

For our readers that are interested in occupational safety and health topics, we are blogging our colleagues “Management Alert” below, with this introductory note. OSHA citations are covered among the labor laws covered by the Executive Order 13673 (Blacklisting Order). The way the Blacklisting Order reads is that the covered violations include citations which are not final, which are being contested by the employer, and which may ultimately be withdrawn through settlement or by a Judge once the employer has had a chance to present its defense.  The Blacklisting Order is another example of the government’s “guilty until proven innocent” approach to regulating businesses and employers.

Note also that the Blacklisting Order will be applicable under:

  • The Fair Labor Standards Act
  • The Occupational Safety and Health Act of 1970 (including OSHA-approved State Plans equivalent to State Laws)
  • The Migrant and Seasonal Agricultural Worker Protection Act
  • The National Labor Relations Act
  • 40 U.S.C. chapter 31, subchapter IV, also known as the Davis-Bacon Act
  • 41 U.S.C. chapter 67, also known as the Service Contract Act
  • Executive Order 11246 of September 24, 1965 (Equal Employment Opportunity)
  • Section 503 of the Rehabilitation Act of 1973
  • The Vietnam Era Veterans’ Readjustment Assistance Act of 1972 and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974
  • The Family and Medical Leave Act
  • Title VII of the Civil Rights Act of 1964
  • The Americans with Disabilities Act of 1990
  • The Age Discrimination in Employment Act of 1967
  • Executive Order 13658 of February 12, 2014 (Establishing a Minimum Wage for Contractors)

In a significant victory for the government contracting community, a federal judge sitting in the U.S. District Court for the Eastern District of Texas partially stayed the implementation of Executive Order 13673, “Fair Pay and Safe Workplaces,” referred to in the government contracting community as the “Blacklisting Order.”  As discussed in more detail here, the Blacklisting Order would:

  1. Require government contractors to disclose “labor law violations” under fourteen different statutes and Executive Orders when bidding for or modifying contracts;
  2. Prohibit employers from entering into mandatory pre-dispute arbitration agreements with employees; and
  3. Require certain disclosures to independent contractors and employees concerning their employment status and information related to wages and hours worked.

When the White House issued the Executive Order, the government contracting community expressed concerns about the substantial burdens it would impose on businesses and noted that the Order seemed to exceed the limits of Executive power.  Judge Marcia Crone, a federal judge in Texas, agreed.  Late on October 24, 2016, Judge Crone issued a preliminary injunction blocking: (1) the labor law violations disclosure requirements and (2) the prohibition against entering into mandatory pre-dispute arbitration agreements.  The preliminary injunction applies to all federal contractors subject to the Executive Order and it blocks all aspects of the requirements and the implementing regulations, except the paycheck transparency provision.

The Plaintiffs, an association of government contractors in Texas, argued that the Executive Order and its implementing regulations and guidance exceeded Executive power and would impose irreparable harm on their businesses.  Judge Crone found the Plaintiffs’ arguments compelling with regard to the reporting and disclosure requirements and arbitration clause prohibitions, and stayed the implementation of those requirements.

In her decision, the Judge addressed several of the arguments raised by the contracting community Plaintiffs and the government Defendants.

  • The Judge found that the Executive Order and its implementing regulations and guidance likely exceeded the limits of Executive power.
  • She noted that fourteen statutes and Executive Orders of which the Blacklisting Order requires contractors to publicly disclose “violations” all have their own detailed enforcement mechanisms and penalties.
  • The Judge noted that under the Blacklisting Order, a contractor could face debarment or disqualification even if it was contesting a violation or over nothing more than the issuance of a citation by an individual government agency official.
  • Judge Crone also found persuasive the Plaintiffs’ arguments that the provisions of the Executive Order and Final Rule which restrict or prohibit certain mandatory pre-dispute arbitration agreements are in violation of the Federal Arbitration Act and the government’s general policy in favor of arbitration.
  • The Judge found the reporting and disclosure requirements to be “compelled speech” that likely violates the contractors’ First Amendment rights and also agreed that the Executive Order likely violates contractors’ Due Process rights by “compelling them to report and defend against non-final agency allegations of labor law violations without being entitled to a hearing at which to contest such allegations.”
  • Judge Crone found that the Executive Order is likely arbitrary and capricious “in view of the complex, cumbersome, and costly requirements . . . which hamper efficiency without quantifiable benefits.”

Although the contracting community’s victory is substantial, it was not complete, as Judge Crone left the paycheck transparency provisions to take effect on their regular schedule (starting on January 1, 2017).  The paycheck transparency provisions require that contractors with procurement contracts of $500,000 provide their employees with a document disclosing “the individual’s hours worked,  overtime hours, pay, and any additions made to or deductions made from pay.” For exempt employees, the document may omit information concerning overtime hours worked so long as the individual has been informed of his or her exempt status.  Covered contractors in states with equivalent paycheck transparency laws, such as New York and California, are deemed to be in compliance with the Executive Order’s requirements so long as they comply with their state’s paycheck transparency law.  Contractors should also be aware that there is always a possibility that the preliminary injunction may be lifted – whether by the Fifth Circuit or another federal court – and in that event, the reporting and disclosure requirements could be reinstated.  For that reason, covered contractors may wish to continue to collect data in case they find themselves once again subject to the reporting and disclosure obligations.

The request for – and subsequent partial granting of – a preliminary injunction staying the implementation of certain provisions of the Blacklisting Order is only the opening salvo in what is likely to be a long fight between the contracting community and the federal government.  As we discussed in our previous alert on the topic, multiple court challenges are possible, and the Blacklisting Order’s provisions may appear before Congress at some point.

Meanwhile, thanks to Judge Crone’s preliminary injunction, the reporting and disclosure requirements and the prohibition on mandatory pre-dispute arbitration agreements are enjoined until further notice, while we continue to closely monitor developments.  Preliminary injunctions typically remain in effect at least until the conclusion of the underlying litigation.  The Plaintiffs may petition the court for the preliminary injunction to become permanent, blocking the government from enforcing the reporting and disclosure requirements and the prohibition on mandatory pre-dispute arbitration agreements (unless the injunction is overturned).  Or the government Defendants may appeal to the U.S. Court of Appeals for the Fifth Circuit, perhaps paving the way for an ultimate ruling by the U.S. Supreme Court.  The ultimate resolution of the contracting community’s concerns about the Blacklisting Order remains to be seen.  One thing is clear, however: while government contractors should be pleased with their victory in Texas, they must still plan to comply with the paycheck transparency provisions.  The contracting community has won the first battle, but the war over blacklisting continues.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the OFCCP & Affirmative Action Compliance Team, the OSHA Compliance, Enforcement & Litigation Team, or the Workplace Policies and Handbooks Team.

By Michael Rybicki, Esq.

Seyfarth Summary: The relevance of the National Labor Relations Act to industries and business sectors that have not traditionally had to deal with its implications – such as hedge funds.

The New York Times recently ran on the front page of its business section a lengthy article discussing the National Labor Relation’s Board challenge to a number of provisions of an employment agreement that Bridgewater Associates, the world’s biggest hedge fund firm, requires each full-time employee to sign. Under the headline Confronting Wall Street’s Secretive Culture – N.L.R.B. Challenges Confidentiality Clauses, the article notes that the Board is challenging Bridgewater’s confidentiality, non-disparagement, and arbitration clauses and went on to state “[t]he unusual action is calling into question longstanding practices and prompting some companies to re-examine their employment agreements.”

With all deference to The Times, however, for a number of years the Board has been finding confidentiality provisions (see e.g., Target Corporation, 359 NLRB No. 103 (2013)) and non-disparagement clauses (see Dish Network Corporation, 359 NLRB No. 108 (2013)) unlawful and has steadfastly maintained, despite much criticism from the courts, that clauses restricting employees to arbitrating disputes are unlawful (D. R. Horton, Inc., 357 NLRB 184 (2012)). If anything is “unusual” – if unsurprising – it is that the Board is going after a hedge fund.

Although many employers (and some of their attorneys) think that the application of the National Labor Relations Act is limited to union-represented employees or at least limited to union or union-related activities, such as collective bargaining, union organizing, or union strikes, hand billing, picketing, or boycotts, the Act’s coverage is much broader. As the Board’s website notes:

  • The NLRA applies to most private sector employers, including manufacturers, retailers, private universities, and health care facilities.
  • Employees at union and non-union workplaces have the right to help each other by sharing information, signing petitions and seeking to improve wages and working conditions in a variety of ways.See NLRB Website: FAQ’s.

The Complaint against Bridgewater (Case Number: 01-CA-169426 (06/30/2016)) is not the first one in the financial sector. For example, as Seyfarth Attorney Ashley Laken noted, the D.C. Circuit recently upheld the Board’s finding that the confidentiality and non-disparagement provisions of Quicken Loan’s employment agreements (see our earlier blog post here) violated the Act.

Confidentiality agreements, for example, can be drafted to lawfully prohibit the disclosure of a wide variety of confidential information, see e.g., GC MEMORANDUM OM 12-31, Case 7 (pp. 17-18) (a rule by a drugstore chain prohibiting the disclosure of confidential information lawful where the rule was clearly in the context of not disclosing personal health information); see also GC MEMORANDUM OM 12-59, p. 20 [Walmart, Case 11-CA-067171] (finding lawful a rule requiring employees to maintain the confidentiality of the employer’s trade secret and confidential information where rule was sufficiently contextualized by examples of prohibited disclosures (i.e., information regarding the development of systems, processes, products, know-how and technology, internal reports, policies, procedures or other internal business-related communications) for employees to understand that it does not reach protected communications about working conditions).

It seems reasonably clear, however, that too often the implications of the NLRA for industries and sectors that have not traditionally had to deal with issues arising under the Act are not considered. Further, even where they are at least considered, frequently all that is done is to include a so-called “savings clause,” stating in effect that nothing contained in an employment agreement, handbook, or work rule, shall be construed as restricting activity protected by the National Labor Relations Act. The Board, however, routinely finds such clauses ineffective. Chipotle Services LLC d/b/a Chipotle Mexican Grill, 364 NLRB No. 72 (2016); see also ISS Facility Services, Inc., 363 NLRB No. 160 (2016).

As noted, the National Labor Relations Act applies to most private sector employers, including industries and business sectors that have not traditionally had to deal with issues arising under its provisions. However, because it provides for only compensatory damages and generally does not offer the opportunity for attorney’s fees, it has generally been ignored by the Plaintiff’s Bar. But in today’s digital age, where employees can readily become aware of the Act’s scope via social media and online content providers, the Act’s implications need to be considered by almost all private sector employers when drafting employment agreements, handbooks, and work rules –  areas into which the Board clearly is looking to expand its effective reach.