Labor Relations & Wages Hours Update
January 2014
Hot Topics in LABOR LAW:
Supreme Court hears oral argument in NLRB v Noel Canning
By Lisa Milam-Perez, J.D. and Pamela Wolf, J.D.
The U.S. Supreme Court heard oral argument in the eagerly anticipated NLRB v. Noel
Canning (Dkt No 12-1281) case, a labor law dispute at its core, but one with much broader
ramifications for the scope of presidential authority under the Constitution. At issue is
whether President Barack Obama’s three polarizing recess appointments to the NLRB in
January 2012 passed muster under the Recess Appointments Clause. Parsing the
questions presented by the Justices in today’s deliberations, most High Court
prognosticators were poised to predict the ultimate answer would be a resounding “no.”
A labor dispute; a constitutional quandary. The road to the Supreme Court began
when Noel Canning, a small beverage company, petitioned for review of an NLRB
decision holding that the employer acted unlawfully when it refused to execute a
collective bargaining agreement that it had reached with the Teamsters union. Noel
Canning challenged the Board’s order on constitutional grounds, contending the agency
lacked authority to issue the ruling because it lacked a valid quorum.
On the day the NLRB issued its holding, it purportedly had five members. But Noel
Canning contended that three of those members, who were appointed by the president as
ostensible recess appointments on January 4, 2012, were not validly appointed because
the Senate was not actually in recess. The Senate was operating at that time pursuant to a
unanimous consent agreement which provided that it would meet in pro forma session
every three business days from December 20, 2011, through January 23, 2012, but that
“no business would be conducted” during those sessions.
Siding with the employer, the D.C. Circuit held that when the Board issued the findings and
order in this case, it did not have a quorum because the recess appointments were
unlawful. (The Third and Fourth Circuits have since reached similar conclusions.) The
appeals court concluded that the “recess” in the Recess Appointments Clause referred to
the period between sessions of the Senate when the Senate is, by definition, not in session
and, therefore, unavailable to receive and act upon nominations from the president.
Finding the “intrasession” interpretation of “recess” unpersuasive, the appeals court
disagreed with an Eleventh Circuit ruling to the contrary and rejected the Board’s
contention that “recess” means breaks in the Senate’s business when it is otherwise in a
continuing session. History supported the employer’s interpretation that “recess” is
limited to intersession recesses, the appeals court determined.
The federal government filed a petition asking the Supreme Court to overturn the
decision; 45 Republican senators also urged the Court to take the case and affirm. Noel
Canning did not oppose a grant of certiorari.
Questions presented. At issue before the High Court were three questions: (1) Whether
the president may use the recess-appointment power during intrasession Senate recesses
or whether the power is limited to intersession recesses. (2) Whether the president’s
recess-appointment power is exercisable for vacancies that exist during a recess or
whether the power is limited to vacancies that first arose during that recess (Noel
Canning had also urged that the NLRB vacancies purportedly filled by the president did
not “happen during the Recess of the Senate,” as required for recess appointments under
the Constitution). (3) Whether the President’s recess-appointment power may be
exercised when the Senate is convening every three days in pro forma session.
The last question had not been addressed by the D.C. Circuit. However, this point of law
could appeal to the High Court if it seeks to affirm the appeals court on narrower grounds
and eschew the broader constitutional quandary. While both Democratic and Republican
presidents have exercised the recess appointment power during the challenged
“intrasession” recesses, only President Obama has appointed nominees during pro forma
sessions.
Reflecting the significance of the issues before the Supreme Court, Senate Republican
Leader Mitch McConnell and 44 of his Senate Republican colleagues requested and were
granted permission to participate in oral argument as amici curiae in the case. Miguel
Estrada, a partner in the Washington, D.C., office of Gibson, Dunn & Crutcher (and
former assistant to the solicitor general) argued on behalf of the Senators. Moreover, the
U.S. Chamber of Commerce’s National Chamber Litigation Center (NCLC) filed a brief
in the case on behalf of Noel Canning, a member of the trade group, marking the first
time that NCLC attorneys directly represented a Chamber member company before the
U.S. Supreme Court. Many organizations have weighed in with amici briefs, including
unions, scholars, legal foundations, justice groups, and employers.
The issues the parties grappled with today were much bigger than the little labor dispute
that spawned it. While the Supreme Court’s decision in Noel Canning could mean that all
of the decisions handed down by the NLRB since those ill-fated January 2012 recess
appointments are invalid — a significant development for the parties in those cases and
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for labor practitioners — today’s argument focused more broadly on the constitutional
questions at stake.
The NLRB’s case. Arguing on behalf of the NLRB, Donald B. Verrilli, Jr., Solicitor
General, urged that to invalidate the recess appointments would “repudiate the
constitutional legitimacy of thousands of appointments by presidents going back to
George Washington.” Further, he warned, “going forward, it would diminish presidential
authority in a way that is flatly at odds with the constitutional structure the Framers
established.”
The Justices questioned Verrilli on how the Constitutional terms “recess,” “vacancy,” and
“may happen” are defined, in the government’s view, and whether there is a “recess”
within that meaning during a pro forma session. Justice Kagan suggested the matter of
recess appointments was, in the modern era, a political one rather than a genuine
safeguard to ensure the executive branch can function while Congress is away. Presidents
of both parties “have used this clause as a way to deal, not with congressional absence,
but with congressional intransigence, with a Congress that simply does not want to
approve appointments that the President thinks ought to be approved.”
Responding, Verrilli agreed that “it may be true as a matter of raw power that the Senate
has the ability to sit on nominations for months and years at a time, but that is 100 miles
from what the Framers would have expected.” But that was a different matter, the other
Justices noted, than whether the Senate was available to consider appointments, which
was the crux of the case.
As for his “status quo” argument that the centuries-long practice of presidential recess
appointments warranted deference notwithstanding what the Constitution actually says on
the matter, the Justices seemed skeptical.
Of more immediate concern to the labor law community, Verrilli noted “there are many
dozens of board decisions and, perhaps, many hundreds of board decisions that are under
a cloud as a result of the D.C. Circuit's ruling in this case. And so, the board will have a
considerable amount of work to do … if the D.C. Circuit's decisions were to be
affirmed.”
Justice Scalia, however, suggested the government would likely rely on the “de facto
officer” doctrine, with success. “You don't really think we're going to go back and rip out
every decision made,” Scalia said.
“I would certainly hope not, Your Honor,” Verrilli replied, “but it certainly casts a
serious cloud over the legitimacy of all of those actions.”
Noel Canning’s case. Pleading the employer’s case, Noel J. Francisco of Jones Day cited
the Advice and Consent Clause, cautioning that the government’s position “would
eviscerate” the check on presidential power embodied in that provision — “creating a
unilateral appointment power available for every vacancy at virtually any time with
advice and consent to be used only when convenient to the President.” Responding to
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Justice Ginsburg’s contention, though, that this view would “destroy the recess clause,”
Francisco argued that “the recess appointment power is a contingent one. It arises only
when the Senate chooses to trigger it by ending its session and beginning its recess. So
the Senate always has the power to prevent recess appointments.”
Presented too with the question of what to do with the long historical record of recess
appointments, Francisco questioned the premise that such “an unbroken and never
contested practice” existed. At any rate, he argued, “The political branches of the
government have no authority to give or take away the structural protections of the
Constitution. They don't exist to protect the Senate from the President or the President
from the Senate. These are liberty-protecting provisions that protect the people from the
government as a whole. So if the Constitution is quite clear as to what those structural
protections are, but the political branches, assuming for the sake of argument, have
conspired to deplete them, that is illegitimate, and it should be rejected by this Court.”
As a practical matter, while the recess appointments clause may have been essential in
the historical context, lest the Senate be subject to a recall in emergency sessions every
time the President needed to confirm a nominee, “today, the Senators can get back to
Washington, D.C. very easily …. They're perfectly willing to be hailed back if
necessary.”
As for the consequences of the High Court’s resolution of the constitutional dispute on
the NLRB, Francisco downplayed the impact, noting that “going forward the government
can solve the problem through agency ratification of past decisions. Going backward,
there are a variety of doctrines that would limit anybody's ability to actually challenge
those past actions, including, for example, the APA's 6-year statute of limitations on
challenging final agency action, various finality rules that would prohibit a party from
raising an issue that they could have but 16 failed to raise in an earlier proceeding, and
various justiciability doctrines, like mootness, standing, and, Your Honor, the de facto
officer doctrine, at least outside of the context of direct appeal.”
The Senators’ position. From the frame of reference of the Republican senators, “this is
all about how the Senate chooses to arrange its affairs” under the Rules of Proceedings
Act,” said Estrada, arguing for the Senators. He reiterated: “the Senate by the design of
the Constitution, the Appointment Clause, the primary method of appointment, has an
absolute veto over nominations.” Addressing the practicalities, Estrada noted too that,
with the nation having moved into the modern age, “the rules of the Senate tend to
provide for the Senate to be available at the drop of a hat.”
Estrada also downplayed the drastic consequences envisioned by the government. “For
all that we hear about today, which has to do with how the heaven will fall, and the
parade of horribles, there is no parade, and there is no horrible. The only thing that will
happen is that the president, heaven help us, will be forced to comply with the advice and
consent that the Appointments Clause actually calls for.”
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Attorneys: Miguel Estrada (Gibson, Dunn & Crutcher), Noel J. Francisco (Jones Day),
Donald B. Verrilli, Jr.
Arguments leveled for and against public sector compulsory agency fees in home
care provider case
By Pamela Wolf, J.D.
The Supreme Court on Tuesday, January 22, heard oral arguments in a case that could
significantly change the landscape for public sector unions, which have increasingly
come under attack and have been blamed for some of the fiscal difficulties faced by state
and local governments.
Assisted by the National Right to Work Foundation, a group of Medicaid home-based
personal care providers filed a class-action federal suit against Illinois Governor Pat
Quinn and Illinois SEIU and AFSCME locals over an executive order that designated
20,000 providers as public employees for collective bargaining purposes (Harris v Quinn
(Dkt No 11-681). The Seventh Circuit held that a CBA that required the attendants to pay an
agency fee to a union did not violate the First Amendment. Because the attendants were
state employees, the union’s collection and use of fair share fees would be permitted by
the Supreme Court’s mandatory union fee jurisprudence, according to the appeals court.
Questions on review. The Supreme Court granted certiorari on October 1, 2013. Two
issues are raised for review:
(1) Whether a state may, consistent with the First and Fourteenth Amendments to the
United States Constitution, compel personal care providers to accept and financially
support a private organization as their exclusive representative to petition the state for
greater reimbursements from its Medicaid programs; and
(2) whether the lower court erred in holding that the claims of certain home care
attendants were not ripe for judicial review.
Argument against the compulsory union fee. In his first point before the High Court,
attorney William L. Messenger, on behalf of the petitioner, argued that this case differs
from the typical public employee union scenario because the personal care providers
must seek reimbursement for their services from the state, as opposed to employees who
are directly employed by the state.
He also asserted that the actual bargaining is “petitioning” and political in nature.
However, when questioned by Justice Anthony Kennedy, Messenger stated that under the
CBA, the state did agree to give certain money to the union for the purpose of offering
health care benefits to the care providers — a benefit they did not have before the union
came into the picture.
Justice Antonin Scalia appeared unconvinced by the “petitioning and public in nature”
distinction drawn by Messenger, using the example of a policeman who wanted raises on
behalf of all policeman — a scenario incorporating the attorney’s own example of public
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employees who differ from personal care providers: “But it's the same grievance if the
union had presented it. The — the grievance is the salaries for policemen are not high
enough.”
Expanding on Scalia’s example, Justice Elena Kagan appeared to agree: “…the ultimate
sanction is the same, right? Somebody grouses about his pay too much, he could get
fired. Somebody refuses to support a union that is negotiating about pay, he can lose his
job. So it's — it's really identical across the two situations.”
Bringing the argument back to center, Justice Samuel Alito framed what he understood to
be the issue in the case: “whether [the care providers] could be required to pay for
somebody else to go and speak and possibly say things that they disagree with.”
Narrowing the scope of the petitioner’s objection to the union through a series of
questions, Justice Sonia Sotomayor pinpointed the problem to the fair share issue. “Yes,
forcing the individuals to support the union for the purpose of petitioning the State over []
the Medicaid rates for homecare,” Messenger confirmed.
Looping back to his earlier colloquy with Messenger, Justice Scalia explained that he had
been trying to show that if the petitioner had a case, it did not rest on the right to petition
the government for redress of grievances, but rather on the First Amendment. Confirming
that Messenger’s position is that care providers are being required to support speech they
do not agree with, Scalia said: “Now, that is … an arguable position, but … I don't think
it's even arguable that the right to petition the government for redress of grievances is —
is involved.”
The confusing nature of the question was revealed through a series of lighthearted
exchanges between the Justices and Messenger, until Justice Kagan turned the focus to
what she thought would inform the issue: “So you're saying, well, the government can
punish somebody for saying something, but the government in the exact same position
cannot compel somebody to say something they disagree with,” seeking a distinction
between the two scenarios.
Messenger also asserted, among other things, that the manner in which care providers
petition the state is not “an internal proprietary matter that the government has free rein to
manage” — in other words, the way in which the care providers petition the state is not
internal workplace speech.
Justice Scalia challenged that contention, saying that it is for private employers, making a
comparison to employers who prefer a closed shop and only want to deal with one union
and thus require every worker hired to join the union and pay dues for representational
purposes. Private employers do this because they believe it in their own interest to do so;
why can’t the government have the same interest, Scalia queried.
According Messenger, in the public sector, where government is involved, compulsory
fees are illegal under the First Amendment.
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In support of the union arrangement. For his part, attorney Paul M. Smith, on behalf of
the respondents, was immediately faced with what appeared to be a misconception that
the reimbursement rate to the care providers was a fixed amount set by the federal
government via the Medicaid program. Smith said, however, he was unaware of any
limitation placed on the recipient state, in this case Illinois, as to how that money is used
to reimburse care providers, i.e., how much the workers are paid.
As to a question posed by Justice Stephen Breyer about the First Amendment and
whether public employee unions face a “bigger mix of public policy issues,” Smith said:
“[T]he fact that it is a public employee union, representing public employees means that
in one sense, everything that is being negotiated could be viewed as a greater matter of
public concern.
“On the other hand, that is not a reason, as [Abood v. Detroit Bd. of Educ., 431 U.S. 209
(1977)] held, to up the ante in terms of constitutional scrutiny. To the contrary, this is the
government as employer dealing with its employees about the basic terms and conditions
of their employment.”
To Justice Kennedy’s query as to whether public employees are required to surrender a
substantial amount of their First Amendment rights to work for the government, Smith
asserted:
“When there are substantial interests of the government as employer that are served by
the sacrifice. What you've said over and over in Duryea, in Garcetti, and in a whole line
of cases is the government gets to have leeway as an employer when there are real
interests at stake, and that in that situation, the employee could be put to the choice.”
Agency gives up on controversial notice posting rule
By Pamela Wolf, J.D.
The NLRB announced on January 6 that it will not seek Supreme Court review of two
Circuit Court of Appeals decisions invalidating the agency’s Notice Posting Rule, which
would have required most private sector employers to post a notice of employee rights
under the NLRA.
On May 7, the D.C. Circuit vacated the controversial rule, upholding a challenge brought
by several employer groups. Instead of hanging its decision on the NLRB’s authority
under NLRA Sec. 6 to promulgate the posting rule, as argued by the parties, the circuit
court concluded that the rule violated employers’ free speech rights as protected by Sec.
8(c) of the Act. The agency’s bids for panel and en banc rehearing were rejected.
In a June 14 ruling, the Fourth Circuit took up the agency authority issue and determined
that the rulemaking function provided for in the NLRA only empowers the NLRB to
carry out its statutorily defined reactive roles in addressing unfair labor practice charges
and conducting representation elections upon request. Thus, the Fourth Circuit held that
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the Board exceeded its authority in promulgating the challenged rule. The Fourth Circuit
similarly rejected the NLRB’s request for rehearing and rehearing en banc.
While it has tossed in the towel as far as judicial review goes, the NLRB said that it
nonetheless “remains committed to ensuring that workers, businesses and labor
organizations are informed of their rights and obligations under the National Labor
Relations Act.” To that end, the agency will continue is its national outreach program to
educate the American public about NLRA. The disputed poster also remains available on
the agency website. The NLRB noted that it may be viewed, displayed and disseminated
voluntarily. In addition the Board pointed to its free NLRB mobile app for iPhone and
Android users, which provides the public with information about the NLRA.
NLRB rescinds “quickie election” rule
By Pamela Wolf, J.D.
The National Labor Relations Board will publish a final rule notice in the Federal Register
on Wednesday, January 22, rescinding the controversial amendments to its representation
case procedures adopted by final rule on December 22, 2011. The move is the final step
after the Board formally retreated last month from its appeal of a district court decision
invalidating the much fought-over revisions that were dubbed the “quickie election” rule.
Pursuant to a stipulation of voluntary dismissal between the parties, the agency’s appeal was
dismissed by the D.C. Circuit on December 9, 2013.
The now-dismantled final rule took effect on April 30, 2012, but on May 14, 2012, the
rule was set aside by a D.C. District Court decision, Chamber of Commerce v. NLRB, on the
grounds that the Board lacked a quorum when it promulgated the rules revision. The
Board temporarily suspended implementation of the amendments adopted in the final
rule, but nonetheless filed an appeal in the D.C. Circuit. That appeal, however, was held
in abeyance following the D.C. Circuit’s Noel Canning v. NLRB decision, which concluded
that President Obama’s recess appointments to the NLRB were improper. The Supreme
Court subsequently granted the NLRB’s petition for cert in Noel Canning and the case was
argued last week on January 13.
“Now that the district court’s decision is no longer subject to appellate review, this final
rule restores the relevant language in the CFR to that which existed before the Board
issued the December 22, 2011, final rule,” the NLRB stated in its Federal Register
notice. The notice details the changes being made in order to restore the language of each
of previously revised subpart to that which existed prior to the December 22, 2011,
“quickie election” amendments, with the exception of certain non-substantive changes
required for publication, such as spelling corrections and formatting changes.
The restoration pertains to 29 CFR Parts 101 and 102, and conforms the NLRB’s
statements of procedures and rules and regulations to the D.C. District Court’s “mandate
that ‘representation elections will have to continue under the old procedures,’” the Board
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said. Given the circumstances, the NLRB found it unnecessary to provide notice and
comment on the restoration.
Dismantled provisions. The “quickie election” rule was intended to reduce unnecessary
litigation and delays in the representation election process, the Board said when it
promulgated the revisions. After the revision was published, the U.S. Chamber of
Commerce immediately filed a lawsuit to block the controversial rule, calling it a “huge
gift to organized labor.”
The amendments that are now reversed focused mainly on the procedures in the minority
of cases when parties are unable to agree on issues such as when a petitioned-for unit is
appropriate. In those cases, under the now-rejected rule, the dispute would have gone to a
hearing in a regional office; the NLRB Regional Director would have decided the matter
and, if appropriate, set an election. The hearing would have been limited to issues that
were relevant to the question of whether an election should be conducted. The hearing
officer would have had the sole authority to limit testimony to relevant issues and to
decide whether or not to accept post-hearing briefs. Once the Regional Director had made
the decision, all appeals of that decision to the Board would have been consolidated into a
single post-election request for review. This would have changed the status quo, under
which parties were permitted to appeal regional director decisions to the Board at
multiple stages in the process. The now-reversed final rule also would have made Board
review of the Regional Directors’ decisions discretionary.
BART board ratifies union contract
On January 2, the Bay Area Rapid Transit (BART) announced that by an 8-1 vote its
board of directors has approved the four-year CBAs reached with the two largest unions
representing its employees: ATU Local 1555 and SEIU Local 1021. The contract
includes revisions recently negotiated to resolve a disputed family leave provision that
BART said was mistakenly included in the original tentative agreements reached on
October 21, 2013. Union employees will be voting on the contract in the coming weeks.
On December 21, 2013, the two unions and the transit district resolved the remaining
contract difference with solutions that are administrative in nature and/or will be covered
within BART's existing budget, according to BART. The CBAs cover 2013-2017.
“We thank the union leaders for all their hard work to resolve the family leave dispute
and to move this agreement forward,” said BART President Joel Keller. “The Bay Area
has been put through far too much and we owe it to our riders and the public to make the
needed reforms to our contract negotiations process so mistakes are avoided in the future.
I will appoint a new Board committee to investigate the policies and practices of labor
negotiations and will make recommendations to the Board and the General Manager on
how we can improve the process.”
The SEIU quickly released a statement regarding the ratification of the contract — after
some eight months of contract talks — which covers more than 2,300 workers
represented by SEIU 1021 and ATU 1555. The union clearly was not pleased with the
manner in which the transit district’s board had handled the contract negotiations.
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“Today’s Board vote incrementally restores the faith that the riders and workers have lost
in the BART Board of Directors, but it’s not enough to fix the damage they’ve caused to
our communities,” said SEIU 1021 Executive Director Pete Castelli. The “unnecessarily
long, tough, and contentious eight months of negotiations” were prolonged by the BART
Directors’ unwillingness to meet and bargain fairly with the workers, according to
Castelli. He maintains that BART today is less safe and less reliable due to the directors’
reckless leadership.
“We look forward to the opportunity to work with our communities and to elect Directors
who are committed to improving service and safety to all who depend on BART,”
Castelli said.
As the ATU pointed out in an earlier statement, the tentative agreement with BART
management was reached only with “the essential assistance of the Federal Mediation
Conciliation Service.”
IAM workers accept Boeing contract extension
The International Association of Machinists and Aerospace Workers (IAM) announced on
January 4 its members have accepted a proposed eight-year contract extension with
Boeing. Union members in IAM District 751 in Puget Sound; District W-24 in Portland,
Oregon; and District 70 in Wichita, Kansas, voted 51 to 49 percent to accept the contract,
which includes a two-part $15,000 signing bonus and assures the 777X will be built in
Puget Sound by IAM members.
The agreement also reaffirms Boeing’s commitment to maintain 737 MAX production in
Renton, Washington through 2024. Analysts estimate the two programs could account for
as many as 20,000 direct and indirect jobs and billions in economic activity.
The union said the proposal also includes changes to IAM members’ defined benefit
pension plan. Although the plan will continue to pay full benefits to all vested members,
Boeing will cease making contributions, and members will instead be covered by a
company-funded 401(k) plan and a separate savings plan that includes matching
company contributions.
“The 777X is not just Boeing’s newest wide-body aircraft,” said IAM International
President Buffenbarger. “In materials, technology and manufacturing skills required, the
777X represents a quantum leap in aviation history. IAM members have built Boeing
aircraft in Puget Sound for more than 60 years. This agreement assures they’ll continue
building them for decades to come.”
“Thanks to this vote by our employees, the future of Boeing in the Puget Sound region
has never looked brighter,” Boeing Commercial Airplanes President and CEO Ray
Conner said in a statement. “We’re proud to say that together, we’ll build the world's next
great airplane — the 777X and its new wing — right here. This will put our workforce on
the cutting edge of composite technology, while sustaining thousands of local jobs for
years to come.”
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Civil rights groups & SEIU file amicus briefs on behalf of OFCCP in UPMC
Braddock v Perez
By Cynthia L. Hackerott, J.D.
A coalition of civil rights groups and the Service Employees International Union (SEIU)
recently announced the filing of two amicus briefs in a high profile case, UPMC
Braddock v Perez (No 13-5158), currently pending before the D.C. Circuit Court of
Appeals, in which three hospitals affiliated with the University of Pittsburgh Medical
Center (UPMC) Health Plan have challenged the OFCCP’s assertion that the hospitals are
federal subcontractors subject to the agency’s jurisdiction. The National Women’s Law
Center (NWLC), the NAACP Legal Defense Fund, and the National Partnership for
Women & Families have jointly filed one brief and the SEIU filed the other. In a joint
statement, the groups note the appeal has the potential to undo the entire legal framework
supporting the role of the OFCCP, adding that their briefs underscore the critical role the
OFCCP plays in protecting the rights of workers.
The hospitals have appealed a March 30, 2013, ruling by the federal district court for the
District of Columbia holding that although the hospitals did not directly contract with the
federal government, they were still subject to OFCCP jurisdiction as federal
subcontractors. The district court found that the hospitals were covered federal
subcontractors because they had contracts with an HMO (the UPMC Health Plan) to
provide medical products and services covered by the HMO under the HMO’s contract
with the US Office of Personnel Management to provide medical coverage to U.S.
government employees.
Hospitals’ arguments. In their appellate brief, the hospitals assert, among other
arguments, that neither Title VII nor the Federal Procurement Act provide the necessary
legislative authority for the affirmative action programs for minorities and women
required by the OFCCP’s regulations implementing Executive Order 11246.
Amicus briefs. The two amicus briefs filed by the civil rights groups and the SEIU assert
that the hospitals’ legal challenge is “an unprecedented and radical move that, should it
prevail, would undo decades of established federal protections created to eradicate
discrimination and ensure equal employment opportunities for all American workers,”
the joint statement notes.
“UPMC’s efforts to dismantle these regulations should concern the workers at these
hospitals and really workers across the country,” said Fatima Goss Graves, NWLC VicePresident of Education and Employment. “What may appear to be a small legal appeal
has the potential to unravel decades of anti-discrimination measures that protect workers
and are widely supported.”
“Americans fought long and hard for these crucial protections that make sure women and
people of color have equal opportunity in the workplace,” saidVeronica Joice of the
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NAACP Legal Defense Fund. “We trust that the court will notset us back decades to a
time when millions of Americans were treated as second class citizens.”
“Particularly at this time when there is a national mandate to reduce health disparities and
improve outcomes, the public and governmental interest in promoting a diverse health
care workforce and fighting discrimination could not be more clear,” added National
Partnership for Women & Families Senior Advisor Judith L. Lichtman.
“UPMC is not above the law. It aggressively attacks workers who speak up for their
rights, and the federal government has already issued historic complaints against UPMC
because of its treatment of workers,” said Neal Bisno, president of SEIU Healthcare
Pennsylvania. “Now, in addition to these attacks, this massive employer is actually
seeking to change the rules and evade its role in uplifting all workers, including women
and people of color.”
Litigation background. In November 2006, the OFCCP filed administrative complaints
against the defendant hospitals alleging that they had violated the laws enforced by the
OFCCP by refusing to permit the agency to conduct compliance reviews. In a January 16,
2008, decision, a DOL Administrative Law Judge (ALJ) found the defendant hospitals to
be subcontractors subject the OFCCP jurisdiction, and ordered the hospitals to permit the
OFCCP to proceed with its compliance review (OFCCP v UPMC Braddock, DOL ALJ,
Nos 2007-OFC-1, 2007-OFC-2, 2007-OFC-3). The DOL’s Administrative Review Board
(ARB) affirmed the ALJ’s decision on May 29, 2009 (OFCCP v UPMC Braddock, DOL
ARB, No 08-048). Pursuant to the Administrative Procedure Act, the hospitals sought
review in the federal district court.
Region 13 in Chicago gets new RA
NLRB General Counsel Richard F. Griffin, Jr., announced on Wednesday, January 8, that
NLRB career attorney Paul Hitterman has been named Regional Attorney (RA) for
Region 13 in Chicago. Hitterman had been serving as a Deputy RA in the Chicago office.
Hitterman will now assist Regional Director Peter Sung Ohr in the enforcement and
administration of the NLRA in Cook, Du Page, Kane, Lake and Will Counties in Illinois
and Lake County in Indiana. He succeeds Arly Eggertsen, who has retired from the
agency.
The new RA began his career with the NLRB in 1988 as an attorney in the Division of
Enforcement Litigation in Washington, D.C. He transferred to the Chicago office in 1991
and was promoted to Trial Specialist in 1996. He became a Supervisory Attorney in 1997
and Deputy Regional Attorney in 1999.
Hitterman obtained a B.S.C. in business administration from DePaul University in 1985.
He received his J.D. from The Columbus School of Law of the Catholic University of
America in 1988.
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Teamsters members reject YRC Worldwide proposal, poised for vote on UPS
tentative deal
By Pamela Wolf, J.D.
This week, Teamsters at transportation and logistics giant YRC Worldwide Inc. (YRCW)
said they’re not on-board with what the company is offering. UPS, however, may fare
better — local Teamster leaders have accepted a tentative deal that will be put to a vote
next week.
YRC proposal. Union members at YRCW have rejected a proposal that would have
extended and modified the existing memorandum of understanding. Ballots counted on
Thursday, January 9, voted against the proposal by a margin of 61 percent to 39 percent.
The union said that YRCW management communicated with Teamster members and
leaders in late October and early November 2013 about the need to make modifications
and get an extension in order to address upcoming debt maturities. After initial outreach,
the company submitted a proposal that Teamster local union leaders agreed to submit to a
vote while management worked to line up new money to reduce company debt and go to
market on refinancing its remaining debt — all three were contingent on the other.
After the proposal was shot down, the union said that its members already had made
“tremendous sacrifices” at YRCW that began six years ago with a 15-percent wage
concession from the National Master Freight Agreement rate and a 75-percent reduction
in pension contributions.
“Our members have sacrificed billions of dollars in wages and pension benefits over the
past five years and yet the company has been unable to recover from the disastrous
policies of the previous management,” said Jim Hoffa, Teamsters General President and
Co-Chairman of TNFINC.
According to media reports, the company’s shares have dropped substantially in the wake
of the proposal’s rejection.
UPS Freight deal. Earlier this week, on January 6, Teamster leaders representing UPS
Freight workers across the country endorsed a new tentative national agreement that they
believe will provide for major economic improvements and protect work and jobs at a
time when most less-than-truckload companies are cutting wages and benefits.
Among other things, the deal offers $2.50 in wage increases during the life of the
agreement, which, if ratified, would run through July 31, 2018. The union says this
provision will make UPS Freight members the highest paid in the industry. The new deal
would also improve the pension rights of 80 percent of the workers, while preserving and
maintaining the benefits of those at the top of the wage scale.
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Details of the new tentative agreement were outlined at the “two-person” meeting, in
which two representatives from each Local Union participated. Now that the deal has
been endorsed by local union leaders, the membership’s ratification vote will take place
January 11-12.
Former White House official named for number two spot at DOL
On Tuesday, January 8, President Barack Obama announced his pick of Christopher P.
Lu for Deputy Secretary, Department of Labor — the number two spot at the agency. The
former White House official is currently a senior fellow at the Center for the Study of the
Presidency and Congress. The nomination must be forwarded to the Senate for advice
and consent.
In 2013, Lu was also a fellow at the University of Chicago Institute of Politics and the
Georgetown University McCourt School of Public Policy. From 2009 to 2013, he served
in the White House as Assistant to the President and Cabinet Secretary. In 2008, Lu was
the Executive Director of the Obama-Biden Transition Project, and from 2005 to 2008,
he was the Legislative Director and then Acting Chief of Staff for Senator Obama. He
was Deputy Chief Counsel of the House Committee on Oversight and Government
Reform (Minority Staff) from 1997 to 2005.
Lu started his career as a law clerk to Judge Robert E. Cowen on the Third Circuit Court
of Appeals and as an attorney at Sidley Austin. He was Co-Chair of the White House
Initiative on Asian Americans and Pacific Islanders from 2011 to 2013. Lu received an
A.B. from Princeton University and a J.D. from Harvard Law School.
Long-time friend to labor retiring from Congress
By Pamela Wolf, J.D.
Senior Democratic Congressman George Miller — the top Democrat on the House
Education and the Workforce Committee — has announced that he will not seek a 21st
term in Congress this fall. Considered by many to be a giant in the continuing effort to
advance labor policy on behalf of workers, Miller has chaired three committees during
the past 40 years and is a principal author of major laws affecting America’s education
system, labor and health policy, and the protection of natural resources.
Miller is the author of H.R. 1010, the Fair Minimum Wage Act of 2013, introduced in the
House last month. The bill would increase the minimum wage to $10.10 in three steps
and provide for automatic annual increases linked to changes in the cost of living. It
would also gradually raise the minimum wage for tipped workers, currently $2.13 an
hour, for the first time in more than 20 years — to 70 percent of the regular minimum
wage.
The Congressman’s release about his retirement points to an impressive career that belies
a tenacious pursuit of a quality education for children from all backgrounds and
economic opportunity for the working poor and middle class. He is known for his
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sophisticated legislative strategies, pointed investigations of powerful special interests,
and impassioned advocacy. He successfully took on asbestos executives, for-profit
colleges, subsidized agribusiness, mining corporations, oil companies, boot camps for
troubled youth, and administration officials of both parties. As his office notes, the
congressman is also well known for sticking with issues over the long haul and engaging
directly with those most affected by the policies under consideration, such as mineworker
families, fishermen, teachers and children, garment workers, seniors, and experts from
across the country in the fields of education, labor, and the environment.
Miller served as chair of the Select Committee on Children, Youth and Families (19831992), the Committee on Natural Resources (1992-1994), the Committee on Education
and Labor (2007-2010), and was the long-time co-chair of Democratic Steering and
Policy Committee, a leadership position he resigned from in January of 2013. He has
used each of these positions to advance his policy priorities and highlight inequities in the
federal budget.
“Wealthy and powerful special interests have always had plenty of friends in
Washington. I came to Congress to stand up for the rest of us,” Miller said. “And I have
learned a great deal in the process. Two lessons stand out among many: First, that
enacting progressive public policy is good for our economy and our country. It helps to
grow and strengthen the middle class, and that makes America a better place for
everyone. And, second, that making good public policy is very hard work. The job is
never done. It requires a great sense of urgency to move forward on the big issues and
enormous stamina to see them all the way through. The wins don’t come quickly, even
when the need is dire, and the losses are hard to accept. And third, that elections matter.
Election results establish the basic parameters for what kind of legislation is possible in
Congress. After each election, it is clear whether we will have a greater or a lessor chance
of forging bi-partisan alliances to move major legislation to help the country.”
Miller is looking forward to continuing his work on issues that have stood at the core of
his career and his passions, “in particular education reform, economic fairness, and
improving labor standards in the United States and abroad, such as in the worldwide
garment industry.”
As for the rest of this year, the Congressman said he plans “to push Congress ‘to do some
good,’ including an effort to achieve the following:
 Extend long-term unemployment insurance benefits to the 1.3 million Americans
who unfairly had their coverage cut off on December 28th.
 Raise the minimum wage to at least $10.10 per hour by 2016, index it to inflation,
and include a raise for tipped workers.
 Further implement the Affordable Care Act to extend health insurance to all
Americans.
 Find common ground to fix the No Child Left Behind Act.
 Make college more affordable through the Higher Education Act.
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


Push for passage of the bi-partisan Miller-Harkin-Hanna bill to implement
President Obama’s initiative to expand early childhood education services
nationally.
Enact comprehensive immigration reform.
Encourage American companies to embrace international labor standards in their
substandard factories in Bangladesh and other countries.
Acknowledging that his agenda is an ambitious one, Miller also said that “it’s an agenda
the American people strongly support and one that will help strengthen our country,
reduce inequality, and create opportunities for all of our children for years to come.”
AFL-CIO President Richard Trumka quickly issued a statement about Miller’s
retirement: “It is impossible to imagine the struggle for fairness for working men and
women without the leadership of George Miller. George Miller fights every day like it is
his last to better the lives of working families. He feels it in his gut, gives voice to it and
acts without hesitation or equivocation. He understands that a strong economy is built by
investing in our greatest asset, the working men and women who wake this country up
and put it to bed every day. From job safety to health care, from retirement security to the
right to have a voice on the job, George Miller has been a towering figure in the House of
Representatives. He is quite simply a giant. His record of accomplishment for America’s
workers will not soon be matched.”
Spending bill poised for Senate vote; sends message on employer liability for
immigration violations, electronic voting in union elections
By Pamela Wolf, J.D. and Stephen K. Cooper, CCH News Staff
On Wednesday, January 15, House lawmakers quickly passed a $1.012-trillion spending
bill for fiscal year (FY) 2014 by a vote of 359 to 67. The Consolidated Appropriations
Act of 2014 (HR 3547) sets spending levels for all federal agencies, including the EEOC,
the DOL, and the NLRB. Along with spending allocations, the bill would give the Labor
Secretary a directive related to employer liability for certain immigration violations and
prevent the NLRB from using appropriations to implement measures that would permit
employees to vote electronically in a bargaining representation elections. The bill is
poised for a Senate vote on Friday morning.
EEOC. The spending bill would give the EEOC funding of $364,000,000 and, among
other things, bars the commission from taking any action to implement any workforce
repositioning, restructuring, or reorganization until the Committees on Appropriations of
the House of Representatives and the Senate have been notified of such proposals.
Labor Department. Appropriations earmarked for the DOL would give the Wage and
Hour Division $224,330,000 in funding for necessary expenses, including reimbursement
to State, Federal, and local agencies and their employees for inspection services rendered.
For necessary expenses for the Office of Labor-Management Standards, the bill provides
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$39,129,000. The OFCCP would receive $104,976,000, and OSHA would get
$552,247,000 with several conditions attached.
The proposed spending bill also includes a directive to the Secretary of Labor that
pertains to DOL investigations of substantial violations related to the admission of
nonimmigrants described in section 101(a)(15)(H)(ii)(a) of the Immigration and
Nationality Act. If the employer of such nonimmigrants demonstrates, by a
preponderance of the evidence, that an agent of the employer engaged in fraud or
misrepresentation to the DOL that was outside the scope of the authority conferred by the
employer, the Secretary is then authorized (1) to exclude the employer from debarment
proceedings under section 655.118 of title 20, Code of Federal Regulations, which were
commenced on or after January 1, 2013; and (2) to initiate or continue debarment
proceedings against the agent who engaged in the fraud or misrepresentation.
NLRB. The spending bill gives the NLRB funding of $274,224,000 for its necessary
expenses. However, none of the appropriated funding can be made available to organize
or assist in organizing agricultural laborers or used in connection with investigations,
hearings, directives, or orders concerning bargaining units composed of certain
agricultural laborers.
The bill also states that none of the funds it provides or that have been provided by prior
appropriation acts “may be used to issue any new administrative directive or regulation
that would provide employees any means of voting through any electronic means to
determine a representative for the purposes of collective bargaining.”
Compromise bill. Members from both political parties said the spending legislation is
less than perfect, but represents a return to congressional regular order and a bipartisan
compromise that would keep the government open through September. Although he
supported the measure, Representative David Price (D-N.C.), ranking member on the
House Appropriations Subcommittee on Homeland Security, said the spending bill bears
the marks of the GOP’s "misguided budget strategy" that cuts appropriations "while
leaving the main drivers of the deficit — tax expenditures and mandatory spending —
largely untouched."
The White House signaled its support for the bill earlier this week in a Statement of
Administration Policy: “The legislation adheres to the funding levels agreed to in the
Bipartisan Budget Act of 2013, and reflects compromise by both parties. It unwinds some
of the damaging cuts caused by sequestration, ensures the continuation of critical services
that the American people depend on, and invests in essential areas such as education,
infrastructure, manufacturing, and scientific research, which contribute to growing the
economy, creating jobs, and strengthening the middle class.”
Continuing appropriations to permit vote. In a related vote, the Senate on January 15
agreed to send President Obama legislation that would keep the federal government open
through January 18. The president signed H J Res 106 the same day, which makes
continuing appropriations for FY 2014 and for other purposes. The short-term spending
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law allows the Senate enough legislative time to approve of the omnibus spending bill,
which due to cloture is slated for a vote this Friday morning.
Spending bill gets the final nod in the Senate, heads to the president
By Pamela Wolf, J.D.
Thursday evening, January 16, in a ballot initially slated to take place the following
morning, the Senate voted 72 - 26 to approve the $1.012-trillion Consolidated
Appropriations Act of 2014. Members from both political parties have called the
spending legislation less than perfect, but say that represents a return to congressional
regular order and a bipartisan compromise that would keep the government open through
September 2014.
The final Congressional approval came after a failed attempt by Senator Ted Cruz (RTex.) to get unanimous consent to take up and adopt two amendments that would prohibit
funding for the Patient Protection and Affordable Care (ACA). One of Cruz’s
amendments would have barred ACA funding so long as the health reform law is
harming the healthcare of Americans. The other would have prevented funding of the
ACA and required fulfillment of the nation’s promise to military retirees.
The spending measure provides funding of $364,000,000 to the EEOC; $224,330,000 to
the DOL’s Wage and Hour Division; $39,129,000 to the Office of Labor-Management
Standards; $104,976,000 to the OFCCP; $552,247,000 to OSHA; and $274,224,000 to
the NLRB.
The omnibus appropriations bill, H.R. 3574, is now headed to President Barack Obama for
signature. Since the White House signaled its approval of the compromise spending
measure earlier this week, it is expected that he will sign the bill.
GC issues complaint against Walmart for NLRA violations during high-profile
employee protests
By Pamela Wolf J.D.
The NLRB’s Office of the General Counsel (GC) has issued a consolidated complaint
against Walmart citing violations of employee rights as a result of activities that occurred
with regard to employee protests in 13 states.
The retail giant has been the target of repeated and continuing protests over its wage and
benefits policies and purported retaliation against workers who protest or engage in
organizing activity. Walmart workers staged widespread Black Friday protests the day
after last Thanksgiving, demanding better wages and calling for a global week of action
against the retailer. Unions and other groups have supported protesters and helped fuel
the ant-Walmart animosity.
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The GC said that it informed Walmart in November 2013 that complaints were
authorized, but it refrained from issuing the complaints in order to permit settlement
discussions. After settlement discussions were unsuccessful, the GC issued a consolidated
complaint regarding some of the alleged violations. The complaint names more than 60
Walmart supervisors and one corporate officer.
The cases were consolidated to avoid unnecessary costs or delay, according to the GC.
The consolidated complaint involves more than 60 employees, 19 of whom were fired
allegedly as a result of their participation in activities protected by the NLRA. The GC
asserts that Walmart violated the Act when:
 During two national television news broadcasts and in statements to employees at
Walmart stores in California and Texas, Walmart unlawfully threatened
employees with reprisal if they engaged in strikes and protests.
 At stores in California, Colorado, Florida, Illinois, Kentucky, Louisiana,
Maryland, Massachusetts, Minnesota, North Carolina, Ohio, Texas, and
Washington, Walmart unlawfully threatened, disciplined, and/or fired employees
for having engaged in legally protected strikes and protests.
 At stores in California, Florida, and Texas, Walmart unlawfully threatened,
surveilled, disciplined, and/or fired employees in anticipation of or in response to
employees’ other protected concerted activities.
Walmart has until January 28 to respond to the complaint.
The GC notes that this is not the first time that it has authorized or issued complaints
against the giant retailer and that additional charges remain under investigation.
Union membership rate unchanged in 2013, BLS says
The percent of wage and salary workers who were members of unions in 2013 was the
same as it was in 2012 — 11.3 percent, the U.S. Bureau of Labor Statistics (BLS)
reported on January 24.
The number of wage and salary workers belonging to unions, at 14.5 million, was little
different from 2012. The latest numbers represent a continuing, substantial decline from
the 20.1-percent union membership rate (with 17.7 million union workers) that the BLS
reported in 1983, the first year for which comparable union data are available.
The AFL-CIO weighed in on these latest statistics, noting that there strong gains in
construction and manufacturing that were made against a background of strike actions by
low-wage workers in the private sector. However, what the union called destructive,
politically motivated layoffs of public-sector workers continued to hurt overall publicsector union membership — thus leaving the total percentage of the workforce that is
unionized virtually unchanged.
“Wall Street’s Great Recession cost millions of America’s workers their jobs and pushed
already depressed wages down even further,” said AFL-CIO President Richard Trumka.
“But in 2013, America’s workers pushed back. At the same time, these numbers show
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that as unorganized workers have taken up the fight for their right to a voice on the job,
union employers are hiring — creating good jobs our economy desperately needs.”
Trumka also had a few words to say about the future of organizing in the United States:
“Make no mistake, the job of rebuilding workers’ bargaining power and raising wages for
the 99% has a long way to go. Collective action among working people remains the
strongest, best force for economic justice in America. We’re building a stronger, more
innovative movement to give voice to the values that built this country. From Walmart
workers to fast food workers to homecare workers, the rising up of workers’ voices
against inequality – both inside and outside of traditional structures — is the story of
2013.”
Industry and occupation of union members According to the BLS report, in 2013, 7.2
million employees in the public sector belonged to a union, compared with 7.3 million
workers in the private sector. The union membership rate for public-sector workers (35.3
percent) was substantially higher than the rate for private-sector workers (6.7 percent).
Within the public sector, the union membership rate was highest for local government
(40.8 percent), which includes employees in heavily unionized occupations, such as
teachers, police officers, and firefighters. In the private sector, industries with high
unionization rates included utilities (25.6 percent), transportation and warehousing (19.6
percent), telecommunications (14.4 percent), and construction (14.1 percent). Low
unionization rates occurred in agriculture and related industries (1.0 percent), finance (1.0
percent), and in food services and drinking places (1.3 percent).
Among occupational groups, the highest unionization rates in 2013 were in education,
training, and library occupations, and protective service occupations (35.3 percent each).
Farming, fishing, and forestry occupations (2.1 percent) and sales and related occupations
(2.9 percent) had the lowest unionization rates.
Selected characteristics of union members. The union membership rate was higher for
men (11.9 percent) than for women (10.5 percent) in 2013. The gap between their rates
has narrowed considerably since 1983, when rates for men and women were 24.7 percent
and 14.6 percent, respectively. Among major race and ethnicity groups, black workers
had a higher union membership rate in 2013 (13.6 percent) than workers who were white
(11.0 percent), Asian (9.4 percent), or Hispanic (9.4 percent). By age, the union
membership rate was highest among workers ages 45 to 64 — 14.0 percent for those ages
45 to 54 and 14.3 percent for those ages 55 to 64. Full-time workers were about twice as
likely as part-time workers to be union members, 12.5 percent compared with 6.0
percent.
Union representation. In 2013, 16.0 million wage and salary workers were represented
by a union. This group includes both union members (14.5 million) and workers who
report no union affiliation but whose jobs are covered by a union contract (1.5 million).
Private-sector employees comprised more than half (810,000) of the 1.5 million workers
who were covered by a union contract but were not members of a union.
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Earnings. In 2013, among full-time wage and salary workers, union members had
median usual weekly earnings of $950, while those who were not union members had
median weekly earnings of $750. In addition to coverage by a collective bargaining
agreement, this earnings difference reflects a variety of influences, including variations in
the distributions of union members and nonunion employees by occupation, industry,
firm size, or geographic region.
Union membership by state. In 2013, 30 states and the District of Columbia had union
membership rates below that of the U.S. average, 11.3 percent, while 20 states had higher
rates. All states in the Middle Atlantic and Pacific divisions reported union membership
rates above the national average, and all states in the East South Central and West South
Central divisions had rates below it. Union membership rates declined over the year in 26
states, rose in 22 states and the District of Columbia, and remained unchanged in 2 states.
Nine states had union membership rates below 5.0 percent in 2013, with North Carolina
having the lowest rate (3.0 percent). The next lowest rates were recorded in Arkansas (3.5
percent), Mississippi and South Carolina (3.7 percent each), and Utah (3.9 percent).
Three states had union membership rates over 20.0 percent in 2013: New York (24.4
percent), Alaska (23.1 percent), and Hawaii (22.1 percent).
State union membership levels depend on both the employment level and union
membership rate. The largest numbers of union members lived in California (2.4 million)
and New York (2.0 million). Over half of the 14.5 million union members in the U.S.
lived in just seven states (California, 2.4 million; New York, 2.0 million; Illinois, 0.9
million; Pennsylvania, 0.7 million; and Michigan, New Jersey, and Ohio, 0.6 million
each), though these states accounted for only about one-third of wage and salary
employment nationally.
Texas had about one-fourth as many union members as New York, despite having 2.7
million more wage and salary employees. Conversely, North Carolina and Hawaii had
comparable numbers of union members (117,000 and 121,000, respectively), though
North Carolina's wage and salary employment level (3.9 million) was more than seven
times that of Hawaii (549,000).
The data on union membership were collected as part of the Current Population Survey
(CPS), a monthly sample survey of about 60,000 households that obtains information on
employment and unemployment among the nation's civilian noninstitutional population
age 16 and over.
Teamsters approve tentative deal with YRC Worldwide
Pamela Wolf, J.D.
The Teamsters have approved, by a vote of 12,267 to 6,314, a tentative agreement with
YRC Worldwide Inc. that is aimed at protecting more than 30,000 jobs, the union
announced on January 26. Workers voted for approval over the weekend after having
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rejected a prior company proposal earlier this month by a margin of 61 percent to 39
percent.
The plan approved by Teamsters working for the logistics giant will provide a pathway
for substantial debt reduction and refinancing initiatives that will permit the company to
protect jobs, according to the union.
“This was a very difficult vote for our members, but in the end they did what they believe
will give this company the best chance to stay in business and protect their jobs,” said
Jim Hoffa, Teamsters General President and Co-Chairman of the Teamsters National
Freight Industry Negotiating Committee (TNFINC). “Now we will hold management's
feet to the fire to make sure our members' jobs are protected and redouble our efforts to
make sure this company handles its finances responsibly.”
“Once again, our members' sacrifices are providing the lifeline for the company,” said
Tyson Johnson, Director of the Teamsters National Freight Division and Co-Chairman of
TNFINC.
“Now we fully expect the company to successfully conclude the deleveraging and
refinancing components of the restructuring to once and for all put this company on a
sustainable path.”
YRC Worldwide’s CEO, James Welch, quickly issued a statement thanking workers for
approval vote: “My deepest thanks to our employees for their continued commitment to
moving YRC
Worldwide forward and putting us on the road to once again becoming a North American
LTL industry leader. With this MOU extension, we took another significant step toward
providing our employees the job security they deserve while providing our prospective
lenders and equity investors the path they need for the company to achieve a complete
recapitalization and achieve a healthy capital structure.”
Welch noted that the five-year extension “includes important customer service
enhancements, cost savings and a profit sharing plan for eligible IBT employees that is
dependent on operating performance and our ability to become more competitive in the
marketplace.”
NU football players petition NLRB for union representation
By Pamela Wolf, J.D.
In a move that has stirred much controversy, football players at Northwestern University
(NU) have petitioned the NLRB for representation by the College Athletic Players
Association (CAPA). According to media reports the NU athletes are not just concerned
about having a seat at the table as “employees,” they are also very concerned about health
and safety issues for which they believe they currently lack adequate protections, such as
when they sustain concussions and other injuries. The move is backed by the United Steel
Workers Union, which is covering CAPA’s legal expense.
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The development is perhaps not too surprising in the wake of now-stalled efforts to
approve a $764 million-plus settlement of the high-profile NLF concussion class action
and the resulting push in both professional and amateur sports for greater protections
from such damaging injuries. The judge there withheld approval of the deal due to
concerns about the adequacy of the settlement fund given that qualifying diagnoses can
only be made after death.
At a press conference on January 28, USW International President Leo W. Gerard, USW
National Political Director Tim Waters, Northwestern quarterback Kain Colter, and
CAPA President Ramogi Huma announced the filing of a the NU football players’ NLRB
petition for representation by CAPA. An “overwhelming majority” of the NU football
players were said to have signed cards supporting the unionization effort.
CAPA is a new union established by Huma, Colter and former University of
Massachusetts basketball player Luke Bonner. The group’s goal is to achieve greater
legal protection for students’ scholarships and to improve the conditions under which all
student-athletes live and play.
The filing of the NLRB representation petition has drawn much discussion about the
nature of unions and exactly when union representation is appropriate. Those who
support the college football players have asserted that the players’ receipt of scholarship
and required uniforms and appearances at certain venues, among other things, evidences
an employment relationship.
“Too many athletes who generate huge sums of money for their universities still struggle
to pay for basic necessities, and too many live in fear of losing their scholarships due to
injury or accident,” Gerard pointed out. “These students deserve some assurance that
when they devote weeks, months and years of their lives to an academic institution, that
they will not be left out to dry, without the same basic protections that we all expect from
the institutions we serve.”
The National Collegiate Athletic Association (NCAA) responded to the NU football
players’ unionization effort with a denial of any employment relationship between the
players and the NCAA, however. According to NCAA Chief Legal Officer Donald
Remy, “This union-backed attempt to turn student-athletes into employees undermines
the purpose of college: an education. Student-athletes are not employees, and their
participation in college sports is voluntary. We stand for all student-athletes, not just
those the unions want to professionalize.”
Remy noted that many student athletes are provided scholarships and many other benefits
for their participation, but he denied any employment relationship between the NCAA,
affiliated institutions and student athletes. He also said that student athletes do not meet
the definition of “employees” under either the NLRA or the FLSA, and expressed
confidence that the Labor Board would find, in favor of the NCAA, that there is no right
on the part of student athletes to organize.
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Union identifies “top 10” list for improving the lives of federal workers through
executive action
By Pamela Wolf, J.D.
America’s largest federal union has given President Obama a top 10 list of improvements
that he can make for the federal government workforce via executive order. The list was
compiled by the American Federation of Government Employees (AFGE),which
represents some 670,000 workers in the federal government and the government of the
District of Columbia, in response to Obama’s State of the Union Address and his pledge to
act without legislation "wherever and whenever" possible to expand opportunity for
American families.
"These are concrete actions President Obama can take right now to address inequalities
that currently exist in the federal workforce, while improving accountability and saving
taxpayer dollars," said AFGE National President J. David Cox, Sr.
The list, announced by the union on January 29, includes measures that would arguably
put some federal workers on equal footing with private sector employees and improve the
lot of veterans in federal employment:
(1) Align locality boundaries so that hourly and salaried federal employees who work
in the same location are treated the same when it comes drawing local pay area
boundaries. According to AFGE, no private firm that pays geographic pay
differentials treats its hourly and salaried employees differently in this respect. The
disparate treatment of federal workers who work side-by-side for the same
employer is unfair and unproductive, the union says.
(2) Extend to Transportation Security Officers (TSO) the same disciplinary appeal
rights enjoyed by most federal employees, including Transportation Security
Administration managers (TSA). According to the union, TSOs are limited in their
ability to appeal adverse actions to the Merit Systems Protection Board and instead
must rely primarily on an internal disciplinary review board within TSA.
(3) Stop the Department of Veterans Affairs from downgrading low-wage positions,
many of which, according to AFGE, go to veterans and disabled veterans. These
downgrades — called “reclassification" by the agency — cut thousands of dollars
annually from already paltry salaries and, when applied to current workers, they
cause reductions in salary and retirement benefits and degrade services to veterans,
the union says.
(4) Free agencies from the Office of Management and Budget's arbitrary constraints on
the size of in-house workforces, so they can instead manage by budgets and
ceilings. If agencies have work to do and money to spend, the union asserts that
there is no reason why federal employees cannot be used. However, these
performance decisions are now being dictated by arbitrary workforce caps and cuts,
according to AFGE.
(5) Give agencies a long-awaited costing methodology to govern the insourcing
process and encourage them to look for opportunities to save money through
intelligent insourcing.
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(6)
Direct agencies to expedite compliance with inventories of service contracts and
integrate them into budget processes, so they will have the same control over
service contract spending that they have already over federal employee spending
and can systematically identify bad contracts or those that cost too much.
(7) Tell the Department of Defense to stop using borrowed military manpower, a
practice that results in scores of hard-working civil servants — many of them
Wounded Warriors — being replaced by more expensive, less experienced military
personnel.
(8) Make sure the administration is ready to issue a rule implementing the statutory
reduction in the annual cap on taxpayer subsidies on contractor compensation. In
June, the cap will be reduced to $487,000 assuming the Federal Acquisition
Regulation Council has issued the necessary rule.
(9) Support the quest to allow Bureau of Prisons correctional officers who work in
highly dangerous areas of federal prisons to routinely carry pepper spray to defend
themselves if physically attacked by violent inmates.
(10) Order the U.S. Department of Agriculture to retract its proposal to “radically
overhaul” the federal poultry inspection system by taking most federal inspectors
off the slaughter line and turning over inspection activities currently performed by
federal inspectors to untrained plant employees. According to AFGE, this costcutting plan would endanger the health and safety of employees – and the
American public – by allowing plants to increase their line speeds up to 175
chicken carcasses per minute. As result, the union say that the lone remaining
federal inspector on the slaughter line would have a third of a second to examine
each chicken carcass for disease, infection and contamination.
The White House has posted its own list of actions that the President will take through the
power of executive order; none of them, however, specifically target the federal
government workforce other than his anticipated executive order that will increase the
minimum wage for workers on federal contracts to $10.10 an hour.
Union president files suit against Alaska DOC officials asserting First Amendment
retaliation claim
By Pamela Wolf, J.D.
The president of the Alaska Correctional Officers’ Association (ACOA) has filed a
lawsuit against two Alaska Department of Corrections (DOC) officials whom he
contends have retaliated against him for his union-related activities. Randall McLellan
has served as member of the contract negotiations team, represented the union in
arbitration, and advocated for the best interests of the more than 900 corrections officers
that work in 13 corrections facilities statewide, according to the complaint filed on January
28.
The two officials, who are sued in both their official and personal capacities, have, for
more than five years, “orchestrated a systematic course of harassment and persecution of
McLellan in retaliation for his advocacy on behalf of the ACOA and its membership, as
25
well as the interests of the inmate population,” the complaint alleges. In 2008, after one
of the officials was appointed Commissioner of the DOC and took several actions viewed
as hostile to union members and detrimental to their working conditions and the safety of
prisons and jails, the union membership passed a vote of no-confidence in the official.
McLellan was the spokesperson in favor of the no-confidence vote. Thereafter, the DOC
allegedly began to maintain a secret personnel file of purported infractions by McLellan,
contrary to CBA provisions.
The file, which McLellan says was created in an effort to find grounds to discipline him,
contained trivial infractions such as “a failure to say good morning, a failure to verbally
respond to a comment, and a failure to wear his name tag.”
When McLellan met with a reporter at the DOC’s direction to discuss a difficult-to-treat
bacterial infection of concern, he purportedly expressed “valid and true concerns about
the lack of clean linens and prisoner clothing” at a pretrial facility. After those comments
appeared in a newspaper, the Commissioner allegedly called them slanderous during a
radio show interview and later, despite a history of problems, faulted McLellan for the
problem and for “spreading hate and fear through false statements and not discussing it
with his supervisor instead of the press.”
McLellan was allegedly subjected to a host of retaliatory actions that began the day after
the radio interview, including an order directing him and his shift to conduct an intense
and thorough sanitation of the cited area of the pretrial facility and to complete a detailed
report on the cleaning; being called to answer questions in "out of session" legislative
committee hearings during which he was publicly chastised by a state legislator for his
personal attacks on his own officers, after which the legislature called for an audit of his
department; being targeted for discipline and subjected to special monitoring; being
subjected to unfounded investigations and disciplinary actions; being subjected to
character assassination; and being denied business that thereby interfered with his ability
to fulfill his duties as the union president and a member of its negotiating team.
Matters escalated when the union won an arbitration and McLellan was investigated for a
pepper-spraying incident that occurred four days earlier — the arresting trooper had
allegedly confirmed McLellan’s appropriate use of pepper-spray on the arrestee, who did
not file a complaint and apologized for his combativeness. Ultimately, McLellan was
disciplined, demoted and subject to retraining, among other things.
Filing First and Fourteenth Amendment claims under Section 1983, McLellan is seeking
compensatory, nominal, and punitive damages not to exceed $100,000.
LEADING CASE NEWS:
U.S.S.Ct.: Pending ruling on attorney fees does not prevent judgment on merits
from becoming final for purposes of appeal
26
By Ronald Miller, J.D.
Whether a claim for attorneys’ fees is based on a statute, a contract, or both, the pendency
of a ruling on an award for fees and costs does not prevent the merits judgment from
becoming final for purposes of appeal, ruled a unanimous U.S. Supreme Court. Resolving
a conflict among the circuit courts, the High Court reversed the decision of the First
Circuit in a suit against an employer brought by union benefit funds. Finding that a
district court’s order awarding unpaid contributions to the funds was final, the Court
concluded that there was no timely appeal from that order within the 30 window to file a
notice of appeal (Ray Haluch Gravel Co v Central Pension Fund of International
Brotherhood of Operating Engineers and Participating Employers, January 15, 2014,
Kennedy, A).
In the underlying dispute, union pension funds sued an employer for contributions due
under a collective bargaining agreement. Based on an audit to determine whether the
employer was meeting its obligations under the CBA, the funds demanded additional
contributions. The employer refused and the funds filed a lawsuit alleging that the
employer failed to make required contributions in violation of ERISA and the LMRA.
The funds also sought attorneys’ fees and auditor’s fees and costs.
Motion for attorneys’ fees. At the conclusion of a bench trial, the district court asked the
parties to submit proposed findings of fact and conclusions of law to allow the court “to
consider both the possibility of enforcing [a] settlement and a decision on the merits at
the same time.” It gave the plaintiffs the option to offer a submission with regard to fees
along with their proposed findings of fact and conclusions of law, or to “wait to see if I
find in your favor and submit the fee petition later on.” Initially, the funds chose to
submit their fee petition at the same time as their proposed findings of fact and
conclusions of law, but they later changed course. On April 4, 2011, the funds moved for
an order awarding attorneys’ fees and costs in excess of $143,000 incurred in attempting
to collect the delinquent contributions.
As to the merits of the claim that the employer underpaid, on June 17, 2011, the district
court ruled that the funds were entitled to nearly $27,000 of unpaid contributions, less
than the funds had requested, and a judgment was issued in their favor. The district court
did not rule on the funds’ motion for attorneys’ fees and costs until July 25, 2011, when it
awarded a total of nearly $35,000 in attorneys’ fees and costs. On August 15, 2011, the
funds appealed both decisions and the employer cross-appealed.
Contractual right to attorneys’ fees. Before the court of appeals, the employer argued
that there had been no timely appeal from the June 17 decision on the merits. In the
employer’s view, the June 17 decision was a final decision under 28 U.S.C. Sec.1291, so
that notice of appeal had to be filed within 30 days thereafter. On the other hand, the
funds argued that there was no final decision until July 25, when the district court
rendered its decision on the funds’ request for attorneys’ fees and costs.
27
The court of appeals agreed with the funds. While it acknowledged the Supreme Court’s
holding that an unresolved issue of attorneys’ fees generally does not prevent judgment
on the merits from being final, the appeals court held instead that where, as here, an
entitlement to attorneys’ fees derives from a contract, the critical question is whether the
claim for attorneys’ fees is part of the merits. Interpreting the CBA in this case as
“provid[ing] for the payment of attorneys’ fees as an element of damages in the event of a
breach,” the appeals court held that the June 17 decision was not final, and so concluded
that the appeal was timely as to all issues. The employer sought review of that decision.
Timeliness of appeal. The Supreme Court granted review of the matter to resolve a
conflict among the circuit courts over whether and when an unresolved issue of
attorneys’ fees based on a contract prevents judgment on the merits from being final. Sec.
1291 provides that the courts of appeals have jurisdiction of appeals from all final
decisions of the district courts. “The timely filing of a notice of appeal in a civil case is a
jurisdictional requirement.” The parties in this case agreed that notice of appeal was not
given within 30 days of the June 17 decision but that it was given within 30 days of the
July 25 decision. The question was whether the June 17 order was a final decision for
purposes of Sec. 1291.
On appeal, the employer argued that the June 17 decision was a final decision under 28
U.S.C. Sec.1291, so that notice of appeal had to be filed within 30 days thereafter. In
Budinich v Becton Dickinson & Co., the Supreme Court addressed the question whether
an unresolved issue of attorney’s fees for the litigation prevents a judgment from being
final. There, the court held that the judgment was final for purposes of Sec.1291 despite
the unresolved issue of attorney’s fees.
The funds’ attempt to distinguish Budinich failed. The High Court rejected the funds’
contention that contractual attorneys’ fees are always a measure of damages. The Court
observed that Budinich’s uniform rule did not depend on whether the law authorizing a
particular fee claim treated the fees as part of the merits, and there was no reason to
depart from that sound reasoning. Rather, it concluded that the operational consistency
stressed in Budinich is not promoted by providing for different jurisdictional effect based
solely on whether an asserted right to fees is based on contract or statute.
Avoiding piecemeal litigation. The funds urged the importance of avoiding piecemeal
litigation, and it sufficed to say that those concerns were counterbalanced by the interest
in determining with promptness and clarity whether the ruling on the merits will be
appealed. Furthermore, the FRCP 54(d)(2) and 58(e) provide a means to avoid a
piecemeal approach in many cases. Complex variations in statutory and contractual feeshifting provisions also counsel against treating attorneys’ fees claims authorized by
contract and statute differently for finality purposes observed the Court. Similarly, the
Court rejected the funds’ claim that it was unclear whether Budinich applies where nonattorney professional fees are included in a motion for attorneys’ fees and costs. There is
no apparent reason why parties or courts would find it difficult to tell that Budinich
remains applicable where such fees are claimed and awarded incidental to attorney’s fees,
observed the Court.
28
The Court was also unpersuaded by the funds’ argument that fees accrued prior to the
commencement of litigation fell outside the scope of Budinich. The Court observed that
“some of the services performed before a lawsuit is formally commenced by the filing of
a complaint are performed ‘on the litigation.’” Fees for investigation, preliminary legal
research, drafting of demand letters, and working on the initial complaint fit the
description of standard preliminary steps toward litigation.
The case number is 12-992.
Attorneys: Dan Himmelfarb (Mayer Brown) for Ray Haluch Gravel Co. Stephanos Bibas,
University of Pennsylvania Law School, for Central Pension Fund of the International
Union of Operating Engineers and Participating Employers.
5th Cir.: Conoco did not agree to submit question of arbitrability of employee’s
discharge to arbitrator
By Kathleen Kapusta, J.D.
Finding that a refinery employee’s discharge for testing above the allowed threshold for
hydrocodone during a random drug test was not arbitrable under the terms of the parties’
bargaining agreement, the Fifth Circuit affirmed a district court’s decision to vacate an
arbitrator’s award in favor of the employee. Further, observing that Conoco consistently
objected to the arbitrator’s jurisdiction to arbitrate the discharge, the appeals court found
the company did not clearly and unmistakably agree to arbitrate arbitrability
(ConocoPhillips, Inc v Local 13-055 United Steelworkers International Union, January 30, 2014,
Clement, E).
The employee, who was terminated when he failed the drug test, claimed that the test
result was caused by several doses of a prescription cough medication that had been
prescribed for him several years earlier and had long since expired. Although the CBA
provided that “[d]ischarge for a confirmed positive test under the substance abuse policy
shall not be subject to grievance or arbitration” except with respect to “the integrity of the
chain of custody,” his union brought an arbitration action against the company. It
contended that the grievance was for unjust discharge and was properly before the
arbitrator.
Continuing objection. While Conoco argued that the dispute was not arbitrable except
with respect to the chain of custody, the arbitrator stated that he would nevertheless hear
the merits of the arbitrability question. Conoco then presented its case, focusing primarily
on the chain of custody of the drug test evidence. When the union did not limit its case to
the chain of custody issue, Conoco repeatedly objected on the ground that the arbitrator
was exceeding his jurisdiction under the CBA, eventually logging a continuing objection
to the union’s case.
29
Arbitrator’s decision. Despite Conoco’s objections, the arbitrator found that he did have
the authority to consider the dispute, determined that it was arbitrable, and entered an
award for the employee. Arguing that it never consented to arbitrate a discharge for a
positive drug test, and never agreed to allow the arbitrator to decide whether the dispute
was arbitrable, Conoco sought vacatur of the award. The district court granted Conoco’s
motion, holding that “there was no clear and unmistakable agreement” to submit the
question of arbitrability to the arbitrator.
Clear and unmistakable agreement. Noting that the issue on appeal was whether the
parties agreed to submit the question of arbitrability to the arbitrator, the court pointed
out that the union had the burden of demonstrating clearly and unmistakably that the
parties agreed to have the arbitrator decide the question. The union failed to meet this
burden. The union argued that Conoco’s conduct during the arbitration hearing
demonstrated that it readily submitted the question of arbitrability to the arbitrator.
Disagreeing, the court found that at best Conoco’s actions and statements were
ambiguous; at worst, they demonstrated a clear rejection of the arbitrator’s authority to
determine arbitrability.
While the union focused on the fact that Conoco argued arbitrability to the arbitrator,
failed to object to the arbitrator’s indications that he would address arbitrability, and
presented arguments beyond mere chain of custody at the hearing, the court found that
none of this established a clear and unmistakable intent to be bound by the arbitrator’s
decision on arbitrability. “The fact that Conoco raised an issue of jurisdiction at the
hearing and submitted briefing to dissuade the arbitrator from addressing the merits of the
discharge does not indicate that it intended to be bound by that determination,” the court
stated.
Ambiguity and silence. As to the union’s argument that Conoco failed to object to
certain indications that the arbitrator would consider the arbitrability issue and that all of
Conoco’s objections referred to whether the question was arbitrable, not whether the
arbitrator had the power to decide that issue, the court observed that in determining
whether parties have agreed to arbitrate arbitrability, ambiguity and silence favor having
that question decided by the courts, not the arbitrator. Similarly, the court pointed out, to
the extent that Conoco presented arguments that extended to the merits of the dispute, “it
cannot be the case that merely countering your opponent’s case demonstrates an intent to
be bound by the arbitrator’s decision.”
Though the union relied on two nonbinding cases that found a party’s failure to object to
the arbitrator’s authority to decide arbitrability conclusive in finding a clear and
unmistakable intent to arbitrate, the court found that this analysis flipped the burden of
proof on its head by requiring the objecting party to have made some affirmative showing
that it did not wish to be bound —which is the natural state absent an arbitration
agreement — rather than requiring clear and unmistakable proof of an affirmative
agreement to arbitrate.
30
Finding that Conoco consistently objected to the jurisdiction of the arbitrator to arbitrate
the employee’s discharge, the court noted that it went so far as to object to his power over
“anything more than just what the Contract says” and “anything else” besides the chain of
custody. Noting that the union had the burden of demonstrating Conoco’s “clear and
unmistakable” intent to be bound by the arbitrator’s decision on arbitrability, and that
silence, ambiguity, and merely arguing the arbitrability issue to the arbitrator were
insufficient to meet this burden, the court affirmed the district court’s judgment that
Conoco did not clearly and unmistakably agree to arbitrate arbitrability.
Arbitrability of dispute. Turning to the question of whether the district court erred in
determining that the employee’s discharge was not arbitrable, the court found that the
union failed to challenge the lower court’s determination that the dispute was not
arbitrable on appeal. Noting that rather than argue that the district court’s interpretation of
the arbitrability agreement was in error, the union instead argued that the court failed to
defer to the arbitrator’s decision on arbitrability. But the appeals court pointed out that
Conoco did not agree to arbitrate arbitrability.
This placed the question of whether the dispute was arbitrable solely in the hands of the
district court. “The district court owed no deference to the arbitrator in answering that
question, and [the union] does not challenge the merits of the district court’s de novo
review of that question.” Accordingly, the court affirmed the vacation of the arbitration
award.
The case number is 12-31225.
Attorneys: Keith M. Pyburn, Jr. (Fisher & Phillips) for ConocoPhillips, Inc. Louis L.
Robein, Jr. (Robein, Urann, Spencer, Picard & Cangemi) for Local 13-0555 United
Steelworkers International Union.
6th Cir.: City’s modifications of CBAs to reduce retiree healthcare benefits enjoined
as violating Contract Clause of U.S. Constitution
By Ronald Miller, J.D.
A federal district court did not abuse its discretion in granting a preliminary injunction to
retirees of the City of Flint, Michigan to bar an emergency manager, who was appointed
by the governor to address a financial crises, from modifying existing collective
bargaining agreements with respect to healthcare benefits to shift out-of-pocket medical
expenses to the retires, ruled the Sixth Circuit in an unpublished decision. The appeals
court concluded that because Michigan’s Public Act 4, which provided for the
appointment of an emergency manager for financial distressed municipalities, explicitly
contemplated that the emergency manager’s orders would carry the force of the state’s
sovereign powers, modifications to the CBAs constituted legislative acts that impaired
the agreements in violation of the U.S. Constitution’s Contract Clause (Welch v Brown,
January 3, 2014, Cole, G).
31
The plaintiffs represented a class of individual retired municipal workers, their eligible
spouses and dependents, and the union representing the retirees’ interests, and sought
injunctive relief under 42 U.S.C. Sec. 1983. According to the plaintiffs, the defendants,
including the city, emergency manager, retirement officer manager and finance director,
violated the Contract and Bankruptcy Clauses of the United States Constitution and
deprived them of a property interest without due process or just compensation.
Specifically, the plaintiffs requested a preliminary injunction to enjoin the defendants
from modifying the contracts and ordinances governing their healthcare benefits and to
restore any already modified agreements to the status quo ante.
In this instance, the defendants contended that reducing retiree benefits was a “necessary
change” to avoid bankruptcy — the modifications saved the city $3.5 million by shifting
certain expenses to the retirees. Nevertheless, the Sixth Circuit found no abuse of
discretion in the district court’s award of a preliminary injunction based on the Contract
Clause.
CBAs modified. In 2011, the Michigan legislature passed Public Act 4 to ensure the
financial accountability of local governments. The governor appointed an emergency
manager for the City of Flint, with authority to modify CBAs in order to “rectify the
financial emergency.” However, Public Act 4 was subsequently repealed. Thereafter, a
new emergency manager was appointed. Although the Act was repealed, the defendants
seek to enforce the actions taken by prior emergency manager acting under Public Act 4.
In order to balance its budget, as required by state law, the city proposed reductions in its
workforce, salary reductions, and modifications to pension and healthcare plans,
including orders modifying certain terms in CBAs between the city and its retirees. Under
the city’s plans, the retirees would be forced to pay minimum premium amounts, co-pays
and other out-of-pocket expenses, and spouses would no longer be covered. However, the
retirees claimed that they are entitled to lifetime healthcare benefits identical or
comparable to the plans in effect at the time of their retirement, and that they were unable
to pay premiums because they were on fixed incomes.
Exercise of legislative authority. The retirees claimed that the defendants violated the
Contract Clause because the proposed modifications impaired provisions of their CBAs.
In Allied Structural Steel Co v Spannaus, the Supreme Court recognized the “high value”
the Framers placed on protecting private contracts. However, case law also makes clear
that this prohibition is not absolute. Although citizens have the right to order their affairs
by contract, states must be allowed to carry out “essential attributes of sovereign power”
to safeguard their citizens.
Before addressing the merits of the retirees’ Contract Clause claim, the Sixth Circuit
examined whether or not the emergency manager’s orders constituted an exercise of
legislative authority. A cause of action under the Contract Clause must be based on
legislative acts because “the prohibition [against the impairment of contracts] is aimed at
the legislative power of the state.”
Here, the Sixth Circuit concluded that the terms of Public Act 4 made clear that orders
issued under its provisions are an exercise of legislative power. Under the Act, the
emergency manager had the facially unlimited authority to reject or modify the terms of
32
existing CBAs. The Act also gave the emergency manager the ability to adopt or amend
ordinances and exercise any power “relating to the operation of the local government.”
As the district court explained, the emergency manager did not merely enforce alreadyexisting laws, but had the authority to repeal and enact new municipal ordinances in place
of local officials, sufficiently establishing an exercise of legislative power. Consequently,
the Sixth Circuit concluded that the character and effect of the challenged orders were
properly understood as legislative acts.
Merits of dispute. The appeals court next turned to consider whether the retirees were
likely to succeed on the merits of their Contract Clause claim. The Supreme Court’s
framework for evaluating contract impairment claims involves a three-prong analysis
announced in Energy Reserves Grp, Inc v Kansas Power & Light Co. Courts must
determine (1) whether a plaintiff has established “a substantial impairment” of a
contractual relationship, (2) whether the state has a “significant and legitimate public
purpose behind the regulation” such as the “remedying of a broad and general social or
economic problem,” and (3) whether the impairment is reasonable and necessary to serve
that purpose.
In this instance, the modifications would impose a “severe strain” on the retirees by
requiring them to pay significant healthcare increases when most lived on fixed incomes.
Courts have recognized that addressing a fiscal emergency is a legitimate public purpose.
Here, the orders were part of a larger plan to remedy the city’s dire financial situation,
and so they satisfied the public purpose inquiry. Examining the reasonable and necessary
element, the appeals court observed that impairing a contract is not necessary if “a less
drastic modification” would have allowed the contract to remain in place. The court also
noted that the record did not establish that bankruptcy was imminent and did not
demonstrate that the defendants considered alternative strategies before modifying retiree
benefits. Thus, the appeals court agreed with the district court’s conclusion that altering
the retirees’ healthcare benefits was not reasonably necessary to avoid bankruptcy and
balance the city’s budget.
Irreparable harm. With respect to whether the retirees demonstrated irreparable harm,
the appeals court observed that “[n]umerous courts have found that reductions in retiree
insurance coverage constitute irreparable harm.” Because the retirees would be forced to
choose between paying for needed medical care and paying for basic necessities, they
were likely to suffer non-compensable harm as a result of changes to the CBAs. Thus, the
appeals court concluded that the district court’s finding of irreparable harm was not
clearly incorrect because the record showed that the retirees’ access to medical care may
be compromised.
Finally, addressing the remaining factors of whether granting preliminary injunctive
relief will
cause substantial harm to others and whether the injunction is in the public interest, the
appeals court concluded that, though a close question, after balancing the various
considerations, it could not find that the district court abused its discretion by issuing a
33
preliminary injunction. Thus, it affirmed the district court’s award of a preliminary
injunction based on the Contract Clause.
The case number is 13-1476.
Attorneys: Alec Scott Gibbs (Law Office of Gregory T. Gibbs) for John Welch. Stephen
J. Hitchcock (Giarmarco, Mullins & Horton) for Michael Brown.
6th Cir.: Court’s refusal to issue Sec. 10(j) injunction as requested by NLRB
regional director not an abuse of discretion
By Ronald Miller, J.D.
A federal district court did not abuse its discretion when it denied an NLRB regional
director’s petition for a Sec. 10(j) injunction against unfair labor practices committed by
an employer and union in connection with a contract for “yard work” at a Ford assembly
plant, ruled the Sixth Circuit in a unpublished decision. Although the appeals court
majority concluded that the regional director established that there existed reasonable
cause to believe that the defendants engaged in unfair labor practices, it went on to find
that maintaining the status quo did not require reinstating a predecessor’s employees, so
the interim injunctive relief being sought was not reasonably necessary to preserve the
Board’s ultimate remedial power. Judge Karen Moore filed a separate dissent (Muffley v
Voith Industrial Services, Inc, January 13, 2014, Guy, R, Jr).
The employer was the successful bidder for a new contract to perform yard work at the
Ford facility, which was awarded after a shutdown for retooling that lasted more than a
year. The essence of this matter is a conflict over which union — the Teamsters or the
Auto Workers Union (UAW) — would represent the employer’s hourly employees.
Other employees at the facility were represented by the UAW. Yard workers, on the other
hand, had been represented by the Teamsters. The Board’s complaint alleged that the
employer discriminatorily refused to hire its predecessor’s Teamsters-represented
employees; that the employer and UAW unlawfully coerced employees to authorize the
UAW as their bargaining representative; and the employer unlawfully provided, and the
UAW unlawfully accepted, assistance and recognition as the bargaining representative
for the employer’s “yard employees.”
Premature recognition. The regional director petitioned for an order of interim
injunctive relief pursuant to Sec. 10(j), pending the NLRB’s resolution of its underlying
administrative complaint. However, the district court denied the petition for injunctive
relief. The Board timely appealed that decision, but not until after an ALJ issued his
decision finding that most of the alleged unfair labor practices had been proven and
recommending broad remedial and injunctive relief. The ALJ found that a staffing
agency, acting as an agent for the employer, informed some applicants that the positions
would be UAW jobs, discriminated against Teamsters members, and excluded former
employees who had not worked recently or passed newly implemented behavioral tests.
34
On April 9, 2012, the employer withdrew recognition of the UAW after concern was
raised that it may have been prematurely granted. When production resumed on April 16,
the employer had 75 employees, 11 of whom were former employees of the predecessor.
UAW organizers were granted access to the yard employees and on May 1, 2012, the
employer recognized it as exclusive bargaining representative.
Reasonable cause. To grant injunctive relief under Sec. 10(j), a district court is required
to find both (1) “reasonable cause” to believe an unfair labor practice has occurred; and
(2) that injunctive relief with respect to such practices would be “just and proper.” Here,
the district court declined to make any factual findings concerning the unfair labor
practices in advance of the ALJ’s decision. Rather, the district court assumed from the
facts alleged by the regional director that there was reasonable cause to believe unfair
labor practices had occurred as part of a concerted effort to thwart the Teamsters
presence.
Emphasizing the temporary nature of Sec. 10(j) relief, the regional director urged the
appeals court to determine in the first instance that reasonable cause existed based on the
administrative record and taking notice of the ALJ’s subsequently issued decision. The
appeals court observed that although the ALJ’s decision was under review by the Board,
it could take the ALJ’s findings and conclusions into account in assessing whether the
reasonable cause standard had been met.
Workforce continuity. Here, the regional director claimed that the employer was a
successor employer under the Burns/Fall River doctrine obligated to recognize and
bargain with the union that represented its predecessor’s employees. “Where a new
employer acquires a business without changing its essential nature, and a majority of its
employees previously worked for the predecessor, the new employer has a duty to
recognize and bargain with the incumbent union representing its predecessor’s
employees.” Whether an entity constitutes a successor employer is a factual
determination based on the totality of the circumstances and the focus of that inquiry is
“whether there is ‘substantial continuity’ between the enterprises.”
The threshold inquiry for “substantial continuity” is “whether the majority of the new
employer’s workforce was previously employed by the predecessor.” In this instance, the
Sixth Circuit found that it was not. The ALJ found that discriminatory motive could be
inferred from the circumstances, and concluded that the employer had established a
hiring procedure designed to exclude or limit the hiring of the predecessor’s employees.
Thus, the regional director met his burden of establishing reasonable cause to believe the
employer unlawfully refused to hire former Teamsters-represented employees.
Once work force continuity was established, the other factors to be considered in
determining whether there was substantial continuity for successorship purposes include:
“(1) whether the business of the two entities remain unchanged; (2) whether the
employees continue to perform the same job functions under unchanged working
conditions; (3) whether the production processes remain the same; and (4) whether the
new entity provides the same customers with the same product.”
35
Here, the appeals court found it significant that the employer did not take over the
predecessor’s operations and the yard work did not continue uninterrupted. It was also
relevant that the 14-month hiatus in operations coincided with the end of the
predecessor’s contract. The employer also disputed that the yard work it performed was
substantially the same as the work performed by its predecessor. Despite the employer’s
arguments, the ALJ found that the evidence established substantial continuity between
the employers; thus, facts existed to support the regional director’s claim that the
employer was a successor employer whose refusal to recognize the Teamsters was
unlawful.
Just and proper. The Sec. 10(j) relief being sought pending the Board’s final decision
included: hiring 85 Teamsters applicants, displacing current UAW-represented
employees; withdrawing UAW recognition; and rescinding all terms and conditions of
employment. However, the district court found that rather than seeking a return to the
status quo, the regional director was seeking injunctive relief to right perceived wrongs,
and concluded that it was “forbidden from usurping the power of the NLRB by taking
such action.” Further, the district court concluded that it would not grant interim relief
requiring the unseating of both current employees and the UAW in advance of any
adjudication of the administrative complaint.
The appeals court observed that accepting that the regional director may be seeking
restoration of the status quo, the critical question was whether the interim injunctive relief
being sought was reasonably necessary to preserve the Board’s ultimate remedial power
once the administrative proceedings have concluded. Here, the appeals court concluded
that there is no reason to believe in this case that the denial of interim injunctive relief
will allow support for the Teamsters to erode to the point that the Board will be unable to
adequately remedy the harm resulting from the alleged unfair labor practices.
Consequently, the appeals court declined to find that interim injunctive relief was
reasonably necessary to protect the Board’s power to remedy the harm from the unfair
labor practices once a final administrative decision is issued.
Dissent. In a separate dissent, Judge Moore agreed with the majority that the district
court properly found that the regional director established that there exists reasonable
cause to believe that the defendants engaged in unfair labor practices. But she argued that
the majority improperly enlarged the role of the appeals court to determine for itself
whether interim injunctive relief was just and proper. It was for the district judge to
determine from the evidence whether injunctive relief would be just and proper. Thus, the
dissent would hold that the district court abused its discretion and would remand with
instructions to perform the “just and proper”analysis.
The case number is 12-6628.
Attorneys: Elinor L. Merberg, National Labor Relations Board, for Gary W. Muffley.
Gary A. Marsack (Lindner & Marsack) and Stephen L. Richey (Thompson Hine) for
Voith Industrial Services, Inc. Michele D. Henry (Priddy, Cutler, Miller & Meade) for
36
United Automobile, Aerospace and Agricultural Implement Workers of America, Local
Union No. 862.
7th Cir.: FRSA’s election-of-remedies provision did not bar discharged employee
from pursuing claims under both FRSA and CBA
By Ronald Miller, J.D.
The Federal Railroad Safety Act’s election-of-remedies provision did not bar an
employee who had been wrongfully discharged from obtaining relief through a collective
bargaining agreement’s grievance and arbitration provisions under the Railway Labor Act
and an administrative claim under FRSA, ruled the Seventh Circuit. The FRSA’s
election-of-remedies provision was concerned with provisions of law that granted
workers substantive protections, and the RLA was not, the appeals court determined
(Reed v Norfolk Southern Railway Co, January 15, 2014, Flaum, J).
In April 2009, the employee experienced a bout of severe abdominal pain while working.
He claimed that after he informed his supervisor, company officials were reluctant to
provide medical treatment and pressured him into signing a statement that he had not
been “injured on or at work.” The employee was on medical leave for about seven
months. Soon after he returned to work, a company claims agent urged him to state
whether he thought the April incident was work-related. The employee admitted that he
felt that his work played a role in his injury. The employer responded by firing him for
making inconsistent statements and for violating an internal rule requiring same-day
reporting of on-site injuries.
The employee’s union believed that his discharge violated the terms of a bargaining
agreement. Following his termination, the employee appealed his dismissal to an arbitral
board under Sec. 3 of the RLA. While the arbitration proceeding was pending, he filed a
complaint with OSHA alleging the employer violated the FRSA, which prohibits railroad
carriers from discriminating against employees who notify the carrier of a work-related
personal injury. After waiting the requisite period of time, he brought an original action
in federal district court.
Election-of-remedies. About seven months after the employee brought his FRSA suit, a
public law board issued its opinion finding his violations of company policy were not
grounds for dismissal and awarded him reinstatement and backpay. Thereafter, the
employer moved for summary judgment in the FRSA suit contending that, by choosing to
arbitrate his grievance, the employee had triggered the FRSA’s election-of-remedies
provision. However, the district court denied the employer’s motion. It reasoned that the
arbitration proceedings were not an “election” of remedies because arbitration was
mandatory, and that a CBA was not “another provision of law” because it arose out of a
private agreement rather than a federal or state statute. The employer sought interlocutory
review.
37
Provision of law. Under the FRSA’s election-of-remedies provision, 29 U.S.C. Sec.
20109(f), an employee may not seek protection under both this section and another
provision of law for the same allegedly unlawful act by a railroad carrier. RLA Sec. 153
First (i) requires that disputes growing out of collective bargaining agreements initially be
handled through the rail carrier’s internal processes, but if those processes fail, either
party has the right to appeal to the National Railroad Adjustment Board.
The employer saw the RLA as the “provision of law” it needed to get its foot in the door
of Sec. 20109(f), relying on the Supreme Court decision in Norfolk & Western Railway
Co. v. American Train Dispatchers Ass’n., which addressed a similar phrase in the
Interstate Commerce Act to support its position. However, the Seventh Circuit concluded
that just because the Supreme Court treated the RLA as “law” for Interstate Commerce
Act purposes, it did not mean that it had to treat the Act as “law” for FRSA purposes.
Dispatchers did not require that outcome if statutory text and context point the other way.
The FRSA must be read on its own terms. Here, the district court had concluded that the
RLA was not a “provision of law” within the meaning of Sec. 20109(f).
The RLA “does not undertake governmental regulation of wages, hours or working
conditions, but instead seeks to provide a means by which agreement may be reached
with respect to them.” Likewise, the RLA’s streamlined arbitration procedures are
intended only to “see that disagreement about [working] conditions does not reach the
point of … threaten[ing] continuity of work, not to remove conditions that threaten the
health or safety of workers.” Thus, the Seventh Circuit expressed doubts that a person
who arbitrates a grievance based on a private contractual agreement necessarily does so
“under” federal law merely because a federal statute requires that the claim be brought
before an adjustment board.
Where a railroad employee’s claim is based only on rights set forth in a CBA, he was
seeking protection under the agreement and not under the RLA, the appeals court
observed. The RLA offered the employee no protection at all, but merely instructed him
to bring any grievances that could not be resolved on-property to a specific forum. By
appealing to that forum, the employee did not seek protection under the RLA. Nothing in
RLA Sec. 153 offers substantive protection akin to 49 U.S.C. Sec. 20109. Thus, the
employee was not precluded from obtaining relief under the FRSA simply because he
appealed his grievance to a Public Law Board under the RLA.
The case number is 13-2307.
Attorneys: Charles A. Collins (Charles A. Collins, PA) for Justin D. Reed. James S.
Whitehead (Sidley Austin) for Norfolk Southern Railway Co.
7th Cir.: Employee’s Title VII claim against union alleging abandonment because of
race revived
By Kathleen Kapusta, J.D.
38
Vacating a district court’s grant of summary judgment to the American Federation of
Teachers on an African-American member’s claim that the union abandoned him because
of his race when it refused to pursue a grievance on his behalf after he was terminated,
and then refused to represent him in a lawsuit against the school district, the Seventh
Circuit ruled that a claim against a labor organization under Title VII does not depend on
showing that either the employer or the union violated any state statute or contract (Green
v American Federation of Teachers/Illinois Federation of Teachers Local 604 , January 23, 2014,
Easterbrook, F).
After the union refused the teacher’s requests to pursue the grievance under the collective
bargaining agreement and to represent him in his lawsuit against the school district under
the Teacher Tenure Act, he sued on his own and won. He then brought suit against the
union, contending that it violated Title VII by abandoning him because of his race. He
argued that not only did the union represent comparable white employees in grievance
proceedings and litigation under the Tenure Act, it also retaliated against him because he
had opposed earlier discrimination.
Lower court proceedings. Granting summary judgment to the union before the
commencement of discovery, the district court found that a union cannot be liable under
Title VII unless it first violates a duty created by statute or contract. Thus, the court
concluded that the teacher failed to meet his prima facie case because he did not show
that the union breached the CBA or that it owed a duty of fair representation to him.
Accordingly, the court found that it did not need to address whether the union had any
discriminatory animus.
No Title VII analysis. Vacating the lower court’s decision, the appeals court found that
neither Sec. 2000e-2(c), which forbids discrimination by any labor organization, nor Sec.
2000e-3(a), which forbids retaliation against a person who has asserted rights under Title
VII or supported another person’s assertions of rights, “makes anything turn on the
existence of a statutory or contractual duty violated by the act said to be discriminatory.”
According to the appeals court, the district court did not analyze the language of either
section or recognize that the application of Title VII to employers does not depend on a
statute or contract outside of Title VII. “Nothing in the text or genesis of Title VII
suggests that claims against labor organizations should be treated differently,” the appeals
court stated.
Pointless. In addition, the court pointed out, the district court’s approach would make
Title VII pointless. Under its approach, unless a contract or some other statute gives a
plaintiff an entitlement, Title VII would do nothing. Yet, if a union has such a duty, and
violates that duty, then a remedy may be had under the statute or contract. “Title VII
would be otiose, and claims of discrimination against unions would be either unavailing
or unnecessary,” explained the court.
Observing that the lower court relied on Greenslade v Chicago Sun-Times, Inc., in which
the Seventh Circuit previously stated that to have a prima facie case of discrimination
against a labor union a worker must show that: “(1) the [employer] violated the collective
39
bargaining agreement between the union and the [employer]; (2) the [union] breached its
own duty of fair representation by letting the breach go unrepaired; and (3) that some
evidence indicates animus against [a protected class] motivated the [union],” the appeals
court noted that this passage was dictum.
Language withdrawn. In addition, the Greenslade passage also conflated Title VII with
the elements of a hybrid beach-of-contract/duty of fair representation claim against an
employer and union. Noting that Greenslade got the language from Bugg v Allied
Industrial Workers Local 507, which expressly attributed it to the Supreme Court’s
decision in Vaca v Sipes and other hybrid contract/DFR opinions, the appeals court found
that this “approach does not bear any evident relation to Title VII;” thus, the court
withdrew the language.
Finally, the court pointed out that when the Supreme Court established the elements of a
Title VII prima facie case in McDonnell Douglas Corp. v Green, it did not include any
element that depended on breaking a contract. Noting that in the 40 years since
McDonnell Douglas, courts have regularly restated or modified the elements to cover
new situations and that this approach may cause more problems than it solves, the court
nevertheless explained that an appeals court is “not authorized to abjure a framework that
the Supreme Court has established, but we also are not authorized to add to that
framework in a way that causes Title VII as administered to include elements missing
from Title VII as enacted.”
The case number is 13-2823.
Attorneys: Michael T. Smith (The Law Offices of Michael T. Smith) for Robert Green.
Gilbert Feldman (Cornfield & Feldman) for AFT/IFT LOCAL 604.
8th Cir.: Employer unable to invoke public policy exception to vacate arbitrator’s
reinstatement of laboratory employee
By Ronald Miller, J.D.
An animal pharmaceutical company was unable to invoke the public policy exception to
vacate an arbitration award that reinstated a laboratory employee who had been fired for
falsifying work records, ruled the Eighth Circuit in affirming a district court’s judgment.
The appeals court rejected the employer’s contention that the arbitrator’s conclusion that
the employee’s violation of plant rules was not “just cause” for the harsh termination
remedy did not draw its essence from the parties’ collective bargaining agreement and its
enforcement would violate public policy as reflected in U.S. Department of Agriculture
(USDA) regulations (Boehringer Ingelheim Vetmedica, Inc v United Food and Commercial
Workers, District Union Local Two, January 14, 2014, Loken, J).
Under the terms of the parties’ CBA, disputes regarding employee discipline and
discharge was subject to grievance and arbitration. Acting under its management rights
clause, the employer adopted plant conduct rules and standard operating procedures.
40
Certain offenses were subject to immediate discharge, including falsifying records. On
August 24, 2010, the employee called in sick, and another employee was assigned to
carry out her duties. The coworker noticed that the forms attached to seven pieces of
equipment the employee was monitoring had been pre-filled with the entire week’s
readings. She notified her superior. When confronted the next day, the employee
admitted pre-filling the forms to “save time.” She asserted that she would correct any prefilled data if the actual measurements varied. The employee was terminated and the union
grieved the termination.
Circumstances of employee’s case. At the arbitration hearing, the employer presented
evidence that it had terminated four other employees for falsifying records. However, the
union countered with evidence that a custodial employee was only warned after twice
falsely reporting she had cleaned a particular area. The arbitrator found that falsification
of company records was a serious offense that warranted discipline of some form.
Nevertheless, pointing to the employee’s 13 years of seniority without performance
issues, and that at least one other employee “was not discharged despite falsification,” the
arbitrator concluded that in assessing discipline the employer did not give sufficient
consideration to the circumstances of the case. Thus, the arbitrator reinstated the
employee without backpay. The employer appealed.
On appeal, the employer contended that the arbitration award did not draw its essence
from the CBA for two reasons: (1) the arbitrator ignored language in the CBA that
falsification of work records will result in discharge, and (2) the arbitrator disregarded the
mandatory discharge language contained in plant conduct rules adopted by the employer.
With respect to its first reason, the employer conceded that it did not argue that issue
before the arbitrator because the entire CBA was part of the arbitration record. Here, the
appeals court agreed with the district court that the employer’s failure to argue this issue
waived it.
With respect to the conduct rules adopted by the employer, the Eighth Circuit observed
that the district court correctly noted that precedent “differentiates between explicit
contractual language and rules or policies promulgated under a general management
rights clause.” When a CBA acknowledges management’s right to adopt plant rules
unilaterally, that does not include the right to renege on the collectively bargained
agreement that the employer will only discharge an employee “for cause,” explained the
appeals court. Here, the arbitrator specifically analyzed whether the employee had
committed an offense by pre-filling equipment monitoring sheets, concluded that she had,
and then weighed the gravity of that misconduct against her work record, and evidence of
how the employer had treated other record falsifications less harshly.
Public policy issue. Next, the appeals court turned to the employer’s argument that the
award must be vacated because its enforcement would violate public policies requiring
competent personnel and the keeping of proper, reliable records in the animal health
industry. As applied here, this narrow exception focused not on whether the employee’s
behavior violated well defined and dominant public policy, but on whether the
arbitrator’s decision to reinstate her would violate public policy. As an initial matter, the
41
appeals court disagreed with the union and district court that the employer has waived its
right to challenge the award on public policy grounds, because CBA agreements do not
formulate public policy, and arbitrators cannot consider matters not encompassed by the
governing agreement.
On the other hand, failure to raise a potential public policy defense to the arbitrator
prevents the development of a factual record on the issue. Thus, given the narrowness of
the exception, the employer’s failure to raise the issue at the arbitration hearing was fatal
to the employer’s claim. The employer’s business was comprehensively regulated to
ensure quality and safety, and the standard operating procedures the employee violated
were adopted, at least in part, to ensure compliance with these USDA regulations.
However, the appeals court concluded that the employer made nowhere near the factual
and legal showing that these regulations evidenced a well-defined and dominant public
policy that was required for it to invoke the narrow public policy exemption.
The case number is 12-3740.
Attorneys: Anthony Barrett Byergo (Ogletree & Deakins) and Nicholas James Walker
(Littler & Mendelson) for Boehringer Ingelheim Vetmedica, Inc. Scott L. Brown (Blake
& Uhlig) for United Food and Commercial Workers, District Local Two.
9th Cir.: Under RLA, nonunion workers must try to settle all disputes with
employer before striking
By Ronald Miller, J.D.
Affirming a preliminary strike injunction under the Railway Labor Act against employees
of an aircraft service provider, a divided Ninth Circuit held the Norris-LaGuardia Act did
not withdraw jurisdiction from the district court to enjoin the strike, which grew out a
labor dispute, because the RLA is recognized as an exception to the NLGA’s jurisdictionstripping provisions. The employees had an enforceable duty under Sec. 2 First of the
RLA to diligently strive to make and maintain agreements and settle all disputes. Judge
Milan D. Smith, Jr. dissented (Aircraft Service International, Inc v International Brotherhood of
Teamsters Local 117, January 10, 2014, Smith, N.R).
To avoid interruptions to interstate commerce, Sec. 152 First of the RLA imposes a duty
on all carrier employees to engage in the Act’s labor dispute resolution procedures before
ceasing to perform their work. Because the employees of Aircraft Service International
(ASI) are carrier employees, they must comply with the Act. Consequently, the district
court did not abuse its discretion in issuing a strike injunction. Nor did the injunction
violate the employees’ First Amendment rights.
Work stoppage enjoined. ASI provides aircraft services, including refueling airplanes.
On September 14, 2012, it suspended one of its employees, allegedly for screaming
obscenities at his supervisor. However, the employee and coworkers countered that he
was suspended in retaliation for his leadership on workplace safety issues. (The employee
42
had testified at a Seattle Port Commission hearing just two days prior to his suspension.)
After his suspension, coworkers decided to organize “a group response” to advocate for
his reinstatement. Following two weeks of failed efforts toward that end, his coworkers
decided to strike for up to eight hours on some future date.
After a community coalition announced the employees’ decision to strike at a press
conference, ASI immediately filed a complaint in the district court seeking to enjoin the
strike as unlawful under the RLA. The district court issued a TRO prohibiting the strike
and seeking to maintain the status quo pending the outcome of a hearing. After a full
hearing, the court concluded that preliminary injunctive relief was proper, applying the
factors in Winter v Natural Resources Defense Counsel. The text and purposes of the
RLA supported ASI’s position that air carrier employees “are never permitted to strike as
a first step.” Also, the threat of irreparable harm was largely self-evident, as the
employees were threatening to shut down an airport. Finally, it concluded, “an unlawful
strike would plainly be contrary to the public interest” while “an injunction might prevent
commerce from being severely disrupted.”
On appeal, the defendants challenged the district court’s exercise of jurisdiction over the
dispute and contended that the breadth of the injunction violated their First Amendment
rights.
Federal court jurisdiction over dispute. Generally, the NLGA withdraws jurisdiction
from federal courts to enjoin strikes “growing out of any labor dispute.” However, the
NLGA “does not deprive the federal court of jurisdiction to enjoin compliance with
various mandates of the Railway Labor Act.” Congress enacted the RLA to eliminate
interruptions to interstate commerce caused by labor disputes between carriers and their
employees. Given this purpose, the RLA has been recognized as an exception to the
NLGA’s jurisdiction-stripping provisions.
Section 2 First of the RLA imposes on all carrier employees a duty to diligently strive to
make and maintain agreements and settle all disputes. Striking without even attempting to
appoint a representative and collectively bargain violates this duty. Yet here, the
employees made no attempt to engage in the RLA’s procedures. Notwithstanding the
apparent clarity of this provision as applying to all carrier employees, the defendants
argued that the RLA did not provide federal jurisdiction over this dispute because they
had no enforceable duty under the Act.
An obligation, not a policy statement. The employees first argued that Sec. 2 First is
only a policy, not an independent obligation. Further, they asserted, the RLA’s other
provisions addressed only the resolution of disputes over the formation of collective
bargaining agreements, interpreting such agreements, and appointing a representative;
since they were disinterested in all such activity, the RLA did not compel them to do
anything. However, the Ninth Circuit found this argument fatally flawed. First, the
Supreme Court has explicitly rejected this narrow view of Sec. 2 First. Instead of being a
mere statement of policy, the provision was designed to be a legal obligation. Further, the
Ninth Circuit, in Reg’l Airline Pilots Ass’n v Wings W. Airlines, Inc, found that Sec. 2
First imposes an independent, mandatory duty enforceable by the courts.
43
The text of Sec. 2 First further condemned the employees’ narrow view. It provides that
all carrier employees have a specific duty to “exert every reasonable effort to make and
maintain agreements concerning rates of pay, rules, and working conditions, and to settle
all disputes, whether arising out of the application of such agreements or otherwise.”
Thus, carrier employees have a clear duty to “make” agreements, not just maintain
preexisting ones. The presence of “or otherwise” demonstrates Congress’s intent to
require labor disputes to be settled even if they do not fit into the major or minor
resolution mechanisms.
Nonunion employees covered. The employees next contended that even if Sec. 2 First
represented more than policy, it only applied to unionized carrier employees. However,
this view was inconsistent with the text of the statute. While the RLA was passed to
encourage collective bargaining by carriers and their employees to prevent wasteful
strikes and interruptions to interstate commerce, it did not undertake to compel agreement
between the employer and individual employees, or to compel a union and a carrier to
comply with the RLA’s procedures; rather, the RLA was meant for resolving “collective
disputes directly between the carrier and its employees.” Therefore, the employees’
decision to strike before appointing a representative and attempting to collectively
bargain under the procedures of the Act was a violation of their duty under Sec. 2 First.
NLGA no bar to jurisdiction. Finally, the majority concluded that Sec. Eight of the
NLGA did not strip the district court of jurisdiction. The NLGA prohibits issuing a
restraining order or injunction to a complainant who has failed to comply with any
obligation imposed by law which is involved in a labor dispute. Because a specific RLA
duty applies in this controversy, the NLGA does not control its resolution. Further, ASI
desired to resolve the dispute with its employees the way Congress intended — through
the procedures embodied in the RLA. Thus, the district court’s exercise of jurisdiction in
this case was proper.
Dissent. Judge Milan Smith dissented from the majority’s conclusion that Sec. 2 First of
the RLA imposed a duty on the employees to refrain from striking while imposing no
corresponding duty on the employer to negotiate before it sought an injunction.
According to the dissent, the majority reads the language of Sec. 2 First too broadly.
Finding that the employees had violated no express provision of the RLA, and the
employer failed to satisfy the condition precedent in Sec. 8 of the NLGA before seeking
an injunction, the dissent would conclude that the district court had no jurisdiction to
issue the injunction.
The case number is 12-36026.
Attorneys: Dimitri Iglitzin (Schwerin Campbell Barnard Iglitzin & Lavitt) for
International Brotherhood of Teamsters Local 117. David P. Dean (James & Hoffman)
for Working Washington. Douglas W. Hall (FordHarrison) and Ami M. De Celle
(Winterbauer & Diamond) for Aircraft Service International Inc.
44
NLRB: Supervisors possessed authority to take corrective action against employees,
but did not exercise independent judgment
By Ronald Miller, J.D.
An employer was granted its request for review of an acting regional director’s direction
of an election to consider a finding that shift and unit supervisors at a facility did not
possess the authority to responsibly direct the employer’s operations and unit counselors.
The NLRB disagreed with the regional director’s conclusion that the supervisors did not
possess the required authority to take corrective action regarding a counselor’s deficient
performance. However, the Board affirmed on different grounds the regional director’s
finding that the supervisors did not responsibly direct within the meaning of NLRA Sec.
2(11), namely that they were not held accountable for the counselor’s poor performance,
and they did not direct the counselors using independent judgment. Member Miscimarra
filed a separate opinion concurring in part and dissenting in part (Community Education
Centers, Inc, January 9, 2014).
With respect to the regional director’s finding that the supervisors did not possess the
required authority to take corrective action regarding deficient performance, the Board
agreed with the employer that the regional director set the standard for corrective action
too high. Here, the regional director based his finding on the absence of evidence that the
supervisors can recommend discipline or cause a dismissal through an unsatisfactory
evaluation. However, the Board noted that the threshold of corrective action for purposes
of demonstrating responsible direction falls below that of other Sec. 2(11) indicia,
including disciplinary and promotion authority.
The evidence indicated that the supervisors could take corrective action by recording a
counselor’s failures to follow proper procedures and by providing related training. While
these corrective actions fell short of “disciplinary authority” because the supervisors
could not impose or effectively recommend discipline, they did involve reporting
deficiencies in a counselor’s performance to the disciplinary committee, which then
forwarded the information on to the corporate office for final approval. Thus, applying
the correct standard, the Board found that the supervisors did possess authority to take
corrective action.
Accountability and independent judgment. Nevertheless, the Board found that the
employer did not satisfy its burden of proof as to the other elements required to establish
that the supervisor’s direction of the counselors constituted responsible direction under
Sec. 2(1): accountability and the exercise of independent judgment. In reviewing the
disciplinary and supervision notices and evaluations issued by supervisors submitted into
evidence by the employer, the Board found that they concerned the supervisors’ own
performance rather than that of the counselors. Thus, such evidence failed to demonstrate
that the employer held the supervisors accountable for the counselors’ poor performance.
The NLRB also held that the employer did not demonstrate that the supervisors direct the
counselors using independent judgment. Again referring to the notices and evaluations,
45
the Board concluded that these documents merely indicate that the supervisors correct
counselors in such tasks as writing reports on resident behavior, maintaining logbooks,
filling out unit inspection/tour sheets, and addressing the residents. The employer failed
to demonstrate that the supervisors’ direction of counselors in performing these tasks was
not controlled by the employer’s own policies and procedures or involved a degree of
discretion rising above the merely routine. Consequently, the Board agreed with the
regional director’s conclusion that the supervisors did not possess the supervisory
authority to responsibility direct the counselors.
Partial concurrence, and partial dissent. Member Miscimarra joined the Board
majority in granting the employer’s request to review the regional director’s finding that
the supervisors did not possess authority to responsibly direct counselors. He also agreed
with the majority that the regional director applied the wrong standard to find that the
supervisors lacked authority to take “corrective action” regarding a counselor’s
performance. However, in concluding that the supervisors were not statutory supervisors,
Member Miscimarra reached the same result but for a different reason. First, he disagreed
with the majority’s interpretation of “accountability.”
According to Miscimarra, “accountability” can exist where the evidence establishes that
the supervisor suffers adverse consequences for failing to adequate oversee the
counselors performance. Nevertheless, Miscimarra agreed that the employer failed to
show that the supervisors exercised independent judgment in directing the counselors.
The slip opinion number is 360 NLRB No 17.
NLRB: Employer violated NLRB by drawing distinction between union organizing
event and union membership meetings
By Ronald Miller, J.D.
An employer unlawfully denied a union the use of its property to hold an organizing
event, ruled a three-member panel of the NLRB. The employer’s HR director stated that
he did not object to an “in-house” union meeting in a fire station situated on property
owned by the company, but he had a problem with a union organizing event.
Consequently, the employer engaged in unlawful discrimination by drawing a distinction
between the union’s organizing event and membership meetings by its “in-house” union
(Phillips 66 (Sweeny Refinery), January 15, 2014).
Organizing event. The employer owned a tract of land across the road from its facility,
which it leased to a local fire department for its fire station. Without objection from the
employer, the fire chief had routinely permitted the union representing a small unit of the
employer’s crane operators to hold monthly membership meetings in the fire station’s
office. In August 2012, the union obtained permission from the fire chief to use the fire
station’s office and immediate surrounding area for a barbecue aimed at organizing the
employer’s remaining 340 unrepresented employees. It distributed flyers inviting
employees to attend the event to discuss the benefits of having a union.
46
Distinctions drawn. Days before the event was to occur, the employer’s HR director
called the fire chief and told him that “the unions are really not supposed to have things
on our property,” and directed the fire chief to tell the union to move its event elsewhere.
In response to the fire chief’s query whether he was wrong to let the unions use the fire
station for monthly meetings, the HR director replied that he did not object to the “inhouse” union meeting in the fire station, and that “he only had a problem with this event
and not with the other meetings.” The fire chief advised the union that it would have to
move the event.
Unlawful discrimination. The NLRB agreed with an administrative law judge that the
employer engaged in unlawful discrimination by drawing a distinction between the
union’s organizing event and membership meetings by its “in-house” union. There
appeared to be no reason for the employer’s action other than that the union was
attempting to organize its unrepresented employees, the Board observed. It rejected the
employer’s contention that it barred use of the fire station property for the organizing
event because the barbecue would have involved the consumption of alcohol and the fire
station’s office was too small to accommodate the expected turnout. There was no
evidence that the HR director relied on these lawful reasons for having the union move
the event at the time of the decision.
Other ULPs. Additionally, the Board agreed with the ALJ that a supervisor unlawfully
threatened a lead operator by telling him that the company would probably reclassify that
job as a salaried position (resulting in a pay cut) if the union came in, and that another
supervisor unlawfully interrogated an employee when she asked him, “[w]hat’s your
opinion of this union thing?”
The slip opinion number is 360 NLRB No. 26.
Attorneys: Dean Owens for General Counsel. Dan Dargene (Olgetree Deakins) for
Phillips 66 (Sweeny Refinery).
NLRB: Employer’s discharge of former union member unlawfully motivated by
union status
By Ronald Miller, J.D.
An employer unlawfully discharged an employee because of his former membership in a
union, ruled a three-member panel of the NLRB. The employer became aware of the
employee’s involvement in union activity, in part, through the unlawful interrogation of
employees. Moreover, the employer’s hiring of two new workers just one day after it
discharged the employee belied its claim that it could not afford to pay him. Thus, the
Board found that animus against his former union status was a motivating factor in his
discharge (K-Air Corp, January 16, 2014).
The company president hired the employee to start work on a construction project. The
employee was a former member of the Sheet Metal Workers union, but did not so inform
47
the employer. Just two days after beginning work on the site, the employer contacted the
employee and advised him that he did not have the money to pay him for additional
work. However, when the employee returned to the jobsite to pick up his tools, he met a
former coworker who told him that the employer had just hired him and another worker
that day. When the employee confronted the employer regarding the matter, he was once
again told that there was not enough money to pay him.
Antiunion animus. In this instance, there was no question that the employee had
engaged in union activity and that the employer became aware of such activity, in part,
through its unlawful interrogation of employees. The record established the employer’s
animus toward union activity generally, and the employee’s former union affiliation
specifically. Animus was shown by the employer’s unlawful interrogations, its threat to a
coworker that it “had no interest in having” or “did not want” union members on the job,
and the timing of the employee’s discharge one day after the employer learned of his
union affiliation. The fact that the employer hired two new workers the day after the
employee’s discharge supported an inference that the real reason for his discharge was
his union affiliation.
Additionally, the Board deferred to the compliance stage issues of whether the employee
was disqualified from reinstatement due to an alleged prior conviction and related
misrepresentation on his employment application. For the first time in its exceptions to an
administrative law judge’s recommendations, the employer alleged that it discovered that
the employee was on parole from a 10-year sentence for a serious felony; however, the
employee had indicated on his job application that he had no criminal convictions.
Because the record was inadequate to make a determination of the merits of the
employer’s assertions, the Board left those issues for resolution in the compliance
proceeding.
Unlawful interrogations. With respect to other charges filed against the employer, the
Board agreed with the law judge’s finding that the employer, in two separate
conversations, unlawfully interrogated two employees about their union affiliations.
Those conversations were unlawful where they were both initiated by the employer’s
owner; the owner’s direct and repeated inquiries as to whether the employees were union
members clearly connoted disapproval and hostility; neither employee was known to be a
past or present union member; and both employees minimized their union connections in
response.
On the other hand, the Board disagreed with the ALJ’s finding that the employer did not
unlawfully threaten employees. Here, the Board found that the law judge overlooked the
employer’s statement to an employee that he “had no interest in having” or “did not
want” union members as employees. Rather, the Board found that the statement would
reasonably convey to an employee that the employer did not intend to knowingly employ
union members and so was unlawful.
The slip opinion number is 360 NLRB No. 30.
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Attorneys: Roberto Perez for General Counsel. Melissa Fletcher (Goode, Casseb, Jones,
Riklin, Choate & Watson) for K-Air Corp.
NLRB: Firing employee based on mistaken belief that he disclosed employer’s
jobsite to union unlawful
By Ronald Miller, J.D.
An employer unlawfully discharged an employee because it believed, erroneously, that
he disclosed the location of employer’s jobsite to a union to aid its organizing campaign,
ruled a three-member panel of NLRB. The Board agreed with an administrative law
judge’s determination that the employer failed to show that it would have discharged the
employee for alleged work deficiencies even in the absence of its belief that he was
assisting the union. Consequently, the employer’s retaliation against the employee was
unlawful even though it was mistaken in its belief (Evolutional Mechanical Services, Inc.,
January 27, 2014).
In affirming an administrative law judge’s finding that the employee’s discharge was
unlawful, the Board rejected the employer’s contention that the ALJ held it to an
impermissibly high standard by stating that its affirmative defense burden under Wright
Line was to establish that it discharged the employee “for cause.” Having found that the
General Counsel demonstrated that the employer’s belief that the employee had engaged
in union activity was a motivating factor in his discharge, the law judge appropriately
stated that the burden shifted to the employer to show, as an affirmative defense, that it
would have discharged the employee even if it had not believed that he had engaged in
such activity. Thus, it was clear that in using the phrase “for cause,” the ALJ was simply
requiring the employer to prove that it had a legitimate non-discriminatory reason for
discharging the employee, and that it actually would have discharged him for that reason
in the absence of its belief that he was assisting the union’s organizational activities.
The slip opinion number is 360 NLRB No. 33.
Attorneys: Lisa McNeill for Acting General Counsel. Erick J. Becker for Evolutional
Mechanical Services, Inc. and Murray Mechanical Services, Inc. Will Scott for Sheet
Metal Workers’ International Association, Local Union 105.
Or. S.Ct.: Bar owner a successor employer; must reimburse state for payments to
predecessor’s employees
By Ronald Miller, J.D.
The Oregon Bureau of Labor and Industries (BOLI) correctly determined that the
operator of a bar and restaurant that took over the business assets of a sports bar that went
out of business was a successor employer and, therefore, it was required to reimburse the
agency for wages paid from the state’s Wage Security Fund on behalf of four claimants
previously employed by the sports bar. Since the defendant conducted essentially the
49
same business as the previous employer, the Oregon Supreme Court found it was a
successor, and reversed the contrary decision of a court of appeals (Blachana, LLC dba
Penner’s Portsmouth Club v Bureau of Labor and Industries, January 16, 2014, Walters, M).
The defendant owned a building and operated a bar and restaurant in the building. Since
1940, five different businesses had operated a bar and restaurant in that location, and
customers referred to each business as the “Portsmouth Club.” In 2005, the owner
executed an agreement with the sports bar to operate in the building, and it assumed the
business name “Portsmouth Club.” By May 2006, the sports bar was behind in payments
under the agreement and entered into discussions with the building owner about closing
and repossession of the business.
Ultimately, the sports bar closed, and its owner surrendered all business assets and
relinquished possession of the building to its owner. The sports bar owner was released
from its obligations under the agreement. He left town without paying the bar’s four
employees. The building owner opened a bar and restaurant on the premises, assuming
the business name “Penner’s Portsmouth Club.” The new bar and restaurant did not
employ the same employees as the sports bar, but used much of the same bar equipment
and the same beer vendor. However, it used a different food vendor.
“Successor to the business.” Meanwhile, the sports bar employees filed wage claims
with the BOLI. An investigator assigned to the employees’ case was unable to locate the
sports bar owner. He ultimately determined that the wage claims were valid and that the
sports bar had ceased doing business. The employees’ wages were paid through the Wage
Security Fund, and the BOLI then notified the new operator that it was responsible for the
unpaid wages under ORS 652.414(3) and ORS 652.310(1). After an administrative
hearing, it was concluded that the new bar and restaurant operator was a successor to the
sports bar. The BOLI has consistently held that the test to determine whether an employer
is a successor in a wage claim case is “whether it conducts essentially the same business
as conducted by the predecessor,” the BOLI commissioner explained in a final order.
Thus, the new operator was responsible for reimbursing the Wage Security Fund for the
amount paid out to the former employees of the sports bar.
The new operator sought review of that determination to the court of appeals, which
agreed with the new operator’s contention that the BOLI’s interpretation of the statutory
phrase “successor to the business” was not within the legislature’s intended meaning of
that phrase. The appeals court found the new operator was not a successor because it was
a separate corporate entity with no connection to the sports bar. Thus, the record did not
establish that the new operator was the “legal successor” to the sports bar.
The Oregon Supreme Court rejected the appeals court’s conclusion that an entity is liable
as a “successor to the business” under ORS 652.310(1) only when the entity would be
liable for a predecessor employer's unpaid wages under some law other than that statute.
The state high court began its analysis by describing the legislative history which led to
the creation of the Wage Security Fund — funded by employer taxes. Today, under ORS
652.414, when an employee has filed a claim for unpaid wages and the BOLI has
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determined that the employer is incapable of paying the wage claim, the commissioner
will pay the claim out of the Wage Security Fund.
Definition of employer. It was the definition of “employer” under ORS 652.414 that was
at issue in this case. The wage claimants worked for the sports bar, and the new operator
did not employ them directly or through an agent; but it obtained the sports bar’s business
through repossession. The phrase “successor to the business” is not defined in the
statutes; however, the BOLI has interpreted the phrase through adjudication in contested
cases. As it did before the appeals court, the new operator argued that the BOLI’s
interpretation of the phrase “successor to the business” in ORS 652.310(1) was outside
the legislature’s intended meaning.
To be a “successor,” as that term is used in ORS 652.310(1), an entity must do more than
merely follow its predecessor chronologically; it must conduct a business that “sustains
the like part or character” of the previously conducted business, explained the high court.
However, it rejected the new operator’s contention that to be a “successor,” an entity that
succeeds another must do so in circumstances so that the succeeding entity would be
liable for promises or obligations of its predecessor under law other than the wage statute.
The high court found one interpretation of the two clauses in ORS 652.310(1) that would
give meaning to both. That is, the legislature intended to include within the scope of the
phrase “successor to the business” entities that operate essentially the same business as a
predecessor, but do so without entering into a formal agreement to acquire the business
property of the predecessor. Thus, the court determined that the BOLI’s interpretation of
ORS 652.310(1) was consistent with the legislature’s intent.
Application of interpretation. Moreover, the court concluded that the agency correctly
applied its interpretation to the facts of this case. In determining whether a corporation
conducts essentially the same business as a predecessor, the BOLI considers the
following factors: the name and identity of the business, its location, the lapse of time
between the previous operation and the new operation, whether the businesses employed
substantially the same workforce, whether the same product was manufactured or the
same services offered, and whether the same machinery, equipment, or methods of
production were used.
In this instance, the new operator had not articulated any specific criticism of those
factors and all were logically relevant to a determination of whether a successor operates
“essentially the same business” as a predecessor, noted the high court. Applying its
interpretation of ORS 652.310(1), the BOLI concluded that all but one of the factors
indicated that the new operator conducted essentially the same business as had the sports
bar. The high court determined that the BOLI did not err in reaching that conclusion, and
reversed the decision of the appeals court.
The case number is SC S060789.
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Attorneys: Jonathan Radmacher (McEwen Gisvold) for Blachana, LLC and Penner’s
Portsmouth Club. Karla H. Ferrall, Office of the Attorney General, for Bureau of Labor
and Industries.
Hot Topics in WAGES HOURS & FMLA:
Lawmakers push for increase in minimum wage
The battle to increase the federal minimum wage picked up its pace this week when
lawmakers from both Congressional Chambers spoke out about the need for the change.
At an Economic Policy Institute (EPI) event held on Tuesday, January 14, Senator Tom
Harkin (D-Iowa), Chairman of the Senate Health, Education, Labor, and Pensions
(HELP) Committee; Representative George Miller (D-Cal.), senior Democrat on the
House Education and Workforce Committee; and Jason Furman, Chairman of the White
House Council of Economic Advisers, jointly called on Congress to pass the Fair
Minimum Wage Act (S. 460; H.R. 1010), which would raise the federal minimum wage
to $10.10 an hour. The following day, House Democratic Leader Nancy Pelosi, Labor
Secretary Thomas Perez, Democratic Whip Steny Hoyer, and House Democratic
Members held a press conference for the same purpose.
In prepared remarks at the EPI event, Harkin said, “This is a great show of unity — with
the House, Senate, and White House all here to talk about one of the most important
priorities we can pursue to directly help American families and give a boost to our
economy.” Harkin pointed to what he said used to be a consensus around such priorities
— a “fairly universal agreement that the people who do hard work every day taking care
of our children and elders, running the cash registers, stocking shelves at stores,
delivering a meal or a cup of coffee… are the backbone of this country and the
foundation of our economy.” In the past there was agreement, he said, “that if you
worked hard and played by the rules, you should be able to earn enough to support your
family and keep a roof over your head, put some money away for a rainy day, and have a
secure retirement.”
The senator observed that these fundamental values and principles are under attack in
public discourse and that many now have a new attitude of, “tough luck, you’re on your
own,” that “if you struggle, even if you face insurmountable challenges, it’s probably
your own fault.”
What used to be only “harsh rhetoric from talk-radio partisans trying to attract ratings,”
had now become part of the everyday discourse in Congress, according to Harkin. “We
hear how minimum wage workers don’t deserve a fair wage because they are not worth
$10.10 an hour, or that raising the minimum wage won’t actually help lift people out of
poverty. “The predominant attitude seems to be that minimum wage workers should just
‘get a better job’ or ‘work harder.’ Tell that to the single mother working two jobs who’s
trying to put food on the table and figure out how to keep her kids safe and cared for
while she’s working double shifts.”
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The legislation introduced by Senator Harkin and Representative Miller would raise the
minimum wage over three years from $7.25 to $10.10 an hour; it would raise the
minimum wage for tipped workers for the first time in over two decades. “And critically,
the minimum wage would be indexed to inflation after that, so that we will not need to
have debates like this in the future, and families’ wellbeing is assured, not turned into a
political football,” Harkin said.
According to Harkin, if the legislation is enacted, the minimum wage will no longer be a
poverty wage: “In fact, a major economic study released just a few weeks ago quantifies
the effect: the careful analysis proves that raising the minimum wage does, in fact, reduce
poverty significantly,” he said. “This new study projects that, under the Harkin/Miller
bill, 4.6 million people would be lifted above poverty when the $10.10 wage is fully
implemented, and 6.8 million people in the longer term, or the second year after
implementation.”
Child care industry employers in Kentucky under scrutiny
By Pamela Wolf, J.D.
Kentucky child care industry employers would do well to make sure they have
appropriate and effective wage and hour compliance policies in place. An ongoing
enforcement initiative by the DOL’s Wage and Hour Division (WHD) that targets the
child care industry in Kentucky has uncovered significant violations of the FLSA
minimum wage, overtime and recordkeeping provisions.
The agency announced this week that in fiscal year 2013, the WHD’s Louisville District
Office processed 59 cases involving child care providers and reaped more than $170,000
in back wages for more than 600 workers. The WHD shows no sign of slowing down its
targeted enforcement efforts and appears committed to the initiative going forward.
The WHD notes that the child care industry employs many low-wage workers who, due
to a lack of knowledge of the law or hesitance to exercise their rights, are vulnerable to
disparate treatment and labor violations.
Typical violations. Among the most common violations found by the WHD are:
 employers failing to count time spent when employees attend mandatory training
courses as compensable;
 improperly classifying FLSA-covered employees as exempt from receiving
overtime compensation;
 making illegal deductions from employees’ wages that resulted in earnings falling
below the federal minimum wage;
 paying employees straight-time wages rather than time and one-half their regular
rates of pay for hours worked over 40 in a workweek;
 missed payrolls that resulted in additional minimum wage and overtime
violations; and
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
failing to maintain the required record keeping.
Child care industry employers in Kentucky should consider conducting an internal audit
to determine whether their policies and practices create exposure to liability for any of the
FLSA violations listed above.
Unannounced visits. The agency said that its investigators continue to make
unannounced visits to child care service providers throughout Kentucky, including
franchises, enterprises with multiple locations, and facilities operating under a state
license. The investigators may make thorough inspections of payroll records and
employment practices, as well as employee interviews, with the aim of ensuring
compliance with all applicable labor standards.
Compliance outreach. In addition to enforcement efforts, the WHD is conducting
outreach to workers, employee associations, community organizations, state and local
agencies, and other stakeholders to inform them of the ongoing initiative and encourage
their participation in promoting industrywide compliance. The WHD also continues to
provide compliance assistance and education to employers, industry associations, and
state licensing agencies on all applicable regulations, and will continue the initiative this
year.
“Our ongoing initiative in Kentucky seeks to remedy widespread labor violations, ensure
compliance among employers previously found in violation of the FLSA and promote
compliance throughout the child care industry. It is important that workers in this
industry are paid their rightful wages and treated with respect, so they, in turn, can
provide quality child care service to Kentucky’s working families,” said Karen Garnett,
director of the Wage and Hour Division’s Louisville District Office. “The department is
seeking compliance commitments from employers to prevent future labor violations and
ensure lasting industrywide compliance.”
Owner of NY movie theatre cleaning company faces jail time for underpaying
workers
New York Attorney General Eric T. Schneiderman on January 17 announced the
conviction and sentencing of Jose Hector Hernandez Gramajo, the owner of Royal
Commercial Cleaning, a company that cleaned the United Artists Sheepshead Bay
Stadium 14 Movie Theatre in Sheepshead Bay, Brooklyn. The owner was sentenced to
weekends in jail for 90 days by Brooklyn Criminal Court Judge Alexander Jeong.
In addition to the jail term, the owner was ordered to pay $60,000 in restitution to
underpaid employees. Of that amount, approximately $8,000 will be paid to two workers
who were given checks by Hernandez Gramajo for back wages, following an
investigation by the U.S. Department of Labor. Hernandez Gramajo told the workers to
cash the checks and return the money to him or they would be fired. The remaining
restitution will be distributed to other workers who were paid less than the minimum and
overtime wages required by law.
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Along with demanding return of the back wages, Hernandez and his company paid most
of their employees a flat rate of $700 or $800 twice a month and did not pay employees
overtime for hours worked beyond 40 hours a week. In general, these employees worked
seven days a week, eight hours a day. For these workers, the flat rate was less than the
minimum wage. The crew foreman was also paid a flat rate and did not receive overtime
pay for the more than 56 hours a week he worked.
Hernandez Gramajo pleaded guilty on January 9, 2014, to a violation of Labor Law 198a, Failure to Pay Wages, a misdemeanor. Royal Commercial Cleaning Inc. pleaded guilty
to one count of Grand Larceny in the Fourth Degree, a class E felony.
“This employer not only robbed his employees of a lawful wage, but also attempted to
deny them back wages, even after a federal investigation into his labor abuses,” said
Attorney General Schneiderman. “We will pursue full accountability, including jail time,
for any employer who shows such blatant disregard for rule of law and for workers’
rights.”
GAO says DOL’s WHD needs systematic approach to identifying necessary FLSA
guidance
The GAO recommends that the Secretary of Labor direct the Wage and Hour Division
(WHD) Administrator to develop a systematic approach to identifying and considering
areas of confusion that may contribute to possible FLSA violations with the aim of
informing the development and assessment of agency guidance. According to a GAO
report released on January 23, the WHD agrees, and has plans to address the
recommendation.
A study was conducted by the GAO because there were questions about the effect of
FLSA lawsuits on employers and workers, and on the WHD's enforcement and
compliance assistance efforts as the number of lawsuits has increased. The GAO
analyzed federal district court data from fiscal years (FY) 1991 to 2012 and reviewed
selected documents from a representative sample of lawsuits filed in federal district court
in FY 2012. It also reviewed the DOL's planning and performance documents, and
interviewed DOL officials, stakeholders, including federal judges, plaintiff and defense
attorneys who specialize in FLSA cases, officials from organizations representing
workers and employers, and academics about FLSA litigation trends and WHD's
enforcement and compliance assistance efforts.
Findings. According to the GAO, there were substantial increases over the last decade in
the number of civil lawsuits filed in federal district courts alleging FLSA violations.
Federal courts in most states experienced a rise in the number of FLSA lawsuits filed and
the percentage of total civil lawsuits filed that were FLSA cases. However, there were
large increases concentrated in a few states, including Florida and New York. The GAO
said the number of workers involved in FLSA lawsuits is unknown because the courts do
not collect that data.
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Of the many factors that may contribute to this general trend, the factor cited most often
by stakeholders, including attorneys and judges, was attorneys' increased willingness to
take on such cases. The GAO said that in FY 2012, about 97 percent of FLSA lawsuits
were filed against private sector employers, frequently those in the accommodations and
food services industry. Ninety-five percent of the lawsuits filed included overtime
allegations.
The WHD has an annual process for planning how it will target enforcement and
compliance assistance resources in an effect to help prevent and identify potential FLSA
violations, but it does not compile and analyze relevant data to help determine what
guidance is needed — a best practice previously identified by the GAO.
In planning its enforcement efforts, the WHD targets industries it determines to have a
high likelihood of FLSA violations. While the WHD does not analyze data on FLSA
lawsuits when planning its enforcement efforts, it does use information on its receipt and
investigation of FLSA complaints. In developing its guidance on the FLSA, the WHD
considers input from its regional offices but does not have a systematic approach that
includes analyzing relevant data, nor does it have a routine, data-based process for
assessing the adequacy of its guidance, according to the GAO.
The GAO noted that since 2009, the WHD has reduced the number of FLSA-related
guidance documents it has published. However, plaintiff and defense attorneys
interviewed by the GAO indicated that more FLSA guidance from the WHD would be
helpful, such as guidance on how to determine whether certain types of workers are
exempt from overtime pay and other requirements.
GAO recommendation. The GAO recommended that to help inform its compliance
assistance efforts, the WHD Administrator should develop a systematic approach for
identifying areas of confusion about FLSA requirements that contribute to possible
violations and improving the guidance it provides to employers and workers in those
areas. The recommended approach could include compiling and analyzing data on
requests for guidance on FLSA-related issues, and gathering and using input from FLSA
stakeholders or other users of existing guidance through an advisory panel or other
means.
Senator Gillibrand announces Family and Medical Insurance Leave Act
By Jeff Carlson, CCH News Staff
Senator Kirsten Gillibrand (D-N.Y.) on January 23 announced federal legislation that
would create paid family and medical leave. The Family and Medical Insurance Leave
(FAMILY) Act would be funded by employee and employer contributions of 0.2 percent
of wages each.
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“When a young parent needs time to care for a newborn child — it should never come
down to an outdated policy that lets her boss decide how long it will take — and decide
the fate of her career and her future along with it,” said Gillibrand. “Choosing between
your loved ones and your career and your future is a choice no one should have to make.”
The FAMILY Act would create an independent trust fund within the Social Security
Administration to collect fees and provide benefits, creating a self-sufficient program that
would not add to the federal budget, according to Gillibrand’s office. Benefit levels,
modeled on existing successful state programs in New Jersey and California, would equal
66 percent of an individual’s typical monthly wages up to a capped monthly amount that
would be indexed for inflation.
The proposal makes leave available to every individual regardless of the size of their
current employer and regardless of whether such individual is currently employed by an
employer, self-employed or currently unemployed, as long as the person has sufficient
earnings and work history.
President to raise minimum wage on federal contracts to $10.10 an hour, pushes for
same boost in private sector
By Pamela Wolf, J.D.
In a preview of one of the topics to be addressed at the State of the Union Address, the
White House let it be known that President Obama is going to raise the minimum wage
for individuals working on federal contracts — via executive order, that rate will increase
to $10.10 an hour.
The Chief Executive Officer also wants to work with Congress to pass a previously
introduced bill that would raise the federal minimum wage to the same rate. The current
rate is $7.25 an hour.
Harkin-Miller bill. The Fair Minimum Wage Act of 2013 was introduced in the Senate
(S. 460) last year by Senator Tom Harkin (D-Iowa), Chairman of the Senate Health,
Education, Labor, and Pensions (HELP) Committee, and in the House (H.R. 1010) by
Congressman George Miller (D-Cal). The legislation would increase the minimum wage
to $10.10 in three steps and provide for automatic annual increases linked to changes in
the cost of living. It would also gradually raise the minimum wage for tipped workers,
currently $2.13 an hour, for the first time in more than 20 years — to 70 percent of the
regular minimum wage. It’s unlikely that the GOP-controlled House will approve it.
In a fact sheet posted on January 28, the White House expressed the President’s support
for the Harkin-Miller bill and said that he will continue to work with Congress to get its
proposed $10.10 minimum wage that will thereafter be indexed to inflation.
Federal contracts wage hike. The beneficiaries of the President’s upcoming executive
order will be those who work on new federal contracts for services and construction and
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currently are paid less than $10.10 an hour — including janitors, construction workers,
and military base workers who wash dishes, serve food, and do laundry.
According to the fact sheet, the wage boost for federal contract workers will provide
good value for the federal government and taxpayers, lower turnover, increase morale,
lead to higher overall productivity, and improve the quality and efficiency of services
provided to the government.
“When Maryland passed its living wage law for companies contracting with the state,
there was an increase in the number of contractors bidding and higher competition can
help ensure better quality,” the Administration points out.
The White House also states that the wage increase will be manageable for contractors
because it will apply to new contracts after the effective date of the order, giving
contractors time to prepare and price their bids accordingly.
Private sector wage boost. As to the federal minimum wage, the fact sheet points to
businesses like Costco that have supported past increases to the minimum wage “because
it helps build a strong workforce and profitability over the long run.” Low wages, the
White House says, are bad for business because paying low wages lowers employee
morale, encourages low productivity, and leads to frequent employee turnover, all of
which impose costs on businesses.
About 60 percent of workers benefiting from a higher minimum wage are women and
less than 20 percent are teenagers, according to the fact sheet. The workers who stand to
benefit brought home 46 percent of their household’s total wage and salary income in
2011 — the boost will directly help parents make ends meet and support their families.
“Raising the minimum wage will make sure no family of four with a full-time worker has
to raise their children in poverty,” according to the White House. “It has been seven years
since Congress last acted to increase the minimum wage and, adjusted for inflation, today
the real value of minimum wage is roughly the same as what it was in the 1950s, despite
the fact that the typical American family’s income has doubled since then.”
According to the White House, by indexing the minimum wage to inflation, as would be
the case under the Harkin-Miller bill, lower-income workers would be better able to keep
up in the future.
Introduced in 1938, the minimum wage has been increased 22 times, but it has also
eroded substantially over several prolonged periods due to inflation. Legislators on both
sides of the aisle agree that indexing the minimum wage to inflation would ensure that
working families can keep up with expenses and will not have to suffer if Congress fails
to act. The fact sheet also points out that indexing would isolate workers form a repeat of
the 34-percent decline in the real value of the minimum wage from 1978 to 1989, and the
19-percent decline in real value from 1998 to 2006.
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Labor Secretary. Secretary of Labor Thomas Perez is on the same page as the President.
In a blog posting on January 23, he said: “In the wealthiest nation on earth, no one who
works a full time job should have to live in poverty. That’s a fundamental value
proposition, an article of faith in our country that I know an overwhelming majority of
Americans agree on.”
“The business leaders I’ve talked to in the last few days shatter the myth that a higher
minimum wage hurts the bottom line,” Perez commented. “They know that our economy
is powered by consumer demand, and it will benefit from more money in the pockets of
working families who will spend it on goods and services. Better than anyone, business
leaders know that leads to business growth and job creation.”
Colorado roofing company to pay $230,000 in unpaid wages and penalties under
FLSA and INA
The DOL has obtained a consent judgment from a federal court in Colorado ordering
Superior Roofing Inc., dba Superior Roofing, to pay $143,000 in back wages to 343
workers for unpaid minimum wage and overtime due under the FLSA. The court also
court entered an injunction barring the employer from violating the FLSA in the future or
retaliating against any employee who files a complaint with, or cooperates in an
investigation by, DOL’s Wage and Hour Division (WHD).
In a separate proceeding, the DOL’s Office of Administrative Law Judges entered an
order approving a settlement agreement under which the company will pay $43,000 in
back wages and $44,000 in penalties under the H-2B provisions of the Immigration and
Nationality Act (INA), bringing the total back wages and penalties to $230,000.
The WHD’s Denver District Office conducted an investigation that determined Superior
Roofing violated the FLSA’s minimum wage requirements when it made illegal
deductions for tools and other pre-employment costs, according to a DOL announcement.
The company also purportedly failed to pay for all hours worked, did not include
nondiscretionary bonuses in the overtime rate, and neglected to maintain accurate records
of employee work hours.
The DOL said that Superior Roofing also violated provisions of the H-2B nonimmigrant
visa program by failing to pay the offered wage rate; employed H-2B workers in jobs for
which they were not certified; failed to notify the required federal agencies and pay return
transportation when it dismissed H-2B employees before the end of the certification;
placed H-2B workers outside the certified area of intended employment; and failed to
hire qualified U.S. workers. From the back wages the company has been ordered to pay,
unlawfully rejected U.S. workers will get $18,000.
“Employers that choose to participate in the voluntary H-2B program must realize they
are required to follow all of the labor standards of the program and other applicable
laws,” said Cynthia Watson, regional administrator for the Wage and Hour Division in
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the Southwest. “The department is committed to protecting all workers, and no one
should have to give up their rights under the law to make a living.”
The DOL filed its lawsuit in the District of Colorado; the case number is 1:13-cv-03468WYD.
President’s pick for Administrator of Wage and Hour Division once again gets the
HELP Committee’s nod
By Pamela Wolf, J.D.
On Wednesday, January 29, the Senate Committee on Health, Education, Labor, and
Pensions (HELP) favorably reported to the full Senate its approval of David Weil, of
Massachusetts, for the job of Administrator of the Wage and Hour Division, Department
of Labor. The move came after the committee held hearings on the nomination on
December 10, 2013, and January 29, 2014. The committee previously approved Weil’s
nomination before the end of the last legislative session. The president announced his
choice for the job on September 10, 2013. Weil’s nomination will now proceed to the full
Senate.
The nominee is Professor of Markets, Public Policy, and Law, and the Everett W. Lord
Distinguished Faculty Scholar at Boston University School of Management, where he has
worked since 1992. He is also Senior Research Fellow and Co-Director of the
Transparency Policy Project at the John F. Kennedy School of Government at Harvard
University, a position he has held since 2002. Weil has also been a lecturer and Research
Fellow at the Harvard Law School Labor and Worklife Program since 1987. He is the
recipient of the Broderick Prize in Research and the Broderick Prize for Teaching at
Boston University, the Shingo Prize for Research on Manufacturing Innovations, and
Boston University School of Management Best M.B.A. Instructor of the Year in 2011
and 2012.
Weil received a B.S. from the School of Industrial and Labor Relations at Cornell
University, an M.P.P. from the John F. Kennedy School of Government at Harvard
University, and a Ph.D. in Public Policy from Harvard University.
Those opposed to Weil’s nomination have raised concerns about his lack of private sector
work experience, lack of legal training, and close affinity to labor unions.
However, HELP Committee Chairman Tom Harkin (D-Iowa) praised the nominee in a
statement issued after the approval of Weil and several other nominees: “In his testimony
to the Committee last month, David Weil demonstrated that he is a superb choice to head
the Wage and Hour Division at the Department of Labor. Indeed, Dr. Weil is a leading
expert on the enforcement of our country’s workplace laws, including minimum wage
and overtime regulations. During his academic career, he has provided extensive counsel
to the Department of Labor under both Republican and Democratic administrations and
will bring unique talents to the Division, from his background as a business school
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professor as well as his extensive work in mediation. Dr. Weil will be an exceptional
leader of the Wage and Hour Division.”
LEADING CASE NEWS:
U.S.S.Ct.: Time spent donning and doffing protective clothes not compensable,
unanimous High Court holds, rejecting use of de minimis standard
By Lisa Milam-Perez, J.D.
The time spent by production workers donning and doffing their protective gear was not
compensable under the FLSA, a unanimous Supreme Court ruled on Monday, affirming
the Seventh Circuit. The High Court clarified the scope and definition of “clothes” and
“changing” within the “changing clothes” exception found in Section 203(o) of the Act,
which provides that donning and doffing activities may be exempt from compensable
time under the express terms of, or custom or practice under, a bona fide collective
bargaining agreement. The Court also set forth what it deemed a more workable approach
to resolving whether time spent donning and doffing protective gear was compensable,
eschewing the de minimis doctrine used by some circuits as ill-suited to a statutory
provision that is itself “all about trifles.” (Sandifer v U.S. Steel Corp, January 27, 2014,
Scalia, A).
Wage dispute. Hourly workers at a U.S. Steel’s Gary Works plant had filed an FLSA
collective action alleging they were unlawfully denied pay for the time they spent putting
on and taking off various required work clothes and protective gear at the start and end of
their work day. The CBA between U.S. Steel and the union did not require compensation
for such time, and dating as far back as 1947, their contracts had never had such a
requirement. The Seventh Circuit held that, because the applicable CBA did not require
compensation for donning and doffing activities, U.S. Steel did not have to pay workers
for such time.
Had the clothes-changing time not been rendered noncompensable pursuant to Sec.
203(o), it would have been a “principal activity,” and thus compensable. The employees
had argued to no avail that this provision was inapplicable, though, because their
“clothes” were not clothes within the meaning of the Act, but rather safety equipment.
But the appeals court held the required work gear was both clothing and personal
protective equipment, reasoning that it would be absurd to exclude all work clothing that
had a protective function from the reach of this provision.
The employees petitioned the Supreme Court, contending that the decision conflicted
with the First Circuit’s holding in Tum v Barber Foods, Inc and, more importantly, with
the Supreme Court’s decision in IBP, Inc v Alvarez. The Court agreed to resolve the
circuit conflict regarding the scope of Sec. 203(o). At issue was the meaning of the
phrase “changing clothes” as it appears within FLSA, Sec. 203(o). The Court found the
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protective gear at issue qualified as “clothes,” and donning and doffing the gear
constituted “changing clothes” within the meaning of the statutory provision.
“Clothes,” defined. Applying the ordinary, common meaning of the term “clothes” as
defined in dictionaries from the era in Sec. 203(o) was enacted, the Supreme Court
reasoned there was no basis for interpreting the term in any other manner so as to omit
protective clothing from its reach. “Clothes” were defined as “items that are both
designed and used to cover the body and are commonly regarded as articles of dress,” and
“that is what we hold to be the meaning of the word” for purposes of the statute, the
Court wrote.
The Court rejected the employees’ assertion that the word “clothes” was too
indeterminate to attribute a general meaning to the term, and their additional plea that,
regardless of what that term did include, it necessarily excluded items designed to protect
employees from workplace hazards. But the distinction they urged would potentially
nullify Sec. 203(o), the Court noted.
The compensation requirement, to which this provision is merely an exception, applies to
time spent changing clothes only when those tasks constitute “an integral and
indispensable part of the principal activities for which covered workmen are employed.”
As the Court pointed out, though, “protective gear is the only clothing that is integral and
indispensable to the work of factory workers, butchers, longshoremen, and a host of other
occupations.”
If the employees’ definition of “clothes” applied, Sec. 203(o) would cover only
“costumes” worn by workers such as waiters, doormen, and train conductors. Their
proposed definition also didn’t square with the historical context in which the statutory
provision was enacted; as the Court observed, it “flatly contradicts” an illustration
provided by the DOL in its 1947 regulations to demonstrate how “changing clothes”
might be related to a principal activity. The Court didn’t sweat the “fanciful
hypotheticals” presented by the employees in their effort to show that a too-generic definition of “clothes” would “cast a net so vast as to capture all manner of marginal things
— from bandoliers to barrettes to bandages.” As the statutory context made clear, the
“clothes” referred to are those that are integral to the performance of one’s job, and the
items referenced by the employees didn’t fit the bill. (On the other hand, the
interpretation put forth by the employer, which would encompass in the exception “the
entire outfit that one puts on to be ready for work,” might be “more readily
administrable,” the Court said, but was even more lacking in textual foundation than the
employees’ proposed definition.)
Even as to those items that can be regarded as integral to job performance, though, the
Court noted that its definition “does not embrace the view, adopted by some Courts of
Appeals, that ‘clothes’ means essentially anything worn on the body — including
accessories, tools, and so forth. The construction we adopt today is considerably more
contained,” and affords a distinction between clothes and other “wearable items that are
not clothes, such as some equipment and devices.”
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“Changing,” ill-defined. Disagreeing with the employees’ contention that the normal
meaning of “changing clothes” would not encompass the act of putting protective gear on
over one’s street clothes, the Court looked to the purpose underlying Sec. 203(o): “to
permit collective bargaining over the compensability of clothes-changing time and to
promote the predictability achieved through mutually beneficial negotiation.” If changing
only meant “substituting,” as the employees suggested, it would afford little predictability
— and thus little opportunity for meaningful bargaining.
“Whether one actually exchanges street clothes for work clothes or simply layers
garments atop one another after arriving on the job site is often a matter of purely
personal choice,” the Court noted. “That choice maybe influenced by such happenstances
and vagaries as what month it is, what styles are in vogue, what time the employee wakes
up, what mode of transportation he uses, and so on.” The Court declined to read the
provision as allowing employees “to opt into or out of its coverage at random or at will.”
De minimis standard disfavored. The employees pointed to 12 specific items they
argued were “protective gear” and thus not covered under Sec. 203(o), including a flameretardant jacket, a hard hat, and other items, all of which they wanted to be paid to don
and doff. But only three items — safety glasses, earplugs, and a respirator — were not
“clothes” as defined by the Court above. The more salient question, at any rate, was
whether the time spent donning and removing these few items had to be deducted from
the otherwise-noncompensable donning and doffing time. Some circuit courts have
invoked the de minimis standard to address the matter, but in the Supreme Court’s view,
that doctrine was ill-suited to a statute that is itself “all about trifles” such as “the relatively insignificant periods of time in which employees wash up and put on various items
of clothing needed for their jobs.”
A more appropriate way to proceed, according to the Court, was for courts to ask whether
the period at issue can, “on the whole,” be fairly characterized as “time spent in changing
clothes or washing.” If so, then the entire donning and doffing period qualifies under Sec.
203(o) and the time spent putting on and removing protective items “need not be
subtracted.” But if an employee spends the great majority of this time putting on and
removing equipment or other non-clothes items, then the entire period would not fall
under the exception — even if some clothes items were donned and doffed during this
time as well.
“[I]t is most unlikely Congress meant Sec. 203(o) to convert federal judges into timestudy professionals,” the Court reasoned. “That is especially so since the consequence of
dispensing with the intricate exercise of separating the minutes spent clothes-changing
and washing from the minutes devoted to other activities is not to prevent compensation
for the uncovered segments, but merely to leave the issue of compensation to the process
of collective bargaining.”
One note of discord. The Justices were unanimous in today’s holding, save for Justice
Sotomayor’s refusal to join a footnote addressing whether the oft-stated adage that FLSA
exemptions are to be narrowly construed against employers applied to Sec. 203 in
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particular. In its 2012 decision in Christopher v. SmithKline Beecham Corp., the High
Court declared this “narrow-construction principle” inapplicable to a provision appearing
in Sec. 203, the “Definitions” section of the statute, concluding the principle applied only
to Sec. 213, the FLSA’s “exemptions” provisions. But the Court noted it did not need to
resolve the matter to decide the case at hand.
A practitioner’s view. “Interestingly, the Department of Labor did not urge the Court to
defer to one of its many differing opinion letters,” noted W. V. Bernie Siebert, a partner
in the Denver office of Sherman & Howard (and Member of the Employment Law Daily
Editorial Advisory Board), commenting on today’s Supreme Court decision.(The agency
had acknowledged that its interpretations had “vacillated considerably over the years.”)
Also useful was the High Court’s express exclusion from its definition of clothing some
items that are worn on the body by employees, Siebert said.“Specifically, the Court
mentioned knife holders, hard hats, and ear plugs as not being clothing.”
Perhaps most important was the Court’s acknowledgement that “federal judges should
not be converted into time study professionals,” Siebert observed. He looked favorably at
the approach handed down by the Court today. “In essence, federal judges need only
decide if the vast majority of time is spent donning and doffing clothing and if so then the
entire time, including the time spent donning and doffing other items, is not compensable.
Hopefully, this decision will give guidance to federal judges and eliminate the battle of
time study experts in donning and doffing cases.”
The case number is 12-417.
Attorneys: Eric Schnapper, University of Washington School of Law, for Clifton
Sandifer. Lawrence C. DiNardo (Jones Day) for U.S. Steel Corp.
2nd Cir.: Two questions certified to New York high court regarding prevailing wage
claims for testing and inspection work brought by workers
By Brandi O. Brown, J.D.
On appeal of a state law action for prevailing wages brought by employees challenging a
district court’s grant of summary judgment in favor of an employer, the Second Circuit
certified two questions to the New York Court of Appeals related to testing and
inspection work. First, the appeals court asked what deference should a court pay to an
agency decision, made for enforcement purposes, construing state law prospectively only
when the court is deciding the meaning of that section for a time period preceding the
decision? Second, does the commitment to pay prevailing wages bind the employer to
pay those wages only for work activities clearly understood by the parties to be covered
or must the employer pay prevailing wages for all work activities ultimately deemed to be
covered by that portion of the statute? (Ramos v SimplexGrinnell LP, January 23, 2014,
Calabresi, G).
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Workers who installed, maintained, repaired, tested, and inspected fire alarm and
suppression systems in public and private buildings for the employer, SimplexGrinnell,
claimed that since February 2011 their employer had not paid them “prevailing wages”
for their public works labor as required by New York Labor Law, Sec. 220. Although two
options for enforcement were available — an Article 78 proceeding before the
Department of Labor (DOL) and a third party breach of contract claim — the employees
chose to use the latter method of enforcement and brought suit.
DOL weighs in. While litigation was ongoing, however, the employer unilaterally sought
clarification from DOL regarding what work was “covered.” DOL issued an opinion
letter on December 31, 2009, effective January 1, 2010, concluding that testing and
inspection work was covered because such work was a form of “maintenance work,”
which was a covered category. However, the agency decided to enforce its decision
prospectively only because there had been “much confusion” over whether it had earlier
interpreted testing and inspection work as covered.
In granting summary judgment in favor of the employer regarding the testing and
inspection work (it denied the motion as it related to claims for non-testing and inspection
work and certified a class of 600 plaintiffs on those claims), the district court focused on
the DOL opinion letter, ruling that deference was due not only to the agency’s conclusion
regarding coverage, but also to the agency’s decision to enforce that conclusion
prospectively only. The district court also held that third party breach of contract claims
could not be brought for the testing and inspection work because the employer could not
have had reason to believe it would be required to pay prevailing wages for that work and
there was no explicit contract provision requiring that such work be covered.
First certified question. The Second Circuit panel did not take issue with the district
court’s determination that deference was due to the DOL’s construction of the statute
regarding coverage. What was uncertain to the appeals court was whether deference was
due to the DOL’s administrative decision to apply that construction in its own
enforcement prospectively only.
Under state law, that conclusion might be appropriate. But, the court noted, it was equally
plausible that the DOL had not answered the question of whether or not that coverage
stretched back to 2001, when the litigation in this suit began. Notable to the court was
that the statute itself had not changed during that time and that the DOL had not said that
testing and inspection work was not covered prior to its 2009 ruling. Instead, the DOL
stated there had been confusion and, given that confusion, it would only apply its ruling
going forward for the purposes of its own enforcement proceedings. Also notable to the
appeals court was that the DOL did not have before it an agency proceeding presenting
questions about the past, which was what was before the district court. It seemed
“perfectly possible” to the appellate panel to require the district court to defer to the
DOL’s construction regarding coverage, but not to its enforcement decision.
Also unclear to the appeals court was the scope of deference to be given. For Article 78
proceedings, judicial review was limited to whether the determination was arbitrary,
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capricious, or an abuse of discretion, per New York Court of Appeals precedent. This
case, however, began in federal court and, although the state high court had made clear
that some deference was due, it was an unsettled matter whether the agency’s prospective
enforcement decision should be given deference. This case, and this question specifically,
met all the requirements for certification — it was an issue that had not been addressed
by the state high court, the issue was important to how administrative determinations
were weighed by state courts, and a state high court ruling would likely determine the
claim before the Second Circuit. Therefore, the court certified the deference question to
the New York Court of Appeals.
Second certified question. The Second Circuit also certified a second question —
whether a party’s commitment to pay prevailing wages under NYLL Sec. 220 bound it to
pay those wages only for those work activities that were clearly understood to be covered
by that section or whether it required the employer to pay prevailing wages for all work
activities that were “ultimately deemed” to be covered. The appeals court was uncertain
whether the approach taken by the district court was correct under state law. A plausible
reading of the statute would be that the employer was agreeing to be bound to pay
prevailing wages for every kind of work that Sec. 220 covered and the district court
“could just as easily have concluded” that the employer contracted to be bound by what
the section was ultimately read to require. This question also met all the requirements for
certification.
The case number is 12-4901-cv.
Attorneys: Raymond Charles Fay (Fay Law Group) for Roberto Ramos. Dominick C.
Capozzola (Ogletree Deakins) for SimplexGrinnell LP. Bruce E. Menken (Beranbaum
Menken) for John Doe Bonding Co., #1-3.
5th Cir.: Older study finding that arbitration was favorable to employers was not
reliable or relevant as applied to current suit
By Lorene D. Park, J.D.
Finding no error in a lower court completely disregarding an older Cornell study, upon
which an employee relied to argue that arbitration was generally unfair to employees and
the agreement she signed should not be enforced, the Fifth Circuit in an unpublished
opinion affirmed an order dismissing the suit and compelling arbitration. Explaining that
the study did not meet the relevance and reliability standards of Rule 702 and Daubert,
the appeals court noted that the study compared litigation outcomes from one time period
to arbitration outcomes from a different period, and that the data was over five years old
by the time the employee filed suit (Diggs v Citigroup, Inc, January 8, 2014, per curiam).
When the employee was hired by Citigroup, she signed an arbitration agreement that
subjected all employment-related disputes to binding arbitration before the AAA. In
2011, she was terminated for absenteeism. She filed suit under Title VII and the FMLA
claiming she was fired because she missed time due to hospitalization and pregnancy
66
complications. The employer moved to compel arbitration and the employee responded
by arguing the agreement was unenforceable, unconscionable, and violated public policy.
Scientific evidence. To support her argument, the employee relied on a study by Cornell
University which concluded that “there is a large gap in outcomes between the
employment arbitration and litigation forums, with employees obtaining significantly less
favorable outcomes in arbitration.” Granting the employer’s motion to compel, the
district court found that the agreement was valid and did not violate public policy, and
that the dispute fell within the scope of the agreement. The court completely disregarded
the Cornell study because it did not satisfy the evidentiary standards of Fed. R. Evid. 702.
Affirming, the Fifth Circuit noted that under the Supreme Court’s decision in Daubert,
any scientific testimony or evidence admitted must be relevant and reliable. In terms of
relevance, Rule 702 requires that it “assist the trier of fact to understand the evidence or
to determine a fact in issue.” Determining reliability requires the court to engage in a
“preliminary assessment of whether the reasoning or methodology underlying the
testimony is scientifically valid and of whether that reasoning or methodology properly
can be applied to the facts in issue.”
Study not relevant or reliable. Here, the appeals court found that the Cornell study,
which was presented by the employee to show how arbitration is generally unfair to
employees, failed to take into account a number of factors or variables relevant to this
case and thus failed to meet relevance and reliability requirements. The study generally
assessed differential outcomes between employers and employees in arbitration and
litigation; it was not created for this case. Indeed, both the study and the scientist’s
affidavit summarizing the results were completed years before this suit was filed.
“An expert’s opinion should not be admitted if it does not apply to the specific facts of
the case,” explained the appeals court. The Cornell study and affidavit provided no casespecific analysis to aid the trier of fact in determining if the arbitration agreement
involved in this case was enforceable. Instead, it summarily posited that employers have
a greater likelihood of success than employees do before the AAA. The court also noted
that in the five years between the time the data was compiled and the time the employee
filed suit, significant changes in litigation and arbitration outcomes may have occurred.
For these reasons, the employee failed to show the evidence was relevant.
The study’s reliability was also questionable because it compared arbitration statistics
from one time period (2003 to 2007) to litigation statistics from a different time period
(1996 and 1999/2000). For these reasons, there was no abuse of discretion in disregarding
the study and the affidavit. And, because the employee’s challenges to the enforceability
of the arbitration agreement were completely grounded on the Cornell study, there was no
error in finding that a valid arbitration agreement existed between the employee and the
employer and that the instant dispute fell within the confines of that agreement.
The case number is 13-10138.
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Attorneys: John Henry Crouch, IV (Kilgore & Kilgore) for Samantha Diggs. Denise
Cotter Villani (Ogletree Deakins) for Citigroup, Inc.
6th Cir.: Employee paid for 1,257 hours in prior 12 months, but who worked less,
did not show FMLA eligibility
By Marjorie Johnson, J.D.
A part-time African-American FedEx employee who was disciplined for not wearing a
seat belt while driving a fork lift, and for accumulating too many unexcused absences
after having missed several days of work due to vertigo, failed to advance his Title VII,
FMLA, and state law claims of race bias and hostile work environment, the Sixth Circuit
ruled in an unpublished opinion affirming dismissal of his claims on summary judgment.
He failed to show that he was eligible for FMLA leave where, although a company
document showed that he had been paid for 1,257 hours in the preceding 12 months, he
failed to refute that he had actually only worked 1,109 hours. He also failed to show that
he was treated less favorably than similarly situated coworkers outside his protected class
(Saulsberry v Federal Express Corp, January 10, 2014, Cleland, R).
The employee worked for FedEx as a part-time “DOT” handler. His job duties included
loading and unloading packages from aircraft containers and FedEx vehicles, as well as
occasionally operating a vehicle. Pursuant to federal DOT regulations, he was required to
pass a medical examination. Moreover, FedEx policy stated that a violation of corporate
regulations, including failure to wear a seatbelt, could result in severe disciplinary action,
including termination.
Disciplinary actions. In June 2010, he received a written warning for a “serious safety
violation” after he operated a forklift without wearing his seatbelt. The warning stated
that he would be subject to termination if he received three more notifications of
deficiency within twelve months. Around the same time, two Caucasian coworkers who
were involved in car accidents were given written counseling pursuant to the company’s
“vehicle accidents” policy.
On December 22, the employee went to the emergency room due to dizziness and was
diagnosed with a urinary-tract infection and vertigo. Because he was not released to
return to work without restrictions until December 27, he missed five days of work. He
was again absent a couple of weeks later due to vertigo. Consequently, on January 24, he
received a warning of unsatisfactory attendance. The warning letter listed 14 absences,
five of which included unscheduled absences due to vertigo. Because he had received the
warning letter back in June, this was deemed his “second formal notification of
deficiency.” He was given the option of returning to work with either a Personal
Performance Agreement (PPA) or a letter of resignation. He chose the PPA.
Meanwhile, on January 20, he requested FMLA leave. FedEx denied his request, finding
that he failed to meet the FMLA’s 1,250-hours-worked-requirement. That same day, he
met with a FedEx doctor who disqualified him from driving due to his vertigo, pursuant
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to company policy which required him to be free of vertigo symptoms for 60 days before
he could be re-certified to drive. He was then placed on a Temporary Return to Work
(TRW) assignment mandating that he work no more than 20 hours per week with
temporary restrictions of no driving. Two months later, he was cleared to resume driving
duties.
Non-eligible under FMLA. The employee failed to refute FedEx’s assertion that he was
not entitled to FMLA leave because he had not met the law’s 1,250-hours-workedrequirement, the Sixth Circuit ruled. As evidence that he only worked 1,136 hours during
the twelve months before his requested leave, FedEx submitted his Notice of Eligibility
as well as an HR advisor’s testimony. Although the employee submitted a “Monthly
Trend Report,” that listed his “HR PAID TOT” as 1257.29, the document did not
establish that he actually worked at least 1,250 hours during the prior 12-month period
since it included vacation and sick pay.
Neither the FMLA nor the FLSA define the term “hours of service,” but the FMLA’s
implementing regulations clarify that “[t]he determining factor is the number of hours an
employee has worked for the employer within the meaning of the FLSA.” Moreover, the
Sixth Circuit previously confirmed that “hours of service,” include only those hours
actually worked in the service and at the gain of the employer. Thus, to qualify as an
“eligible employee” under the FMLA, the employee was required to prove that he
actually worked 1,250 hours.
Although the employee argued that the Monthly Trend showed that he put in 1,257 hours
of service within one year, it also listed “HR WKD TOT” as “1109.29.” Moreover, he
testified that he did not actually work 1,257 hours, but was paid for 1,257 hours since the
“Hours Paid Total” included the hours he was paid for vacation and holidays. He also
failed to refute the company’s records showing that he had worked only 1,136 hours
during the 12 months preceding his requested FMLA leave. Moreover, he testified that he
punched a time card at the beginning and end of his shifts in accordance with FedEx
policy and that he believed that FedEx kept an accurate accounting and record of his
hours worked.
Race bias and HWE claims. Summary judgment was also warranted as to the
employee’s race bias claims because he failed to establish that he was treated less
favorably than similarly situated coworkers outside his class. Although he argued that
two Caucasian coworkers were treated more favorably because they were only counseled
for vehicle accidents rather than receiving a warning letter, his conduct was not
comparably serious as he had failed to wear his seatbelt while in a forklift while the two
coworkers were involved in vehicular accidents. While at first glance their differing
punishments may seem incongruous since both involved motorized vehicles, the appeals
court refused to “sit as a super-personnel department,” stating that it was “inappropriate
for the judiciary to substitute its judgment for that of management.”
FedEx disciplined the employee for violating a different company policy from the policy
that his two peers violated. He received a “serious safety violation” pursuant to FedEx’s
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“Acceptable Conduct Policy,” while the two coworkers each received a written
counseling
pursuant to FedEx’s “Vehicle Accidents/Occurrences Policy.” Because FedEx had the
discretion to assign different punishments to violations of different company policies, the
employee did not engage in the same conduct as his proposed comparators and could not
establish that he was treated differently than similarly situated non-protected employees.
Finally, the appeals court rejected his assertion that he suffered a hostile work
environment when he was put on TRW without his knowledge and placed in a more
exhaustive job despite his physical diagnosis. Although he asserted that other nonminority employees were treated more favorably, he admitted that he was unaware of any
non-black employee who received better treatment than he did with respect to his TRW
assignment. He also provided no evidence that his placement on TRW was racially
motivated. Indeed, his TRW status allowed him to maintain his income within his
medical restrictions — “quite the opposite of harassment.”
The case number is 13-5345.
Attorneys: Travis Edgar Davison (Law Offices of Travis Edgar Davison) for Pernell
Saulsberry. Elizabeth Low for Federal Express Corp.
6th Cir.: Insurance company must indemnify hospital for antitrust settlement
arising from alleged conspiracy to depress nurses’ wages
By Ronald Miller, J.D.
An insurance company was required to indemnify a hospital for the settlement of an
antitrust class action brought by nurses against the employer and other Detroit-area
hospitals for allegedly colluding to depress the nurses’ wages, ruled the Six Circuit in an
unpublished decision. By the explicit terms of the insurance policy issued to the hospital,
the insurer agreed to provide coverage for antitrust claims, and Michigan public policy
did not bar such coverage (William Beaumont Hospital v Federal Insurance Co, January 16,
2014, Carr, J).
Antitrust suit. During the policy term, two registered nurses, neither of whom was
employed by the hospital, brought a class action against eight Detroit-area hospital
systems, including the employer. The nurses claimed that the hospitals had violated Sec.
1 of the Sherman Act by (1) conspiring to depress wages of the nurses, and (2)
exchanging information regarding compensation of nurses, which had the effect of
depressing their wages. A federal district court permitted the nurses to move forward on
their Sec. 1 “rule of reason” claim that the defendant hospitals had unlawfully agreed
among themselves to share compensation information in a manner that harmed
compensation and depressed nurses’ wages.
Once named a defendant in the underlying lawsuit, the hospital timely requested
coverage from the insurer under its insurance policy. The insurer recognized the action as
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an antitrust claim, as defined by the policy, which provided that it would pay eighty
percent of a covered antitrust loss.
Further, the insurer consented to the hospital’s choice of defense counsel and agreed to
advance it eighty percent of defense costs. It also participated in settlement negotiations.
During settlement negotiations with the nurses, the hospital sought a declaration that the
insurer was obligated to indemnify it. However, the insurer counterclaimed, arguing that
the settlement constituted disgorgement and was not considered a loss under the policy
and so was uninsurable.
While the coverage action was pending, the hospital settled with the nurses for
approximately $11.3 million. The insurer paid eighty percent of the settlement subject to
its right to reimbursement. That amount was at issue in this appeal.
Express coverage. The insurance company’s principal argument was that the nurses’
claims arose from the hospital’s gaining of an advantage — nurses’ services at belowmarket compensation — to which it was not entitled and that the settlement was a
disgorgement of that advantage. Accordingly, the insurer claimed that there was no
coverage for what the nurses received from the underlying lawsuit. On the other hand, the
hospital argued that under the terms of the policy itself, the insurer must cover the
settlement with its own nurses, as well as with nurses at other hospitals. Further, the
hospital contended that disgorgement and restitution were distinct remedies and that the
policy only explicitly excluded disgorgement. The hospital pointed out that, according to
the nurses’ complaint, they were seeking only compensatory damages.
The Sixth Circuit found the hospital’s argument convincing. First, it observed that the
exclusionary clause in the policy specifically stated that only disgorgement was not a
covered loss. The endorsement also explicitly covered treble damages as an insurable
loss. Here, the court pointed out that the insurer used the terms disgorgement and
restitution interchangeably, even though the policy spoke only in terms of disgorgement.
Because the insurer wrote the policy using the term disgorgement without mentioning
reimbursement, the court construed the policy strictly in favor of the insured.
Disgorgement and compensatory damages are closely related but not interchangeable,
noted the appeals court. To disgorge means “to give up illicit or ill-gotten gains.” Illicit
means “not permitted, not allowed, unlawful.” Ill-gotten means “obtains dishonestly or
otherwise unlawfully or unjustly.” Gain means “an increase in or addition to what is of
profit, advantage, or benefit.”
Relying on these definitions, the appeals court determined that the hospital never gained
possession of the nurses’ wages illicitly, unlawfully, or unjustly. Rather, the hospital
retained the due, but unpaid, unlawfully. The hospital could not have taken money from
the nurses because it was never in their hands in the first place. Therefore, the damages
the hospital paid in settlement of the claim did not constitute disgorgement.
Compensatory damages. In addition to the explicit terms of the policy, the calculation
of the settlement itself indicated that the nurses were seeking purely compensatory
damages. No part of the calculation was based on the hospital’s profits (whether actual or
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estimated) resulting from its misconduct. Further, the formula used by the district court to
calculate the settlement amount bore no relationship to the hospital’s profits; rather the
nurses’ compensation provided the method of determining what the hospital was required
to pay in settlement of the case. Thus, the settlement did not represent disgorgement, but
was a straightforward calculation of the nurses’ compensatory damages.
Moreover, the body of antitrust law itself tended to go against the insurer’s arguments
that the settlement constituted disgorgement. The Supreme Court has emphasized that
“the antitrust private action was created primarily as a remedy for the victims of antitrust
violations.” Other circuits have also recognized the compensatory nature of the private
antitrust action. Consequently, based on the nurses’ complaint, terms of the policy, and
principles of antitrust law, the Sixth Circuit found that the settlement did not constitute
disgorgement under the policy and was therefore covered.
Public policy issue. Finally, the appeals court turned to the insurer’s argument that
coverage was contrary to Michigan’s public policy. In essence, the insurer argued that if
it has to insure the hospital, then the hospital will profit from its own wrongdoing and
transfer the cost of returning money wrongfully withheld to the insurer. However, the
appeals court observed that the hospital read Michigan case law more accurately than the
insurer. Thus, the doctrine that an insured may not profit from its own wrongdoing relates
to intentional tortious or criminal acts. The court was unpersuaded by the insurer’s
argument that all wrongful acts alleged to involve a statutory violation are uninsurable.
Consequently, the insurer’s public policy claim failed.
The case number is 13-1468.
Attorneys: Keefe A. Brooks (Brooks Wilkins Sharkey & Turco) and Stephanie Douglas
(Bush, Seyferth & Paige) for William Beaumont Hospital. Michael F. Perlis (Locke
Lord) for Federal Insurance Co.
7th Cir.: Applebee’s franchise denied motion to appeal magistrate’s denial of
challenge to class certification in tip-credit wage suit
By Lisa Milam-Perez, J.D.
Refusing to consider the second petition brought by an Applebee’s franchisee seeking to
overturn a magistrate’s decision to certify a class of restaurant employees in a tip-pooling
wage suit, the Seventh Circuit availed itself of the opportunity to advise would-be
petitioners as to when it was appropriate to pursue appellate review of such rulings under
Rule 23(f) when a lower court alters the class definition. “To avoid being inundated we
need a standard for coping with repeat motions,” Judge Posner wrote (Driver v AppleIllinois,
LLC, January 15, 2014, Posner, R).
Tip-credit class. The magistrate presiding over the case certified a class comprised of
waiters, bartenders, and other tipped employees of Applebee’s restaurants who alleged
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they were required to perform non-tipped work that rendered the restaurant ineligible to
apply the tip credit under FLSA Section 203(m) and Illinois law.
In her first ruling on class certification, the judge certified a class of employees “who
worked as tipped employees earning a sub-minimum, tip credit wage rate, and who
performed duties unrelated to their tipped occupation for which they are not paid at the
minimum wage rate.” A second ruling modified the definition, and the last — the one
that precipitated the employer’s current petition to the Seventh Circuit — substituted a
much simpler definition: employees “who worked as tipped employees earning a subminimum, tip credit wage rate.” This class definition was over-inclusive, according to the
appeals court, because it did not address the employees’ non-tipped work.
The judge had found the employer had a policy of requiring tipped employees to do
nontipped work without paying them the full minimum wage for the time they spent
doing that work. However, the Department of Labor has distinguished between nontipped
work that is “related” to tipped work and other nontipped duties; as long as a tipped
employee spends no more than 20 percent of his or her workday doing nontipped duties
related to tipped work, the employer doesn’t have to pay the full minimum wage for the
time spent performing such work. The judge previously found that “many” of the
employees spent more than 20 percent of their day performing duties related to tipped
work. She did not, however, find that all employees did — or that the employees who
didn’t performed at least some nontipped work unrelated to tipped work, thus entitling
them to the full minimum wage for that work.
It was not this material alteration to the class definition that the employer sought to
challenge, though. Rather, it objected to several orders issued by the district court since
the employee’s first Rule 23(f) petition was filed and denied more than three years ago
(such as, for example, an order allowing the employees to use representative evidence,
with damages to be extrapolated from a sample of the class members, rather than
requiring that they be calculated for all 15,000 class members individually).
Rule 23(f). Rule 23(f) authorizes a court of appeals to entertain interlocutory appeals
from orders granting or denying class certification. The rule does not forbid a party to file
repeated motions seeking permission to appeal if a judge alters the class definition and
issues a new certification order — which is not uncommon, the appeals court noted. Rule
23(f) petitions may be granted where deciding the appeal would clarify class action law,
but that was not the basis of the employer’s petition here. Rather, the employer asserted
that because the magistrate changed the definition of the class since its previous petition
was denied “opens the door for him to renew his challenge to the initial grant of class
certification.” But “that can’t be right,” said the court. “In the course of a class action suit
the presiding judge is quite likely to alter the class definition. There is no reason why
such an alteration should open the door to an interlocutory appeal unrelated to the
alteration.”
The Seventh Circuit has held — as has the Tenth Circuit, and other courts of appeals
have so implied — that to justify a second appeal from an order granting or denying class
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certification, the order appealed from must have “materially alter[ed] a previous order
granting or denying class certification.” Absent such a requirement, parties would be
allowed to file Rule 23(f) petitions whenever there was even a slight change in the class
definition, resulting in the entry of a modified class certification order. Yet Rule 23(f)
authorizes interlocutory appeals only of orders “granting or denying class-action
certification,” and an order altering the class certification immaterially “can’t readily be
thought a grant or a denial of certification, while an order that alters the certification
materially is to that extent a grant or denial of certification,” the court reasoned.
“The words ‘granting’ and ‘denying’ class certification can be stretched only so far. They
can’t embrace every order the judge issues that a party doesn’t like.” Thus, the Seventh
Circuit denied the employer’s petition for permission to appeal.
The case number is 13-8029.
Attorneys: Paul DeCamp (Jackson Lewis) for W. Curtis Smith and AppleIllinois, LLC.
Jamie Golden Sypulski (Law Office of Jamie G. Sypulski) for Glenn Driver.
7th Cir.: Employee provided “care for” terminally ill mother within meaning of
FMLA on final family vacation
By Ronald Miller, J.D.
The FMLA applied when an employee requested leave to care for a terminally ill parent
while that parent was traveling away from home, ruled the Seventh Circuit. The appeals
court concluded that such an employee was seeking leave “to care for” a family member
within the meaning of the Act. Here, the court observed that the employer failed to
explain why certain services provided to a family member at home should be considered
“care,” but those same services provided away from home should not be (Ballard v
Chicago Park District, January 28, 2014, Flaum, J).
The plaintiff was a former Chicago Park District employee. Her mother had been
diagnosed with end-stage congestive heart failure and began receiving hospice support.
The employee lived with her mother and acted as her primary caregiver. The employee’s
mother met with a social worker to discuss end-of-life goals. She expressed that she had
always wanted to take a family trip to Las Vegas. Thereafter, the social worker was able
to secure funding for a six-day trip through an organization that facilitated opportunities
for terminally ill adults.
The employee requested unpaid leave from the park district so she could accompany her
mother on the trip. Ultimately, the park district denied the request, although the employee
maintained that she was not informed of the denial prior to her trip. The employee and
her mother traveled to Las Vegas as planned and the employee served as her mother’s
caregiver during the trip. Several months later, the park district terminated the employee
for unauthorized absences accumulated during her trip. The employee filed suit under the
FMLA. In response, the park district moved for summary judgment, arguing that the
employee did not “care for” her mother in Las Vegas, because she was already providing
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care at home, and because the trip was unrelated to the mother’s continuing course of
medical treatment. After the district court denied the motion, the park district moved for
an interlocutory appeal.
Care away from home. The park district did not dispute that the employee’s mother
suffered from a serious health condition but instead claimed that she did not “care for”
her mother in Las Vegas. The employer would limit “care” only to services provided in
connection with ongoing medical treatment. However, the Seventh Circuit found one
problem with the employer’s argument was that the FMLA, 29 U.S.C. Sec.
2612(a)(1)(C), speaks in terms of “care,” not “treatment.” Moreover, the park district
failed to explain why participation in ongoing treatment is required when the employee
provides away-from-home care, but not when she provides at-home care.
Another problem with the park district’s argument was that the FMLA does not restrict
care to a particular place or geographic location. The only limitation the Act places on
care is that the family member must have a serious health condition. The appeals court
was reluctant, without good reason, to read in another limitation that Congress had not
provided.
Nonetheless, because the FMLA does not define “care,” the court turned to the
Department of Labor’s regulations. First, the appeals court observed that there are no
regulations specifically interpreting Sec. 2612(a)(1)(C). There are, however, regulations
interpreting a closely related provision concerning health-care provider certification, 29
U.S.C. Sec. 2613(b)(4)(A). These regulations defined “care” expansively, to include
“physical and psychological care” — again without any geographic limitation.
No ongoing treatment requirement. The mother’s basic medical, hygienic, and
nutritional needs did not change while she was in Las Vegas; the employer continued to
assist her mother with those needs during the trip. Thus, at the very least, the employee
requested leave in order to provide physical care. That, in turn, was enough to satisfy Sec.
2612(a)(1)(C).
The court rejected the employer’s contention that any care the employee provided to her
mother in Las Vegas needed to be connected to ongoing medical treatment in order for
her leave to be protected by the FMLA. Again, the court pointed out that neither the
statute nor the regulations used the term “treatment” in their definition of care. The court
concluded that it would be odd to read an ongoing treatment requirement into the
definition of “care” when the definition of “serious health condition” explicitly states that
active treatment is not a prerequisite, 29 C.F.R. Sec. 825.114(a)(2)(iv).
Still, in support of its position, the park district relied on out-of-circuit case law
construing Sec. 2612(a)(1)(C). A pair of Ninth Circuit cases, Tellis v Alaska Airlines, Inc
and Marchisheck v San Mateo Cnty, held that “caring for a family member with a serious
health condition ‘involves some level of participation in ongoing treatment of that
condition.’” It also cited the First Circuit’s decision in Tayag v Lahey Clinic Hosp., Inc.
However, the Seventh Circuit parted ways with the First and Ninth Circuits on this point.
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Rather, it noted that the relevant rule says that, so long as the employee attends to a
family member’s basic medical, hygienic, or nutritional needs, that employee is caring
for the family member, even if that care is not part of ongoing treatment of the condition.
Thus, the judgment of the district court was affirmed.
The case number is 13-1445.
Attorneys: Paul W. Ryan (Serpe Ryan) for Beverly Ballard. Nelson A. Brown, Jr., for
Chicago Park District.
10th Cir.: Double-dipping union president not employee of union entitled to wages,
overtime
By Joy P. Waltemath, J.D.
A union council’s president was a volunteer, not an employee, and consequently was not
entitled to unpaid wages and overtime under the FLSA and the New Mexico Minimum
Wage Act, the Tenth Circuit affirmed in an unpublished opinion (Padilla v AFSCME
Council 18, January 3, 2014, Phillips, G.)
The council president position was that of an executive officer who presided over or
attended various meetings, reported back to the membership, signed checks, and
reviewed financial reports. While serving in this capacity, the council president remained
a full-time employee of the county water authority, and he performed his union duties
during regular work hours at the authority and on weekends. Claiming he worked more
than 40 hours a week performing his union duties, he sued the union alleging his was an
employee entitled to unpaid wages and overtime pay under the both the FLSA and state
law.
“Lost-time payments.” The union council had a “lost-time payments policy” that
allowed payments to be made to officers or members as compensation “for having to take
uncompensated leave from their employment to perform union duties,” the appeals court
noted. It was the union’s position that these lost-time reimbursements were designed to
relieve, in part, the difficulties created by volunteerism, that the president had already
received payment for his presidential duties under the policy, and that the president was a
volunteer. And, in fact, the president in the past had submitted the required “lost time”
request form that verified the number of lost-time hours, for which he had received
payments at a rate of $25.04 per hour (receiving over $22k from the union one year, $41k
the next).
Double-dipping. The appeals court also noted that in September 2011, AFSCME
International had expelled the president from his council position, finding him guilty of
misappropriation and misuse of union funds in violation of the union’s constitution for
having requested and received “lost time payments” for hours for which he did not take
uncompensated leave from his paid employment. He was ordered to make restitution to
the tune of over $29k to AFSCME.
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On appeal, the Tenth Circuit agreed completely with the district court’s analysis that the
president was a volunteer and not an “employee” of the union council. Relying on U.S.
Supreme Court precedent in Tony & Susan Alamo Foundation v. Secretary of Labor,
which distinguished employees from volunteers under the FLSA , the court looked to
whether the president had expected compensation for his service to the union. Because
the basis for the union’s payments to him was its lost-time policy, the president could not
have expected to receive wages from the union for time for which he was also paid by the
water authority. The court found that the president was not economically dependent on
the union, nor did he receive wages from the union for his services. Further, applying the
economic reality test and looking at the totality of the circumstances, the court agreed
that the union did not exert control over the president’s services, including his schedule
and the amount of time spent on his presidential duties, nor did it hire or fire the
president. Accordingly, summary judgment for the union was affirmed.
The case number is 13-2080.
Attorneys: Rhonda Lee Luginbyhl (Young Law Firm) for Andrew Padilla. Stephen
Curtice (Youtz & Valdez) for AFSCME Council 18.
10th Cir.: Decision by committee won’t insulate employer from potential liability for
FMLA, ADA claims
By Lisa Milam-Perez, J.D.
Reviving a discharged mechanic’s FMLA and ADA claims, the Tenth Circuit concluded
the employee established a genuine issue of material fact as to whether his employer’s
stated reasons for firing him — a safety violation and a (related) quarrel with a coworker
over the incident — were pretextual, particularly in light of management’s oft-stated
annoyance with the employee’s need for intermittent leave. The employer claimed that
the discharge decision was made by a committee of managers, different decision-makers
than the individuals responsible for determining the fate of other employees with similar
infractions who were treated more leniently.
“Although there is no clear legal rule as to how much overlap is needed among decision
maker groups for employees to be similarly situated, requiring absolute congruence
would too easily enable employers to evade liability for violation of federal employment
laws,” the appeals court said (Smothers v Solvay Chemicals, Inc, January 21, 2014,
Matheson, S Jr).
Injury, intermittent leave. The employee had worked for the company for 18 years
when he was fired, ostensibly for a first-time safety violation and a related dispute with a
coworker. He filed suit under the FMLA, ADA, and state law, contending the real reason
for his termination was the employer’s displeasure with his need for medical leave and
his disability. He had injured his neck years earlier and developed a degenerative disc
disease in his spine. His condition required three surgeries to his neck within five years,
as well as numerous other medical procedures. He also suffered severe ongoing pain —
chronic neck pain, severe migraine headaches, and lower back problems.
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The employee had to travel for appointments with a medical specialist, who noted that his
pain and injury required him to be “quite miserable” and miss “a lot of work.” At times
the pain was so severe, his medical provider stated, that the employee “would basically
be unable to work” without pain treatments. His disability also impacted his sleep;
surgeries and other treatments, including pain medicine, offered no respite. His doctor
also prescribed various sleeping aids, which did not resolve the problem. He sought and
was granted intermittent FMLA leave for his condition.
Annoyed by absences. Managers and coworkers complained about his FMLA-protected
absences. The production superintendent pressured him to change from the graveyard
shift to a day shift, where the larger staff could more readily absorb his absences. But this
shift change would have reduced the employee’s income by $7,000 a year and he didn’t
want to do it. And, as an HR rep advised the superintendent, forcing him to transfer shifts
would violate the FMLA. The superintendent relented, but he continued to complain
about the absences. Moreover, while deemed an “excellent” employee, he was given a
negative review because of his absenteeism. He was also rejected for a promotion,
expressly due to his absences.
Safety incident. Finally, the employee was suspended pending an investigation into a
safety-related incident in which he failed to wait for a “line break” permit and lockout
before repairing a pump. During the incident, he got into a verbal spat with a coworker as
to whether the “line break” permit was required before the repair could be made.
Presciently, while out on suspension, he emailed to managers noting that he was “very
worried” that the company was “going to use this incident as a reason to terminate my
employment due to the amount of time I have missed due to my disability.”
While being interviewed in the course of the investigation, the employee was denied the
opportunity to talk about the quarrel; the investigator wanted to hear only about the safety
violation. Yet the company was quite eager to hear the coworker’s version of events,
even going to his home to obtain a more detailed account of the incident. However, no
effort was made to get the employee’s side of the story. Following the investigation, the
employee was discharged, the result of a group decision by six managers. Among the
group members: the site manager, HR manager, safety manager, and the production
superintendent who had lobbied for his shift change. Prior to the final decision, three of
the six had personally conferred with the employee’s coworker about the dispute with the
employee; five of the six acknowledged in testimony that the dispute had weighed
heavily in the group’s decision to fire the employee. Two said the coworker’s
characterization of the employee’s behavior was heavily credited in the termination
decision.
The Tenth Circuit, reversing the district court’s grant of summary judgment on the
federal claims that followed, noted evidence that other employees were treated more
favorably after committing serious safety violations. The employer treated the employee
differently from similarly situated employees who committed comparable safety
violations; its investigation into his quarrel with his coworker was one-sided and
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inadequate; and management previously took negative action against him because of his
FMLA-protected absences. Together, these created a triable issue of fact as to whether
his FMLA leave was a substantial motivation in the decision to fire him, the appeals court
found.
Same-ish decisionmaker. The court rejected the employer’s contention that the
comparators cited by the employee as having been treated more favorably were not
similarly situated because different decision-makers were involved. According to the
employer, it uses group decisionmaking to discipline for safety violations, and the
composition of the group that fired the employee differed from the composition of the
groups that disciplined the comparators identified by the employee. But the facts did not
bear this out. Five of the six decision-makers who fired the employee also participated in
at least one decision in which a similarly situated employee was treated more favorably
after violating the same or comparable safety rules. For example, a committee comprised
of several of the same group members opted not to fire two foremen and one hourly
worker, all of whom violated the lockout policy. Another group member was involved in
a decision not to discipline an employee who committed the “presumably serious safety
violation” of being intoxicated at work.
The district court erred by “insisting that the composition of the decision maker groups be
precisely the same in every relevant disciplinary decision,” the appeals court found. “We
disagree because there is more than enough overlap to conclude the employees identified
here were similarly situated.”
Violation no worse. Also without merit was the employer’s claim that the employee’s
safety violation was worse than the other employees’ offenses because he acted
deliberately and violated a clear policy. Yet the record indicated that other employees
also deliberately violated clear policies. Similarly, while the employer argued that two
violators were different because they had at least taken some safety precautions, had
apologized, and promised not to repeat the mistake, the record showed the employee here
also apologized and promised not to repeat the error. Moreover, he, too, took precautions.
Next, the employer emphasized that the employee had been trained on the company’s
safety rules, but every employee was required to complete the same safety training. As
such, the employee established a material fact issue as to whether he was punished more
harshly than similarly situated employees after comparable safety violations.
Unfair investigation. The employer then sought to distinguish the employee from his
comparators by citing the subsequent quarrel with the coworker. However, a jury could
still reasonably infer pretext given the company’s inadequate investigation into this
dispute that purportedly drove the discharge decision. A failure to conduct a fair
investigation of a violation that purportedly prompts an adverse action may support an
inference of pretext, the appeals court observed. Here, the decision-maker concluded the
employee had been “hostile” and “defiant,” which the employee adamantly denied. And
the managers admitted that their characterization of his behavior was based entirely on
the coworker’s description of the incident. Three decision makers personally spoke with
the coworker to hear his allegations; none heard the employee’s take on the matter. In
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fact, during his only meeting with any of the decision-makers, the manager refused to let
him talk about the quarrel at all. Moreover, he was not told about the coworker’s
allegations or given a chance to explain or deny them. Yet one of the decision-makers
even traveled to the coworker’s home to hear his story.
The record suggests that the decision-makers deliberately prevented the employee from
defending his actions, then reached their conclusions about what transpired based on onesided information. And the district court improperly resolved disputed facts and
inferences in the company’s favor, ignoring “fatal problems” with the employer’s
investigation, the Tenth Circuit held.
Past evidence of animus. Lending further support to the employee’s FMLA claim were
the negative comments and actions concerning his FMLA-protected absences, which
demonstrated bias and supported the inference that the safety violation was pretext. The
district court had ruled that these past events could not support independent FMLA
claims because they were not serious enough to be materially adverse employment
actions. But that didn’t render these facts irrelevant. “Even when an incident of alleged
employer discrimination or retaliation does not support an independent retaliation claim,
it may be relevant as background evidence in a pretext inquiry.”
The employer conceded that managers and coworkers had long complained about the
employee’s FMLA-protected absences and tried to force him to change shifts. The
manager involved in this effort testified that he and others remained openly frustrated
with the employee’s absences and repeatedly asked senior managers and HR if there was
“something else [they could] do.” On these additional background facts, a jury could
surely find that the employer was frustrated with the employee’s use of FMLA leave and
“seized upon his safety violation and quarrel … as a pretext to fire him and avoid the
inconvenience caused by his FMLA-protected absences.”
Disability bias claim revived. Quickly resolving the only issue in dispute as to the
employee’s prima facie disability discrimination claim, the Tenth Circuit found the
employee was disabled within the meaning of the statute because a reasonable jury could
find that his medical condition substantially limited his ability to sleep. He consistently
complained of an inability to sleep as a result of his medical condition: he reported
waking between four and six times each night because of his pain and being able to sleep
only four or six hours a night in spite of multiple prescription pain medications and
various prescription sleep aids. And, because the showing of pretext for purposes of the
FMLA claim extended to his ADA claim, summary judgment was reversed as to this
cause of action as well.
Breach of contract claim. The appeals court would not, however, disturb the lower
court’s holding on the employee’s state law claim for breach of an implied employment
contract. He failed to show a genuine dispute of fact as to whether the company violated
the terms of its employee handbook when it terminated him, as required to state a claim
under Wyoming law. The handbook at issue contained an “unambiguous” provision
allowing the company to terminate an employee immediately for a serious offense,
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including a safety violation. And the employee conceded he violated a safety rule. Thus,
the grant of summary judgment in the employer’s favor on this claim was affirmed.
The case number is 12-8013.
Attorneys: Sharon M. Rose (Lavery & Rose) for Steven Smothers. Paul J. Hickey
(Hickey & Evans) for Solvay Chemicals, Inc.
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