Labor Relations & Wages Hours Update
February 2015
Hot Topics in LABOR LAW:
Steelworkers union launches strike at oil refineries, plants
Citing a breakdown in negotiations with Shell Oil Co. (the lead company for national oil
bargaining talks), the United Steelworkers union went on strike Sunday, February 1, at
nine of the nation’s oil refineries. The work stoppage affects five refineries in Texas, two
sites in California, and worksites in Kentucky and Washington.
When the USW rejected Shell’s last offer (the company’s fifth), “Shell refused to provide
us with a counter-offer and left the bargaining table,” said Leo W. Gerard, USW
International President. “We had no choice but to give notice of a work stoppage.” The
union offered to bargain over a safe and orderly shutdown or a safe and orderly
transitional release. Oil workers were told to stay at their posts until they were relieved or
to finish out their shift.
Gary Beevers, the union’s international vice president and chair of its National Oil
Bargaining Program, said that the company refused to return to the bargaining table.
According to Beevers, the work stoppage was called due to workers’ concerns about
“onerous” overtime, unsafe staffing levels and dangerous work conditions, the
subcontracting of work, “the industry’s refusal to make opportunities for workers in the
trade crafts,” and the replacement of union jobs with contractors when union workers
leave or retire.
While contract talks have reached an impasse, the remaining USW-represented refineries
and oil facilities are currently operating under a rolling 24-hour contract extension. The
850,000-member USW represents workers at 65 U.S. refineries that produce some 64
percent of the oil in the United States, as well as oil terminals, pipelines and
petrochemical facilities.
National Mediation Board tweaks rail arbitration procedures
Noting that it is “entering another phase in its more than decade-long program to improve
the processing of rail arbitration disputes,” the National Mediation Board announced last
week that, beginning in February, it will formalize and adopt measures, tested in a pilot
program, to change the way arbitrators are to be paid and to further expedite the federal
agency’s handling of cases.
Discussing the NMB’s ongoing reform efforts, the agency noted that by the end of fiscal
year 2014, contemporary audit procedures were in place, cases were being handled in a
timely manner, and there was essentially no backlog of cases. Also last year, the agency
began a pilot program under which arbitrators were paid on a “per case basis,” as
opposed to the longstanding practice of paying arbitrators a daily rate for services. The
Board also tested a “60-day rule” that mandated some activity on an arbitration case that
has been referred to an arbitrator. These procedures will be formally implemented.
The changes will bring three important advantages, according to the NMB: (1) The payper-case approach will allow the agency to accurately budget and track expenses for
arbitration cases in a way that meets modern accounting standards; and (2) will allow
arbitrators to control their schedules and process cases much faster than was possible
under the traditional pay-per-day approach; (3) the 60-day rule will ensure that cases are
moved through the system and that funds for cases with no activity can be reallocated to
cases with a higher priority. All of these changes are tracked and managed by a webbased Arbitrator Work Space that offers a one-stop place for arbitrators to be assigned
cases, request permission to work, file vouchers and invoices, and record awards.
The NMB declined to label these latest changes as the “final” steps in the improvement
process that the agency launched back in 2002—noting that “no system is perfect”—but
it did state that the newly implemented procedures “represent significant steps to even
further ensure that public money is expended wisely, and that the parties who rely on the
RLA and the NMB continue to be served well.”
The NMB stressed that throughout implementation of these reforms, the agency held
ongoing discussions with rail labor and management and with NMB arbitrators to ensure
that the changes improve case management and provide prompt access to the resolution
of grievances for railroad industry workers.
Jazz pilots approve agreement that gives career options
The pilots of Jazz Aviation voted to ratify a new collective bargaining agreement by a
very comfortable margin of 95 percent of the nearly 96 percent of eligible voters who
turned out. Included in the tentative deal was a provision that permits Jazz pilots to move
to Air Canada through a pilot mobility agreement, according to a February 2 statement by
the Air Line Pilots Association, Int'l (ALPA), which represents the pilots.
The agreement is part of a renewed capacity purchase agreement (CPA) with Air Canada,
Jazz Aviation's mainline partner, through 2025, the union said. In addition to providing
cost savings, this allows Jazz Aviation to re-fleet, which further enhances the pilots' job
security.
2
A requirement of the new CPA with Air Canada was that a minimum number of Jazz
pilots would place their names on a pilot mobility list (PML). The union explained that as
part of the tentative agreement ratification information process, Jazz pilots were asked to
evaluate the pilot mobility agreement between Jazz Aviation and Air Canada and place
their names on the PML. Air Canada has agreed that a minimum 80 percent of its new
hires will come from the PML until it is exhausted. For pilots who choose to remain at
Jazz, the collective agreement protects their pensions and pay rates while aligning newhire pay rates more closely with industry standards, according to the union.
“In only two weeks from introduction to ratification, we asked this pilot group to make
hard choices—not only about this company, but their own career,” said Capt. Claude
Buraglia, leader of the Jazz unit of ALPA. “Our pilots came out in large numbers to
roadshows, asked questions, and decided that our future was best ensured by a deal that
provided career options, while protecting those pilots who wish to stay with Jazz.”
New Regional Attorney named for Region 3
NLRB career attorney Mary Elizabeth (Beth) Mattimore has been appointed to the job of
Regional Attorney of the Regional Office in Buffalo, New York—Region 3. Board
General Counsel Richard F. Griffin, Jr., made the announcement on February 2. As
Regional Attorney, Mattimore will assist Regional Director Rhonda P. Ley in the
enforcement and administration of the NLRA in several counties in Vermont and all New
York State counties except the New York City metropolitan area serviced by Regions 2
and 29.
Mattimore has been serving as Deputy Regional Attorney in Region 3; she succeeds
Michael J. Israel, who retired last year. Mattimore graduated from Southern Illinois
University with a B.S. in Biology. She received her Master’s in Natural Sciences and her
J.D. from the State University of New York at Buffalo. After graduation from law school,
she worked in private practice for six years before joining the NLRB at the Buffalo
Regional Office as a Field Attorney in 1995. Mattimore was later promoted to
Supervisory Field Attorney in 2007, and then to Deputy Regional Attorney in 2009.
GC directs regions to seek work-search expenses, even when search was fruitless
By Lisa Milam-Perez, J.D.
NLRB regional offices should affirmatively allege, in initial unfair labor practice
complaints where backpay will likely be owed, that job-search and work-related expenses
are being sought—regardless of whether those expenses exceed interim earnings, NLRB
General Counsel Richard Griffin directed in a January 30 memo (GC Memorandum 1501). The General Counsel also instructed the regions to argue that the Board should
overrule precedent holding that such expenses are payable only to the extent they don’t
exceed interim earnings.
Griffin said he was clarifying a 2011 directive (specifically, GC 11-08, which provided
for daily compounded interest on make-whole awards) in which he advised the regions to
plead additional remedies in their complaints going forward. In that memo, the general
counsel had merely instructed the regions to make sure that job search and work-related
3
expenses were calculated separately from backpay and charged to a respondent employer,
regardless of whether the discriminatee had actually received earnings during the interim
period. Here, he instructed the regions to expressly plead such relief. Among the interim
expenses at issue, he noted, were the higher transportation costs involved in the job
search or the commute to an interim job; the costs of tools or uniforms necessitated by
interim employment; the costs of room and board when seeking employment or working
away from home; required union dues and related fees incurred in the interim job (if not
required while working for the respondent employer); and moving expenses incurred in
accepting an interim position.
Griffin also provided the regions with proposed language (for briefing purposes) when
arguing that the NLRB should award job-search and work-related expenses regardless of
whether the amounts exceed interim earnings.
Not fully compensated. As it stands now, the NLRB merely considers the job-search and
work-related expenses as an offset to interim earnings. Consequently, under current
Board law, a discriminatee who incurs expenses while seeking interim work, yet is
unable to secure such employment, is not entitled to any reimbursement for those
expenses. And a discriminatee who ultimately obtains a job, but at such a pay rate, or of
such a duration, that interim earnings fail to exceed these expenses, is left without full
compensation for those expenses.
“The practical effect of this rule is to punish discriminatees, who meet their statutory
obligations to seek interim work, but who, through no fault of their own, are unable to
secure employment, or who secure employment at a lower rate than interim expenses,”
Griffin asserted. “Aside from being inequitable, this current rule is contrary to general
Board remedial principles.”
The Board’s current position fails to make discriminatees whole, “inasmuch as it
excludes from the backpay monies spent by the discriminatee that would not have been
expended but for the employer's unlawful conduct,” according to Griffin. “Worse still,
the rule applies this truncated remedial structure only to those discriminatees who are
affected most by an employer's unlawful actions—i.e., those employees who, despite
searching for employment following the employer's violations, are unable to secure
work.” This rule also runs counter to the approach taken by the EEOC and the
Department of Labor, he pointed out.
Thus, the regions should argue that a change to the existing Board rule “is clearly
warranted,” Griffin said. “In order for employees truly to be made whole for their losses,
the Board should hold that search-for-work and work-related expenses will be charged to
a respondent regardless of whether the discriminatee received interim earnings during the
period. These expenses should be calculated separately from taxable net backpay and
should be paid separately, in the payroll period when incurred, with daily compounded
interest charged on these amounts.”
4
Triumph Aerostructures reinstate 5 workers, pay others in ULP settlement
Triumph Aerostructures, LLC, will reinstate five employees to their previous positions at
the company’s Grand Prairie, Texas, facility under a settlement agreement with the
National Labor Relations Board. The commercial, military, and business aircraft parts
manufacturer will also pay seven employees $204,665 for back pay and losses in
retirement contributions and other pay and benefits, according to a February 3 NLRB
announcement.
The NLRB’s Region 16 Office issued an unfair labor practices complaint in September
2014, alleging that the Triumph violated the NLRA by failing to bargain in good faith
with its employees’ bargaining representative, the UAW and its Local Union 848, when it
unilaterally implemented changes to its SPA 1700 training program, resulting in the
discharge of seven employees.
The parties entered into an informal Board settlement agreement on January 30, 2015.
Under the agreement, Triumph will pay $204,665 to seven employees. Nine employees
will also have a total of 480 hours of paid leave restored. The employer will also post a
notice in its workplace that addresses the alleged violations and advises employees of
their rights under the NLRA.
California teachers ask the Justices to overrule Abood
By Pamela Wolf, J.D.
Represented by the Center for Individual Rights, 10 teachers and the Christian Educators
Association International (CEAI) have filed a petition for cert that, if granted, will give
the Justices a chance to take another look at the Court’s 1977 ruling in Abood v. Detroit
Board of Education that state employees may be compelled to pay agency fees to publicsector unions. Last June, in Harris v Quinn, the Justices questioned the foundation for the
precedent established in Abood but let it stand in the face of a case involving workers
who were not “full-fledged” state employees and thus to whom Abood did not apply. This
case would give the Justices the chance to overrule the shaky precedent.
The petition for cert in Friedrichs v. California Teachers Association, filed on January
26, directly implicates Abood, so much so that a district court in California entered
judgment on the pleadings in favor of the CTA and the Ninth Circuit summarily affirmed.
Summary proceedings below. Under California law, a union may become the exclusive
bargaining representative of public teachers and may establish an “agency-shop”
arrangement with a school district, whereby all employees, as a condition of continued
employment, can be required to either join the union or pay a fair share service fee—a socalled “agency fee”—that is generally the same amount as union dues. Agency fees can
only be used for matters germane to collective bargaining, so unions must identify both
the agency and the non-chargeable portions of the fee. To avoid paying non-chargeable
portions, teachers must affirmatively object and renew the opposition in writing every
year.
5
The plaintiffs sued the teachers union, asserting that the state’s agency shop arrangement
and opt-out procedures for non-chargeable union expenditures violate their free speech
and association rights under the First and Fourteenth Amendments to the U.S.
Constitution. They sought judgment in favor of the defendants.
The district court, citing Abood and Mitchell v. Los Angeles Unified School District, a
Ninth Circuit decision following its precedent, ruled that the plaintiffs’ claims were
foreclosed—a fact that none of the parties disputed.
In November 2014, the Ninth Circuit summarily affirmed the lower court’s ruling,
finding the questions presented on appeal “so insubstantial as not to require further
argument, because they are governed by controlling Supreme Court and Ninth Circuit
precedent.”
Questions put to the Justices. The petition for cert asks the Justices to determine
whether:

Abood should be overruled and public-sector agency shop arrangements
invalidated on First Amendment grounds.

It is a First Amendment violation to require public employees to affirmatively
object to subsidizing non-chargeable speech by public-sector unions rather than
requiring them to affirmatively consent to such speech.
Among other things, the teachers argue that Abood is irreconcilable with the Court’s
other First Amendment rulings and should be overruled.
After its Harris decision, there is much speculation that the Court will agree to take up
the Abood question.
Nissan unwilling to let NCP mediate alleged antiunion practices
By Pamela Wolf, J.D.
Nissan Motor Company is “not willing to participate in mediation” over a longstanding
dispute with the United Auto Workers (UAW) and IndustriALL Global Union
Federation, according to the State Department-based US National Contact Point (NCP)
for the Organization for Economic Cooperation and Development (OECD) Guidelines for
Multinational Enterprises. Therefore, the voluntary mediation process could not be
established, an NCP final statement concluded.
The NCP offered the mediation in response to an April 2014 “specific instance” filed by
the UAW and IndustriALL. The unions cited the “company’s antiunion practices in the
United States” that run afoul of the OECD Guidelines. The NCP’s final action followed a
review of evidence submitted by the unions, which, according to the UAW, included
“implied threats of plant closing and other forms of management interference with
workers’ organizing efforts at the company’s Canton, Mississippi, factory.”
6
Nissan’s position. According the final statement, Nissan asserted among other things,
that the NCP’s involvement in the matter was unwarranted because:

Representational rights of workers in the private sector are within the sole
jurisdiction of the NLRB.

The NCP should not try to broker an agreement that includes terms that would
place Nissan in a position of either potentially violating U.S. law, or waiving
employer rights conferred to Nissan by Congress and recognized by the
International Labor Organization.

As shown by UAW/IndustriALL’s publicity about the issue, the Specific Instance
is “a component of a larger public relations campaign by the UAW to attempt to
discredit and pressure Nissan into acceding to the UAW’s demands.”
Final conclusions. “In this case, because the issues raised merited further examination,
the U.S. NCP offered the parties access to a facilitated, consensual mediation through
non-adversarial means,” the NCP explained in its final statement. “It is the position of the
U.S. NCP that it is exactly its role to offer an opportunity, should both parties agree, to
facilitate an agreement to address the allegations raised in this Specific Instance that is
mutually accepted by the parties and that does not violate applicable law. The parties are
in control of the outcome of an agreement. Participation is voluntary and no parties
would be compelled to violate the law or waive their rights under the law during the NCP
process.”
In addition to its conclusion that voluntary mediation could not be established, the NCP
reached several other conclusions. As to the issue of the unions publicizing the
submission of the instance that initiated NCP involvement, the final statement concludes
that “public reference to the filing of the Specific Instance is not inconsistent with those
provisions such that it would warrant further NCP action or breach of confidentiality by
the parties.”
The NCP also recommended that “Nissan North America, Inc., in cooperation and with
guidance from Nissan corporate headquarters in Japan, conduct corporate-wide labor
rights review processes, consistent with the recommendation of the Guidelines … .”
As to mediation, the NCP recommended that “Nissan evaluate the allegations raised by
the submitters and consider how to address them, including the opportunity to engage
informally or formally with the submitters” and “consider mediating, either through its
own internal processes or through third-party mechanisms, the issues raised by
UAW/IndustriALL to seek a resolution to the issues raised.”
The NCP said that it “remains available to assist the parties in facilitating dialogue in the
future on these matters, if the parties later agree to pursue mediation or another form of
alternative dispute resolution.”
“It is clear Nissan behaves one way in some parts of the world but is grossly exploiting
workers in the United States,” remarked UAW President Dennis Williams. “The fact that
7
the company continues to ignore the severity of the situation and its refusal to end these
abuses or engage in dialogue that could result in a positive step forward for both workers
and the company is absolutely unreasonable.”
Reconsideration of joint employer standard: Common law agency vs. evolving
business practices
By Pamela Wolf, J.D.
On Thursday, February 5, the Senate Health, Education, Labor and Pensions (HELP)
Committee held a hearing on the National Labor Relation Board’s current reconsideration
of its longtime joint employer standard. The hearing, Who’s the Boss? The “Joint
Employer” Standard and Business Ownership, showcased a battle that has been brewing
for several years and is playing out all across the country in the form of low-wage worker
protests. The competing views expressed by Committee Chair Lamar Alexander (RTenn.), Committee Ranking Member Patty Murray (D-Wash.), and the four invited
panelists revealed a battle over whether the Board should remain tethered to common law
agency principles, or have the freedom to evolve the standard according to the changing
economic climate and the business models that have evolved as a result.
Small business killer? According to Alexander, a Board decision to alter the joint
employer standard “could destroy a small business opportunity for more than 700,000
Americans.” He underscored that both political parties have bemoaned the reality that it’s
becoming harder and harder to climb the economic ladder of success in the United States.
“Successfully operating a franchise business is today one of the most important ways to
do that,” Alexander said.
The Senator framed the controversy this way: “The board and its General Counsel are
pursuing a change to what is called the ‘joint employer’ standard. This standard, or test,
has since 1984 required that for a business to be considered a joint employer, it must hold
direct control over the terms and conditions of a worker’s employment—to decide that,
the NLRB looks at who hires and fires, sets work hours, picks uniforms, issues directions
to employees, determines compensation, handles day to day supervision, and conducts
recordkeeping.
“Under the changes the NLRB is now considering, it would take just indirect control over
the employees’ terms and conditions of employment, or even unexercised potential to
control working conditions, or where ‘industrial realities’ otherwise made it essential to
meaningful collective bargaining.”
Common law agency roots. Echoing some of Alexander’s concerns, Marshall B.
Babson, Counsel at Seyfarth Shaw and former Democratic Board Member in the late
1980s, pointed out that the NLRB’s General Counsel “now advocates a new jointemployer standard that includes employers who are ‘essential for meaningful collective
bargaining,’ a test implicitly, if not explicitly, rejected outright by Congress in 1947 and
by decades of Board precedent as wholly untethered to the common law of agency.” He
said that under the proposed standard, “an entity would be deemed an ‘employer’ or a
‘joint-employer’ if it ‘exercised direct or indirect control over working conditions, had
8
the unexercised potential to control working conditions, or where ‘industrial realities’
otherwise made it essential to meaningful bargaining.’”
Babson said that the proposal is not merely a “policy choice,” and that it “cannot be
squared with an Act that is rooted in, and bounded by, the common law definitions of
employer and employee.” He observed that Congress and the Supreme Court “have
repeatedly instructed that determinations of employee, employer and, by extension, jointemployer status under the Act must be bound by the common law of agency.”
Reiterating the NLRA’s roots in common law agency principles, Babson urged: “Time
and again Congress and the Supreme Court have directed that the Board must rely upon
the common law of agency in making determinations with respect to who is an employee
and who is an employer under the Act. The current joint-employer standard promotes
stability and predictability in business relationships and collective bargaining, which
allows for corporate efficiency and innovation. Any modification to the longstanding
principles which are grounded in the Act’s text are unwarranted and will have deleterious
consequences which are both extensive and far reaching.”
Franchise model in real-time. Senator Murray painted a picture of what the franchise
model looks like today—the source of a problem that a change in the joint-employer test
might be able to resolve: “The parent company of a franchise can dictate pricing and
store hours. It can prohibit collective bargaining and it can monitor, in real time, worker
hours and staffing levels. And yet, the parent company can put all the liability for poor
working conditions and low wages squarely on the shoulders of its franchise owners.
“And without collective bargaining rights, workers have no recourse for improving these
workplace conditions. This arrangement can also hurt franchise owners. These small
business owners face pressure in bidding for franchise licenses and they struggle to
manage under corporate rules. That’s not good for workers. It’s not good for franchise
owners. And, it lets some major corporations have it both ways. They can squeeze both
workers and small business owners, while they make record profits. And they get to
escape all liability for low wages and poor working conditions.
“When workers make poverty wages, it’s federal taxpayers who end up paying the price.
More than half of fast-food workers in our country are enrolled in at least one public
assistance program. Taxpayers pay nearly $7 billion a year for public assistance that help
fast-food restaurant workers make ends meet.”
Usual procedure to effectuate NLRA. Professor Paul M. Secunda, Director of the
Labor and Employment Law Program at Marquette University Law School, put the
Board’s reconsideration of the joint employer standard in the context of dynamic
employment relationships and the Board’s obligation to ensure that it continues to
effectuate the purposes of the NLRA. “The Board is following its usual and ordinary
adjudicatory process to ascertain whether employees in certain economic structures are
able to properly exercise their organizational, collective bargaining, and concerted
activity rights under the Act,” he told the HELP Committee.
9
“Employment relationships are dynamic, and the mix of jobs and relationships in our
economy shifts over time,” according to Secunda. “The Board is simply re-examining its
joint employer standard to ensure that it properly effectuates the purposes of the Act. As
the agency charged with administering the NLRA, the NLRB must ensure that it is
fulfilling its statutory mandate by protecting employees’ rights to engage in concerted
activity and to bargain collectively with their employers.”
He also stressed that the Board has not yet decided what actions to take. “There is
nothing extraordinary or unusual about the adjudicatory process that the Board is
following in re-examining its joint employer test,” Secunda said, noting that in the
underlying case, Browning-Ferris, “the Board has done what it has done many times
before—it has asked for amicus briefs from all interested parties based on the facts of the
case.” Unlike other federal agencies, he observed, the NLRB “generally does not engage
in rule-making and instead develops the ‘common law of the shop’ through fact-intensive
investigations of complex, individual cases.” The law professor also noted that the Board
“has continuously reconsidered and adjusted its joint employer standard based on
experience.”
“The express purpose of the Act is to ensure industrial peace through the process of
collective bargaining over terms and conditions of employment,” Secunda explained.
“Industrial peace can only be fostered if employees have an opportunity to collective
bargain with all parties that meaningful control workplace terms and conditions.
Therefore, by re-examining its joint employer test, the Board is simply fulfilling the
responsibility that the U.S. Supreme Court has entrusted to it: ‘adapt[ing] the [National
Labor Relations Act] to changing patterns of industrial life.’… Browning-Ferris does not
represent the Board acting in an unusual or activist way in asking whether it should revise
its joint employer test in any manner in light of evolving economic realities.”
Pointing to some of those evolving realities, Secunda cited “the rapid expansion of
precarious low-wage work and subcontracting that have fractured the 21st century
workplace. … By 2013, staffing services generated $109 billion in sales and 2.8 million
temp positions. In the first quarter of 2014, True Blue (formerly Labor Ready), the largest
U.S. staffing agency, had a profit of $120 million on gross revenues of $453 million.
Franchising is equally profitable as evidenced by the fast-food sector of the restaurant
industry where in 2012 the ten largest franchises employed over 2.25 million workers and
earned more than $7.4 billion in profits.
“There are more than 3.5 million fast-food workers and more than 75 per cent of them
work in franchised outlets. Numerous studies indicate that under-employment and
poverty-inducing earnings are the norms. Households that include an employed, fast-food
worker are four times as likely to live below the federal poverty level. The social costs of
these conditions are born by U.S. taxpayers, who shell out about $3.8 billion per year to
cover the cost of public benefits received by fast-food workers employed at the top-ten
fast-food franchises.
“By considering whether its existing joint employer standard is consistent with Congress’
intent in light of changing employment practices, the Board is acting responsibly and well
10
within its statutory authority,” Secunda said, urging the HELP Committee to “allow the
administrative process to run its normal course before any conclusions about the impact
of such a decision are reached.”
Playing CRA card, Senate GOP moves to block NLRB ‘quickie’ election rules
By Lisa Milam-Perez, J.D.
According to media reports, Senate Republicans today introduced a measure to block the
NLRB’s much-maligned revised representation election rules, resorting to the
Congressional Review Act as had been anticipated in recent weeks in an effort to prevent
the Board’s new rules from taking effect as scheduled on April 14. House Republicans
are expected to follow suit, with House Education and the Workforce Chairman John
Kline (R-Minn) intending to introduce a joint resolution in the House.
NLRB Chairman Mark G. Pearce responded promptly today to the Senate’s introduction
of S.J. Res. 8, “A Congressional Review Act Resolution of Disapproval.” He issued a
statement this afternoon defending the agency’s sweeping rule changes in the face of
Congressional opposition.
“The Board remains committed to the critical work of this agency and fully carrying out
the law,” Pearce said. “As Congress considers this resolution, this Agency will continue
productive conversations about the rule ensuring that our processes help fulfill the
promise of the National Labor Relations Act.
“However, it is undeniable that modernizing and streamlining the representation-case
process is far overdue,” Pearce continued. “Both businesses and workers deserve a
process that is effective, fair, and free of unnecessary delays, which is exactly what this
rule strives to accomplish.”
The Board is also currently fending off two industry lawsuits seeking to invalidate the
representation rules.
Navistar workers ratify 4-year contract
Workers at Navistar International Corp. have ratified a new four-year bargaining
agreement, the United Auto Workers and the company announced Monday, February 9.
The newly approved deal, approved by a majority of the 1,500 UAW-represented
Navistar workers, replaces a contract that expired last October. The union represents
workers at five Navistar facilities in Dallas, Texas; Atlanta, Georgia; Melrose Park,
Illinois; Springfield, Ohio; and York, Pennsylvania.
"The new contract will help our UAW-represented facilities embrace lean principles,
which will allow them to remain competitive in today's business environment," said Troy
Clarke, Navistar president and chief executive officer. "The contract also helps our
UAW-represented employees and retirees maintain a good standard of living."
“UAW members have approved a contract that is fair and equitable for both them and
company,” said UAW vice president Norwood Jewell, who directs the union's heavy
11
truck department. “With this new contract, our members may continue serving our
customers in the heavy truck industry while maintaining good jobs and benefits that will
allow them to support their family and community. This is an example of how working
men and women and companies can work together so that everyone wins."
Navistar senior vice president Bill Osborne commended the UAW for its efforts to
collaborate to address the needs of employees along with critical business matters. “We
value our partnership with the UAW,” Osborne said. “We found common ground on
some difficult issues and we will continue in that spirit of cooperation as we move
forward.”
Steelworkers strike against oil industry expands
United Steelworkers-represented workers at BP refineries in Indiana and Ohio are joining
the ongoing oil industry strike that began on February 1 at nine refineries and chemical
plants after bargaining negotiations stalled. Another 1,100 USW members have joined
the work stoppage, the union announced, in addition to the 3,800 workers already on an
unfair labor practice strike of facilities in California, Kentucky, Texas, and Washington.
The union gave strike notice to BP management on Friday, February 6; the BP workers
joined the strike on Sunday morning. The strike now involves 11 refineries around the
nation.
The USW also held a “national day of action” over the weekend, with rallies by workers
at 65 oil refineries and 200 other facilities nationwide, including terminals, pipelines, and
petrochemical plants. According to USW president Leo Gerard, the event was intended to
be a show of solidarity in the union’s bargaining dispute with the nation’s large oil
companies.
Gerard said that the oil industry “is long overdue to address many of the issues the union
brought to the table that directly impact workers' health and safety.”
"After long days of discussions with the industry's lead company, Shell Oil, little
progress has been made on our members' central issues concerning health and safety,
fatigue, inadequate staffing levels that differ from what is shown on paper, contracting
out of daily maintenance jobs, high out-of-pocket and health care costs," said Gary
Beevers, USW international vice president and head of the union's National Oil
Bargaining Program (NOBP). Beevers said Shell refuses to agree to “no retrogression”
language in the contract, which refers to acceptance of previous agreements with the
industry. “We will not relinquish 50 years of progress in NOBP bargaining.”
Negotiations between the USW and oil industry representatives are on a temporary hiatus
while the USW waits for the companies to comply with a long-pending information
request, the union said.
In addition to health and safety issues, contracting out and health care, the USW said it is
striking over the oil companies' bad-faith bargaining, including the refusal to bargain over
mandatory subjects; undue delays in providing information; impeded bargaining; and
threats issued to workers if they join the strike. The Steelworkers filed unfair labor
12
practice charges against several of the struck employers; the union said it will file
additional unfair labor practice charges this week.
USW members account for about 64 percent of the country's oil refining capacity, and
more locations could soon join the strike if the union deems it “necessary.” The USW
represents 850,000 workers.
Griffin names assistant to regional director in New York
NLRB General Counsel Richard F. Griffin, Jr. has appointed Nicholas H. Lewis to serve
as the Assistant to the Regional Director of the NLRB’s regional office in Region 2, New
York. In this position, Lewis will assist Regional Director Karen Fernbach in the
administration and enforcement of the NLRA in Manhattan, the Bronx, and several
counties north of New York City. Lewis succeeds Elbert Tellem, who recently retired.
Lewis began his career with the NLRB in 1988 as a field examiner in the New York
office. Since March 1997, he has served as a supervisory field examiner, according to a
February 9 agency release. He received a B.A. degree in economics from the University
of Vermont and a M.S. in Labor Studies from the University of Massachusetts at
Amherst.
GC issues guideline memorandum on new deferral to arbitration standard
By David Stephanides, J.D.
In light of the NLRB’s recent decision in Babcock & Wilcox Construction Co., General
Counsel Richard F. Griffin, Jr. has issued a new memorandum, GC 15-02, instructing the
regions on the Board’s new standard for deferring to arbitral decisions in unfair labor
practice cases.
In Babcock, the Board concluded that its existing standard for determining whether to
defer to arbitration proceedings did not adequately balance the protection of employees’
rights under the NLRA and the national policy of encouraging arbitration of disputes
arising over the application or interpretation of a bargaining agreement. The Board
agreed with the General Counsel that the burden of proving that deferral is appropriate is
properly placed on the party urging deferral, and it also agreed that deferral is appropriate
only when the arbitrator has been explicitly authorized to decide the statutory issue.
Griffin’s memorandum explains the new standard and describes the circumstances under
which it applies to post- and pre-arbitrable deferrals and deferral to grievance settlements.
Postarbitral deferral. Griffin instructs the regions to submit questions concerning
whether the statutory issue was presented to and considered by the arbitrator to the
Division of Advice. Likewise, any case where a party argues that it was prevented from
placing the statutory issue before the arbitrator, including situations where a union waited
to file an unfair labor practice charge until after the arbitration, should be submitted to the
division.
13
Regions are also instructed to submit any case where the arbitral ruling on the statutory
issue arguably fails to satisfy the “reasonably permitted” requirement, such as where an
arbitrator places no weight on facts critical to the unfair labor practice or misconstrues
Board law. As to cases presenting remedial deficiencies, a region may defer whenever the
relief granted by the arbitral award is such that the region would have the authority to
unilaterally accept it as settlement of the unfair labor practice charge. Regions should also
submit to the division any case where it seeks to issue a complaint on the basis that an
arbitral remedy is insufficient, including cases where the region wishes to challenge an
arbitral award on the basis that it failed to provide a notice posting in light of the
circumstances of that particular case.
Prearbitral deferral. In prearbitral situations (cases currently on Collyer deferral),
regions should send letters to the parties notifying them of the Babcock decision, attach
memorandum GC 15-02, and instruct them as to the circumstances under which the new
deferral standards may apply. With respect to future charges in which a party raises
prearbitral deferral as a defense to unfair labor practice allegations, regions must take into
account which standard will apply to the ultimate arbitration in deciding whether to place
the case on administrative deferral. In processing such cases, regions should assess
whether the statutory right at issue is incorporated in the applicable bargaining
agreement. Any questions about whether a specific statutory right has been incorporated
into the agreement should also be submitted to the Division of Advice. If it is so
incorporated, regions should place the case on administrative deferral, provided all of the
other Collyer requirements are met and there is arguable merit. Once an arbitration award
issues, regions should assess it under Babcock.
Next, if the statutory right is not incorporated in the contract, regions should ask both
parties if they will authorize the arbitrator to decide the unfair labor practice. If the parties
so authorize, regions should obtain such commitments in writing and place the case on
administrative deferral, provided all of the other Collyer requirements are met and there
is arguable merit. Once an arbitration award issues, the regions should assess it under
Babcock.
Finally, if the statutory right is not incorporated in the contract and one or both parties
refuse to authorize arbitration of the unfair labor practice, how the case should be
processed will depend on whether the applicable contract was executed before or after
December 15, 2014, the date the Babcock decision issued. If the contract was executed on
or before that date, regions should place the case on administrative deferral, provided that
Collyer requirements are met and there is arguable merit. Once an arbitration award
issues, regions should assess it under Olin. If the contract was executed after December
15, 2014, regions should conduct a full investigation of the merits and issue a complaint
or dismiss the charge accordingly. If, after issuing complaint, a region learns that the
parties have subsequently agreed to authorize arbitration of the unfair labor practice, the
region should place the case on administrative deferral and apply Babcock once an award
issues.
Deferral to grievance settlements. So long as a grievance settlement is satisfactory
under the Board’s 1987 decision in Independent Stave, regions may accept a charging
14
party’s request for withdrawal of a charge in cases with arguable merit, since such a
request suggests an intent to settle the unfair labor practice and prosecution would not
effectuate the purposes of the Act. Any merit cases where the charging party does not
withdraw the charge following settlement of the grievance, or where a discriminatee
objects to the withdrawal, should be submitted to the Division of Advice with
recommendations regarding whether the parties intended that the settlement would
resolve the unfair labor practice issue, whether the settlement agreement addresses that
issue, and whether the agreement meets the requirements of Independent Stave.
Although the Board did not articulate whether the new grievance settlement deferral
standard would apply retroactively or prospectively, Griffin assumes that the policy
considerations informing the Board’s nuanced approach toward postarbitral deferral
apply equally to the grievance settlement context. Thus, it is inferred that the new
standard for evaluating grievance settlements should apply in parallel fashion as the new
standard for reviewing arbitral awards, and should apply in all cases where Babcock
would have applied had the parties proceeded to arbitration.
IFA supports group opposing NLRB’s expansion of joint employer definition
By John W. Arden, J.D., LLM.
The Coalition to Save Local Businesses—a business group formed to oppose the National
Labor Relations Board’s expansion of “joint employer” of franchisee employees to
include franchisors—was praised by Steve Caldeira, President and CEO of the
International Franchise Association (IFA), in a statement issued yesterday.
“The recent and pending actions redefining the long-standing and widely accepted
definition of what constitutes a joint employer by the NLRB clearly represents an
existential threat to the franchise business model,” Caldeira said. “The pending
recommendation by the NLRB’s General Counsel would upend the 780,000 locallyowned franchise businesses across the U.S. and in turn jeopardize the 8.9 million jobs
they directly support.”
“As more franchisees learned about the NLRB actions to undermine their local
businesses, the more they sought an opportunity to express their disagreement with the
NLRB and engage with their elected representatives,” he explained. “The Coalition to
Save Local Businesses provides them with that platform and we’re proud to be part of it.”
The Coalition intends to inform members of Congress about the potentially devastating
impact that redefining the joint employer standard would have on the U.S. economy,
according to the IFA.
The expansion of the joint employer definition would increase franchisor responsibilities
and make them more liable for franchisees’ actions, potentially leading to the
consolidation of franchisors and forcing franchisees into a role similar to that of a store
manager, the IFA predicted.
15
“There’s no upside to upsetting the long-standing employer-employee relationship,”
Caldeira said. “In fact, these new regulations from the NLRB would diminish
entrepreneurial investment, stifling job growth and economic activity in communities
from coast to coast.”
The IFA is the world’s oldest and largest organization representing franchising
worldwide. Its members include franchise companies in more than 300 different business
format categories, individual franchisees, and companies that support the industry in
marketing, law, technology, and business development.
HELP Committee scrutinizes controversial NLRB representation election rule
By Pamela Wolf, J.D.
On Wednesday, February 11, the Senate Health, Education, Labor, and Pensions (HELP)
Committee held a hearing on an NLRB rule that is alternately characterized as a “quickie
election rule” or a “representation rule to streamline and modernize election procedures,”
depending on the speaker’s perspective. Those who oppose the rule say that it permits
employers to be ambushed by an impending union representation election before they
even know what’s happening. Others, who think the rule is warranted, point to frequent
and unnecessary delays in representation cases that are caused by employers who are far
from caught off guard, but rather are mounting vigorous antiunion campaigns.
Revised representation election rule. The NLRB approved the revised rule by a 3-2
ballot in December 2014. Announcing the adoption of the rule, the Board said that the
revision amends representation-case procedures to “modernize and streamline” the
process for resolving representation disputes. The Board also provided a comparison
table of current and new case procedures.
Resolution to block implementation. On Monday, February 9, two days before the
HELP Committee hearing, Ambushed: How the NLRB’s New Election Rule Harms
Employers & Employees, Republican lawmakers introduced a joint resolution, S.J. Res. 8
(H.J. Res. 29), aimed to halt implementation of the rule under a provision of the
Congressional Review Act. The simple resolution states that “Congress disapproves the
rule submitted by the National Labor Relations Board relating to representation case
procedures (published at 79 Fed. Reg. 74308 (December 15, 2014)), and such rule shall
have no force or effect.” If the GOP lawmakers are unsuccessful, the rule will be
effective April 14, 2015.
Ambush election rule. In prepared remarks at the committee hearing, Alexander said: “I
refer to this as the ambush election rule, because it forces a union election before an
employer has a chance to figure out what is going on. Even worse, it jeopardizes
employees' privacy by requiring employers to turn over personal information including
email addresses, phone numbers, shift hours and locations to union organizers.”
According to Alexander, more than 95 percent of union elections take place within 56
days of the petition-filing. Under the revised rule, however, elections could occur within
as few as 11 days. He said that the rule will harm both employers and employees alike.
16
Alexander laid out what he saw as the timetable for employers under the revised rule,
noting that before the preelection hearing that will generally begin within eight days after
a hearing notice is filed, an employer will have less than one week to:

figure out what an election petition is,

find legal representation,

determine legal positions on the relevant issues,

learn what statements and actions the law permits and prohibits,

gather information required by the NLRB,

communicate with employees about the decision they are making, and

correct any misstatements and falsehoods that employees may be hearing from
union organizers.
“Making even the slightest mistake in the lead-up to an election can result in the NLRB
setting aside the results and ordering a ‘re-run’ election—or worse, the Board could
require an employer to automatically bargain with the union,” Alexander warned.
Circumvents Congress, hurts everyone. The revised rule “will undermine an
employer’s ability to mount a lawful, effective information dialogue with its employees
on whether or not to select union representation,” predicted Charles I. Cohen, Senior
Counsel at Morgan, Lewis & Bockius LLP, where he represents employers. From 1994 to
1996, Cohen also served as Board Member. He called it “a transparent attempt to
circumvent Congress on the issue of how, if at all, to reform the nation’s labor laws after
the failure of the prior 111th Congress to pass the Employee Free Choice Act (EFCA),
legislation supported by the labor movement that would have all but ended secret ballot
elections at the NLRB in favor of ‘card check’ recognition.”
“In virtually every controversial NLRB initiative that I have witnessed in the past, the
emphasis has been on enforcing the law while plugging opportunities for parties to
violate the law or game the system,” Cohen said. “Unlike any of these other initiatives,
however, this one transparently seeks to deprive law-abiding and nongames-playing
employers of their right to communicate their views under Section 8(c) of the Act. The
entire employer community is presumed to be on the wrong side standing ready to
trample the rights of employees. The Final Rule also deprives employees of their right to
receive key information from all sides in order to be fully informed on how and whether
to exercise their Section 7 rights.”
According to Cohen, “no public good will come from the Final Rule.” He pointed to
“proposed budget cuts, Congressional backlash and increased oversight, such as this very
hearing, and more politicization of the NLRB,” which he called “neither good nor fair for
the NLRB as an institution, its staff, or indeed the country.” The bottom line from
Cohen’s perspective: “This Final Rule by the Board will result not only in increased
17
fights between labor and management; it will embroil the United States government in a
most unfortunate way.”
Modest, common-sense updates. HELP Committee Ranking Member Patty Murray (DWash.) saw the revised rule very differently, calling it the Board’s “new representation
rule to streamline and modernize election procedures.” She criticized Republicans for
“opposing modest and common-sense updates to bring the NLRB election process into
the 21st century and guarantee a free and fair election process for today’s workers.”
According to Murray, “Republicans are once again putting the profits of the biggest
corporations ahead of the rights and opportunities of middle class families,” she
remarked.
“When workers want to vote on whether to form a union, they aren’t looking for special
treatment,” Murray pointed out. “They are simply trying to exercise their basic rights. But
too often, big corporations use loopholes in the current election process to delay a straight
up-or-down vote.”
“Workers have the right to vote on union representation in elections that are free from
unnecessary delays and wasteful stall tactics. And our country should not turn our backs
on empowering workers through collective bargaining—especially because that’s the
very thing that helped so many workers climb into the middle class.”
The new representation election rule, according to Murray, “makes important, but
modest, amendments to guarantee a free and fair election process in today’s modern
workplace.” She cited for example, that the old rules “are vulnerable to frivolous
litigation, which would drag out elections and to put workers’ rights on hold.” The new
rule “will reduce unnecessary litigation on issues that aren’t relevant to the outcome of
the election.”
Murray also noted that previously, employers had to send information to employees
through the post office, which cost time and money. “This new rule brings the rules into
the 21st century by letting employers and unions file forms electronically. And, it will
allow the use of more modern forms of communication to employees through cell phones
and email.”
Protecting workers. “The National Labor Relations Act is a recognition that business of
our country flows more freely, and our economic system works better, when workers
have the protection of the Act to join together to form unions for their collective good,”
explained Caren P. Sencer, Partner at Weinberg, Roger and Rosenfeld, a firm that
represents unions, working people, and their institutions. “The Act was and remains a
response to strikes and other disruptions to commerce. Updating the election procedure
rules to conform to modern technology and existing practice does not alter the purpose of
the Act but rather streamlines procedure and furthers the purpose of the Act by providing
more and clearer information to workers.”
For the NLRA to effectuate its goal of protecting workers, “the Board must do more than
adjudicate or attempt to mediate disputes between employers and unions,” according to
18
Spencer. “The Board is charged with protecting the rights of employees to organize. Its
first and utmost concern should always be the rights of workers seeking to use its process
to establish, change or disestablish a collective voice in the workplace. That process
should be easily understood and accessible. If something creates a barrier to free choice
and self-organization, it should be rejected or modified.”
Spencer pointed to the opportunities for employers to delay the process that currently
exist. “This puts enormous pressure on the union to agree to unreasonable demands from
the employer regarding the composition of the bargaining unit and other issues,” she
observed. “Under the current system, the employer can force a hearing solely for delay
purposes to resolve issues not relevant to whether there is a question concerning
representation requiring an election. This delays an election weeks and sometimes
months, because the Regional Director does not have the authority to refuse to take
evidence in the absence of dispute requiring resolution.”
“In many cases, the parties are able to stipulate to the scope of the bargaining unit and to
the time and place for the election because of the efforts of the Region to apply the
Board’s goal of an election being held within 42 days of a petition being filed,” according
to Cohen. “Most employers insist upon the 39th, 40th, or 41st day for an election. The
Union has no choice but to agree to this delayed election because, if the matter goes to a
hearing without a stipulated election, the hearing will inevitably result in delay of the
election for at least several weeks beyond the 42nd day. This is true even when there is
no actual dispute between the parties as to the scope of the appropriate unit. The threat of
delay by litigation throughout the petition procedure skews the pre-election process.”
Bill permits increase over CBA wages for meritorious workers
By Pamela Wolf, J.D.
Senator Marco Rubio (R-Fla.) and Representative Todd Rokita (R-Ind.) have introduced
a bill to amend the NLRA so that employers would be able to give merit-based
compensation increases to individual employees, even if those increases are not part of a
collective bargaining agreement. If enacted, the Rewarding Achievement and
Incentivizing Successful Employees (RAISE) Act would essentially make wages set in
union contracts a minimum floor, while giving employers the flexibility to reward
diligent employees for their hard work, according to the lawmakers.
Under current law, unless otherwise provided in a CBA, the wage specified in a union
contract is both a minimum and a maximum. Rubio and Rokita pointed out that the
proposed change to permit merit-based compensation would apply to 7.6 million
American unionized workers, 2.8 million of whom are women.
“Helping people achieve the American Dream means providing them with the skills and
opportunities that lead to better pay in better jobs,” Rubio said in a statement announcing
the proposal on February 12. “When America’s workers earn a raise because of their hard
work, union bosses should not be able to block it as labor policy currently allows. The
RAISE Act would bring greater fairness and opportunity to the modern workplace by
giving American workers the freedom to earn more money for a job well done.”
19
Senator Lamar Alexander (R-Tenn.), Chair of the Senate Health, Education, Labor and
Pensions (HELP) Committee, also cosponsored the legislation. “This bill will give
employers the freedom to pay their employees more for a job well done, for their
dedication and hard work, rather than for their time spent in a union,” he said in a
statement.
American Council of Employees gets a place at the VW table
By Pamela Wolf, J.D.
On Monday, February 16, Volkswagen Group AG told employees at its Chattanooga
plant that the American Council of Employees (ACE) had met the requirements under the
company’s Community Organization Engagement (COE) policy for “Level 1” support,
meaning that Ace members make up more than 15 percent of those on the current
employee roster. Accordingly, the employee organization has earned the right to express
its voice in the workplace through access to various employer groups. ACE is the
apparent rival of the UAW, which in a high-profile battle a year ago lost its bid to
organize the VW plant by a vote of 712-626. In the wake of the election loss, the UAW
formed Local 42 with the goal of giving employees a voice in the workplace via the
company’s German-style labor model.
VW labor model. The COE policy gives eligible organizations the opportunity to engage
in constructive dialogue with Volkswagen and its employees. To be eligible for such
activity, “an organization must exist for the primary purpose of representing employees
and their interests to employers consistent with the National Labor Relations Act” and
must also agree to comply with the policy. Volkswagen reserves its right under the policy
to define and determine eligibility consistent with the NLRA.
However, as a Volkswagen spokesperson made clear to Employment Law Daily, the fact
that any group has met the threshold requirements for engaging in dialogue with
Volkswagen under the COE policy does not mean it is the exclusive bargaining
representative of any group of employees for collective bargaining purposes.
So, to what opportunities for engagement is ACE now entitled? Consistent with
Volkswagen’s Open Door and Solicitation policies, individual or groups of employees
are already free to discuss and/or promote their interests /group in non-work areas during
non-work time; wear promotional clothing in non-work areas during non-work time;
display/use promotional items that comply with material specifications (i.e., no silicone);
and raise questions, ideas, or concerns directly to Volkswagen management at any time.
Additional opportunities are available for groups that have completed the verification
process and “represent a significant percentage of employees in the relevant employee
group and whose members support the organization’s interaction with Volkswagen
pursuant to this policy.” Ace has been verified for Level 1 support, which permits the
organization in addition to reserve and utilize space in the Conference Center for internal
employee meetings on non-work time once per month and post announcements and
information in company-designated locations. Organization representatives who are VW
20
employees may also meet monthly with company HR to present topics that are of general
interest to their membership.
UAW won Level 3 privileges. In December 2014, UAW Local 42 submitted a sufficient
number of cards that were independently verified to include enough employees to gain
“Level 3” support, which means that more than 45 percent of current employees were
members of the organization. That level of membership entitled Local 42 to:

Reserve and utilize space in the Conference Center for meetings on non-work
time once per week

Invite external representatives of their organization for Conference Center
meetings once per month

Post materials on a dedicated/branded posting board

Meet quarterly with a member of the Volkswagen Chattanooga Executive
Committee (a Level 2 privilege that accelerates to bi-weekly with Level 3
support)

Reserve and utilize on-site locations for meetings on non-work time (with staff
and/or employees) as reasonably needed

Meet bi-weekly with Company HR and monthly with the Volkswagen
Chattanooga Executive Committee
According to some media reports, ACE is allegedly a group that may have been backed
by business and political interests. However, ACE calls itself “an independent employee
council created to ensure that all VW Chattanooga employees have a voice on the
Volkswagen Global Works Council.” The organization also says that it is a local, not
national, group that has no outside influence or political agenda.
West Coast labor battle draws Labor Secretary’s intervention
By Pamela Wolf, J.D.
U.S. Labor Secretary Thomas Perez has been dispatched to the West Coast to help
resolve the nine-month-long contract dispute between the Pacific Maritime Association
(PMA), bargaining for shippers, and the International Longshore and Warehouse Union
(ILWU), representing some 20,000 dock workers, according to media reports. The
dispute heated up and negotiations came to a halt with work slowdowns and weekend
lockouts that have affected 29 ports. On Monday, February 9, the West Coast ports reopened after being closed by employers, the union reported. However, on February 11,
the PMA announced that vessel operations would be suspended the following weekend
and Presidents’ Day holidays, all of which command premium pay.
Contract dispute heats up. The move came on the heels of what the PMA characterized
as the union’s demand for a contract provision that the employer representative said
would essentially permit the union to fire an arbitrator who rules against the union. On
21
February 9, the union’s message to members seemed to indicate that the contract dispute
was close to resolution: “The union remains focused on reaching a settlement as quickly
as possible with employers. Talks to resolve the few remaining issues between the
Longshore Union and Pacific Maritime Association are ongoing.”
But on February 9, PMA issued a statement announcing the suspension of vessel
operations through the following weekend and holidays:
“In light of ongoing and costly ILWU slowdowns, PMA members will temporarily
suspend premium-pay weekend and holiday vessel operations on four upcoming dates,
while yard, gate and rail operations will continue at terminal operators’ discretion. In
Southern California, terminal operators will expand daytime vessel operations on nonholiday weekdays.
“Weekend and holiday pay rates command a premium of at least 50% of the basic
longshore wage rate. As a result, working hours on those days would be paid at between
$54 and $75 per hour for longshore workers and clerks, and between $77 and $92 per
hour for foremen. PMA members have concluded that they will not conduct vessel
operations on those dates, paying full shifts of ILWU workers such high rates for
severely diminished productivity while the backlog of cargo at West Coast ports grows.”
ILWU President Robert McEllrath responded to the development in a video message,
telling members, “You know the truth. We want to go to work and they’re blaming us.”
He said the PMA’s move was aimed to divide dock workers and that union negotiators
had been waiting for five days for the PMA, presumably to return to negotiations, and
they had not yet shown up.
The PMA said that earlier this month, following nine months of contract talks, it
extended this comprehensive offer that would: “raise ILWU wages by 14 percent over
five-years, on top of current average full-time wages of $147,000 per year. It would
maintain fully employer-paid health care, worth $35,000 per year, and increase the ILWU
pension to as much as $88,800 per year. The pay guarantee program would ensure that
longshore workers are paid for 40 hours per week, even if no work is available, and the
ILWU would have jurisdiction over the maintenance and repair of truck chassis.”
Impact on consumers. While much has been made of the negative impact of the labor
disruption on West Coast ports, economist Christopher Thornberg downplayed the
impact on consumers in an interview with PBS:
“You know, I realize that it’s easy to make big news about these ports. You hear all the
rhetoric about these being an important, almost, if you will, an artery of the U.S.
economy, and if it gets cut off, we almost think about the body economy bleeding out, as
the case may be.
“But those kind of views are highly overstated. Go to your local supermarket, go to your
local department store, the shelves are stuffed with products and goods.
22
“Nobody in the United States is being denied any kind of consumption choice as a result
of these disruptions. And, candidly, it would take a very long time for that to happen.
“The ports are a cheap and convenient way of moving product in and out of the United
States, but they are not the only way.”
Meanwhile, the PMA and the ILWU are currently honoring a media blackout suggested
by a federal arbitrator, according news reports.
Texas medical services provider will rescind overbroad social media, other policies
Baylor Health Care System, Scott & White Healthcare has agreed to rescind a series of
overly broad policies, including its social media policies, the NLRB’s Fort Worth
Regional Office announced last Thursday, February 12. The medical services provider
operating throughout Texas will also post and email an NLRB Notice to its 35,000 Texas
employees in response to a complaint filed by the Region 16 Office in Fort Worth.
Three individuals filed unfair labor practice charges with the NLRB, alleging that Baylor
Health Care System, Scott & White Healthcare maintained overly broad policies with
regards to social media, government investigations and inquiries, fair treatment,
addressing compliance concerns, solicitation and distribution, union-free workplace,
personal conduct, and its code of ethical conduct, the NLRB said. Region 16, after
finding merit to the allegations, issued a complaint because the overly broad rules
interfered with employees’ Section 7 rights to engage in concerted activity for mutual aid
and protection.
During the hearing, an administrative law judge approved a settlement agreement
resolving the dispute. The agreement requires that Health Care System, Scott & White
Healthcare notify employees that it will rescind its unlawful policies and post NLRB
notices at all of its locations throughout Texas, as well as notify its employees
electronically that it rescinded these policies and advise them of their Section 7 rights in
the workplace.
Court-approved deal takes Teamsters out from under government microscope
By Pamela Wolf, J.D.
Noting, among other things, that an “agency’s determination that settlement is
appropriate merits ‘significant deference,” a federal judge on February 17 approved a
final agreement and stipulation of dismissal that brings to an end a quarter century of
federal government oversight of the International Brotherhood of Teamsters (IBT). After
thoroughly reviewing the final agreement and proposed order, Southern District of New
York Chief Judge Loretta Preska found “no doubt that it was procedurally proper, its
terms were clear, it reflected resolution of the claims at issue, and it was untainted by
collusion or corruption.” Accordingly the court entered an order approving the final
agreement and dismissing the historic case with prejudice.
Consent decree. The original consent order was entered on March 14, 1989, in an effort
to rid the IBT “of any criminal element or organized crime and corruption and
23
establishing a culture of democracy to maintain the Union for the sole benefit of its
members,” according to the final agreement, which was reached between the parties last
month. The consent decree, which enjoined certain activity and implemented reforms of
the IBT’s disciplinary and electoral processes, included these features, according to a
brief supporting the final agreement:

Permanently enjoined all IBT members, officers, employees, and agents from
committing acts of racketeering activity and knowingly associating with various
organized crime groups or persons otherwise enjoined from participating in union
affairs;

Provided for “one-member, one-vote” direct elections of IBT International
Officers, subject to independent oversight, whereby IBT locals’ rank-and-file
members would elect delegates to a nominating convention, convention delegates
would nominate candidates, and IBT rank-and-file members would then vote in a
general election on all nominees who received 5 percent or more of the delegates’
votes; and

Established the court-appointed, three-member Independent Review Board as a
permanent part of the union’s constitution to investigate and prosecute
wrongdoing and oversee the IBT’s implementation of disciplinary or trusteeship
charges.
The decree was subsequently clarified and modified along the way by agreement of the
parties and by order of the court.
Final agreement. While much progress was made under the decree, the parties
acknowledged in the final agreement, which has been incorporated into the court’s order,
that “the threat posed to the IBT by organized crime and other corrupting influences,
while substantially diminished, persists.” Accordingly, the agreement permanently
enjoins all current and future members, officers, agents, representatives, employees, and
persons holding positions of trust in the IBT and any of its constituent entities from:

Committing any act of racketeering activity, as defined in 18 U.S.C. § 1961;

Knowingly associating with any member or associate of any Organized Crime
Family of La Cosa Nostra or any other criminal group;

Knowingly associating with any person enjoined from participating in union
affairs;

Obstructing, or otherwise interfering, directly or indirectly, with the work of any
person appointed to effectuate the terms of this Final Order; and

Knowingly permitting any member or associate of any criminal group, or any
person otherwise enjoined from participating in union affairs, to exercise any
control or influence, directly or indirectly, in any way or degree, in the affairs of
the IBT or any of its constituent entities.
24
Transition period. The consent decree has been replaced by a final order under which
the government’s continued involvement in the internal affairs of the IBT will be phased
out over a five-year transition period beginning immediately. The final order also
provides for continued direct membership elections of the Teamsters Union’s
International officers and for independent investigation and monitoring of internal
disciplinary matters involving allegations of corruption.
“This is an historic agreement that returns our great union to our 1.4 million Teamster
members,” Teamsters General President James P. Hoffa said in a statement. “Our union
is committed to the democratic process, and we can proudly declare that corrupt elements
have been driven from the Teamsters and that government oversight can come to an end.”
Electronic filing to be available in FLRA ULP proceedings before ALJs
By Pamela Wolf, J.D.
The Federal Labor Relations Authority (FLRA) has issued a final rule to make electronic
filing available for certain documents involved in unfair labor practice (ULP)
proceedings before the FLRA’s Office of Administrative Law Judges. The move comes
in the fourth stage of an initiative to make electronic filing or “eFiling” available to
parties in all cases before the FLRA. The eFiling enhancements are expected to increase
efficiency by reducing procedural filing errors and processing delays, according to
a notice slated for publication in the Federal Register on Friday, February 20.
In the first stage of its eFiling initiative, the FLRA enabled parties to use eFiling to file
requests for Federal Service Impasses Panel assistance in the resolution of negotiation
impasses. In its second stage, the initiative provided parties with an option to use eFiling
to electronically file 11 types of documents in cases filed with the FLRA’s three-member
adjudicatory body, the Authority. The third stage of the initiative gave parties the option
to use eFiling to electronically file certain documents involved in representation and
unfair labor practice proceedings.
In the fourth stage of the initiative—the subject of the final rule—parties will be able to
use the FLRA’s eFiling system to file certain documents involved in unfair labor practice
proceedings before the FLRA’s Office of Administrative Law Judges (OALJ). The final
rule modifies the FLRA’s existing regulations to permit eFiling of those documents. The
FLRA said that as eFiling procedures develop, the revisions set forth in the final rule may
be evaluated and revised further.
Specifically, the final rule amends 5 CFR Part 2429 to add a new Section 2429.24(f)(15)
to permit electronic filing of documents submitted to the OALJ, including answers to
complaints, motions, briefs, pre-hearing disclosures, stipulations, and any other
documents as permitted by the eFiling system for the OALJ.
The final rule is effective 30 days after its publication in the Federal Register.
25
Written comments on the rule may be emailed to engagetheFLRA@flra.gov or sent to the
Case Intake and Publication Office, Federal Labor Relations Authority, 1400 K Street
NW, Washington, DC 20424.
NRF wants President Obama to step into West Coast port dispute
By Pamela Wolf, J.D.
The National Retail Federation (NRF) is calling on President Obama to take the labor
dispute between the International Longshore and Warehouse Union (ILWU) and Pacific
Maritime Association (PMA) into his own hands if a deal isn’t reached today, Friday,
February 20. The contract dispute, which has been ongoing for about nine months,
reached a crescendo when negotiations came to a halt earlier this month, with work
slowdowns and weekend lockouts that have affected 29 West Coast ports.
The White House sent Labor Secretary Thomas Perez to San Francisco nearly a week ago
to try his hand at inspiring a deal between the union and the PMA, which represents the
shippers. But so far, there has been no word on the progress of the negotiations—perhaps
because of a media blackout suggested earlier by a federal arbitrator.
The NRF Vice President for Supply Chain and Customs Policy Jonathan Gold issued
a statement on February 20 noting the absence of a deal, despite the Secretary’s efforts.
He proposed a next step: “We understand the Secretary has given the parties a deadline to
reach an agreement,” Gold said. “If a deal is not reached today, we support the decision
to move the negotiations to Washington and we call upon the president to personally
engage in the discussions until an agreement is reached.”
According to Gold, retailers and supply chain stakeholders “cannot afford another week
of uncertainty at the Pacific ports, where dozens upon dozens of ships and thousands of
containers are held out at sea, and where hundreds of millions of dollars of consumer
goods, inventory and merchandise sit idle.”
The NRF VP called it “inconceivable that the parties are knowingly and willfully
allowing the economy to be held hostage over a particular grievance, individual or issue.”
He said that millions of American businesses and their employees have been put at risk
due to the impasse and called for a final resolution today.
The question of the impact of the dispute is debatable. Economist Christopher Thornberg
downplayed the impact on consumers in an interview with PBS, saying, “Nobody in the
United States is being denied any kind of consumption choice as a result of these
disruptions. And, candidly, it would take a very long time for that to happen.”
West Coast ports dispute ends with tentative contract
The International Longshore and Warehouse Union (ILWU) and Pacific Maritime
Association (PMA) reached a tentative agreement on a new, five-year labor contract
covering operations at 29 ports on the Pacific coast—and ending a potentially crippling
work stoppage—with the aid of the Federal Mediation and Conciliation Service and the
26
involvement of DOL Secretary Thomas Perez, who had been dispatched by President
Obama.
“I am extremely pleased to announce today that after extensive negotiations and
mediation provided by the FMCS and with the support and assistance of Secretary of
Labor Tom Perez, Secretary of Commerce Penny Pritzker, and Los Angeles Mayor Eric
Garcetti, representatives of the ILWU and PMA have tentatively agreed to a new
contract, resolving all outstanding issues that divided them and that have affected
operations at U.S. west coast ports,” said Allison Beck, FMCS acting director on
February 20.
Arduous negotiations. FMCS deputy director Scot Beckenbaugh led the agency’s efforts
in assisting the negotiations, which had been ongoing for more than nine months. “Due to
the complexity of the issues the parties had to address, these have been lengthy and at
times difficult negotiations. The parties persevered over a long and challenging process
and were ultimately successful in averting any further situations that could have been
disruptive to shipping operations and to the nation’s economy,” Beck added.
“After more than nine months of negotiations, we are pleased to have reached an
agreement that is good for workers and for the industry,” said PMA president James
McKenna and ILWU president Bob McEllrath in a joint statement. “We are also pleased
that our ports can now resume full operations.” The parties did not release details of the
agreement, which is subject to ratification by both parties.
White House relieved. “This is great news for the parties involved in the negotiation and
a huge relief for our economy—particularly the countless American workers, farmers,
and businesses that have been affected by the dispute and those facing even greater
disruption and costs with further delays,” according to a White House press statement
issued on February 20. President Obama issued a note of gratitude to Secretary Perez for
his role in resolving the labor dispute, along with the FMCS, and called on the parties “to
work together to clear out the backlogs and congestion in the West Coast Ports as they
finalize their agreement.”
Bump in road. On Sunday, February 22, however, the PMA announced that an arbitrator
ruled that longshoremen affiliated with ILWU Local 10 had conducted illegal work
stoppages at the Port of Oakland, resulting in port operations being shut down during the
day shift. “The Pacific Maritime Association will continue to address any future work
stoppages by Local 10 through the grievance and arbitration process, and, if necessary, in
court,” the association said.
Never again. The National Retail Federation, which had urged the President to step in to
help put an end to the dispute, welcomed the news that a contract had been reached. “The
congestion, slowdowns and suspensions over the last few months have had a significant
economic impact on the entire supply chain and those who rely on the West Coast ports
to move their goods and products around the world and throughout the country. The
agricultural, manufacturing, retailing and transportation industries have all suffered due
27
to the nine-month long contract negotiations,” said NRF president and CEO Matthew
Shay.
“As we welcome [the] news, we must dedicate ourselves to finding a new way to ensure
that this nightmare scenario is not repeated again. If we are to truly have modern
international trade, supply chain and transportation systems, we must develop a better
process for contract negotiations moving forward. We must commit whatever resources
necessary to ensure that this will not happen again.”
USW expands oil refinery strike
The USW is expanding its unfair labor practice strike (ULP) with the addition of a work
stoppage at the Motiva Enterprises refinery in Port Arthur, Texas. The refinery, a 50-50
joint venture between Shell Oil Company (the American subsidiary of Royal Dutch
Shell) and Saudi Refining, Inc., produces in excess of 600,000 barrels per day. Strike
notices were also delivered at Motiva’s two Louisiana refineries in Convent and Norco as
well as the Shell Chemical plant in Norco, the USW said in a February 21 statement.
These facilities, also jointly operated by Royal Dutch Shell and Saudi Refining, Inc., of
Saudi Arabia, produce 235,000 and 238,000 barrels per day, respectively.
About 1,350 USW members work at the three refineries and the chemical plant that
together have a daily capacity of 1,073,260 barrels per day, according to the union. This
latest move adds muscle to a strike that began on February 1 at nine of the nation’s oil
refineries, ostensibly over a breakdown in negotiations with Shell Oil Co., the lead
company for national oil bargaining talks. Previously, 11 facilities and 5,200 workers
went out on the ULP strike.
According to Gary Beevers, the union’s international vice president and chair of its
National Oil Bargaining Program, the work stoppage was called due to workers’ concerns
about “onerous” overtime, unsafe staffing levels and dangerous work conditions, the
subcontracting of work, “the industry’s refusal to make opportunities for workers in the
trade crafts,” and the replacement of union jobs with contractors when union workers
leave or retire.
The expansion of the strike came in the face of the “industry’s refusal to meaningfully
address safety issues through good faith bargaining,” according to USW International
President Leo W. Gerard, who said the union had no other option but to expand the work
stoppage.
“We’re committed to reaching a settlement that works for both parties” said USW Vice
President Tom Conway, “but adequate staffing levels, worker fatigue and other important
safety issues must be addressed.”
Vehicle search not an ‘investigatory interview’ for Weingarten purposes
By Lisa Milam-Perez, J.D.
An employer did not violate an employee’s Weingarten rights when, without the
employee or her union rep present, it searched her company vehicle pursuant to an
28
investigation into suspicions of drug use, according to the NLRB’s Division of Advice, in
a February 6th Advice Memorandum released on February 20. Concluding that the
vehicle search did not qualify as an investigatory interview such that the employee’s
Weingarten rights would be implicated, the Division of Advice directed the Region to
dismiss an unfair labor practice complaint, absent withdrawal.
Suspicion of drug use. A Southwestern Bell technician represented by the
Communications Workers union fell under suspicion of drug use after a small bag of
marijuana was found under a chair where she and a coworker had been sitting. The
employer investigated the matter that same day, interviewing both the employee and her
coworker. The employee had requested the presence of a union rep at the interview,
which was granted. After the interview, the employee left for lunch with her union reps.
While she was gone, the employer searched her company vehicle, without notifying
either the employee or her union reps, and without their presence. It found a CD case
containing music CDs, as well as pornographic DVDs. It found nothing marijuanarelated, however.
Thereafter, the employer called the employee in for a second interview—again with her
union reps present, during which she admitted that the CD case belonged to her but
denied any knowledge of the pornographic DVDs. She was suspended on suspicion of
possession of illegal drugs on company property. The employer later concluded that it
lacked sufficient evidence to discipline the employee on this basis, though, and she was
returned to work with backpay. However, upon her return, she was issued a written
warning (the first step in the company’s progressive discipline procedure) for possession
of pornography. The union grieved the employee discipline, but it did not grieve the
absence of a union rep during the vehicle search.
Not an investigatory interview. The Weingarten right applies only to fact-finding
interviews, noted Barry J. Kearney, Associate General Counsel in the Division of Advice.
And an employer is engaged in an investigatory interview for Weingarten purposes
“when the employer confronts an employee and asks her to answer questions related to a
disciplinary investigation.” The rationale is that, in such instances, an employee may be
too afraid or tongue-tied to accurately discuss the incident under investigation, or “too
ignorant to raise extenuating factors”—and that “a knowledgeable union representative”
can offer important assistance.
Here, though, the employer wasn’t confronting the employee as it searched the company
vehicle, and was asking her no questions, so this rationale did not apply. “[T] Employee
was not present for the search, was not asked to aid the search, and was not even aware
the search was taking place. Because the Employer asked nothing of the Employee, the
Employee had no need for a Union representative’s assistance.”
Right otherwise honored. The vehicle search was not itself an investigatory interview
within the meaning of Weingarten; however, there was no question that the interactions
with the employee before and after the vehicle inspection were investigatory interviews.
Under these circumstances, did the vehicle search amount to a continuation of the prior
investigatory interview? And if so, did the employee’s prior request for union
29
representation mean the company should have granted her Weingarten rights during the
course of the search?
The Division of Advice concluded that the search was not a continuation of the prior
interview. Moreover, when the employer followed up with a subsequent interview
regarding the results of its search, it honored the employee’s request for a union
representative at that point. Therefore, the Division concluded that the employer did not
violate NLRA, Section 8(a)(1).
Lawmakers question tax carve-outs for organized labor’s ‘Cadillac Plans’
By Jeff Carlson, Wolters Kluwer News Staff
Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) and Senate Judiciary
Chairman Charles E. Grassley (R-Iowa) on February 25 questioned the Obama
Administration’s recent guidance, Notice 2015-16, on the Patient Protection and
Affordable Care Act’s (ACA) ‘’Cadillac plan tax.” The tax is a 40-percent nondeductible
excise tax placed on certain health care plans under the ACA.
The threshold for the tax operates in much the same way as the Alternative Minimum
Tax and, over time, will affect more and more middle-class workers. Notice 2015-16
seeks comments regarding a special allowance for a number of occupation categories,
many of which are affiliated with organized labor. In a letter to Treasury Secretary Jack
Lew, the lawmakers urged the administration to work with Congress to repeal the tax for
all affected and not just what they termed “favored constituencies.”
“The cure for this mistake is not a carve out for the president’s political supporters but a
repeal that benefits all Americans, including the countless teachers, nurses and other
professionals that (sic) will be subject to this tax over time,” Hatch and Grassley wrote.
“The structure of this tax creates a draconian policy that will penalize countless
Americans with a 40-percent excise tax, whether they are a shop foreman, a factory
manager or an office secretary.”
Fair Pay and Safe Workplaces EO: Necessary and workable?
By Pamela Wolf, J.D.
On Thursday, February 26, the House Subcommittee on Workforce Protections and the
Subcommittee on Health, Employment, Labor, and Pensions jointly held a hearing to
examine the effects of President Obama’s “Fair Pay and Safe Workplaces” executive
order, signed on July 31, 2014, the day after House Republicans voted to sue him for
such actions. Opposing testimony was offered as to whether the executive action was
necessary or is workable.
Action under examination. Executive Order 13673, according to the White House, is
aimed at protecting both workers and taxpayers alike by ensuring government contracts
are not going to companies that violate federal labor laws. The executive directive is
designed to:
30

Hold corporations accountable by requiring potential contractors to disclose labor
law violations from the past three years before they can receive a contract.

Give workers better and clearer information on their paychecks, so they can be
sure they’re getting paid what they’re owed.

Give more workers who may have been sexually assaulted or had their civil rights
violated their day in court.

Ease compliance burdens for business owners around the country by streamlining
all types of reporting requirements across the federal government, the first step in
a series of actions to make it easier for companies, including small businesses, to
do business with the government.

For companies that have violations, rather than emphasizing punishment, give
them a chance to follow good workplace practices and come into compliance with
the law.
The administration said that it would spend time talking to and listening to businesses
owners so that the EO can be implemented thoughtfully and in a manner that is
manageable. The president said that the goal “is to make sure that the EO raises standards
across the economy; encourages contractors to adopt better practices for all their
employees, not just those working on federal contracts; give responsible businesses that
play by the rules a fairer shot to compete for business; streamline the process; and
improve wages and working conditions for folks who work hard every single day to
provide for their families and contribute to our country.”
Committee opposition. The joint subcommittee majorities’ opposition to the president’s
action was apparent in the hearing’s title: The Blacklisting Executive Order: Rewriting
Federal Labor Policies Through Executive Fiat. After the hearing, the two committees
issued a release underscoring what they saw as the downside of the EO, pointing to
witness and member discussions that centered on “how the administration’s executive
overreach is not only redundant, but how it will create a bureaucratic nightmare that
impedes the operation of the federal government and results in less efficient services for
taxpayers.”
“We can all agree bad actors who deny workers basic protections, including wage and
overtime protections, should not be awarded federal contracts funded with taxpayer
dollars,” said Subcommittee on Workforce Protections Chair Tim Walberg (R-Mich.).
“The federal government has had a system in place for decades which, if used effectively,
would deny federal contracts to bad actors. Rather than dealing with these contractors
directly under the existing system, on July 31, 2014, President Obama signed an
executive order adding a burdensome, redundant, and unnecessarily punitive layer onto
the federal procurement system.”
Addressing the “administrative nightmare unleashed by the order,” Rep. Bradley
Byrne (R-Ala.) argued that “the result of this new process will be a significantly delayed
contracting process that limits both healthy competition and the efficient delivery of
31
goods to the U.S. government at a reasonable price to taxpayers … Rather than impose
additional layers of bureaucracy the administration would be better served working with
Congress and stakeholders to ensure the rules and regulations implementing our laws are
modernized and streamlined.”
Unnecessary and unworkable. Much of the opposition to the EO centered on the
question of whether it was necessary and the extent to which it is workable. Jones Day
attorney Willis J. Goldsmith, testifying on behalf of the U.S. Chamber of Commerce,
offered seven points that summarized the Chamber’s objection to EO 13673:
1. Its “Alice in Wonderland-like structure … makes it completely unworkable in the
real world, and no amount of ‘clarification’ through rulemaking or guidance will
cure this underlying problem.”
2. It’s unnecessary because the laws identified in the order “already contain strong
enforcement mechanisms to punish those who would violate those laws and only
Congress can address any identified gaps in those enforcement mechanisms.”
3. It “imposes extremely onerous and expensive compliance obligations on regulated
contractors and subcontractors and, as a result, will drive many employers from the
contracting world to the detriment of both the taxpayers who benefit from increased
competition and the employees who work for those companies.”
4. It is “simply, and fundamentally, unfair in that it may punish contractors and
subcontractors for violations that have not yet been proven or finally adjudicated,
thereby shortchanging companies’ rights to due process and creating the potential
that competitors and union corporate campaigns will misuse the data provided.”
5. It’s “so Byzantine and riddled with uncertainties that it will be impossible to predict
how it will be applied in the contracting universe, leading to gross uncertainties
among the regulated community as to who will qualify for a contract or not.”
6. It “imposes impossible burdens on those who will be charged within the agencies to
implement it, in part driven by the enormous paperwork and in part driven by the
impossibility of trying to untangle the enormous complexities of the laws
involved.”
7. It “clearly exceeds the President’s executive authority and is unconstitutional.”
“Perhaps all of these logistical burdens would make sense to some degree if the
Executive Order could accomplish an otherwise unattainable result,” Goldsmith said.
“But there is little evidence to demonstrate that existing authorities are not, or could not
be, effective to ensure that federal contractors comply with relevant labor laws.”
Better protections needed. The only invited panelist who offered an opposing point of
view, Karla Walter, Associate Director of the American Worker Project at the Center for
American Progress Action Fund, painted a different picture—underscoring the need for
32
action to protect both the workers and businesses that play by the rules. She emphasized
three main points for the committee members’ consideration:

“First, far too often companies with long and egregious records of violating
workplace laws continue to receive federal contracts. This not only harms
workers, but also taxpayers, and law-abiding businesses.

“Second, the contractor review process is supposed to prevent this from
happening by ensuring that only responsible companies receive federal contracts,
but the current system is broken.

“Third, President Obama’s Fair Pay and Safe Workplaces Executive Order—
informed by proven methods adopted by state governments, the private sector,
and even federal government agencies in limited instances—strives to help fix the
broken system and ensure that law-breaking contractors come into compliance
before they are able to receive new contracts.”
Walter pointed to a 2013 report by the Majority Committee Staff of the Senate Health,
Education, Labor and Pensions Committee, which found that government contractors are
often among the worst violators of workplace laws: “The report reviewed the 100 largest
penalties and assessments for violations of both workplace wage and health and safety
laws between fiscal years 2007 and 2012, finding that nearly 30 percent of the top
violators were federal contractors that were still receiving contracts after having
committed these violations,” she noted. Those companies were cited for 1,776 separate
violations and paid $196 million in penalties and assessments.
“Workers at these companies were short-changed by $82 million, with violations that
included not paying workers at a chemical weapons storage facility for time spent
donning safety gear; failing to pay more than 25,000 call center workers for overtime;
and misclassifying workers responsible for helping recently released prisoners re-enter
society and find work,” Walter noted.
“And at least 42 people have died from workplace accidents and injuries at these
companies,” she continued. “The victims range from a 46-year-old father of four killed
while trying to clear a clothes jam in an industrial dryer, to 13 workers killed in a sugar
refinery explosion sparked by combustible dust, to workers at two separate companies
killed in oil refinery explosions.”
Career employee named Regional Director in Pittsburgh
Career employee Nancy Wilson has been named Regional Director of the NLRB’s Office
in Pittsburgh, Pennsylvania (Region 6). Chairman Mark Gaston Pearce and General
Counsel Richard F. Griffin, Jr., made the announcement of Friday, February 27. In her
new job, Wilson will be responsible for enforcing the National Labor Relations Act to
protect private-sector employees in western Pennsylvania, counties in northern West
Virginia, Garrett and Allegany Counties in Maryland, and Highland County in Virginia.
33
Wilson began her 27-year career as a Field Examiner in the Board’s Newark, New Jersey
office, according to a February 27 agency release. After 17 years there she transferred to
what was then Region 11 (Winston-Salem) and continued working as a senior Field
Examiner. In 2006, Wilson was promoted to the Supervisory Field Examiner position. In
2013 she became Assistant to the Regional Director in Region 10 (Atlanta), which, in
addition to the Regional Office in Atlanta, also includes a Sub-regional Office in
Winston-Salem and two Resident Offices in Birmingham, Alabama, and Nashville,
Tennessee.
The new Regional Director received her Bachelor of Arts degree from William Patterson
College and her Master’s degree from Rutgers University, Graduate School of Industrial
Relations.
LEADING CASE NEWS:
D.C. Cir.: Hearing officer wrongly revoked employer subpoenas into overzealous
electioneers’ union ties
By Lisa Milam-Perez, J.D.
An NLRB hearing officer erred in revoking an employer’s subpoenas seeking documents
that might have proven relevant to determining whether employees were acting as agents
of the Teamsters union when they allegedly engaged in pre-election misconduct, the D.C.
Circuit found. In upholding the hearing officer’s determination, the Board used the
flawed reasoning that in revoking the subpoenas, she had balanced the employees’
confidentiality interests against the employer’s need for the documents requested. In fact,
though, the hearing officer never undertook such a balancing test—and the Board
apparently didn’t either, the appeals court noted. Thus, it granted the employer’s petition
for review and denied the Board’s petition for enforcement of its order finding the
employer had unlawfully refused to bargain after calling into question the union’s
certification as bargaining representative (Ozark Automotive Distributors, Inc. dba
O'Reilly Auto Parks v. NLRB, February 10, 2015, Randolph, A.).
Pre-election shenanigans. In a 2010 representation election, 17 of 32 employees of an
automotive parts distributor voted in favor of the Teamsters; 14 voters rejected the union,
and one ballot was deemed void. The employer filed election objections, contending that
in the days leading up to the election, union supporters—including four employees who
the employer insisted were acting as agents of the union—engaged in threats, coercion,
appeals to racial prejudice, and other improper tactics that served to interfere with
employees’ free choice. The regional director ordered an evidentiary hearing on the
charges.
Employer’s subpoenas. Prior to the hearing, the employer served subpoenas duces
tecum on the union and on one employee who it presumed to be acting as a union agent.
The subpoena to the union sought documents regarding the employer and eligible voters,
and also documents related to the specific named employees who were believed to be
acting at the union’s behest. It sought information about communications between the
union (and one union rep in particular) and company employees, and also between those
34
employees presumed to be union agents and the company’s other employees. The
subpoena to the suspected union agent requested his telephone records, along with other
documents related to calls between him and the union, and between him and other
eligible voters.
The union filed an objection to a portion of both subpoenas, arguing that the requests
were vague and overbroad, implicated attorney-client and work-product privileges, did
not describe with particularity the evidence sought, and requested documents that
“clearly do not relate to the discrete issues framed” in the case.
Subpoenas revoked. The hearing officer declined to rule on the issue, despite the
employer’s pleas of prejudice, saying she wanted to hear more evidence and reasoning
that the employer might end up getting the information requested through testimony
anyhow. If not, she said, she would revisit the subpoena request. However, at the close of
testimony, she granted the union’s motions to revoke the subpoenas, citing concerns
about employee confidentiality as well as the need to protect their Section 7 rights. Also,
even without having examined the documents sought by the employer, she doubted the
relevance of some of the subpoena requests. Yet she declined to narrow the scope of the
subpoenas, stating she wouldn’t require the union (or the individual employee) to
produce any documents in light of her concerns about employees’ Section 7 activity.
On the merits, the hearing officer recommended that the Board overrule the employer’s
election objections and certify the union. She determined that while the individuals at the
heart of the subpoena request “were the group of employees whose purpose was to
organize employees in support” of the union, they weren’t acting as the union’s agents;
thus, any allegedly coercive activity on their part didn’t undermine the fairness of the
election. On appeal, a divided NLRB (Member Hayes dissented) adopted the hearing
officer’s findings and recommendations and certified the union as bargaining rep. The
Board later found the employer’s subsequent refusal to bargain violated Sec. 8(a)(3) of
the Act.
Apparent authority? In attempting to set aside a union election based on employee
election misconduct, an employer has a far more arduous task before it if that misconduct
is not attributable to the union. Thus, an employer will endeavor to “lay employee
misconduct at the union’s feet.” To do so, it need not prove that the union expressly
authorized the employee conduct; it’s enough that the employees had the union’s
“apparent authority” to act for the union, the D.C. Circuit explained. Here, the subpoenas
sought information bearing on just that question: whether the named employees had
actual or apparent authority to act on the union’s behalf. But the Board concluded that the
employer had not made a showing that its need for the requested information “was
paramount to the employees’ confidentiality interests protected by [Section] 7 of the
Act.”
What confidentiality interests? However, “at least some of the document requests” did
not implicate employee confidentiality interests at all, the D.C. Circuit observed, vacating
the Board’s order. The subpoena to the individual employee, for example, requested
records of his telephone calls with the union, and his calls with other eligible voters. But
35
the employer had sought only the date and time of each call, not the content of the call,
leaving the appeals court to wonder how the subpoenas could so impinge on employee
privacy that it outweighed the employer’s need for the information.
While the Board typically protects the identify of employees who attend union meetings,
lest disclosure have a chilling effect on union activity, in this case the subpoenaed
employee had testified as a witness for the union at the hearing, and he was asked by the
employer’s attorney—without objection—“whether he had spoken with anyone at the
union, or made or received any calls to or from the union, during the critical period
before the election.” And he was represented during the proceeding by the union’s
lawyer. If he had no objections at that point, then “surely he could not have had any
legitimate objections to producing records of calls between him and the union,” the
appeals court reasoned.
As for the request for information regarding calls between the employee and his
coworkers, some of them had testified that the subpoenaed employee threatened them.
Presumably, those employees would not object to their employer getting access to
records showing that the employee had in fact called them. And as for the request for
“any and all” documents related to his calls with other employees, to the extent that the
request implicated “protected” information, the hearing officer should at least have
balanced the confidentiality interests with the employer’s need for the documents. Yet
there was nothing in the record suggesting she did so. She didn’t require production for in
camera review; she did not know what the documents would have shown, the appeals
court observed.
An easy fix. Even if the hearing officer had reason to find that employees’ confidentiality
interests outweighed the company’s need for some of the documents, she could have
narrowed the scope of the subpoenas rather than revoke them outright. In fact, the
NLRB’s guide for hearing officers states that “when confidentiality or other objections
are raised to oppose a subpoena duces tecum, the hearing officer should consider
receiving the material in camera and reviewing the documents to determine whether
redacting certain information or narrowing the scope of the subpoena might cure the
objection.” But the hearing officer didn’t go by the book.
Prejudice. As the employer’s attorney told the hearing officer to no avail, establishing
that the employees in question were acting as union agents was “critical” to the
company’s case. As such, the appeals court rejected the Board’s plea that it enforce the
bargaining order even if the hearing officer quashed the subpoenas in error. Contrary to
the Board’s contention, the employer was able to show that it suffered prejudice by the
hearing officer’s action.
As the appeals court saw it, there was at least some indication that the union and the
subpoenaed employee were in possession of relevant documents sought in the subpoenas:
Namely, while the union attorney asserted that some of the documents requested simply
did not exist, counsel made no such claim as to certain other requested documents. The
natural inference, then, was that the union did possess records of conversations between
the union and the employees alleged to be union agents, and that the subpoenaed
36
employee had records of phone calls between him and the union, and between him and
company employees.
The Board might well have entertained the same inference: It concluded that complying
with the subpoenas would infringe on employees’ interest in maintaining privacy as to
their communications with the union. But that assumed the union and the subpoenaed
employee had responsive documents, the appeals court noted. “If they had no documents,
we cannot see how requiring compliance with the subpoenas could possibly have affected
anyone’s privacy interests.” (And if they did have documents, then the prejudice to the
employer here was clear.)
Moreover, the hearing officer’s refusal to rule on the subpoenas until the close of the
evidence exacerbated the prejudice to the employer. Had she at least issued the ruling
prior to the hearing, she would have alerted the employer to the fact that it would need to
alter its approach—perhaps call additional witnesses, seek other documents from
elsewhere, or reformulate questions for cross-examination.
Relevance. Invoking the Federal Rules of Evidence, the appeals court noted that
“relevant” evidence is that “having any tendency to make the existence of any fact that is
of consequence to the determination of the action more probable or less probable than it
would be without the evidence.” In this case, the “fact of consequence” was the status of
the employees as union agents, and the documents sought (records of telephone calls
among these employees and the union) bore on that subject. The “amount of association
between” the union and these employees was an important factor in determining whether
their conduct during the election campaign should be attributed to the union.
So too notes the Board’s guide for hearing officers (which, as had already been
established, the hearing officer here failed to heed): “Subpoenaed information should be
produced if it relates to any matter in question or if it can provide background
information or lead to other evidence potentially relevant to the inquiry.” The documents
sought by the employer prior to the hearing qualified on both counts; not only did they
relate to the question whether the employees were agents of the union, but the documents
could have led to other relevant evidence too.
Impeachment value. The hearing officer had found that the subpoenaed employee, who
described himself as a “front runner” for the union, did not testify credibly at the hearing.
He denied talking to anyone from the union or having had any conversations with
coworkers about the union. Although she discredited this testimony, she didn’t take “the
next logical step” of finding that the documents sought in the subpoenas were relevant to
that subject and finding further that the employee’s lack of candor “lent support to the
plausibility of the company’s version of events.”
Further, “[a]s experienced trial attorneys know, when a hostile witness realizes that
examining counsel has information bearing on the answers to counsel’s questions, the
witness tends to be more candid,” the appeals court added. “Here, the company was
deprived of this incentive for truthful and complete testimony.” Thus, the Board’s order
was vacated, and the case was remanded to the Board.
37
The case numbers are 11-1320 and 11-1352.
Attorneys: Jonathan A. Siegel (Jackson Lewis) for Ozark Automotive Distributors, Inc.
Milakshmi V. Rajapakse for NLRB.
3rd Cir.: Award of attorney fees upheld for union member who challenged union’s
constitution and procedures
By Ronald Miller, J.D.
On a third appeal, The Third Circuit upheld a district court’s order denying the
Longshoremen’s motion for relief from judgment under FRCP 60(b)(5) after affirming
the lower court’s holding that a union member was a prevailing party in a suit over union
procedures and awarding him attorney’s fees in the amount of $243,758. The district
court did not err by considering the impact of the member’s due process and free speech
successes from a first disciplinary hearing conducted by the union, after adjusting the fees
downward for claims associated with a second disciplinary hearing (McBride v.
International Longshoremen’s Association, February 19, 2015, Nygaard, R.).
Eddie Knight, the plaintiff at issue in this appeal, was a member of the Longshoremen’s
union and was financial secretary for Local 694. In 2000, he distributed a flier that stated
the local was hosting a group known as the Workers’ Coalition. Adam McBride was
executive director of a port corporation operated by the Port of Wilmington, Delaware,
where union members worked. He saw one of the fliers and offered to speak at the
conference. He also contributed $500, paying it directly to the hotel were the meeting was
happening. When James Paylor, a union national vice president, told McBride that the
union was not affiliated with the Worker’s Coalition, McBride withdrew his offer to
speak, but did not ask that the $500 be returned.
Union charges. Knight filed charges against Paylor for interfering with the local. Paylor
counter-charged Knight, accusing him of making frivolous claims that were detrimental
to the union. He also asserted that Knight used the union name without permission,
violating the union’s constitution. Subsequently, a union board cleared Paylor, but
decided Knight committed three violations: (1) misled McBride; (2A) violated Sec. 302
of the LMRDA by accepting a gift from an employer; and (3) used the union name
without permission to solicit funds from an employer. He was suspended and ordered to
personally repay the port corporation.
Knight filed suit alleging the union constitutional provision prohibiting the use of its
name violated his free speech rights; that the union refused to permit him to record the
disciplinary hearing; selected a biased union member to serve on the board; and failed to
give union members proper notice about the LMRDA. The district court abstained on the
free speech issue and ruled against Knight on the due process claims. In a 2006 order, the
Third Circuit ruled that the lower court should not have abstained on the free speech
issue. The ruling on the due process claims was also reversed.
Following remand, the district court ordered the union to revise the constitutional
provision and create a new policy for distributing copies of summaries of the LMRDA. It
38
also ordered the union to give Knight a new hearing with an impartial tribunal and to
permit him to record the hearing. While the union complied with the due process issues,
it did not immediately fulfill the requirements of the order to change its constitution.
Instead, it asked for a ruling from an ethics officer that Knight be disciplined under the
constitutional provision for conduct detrimental to the welfare of the union by violating
Sec. 302(a). The officer concluded that Knight did not violate that provision.
Prevailing party. Knight and the union filed summary judgment motions, which the
district court mostly denied. It did order a hearing on Knight’s assertion that the union
never charged him with violating the spirit of Sec. 302(a), and instructed the parties to
present evidence regarding Knight’s request for compensatory and punitive damages.
Ultimately, the district court ruled that Knight was entitled to be reimbursed the $500
union fine, with post-judgment interest. It concluded that Knight did not present enough
evidence, though, to justify either compensatory damages for lost income or punitive
damages. However, following post-judgment motions, the district court awarded Knight
$295, 972 in fees and costs, concluding that he was a prevailing party who conferred a
common benefit to all union members because of his successful free speech and due
process challenges.
In a 2013 decision, the Third Circuit agreed with the union that Knight’s due process
rights under LMRDA 101(a)(5) were not violated in the second hearing, and disagreed
that damages should be awarded. Before the appeals court issued its mandate, the
employee filed a motion with the district court to require the surety to pay attorney’s fees
or order the union to continue the bond it posted. For its part, the union filed a motion for
relief from the judgment under Rule 60(b)(5), arguing that Knight no longer was a
prevailing party and could not claim attorney’s fees. The district court denied the union’s
motion for relief and ultimately awarded Knight attorney’s fees, costs, and post-judgment
interest. The union appealed.
District court jurisdiction. The union asserted that the Third Circuit’s 2013 order
remanded the case to the district court to do one thing: vacate the award of damages.
Thus, it argued that the district court did not have authority to do anything else. However,
the appeals court disagreed. While the district court was required to follow the appeals
court’s mandate, there was no basis for the union to say that the district court acted
improperly. “On remand, a trial court is free ‘to make any order or direction in further
progress of the case, not inconsistent with the decision of the appellate court, as to any
question not settled by the decision.’”
Knight’s appeal focused on the district court’s damages ruling. The union’s cross-appeal
challenged the district court’s ruling that the second disciplinary hearing violated due
process under the LMRDA. These were the issues decided by the appeals court. The
Third Circuit did not rule on the district court’s award of attorney’s fees. Therefore, the
appeals court’s mandate did not prevent the district court from deciding Knight’s postappeal motions on the bond and attorney’s fees, and the union’s motion for relief.
Relief from judgment. The union’s second claim was that the district court wrongly
denied its Rule 60(b)(5) motion for relief from judgment. The union had the burden of
39
convincing the appeals court that the district court misinterpreted the legal definition of
prevailing party here and that, because of this misunderstanding, it relied on the wrong
facts to decide its motion. Essentially, the argument was that the district court should
have focused on the relief that the appeals court gave the union in 2013 and should have
minimized or ignored the judgment in Knight’s favor in 2006.
According to the union, without a final judgment in his favor, Knight was no longer a
prevailing party. Focusing on Knight’s underlying motive for the lawsuit (reversing the
union’s discipline against him) as the centerpiece of any determination on his success, the
union argued that Knight lost the battle, since his suspension was not revoked and his fine
was not reduced. While there was truth in the union’s position, the appeals court
disagreed that the district court went astray by relying on the appeals court’s 2006 order
granting Knight relief on his due process and free speech claims, rather than focusing
exclusively on the final judgment in the union’s favor.
The appeals court acknowledged that Knight launched this lawsuit because he wanted to
reverse the union’s decision to fine and suspend him and that, ultimately, this did not
happen. But his complaint pointed to problems that could not be fixed with monetary
damages. It was important to the appeals court that the focus of Knight’s lawsuit was on
challenging the validity of the process used to discipline him. By claiming that the
union’s constitution infringed his free speech rights, and that basic elements of the
union’s disciplinary process violated his due process rights, he raised larger issues about
structural elements of his disciplinary process. All of this gave the district court good
reason to look beyond the absence of monetary damages in the final judgment to figure
out if Knight’s lawsuit was successful.
Effect of prior ruling. Next, the appeals court rejected the union’s contention that the
district court mistakenly relied on its 2006 opinion and ignored or contradicted the final
judgment in this case. The union was correct that the 2006 order contained a remand that
precluded its finality; however, the district court ordered attorney’s fees after a final
judgment had been rendered. Although the district court relied on unchallenged rulings
from a non-final order, it did so only after all issues in the case had been resolved. The
union was also right to say that a party’s victory on an interim order is often not enough
to claim entitlement to attorney’s fees; however, it went too far to say that an interim
order can never ground attorney’s fees. Therefore, even if the appeals court were to say
that the attorney’s fees in this case were awarded on an interim order, that alone would
not be enough to reverse the district court’s decision here.
With respect to the substance of the 2006 order, the union again spoke truthfully in
saying that a remand for a new trial is not a victory that counts as having “prevailed.” But
none of that really mattered here, because the Third Circuit’s 2006 order did not remand
for a new trial. Rather, the 2006 order gave Knight a final decision in his favor on every
claim he raised in his complaint. The issue before the appeals court in 2006 was whether
the union respected Knight’s rights and complied with the LMRDA when it disciplined
him, not whether the union’s decision to discipline him was right or wrong. Thus, the
2006 order did not return Knight to “square one.”
40
Finally, the union argued that the Third Circuit’s 2013 order reversed any possible basis
for Knight to claim that he was a prevailing party. However, the appeals court pointed out
that the 2013 order merely rejected Knight’s new challenges to the fairness of the second
hearing, and did nothing to affect the appeals court’s holding about the problems arising
from the first hearing. Thus, the Third Circuit concluded that the district court did not err
in its understanding and application of the legal concept of “prevailing party” under the
common benefit doctrine.
The case number is 13-4260.
Attorneys: Stephen B. Potter (Potter, Carmine & Associates) and John P. Sheridan
(Marrinan & Marzzola Mardon) for International Longshoremen’s Association. Michael
J. Goldberg (Law Office of Michael J. Goldberg) and Perry F. Goldlust (Law Office of
Perry F. Goldlust) for Eddie McBride.
6th Cir.: Pursuit of CBA remedies did not bar FRSA whistleblower claim
By Lisa Milam-Perez, J.D.
A railway employee was not precluded from bringing a whistleblower retaliation claim
under the Federal Railroad Safety Act while simultaneously pursuing mandatory
arbitration under a bargaining agreement, the Sixth Circuit held, denying a railroad’s
petition for review of a DOL Administrative Review Board order finding a violation of
the Act (Norfolk Southern Railway Co. v. Perez, February 18, 2015, Griffin, R.).
The FRSA prohibits a railroad carrier from retaliating against employees who report
work-related injuries and potential safety violations. The statute expressly provides that
an employee “may not seek protection under both this section and another provision of
law for the same allegedly unlawful act of the railroad carrier.” At issue here is whether
that provision of the statute, Sec. 20109(f), precludes an employee from bringing an
FRSA claim if he already asserted a claim that the challenged adverse employment action
violated the terms of a bargaining agreement, and then arbitrated that dispute pursuant to
the Railway Labor Act. The Sixth Circuit concluded it does not. “Both the Fifth and
Seventh Circuits have construed § 20109(f) in largely the same way,” the appeals court
observed, “and we see no need to vary significantly from their approach.”
Procedural history. A Norfolk Southern train conductor was injured on the job, reported
his injury, and took several months of leave. Shortly after he returned to work, he was
suspended without pay for 30 days for exceeding train speed limits. His union appealed
the suspension pursuant to the RLA’s procedures, claiming that it was not supported by
good cause and thus violated the applicable bargaining agreement. The arbitration board
concluded that the railroad was “justified” in holding the employee responsible for the
train’s speed. But it reduced his punishment to a 30-day deferred suspension with pay.
While his grievance-related appeal was still pending before the arbitration board, the
employee filed an FRSA complaint with the Department of Labor, claiming that his
suspension was in retaliation for reporting his prior work-related injury. Norfolk Southern
argued that the FRSA’s election-of-remedies provision barred his claim, since he had
41
already challenged the suspension in arbitration. An administrative law judge denied the
railroad’s motion for a summary decision, and ultimately found in favor of the employee
on the merits of his FRSA claim. The DOL’s Administrative Review Board upheld the
ALJ, rejecting the railroad’s challenge to the ALJ’s election-of-remedies ruling.
Legislative history. The Sixth Circuit looked back at the RLA as originally enacted, with
its optional alternative dispute resolution scheme, and noted the subsequent adoption of
mandatory arbitration in the face of employers’ reluctance to arbitrate when the
procedure was merely permissive. The appeals court also traced the evolution of the
FRSA’s anti-retaliation protections, absent in the original version of the statute, but added
by amendment in 1980.
Under the 1980 version of the FRSA, employees seeking to bring an FRSA retaliation
claim had to do so pursuant to the RLA’s mandatory arbitration procedure; FRSA claims,
just as with other work-related grievances, had to go before an arbitration board under the
RLA. Significantly, though, in 2007 the FRSA was amended again, to permit employees
to file FRSA claims with the Secretary of Labor rather than proceed through RLA
arbitration.
Additional amendments in 2009 beefed up the statute’s anti-retaliation protections even
further, with this provision: “Nothing in this section shall be deemed to diminish the
rights, privileges, or remedies of any employee under any Federal or State law or under
any collective bargaining agreement. The rights and remedies in this section may not be
waived by any agreement, policy, form, or condition of employment.” Yet the preexisting
election-of-remedies provision remained intact, leaving the court to grapple with it here.
“Another provision of law.” Against this legislative backdrop, the court held the ARB
did not err in concluding that the employee’s FRSA claim was not barred by its electionof-remedies requirement, rejecting the railroad’s contention that arbitration under the
RLA (i.e., “another provision of law,” under FRSA election-of-remedies parlance) fell
within the reach of this provision. In the appeals court’s view, the plain language of Sec.
20109(f) defeated this notion. “There is no question both that the RLA is ‘another
provision of law’ and that a collective bargaining agreement is not,” the appeals court
wrote. As such, “the parties’ extended duel over whether the RLA is the precise type of
legal provision envisioned by § 20109(f) is somewhat off the mark.”
Sought “protection.” With a nod to the Seventh Circuit’s treatment of the issue, the
Sixth Circuit noted that the operative question here was not whether the RLA is a
“provision of law” within the meaning of the clause at hand, but whether the employee
had sought “protection” under the RLA when he grieved, then arbitrated, his suspension.
The operative answer: an employee is not “seeking protection” under the RLA by
invoking mandatory arbitration when pursuing a grievance under the terms of a
bargaining agreement.
Taking the election-of-remedies language “at face value,” and construing “protection”
according to its dictionary meaning of “shelter,” the appeals court concluded that an
employee “seeks protection” under an alternative provision of law only when he seeks to
42
use that law as a shelter—that is, “only if the statute is the source of the substantive
remedy for the harm that the employee is attempting to avert.” It’s not enough for the
alternative provision of law to merely provide “a procedural mechanism” that enables an
employee to seek shelter behind some alternative “independent legal bulwark,” the court
explained. “The rights guaranteed to the employee in the statute must be the barrier that is
interposed between the employee and the threatened harm.”
The CBA’s the shield. It would be one thing, the court continued, if the employee had to
use the RLA to validate his right to arbitrate his dispute against a reluctant employer in
the first place. In that case, he would be “seeking protection” under the RLA, with its
guarantee of mandatory arbitration, and the statute would be the “other provision of law”
that the election-of-remedies clause envisions. Here, though, the employee was seeking to
validate his rights under a bargaining agreement, and had merely leveraged the RLA to
seek such redress. As such, the CBA was his shield, not the RLA. And, because a private
contract is not “a provision of law,” the election-of-remedies provision did not bar the
employee from pursuing his FRSA claim.
No diminishment of rights. The employer argued “strenuously” that the RLA’s arbitral
forum was itself a form of protection that the statute bestowed upon railroad employees.
The court had no qualm with this point, seeing as “railroad workers of yore” had
specifically lobbied for the mandatory dispute-resolution process given “the inequitable
vagaries of the preexisting voluntary arbitration regime.” And there was a valid argument
to be made, the court acknowledged, that the employee had sought “protection” under the
RLA, at least to some extent, “when he invoked the only available process that would
construct the substantive meaning of his collective bargaining agreement.” Still, the
railroad could not clear the hurdle imposed by FRSA Sec. 20109(h), the subsequent
addition to the statute, which bars the use of Sec. 20109(f) to “diminish” an employee’s
rights under any law or bargaining agreement.
Clearly, Sec. 20109(f) dilutes an employee’s rights whenever it is enforced, the court
pointed out. “Restricting an employee to only one of the numerous arrows in his quiver
obviously reduces the number of options available to him” and dilutes the value of those
rights under both options, it reasoned. Thus, subsection (f), combined with subsection (h),
present a “linguistic contradiction.” Nonetheless, there were “multiple considerations”
weighing in favor of construing the clause such that subsection (h) trumps subsection (f),
and not the other way around. For one: the DOL’s interpretation, which (even the
employer conceded) had persuasive authority if not Chevron-level deference.
Moreover, the DOL’s conclusion that railroad workers are not barred from pursuing their
rights under the FRSA when they enforce their contractual rights to arbitrate under the
RLA comports with the legislative history. “No one doubts” that, when it added
subsection (h) in 2007, Congress meant to expand the FRSA’s protections. In doing so,
presumably Congress overrode subsection (f)’s purpose of barring “resort to two separate
remedies,” the appeals court reasoned. Therefore, to the extent these provisions conflict,
subsection (h) is controlling, the Sixth Circuit concluded.
The case number is 14-3274.
43
Attorneys: John B. Lewis (Baker & Hostetler) for Norfolk Southern Railway Co. Rachel
Goldberg for U.S. Department of Labor. Robert E. Harrington, III (Harrington,
Thompson, Acker & Harrington) for Intervenor.
NLRB: Crew leaders independent contractors properly excluded from bargaining
unit
By Ronald Miller, J.D.
Crew leaders who hired drywall hangers and finishers to perform an employer’s drywall
installation work on commercial and residential buildings were not employees under Sec.
2(3) of the NLRA, ruled a three-member panel of the NLRB. Applying the formulation
announced in FedEx Home Delivery for evaluating when individuals are employees or
independent contractors, the NLRB held that crew leaders were independent contractors
properly excluded from the bargaining unit. Although adhering to his criticism of the
majority’s independent contractor analysis announced in FedEx, Member Johnson
concurred in the Board’s finding (Porter Drywall, Inc., January 29, 2015).
Independent contractor agreement. The employer’s primary business was drywall
installation. Its workforce consisted of managerial and supervisory personnel. The
employer used approximately 34 subcontractors or crew leaders on a regular basis to
perform various phases of drywall installation. In turn, the crew leaders hired drywall
installers to assist them in performing the work. The employer played no role in the
selection, screening, or approval of crew leaders’ crews. The employer required crew
leaders to execute a standardized written “Independent Contractor Agreement” that sets
forth the parties’ working relationship. Under the terms of the agreement, crew leaders
are not guaranteed work, can refuse work offered by the employer, and are free to work
for other contractors. Although the crew leaders are responsible for meeting deadlines
specified by the employer, they are free to set their own schedules for performing work.
Uncontroverted record testimony established that crew leaders solicit and perform work
for other contractors. Crew leaders can and often do visit a jobsite to inspect it before
deciding to accept work offered by the employer. Crew leaders and their crews are not
subject to the employer’s handbook or other employment policies, including the
employer’s drug testing policy. Crew leaders furnish their own transportation, tools, and
certain supplies like nails and tape, and are responsible for maintaining their equipment in
working order. The employer pays crew leaders on a project basis pursuant to an
established formula based on the square footage of the work area, the particular phase of
drywall work being performed, and whether the structure is commercial or residential.
The employer is obligated to pay crew leaders full and final payment within seven days
of project completion.
In this instance, the union petitioned the Board to review a decision of a regional director
that crew leaders are independent contractors. Further, the union asserted that compelling
reasons existed for reconsidering Board policy.
FedEx formulation. The Board granted review to analyze this case under its recently
issued decision in FedEx Home Delivery. Specifically, in FedEx, the Board reaffirmed
44
the longstanding principle, articulated by the Supreme Court in United Insurance, that,
“in evaluating independent-contractor status ‘in light of the pertinent common-law
agency principles,’ ‘all of the incidents of the relationship must be assessed and weighed
with no one factor being decisive.’” The Board now applied the factors set forth in Sec.
220 of the Restatement (Second) of Agency, to evaluate whether there were actual, not
merely theoretical, entrepreneurial opportunities, and to assess the newly articulated
independent-business factor in relation to the facts.
Extent of control. The union did not contest the authority of the crew leaders to direct
and control the performance of installation work assigned them. It also did not contest the
crew leaders’ ability to set their own hours and those of their crews or to exercise
disciplinary authority over the employees they hire. Crew leaders complete the scope of
work awarded to them without any close supervision by the employer’s superintendents.
Thus, the Board found that the extent of control factor weighed in favor of independent
contractor status. Further, crew leaders operate drywall installation businesses, and do not
work exclusively for the employer. The employer also requires crew leaders to indemnify
it against any damage claims that may arise as a result of the work of their crews. Thus,
this factor weighed in favor of independent contractor status.
Direction of work. Crew leaders do not receive assistance from the employer on the
jobsite. Crew leaders alone are responsible for supervising the work of their crews,
paying their crews and handling tax withholdings, carrying workers’ compensation and
liability insurance, setting work hours, communicating with the employer’s
superintendents, and returning to fix any large problems with their crews’ installation
work. Crew leaders practiced a trade and performed skilled work, so this factor also
weighed in favor of independent contractor status. The crew leaders were responsible for
their crews’ tools, supplies, and transportation, and insuring that their equipment is in
working order, which also favored independent contractor status.
Length of employment. Crew leaders work for the employer on a project basis rather
than for an indefinite time period. They may decline work offered by the employer and
work for other companies. Accordingly, the relationship between the crew leaders and the
employer appeared to be no different than is customary in the construction industry. This
factor weighed in favor of independent contractor status. The employer pays crew leaders
on a project basis, and the crew leaders in turn pay the crew. Crew leaders are also
responsible for providing unemployment and workers’ compensation insurance for both
themselves and their crews. Crew leaders do not receive an hourly rate, but rather are
paid pursuant to an established square footage formula. However, on Davis-Bacon Act
jobs, the employer paid wages directly to crew members. Still, the small percentage of
jobs with direct pay did not mandate a different result here.
Business of employer. Crew leaders and their installers perform the primary service
provided by the employer. Because they performed work that was at the very core of the
employer’s business, the regular business factor weighed heavily in favor of employee
status. The fact that the crew leaders did not have the opportunity to bargain over the
terms of the “Independent Contractor Agreement,” the Board found provided
“inconclusive evidence” that the crew leaders were independent contractors. However,
45
other evidence supported a finding that the parties believed they were creating an
independent contractor relationship, including that the crew leaders were free to reject
work, work for other contractors, and determine the profitability of work. Thus, this
factor weighed in favor of independent contractor status.
Crew leaders have a financial interest in the work being performed because they are paid
a square footage rate for each project rather than being paid based on time. Crew leaders
have a realistic opportunity to work for other companies and have control over important
business decisions. Overall, this factor supported a finding that the crew leaders’
opportunities for gain are more than merely theoretical and weighed in favor of
independent contractor status. As a result, the Board concluded that the employer carried
its burden of establishing that the crew leaders were independent contractors, and the
regional director correctly determined that the drywall installers were employees of the
crew leaders.
The slip opinion number is 362 NLRB No. 6.
Attorneys: Marilyn Widman (Widman & Franklin) for International Union of Painters
and Allied Trades Local Union 1275. William Nolan (Barnes & Thornburg) for Porter
Drywall, Inc.
NLRB: Letters advising of dues payment options unlawfully encouraged union
resignation
By Kathleen Kapusta, J.D.
An employer that sent letters to its employees after it agreed to payroll dues deduction
(but prior to reneging on that agreement), in which it advised them of their options
regarding the payment of dues, and which contained the statement “We are not
suggesting that you do or do not resign your membership in the union, but we want you
to be aware of our understanding of your options,” played more than a purely ministerial
and passive role in their decisions regarding union membership, a three-member panel of
the NLRB held. Agreeing with the decision of an administrative law judge, the Board
found that the letters encouraged employees to resign from the union and constituted
unlawful solicitation. However, it reversed the law judge’s dismissal of the allegation that
the employer violated Section 8(a)(1) by interrogating an employee regarding his support
for the union (Space Needle, LLC, January 30, 2015).
The letters. Although the employer agreed to reinstate payroll dues deduction on January
2, it reneged on that agreement on February 11. Just days before February 11, it
distributed letters to its employees through its managers advising them of their options
regarding the payment of dues, including the revocation of dues authorizations and
resignation from union membership. While the letters varied slightly based on whether an
employee had a current dues authorization form on file and whether he or she had been
hired before the bargaining agreement expired, all of the letters stated that the union had
demanded that dues be deducted from their paychecks.
46
Further, the employer instructed its managers to inform the employees that it did not want
to resume dues deduction but would do so unless they directed it otherwise. It also
directed its managers to tell the HR manager of employee requests for a sample
resignation letter. The HR manager maintained a spreadsheet in her office listing all unit
employees and noting whether they had requested or submitted a letter withdrawing from
union membership.
Just informing them of their rights. Relying on Perkins Machine Co. and Peoples Gas
System, the employer argued that its letters simply informed employees of their rights and
therefore did not constitute unlawful solicitation. Finding those cases to be
distinguishable in critical respects, the Board first noted that in both, the collectivebargaining agreements provided for an annual window allowing employees to revoke
their dues-checkoff authorization; the employers issued letters to union members just
prior to the window period, pointing out the contract’s checkoff revocation provision and
dates; the letters reassured employees that the employer was not urging them either to
remain union members or to resign from the union and that their choice would have no
effect on their wages, benefits, or treatment; and the employers’ action occurred in an
atmosphere free of any coercion.
Purpose not neutral. Here, by contrast, the employer did not distribute its letters in
anticipation of a contractually-established window period for revocation. In fact, the
Board observed, the letters notifying employees of future window periods for revoking
dues authorization offered that they could sidestep those periods by resigning from the
union immediately. “The suggestion of resignation from the Union as a more expeditious
option showed that the Respondent’s purpose was not neutral with regard to union
membership, as does the timing of the letters—just after the Respondent agreed with the
Union to reinstate payroll dues deduction,” explained the Board, noting that the
employer’s purpose was further demonstrated by its instructions to its managers to inform
employees orally, when delivering the letters, that it did not want to resume dues
deduction.
In addition, the employer’s attempt to monitor its employees’ responses to the letters by
requiring the sample resignation letters be requested directly from management put it in
the position of knowing exactly which employees chose to resign their union membership
and thereby further pressured them to make that choice. And while the letters issued to
the post-expiration hires included the reassurance that their decision regarding whether to
join the join would not impact their wages, benefits, or seniority, the letters to other
employees only provided that resignation would not affect their terms and conditions of
employment. Moreover, none of the letters included any assurance about future treatment
by the employer if they elected not to resign their union membership, observed the Board.
Other unfair labor practices. Finally, the Board pointed out, the solicitation here was
accompanied by other unfair labor practices, including unlawful polling and coercive
statements to employees contemporaneous with the distribution of the letters. Thus,
considering all of the circumstances, the Board found that the letters constituted unlawful
solicitation in violation of Section 8(a)(1).
47
Unlawful polling. As to the law judge’s additional finding of unlawful polling
concerning employees’ union membership, the Board noted that the employer told its
employees they could obtain a sample resignation letter from their managers or from HR.
When they did so, the managers were to notify the HR manager, who recorded the
information and noted whether she had seen a completed resignation letter. This process,
the Board stated, allowed the employer to closely track who requested or completed the
letters and who did not. “Whether or not the employees were actually aware that their
actions were being documented, they clearly understood that they were revealing their
choices regarding membership to management by their action or inaction following the
Respondent’s letters,” the Board stated, observing that it has found that as a general
matter, placing employees in a position “in which they reasonably would feel pressured
to ‘make an observable choice that demonstrates their support for or rejection of the
union’” is coercive.
Pointing out that the employer established no legitimate reason for knowing whether
employees resigned their union membership, given the lack of any necessary correlation
between membership and dues obligations, the Board concluded that both the solicitation
of employees to resign from the union and the polling of their responses violated Section
8(a)(1).
Unlawful interrogation. Reversing the law judge’s dismissal of the allegation that the
employer unlawfully interrogated an employee about his support for the union, the Board
observed that an admitted supervisor, in delivering the employer’s letter, pulled him aside
and told him he knew “things were getting a little crazy” and he wanted the employee to
know his options, including resigning his union membership. Specifically, he stated, “I
know you’re a smart guy and you’ll make the right decision. I know you kind of see
which way the wind is blowing.” Although the law judge found that the supervisor did
not directly question the employee about his sympathies, the Board found that the
statements were nonetheless coercive.
Noting that they were made in the context of what the judge found to be a pattern of
conduct by which the employer solicited employees not to support the union and closely
tracked their continued support, the Board observed that when the supervisor spoke to the
employee, he was acting as directed in furtherance of these efforts. Further, he conveyed
his displeasure with unions, while assuring the employee that he knew he would “make
the right decision.” Thus, regardless of whether the supervisor’s statements amounted to
an interrogation, they were coercive concerning the employee’s exercise of his Section 7
rights.
The slip opinion number is 362 NLRB No. 11.
Attorneys: Brian Lundgren (Davis Grimm Payne & Marra) for Space Needle, LLC.
Carson Glickman-Flora (Schwerin Campbell Barnard Iglitzin & Lavitt) for UNITE
HERE! Local 8 and Julia Dube.
48
NLRB: Traditional accretion standard not applied in including new employees into
existing bargaining unit
By Ronald Miller, J.D.
A bargaining unit should not have been clarified to include plant operators and
maintenance specialists from one power plant location into an existing bargaining unit
comprised of employees from six other plant locations, ruled the NLRB is a threemember panel decision. The Board found that the regional director failed to follow the
Board’s traditional accretion standard because the disputed employees did not share an
overwhelming community of interest with the employees in the existing union. Further,
the Board found that its preference for systemwide units in the public utility industry did
not warrant a different result. Accordingly, the Board reversed the regional director’s
decision (NV Energy, Inc., January 30, 2015).
The employer was engaged in the generation and distribution of electricity to customers
in California and Nevada. The union represented a unit consisting of some 1950
employees in the employer’s southern division, including control operators and
maintenance technicians. In October 2008, the employer acquired a new plant located in
the geographic parameters of its southern division. The plant operators and maintenance
specialists at the acquired plant were, in terms of skills and functions, equivalent to
control operators and maintenance technicians in the existing unit. However, they had
some additional responsibilities.
Upon acquiring the plant, the employer interviewed and hired all of former employees,
except two managers. Since then, the employer has integrated the plant into its
communications system, and the plant employees have been added to its payroll and
leave systems. The employees of the new plant are also now covered by the employer’s
companywide safety manual, and share a safety representative with employees at two
other plants. However, it was undisputed that the duties of the new employees had not
changed since the employer’s acquisition of the plant.
Employee interchange. There was no evidence that bargaining unit employees have had
any temporary or permanent interchange with employees at the new plant. Similarly,
there has been little physical contact between employees at the new plant and existing
bargaining unit employees. On occasion, the new plant employees have gone to other
plants to borrow equipment, and several employees from the new plant have attended
safety meetings at another plant. At least one plant operator from the new plan
participates in a daily morning conference call that includes control operators from other
plants.
By contrast, there was evidence indicating interchange and common supervision among
the other six plants. For example, control operators from one plant covered for plant
operators at another plant. There was also testimony that employees in the existing
bargaining unit had received transfers from one plant to another. In addition, there was
also testimony that two groups of plants in the existing bargaining unit were treated as a
single facility, with common supervisors and managers.
49
Union representation. Prior to the acquisition, the employees at the new plant were
unrepresented. In contrast, employees of the six other plants always enjoyed
representation by a union. Thus, the new plant acquisition was the only example of the
employer acquiring a facility staffed by unrepresented employees. Shortly after the
employer acquired the new plant, representatives of the union contacted at least some of
its employees about signing dues checkoff authorization forms; but only two employees
signed them. However, the employees of the new plant received pay and benefits
substantially similar to bargaining unit employees.
The regional director found “little difference” between the employees in the new plant
and the bargaining unit employees, and that, accordingly, accretion was appropriate
because the employees of the new plant and the bargaining unit employees “share a
sufficient community of interest.” In so finding, the regional director acknowledged that
collective-bargaining history did not support adding the employees of the new plant to
the existing unit.
Accretion analysis. When the Board finds an accretion, it adds employees to an existing
bargaining unit without conducting a representation election. Under the well-established
accretion standard set forth in Safeway Stores, Inc., the Board finds “a valid accretion
only when the additional employees have little or no separate group identity and thus
cannot be considered to be a separate appropriate unit and when the additional employees
share an overwhelming community of interest with the preexisting unit to which they are
accreted.”
In determining whether this standard has been met, the Board considers factors including
integration of operations, centralization of management and administrative control,
geographic proximity, similarity of working conditions, skills and functions, common
control of labor relations, collective-bargaining history, degree of separate daily
supervision, and degree of employee interchange. However, the Board has held that the
“two most important factors—indeed, the two factors that have been identified as critical
to an accretion finding—are employee interchange and common day-to-day supervision,”
and therefore “the absence of these two factors will ordinarily defeat a claim of lawful
accretion.”
In this instance, the Board found that the regional director did not apply the applicable
standard. Applying the correct standard, the Board found that the two groups did not
share an overwhelming community of interest and that the employees of the new plant
have retained a separate identity from the bargaining unit employees. Integration of
operations, the similarity of terms and conditions of employment, centralized control of
management and labor relations, and similarity of skills all favored finding an accretion.
However, the Board found that these factors were clearly outweighed by factors that
disfavor accretion.
There was no permanent or temporary interchange between employees of the new plant
and bargaining unit employees. Similarly, there was no common day-to-day supervision.
Moreover, there was no evidence that any individuals with day-to-day authority over unit
50
employees have such authority over the employees at the new plant. Under these
circumstances, the Board found that there was no shared day-to-day supervision between
the employees of the new plant and bargaining unit employees. Together, the absence of
these two critical factors prevented a finding of overwhelming community of interest
here.
With respect to the remaining factors, the Board also found that these factors did not
favor a finding of accretion. Since daily conference calls lasted only 15 – 30 minutes, and
were designed simply to advise relevant personnel about generation demands, the degree
of contact was not significant enough to favor accretion. Similarly, bargaining history,
different work expectations, and location, also did not favor accretion. Thus, the Board
found that the facts of this case did not meet its restrictive standard for accretion,
particularly given the absence of the two “critical” factors, which ordinarily defeats an
accretion.
The slip opinion number is 362 NLRB No. 5.
Attorneys: David Lonergan (Hunton & Williams) for NV Energy, Inc. Edwin Hill, for
International Brotherhood of Electrical Workers.
NLRB: Property management company, electrical contractor were single employer,
jointly liable for backpay
By Brandi O. Brown, J.D.
A company that owned and managed rental property and an electrical contractor that
formerly employed the workers in question and held a lease on part of the rental property
constituted a single employer, a three-member panel of the NLRB ruled, rejecting an
administrative law judge’s contrary conclusion. Thus, the two entities were jointly and
severally liable for over $120,000 in backpay to four workers. The commonly owned and
managed entities did not operate at arm’s length, as demonstrated by over $60,000 in rent
left unpaid to the management company by the electrical contractor, and their operations
were substantially interrelated. Although there was no evidence of centralized labor
control, that factor held less significance in light of the fact that the management
company did not have employees (Lederach Electric, Inc., February 3, 2015).
$120K in backpay. A law judge determined that the electrical contractor had violated the
NLRA by laying off four employees because of their union activities and membership.
The electrical contractor was also found liable for retaliating against three of the workers
for engaging in protected, concerted activities. After the decision became a final order,
the regional director issued a backpay specification, later amended, and the law judge
found the electrical contractor owed a combined amount of over $120,000 to the four
workers. The Board affirmed, and the regional director issued a specification asserting
that the management company and the electrical contractor constituted a single employer
and were jointly and severally liable for the amount.
A law judge determined that the two entities did not constitute a single employer.
Although the judge acknowledged that the two entities were commonly owned,
51
commonly managed, and did not have an arm’s-length relationship, the judge determined
that the interrelation of operations and centralized control of labor relations factors
weighed against a finding of single-employer status. A three-member Board panel
reversed.
Not at arm’s length. The ALJ erred in determining that the interrelation of operations
weighed against a finding of single employer status, the Board determined. In addition to
the fact that the two companies shared a post office box, that the electrical contractor
received rent payments from other tenants on the management company’s behalf, and
that the electrical contractor used the management company’s phones to conduct
business, the record also showed that the management company allowed the electrical
company to skip out on paying rent for many months. The rent was $3,000 per month
and, all told, the electrical contractor owed $62,000 in rent. One of co-owners admitted
that he had allowed this situation to exist because he knew that doing so would allow the
electrical contractor to pay other creditors and employees. This demonstrated that there
was no arm’s-length relationship between the two entities and, thus, their operations were
“substantially interrelated.”
The panel found no merit in the ALJ’s determination that the failure to find a common
business purpose between the two entities was fatal to finding single-employer status.
Even without such a finding, a single-employer relationship could be found where there
was evidence there was not an arm’s-length relationship between the entities, as was the
case here.
The same held true of the failure to find centralized control of labor, a factor that held
less significance where one of the entities did not have employees. Furthermore, common
management and common ownership and financial control were clearly established, as
acknowledged by the ALJ. Combined with the evidence of interrelated operations, this
was enough to establish that the two entities were a single employer and to hold them
jointly and severally liable for the backpay due.
The slip opinion number is 362 NLRB No 14.
Attorneys: Robert Krandel (Flamm Walton) for Morris Road Partners, LLC and Lederach
Electric. Robert Kurnick (Sherman, Dunn, Cohen, Leifer & Yellig) for International
Brotherhood of Electrical Workers Local Union 380.
NLRB: Evidence showed discharge motivated by employees’ union affiliation
By Ronald Miller, J.D.
An employer acted unlawfully when it discharged, laid off, or terminated 13 union
employees after it repudiated its Sec. 8(f) bargaining relationship with the union, ruled a
divided three-member panel of the NLRB in a 2-1 decision. The Board found that the
evidence established that the discharges were motivated by the employees’ union
affiliation and therefore were unlawful. Even assuming an absence of specific evidence
of unlawful motive, the Board further found the employer’s conduct was “inherently
destructive” of the employees’ rights, and the employer’s asserted business justification
52
did not outweigh the destructive impact. Member Miscimarra filed a separate dissenting
opinion (Hawaiian Dredging Construction Co., Inc., February 9, 2015).
Bargaining negotiations. The employer is the largest general contractor in Hawaii, and
employs approximately 375 craft employees. At relevant times, it was a member of the
Association of Boilermakers Employers of Hawaii, which had been party to an 8(f)
prehire collective bargaining agreement with the Boilermakers union for at least 20 years.
The Boilermakers provided the employer with employees to perform welding and other
duties. At the time the most recent agreement expired on September 30, 2010, the
association and union had not reached a new agreement. The union notified the
employer’s senior project manager and chairman of the association of its availability to
continue negotiations. On October 1, 2010, a crew of Boilermaker-represented employees
informed the employer that they would not work that day because the agreement had
expired.
A week later, the parties agreed to extend the terms of the expired CBA through October
29, to facilitate bargaining. The October 29 date passed with no new agreement, but
negotiations continued. Ultimately, the association filed charges with the NLRB alleging
that the union refused to sign a purported agreement and had insisted on terms that had
not been negotiated. After an NLRB regional office dismissed the charge, the association
terminated its Sec. 8(f) relationship and informed the union that the association would no
longer be using its members for future work. The employer temporarily shut down
ongoing welding operations and terminated its 13 Boilermaker-represented employees.
Thereafter, the employer entered into a CBA with the Plumbers union and resumed
welding operations with Plumbers-represented employees.
Law judge’s decision. Analyzing the discharge of the Boilermaker-represented
employees under the framework set forth in NLRB v. Great Dane Trailers, Inc., under
which the lawfulness of an employer’s conduct turns on the impact of such conduct on
Sec. 7 rights, an administrative law judge concluded that the employer did not violate
Sec. 8(a)(3). Alternatively, the law judge found the discharges were also lawful under the
Board’s motive-based Wright Line standard. On exceptions, the NLRB General Counsel
and union contended that the employer’s discharge of all Boilermaker-represented
employees constituted “inherently destructive” conduct. They further asserted that the
employer’s alleged practice of working only under a CBA was not a sufficient
justification for discriminatorily discharging employees.
Wright Line as appropriate framework. Contrary to the law judge, the NLRB
concluded that the discharges were unlawful under both Wright Line and Great Dane.
The employer contended that the sole reason for the discharge was that it no longer had a
bargaining relationship with the Boilermakers. The Board pointed out that inasmuch as
this case turned on the employer’s motive, Wright Line was the appropriate analytical
framework. Here, the majority found that the first two elements of the Wright Line test
were undisputed: all of the alleged discriminatees were members of the Boilermakers,
and their union affiliation was known to the employer. Moreover, the third element,
animus, was readily established by the employer’s summary discharge of all of its
Boilermaker-represented employees and only its Boilermakers-represented employees.
53
While the majority conceded that the employer was free to terminate a Sec. 8(f)
relationship after the union contract expired, it pointed out that the employer nonetheless
could not discriminatorily discharge employees because of their affiliation with that
union. According to the majority, this is exactly what the employer did in this instance.
Rebuttal burden. Further, the majority found that the employer failed to meet its rebuttal
burden of demonstrating that it would have discharged the employees even in the absence
of their affiliation with the Boilermakers. With respect to the employer’s contention that
it requires that all its craft work be performed under CBAs to avoid the instability and
unpredictability of working without the protections of an agreement, the Board was not
persuaded, based on the record, that the employer so strictly adhered to this business
practice that it would have discharged the discriminatees on this basis alone.
“Inherently destructive” conduct. Alternatively, the Board majority concluded that the
discharges were unlawful under Great Dane. If an employer’s conduct is “inherently
destructive” of important employee rights, no proof of discriminatory motive is needed
and the Board can find a violation even if the employer introduces evidence of a business
justification. Applying those principles, the majority found that the discharge of
Boilermakers-represented employees was inherently destructive of their right to
membership in the union of their choosing, unencumbered by the threat of adverse
employment action. Here, the employer’s conduct harmed the discriminatees by delaying
their ability to promptly return to work once the employer resumed its operations.
Business justification. The Board then turned to consider the next step in the Great
Dane analysis: whether the employer’s asserted business justification was sufficient to
outweigh the destructive impact of the discharges. Recalling that the record did not
support the employer’s contention that it required all of its craft work be performed under
CBAs, the majority found that this justification did not outweigh the harm done to the
employees on account of their union affiliation. Finding that the employer could not sever
its employment relationship with the discriminatees on account of their Boilermakers’
membership, the majority concluded that the discharge of the Boilermakers-represented
employees upon the repudiation of its Sec. 8(f) relationship violated Sec. 8(a)(3).
Dissent. This case turned on three black-letter principles, Member Miscimarra argued in
dissent: (1) When a “prehire” agreement exists between a construction industry employer
and a union, the employer has the right, on or after the agreement’s expiration, to
repudiate the agreement and abandon any relationship with the union; (2) Absent a
conflicting agreement, the employer has the right to enter into a different prehire
agreement with a different union; and (3) The NLRA does not require any employer to
remain in business or to continue any particular type of work. According to Miscimarra,
those principles relate to what the employer did in this case. It had a prehire agreement, it
entered into a new prehire agreement with a different union after the agreement expired,
and, during the hiatus between the agreements, it discontinued all welding operations,
leading to the discharge of the employees in this instance.
Miscimarra argued further that the employer’s actions were lawful under the Supreme
Court’s ruling in Textile Workers Union v. Darlington Mfg. Co. First, he pointed out that
54
under Darlington, the employer’s cessation of welding work was lawful without regard to
its motivation. Second, even if motivation was relevant, the record did not reasonably
support any finding of unlawful motivation, Miscimarra asserted. Thus, he disagreed with
the majority’s finding of a violation.
The slip opinion number is 362 NLRB No. 10.
Attorneys: Meredith A. Burns for Acting General Counsel. Barry W. Marr (Marr, Jones
& Wang) for Arakaki Mechanical, LLC, Hawaiian Dredging Construction Co., Inc., and
Association of Boilermakers Employers of Hawaii. Caren Sencer (Weinberg, Roger &
Rosenfeld) for International Brotherhood of Boilermakers, Iron Ship Builders,
Blacksmiths, Forgers and Helpers, Local 627.
NLRB: Board takes employer’s confidentiality agreement, memo to task
By Lisa Milam-Perez, J.D.
A transportation company’s confidentiality agreement and memo to employees barring
talk of “company business” with outsiders were overbroad and violated NLRA, Section
8(a)(1), a divided three-member NLRB panel held, concluding that employees would
reasonably construe language in both documents as prohibiting protected activity.
Dissenting on this point, Member Johnson would have adopted the law judge’s reasoning
and findings to the contrary (Battle’s Transportation, Inc., February 24, 2015).
Confidentiality agreement overbroad. The employer required all of its employees to
sign a confidentiality agreement that bars employees from, among other things,
discussing “human resources related information” and “investigations by outside
agencies.” The ALJ concluded that employees would not reasonably construe these
provisions as prohibiting them from discussing wages or other terms and conditions of
employment, mainly by taking these clauses in context of the other types of information
included in the list of confidential information: “drug and alcohol screening results,
personal/bereavement/family leave information, insurance/worker’s compensation,
customer lists (address, telephone number, medical/health related), financial, supplier
lists and prices, fee/pricing schedules, methods, processes or marketing plans.”
The Board majority disagreed, finding that employees would reasonably construe the
challenged phrases to encompass terms and conditions of employment and to restrict
them from discussing protected activity, such as Board complaints or investigations. In
support of its holding, the majority cited the Board’s 2014 ruling in Fresh & Easy
Neighborhood Market, among other precedents. (Adhering to his dissent in that case,
Member Johnson did not believe that employees would reasonably construe the
confidentiality agreement to have the meaning ascribed by the majority.)
Also problematic, according to the majority, was the agreement’s provision barring
employees from using any of this information “for his or her own benefit or the benefit of
others,” as employees would reasonably construe this restriction as prohibiting protected
concerted activity.
55
Memo unlawfully vague. On the eve of an expiring bargaining agreement, a driver on
the company’s VA medical center route mentioned to clients that Thursday would be “the
last day of our contract.” Confused clients thought that meant the transportation company
would no longer be providing its services to the hospital. That prompted a memo from
management to the drivers detailing the miscommunication and the resulting
misperception by clients, along with instructions to drivers “that you are not to
communicate any Battle’s company business with our clients.” The ALJ concluded that
the memo merely addressed the specific, recent problem, and that employees would not
construe the document as restricting their Section 7 rights. Once again, though, the Board
majority disagreed. When reading the memo as a whole, it found the employer’s broad
directive to be unlawfully vague and overbroad, and likely to be interpreted by employees
as restricting discussions about union-related matters.
Uncertainty irrelevant. It appeared that the clients interpreted the driver’s statements to
mean that the company’s contract to transport them to the VA center was coming to an
end, not that the drivers’ bargaining agreement was expiring. Perhaps the clients thought
the driver was referring to the bargaining agreement, but wondered whether the expiring
CBA would impact their transportation services. At any rate, the Board found no need to
resolve the uncertainty, as the sweeping restriction on talking about any “company
business,” without qualification, could be perceived by employees as a ban on discussing
any matters affecting their terms and conditions of employment with clients, including
the expiration of their collective-bargaining agreement. “Such prohibitions on discussions
with third parties clearly violate employees’ Section 7 rights.”
As the majority explained, “employees’ ability to communicate with customers about
terms and conditions of employment for mutual aid or protection is a right protected by
Section 7 of the Act, notwithstanding that the listener might misinterpret or react
unfavorably to the communication.” Here, the underlying miscommunication didn’t
warrant the overbroad ban on discussing “company business,” the majority held.
Other findings affirmed. The Board adopted the law judge’s finding that the company
violated the Act when it requested that the union replace a particular employee as its shop
steward, as well as the ALJ’s finding that the employer unlawfully ignored that
employee’s seniority status when it refused to transfer him back to the VA center route
and then later suspended and discharged him.
The slip opinion number is 362 NLRB No. 17.
NLRB: Information sought was presumptively relevant, even though parties
negotiated a contract without it
By Lisa Milam-Perez, J.D.
An employer violated its bargaining duty when it refused to timely furnish a union with
requested information during negotiations for a successor bargaining agreement, a threemember NLRB panel held. Denying the employer’s motion to reopen the record to admit
evidence that the parties had subsequently negotiated a contract agreement anyhow, the
Board rejected the employer’s contention that, because it reached a contract deal with the
56
union without having furnished the information, the information wasn’t relevant for
bargaining purposes (McKenzie-Willamette Regional Medical Center Associates, LLC
dba McKenzie-Willamette Medical Center, February 24, 2015).
Addressing a complaint that the employer had unlawfully refused to bargain by
withholding information that the union requested, the law judge concluded that the
information sought was presumptively relevant, and the employer was obligated to
furnish it. In its bid to reopen the record, the employer wanted to admit evidence of the
CBA that the parties negotiated after the ULP hearing closed. It argued that “insofar as
the parties were able to reach agreement,” their CBA demonstrates that the union didn’t
really need the information that it requested during negotiations.
Agreeing with the ALJ, the NLRB rejected this reasoning. “The fact that the Union chose
to bargain in the absence of complete information and that the parties were able to
conclude a successor collective-bargaining agreement does not mean that the information
would not have been useful to the Union in bargaining or rebut the presumption of
relevance,” it wrote.
The Board also held the ALJ properly rejected the employer’s defense that, because the
Board lacked a quorum when it appointed the regional director, his appointment and,
consequently, his underlying complaint, were invalid. In fact, although the regional
director’s appointment wasn’t announced until January 2012 (at which point there was no
lawful NLRB quorum), the Board actually signed off on his appointment in December
2011, when a valid quorum was still in place. The fact that the regional director didn’t
assume his duties until January 2012 was irrelevant.
The quorum issue was the only defense that the employer intended to assert, its counsel
stated at the hearing; and, aside from raising it, counsel indicated he would not otherwise
participate in the proceeding. The employer’s decision not to provide a defense on the
merits meant the evidence presented by the General Counsel stood unrebutted. Given that
this evidence was sufficient to establish the violations alleged, the Board found the
employer violated NLRA, Section 8(a)(5) by unlawfully refusing to bargain.
The slip opinion number is 362 NLRB No. 20.
Attorneys: Helena Fiorianti for General Counsel. Bryan T. Carmody for McKenzieWillamette Regional Medical Center Associates, LLC and McKenzie-Willamette
Medical Center.
NLRB: UPS didn’t unlawfully fail to comply with union information requests
By Ronald Miller, J.D.
An administrative law judge’s dismissal of a complaint alleging that UPS failed to
comply with relevant information requests by the Teamsters union was upheld by a threemember panel of the NLRB. Here, the Board found that the employer rebutted the
presumption of relevance with respect to many of the requested documents, that it timely
raised legitimate concerns over the burdensomeness of the requests, and that the union
57
did not respond adequately. As a result, it determined that the employer did not violate
the NLRA by failing to provide information in response to “lunch grievance” requests;
that it complied with a settlement agreement; that it did not commit post-settlement
violations; that the settlement agreement should be reinstated; and the pre-settlement
information requests were resolved by the settlement agreement (United Parcel Service
of America, Inc., February 26, 2015).
The Teamsters charged that UPS failed to provide relevant information required by the
union on 21 different occasions. An NLRB regional director issued a complaint on the
charges, but the hearing was postponed indefinitely when the parties agreed to an
informal settlement. Subsequently, two more charges were filed alleging that UPS again
failed to provide certain requested information. The regional director set aside the
settlement agreement and issued a new complaint based on all of the charges. The
disputed information requests fell into three categories: (1) requests seeking information
related to a recurring “lunch grievance”; (2) requests submitted before the settlement was
signed; and (3) post-settlement requests.
Lunch grievances. The union alleged that UPS was forcing drivers to work through their
lunch period in order to avoid retaliation for not meeting their performance numbers. For
each grievance, a union steward requested: (1) timecards; (2) delivery reports; (3)
manifests; (4) “telematics,” including the average speed of the vehicle in motion on each
route; (5) a “time between stops” section summary; (6) a weekly operation report; and (7)
driver recap summaries for all unit drivers, in the 10-day period immediately preceding
the request.
The requests led to a series of letters between the union and a UPS official. The employer
protested that the requests were overly broad, contended that several categories of
documents were not necessary to determine whether a driver took a meal period on a
particular day, and offered less burdensome alternatives. Still, the union insisted that it
wanted all of the information requested in order to process the grievances.
The earlier settlement did not purport to resolve the dispute over the lunch grievance
information requests, and UPS did not provide any of the information requested related to
the lunch grievances.
Union bad faith. A law judge found the union acted in bad faith when it made these
information requests and when it subsequently refused to discuss or agree to any
accommodation that would reduce the burden on the employer. The union steward was
consistently unwilling even to discuss an accommodation and he never attempted to
explain why the employer’s suggestions for less burdensome alternatives were
insufficient, the law judge noted. On the other hand, the ALJ concluded that UPS acted in
good faith and sought to comply with the union’s requests, so that its failure to furnish
the requested documents was not unlawful.
The NLRB agreed that UPS did not violate the NLRA by failing to provide the requested
information, but did not rely on the law judge’s findings that the union acted in bad faith
or that the employer sought to comply with the lunch grievance requests.
58
Discovery-type standard. The Board used a liberal discovery-type standard for
determining which information requests must be honored. Where, as here, requested
information is related to unit employees’ terms and conditions of employment, the
information is presumptively relevant and the union need not make any specific showing
of relevance. However, the employer has the opportunity to rebut the presumption of
relevance. The Board found that in the context of this case, UPS effectively rebutted the
presumption of relevance with respect to many of the requested documents and that, with
respect to the requests as a whole, it demonstrated that it timely raised legitimate
concerns over the burdensomeness and overbreadth of the information requests, to which
the union did not respond adequately.
Although the union was attempting to determine whether drivers were properly taking
their lunch breaks, it insisted on a vast number of documents and information that went
far beyond what was potentially relevant to that determination. Like the ALJ, the Board
was unable to see how detailed information related to packages on board trucks was
relevant to the question of whether drivers delivered packages during their lunch breaks.
Moreover, many of the reports requested contained overlapping information, and the
union never explained how it would benefit from having the same information in multiple
reports.
Importantly, the UPS timely asserted its concerns over the burdensomeness of the lunch
grievance information requests, and attempted to reach an accommodation with the
union. Because the union insisted on receiving all of the requested information, it
effectively precluded a test of the employer’s willingness to give the union the
information it needed on mutually satisfactory terms. As a result, the Board held that UPS
did not unlawfully fail to provide the requested lunch grievance documents to the union.
Settlement agreement. The regional director argued that UPS failed to comply with the
settlement agreement because it did not provide training on interpreting non-native
documents, and the union’s failure to provide proposed dates was immaterial. However,
the Board agreed with the rationale of the law judge, who ruled that the employer made a
good-faith effort to comply with the settlement by offering to provide the training but that
the union’s unexplained inaction prevented the training being scheduled.
Post-settlement information requests. Although the law judge determined that UPS had
not rebutted the presumption that the requested documents were relevant, he nevertheless
found no violation because the documents provided by the employer, in fact, contained
the information requested by the union. An employer’s failure to inform the union that
the information it seeks is available or has been provided in a different format from the
requested one can be a violation of the Act. However, although the employer did not
provide the union with a required weekly operating report, all that information was
included in other reports, and the union was aware that the information it was seeking
was contained in other requested documents. Thus, the employer did not unlawfully
refuse to provide information following the settlement.
The slip opinion number is 362 NLRB No. 22.
59
Attorneys: Linda Reeder for General Counsel. Marcus Crider (Waller Lansden Dortch &
Davis) for United Parcel Service of America, Inc.
Hot Topics in WAGES HOURS & FMLA:
DOL updates FMLA definition of spouse to include employees in same-sex
marriages
Employees in legal same-sex marriages will have the same rights to take leave to care for
a spouse with a serious health condition under the FMLA—regardless of where they
live—as those afforded to employees in opposite-sex marriages, under an amendment to
the DOL’s FMLA regulations announced on Monday, February 23. Specifically, the
Wage and Hour Division will issue a final rule amending its regulations at 29 CFR Part
825 to adopt a “place of celebration” provision. The rule change is slated for publication
in the Federal Register on February 25 and will take effect 30 days thereafter.
The DOL has updated the FMLA regulatory definition of “spouse” so that an eligible
employee in a legal same-sex marriage will be able to take FMLA leave for his or her
spouse regardless of the state in which the employee resides. The rule change was
promulgated in keeping with the U.S. Supreme Court’s decision last year in United States
v. Windsor, which struck down the federal Defense of Marriage Act (DOMA) provision
interpreting “marriage” and “spouse” to be limited to opposite-sex marriage for purposes
of federal law.
The DOL commenced the current rulemaking with a June 2014 notice in the Federal
Register inviting public comment; the agency received 77 comment submissions,
representing more than 18,000 individuals, the “vast majority” of which were supportive
of the regulatory change to a “place of celebration” rule. The pending Federal Register
notice summarizes those comments.
Place of celebration. Previously, the regulatory definition of “spouse” did not include
same-sex spouses if an employee resided in a state that did not recognize the employee’s
same-sex marriage. Under the new rule, eligibility for federal FMLA protections is based
on the law of the place in which the marriage took place. This “place of celebration”
provision allows all legally married couples, whether opposite-sex or same-sex, to have
consistent federal family leave rights regardless of whether the state in which they
currently reside recognizes such marriages.
In supplementary information to the final rule, the DOL also notes that such a rule
“reduces the administrative burden on employers that operate in more than one State, or
that have employees who move between States with different marriage recognition rules;
such employers will not have to consider the employee’s state of residence and the laws
of that State in determining the employee’s eligibility for FMLA leave.” Moreover, the
place of celebration rule is consistent with interpretations adopted by other federal
agencies, including the Department of Defense and the Internal Revenue Service,
allowing for greater uniformity.
60
Employee documentation requirements. The DOL received numerous comments
regarding the documentation that employers may require from employees in order to
confirm a family relationship—in particular, what documentation an employer may
require in order to confirm that an employee has a valid marriage. Rejecting several
proposals by commenters, however, the DOL declined to modify the relevant regulation
at Sec. 825.122(k), which permits employers to require employees who take leave to care
for a family member to provide reasonable documentation of the family relationship.
Currently, reasonable documentation may take the form of either a simple statement from
the employee that such a relationship exists, or documentation such as a birth certificate
or court document. The DOL said that, in its view, that provision “adequately addresses
the nature of the documentation that employers may require,” and that “in all cases, a
simple statement of family relationship is sufficient under the regulation to satisfy the
employer’s request.” However, the employer may require that statement to be in writing.
The DOL also said that if an employee has already submitted proof of marriage for some
other purpose, such as obtaining health benefits for the spouse, “such proof is sufficient
to confirm the family relationship for purposes of FMLA leave.”
Senate Dems urge $56,680 salary floor in new OT regs
A group of 26 Democratic senators reaffirmed their support for updating the Department
of Labor’s overtime regulations to boost workers’ overtime pay in a letter to President
Obama late last week. Led by Patty Murray (D-Wash.), the top Democrat on the Senate
(HELP) Committee, and Bernie Sanders (I-Vt), the senators on January 29 specifically
urged the President to raise the overtime threshold for salaries workers to $56,680 a year
in order to ensure that “more middle-class workers are paid fairly for overtime hours.”
Currently, the salary threshold for receiving overtime pay is $23,660—below the poverty
line for a family of four, the senators noted. “That threshold covers approximately 11
percent of today’s salaried workers, and disqualifies millions of middle-class workers
who often work long hours from getting time-and-a-half pay. Raising the threshold to
$56,680 would cover 47 percent of today’s salaried workers, ensuring more workers get a
fair day’s pay for a hard day’s work.”
“Too many Americans are working longer and harder without anything to show for their
efforts in their paychecks,” the senators wrote. “These long hours are straining middle
class workers and their families. Since the 1970s, average salaries for middle class
individuals have dropped even while salaried workers have increased the hours they
spend on the job. Strengthening overtime protections will help millions of middle class
families.”
Murray and Sanders were joined by Dick Durbin (D-Ill), Sheldon Whitehouse (D-RI),
Sherrod Brown (D-Ohio), Al Franken (D-Minn), Debbie Stabenow (D-Mich), Bob Casey
(D-Pa), Martin Heinrich (D-NM), Elizabeth Warren (D-Mass), Tammy Baldwin (DWisc), Kirsten Gillibrand (D-NY), Jack Reed (D-RI), Richard Blumenthal (D-Conn),
Chuck Schumer (D-NY), Ed Markey (D-Mass), Pat Leahy (D-Vt), Mazie Hirono (DHaw), Chris Murphy (D-Conn), Brian Schatz (D-Haw), Barbara Mikulski (D-Md), Ron
61
Wyden (D-Ore), Cory Booker (D-NJ), Maria Cantwell (D-Wash), Ben Cardin (D-Md),
and Jeanne Shaheen (D-NH).
Budget proposal aimed at ‘middleclass economics,’ $1.8B deficit reduction
By Pamela Wolf, J.D.
As foreshadowed in his State of the Union address, President Obama’s budget proposal,
released on Monday, February 2, is aimed “to bring middle-class economics into the 21st
Century.” It also attempts a $1.8-trillion deficit reduction over the next 10 years.
Echoing the theme of his SOTU address, Obama asked in his budget message, “will we
commit ourselves to an economy that generates rising incomes and chances for everyone
who makes the effort?” The past six years has shown that middle-class economic works,
according to the president. “We’ve reaffirmed one of our most fundamental values as
Americans: that this country does best when everyone gets their fair shot, does their fair
share, and plays by the same set of rules.”
The president said that the ideas offered in his budget proposal “are designed to bring
middle-class economics into the 21st Century” and said that they will “help working
families feel more secure with paychecks that go further, help American workers upgrade
their skills, so they can compete for higher-paying jobs, and help create the conditions for
our businesses to keep generating good new jobs for our workers to fill.” Obama also
vowed, “We will make these investments and end the harmful spending cuts known as
sequestration, by cutting inefficient spending, and closing tax loopholes.”
The proposal will also create “a more sustainable fiscal path by achieving $1.8 trillion in
deficit reduction, primarily from reforms in health programs, our tax code, and
immigration,” according to the president. That reduction would be achieved over the
course of 10 years.
Worker protections. The president’s budget proposal would give nearly $1.9 billion to
the DOL’s worker protection agencies with the goal of “putting them on sound footing to
meet their responsibilities to defend the health, safety, wages, working conditions, and
retirement security of American workers.” The proposal also says that Obama’s
administration is “pursuing a combination of executive and legislative actions to
strengthen these laws and their enforcement, so workers can earn wages that will allow
them to sustain their families, be protected from discrimination, return home safely at the
end of a day’s work, and retire with dignity.”
The proposal points, among other things, to budgetary and administrative actions that
support raising the minimum wage; enhance worker safety and protections for
whistleblowers; and strengthen penalties against employers who jeopardize workers’
health, safety, wages, and retirement security.
The president’s total fiscal (FY) 2016 budget request for the DOL is $13.2 billion in
discretionary authority, coupled with mandatory funding, and 17,880 full-time equivalent
62
employees. The request represents about a $1.2-billion increase over FY 2015 levels,
according to the DOL’s Budget in Brief.
A fact sheet released by the DOL gives a short-hand summary of the goals implemented
by the agency’s proposed FY 2016 funding:

Supports working families by providing funding to States to help them establish
paid leave programs

Builds on the Workforce Innovation and Opportunity Act by increasing access to
employment services and training opportunities

Ensures that training is designed to lead to good jobs by expanding effective
work-based models like Registered Apprenticeships and credentials that have real
labor-market value

Provides more assistance to populations like ex-offenders and disconnected youth
who face greater barriers to reemployment

Reduces barriers created by unnecessary occupational licensing requirements

Reauthorizes the Trade Adjustment Assistance program

Enhances enforcement to protect wages, worker safety, and protections for
whistleblowers

Strengthens retirement security by expanding retirement savings options

Supports raising the minimum wage and modernizing overtime rules
The budget proposal for the DOL also includes steps that are aimed to improve programs
and services in Unemployment Insurance, the Senior Community Service Employment
Program, Information Technology, the Federal Employees’ Compensation Act, the Job
Corps, and the Pension Benefit Guaranty Corporation.
Specifically, the nearly $1.9 billion allocated to the DOL’s worker protection agencies
includes:

$207 million for EBSA to provide benefit security to the public and increase their
confidence that their retirement, health and other benefits will be available when
needed. The budget includes proposals that would make saving easier for millions
of Americans currently without employer-based retirement plans.

$114 million for the OFCCP to enforce equal employment opportunity with
federal contractors.
63

$277 million for the Wage and Hour Division to ensure workers receive
appropriate wages and overtime pay, as well as the right to take job-protected
leave for family and medical leave purposes.

$592 million for OSHA to foster employer compliance with safety and health
regulations and inspect hazardous workplaces, and strengthen its protection of
whistleblowers against retaliation for reporting unsafe and unscrupulous practices.

$395 million for the Mine Safety and Health Administration to help protect
workers in one of our nation's most dangerous industries.
EEOC proposed budget. The budget request for the EEOC is $373,112,000, which
includes $29,500,000 for state and local programs—a bump of $8,612,000 over the
agency’s FY 2015 appropriation.
EEOC Chair Jenny R. Yang noted that the agency’s FY 2014 appropriations permitted
the Commission to launch what she called “a critical hiring effort” aimed at rebuilding
the EEOC’s workforce, particularly those workers who provide direct services to the
public through field offices or who investigate, mediate, conciliate, and litigate pending
discrimination claims.
The agency has hired 363 new employees to date and has a full-time equivalent level of
2,180. Given the hiring that was launched in mid-2014 following a three-year hiring
freeze, the EEOC expects that the increased staffing levels will result in increased
resolutions and contribute to inventory reduction. In FY 2014, the agency’s charge
resolutions were 87,442, but with its hiring of investigators and other front-line staff
starting FY 2014 and continuing into FY 2015, the EEOC projects an increase in
resolutions to 92,929, which will climb to 99,217 in FY 2016. As a result, the agency
expects a declining pending inventory of 68,735 by the end of FY 2016—a 9-percent
decrease.
“This budget submission requests a level of funding for the EEOC that will allow the
Agency to continue to restore our capacity in mission critical areas, repair the adverse
effects of recent budget cuts, address staff attrition and workload concerns, and continue
to implement our Strategic Plan to better serve the public,” wrote Yang in her
introductory message to the EEOC’s Congressional Budget Justification for FY 2016.
Will Obama's budget break a legislative logjam on paid family leave?
After more than a decade of trying, backers of paid family leave have managed to get just
a handful of states to guarantee paid leave for new parents and workers who have to take
time off because they are sick or must care for an ailing family member.
A proposal by President Barack Obama, which he unveiled in his State of the Union
speech last month and included in the federal budget he proposed on Monday, could
break the logjam.
64
Just three states currently have paid family leave policies. California became the first
state to adopt paid family leave in 2002, followed by New Jersey in 2008 and Rhode
Island in 2013. In all three, benefits are paid from the state’s temporary disability
insurance program. But only five states have disability insurance programs (Hawaii and
New York are the others). As Stateline reported last year, the lack of such programs in
other states has emerged as perhaps the biggest roadblock to paid leave laws in the states.
Obama is calling on Congress to approve $2 billion for up to five more states to start their
own paid leave programs. That money would be available for three years, after which
states would have to pick up the tab for the programs. The budget also includes $35
million states can tap for technical and administrative support as they consider their own
plans.
Taken together, the moves have paid leave supporters eager for another push in
statehouses this year.
Already, bills have been drafted in Colorado, Connecticut, Hawaii, Massachusetts,
Nebraska and Wisconsin, and campaigns are likely in other states and the District of
Columbia.
“The fact that the president put paid sick leave days and paid family leave (in his State of
the Union) is tremendous progress in terms of moving the nation,” said Vicki Shabo, vice
president at the National Partnership for Women & Families, an advocacy group.
California dreaming
The paid leave programs in California, New Jersey and Rhode Island are similar, but
California’s is cited most often as a model. Workers in California pay a 1 percent payroll
tax to fund the program, which pays for qualified workers to take six weeks off at about
half their normal weekly salaries, up to a maximum of $1,100.
Paid leave proponents have failed to push through a similar system in numerous states,
but perhaps the most frustrating defeat occurred in Washington state. Lawmakers there
actually passed a paid leave law in 2007, only to see it collapse when they couldn’t agree
on a plan to fund it. Others have studied the idea, drawing on money from the U.S.
Department of Labor to do so.
But Obama’s plan has proponents feeling more bullish than they have in years.
Sherry Leiwant, co-president of A Better Balance, a New York-based group that supports
paid leave, called Obama’s proposal “a huge factor” in the debate, although she noted
Republican control of the New York State Senate would be an added challenge this year.
Lisa Kimura, executive director of the Healthy Mothers Healthy Babies Coalition of
Hawaii, which will hold a lobby day this week supporting its paid leave bill, said federal
funding could alleviate fiscal concerns that have held the program back. The bill’s first
hearing is scheduled for today [February 3, 2015].
65
“Many of the initial concerns about implementation of the program involve questions
about cost,” Kimura said. “Putting paid family leave in the national spotlight creates the
opportunity for honest conversation about what families need and deserve.”
Obstacles remain
But many Republicans, backed by business groups, continue to oppose any kind of paid
leave mandates at the state or federal level, a reality that could stymie the president’s
efforts before they even have a chance to affect the states. In some places, Democratic
lawmakers also have been wary of the impact on employers.
“Americans have great freedom when it comes to work,” U.S. Sen. Lamar Alexander, a
Tennessee Republican, told the Associated Press after the president’s speech. “One more
government mandate, however well-intentioned, will only reduce those freedoms.” (The
federal money is designed to spur states to pass their own paid leave laws, but Obama is
not proposing a federal paid leave mandate.)
Some human resource specialists also question the wisdom of paid leave policies,
warning that they can handcuff companies that want to offer flexible workplace
compensation and time-off policies to their workers.
“The idea here is that one-size-fits-all mandates limit employers’ flexibility to be creative
and innovative in designing their overall leave programs,” said Lisa Horn, director of
congressional affairs for the Society for Human Resource Management, a membership
organization for human resource professionals.
“You can’t look at state policies in a vacuum, because now you’re often required not only
to comply with the state but also the federal statute,” Horn said. The federal Family and
Medical Leave Act, signed into law in 1993, guarantees workers up to 12 weeks of
unpaid, job-protected leave per year. FMLA applies to all public agencies, all public and
private K-12 schools, and companies with 50 or more employees. In some cases, Horn
said FMLA overlaps with or conflicts with state law.
But even Horn expects paid leave proposals to gain traction this year, especially in the
five states (Connecticut, Delaware, Hawaii, Oregon and Vermont) that don’t have paid
leave programs but where Democrats control both the legislature and the governor’s
mansion.
In those states, Shabo of the National Partnership for Women & Families said, the
president’s push and the availability of federal money could make a huge difference.
“There’s a strong argument to be made that having federal funding available to do the
work that would need to be done to piggyback is important,” Shabo said.
Source: Jake Grovum, Staff Writer, Stateline (http://www.pewstates.org), February 3,
2015. Stateline is a nonpartisan, nonprofit news service of the Pew Center on the States
that provides daily reporting and analysis on trends in state policy.
66
Company gets $560K lesson that telemarketers are not independent contractors
A federal court in Nevada has ordered a Las Vegas-based telemarketing company to pay
$280,000 in minimum wage and overtime back wages and an equal amount in liquidated
damages to 398 employees for FLSA violations, bringing the total relief to $560,000. The
consent judgment entered by the court resolves a DOL lawsuit against Intelliconnect
Communications LLC, owners Brenda Portela and Stephanie Meehan, and S&M
Management Services Inc., a successor employer. Intelliconect provides telemarketing
services to companies, such as those purchasing utility and phone lines from larger
companies, and sells them to residential and commercial customers.
A DOL Wage and Hour Division investigation found that from January 2010 through
December 2012, Intelliconnect misclassified its telemarketers as independent contractors,
which denied them minimum wage and overtime wages, according to WHD release on
February 2.
Investigators found that the employer paid the telemarketers based on a percentage of
individual sales, resulting in many of them working for days and weeks for little or no
pay.
Under the consent judgment resolving the suit, Intelliconnect will be independently
monitored for the next three years to ensure future compliance due to the nature and
circumstances of the violations found. The company is also barred from retaliating
against employees for accepting back wages or for exercising their rights under the FLSA
and must take additional proactive measures to ensure future compliance.
The WHD said that Intelliconnect and its owners admitted to the misclassification of
employees and agreed to provide annual training sessions for a period of three years, and
to produce and maintain for workers explanations when they claim a worker is exempt
from minimum wage and overtime.
Developer, affiliated companies must pay $512K in unpaid wages, liquidated
damages
A developer, David Emami, and three of his affiliated companies must pay 33 Portlandarea employees $512,290 in unpaid wages and liquidated damages under an order entered
by a federal court in Oregon. The order comes in the wake of a DOL investigation that
found Emami and companies Oak Grove Cinemas Inc., Barrington Management LLC,
and Barrington Venture LLC willfully violated FLSA overtime and recordkeeping
provisions. The court also ruled that Emami violated the anti-retaliation protections of the
FLSA by threatening employees who cooperated with the department’s investigation,
according to a February 2 agency release.
The DOL concluded that workers Emami employed as general maintenance, landscaping,
and construction workers at commercial properties he owned or maintained had two time
cards for most pay periods. On one time card, employees recorded their morning start
time and a midafternoon end time. The employees immediately clocked in on a second
time card to record the remainder of a day’s work hours, the DOL said. The workers’
duties and rates of pay remained the same each day at each work location.
67
Workers typically received two paychecks each time they were paid—one from Emami’s
Oak Grove Cinemas and another from Barrington Management or Barrington Venture,
according to the DOL. The employer claimed that the employees were independent
contractors during the hours they spent working for the Barrington companies. The
combined paychecks covered all of the employees’ hours, including those over 40 per
week, paid at straight time. The DOL found, and the court agreed, that Emami’s
“scheme” was deliberately concocted to avoid paying his employees overtime.
The court also found that Emami violated the FLSA’s anti-retaliation provision by
threatening to retaliate against employees for cooperating with the DOL’s investigation
or becoming a witness for the government. Threats of retaliation included intimidation
and threats of physical force against cooperating employees.
The DOL filed its lawsuit in the District of Oregon; the case number is 03:13-cv-00728HZ.
Court approves $30M settlement in FLSA collective action against Publix Super
Markets
By Lisa Milam-Perez, J.D.
A federal district court in Tennessee has approved a $30 million settlement in a collective
action brought by a former employee of grocery store chain Publix Super Markets, Inc.,
alleging that the company improperly calculated overtime pay for its managers and
assistant managers pursuant to the fluctuating workweek method. The court had granted
conditional certification to the putative collective action wage suit in 2013; in a February
4 order, it granted the parties’ joint motion for settlement approval and to reopen the optin period for a second group of class members for settlement purposes. The court also
signed off on the plaintiffs’ unopposed motion for approximately $6.6 million in
attorneys’ fees and costs from the settlement fund. Service awards to named plaintiffs,
and to other class members either deposed in the litigation or who had responded to
written discovery, will also be paid out from the settlement fund.
Under the terms of the settlement, the class is broken into two groups of participants: one
group of employees who had already opted into the litigation by filing signed consents
(and whose claims had not otherwise been dismissed); and all other department managers
or assistant managers who worked overtime during the period in question who were paid
overtime under the fluctuating workweek method. The first group will share from a $7.7
million payout. Publix will make an offer of settlement to members of the second group;
those who satisfy the requirements for participation and accept the settlement offer will
partake from a $15.5 million pool, distributed pro rata among class members.
Class members participating in the settlement will release any and all claims that could
have been brought arising from Publix’ alleged failure to pay overtime during the pay
periods in which they worked as “fluctuating workweek associates.” (Claims currently
pending in another lawsuit against Publix in the same district court are not included in the
release here.) Publix denied any liability for the claims alleged or that it had violated the
FLSA’s overtime provisions.
68
The lawsuit, Ott v. Publix Super Markets, Inc. (No. 3:12-cv-00486), was brought in a
federal district court in Tennessee.
Justices asked to scrutinize FLSA outside sales exemption, collective action waivers
By Pamela Wolf, J.D.
KeHE Distributors has asked the Supreme Court to review a Sixth Circuit decision
finding that the company’s sales representatives were not exempt from FLSA overtime
under the outside sales exemption and that employees who signed waivers contained in a
separation agreement could not be excluded from a collective action.
Last July, the Sixth circuit found, in Killion v. KeHE Distributors, LLC, that a district
court had erred in concluding that the reps’ reordering of merchandise constituted a
“sale” for FLSA purposes as a matter of law and that making sales was the reps’ primary
duty. The appeals court also found that those who signed unmodified separation
agreements purportedly giving up the right to become a member of a class or collective
action could not be excluded from a collective action. The court reasoned that because no
arbitration agreement was present in this case, the decision in Boaz v. FedEx Customer
Information Services, Inc. was controlling. Boaz implied that a plaintiff’s right to
participate in a collective action cannot normally be waived.
In a petition for cert filed on February 6, KeHE Distributors contends that the Sixth
Circuit’s conclusion that an employee’s right to join a FLSA collective action may not be
waived creates a 7-1 circuit split, with the Second, Third, Fourth, Fifth, Eighth, Ninth and
Eleventh Circuits finding otherwise. The Sixth Circuit ruling also conflicts with High
Court precedent, according to the petition.
The food distributor also asserts that the Justices should address whether the FLSA’s
outside sales exemption excludes those who are paid entirely on commission and write
orders to replenish customer inventory, but do not alone cause increased sales. According
to the petition, permitting a jury to conclude that the company’s sales reps are not making
sales despite the fact that they “write and transform orders,” make “cold-calls,” and are
paid only commission is contrary to DOL guidance, the FLSA, and the Supreme Court’s
decision in Christopher v. SmithKline Beecham Corp., which found a more expansive
definition of “sale,” an argument rejected by the Sixth Circuit below.
Push for earned sick leave continues
By Pamela Wolf, J.D.
Refusing to give up their goals, Congresswoman Rosa DeLauro (D-Conn.) and Senator
Patty Murray (D-Wash) have reintroduced legislation that would let workers earn paid
sick leave that can be used for their own illness, to care for a sick family member, to
obtain preventive care, or to address the impacts of domestic violence, stalking, or sexual
assault. As expected, the Healthy Families Act, which never made it out of committee
last year, was submitted for another try on February 12. The measure has been put before
lawmakers every year since 2004.
69
The bill (H.R. 932, S. 497) would allow workers in businesses with at least 15 employees
to earn up to 56 hours or seven days of job-protected, paid sick leave every year. One
hour of paid sick time would be earned for every 30 hours worked. Workers at a business
with fewer than 15 employees would be able to earn up to seven job-protected days of
unpaid sick leave annually. Employers that already provide paid sick time would not be
required to change their current policies as long as they meet the minimum standards
outlined in the Healthy Families Act. Employers would also be able to require workers to
provide documentation to support any request for leave longer than three consecutive
days. Additional information about the measure is provided in a fact sheet. DeLauro, a
longtime advocate for policies that benefit working Americans, has introduced the
Healthy Families Act in every Congress since 2004. Murray has been an original
cosponsor of the Healthy Families Act since 2004.
Last month, President Barack Obama pressed Congress to pass the Healthy Families Act
and urged states to pass legislation that would give more workers access to paid leave.
Putting his money where his mouth is, Obama proposed funding that would help states
and municipalities figure out how to make earned sick-time and paid leave a reality. The
White House outlined the president’s planned steps to advance the reality of earned sick
time in a fact sheet.
“Everyone should be able to take care of themselves and their families when they are sick
without having to worry about losing their jobs,” said DeLauro, senior Democrat on the
subcommittee responsible for funding the departments of Labor, and Health and Human
Services. “The United States is the only developed country that does not require
employers to offer paid sick days. I am proud that my home state of Connecticut was the
first in the nation to pass a paid sick days law, back in 2011. Since then it has spread to
California, Massachusetts, and nearly 20 cities. We need to take it national. The Healthy
Families Act is smart policy that needs to become law.” “It is unacceptable that for 43
million of our nation’s workers, catching the flu or needing to care for a sick family
member means losing a day of pay, or even losing a job,” said Murray, ranking member
on the Senate Health, Education, Labor, and Pensions Committee. “No one should ever
have to choose between their health, or a loved one’s health, and their economic security,
but our outdated policies are forcing too many workers to make that kind of choice. That
needs to change, which is why it’s time to pass the Healthy Families Act and help make
sure our economy works for all families, not just those at the top.”
Walmart boosting wages, making schedules more stable
By Pamela Wolf, J.D.
Walmart CEO Doug McMillon has announced a package of changes in employee wages,
scheduling, benefits, and opportunities for advancement, including an imminent startingpay hike to at least $9 an hour. The company is pursuing what McMillon called
“comprehensive changes to our hiring, training, compensation, and scheduling programs,
as well as to our store structure”—changes that he said will be sustainable long term. The
giant retailer has been at the center of continuing protests over working conditions,
including low wages, that were held in 2013 and 2014.
70
Wage hikes. The package of changes announced on Thursday, February 19, by the retail
giant is aimed to kick off a new approach to Walmart jobs. Among the most immediate
changes is a starting-pay hike to at least $9 an hour beginning in April, and another boost
to at least $10 an hour by February 2016.
The company is also putting in place an innovative program for future associates that will
permit them to “join Walmart at $9 an hour or more next year, receive skills-based
training for six months, and then be guaranteed at least $10 an hour upon successful
completion of that program,” the CEO said. In an effort to strengthen department
manager roles, the company will raise the starting wage for some of those jobs to at least
$13 an hour this summer, with a hike to at least $15 an hour early next year.
When these changes go into effect in April, the average full-time hourly wage at Walmart
will be $13/hour, up from $12.85, while the average part-time hourly wage will be
$10/hour, up from $9.48.
The company said that it’s also working to ensure that in-store promotions come with
“more meaningful raises,” with additional information to be made available later this
year. Associates will continue to earn quarterly bonuses based on store performance.
More stable scheduling. Walmart also vowed to give associates more control and
ownership of their schedules—by 2016, some associates will be offered fixed schedules
each week. The company is now piloting the program with expected expansion early next
year. Walmart said that associates will know their schedules at least two and a half weeks
in advance, making it easier for them to plan their personal schedules. Associates
interested in picking up additional hours are also able to view available shifts and select
them.
The move on Walmart’s part, whether intentional or not, addresses some of the problems
sought to be remedied by the Schedules That Work Act (HR 5159 and S 2642), introduced
last July. The bill never made it out of committee in either chamber of Congress, though.
“Retail sales, food preparation and service, and building cleaning occupations are among
those most likely to have unpredictable and unstable schedules,” the legislative findings
underpinning the bill state. “According to data from the Bureau of Labor Statistics, 66
percent of food service workers, 52 percent of retail workers, and 40 percent of janitors
and housekeepers know their schedules only a week or less in advance. The average
variation in work hours in a single month is 70 percent for food service workers, 50
percent for retail workers, and 40 percent for janitors and housekeepers.”
Walmart and the Walmart Foundation are also committing $100 million over five years
to “support programs that help increase the economic mobility for entry-level workers by
advancing their careers, in order to promote a stronger workforce.”
McMillon, among other things, pointed to company statistics showing that about 75
percent of Walmart’s U.S. management teams began in an hourly role.
71
Justices asked to clarify post-Twomby and Iqbal pleading standards
By Pamela Wolf, J.D.
A cable installer whose FLSA claims were tossed in the lower courts has turned to the
Justices to clear up the considerable confusion surrounding what exactly is the
appropriate pleading standard in the wake of the Court’s Twomby and Iqbal decisions.
In Landers v. Quality Communications, Inc., the petitioner sought to recover, for himself
and other similarly situated workers, the minimum wages and overtime pay he said his
employer failed to pay, in violation of the FLSA.
In an issue of first impression, and mindful of the Supreme Court’s admonition that the
pleading of detailed facts is not required under Rule 8, the Ninth Circuit joined the First,
Second, and Third Circuits in holding that in order to survive a motion to dismiss postTwombly and Iqbal, a plaintiff asserting an overtime claim must allege that he worked
more than 40 hours in a given workweek without being compensated for the overtime
hours worked during that workweek. Also agreeing that the plausibility of a claim is
“context-specific,” the appeals court explained that a plaintiff may establish a plausible
claim by estimating the length of his average workweek during the applicable period and
the average rate at which he was paid, the amount of overtime wages allegedly owed, or
any other facts that will permit a court to find plausibility.
Applying that standard to the cable installer’s claims, the Ninth Circuit found he had
failed to state a claim for unpaid minimum wages and overtime where his complaint did
not allege facts showing that there was a specific week in which he was entitled to but
was denied minimum or overtime wages. Accordingly, the appeals court affirmed the
district court’s dismissal of the cable installer’s complaint.
“Some lower courts in recent years have required employees to plead more and more
factual content—facts which most often sit in the hands of the defendant—before
allowing a case to proceed in court,” according to Nichols Kaster, PLLP, one of the law
firms representing the cable installer in his petition for cert. “Other courts have stuck to
the traditional rule that a complaint must only contain ‘a short and plain statement of the
claim showing that the pleader is entitled to relief.’”
Nichols Kaster said that the cable installer’s case carries implications beyond employee
rights. “The same kinds of heightened pleading standards effectively close the courthouse
doors on many plaintiffs alleging environmental damage, consumer protection violations,
and official misconduct,” according to the firm.
The petitioner is also represented by law firm Leon Greenberg, PC.
In a petition for cert filed on February 10, the cable installer posed this question to the
Court: “Whether plaintiffs seeking overtime under the FLSA must support their
allegations with detailed facts demonstrating the time, place, manner, and extent of their
uncompensated work; or whether it is sufficient if plaintiffs’ allegations give defendants
fair notice of plaintiffs’ claims for overtime and the grounds upon which it rests.”
72
The case is Landers v. Quality Communications, Inc., No. 14-969.
Latest exotic dancer wage suit targets Larry Flynt’s club
Larry Flynt’s Hustler Club is the latest among New York City adult entertainment
enterprises to be accused of violating federal and state labor laws in a putative class
action filed by New York plaintiffs’ firm Outten & Golden LLP. Alleging widespread
FLSA and New York Labor Law violations, the complaint claims that Hustler deprived
the club’s dancers of minimum wages and of reimbursement for uniform expenses, as
well as their right to keep customer tips and to work without paying house “rental fees.”
According to a press statement issued by the law firm, the suit seeks to recover lost
wages and other damages on behalf of current and former dancers who worked for the
club since February 18, 2009, court costs and attorneys' fees, and other damages.
Attorneys Justin M. Swartz, Deirdre Aaron, and Olivia J. Quinto, of Outten & Golden’s
New York office, represent the named plaintiff.
“The claims here, that Larry Flynt's Hustler Club does not follow worker protection
statutes, are nothing new in the New York City adult entertainment industry,” said
Swartz, who has represented dancers in several high-profile wage and hour suits.
“Entertainers at many clubs suffer because of the wide disparity in bargaining power
between workers and club owners. We are trying to clean up the industry's compensation
practices one club at a time.”
“Over the years, entertainers at adult clubs have made some strides by winning
recognition as employees and otherwise protecting their workplace rights, including in
cases that our firm has prosecuted and cases prosecuted by the U.S. Department of
Labor,” Deirdre Aaron added. “These cases are just the beginning. More must be done to
protect entertainers' workplace rights. This lawsuit continues that effort.”
In addition to CMSG Restaurant Group, LLC, doing business as Larry Flynt's Hustler
Club, the complaint names several individual defendants.
The lawsuit, Martinez v. CMSG Restaurant Group, LLC dba Larry Flynt's Hustler Club,
No. 15-cv-1181 (ER) (SN), was filed in the Southern District of New York.
Most employers provide paid leave, but less for caregivers, part-time employees
Almost all U.S. employers with 50 or more employees (99 percent) have some form of
time off with pay for their full-time employees, according to national data released by the
Families and Work Institute (FWI) and the Society for Human Resource Management
(SHRM). The study, Paid Time Off, Vacations, Sick Days and Short-term Caregiving in
the United States, also found that only about one-third of employers provide at least five
days of paid leave for caregiving and roughly 25 percent provide paid leave to part-time
employees.
The study is based on findings in the 2014 National Study of Employers. It found no
significant differences between large employers (1,000 and more employees) and small
73
employers (50 to 99 employees) in offering any of the three types of paid leave—sick
days, vacation time or general paid time off, known as PTO.
Mike Aitken, SHRM’s vice president of government affairs, said: “This study shows that
paid leave is available to the vast majority of full-time employees. When employers
control their own benefit offerings, there can be flexibility and creativity, which benefit
both employers and employees.”
Overall, few employers offer paid leave options to part-time employees—whether they
are hourly (offered by 24 percent of employers) or salaried (32 percent). Among
employers with a PTO program, large employers are more likely to offer it to their parttime salaried and hourly employees than small employers.
In terms of what type of paid leave is provided, vacation time was at the top of the list,
provided by 58 percent of organizations. It was followed by sick days (52 percent) and
PTO (41 percent).
It’s difficult to gauge whether the number of employers offering paid leave overall has
changed since 2008 because the criteria from tracking such data has changed to include
PTO, in addition to sick and vacation time. A growing number of employers are using the
PTO designation, putting all paid leave in one PTO bucket and giving employees the
choice of whether to use the time for vacation, illness or any other reason.
The WHD cometh: Low-wage industries, emerging business models targeted
By Pamela Wolf, J.D.
Employers, especially those in low-wage industries or that use emerging business
models, should be on notice that the Wage and Hour Division sees them as fertile ground
for proactive investigations—the agency won’t be waiting for a worker to complain.
WHD Administrator David Weil talked numbers and connected them to the real-life
consequences for the workers on the receiving end of the wages recovered by his
division. He also emphasized the WHD’s commitment and success using proactive
investigation and targeted industry strategies.
In a blog post on Thursday, February 26, Weil pointed out that during fiscal year 2014,
WHD investigations found more than $240 million owed to more than 270,000 workers
whose employers failed to pay them the wages they had earned in violation of the FLSA.
Since FY 2009, the division has recovered more than $1.3 billion in back wages for more
than 1.5 million workers.
The WHD collected an average of more than $659,000 in back wages for workers every
day last year. “That’s enough for more than 3,500 working families to buy a week’s
groceries,” Weil said. On average, investigations found more than $890 for each worker
who was owed back wages. Translating those numbers again into real-life consequences,
Weil said that for a waiter or waitress “it means more than three and a half times what
they would earn in a typical workweek. Imagine how challenging it would be if you
weren’t compensated for three-and-a-half weeks of work.”
74
More proactive investigations. Weil underscored the fact that the WHD is proactively
initiating investigations instead of waiting for a complaint to be filed. In 2014 more than
43 percent of its investigations were initiated proactively—up from 35 percent from five
years ago. “We’ve directed our resources to where the data and evidence show wage
violations are most likely to occur, where emerging business models lend themselves to
such violations, and where workers are least likely to exercise their rights,” he explained.
Citing the numbers that support the division’s strategic enforcement efforts are netting
results, Weil said the division found workers had been underpaid in 78 percent of these
agency-initiated investigations in FY 2014—a 65-percent increase from FY 2009.
Industry targeting successful. The WHD has also been targeting its resources to the
right industries, according to Weil: “These measures show that we are investigating the
right industries, and within those industries we are looking in the right places. Last year,
we recovered $79 million owed to 109,000 workers in low-wage industries—more than a
37-percent increase in back wages and more than a 41-percent increase in the number of
workers helped from six years ago.”
Weil said his motivation for sharing the data included transparency and to illustrate for
taxpayers the return on their investment. “In reviewing the results of our work, it’s clear
that we’re making progress but our work must continue—too many workers still aren’t
properly compensated for their labor, affecting themselves, their families and entire
communities,” he said.
LEADING CASE NEWS:
D.C. Cir.: Hostility to leave request, requiring FFD exam support revival of FMLA
claims
By Brandi O. Brown, J.D.
An officer whose depression-related requests for intermittent leave were met with explicit
anger and irritation by her supervisor and another upper-level manager, as well as with a
demand that she undergo a fitness-for-duty examination, will again be able to pursue her
claims, the D.C. Circuit ruled, reversing an order of the district court dismissing her
complaint. Turning to the NLRA for guidance, the appeals court found that the employee,
whose depression stemmed from her husband’s suicide and her sister’s later demise,
sufficiently alleged an FMLA interference claim by describing her managers’ reaction to
her requests, even if she was not actually denied leave. She also sufficiently pleaded her
retaliation claim (Gordon v. U.S. Capitol Police, February 20, 2015, Williams, S.).
Intermittent bouts of depression. In her complaint, the officer alleged that following the
suicide of her husband, she began to suffer from bouts of depression. In May 2011, she
sought pre-approval of a bank of FMLA leave to be used at future, unspecified dates as
part of a system her employer had in place allowing for such requests. The employer
approved 240 hours of FMLA leave. However, the officer subsequently learned that an
upper-level manager was angry about FMLA requests and specifically had announced his
intent to “find a problem” with her request.
75
Fitness-for-duty exam. In July, the employee was informed that due to the medical
condition outlined in her FMLA leave request, her police powers would be revoked
pending a fitness-for-duty exam. She had been scheduled to work overtime during the
days in which her police powers were revoked and, as a result, lost the opportunity to
earn $850. She also spent $50 on travel to and from the exam. She passed the exam and
her powers were reinstated. However, the exam remained on her record and the employee
alleged that this would hurt future opportunities for pay raises, transfers, and promotions.
Death, anniversary, and training. A few months later, the officer was scheduled to
attend a multi-day active shooter training session. A scheduled appointment with her
therapist, however, conflicted with the training. She already had to reschedule a prior
appointment because of her sister’s funeral. Her sister’s death had occurred as the
anniversary of her husband’s death approached. Therefore, she requested use of her
FMLA leave to miss the scheduled training. Her supervisor “became irate” about her
request and initially refused it, demanding a note from her doctor. However, he later
approved the request.
The officer subsequently filed suit against her employer, alleging retaliation and
interference with her FMLA rights. The employer moved to dismiss her complaint under
Fed. R. Civ. P. 12(b)(6), which was granted by the district court. The employee appealed
and the D.C. Circuit reversed.
Interference. With regard to the employee’s interference claim under 29 U.S.C. Sec.
2615(a)(1) the court was faced with the question of whether she could state a claim for
interference when she was not actually deprived of leave. In other words, the court
considered whether an interference claim could be based on “ineffective employer
discouragement,” such as what had been alleged by the employee.
NLRA guidance. The question was not resolved by the text of the statutory section and,
therefore, the court turned for guidance to judicial constructions of NLRA Section
8(a)(1), which served a similar function, i.e., to define those circumstances where an
employer chilled an employee’s exercise of rights created by other provisions. At the
point of FMLA enactment, almost every circuit court had interpreted that NLRA
provision as establishing interference where an employer’s action “had a ‘reasonable
tendency’ to interfere with employees’ rights, whether or not it actually did so.”
Those previous interpretations of that provision “provide a strong indication that FMLA
interference claims do not require effective interference,” the court concluded, but only
that the employer’s conduct “reasonably tends to interfere” with the employee’s exercise
of rights. Thus, the court held, “an employer action with a reasonable tendency to
‘interfere with, restrain, or deny’ the ‘exercise of or attempt to exercise’ an FMLA right”
could give rise to a claim even if it “fails to actually prevent such exercise or attempt.”
The employee’s complaint satisfied that element, the court concluded.
Retaliation. Noting that there was a “good deal of overlap in the coverage” of the two
subsections contained within Section 2615(a), the court considered, and accepted, the
sufficiency of the employee’s allegations under each. Observing that the employee relied
76
primarily on the second subsection (which requires opposing any practice made unlawful
by the FMLA), the appeals court noted that provision’s parallels with Title VII’s
retaliation provision. However, the court explained that it had also recognized a
retaliation claim based on the first subsection (which contains no requirement that she
oppose any practice). Both subsections, however, had been held to follow the familiar
analytical framework fashioned under Title VII’s provision.
Ambiguity regarding standard. The employee sufficiently pleaded the elements of her
prima facie case. Even if the employer’s assertion that the employee had not engaged in
“protected activity” as defined in Section 2615(a)(2) was correct, she could still advance
her claim under the other subsection, the court explained. Moreover, although the
employer also argued that the “material adversity” standard outlined in Burlington
Northern & Santa Fe Railway Co. v. White, a Title VII decision, should apply, and that
the employee could not satisfy it, the court disagreed. While applying that higher
standard was conceivable given the importation of the Title VII framework to FMLA
retaliation claims and, indeed, other circuit courts have so held, the appeals court
explained that it was also “conceivable that a lower standard might govern” under a
previous U.S. Supreme Court case interpreting the FMLA. In Ragsdale v. Wolverine
World Wide, Inc., the Court held that FMLA claimants should look to the statute’s
enumeration of remedies in order to show “prejudice.” Those remedies included damages
related to “any actual monetary losses,” the court explained. Regardless of which
standard applied, the appeals court concluded that at this stage of litigation the
employee’s allegations of lost wages and travel expenses, as well as the harms she
alleged would result from having to undergo the fitness-for-duty exam, were sufficient.
(In its discussion of retaliation, the court also discussed this “doctrinal ambiguity,”
without resolution of it.)
Moreover, the employee’s complaint explicitly alleged a causal link between her initial
request for FMLA leave and the requirement that she undergo the fitness-for-duty exam.
She alleged that an upper-level manager said he was “mad” about such requests and
promised to find something wrong with her request in particular. She also alleged that her
supervisor became “irate” when she made a request for leave. Regardless of the
employer’s contention that there were safety concerns, the court explained that under
Rule 12(b)(6) it had to accept the allegations within the complaint as true and draw
inferences in the employee’s favor. Her allegations “amply support the inference of
retaliatory purpose” and were sufficient to defeat the employer’s motion.
The case number is 13-5072.
Attorneys: Sara L. Faulman (Woodley & McGillivary) for Judy Anne Gordon. Frederick
M. Herrera for United States Capitol Police.
77
2d Cir.: Employees not required to show damages measurable on classwide basis to
certify wage-hour claims
By Marjorie Johnson, J.D.
Determining that the U.S. Supreme Court’s decision in Comcast Corp. v. Behrend did not
require that damages be measurable on a classwide basis for certification under Rule
23(b)(3), the Second Circuit vacated and remanded a district court’s order denying, for
that sole reason, class certification of wage claims brought by Applebee’s employees.
The appeals court acknowledged that Comcast reiterated that damages questions should
be considered at the certification stage when weighing predominance issues; however, the
Supreme Court did not completely foreclose the possibility of class certification in cases
involving individualized damages calculations (Roach v. T.L. Cannon Corp., February
10, 2015, Droney, C.).
The wage-hour lawsuit brought by former employees of certain Applebee’s restaurants in
upstate New York alleged a collective FLSA action and a putative class action for
violations of the New York law. They alleged two claims: (1) that their employer had a
policy of not paying hourly employees an extra hour of pay when working a 10-hour
work day, as was then required by New York law (the “spread-of-hours” claim); and (2)
that managers were required to subtract pay for statutorily mandated rest breaks that the
employees did not actually take (the “rest-break” claim).
Partial certification recommended. Following discovery, the employees moved to
certify subclasses corresponding to each state law claim. With respect to their spread-ofhours claim, the magistrate judge to whom the motion was referred found that they had
satisfied the Rule 23(a) prerequisites to class certification with respect to certain
employees and that the common question of whether the employer had a policy of
depriving minimum-wage employees the extra hour of pay predominated over individual
questions, thus warranting class certification under Rule 23(b)(3). However, the
magistrate recommended that certification be denied with respect to their rest-break claim
since they could not satisfy Rule 23(a)’s adequacy of representation requirement.
Certification denied in full. In response to the employees’ objections, the district court
denied class certification on both claims based on its interpretation of the Supreme
Court’s decision in Comcast, issued after the magistrate’s recommendation. Specifically,
the court construed Comcast as holding that the failure of the proponent of the class to
offer a damages model that was “susceptible of measurement across the entire class for
purposes of Rule 23(b)(3)” was fatal to certification. Without considering whether any
common questions of law or fact existed with respect to either claim, the court found that
damages in both putative classes were “highly individualized” and that the employees did
not offer a model of damages susceptible of measurement across the putative class. In
denying certification, the court relied exclusively on Comcast and did not address the
employees’ objections to the magistrate’s recommendation.
Comcast misunderstood. The district court erroneously held that, following Comcast,
class certification under Rule 23(b)(3) required damages to be measurable on a classwide
basis, the Second Circuit found. Rule 23(b) allows for certification if both (1) questions
78
of law or fact common to class members predominate over any questions affecting only
individual members and (2) a class action is superior to other available methods for fairly
and efficiently adjudicating the controversy. Predominance is satisfied if resolution of
some of the legal or factual questions that qualify each class member’s case as a genuine
controversy can be achieved through generalized proof and if these particular issues are
more substantial than the issues subject only to individualized proof. Prior to Comcast, it
was well-established in the Second Circuit that the fact that damages may have to be
ascertained on an individual basis was not sufficient to defeat class certification under
Rule 23(b)(3).
After an in-depth synopsis of the Comcast decision, the appeals court found that the
Supreme Court did not overrule Second Circuit precedent. In particular, the High Court
in Comcast noted that neither party contested the district court’s holding that Rule
23(b)(3) predominance required a showing that damages resulting from the
anticompetitive injury at issue there were measurable on a classwide basis. The plaintiffs’
expert testimony failed to carry that burden since the damages model did not measure
only those damages attributable to the plaintiffs’ theory of injury and, therefore, it could
not establish that damages were susceptible of measurement across the entire class.
Because the model included calculations accounting for three other theories of injury
which the district court did not certify, class certification was inappropriate.
Narrow interpretation. The Supreme Court did not hold in Comcast that a class cannot
be certified under Rule 23(b)(3) simply because damages cannot be measured on a
classwide basis. Rather, it more narrowly held that a model for determining classwide
damages relied upon to certify a class under Rule 23(b)(3) must actually measure
damages that result from the class’s asserted theory of injury. Indeed, the High Court
itself explained that if all four types of anticompetitive injury had been approved for
certification by the district court, the plaintiffs’ damages methodology “‘might have been
sound, and might have produced commonality of damages.’”
Individualized damages still a consideration. The Second Circuit acknowledged that
Comcast reiterated that damages questions should be considered at the certification stage
when weighing predominance issues. Indeed, the fact that damages may have to be
ascertained on an individual basis is a factor that must be considered in deciding whether
issues susceptible to generalized proof outweigh individual issues. However, the Supreme
Court has not completely foreclosed the possibility of class certification under Rule
23(b)(3) in cases involving individualized damages calculations. Notably, this reading of
Comcast was consistent with the interpretation of other circuits that had applied the
Comcast ruling.
Individualized damages predominate? The appeals court went on to reject the
employer’s assertion that the district court had denied class certification because the
employees failed to establish that common issues of law and fact predominated over the
individualized nature of the damages inquiry. Rather, in considering whether to certify
their spread-of-hours and rest-break claims under Rule 23(b)(3), the district court did not
evaluate whether the individualized damages questions predominated over the common
79
questions of liability identified by the magistrate, nor did it consider the magistrate’s
identification of such common questions.
The district court had refused to certify the employee’s spread-of-hours and rest-break
claims solely because it concluded damages were not capable of measurement on a
classwide basis, That holding was not required by Comcast; was contrary to Second
Circuit precedent (left undisturbed by Comcast); and could not support the district court’s
denial of the employees’ motion for certification. Accordingly, the appeals court vacated
and remanded the district court’s order denying class certification.
The case number is 13-3070-cv.
2d Cir.: Assistant store manager class certification as to liability upheld
By Joy P. Waltemath, J.D.
In a summary order affirming certification for liability purposes of a class of assistant
store managers (ASMs) who claimed they were misclassified and not paid overtime, the
Second Circuit ruled that the district court had in fact rigorously analyzed the evidence
when it found the employer uniformly classified all ASMs as exempt without an
individualized determination to satisfy commonality. Moreover, in decertifying the class
with respect to damages, the district court had concluded (1) that the individualized
nature of the damages inquiry would defeat Rule 23(b)(3) predominance as to damages,
but (2) that predominance was satisfied with respect to the issue of liability alone, and (3)
that common issues were more substantial than individual ones, a ruling the Second
Circuit upheld as within its discretion (Jacob v. Duane Reade, Inc., February 10, 2015,
per curiam).
Although the district court had certified the class in March 2013, finding that common
questions as to whether ASMs were misclassified as employees exempt from state law
overtime requirements predominated over any individualized questions and that
adjudication as a class would be superior, the Supreme Court then decided Comcast
Corp. v. Behrend, and the employer moved for reconsideration, which the district court
granted. However, it decertified the class with respect to damages only.
Rule 23 standard. On appeal, the Second Circuit disagreed with the employer’s
contention that the lower court had not “rigorously examined” all the evidence relevant to
class certification as required by Supreme Court precedent. And although the district
court did state that a “plaintiff’s pleadings are taken as true for the purposes of examining
a class certification motion”—a standard expressly rejected in Dukes—the district court
actually applied the appropriate standard, not relying on the pleadings alone, but instead
it considered the parties’ evidentiary submissions and made findings of fact.
Rule 23(a) commonality. The employer next argued that the commonality analysis
undertaken by the district court failed to identify evidence “sufficient to generate
common answers” as Dukes requires. Again the appeals court disagreed, noting that the
common contention to be proved was whether the employer misclassified its employees
as exempt from New York law’s overtime requirements.
80
In support of that, the lower court relied on evidence that the employer uniformly
classified all ASMs as exempt without an individualized determination of each ASM’s
job responsibilities, and the ASMs carried out their duties “pursuant to a uniform policy,
uniform training, and uniform procedures across all stores.” Deposition testimony from
the former director of training and development established that the ASMs had “similar
baseline responsibilities from store to store,” and extensive deposition testimony of
ASMs established that all ASMs shared similar primary job responsibilities. Overall, the
evidence supported the district court’s conclusion that the misclassification question was
subject to classwide resolution.
Rule 23(b) predominance. The employer also urged that Comcast required the district
court to analyze whether common questions predominate over individual questions in the
case as a whole before certifying the class with respect to any particular issue. “This is a
misreading of Comcast,” said the Second Circuit, explaining that its opinion in Roach v.
T.L. Cannon Corp. clarified Comcast to mean “simply that a model for measuring
classwide damages relied upon to certify a class under Rule 23(b)(3) must actually
measure damages that result from the class’s asserted theory of injury.”
But that holding had little application in this case. In decertifying the class with respect to
damages, the district court found that although the individualized nature of the damages
inquiry would defeat Rule 23(b)(3) predominance in the case as a whole, predominance
was satisfied with respect to the issue of liability alone. In a misclassification case that
involves a number of “subsidiary questions, each of which may or may not be able to be
proven in common,” Second Circuit precedent requires plaintiffs to make two showings:
(1) that some of the subsidiary questions can be answered with respect to the members of
the class as a whole through generalized proof, and (2) that those common issues are
more substantial than individual ones. Reviewing the district court’s certification
determination for abuse of discretion, the court found no such abuse and affirmed class
certification on the issue of liability.
The case number is 13-3873-cv.
Attorneys: Adam T. Klein (Outten & Golden) for Mani Jacob and Lesleena Mars. Craig
R. Benson (Littler Mendelson) for Walgreen Co., Duane Reade Holdings, Inc., and
Duane Reade, Inc.
6th Cir.: Medical center denied appeal of class cert in suit over conspiracy to
suppress wages
By Greg Hammond, J.D.
VHS of Michigan, doing business as Detroit Medical Center (DMC), could not appeal an
order granting class certification in area nurses’ antitrust claims that DMC conspired to
suppress wages. In denying DMC’s petition for permission to appeal, the Sixth Circuit
determined in an unpublished opinion that DMC failed to demonstrate it was likely to
succeed on appeal, and no other factor weighed in favor of appeal (In re VHS of
Michigan, Inc. dba Detroit Medical Center, February 3, 2015, Stranch, J.).
81
Two Detroit-area nurses filed suit against eight local hospitals, alleging a conspiracy to
suppress wages in violation of the Sherman Act. Specifically, they claimed the hospitals:
(1) conspired among themselves and with other local hospitals to hold down the wages of
registered nurses employed at these hospitals (the “per se” claim); and (2) exchanged
compensation-related information among themselves that reduced competition among
Detroit-area hospitals in the wages paid to registered nurses (the “rule of reason” claim).
DMC is the only hospital that has not settled the nurses’ claims.
The federal district court in Michigan granted summary judgment for the defendants on
the per se claim, and granted class certification for the rule of reason claim. In
reconsidering its certification order in light of the Supreme Court’s decision in Comcast
Corp. v. Behrend, the court determined that Comcast did not call into question its prior
decision, and consequently recertified the class and reinstated the prior certification
opinion.
Petition to appeal. DMC petitioned for permission to appeal, arguing that the district
court’s application of Comcast was an abuse of discretion. Specifically, DMC alleged
that the nurses failed to show a link between their damages model and the rule of reason
theory and that the damages from the two theories can be aggregated.
In determining whether a district court clearly abused its discretion in granting class
certification, the appellate court considers four factors: (1) whether DMC is likely to
succeed on appeal under the deferential abuse-of-discretion standard; (2) whether the cost
of continuing the litigation for either party will hamper subsequent review; (3) whether
the case presents a novel or unsettled question of law; and (4) the procedural posture of
the case.
The appellate court rejected DMC’s arguments, finding that DMC failed to demonstrate a
strong likelihood of success on appeal and that no other factor strongly favors permitting
the appeal. Specifically, the court noted that Comcast applies where multiple theories of
liability exist, those theories create separable anticompetitive effects, and the combined
effects can result in aggregated damages. In this case, the district court correctly
concluded that the two theories of anticompetitive conduct, the per se claim and the rule
of reason claim, were mutually exclusive. Further, because the expert’s damages
calculation applied to either theory of anticompetitive conduct, the district court
appropriately determined that damages were not improperly aggregated. The aggregateddamages concern raised in Comcast was therefore inapplicable in the instant case, and the
district court did not abuse its discretion in granting class certification.
The case number is 14-0107.
Attorneys: Thomas Henderson Dupree, Jr. (Gibson, Dunn & Crutcher) for VHS of
Michigan, Inc. Mark Adam Griffin (Keller Rohrback) for Pat Cason-Merendo.
82
8th Cir.: “Supervision” of prescription regimen required for serious health
condition
By Joy P. Waltemath, J.D.
Because a plant worker who took leave for several days had not shown he was under
continuing treatment, either by a required follow-up visit within 30 days or prescription
medications under “supervision” of a health care provider, his FMLA claims failed, the
Eighth Circuit ruled, upholding summary judgment for the employer on grounds different
from the district court. The lower court had found the worker failed to give adequate
notice of his need for leave and additionally had not shown that the employer’s reason for
firing him—that he altered, falsified, or forged his doctor’s excuse—was pretextual
(Johnson v. Wheeling Machine Products, February 20, 2015, Wollman, R.).
Claiming a terrible headache—like “his head would explode”—and blurred vision, on
May 12 the worker told his supervisor he was going to see a doctor. He saw a physician’s
assistant (one he had never seen before) at a nearby clinic, who diagnosed high blood
pressure, prescribed blood pressure medication, told him to follow up with his regular
doctor, and gave him a note saying he had received treatment and could return to work
May 16. After seeing the PA, the worker stopped by the plant to give his excuse to a
supervisor and left the employee-relations supervisor a second voicemail that he had been
taken off work for a few days.
Third time is no charm. Apparently unconvinced by the written excuse, the employeerelations supervisor contacted the worker the next day, asking him who had written his
name on the note (the worker had, he explained, on request from the PA), and telling him
to get another excuse. That same day (May 13) the employee returned to the clinic, got
another excuse from the paramedic (because the PA was unavailable), which the
employee relations supervisor again rejected. She sent him back for a third excuse,
preferably to be returned the same day, “stating the reasons for being off work.” He
returned to the clinic but it would not provide him with a more detailed reason for the
absence.
Falsifying excuse. Consequently, the employee-relations supervisor suspended the
employee on May 16 and terminated him on May 18 “for altering, falsifying, or forging
the work excuse.” The day he was terminated, the PA faxed new copies of the work
excuses to the employee-relations supervisor, explained that he had, in fact, given the
excuses to the worker, and later provided a personally signed letter confirming that the
worker had been treated by him in the clinic and, to his knowledge, none of the work
excuses were falsified. His employer remained unmoved. After the district court granted
summary judgment on his FMLA claims, the employee appealed.
FMLA “entitlement” claims. On appeal, the Eighth Circuit analyzed the employee’s
claims as FMLA entitlement (denial of a benefit to which he was entitled) and
discrimination claims. His entitlement claim was based on the employer’s failure to
reinstate him. To succeed on either claim, however, he had to show he was in fact entitled
to leave under the FMLA. In the appeals court’s view, he could not.
83
Two treatments within 30 days. The worker’s argument that he was entitled to FMLA
leave due to his high blood pressure depended on whether he had proven he suffered a
qualifying serious health condition; he claimed that he had under the “continuing
treatment” prong of the regulations’ definitions (29 C.F.R. Sec. 825.115(a)(1)). He
pointed to evidence that he was treated May 12 at the clinic and again—some time
later—by his own physician for a follow-up visit. But because he had no evidence that his
follow-up visit occurred within 30 days, or that the PA had in fact instructed him to
follow up within 30 days, he could not prove he met the regulations’ requirements for
two visits within 30 days.
“Regimen”. The employee was similarly unsuccessful with his argument that he met the
“regimen” definition of continuing treatment in Sec. 825.115(a)(2). Although he had
evidence that he was treated for high blood pressure, received prescription medication,
and was instructed to follow up at some point with his regular doctor, that was not
enough in the Eighth Circuit’s view, because a regimen of continuing treatment—in this
case, a course of prescription medication—must also be “under the supervision of the
health care provider.”
“Supervision” requirement. “We believe that the supervision requirement must be
given effect,” stated the court. The fact that a health care provider prescribes medication
does not necessarily mean that the provider is “supervising” the prescription regimen,
reasoned the court, so by requiring that the health care provider supervise the regimen,
the regulation helps to ensure that minor conditions will fall outside the FMLA’s
coverage, “as Congress intended.” If a health condition is “serious,” either supervision
(for example, communications between patient and provider to discuss the patient’s
condition) or a follow-up appointment soon after the first visit is required, concluded the
court (that, of course, could satisfy the two-treatment definition as well).
Quoting the dictionary definition of supervision, the court reasoned that the PA did not
“oversee, watch, or direct any part of” the worker’s treatment regimen; he simply
prescribed medication and sent him on his way. Neither the worker nor the PA claimed
the worker followed up regarding his treatment or that the PA advised him to call him
back if his condition did not improve.
The court also seemed quite taken by the fact that at the worker’s follow-up appointment,
his prescription was not renewed, and he was instructed instead to control his blood
pressure with exercise, which does not constitute a “regimen of continuing treatment.”
Thus, he failed to raise a material fact issue as to whether he had a serious health
condition within the meaning of the FMLA.
No FMLA entitlement, no harm. Although the worker also argued that his employer’s
requirement of immediate certification from a health care provider (instead of allowing
15 days) and failure to provide FMLA notice prejudiced him, this did not change the
result, noted the court. Assuming, without deciding, that the employer’s certification
requirements exceeded what an employer may permissibly require from employees
taking FMLA leave, the worker’s failure to demonstrate he had a serious health condition
mooted his argument. As to the lack of notice, technical violations of the FMLA are not
84
actionable unless they harm an employee, and here the worker had not shown how the
lack of notice could have harmed him since he was not, in fact, entitled to FMLA leave.
Summary judgment in the employer’s favor was affirmed.
The case number is: 13-3786.
Attorneys: Lucien Ramseur Gillham (Sutter & Gillham) for Kendrick Johnson. Emmett
B. Chiles (Quattlebaum & Grooms) for Wheeling Machine Products, United States Steel
Tubular Products, Inc., and United States Steel Corp.
9th Cir.: Questions over provisions governing day of rest certified to California high
court
By Kathleen Kapusta, J.D.
Asking the California Supreme Court to exercise its discretion to decide questions of
extreme importance to tens of thousands of employees in that state, and explaining that
the answers to those questions would be dispositive of the appeal before it, the Ninth
Circuit certified to the state’s highest court three questions concerning the interpretation
of several labor code provisions governing an employer’s obligation to provide its
employees with a day of rest (Mendoza v. Nordstrom, Inc., February 19, 2015, Graber,
S.).
No day off. Two Nordstrom employees alleged that they were required to work more
than six consecutive days without a day of rest in violation of California’s Labor Code;
one employee claimed that this occurred on three occasions while the other alleged that it
happened to him once. As to the first employee, he was not originally scheduled to work
more than six consecutive days but he did so after being asked by either his supervisor or
a coworker to fill in for someone else. On all occasions in which they worked more than
six consecutive days, they each worked less than six hours on at least one of those days.
Asserting that it violated California Labor Code Sections 551 and 552 by failing to
provide him with one day’s rest in seven on three occasions, the first employee brought
suit against Nordstrom on behalf of a class of similarly situated hourly, nonexempt
Nordstrom employees in California. He also brought a claim pursuant to the state’s
Private Attorneys General Act. The second employee’s complaint in intervention alleged
the same causes of action.
Lower court proceedings. Dismissing the action after a bench trial, the district court
ruled that the day of-rest statute, California Labor Code Section 551, applies on a rolling
basis to any consecutive seven-day period, rather than by the workweek. It found,
however, that California Labor Code Section 556 exempted Nordstrom from that
requirement because each employee worked less than six hours on at least one day in the
consecutive seven days of work. Even if the exemption did not apply, the lower court
found that Nordstrom did not “cause” the employees to work more than seven
consecutive days within the meaning of California Labor Code Section 552 because there
was no coercion and the employees waived their rights under California Labor Code
Section 551 by accepting additional shifts when they were offered.
85
Certified questions. On appeal, the Ninth Circuit certified three questions to the
California high court: “(A) California Labor Code section 551 provides that ‘[e]very
person employed in any occupation of labor is entitled to one day’s rest therefrom in
seven.’ Is the required day of rest calculated by the workweek, or is it calculated on a
rolling basis for any consecutive seven day period? (B) California Labor Code section
556 exempts employers from providing such a day of rest ‘when the total hours of
employment do not exceed 30 hours in any week or six hours in any one day thereof.’
Does that exemption apply when an employee works less than six hours in any one day of
the applicable week, or does it apply only when an employee works less than six hours in
each day of the week? (C) California Labor Code section 552 provides that an employer
may not ‘cause his employees to work more than six days in seven.’ What does it mean
for an employer to ‘cause’ an employee to work more than six days in seven: force,
coerce, pressure, schedule, encourage, reward, permit, or something else?”
Day of rest. Observing that no controlling California precedent answers any of the
certified questions of statutory interpretation, the court noted that the text of the
applicable statutes was ambiguous, it was not aware of any pertinent legislative history,
and the answer to the certified questions was not obvious. As to the day of rest
requirement, it was unclear whether the statute applied to any consecutive seven days or
to a workweek. Here, the court pointed out that while neither Section 551 nor Section 552
used the term “workweek,” it was used in surrounding provisions of the labor code,
demonstrating that the legislature could have used the workweek concept had it intended
to do so. Moreover, the court stated, “the purpose of the law plainly is to avoid
overworking employees by providing a regular day of rest in most circumstances.
Allowing 12 consecutive days of work every two weeks could run counter to that
purpose.”
On the other hand, noted the court, Section 510(a), pertaining to overtime, provides in
part that “any work in excess of eight hours on any seventh day of a workweek shall be
compensated at the rate of no less than twice the regular rate of pay of an employee.”
This, the court reasoned, hints both that the concept of working a seventh day
encompasses the concept of the workweek and that the prohibition on working seven
days is not absolute. Citing to Wage Order No. 7, which states that “[a]n employee may
be employed on seven (7) workdays in one workweek when the total hours of
employment during such workweek do not exceed 30 and the total hours of employment
in any one workday thereof do not exceed six (6),” the court found that the phrasing of
this suggested obliquely—but by no means directly—that Sections 551 and 552 apply to
a workweek and that the overreaching purpose of the law can be met when an employee
receives four days off per month.
Here, the appeals court found that both interpretations were plausible and the question
affects nearly all California employers.
Exemption. Turning to Section 556, which exempts an employer from the day-of-rest
requirement “when the total hours [worked by an employee] do not exceed 30 hours in
any week or six hours in any one day thereof,” the court found that grammatically, “the
second half of that formulation is ambiguous.” While to the court, the more natural
86
reading of the words is that an employer need not provide a day of rest if an employee
works less than six hours in “any” single day of the applicable week, it pointed out that
“any” can also mean “each” or “all.” Noting that the purpose of the statute is to exempt
an employer from providing a day of rest only with respect to part-time employees, the
court once again found both interpretations plausible, no useful legislative history, and no
California appellate case to guide it. “And once again, the obligations of thousands of
California employers, and the rights of tens of thousands of California workers, are at
stake,” wrote the court.
“Cause” to work. Explaining that pursuant to Section 552, an employer may not
“cause” its employees to work more than six days in seven, the court noted that the
district court relied on Brinker Rest. Corp. v. Superior Court—in which the California
Supreme Court held that an employer must relieve an employee of all duty during meal
and rest breaks, but that the employer has no duty to ensure that the employee does not in
fact choose to continue to work during that time—to conclude that so long as an
employee is not compelled to work in violation of the day-of-rest statute, the employer
has not violated the statute. Brinker, however, involved different statutory text, the court
here noted, stating that it was unpersuaded that Brinker provided guidance here. Once
again, the court pointed out that the statutory text at issue was unclear and that California
employers and employees need to know what the statute means.
Stating that it was uncertain as to whether the district court correctly or incorrectly
interpreted the relevant statutes, the appeals court observed that “the consequences of any
interpretation of the day-of-rest statutes will have profound legal, economic, and practical
consequences for employers and employees throughout the state of California and will
govern the outcome of many disputes in both state and federal courts in the Ninth
Circuit.” Therefore, it found that these questions were worthy of decision by the
California Supreme Court.
The case number is 12-57130.
Attorneys: Andre Emilio Jardini (Knapp, Petersen & Clarke) for Christopher Mendoza.
Julie Dunne (Littler Mendelson) for Nordstrom, Inc.
87