Labor Relations & Wages Hours Update
May 2014
Hot Topics in LABOR LAW:
General Counsel adds successor cases to agency’s priorities for 10(j) injunctive
relief
By Lisa Milam-Perez, J.D.
NLRB General Counsel Richard F. Griffin, Jr. issued GC Memo 14-03 on Wednesday,
April 30 reaffirming the commitment of the General Counsel’s office to “aggressively
seek 10(j) relief” when necessary in order “to preserve the status quo and the efficacy of
final Board orders.” Writing to the agency’s regional directors, officers-in-charge, and
resident officers, Griffin identified the particular kinds of cases that in his view, warrant
motions for 10(j) relief. Following the lead of his predecessors in the GC’s office, he
cited first-contract bargaining cases and allegations of discharge during organizing
campaigns; he also added successor cases to that list.
Past priorities. Former GC Ronald Meisburg in 2006 instructed regional offices to focus
their attention on violations that occur post-certification, when parties are (or should be)
bargaining for a first contract. Former Acting GC Lafe Solomon reaffirmed that priority
in 2011, directing the regions to "continue to consider the propriety of 10(j) relief in all
first-contract bargaining cases," and also initiated a program to ensure that prompt and
effective remedies are obtained when employees are unlawfully discharged or face other
adverse consequences due to union organizing at their workplaces, establishing timelines
to streamline processing of those cases.
Past results. Consequently, in FY 2012 and 2013, the agency sought 10(j) relief in 19
first-contract bargaining cases and obtained bargaining orders in 16 of those cases — an
average success rate of 84 percent. During that same period, 10(j) relief was pursued in
39 cases involving discharges during an organizing campaign, with an average success
rate of 80 percent. These efforts resulted in offers of reinstatement for 454 discharged
employees and more than $5.4 million in back pay and interest from unfair labor practice
and 10(j) litigation and settlements during those two years, Griffin reported. Endorsing
these initiatives, he noted that the agency was on track to obtain similar results in 2014.
Stay the course. Griffin instructed the regional offices to continue to adhere to the
policies set forth in previous Memoranda GC 06-05, 11-06, and 10-07, and to send a
recommendation to the Injunction Litigation Branch regarding the need for 10(j) relief
“in all meritorious cases involving a discharge during an organizing campaign or arising
during negotiations for a first contract.” He directed the regions to seek specific remedies,
both in 10(j) recommendations and administrative complaints, that will most effectively
restore the pre-violation status quo and restore employees’ Section 7 rights.
Consider in every case. “Cases involving a discharge during an organizing campaign or
arising during negotiations for a first contract frequently require the most expeditious
relief to ensure that employees are not irreparably deprived of those rights,” noted
Griffin, but those aren’t the only instances in which 10(j) relief might be warranted.
Therefore, he advised the regions to consider whether such relief may be needed “early in
the investigation of every case.” Even if a case is not identified early in the casehandling process, Griffin said, regions should continue examining whether injunctive
relief is necessary throughout the investigative and prosecutorial process. “[T]he impact
of the unfair labor practices on employees' Section 7 rights may change at any time,” he
wrote.
Successor cases. In addition to the priorities established by his predecessors, Griffin
targeted for injunctive relief those cases involving a successor’s refusal to bargain or
refusal to hire. “In many ways, successor cases present the same need for protection as
those with a newly certified union,” he wrote. “In both, the status of the employees'
chosen collective-bargaining representative is particularly vulnerable to unfair labor
practices.” Accordingly, Griffin told the regions to submit to the Injunction Litigation
Branch a recommendation as to whether to seek 10(j) relief in all successorship cases in
which a determination has been made to issue a complaint.
Agency training. The Injunction Litigation Branch (with the Division of Operations) is
rolling out a program to train NLRB field personnel in 10(j) procedures, according to
Griffin. New field employees will be trained to identify 10(j) cases and “understand the
fundamental 10(j) concept of the need to avoid remedial failure.” Experienced field
attorneys will receive training geared toward litigating 10(j) cases in district court. The
agency also has updated its resources and training materials for investigating and
litigating 10(j) cases, he said.
Board soliciting briefs on whether Register Guard should be overruled
The NLRB is soliciting briefs regarding employees’ use of electronic communication in
conjunction with their Section 7 rights and the question of whether the Board’s decision
in Register Guard should stand.
Case before the Board. The case at issue is Purple Communications, Inc. (Nos 21-CA095151; 21-RC-091531; 21-RC-091584), in which an administrative law judge, relying
on Register Guard, dismissed the allegation that the employer violated Section 8(a)(1) by
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prohibiting use of its electronic equipment and email systems for activity unrelated to the
employer’s business purposes.
The General Counsel and the charging party, the Communication Workers of America,
AFL-CIO, have asked the Board to overrule Register Guard and adopt a rule that
employees who are permitted to use their employer’s email for work purposes have the
right to use it for Section 7 activity, subject only to the need to maintain production and
discipline.
Questions for consideration. To aid in the consideration of this issue, the Board has
invited parties and interested amici to file briefs addressing these questions:
(1) Should the Board reconsider its conclusion in Register Guard that employees do
not have a statutory right to use their employer’s email system (or other electronic
communications systems) for Section 7 purposes?
(2) If the Board overrules Register Guard, what standard(s) of employee access to the
employer’s electronic communications systems should be established? What
restrictions, if any, may an employer place on such access, and what factors are
relevant to such restrictions?
(3) In deciding the above questions, to what extent and how should the impact on the
employer of employees’ use of an employer’s electronic communications
technology affect the issue?
(4) Do employee personal electronic devices (e.g., phones, tablets), social media
accounts, and/or personal email accounts affect the proper balance to be struck
between employers’ rights and employees’ Section 7 rights to communicate about
work-related matters? If so, how?
(5) Identify any other technological issues concerning email or other electronic
communications systems that the Board should consider in answering the foregoing
questions, including any relevant changes that may have occurred in electronic
communications technology since Register Guard was decided. How should these
affect the Board’s decision?
The Board has encouraged the parties and amici to submit empirical and other evidence
in answering these questions.
Filing briefs. Although the NLRB’s press release indicates that briefs should be filed on
or before June 13, 2014, the agency’s notice states that briefs not exceeding 25 pages in
length must be filed with the NLRB in Washington, D.C. on or before June 16, 2014.
Responsive briefs must be filed on or before June 30, 2014, and also are limited to 25
pages in length. No other responsive briefs will be accepted.
Briefs must be filed electronically and served on all case participants listed here under the
heading “Service Documents.” For assistance with filing, contact Gary W. Shinners,
Executive Secretary, NLRB. The briefs submitted by the parties are available here.
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Greenbrier Rail Service bid to stay injunction ordered after layoffs in midst of
union campaign is rejected
Under an order issued by the Ninth Circuit on April 23, Gunderson Rail Services, dba
Greenbrier Rail Services, must comply with a temporary injunction issued by a federal
district court in Arizona at the request of the NLRB’s Region 28 following layoffs in the
midst of an organizing campaign. Greenbrier requested an emergency partial stay of the
injunction pending appeal, but the Ninth Circuit declined. The appeals court also lifted its
earlier temporary stay of part of the lower court’s order.
On November 11, 2012, according to an NLRB announcement, the nation-wide railway
car repair and maintenance provider laid off 28 of 90 employees working at its Tucson,
Arizona, facility in the wake of its employees’ union organizing campaign. A majority of
Greenbrier’s employees had signed union authorization cards affirming they wanted the
Sheet Metal Workers’ International Association, Local 359, to represent them in
collective bargaining.
After the NLRB’s Phoenix Regional Office, Region 28, found merit to the union’s charge
that the layoff was unlawful, a NLRB administrative hearing was scheduled. Just prior to
the start of the hearing, Greenbrier’s officials announced plans to close the Tucson
facility and lay off the remaining employees. The Region thereafter determined that the
impending closure and further layoffs were unfair labor practices aimed at further
disrupting union organizing efforts.
The Region sought injunctive relief in a district court in Arizona that would require
Greenbrier to reopen its Tucson facility, restore its operations, reinstate the laid-off
employees, and bargain with the union. The region pursued temporary injunctive relief
because it found that Greenbrier’s actions squelched all union support at its facility and
an immediate remedy was necessary in order to counter Greenbrier’s unlawful actions
while litigation before the Board was pending.
Siding with the NLRB, the district court on March 14, 2014, ruled that a temporary
injunction should be issued. The court’s injunction order required Greenbrier to reopen
and restore operations at its Tucson facility, to offer immediate reinstatement to the
Tucson employees, and to bargain with the union in good faith. The order was later
clarified to require Greenbrier to continue its past practice of sending its own rail cars and
equipment to Tucson for repair or service, to inform its largest customer that it would
charge the same rates it had in effect in 2013, and to further inform other past customers
that its Tucson facility had reopened and solicit them to use Greenbrier’s services.
Greenbrier appealed to the Ninth Circuit and filed an emergency motion to stay the
injunction order. On April 23, the Ninth Circuit denied the stay request and ordered
Greenbrier to comply with the lower court’s injunction order, as clarified, by no later than
May 5. The appeal remains pending.
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Detroit’s retired employees will take 4.5-percent cut in pension benefits under
bankruptcy plan deal between city and DRCEA
By Pamela Wolf, J.D.
The City of Detroit, working through federal bankruptcy mediators, has reached an
agreement on the treatment of pension and healthcare benefits with the association
representing retired Detroit general city employees, according to a May 2 announcement
by law firm Lippitt O'Keefe Gornbein, PLLC. The deal includes a 4.5-percent cut in
pension benefits and a change in cost of living allowances (COLAs). Lippitt O'Keefe
Gornbein represented the Detroit Retired City Employees Association (DRCEA) in
reaching this latest agreement. The firm also represented the Retired Detroit Police and
Fire Fighters Association (RDPFFA) in reaching a similar agreement with the city on
April 15.
In a lengthy landmark opinion filed on December 5, 2013, Bankruptcy Judge Steven
Rhodes, sitting in the Eastern District of Michigan, concluded that the once-prominent
city may be a Chapter 9 debtor under the Bankruptcy Code. The judge also found that
municipal pension rights are contract rights under Michigan’s constitution; they are
subject to impairment in federal bankruptcy proceedings; and because the state here
consented, that impairment does not violate the Tenth Amendment. Thus as applied to the
Detroit bankruptcy filing, Chapter 9 is constitutional.
Mediation solution plan offered. Earlier this year, Michigan Governor Rick Snyder,
along with majority leaders of State House and Senate, on January 22, said they backed a
plan that would provide “an unprecedented bankruptcy mediation solution” that would
mitigate the anticipated cuts to retiree pensions in the Detroit bankruptcy case and keep
the city moving toward revitalization. They also pledged to continue to work closely with
state lawmakers in both chambers, the mediators, and all parties involved with the aim of
reaching a settlement in the near future.
Under that plan, the Governor and law makers pledged to work with the Michigan
Legislature to allocate up to $350 million over the next 20 years to be combined with
funds raised by private Michigan foundations to assist in saving retiree pensions. The
governor recommended that these state funds would come from tobacco settlement
revenues. The governor pointed to a coalition of foundations that had already pledged
over $330 million over the next 20 years, which jump-started a mediation solution that
offered the hope of resolving key elements of the city’s bankruptcy process.
DRCEA agreement. Months later, on the heels of the RDPFFA deal in April, the Detroit
Retired City Employees Association (DRCEA) has now reached an agreement with the
city regarding the proposed Bankruptcy Plan of Adjustment. The DRCEA is the city's
largest employee association with almost 8,000 members — about 75 percent of Detroit's
eligible general retirees. Founded in 1960, DRCEA has over the past 53 years played an
active role in improving and protecting general city retiree pensions and benefits.
Under the agreement, the city retirees will see a 4.5-percent cut in current pension
benefits, as well as a loss of COLAs, which can be restored depending upon the
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performance of the General Retirement System under the Plan of Adjustment. Retirees
will also enjoy a “meaningful voice” in governance of the General Retirement System
and of a Voluntary Employees Beneficiary Association (VEBA) that will be established.
“We thank the mediators for their extraordinary work in reaching this milestone
agreement,” said Brian O'Keefe, managing partner of Lippitt O'Keefe Gornbein. “We
believe this is a favorable deal under the current situation and it further clears a path for
the city to emerge from bankruptcy.”
“Some will criticize the work that we have done and the recommendation that we are
making, but we believe that the terms we have negotiated provide the best protections
that could be obtained under the circumstances,” said Shirley Lightsey, president of the
DRCEA.
Attorneys: (Lippitt O'Keefe Gornbein)
Circuit split on how to construe duration of retiree health care benefits under CBAs
to be resolved
By Pamela Wolf, J.D. and Ronald Miller, J.D.
On Monday, May 5, the Supreme Court issued an order revealing that it will resolve a
circuit split over how courts should construe the duration of retiree health-care benefits
under collective bargaining agreements, which rarely explicitly address the question. The
Court granted the petition for certiorari filed by M&G Polymers USA, LLC, and its
medical plans for review of a Sixth Circuit ruling that affirmed a district court’s grant of a
permanent injunction requiring the employer to provide lifetime, contribution-free health
care benefits for certain retirees. The case is M&G Polymers USA, LLC v. Ticket (Dkt No
13-1010).
Permanent injunction issued. The retirees here brought a class action against the
employer after it announced that they would be required to make health care
contributions. The retirees contended that the promise of “full Company contribution
towards the cost of [health care] benefits” in collective bargaining agreements provided
them with a vested right to receive lifetime health care benefits in retirement without any
contributions. The employer countered that cap letters entered between itself and the
bargaining unit representative limited that promise. Eventually, a bench trial was
conducted and the district court found for the retirees on their claims that the employer
violated both the labor agreements and the employee benefit plans. The trial court issued
a permanent injunction to reinstate the retirees’ lifetime contribution-free health care
benefits. However, the retirees were only reinstated to the post-2007 versions of the
plans.
Liability determination. On appeal to the Sixth Circuit, the employer sought to have the
permanent injunction dissolved. Meanwhile, the retirees appealed that portion of the
permanent injunction that reinstated the post-2007 versions of the benefit plans. At the
threshold, the Sixth Circuit observed that the liability determination in this case hinged on
whether the CBAs vested in the retirees a right to lifetime no-contribution health care
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benefits. Unlike a pension plan, a health care plan is a welfare benefit plan that does not
vest automatically, but only “if the parties so intended when they executed the labor
agreements.”
Here, the appeals court noted that in a prior ruling (2009) it concluded that the language
of the parties’ master pension and insurance agreement indicated a desire to vest benefits.
However, it was a matter of factual dispute whether the side letters between the parties
were part of the CBA. Consequently, the appeals court’s earlier ruling in this case did not
conclusively determine that the retirement benefits had vested. In its decision on remand,
the district court performed its own analysis of the facts, which led it to conclude that the
cap letters were not part of the CBA and that vesting had occurred. The appeals court
subsequently concluded that the district court did not clearly err in finding the cap letters
inapplicable to this particular plant.
Moreover, the district court did not err by considering the lack of awareness of the cap
letters on the part of the employer’s accountants and actuaries as evidence that the cap
letters were not applicable to the plant. The district court properly treated such lack of
awareness as circumstantial, not “dispositive,” evidence that the cap letters did not apply
to this plant.
The employer also argued that the 2003-6 letter of understanding (LOU), that permitted
collecting contributions from retirees whose insurance costs exceeded the caps, was
applicable to all retirees because employers may lawfully implement portions of a final
offer after an impasse is reached in bargaining. Rejecting this argument, the appeals court
explained that any portions affecting then-retirees’ rights were not lawfully implemented
because the ability to take unilateral action post-impasse only applies to mandatory topics
of bargaining, while retiree benefits are a permissive topic. Further, when LOU 2003-6
became part of the 2005 CBA, it could not be applied to pre-August 9, 2005, retirees
because their benefits had already vested.
Because the district court did not clearly err in finding that the cap letters were not part of
the pre-2005 CBAs, it also did not clearly err in interpreting the pre-2005 CBAs as
vesting a right to lifetime contribution-free benefits in the pre-August 9, 2005 retirees.
Given the inapplicability of the capping agreements, the district court did not err in
finding that pre-August 9, 2005 retirees had a vested right to receive contribution-free
health care benefits.
Scope of permanent injunction. Similarly, the Sixth Circuit concluded that the district
court did not abuse its discretion when it ordered retirees and dependents previously
enrolled in a pre-2007 plan to be enrolled in the current plan instead of being reinstated to
the pre-2007 plan. The appeals court pointed out that the 2007 changes to the health plan
were not unreasonable. Thus, it affirmed the judgment of the district court.
Question facing the Court. In its petition for certiorari, M&G Polymers and the plans
noted that when employees and unions bargain with employers for retiree health-care
benefits, those benefits, as well as the conditions for receiving them, are set forth in
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collective bargaining agreements that almost never address the duration of those benefits.
The circuit courts are “badly split” on how to address the contractual silence.
Although the petitioners offered two questions for the High Court’s consideration, cert
was granted only on this one: “Whether, when construing collective bargaining
agreements in Labor Management Relations Act (LMRA) cases, courts should presume
that silence concerning the duration of retiree health-care benefits means the parties
intended those benefits to vest (and therefore continue indefinitely), as the Sixth Circuit
holds; or should require a clear statement that health-care benefits are intended to survive
the termination of the collective bargaining agreement, as the Third Circuit holds; or
should require at least some language in the agreement that can reasonably support an
interpretation that health-care benefits should continue indefinitely, as the Second and
Seventh Circuits hold.”
House workforce committee holds hearing on union organizing of student athletes
By Lisa Milam-Perez, J.D.
The House Education and the Workforce Committee held a hearing on Thursday, May 8,
on the recent determination by an NLRB regional director that student athletes are
statutory employees under the NLRA for collective bargaining purposes. The hearing,
"Big Labor on College Campuses: Examining the Consequences of Unionizing Student
Athletes," included testimony from higher education officials, labor law and antitrust
attorneys, and a former student-athlete. The speakers testified on the implications of the
issue on both college athletics and college athletes. Absent from the hearing was
testimony representing organized labor’s perspective on the ongoing controversy.
In March, an NLRB regional director in Chicago ruled that “grant-in-aid” scholarship
players on Northwestern University’s football team were employees within the meaning
of the NLRA, opening the door for the athletes to join the College Athletes Players
Association (CAPA), a Steelworkers-backed union.
According to Rep. John Kline (R-Minn), who heads up the House labor committee, the
decision “represents a radical departure from longstanding federal labor policies.” The
NLRB agreed to take up Northwestern’s challenge to the regional director’s ruling. While
the Northwestern players voted as scheduled in a representation election in late April, the
ballots were impounded pending a resolution by the full Board on their employment
status.
Not a sports franchise. “Baylor University is emphatically not a professional sports
franchise,” said Ken Starr, President and Chancellor of Baylor University, a private,
Christian institution. According to Starr, the regional director’s decision to characterize
the student-athletes as “employees” amounted to “a fundamental paradigm shift with
respect to the relationship between universities and their student-athletes.”
“While limited by its terms to private institutions,” Starr added, “the decision is bound to
affect all Division I athletic programs — public and private alike. A variety of questions
and unintended consequences arise out of this ruling with far-reaching legal, regulatory,
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and financial implications that may significantly affect the future of intercollegiate
athletics.”
Scope of the issue. Seyfarth Shaw’s Bradford L. Livingston, however, pointed out the
relatively limited reach of a potential NLRB finding that student-athletes are statutory
employees — and the inherent conflicts that would follow as a result. “[B]ecause most
major college football programs are part of public institutions, the NLRB has statutory
jurisdiction over only 17 of the roughly 120 colleges and universities that play major
college football,” he noted. “In asserting jurisdiction, the NLRB’s rules would apply to
these teams in ways inapplicable to more than eighty-five percent of their intercollegiate
competitors. And those remaining 100 or so public institutions are subject to, where such
laws exist, a variety of conflicting state statutes as to whether or not their public
universities’ student-athletes could organize and, if so, over what subjects they could
bargain collectively. The resulting patchwork of laws, differing collective bargaining
agreements, and uneven terms governing student athletes would be unworkable,”
Livingston testified.
Other implications. Conversely, though, in a footnote to his prepared testimony,
Livingston pointed out the broader implications of a determination that student athletes
are employees — including their entitlement to additional rights under Title VII, the
FLSA, the ADA, ERISA, and state laws. Among the myriad employment issues that
would arise: “[A]are student-athletes ‘on the clock’ and entitled to compensation if a
coach requires attendance in class or at study halls? If a player is late for practice and as a
penalty must spend time in an extra study hall session, is that time compensable? Under
the Americans with Disabilities Act, could a player with a doctor’s note be excused from
practice, but still expect to play in the game? During the break between the Spring and
Fall semesters when athletes are no longer receiving their scholarships, are they entitled
to unemployment compensation? Could the EEOC challenge a university’s scholarship
offers and acceptances under a disparate impact analysis? Could the EEOC challenge a
failing grade in a class under disparate treatment analysis? If they are considered
employees, would student athletes’ scholarships be considered taxable income that is
subject to withholding and income tax, and if so, would it make a college education
unaffordable for many current scholarship recipients?”
A “price-fixing cartel.” Andy Schwarz, a partner at OSKR, LLC and economist who
specializes in antitrust economics, approached the issue from a different angle. Noting the
panel’s focus on the “unintended consequences of unionizing college football,” he
asserted that “the biggest threat to college sports from collective action is the current
price-fixing cartel called the NCAA. By price-fixing, I am focused on how the 351
Schools in Division I stifle healthy economic competition through collusion to impose
limits on all forms of athlete compensation.”
“College football is big business,” Schwarz said, noting that “individual [college] athletic
departments regularly generate more revenue than almost all NHL and NBA teams.” He
added, “the NCAA’s efforts to commercialize the sport are exactly how a vibrant
business like College Football should behave.” However, he testified, the NCAA
deliberately coined the term “student-athlete” specifically “to dodge legal responsibilities
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for athlete safety and medical expenses. In time, that term has also served to disguise its
economic collusion.”
Schwarz testified that the NCAA “devotes millions to investigate suspicions of possible
market compensation while denying it has any legal responsibility to protect the heads or
bodies of its athletes.” He spoke, for example, of an athlete who broke his leg during last
year’s NCAA basketball tournament who is excluded from workers compensation
benefits. “Far more effort was spent to determine whether Johnny Manziel received a
market rate of compensation for his autograph than was spent investigating whether Matt
Scott of Arizona, who showed clear signs of concussion during a televised game (that I
myself watched), was put at risk by quickly returning to play in the same game.”
Schwarz also noted that 40 to 45 percent of all college football players “come from
families with low enough means that they receive Pell Grants. As one example, in 2006,
65% of UCLA’s Football Athletes received these government grants. In other cases,
athletes qualify for food stamps.” Yet, he continued, “[b]ecause most athletes do not go
on to work in the NFL, the current system denies more than 95 percent of college football
players access to the four best earnings years of their sports careers.”
“Something far more valuable.” “The vast majority of our student-athletes will not go
on to earn a living in professional sports careers,” Bernard M. Muir, Stanford
University’s athletic director, acknowledged. “Our student-athletes at Stanford do not
receive salaries, but they receive something far more valuable – and that is an academic
experience of the very highest quality, funded in many cases by scholarship support, that
rigorously prepares them for leadership and success in the world.” Muir testified that
student-athletes at Stanford are, first and foremost, students, and are the beneficiaries of a
rigorous, top-notch academic program. A number of Stanford student-athletes have gone
on to earn master’s degrees, he noted.
A student-centric model. “I was not an employee… nor did I want to be one,” said
Patrick C. Eilers, a former student-athlete at Notre Dame and currently managing director
of Madison Dearborn Partners. However, he noted that the players’ impetus to join a
union was “a means to an end, a vehicle if you will, to implement improvements to our
collegiate athletic system.” And he supported the underlying goals of the players
currently seeking the opportunity to bargain collectively, including mandated four-year
scholarships, health and insurance benefits, stipends, and transfer eligibility.
“I believe there is little debate about the necessary logical improvements,” Eilers said. “I
believe the debate today should instead be focused on seeking the most effective vehicle
to cause the implementation of these improvements.”
“I’m concerned that calling student-athletes ‘employees’ will make the system more of a
business than it is already is. In my mind, we need to gravitate collegiate athletics toward
a student centric model — not the other way around. I also worry about the unintended
consequences of being deemed an ‘employee’ and what unionization could bring to
college athletics.”
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Kline: too many tough questions. “Today’s witnesses confirmed classifying student
athletes as school ‘employees’ will hurt their athletic and academic careers,” said Kline
following the hearing. “There is no question the legitimate concerns of student athletes
must be addressed, but doing so at the collective bargaining table will do more harm than
good.
“Instead of treating student athletes as something they are not,” he continued, “let’s help
ensure the real challenges they face are resolved… We share the concerns of players that
progress is too slow, but forming a union is not the answer.”
According to Kline, there were “tough questions” to be resolved before students and
university administrators should be forced to face each other in contract negotiations.
“What issues would a union representing college athletes raise at the bargaining table?
Would a union negotiate over the number and length of practices? Perhaps the union
would seek to bargain over the number of games. If management and the union are at an
impasse, would players go on strike? Would student athletes on strike attend class and
have access to financial aid?”
“How would student athletes provide financial support to the union? Would dues be
deducted from scholarships before being disbursed to students? Or are students expected
to pay out of pocket? We know many student athletes struggle financially. How will they
shoulder the cost of joining a union?”
“Speaking of costs,” Kline continued, “where will smaller colleges and universities find
the resources to manage labor relations with student athletes? A lot of institutions operate
on thin margins and college costs are soaring. Are these schools ready to make some
difficult decisions, such as cutting support to other athletic programs like lacrosse and
field hockey, or even raising tuition?”
“And finally,” Kline said, “how will other NLRB policies affect our higher education
system? Are college campuses prepared for micro-unions and ambush elections? Are
administrators equipped to bargain with competing unions representing different athletic
programs? Will students be able to make an informed decision about joining a union in as
few as 10 days, while attending class and going to practice?”
“I strongly urge the Obama board to change course and encourage key stakeholders to get
to work.”
Miller’s rebuttal. “Our nation’s talented college athletes have become units of
production that are over-scheduled and over-worked, left without safeguards for their
health and safety, and encouraged to put their education on a backburner in favor of their
success on the field,” said Rep. George Miller, the House labor committee’s senior
Democrat.
“By banding together and bargaining, these athletes can win the kinds of things union
workers have demanded and won across the country, including a say about avoiding
serious injury on the job, medical benefits and security if something does go wrong,
meaningful input into how they balance their work — in this case football — with their
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academic needs and other responsibilities, and the respectful treatment and care they so
richly deserve.”
Attorneys: (Seyfarth Shaw) (OSKR LLC)
Agency announces staff appointments in regional offices
Rhonda Ley has been named Acting Regional Director of the NLRB’s Regional Office in
Pittsburgh, PA (Region 6), the NLRB announced on Wednesday, May 7. Ley will
supervise the handling of NLRB cases arising in 41 counties in Pennsylvania and 26
counties in West Virginia. She will fill in for recently retired Regional Director Bob
Chester until a permanent Director is appointed. A career NLRB employee, Ley has been
serving as the Regional Director in the Buffalo, NY (Region 3) office since 2009 and she
will continue also to serve in that position. Region 3 encompasses most of New York
State, except for counties in and around the New York City area. Region 3 also
supervises a Resident Office in Albany, NY.
Ley earned her J.D. degree from The Ohio State University, Moritz School of Law in
1980. She began her career in the Cincinnati, OH Regional Office, starting in 1980 as a
Field Attorney. She transferred to the Brooklyn, NY Regional Office in 1985 and was
promoted to the position of Supervisory Attorney there in 1995. In 1997, Ley was
promoted to the position of Regional Attorney in the Buffalo Regional Office.
Also on Wednesday, NLRB General Counsel Richard F. Griffin, Jr. announced the
appointment of Iva Y. Choe as Regional Attorney for Region 8, Cleveland, Ohio. A
career NLRB employee, Choe had been serving as a Supervisory Field Attorney at the
Cleveland office. In her new position, she will assist Regional Director Allen Binstock in
the enforcement and administration of the NLRA in Northern Ohio. Choe succeeds
Binstock, who was promoted to his current position in March. Choe received her J.D.
from Ohio State University in 1995, and started working at the Cleveland office as an
attorney that year. She was promoted to Supervisory Field Attorney in 2012.
Employees laid off by special education agency during bargaining get backpay,
offers of reinstatement
The NLRB announced on Friday, May 9, that a group of employees who were laid off
during bargaining for a first CBA have recovered backpay and received offers of
reinstatement as part of a settlement reached after the Board had determined to, but not
yet filed, a petition for injunctive relief.
The affected individuals were employees of the Biondi Elementary School in the Bronx
and Biondi Middle and High School in Yonkers, New York. They were laid off during
bargaining for an initial collective-bargaining agreement by Leake and Watts Services, a
nonprofit agency in New York that provides special education at the Biondi Schools,
among other places.
On March 28, 2014, the Board directed NLRB Region 2–Manhattan to seek an order in
federal court requiring Leake and Watts to reinstate the laid-off employees; to rescind
unilateral changes that had been made to the employees’ health insurance; to provide
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requested information to the union; and to bargain in good faith with the union. The
Board sought this temporary injunctive relief to protect the right of the employees to have
their chosen bargaining representative, Workers Essential at Leake and Watts, New York
State United Teachers, AFT, to advocate on their behalf in collective bargaining and to
prevent erosion of support for the union due to the the company’s alleged unlawful
activities.
On April 14, before NLRB filed the petition for injunctive relief, Administrative Law
Judge Lauren Esposito approved a global settlement agreement between the parties.
While not admitting liability, Leake and Watts agreed to offer reinstatement to the laidoff employees, to provide them with backpay, to pay out-of-pocket medical expenses
incurred by bargaining unit employees as a result of the unilateral changes to the
employees’ health insurance, and to bargain in good faith. In addition, the company
agreed to post and email a notice addressing the alleged violations and advising
employees of their NLRA rights.
Board invites parties and amici to comment on whether Northwestern football
players are “employees” who can unionize
On Monday, May 12, the NLRB invited parties and interested amici to comment on
several issues arising from the controversial finding by a Regional Director that
Northwestern University grant-in-aid scholarship football players can unionize (Case 13RC-121359).
Football players are employees. On March 26, 2014, the NLRB regional director for
Region 13 ruled that grant-in-aid scholarship football players at Northwestern University
(NU) are statutory employees under the NLRA and directed a representation election to
take place. The regional director concluded that scholarship players who perform
football-related services for the university under a contract for hire in return for
compensation are subject to the employer’s control and are therefore employees within
the meaning of the Act.
On April 24, 2014, the Board granted Northwestern University’s request to review the
decision. The request for review and decision and direction of election raised substantial
issues warranting review, the Board said in a statement.
Issues on review. To aid in the consideration of the issues raised in the case, the NLRB
has invited the parties and interested amici to file briefs on or before June 26, 2014,
specifically addressing one or more of the following questions, in addition to any other
issues raised:
(1) What test should the Board apply to determine whether grant-in-aid scholarship
football players are “employees” within the meaning of Section 2(3) of the Act, and
what is the proper result here, applying the appropriate test?
(2) Insofar as the Board’s decision in Brown University, 342 NLRB 483 (2004), may
be applicable to this case, should the Board adhere to, modify, or overrule the test
13
of employee status applied in that case, and if so, on what basis?
(3) What policy considerations are relevant to the Board’s determination of whether
grant-in-aid scholarship football players are “employees” within the meaning of
Section 2(3) of the Act and what result do they suggest here?
(4) To what extent, if any, is the existence or absence of determinations regarding
employee status of grant-in-aid scholarship football players under other federal or
state statutes or regulations relevant to whether such players are “employees” under
the Act?
(5) To what extent are the employment discrimination provisions of Title VII, in
comparison to the antidiscrimination provisions of Title IX of the Education
Amendments Act of 1972, relevant to whether grant-in-aid scholarship football
players are “employees” under the Act?
(6) If grant-in-aid scholarship football players are “employees” under the Act, to what
extent, if any, should the Board consider, in determining the parties’ collective
bargaining obligations, the existence of outside constraints that may alter the ability
of the parties to engage in collective bargaining as to certain terms and conditions
of employment? What, if any, should be the impact of such constraints on the
parties’ bargaining obligations? In the alternative, should the Board recognize
grant-in-aid scholarship football players as “employees” under the Act, but
preclude them from being represented in any bargaining unit or engaging in any
collective bargaining, as is the case with confidential employees under Board law?
Briefs. The parties may file briefs on review not exceeding 50 pages. Interested amici
may file briefs not exceeding 30 pages. The parties may file responsive briefs before July
10, 2014, not exceeding 25 pages. The NLRB will accept no other responsive briefs.
Briefs must be filed electronically by going to www.nlrb.gov and clicking on “E-File
Documents.” Parties and amici must serve all case participants on the case participants
list under the heading “Service Documents.” If assistance is needed in E-Filing, please
contact the Office of Executive Secretary at 202-273-1940 or Executive Secretary Gary
Shinners at 202-273-3737.
Board seeks input as to whether current joint employer standard should be changed
The NLRB has extended an invitation to parties and interested amici to filed briefs
addressing the Board’s joint employer standard, as raised in Browning-Ferris Industries
(No 32-RC-109684). On April 30, 2014, the Board granted the employer’s request for
review of a Regional Director’s decision and direction of election, finding it raised
substantial issues warranting review.
Questions under consideration. The notice and invitation to file briefs issued by the
Board on May 12 requests that the parties and interested amici address one or more of the
following questions in their briefs:
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(1) Under the Board’s current joint-employer standard, as articulated in TLI, Inc., 271
NLRB 798 (1984), enfd. mem. 772 F.2d 894 (3d Cir. 1985), and Laerco
Transportation, 269 NLRB 324 (1984), is Leadpoint Business Services the sole
employer of the petitioned-for employees?
(2) Should the Board adhere to its existing joint-employer standard or adopt a new
standard? What considerations should influence the Board’s decision in this regard?
(3) If the Board adopts a new standard for determining joint-employer status, what
should that standard be? If it involves the application of a multifactor test, what
factors should be examined? What should be the basis or rationale for such a
standard?
Briefs. The parties may file briefs on review of not more than 50 pages in length on or
before June 26, 2014. Interested amici may file briefs of not more than 30 pages on or
before the same date. The parties may file responsive briefs on or before July 10, 2014,
not to exceed 25 pages. The NLRB will accept no other responsive briefs.
Briefs must be filed electronically by going to www.nlrb.gov and clicking on “E-File
Documents.” All case participants must be served; a list is available at this link, under the
heading “Service Documents.” For E-Filing assistance contact the Office of Executive
Secretary at 202-273-1940 or Executive Secretary Gary Shinners at 202-273-3737.
Fast food fight goes global
By Lisa Milam-Perez, J.D.
Fast food employees and worker advocates escalated their ongoing protests over what
they decry as sub-par wages and working conditions in the industry by staging a global,
one-day boycott on Thursday. The event was part of the continuing “Fight for Fifteen”
campaign, which aims to secure $15 an hour pay for U.S. employees in fast-food
restaurants. Job actions were scheduled to take place in more than 150 cities around the
U.S. and in 30 other countries, with thousands of workers expected to participate.
Many of the international protest actions were focused on McDonald's, the fast-food giant
with the farthest global reach. According to the Machinists union, which voiced its
support for today’s event, activists held a teach-in outside McDonald’s head office in
Auckland, New Zealand; staged flash mobs at five McDonald’s locations in the
Philippines; and shut down a major McDonald’s during lunchtime in Belgium.
The company’s official response was to extend an olive branch. “McDonald’s respects
our employees’ right to voice their opinions and to protest lawfully and peacefully,” said
Heidi Barker Sa Shekhem, McDonald’s global spokesperson. “If employees participate in
these activities, they are welcomed back and scheduled to work their regular shifts. We
value our employees’ well-being and the contributions they make to our restaurants, and
thank them for what they do each and every day. Our restaurants remain open today and
every day thanks to the dedicated employees serving our customers. We respect the right
of employees to choose whether or not they want to unionize."
15
Industry response. On Wednesday, the National Restaurant Association issued a
preemptive response to today’s planned activities. “Restaurants are the cornerstones of
our nation’s small business community. Over ninety percent of restaurants are
independent or franchisee owned. From local diners, to city steakhouses to America’s
favorite chains, restaurants are creating jobs and providing real pathways to success,”
said Scott DeFife, the National Restaurant Association’s Executive Vice President for
policy and government affairs, in a statement issued May 14.
“A dramatic increase to labor costs like the one proposed by SEIU-backed Fast Food
Forward and Fight for 15 is not the comprehensive solution to income inequality,” DeFife
said. “It will only hurt business owners’ ability to create entry level jobs. These unionbacked protests are nothing more than big labor’s attempt to push their own agenda while
attacking an industry that provides opportunity to millions of Americans.
“Instead of demonizing an industry that opens doors for workers of all ages,
backgrounds, and skill levels, the focus should be on finding better solutions to lift
individuals out of poverty. Pro-growth policies and policies that focus on increased
access to education and job training opportunities are far more effective ways of
providing real, meaningful impact on workers’ ability to earn and advance,” DeFife said.
Organized labor support. “Working families everywhere are inspired by the spirit and
the courage of fast food workers who are striking today in over 150 cities,” said AFLCIO President Richard Trumka, in a show of support. “Every worker deserves fair wages
and the right to form a union without retaliation because no one who works full-time
should struggle to support their family. That’s why the ‘Fight for Fifteen’ movement is
growing bigger and protests are happening across America and six different continents.
“The message is clear: corporations should pay their employees fair wages and Congress
should act so no one gets left behind,” Trumka said. “Only then will we have an economy
that works for all working people."
Steelworkers reach tentative contract agreement with Alcoa
The United Steelworkers reached a tentative deal late Thursday on a new contract with
Alcoa Inc, the union announced on Friday, May 16. The five-year agreement, which
replaces the previous four-year contract that expired a day earlier, would cover about
6,000 members of 11 USW local unions at Alcoa plants in Indiana, Texas, Iowa, North
Carolina, Tennessee, Washington, New York, and Arkansas.
The union's local presidents voted unanimously to recommend that members ratify the
proposed contract. Ratification votes will be scheduled over the next several weeks, the
union said, withholding any further details on the proposed contract until members had
the chance to review and vote on the agreement. But USW international vice president
Tim Conway, who led the negotiations for the union, said the deal “includes solid gains
in wages and retirement security and preserves quality, affordable health care coverage
for both active and retired USW members.”
16
Walmart, subcontractor settle wage suit filed on behalf of 1,800 warehouse workers
in California
By Lisa Milam-Perez, J.D.
Walmart and its largest import distribution subcontractor, Schneider Logistics, Inc., have
agreed to settle a lawsuit alleging wage and hour violations at a Walmart warehouse
facility in Riverside County, California. Under the terms of the settlement, Schneider will
pay $21 million in unpaid wages, interest, and penalties for federal and state-law wage
violations covering a ten-year period. The settlement does not indicate whether Walmart
will contribute behind the scenes to that payout, but both companies secured complete
releases as part of the settlement agreement, according to a press release announcing the
deal.
The suit alleged major wage violations over a 10-year period against “lumpers,” who load
and unload boxes by hand from shipping containers and into trailers. The workers were
directly employed by loading/unloading companies Impact Logistics, Inc., and RogersPremier Loading and Unloading Services and/or Premier Warehousing Ventures,
subcontractors for Schneider. According to their lawsuit, the workers often worked
double shifts — 16 hours/day, 7 days per week — without required breaks or overtime
premiums, and often for less than minimum wage. Instead, they were paid an elaborate
piece rate that was found to be illegal. Their pay scale was quickly altered after the suit
was filed in November 2011, according to the plaintiffs.
The settlement applies to over 1,800 workers who worked between 2001 and 2013 at
three Schneider Logistics distribution centers in Mira Loma, California, that were
completely dedicated to servicing Walmart. The facilities, operated by various warehouse
companies for Walmart since 2001, function together as the largest Walmart distribution
center in the Western United States, according to plaintiffs’ counsel.
Walmart a joint employer. In January, a federal court ruled that Walmart would have to
face trial as a potential joint employer, the first time a retailer would have had to stand
trial for the actions of its warehouse contractors. Walmart had maintained that it had no
control over the workers, but plaintiffs’ counsel argued that the presence of up to a dozen
Walmart managers on site and the retailer’s daily control over the work at every level
made them both aware of and liable for wage and hour violations at the warehouse.
Then in March, the court held Walmart lacked standing to challenge a settlement reached
with the loading and unloading companies; Schneider also lacked standing to object, the
court found, even though both were named defendants.
Only the latest win. The settlement announced this week is the latest in a string of legal
victories for Schneider workers. In December 2013, Schneider settled a separate suit filed
by employees at the same warehouses in 2012 for $4.7 million; this settlement was given
final approval by the Court on May 12. Previously, in October 2011, the California Labor
Commissioner cited and fined the staffing agency subcontractors for over $1 million for
illegal recordkeeping and pay records. Since then, Schneider has been enjoined from
firing employees who brought suit and instead was compelled to take the workers on as
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direct employees, with starting hourly wages of $12.50 per hour and benefits. Earlier this
year, the two staffing agencies settled for $1.7 million.
Alt-labor involvement. Warehouse Workers United had a hand in the ongoing litigation
from the outset. The “alt-labor” group, thought to have ties to organized labor, seeks to
improve working conditions and wages for warehouse industry employees in California,
and Walmart’s distribution center was clearly the biggest fish in that pond. “Walmart has
denied its control of its subcontracted warehouses time and again, despite the existence of
their own Standards for Suppliers document that that prohibits wage theft, health and
safety violations, and retaliation,” noted Sheheryar Kaoosji, Director of the Warehouse
Worker Resource Center.
“Fissured workplace.” The settlement marks a significant development for worker
advocates seeking to hold large employers accountable for labor and employment
violations committed at the hands of their subcontractors, suppliers, and related entities.
The Schneider Logistics case was a bellwether for the notion of "The Fissured
Workplace,” as newly appointed Wage and Hour Administrator David Weil calls it, in
which “large corporations have shed their role as direct employers of the people
responsible for their products, in favor of outsourcing work to small companies that
compete fiercely with one another.” In rejecting his appointment to the DOL leadership
post, Sen. Lamar Alexander, ranking Republican on the Senate HELP committee,
referenced Weil’s text by that name and its suggestion that the agency “should target
employers who use certain business models.”
The case, Carrillo vs. Schneider Logistics, was filed in the federal district court in the
Central District of California.
NLRB announces regional staff appointments
Michael C. Cass has been named Officer-in-Charge in the NLRB’s Hartford, Subregion
34 office, NLRB Chair Mark Gaston Pearce and General Counsel Richard F. Griffin, Jr.,
announced on Thursday, May 15. A career NLRB employee, Cass had been serving as a
Supervisory Field Examiner in the Hartford office. In his new position, he will assist
Jonathan B. Kreisberg, Regional Director in Region 1 in Boston, in enforcing and
administering the NLRA in Connecticut. Cass succeeds John S. Cotter, who is retiring.
While pursuing a graduate degree in labor studies from the University of Massachusetts,
Cass served as a student assistant with the NLRB’s Pittsburgh Regional Office. He was
hired as a field examiner in the Hartford office in 1983. In 2000, he was promoted to
Compliance Officer and, in 2002, to Supervisory Field Examiner in that office.
Pearce and Griffin, Jr., also announced on Thursday that Scott Thompson will serve as
Officer-in-Charge of the Board’s subregional office in Winston-Salem, North Carolina
(Sub-Region 11). In his new position, Thompson will assist Claude Harrell, Director of
the NLRB’s Region 10 in Atlanta, in enforcing the Act in Georgia, North Carolina and
South Carolina, and in certain counties in Alabama, Kentucky, Tennessee, Virginia and
West Virginia. Thompson began his career with the NLRB in 1985 as a legal assistant on
the staffs of former Board Members Patricia Diaz-Dennis and Mary Cracraft. In 1987, he
18
transferred to the Philadelphia Regional Office as a field attorney. He was promoted to
Supervisory Field Attorney in 1993 and Deputy Regional Attorney in 1998.
Police officers choose Teamsters, sanitation contract workers unionize, Daimler
Trucks employees accept new deal
By Pamela Wolf, J.D.
Among the recent developments on the labor front, police officers in Park Ridge, Illinois,
have joined the Teamsters, workers at Daimler Trucks North America facilities have a
new contract, and contract sanitation workers at a Tyson poultry plant have unionized.
Park Ridge Police Department. Police Officers in Park Ridge, Illinois, formerly
represented by the Fraternal Order of Police, have voted for Teamsters representation,
according to a Teamster announcement. The vote took place on May 9.
“We are extremely proud to welcome our newest members to Local 700,” said Becky
Strzechowski, President of Teamsters Local 700. “These hardworking men and women
will now have a Union that is dedicated to protecting the rights and improving the
livelihoods of our Teamsters brothers and sisters.” Teamsters Local 700 represents more
than 11,000 members, including more than 5,200 law enforcement members.
Daimler Trucks North America. UAW members at Daimler Trucks North America’s
(DTNA) facilities located in Cleveland, Mt. Holly, and Gastonia, North Carolina, ratified
a new four-year CBA on May 19, according to the union. The contract rewards workers
for several years of consistently increasing market share and quality production, while
increasing the competitiveness of DTNA’s truck manufacturing plants based in North
Carolina, the union said.
The contract includes a $7,000-ratification bonus and 3-percent wage increases the first
and third years of the agreement, with 3-percent lump-sum bonuses in the second and
fourth years. Other economic gains include an increased night-shift premium and an
attendance bonus program.
Faced with the increasing cost of providing health care benefits to retired workers, the
UAW and DTNA worked together to establish a Voluntary Employee Benefit
Association (VEBA) that will secure retiree benefits for the long term. The contract,
including the VEBA agreement for future retirees, becomes effective upon Daimler
Supervisory Board approval. Upon court approval, current retirees will also be included
in the VEBA, and DTNA will provide additional funding.
“The new four-year agreement between Daimler Trucks North America and the UAW
serves the mutual benefit of our company, valued workers, and retirees,” said Martin
Daum, president and CEO, Daimler Trucks North America. “The ongoing close
collaboration with the UAW has resulted in a contract that will help assure Daimler
Trucks North America’s continued manufacturing excellence and market leadership.”
19
QSI Contract Sanitation. More than 30 QSI Contract Sanitation workers have voted to
join the Retail, Wholesale and Department Store Union, Southeast Council. The workers
are employed at a Tyson poultry plant in Buena Vista, Georgia. According to the union,
the Workers at QSI Contract Sanitation said they needed a voice on the job to address the
lack of a grievance procedure and improve their jobs at the plant.
The poultry processing workers at the Tyson plant are already members of the RWDSU
and played a critical role in assisting QSI Contract Sanitation workers win a union voice,
the union said. After speaking with their RWDSU coworkers, QSI workers realized the
only way they could resolve the lack of a grievance procedure and improve their jobs was
by joining a union and negotiating a union contract.
Kaiser forced social worker off the job prematurely in retaliation for blog postings
about poor mental health services, union says
By Pamela Wolf, J.D.
In the latest of a series of alleged incidents casting Kaiser Permanente in a rather poor
light, the National Union of Healthcare Workers (NUHW) has reported that a licensed
clinical social worker at Kaiser in Santa Rosa was prematurely forced off the job after
documenting his concerns about deficiencies in mental health care provided by the HMO,
which is the largest in California. Kaiser is also the largest private-sector provider of
mental health services in the state. The HMO has been in the union’s cross-hairs for
several years.
The social worker gave Kaiser 90 days’ notice in late February, according to the union,
ostensibly because after years of seeing the HMO provide inadequate mental health
services due to understaffing and cost-cutting measures, he felt he could no longer in
good conscience continue to work there. The social worker believed that the restrictions
and limitations of Kaiser's policies required him and his colleagues to provide
substandard care to patients — a concern that the union says clinicians have been voicing
for years to no avail.
Blog postings prompt employer action. The social worker had offered, and Kaiser had
accepted, his resignation effective May 30, leaving him enough time to complete
treatment for his patients, the union reported. The social worker also started a blog,
90daystochange.com, in which he wrote about his experiences at Kaiser, the perceived
shortcomings of the HMO’s mental health services, and the changes he believed
necessary to put Kaiser on the right course.
After 67 days of daily entries to the blog, on May 8, management allegedly notified the
social worker that the HMO was accepting his resignation immediately, some three
weeks earlier than originally agreed, and escorted him from the premises. According to
the union, the development followed on the heels of two actions by the social worker: (1)
he stated in his blog that timely access to care could have prevented the death of one of
his patients who committed suicide during a 42-day wait between his first and second
one-on-one therapy appointments; and (2) as a means of avoiding another tragic death, he
20
began noting in patients' charts when he felt they needed better or more frequent care
than they were getting.
The union called it “unconscionable” to dismiss a care provider for expressing concern
for his patients. Moreover, dismissing a therapist before he is able to conclude his
sessions with patients in need and whose trust he has earned is irresponsible and
counterproductive, according to the union.
$4-million fine. In June 2013, California’s Department of Managed Health Care
(DMHC) cited Kaiser for illegally delaying patients’ access to mental health services and
violating the California Mental Health Parity Act in addition to other violations,
according to NUHW. The DMHC levied a $4-million fine against the HMO in response
to an exhaustive complaint filed by Kaiser’s own clinicians working through the union.
DMHC investigators confirmed the details of violations set forth in an NUHW report,
Care Delayed, Care Denied, the union said, adding that DMHC investigators found
Kaiser guilty of “serious” violations in its mental health care services.
The union pointed to these violations cited by the DMHC:

Kaiser committed “systemic access deficiencies” by failing to provide its
members with timely access to mental health services. Instead, large numbers of
Kaiser’s patients were required to endure lengthy waits for appointments in
violation of California’s “timely access” regulations.

Kaiser’s internal recordkeeping system contained numerous problems – including
a parallel set of “paper” appointment records that differed from the HMO’s
electronic records – that hid patients’ lengthy wait times from government
inspectors.

Kaiser failed to adequately monitor and correct its violations of state law. Records
show that Kaiser was aware of its violations but failed to take action to correct the
problems.

Kaiser provided “inaccurate educational materials” to its members that had the
effect of dissuading them from pursuing medically necessary care and violated
state and federal mental health parity laws.
In April, Kaiser lost its bid to make a hearing on the $4-million fine off-limits to the
public.
Union leader arrested during mass protests at McDonald’s headquarters
By Pamela Wolf, J.D.
Amid the confusion created by protestors reportedly amassed outside McDonald’s
headquarters near Chicago on May 21, Kay Henry, President of the Service Employees
International Union (SEIU), was arrested. According to media reports, some 2,000
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protestors, a significant number in McDonald’s uniforms, gathered at the site of a
shareholders’ meeting to press for better wages and the right to unionize.
The event is just one more among many similar scenes in a continuing series of protests
across many months by workers in typically low-wage industries such as fast-food
restaurants.
“Earlier today, I was arrested outside of McDonald's world headquarters alongside more
than 100 McDonald's workers from across the country because we engaged in a peaceful,
nonviolent act of civil disobedience,” Henry said in a statement.
“I was arrested because I want McDonald's workers to know that 2.1 million members of
SEIU — home care workers, child care workers, adjunct professors, security officers,
hospital workers and many others — proudly stand with them.
“We came to McDonald's world headquarters because this is where the real decisions are
made. It's time for the McDonald's corporation to stop hiding behind its franchisees and
to stop pretending that it can't boost pay for the people who make and serve their food. …
McDonald's is the world's second largest private sector employer. It is extraordinarily
profitable. It has an obligation to pay the people who run its stores enough to afford their
basic needs.”
Although McDonald’s has not yet posted a response to the protests at its headquarters,
last week it posted the following statement on the May 15th rallies:
“We respect everyone’s right to voice an opinion. McDonald’s respects our employees’
right to voice their opinions and to protest lawfully and peacefully. If employees
participate in these activities, they are welcomed back and scheduled to work their
regular shifts. We value our employees’ well-being and the contributions they make to
our restaurants, and thank them for what they do each and every day. Our restaurants
remain open today and every day thanks to the dedicated employees serving our
customers. We respect the right of employees to choose whether or not they want to
unionize."
Triple A Fire Protection will pay $2.7M to resolve purported NLRA violations,
recognize union
The NLRB has approved a $2.7 million settlement agreement with Triple A Fire
Protection, Inc., and the United Association of Journeymen and Apprentices of the
Plumbing and Pipefitting Industry of the United States and Canada, Road Sprinkler
Fitters Local Union No. 669, AFL-CIO, according to an agency announcement on May
23. The agreement resolves several longstanding reported NLRA violations by the
Alabama company, which installs fire protection systems throughout the Southeast.
The deal restores the employees’ selection of the union as their bargaining representative
and provides $2.7 million in back pay and pension fund payments on behalf of 462
current and former employees, the NLRB said. Triple A Fire Protection will be permitted
22
to make installment payments to better ensure the continuation of its business operation
while complying with the terms of the settlement.
General Counsel names three new appointments to the Division of Operations
Management
On Monday, May 27, the NLRB announced the appointment of three individuals to serve
in the Board’s Division of Operations-Management of the Office of the General Counsel
in Washington. Two of the new appointees will serve as Deputy Assistant General
Counsel and a third has been named Deputy to the Assistant General Counsel. In their
new positions, the three appointees, Richard Wainstein, Dolores Boda, and John
Giannopoulos will assist the General Counsel in managing the 26 NLRB Regional
Offices and provide programmatic support for national enforcement and administration of
the NLRA.
Richard Wainstein. Wainstein, a career attorney, has been appointed Deputy Assistant
General Counsel in the Division of Operations-Management. Wainstein received his B.A.
degree from Princeton University in 1979, and his J.D. degree from the University of
Virginia School of Law in 1984. After graduation, he joined the NLRB as staff
counsel. From 1984 to 1987, he worked for former Board Members Patricia Dennis,
Wilford Johansen, and Mary Cracraft and the Office of Representation Appeals. In 1987,
Wainstein transferred to the Board’s Regional Office in Philadelphia where he worked as
a field attorney; in 2001 he was promoted to Supervisory Attorney.
Dolores Boda. Boda, a Supervisory Field Examiner , has been appointed as Deputy to
the Assistant General Counsel in the Division of Operations-Management. Boda received
a B.A. in English Literature from Wright State University and a Master’s degree in Labor
Relations and Human Resources from Cleveland State University. She began her career
with the NLRB in 1999 as Co-op Field Examiner in the Cleveland, Ohio, Regional Office
and upon graduation was hired as a Field Examiner. In 2010 Boda relocated to the Fort
Worth, Texas, Regional Office after her promotion to Supervisory Field Examiner.
John Giannopoulos. Giannopoulos, a Supervisory Field Attorney, was named Deputy
Assistant General Counsel in the Division of Operations-Management. Giannopoulos
received his B.A. degree from the University of Utah in 1988, a M.B.A. degree in
Finance from the University of Wisconsin-Madison in 1989, and a J.D. degree from the
University of Utah in 1995. After beginning his legal career with a law firm, he was hired
as a Field Attorney in the NLRB’s Phoenix, Arizona Regional Office in 1999; he was
promoted to Supervisory Attorney in 2011.
LEADING CASE NEWS:
2d Cir.: Hybrid Sec. 301 suit fails because employees unable to show union’s action
breached duty of fair representation
By Ronald Miller, J.D.
Banquet servers employed by hotel could not maintain a hybrid Sec. 301 suit because
they were unable to show that union’s actions constituted breach of duty of fair
23
representation, ruled the Second Circuit in an unpublished decision. The appeals court
concluded that the record did not support the employees’ contention that the district court
failed to consider the context and history of the relationship between the union and
banquet servers, and so affirmed the lower court’s ruling that the employees failed to
plead a plausible claim that the union breached its duty of fair representation (Bejjani v
Manhattan Sheraton Corp, May 27, 2014, per curiam).
Duty of fair representation. The plaintiffs, banquet servers represented by a union,
appealed the dismissal of their claims that the hotel violated terms of a collective
bargaining agreement and that their union violated its duty of fair representation. To
pursue their “Sec. 301/Fair Representation” claim, the employees were required to
plausibly allege both (1) the employer’s breach of a collective bargaining agreement and
(2) the union’s breach of its duty of fair representation with respect to the union
members.
With respect to the union, the employees had to plausibly allege that its actions were
“wholly arbitrary, discriminatory, or in bad faith.” To be “arbitrary,” the alleged actions
of the union must fall “so far outside a wide range of reasonableness as to be irrational.”
To be “discriminatory,” the allegations must plausibly allege disparate treatment “that
was intentional, severe, and unrelated to legitimate union objectives.” “Bad faith”
required allegations that the union engaged in “fraud, dishonesty, [or] other intentionally
misleading conduct” with “an improper intent, purpose or motive.” Further, the
employees had to allege a “causal connection between the union’s wrongful conduct and
their injuries.”
Concealed agreement. Here, the employees argued that the district court failed to
consider the context and history of the relationship between the banquet servers and the
union and, therefore, failed to recognize that their complaint plausibly alleged that the
union had endeavored to retaliate against them by entering a concealed agreement (Adour
Agreement) benefitting other union members at the expense of the banquet servers.
However, the Second Circuit concluded that the complaint alleged nothing more than
legal and non-arbitrary union actions that the plaintiffs construed as retaliatory because
they did not benefit banquet servers. Even assuming the Adour Agreement disadvantaged
banquet servers, it was not irrational, dishonest, or unrelated to union objectives for the
union to enter into such an agreement, in light of its benefits for other union members.
Further, the union’s failure to disclose the Adour Agreement did not plausibly state a
claim of breach of fair representation duty. Although the union represents the banquet
servers in negotiations and disputes with the hotel, it was under no duty to disclose the
Adour Agreement in negotiations to settle a prior lawsuit in which they were represented
by counsel, not the union, as the union was adverse to the banquet servers. Moreover, not
alerting the banquet servers to the Adour Agreement when they complained about the
hotel shifting work to non-banquet servers did not create an inference of bad faith
because servers did not plausibly allege that the Adour Agreement violated any
“unambiguous contractual entitlement[s],” and the servers did not allege any
“intentionally misleading conduct” with regard to their rights.
24
The appeals court also rejected the banquet servers’ argument that the timing of the
Adour Agreement in relation to their first lawsuit allowed a plausible inference of
collusive union and hotel retaliation against them. A six-week delay between the servers’
first lawsuit against the union and the Adour Agreement, by itself, failed to raise a
plausible inference of bad faith or conspiracy to retaliate. Moreover, specific
misstatements at issue — requests for information and previous meeting dates with hotel
— were minor discrepancies that did not indicate intentional misrepresentation, but
instead supported at most an inference of negligence, not bad faith or conspiracy to
retaliate. As a result, the district court’s order of dismissal was affirmed.
The case number is: 13-2860-cv.
Attorneys: Michael Starr (Holland & Knight) for Manhattan Sheraton Corp. dba St. Regis
Hotel. Barry Neal Saltzman (Pitta & Giblin) for New York Hotel and Motel Trades
Council. Robert N. Felix (Law Office of Robert N. Felix) for Joseph Bejjani.
5th Cir.: Union contract “clearly and unmistakably” required worker to arbitrate
Rehab Act claims but not FMLA claims
By Marjorie Johnson, J.D.
The Fifth Circuit revived a postal employee’s FMLA claims against the United States
Postal Service (USPS), ruling that the applicable collective bargaining agreement did not
clearly and unmistakably require her to resolve those claims through arbitration. On the
other hand, she would not get a second shot at her Rehabilitation Act claims since the
CBA’s incorporation of that particular statute was sufficiently clear and unmistakable to
waive her right to bring such claims in federal court. Finally, although the employee had
standing to seek compensatory damages, injunctive relief was no longer available since
she had retired. Accordingly, the district court’s dismissal of the employee’s claims on
summary judgment was affirmed in part, reversed in part and remanded (Gilbert v
Donahoe, April 30, 2014, Owen, P).
After the USPS subjected the employee to a “due process” interview regarding her
practice of taking leave during its busy seasons, she filed an EEO complaint alleging age
and disability bias. Shortly thereafter, she sought paid sick leave, which the USPS
temporarily denied. Although her request was eventually granted, she filed an internal
grievance pursuant to provisions in the CBA. She also amended her EEO complaint to
assert retaliation. USPS denied her grievance and dismissed her EEO complaint.
District court dismissed claims. While the union was appealing dismissal of her
grievance to an arbitrator, the employee filed the instant action asserting FMLA
interference. USPS moved for dismissal, asserting that the CBA’s mandatory grievance
procedure was the exclusive method of resolving her claims. Meanwhile, the employee
sought paid sick leave for two days. Finding her doctor’s note insufficiently specific
under the terms of the CBA, the supervisor designated her absence as unpaid. She
thereafter amended her complaint to add a Rehabilitation Act claim. The district court
dismissed both claims, holding that it lacked subject matter jurisdiction since the CBA’s
25
mandatory grievance procedure “clearly and unmistakably” required her to resolve her
statutory claims through that procedure. Shortly thereafter, she retired.
Statues must be identified. While a union and employer may agree to submit
employees’ statutory claims exclusively to arbitration, the CBA must “clearly and
unmistakably” require union members to submit their statutory claims to those
procedures, the appeals court explained. Moreover, for a waiver of an employee’s right to
a judicial forum for statutory discrimination claims to be clear and unmistakable, the
CBA must identify the specific statutes the agreement purports to incorporate or include
an arbitration clause that explicitly refers to statutory claims.
Here, the grievance procedure in the CBA stated that a grievance included a complaint
“which involves the interpretation, application of, or compliance with the provisions of
this Agreement.” It further provided that the failure of the aggrieved party or the union to
present the grievance within the prescribed time limits of the steps of the grievance
procedure, including arbitration, would be considered as a waiver of the grievance. It also
stated that if the grievance ultimately proceeded to arbitration, the arbitrator’s decision
would be final and binding.
Statues referenced in CBA. In dismissing the employee’s claims, the district court
recognized that the grievance procedure did not specifically identify either the FMLA or
the Rehabilitation Act, nor did it explicitly state that the grievance and arbitration
procedures were the sole and exclusive remedy. However, it concluded that other
provisions in the CBA incorporated both the FMLA and the Rehabilitation Act.
Specifically, it pointed to a section which provided that, “consistent with the other
provisions of this Agreement, there shall be no unlawful discrimination against
handicapped employees, as prohibited by the Rehabilitation Act.” As for the FMLA, it
pointed to the Employee and Labor Relations Manual (ELM), which was incorporated
into the CBA. A section of the ELM stated that it “provides policies to comply with the
[FMLA].” Thus, the district court held that the CBA identified the specific statutes it
purported to incorporate and therefore “clearly and unmistakably” required employees to
submit their claims under those statutes to the specified grievance procedure.
The Fifth Circuit agreed that the CBA clearly and unmistakably required the employee to
submit her Rehabilitation Act claims to arbitration. However, it found that it had not done
the same with regard to her FMLA claims. Notably, the CBA’s grievance procedure
made no explicit reference to statutory claims, including claims under the FMLA or the
Rehabilitation Act. And, while other provisions of the CBA did specifically identify both
federal statutes, the ways in which it did so were distinct. Specifically, a provision
provided that it was incorporating into the agreement the prohibition of discrimination
against handicapped employees contained in the Rehabilitation Act. It thus identified the
specific statutes which it purported to incorporate. Combined with the grievance
procedure, the provision made it clear and unmistakable that the Rehabilitation Act was
part of the CBA and subject to the same grievance procedures.
By contrast, the ELM only provided policies to comply with the FMLA. It did not
purport to make the FMLA a part of the agreement and this was important since
26
references to statutes that fall short of incorporation are insufficiently “clear and
unmistakable” to bar access to federal court. Accordingly, while the CBA required the
employee to pursue her Rehabilitation Act claims through the grievance and arbitration
procedures, its references to the FMLA were not sufficiently clear and unmistakable to
deprive the district court of subject matter jurisdiction over claims arising under that
statute.
Standing limited to non-injunctive relief. The appeals court rejected the USPS’s
contention that the employee lacked standing to bring her FMLA claims since she was
paid for the time that she was on FMLA leave and did not request FMLA leave for her
second absence. However, the employee alleged that USPS’s actions — including the
allegedly harassing interview, the temporary denial of the first leave request, and the
complete denial of the second request — constituted FMLA interference and retaliation.
Thus, it was irrelevant that USPS ultimately paid her for her first absence since she
claimed injuries that this payment did not redress, including the interest she lost as a
result of the delay and the complete refusal to pay in response to the second request.
However, the employee’s retirement did destroy her standing to bring claims for
injunctive relief since she could no longer demonstrate that she faced a realistic threat of
the employer’s policy harming her in the future. Accordingly, the appeals court held that
the district court possessed subject matter jurisdiction over her FMLA claims, with the
exception of her claims for injunctive relief.
The case number is: 13-40328.
Attorneys: Robert Austin Wells (U.S. Attorney’s Office) for Patrick R. Donahoe.
Rebecca L. Fisher (Rebecca L. Fisher & Associates) for Sandra Kay Gilbert.
6th Cir.: Grant of partial summary judgment by trial court not final decision;
appeals court without jurisdiction to hear parties’ appeal
By Ronald Miller, J.D.
The Sixth Circuit determined that it was without jurisdiction to hear the appeal of a union
and county challenging a district court’s grant of partial summary judgment finding that
their implementation of an election-of-remedies clause in a collective bargaining
agreement violated federal law. Finding that the district court’s order granting partial
summary judgment did not amount to a final decision, the appeals court dismissed the
appeal (Trayling v St Joseph County Employers Chapter of Local #2955, May 1, 2014,
Sutton, J).
Election-of-remedies clause. After losing her job as an appraiser for the county, the
plaintiff filed a grievance with her union and a discrimination charge with the Michigan
Civil Rights Department. The union refused to pursue the grievance because the
collective bargaining agreement’s election-of-remedies clause prohibited using the
internal grievance process and an external statutory process simultaneously. Thereafter,
the employee sued the union and the county — the county for age and disability
discrimination and both entities for implementing an allegedly unlawful election-ofremedies rule. In a motion for partial summary judgment, the employee asked the court to
27
hold that the election-of-remedies rule violated federal law. The district court granted the
motion, and the county and the union appealed.
All three parties wanted the Sixth Circuit to hear this appeal. They relied on an exception
to the finality requirement, 28 U.S.C. Sec. 1292(a), which allows the appeals court to
review orders “granting injunctions” even when the appeal is midway through the case.
In their view, the district court enjoined the enforcement of the election-of-remedies
clause. However, the appeals court observed that there was no sign that the district court
ever enjoined anything, and the employee never moved for a preliminary injunction.
Nothing in the district court’s opinion mentioned anything about injunctions and its
ruling that the election-of-remedies clause violated federal law fell short of an injunction.
The court explained that “the parties’ injunction-by-implication theory ignores a
foundation of appellate review: In the absence of a contrary signal in the district court’s
ruling, we presume that the court followed the law.” FRCP 65 requires every injunction
to state its grounds, to state its terms with specificity, and to “describe in reasonable
detail — and not by referring to the complaint or other document — the act or acts
restrained or required.” Finding that there was no order granting an injunction, the
appeals court dismissed the appeal.
The case number is: 13-1968/1969.
Attorneys: Marcelyn A. Stepanski (Johnson, Rosati, Schultz & Joppich) for County of St.
Joseph. Terri L. Dennings (Miller Cohen) for St. Joseph County Employers Chapter of
Local #2955. William F. Piper II (Law Office of William Frank Piper, II) for Anita
Trayling.
7th Cir.: Postal employee’s suit properly dismissed, court unable to provide any of
the relief she requested
By Ronald Miller, J.D.
The complaint of a Postal Service employee who filed suit against her union for breach of
its duty of fair representation after she was stripped of her bid job for violating a
collective bargaining agreement’s four-month rule on temporary supervisory assignments
was properly dismissed on summary judgment, ruled the Seventh Circuit. In affirming a
district court’s judgment, the appeals court determined that none of the relief that the
employee sought was available to her. The union itself could not reinstate the employee,
and the court could not order the Postal Service to give her bid job back because it was
not a party to the suit. Further, punitive damages are not available in suits by union
members against the union for failing to properly pursue a grievance. Nor were emotional
distress damages available in a fair representation case (Zepperi-Lomanto v American
Postal Workers Union, AFL-CIO, May 2, 2014, Rovner, I).
Temporary supervisory position. The plaintiff, an employee of the Postal Service, sued
her union for breaching its duty of fair representation by filing retaliatory grievances
against her. The employee worked as a custodian at a USPS cleaning the processing
facility. Her position was a “bid job,” with a fixed schedule, awarded on a seniority basis
28
under a collective bargaining agreement. In 2005, the employee started working as a
“temporary maintenance supervisor” for higher pay on an as-needed basis. Because the
position was not meant to be permanent, the CBA limited their term to four months;
however, postal managers could reassign employees as temporary supervisors after they
return to their regular jobs for a two-week pay period. Bid jobs are reserved during such
temporary assignments for four months only and then declared vacant, so another union
member can enjoy a steady schedule.
In December 2008, a union steward warned the employee that she violated the fourmonth rule when she did not return to her custodian position for a full two-week pay
period between supervisory assignments. Although the employee had worked as a
custodian for two consecutive weeks, those weeks did not align with a pay period. At that
time, the steward decided not to file a grievance against her with Postal Service
management.
Union grievances. A few weeks later, the employee was again assigned to be a
temporary supervisor. During this assignment, the employee told a supervisor that
another union steward had entered false information on his time sheet. As a result, the
steward received a written warning. Soon thereafter, a grievance was filed against the
employee, alleging that she submitted false information about sick leave. However,
Postal Service management denied the grievance for lack of evidence, and cast doubt on
the steward’s motives. It was reported that the steward told the employee, “this is what
happens when you issue action on a fellow steward.”
Still, a second grievance was filed against the employee for working as a supervisor
without having first completed a two-week pay period as a custodian between
supervisory assignments. Shortly before the end of her four-month supervisory period,
the employee received travel time at the supervisory pay rate for attending training for
Postal Service supervisors, even though her return fell on the first day of a new pay
period. For the rest of the new pay period, she returned to her custodial work, and then
the next day was again assigned to be a temporary supervisor. Two employees submitted
statements that the employee was working in the supervisor’s office during the
intermediate pay period. After Postal Service management concluded that the employee
had indeed violated the four-month rule, she was stripped of her bid job.
Thereafter, the employee sued the union for breach of its duty of fair representation. She
alleged that instead of fairly representing her in the dispute about the CBA’s four-month
rule, the union acted in bad faith by filing retaliatory grievances against her. In response,
the union moved for summary judgment arguing that because its second grievance was
successful, it did not breach its duty of fair representation. Further, it contended that the
employee could not obtain the relief she sought. The district court agreed and granted the
union’s motion. This appeal followed.
Reinstatement request. The Seventh Circuit affirmed the district court’s judgment,
agreeing that none of the relief that the employee sought was available to her. With
respect to her reinstatement, the employee argued that the union could convince the
Postal Service to reinstate her. However, the union itself could not reinstate the
29
employee, and the court could not order the employer to give back her bid job because it
was not a party to this action.
Punitive damages. With respect to punitive damages, the Seventh Circuit noted that the
Supreme Court held in International Brotherhood of Electrical Workers v Foust, that
punitive damages are not available in suits by union members against the union for
failing to properly pursue a grievance. Foust has been interpreted to establish “a blanket
prohibition against the recovery of punitive damages in all fair representation suits.”
Emotional distress damages. Emotional distress damages are also not available in a
breach of the duty of fair representation cases, concluded the Seventh Circuit. While
other circuits have allowed emotional distress damages in exceptional cases when the
union’s conduct was “truly outrageous,” the conduct of the union did not rise to that level
in this case. The employee’s allegations that the union filed a retaliatory grievance
against her and submitted false statements by two employees suggested that the union
may have cut corners, but its behavior was not “truly outrageous.”
Finally, the appeals court rejected the employee’s contention that attorneys’ fees are
recoverable when a union breaches its duty of fair representation. The court observed that
Bennett v Local Union No.66, cited by the employee, authorized the recovery only legal
“expenses incurred in pursuing the claim against the employer,” not attorneys’ fees in a
suit against the union.
The case number is: 12-1384.
Attorneys: James T. Harrison (Harrison Law Offices) for Carrie L. Zepperi-Lomanto.
Richard Steven Edelman (O’Donnell, Schwartz & Anderson) for American Postal
Workers Union.
7th Cir.: District court did not misconstrue arbitrator’s award allowing employer to
implement bargaining proposals
By Kathleen Kapusta, J.D.
Rejecting what it called the Steelworker’s request to “write in the margins” of an
arbitrator’s decision interpreting a collective bargaining agreement to add language
favorable to it, the Seventh Circuit affirmed a district court’s ruling that the award did not
preclude an employer from unilaterally implementing bargaining proposals that included
economic concessions the union opposed. In affirming the lower court’s decision, the
appeals court found that neither the text of the arbitrator’s decision nor the arbitration
record supported the union’s arguments (Steelworkers v PPG Industries, Inc, May 9,
2014, Rovner, I).
In April 2009, the employer informed the union that it wanted to modify the CBA in
order to reduce labor costs. The parties then attended an informal meeting in May, at
which the employer explained that it needed to reduce costs by $10 an hour in order to
remain competitive and that one possible method of achieving this would be to
implement a “two-tier” wage system in which lower “second-tier” compensation would
30
be paid to new hires. At the meeting, and in a subsequent email, the employer stated even
after implementing the two-tier system, without concessions from current employees, it
would not be able to meet the $10 target.
Negotiating conference. Pursuant to the CBA, the parties subsequently held an official
negotiating conference. The CBA required any proposed changes to be presented “not
later than the first day of the conference.” While the employer, on the first day, reiterated
its desire to reduce labor costs and implement a two-tiered wage structure, it did not
present particular dollar amounts of wage or benefit cuts. Instead, it introduced several
noneconomic bargaining proposals. During the next two days, however, it put forth other
proposals, including the two-tier wage system.
Arbitrator’s award. Contending that it was not required to bargain about proposals
made after the first day, the union filed a grievance. Finding that by the beginning of the
conference, the union knew or should have known of the employer’s labor cost goals and
its two-tier wage system, an arbitrator concluded, in a three-sentence award, that the $10
reduction in wage costs and the two-tier wage system were viable proposals. However,
other proposals made after the first day of the conference were untimely.
Wage cuts implemented. The employer then put forward its final offer, which included
the two-tier wage system that cut existing employees’ compensation. After determining
that the parties were at an impasse, the employer unilaterally implemented the offer.
Seeking to confirm and enforce the arbitrator’s award, the union sue and the district court
granting summary judgment to the employer.
Cuts to existing employees’ wages. On appeal, the union first argued that by the first
day of the conference, the employer never suggested cuts to existing employees’ wages;
therefore, the arbitrator could not possibly have approved these cuts as timely.
Disagreeing, the appeals court found that the record before the arbitrator established that
by the first day of the conference, the employer had raised the possibility of
compensation cuts for existing employees. Not only had it explained at the informal
meeting that implementing the two-tiered system would not be sufficient on its own to
achieve the desired reduction in labor, it stated in its follow-up email that it would be
difficult to get to the $10 target without significant concessions from current employees.
Thus, finding that the employer raised the possibility of compensation cuts for existing
employees by the first day of the meeting, the court refused to “interject itself into the
arbitration process” by reading into the arbitrator’s opinion a conclusion that proposed
wage cuts for existing employees were untimely.
Benefits. Relying on the arbitrator’s use of the word “wage” in describing the two-tier
proposal, the union next argued that the district court should have recognized that the
arbitrator barred the employer from cutting employees’ benefits (as opposed to wages).
The court, however, found that it did not follow from the arbitrator’s use of the word
“wage” that he meant to distinguish between wages and benefits, let alone to rule
untimely any proposals cutting benefits. Nor was this position supported by the
arbitration record. Turning again to the employer’s email, the court noted that its itemized
estimated labor costs included a row labeled “benefits’ and showed that the amount of
31
hourly benefits for second-tier employee was “$0.00,” a significant reduction from the
amount shown for other categories of employees. The union, in arguing that the district
court should have recognized a distinction between wages and benefits again sought
relief that the arbitrator did not grant, the court stated.
Award not meaningless. Finally, the court rejected the union’s argument that by
allowing the employer to decrease the wages and benefits of existing employees, the
district court erroneously rendered the arbitrator’s award “meaningless.” Here, the court
found that the union was wrong when it claimed that the lower court “interpreted the
award as imposing no obligation whatsoever” on the employer. While it was true that the
arbitrator ruled some proposals untimely and declared that proposals first introduced after
the first day of the meeting were “discretionary items for bargaining,” the union
overlooked changes that the employer did make to its offer in the wake of the arbitrator’s
decision. Specifically, it removed several proposals that were introduced after the first
day of the conference that did not relate to labor cost reductions or the implementation of
the two-tier system. Although the union argued that these were insignificant compared to
the wage concessions, the court pointed out that the employer’s changes made in
response to the arbitrator’s award undermined the union’s argument that the award, as
interpreted by both the employer and the district court, imposed “no obligation
whatsoever” on the employer. “The award may not have been as favorable to the Union
as it wanted, but it was not ‘meaningless,’” the appeals court concluded.
The case number is: 13-2468.
Attorneys: Stephen A. Yokich (Cornfield & Feldman) for Steelworkers. Joseph James
Torres (Winston & Strawn) for PPG Industries, Inc.
8th Cir.: Collective bargaining agreement supersedes employer’s enforcement of
last chance agreement to discharge employee for drug violation
By Ronald Miller, J.D.
A district court ruling that an arbitrator overstepped his authority in refusing to enforce
the mandatory discharge clause of a last chance agreement (LCA) was reversed on appeal
by a divided panel of the Eighth Circuit. The appeals court determined that because the
arbitrator specifically invoked and applied the “just cause” provision of the parties’
collective bargaining agreement, the contract that defined his authority, his decision drew
its essence from the CBA. Judge Colloton concurred in the judgment in part and
dissented in part (Associated Electric Cooperative, Inc v International Brotherhood of
Electrical Workers, Local No. 53, May 14, 2014, Loken, J).
The employer, an electric cooperative, operated an electric generating plant. Plant
employees were represented by a union and covered by a collective bargaining
agreement. Among the provisions of the CBA was a “broad” management rights clause, a
provision that discipline and/or discharge was to be for “just cause” only, and detailed
grievance and arbitration procedures. The CBA did not include agreed upon procedures
for the use of progressive discipline or LCAs.
32
Last chance agreement. In April 2011, the employer subjected employees at work that
day to random drug testing, a practice it instituted in 2008 after discussions with the
union. A refrigeration mechanic provided a urine sample, then informed the plant
manager that he would test positive because he had recently smoked marijuana with
family members while on leave to attend his brother’s funeral. The employee signed a
standard form LCA and was suspended without pay. One week later, the employer
advised the employee that he would likely qualify for “FMLA sick leave” when he began
the chemical dependency treatment required by the LCA, and that his return to work was
contingent on successful completion of a treatment program, and a negative test result.
The next day, the employer informed the employee that his urine sample was negative.
Nonetheless, he remained on suspension and continued treatment under the LCA.
While suspended, the employee submitted to two drug tests that showed trace amounts of
marijuana, which prevented his return to work, and another drug. The employee had a
valid prescription for the other drug. On June 3, the employee’s treatment counselor
advised the employer that he needed no further treatment and could return to work.
Thereafter, the employee was instructed to appear for a return-to-work drug screen.
Laboratory analysis of the employee’s urine sample revealed the presence of a Valium,
for which he did not have a prescription. Under the employer’s drug guidelines taking a
non-prescribed medication results in a positive test. As a result, the employee was
terminated for violating the LCA by testing positive “for a controlled substance.”
“Just cause” determination absent. The union timely filed a grievance asserting that
there was not “just cause for termination.” After the employer denied the grievance, the
dispute was submitted to arbitration. Ultimately, the arbitrator sustained the grievance in
full, and ordered the employee’s reinstatement with back pay. Although the arbitrator
acknowledged the employer’s strong interest in a drug-free workplace, and noted that
LCA are “commonly used” as substitutes for the just cause provision of the CBA, in this
instance the arbitrator found the LCA was “unconscionable” because the employee’s
original urine sample tested negative and did not establish that he had broken any work
rule. Thus, the arbitrator concluded that the employee was first suspended and then
terminated without just cause.
The employer commenced this action seeking to vacate the arbitrator’s award; while the
union counterclaimed to enforce the award. Finding that the LCA “superseded the
collective bargaining agreement,” the district court granted the employer’s motion for
summary judgment, vacating the award.
“Unconscionable” ruling wrong. As an initial matter, the Eighth Circuit concluded that
the district court understandably disagreed with the arbitrator’s decision to declare the
LCA “unconscionable.” Rather, the management rights clause of the CBA
unambiguously confirmed the employer’s right to adopt plant rules, such as a drug policy
with random drug testing. It also confirmed the employer’s right to discipline employees,
which included the discretion to enter LCAs. Thus, the LCA was not “unconscionable”
when the employer and employee entered the agreement after the employee predicted he
would fail the drug test.
33
However, the appeals court found that the district court read its decision in Coca-Cola
Bottling Co v Teamsters Local Union No 688 too broadly when it concluded that the
arbitrator was obligated to enforce a mandatory termination provision in the LCA. Unlike
Coca-Cola Bottling, the union here did not agree to the LCA between the employer and
employee, and the LCA was the result of a mutual mistake — that the employee had
violated the employer’s drug policy — not the result of pending disciplinary proceedings.
The relevant agreement between the union and the employer was the CBA. It provided
that “discharge of employees shall be for just cause;” that disputes “over the
interpretation or application of the CBA, or other agreements made between Management
and employees . . . shall be settled through the grievance procedure;” and that the union
and employer may submit unresolved grievances to arbitration.
Thus, the union and employer acted in accordance with the CBA in submitting to the
arbitrator whether there was just cause for the employee’s termination, and the arbitrator
correctly focused his decision on the just cause issue. While this focus did not permit the
arbitrator to ignore the LCA, it did mean that he was not contractually bound to apply the
LCA’s mandatory termination clause if the evidence persuaded him there was not just
cause to do so.
“Just cause” determination. Where a CBA requires “just cause” to discipline or
discharge an employee but fails to define the term, the arbitrator’s broad authority to
interpret the contract includes defining and applying that term of the contract. Viewed
from this perspective, the arbitrator’s decision to sustain the union’s grievance must be
enforced. The arbitrator found that, because the employee’s random drug test proved to
be negative, he had not violated any work rule and therefore should not have been kept
on an LCA.
The arbitrator also found that the employee’s termination was unfair because he was
summarily terminated before he returned to work, without an inquiry to explore whether
inadvertently taking the wrong prescription drug was a drug policy violation, and if it
was, whether the appropriate discipline was immediate discharge, or an extension of the
suspension period until he could pass the return-to-work drug screen. Because the
arbitrator specifically invoked and applied the just cause provision of the CBA, his
decision sustaining the union’s grievance must be enforced, concluded the majority.
However, finding that the union grieved the discharge, not the suspension, the appeals
court declined to enforce that portion of the award granting the employee back pay from
the day he was suspended until the day he was discharged.
Concurring in judgment in part and dissenting in part. In his opinion, Judge Colloton
observed that the CBA between the parties provided that any dispute over the
interpretation or application of the agreement, or other agreements made between
management and employees shall be settled through the grievance procedure. Thus, when
a dispute arose over the interpretation and application of the LCA, the matter was
submitted to the arbitrator in accordance with the grievance procedure. Given the limited
scope of judicial review, the arbitrator’s decision should be upheld, he explained. With
respect to the issue of the LCA’s unconscionability, that issue should be decided by an
arbitrator and not by the court.
34
The case number is: 12-3712.
Attorneys: Rick Eugene Temple (Rick E. Temple Law Office) for Associated Electric
Cooperative, Inc. Michael E. Amash (Blake & Uhlig) for International Brotherhood of
Electrical Workers, Local No. 53.
9th Cir.: Federal Railroad Administration lacked jurisdiction to resolve dispute
over designation of terminals; no authority to interpret CBA
By Kathleen Kapusta, J.D.
Denying a railroad’s petition for review of a decision of the Federal Railroad
Administration (FRA), the Ninth Circuit found that the underlying dispute between the
railroad and a union over the designation of terminals for a new service railroad was
fundamentally an issue of contract interpretation that was beyond the FRA’s adjudicatory
powers (United Transportation Union v Foxx, May 7, 2014, Schroeder, M).
The dispute at issue originated in 2010 when the railroad, quoting a relevant provision of
the parties’ CBA, submitted notice to the union that it was planning to establish a new
rail service. When the parties were unable to come to an agreement as to the terminals,
the union asked the FRA Administrator to issue an order preventing the railroad from
taking “illegal unilateral action” to create a terminal. The union, which was concerned
that the proposed terminal was located in a remote location, contended that it could be
established only by agreement between labor and management. The railroad; however,
argued that pursuant to the CBA, if negotiations failed, it could begin service on the new
line. Concluding that the resolution of the dispute required interpretation of the CBA,
which it lacked authority to do, the FRA, in a letter decision found that such a dispute
over interpretation was governed by the resolution procedures authorized in the RLA.
Dispute outside purview of FRA’s authority. On appeal, the Ninth Circuit first found
that the CBA was “unquestionably relevant.” It noted that in 49 U.S.C. Sec. 21101(1),
Congress attempted to clarify that the designation of terminals is to be determined by
collective bargaining agreements. Further, this intent has been incorporated in the FRA
agency policy. Agreeing with the FRA that the dispute was outside the purview of its
authority, the appeals court pointed out that the agency can review an agreement to
determine what the designated terminals are, but it cannot interpret the agreement to
decide how the terminals shall be designated.
The court observed that the dispute over designating terminals was significant because
under the railroad safety laws, known as the Hours of Service Laws (HSL), if an
employee is released from work for more than four hours at a designated terminal, he is
not on duty. However, if an employee is released at a place other than at a designated
terminal, he is on duty. These are the provisions of the HSL that the FRA administers.
Hours of Service Laws. Noting that the HSL are intended to ensure that employees have
adequate rest to perform their work, and therefore on-duty hours are limited, the court
observed that the HSL calculates duty time with reference to when the employee begins
and is released from duty. It is common practice in the railroad industry, however, to
35
release employees from duty at a terminal different from the one at which they begin
their service day. The HSL thus includes provisions indicating whether time spent after
such a release is calculated as on duty or off duty. In order to determine whether an
employee is on or off duty after release, it must first be determined whether the terminal
of release was a “designated terminal.”
Designated terminal. Because the term “designated terminal” was not originally defined,
a split developed among the circuit courts in the 1970s. For example, although the Ninth
Circuit ruled that the designation was controlled by the CBA, the Eighth Circuit held that
the “designation” was effectively placed within the employer’s control. Congress
attempted to resolve this problem by defining “designated terminal” in Sec. 21101(1) as
the “the home or away-from-home terminal for the assignment of a particular crew.” The
accompanying legislative history noted that “such locations shall be determined by
reference to collective bargaining agreements applicable to particular crew assignments.”
As to the dispute at issue here, the court noted that there was no serious disagreement that
under the statutory provisions of the HSL and the provisions of the CBA, the parties were
expected to designate the terminals through collective bargaining negotiations. If they
had agreed on terminals, the court pointed out, the FRA could have reviewed the CBA to
determine whether the hours of service laws were being complied with.
However, because they did not agree on any designated terminals, the union asked the
FRA Administrator, in effect, to declare that absent such agreement, the proposed
terminal could not be treated as a designated terminal. Noting that if it was not treated as
a designated terminal, then all crew time there would be on-duty time, the court pointed
out that arbitration of the underlying issue was what was required by the CBA in the
absence of an agreement by the parties as to the designated terminal.
Though the railroad argued that under the CBA it could designate a terminal on an
interim basis pending arbitration, the court found that the agreement was “not crystal
clear.” However, it observed, the question was not whether the railroad’s interpretation of
the agreement was correct. The question was whether the underlying issue was one of
interpretation of the bargaining agreement.
Stating that it had little difficulty determining that it was, the court found it could reach
this conclusion without having to consider any issue as to the degree of deference owed
the FRA concerning the application of the HSL or its own jurisprudence. The underlying
dispute, the court stated, was a contractual dispute; thus it was one that the RLA was
designed to resolve. Noting that the FRA has consistently taken the position that its duty
is to enforce the HSL and not to interpret collective bargaining agreements, the court
concluded that the FRA correctly determined that this was fundamentally an issue of
contract interpretation beyond its adjudicatory powers.
The case number is: 11-73258.
Attorneys: Joy K. Park (U.S. Department of Transportation) for Anthony Foxx. Lawrence
M. Mann (Alper & Mann) for United Transp Union.
36
NLRB: Union employee’s charge that she was forced to be a union member was
time-barred
By Lisa Milam-Perez, J.D.
Charges that a local union required an employee to be a union member as a condition of
her employment were time-barred, a divided NLRB panel held, affirming a law judge’s
dismissal of the complaint allegation. The General Counsel failed to present evidence that
the union imposed such a requirement within the six-month limitation period of
Sec.10(b), and a current violation could only be made out by relying on anterior events
that predated this period — which the principles set forth by the Supreme Court in Bryan
Mfg forbids, the majority held (Laborers’ International Union of North America, Local
16, April 30, 2014).
Forced membership. The charging party worked as an administrative assistant for
LIUNA, Local 16, which represents construction laborers and custodians in New Mexico.
Upon hire, the union began to deduct $15 a month from her paycheck for membership
dues (along with a $25 deduction per paycheck until her $100 “initiation fee” was paid).
She was not a member of any LIUNA-represented bargaining unit or covered by a CBA,
though. When the employee inquired about the deductions, she was told she had to
become a member of the union in order to start work. A year later, she signed off on
another document authorizing dues deductions; the last sentence of the document
expressly stated that the authorization was voluntary, could be revoked in writing at any
time, and was not dependent upon her being a member of the union. (The employee was
simultaneously given a “voluntary authorization” form for deductions for a political
action fund, which she refused to sign, suffering no reprisal as a result.)
Four years later, the employee was still paying union dues, and complained that she
didn’t understand why, seeing as her pay had been static for such a long time. (The local
had a pay freeze in effect for three years at that point). In response, she was simply told
she “had to pay dues.” After continuing to press her demands for a pay raise, she was
terminated by the local’s newly elected president, ostensibly for a dispute that erupted
after she parked in an unauthorized parking spot. Among the numerous unfair labor
practice charges that followed, the General Counsel contended that the union unlawfully
required the employee to become a member of Local 16 as a condition of her
employment. However, an administrative law judge found this charge was barred by Sec.
10(b)’s six-month limitations period. The Board majority agreed.
Outside limitations period. The Supreme Court’s holding in Bryan Mfg. Co. v. NLRB
governs the use of time-barred events when, in cases like those at hand, “conduct
occurring within the limitations period can be charged to be an unfair labor practice only
through reliance on an earlier unfair labor practice.” In that circumstance, the High Court
held, “use of the earlier unfair labor practice is not merely ‘evidentiary,’ since it does not
simply lay bare a putative current unfair labor practice. Rather, it serves to cloak with
illegality that which was otherwise lawful. And where a complaint based upon that earlier
event is time-barred, to permit the event itself to be so used in effect results in reviving a
legally defunct unfair labor practice.”
37
Applying this principle here, the Board found the conduct that occurred within the
limitations period could only be deemed unlawful by relying on a defunct unfair labor
practice. When the employee was first hired — and on other occasions that preceded the
six-month limitations period — the union told her that she had to join the union and pay
dues. But there was no evidence that the union maintained or imposed a policy requiring
union membership within the 10(b) period. The fact that she continued to pay dues “does
not show she was required to do so,” the majority reasoned. “Nor does her continued
union membership establish a violation, as employees are free to join and maintain
membership in a labor organization that does not represent them.” The Board also refused
to rely on the fact that the union never told the employee that her membership was
voluntary as evidence that the mandatory policy was in existence during the 10(b) period.
“Doing so would improperly shift the burden of proving a current unfair labor practice
from the General Counsel to the Respondent,” the majority said.
Concluding that a current violation could only be made out by relying on the events that
predated the limitations period, which Bryan Mfg. forbids, the Board found the law judge
properly dismissed as time-barred this complaint allegation.
Hirozawa: a continuing violation. Member Hirozawa disagreed, finding the allegation
amounted to a “continuing violation” under Bryan Mfg. The General Counsel alleged that
the employee was unlawfully required to be a union member and pay dues within the
limitations period. If the union maintained a policy requiring her membership, that policy
was facially unlawful, and it is “well established” that the maintenance of a facially
unlawful policy within the 10(b) period is an independent violation of the Act, he noted.
In the dissent’s view, the evidence establishing the union’s initial imposition of the
mandatory membership requirement may be considered, under Bryan Mfg, to elucidate
the subsequent (timely) events. Because finding the allegation meritorious did not
therefore depend upon finding that conduct outside the limitations period constituted an
earlier unfair labor practice, Hirozawa would find the allegation timely.
The slip opinion is: 360 NLRB No. 77.
Attorneys: Shane Youtz (Youtz and Valdez) for Laborers' International Union of North
America, Local No. 16.
NLRB: Employer did not discipline employee for invoking Weingarten right
By Ronald Miller, J.D.
An employer did not act unlawfully by denying an employee’s request for a Weingarten
representative and then discontinuing the interview, ruled a divided three-member panel
of the NLRB. The Board also affirmed the dismissal of allegations that the employer
acted unlawfully when it subsequently meted out discipline to the employee. Member
Schiffer dissented in part, arguing that the record demonstrated that the employee was
disciplined not merely after invoking his Weingarten right, but because he did so (YRC,
Inc dba YRC Freight, April 30, 2014).
38
The employer was a trucking company and had a unionized facility. A dock supervisor
spotted the employee, a truck driver, pulling out of the yard more than an hour after his
expected departure time. According to the supervisor, he had not decided whether to
discipline the employee at that time. The supervisor approached the employee and asked
why he was delayed. In response, the employee asked whether the question was
investigatory. The supervisor replied that he was asking a question. The employee stated
that if the question was investigatory, he would like a union steward present. The
supervisor advised the employee that no stewards were available, but that he could pick
someone else. When the employee requested to see a list of employees scheduled to
work, the supervisor responded that he would be receiving discipline for misuse of
company time. Thereafter, the employee was mailed a warning letter.
An administrative law judge rejected both allegations by the General Counsel: that the
employer denied the employee’s request to participate in the investigative interview with
a Weingarten representative, and by issuing the warning letter. Rather, the ALJ credited
the supervisor’s testimony that he disciplined the employee for misusing company time.
Right to union representative. Under the Supreme Court’s Weingarten decision, an
employee has a right to request the attendance of a union representative in any interview
that he or she “reasonably fears may result in his discipline.” Two well established
Weingarten principles are relevant in the instant case. First, the NLRA protects an
employee from retaliation motivated by an employer’s hostility towards an employee’s
Weingarten request. Second, an employer confronted with an employee request for
Weingarten representation may respond by choosing not to move forward with the
investigative interview.
Here, the Board majority agreed with the ALJ that the employer did not unlawfully refuse
the employee’s request for union representation. Weingarten expressly provides that
when an employee requests representation, the employer may choose not to move
forward with the interview. As a consequence, the employer did not violate the Act when
the supervisor elected not to conduct the investigatory interview after the employee
invoked his Weingarten rights.
Retaliatory reprimand. The remaining issue concerned whether the employer’s warning
letter constituted unlawful retaliation motivated by the employee’s request for
representation. The General Counsel argued that because the supervisor had not decided
to discipline the employee at the time he approached him to explain why he had been
delayed, the subsequent warning letter, coming after the employee made his Weingarten
request, was unlawful because the request was the “but for” cause of his discipline.
However, the majority again disagreed. The Board observed that the ALJ correctly
recognized that Weingarten gives employees a right to union representation during
investigative interviews but does not afford immunity for unexplained conduct. Thus,
while the employee had the right to request the presence of a representative, the
supervisor had already observed the employee leaving one hour late, was “free to act on
the basis of whatever information he had and without such additional facts as might have
been gleaned through the interview.”
39
The majority went on to explain that Weingarten does not require employers to conduct
or continue an investigative interview, nor does it require employers to undertake other
investigative steps before imposing discipline. Additionally, nothing in Weingarten
prevents an employee from providing an exculpatory explanation in some manner not
involving a back-and-forth oral exchange of questions and answers. Thus, the employee’s
assertion of his Weingarten rights did not immunize him from the consequences of his
unexplained late departure from the yard. Although the employee was disciplined after he
invoked his Weingarten rights, it did not follow that he was disciplined because he
invoked those rights.
Dissent. In dissent, Member Schiffer argued that there was no good basis to conclude that
the employee would have been disciplined even if he had not asked for a union
representative. The dissent pointed out that the only intervening event between the
supervisor’s asking the employee why he was delayed in leaving the yard and then
advising him that he would be disciplined was that he invoked his Weingarten right.
According to the dissent, the record established that the employer disciplined the
employee, at least in part, because instead of offering an explanation for his delay, he
asked for a Weingarten representative.
The slip opinion is: 360 NLRB No. 90.
Attorneys: Jeffrey R. Vlasek (Baker Hostetler) for YRC Inc.
NLRB: Union’s negligence in letting employee’s grievance lapse did not constitute
breach of duty of fair representation
By Ronald Miller, J.D.
A union did not violate its duty of fair representation by failing to timely request
arbitration of a member’s grievance, resulting in the forfeiture of his arbitral claim, and
thereafter erroneously informing the employee that his grievance was scheduled for
arbitration, ruled a divided three-member panel of the NLRB. Although the Board
concluded that the union undoubtedly acted negligently in failing to timely secure
arbitration of the employee’s claim, the record failed to disclose the “something more
than mere negligence” necessary to establish a violation of the Act. Because the union
neither ignored the employee’s grievance nor processed it in a perfunctory manner, but
simply failed through negligence to timely file for arbitration, the evidence does not
establish that the union acted arbitrarily. Member Miscimarra dissented (Amalgamated
Transit Union Local No 1498, April 30, 2014).
The union represented bus drivers and maintenance employees under the terms of a
collective bargaining agreement. The employee filed a grievance protesting an
employer’s failure to award him a “C mechanic” position pursuant to the job bidding
procedures. In fact, it was the union’s president that had encouraged the employee to file
the grievance, suggested appropriate language, and spoke to management officials on his
behalf concerning the failed bid. After the grievance was denied by the employer, the
union president continued to vigorously represent the employee, appealing denial of the
grievance. The parties’ CBA required that a party seeking arbitration must notify the
40
Federal Mediation and Conciliation Service (FMCS) within 30 days following receipt of
the employer’s denial. Failure to comply with the 30-day time limit would result in the
forfeiture of the claim.
In the present case, the employer denied the appeal on or about September 5, 2010. By
letter dated September 23, the union informed the employer that it would take the
grievance to arbitration. In particular, the union informed the employer that it had
directed its attorney to file the necessary paperwork with the FMCS. The 30-day period
for filing with the FMCS ended October 5. By letter dated October 7 but not mailed until
October 25, the employer informed the union that the 30-day period had ended on
October 5 but that the employer had heard nothing from the FMCS. The letter went on to
state that if the employer did not receive the arbitrator list “ASAP,” it would consider the
grievance forfeited.
Upon receiving the employer’s letter, the union president promptly telephoned its
attorney to confirm that he had, in fact, arranged for the employee’s arbitration. The
attorney erroneously advised the union official that he had. The union attorney thought
that he arranged with the employer’s counsel to use an arbitration list that had been
requested for another grievance, as they had done previously. In fact, the attorney had
made no such arrangements with the employer’s counsel nor had he contacted the FMCS.
Because the union had not satisfied its contractual obligations, the employee’s claim was
forfeited.
Approximately two years lapsed between the union’s initial failure to request an
arbitration list and its ultimate discovery of the mistake and notice to the employee. On
various occasions during that time, the union had informed the employee that his
arbitration was pending.
Union conduct not arbitrary. The General Counsel argued that the union’s conduct was
“arbitrary,” and therefore unlawful. However, a union’s actions are considered arbitrary
only if the union has acted “so far outside ‘a wide range of reasonableness’ as to be
irrational.” Mere negligence is not sufficient to establish arbitrary conduct. Accordingly,
a union that negligently misses a filing deadline for an arbitration, even if it results in the
matter being time barred, does not violate its duty of fair representation. Something more
than ineptitude or mismanagement is required.
Here, the Board majority concluded that there was no doubt that the union acted
negligently in failing to timely secure arbitration of the employee’s claim, resulting in its
forfeiture. According to the majority, neither the union president nor its counsel evaded
the union’s responsibility to timely arrange for the employee’s arbitration; rather, the
union attorney failed to act in a manner consistent with the union’s contractual
obligations, but believed that he had. Such an inadvertent error was not the type of
conduct that the principles of fair representation were intended to reach.
Dissent. In dissent, Member Miscimarra observed that he and the majority agreed on
everything in this case except the outcome. He dissented after concluding that despite the
well-intentions of the union and its agents, it repeatedly failed to take reasonable steps to
41
confirm that arbitration was being pursued, and that recurring inquiries clearly warranted
some further action by the union. Thus, according to the dissent, the record established
that the union’s grievance processing degraded to the level of becoming “perfunctory”
and warranted a conclusion that the union violated its duty of fair representation.
The slip opinion is: 360 NLRB No. 96.
Attorneys: Weston R. Moore (Moore Law Center) for Amalgamated Transit Union Local
No. 1498.
NLRB: Employer unlawfully posted sign prohibiting union meetings in employee
break room
By Ronald Miller, J.D.
An employer acted unlawfully by posting a sign in an employee break room prohibiting
union meetings there, ruled a three-member panel of the NLRB. Because the sign did not
acknowledge the union’s right to have access to the employer’s premises for certain
purposes as provided in the parties’ expired collective bargaining agreement, it was
unlawfully overbroad. Similarly, the employer acted unlawfully by maintaining an offduty access policy that prohibited employees from remaining on its premises after their
shift ended unless they received prior authorization from a supervisor (American Baptist
Homes of the West dba Piedmont Gardens, May 1, 2014).
Union break room ban. The sign baldly stated that “[t]he union is not permitted to hold
meetings in the employee break room.” This stated prohibition did not acknowledge the
union’s right to have access to the employer’s premises for certain purposes as stated in
the parties’ expired CBA. The Board rejected the employer’s argument that the sign did
not constitute a violation because it did not actually interfere with employees’ Sec. 7
rights. It pointed to a union representative conversing with an unspecified number of
employees in the break room after the sign had been posted. However, the Board was not
persuaded by the employer’s argument because employees could not reasonably infer
from those conversations that, contrary to the clear language of the sign, the union was
permitted to hold meetings in the break room.
Off-duty access policy. The NLRB further adopted an administrative law judge’s finding
that the employer acted unlawfully by maintaining a policy prohibiting employees from
remaining on its premises after their shift “unless previously authorized by” their
supervisor. Under the Board’s ruling in Tri-County Medical Center, a rule restricting offduty employee access is valid only if it (1) limits access solely with respect to the interior
of the facility and other working areas, (2) is clearly disseminated to all employees, and
(3) applies to off-duty employees seeking access to the plant for any purpose and not just
to those employees engaging in union activity. Here, the Board concluded that the
employer’s policy was unlawful under the third prong of the Tri-County standard because
the “with supervisor authorization” exception to the off-duty access policy gave the
employer broad discretion to decide when and why employees may access its facility.
42
Again, the Board rejected the employer’s contention that the access policy was lawful
because in practice, it only permitted off-duty employees to enter the nursing facility in
three limited circumstances: to pick up a paycheck, attend a scheduled meeting with HR,
or arrive early for the night shift. However, the Board noted that the employer had not, in
fact, informed employees that supervisors and managers may grant access to off-duty
employees only under the three categories identified by its HR director. Additionally, the
Board rejected the employer’s assertion that the union “waived any defects” of the policy
by successfully lobbying it to permit off-duty employees to access the vestibule for up to
an hour prior to the start of the night shift. Here, the Board noted that the union did not
clearly and unmistakably consent to the aspects of the policy that made it unlawful under
Tri-County, despite prevailing on the vestibule access issue.
Enforcement of policy. Finally, by enforcing the off-duty access rule against two
employees who sought access to the premises to engage in protected activity of aiding the
union in presenting employee complaints to management, the employer acted unlawfully.
Thus, in addition to finding that the employer’s off-duty access policy was unlawful on
its face, the ALJ correctly found that the employer’s enforcement of the policy against
the two off-duty employees who were seeking access to present employment-related
complaints to management reasonably tended to interfere with employees in the exercise
of their rights under Sec. 7 of the NLRA.
The slip opinion is: 360 NLRB No. 100.
Attorneys: David J. Durham (Arnold & Porter) for American Baptist Homes of the West
dba Piedmont Gardens. Manual A. Boigues (Weinberg, Roger & Rosenfeld) for SEIU,
United Healthcare Workers West.
NLRB: Union campaign flyer picturing voters and stating their intent to vote for
union didn’t warrant setting aside election
By Ronald Miller, J.D.
An employer’s allegation that a union deceived voters by distributing a campaign flyer
showing pictures of eligible voters and statements of their intent to vote for the union was
overruled by a divided three-member panel of the NLRB. Applying the standard of
Midland National Life Insurance Co, the Board majority declined to delve into the truth
or falsity of campaign statements. At any rate, the majority concluded that the employee,
whose affidavit the employer relied on had, in fact, authorized the union’s use of her
name and likeness. Member Miscimarra dissented and would have ordered a hearing to
determine whether union employees whose pictures appeared on the flyer expressly
consented to the public disclosure of how they intended to vote (Durham School Services,
LP, May 9, 2014).
Following the union’s victory in a representation election, the employer filed objections
to the election with the regional director. The regional director overruled the objections
without a hearing. According to the employer’s first objection, the union deceived voters
by distributing a campaign flyer that contained pictures of eligible voters and statements
43
misrepresenting their intent to vote for union. However, the regional director found that
the employer’s evidence did not raise a substantial and material factual issue under
Midland National Life Insurance Co.
Midland standard. Under the Midland standard, the NLRB will not probe into the truth
or falsity of the parties’ campaign statements and will not set aside an election on the
basis of misleading statements unless “a party has used forged documents which render
the voters unable to recognize propaganda for what it is.” It is well established that the
Midland standard applies where unions circulate campaign literature that identifies
individual employees as union supporters, as well as attributing pro-union statements to
them or representing that they intend to vote for the union.
In this instance, the employer’s objection relied primarily on the affidavit of a bargaining
unit member stating that she did not intend to vote for the union and did not authorize the
union to attribute any quotation to her. However, the employee admitted that she
voluntarily signed, but claims not to have read, a document provided by the union
(entitled Release Form), that contained a preprinted statement giving the union
permission to use her name and likeness in union publications. On these facts, the
majority agreed with the regional director that the evidence failed to establish that the
union misrepresented the employee’s sentiments. Moreover, other documentary evidence
indicated that the employee added her name to two petitions that proclaimed support for
the union. As a result, there was no basis to conclude that the union engaged in any
misrepresentation.
Additionally, the majority explained that even assuming that the employee did not in fact
support the union, or write the statement attributed to her, it would still affirm the
regional director’s decision to overrule the objection without a hearing under the Midland
standard. Here, there was no claim of forgery, nor was there any dispute that the union’s
flyer was easily recognizable as campaign propaganda. At most, the employer’s evidence
suggested a possible misrepresentation of the employee’s sentiments which, under
Midland, provided no basis for setting aside the election.
Conduct of NLRB agent. Similarly, the majority overruled the employer’s objection that
a Board agent’s handling of the election compromised the integrity of the election when
the agent carried the election booth and ballot box to the employer’s parking lot in order
to permit a disabled employee to cast a ballot. In seeking to overturn the election, the
employer argued that the standard to be applied to the agent’s conduct was whether “the
manner in which the election was conducted raises a reasonable doubt as to the fairness
and validity of the election.” Here, the Board concluded that the regional director actually
applied this correct standard in her analysis of the employer’s evidence on this objection,
and it agreed with her analysis that no hearing was necessary.
Dissent. Member Miscimarra would remand the employer’s objection for a hearing on
whether the employee and other unit members expressly consented to the public
disclosure of how they intended to vote. According to the dissent, where, as here, a union
has publicized employees’ intended votes, the Board has applied a standard where
legality turned on whether the union resorted to forgery or pervasive misrepresentation.
44
Member Miscimarra would hold that a party engages in objectionable conduct when it
publicizes how specific, named employees intend to vote unless the party obtained
express consent from those employees to disclose how they intended to vote.
The slip opinion is: 360 NLRB No. 108.
Attorneys: Charles P. Roberts III (Constangy, Brooks & Smith) for Durham School
Services, LP. David C. Tufts (The Gardner Firm) for International Brotherhood of
Teamsters, Local 991.
NLRB: Employer unlawfully refused to furnish information used to set new
production standards
By Ronald Miller, J.D.
An employer acted unlawfully by refusing to furnish a union with requested information,
including time studies that related to the setting of production standards relevant for the
representation of bargaining unit employees, concluded a divided three-member panel of
the NLRB. Because the employer failed to offer a particularized demonstration of why
the time studies would “trigger specific confidentiality concerns,” it failed to demonstrate
a legitimate and substantial confidentiality interest in the time studies. Member Johnson
filed a separate opinion in which he found that the employer’s evidence was sufficient to
establish that it had a legitimate and substantial confidentiality interest (Howard
Industries, Inc, May 13, 2014).
The employer manufactured coils for electrical transformers. For each custom-designed
coil, it set production standards detailing the steps necessary to manufacture each coil to
specification and the corresponding time required for an employee to complete each step.
Employees are evaluated on their efficiency and are written up if they fall below 90percent efficiency. After concluding that employees were greatly exceeding their
efficiency ratings, the employer determined that the production standards were outdated
and required revision. In July 2010, it issued a memo to employees advising them
standards would change. Upon being informed of the impending change in standards, the
union requested information related to the new and original standards and how they were
set. The union continued to request such information over the next two years. However,
the employer refused on the grounds that such information was proprietary and
constituted trade secrets. Instead, it offered the union the opportunity to visit the plant and
view the coil-winding process. The union refused this offer and the employer refused to
supply the requested information.
Trade secret claim. An administrative law judge found that the requested information
was presumptively relevant because the production standards were used as a basis for
disciplining bargaining unit employees and the union needed to be able to challenge their
reasonableness in grievance/arbitration proceedings. Here, the ALJ concluded that the
employer did not demonstrate that it had a legitimate and substantial interest in keeping
this relevant information confidential. Specifically, the law judge rejected the employer’s
contention that the records showed a unique manufacturing process that constituted a
45
trade secret. He found that the employer did not demonstrate that it otherwise departed
from the general practices in the industry.
Additionally, the ALJ determined that even assuming the employer established a
confidentiality interest, that interest was insufficient to outweigh the union’s need for the
information because: (1) the employer did not use technology unknown in the industry;
(2) the employer did not use a secret method to assemble transformers that differed from
other manufacturers; (3) the record did not establish that disclosure would place the
employer at a significant competitive disadvantage; and (4) employees were already
aware of the steps in assembling a particular transformer. Finally, the law judge found
that even if the employer had a strong interest in confidentiality, it had an obligation to
seek an accommodation with the union and failed to do so.
NLRB ruling. The majority observed that when a union requests relevant but assertedly
confidential information, the Board balances the union’s need for the information against
any “legitimate and substantial confidentiality interests established by the employer.”
Where a claim of confidentiality is adequately established, it may be a valid basis for
declining to fully produce the requested information. However, the party asserting this
confidentiality claim cannot simply refuse to furnish the information. Rather, it has a duty
to come forward with an offer to accommodate the request and engage in bargaining to
seek a resolution that addresses both parties’ needs.
In this instance, the majority determined that the employer failed to demonstrate how
records showing the steps of the manufacturing process and the amount of time it should
take to complete each step would reveal confidential or proprietary information.
Although the employer offered testimony about the coil-manufacturing process, it failed
to demonstrate that competitors did not follow the same steps when they created similar
coils or that its coils actually differed in nature from those of its competitors. As a
consequence, the employer acted unlawfully in withholding information from the union.
Accommodation requirement. Moreover, the full panel agreed that even if the employer
had demonstrated that the information was confidential, it was nevertheless obligated to
seek an accommodation of the union’s need for the information through bargaining. The
employer’s offer of a plant tour failed to satisfy this obligation. The offer was not
reasonable as it was neither responsive to the union’s request for information related to
the formulation of production standards, nor an adequate means of conveying that
information. Thus, the employer acted unlawfully in refusing to furnish the requested
information.
Concurring and dissenting opinion. Member Johnson dissented, finding that the
employer’s evidence was sufficient to establish that it had a legitimate and substantial
confidentiality interest. However, he agreed with the majority that the employer failed to
attempt to accommodate the union’s indisputable need for the information, other than
offering a plant tour that would not provide any particularized time study information to
the union.
The slip opinion is: 360 NLRB No. 111.
46
Attorneys: Clarence Larkin (International Brotherhood of Electrical Workers, Local
1317) for International Brotherhood of Electrical Workers, Local 1317. Elmer E. White
III (The Kullman Firm) for Howard Industries, Inc.
NLRB: Employer’s unlawful acts during period before union election warranted
setting aside election results
By Ronald Miller, J.D.
An employer acted unlawfully by interrogating an employee, removing union literature
from an employee break room and engaging in surveillance of employees’ union
leafleting activity, ruled a three-member panel of the NLRB. Here, the Board determined
that the impact of the employer’s unlawful conduct could not be trivialized as isolated or
de minimis. Rather, it fell squarely within the Board’s longstanding policy to direct a new
election where the unfair labor practices committed during the critical period before the
election interfered with employees’ free choice. However, the Board reversed a finding
that the employer unlawfully threatened that selecting the union would be futile, where
that theory was never alleged in the General Counsel’s complaint. In light of the
employer’s unlawful conduct, the Board agreed with an administrative law judge’s
recommendation that an election won by the employer be set aside. Member Miscimarra
filed a partial dissent (Intertape Polymer Corp, May 23, 2014).
The employer operates a tape manufacturing facility. The union filed a petition seeking to
represent the facility’s production and maintenance employees, and a resulting election
was lost by the union. Thereafter, the union filed a charge alleging objectionable conduct
by the employer during its organizing campaign, including unlawfully interrogating an
employee regarding his union sentiments, removing union literature from the employee
break room and engaging in surveillance of employees’ union activities.
Unlawful interrogation. During the union’s organizing drive, but before the union filed
its representation petition, a supervisor approached an employee at his workstation and
questioned him about his view of the union. In this instance, the NLRB agreed with an
administrative law judge that the supervisor’s questioning was coercive and so unlawful.
In determining whether questioning of this nature is unlawful, the Board considers a
number of factors, including: (1) whether there is a history of employer hostility to or
discrimination against protected activity; (2) the nature of the information sought; (3) the
identity of the questioner; (4) the place and method of interrogation; and (5) the
truthfulness of the employee’s reply. Additionally, the Board will also consider the nature
of the relationship between the supervisor and the employee.
Applying these factors to the case at hand, the Board found that the questioning was
unlawful. First, the supervisor directed the employee to reveal his view of the union.
Although the supervisor was low-level, his position as the employee’s direct supervisor
reasonably tended to make the questioning that much more threatening. Moreover, the
supervisor offered no justification for his questioning or assurances against reprisals.
Further, the preexisting hostility between the supervisor and employee, along with the
employee’s unwillingness to answer the supervisor weighed in favor of finding a
violation. Finally, the Board determined that the supervisor’s comment regarding the
47
union that “it can hurt you” exacerbated the already coercive nature of the inquiry into
the employee’s opinion of the union.
Confiscation of union literature. Before the union campaign began, literature left in the
employee break room remained untouched until at least the end of the workday. But after
the union filed its representation petition, supervisors monitored the break room much
more closely and began removing all literature, including that related to the union
campaign, shortly after employees finished their breaks. Prior to the union campaign, the
employer had a policy prohibiting distribution of literature during working time and in
working areas. Consequently, this change in policy as a reaction to and countermeasure
against the union campaign was unlawful.
Surveillance of employees’ leafleting. The Board also agreed with the ALJ that “out of
the ordinary” behavior of the employer by having supervisors distribute leaflets at the
plant gate simultaneously while union supporters were handing out leaflets supported a
finding of unlawful surveillance. Management officials typically communicated with
employees in meetings, and there was no evidence that, prior to the union campaign, it
had leafleted its own employees. The supervisors could see not only the employee
distributing the leaflets, but also which employees accepted or rejected the leaflets, and
any interactions between the employees. The Board rejected the employer’s contention
that it was simply exercising its Sec. 8(c) right to communicate with its employees.
Rather, the Board pointed out that such communication is unlawful if it includes out-ofthe-ordinary conduct placing employees’ union activities under surveillance.
Threat of futility. However, the NLRB agreed with the employer that it did not engage
in objectionable election conduct by threatening employees that it would be futile to
select the union as their collective bargaining representative. The law judge found an
unlawful threat of futility based on comments made by a senior company official at a
meeting of employees. While the complaint alleged that the official made an implied
threat of discharge at the meeting, there was no complaint allegation of an unlawful threat
of futility. Moreover, during the hearing, counsel for the General Counsel made it clear
that he was not pursuing a theory that the official’s comments were unlawful as a threat
of futility. Thereafter, the General Counsel never sought to amend the complaint and
never argued that the employer made an unlawful threat of futility. Under such
circumstances, the Board found that the employer did not have fair notice that the ALJ
would make findings based on this unalleged theory. Thus, the finding of a violation was
reversed.
Partial dissent. Member Miscimarra dissented from that NLRB’s finding of unlawful
interrogation and surveillance. With respect to the unlawful interrogation allegation, the
dissent argued that the General Counsel had not proven that the supervisor coercively
interrogated the employee, since it was an informal conversation at the employee’s
workstation and the supervisor posed no questions intended to elicit information upon
which to retaliate. With respect to the allegation of unlawful surveillance, the dissent
contended that the employer had a right to campaign against the union on its own
property. Further, the dissent argued that there was no evidence that supervisors located
themselves at the gate to spy on employees’ union activities.
48
Moreover, he argued that even if the surveillance allegation had merit, there was no
evidence that such surveillance could have affected the election results, and so did not
warrant setting aside the election.
The slip opinion is: 360 NLRB No. 114.
Attorneys: Michael D. Carrouth (Fisher & Phillips) for Intertape Polymer Corp.
Benjamin Brandon (United Steel, Paper & Forestry, Rubber, Manufacturing, Energy,
Allied Industrial and Service Workers International Union) for United Steel, Paper &
Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers
International Union.
NLRB: Successor bar not impediment to direction of election where a reasonable
period of bargaining had elapsed
By Ronald Miller, J.D.
An employer’s request for the review of a regional director’s direction of an election was
denied by a three-member panel of the NLRB, which determined that there was no
successor bar at the time a union’s election petition was filed because a “reasonable
period of bargaining” had followed the employer’s commencement of negotiations with a
rival union. Member Miscimarra filed a separate concurring opinion (FJC Security
Services, Inc, May 21, 2014).
In this instance, the employer argued that the union’s petition must be dismissed because
of the successor bar reestablished in UGL-UNICCO Service Co. It contended that a
“reasonable period for bargaining” had not yet elapsed so the challenge to the incumbent
union’s majority status should be rejected.
The NLRB observed that although the parties disagreed on the proper application of the
successor bar to the facts of this case, no party argued that the Board should modify or
overrule UGL-UNICCO Service Co, which reinstated the “successor bar” doctrine. Under
that doctrine, when a business changes hands, and if the new employer is a “successor”
under NLRB v Burns Security Services, the incumbent union is granted an insulated
period — a “reasonable period for bargaining” — during which its majority status may
not be challenged. Here, the majority opinion rejected the concurrence’s view that UGLUNICCO is “inappropriate,” “contrary to the Supreme Court’s decision in Burns,” or
“inconsistent with the Act.”
Concurrence. In a separate concurring opinion, Member Miscimarra agreed with the
result reached in the majority opinion, but not with their rationale. Rather, he would
adhere to the standard established in MV Transportation, which was overruled by UGLUNICCO. In MV Transportation, the Board held that “an incumbent union in a
successorship situation is entitled to a rebuttable presumption of continuing majority
status, which will not serve as a bar” whenever a rival union petition is filed. Thus,
Member Miscimarra would find that the newly filed petition in this case warranted an
election, without any evaluation of whether a “reasonable period for bargaining” had
elapsed.
49
The slip opinion is: 360 NLRB No. 115.
Attorneys: Clifford Ingber (The Ingber Law Firm) for FJC Security Services Inc.
International Guards Union of America, (IGUA) Local 137, pro se. United Government
Security Officers of America International Union, pro se.
NLRB: Employee’s outburst did not strip him of NLRA protections, Board holds on
remand
By Ronald Miller, J.D.
In a decision on remand from the Ninth Circuit, a divided three-member panel of the
NLRB ruled that an employee’s outburst while engaged in otherwise-protected activity
did not cost him the NLRA’s protection. Reapplying the four-factor Atlantic Steel test for
determining when an employee’s improper conduct strips the employee of the protections
of the Act, the Board majority found the employee’s activity remained protected despite
the outburst, thus his discharge was unlawful (Plaza Auto Center, May 28, 2014).
Steady stream of complaints. The employee, an automobile salesman, was fired within
two months of being hired by a Yuma, Arizona, used car dealership. He complained
regularly that, during “tent sales” held in the parking lot at the local Sears, the employer
did not allow the salesmen to take bathroom and meal breaks. He also complained about
the fact that the salesmen were paid on a straight commission basis and inquired into
whether minimum wage laws were being violated. In addition, the salesman asked the
dealership to provide information on the dealer costs of the vehicles that he sold,
contending that he was being cheated on his commissions.
During a meeting in the owner’s office, the salesman was admonished for “asking too
many questions” and “talking a lot of negative stuff” that would have a detrimental
impact on the sales force. The salesman simply countered with more questions about
vehicle costs, commissions, and the minimum wage. The owner responded that the
salesman had to follow the company’s policies and procedures, noted that salespeople
normally do not know the dealer’s cost of vehicles, and that he should not be complaining
about pay. He then told the salesman that if he did not trust the company, he shouldn’t
work there.
At that point, the salesman lost his temper and began to berate the owner in a raised
voice, calling him a “fucking crook” and an “asshole.” The salesman also said that the
manager was “stupid,” that “nobody liked him,” and that his employees talked about him
behind his back. During this exchange, the salesman stood up, pushed his chair aside, and
said that if the owner fired him, he would regret it. Calling his bluff, the owner fired the
salesman.
“Reasoned explanation” required. The Ninth Circuit found the NLRB’s original
decision “internally inconsistent” in its treatment of an administrative law judge’s
findings regarding the employee’s outburst. The appeals court directed a rebalancing of
the Atlantic Steel factors on remand, and that the Board should adopt the ALJ’s additional
findings that the employee’s behavior was “belligerent,” “menacing,” and “at least
50
physically aggressive if not menacing,” or reject those additional findings with a
“reasoned explanation.”
Before rebalancing the Atlantic Steel factors, the NLRB first had to determine the nature
of the salesman’s outburst, namely whether it solely involved obscene and denigrating
remarks that constituted insubordination, or whether it also was menacing, physically
aggressive, or belligerent. After reviewing the record, the Board concluded that the
employee did not engage in menacing, physically aggressive, or belligerent conduct.
Nature of outburst. The Board found two critical issues with regard to what happened
during the meeting. First was whether the employee was fired before or after his outburst.
Second were the circumstances and manner of the outburst. The Board accepted the
ALJ’s credibility determinations, in particular, that the outburst occurred before the
employee was fired, that he said the owner “would regret” its decision, and that he rose
from his chair. Still, the question remained whether his conduct was menacing, physically
aggressive, or belligerent — a question to be resolved under an objective standard.
The Board acknowledged that it failed to make an explicit assessment of the credited
evidence under the applicable objective standard in its prior decision. However, applying
the standard here, it concluded that, based on all the evidence, the employee’s conduct
was not menacing, physically aggressive, or belligerent. The employee’s statement that
the owner would regret firing him was not a threat of physical harm, under the
circumstances. There was no credited evidence that the employee had committed any
violent acts or threatened to commit any violent acts while employed by the dealer.
Rather, the employee was threatening legal consequences, and the employer, in fact,
implicitly agreed that such interpretation was reasonable because it stated in its brief
before the Ninth Circuit that the employee’s filing of an unfair labor practice charge
constituted making good on his threat upon his termination.
As for the ALJ’s finding that the employee arose from his chair and pushed it aside, the
Board concluded that this conduct, viewed objectively, was not menacing, physically
aggressive, or belligerent. Since the meeting occurred in a small office, the Board
observed that it would have been difficult for the employee to stand up without pushing
his chair aside. Again, the employee had no history of violent or threatening behavior, the
Board noted. Moreover, there was no evidence that he tried to hit the owner or even made
a fist. Further, the managers present during the meeting admitted that they made no effort
to restrain the employee, and he was not immediately removed from the property after he
was fired. Consequently, the Board rejected the law judge’s conclusion that the employee
was menacing, physically aggressive, or belligerent.
Rebalancing. Next, the NLRB turned to rebalancing the Atlantic Steel factors as directed
by the Ninth Circuit. It concluded that the employee did not lose the protection of the Act
even though the nature of his outburst weighed against protection by virtue of his use of
obscene and personally denigrating language. Here, the employee targeted the owner
personally and used profanity repeatedly. Moreover, there was evidence that the
employer did not tolerate employees cursing at management. Nonetheless, while the
Board agreed with the Ninth Circuit that the nature of the outburst weighed against
51
protection, it concluded that the remaining three Atlantic Steel factors favored the
employee retaining protection.
First, the fact that the outburst occurred in a closed-door meeting in a manager’s office
weighed heavily in favor of protection. An employer’s interest in maintaining order and
discipline in his establishment is affected less by a private outburst in a manager’s office
than a similar outburst on the work floor witnessed by other employees. Thus, because
the outburst was not witnessed by other employees, affording protection in this instance
served the NLRA’s goal of protecting Sec. 7 rights without unduly impairing the
employer’s interest in maintaining workplace order and discipline.
Further, finding that the employer provoked the employee’s outburst, the Board also
found that the fourth Atlantic Steel factor weighed heavily in favor of protection. During
the meeting, the owner twice stated that the employee did not need to work for the
dealership if he did not care for its policies. Telling an employee who is engaged in
protected activity that he may quit if he does not like the employer’s policies is an
implied threat of discharge because it suggests protected activity is incompatible with
continued employment. The employer also refused to deal with the substance of the
employee’s complaints about working conditions. Board precedent makes clear that
outbursts are more likely to be protected when the employer expresses hostility to the
employee’s very act of complaining. Thus, the Board concluded that the outburst would
not have occurred but for the employer’s provocation. As a result, the Board found that
the three factors weighing in favor of protection outweigh the one factor weighing against
it.
Dissent. Member Johnson filed a dissent in which he argued that the majority failed to
apply the law of the case set by the Ninth Circuit. Further, he argued that the standard
applied by the majority would permit employees to curse, denigrate, and defy their
managers with impunity during the course of otherwise protected activity, provided that
they do so in front of a relatively small audience. The dissent observed that it is well
established that “although employees are permitted some leeway for impulsive behavior
when engaging in concerted activity, this leeway is balanced against an employer’s right
to maintain order and respect.” According to the dissent, the employer lawfully
discharged the employee for opprobrious conduct that warranted removal of the statutory
protection he otherwise enjoyed.
The case number is: 360 NLRB No. 117.
Attorneys: Alicia Aguirre (The Law Office of Alicia Z. Aguirre) for Plaza Auto Center,
Inc.
NLRB: Removing union’s “Busted” flyers, prohibiting wearing of “Busted” stickers
unlawful interference
By Lisa Milam-Perez, J.D.
A healthcare employer unlawfully removed a flier from a union’s bulletin boards
announcing that the employer had been “Busted” by the NLRB in a prior unfair labor
52
practice proceeding, a three-member NLRB panel held, affirming a law judge’s findings.
The employer also violated the NLRA by directing employees to remove “Busted”
stickers while in patient-care areas and, in two facilities, by banning the wearing of the
stickers outright. Member Miscimarra dissented in part (Healthbridge Management, LLC,
May 22, 2014).
In response to an earlier NLRB complaint against Healthbridge Management, which
operates six health care facilities in Connecticut, the union prepared flyers and stickers
stating that the employer had been “Busted” for violating federal labor law. The “Busted”
flyer was posted on the union’s bulletin board at every facility, and employees at each of
the facilities wore the “Busted” stickers. On the day the flyer was posted, HealthBridge’s
senior vice president of labor relations directed the managers of the respective facilities to
remove the flyers from the bulletin boards, and to instruct employees to remove the
stickers when in patient care areas or while providing patient care. Employees at four of
the six facilities were so informed, but those at the other two were categorically barred
from wearing the stickers anywhere.
Removal from bulletin board. A 2-1 Board majority found the employer violated Sec.
8(a)(1) by removing the “Busted” flyer from union bulletin boards, rejecting the
employer’s contention that it was entitled to do so because the VP of labor relations had
previously ordered the removal of flyers deemed improper without pushback from the
union.
The applicable CBA provides that the employer will furnish, at each facility, a bulletin
board for the union to post “proper” notices. But there was no evidence the employer had
the right under the contract to unilaterally decide which notices were proper, or to remove
notices deemed improper. There was also no evidence that the union knew that the
employer had interpreted the contract’s bulletin board provision in this fashion — or had
acquiesced to it. Nor did the employer establish that it knew of prior directives to remove
union postings, or that any other postings had been removed in the past. In fact, the
record evidence indicated that the VP had urged the managers to act “discreetly” when
removing the fliers, suggesting an effort to conceal the employer’s action.
Prohibition on wearing sticker. The employer also violated Sec. 8(a)(1) by prohibiting
employees from wearing the “Busted” sticker, the Board found. It is well-established that
employees have a protected right to wear union insignia at work in the absence of
“special circumstances,” as in the case of healthcare facilities, where it might prove
disruptive to patient care. In accordance with the standard rule, in nonpatient care areas,
restrictions on wearing insignia are presumptively invalid, and the employer bears the
burden to establish special circumstances justifying its action, the Board explained.
However, restrictions on wearing insignia in immediate patient care areas are
presumptively valid. Nonetheless, the presumption of validity does not apply to a
selective ban on only certain union insignia, according to the majority; in those
circumstances, the employer still bears the burden of showing the prohibition was
“necessary to avoid disruption of health-care operations or disturbance of patients.”
53
Applying this precedent, the Board found the ban on employees wearing the “Busted”
sticker in all areas of the facility (as imposed at two of the employer’s facilities) was
presumptively invalid; so too, held the majority, as to the ban as to immediate patient
care areas only (imposed at the other facilities). Because it was a selective ban on the
“Busted” sticker only, it was not entitled to a presumption of validity.
Presumptively valid? Member Miscimarra disagreed that the employer violated Sec.
8(a)(1) by ordering removal of the “Busted” sticker in immediate patient-care areas at the
four facilities. In his view, the employer did not have to ban all insignia in immediate
patient-care areas for a prohibition on the “Busted” sticker to be presumptively valid. He
noted that, “under the majority’s contrary view in Saint John’s Health Center, a button
rule, to be presumptively valid, must indiscriminately prohibit all unofficial buttons,
including those bearing innocuous messages that promote a “relaxing and helpful
atmosphere.” However, the majority replied, as explained in Saint John’s Health Center,
“although a presumption of validity applies to a healthcare facility’s ban on all
nonofficial insignia in immediate patient care areas, it does not apply to a selective ban
on only certain union insignia.”
“Special circumstances” showing. In both circumstances, then, the question was
whether the employer established “special circumstances” justifying its prohibition on
wearing the “Busted” sticker. An employer must offer more than “generalized
speculation or subjective belief” about the potential disturbance of patients or disruption
of operations in order to establish “special circumstances” sufficient to justify a ban on
union insignia, the Board has consistently held. And the employer failed to do so here,
according to the majority. (Miscimarra disagreed on this point too, reasoning that a
“special circumstances” finding was not necessary as to the prohibition of the “Busted”
sticker in immediate patient-care areas since, he maintained, the ban was presumptively
valid).
Mere conjecture. To support its “special circumstances” argument, the employer offered
the testimony of its VP of labor relations. However, the Board found her decision to ban
the “Busted” sticker was based merely on her “belief and conjecture” that the sticker
would upset the patients; her testimony was not based on any specific experience with a
patient, family member, or employee. Nor did she present any specific evidence of harm
or likelihood of harm to patients from employees wearing the sticker.
The majority rejected Miscimarra’s assertion that the law judge had imposed “an
unreasonably high and unrealistic burden” on the employer to establish special
circumstances. In Sacred Heart Medical Center, Miscimarra wrote, “the Board made
clear that the reasoned judgment of health care professionals concerning potential harm to
patients may be relied upon to impose an insignia ban.” But the majority’s decision
essentially required an employer to show actual harm or a disturbance to patients in order
to meet its burden, he contended. “What we require, consistent with the Board precedent,
is specific evidence, not the general and speculative testimony that the Employer
provided here,” the majority countered.
54
Effect of employer’s communications. In the majority’s view, further undercutting the
VP’s stated concern that patients would be disturbed was the fact that, both before and
after the VP banned the stickers, the employer had itself sent letters to patients and their
families regarding its ongoing labor dispute with the union and, in one letter, specifically
addressed the Board complaint referenced in the “Busted” sticker. According to
Miscimarra, though, the employer’s communications in fact “served to provide
assurances that normal operations and care would remain unaffected by the dispute,
underscoring the employer’s commitment to taking actions necessary to maintain an
atmosphere of care.”
Expert testimony unpersuasive. Healthbridge also offered the testimony of a physician,
an outside expert witness, to show “special circumstances.” However, the expert gave
only speculative testimony about the effect of the sticker on patients, the majority
observed; her opinion was not informed by actual information about or experience with
the facilities, their staff, or their patients. The expert never spoke to any patients, family
members, or caregivers at the facilities. Moreover, in reaching her opinion on the effect
of the “Busted” sticker on patients, the expert failed to consider the impact of the
employer’s own communications with patients and their families about the ongoing labor
dispute.
Miscimarra argued that the law judge improperly rejected this “uncontroverted expert
testimony” as to the likely impact of the “Busted” stickers in patient-care areas because
the expert opinion had not been informed by speaking to any patients, family members or
caregivers. Under this “circular” standard, he noted, an objectionable button would first
have to be permitted (and presumably evoke a distressed response from patients and their
families) before it can be prohibited.
Post-hoc rationalization. Miscimarra also was troubled that the outside expert’s
testimony had been discounted because Healthbridge had not consulted her until after
making the decision to ban the “Busted” sticker. Under applicable precedent, “a manager
may reasonably rely on her own common sense and experience when determining that
objectionable insignia would cause upset to patients and family members in patient-care
areas,” he argued. “It is relevant and probative when a qualified witness provides expert
testimony stating that the manager’s judgment was reasonable, without regard for
whether the expert was consulted at the time of the events in question.” Thus, regardless
whether the VP was aware of the expert’s views when she imposed the ban, the expert’s
opinion bolsters the employer’s “special circumstances” showing, he urged.
However, the majority noted, their dissenting colleague cited no precedent which holds
that the testimony of an expert witness, not consulted until the unfair labor practice
hearing, was sufficient to justify an employer’s ban on union insignia. In fact, the Board
has rejected such post-hoc rationalizations for an employer’s actions under similar
circumstances, it said.
The slip opinion is: 360 NLRB No. 118.
Attorneys: George Loveland (Littler Mendelson) for Healthbridge Management, LLC.
55
Mich. Sup. Ct.: NLRA, LMRDA did not bar business agents’ state-law
whistleblower claims against union arising from allegations of criminal misconduct,
but preempted to extent they complained of wages, safety concerns
By Lisa Milam-Perez, J.D.
Union business agents’ state-law whistleblower claims contending they were laid off
indefinitely by the union local after reporting suspected criminal misconduct to the
federal DOL were not preempted by either the NLRA or the LMRDA, a divided
Michigan Supreme Court ruled. However, their allegations of retaliation for reporting
improper wages and an unsafe work environment covered conduct arguably prohibited by
the NLRA, and thus fell exclusively under the purview of the NLRB, the state high court
found. Going forward, plaintiffs may only pursue in state court their WPA claims
alleging retaliation for reporting criminal misconduct such as fraud and embezzlement,
state courts have subject-matter jurisdiction over those claims (Henry v Laborers’ Local
1191 dba Road Construction Laborers of Michigan Local 1191, May 5, 2014, Kelly, M).
Reports of misconduct. Business agents for a laborer’s union local sued the union, along
with its business manager and president, contending they violated the Michigan
Whistleblowers’ Protection Act by laying the agents off “indefinitely” in retaliation for
reporting suspected fraud and embezzlement and other misconduct to the DOL.
According to the agents, the officials had asked several members to repair the façade of a
union building but misrepresented payments for that work as “picket duty.” The agents
also contended that the members weren’t paid union wages for performing the suspicious
repair work and had to do the job without proper safety precautions.
Suspecting an illegal kickback scheme and misappropriation of funds, the agents raised a
stir among the membership, to leaders of the parent union, and to local news outlets.
Then they contacted the DOL with their suspicions, informing the union that they were
intending to do so. The DOL investigated and referred the matter to an assistant U.S.
attorney, who declined to intervene. But the business agents were soon notified that they
were being laid off indefinitely, prompting their whistleblower suit in state court. (Other
business agents who participated in the DOL investigation were essentially terminated as
well; their separate WPA action was consolidated.)
No LMRDA preemption. When individuals have dual status as both employees and
members of a union, the LMRDA only protects them from discipline in their capacity as
union members, not as employees. Thus, a state-law retaliation claim brought by a union
employee as an employee is preempted to the extent that it conflicts with the LMRDA’s
purposes. The statute also preempts state law that would unduly limit union officials’
discretion to select their employees. Thus, when a union employee brings a state-law
retaliation claim in his capacity as an employee, a court must decide whether the claim
conflicts with the LMRDA’s purpose and goal of protecting democratic processes in
union leadership, the state high court explained.
The discretion the LMRDA affords unions to choose their employees is not limitless,
however. The statute does not preempt state wrongful-termination claims where elected
union officials are alleged to have used their discretion as a shield to hide criminal
56
misconduct. And in this case, the business agents’ WPA claims were premised on
reporting the union officials’ alleged criminal misconduct; thus, the claims survived
assertions of LMRDA preemption. Thus, the state court properly exercised jurisdiction
over the agents’ state-law retaliation claims.
NLRA preempted some claims. In their WPA claims, the business agents alleged the
union officials unlawfully retaliated against them for reporting two categories of
suspected wrongdoing: (1) criminal misconduct (fraud, embezzlement and misuse of
funds) and (2) improper working conditions (that workers were paid unfairly and were
not provided with necessary safety precautions). The NLRA preempted claims related to
the latter, the state supreme court held.
When they challenged the improper wages and lack of safety precautions under which the
union members had to work, the business agents “unquestionably acted with the purpose
of furthering group goals,” the high court reasoned. “Their claims of unfair wages and an
unsafe work environment are prototypical issues of dispute under the NLRA.” Thus, their
conduct arguably fell under Sec. 7 of the Act, which protects employees from retaliation
when they seek to improve working conditions through resort to administrative and
judicial forums, among other activities. And neither of the exceptions to NLRA
preemption applied. Because the appeals court had failed to distinguish the WPA claims
involving defendants’ working conditions from the claims regarding criminal
misconduct, its decision was affirmed only in part.
Partial dissent. Justice Zahra dissented in part from the majority’s finding as to NLRA
preemption, concluding that the business agents’ WPA claims regarding accusations of
criminal misconduct were also arguably subject to the NLRA because their reporting of
alleged wrongful conduct was done to assist the union by revealing that its assets might
be subject to depletion through fraud, embezzlement, and misuse of funds. The NLRA
prohibits union officials, in their capacity as employers, from discharging employees
simply for reporting suspicions of illegal activity that threatened to harm the union.
According to the dissent, the business agents’ state-law WPA claims represented “a
classic example of unacceptable NLRA circumvention through artful pleading.”
The case numbers are: 145631 and 145632.
Attorneys: Christopher P. Legghio (Legghio & Israel) for Laborers' Local 1191 dba Road
Construction Laborers of Michigan Local 1191. Joel B. Sklar (Law Offices of Joel B.
Sklar) for Anthony Henry.
N.Y. Sup. Ct.: Safety concerns of school district outweighed teachers’ protected
picketing; disciplinary fines affirmed
By Ronald Miller, J.D.
Although picketing by teachers outside of a middle school was a form of protected
speech and addressed a matter of public concern, a divided New York Court of Appeals
(the state’s high court) concluded that a school district’s safety concerns outweighed the
teachers’ interest in protected speech. As a result, the high court reversed an appellate
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court ruling finding that a disciplinary proceeding against the teachers violated their First
Amendment free speech rights. Justice Smith filed a separate concurring opinion, while
Justice Rivera dissented (Santer v Board of Education of East Meadow Union Free
School District, May 6, 2014, Abdus-Salaam, S).
School district teachers were members of a collective bargaining unit. The parties’
collective bargaining agreement expired in September 2004 and, for several years
following its expiration, they were unable to reach agreement on a new contract. To
express their dissatisfaction with the lack of progress, teachers engaged in weekly protest
activities, including picketing. The teachers generally picketed on Monday and Friday
mornings, usually walking along the sidewalk in front of the school carrying union signs
as students were arriving for school. The school is located on a relatively narrow, twoway public street that runs in from of the school’s main entrance.
Picketing activity. The teachers planned for their usual picketing demonstration on the
day in question. Because the weather forecast called for heavy rain that day, they voted to
park their cars along the street and place picket signs in their car windows so parents
would be reminded of the ongoing labor negotiations. The teachers parked their vehicles
in front of the school along both sides of the street, in legal parking spots off of school
property. Parents dropping off their children could not pull their cars alongside the curb
as they regularly did but had to stop in the middle of the street to drop off their children.
This caused traffic congestion in both directions, and children had to cross the street
through the traffic, in the rain, to reach the school.
Following the picketing demonstration, the school district commenced disciplinary
proceedings against the teachers who participated. Specifically, it alleged that the
teachers created a health and safety risk by parking their cars so that students had to be
dropped off in the middle of the street instead of at curbside. Although the arbitrators
acknowledged that the demonstration was conducted on public property while the
teachers were off-duty, and that their cars were legally parked, they concluded that the
teachers intended to (and did) disrupt the student drop-off. After hearings, the teachers
were found guilty of misconduct and fined.
Protected speech. The teachers commenced a separate action to vacate the arbitration
awards, arguing that the disciplinary proceedings and fines violated their First
Amendment free speech rights. A trial court denied their petitions, but an appellate court
reversed the arbitration awards, concluding, first, that the teachers’ speech addressed a
matter of public concern and, second, that the district failed to meet its burden of
demonstrating that the teachers’ exercise of their free speech rights “so threatened the
school’s effective operation as to justify the imposition of discipline.”
On appeal to the New York Court of Appeals, the school district argued that, as a
threshold matter, the demonstration did not qualify as a form of “speech” entitled to First
Amendment protection. However, the high court noted that it is established that, as a
general matter, “peaceful picketing” is an “expressive activity involving speech protected
by the First Amendment.” The arbitrators had concluded that the teachers engaged in
picketing from their cars, and the evidence at the hearings provided a rational basis for
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this finding of fact. Moreover, although the arbitrators determined that the teachers
intended to create a disruption by parking in the student drop-off area, that finding did
not, under these circumstances, deprive their picketing activity of its status as “speech.”
Accordingly, the state high court agreed that the demonstration constituted “speech”
protected by the First Amendment.
Balancing of interests. However, that did not end the inquiry. The high court observed
that under Pickering, whether a public employee is properly disciplined for engaging in
speech required a balancing between the employee’s interest as a citizen in commenting
on a matter of public concern and the public employer’s interest in promoting efficiency
of public services. This balancing test recognizes that the public employer must be
permitted a level of control over its employees so that it may fulfill essential services,
such as public safety and education, efficiently and effectively.
In this instance, the state high court agreed with the appellate court that the teachers’
speech related to a matter of public concern — an ongoing labor dispute. Moreover, the
picketing was conducted outside the workplace on a public street and was addressed to a
public audience. Thus, the record as a whole indicated that the teachers’ speech was
entitled to First Amendment protection. Next, the high court moved to the Pickering
balancing test, weighing the employee’s First Amendment rights against the school
district’s interest “in promoting the efficiency of the public services it performs through
its employees.”
First, the high court noted that the interests the school district asserted in this case were
legitimate — ensuring the safety of its students and maintaining orderly operations at the
school. The school district argued that the evidence showed that the parking
demonstration created dangerous traffic conditions that could have injured a student and
that it caused actual disruption to the school’s operations. Thus, it maintained that the
evidence was sufficient to justify discipline of the teachers, and that it was not required to
prove that a student was actually injured to tip the balance in its favor.
The court agreed, concluding that the teachers’ interests in engaging in constitutionally
protected speech in the particular manner employed in this case were outweighed by the
school district’s interests in maintaining effective operations at the school. The court also
determined that the school district satisfied its burden of proving that the discipline
imposed was justified because the teachers created a substantial risk to student safety and
an actual disruption of school operations. As a consequence, the appellate court decision
was reversed.
Dissent. Concluding that there was no legal or factual error in the appellate court’s
application of the Pickering balancing test, Justice Rivera dissented from the majority’s
decision. The dissent argued that the majority ignored the appellate court’s conclusions
and made its own findings that the evidence demonstrated a potential risk to student
safety that outweighed the teachers’ speech about collective bargaining. According to
Rivera, the majority’s factual findings failed to address the constitutional question —
whether the speech so affected the school as to disrupt its “effective and efficient
fulfillment of its responsibilities to the public.” However, considering the school district’s
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lack of an urgent response to the situation, the dissent would not tip the balance in its
favor.
The case numbers are: 51 and 52.
Attorneys: George B. Pauta (Littler Mendelson) for Board of Educ. of E. Meadow Union
Free Sch. Dist. Sherry B. Bokser (New York State United Teachers) for Richard Santer.
Hot Topics in WAGES HOURS & FMLA:
Agency seeks $2M in back wages, penalties, and debarment of California
strawberry grower over wage-hour and H-2A violations
The DOL has taken action to obtain a judgment for almost $2 million in back wages and
penalties, as well and a three-year debarment against Watsonville, California-based
strawberry grower Fernandez Farms Inc. and its president, according to an April 30 press
release.
The federal agency has filed a lawsuit seeking nearly $1 million in back wages that
would go to about 400 farm workers as a result of minimum wage and overtime
violations. Another $1 million is sought in penalties for those wage violations as well as
for “egregious violations” of the H-2A temporary non-immigrant worker program,
including failure to hire qualified U.S. workers and allegedly requiring workers to pay a
substantial amount of their earnings to cover costs of the program.
Investigators from the DOL’s Wage and Hour Division (WHD) found that from May
2010 to December 2011, Fernandez Farms failed to pay workers the proper hourly wage
and keep complete and accurate personnel and payroll records. In addition, the employer
purportedly required each temporary worker to kickback more than $1,600 from their
earnings per season to cover administrative costs of the program — a direct violation of
H-2A program rules. Investigators also determined that the grower violated federal
housing, safety, and health requirements under the H-2A program. According to the
DOL, the employer impeded the department’s investigation by intimidating workers and
coercing them to hide from or lie to investigators, resulting in an extended investigation.
“This employer blatantly disregarded the law — underpaying low-wage workers,
demanding kickbacks and circumventing rules on proper hiring,” said Laura Fortman,
deputy administrator of the WHD. “Because of the nature of these violations, the
department has no choice but to seek a debarment order that prohibits Fernandez Farms
Inc. and its president, Gonzalo Fernandez, from applying to the H2-A program for three
years, the maximum allowed.”
Securitas to pay $1.275 million to settle FLSA and Illinois wage claims for training
and orientation off-the-clock work
By Pamela Wolf, J.D.
On Wednesday, May 7, a federal judge in Chicago gave final approval to a $1.275
million settlement resolving the class claims of security guards in Illinois that they were
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forced to work off the clock during their training and orientation for employment with
Securitas Security Services USA, Inc. The settlement resolves the claims raised in two
lawsuits; one brought under the FLSA, and another filed under the Illinois Minimum
Wage Act.
Although Securitas admits no wrongdoing or liability, and challenged whether the action
can be settled on a class-wide basis, it has agreed to pay $1.275 million to put the
litigation to an end. The class includes more than 9,860 individuals, 90 of whom have
opted out. For purposes of settlement only, Securitas stipulated to a settlement class of all
those who attended new hire orientation in Illinois from May 29, 2006 to June 30, 2011.
None of the class members raised objections to the proposed settlement.
From the settlement fund, 703 participating FLSA class members will receive gross
amounts of $57.20 each, computed as four hours at $7.15, the average minimum wage in
effect, and multiplied by two for liquidated damages. Another potentially 9,190 Illinois
Minimum Wage Act class members will receive a gross amount of $32.60 each,
computed as four hours at the average minimum wage of $8.15 for class members who
attended introductory training and orientation before December 31, 2009; those who
attended introductory training and orientation between December 31, 2009 and June 30,
2011 will receive $24.45 gross, computed as three hours at the minimum wage of $8.15.
These amounts are subject to taxes and deductions.
From the $1.275 million settlement fund, the seven representative plaintiffs will each be
given $5,000, and $929,844 in attorneys’ fees and costs will go to class counsel.
New Jersey ship repair contractors pay $720,000 in unpaid wages, liquidated
damages
Bayonne Dry Dock and Repair Corp. and Coastwide Material Supply Corp., based in
Bayonne, New Jersey, has paid $720,000 in unpaid wages and liquidated damages that
will be distributed to 224 individuals who worked for the firms at the Military Ocean
Terminal in Bayonne, according to the DOL. A DOL Wage and Hour Division
investigation found the companies violated overtime provisions of the Walsh-Healey
Public Contracts Act, which establishes minimum wage, maximum hours, and safety and
health standards for work on contracts in excess of $10,000 for the manufacturing or
furnishing of materials, supplies, articles or equipment to the U.S. government or
Washington, D.C.
Bayonne Dry Dock and Repair had a federal contract to repair and rehabilitate U.S. Navy
and Coast Guard vessels. The company later engaged Coastwide Material Supply as a
subcontractor on the contract. These firms share common ownership, the DOL said.
Specifically, WHD investigators found the companies had full-time crew leaders who
brought in temporary workers on an as-needed basis. However, the companies failed to
consider the temporary workers as employees, failed to keep accurate and complete
records, and did not pay overtime, as required by law.
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After the companies were told of the violations, they agreed to pay the back wages and
damages and to comply with all applicable provisions of the act on all work performed as
part of any contract covered by the act, whether as a prime or subcontractor. The WHD is
now dispersing back wages.
“The payment of back wages, damages, and the potential for debarment reinforce the
responsibility of government contractors to pay the proper wages to employees who work
on public projects,” said WHD District Director John Warner. “These back wages will go
far to help these workers, many of whom were displaced from jobs after Hurricane
Sandy. The workers did what was expected of them and sought employment to provide
for themselves and their families. They deserve proper payment for hard work.”
New York-based supermarket chain to pay back wages, liquidated damages to
baggers, many of whom worked for tips only
The DOL has obtained a consent judgment against a Glendale, New York–based chain of
17 neighborhood supermarkets and its owner. The firm, dba NSA Supermarket, NSA
Golden Mango, and Met Food in the New York City area, has agreed to pay $372,172 in
back wages and liquidated damages to 18 workers whom the Wage and Hour Division
(WHD) found had worked for less than the minimum wage at stores in Brooklyn and
Queens, according to a DOL announcement.
Investigators found that the defendants violated the FLSA’s minimum wage and
recordkeeping provisions. Many of the firm’s grocery baggers, who assisted cashiers,
were found to have worked for tips only. Two baggers were paid a minimal weekly
salary, according to the WHD. The defendants also did not make and keep adequate and
accurate records of the hours worked by and wages paid to the employees, many of
whom are Spanish-speaking, the WHD found.
Under a consent judgment resolving the case, the owner and the corporations that own
the stores will pay the $248,115 in back wages and $124,057 in liquidated damages. They
will also post FLSA posters informing workers of their rights in English and Spanish at
conspicuous locations in all stores and comply with the minimum wage, overtime,
recordkeeping and anti-retaliation provisions of the FLSA. In addition, the defendants
will pay $7,480 in civil money penalties. The consent decree applies to all 17 store
locations.
The DOL brought its lawsuit in the Eastern District of New York; the case number is CV
13-cv-06175.
Minneapolis restaurant owes more than $117,000 in unpaid wages to 18 workers
Workers at the Hibachi Buffet Inc. in Minneapolis will be paid $117,152 in back wages
after an investigation by the DOL’s Wage and Hour Division revealed violations by the
employer of the FLSA’s minimum wage, overtime and recordkeeping provisions, the
agency recently announced. Kitchen workers typically worked 60 hours per week for a
fixed monthly salary, often earning far less than the legally required minimum wage of
$7.25 per hour.
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Investigators from the division’s Minneapolis district office determined that the company
paid kitchen workers a fixed salary that did not cover minimum wage for all hours
worked. The company also failed to ensure that wait staff earned minimum wage, failed
to pay workers at one and one-half times their hourly rate for hours worked beyond 40 in
a workweek, and did not maintain accurate and complete records of hours worked by
kitchen employees.
“Those who work in the restaurant industry do so for relatively low wages, making the
violations uncovered here all the more egregious when considering that those who work
hard and play by the rules are not paid the wages they’ve earned,” said Theresa Walls,
district director for the Wage and Hour Division in Minneapolis. “The Wage and Hour
Division is committed to reaching workers and improving compliance in this industry.”
Investigators conducted interviews in several languages to obtain accurate information
about hours worked and wages paid. Wage and Hour Division has staff fluent in nearly
50 languages, and also has a language interpretive service that can assist with translating
more than 170 languages.
Hibachi Buffet signed a settlement agreement with the DOL in which it agreed to install
and use a digital time clock and contract with a public accounting firm to perform
biannual audits of the company’s employment and pay practices.
Drywall company pays $600,000 in back wages, liquidated damages, civil penalties
resulting from worker misclassification
The DOL’s Wage and Hour Division has entered into a consent judgment with Paul
Johnson Drywall, Inc., under which the Prescott, Arizona-based company will take
concrete steps to ensure that misclassification of its workforce does not occur again and
pay $556,000 in overtime back wages and liquidated damages to at least 445 current and
former employees, the DOL announced on May 19. The employer also agreed to pay
$44,000 in civil monetary penalties.
As a result of a WHD investigation, Paul Johnson Drywall has also severed it relationship
with Arizona Tract LLC, a construction labor contractor. Beginning in April 2013,
according to the WHD, Paul Johnson Drywall entered into a contract with Arizona Tract
for provision of drywall labor. Arizona Tract purportedly classified former Paul Johnson
Drywall workers as “member/owners” instead of employees, which stripped them of
basic worker protections afforded to employees. The consent judgment resolves the
WHD investigation that began to look into construction contractors that Arizona Tract
had solicited.
The WHD investigation also had found that prior to being solicited by Arizona Tract,
Paul Johnson Drywall had failed to pay employees paid on a piece-rate basis the proper
overtime at time and one-half their regular rates of pay for all hours worked beyond 40 in
a single workweek and also neglected to keep complete and accurate records as required
under the FLSA.
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In addition to the payment of $600,000 in back wages, damages, and penalties, Paul
Johnson Drywall has agreed to take proactive steps to ensure that its workers are properly
classified and paid as employees, and to improve compliance in the construction industry.
The company will hire a third-party monitor to ensure compliance and will require any
drywall subcontractors to conduct regular training of supervisors and employees
regarding FLSA requirements. If Johnson Drywall hires a subcontractor, the consent
judgment requires the company to ensure that the subcontractor is properly licensed and
insured, and that the subcontractor complies with the FLSA.
Paul Johnson Drywall also agreed to implement an educational campaign to promote
awareness of the importance of FLSA compliance in the Arizona residential construction
industry. In the months ahead, Paul Johnson Drywall will make presentations to local
home builder associations addressing the importance of properly classifying and paying
workers in the drywall industry as employees, and identify the costs workers, taxpayers,
and law-abiding employers, due to the resulting unfair competition, endure from the
unlawful misclassification of employees as independent contractors.
“With increasing frequency, we are entering into agreements, like this one, with
employers found in violation,” said WHD Regional Administrator Ruben Rosalez. “In
addition to paying back wages, damages, and penalties, ongoing efforts like those called
for with Paul Johnson Drywall keep compliance prominently on the employer’s
radar. These agreements greatly enhance our efforts to maintain compliance and to
protect workers’ wages long after an investigation.”
Restaurant will pay back wages for FLSA pay violations for tipped employees,
managers paid from tip pool
Black Bear Burritos LLC has agreed to pay a total of $232,295 in back wages to 105
workers employed at two restaurants located in Morgantown, West Virginia, following a
DOL Wage and Hour Division (WHD) investigation that found FLSA minimum wage
and overtime violations, according to an agency announcement on May 14. The
purported violations included requiring servers to participate in an illegal tip pool or tipsharing arrangement. Once aware of the violations, the company agreed to pay all back
wages and to ensure future compliance.
WHD investigators found minimum wage violations stemming from the employer’s
practice of requiring servers to participate in an illegal tip-sharing arrangement. Under
the FLSA, tips are the property of the employees who receive them — restaurant owners
can benefit, however, by claiming a credit, based on the tips, toward their obligation to
pay those employees the full minimum wage. Employers are not permitted to take the
employee’s tips for an invalid tip pool, though, such as one that includes employees who
do not customarily receive tips.
Where an employee’s tips combined with the employer’s direct wages do not equal the
minimum wage, employers are required under the FLSA to make up the difference during
the pay period. An employer that claims a tip credit is required to pay a tipped employee
only $2.13 an hour in direct wages, provided that amount plus the tips received equals at
least the federal minimum wage of $7.25 an hour.
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The investigation also revealed minimum wage and overtime violations for salaried
managers whose salaries were unlawfully paid, in part, by using money from the tip pool.
Additional overtime violations purportedly occurred because the employer based
overtime premium pay on employees’ cash wages instead of the regular rate, which was
the federal minimum wage of $7.25 an hour — the tip credit plus the cash wage.
Universal Alloy Corp. would pay $4.75M to settle wage and hour claims under
proposed deal
By Pamela Wolf, J.D.
Under a proposed deal, Universal Alloy Corporation would pay $4.75 million to put an
end to class litigation over purported wage hour violations affecting more than 700
current and former employees. The plaintiffs filed a motion for preliminary approval of
the deal with the court on Friday, May 16.
In a suit filed in the Central District of California, three named plaintiffs sought, for
themselves and others similarly situated, unpaid minimum and overtime wages and
premium wages for meal and rest period violations, as well as derivative statutory and
civil penalties. The claims arise from the company’s purported unlawful time-shaving
and rounding practices, miscalculation of the regular rate of pay for overtime purposes,
and unlawful meal and rest period policies.
Challenged practices. The plaintiffs challenged several of Universal Alloy’s wage-hour
practices. At its California facility, the company allegedly utilized a time-shaving
mechanism under which hourly employees are paid only for their scheduled shift times,
regardless of whether they actually worked additional hours. The company is claimed to
have used a similar mechanism at facilities outside California that likewise deprived
hourly employees of overtime compensation for all hours they actually worked.
According to the plaintiffs, the company also provided various forms of bonuses,
incentive pay, and fringe benefits to hourly nonexempt employees, but failed to include
the value of these forms of compensation in nonexempt employees’ regular rates of pay,
contrary to wage and hour laws. These payroll practices resulted in “a company-wide
miscalculation of non-exempt employees’ overtime rates and a systematic underpayment
of overtime wages under California and Federal law,” the plaintiffs contend.
In addition, Universal Alloy maintained “facially unlawful meal and rest period policies”
that were silent as to the timing and duration of meal and rest periods and thus did not
provide the plaintiffs and other hourly nonexempt employees with all the meal and rest
periods to which they were entitled. The company also failed to pay required premium
pay under California Labor Code Sec. 226.7 in lieu of providing all required meal and
rest periods.
The plaintiffs also asserted that the company forced nonexempt employees to sign onduty meal period agreements, even though the nature of the work they performed did not
justify the use of on-duty meal periods. When meal periods were provided, they were
allegedly only 20 minutes long. The plaintiffs asserted wage statement claims as well.
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Settlement proposal. The proposed settlement of the class litigation came after nearly a
year of research, informal discovery, and negotiations, including two mediation sessions,
the most recent of which resulted in a proposed settlement on February 18, 2014.
The settlement proceeds would be distributed among two classes: The “California Class”
would include about 390 current and former hourly nonexempt employees, while the
“FLSA Settlement Class” would encompass an additional 380 current and former hourly
nonexempt employees. The combined class size is estimated at 770 members.
The maximum settlement amount of $4,750,000 would provide an average payment of
$7,476 to members of the California Class and $840 to members of the FLSA Settlement
Class. Class counsel would receive $1.425 million in attorneys’ fees and $45,000 would
be allocated to costs. Another $17,500 would be allocated as incentive payments to the
three representative plaintiffs, $7,500 is earmarked as PAGA penalties, and $20,000 is
reserved for administration costs. Thus, after all other costs, $3.235 million would be left
for distribution to class members.
Universal Alloy has “strenuously” denied the allegations and admits no liability.
Management attorney offers guidance on “tough FMLA situations”
By Lisa Milam-Perez, J.D.
The FMLA is a “confounding statute,” said Penelope J. Phillips, a partner at Minneapolis
management-side firm Felhaber Larson. Phillips presented a session on “7 Tough FMLA
Situations — And How Best to Handle Them” on Monday, May 19 at the Minnesota
CLE’s Upper Midwest Employment Law Institute in St. Paul, Minnesota. “Note that the
title says `situations,’ not `answers,’” she pointed out, only half in jest, “because with the
FMLA there aren’t really `answers.’” Nonetheless, she offered practical steps on
navigating a number of common, and particularly thorny, FMLA problems.
Missed deadlines, breached call-in procedures. How can employers respond when an
employee fails to adhere to FMLA deadlines and the organization’s established notice
and call-in procedures? The FMLA regulations distinguish between foreseeable and
unforeseeable leave, and there are necessarily different notice standards for each. “My
experience is most people don’t take planned leave,” Phillips said. “It’s usually
unforeseeable leave — and I use that word loosely.” But in either case, she reminded
attendees, “you can require your employees to follow your established call-in
procedures.”
Under the statute, employers can require employees to comply with the “usual and
customary notice and procedural requirements for requesting leave,” absent extenuating
circumstances. That may mean a written notice setting forth the reasons for the leave,
expected duration, and anticipated start of the leave period. Even where leave is
unforeseeable, an employer can mandate that employees call a designated number or
specific individual to request leave (where practicable). And if the employee fails to
follow established procedures — for example, calling in at least one hour before the start
of one’s shift — then the employer may delay or deny leave, and refuse to count the
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employee’s absences as FMLA-qualifying. Phillips advised employers to ensure their
front-line supervisors are sufficiently trained so that they don’t inadvertently waive the
notice requirement or give “mixed signals” as to whether adherence to the notice policy
will be expected. Call-in policies “should be enforced and applied consistently for all
forms of absences,” she urged.
Phillips also recommended that employers prepare a routine list of probative questions
that employees are to be asked when they call in to report an absence in order to clearly
discern whether the absence is FMLA-covered. The standard inquiry should include the
specific reason for the absence; what job duties the employee cannot perform; whether
the employee will be seeing a doctor for the injury or illness; whether the employee
previously suffered from the condition, had previously taken leave for it, and when; when
the employee first learned he or she would need to be absent; and the expected return date
or time.
Infinite “intermittent” leave. How can an employer address intermittent leave that
never ends? It’s a very common problem, Phillips notes; once an employee uses up the
eligible 480 hours in a year, he or she gets a fresh leave entitlement as a new FMLA year
commences. However, if an employer has reason to doubt the validity of the initial
certification, it can ask for a second opinion (at the employer’s expense), and can seek a
(binding) third opinion if the first two are at odds.
Failing that, the employee who takes intermittent leave of indefinite duration may well be
deemed unqualified at a certain point. “The Eighth Circuit says if you are perpetually
gone from work such that you’re turning a full-time job into a perpetually part-time job,
you are not complying with the spirit of the statute,” Phillips said. She noted at least one
employer that has taken the stance that “if you need intermittent leave, and there is no
end date, you are no longer eligible for FMLA leave. At that point it’s an ADA issue, and
we don’t know whether we can accommodate you.”
“It’s a very aggressive position,” she acknowledged. “But they’re so frustrated with the
situation that they run the risk of creating a retaliation claim. At some point you have to
say enough is enough. You don’t want to be unsympathetic to people with chronic health
conditions, but the FMLA wasn’t intended to require the creation of a permanent parttime job. “
Phillips recommended that employers obtain a new FMLA medical certification at the
beginning of each FMLA year. Not a recertification, she stressed — a new certification.
“That means you can get a second medical opinion, which you can’t do with
recertification.” She also advised employers to “follow up on changed or suspicious
circumstances.” Employers can seek recertification more frequently than 30 days if
circumstances have changed significantly (such as the duration or frequency of the
employee’s absences, the nature or severity of the illness, or complications from the
illness). More frequent recertification can also be requested if the employee requests an
extension of FMLA leave or if the employer has received information that casts doubt
upon the employee’s stated reason for the absence or the continuing validity of the
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FMLA certification (when, for example, the employee on leave for knee surgery plays in
the company softball game).
What of the employee who seems to need intermittent leave only on Mondays and
Fridays, and only during the summer months? “Send a letter to the healthcare provider
and ask whether the employee’s condition is consistent with his or her pattern of
attendance,” Phillips advised. An employer also has some control over when an employee
schedules a planned treatment. “You can ask your employee to schedule physical therapy,
for example, at a time that is least disruptive to the company,” she noted. Finally, an
employer might consider the temporary transfer of an employee to a post that can be
more readily accommodated during the period of recurring intermittent leave.
Designating, calculating leave usage. Calculating FMLA-qualifying leave, particularly
intermittent leave, can be cumbersome. “You’re always going to get the person who’s
going to screw it up,” Phillips observed. “It’s so important to allocate leave properly and
also to make sure the employee understands what she has to do.”
Employers must allow FMLA leave to be taken in the smallest increment of time allowed
for any other type of leave (as long as the smallest increment is no more than one hour)
and also must allow leave increments to be taken during the same time of day allowed for
other kinds of leave (such as the beginning of shift, for example). Only the amount of
leave actually taken may be counted against FMLA leave entitlement; also, the time an
employee is not regularly scheduled to work may not count as FMLA leave. Required
overtime not worked due to an FMLA-qualifying reason may be counted as FMLA leave,
but voluntary overtime may not be counted.
An employer may retroactively designate an employee’s time off as FMLA leave,
provided that appropriate notice is given, and only if the failure to timely designate leave
did not harm the employee. (To state an actionable FMLA claim, an employee would
have to show he was somehow prejudiced by the employer’s lack of notice.) “I tend to
take an aggressive approach and retroactively designate,” Phillips explained. How far
back can an employer go? Phillips suggested 90 days as the outer limit in retroactively
designating leave.
Family care leave. Leave to care for a family member raises its own set of challenges.
She reminded employers that FMLA leave includes providing psychological comfort to a
family member with a serious health condition, in addition to caring for the individual’s
medical or hygienic needs. It also includes situations where an employee needs to fill in
for others who are providing care to the family member, or to arrange for such care (for
example, when transferring a family member to a nursing home). On the other hand, the
employer should ensure that the requested leave is actually covered under the Act. “If an
employee is taking leave to care for his kids because his wife, their usual caretaker, has a
serious health condition, that’s not covered FMLA leave,” Phillips said.
Restricted return to work. An employee who returns from FMLA leave with
restrictions may also be a qualified individual with a disability under the ADA,
presenting another layer of complexity. The FMLA and ADA can overlap when an
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employee seeks additional leave in excess of the 12-week FMLA entitlement; returns to a
part-time schedule or a light-duty position; or when an employer requests a fitness-forduty certification. The overlap requires employers to grapple with questions such as
which physician (employee’s or employer’s) must administer a fitness-for-duty exam;
whether reinstatement to the exact same job is required or whether an equivalent position
would suffice; or whether group health plan coverage must be maintained during an
extended leave.
When presented with an FMLA/ADA overlap issue, Phillips advises employers to
perform the FMLA analysis first. “The FMLA is a much stricter law; there are so many
more restrictions on what an employer can and cannot do. And then start thinking about
the ADA, and whether the work restriction is a reasonable accommodation. I always take
the position that you assume a disability without conceding it — and without saying
that’s what you’re doing”
Keeping the job open. Can you fire an employee who is unable to return to work after
exhausting FMLA leave? An employer typically is not required to hold a position open in
such cases. However, “additional leave is a reasonable accommodation under the ADA,”
Phillips reminded, so an employer must consider whether the employee is a qualified
individual with a disability and therefore statutorily entitled to further leave, or to
reassignment to a vacant post (provided such accommodations would not present an
undue hardship to the employer).
Certification rights and responsibilities. “Understand what you have the right to do,”
Phillips told employers. “If you have a vague, insufficient or incomplete certification,
you have the right to request a more definite statement. If you don’t believe the
certification was filled out by the medical provider — if the form looks like it was
completed in your employee’s handwriting, for example — you can authenticate. You
can seek second or third opinions. Use them.” And if the resubmitted certification does
not correct the deficiencies, an employer may deny FMLA leave.
On the other hand, she noted, employers must be careful to ensure that a request for
further information on the medical certification is not construed as interference with an
employee’s FMLA rights.
More tough situations. Further reflecting the “confounding” nature of the FMLA and
the complexities of administering the statute, Phillips was inundated with questions —
some broadly framed (“Can you force employees to take full-time FMLA leave?” No, an
employee need only take the leave actually required. “What about employees getting
emails and work-related calls while out on leave?” Not good, she cautioned.) Other
queries were based on particular and in some cases intricate scenarios.
“Ninety-nine percent of employees who take leave are using it properly,” Phillips
contended. “But no one ever calls their lawyer about employees who are using it
properly.”
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Contractors must pay $650,000-plus for prevailing wage and fringe benefit
violations, debarred for three years
Enviro & Demo Masters Inc. and Gladiators Contracting Corp., along with the
companies’ owner and a foreman, have been ordered to pay a total of $656,646 to 37
workers after failing to pay them the required prevailing wage rates and fringe benefits on
a federally funded construction project in New York City, according a DOL Wage and
Hour Division (WHD) announcement on May 22. The parties have also been debarred
from seeking and obtaining federal contracts for three years due to the extent and willful
nature of the violations.
In a separate proceeding, the owner and foreman were found guilty in federal court in
November 2013 of criminal charges related to the project, including submission of
fraudulent certified payrolls to the New York City Department of Housing Preservation
and Development. They were sentenced to six and four years in prison, respectively, and
are slated to surrender on June 2, 2014, the WHD said.
The two companies were subcontractors performing demolition work on the construction
of affordable housing projects, Hobbs Court and Ciena in East Harlem, that were part of
the Metro North Rehabilitation and Redevelopment Program. The program was funded in
part by the U.S. Department of Housing and Urban Development under the American
Recovery and Reinvestment Act of 2009 through the New York State Division of
Housing and Community Renewal and the New York City Department of Housing
Preservation and Development (NYCDHPD).
A WHD investigation found that Enviro & Demo Masters falsified certified payroll
records by deliberately omitting employees from the payroll and instead listing family
members who performed no work on the project and listing wage rates that were not paid
to workers. The company also failed to pay 37 workers the prevailing wage rates for their
particular job classifications and neglected to pay them one-and-a-half times their basic
hourly rates for all hours worked above 40 in a workweek.
“These employers deliberately and knowingly committed willful and fraudulent
violations of federal government contracts law, and they cheated a largely immigrant
workforce,” remarked WHD District Director Maria Rosado. “These workers were often
required to work for less than one-third of what they should have been paid, creating
undue hardship for them and their families.”
The subcontractors disputed the WHD’s findings and a hearing was held before a Labor
Department administrative law judge (ALJ). On April 23, 2014, the ALJ issued a
decision and order affirming the WHD’s findings and instructing the NYCDHPD, which
had withheld the funds, to release the monies to the WHD for payment to the workers.
The decision and order will become final 40 days after issuance if no appeal is filed.
The ALJ also found the project’s prime contractor, Hobbs Ciena Associates LP and
Hobbs Ciena Housing Development Corp., jointly and severally liable for payment of the
back wages by its subcontractor Enviro & Demo Masters. On a Davis-Bacon Act covered
project, the prime contractor is responsible for the compliance of all subcontractors.
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California restaurants, owner, to pay $344,528 in unpaid wages, liquid damages
Under a judgment obtained by the DOL, China Wok Express in Whittier, California, and
Golden Wok Fried Chicken will pay $172,264 to 11 employees in unpaid minimum wage
and overtime wages due under the FLSA. The two restaurants and their owner are also
required to pay an equal amount in liquidated damages to the workers, bringing the total
monetary relief to $344,528. The Central District of California judge also enjoined and
restrained the owner from withholding all unpaid compensation and from violating the
FLSA in the future.
A DOL Wage and Hour Division (WHD) investigation found that the two restaurants
paid the workers on a salary basis without regard to FLSA minimum wage and overtime
requirements. Several of the affected workers, including cooks and cashiers at both
locations, purportedly worked between 67 to 69 hours a week on average, and often from
about 10 a.m. to 10 p.m., six days a week.
The WHD found additional violations, including failure to maintain accurate and
complete records of hours worked and wages paid to the employees. The employer
provided falsified records in an attempt to hide real hours worked and wages paid,
according to the WHD. Investigators also determined that after the WHD informed the
employer of the violations found, there was a continued disregard the minimum wage,
overtime and record-keeping requirements.
“We have put a stop to this employer’s repeated and willful attempts to cheat workers out
of their hard-earned wages with this successful litigation,” said WHD Regional
Administrator Ruben Rosalez. “The employer’s disregard of the department’s findings in
this case has resulted in a judgment that not only makes vulnerable workers whole, but
sends a clear message to all employers in the restaurant industry.” Rosalez also pointed
out the restaurant industry employs some of our country’s lowest paid workers, who are
vulnerable to exploitation.
Proposed rules on FMLA definition of spouse, minimum wage for new federal
contracts close at hand
By Pamela Wolf, J.D.
The DOL anticipates that it will release a proposed rule modifying the definition of
“spouse” for FMLA purposes by the end of May, according to its Agency Rule List for
Spring 2014. By the end of June, the agency hopes to issue a proposed rule raising the
minimum wage for workers on new federal contracts to $10.10 an hour. The DOL
expects to move on President Obama’s directive to streamline existing overtime
regulations for executive, administrative, and professional employees by the end of
November, and aims to issue a final rule on persuader agreements by the end of the
year.
FLMA definition of “spouse.” In light of the Supreme Court’s June 2013 Windsor
decision, the DOL aims to publish a proposed revision of the definition of “spouse” under
the FMLA by the end of May. Under the FMLA, eligible employees of covered
employers are entitled to take unpaid, job-protected leave for specified family and
71
medical reasons with continuation of group health insurance coverage under the same
terms and conditions as if the employee had not taken leave. Among other reasons, leave
may be taken to care for a spouse with a serious health condition.
Federal contractor minimum wage. By the end of June, the DOL expects to issue a
proposed rule implementing Executive Order 13658, which increases the minimum wage
that must be paid to workers working on certain new federal contracts to $10.10 per hour
and indexes the wage rate to inflation thereafter.
FLSA exemptions. According to the Rule List, the DOL anticipates that it will issue
proposed FLSA regulations in November 2014 that modernize and streamline existing
overtime regulations for executive, administrative, and professional employees. A
memorandum issued by President Obama on March 13 directed the Secretary of Labor to
take this action. These regulations were last updated in 2004.
Persuader agreements. The agency anticipates that it will publish a final rule revising its
interpretation of Sec. 203(c) of the Labor-Management Reporting and Disclosure Act
(LMRDA) in December 2014. Section 203(c) creates an “advice” exemption from
reporting requirements that apply to employers and other persons with regard to
persuading employees about organizing and collective bargaining rights. The revision
would narrow the scope of the advice exemption.
On June 26, 2011, a proposed rule was published in the Federal Register (76 FR 36178).
The comment period ended on August 22, 2011, but was extended September 21, 2011.
The DOL also intends to publish in December 2014 a notice and rulemaking seeking
consideration of the Form LM-21, Receipts and Disbursements Report, which is required
under Sec. 203(b) of LMRDA. The agency will propose mandatory electronic filing for
Form LM-21 filers and will review the layout of Form LM-21 and its instructions,
including the detail required to be reported.
LEADING CASE NEWS:
1st Cir.: Employee failed to show harm from late, inadequate FMLA notices; no
evidence he could return to work before expiration of leave
By Kathleen Kapusta, J.D.
Although a school district’s FMLA eligibility and designation notices to a fourth grade
teacher were inadequate and untimely, he failed to show he suffered any harm from the
lack of notice, the First Circuit ruled in affirming summary judgment for the employer.
The employee, who was terminated when he did not return to work after the expiration of
his leave, did not demonstrate that he could have structured his leave differently if he had
known it would count toward his FMLA entitlement, the appeals court stated. Nor did his
employer’s failure to provide timely notice salvage his reinstatement claim where he
failed to show that he could have returned to work within the FMLA period, even if the
school district had properly notified him of his rights (Bellone v Southwick-Tolland
Regional School District, May 2, 2014, Stahl, N).
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On March 4, 2010, the employee informed his employer that he needed to take a twoweek leave of absence for medical reasons. He provided a notice from his physician
stating that he would be unable to work for those two weeks. At the end of that period, he
provided a second note stating he would be unable to work until mid-April. On March 24,
the school district sent the employee what it later characterized as an FMLA eligibility
notice instructing him to fill out a certification form and return it within 15 days.
Uncertain leave. The employee’s doctor filled out the form, indicating the employee
would be unable to teach for an “uncertain” period of time. For the remainder of the
academic year, the doctor continued to provide correspondence stating that the employee
was unable to work. On July 9, the district sent the employee an FMLA designation
notice, informing him that he had been approved for FMLA leave beginning March 4
through June 4; that he had exhausted his FMLA entitlement; and that his physician was
required to provide a medical opinion regarding his ability to return for the following
school year. On August 30, the district received a letter from a psychologist stating that
he could see no psychological reason the employee could not return to work at the
beginning of the new academic year.
When the employee failed to return, the district placed him on paid administrative leave
and assigned him to a new position. Believing this to be a demotion, the employee failed
to report for work by the stated deadline. He was then terminated. He subsequently sued
alleging that the district interfered with his FMLA rights by failing to provide proper and
timely notices and retaliated against him by requesting a fitness-for-duty certification.
The district court granted summary judgment to the employer.
Harm. On appeal, the school district did not challenge the lower court’s conclusion that
the eligibility and designation notices were both untimely and that the eligibility notice
was also inadequate. Thus, the appeals court accepted those findings. The court pointed
out, however, that late or inadequate notices are not actionable unless they harm the
employee. Although the employee claimed that he could have structured his leave
differently in order to preserve some of his FMLA entitlement if he’d received the proper
notice, the court disagreed.
Here, the court observed that the employee went out on leave on March 4 and from that
point through the end of the academic year, the district received regular communications
from his doctor stating that he was medically unable to work. There was no evidence he
was fit to return until the district received the psychologist’s letter on August 30 stating
that he could see no psychological reasons why the employee could not return. Because
the employee presented no evidence, other than his own unsupported statements, to
contradict his doctor, he failed to establish any fact disputes to justify his opposition to
the summary judgment motion.
Reinstatement. Nor did the employee fare any better on his claim that the district
violated the FMLA's requirement that a covered employee returning from leave be
restored to his previous or equivalent position. Pointing out that it has previously held
that an employee is not entitled to reinstatement under the FLMA if he is unable to return
to work until after the expiration of his leave, the court here found that the undisputed
73
facts demonstrated that the employee went out on leave on March 4 and was medically
unable to return to work before at least the end of the academic year. That was a leave
period of about 15 weeks — more than the 12 weeks guaranteed under the FMLA.
Finding that it did not need to address whether the new position offered to the employee
was equivalent to his old one, the court concluded that he failed to show that he could
have returned to work within the FMLA period even if the school district had properly
notified him of his rights.
Fitness for duty requirement. As to the employee’s claim that the district did not
uniformly apply its fitness-for-duty certification requirement, the court observed that the
district presented an affidavit from the superintendent of school stating that it consistently
required a fitness-for-duty certification for any employee returning to work after a serious
illness. Because the employee did not offer any evidence to refute this assertion, he failed
to demonstrate the existence of a genuine fact issue. Accordingly, the appeals court
affirmed summary judgment in favor of the employer.
The case number is: 13-1341.
Attorneys: Patricia M. Rapinchuk (Robinson Donovan) for Southwick-Tolland Regional
School District. Scott Bellone, pro se.
6th Cir.: Evidence of alleged prior FMLA violations by other decisionmakers more
prejudicial than probative of employee’s claims
By Joy P. Waltemath, J.D.
Finding no error in a district court’s determination that there was no interference with a
discharged employee’s FMLA rights, given that the employee failed to object to the
magistrate’s report and recommendation, the Sixth Circuit upheld summary judgment to
the employer in an unpublished decision. Further, the court agreed that testimony about
of “a litany of alleged violations of federal labor laws” from the senior director of HR at
the time was appropriately excluded from trial due to its limited probative value (Schrack
v R+L Carriers, Inc, May 2, 2014, Bell, R).
A security installation tech began falling asleep on the job; after three instances in just a
few weeks, he was first warned and then terminated. But after his daughter informed the
company he had been hospitalized for narcolepsy and asked that he be reinstated and
given FMLA leave to recover, the company did reinstate him, granting him FMLA leave.
Contemporaneously with his leave, the company began terminating a number of its
employees – a total of 68 through year-end. Meanwhile, when the employee was released
to return to work, the company requested a more detailed release that explicitly stated he
could safely operate a vehicle. The employee’s physician sent a more detailed release that
addressed the company’s concerns; however, the company terminated him the next day.
He sued alleging FMLA interference and retaliation as well as age and disability
discrimination.
The district court tossed his claims for age discrimination and interference with his
FMLA rights, finding that the company had evidence it had conducted a legitimate
74
reduction in force RIF under which the employee was terminated, not because of his age,
and that because he received all leave available under the FMLA, the company could not
have interfered with his FMLA rights. However, both the employee’s claims for FMLA
retaliatory discharge and disability discrimination did go to a jury on whether the alleged
RIF was a pretext for illegal discharge. But the jury said no to both of those claims.
FMLA interference. When the employee appealed two issues from the district court’s
ruling, the Sixth Circuit affirmed. Notably, the Magistrate Judge had issued a Report and
Recommendation concluding that the employee was not denied an FMLA benefit
because he received the full 12 weeks of leave to which he was entitled. The employee
did not object to the R&R, the court pointed out, and while it was true he could not
appeal the entry of partial summary judgment before that judgment became final, he was
obligated to present any objections he had to the R&R – before summary judgment was
entered in the first place. Because he failed to do this, the issue was not properly before
the court, and the employee could not shift the basis of his FMLA interference claim on
appeal by arguing not that he was denied FMLA benefits, but that the company was
required to return him to work.
Other “bad acts” testimony. According to the Sixth Circuit, the employee also argued
the district court erred by refusing his evidence of “a litany of alleged violations of
federal labor laws” based on testimony from the senior director of HR when he was
terminated. The district judge determined that this testimony was not relevant and that its
prejudicial effect outweighed any probative value it might have, but the court allowed the
HR director to testify about his limited knowledge of the employee’s discharge and his
involvement with the RIF. Agreeing that the testimony was more prejudicial than
probative, the court pointed to Supreme Court and its own precedent to determine the
admissibility of “other acts” testimony in employment discrimination cases, which must
be done on a case-by-case basis. Factors include: (1) whether the evidence is logically or
reasonably tied to the decision made with respect to the employee; (2) whether the same
“bad actors” were involved in the “other” conduct and in the challenged conduct; (3)
whether the other acts and the challenged conduct were in close temporal and geographic
proximity; (4) whether decision makers within the organization knew of the decisions of
others; (5) whether the other affected employees and the plaintiff were similarly situated;
and (6) the nature of the employees’ allegations.
Some FMLA-related evidence. Here, the employee argued the excluded testimony was
relevant to his case because it showed a discriminatory environment, which would aid in
proving his claim that the RIF was a pretext for his illegal discharge – either retaliation
for using FMLA leave, or alternatively because he was disabled from narcolepsy.
Clearly, said the court, the HR director’s testimony regarding alleged age and gender
discrimination was irrelevant because it did not relate to the employee’s surviving claims.
But, with respect to the company’s alleged history of FMLA violations, it was a closer
question. There was testimony that the HR director was instructed by his own supervisor
not to report his own health issues because “the owners” did not want sick people on the
payroll, that the supervisor had been instructed by “the owners” to fire anyone who
exhausted his or her FMLA benefits, and that employees routinely complained that his
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supervisor would deny or delay their return to work after being cleared for work after an
FMLA leave of absence.
Evidence too attenuated. However, the court found the proffered testimony too vague to
make any logical connection between the HR director’s allegations and the employee’s
firing. The HR director identified his supervisor and the owner as the “bad actors”;
however, the employee’s own department head and the benefits manager were the
decision-makers involved in the employee’s termination. The employee failed at all to
connect the alleged actions about which the HR director testified to the decisionmakers
who fired him. Overall, said the court, the HR director’s allegations were too vague and
conclusory to determine if the nature of the claims actually was similar. The only factor
favoring admitting the testimony was that the alleged bad acts occurred at the same time
and place as the employee’s discharge. That was not enough, said the Sixth Circuit, to
reverse the district court.
The case number is: 13-3261.
Attorneys: Randolph H. Freking (Freking and Betz) for Larry Schrack. Anthony C. White
(Thompson Hine) for R+L Carriers, Inc.
6th Cir.: Shift supervisors’ overtime claims revived, fact dispute remains over
whether they had sufficient influence over personnel decisions to be exempt
executives
By Lisa Milam-Perez, J.D.
A reasonable jury could find that front-line production and logistics supervisors at a
manufacturing plant did not have sufficient influence over personnel decisions to be
classified as bona fide executive employees, the Sixth Circuit held in an unpublished
opinion. The appeals court therefore revived the supervisors’ FLSA overtime claims,
reversing the district court’s grant of summary judgment in the employer’s favor and
remanding for trial (Bacon v Eaton Aeroquip LLC, May 1, 2014, Keith, D).
Supervisory duties. According to the facts laid out in detail by the district court below,
the supervisors managed functional departments of 20-30 workers. Under the terms of the
collective bargaining agreement in effect at the plant, they were prohibited from
performing regular work; they spent 100 percent of their time supervising nonexempt
employees — ensuring their compliance with policies and procedures, tracking and
reporting performance and productivity, assessing training needs and conducting training.
The supervisors also made manpower assignments, assessing staffing needs and
deploying existing employees to meet production demands or transferring them in or out
of departments or jobs to accommodate work needs. (Such transfers had the potential to
affect a worker’s pay under the contract.) The supervisors also conducted one-on-one
disciplinary sessions with employees, wrote them up as needed, and had discretionary
authority to determine whether formal discipline should be initiated. However, they
played no role in hiring, never completed the requisite training for conducting interviews,
and did not participate in the interviewing process.
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Contending that they had no authority to hire, discipline, or fire employees or otherwise
influence personnel decisions, the supervisors alleged that they were improperly
classified as exempt and improperly denied overtime. They conceded that they satisfied
the first three prongs of the DOL’s executive exemption test; the only issue before the
Sixth Circuit, then, was whether they had “the authority to hire or fire other employees or
whose suggestions and recommendations as to the hiring, firing, advancement, promotion
or any other change of status of other employees are given particular weight.”
Change of status. Whether the supervisors had significant influence over employees’
changes of status was of particular importance here, the appeals court noted, because
even if the employer was unable to show that the supervisors played a role in hiring,
firing, or promotion, the exemption test’s fourth prong can be met by demonstrating that
the supervisors were instrumental in other employment status changes, such as
reassignments or changes in benefits or pay. The appeals court applied 29 C.F.R.
541.105, the DOL’s three-part test of whether an employee has significant influence over
other employees’ “changes of status,” and found the supervisors submitted substantial
evidence that they did not have significant influence over other employees’ changes of
status.
Recommendations as to personnel decisions. According to the supervisors, their
personnel recommendations were disregarded and rejected, they were not trained to
participate in recruitment and intake, and decision-making as to personnel issues was not
included in their job descriptions. And they submitted evidence that the employer neither
relied upon, nor necessarily welcomed, their recommendations as to personnel decisions.
Disciplinary and personnel actions that the supervisors effectuated were largely based on
direct orders from their own superiors and were not independent actions taken by the
supervisors themselves, they claimed.
Probationary evaluations. While the supervisors completed probationary evaluations
for employees under their supervision, they contended that the employer hired
probationary employees as a matter of course and that it placed little weight upon the
probationary evaluations that they completed. In fact, the supervisors only submitted their
probationary evaluations after the employee’s probation had ended; thus, their
evaluations had no influence upon whether the probationary employee ultimately was
hired. One supervisor, for example, alleged that HR explicitly informed him that his
hiring recommendation was not needed and that, in fact, his recommendation could be
improperly construed as evidence of favoritism.
Progressive discipline. The employer contended the supervisors had indirect but
nevertheless significant influence over employees’ status changes by making
recommendations pursuant to its progressive discipline system. However, the record
reflected that discipline may not in fact have been used progressively but rather, was
imposed in a more ad hoc manner upon which HR and management decided. According
to the supervisors, the employer failed to follow up on the discipline reports that they
issued and, at times, it discarded those reports. For example, they submitted evidence that
past disciplinary action forms that they completed were removed from employees’ files,
thereby eliminating a record upon which discipline could progress. The supervisors also
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had evidence that employees received the same form of reprimand for repeat violations,
undermining the employer’s claim that discipline escalated from minor to severe
punishments (based, at least in part, on the supervisors’ recommendations).
On this record, a reasonable jury could find that some or all of the supervisors lacked
sufficient influence over their subordinates’ changes of status to be properly classified as
exempt executives under the FLSA, the Sixth Circuit held. Thus, the lower court erred in
granting summary judgment to the employer.
The case number is: 13-1816.
Attorneys: Josh Sanford (Sanford Law Office) for Jeffrey Bacon. Chris R. Pace (Ogletree
Deakins) for Eaton Aeroquip, LLC.
6th Cir.: Lack of discovery on application of FLSA administrative exemption
prompts remand
By Joy P. Waltemath, J.D.
Caught between rules requiring prompt notice of claimed FLSA exemptions as an
affirmative defense and those arguing for leniency in permitting amendments to
pleadings, the Sixth Circuit reversed summary judgment for a county coroner that was
allowed a late amendment to his answer to raise the exemptions as an affirmative defense
to his investigator’ FLSA overtime claims. Because the coroner’s belated assertion of the
affirmative defense precluded the investigators from conducting meaningful discovery on
their claim — the district court granted summary judgment to the coroner the day after
allowing the amendment — the appeals court, in an unpublished opinion, reversed and
remanded for limited discovery on the claimed exemption (Hopkins v Chartrand, May
20, 2014, Cole, R Jr).
Procedural posture. Two investigators for the county coroner were laid off for
budgetary reasons. They sued, but the only issue on appeal involved their claim for
overtime wages as required under the FLSA and Ohio law. It was apparently undisputed
the coroner never undertook any investigation to determine whether his employees were
entitled to overtime; instead, he merely paid them a salary, as his predecessor had done,
under the assumption that the investigators were not entitled to overtime. In his answer to
their lawsuit, the coroner raised his “compliance” with the FLSA as an affirmative
defense, but he did not specifically claim that the investigators were exempt or identify
which exemption(s) he claimed applied. So the investigators argued in their summary
judgment motion that the coroner had waived exemptions as a defense.
Despite not pleading any overtime exemptions in his answer, the coroner argued in his
summary judgment motion that both investigators were exempt administrative
employees. He later moved to clarify or amend his answer to raise the specific
exemptions and, although the investigators claimed prejudice, the district court granted
leave to amend and the next day granted summary judgment against investigator’s FLSA
claims, finding they were both exempt administrative employees.
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Waiver. Claiming waiver, the investigators said the coroner forfeited his ability to rely
on the FLSA’s overtime exemptions by not specifically raising them in his answer and
that the district court abused its discretion by granting his belated motion to clarify or
amend. The Sixth Circuit agreed, at least in part, because the lower court granted
summary judgment without affording additional discovery. Exempt status is an
affirmative defense that defendants must prove, and generally it must be claimed in the
first responsive pleading or will be considered waived. But courts are and should be
liberal in granting amendments based on the principle that cases should be tried on their
merits rather than the technicalities of pleadings.
Unfair surprise. To start, the Sixth Circuit noted that by granting the motion to amend in
a marginal entry order, the district court frustrated meaningful appellate review by
providing no insight into its reasoning. While such amendments are clearly within a
district court’s discretion, here the court could not determine whether the lower court had
“failed to consider the competing interests of the parties and likelihood of prejudice to the
opponent.” However, it appeared to the appeals court that the nature of the defense itself
and the record suggested that the belated amendment may have surprised and unfairly
prejudiced the investigators. To establish an FLSA exemption requires an employer’s
proof of a number of factors and, as the court remarked, “questions of fact often
predominate in overtime-exemption cases.”
Based on the record, the parties “seemed to disagree” only as to what constituted the
investigators’ “primary duty” and whether it “directly related to the management or
general business operations” of the county coroner to come under the administrative
exemption. The appeals court used the qualifying language “seemed to disagree” because
the parties agreed on the facts surrounding the investigators’ day-to-day duties, “to the
extent the parties developed the record on this front.” But the record reflected “a glaring
lack of factual development regarding the investigators’ primary duties and how closely
they related to the management of the coroner’s office,” the court pointed out. The
coroner never even mentioned the FLSA exemptions in his deposition, for example, and
the court believed the investigators would have pursued the matter further in discovery
had they known it was at issue.
So, balancing Rule 8(c)’s requirements to put opposing parties on notice of a claimed
affirmative defense and Rule 15(a)’s instructions to permit amendments that will allow
resolution of cases on their merits as opposed to the technicalities of pleadings, the court
noted that it lacked any reasoning from the district court to guide its review. Determining
that a remand was warranted, the Sixth Circuit remanded for limited discovery to allow
both sides to flesh out the investigators’ primary duties and whether they directly related
to the management or general business operations of the county coroner. This would
correct any prejudice the investigators suffered from the belated amendment and would
lead to a merits-based decision as opposed to “a hollow procedural win for either side,”
the court concluded.
The case number is: 13-3964.
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Attorneys: James A. Budzik (Mansour, Gavin, Gerlack & Manos) for Kevin M.
Chartrand. Richard N. Selby II (Dworken & Bernstein) for John Hopkins.
7th Cir.: Employer estopped from denying employee was entitled to FMLA leave by
waiting “months after the fact” to do so; court rejects “bifurcated FMLA
entitlement” theory
By Lisa Milam-Perez, J.D.
A state employer was equitably estopped from denying an employee’s right to FMLA
leave beyond the period when his leave entitlement expired and also was estopped from
seeking to recoup the costs of health insurance premiums that it paid out while the
employee was taking leave beyond the disputed entitlement period. The Seventh Circuit
rejected the employer’s “convoluted and confusing argument” on appeal that there was a
“longstanding distinction” between “threshold entitlement” to FMLA leave (i.e. whether
there is an underlying serious health condition) and “date-specific entitlement” (to
intermittent FMLA leave on a given day) — and that the district court’s ruling in the
employee’s favor on the entitlement question resolved only the first of those inquiries
(Holder v Illinois Department of Corrections, May 2, 2014, Rovner, D).
There are not two types of entitlement to leave, the Seventh Circuit said; there are only
“various legitimate ways an employer can deny FMLA leave when it discovers that an
employee is not entitled to the leave [on a particular day] and then immediately acts on
that knowledge.” But the employer in this case didn’t challenge the employee’s right to
leave until “months and months after the fact” without once seeking additional
information from the employee. “There must be some ability for an employee to rely on a
grant of leave without risk of retroactive revocation months down the road,” the appeals
court said. As such, estoppel applied, and the Seventh Circuit affirmed a ruling in the
employee’s favor on his FMLA interference claim.
Intermittent leave. A correctional officer whose wife suffered from a chronic mood
disorder and substance abuse disorder, the employee requested and was granted FMLA
intermittent leave in October 2007 to care for her. His employer never asked him to
submit any additional medical documentation supporting his claim for FMLA benefits,
and it continued to pay its share of his health insurance premium until April 18, 2008.
The FMLA medical certification form that he submitted attributed to FMLA leave the
seven absences that he had already taken in August and September of 2007. In all, the
employee requested and received FMLA leave for approximately 130 days between
September 2007 through April 30, 2008.
On April 18, 2008, the employer’s FMLA coordinator advised the employee that his
FMLA leave expired; he was told that if he needed additional leave he could take it under
the Illinois Family Responsibility Leave program (FRL), which allows up to a year of
unpaid leave. Under the FRL program, though, the state only covers an employee’s
insurance premiums for up to six months. The employee took 29 more absences between
April 20 and June 9, 2008, under the state FRL program. More than eight months later,
though, he was informed that his employer had mistakenly paid for his health insurance
premiums past the 60th day (12 weeks) to which he was entitled to leave — including the
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period extending from January through June 2008 — and that he would be responsible
for repaying those health premiums. The state began garnishing his wages to that end —
25 percent of his earnings each month.
FMLA suit. The employee filed suit, contending that the employer interfered with his
rights under the FMLA by denying him (after the fact) intermittent leave beginning in
January 2008, by failing to provide notice that his FMLA leave was exhausted, and by
requiring him to repay the premiums beginning in January 2008. The employee
contended that he was entitled to continue his leave after the 60th day because the
employer had approved those additional days of FMLA leave and now was equitably
estopped from denying it. The district court agreed, granting summary judgment on this
issue. In its ruling, the lower court also held the employee was entitled to FMLA leave to
care for his wife. It left for the jury remaining factual issues as to when the leave actually
expired, whether it was reasonable for the employee to rely on the employer’s assertions
that he was entitled to FMLA leave after his 60th absence, and, if so, how many days
beyond the 60th absence was that reliance reasonable.
After a jury returned a verdict in the employer’s favor, the court granted judgment as a
matter of law to the employee as to leave entitlement for the month of January 2008
(awarding him $1,222 in premium costs), and it then entered judgment for the employer
on the remaining months in dispute. The employer appealed the employee’s partial win.
Rule 50(b) motion. As an initial matter, the appeals court resolved in the employee’s
favor a challenge to the lower court’s grant of the employee’s Rule 50(b) motion based
on a procedural lapse. When the employee previously raised his Rule 50(b) motion, the
court noted it would take the motion under advisement. The employee then failed to
renew his motion after the verdict for the employer — having had little time to do so,
because it was immediately granted by the court upon hearing the verdict.
Previously the Seventh Circuit has noted that a Rule 50(b) motion for judgment as a
matter of law “must indeed be renewed at the close of evidence if the moving party wants
to obtain such relief should the jury bring in a verdict against him.” However, the court
has not “applied this rule rigidly” in the past, and it declined to do so here. Where the
court had previously taken the motion for a verdict under advisement, the employer “had
no reason to be surprised that the motion is still in play.” There was no “mousetrapping”
going on in this instance, the appeals court said, and the employer was not disadvantaged
by the ruling since it knew the Rule 50(b) motion was still in play.
Entitlement to leave. The employer then sought to attack the notion that the employee
was eligible for leave in the first place. It was a tough hurdle to clear, as the lower court
had ruled on summary judgment that the employee was entitled to leave (at least up until
his 60th day of leave). Undaunted, the employer urged that the lower court had ruled only
that the employee established his “threshold” entitlement to leave (based on a family
member’s serious health condition) but not on whether the employee was actually entitled
to take leave on any particular day that he was absent because his wife required care. But
the employer never sought to limit the summary judgment ruling to one particular type of
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entitlement. And its argument that the court only ruled on the first of two types of
entitlement was not supported by the procedural facts.
Nor was this argument supported by the case law cited by the employer. “What those
cases do demonstrate,” the appeals court noted, “is that there are various reasons why an
employee might be ineligible for leave; sometimes employees attempt to take FMLA
leave to which they are not entitled; employers can and do ferret out the illegitimate
leaves by timely asking for more support for the need for leave — either before or after
the fact, by conducting surveillance, asking for medical documentation or by immediately
denying leave to which an employee is not entitled. In none of these cases has an
employer granted scores and scores of leave days without any requests for more proof,
only to deny the leave months and months after the fact.”
Estoppel. Moreover, even if the appeals court were to find that these two distinct types of
leave entitlement did exist, it noted, it failed to see how estoppel principles wouldn’t also
preclude the employer from arguing about date-specific entitlement as well based on
these facts. If the employer had denied leave in its entirety, the appeals court noted, the
employee could have explored other options for leave or for care for his wife — under
the FRL program, for example. And if he had known the employer would later doubt the
veracity of his need for leave on any given day, he could have presented support for his
need for leave. “Moreover, if he had known his leave might be denied retroactively long
after the fact and he would be liable for more than $8,000 of premium payments, he could
have assessed the financial risk of taking leave.”
Liquidated damages. Finally, the appeals court rejected the employer’s assertion that it
should not be required to pay liquidated damages on the employee’s favorable judgment
over the disputed January 2008 premiums. The court was not persuaded that the employer
determined, before the employee prevailed in the district court, that he was not
responsible for paying the premiums and that it had assessed that charge in error. The
district court concluded that the employer had not carried its burden of showing that its
decision to withhold from the employee’s pay the costs of the employer’s contribution for
health insurance benefits for that month was in good faith.
The case number is: 12-1456.
Attorneys: John A. Baker (Baker, Baker & Krajewski) for Zane Holder. Mary Ellen
Welsh (Illinois Attorney General's Office) for Illinois Department of Corrections.
7th Cir.: Ruling that donning and doffing time at meal breaks not compensable left
standing by en banc appeals court
By Ronald Miller, J.D.
In an en banc decision, a majority of Seventh Circuit judges voted to deny a petition for
rehearing of a panel ruling that a poultry processor did not violate the FLSA or Illinois
Minimum Wage Law (IMWL) by failing to compensate workers for donning and doffing
time at meal breaks, where a collective bargaining agreement specifically excluded such
time from compensable working time. According to the panel majority in the prior ruling,
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amicable labor-management relations would be impaired by broadly reading statutes and
regulations that remove wage and hour issues from the scope of collective bargaining.
Judge Williams filed a separate opinion dissenting from the denial of rehearing en banc,
joined by Chief Judge Diane Wood and Judges Rovner and Hamilton (Mitchell v JCG
Industries, Inc, May 28, 2014, per curiam).
“Changing” time. The poultry line workers were represented by a union that had a CBA
with the employer governing their conditions of employment. Because of the nature of
their work, “rigid sanitation requirements must be met.” So before beginning their shifts,
the line workers were required to put on a sterilized jacket, plastic apron, cut-resistant
gloves, plastic sleeves, earplugs, and a hairnet. They were also required to remove this
sanitary gear at the start of their half-hour lunch break and put it back on before returning
to work. The time the workers spent changing before and after eating lunch was time
taken out of their lunch break rather than out of the four-hour shifts that preceded and
followed it. The principal issue in the case was whether the time spent in changing during
the lunch break was working time that must be compensated.
The employees conceded that the meal break was a bona fide meal break under 29 C.F.R.
Sec. 785.19(a), so it was not time the employer was required to compensate them for. At
any rate, the CBA between the employer and union did not require such compensation.
Rather, the employees argued that federal and state law required that this changing time
be compensated at the overtime rate. FLSA, Sec. 203(o) excludes from compensable time
“any time spent in changing clothes at the beginning or end of each workday which was
excluded from measured working time … by the express terms of or by custom or
practice under a bona fide collective-bargaining agreement applicable to the particular
employee.” Here, the bone of contention was that the lunch break did not occur at the
beginning or end of the shift, so the employees asserted that only that period was the
“workday.”
Continuous workday doctrine. In the original panel decision, the majority concluded
that the “workday” includes night work and it may include four-hour shifts separated by
meal breaks. The applicable regulation defines “workday” to mean “in general, the period
between the commencement and completion on the same workday of an employee’s
principal activity or activities,” 29 C.F.R. Sec. 790.6(b). The qualifying phrase “in
general” allows room for an exception, and the court found a compelling reason to
recognize an exception in this case. Observing that the FLSA does not require that
employers provide meal breaks, the majority found that this was another reason to
interpret “workday” in this manner. Moreover, the Supreme Court recently pointed out in
Sandifer v U.S. Steel Corp, that Sec. 203(o) provides that the compensability of time
spent changing clothes or washing is a subject appropriately committed to collective
bargaining.
The majority also concluded in the alternative that the de minimis doctrine was
applicable, since the “vast majority of the time” spent by the poultry workers during their
lunch breaks was not devoted to donning and doffing.
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Dissent. Dissenting from the denial of rehearing, Judge Williams argued that this is an
important case with far-reaching implications for, among others, workers who are being
paid minimum wage or close to it. The dissent argued that the case should have been
heard en banc because the panel opinion calls into question the application of the FLSA’s
“continuous workday” doctrine, erroneously applies de minimis analysis to the FLSA in
contravention of Supreme Court precedent, and improperly applies the summary
judgment standard.
Aside from the specifics of this case, the dissent expressed concerns about what effect the
majority’s analysis will have on the “continuous workday” doctrine going forward. Under
the doctrine, workers must be compensated for time they spend doing what might
otherwise be noncompensable if those activities occur during the “period between
commencement and completion on the same workday of an employee’s principal activity
or activities,” subject to FLSA carve-outs. Whereas before the majority’s opinion, the
employees only had one “beginning [and] end” of the workday that was subject to
collective bargaining, now the same employees have two, according to the dissent,
arguing that the majority’s fracturing of the workday now calls into question the very
existence of the “continuous workday” doctrine.
The case number is: 13-2115.
Attorneys: Stephen Novack (Novack & Macey) for JCG Industries, Inc. Jac A. Cotiguala
(Jac A. Cotiguala & Associates) for Rochelle Mitchell.
8th Cir.: Seasonal tax preparers not entitled to compensation for rehire training;
not statutory employees under FLSA or state law
By Lisa Milam-Perez, J.D.
H&R Block did not have to pay seasonal tax preparers for the time they spent completing
24-hours of training that was required of all rehires prior to tax season, the Eighth Circuit
held, affirming a district court’s grant of summary judgment in the company’s favor.
Rejecting the plaintiffs’ contention that they were ongoing employees of the tax
preparation company, including during the off-season, the appeals court found the
plaintiffs were trainees at the time they underwent the mandated training, not statutory
employees under the FLSA. The DOL’s six criteria for determining whether individuals
are “trainees” or “employees” supported its conclusion, the appeals court noted (Petroski
v H&R Block Enterprises, LLC, May 2, 2014, Wollman, R).
Seasonal hires. Due to the seasonal nature of the tax services industry, the majority of
H&R Block’s employees are seasonal, working only during the tax season. A tax
preparation professional employed by H&R Block who wants to work for the company
during the following tax season must reapply, completing an employment application and
submitting to a job interview. If selected, he or she must complete new hire paperwork
(such as (I-9 forms) and enter into an employment agreement. The employment
agreement typically sets forth the term of employment as lasting only for the duration of
the tax season.
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After the specified period of employment is over, the tax professional is under no
obligation to return to H&R Block for the following tax season, and H&R Block is under
no obligation to rehire that individual in the future. During the off-season, tax preparers
are eligible to collect unemployment, and many work other jobs. From 2008 to 2012,
H&R Block rehired 268,804 of the tax preparers; it did not rehire approximately 20,357.
Mandatory training. To be eligible for rehire for the following tax season, H&R Block
requires current and former tax professionals to complete 24 hours of continuing
professional education (CPE) training. No federal regulation required tax professionals to
complete continuing education courses to prepare tax returns during the time period at
issue here. However, as the company handbook explains, meeting the CPE requirement is
not a guarantee of future employment with the company.
H&R Block offers live and web-based courses on topics such as adjustments, investment
income, and itemized deductions, and charges $20 for access to the courses. Most of the
courses are purchased from an outside vendor, although some cover the company’s
internal systems and software programs. A tax professional doesn’t have to take H&R
Block’s courses, though; he or she can also meet the training requirement by enrolling in
courses offered by other qualified providers. Either way, H&R Block does not pay the tax
professionals for the time they spend meeting the rehire training requirement.
Consolidated class action. After several similar cases were consolidated, the district
court conditionally certified a FLSA collective action consisting current or former H&R
Block tax professionals who were not paid for the time spent completing mandatory
rehire training. (The court also certified California and New York class actions under
Rule 23.) On the merits, though, the court subsequently granted summary judgment to
H&R Block, rejecting the plaintiffs’ argument that they were employed from one tax
season to the next. Rather, the lower court held the plaintiffs were trainees and not
employees at the time they completed their required rehire training. And, as trainees, they
were not entitled to compensation under the FLSA (or California and New York law).
Ongoing employees? On appeal, the tax professionals argued that the district court
should have considered whether their employment with H&R Block continued from one
tax season to the next — urging that “workers can retain their ‘employee’ status during
the interval between the completion of one period of employment and the commencement
of another if, as a factual matter, they are customarily continued in their employment with
recognition of their preferential claims to their jobs.”
NLRA cases did not apply. The plaintiffs also contended that the lower court applied
the wrong legal framework for deciding whether they were statutory employees at the
time of their off-season training. In their view, the court should have applied the Supreme
Court’s 1940 holding in NLRB v. Waterman S.S. Corp. and NLRB v. Labor Ready, Inc., a
2001 Fourth Circuit decision applying the Supreme Court precedent. In Waterman, the
Supreme Court held that a seaman’s relationship to his ship (and tenure with his
employer) did not terminate when his ship lays up in dry dock or for repairs. In Labor
Ready, the Fourth Circuit invalidated an employment agency’s policy of barring union
solicitation by incumbent temporary workers — rejecting the agency’s argument that its
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relationship with a temp worker is dissolved each evening and not renewed until the
worker is given another assignment. But both of these cases were brought under the
NLRA, and while the Eighth Circuit recognized that the NLRA was enacted along with
the FLSA “as part of the same remedial social legislation,” no court has applied these
decisions to a case brought under the FLSA.
Moreover, those cases were distinguishable on the facts. Unlike the “short and often
variable intervals between work assignments in Waterman and Labor Ready, the tax offseason lasted most of the year,” the appeals court noted. The tax preparers could work
elsewhere for some eight months out of the year or seek unemployment compensation.
Also, their employment agreements expressly stated that their terms ended at the
conclusion of the tax season, and they had to complete the entire employment application
process before starting work again.
Portland Terminal precedent. Rather, the district court engaged in the appropriate
inquiry, the appeals court said, by applying Walling v. Portland Terminal Co., a 1947
Supreme Court ruling. That case addressed the question whether an applicant being
trained to fill a position was an employee under the FLSA. The High Court found the
employer had received “no ‘immediate advantage’” from work done by the trainee during
a training course in which potential employees had to enroll before they could be
considered for employment. As such, the applicants were not employees under the FLSA.
The key takeaway from Portland Terminal was that the proper focus is on “the relative
benefits of the work performed by the purported employees.” And on that point, the facts
of that ruling were not “meaningfully different” from the case at hand. H&R Block
received no immediate advantage from the rehire training completed by the tax
professionals, who did not prepare tax returns or complete any other productive work for
clients during training. They did not displace any regular employees or in any way
expedite the company’s business. “While the CPE requirement is no doubt useful to H&R
Block in that the training helps educate the tax professionals and keep them current on
tax issues,” the court said, “H&R Block does not reap the benefits until after the tax
professionals accept the company’s offer of employment.”
Primary benefit. The plaintiffs also argued that H&R Block received an immediate
economic advantage from the mandated training because it charges $20 for access to the
courses and because it holds itself out as having “the best trained and most qualified” tax
preparers in the industry. But the course fee was de minimis and merely offset the costs
of purchasing or creating the courses; also, H&R Block generates no income when the
tax preparers take courses offered elsewhere. And the alleged bragging rights “are not the
type of immediate advantage Portland Terminal envisioned.” Next, they argued that
H&R Block was the primary beneficiary of the training because the skills acquired were
not transferable elsewhere, as the training courses referred to H&R Block’s internal
systems and proprietary software. But the use of H&R Block’s internal systems and
software in training courses did not render the skills learned nontransferable, the court
said, reasoning that the courses were on substantive tax topics that could be applied in a
job with a different tax preparation service provider.
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That was of little solace, though, where their employment agreements prohibiting them
from soliciting or providing tax preparation services to H&R Block’s clients for two
years, the plaintiffs argued. But the appeals court concluded they were not unduly
sidelined by the confidentiality and noncompete provisions in their contracts; they would
not have to use H&R Block’s trade secrets or solicit the company’s customers in order to
take advantage of the knowledge they acquired for gainful employment outside of H&R
Block.
No expectation of payment. Finally, the appeals court rejected the plaintiffs’ claim that
a disputed fact issue remained as to whether they understood that they were not entitled
to compensation for the required training. Prior to 2012, H&R Block did not
communicate in writing to the tax preparers that they would not be paid for the CPE time
or obtain written acknowledgment from them that they understood that they would not be
paid. However, it was enough for the appeals court that H&R Block’s company
handbooks explained that tax professionals must complete the training to be eligible for
rehire, that doing so was not a guarantee of future employment, and that H&R Block
charged $20 for access to its courses.
The case number is: 13-2076.
Attorneys: George Allan Hanson (Stueve & Siegel) for Barbara Petroski. Mark G. Arnold
(Husch & Blackwell) for H&R Block Enterprises, LLC.
8th Cir.: Jury finding of employer good faith only advisory but rejecting reason for
not rehiring worker who took FMLA leave was binding; liquidated damages claim
revived
By Brandi O. Brown, J.D.
Affirming in part a judgment entered in favor of a city employee on his FMLA retaliation
claim, the Eighth Circuit found the jury’s verdict supported by evidence that the city
manager expressed concern about the employee’s use of FMLA leave and then, after the
employee’s termination, refused to rehire him though his doctor had cleared him for work
and his former supervisor recommended him as the most qualified. The appeals court
further found that the trial court erred in denying liquidated damages to the employee,
explaining that the jury’s finding that the employer acted in good faith was only
“advisory,” that the jury’s rejection of the proffered reasons for not rehiring the employee
was binding, and that a finding of intentional retaliation sets a very high bar for showing
good faith (Jackson v City of Hot Springs, May 12, 2014, Gruender, R).
After almost 10 years of employment, the machinist had surgery for a gallbladder and
pancreatic condition. During his extensive recovery, which included multiple
hospitalizations, he used over two months’ worth of accrued leave, after which he
requested leave under the FMLA. After he exhausted that leave, he requested a
discretionary period of leave without pay. The city manager, the employee’s ultimate
supervisor, expressed concern that this was a “ploy” to ultimately get disability, but
granted an additional one month of leave without pay. The city manager selected the
return date, noting how long the employee had been off and that “the additional work
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load has caused overtime and other issues we can no longer deal with.” When the
employee was unable to return, his employment was terminated.
Reapplication. Just over a month later, however, the employee was released to return to
work and sought reinstatement. After a meeting between the employee, his immediate
supervisor, and two other employees, the city manager told him he would have to reapply
for his job. He was interviewed along with two other candidates and all three were asked
to demonstrate use of the equipment. The employee’s immediate supervisor selected him
for the position, stating that “he could do all the machines” and that “he could handle the
workload that was there.” HR emailed the recommendation to the city manager, who
responded, “I think it is a mistake, however, I will not micro manage. I will simply hold
them accountable for their decision.”
Nevertheless, the city manager did not follow the recommendation and, instead,
determined that the proper procedure had not been followed because the safety
coordinator had not participated in the interviews. The immediate supervisor contended
that he was not told that the safety coordinator had to be involved. Although the city
manager told the safety coordinator the interviews would be conducted again, they were
not. Instead, the position was reposted a few months later. The plaintiff reapplied, but
was not interviewed. The city manager alleged that he was not selected because the other
candidates had better computer and diagnostic skills, but the selected applicant did not
have experience on all of the shop’s machines.
Trial. The employee filed suit, alleging violations of the Arkansas Civil Rights Act
(ACRA), the FMLA, the ADA, and the Rehab Act. Ultimately, the parties went to trial on
FMLA and ACRA retaliation claims (for termination and failure to rehire) and on Rehab
Act and ACRA disability discrimination claims (for failure to rehire). At the close of the
case, the district court partially granted the employer’s motion for judgment as a matter
of law and the only two claims that were submitted to the jury were the FMLA retaliation
claim and a corresponding ACRA retaliation claim based upon failure to rehire. The jury
awarded the employee $56,000 in lost compensation and $25,000 for emotional distress.
It found, however, that the employer acted in good faith. The district court denied the
employee’s request for liquidated damages under the FMLA and vacated the jury’s award
of emotional distress damages. Both parties appealed.
Retaliation. On appeal, the employer argued that the court below should have granted its
motion for judgment as a matter of law on the FMLA retaliation claim, arguing (1) that
the employee did not put forth enough evidence for the jury to find that he could perform
the essential functions of the job and (2) that the evidence did not support a causal link
between the city manager’s failure to rehire him and his FMLA leave. The appeals court
rejected both arguments.
First, assuming without deciding that the employee’s ability to perform the essential
functions of the job was even an element of the FMLA retaliation claim, the appeals court
found sufficient evidence supporting the jury’s finding. It noted that when the employee
first applied, his doctor had released him for work “with activity as tolerated.” It also
noted that he had demonstrated use of the machines during his interview and had been
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recommended for the position because he could operate all of the machines. The
immediate supervisor testified that the employee received the highest interview rating
because “[h]e could handle the workload that was there.”
Hernia and painkillers. Although contemporaneous medical records indicated the
employee had a hernia, he was not suffering from abdominal pain at the time of the
interview. The hernia only caused him significant pain after he was not hired. And he had
testified that he could perform lifting using forklifts and hand-held lifts and presented
evidence that he could get help from coworkers when lifting heavy items. Additionally,
he testified that his use of prescribed painkillers would not have affected his ability to do
the job safely. Thus, a reasonable juror could find that the employee was capable of
performing the essential functions of the position.
Causation. Furthermore, there was sufficient evidence supporting an inference of
retaliatory motive, the appeals court found. It noted the city manager’s comments and
actions, including his expressed concern about the amount of time off the employee had
taken off and concern that it was a ploy to prolong his insurance to get disability pay;
making the employee reapply for his job; not hiring him though he had been selected as
the most qualified; and stating that he thought the hiring recommendation was “a
mistake.” The appeals court also pointed to evidence that could have led the jury to reject
the reasons given by the employer for not hiring the employee. The immediate supervisor
testified that he had not been told that the safety coordinator had to be involved and the
safety coordinator was told that the interviews would be done again, but they were not.
Moreover, the second job posting had the same qualifications and duties. And, the
selected did not have experience on all the machines in the department. Finally, the
employer’s reasoning for not hiring the welder changed in that short period of time,
which provided support for a pretext finding.
Liquidated damages. The appeals court rejected two out of the three arguments made by
the employee. First the court affirmed the district court’s granting of the employer’s
motion for judgment as a matter of law on the ACRA disability discrimination claim,
finding that although the lower court had erred in finding that the employee had not
presented sufficient evidence that could allow a jury to conclude that he could perform
the essential functions of his job, judgment as a matter of law was proper because the
employee had not presented sufficient evidence that the adverse action was the result of
an “ACRA-defined disability.” The ACRA only contemplated coverage for persons
currently suffering a disability, which the employee was not at the time that he was not
rehired.
However, the lower court erred in denying liquidated damages. Although the jury had
found that the employer had acted in good faith, that finding was only “advisory.” On the
other hand, the jury’s rejection of the employer’s reasons for not rehiring the employee
was binding and a finding of intentional retaliation sets a very high bar for showing good
faith. The appellate court also noted that the employer had not responded to the
employee’s argument on appeal and that the lower court had not provided any factual
support for its finding that the employer had met its burden of establishing good faith.
The only evidence, then, to support a good faith argument were the reasons given for not
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hiring the welder — and those reasons were not sufficient “to amount to good faith.”
Thus, the district court’s denial of liquidated damages was reversed.
The case number is: 13-1772.
Attorneys: Brian Wade Albright (Hot Springs, Arkansas City Attorney) for City of Hot
Springs. Lucien Ramseur Gillham (Sutter & Gillham) for Wayne Jackson.
11th Cir.: Painting pleasure boats for local customers did not qualify employee for
“individual” coverage under FLSA
By Ronald Miller, J.D.
An employee engaged in the business of painting pleasure boats for local customers did
not affect interstate commerce and so was not an individual “engaged in commerce”
subject to the overtime protections of the FLSA, ruled the Eleventh Circuit in an
unpublished decision.
Moreover, the fact that he worked on boats with foreign registries did not have the type
of “close and immediate” connection with interstate commerce that would trigger
individual coverage. As a result, the appeals court affirmed a district court’s grant of
summary judgment in favor of the employer (Pino v Painted to Perfection Corp, May 12,
2014, per curiam).
The employer was a yacht refinishing and painting business in south Florida. In the
relevant time period, the employee worked as a prep person, and later a painter and
supervisor. While an hourly employee, he averaged 63 hours per week, with no overtime
compensation. Subsequently, the employee filed a suit seeking overtime wages under the
FLSA. He alleged the employer was an “enterprise” grossing $500,000 or more a year,
and that both his work and the business itself affected interstate commerce. In response,
the employer moved for summary judgment, explaining that its business did not gross
more than $500,000 a year during any of the relevant years, so that it was not an
“enterprise” under the FLSA. It also argued that the employee’s work did not affect
interstate commerce because he painted pleasure boats for local customers.
The district court found that the employer’s business was not an “enterprise” under the
FLSA. It also found that the employee was not entitled to individual coverage under the
FLSA because he did not use instrumentalities of commerce. The district court explained
that although the employee worked on boats with foreign registries, that fact did not
change his intrastate activity to one involving interstate commerce. The employee
appealed.
Individual coverage. To be entitled to the protections of the FLSA, the employee had to
first show that he was covered by the Act by establishing either that his employer was an
“enterprise engaged in commerce” or that he was entitled to individual coverage. At issue
in this case was whether he could establish individual coverage.
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To be eligible for “individual coverage,” the employee was required to show that he was
“engaged in” commerce; that is, he regularly and “directly participat[ed] in the actual
movement of persons or things in interstate commerce” by “working for an
instrumentality of interstate commerce.” In this instance, the Eleventh Circuit agreed with
the district court that the employee’s arguments that he was “engaged in commerce”
because he worked on boats with foreign registries, he spoke with captains of boats with
foreign registries, and the business owner traveled out of state to work on boats, was
insufficient to establish FLSA coverage.
There was no dispute that the employee never traveled outside Florida to work on any
boats, and the fact that the business owner did was irrelevant. Moreover, the fact that the
boats at some point moved in interstate commerce was also insufficient. Rather, the
employee was required to show that he “directly participated in the actual movement of
persons or things in interstate commerce.” The interstate nature of the boats the employee
worked on ended when they reached their ultimate consumer. Further, the act of painting
the boats was a purely intrastate activity. With respect to the boats with foreign registries,
the appeals court determined that painting such boats did not have the type of “close and
immediate” connection with interstate commerce that would trigger individual coverage.
Accordingly, it concluded that the employee was not engaged in commerce in such a way
as to be eligible for individual coverage under the FLSA.
The case number is: 13-14769.
Attorneys: Eddy O. Marban (Law Office of Eddy O. Marban) for Painted to Perfection
Corp. Jamie H. Zidell (J.H. Zidell) for Alfredo Ocampo Pino.
Md. Spec. App.: Plaintiff’s counsel entitled to recovery of fees for successful
appellate advocacy in wage suit
By Ronald Miller, J.D.
In long-running litigation over allegedly unpaid wages, the Maryland high court has
reiterated that the lodestar approach was proper method for determining attorney fees –
but also found that the approach of the court below to attorney fees actually was
inconsistent with the lodestar approach. Importantly, the state high court found the lower
court erred in not awarding any fees for time expended in pursuing successful appeals in
the case. It was entirely reasonable, reasoned the court, for the employee to pursue
appeals, which she won and which established important precedents (Friolo v Frankel,
May 19, 2014, Wilner, A).
In this long-running litigation, the employee was an administrative assistant for a medical
practice charged with collecting monthly receivables. In her lawsuit, she sought a five
percent interest in the practice, unpaid monthly bonuses, and overtime compensation. In
this third appearance before the Maryland Court of Appeals (the state’s highest court), the
issue involved the award of attorney’s fees. Early in the case, the employee offered to
settle for $36,000. However, no offer was made by the employer at that time, so the case
proceeded to jury trial. The only claims submitted to the jury were the employee’s claims
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for unpaid bonuses and unpaid overtime. The jury awarded the employee nearly all she
requested for compensatory damages.
The jury was instructed that, if it found that the employer withheld wages from the
employee and the withholding was not a result of a bona fide dispute, it could, if it
deemed appropriate, award her extra compensation up to three times the amount “that
you find she is entitled to.” The jury did not award any additional damages, and the
employer paid the judgment.
Lodestar approach. Two weeks after entry of judgment, the employee’s attorney filed a
motion for attorneys’ fees and costs asserting that the fees should be calculated in
accordance with a modified lodestar approach (reasonable hours expended times
reasonable hourly rate), and it offered as reasonable a total of 263 hours expended by four
attorneys in the firm, for a total of $61,125, which was ultimately raised to $69,637 based
on 275 hours. The employer responded that, because the jury did not find the lack of a
bona fide dispute, no fees were warranted, and in any event, the fees requested were
unreasonable.
In a hearing, the trial court, though suggesting that it was considering the lodestar
approach, actually awarded a $4,712 fee based on 40 percent of the $11,778 judgment.
The employee appealed, claiming that the court erred in not using the lodestar approach.
In a prior appeal, the state high court had ruled that there was no actual entitlement to
attorneys’ fees under either the Maryland Wage Payment and Collection Law or the
Maryland Wage and Hour Law, but noted that the trial court did award fees in this case,
and no cross-appeal had been taken from that decision. The only issue was the
appropriate method for calculating the fee. At that time, the Maryland high court held that
the lodestar approach, as applied in federal courts, was the proper method, and the case
was remanded.
Compensation for appellate and post-remand services. On remand, the employee
renewed her request for $69,637 in attorneys’ fees and sought an additional $58,172 for
pursuing the appeal. The trial court then awarded the employee what it regarded as a
“lodestar amount” of $65,348. Both parties appealed. The Court of Special Appeals (the
intermediate appellate court) agreed with the employer that any entitlement under the two
statutes to reasonable fees “does not extend to compensation for appellate and postremand services where the plaintiff’s judgment has been satisfied and the sole issue on
appeal is counsel’s dissatisfaction with the trial court’s award.” Review was granted to
consider the correctness of the intermediate appellate court’s conclusion regarding posttrial and appellate fees.
Although the state high court agreed with the intermediate court that the trial court’s
award of attorneys’ fees was in conflict with its instructions in the earlier appeal, it
disagreed with the three-part test formulated by the appellate court to determine
circumstances under which fees could properly be awarded for appellate work. Rather,
the high court concluded that, when a plaintiff obtains relief under the wage statutes and
obtains an award of attorneys’ fees and, on appeal, is successful in procuring an increase
in those fees or in correcting an error made by the trial court, “attorneys’ fees incurred
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during the appeal should be considered as a part of the lodestar analysis” required to be
conducted on remand. The matter was again remanded to the trial court.
This time the trial court referred the matter to a special master. Despite the special
master’s analysis, the trial court found him too generous and ended up awarding the
employee only $5,000 in attorneys’ fees. The employee appealed again to the
intermediate court, complaining that the trial court improperly used the hourly rates in the
retainer agreement rather those stipulated as applicable by the parties, and that it erred in
allowing nothing for the appellate work. The intermediate court found merit in the
employee’s arguments and concluded that the trial court erred (1) in not applying the
stipulated hourly rate, (2) in suggesting that limits on client liability for fees in a retainer
agreement make fee awards exceeding those limits unreasonable, and (3) in using the size
of the underlying judgment as determinant of the time necessary to achieve that
judgment.
Unprecedented mathematical formula. The state high court noted that if the
intermediate court entered judgment in accordance with its conclusions, the case would
have ended there. However, the intermediate court invented and applied an
unprecedented mathematical formula for determining how attorneys’ fees in this case
only should be calculated. Again, the high court reiterated that the lodestar approach is
the presumptively appropriate methodology to be used under the state’s wage laws. The
starting point for determining a reasonable fee under the lodestar approach is to multiply
“the number of hours reasonably expended on the litigation multiplied by a reasonable
hourly rate.” The product may be adjusted upward or downward based on the results
obtained — the degree of success and the level of success.
In addition to these guidelines, on remand, the court (i) would need to consider that, with
respect to the bonuses, an award of attorneys’ fees is permitted only if the non-payment
was not result of a bona fide dispute and the jury failed to make any finding in that
regard, (ii) would need to determine whether the unsuccessful claims were truly related to
the successful ones; and (iii) should consider and give appropriate weight to any fee
agreement between the employee and his counsel. As a result of the initial appeal, the
high court determined that the employee’s claim for pre-trial and trial work would be
unreasonable even under a lodestar approach. Still, the employee requested the same fee
on remand, plus an additional amount for appellate work.
Here, the high court agreed a party should not be permitted to increase a fee award by
prolonging the litigation as a result of making unreasonable settlement demands or
rejecting reasonable settlement offers. Early in this litigation, the employee offered to
settle for $36,000. On the other hand, the employer never made an offer that could be
regarded as reasonable. Ultimately, the high court rejected the approach adopted by the
intermediate court and held the trial court’s conclusion that the non-payment of bonuses
was not subject to fee-shifting was correct, so that the pro rata reduction in the fee request
did not constitute an abuse of discretion. Similarly, the trial court’s use of the hourly rates
provided for in the employee’s retainer agreement, rather than the hourly rates stipulated
by the parties was also not an abuse of discretion. Further, the trial court’s determination
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as to the reasonable number of hours necessary to complete the trial and immediate posttrial stage also did not amount to an abuse of his discretion.
With respect to appellate work, the trial court acted inconsistently with the high court’s
prior pronouncements. It was an important and unresolved issue in Maryland law whether
no attorneys’ fees were awardable for appellate time when the appeal concerned only fees
and not the underlying judgment. The high court observed that “it is as important to
compensate counsel for ensuring that the trial court gets it right, even if to do so requires
counsel to appeal, as it is to ensure that counsel is compensated for services rendered at
trial” and that “it is a disincentive to the retention of competent counsel in these kinds of
cases to deny recovery for successful appellate advocacy.” Thus, plaintiff’s counsel was
entitled to an award of fees for the time reasonably expended in pursuing those appeals.
As a result, the high court again directed that the case be remanded.
The case number is: 102.
Attorneys: Gerald J. Emig (Gleason Flynn Emig & Fogleman Chtd) for Douglas Frankel.
Leizer Z. Goldsmith (The Goldsmith Law Firm) for Joy Friolo.
N.D. Sup. Ct.: $150K award affirmed on behalf of apprentice electricians not paid
for travel time between home base and jobsites
By Brandi O. Brown, J.D.
The Supreme Court of North Dakota affirmed an award of almost $150,000 in favor of
the state department of labor on behalf of seven journeymen who claimed they were not
paid for travel time spent driving company vehicles between their employer’s home base
and jobsites. There was evidence that the utility vehicles had a large carrying capacity
and carried equipment and other items without which the journeymen would have been
unable to do their jobs. The district court’s judgment was affirmed (State of North Dakota
ex rel Storbakken v Scott’s Electric, Inc, May 12, 2014, Crothers, D).
In 2008, seven journeymen or apprentice electricians filed claims with the state’s
department of labor seeking unpaid wages from their employer for travel time while
driving company-owned vehicles. After investigation, the department requested payment
of wages that the department had determined were valid and enforceable. After
unsuccessful efforts to collect those wages from the employer, the department brought
action. The district court awarded judgment of almost $150,000 in favor of the
department for unpaid wages, penalties, and interest.
Then, after filing a notice of appeal, the employer offered to pay the state for
“undisputed” wages, penalties, and interest. A “Partial Satisfaction of Judgment for
Undisputed Wages, Interest, and Statutory Penalties” for over $48,200 was entered by the
court. On appeal, the employer sought reversal of the judgment and requested the state
supreme court to render “a take-nothing judgment” in its favor.
“Take-nothing judgment.” However, there were questions regarding whether the
requested “take-nothing judgment” could include the partial satisfaction judgment
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payment. The state contended that the request was barred to the extent of the postjudgment payment the employer already had made for “undisputed” wages, penalties, and
interest. The employer did not respond to that argument and continued to request that the
Supreme Court “render a take-nothing judgment.” However, the court held that the
employer could only challenge the judgment in excess of that “undisputed amount”
because the employer’s request for reversal and entry of the “take-nothing” judgment
violated the well-established principle that arguments not raised before the district could
not be raised on appeal for the first time. In other words, the employer could not “on
appeal dispute its ‘undisputed’ liability.”
Compensable travel time. With respect to the remaining amount, the court considered
the employer’s question whether, under either the FLSA or state law, “the claimants'
travel time between the home base and the various jobsites was a compensable principal
activity or a noncompensable preliminary or postliminary activity of employment.” Such
a factual decision involved consideration of whether employees were required to
transport essential equipment and whether the equipment was significantly heavier than
equipment an ordinary commuter carries, explained the court.
The record contained photographs of the utility vehicles in question, which had overhead
racks, were equipped to pull trailers that could carry other large equipment like back hoes
and loaders, and had a large carrying capacity. The court noted testimony from claimants
that they were required to transport equipment, tools, and materials to jobsites on a daily
basis and could not have performed their jobs without the items carried. They also
testified about loading and unloading equipment, and servicing, fueling, and cleaning the
vehicles at the beginning and end of the work day. The employer’s contention that the
time spent on these activities was de minimis “ignores the weight of the evidence,” the
court noted.
Moreover, the employer’s work policies imposed strict conditions on use of the vehicles,
which prohibited personal use and mandated that the employees were responsible for
servicing and fueling the vehicles and cleaning them. Vehicle assignment charts were
used daily, which designated a driver and employees assigned to the vehicle.
Likewise, the employer’s argument that it did not have the requisite constructive
knowledge to establish liability was belied by evidence from claimants that they had
attempted to record the time spent on travel on timecards, but that those timecards were
“routinely rejected.” One claimant testified that they were told not to record that time and
that when they did, the timecard was rejected and they were told to remove it. Thus, the
court found that the lower court’s findings were not clearly erroneous and that it did not
misapply the facts to the law.
Amount of hours awarded. The court also rejected the employer’s argument that the
claimants had not produced sufficient evidence that they worked the amount of unpaid
hours that were awarded. The employer complained that there were discrepancies and
inconsistencies in the how the department of labor calculated the amounts. However, the
claimants recorded travel time on the back of timecards as vehicle usage, and the
employer had acknowledged that this method was an accurate representation of the time
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spent by each claimant driving a company-owned vehicle. The investigator based her
review on that recorded information, relied on worksheets provided by the employer, and
prepared wage claim determinations for each of the claimants. The court below had
adopted those calculations. “On this voluminous record, a few inconsistencies do not
render an approximation of hours worked clearly erroneous,” noted the court, and, on the
whole, it found unconvincing the employer’s argument that the methodology was flawed
or that the district court’s findings was clearly erroneous.
The case number is: 20130264.
Attorneys: Leslie B. Oliver (Vogel Law Firm) for Scott's Electric, Inc. Douglas B.
Anderson (Office of Attorney General) for State of North Dakota, ex rel Bonnie L.
Storbakken.
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