Labor Relations & Wages Hours Update
September 2013
Hot Topics in LABOR LAW:
New mobile app provides users with information on NLRA rights
By Pamela Wolf, J.D.
In a move perhaps connected to its recently embattled “notice posting rule,” the NLRB
announced the launch of a new mobile app — available free of charge for iPhone and
Android users — that provides employers, employees and unions with information on
their rights and obligations under the NLRA.
In a June 14 opinion, the Fourth Circuit Court of Appeals invalidated the NLRB’s notice
posting rule that required employers subject to the NLRA to post an official Board notice
informing employees of their rights under the Act (Chamber of Commerce of the United
States v NLRB, Duncan, A). The appeals court determined that the rulemaking function
provided for in the NLRA only empowers the NLRB to carry out its statutorily defined
reactive roles in addressing unfair labor practice (ULP) charges and conducting
representation elections upon request. Thus, it concluded that the Board exceeded its
authority in promulgating the challenged rule.
As to this latest outreach effort, the Board says that it received more than 82,000 public
inquiries regarding workplace issues last year. “It is clear that the American people have
questions about the law,” NLRB Chairman Mark Gaston Pearce said. “This app can help
provide the answers.”
The new app provides information for employers, employees, and unions, with sections
that describe the rights enforced by Board, along with contact information for the
agency’s regional offices across the country. The app also details the process that the
NLRB uses in representation elections.
Every month, an average of 2,000 unfair labor practice charges and 200 representation
petitions are filed with the NLRB, according to the agency. In 2012, the Board collected
more than $44 million in back pay or the reimbursement of fees, dues and fines. More
than 1,200 employees were offered reinstatement as a result of Board’s enforcement
efforts.
The app is currently available for iPhone users on the Apple Store and Android users on
Google Play.
“The National Labor Relations Act guarantees the right of workers to join together, with
or without a union, to improve their working lives,” Pearce noted. “The promise of the
law can only be fulfilled when employers and employees understand their rights and
obligations. With this app, we are using 21st Century technology to inform and educate
the public about the law and their rights.”
Just before Labor Day, workers win union representation, get a contract extension,
launch a boycott, strike, and get a new CBA
By Pamela Wolf, J.D.
As the Labor Day holiday weekend was approaching developments on the labor scene
brought unionization to airport shuttle drivers in Seattle, a contract extension to Seattle’s
Air Express International, the launch of a boycott by Seattle Hyatt workers trying to
organize, a strike by Oakland airport food and retail workers in protest of purported
unfair labor practices, and a new contract for BF Goodrich workers in Tuscaloosa,
Alabama and Fort Wayne, Indiana.
Airport shuttle drivers. On August 26, shuttle drivers at GCA Services Group joined
Teamsters Local 117 in Tukwila, Washington, by a vote of 91-44. The shuttle drivers are
responsible for shuttling rental cars and other vehicles at the Seattle-Tacoma International
Airport.
The bargaining unit of 160 workers is predominantly made up of Somali immigrants,
according to the Teamsters. The workers united in an effort to win respect from
management and better wages at GCA, which is a contractor for Avis Budget Group.
The Teamsters organization drive began more than six months ago, according to the
union. The workers are looking for more respect, better wages, and benefits for
themselves and other non-union workers at the airport, who are typically paid minimum
wage with no benefits. GCA employees are also seeking more job security and paid sick
leave.
“This victory is an exciting step forward for all workers at the Seattle Airport,” said Local
117 Organizing Director Leonard Smith. “It’s an example of how working together and
sticking together truly pays off. By uniting for respect and dignity, the workers are
showing other employees at the airport that they can come together and fight to improve
their lives.”
The campaign for Teamster representation at GCA — which included help from
organizers at Teamsters Local 174, SEIU, and Working Washington — is part of an
ongoing coalition effort among local unions and community groups organizing to win
2
better working conditions for employees at the Seattle Airport, the Teamsters said. The
coalition has been working to organize non-union airport workers employed by
contractors like GCA and others. In conjunction with other national campaigns to
demand higher pay for low-wage workers, the coalition is pushing a ballot initiative in
SeaTac, Washington, to raise the hourly minimum wage to $15.
Air Express International. Teamsters employed at Seattle’s Air Express International
(AEI) overwhelmingly approved a one-year contract extension that protects health,
welfare, and pension benefits, and provides a $750 bonus, the union announced on
August 27. The contract-extension was approved by a margin of 84-16 percent. The
contract covers 800 workers.
Due to substantial operational changes likely occurring at AEI stations later this year, the
Teamsters National AEI Negotiating Committee determined that the one-year contract
extension was necessary to allow more time to investigate and evaluate the company’s
new business model and its potential impact on workers’ jobs.
In exchange for the union’s agreement to the extension, AEI will maintain participation
in all existing health, welfare, and pension funds with an increase in the contribution rate
of up to $1 per hour effective as soon as payable, with a $750 bonus for all employees,
including those on the layoff list, to be paid within 30 days of ratification of the
extension. The ratified extension is effective through March 31, 2014, although the union
anticipates reaching a tentative agreement with AEI well in advance of that expiration
date.
“The Teamsters Union continues to meet with management and we continue to closely
monitor the changes being proposed to make sure our members’ jobs are protected,” said
Bill Hamilton, Director of the Teamsters Express Division. “We have requested extensive
information from the company and our team of experts continues to diligently investigate
all the issues.”
Seattle Hyatt workers. On August 27, Seattle Hyatt hotel workers and supporters kicked
off a boycott of the Hyatt at Olive 8 and the Grand Hyatt Seattle to denounce difficult
working conditions, unaffordable healthcare, and use of subcontracted workers. Seattle
Hyatt workers also say the hotels’ local owner, Richard Hedreen, has refused to agree to
a fair process for workers to form a union free from management intimidation — a
process backed by Hyatt Hotels in a recent national agreement.
Workers are calling on customers to not eat, meet, or sleep at the two local hotels until
the matter is resolved. The workers have reported having difficulty in affording Hyatt
health insurance, which can cost as much as $400 a month for a family of four. They also
say more work is being done by subcontracted workers, who are typically paid less with
even fewer benefits.
In addition, workers said that hotel housekeeping work is difficult and it can lead to
debilitating pain and injuries from years of lifting heavy mattresses and scrubbing floors.
At the Hyatt at Olive 8, women often clean on their hands and knees and lug supplies
3
from room to room without even the simple aid of a housekeeper cart, according to the
workers. Instead, they must use a small suitcase to haul supplies and run around to
restock linens, which requires rushing and strain that can cause injuries.
By contrast, unionized hotel workers in Seattle enjoy health and safety protections, job
security, and affordable family healthcare, among other benefits, according to Unite
HERE.
In response, workers have called for a fair process to form a union. In July, Unite HERE
and Hyatt Hotels at the corporate level reached a national agreement on such a process,
which has gone forward at other Hyatts in the U.S. However, Hedreen purportedly has
refused to implement the agreed elections process in Seattle.
Three months after workers began organizing last year, Hyatt agreed to give many
workers raises of $1 to $3 per hour. “Richard Hedreen has done the right thing for his
workers in the past, and Hyatt has removed any roadblocks for him to do so in this
instance,” says King County, Washington, Council Chair Larry Gossett. “We are asking
him to step up and give workers a truly sustainable and secure future in Seattle.”
King County Councilmembers Larry Gossett, Joe McDermott, Julia Patterson, and Larry
Phillips have endorsed the boycott.
Oakland airport workers. On Friday, August 30, on the heels of an East-Bay-wide
strike of fast food workers, 180 Oakland Airport food and retail workers walked off the
job to protest unfair labor practices by their employer, Host International, including what
they characterized as regressive bargaining and a retaliatory lawsuit filed against the
union.
Host's most recent proposals would strip away benefits that the workers have depended
on for years, according to Unite HERE. The workers have been in contract negotiations
with Host for the past year. Their wages are already low, according to the union. Retail
clerks earn between $9.75 and $12.64 an hour. Host's latest proposal would gut their
contract, drastically reducing vacation and sick days, eliminating pensions and paid meal
breaks, cutting pay for new hires, freezing longtime workers' wages for five years, and
removing workers from the union’s affordable health insurance plan.
Unite HERE Local 2850 said it has tried for a year to reach a fair compromise through
negotiation, but Host’s proposals have only gotten worse for workers. “The only
movement Host has made is backward. We hope that the Port of Oakland will step in to
help resolve this dispute,” said Local 2850 President Wei-Ling Huber.
BF Goodrich. United Steelworkers (USW) members ratified a new three-year contract
covering about 2,400 workers at two BF Goodrich facilities in Tuscaloosa, Alabama, and
Fort Wayne, Indiana. The ratification came two weeks after members at the two USW
locals rejected a proposed tentative agreement with the tire company.
4
The two sides resumed negotiations after that vote, producing the new agreement. The
three-year contract with employees at Local 351L (Tuscaloosa) and Local 715L (Ft.
Wayne) will expire in July 2016.
ILWU disaffiliates with AFL-CIO
By Pamela Wolf, J.D.
The International Longshore & Warehouse Union (ILWU) has cut its affiliation with the
AFL-CIO, citing “attacks by affiliates” against the succeeding union, as well as its
frustration with the AFL-CIO’s “moderate, overly compromising positions” on important
matters such as immigration, labor law reform, and international labor issues.
While acknowledging the support occasionally provided by the federation’s national
office, ILWU International President Robert McEllrath, in an August 29 letter to AFLCIO President Richard Trumka, included a laundry list of actions by national affiliates
that undermined ILWU contract struggles. Particularly notable was an affiliate’s “raid” in
2011, when it filled longshore jobs at the new EGT grain facility in Longview,
Washington; the affiliate’s members crossed the picket line for six months while the
ILWU fought to secure the jurisdiction. During that battle, according to McEllrath,
Trumka’s office issued a directive to the Oregon State Federation to rescind its support
for the ILWU’s fight at EGT.
Among other offenses were ULP and Article XX (AFL-CIO constitution’s no-raiding
provision) charges filed by affiliates against the ILWU; an affiliate’s imposition of
internal fines against dual union members for taking jobs as longshoremen, with the
purported purpose of preventing the ILWU from filling new waterfront jobs that replace
traditional longshore work because of new technologies; and blatant crossing of ILWU
picket lines in the regional grain industry.
At the legislative level, McEllrath complained that the AFL-CIO has not stood its ground
on the issues that are most important to ILWU members and slammed the federation for
lobbying affiliates to support a bill that taxes health care plans — presumably, the
Affordable Care Act. McEllrath also pointed to the AFL-CIO’s support for an
immigration bill that “imposes extremely long waiting periods on the path to citizenship
and favors workers with higher education and profitability to corporations, as opposed to
the undocumented workers such as janitors and farm workers who would greatly benefit
from the protections granted by legalization.”
McEllrath also clarified that the ILWU will continue to provide “whatever aid and
support we can for our fellow trade unionists and workers everywhere,” even though it
has disaffiliated with the AFL-CIO.
Nurses unions, Dignity Health reach groundbreaking tentative pact
Registered nurses at Dignity Health have reached a tentative CBA covering some 12,000
RNs at 28 Dignity hospitals in California and Nevada that nurses characterize as a “sharp
break from a concessionary spiral so prevalent among many employers in healthcare and
other sectors.” The RNs are members of the California Nurses Association and National
5
Nurses Organizing Committee-Nevada, both part of the 185,000-member National
Nurses United.
At its core, the agreement guarantees no reduction in health coverage, expands
guaranteed pensions and retiree health benefits, and establishes a dramatic new “RN
Accident Prevention Program” that the National Nurses Union (NNU) says is the first in
the nation by a major hospital system that provides unprecedented supplemental
insurance protection for nurses injured in workplace violence or by needle stick
accidents.
The RNs will hold ratification meetings in the coming weeks at Dignity hospitals in
Northern California, Southern California, the Sacramento region, San Bernardino, the
Central California Coast, and Las Vegas.
“At a time when nurses and other American workers are facing an all-out employer
assault on health coverage, retirement security, wages and workplace rights, and RNs are
struggling to maintain their ability to be effective advocates for patient protections, this
agreement is a seminal achievement that should resonate throughout the healthcare
industry,” said NNU Executive Director RoseAnn DeMoro.
“Nurses around the nation will look at this agreement, especially the RN Accident
Prevention Program, with appreciation for the forward approach to protect dedicated
nurses, their communities, and their patients. I could not be more proud of the unity and
dedication of the Dignity RNs to achieve this monumental program,” DeMoro added.
While Dignity hospitals have not experienced the problems with workplace violence that
have become prevalent at some other hospitals, “this agreement shows vision and a
commitment by the hospitals to assure the highest degree of safety for our patients, their
families, and the staff,” said Lorna Gunderson, RN at Dignity’s Dominican Hospital in
Santa Cruz.
The tentative contract includes the following highlights:

The RN Accident Prevention Program commits the hospitals to adopt meaningful
violence prevention policies and threat detection, assessment, and management,
prompt investigation and zero tolerance of any reported incidents, and ensure safe
staffing on all units on all shifts, all of which are key for safe workplace settings.

The policy is backed up with a financial commitment — providing RNs with
supplemental insurance benefits of up to $200,000 in the event of accidental
death, felonious assault, contraction of HIV or hepatitis from needle sticks, as
well as other indemnity benefits and trauma counseling.

The pact secures the health, dental, and vision plans, and actually expands both
the defined benefit, guaranteed pension coverage by offering it to more RNs, as
well as strengthening Dignity’s retiree health coverage.
6

Over the four years of the agreement, RNs will receive additional pay hikes of 9
percent, on top of a 2- or 3-percent pay increase (depending on location) earlier
this year that is already in effect.

All the hospitals, including the Las Vegas St. Rose Dominican facilities, will now
be a part of one master unit, with local bargaining maintained for individual
facilities, with a system-wide RN bargaining council to work to further assure
quality patient care and RN standards in all Dignity hospitals.
“With a solid contract in place, we are able to continue to deliver excellent, safe, patient
care to those people in our communities,” said Mary Albert, an RN at St. Mary Medical
Center in Long Beach. “In answer to the nursing surveys, we have accomplished our goal
to maintain health care, increase retirement, pension plans, and health savings accounts
for our RNs. Our patient ratios are solid and patient safety issues continue as our top
priority.”
Notice posting rule still dead
By Pamela Wolf, J.D.
Despite its best efforts, the NLRB has been unable to get any traction in its attempt to
revive its controversial notice posting rule. The DC Circuit Court of Appeals has flatly
rejected the Board’s bid for another chance to convince jurists that the rule should stand.
On September 4, in a pair of orders, the NLRB’s requests for reconsideration by both the
circuit panel and the en banc court were denied.
On May 7, the DC Circuit vacated the NLRB’s rule requiring employers to notify
employees of their rights under the NLRA, upholding a challenge brought by several
employer groups. Instead of hanging its decision on the NLRB’s authority under NLRA
Sec. 6 to promulgate the posting rule, as argued by the parties, the circuit court concluded
that the rule violated employers’ free speech rights as protected by Sec. 8(c) of the Act.
In a June 14 ruling, the Fourth Circuit took up the agency authority issue and determined
that the rulemaking function provided for in the NLRA only empowers the NLRB to
carry out its statutorily defined reactive roles in addressing unfair labor practice charges
and conducting representation elections upon request. Thus, the Fourth Circuit held that
the Board exceeded its authority in promulgating the challenged rule. The Fourth Circuit
similarly rejected the NLRB’s request for rehearing and rehearing en banc.
Associated Builders and Contractors (ABC) quickly responded to this latest denial of
reconsideration by the D.C. Circuit, issuing a statement applauding the decision. “It’s
become very clear that the NLRB exceeded its authority by issuing the so-called Poster
Rule in the first place,” said ABC Vice President of Government Affairs Geoff Burr.
“The poster was flawed from the beginning when it only detailed how workers have the
right to join a union, but omitted their rights to decertify a union.” Burr called the posting
rule “a perfect example of how the pro-union board has abandoned its role as a neutral
enforcer and arbiter of labor law,” and vowed that ABC will continue fighting “the
7
NLRB’s politically motivated policies that threaten to paralyze the construction industry
in order to benefit the special interests of politically powerful unions.”
Lawmakers seek JCT, CBO estimates of premium tax credits for union health care
plans
By Stephen K. Cooper
The Joint Committee on Taxation (JCT) and the Congressional Budget Office (CBO)
were asked to estimate the cost of providing premium tax credits to union members who
participate in multiemployer health care plans. The request for estimates came from
House Ways and Means Chairman Dave Camp (R-Mich) and House Education and the
Workforce Committee Chairman John Kline (R-Minn) following news reports that the
Obama administration is crafting more lenient rules for union health plans that would
result in higher federal subsidy spending under the Affordable Care Act. Any regulatory
scheme that extends taxpayer subsidies to union health plans would contradict the health
care law and result in higher spending due to more covered individuals, Kline and Camp
said in a September 5 request to the CBO and JCT.
Camp and Kline are concerned that the Obama administration is preparing to announce
regulations that would allow some multiemployer union plans to be qualified as exchange
health plans. “This would clearly contradict the intent of the law which denies taxpayer
provided premium tax credits to individuals who are eligible for qualified employer
sponsored coverage,” the letter states. The lawmakers want the JCT and CBO to respond
by September 19. Specifically, Camp and Kline want to know if current premium tax
credit estimates include employees of multiemployer plans. They also want a legal
analysis of whether these employees are eligible for the credits.
Iowa home care providers hold on to jobs; Southwest Airlines flight attendants have
tentative CBA; United Airlines flight simulator techs are now Teamsters
By Pamela Wolf, J.D.
Among the many new development on the labor front, Iowa home care providers were
able to hold on to their jobs, Southwest Airlines flight attendants reached a tentative
contract, and United airlines flight simulator technicians agreed to be represented solely
by the Teamsters union.
Home care providers. The American Federation of State, County and Municipal
Employees (AFSCME) Iowa Council 61 earlier this week claimed a victory, as part of a
bipartisan alliance that included home care providers and Iowa consumers, in preserving
a program that permits those in need of care to work directly with individual home care
providers.
The jobs of Iowa’s individual consumer-directed attendant care (CDAC) providers were
slated for potential elimination, according to the union, despite the program being the
most popular choice of home care consumers in the state. Under the system, more than
4,500 consumers control their own care.
8
The Iowa Department of Human Services had proposed eliminating the individual CDAC
option, which would have forced consumers to use an agency or a financial institution to
locate care. Individual CDAC providers would have lost their jobs.
But for the proposal to become effective, it had to go before a committee of the Iowa
General Assembly.
AFSCME Iowa Council 61 mobilized home care providers and consumers, holding town
hall meetings across the state. After a successful grassroots campaign and lobbying of the
five Democrats and five Republicans on the committee, the state abandoned the rule
change.
Flight attendants. The Association of Flight Attendants-CWA has reached a tentative
agreement with Southwest Airlines management covering more than 1,700 Flight
Attendants who remain at AirTran during the AirTran/Southwest merger process, the
union said on September 5.
“AirTran Flight Attendants’ immense contributions have played a key role in the overall
success of this merger,” said Alison Head, AFA AirTran President. “These negotiations
have been difficult. Working in the limited time frame left for AirTran, it became clear it
was time to make some difficult decisions, and bring these negotiations to a close
allowing our members to determine the next step.”
“This agreement provides certainty in pay parity with the Southwest Airlines Flight
Attendants over the next 15 months,” said AFA-CWA President Veda Shook. “Whether
or not Southwest Airlines management sticks to its merger timeline, our AirTran Flight
Attendants will be protected.”
The Southwest/AirTran merger was announced in 2011.
Flight simulator technicians. On September 4, the National Mediation Board announced
that flight simulator technicians at United Airlines voted 78 to 13 for sole representation
by the International Brotherhood of Teamsters. The 98 technicians were previously
represented by the Teamsters at United in Denver and the Transport Workers Union at
Continental in Houston prior to the 2010 merger of the two airlines, according to the
Teamsters.
As a result of the election, which began on August 20 and ended September 4—with 93
percent participation—the technicians will now be represented by Teamsters Local 455 in
Denver and Local 19 in Houston.
“We’re looking forward to working toward an amalgamated agreement for the entire
flight simulator craft technicians and class and craft,” said James Prout, chief steward of
the Denver-based unit.
German-style works council may be coming to Chattanooga
By Pamela Wolf, J.D.
9
The United Auto Workers issued a statement on September 6 regarding its discussions
about representation and a works council for the Volkswagen plant in Chattanooga,
Tennessee. If fruitful, the discussions may lead to the introduction of a new labor
relations model in the United States.
The VW-UAW discussions take place at a time when traditional unions in the United
States are on the decline. According to the U.S. Bureau of Labor Statistics, the union
workforce membership rate was 11.3 percent in 2012, down from 11.8 percent in 2011.
In 1983, the participation rate was 20.1 percent. The public sector membership rate in
2012 was 35.9 percent as compared to a private sector rate of 6.6 percent. New York had
the highest union membership rate in 2012 at 23.2 percent, and North Carolina had the
lowest participation rate at 2.9 percent.
However, 2013 has seen substantial backlash via non-traditional labor groups against
stagnant wages in the face of rising corporate profits during the recovery from the U.S.
economic downturn. Alternative labor groups, often backed by unions, have staged
several nationwide strikes and protests by low-wage workers in the fast food and retail
market segments.
Meanwhile, the UAW confirmed that officials of Volkswagen Group, the Volkswagen
Global Works Council, and the UAW met in Wolfsburg, Germany, on August 30, in
continuation of a series of meetings between their respective representatives. “The
meeting focused on the appropriate paths, consistent with American law, for arriving at
both Volkswagen recognition of UAW representation at its Chattanooga facility and
establishment of a German-style works council,” the UAW said.
“VW is a company that is globally recognized as being at the forefront of respecting the
basic human rights of workers to organize and collectively bargain as spelled out in the
United Nations Guiding Principles on Business and Human Rights, the International
Labor Organization's Declaration on Fundamental Principles and Rights at Work, and the
Organization for Economic Cooperation and Development (OECD) Guidelines for
Multinational Enterprises,” the UAW continued. “Every major VW assembly facility in
the world, with the exception of the Chattanooga facility, has worker representation and a
seat on the VW Global Works Council.”
The UAW touted VW's Global Labor Charter and its Social Charter, noting that they go
beyond international labor standards to establish principles that govern labor relations
and social matters, including remuneration systems, information and communication,
training, occupational health and safety, social and ecological sustainability, labor
standards at suppliers and, most recently, principles for the use of temporary workers. In
addition, the Charter establishes annual labor-management meetings and gives employee
bodies the right to hold workforce meetings at least once a year during which
management informs the workforce on the economic situation and developments in the
area of human resources and social matters, the UAW said.
“Volkswagen is a company that has extensive experience with union representation and
the UAW believes the role of the union in the 21st century is to create an environment
10
where both the company and workers succeed,” the union said. “The UAW appreciates
the opportunity to have direct discussions with VW management. Ultimately, however,
it’s the workers in Chattanooga who will make the decision on representation and a
works council.”
The UAW said that should the Chattanooga workers choose to have representation and a
works council, it is committed to an open, fair and respectful dialogue with VW to create
an environment in which Tennessee workers can participate in VW’s global work council
system.
“VW workers in Chattanooga have the unique opportunity to introduce this new model of
labor relations to the United States, in partnership with the UAW,” according to the
union. “Such a labor relations model would give workers the job security that would
accompany their having an integral role in managing the company and a vehicle to
provide input on workplace improvements that will contribute to the company's success.”
U.S. experiment with German style works council poised to begin
By Pamela Wolf, J.D. and David Stephanides, J.D.
In a move that could be the handwriting on the wall in a global marketplace, a United
Auto Workers spokesperson has confirmed to Employment Law Daily that it has obtained
a majority of UAW authorization cards from workers at Volkswagen’s new plant in
Chattanooga, Tennessee — an important development, but perhaps not as important as
the fact that the card also appears to authorize the importation of a German style “works
council” to the U.S. plant.
Indeed, the authorization card includes language stating that the workers “commend and
embrace the Volkswagen philosophy of co-determination and aim to contribute to the
production of the highest quality products, safe and efficient production methods, and the
overall profitability of Volkswagen.” The language goes on to state: “We believe that the
best way to actively participate in our company and to contrib¬ute to VW’s continued
success is to achieve representation as our colleagues have at the other 61 Volkswagen
facilities across the globe.”
So what does that mean? It means the introduction of a new model of labor relations into
the U.S. labor scene. According to WikiPedia, a works council is a “shop-floor”
organization including workers and executives that functions as a local/firm-level
complement to national labor negotiations. Works councils exist with different names in
a variety of related forms in a number of European countries. Works councils safeguard
employees’ collective interests and have three primary duties: (1) to work cooperatively
and in good faith with trade unions and the employer; (2) to preserve peace in the
workplace (this means that it cannot initiate any form of industrial action to exert
pressure on the employer); and (3) to defend the principle of equal treatment with regard
to age, and the personal development of staff members.
The works council has various rights according to the German Works Constitution Act,
none of which are executive in nature. Only the employer can implement measures within
11
the business unit, such as hiring, dismissal, operational changes, etc. Some of the rights
of the works council include:

Information rights: The works council has a general right to be kept informed in
detail and without delay in keeping its duties under the Works Constitution Act.
The employer is obliged to give the works council a hearing before reaching a
decision on certain matters and to take its arguments into account. However,
management is not bound to accept these arguments. Most important is the right
to be heard before every dismissal and informed of all reasons for the dismissal.

Consultation rights: The works council has the right to be consulted on such
matters as workplace design and equipment, personnel planning, and vocational
training. Again, the employer is not obliged to implement the works council’s
proposals.

Co-determination rights: The most far-reaching rights of the works council are
those of co-determination, which mean that measures cannot take effect until the
works council’s approval is granted. Any social, personnel-related, and economic
measures planned by the employer require the works council’s approval before
they can be implemented.
In Germany, unions bargain for wages, while works councils weigh in on job security,
safety, and other plant-specific matters. How the UAW’s role would intermesh with a
works council is at this point somewhat unclear. However, it is clear that this new type of
relationship would be totally different from established bargaining relationships with U.S.
automakers.
100 arrested in latest protests against Walmart
According to the United Food and Commercial Workers International Union (UFCW),
100 Walmart workers and community members were arrested in 15 U.S. cities on
Thursday, September 5, as they petitioned the retail giant to reinstate what they
characterized as illegally fired and disciplined workers, to publicly commit to improve
jobs, and to end the company’s so-called aggressive violations of workers’ rights.
Thousands of supporters, including the President of the National Organization for
Women, Terry O’Neill, joined protesters in what was reported as the largest mobilization
since the Black Friday protest in 2012. Demonstrations were staged in Baton Rouge,
Boston, Chicago, Cincinnati, Dallas, Denver, Los Angeles, Miami, Minneapolis, New
York, Orlando, Sacramento, San Francisco, Seattle and Washington, D.C., according to
the UFCW.
The arrests and protests came as part of a national call for better wages in low-paying
jobs.
“We’ve had enough of Walmart’s inaction,” said a Walmart worker who was arrested
Thursday in Hyattsville, Maryland. “As the country’s largest employer, Walmart can and
should do better. We aren’t calling for much — a minimum full-time yearly wage of
12
$25,000 and assure us that we can stand up for what’s right without being attacked. I’m
energized by the support I saw today and will be out stronger than ever on Black Friday.”
The protests against Walmart have been fueled by growing backlash against income
inequality and its impact on the economy. “Walmart, the largest company on the Fortune
500 list, made $16 billion in profit last year and the majority of owners of the company,
the Waltons, have the combined wealth of nearly half of American families,” UFCW said
in a release. “Meanwhile, many Walmart workers continue to earn on average poverty
wages of $8.81 an hour, despite misleading claims from Walmart that wages are higher.”
The union also pointed to a May 2013 Congressional report that calculated Walmart
workforce reliance on public assistance, including food stamps, healthcare and other
needs, to be at about $900,000 per year of taxpayer funds at just one of the company’s
4,000 stores.
The UFCW also cited a Demos report demonstrating that a wage floor equivalent of
$25,000 per year for a full-time, year-round employee of retailers with more than 1,000
employees would elevate 1.5 million retail workers and their families out of poverty or
near-poverty, add to the country’s economic growth, increase retail sales, and create more
than 100,000 new jobs.
The union also said that more than 100 unfair labor practice charges against Walmart
have been filed with the NLRB.
According to the UFCW, it has the aim of helping Walmart employees as individuals or
groups in their dealings with the employer over labor rights and standards and in their
efforts to have Walmart publicly commit to adhering to those rights and standards, but it
has no intent to have Walmart recognize or bargain with UFCW as the representative of
Walmart employees.
Walmart has said that the protesters do not represent the views of the vast majority of
Walmart associates, according to media reports.
Fourth Circuit rejects agency bid for rehearing after enforcement denied due to
invalid recess appointments
By Pamela Wolf, J.D.
The Fourth Circuit has denied without comment the NLRB’s petitions for rehearing of
the court’s ruling, in a pair of consolidated cases for enforcement, that the Board lacked a
quorum because President Obama’s three January 4, 2012, Board appointments were
constitutionally infirm, having not been made during “the Recess of the Senate.” The
appeals court had accordingly denied the Board’s applications for enforcement of its
decisions in the two cases. In its request for rehearing, the NLRB was seeking remand of
the cases to the Board for further proceedings.
The issue of the constitutionality of the President’s recess appointments is currently
pending before the U.S. Supreme Court, which granted review in Noel Canning last June.
13
In its petition for rehearing of the cases, the Board noted that in NLRB v Enterprise
Leasing Co Southeast, LLC, the appeals court had concluded there was substantial
evidence supporting the Board’s decision not to set aside the results of the election in
which the employees had chosen union representation. In Huntington Ingalls Inc. v.
NLRB, the court upheld the Board’s ruling regarding the contours of the bargaining unit.
However, because the appeals court had also determined that the recess appointments to
the Board were invalid, and it thus lacked a quorum, the Board’s decisions must be
vacated. The court, in its order and its judgment, denied enforcement.
According to the NLRB, the appeals court’s “decision clearly recognizes that these cases
could be considered, and appropriate final orders entered, in further Board proceedings
consistent with the Court’s opinion.” The denial of enforcement was not based on the
merits of the Board’s decision but rather was based solely on court’s determination that
the recess appointments were invalid and that decisions issued when the Board lacked a
quorum must be vacated. The Board pointed to the court’s reliance on New Process Steel
to confirm its understanding. There, after the Supreme Court held that the Board did not
have authority to issue decisions when its membership fell to only two, the Fourth Circuit
“resolved pending two-member Board cases by ‘grant[ing] the petition for review,
vacat[ing] the Board’s order, and remand[ing] to the Board for further proceedings,’” the
NLRB wrote.
The Board went on to cite experience in the aftermath of New Process Steel, which
“demonstrated that a judgment in the form ‘enforcement denied’ can engender needless
litigation.” To head off the possibility of similar issues arising in Enterprise and
Huntington, depending on the outcome in Noel Canning before the Supreme Court, the
Board sought rehearing for the “limited purpose of clarifying the order and judgment to
explicitly provide that the cases are remanded to permit further proceedings consistent
with the Court’s opinion.”
The Fourth Circuit, however not only declined the NLRB’s petition for rehearing without
comment, it also rejected the intervening IAM’s similar petition for rehearing.
AFL-CIO adopts resolution to expand “alt-labor” efforts, commits to organizing
tobacco farm workers and targeting the South
By Pamela Wolf, J.D.
Among the several resolutions already approved at the AFL-CIO’s 2013 Convention,
which kicked off September 8 in Los Angeles, is one that permits any U.S. worker to join
the labor movement. The federation says it will develop new pathways, either through
affiliate unions, AFL-CIO's community affiliate Working America, worker centers, or
through students. The union federation clearly intends to expand its outreach through altlabor, but it also will carefully avoid any detrimental impact on the unionized labor
segment.
Expanding alt-labor presence. According to the Resolution 5, transparently aimed at
growth, the labor movement must be broad and inclusive, and “cannot be confined within
bargaining units defined by government agencies or limited to workplaces where a
14
majority of employees votes ‘Yes’ in the face of a ruthless campaign by their employer to
deny them representation.”
Noting that the labor movement includes all workers who wish to take collective action to
improve wages, hours and working conditions, the resolution says: “Our unions must be
open to all workers who want to join with us. The AFL-CIO and affiliated unions must
continue to innovate and experiment with new forms of membership and representation
to achieve the ultimate objective of assisting all workers to bargain collectively through
an affiliated union.”
For these and other reasons, the resolution says, the AFL-CIO and its affiliate unions
should “expand existing forms and create new forms of membership to make membership
available to any worker who wants to join the labor movement,” targeting those who are
not already covered by a CBA, a union member, represented by a union, or included in an
affiliated union’s organizing plan.
Via Resolution 5, the union federation has invited “every worker in the United States to
join the labor movement either through an affiliate or through Working America.”
Working America is “another form of membership” created by the AFL-CIO — its altlabor group.
Balance between Working America and union activity. “The AFL-CIO will continue
to experiment with this form of membership in close cooperation with affiliates and
without undermining affiliates’ current collective bargaining relationships or organizing
plans and with the ultimate objective of enabling workers to obtain representation for
purposes of collective bargaining through an affiliated union,” according to the
resolution.
Reaching nonunion workers. To make these new, expanded, open forms of membership
meaningful, democratic, and self-sustaining, Resolution 5 directs that the AFL-CIO,
affiliates, and Working America shall:

Develop forms of workplace representation and advocacy that can benefit
members outside collective bargaining by educating them about their workplace
rights, providing assistance when their rights are violated, encouraging concerted
action to redress workplace problems, and by other lawful means.

Seek to extend non-collectively bargained benefits to those members who are not
represented for purposes of collective bargaining in cooperation with Union
Privilege.

Provide members with education, training, and leadership development
opportunities.

Mobilize these new members in electoral and other political efforts and in support
of organizing drives and collective bargaining campaigns.
15
Resolution 5 also calls on the AFL-CIO and affiliated unions to “deepen their
relationship” with worker centers and other emerging organizations that serve as
advocates for workers not covered by a CBA, who are not union members, and are not
represented by a union, with the aim to “better further the common objective of
expanding the labor movement and raising workers’ standard of living.”
The AFL-CIO and affiliated unions should also “renew and strengthen their ties to
students, recognizing that students have a vital interest in working with union members to
ensure that the workplaces they are about to enter are just, fulfilling and rewarding,”
according to the resolution.
Other resolutions. Other federation resolutions adopted at the convention:

Make it a top priority to develop a Southern Strategy that will include a long-term
commitment to organize the South (Resolution 26);

Commit the AFL-CIO’s engagement in certain activities in support of its Farm
Labor Organizing Committee’s campaign to bring justice to tobacco farm workers
in North Carolina and the South (Resolution 38);

Continue its support for the Employer-Employee Cooperation Act, which
guarantees the basic human right to collectively bargain for wages, hours, and
working conditions for public safety employees (Resolution 41); and

Encourage union affiliates to negotiate language in CBAs that require a union
label verifying that products and services are made or provided by union workers
(Resolution 49).
In addition, convention delegates also passed a constitutional amendment to give younger
workers a seat on the AFL-CIO’s Governing Board.
New master deal for DHL Express workers; tentative CBA for transit workers; UPS
workers to vote on supplemental agreements; clinical social workers win in court
By Pamela Wolf, J.D.
In the world of labor, DHL express shipping workers have a new master agreement,
transit service employees have a tentative CBA, UPS workers are poised to vote on
previously rejected supplemental agreements, and clinical social workers score a legal
victory against a state health benefits plan.
DHL Express. Teamsters working at DHL Express across the country have approved a
new tentative National Master Agreement. According to the union, the three national
operational supplements (e.g., pick-up and delivery; office clerical; and gateway) and all
regional pick-up and delivery supplements (e.g., New England; Central Region;
Philadelphia Area; and Joint Council 7) were also approved. Moreover, the affected
membership has approved 21 of 28 local riders.
16
Majority approval, however, was lacking in seven out of 28 local riders. Only three of the
seven were affirmatively rejected while three small locations had no response and one
small location had a tie vote. The national contract will not go into effect until the status
of the seven riders is resolved.
Leaders from Teamster local unions met in Washington, D.C., on August 7 and
overwhelmingly approved the tentative master agreement and supplements, paving the
way for a vote by the members. The tentative agreement, unanimously endorsed by the
Teamsters DHL National Negotiating Committee, maintains a strong health, welfare and
pension package and also provides wage increases, among other gains.
Ballot materials, including the supplements and local riders, were mailed out around
August 21. The ballots were counted on September 11 in Cheverly, Maryland. The
national master portion of the contract (which contains the economic package) was
ratified by more than a 70-percent margin. The national contract, riders and supplements
cover about 2,000 Teamsters.
Paratransit Services. Teamsters Local Union No. 665 and Paratransit Services, the
company contracted to manage transit services in Lake County, California, by Lake
Transit Authority, reached a tentative CBA on September 5, according to media reports.
The Teamsters accepted an offer that mirrored the last offer made by Paratransit Services
during negotiations on June 19.
The offer made by Paratransit Services to its employees in June included a 2.2-percent
consumer price index raise that, at the time, fell short of the 2.4-percent cost of living
adjustment and the return of 10-step yearly increases forfeited during negotiations three
years ago that workers were seeking. The workers subsequently voted to strike.
Transit services in the county were operating at limited capacity since the start of the
labor dispute on July 29 and were not fully restored until September 3. On August 14, the
employees voted unanimously and unconditionally to return to work, but no deal on a
labor contract had yet been reached.
The Teamsters reportedly later opted to take the deal because they realized they were
fighting a battle that they likely could not win.
As of September 9, reports indicated that six employees had been called back to work,
but more than 25 were still waiting to return. As part of the deal, Paratransit Services
agreed to give priority to employees who were previously on strike when more personnel
is needed based on seniority.
UPS Inc. Teamsters at UPS Inc. will begin voting again on September 18 as to seven of
the 17 supplemental agreements that were rejected in June when the national master
agreement was approved, according to the union.
Local union leaders representing UPS Teamsters who currently receive TeamCare health
care benefits and those moving into the TeamCare plan met in Chicago on September 4
17
to learn about improvements made since the UPS National Master Agreement was
ratified in June.
TeamCare unveiled changes that trustees have made to the plan, which were made
possible by the influx of new participants into TeamCare. The improvements apply to all
UPS Teamsters covered by TeamCare, existing participants and new participants. The
changes were well received by local union leaders.
The UPS National Master Agreement, which was approved in June by a majority of UPS
Teamsters who voted, achieves many contract enhancements that members identified as
extremely important, including wage and benefit increases, additional full-time jobs, and
language improvements, such as harassment, 9.5, SurePost and military leave.
Those provisions, including a 70-cent per hour wage increase, were negotiated to take
effect August 1, 2013. However, none of the provisions of the National Master
Agreement have gone into effect because the national agreement does not take effect
until all regional supplements and riders have been approved. Seventeen supplements and
riders were not approved during the first vote.
Once all supplements and riders are approved, negotiated wage and pension increases
will be paid retroactively to August 1.
State Employees Health Benefits Plan. The New Jersey Society for Clinical Social
Work (CSW)/OPEIU Guild 49 has declared a victory in its legal action against the State
Employees Health Benefits Plan (Horizon BCBS) for lowering their rate of
reimbursement to out-of-network practitioners in January 2009. The NJ State Appellate
Division determined that lowering reimbursement rates by the SHBP and Horizon was
done in violation of N.J.S.A.52:14-17.46.7.
The court, according to CSW/OPEOU Guild 49, found the statute “does not authorize the
Commission (Horizon) to deviate in any way, including rejecting the PHCS UCR fee
schedule, relying on non-nationally recognized database of prevailing health care charges
to change that fee schedule, and imposing a percentage rate or condition the statute does
not permit. Thus the Commission's decision was arbitrary, capricious and unreasonable
and must be reversed.”
“This means that Horizon BCBS must reverse the reduction in reimbursement rates to
LCSWs back to levels before 2009,” said Luba Shagawat, MSW, LCSW, S-NAP, the
director of legislative affairs for Guild 49. “It's taken a long time to get this victory, but
we are thrilled that the courts have reversed this injustice and returned the rate to a fair
level. It proves the power of a collective voice, and what can be accomplished when
workers unite for a common purpose.”
FEC gives green light to SEIU plan for telephone soliciting of payroll deduction
contributions to political education fund
By Pamela Wolf, J.D.
18
The SEIU got the Federal Election Commission’s (FEC) stamp of approval last week on
a proposed plan for telephone solicitation of authorized payroll deduction contributions to
its political education fund.
The FEC on September 12 approved an advisory opinion request from the Service
Employees International Union (SEIU) and its separate segregated fund, the SEIU
Committee on Political Education (SEIU COPE). According to the Commission, the
requestors’ proposed use of recorded telephone conversations to establish restricted class
members’ affirmative authorization of payroll contributions to SEIU COPE is consistent
with the Federal Election Campaign Act (FECA) and Commission Regulations.
The SEIU COPE is registered with the Commission as the SEIU’s separate segregated
fund (“SSF”) and receives its contributions mostly through payroll deductions from the
SEIU’s restricted class. Members of the restricted class authorize these payroll
deductions either in handwritten documents or by electronic signatures provided in email
or web-based communications.
The requestors proposed to obtain and maintain payroll-deduction authorizations from the
SEIU’s members through recorded telephone conversations during which an SEIU
representative would use current membership records to call a member and, consistent
with applicable state law, explain that the conversation is being recorded. The
representative would request that the individual on the telephone provide certain
information (including name, address, and employer) that would be checked against the
SEIU’s records to verify that the person on the phone is the individual sought and is a
current member of the SEIU. Once the representative confirmed that the individual is a
member of SEIU’s restricted class, the representative would then solicit contributions to
the SEIU COPE. The representative would confirm that the member is a U.S. citizen,
note that contributions are not tax-deductible, and provide the information required by 11
C.F.R. § 114.5(a).
If the member agreed to make contributions to the SEIU COPE by payroll deduction, the
representative would record the member’s consent in an electronic database along with
the amount of the authorized deduction, the date of the call, and the SEIU
representative’s identity. The union would maintain this information and a recording of
the telephone conversation for at least three years after the contributions were reported. If
the member’s phone has text-messaging service, the SEIU would send a summary of the
transaction to the member via text message. In the phone call and in any text message
summary, the SEIU would provide the member with a telephone number and address to
which the member could call or write to cancel the deductions at any time.
This proposed method of obtaining and maintaining records of SEIU members’
authorizations for payroll-deduction contributions to the SEIU COPE “is consistent with
the Act and Commission regulations,” the Commission concluded.
NUHW initiates investigation of agency attorney who switched sides in middle of
Kaiser investigation
19
The National Union of Healthcare Workers (NUHW) has filed a complaint with the
California Fair Political Practices Commission (FPPC) asking it to investigate whether a
former official in California’s Department of Managed Health Care (DMHC), who had
the job of investigating Kaiser Permanente’s alleged substandard mental health care,
unlawfully “switched sides” by assisting Kaiser during the investigation.
The official, Marcy Gallagher, was a top DMHC attorney responsible for leading the
agency’s investigation into Kaiser’s alleged patient-care violations, including the HMO’s
purportedly illegal delays in caring for patients with depression, autism, and other
conditions, according to the NUHW. After she led the agency’s investigation for some
eight months, Gallagher resigned her government position and was hired by Kaiser,
where she works for the Kaiser division responsible for defending the company against
the agency’s investigation, the NUHW said.
The union contends that Gallagher has trained Kaiser officials on how to answer
questions posed by DMHC’s investigators. Next month, the agency plans to conduct site
visits at Kaiser hospitals and clinics as part of its ongoing investigation.
“In short, Ms. Gallagher went from directing the DMHC’s investigation against Kaiser to
helping Kaiser fend off the very investigation that she spearheaded,” NUHW said in a
statement.
Documents also show that a number of Kaiser’s top officials were aware of Gallagher’s
highly questionable conduct, including the president of Kaiser’s Southern California
region and a top national official at Kaiser, the union said.
The NUHW’s complaint asks the FPPC to immediately investigate whether Gallagher
violated provisions of California’s Political Reform Act, including its permanent ban on
switching sides by state officials and its ban of influencing prospective employment.
These provisions are intended to prevent private interests from corrupting the government
by buying “insider” assistance from state officials, the union explained, also noting that
Kaiser is California’s largest HMO, with a reported $10.2 billion in profits since 2009.
The union also pointed out that Kaiser is currently under heavy regulatory scrutiny for its
purported mental health violations. After the first phase of the state’s investigation,
Kaiser was assessed a $4 million fine for violating multiple provisions of state law,
including the California Mental Health Parity Act and California’s Timely Access
Regulations. The investigation was prompted by a complaint filed by NUHW, whose
members include 2,500 psychologists, therapists and other licensed mental health
clinicians who care for Kaiser patients at dozens of hospitals, clinics, and emergency
rooms across California.
NLRB, DOL nominees get the green light from HELP Committee
By Pamela Wolf, J.D.
The Senate Health, Education, Labor & Pensions (HELP) Committee on September 18
gave the green light to Richard F. Griffin, Jr., President Obama’s pick for the job of
20
General Counsel of the NLRB. The committee also gave the nod to Scott S. Dahl to be
the DOL’s Inspector General.
Richard F. Griffin, Jr. The President’s choice to fill the NLRB’s General Counsel spot
recently served as Board member as part of the still-controversial recess appointments
that were made in January 2012. His nomination to the NLRB was withdrawn by the
President as part of an eleventh-hour deal with Senate Republicans in the face of their
staunch opposition.
Griffin, who earned a J.D. from Northeastern University School of Law, was previously
general counsel of the International Union of Operating Engineers.
Scott S. Dahl. Currently the Inspector General at the Smithsonian Institution since
January 2012, Dahl has also been an adjunct professor at Georgetown University Law
Center since 1992. He previously served as Deputy Inspector General for the U.S.
Department of Commerce from October 2010 until January 2012, and Deputy Inspector
General for the Office of the Director of National Intelligence from 2007 until 2010.
Before that, Dahl worked at the DOJ for more than 15 years, including as Senior Counsel
to the Inspector General, a prosecutor in the Public Integrity Section of the Criminal
Division, and trial attorney for the Civil Fraud Section in the Civil Division.
Prior to his government service, Dahl was an associate at the D.C. law firm Arnold &
Porter. He received a B.A. from the University of Texas at Austin and a J.D. from the
University of Texas School of Law.
Reining in the Board. Many stakeholders have expressed the view that in recent years,
the NLRB has “gone rogue,” taking such actions as issuing the controversial notice
posting rule without lawful authority to do so. Senator Lamar Alexander (R-Tenn.), the
senior Republican on the committee, issued a warning prior to the hearing on Griffin’s
nomination, saying that he would be working on a way to restructure the Board so that it
is “an umpire rather than an advocate.”
“I am going to be looking for long-term solutions on a restructuring of the National Labor
Relations Board that will ensure that it is more likely to be an umpire and an adjudicator
rather than an advocate, whether the president is a Democrat or a Republican,” Alexander
declared.
“I’ve expressed here before my concern about the ability of the National Labor Relations
Board to be a fair adjudicator — an umpire rather than advocate,” he continued. “That
didn’t start with the Obama administration, but it’s gotten worse with this administration
as it has moved toward the side of union advocacy with such things as ambush elections
and micro-unions and undermining state right-to-work laws.”
Acknowledging Griffin’s credentials but nonetheless slamming his prior union-related
work, Alexander said: “Mr. Griffin has the legal credentials but his background as a
union advocate and his work as general counsel for one of the major unions doesn’t do
anything to help me believe that he will improve the situation at the NLRB. I can count,
21
so I know that the Democratic majority will report Mr. Griffin’s name to the floor and
that he will have an up or down vote and will be confirmed, but I’m going to vote no.”
SCI wins injunction against Teamsters Local 727 in funeral director lock-out battle
By Pamela Wolf, J.D.
In the latest round of an ongoing battle, Service Corporation International (SCI), which
uses the brand name Dignity Memorial, marked a victory when, on Thursday, September
19, a state court in Cook County, Illinois issued a preliminary injunction against
Teamsters Local 727 and its leadership. The funeral industry giant has locked out 59
Chicago-area funeral directors despite a purported unconditional offer to return to work
that was made by the union local.
The labor dispute affects 16 Chicagoland funeral homes. The company forced the
members to strike July 2 for unfair labor practices after bargaining in bad faith, according
to the union. On August 19, the local made an unconditional offer for the funeral
directors and drivers to return to work as contract negotiations continued, but hours later,
SCI management opted to lock out the members.
SCI reported that under the court’s ruling, the union and leaders, including John Coli, Sr.,
and John Coli, Jr., and others, are enjoined from the following conduct:

Conveying any actual or veiled threats against any person; Obstructing, hindering,
impeding or blocking any person's entry to or exit from any funeral site or any
facility containing a funeral site;

Employing bullhorns or other noise amplification devices during funeral or
memorial services irrespective of the distance from the site of the services; and

Permitting the presence of dogs for any purpose whatsoever during labor dispute
activities.
Picketer misconduct. SCI sought preliminary and permanent injunctions due to what it
characterized as repeated incidents of gross insensitivity and harassment directed at
grieving families by union picketers outside of funeral homes affected by the union's
labor dispute. The company pointed to these alleged incidents cited in its original
complaint:

During the service of a young child who had passed away from cancer, picketers
laughed, smiled and joked as they created a disturbance within the immediate
vicinity of the only public entrance to the funeral home. They were asked to move
by a police officer who had been called — then moved back immediately in front
of the building and its entrance after the officer left.

While escorting a woman and her father who were attempting to plan her recently
deceased mother's funeral, an employee escorting them was taunted and called
22
names, the three of them were taunted with a bullhorn and siren sound, and
intimidated by an unleashed German Shepherd.

Picketers used a bullhorn to shout profane and sexually explicit taunts while a
woman and her four- and five-year-old sons attempted to make arrangements for
her grandmother's funeral, causing the family to become visibly upset.

A group of picketers temporarily blocked a grieving widow's vehicle as she tried
to exit the parking lot.

Picketers repeatedly used the siren function on a bullhorn, compressed air horns,
car horns and car alarms to create loud disturbances during funeral arrangements
and services.

Picketers threatened to blow up the house of a retired sheriff's officer hired to
work private security at the funeral home.
Tables turned. The tables were turned last July, when the court denied an emergency
motion filed by SCI in an effort to silence picketers. The judge purportedly found that
SCI had little chance of success on the merits of its complaint and that based upon the
totality of the allegations there is no irreparable harm. The judge could ascertain no
statement of a claim in the complaint and was perplexed as to what SCI hoped to achieve
in a preliminary injunction hearing, according to the Teamsters. The litigation, however,
continued.
On September 16, Teamsters from across Chicago joined the locked out SCI funeral
directors and drivers at a rally at a funeral home in Oak Lawn. “SCI has chosen to lock
out its employees rather than see them return to serving grieving families in their
communities," said John T. Coli, Secretary-Treasurer of Local 727. "SCI has forced this
lockout to get rid of its longtime employees and boost its bottom line. But the Teamsters
will continue to fight on behalf of our members for justice, and for a fair and equitable
contract.”
Teamsters pick up new members in Georgia; unions announce tentative contract
deals
By Pamela Wolf, J.D.
Among recent developments on the labor front, Illinois METRA workers have a tentative
CBA, warehouse workers in McDonough, Georgia, are now Teamsters, St. Louis County
public workers in Minnesota approve a new contract, and Peabody Energy’s Kayenta
Mine workers in Arizona ratify a new CBA.
METRA. According to the National Mediation Board (NMB), METRA, Northeast
Illinois Regional Commuter Railroad Corporation, and the United Transportation Union
(SMART—Transportation Division) reached a tentative CBA on September 19 for the
craft or class of train service employees.
23
The mediation was guided by NMB mediator Walter Darr. The tentative agreement now
goes to the union membership for ratification.
Americold. Warehouse workers at Americold in McDonough, Georgia, voted 30-11 to
join Teamsters Local 528. There are about 50 workers in the bargaining unit. But,
because there are many temporary workers who will become full-time, the bargaining
unit is expected to grow to 80 to 90 workers, the union said.
The company is the largest provider of temperature-controlled warehousing and
distribution services in the United States. Americold has more than 6,000 associates in
100 warehouse locations. The Teamsters represent more than 1,000 Americold workers
nationwide.
The McDonough workers are seeking fair pay, according to the union. “The Americold
workers who are represented by Local 528 receive much higher wages,” said Johnny
Edwards, a Local 528 business agent. “They are also seeking a seniority system,
protection of rights, improved benefits and respect and dignity in the workplace.”
St. Louis County. Members of Local 66 (AFSCME Council 5) have ratified a contract
and averted a strike by more than 1,000 employees of St. Louis County, Minnesota, after
the county dropped a provision reducing sick leave benefits for some workers.
Union members threatened to strike over the proposal, which gave new employees
different benefits than existing ones. The county wanted to reduce the maximum banked
sick leave from 1,900 hours to 1,150 hours for new employees, the union said. Seeking
fairness, AFSCME countered with 1,500 hours for all employees, present and future,
except those who already earned sick leave over the new cap.
After the county accepted the counter-offer on accumulated sick leave, workers voted on
the agreement. Two-thirds of the county’s workforce faced the option of voting to ratify
the contract, or voting no and reauthorizing a strike.
“We forced the county to drop its demand for a divisive two-tier contract,” said
AFSCME’s negotiating team leader, Steve Kniefel. “We put the county on notice that
AFSCME won’t cave into union-busting tactics that pit worker against worker.”
Peabody Energy. The United Mine Workers of America Local 1924 ratified a new sixyear contract for represented employees at Peabody Energy’s Kayenta Mine in Arizona,
where about 98 percent of the hourly workforce is Native American. The agreement has
provisions that will allow for efficiency improvements and includes wage increases and
enhancements for a variety of benefit programs, according to the union.
The Kayenta Mine supplies fuel to the Navajo Generating Station in Page, Arizona.
Mining operations create more than $117 million in annual direct economic benefits to
tribal communities. Employees have a history of strong safety performance, the union
said. This year, they achieved a milestone of more than 1 million work hours without a
lost-time injury.
24
RAISE Act introduced again to permit merit raises regardless of CBA provisions
Senator Marco Rubio (R-Fla.) and Representative Todd Rokita (R-Ind.) announced the
introduction of a bill that would amend the NLRA to permit employers to give out meritbased raises to individual employees regardless of whether the increase is part of a
collective bargaining agreement. The move would turn CBA-set wages into a minimum
floor while giving employers the option of rewarding diligent employees for their hard
work, the lawmakers said of the previously defeated legislation.
On September 19, Rokita introduced HR 3154, the Rewarding Achievement and
Incentivizing Successful Employees (RAISE) Act, which has been referred to the House
Subcommittee on Health, Employment, Labor, and Pensions. The bill has 56 cosponsors.
Rubio and Rokita note that under current law, unless it is specified otherwise in a CBA,
the wage specified in the union contract is both a minimum and a maximum. The new
legislation, if enacted, would apply to 7.6 million American unionized workers, 2.8
million of whom are women, they said.
“The RAISE Act would help American workers earn more money by letting employers
give them merit-based pay raises and bonuses without first having to clear it by union
bosses,” according to Rubio. “Our free enterprise system thrives when hard-working
Americans have the freedom to earn more money for a job well done. This can’t happen
as long as union bosses have more power than job creators when it comes to giving raises
and bonuses to people that earn them, but the RAISE Act would stand with America’s
working class and end this injustice.”
A similar bill by the same name failed when in June 2012, the Senate rejected it. Not
surprisingly, unions applauded the earlier defeat. The Brotherhood of Locomotive
Engineers and Trainmen called the legislation an “anti-union bill” that would have
undermined the rights of workers to bargain collectively under the guise of higher wages.
According to the BLET, the measure would have stripped employees of the right to
negotiate contracts that create a uniform, fair process for granting wage increases. The
union insisted that the measure would have allowed employers to discriminate against
employees by arbitrarily showing favoritism to one worker over another.
AFL-CIO takes action on convention pledge to join with community groups, reach
out to students
By Pamela Wolf, J.D.
The AFL-CIO is already taking action on its pledge to expand its reach in the so-called
“alt-labor” arena. On Tuesday, September 25, the federation announced that it has
entered into a new national partnership with United Students Against Sweatshops
(USAS).
The move is aimed at strengthening workers’ rights and building power for students as
well as workers. The two groups intend to “collaborate on important global solidarity
campaigns, from ensuring safe working conditions for Bangladeshi garment workers to
protecting the freedom of U.S. workers to organize for better jobs whether they work on
25
campus or for companies with university contracts like T-Mobile,” according to AFLCIO’s release.
The federation says the newly formed partnership is “the first concrete step” taken after
the federation’s convention, held in Los Angeles earlier this month, at which there was
unanimous agreement to expand community partnerships.
Resolution 16. Indeed, Resolution 16 was adopted at the convention with the express
belief that by building together with community partners and allies in a “lasting, powerful
movement for social and economic justice and an enduring democracy,” collective
purposes will be achieved. Accordingly, the AFL-CIO and its affiliates resolved to:

Deepen relationships and programs with the community;

Work vigorously on the issues raised by our partners that reflect our shared
values;

Ensure that state federations and central labor councils are well situated to build
enduring partnerships with the community; and

Establish ways in which the AFL-CIO can incentivize the development of shared
agendas and promote best practices.
Resolution 5. Under Resolution 5, also adopted at the convention, the AFL-CIO and
affiliated unions should also “renew and strengthen their ties to students, recognizing that
students have a vital interest in working with union members to ensure that the
workplaces they are about to enter are just, fulfilling and rewarding.”
First student group. The federation has found its first new student-group friend in
USAS. The group is the nation's largest youth-led campaign organization dedicated to
building a student labor movement. Its affiliated locals on over 150 campuses run locally
and nationally-coordinated campaigns for corporate accountability and economic justice,
working in partnership with organizations of workers.
The USAS says its campaigns are designed to expose and hold accountable corporations
that exploit people who work on campuses, in communities and in the overseas factories
where collegiate apparel is produced; they purportedly employ the “unique moral
authority, energy, and power students hold within universities, which often act as anchor
institutions in communities and the global economy.”
“The labor movement shares USAS’s values and vision for global solidarity and social
justice,” said AFL-CIO President Richard Trumka. “Together, we are stronger and better
positioned to meet the mutual goals and objectives of improving the lives of working
people. This partnership demonstrates the AFL-CIO’s determination to turn commitments
on paper into action.”
“As current and future workers, college students are proud to stand side by side with the
labor movement. Whether it’s supporting Bangladeshi workers’ demand for safe
26
workplaces, or opposing Scott Walker’s attacks on public workers, it’s clear that our
struggles are bound together,” said Lingran Kong, a member of USAS’s coordinating
committee and student at the University of Wisconsin. “This agreement solidifies our
commitment to building a stronger movement to defend and advance the rights of
students and workers across the globe.”
Priority activities. Under the National Partnership Agreement, the AFL-CIO and USAS
have identified the following “priority activities” through which they will accomplish
their mutual goals and objectives:

Maintaining regular and substantive communication between the national staffs of
USAS and the AFL-CIO.

Facilitating strong relationships between USAS locals and central labor councils,
state federations, young worker groups, as well as state and regional bodies of
AFL-CIO affiliates.

Encouraging AFL-CIO affiliates, central labor councils, state federations and
USAS locals to collaborate on campaigns of mutual concern at all levels of the
global economy.

Encouraging AFL-CIO affiliates to partner with USAS on affiliate campaigns to
organize workers on campuses, including faculty, adjunct faculty, administrative
and service workers, student workers, and others.

Sharing expertise, including in strategic research to support campaigns.

Promoting USAS, AFL-CIO, and AFL-CIO affiliates’ campaigns through our
respective public communication infrastructures.

The AFL-CIO assisting USAS’ effort to secure needed support and resources.

USAS continuing to educate students about the critical role of labor unions and
the importance of organizing, supporting, and joining unions.
New contracts, unionization, tentative deals and the beat goes on
By Pamela Wolf, J.D.
This week on the labor front, among other developments, truck builders in Wisconsin and
manufacturing workers in suburban Chicago have a new contracts, adjunct faculty at
Tufts University are now unionized, and airline technicians and fleet support have a new
tentative CBA.
Oshkosh Corp. Oshkosh Corp. and the United Auto Workers Local 578 bargaining
committee have reached a tentative agreement on a five-year contract extension. Oshkosh
Corporation designs and builds specialty trucks and truck bodies and access equipment.
27
Local President Joe Preisler said in a press conference that the bargaining committee
believes the proposed deal is a “fair agreement for our people, the company and the
community, including our laid-off people, our retirees and future retirees.”
While not at liberty to discuss the details of the tentative deal, Preisler said that a “Yes
vote will mean a future of stability” in Oshkosh, Wisconsin for years to come. The deal
will be presented to members for ratification this Sunday, September 30.
Senior Flexonics. On Monday, September 23, the Teamsters announced that about 340
manufacturing employees at Senior Flexonics in suburban Chicago have overwhelmingly
ratified their first contract with Teamsters Local 330. By a 3-to-1 margin, the automotive,
energy, medical and aerospace supply manufacturers first gained Teamster representation
in a February 15 election.
After 22 negotiation sessions spanning over six months, Local 330 President Dominic
Romanazzi and the bargaining committee secured a three-year contract that includes
annual wage increases, seniority rights, strike protection and the benefits of the
Teamsters' grievance procedure.
The agreement provides wage increases of up to 3.75 percent in the second and third
years for the company’s production associates and specialists, the union said. All raises
are retroactive to June 3. The contract also includes increased pension contributions, four
paid personal days each year for all workers, and a new right for part-time employees to
be afforded first preference in the filling of full-time vacancies.
The company has also agreed to strict limits on the subcontracting of Teamster work.
New language in the CBA protects all current employees from the threat of lay off or
economic loss as a result of subcontract agreements.
Tufts University. The SEIU announced that adjunct faculty at Tufts University in
Massachusetts have voted overwhelmingly in favor of forming a union with Adjunct
Action/SEIU. Ballots were counted on September 26 at the NLRB. The win sets the table
for contract negotiations at Tufts.
Though once a quintessential middle class job, adjuncts have become part of the lowwage workforce, according to the SEIU. Between 2007 and 2010, the number of people
with master's degrees and doctorates who have had to apply for food stamps,
unemployment or other assistance more than tripled, the union said, pointing to an article
in The Chronicle of Higher Education. The union also cited census data in March 2011
indicating that while 22 million Americans held master's degrees or higher in 2010, about
360,000 were receiving public assistance.
Horizon Air. On Monday, September 23, Horizon Air and the Teamsters jointly
announced a tentative deal on a proposed five-year contract extension covering the
airline's 280 aircraft technicians, fleet service agents and other fleet support positions.
The proposed contract will give Horizon technicians and fleet support employees a wage
increase and several quality of life enhancements. The membership is scheduled to vote
28
on the contract extension in late October. If approved, the agreement would go into effect
in early November and become amendable in December 2019.
Under the Railway Labor Act, which governs CBAs in the airline industry, contracts do
not expire. Instead they become amendable. The current contract for Horizon Air's
technicians and fleet services employees was last ratified in December 2010 and was
scheduled to become amendable on December 16, 2014.
VW workers file NLRB charges against UAW challenging Chattanooga VW plant
authorization cards
By Pamela Wolf, J.D.
The UAW has created the impression the German-style “work councils” are coming to
the U.S. via the Volkswagen plant in Chattanooga, Tennessee. But maybe not so quickly.
Eight of the VW workers have filed charges with the NLRB against the UAW, saying
that it misled and coerced them, along with other workers, into forfeiting their rights
during the recent card check unionization drive, according to the National Right to Work
Legal Defense Foundation (NRTW). Via free legal assistance from NRTW lawyers, the
workers filed their charges at the NLRB’s regional office in Atlanta.
The cards not only authorized the union to represent the workers, they also ostensibly
authorize the importation of a German-style “work council” to the U.S. plant. The card
includes language stating that the workers “commend and embrace the Volkswagen
philosophy of co-determination and aim to contribute to the production of the highest
quality products, safe and efficient production methods, and the overall profitability of
Volkswagen.” The language goes on to state: “We believe that the best way to actively
participate in our company and to contribute to VW’s continued success is to achieve
representation as our colleagues have at the other 61 Volkswagen facilities across the
globe.”
The charges filed by the VW workers — some nine days after a UAW spokesperson
confirmed to Employment Law Daily that the union had obtained a majority of UAW
authorization cards — are said to state that union organizers told the workers that a
signature on the card was to call for a secret ballot unionization election. The charges also
purportedly allege other problems in the card check process, including that some of the
cards used were signed too long ago to be valid. The NLRB charges seek an order that
UAW union officials cease and desist from demanding recognition based upon the tainted
cards.
According to the NRTW, union officials have told workers that they must physically
appear at the union office if they want their cards returned to them. Purportedly, these
workers sought to revoke their signatures following media reports suggesting that
workers were misled or bribed into signing cards.
The NRTW acknowledges that this latest development stems from a NRTW “special
legal notice” targeted to the VW workers. The notice points to the decline of the UAW
29
and suggests that the union now “sees German-style ‘works councils’ as its salvation.”
The notice also disputes the alleged claim of the UAW’s president that workers must join
the union and authorize it to be exclusive bargaining agency in order to have such a work
council. The NRTW’s targeted notice also advises VW workers of several rights under
the NLRA, including their right to revoke a union authorization card that they have
signed and exactly how to do so.
Although contacted, the UAW had not yet responded to Employment Law Daily’s
request for comment by the time of press.
LEADING CASE NEWS:
2d Cir.: Important state law question at stake in public employees’ suit over wage
freeze; lower court should have declined jurisdiction
By Lisa Milam-Perez, J.D.
A federal district court shouldn’t have taken up the state law issues at stake in a suit filed
by Nassau County, New York, police officers’ associations challenging a wage freeze
imposed by a finance authority in the face of a severe fiscal crisis (Carver v Nassau
County Interim Finance Authority, September 20, 2013, Korman, E). Under the
circumstances, the district judge should have declined to reach the pendent state law
claim that required it to interpret, as a matter of first impression, a critical state legislative
scheme to prevent the county’s financial collapse, the Second Circuit found, vacating the
judgment and remanding with instructions to dismiss the state law claim.
In response to a growing financial crisis, the Nassua Interim Finance Authority (NIFA) in
2011 imposed a wage freeze on all county employees, including police offers. The NIFA
was created by the state legislature in 2000 in response to the county’s increasingly
unstable financial condition. Various Nassau County police unions filed suit, contending
that the wage freeze, which breached their collective bargaining agreements with the
county, violated the Contracts Clause, Article I, Section 10 of the U.S. Constitution. The
unions later amended their suit to add a claim that the authority conferred on the NIFA to
impose such a freeze had expired under the terms of the applicable statute. The NIFA was
responsible for approving the county’s budgets and financial plans through 2004; this
authority was extended twice, ultimately ending in 2008. But the NIFA retained
monitoring and oversight responsibility, including the power to review and audit county
budgets and to take remedial measures if necessary.
Granting summary judgment to the unions, the district court found the NIFA’s authority
to freeze wages had expired. The court did not address the jurisdictional issue, beyond
observing that it exercised jurisdiction pursuant to the federal question raised by the
Contracts Clause claim. Yet it didn’t reach the federal constitutional question, finding the
state law issue appropriate for summary disposition.
30
Important state issue. “This case concededly presents an unresolved question of state
law and is also one in which there are exceptional circumstances which provide
compelling reasons for declining jurisdiction,” the Second Circuit noted on appeal.
“Unlike a case involving a dispute between private parties, this case involves the
construction of a significant provision of an extraordinarily consequential legislative
scheme to rescue Nassau County from the brink of bankruptcy, to monitor its financial
condition, and to take steps necessary to prevent a relapse.”
Interpretation of the state law that empowered the NIFA to act implicates critical
questions of that body’s oversight responsibility, and the extent of its authority to control
county spending by imposing a wage freeze on county employees, the appeals court
observed. As such, the district court abused its discretion in taking up the state law claim.
The parties disputed whether the state law issue substantially predominated over the
Contracts Clause claim, just by virtue of the fact that the district court decided it first. But
the appeals court wouldn’t resolve this debate. “It is enough that the construction of the
provision of the NIFA Act at issue raises an unresolved issue of state law — the
interpretation of a poorly drawn statute — that should be resolved by the New York state
courts because the manner in which the statute is construed implicates significant state
interests.”
Nor did the Second Circuit decide whether C.P.L.R. Article 78 (a special statutory
procedure that New York law provides for adjudicating claims that a body or officer has
acted in a manner not authorized by state law) itself deprived the district court of
jurisdiction over claims brought under its provisions. Without deciding that New York’s
stated preference to try Article 78 claims in state court foreclosed federal jurisdiction
outright, the appeals court found this preference was another factor for the court to weigh
in deciding whether to exercise jurisdiction — and yet another strong basis for finding,
on appellate review, that pendent jurisdiction was improvidently exercised here.
The appeals court also declined to take up whether the NIFA was entitled to sovereign
immunity, an argument that the public body raised for the first time on appeal. While this
issue would normally have to be resolved first in cases involving the issue of Article III
subject matter jurisdiction, whether the sovereign immunity claim amounts to a true issue
of subject matter jurisdiction or constitutes an affirmative defense is an open question in
the Supreme Court and the Second Circuit. And because the appeals court could instead
resolve the other jurisdictional question, the sovereign immunity issue could await
another day.
On remand, the district court was directed to dismiss the state-law claim but to retain
jurisdiction over the federal constitutional claim. If the unions pursue their state-law
claims in state court, the district court may then decide at its discretion to stay the federal
action accordingly, given that resolution of the state action could obviate the need to
resolve the federal constitutional question.
The case numbers are 13-0801 and 13-0840.
31
Attorneys: Alan M. Klinger (Stroock & Stroock & Lavan) and Harry Greenberg
(Greenberg Burzichelli Greenberg) for James Carver. Christopher J. Gunther (Skadden,
Arps, Slate, Meagher & Flom) for Nassau County Interim Finance Authority. Marc S.
Wenger (Jackson Lewis) for County Executive of Nassau County, Nassau County
Comptroller, and County of Nassau.
3d Cir.: Lower court to vacate opinion in NLRA 10(j) case rendered moot by
Board’s subsequent resolution of unfair labor practice charges
By Lisa Milam-Perez, J.D.
Notwithstanding an employer’s objections, the Third Circuit granted the NLRB’s motion
to vacate a district court opinion in a Sec. 10(j) case that was subsequently rendered moot
by the agency’s resolution of the underlying unfair labor practice allegations (Lightner v
1621 Route 22 West Operating Company, LLC dba Somerset Valley Rehabilitation and
Nursing Center, September 4, 2013, Ambro, T). While the employer wanted to preserve
the record as set forth in the detailed opinion issued by the court below, the appeals court
said nothing prevented the employer from relying on the facts set forth therein.
Procedural background. The regional director brought unfair labor practice charges
against the employer and, while the complaint was pending, sought a Sec. 10(j)
injunction to prevent the employer from further violating the NLRA and to compel it to
reinstate several workers. In a 129-page opinion following an eight-day hearing, the
district court granted the petition in part, enjoining the company from interfering with
union supporters’ Section 7 rights and ordering it to reinstate two discharged employees.
However, the district court refused to order reinstatement of two other discharged
workers, or to demand that the employer rescind disciplinary notices against other
employees.
Both parties challenged those portions of the order adverse to their respective positions.
While the consolidated cross-appeals were pending in the Third Circuit, the Board issued
a decision and order in the underlying action which rendered moot the district court’s
order granting temporary injunctive relief. The Board then moved to dismiss the crossappeals and asked the Third Circuit to instruct the district court to vacate its opinion and
order. While the employer agreed that the appeals were moot and dismissal was
warranted, it opposed any motion to vacate.
Mootness. Because the Board resolved the underlying charges on the merits, the
agency’s pursuit of temporary relief was moot. When a civil case becomes moot while an
appeal is pending, the normal practice is to vacate the district court judgment “because
doing so ‘clears the path for future relitigation of the issues between the parties,’” the
appeals court noted. The Supreme Court has recognized a limited exception to this
general practice when mootness is the result of settlement. If the parties settle the dispute
while the case is pending on appeal, the High Court reasoned, the losing party “has
voluntarily forfeited his legal remedy… thereby surrendering his claim to the equitable
remedy of vacatur.”
32
Here, mootness arose when the underlying dispute was resolved on the merits in an
administrative proceeding separate from the temporary injunction that spawned the crossappeals. As such, the Board did not voluntarily forfeit its right to a legal remedy on
appeal. And, since both parties had raised a challenge to the district court’s ruling, there
was no evidence that the Board was engaged in “manipulation of the legal system, or an
attempt to erase an unfavorable precedent” by seeking vacatur, the appeals court
concluded. Thus, the limited exception to vacatur did not apply.
Still relevant. The employer argued that even though it had no legal effect, the district
court opinion had ongoing relevance because the Board took judicial notice of testimony
offered before the district court. Moreover, the Board had asked the court to rely on
testimony presented at the hearing below in another action involving these parties.
However, vacating the district court’s opinion and order would “have no effect on the
existence or record of the proceedings before it,” the appeals court explained, adding:
“We know of no ruling that would hinder [the employer] from relying on appropriate
facts in the District Court record.”
Vacated. At any rate, the appeals court said it was unable to review the decision because
it was now moot in light of the Board’s subsequent ruling on the merits. Nonetheless, all
that vacating the prior opinion and order does, the court said, “is protect the parties from
any adverse legal consequences of that unreviewed opinion.”
Accordingly, the Third Circuit dismissed the parties’ cross-appeals and remanded with
directions to the district court to vacate its underlying opinion and order. Its ruling was
based only on the fact that the appeals before it were moot and that governing Supreme
Court law so required, the appeals court wrote, noting that it had not undertaken a
substantive review of the lower court’s “very careful and well-articulated opinion in this
case.”
The case numbers are 12-2122 and 12-2726.
Attorneys: Elinor L. Merberg for NLRB. Rosemary Alito (K&L Gates) and Ellen
Dichner (Gladstein, Reif & Meginniss) for 1621 Route 22 West Operating Co LLC.
6th Cir.: Michigan ban on project labor agreements on public construction projects
not preempted by NLRA
By Ronald Miller, J.D.
Michigan’s current version of its Fair and Open Competition in Governmental
Construction Act (FOCGCA), in which the state made an across-the-board determination
not to require contractors on public construction projects not to enter project labor
agreements (PLAs) was not preempted by the NLRA, ruled a divided Sixth Circuit
(Michigan Building and Construction Trades Council v Snyder, September 6, 2013,
Rogers, J). Noting that such an across-the-board determination could be made by a
private developer, the appeals court determined that the state was acting in a proprietary
manner to improve efficiency in public construction projects, and the Act was no broader
33
than was necessary to meet those goals. Thus, the law was found not preempted by the
NLRA. Judge Moore issued a separate dissenting opinion.
Project labor agreements. A PLA sets out the terms and conditions of employment on a
specific construction project. On a public construction project, the PLA can be entered
into by the governmental unit paying for the project or by a general contractor the
governmental unit hires. The other party to the PLA is the relevant labor organization.
Once a PLA is in force, every lower-level contractor must abide by it to be able to work
on the project.
In 2011, the Michigan legislature passed the FOCGCA that barred governmental units
from entering or expending funds on a project if the contract or any subcontract contained
a PLA. It also forbade the governmental units from awarding grants, tax abatements, or
tax credits while under a PLA, and forbade governmental units and their agents from
placing any PLA terms in bid specifications, project agreements, or other controlling
documents. Union trades councils argued that the new law was preempted by the NLRA,
which permitted the use of PLAs. A district court agreed and determined that the law was
regulatory and that it was preempted by the NLRA. The governor appealed.
Amendment legislation. While the appeal was pending before the Sixth Circuit, the
legislature amended the Act to clarify the law. The amended law only barred
governmental units from entering PLAs themselves. It also forbade governmental units
from discriminating against bidders on public projects based on whether the bidder had
entered into a PLA. A new provision was added stating that the Act “does not prohibit a
governmental unit from awarding a contract, grant, tax abatement, or tax credit to a
private owner, bidder, contractor, or subcontractor who enters into or who is party” to a
PLA so long as entering into that PLA “is not a condition for award of the contract, grant,
tax abatement, or tax credit.” The district court enjoined the new version of the Act as
well, again concluding that it was preempted. The court further concluded that the Act
was tantamount to regulation because it was broad in scope and did not reflect the state’s
interest in efficient procurement of goods or services. The governor appealed this second
injunction, and the two appeals were consolidated.
As an initial matter, the Sixth Circuit concluded that the appeal of the injunction of the
original version of the Act was now moot. The court noted that the earlier version of the
law has been entirely replaced and removing the injunction would have no effect. Thus,
the governor’s appeal of the first injunction was dismissed.
Proprietary statute. The parties agreed that if the statute is proprietary rather than
regulatory, the union trades councils’ arguments based on the NLRA fail. Here, the
appeals court ruled that the current version of the Act is proprietary. The state is seeking
to preserve taxpayer resources by encouraging open competition among potential
contractors and subcontractors. It is not banning PLAs, and contractors who enter into
PLAs can compete on equal footing with non-PLA contractors for public contracts. The
law’s effect is limited to forbidding governmental units from entering into PLAs and then
forcing the terms and conditions found within on bidders, contractors, and subcontractors.
34
The limits of the Act demonstrate its proprietary nature. The Act affects only the actions
of the state and political subdivisions of the state. It has no effect on private projects. The
act forbids governmental units and their agents from entering into PLAs. It does not
forbid the use of PLAs on public projects. Under the Act, bidding on public construction
projects must be open to contractors whether or not they are parties to PLAs, and a
governmental unit cannot discriminate in favor of or against a contractor because it is
party to a PLA. The Act allows private projects receiving state grant funds to use PLAs if
those private entities so desire.
The appeals court noted that the proprietary nature of the Act is directly supported by the
Supreme Court’s ruling in Building & Construction Trades Council v Associated
Builders and Contractors (Boston Harbor), which held that a government-mandated
requirement of a PLA for a construction project was proprietary. There the Supreme
Court explained that when a state owns and manages property it must interact with
private participants in the marketplace. In so doing, the state is not subject to preemption
by the NLRA, because preemption doctrines apply only to regulation.
Applying that lesson to this case, the court concluded that a state legislature believing
that PLAs are inefficient, can decide that public money should not be used for PLA
projects. Although the legislature acted on all projects at once, that was not alone
sufficient to make the action regulatory. Michigan’s statute advanced the proprietary
interest of efficient use of resources and was limited enough to advance only that interest.
Accordingly, the FOCGCA was proprietary, and not regulatory, and therefore was not
preempted by the NLRA.
Dissent. In dissent, Judge Moore argued that the Supreme Court has held that a state
cannot regulate activity protected by the NLRA, and that the FOCGCA forbids all
governmental units in Michigan from entering into PLAs, a collective bargaining
agreement expressly protected by the NLRA. According to the dissent, it was evident that
a statute forbidding a governmental unit from entering into a PLA interferes with the
right to convince the state to enter into a PLA. Thus, Judge Moore would hold that the
district court was correct to recognize this as a right protected by the NLRA and as a right
that the amended Act interfered with.
The case numbers are 12-1246 and 12-2548.
Attorneys: Dennis J. Raterink, Office of Michigan Attorney General, for Richard Snyder.
John R. Canzano (McKnight, McClow, Canzano, Smith & Radtke) and Terry R. Yellig
(Sherman, Dunn, Cohen, Leifer & Yellig) for Michigan Building and Construction
Trades Council.
8th Cir.: Trucking company not entitled to tribunal to resolve grievance regarding
wage concessions for employer association members
By Ronald Miller, J.D.
A federal district court properly rejected a trucking company’s request for the
appointment of a disinterested tribunal to adjudicate its grievance that an employer
35
association violated a master freight agreement by entering into side agreements with the
Teamsters union that provided association members with wage concessions, ruled the
Eighth Circuit (ABF Freight System, Inc v International Brotherhood of Teamsters,
August 30, 2013, Benton, W). The applicable arbitration rules provided a mechanism by
which they could be amended or modified, and thereby offered a way to qualify or
replace national grievance committee (NGC) members who were parties to the grievance,
or to otherwise alter the grievance process. Thus, contrary to the employer’s contention,
the NGC’s grievance process was not unavailable to it.
Master labor agreement. Trucking companies whose employees were represented by
the Teamsters union periodically negotiated the terms of a National Master Freight
Agreement (NMFA) with the union. The trucking companies were represented in their
negotiations with the union by Trucking Management, Inc (TMI). In 2007, ABF
withdrew from TMI and negotiated directly with the Teamsters. Ultimately, the ABF
agreed to become a party to the new NMFA and implement its working terms and
conditions.
Following the onset of the 2008 recession, the TMI and Teamsters negotiated side
agreements reducing pay and benefits. ABF negotiated a different compromise, which its
employees rejected. Thereafter, ABF alleged that the concessions violated provisions of
the NMFA that required employers to maintain certain standards of employment and to
refrain from entering agreements that conflict with the NMFA. Contending that the side
agreements gave other trucking companies an improper competitive advantage, ABF
simultaneously filed a grievance under the NMFA and brought this action.
Before the district court, ABF argued that the NMFA’s grievance resolution system was
unavailable, and asked the court to appoint a disinterested tribunal to hear its grievance.
The defendants responded with a motion to dismiss, arguing that ABF lacked standing to
enforce the NMFA because it was not a party to the agreement but merely signed a “me
too” agreement. The district court granted the motion, but that decision was ultimately
reversed and remanded by the Eighth Circuit. On remand, the defendants again moved to
dismiss, which the district court granted. This appeal ensued.
On appeal, the Eighth Circuit first addressed the appointment of a disinterested tribunal to
adjudicate ABF’s grievance. According to ABF, all members of the NGC were
disqualified from hearing its grievance because they were all parties to the grievance.
ABF argued that because the rules did not allow replacements, the disqualification of the
entire NGC resulted in a failure or lapse in filling an arbitral vacancy and, under the
LMRA, the court may appoint a replacement.
Modification of arbitral rules. However, the appeals court concluded that the district
court could not appoint a new tribunal because the NGC rules provided a solution. The
rules could be amended or modified by a majority vote of the NGC; this offered a way to
qualify or replace NGC members or otherwise alter the grievance process. Appointing a
neutral tribunal would amend or modify the rules, which are explicitly powers of the
NGC. Consequently, because the NMFA grievance process was available, the district
court was obligated to enforce it.
36
Further, the Eighth Circuit concluded that there was no failure or lapse by the NGC in
exercising that power. The fact that considerable time has passed since ABF filed its
grievance was unpersuasive. If ABF had no right to invoke the grievance process, as the
defendants asserted, there was no lapse in invoking that process, and resolving that
contention must occur before the NGC can address the case. Moreover, the appeals court
concluded, there has been no mechanical breakdown, thus the process was available.
Nonetheless, ABF complained that a majority of the NGC consisted of representatives of
the defendant members of the employer association — “who in any event would never
vote to impose liability on their employers in favor of ABF.” However, the appeals court
concluded, ABF assumed this risk by signing the agreement that allowed the NGC to
promulgate its own rules.
Replacement arbitrator. Next, the appeals court concluded that the district court
properly declined to impose an entirely new grievance resolution system on the parties.
ABF claimed that it merely wanted panelists who were not disqualified under the agreedupon grievance rules. However, the procedure suggested by ABF would still not be the
method the parties agreed to — a NGC comprised of representatives of NMFA
signatories. On the other hand, the NGC’s rules included both disqualification from
hearing cases for conflict of interest and the ability to amend or modify the rules, but they
do not disqualify the NGC from such amending or modifying. Though the rules here did
not mandate the NGC’s specific response to a disqualification, they nonetheless made
clear that resolving it by amending or modifying the rules was an issue for the NGC.
Exhaustion of administrative remedies. ABF next argued that it could not exhaust the
grievance resolution process because it was unavailable or futile. However, because the
NGC rules offered a means of amending or modifying the grievance resolution process, it
was not unavailable to ABF. The court rejected ABF’s assertion that the defendants were
not entitled to the exhaustion defense because they failed to affirmatively plead and prove
it. ABF’s failure to exhaust was apparent on the face of its complaint, the court reasoned,
as its grievance was filed on the same day as this suit. The grievance process thus could
only have been exhausted if it were shown to be unavailable or futile. But the NGC’s
ability to amend or modify the rules established that the grievance resolution process was
not unavailable or futile. Thus, the district court properly dismissed ABF’s claim.
The case number is 12-3090.
Attorneys: Thomas G. Hungar (Gibson Dunn), Robert C. Long (Littler Mendelson), and
Michael G. Smith (Dover & Dixon) for ABF Freight System, Inc. Melva Harmon (Melva
Harmon, Attorney At Law) and Samuel Morris (Godwin & Morris) for Teamsters Union.
Geoffrey P. Culbertson (Patton & Tidwell) and Wendy Netter Epstein (Kirkland & Ellis)
for YRC, Inc. T. Merritt Bumpass, Jr. (Frantz & Ward) and Joel D. Johnson (Hayes &
Alford) for Trucking Management, Inc.
8th Cir.: Lower court erred in tossing arbitrator’s award of severance pay following
seamless sale of company
By Lisa Milam-Perez, J.D.
37
A district court should not have vacated an arbitration award granting severance pay to
bargaining unit members whose plant was sold to a successor that kept the facility
running but offered less generous terms than those provided under the CBA (Alcan
Packaging Co v Graphic Communication Conference, International Brotherhood of
Teamsters Local Union No 77-P; September 5, 2013, Colloton, S). Because the arbitrator,
in applying an “employer-specific” rather than “facility-specific” definition of plant
closure, was at least arguably construing the contract’s severance clause provisions, the
court below should have deferred to the arbitrator’s interpretation of the contract, a
divided Eighth Circuit panel held.
The appeals court dismissed the notion that the Federal Arbitration Act allowed for more
vigorous judicial review than the LMRA, noting that the FAA didn’t apply here at any
rate. It also rejected the employer’s argument that the WARN Act’s definition of “plant
closing” compelled a finding that the arbitrator’s interpretation was faulty. Judge
Gruender dissented, lamenting the arbitrator’s award of a “double recovery” to the
workers which, he argued, surely wasn’t contemplated by the parties.
Plant sold, severance denied. Alcan Packaging had a bargaining agreement in place
with two union locals. However, Alcan sold its three covered plants to Bemis Company,
which informed the unions that it would not adopt the terms and conditions of their
contracts with Alcan. Nonetheless, it was a seamless transition on the day that Bemis
took over the plant; operations never ceased. And Bemis eventually hired all of the Alcan
employees who had applied, albeit under less favorable terms of employment.
Meanwhile, the unions filed a grievance against Alcan, claiming that under the CBAs, the
employees were entitled to severance pay from their predecessor. The dispute went to
arbitration.
At issue was the CBA’s severance clause. That provision stated that if “the Company
shall close a plant completely and permanently, employees whose employment shall be
terminated as a result thereof” are entitled to a severance. Alcan argued to the arbitrator
that it never closed the plants, so severance pay was not due. The unions countered that
Alcan had, as far as the company was concerned, “completely and permanently closed
the plants” by selling them off—even though the plants were humming along,
uninterrupted, following the sale. Siding with the unions, the arbitrator ordered the
company to pay severance to the workers. But a district court, concluding that the award
could not be reconciled with the ordinary meaning of the CBA’s severance provision,
granted the employer’s motion to vacate the award.
LMRA governs. Under LMRA Sec. 301, of course, courts must defer to an arbitrator’s
interpretation of a bargaining agreement even if the court’s construction of that
agreement might differ from the arbitrator’s. But Alcan contended that the FAA allowed
for “more vigorous judicial review” than does Sec. 301. However, citing the Supreme
Court’s most recent decision applying the FAA, the Eighth Circuit rejected the notion
that a different standard of review applied. (In fact, the appeals court noted, the Supreme
Court’s most recent case applying Sec. 10(a)(4) of the FAA recited the LMRA Sec. 301
standard, and also cited authorities arising under that statute.) Yet even if there were a
conflict between the statutes, Sec. 301 would apply here, the appeals court said, “because
38
it is a specific directive to create the substantive law that governs collective bargaining
agreements.” Thus, Sec. 301’s deferential standard governed.
Sale = closure? Alcan argued that it did nothing to cease operations at the plant and that
the facilities continued to operate without interruption; thus, severance pay was not due
under the terms of the CBA. In the company’s view, the arbitrator effectively amended
the contract, doling out his own brand of industrial justice. But the appeals court said it
was “not so clear” that the arbitrator’s decision was contrary to the plain language of the
contract. In the arbitrator’s reasonable view, “the Company” closed the plant completely
and permanently—at least from its own point of view. “If another company reopens the
plant after Alcan closes it, even if the closure is for only a day or even an hour, then the
reopening by another party does not vitiate a complete and permanent closure by Alcan,”
the appeals court wrote, parsing the arbitrator’s reasoning.” In his view, that a purchaser
might reopen a plant, or even seamlessly continue operations, does not mean that the
seller did not close it.”
Yet even if the arbitrator was mistaken on this point, that was not enough to set aside the
award. Because he at least arguably construed the relevant provision of the contract, his
decision must stand, the appeals court said. He quoted the relevant contract term and
focused on the issues “as the parties had framed them.” He analyzed the text of the
contract, consulted decisions interpreting similar contracts, and squarely addressed the
parties’ arguments. And the resulting award “has the hallmarks of an honest judgment
that drew its essence from the agreement.”
WARN definition irrelevant. Alcan also sought solace in a previous Eighth Circuit
ruling on point in which the court applied the WARN Act’s facility-specific, rather than
employer-specific, definition of “plant closing,” But the case at hand wasn’t governed by
WARN, the court noted, but rather, by a contract under which the severance-triggering
event occurs if “the Company” closes a plant completely and permanently. “If the
arbitrator had decided this dispute based on the definition of ‘plant closing’ in the WARN
Act rather than by reference to the contract between the parties, then he truly would have
dispensed his own brand of industrial justice.”
“An easy case.” Judge Gruender dissented, deeming this the “rare case” in which an
arbitrator’s interpretation could not stand. “When three plants are sold to another party
and continue operating seamlessly with the same employees during and after that sale, the
plants cannot have closed completely and permanently such that the seller must then pay
severance benefits,” Gruender reasoned. To award severance under these circumstances
was to ignore the plain language of the CBA, he argued. Under the contract, employees
were only entitled to severance benefits if “the Company shall close a plant completely
and permanently” and that closure resulted in the termination of their employment. “The
word ‘closed’ is meant to distinguish it from ‘open.’ The word ‘completely’ is meant to
distinguish it from ‘partially.’ The reference to ‘permanently’ is meant to distinguish it
from ‘temporarily,’” Gruender wrote, quoting the district court. “This unambiguous
language should have made this an easy case.” Here, the plant did not close at all, much
less close “completely and permanently.” Thus, the severance provision was not
triggered.
39
No ambiguity. Gruender argued that the arbitrator’s “employer-specific” take on the
meaning of plant closure, as opposed to a facility-specific interpretation, introduced
ambiguity into the CBA’s severance provision that wasn’t there. That the meaning of
closure was meant to be “unambiguously facility-specific” is obvious, he argued, when
the severance clause is viewed in the larger context of the CBA—specifically, in
conjunction with its successors and assigns clause. Under this provision, no sale or
transfer would relieve the employer of its obligations under the CBA. Thus, even though
Alcan may no longer be the employer, the Bemis employees, by operation of this clause,
were still entitled to the benefits of their CBA. Because Bemis contracted around this
provision, the arbitrator applied it to Alcan—thereby requiring it to “make up the
differences” between the Alcan and the Bemis CBAs.
So, Gruender reasoned, Alcan was ordered under the successor and assigns clause to
honor the CBA as though the employees were still working for it, while simultaneously
being ordered to pay severance benefits due to a complete and permanent closure of the
plants. “Both cannot be true. Either the plants closed, leaving Alcan on the hook for
severance benefits, or the plants did not close, leaving Alcan on the hook for full pay and
benefits as provided in the Alcan collective bargaining agreement.” But the arbitrator,
ignoring the “either-or” bargain at play, awarded a double recovery—“a windfall surely
not contemplated by the collective bargaining agreement.”
The majority was satisfied that the arbitrator’s “interpretive effort,” with its “hallmarks of
an honest judgment,” resolved the matter. But “an interpretive effort by the arbitrator
does not mean that the arbitrator’s decision must stand, if in so doing the arbitrator
modifies unambiguous language,” Gruender argued to no avail.
The case number is 12-3272.
Attorneys: Matthew Roger Eslick (Nyemaster & Goode) and Kevin J. Kinney
(Krukowski & Costello) for Alcan Packaging Co. Thomas Deacon Allison (Allison &
Slutsky), Mark Hedberg (Hedberg & Boulton) for Graphic Communication Conference,
Teamsters.
8th Cir.: Retired NFL players’ claim of interference with prospective economic
advantage fails
By Ronald Miller, J.D.
As the new NFL season gets into full swing, the courts are still dealing with the fallout
from the league’s 2011 lockout of players and the resulting antitrust litigation, as the
Eighth Circuit rejected a challenge to the 2011 collective bargaining agreement raised by
a group of retired players (Eller v National Football League Players Association,
September 23, 2013, Loken, J). Retired NFL players did not have a reasonable
expectation of a prospective contractual settlement with the NFL that would provide
more than the $900 million in increased benefits provided in the 2011 CBA, ruled the
appeals court, in affirming dismissal of their lawsuit Moreover, because bargaining over
retired employees’ rights has become an established practice under federal law, the player
40
association had express permission to bargain on behalf of the retired players, and so did
not interfere with their prospects.
Following the NFL’s March 2011 lockout of players after bargaining to an impasse, both
active and retired players filed class action lawsuits alleging violations of the federal
antitrust laws. In August, the representatives for the active players approved a tentative
settlement of their suit. Ultimately, the NFL and players association signed a new
collective bargaining agreement incorporating the settlement terms. The settlement
reflected a $900 million increase in benefits for retired players.
Subsequently, a group of retired players filed a class action lawsuit against the players
association, asserting that the union wrongfully barred retirees from the settlement
negotiations and negotiated on behalf of the retirees without authority to do so, and
ultimately agreed to a CBA with fewer benefits for retired players than they could have
obtained themselves. The retired players appealed dismissal of their claims for intentional
interference with prospective economic advantage.
Minnesota courts have long-recognized the tort of intentional interference with
prospective economic advantage. When the alleged interference is with prospective
contractual relations, as in this case, the Minnesota Supreme Court has adopted Sec.
766B of the Restatement (Second) of Torts, which provides: “One who intentionally and
improperly interferes with another’s prospective contractual relation . . . is subject to
liability to the other for the pecuniary harm resulting from loss of the benefits of the
relations, whether the interference consists of (a) inducing or otherwise causing a third
person not to enter into or continue the prospective relation or (b) preventing the other
from acquiring or continuing the prospective relation.” In applying this standard,
Minnesota courts require that plaintiffs prove a reasonable expectation of a prospective
economic advantage or contractual relation.
No reasonable expectation. The retirees contended that the players association
improperly interfered with their prospective economic advantage by locking them out of
mediation negotiations with the NFL and then negotiating retired player benefits without
authorization, resulting in fewer benefits for retired players than they could have obtained
if allowed to negotiate with the NFL for themselves. However, the Eighth Circuit agreed
with the district court’s conclusion that the retired players failed to state a plausible claim
for relief because they “could not reasonably have expected to enter into a contract based
on their own negotiating power as opposed to that of the active players,” and because “no
reasonable jury could find the purported interference here to be ‘improper.’”
The retirees’ assertion of a reasonable expectation of prospective economic advantage
from bargaining with the NFL on their own behalf stemmed from a letter by two NFL
owners who asserted that the players association had walked away from an NFL offer
that would have provided over $1.5 billion in additional benefits for retired players. Thus,
they asserted that the players association improperly negotiated a settlement providing
only $900 million in additional benefits to the retired players. However, given the
undisputed history of labor relations and collective bargaining involving the NFL and its
players, the factual allegations in the retired players’ complaint provided no plausible
41
reason to believe that the NFL, having agreed with active players to provide $900 million
in increased benefits for retired players in a new CBA, would be willing to separately
negotiate even greater benefits directly with the retired player class, the appeals court
observed.
Even if the players association bargained on behalf of the retired players without proper
authority to do so, the retired players had no reasonable expectation of a separate,
prospective contractual relation with the NFL that would provide them greater benefits
than the league agreed to provide in the new CBA.
Improper interference. Moreover, even if the retired players alleged an expectation of
prospective contractual relations with the NFL or economic advantage, they failed to
allege facts proving that the player association improperly or wrongfully interfered with
those advantageous prospects. According to the retired players, the association impinged
on their rights by improperly negotiating on their behalf and entering into an agreement
with the NFL that “sacrificed the rights of retirees for the benefit of active players.”
Though retired employees are not members of a collective bargaining unit under the
federal labor laws, “bargaining over pensioners’ rights has become an established
industrial practice,” the appeals court observed. Thus, the player association did not
interfere with retired players’ prospective contractual relations by settling the antitrust
suit with a new CBA that included increased retiree benefits.
Further, Minnesota law has long recognized a “special privilege for competitors,” which
was relevant to the complex relationships at issue in this case. The active and retired
players were competitors for the share of professional football revenues that the NFL was
willing to pay to its players. Under the competitor’s privilege, allegations that the players
association engaged in collective bargaining under the federal labor laws to further the
economic interests of active players, even at the expense of retired players’ economic
interests, did not state a claim for tortious interference under Minnesota law.
The case number 12-2487.
Attorneys: Kaisa M. Adams (Zelle & Hofmann) for Carl Lee Eller. Barbara Podlucky
Berens (Berens & Miller) for NFL Players Association.
9th Cir.: Local union president not protected from discipline under LMRDA Sec.
609
By Lisa Milam-Perez, J.D.
Affirming dismissal of a host of claims brought by the president of a Steelworkers local
that was placed into administratorship following repeated challenges to her leadership,
the Ninth Circuit held that Sec. 609 of the Labor-Management Reporting and Disclosure
Act (LMRDA) does not protect elected union officials from discipline suffered in their
official capacity (United Steel Workers Local 12-369 v United Steel Workers
International, September 6, 2013, Tashima, A. W). Moreover, the union president was
not subjected to race or gender discrimination, the appeals court found; rather, the actions
42
against her could be chalked up to internal politicking among rival factions—or to the
parent union’s need to alleviate such tensions.
Contentious presidency. Before being elected to serve as the first female AfricanAmerican president of her Steelworkers local, the plaintiff had been engaged in efforts to
decertify the union while serving as a staff representative for the local—prompting
formal internal union charges against her (although they were dropped because she
wasn’t given proper notice of the charges). She then was elected the union steward in her
region, but a dispute arose as to the geographic scope of her authority. She filed internal
charges with the local’s executive board alleging that the dispute reflected race and
gender-based discrimination. She also filed a complaint with the EEOC, which found
cause to believe the allegations had merit.
As newly elected president, her administration faced numerous challenges to her
authority, including attempts to oust her from office. An initial round of allegations of
wrongdoing against her were deemed unfounded after an investigation. Nonetheless, the
investigation prompted her to file a second EEOC charge. Shortly thereafter, the
conclusion of the report of her investigation was amended so that it now recommended
that the local be placed under an administratorship. The international union imposed an
emergency administratorship on the local, and the plaintiff was suspended from office.
But a district court enjoined the international, concluding that the union constitution
required a full hearing before such action could be taken.
However, a second round of concerted challenges to the plaintiff’s presidency—based on
allegations that she failed to process grievances, held an unauthorized meeting, subverted
the democratic process, and other infractions—took its toll. A commission was
appointed, which recommended anew that the local be placed under an administratorship.
An internal panel rejected that recommendation, but the president responded by once
again filing legal action. Her complaint alleged claims of race and gender discrimination
along with causes of action under the LMRDA and LMRA. The district court dismissed
her claims under LMRDA Sec. 609; the remaining claims were disposed of following a
bench trial.
Sec. 609. The Ninth Circuit affirmed the lower court’s finding that the president lacked a
cause of action under LMRDA, Sec. 609, which prohibits labor organizations (or their
agents) from disciplining “any of its members” for exercising rights protected under the
statute. (In contrast, LMRDA Sec. 102 provides a private right of action against
violations of equal voting and free speech rights guaranteed under Title 1 of the Act.)
In Finnegan v Leu, the Supreme Court limited the reach of both Sec. 609 and Sec. 102
with respect to appointed union officers. The High Court held that union agents could not
maintain a cause of action under either provision. With respect to Sec. 609, the Court
held that term “discipline” as used therein referred only to retaliatory actions “that affect
a union member’s rights or status as a member of the union.” That is, Sec. 609
encompasses only “punitive actions taken against union members as members.”
However, the Court noted the possibility that “a litigant may maintain an action under
43
Sec.102—to redress an ‘infringement’ of ‘rights secured’ under Title I—without
necessarily stating a violation of Sec. 609.
Subsequently, in Sheet Metal Workers’ Int’l Ass’n v Lynn, the Supreme Court declined to
extend Finnegan’s Sec. 102 analysis to elected union officers, in the case of an elected
business rep who brought suit under Sec. 102, alleging that his removal from office
violated the free speech protections of Sec. 101(a)(2). The Court distinguished Finnegan,
reasoning that the retaliatory removal of an elected officer presented significantly greater
concerns than did the removal of an appointed official. But that holding was expressly
limited to Sec. 102.
These Supreme Court precedents established that an appointed union officer may not
bring suit under either Sec. 102 or Sec. 609 for retaliation suffered in his official capacity,
but an elected officer can bring suit under Sec. 102 when faced with such retaliation. That
left the Ninth Circuit to grapple here with the question whether an elected officer can also
maintain an action under Sec. 609. It resolved the matter by reconciling the tensions
between Finnegan and Lynn, and applying standard principles of statutory interpretation.
Looking to the conference report accompanying the final passage of the LMRDA, the
appeals court found it evident that Congress did not intend for Sec. 609 to apply to
actions directed against union officers in their official capacities. Consequently, because
the alleged retaliatory actions directed toward the plaintiff here impinged only upon her
status as a union officer, she could not seek redress for these actions under Sec. 609.
Finally, the plaintiff failed to establish that the lower court’s findings that the union
defendants had not engaged in unlawful retaliation or discrimination were clearly
erroneous, the Ninth Circuit also affirmed dismissal of her remaining claims.
The case number is 10-35450.
Attorneys: Natalie R. Ram (Morrison & Foerster LLP) for Stephanie B. Green. Danielle
E. Leonard (Altshuler Berzon); Jay Smith (Gilbert & Sackman) for United Steelworkers
International Union, Daniel Hutzenbiler (Robblee Detwiler & Black) for Hanford Atomic
Metal Trades Council.
9th Cir.: Trustees abused discretion in finding plan members couldn’t collect
retirement benefits if they worked certain post-retirement jobs
By Kathleen Kapusta, J.D.
Reversing a district court’s judgment upholding decisions by ERISA pension plan
trustees finding that two plan members were precluded from working certain postretirement jobs if they wanted to collect retirement benefits, the Ninth Circuit observed,
“what the Plan provides, the Trustees may not take away” (Tapley v Locals 302 and 612
of the International Union of Operating Engineers-Employers Construction Industry
Retirement Plan, September 6, 2013, Dearie, R). In so ruling, the court determined that
the trustees abused their discretion by failing reasonably to interpret plan language
defining post-retirement service that precluded the receipt of retirement benefits.
44
The retirees and former union members primarily worked as skilled mechanics in Alaska.
Their respective employers made contributions to the multiemployer collectively
bargained pension plan. The plan permitted participants to take early retirement at age 52
under certain specified conditions. It also permitted early and normal-age retirees to work
while receiving retirement benefits as long as the retirees refrained from post-retirement
service of 51 or more hours during any calendar month. It defined post-retirement service
as all employment that was within the geographic area covered by the plan, in a job
classification in which the participant was employed when in covered employment, and
in the industry in which the individual employers participated.
The plan, however, did not define the term “job classification.” Although both retirees
found jobs with Alaska’s Department of Transportation—one as a traffic flagger and the
other as a snow plow operator—the trustees found that these jobs were in the same job
classifications as their union positions as skilled mechanics and therefore were “postretirement service.” Accordingly, the trustees found that the retirees were not eligible for
retirement benefits while employed in these jobs. Seeking to overturn the trustees’
opinions, the employees sued in federal court. Affirming the decisions, the district court
observed that “[t]he Trustees found numerous skills and duties that were the same for
each job,” which is a “reasonable basis for the Trustees’ conclusion” that the positions
were in the same classification.
Job classification. While it agreed with the district court that it was reasonable to
interpret the term “job classification” to mean more than “job title,” the Ninth Circuit
found that the plain language required that “job classification” must be less encompassing
than “industry,” which referred to the broader types of business activities engaged in by
the employers maintaining the plan. “An interpretation that conflates the two terms
conflicts with the plain language of the Plan by rendering the term ‘job classification’
nugatory.” Here, the court found that the trustees’ expansive interpretation of “job
classification” did just that. Not only did this interpretation give the trustees the power to
preclude post-retirement employment within the construction industry, the court found
that the record suggested they intended to do so.
Turning to the retiree who worked as a flagger, the court pointed out that his covered
employment as a skilled mechanic “was a far cry” from his position as a road crew
worker based both on the type of duties performed and the level of skill required. Noting
that the only overlap between the positions was driving a service truck and the associated
routine maintenance, the court found this “modest overlap” was far from meaningful
considering how different the positions were in actual practice. “To preclude [the
employee] from doing such basic work on the basis of insignificant and incidental
similarities between jobs would effectively preclude him from working in the industry,
contrary to the Plan’s express provisions.”
As to the second retiree, who worked as a snow plow operator, the trustees used the
“same flawed approach” in his case by extracting what they perceived as similar duties
and skills. Rather than acknowledging the significant difference in core skills used in the
retiree’s post-retirement job as a snow plow operator and his covered employment as a
skilled mechanic and service oilier, they chose instead to note that in his covered
45
employment he sometimes operated equipment when he had to move it for servicing.
Here, the court again found that this overlap between jobs was not significant. “Common
sense strongly suggests that a position flagging traffic or plowing snow is not in the same
‘job classification’ as a skilled mechanic repairing heavy equipment utilizing specialized
skills acquired over a long career. These two positions have little in common beyond
basic skills widely acquired through everyday experiences.” Accordingly, the court
reversed the district court’s decision and returned the matter to the trustees for
reevaluation of the merits in a manner consistent with its opinion.
The case number is 11-35220.
Attorneys: Michael Flanigan (Walther & Flanigan) for James Tapley and Michael
Chapman. Catherine A. Rothwell (McKenzie Rothwell Barlow & Korpi) for Locals 302
and 612 of The International Union of Operating Engineers-Employers Construction
Industry Retirement Plan.
9th Cir.: Public works projects not for “federal purpose,” so California DIR’s threat
to fine contractors using I-TAP apprentices not preempted by Fitzgerald Act
By Ronald Miller, J.D.
The Ninth Circuit affirmed a federal district court ruling in favor of the California
Department of Industrial Relations (CDIR) against a union apprenticeship program that
sought a declaratory judgment that the state agency’s actions were inconsistent with
federal Fitzgerald Act regulations governing the employment of apprentices on public
works projects qualifying as “Federal purposes” (Independent Training and
Apprenticeship Program v California Department of Industrial Relations, September 18,
2013, Tashima, A). The state agency had threatened to impose fines on two contractors
that used apprentices enrolled in an apprenticeship program that was registered with the
U.S. Department of Labor as approved for “Federal purposes,” but that was not
recognized by California as a state-approved apprenticeship program. The construction
projects at issue did not qualify as “Federal purposes.”
Under the National Apprenticeship Act of 1937 (the Fitzgerald Act), federal regulations
govern the employment of apprentices on public works projects qualifying for a “Federal
purpose.” The Independent Training and Apprenticeship Program (I-TAP) is registered
with the DOL as an approved apprenticeship program for federal purposes. However, ITAP is not recognized by California as a state-approved apprenticeship program.
Consequently, I-TAP enrollees may not be employed as bona fide apprentices on public
works projects in California that do not fall within the scope of federal purposes.
Apprenticeship standards. The Fitzgerald Act authorized the secretary of labor to
formulate labor standards for apprenticeship programs and to cooperate with state
agencies engaged in formulating apprenticeship standards. The DOL regulations
prescribe the policies and procedures for registration of apprenticeship programs for
“certain Federal purposes.” In turn “Federal purposes” is defined as any federal contract,
grant or arrangement dealing with apprenticeship; and any federal financial or other
46
assistance, benefit, privilege, contribution, allowance, exemption, preference or right
pertaining to apprenticeship.
In California, apprenticeship training is administered by the Division of Apprenticeship
Standards, a subdivision of CDIR. The DOL “derecognized California’s State
Apprenticeship Agency (SAA) in 2007 after the state passed a “needs test” for the
approval of new apprenticeship programs. According to the DOL, the needs test
frustrated the purposes of the Fitzgerald Act of expanding apprenticeship opportunities.
Thus, California no longer has the authority to register or oversee apprenticeship
programs on public works projects in the state that qualify as federal purposes.
In 2010, the CDIR sent letters to two contractors asserting that they were not in
compliance with California law and threatening to impose fines because the contractors
were using I-TAP enrollees on public works projects that CDIR asserted were not for
federal purposes. I-TAP filed suit seeking declaratory and injunctive relief on the ground
that the CDIR’s actions were inconsistent with federal regulations, and thus preempted.
Preemption claim. At issue here were three school construction projects on which the
contractors used I-TAP apprentices. CDIR asserted that the contractors violated
California’s prevailing wage law by employing the I-TAP apprentices. It contended that
I-TAP was not a recognized apprenticeship program under state law. When CDIR
threatened to take enforcement action, one contractor removed its apprentices from the ITAP program and placed them in a state-approved program. The second contractor did
not remove its apprentices from I-TAP and was fined. The district court denied I-TAP’s
motion for injunctive relief.
I-TAP asserted that the CDIR was preempted from refusing to allow the contractors to
treat the I-TAP enrollees as recognized apprentices. If the disputed construction projects
constituted “Federal purposes,” the CDIR would be precluded from enforcing state
apprenticeship criteria, including the needs test, with respect to these projects.
“Federal purpose.” On appeal, the Ninth Circuit was called upon to determine the
meaning of “Federal purposes” under the federal regulations, 29 CFR Sec. 29.2. In
answering this question of first impression, the appeals court invited the secretary of
labor to weigh in on the appropriate understanding of the term in the context of this case.
Under two opinion letters issued in 2004, the DOL interpreted “Federal purposes” to
encompass “all federally funded or supported public works projects,” which excluded
only “those projects involving no Federal financial assistance.” The secretary informed
the court that the DOL had withdrawn its two previous opinion letters, and advanced a
new interpretation that does not encompass the public works project at issue here. Under
the new interpretation, a federal contract, funding, or benefit must be “conditioned” on
conformity to the DOL’s apprenticeship standards for it to be for a “Federal purpose”
under the regulations. The practical effect of the interpretation is that “Federal purposes”
would refer to federal contracts, funding, or other forms of financial assistance that
require compliance with some federal law, where, in turn, that law requires adherence to
federal apprenticeship standards.
47
The appeals court declined to afford controlling deference to the DOL’s new
interpretation under Auer v Robbins, but nevertheless adopted that interpretation as the
most persuasive construction of the regulation at issue. The DOL’s interpretation was
superior to that advanced by I-TAP because it gave effect to the phrases “dealing with
apprenticeship” and “pertaining to apprenticeship,” in contrast to I-TAP’s reading of
“Federal purposes,” which would render those phrases mere surplusage. The DOL’s
interpretation also derived support from the history of the Fitzgerald Act’s implementing
regulations. A DOL circular issued in 1971 similarly supported the DOL’s interpretation.
I-TAP conceded that the three projects implicated in this case are not encompassed by
this understanding of “Federal purposes.” Neither “Build America” bonds nor tax-exempt
municipal bonds, which funded the projects in part, conditioned the federal assistance on
compliance with federal apprenticeship standards. Because the three projects did not
qualify as “Federal purposes,” federal preemption did not apply, and it was permissible
for the CDIR to require the contractors to comply with California’s apprenticeship
standards. Accordingly, the appeals court affirmed the lower court’s judgment.
The case number is 11-17763.
Attorneys: Charles Post (Weintraub Genshlea Chediak Tobin & Tobin) for Independent
Training and Apprenticeship Program. Fred Lonsdale for California Department of
Industrial Relations.
NLRB: Employee unlawfully discharged for Facebook posting urging coworker to
contact lawyer, labor board, ALJ says
By Lisa Milam-Perez, J.D.
A medical transport company unlawfully discharged a driver who posted a comment on a
coworker’s Facebook page urging her to contact an attorney or the “labor board” over her
firing, an NLRB law judge found in a September 4 ruling. The social media policy held
up as the basis for his firing was also unlawful.
Facebook exchange. The discharged employee, an ambulance driver, had posted a
comment on the Facebook page of his work partner in response to her update noting that
she had been fired. The partners were kvetching on the social networking site about the
company and about her discharge, apparently for having told a patient that the company’s
ambulances were in poor condition (an allegation she denied, but her termination wasn’t
at issue here). Several other coworkers piled on. Finally, the employee suggested that his
fired coworker “think about getting a lawyer and taking them to court.” Then he added, in
a subsequent post, “You could contact the labor board too.” A printout of these comments
made its way to the company’s HR director who, after consulting with the chief operating
officer, decided to fire the employee for violating a work rule barring employees from
using social media in a manner that could “discredit” the company or damage its image.
Profanity not the problem. The law judge discredited the employer’s contention that the
employee was only fired for the profanities he spewed during the conversation in which
he was told he was being terminated. The record did not support such a finding,
48
particularly where the employer made no mention of his profanity in either affidavit
submitted by the HR director to the Board. Moreover, while the employer offered no
details as to the nature of the alleged outburst, given the context of the exchange and the
provocation by the employer, the ALJ concluded the discharge would not be justified
under the Atlantic Steel Co test anyhow. The only issue here was whether the Facebook
posts constituted protected, concerted activity under Sec. 7.
Posts were protected. Noting that the Facebook comments “must be considered in the
context in which they were made,” the law judge found them protected under the Act.
The employee was advising a coworker to obtain legal assistance or contact the Board.
Of particular importance, the ALJ said, was the fact that he was responding to a post in
which she said she had been fired for commenting to a patient about the condition of the
company’s vehicles — a matter that was of mutual concern to employees. In fact, the
discharged coworker had been disciplined before for commenting on the Facebook page
of yet another employee about the condition of the ambulances they drove. Because the
employee here was “making common cause” with his fired partner over a shared concern,
his conduct was protected. The fact that his coworker had already been terminated at the
time he made his Facebook comments was irrelevant: she was still entitled to the
protections of the NLRA, and he was encouraging her to vindicate her rights under the
Act.
Effect of post irrelevant. Nor was it a defense that the employee’s Facebook post was
accessible to customers or others outside the company (causing potential harm to the
employer). Numerous Board cases have established that “virtually any form of protected
activity can be subjectively considered disloyal,” the ALJ noted. And NLRA-protected
conduct will often “adversely impact an employer’s reputation and revenue” — even the
act of forming, joining or assisting a union. Pursuant to long-standing Board precedent,
though, the fact that his Facebook posts may have adversely affected the employer’s
business was not a valid defense to the complaint allegations.
Policy unlawful. The social media policy on which the employer based the discharge
here was also unlawful, the ALJ found. The employer had distributed to all newly hired
employees a sheet of bullet points, including one requiring the employee to promise to
“refrain from using social networking sights which could discredit Butler Medical
Transport or damages its image.” This bullet point was relied on by the HR director in
discharging the employee. Also, new employees were required to acknowledge receipt of
these bullet points and “would reasonably understand they were subject to discipline up
to and including termination if their conduct did not conform to the bullet points.” As
such, the ALJ rejected out of hand the employer’s contention that the list of bullet points
was not a “policy.”
Moreover, employees would reasonably construe the language of the bullet point to
prohibit Section 7 activity. The work rule on its face was broad enough to prohibit
posting and distribution of papers regarding wages, hours, and other working conditions,
and it could reasonably be read to apply to non-work time and non-work areas. (Indeed,
the employee was home and off the clock — on workers’ comp leave — when he posted
the offending Facebook comment.) Further, the employer gave no indication that it would
49
interpret the rule narrowly and did not make clear that it would limit the rule’s
application to non-protected distribution or posting of literature. In fact, the company’s
enforcement practice was quite the opposite: it applied the rule to restrict the Sec. 7 rights
of at least two employees.
Finally, the ALJ noted, “any rule that requires employees to secure permission from their
employer before engaging in protected concerted or union activity at an appropriate time
and place is unlawful.”
Attorneys: Gil Abramson (Jackson Lewis) for Butler Medical Transport.
Wash. S.Ct.: Arbitration clause contained in labor agreements signed by employees
unconscionable, unenforceable
By Ronald Miller, J.D.
The arbitration clause in a labor agreement signed by the employees of an armored car
company was declared unconscionable by the Washington Supreme Court in reversing an
appellate court’s order requiring the arbitration of employee wage claims on an individual
basis (Hill v Garda CL Northwest, Inc fka AT Systems, September 12, 2013, Stephens,
D). Key provisions in the arbitration clause were substantively unconscionable, including
a 14-day limitations period for bringing a claim, two- and four-month limitations on back
pay damages, and a fee-splitting provision. Because severing the provisions would
significantly alter both the tone of the arbitration clause and the nature of the arbitration
agreement contemplated by the parties, the court concluded that it was unenforceable.
Labor agreements. Armored car guards brought a class action wage-hour suit against
the employer for alleged violations of the Washington Industrial Welfare Act (WIWA)
and Washington Minimum Wage Act (MWA). According to the suit, they were not
allowed meal and rest breaks as required by the WIWA and MWA. After months of
litigation, including a grant of class certification, the employer moved to compel
arbitration of the claims under the terms of a labor agreement. Each employee had been
required to sign the agreement, which was negotiated between the employer and
employee associations, as part of their employment.
The employee associations represent employees but are not unions in the traditional sense
of the word. They do not collect dues from employees and have no resources. There is
little bargaining that actually occurs in creating the agreements, and employees generally
must accept whatever is offered. The labor agreement contained a clause regarding
grievance and arbitration.
The trial court granted the motion to compel but ruled that the employees could arbitrate
as a class. On appeal, the court of appeals affirmed the order to compel arbitration, but
held the employees must arbitrate individually. The employees sought review of that
decision.
A gateway dispute. The high court rejected the employer’s argument that it should not
consider the employees’ unconscionability argument. Unconscionability is a “gateway
50
dispute” that courts must resolve because a party cannot be required to fulfill a bargain
that should be avoided. If a court compels arbitration without deciding the validity of the
arbitration clause, a party may be forced to proceed through a potentially costly
arbitration before having the opportunity to appeal. Because these disputes go to the
validity of the contract, they are preserved for judicial determination, as opposed to an
arbitrator’s determination. Unconscionability is one such gateway dispute. Thus, the
court examined whether the terms of the arbitration clause were unconscionable. Its short
answer was “yes.”
Unconscionable terms. Turning to the merits of the unconscionability argument, the
court first found that a 14-day limitations provision for bringing a claim was
unconscionable under Gandee v LDL Freedom Enters, Inc. Under state law, the
employees would have a three-year limitations period to bring the types of claims
contemplated here. Moreover, the two- and four-month limitations on back pay damages
were substantively unconscionable under Zuver v Airtouch Commc’ns, Inc. This
provision unfairly favored the employer by significantly curbing what an employee could
recover against it compared to what the employee could recover under a statutory wage
and hour claim. The one-sided provision could not be enforced.
Although the agreement’s fee-sharing provision stated that the employee association and
the company would each pay one-half of the fee charged by the arbitrator, the employees
argued that the provision was unconscionable because the association had no funds for
arbitration. The court agreed that this imposition of costs was problematic under Adler v
Fred Lind Manor. Here, the employees presented evidence of the high costs of individual
arbitration as well as the limited resources of the plaintiffs and the association. Thus, the
employees satisfied their burden to show that the fee-splitting provision was
substantively unconscionable. Thus, the arbitration clause as a whole was unconscionable
and therefore unenforceable.
The case number is 87877-3.
Attorneys: Daniel Foster Johnson (Breskin Johnson & Townsend) for Lawrence Hill.
Clarence M Belnavis (Fisher & Phillips) for Garda CL Northwest, Inc.
Hot Topics in WAGES HOURS & FMLA:
DOL final rule extends FLSA protections to home care workers
By Pamela Wolf, J.D.
On September 17, the DOL released its final rule extending FLSA minimum wage and
overtime protections to most of the nation's workers who provide essential home care
assistance to elderly people and people with illnesses, injuries or disabilities. As a result
of the new rule, nearly two million direct care workers, including home health aides,
personal care aides, and certified nursing assistants, will now receive the same basic
protections already provided to most U.S. workers.
51
The DOL points out the regulatory change will also help guarantee that those who rely on
the assistance of direct care workers will have access to consistent and high-quality care
from a stable and increasingly professional workforce. The final rule is effective January
1, 2015.
Changes prompted by industry developments. In 1974, Congress extended the
protections of FLSA to “domestic service” employees, but exempted from the Act’s
minimum wage and overtime provisions domestic service employees who provide
“companionship services” to elderly people or people with illnesses, injuries, or
disabilities who require assistance in caring for themselves. It also exempted from the
Act’s overtime provision domestic service employees who reside in the household in
which they provide services.
The DOL’s final rule revises its 1975 regulations implementing these amendments to the
Act to better reflect Congressional intent given the changes to the home care industry and
workforce since that time. The most significant change is the DOL’s revision of
“companionship services” to clarify and narrow the duties that fall within the term.
Moreover, third party employers, such as home care agencies, will not be able to claim
either of the exemptions. The major effect of this the final rule is that more domestic
service workers will be protected by the FLSA’s minimum wage, overtime, and
recordkeeping provisions.
The last several decades have seen dramatic growth in the home care industry as more
individuals choose long-term care at home instead of in nursing homes or other facilities,
the DOL noted in a statement. However, despite this growth and the fact that direct care
workers increasingly receive skills training and perform work previously done by trained
nurses, direct care workers remain among the lowest paid in the service industry.
The final rule also clarifies that direct care workers who perform medically related
services for which training is typically a prerequisite are not companionship workers and
therefore are entitled to the minimum wage and overtime. Moreover, consistent with
Congress' initial intent, individual workers who are employed only by the person
receiving services, or that person's family or household, and engaged primarily in
fellowship and protection (providing company, visiting or engaging in hobbies) and care
incidental to such activities, will still be considered exempt from the FLSA's minimum
wage and overtime protections.
There are about 1.9 million direct care workers in the United States, nearly all of whom
are currently employed by home care agencies, according to the DOL. An estimated 90
percent of direct care workers are women, and nearly 50 percent are minorities.
“The department carefully considered the comments received from individuals who
receive home care, workers, third-party employers and administrators of state programs
that support home care,” said Laura Fortman, the principal deputy administrator of the
Wage and Hour Division, the agency that administers and enforces the FLSA. “In
response, the final rule provides increased flexibility, and gives programs sufficient time
52
to make any needed adjustments. Together these changes will allow the rule to better
meet consumers' needs while better protecting direct care workers.”
Sub-regulatory guidance. In conjunction with the release of the final rule, the DOL has
issued sub-regulatory guidance, including a frequently asked questions (FAQ) document
and a series of fact sheets addressing topics such as the application of the final
rule;private home and domestic service employment under the FLSA; companionship
services under the FLSA; live-in domestic service workers under the FLSA; and hours
worked applicable to domestic service employment under the FLSA. A new web portal
includes all of these documents as well as interactive web tools and other materials to
help families, other employers and workers understand the new requirements.
Webinars. The DOL will also be offering five webinars on the final rule, to be held at
the following locations:

Thursday, October 3: Northeast Region (ME, NH, VT, MA, RI, CT, NY, PA, NJ,
DE, MD, DC, VA, WV, PR), 3:00-4:30 ET;

Tuesday, October 8: Western Region (AZ, NV, CA, OR, WA, ID, HI, AK),
10:00-11:30 PT;

Thursday, October 10 Midwest Region (OH, MI, IN, IL, WI, MN, IA, MO, NE,
KS), 1:00-2:30 CT, 2:00-3:30 ET

Tuesday, October 15: Southeast Region (KY, TN, NC, SC, GA, FL, AL, MS),
9:00-10:30 CT, 10:00-11:30 ET

Thursday, October 17: Southwest/Mountain Region (LA, TX, AR, OK, NM, CO,
WY, UT, MT, ND, SD), 1:00-2:30, MT; 2:00-3:30 CT
Registration information will be available on the webinar webpage shortly.
Further information. For further information, contact Mary Ziegler, Director, Division
of Regulations, Legislation, and Interpretation, U.S. Department of Labor, Wage and
Hour Division, 200 Constitution Avenue, NW., Room S-3502, FP Building, Washington,
D.C., 20210; telephone: (202) 693-0406 (this is not a toll-free number).
Tucson car wash pays over $300,000 in back wages for systemic FLSA violations
An Octopus Car Wash franchisee paid $313,333 in back wages to 292 current and former
workers after a DOL Wage and Hour Division (WHD) investigation uncovered systemic
FLSA minimum wage violations at several locations in the Tucson area. The franchisee,
who owns Thornydale Octopus Car Wash Inc., 22nd Street Octopus Car Wash, Inc., and
Valencia Octopus Car Wash Inc., each doing business as Octopus Car Wash, also agreed
to pay a civil money penalty for violating FLSA child labor provisions at the Thornydale
Road location, according to the WHD.
53
Investigators found that employees were routinely put in non-pay status when business
was slow. Workers were purportedly instructed to wait on the premises until a manager
or supervisor put them back on the clock and in paid work status, contrary to FLSA
requirements that covered employees be paid at least the federal minimum wage of $7.25
per hour, as well as one and one-half times their regular rates for every hour they work
beyond 40 per week.
Investigators found employees typically waited for three hours over the course of a work
day.
In addition, the franchisee paid a civil money penalty after investigators found FLSA
violations when one 14-year-old and two 15-year-olds were working more than 8 hours a
day at one of the locations.
“A significant portion of these employees’ work hours went unrecorded and unpaid,” said
Eric Murray, director of the Phoenix District Office, which conducted the investigation.
“These are vulnerable, low-wage workers who worked nearly 40 hours each week, but
were only being paid for 25-30 hours, which is unlawful and unfair to them and their
families. Time spent waiting for customers is considered work time and is compensable
under the FLSA.”
The back wages due have been paid in full, although more than 200 former workers have
not yet been located. This employer is an independent franchisee of the Octopus Car
Wash chain.
The WHD has posted a fact sheet addressing proper pay practices at car wash operations
to help employers and workers understand rules for the industry.
Suit filed on behalf of Ohio restaurant workers; back wages collected from
California-based electrical services provider
The DOL’s Wage and Hour Division (WHD) on September 4 announced the filing of a
lawsuit against an Ohio restaurant operator on behalf of low-wage workers and the
recovery of $242,563 in back wages from a California-based electrical services company
that purportedly kept separate travel payroll records and deducted time for meal breaks
during which employees worked.
Low-wage restaurant workers. The DOL filed suit against Orrville, Ohio-based Arriaga
Inc., operator of Señor Pancho’s restaurant, as well as its manager and an officer, seeking
to recover $272,346 in unpaid wages for 34 employees. A WHD investigation revealed
evidence of violations of FLSA overtime, minimum wage, and recordkeeping provisions.
The suit also seeks liquidated damages for the employees and requests a permanent
injunction enjoining the defendants from committing future FLSA violations.
Tipped employees, such as servers, were made to rely primarily on tips for pay,
according to WHD investigators. Their wages amounted to less than the federal minimum
wage of $7.25 per hour in some workweeks, the DOL said. Several kitchen staff
employees were paid on a salary basis and allegedly did not receive at least the minimum
54
wage for all hours worked. The employer also allegedly failed to pay overtime
compensation for hours worked beyond 40 in a workweek as required by the FLSA.
The DOL said that many employees were also improperly treated as exempt and were
either not paid or were given paychecks that bounced. The company was also found to
have inadequate payroll records and failed to obtain age verification for all employed
minors.
The alleged FLSA violations were found at the Señor Pancho’s Orrville and Shelby,
Ohio, locations. The restaurant’s Shelby location is now under new ownership. The DOL
said it filed the lawsuit (Perez v Arriaga Inc, dba Señor Pancho’s; No 5:13-cv-01939)
because the defendants have refused to pay the back wages owed to the affected
employees.
Travel and meal breaks. Solis Lighting and Electrical Services paid $242,563 in back
wages to 101 employees after a WHD investigation found the San Clemente-based
employer violated FLSA overtime and recordkeeping provisions. The lighting, energy
management, and electrical services company serves more than 2,000 locations across 11
states.
The WHD investigation disclosed that the company failed to pay workers an overtime
premium for hours worked beyond 40 per week. The employer purportedly kept another
payroll record for travel time, paying employees separately for work time spent in travel
at the regular hourly rate, even when total work hours exceeded 40 per week.
The DOL said that the employer also routinely deducted a 30-minute meal break from the
workers’ daily work hours, even though employees worked through their meal breaks.
Solis Lighting and Electrical has already paid the back wages in full and implemented
new policies to comply with FLSA requirements, such as converting salaried employees
to hourly pay and having employees complete their own time sheets, according to the
DOL.
PNC Bank to pay $7 million under proposed class settlement of FLSA, state wage
law claims
By Pamela Wolf, J.D.
PCN Bank, NA will pay $7 million to settle a collective and class action brought by
mortgage loan originators (MLO) to recover unpaid overtime wages for themselves and a
class of other MLOs employed by the bank under a motion for preliminary approval of
Rule 23 and FLSA class settlements that was filed on September 6. The settlement of
alleged FLSA and state wage law violations was reached after a day of mediation in New
York on June 18.
Previously, PNC classified its MLOs as exempt, compensating them through a
combination of commissions and a salary draw. On April 1, 2011, the bank reclassified
MLOs as a group as nonexempt, overtime-eligible employees. The MLOs characterized
55
the previous exempt designation as unlawful misclassification and alleged that PNC’s
failure to pay overtime violated the FLSA.
In February, Judge Marbley, sitting in the Southern District of Ohio, granted conditional
certification of the FLSA collective action. In March, the court granted in part the
plaintiffs’ request for tolling, allowing tolling back to March 19, 2012, the date that the
plaintiffs filed their motion for conditional certification and notice.
The $7 million settlement would, after deductions for attorneys’ fees, litigation costs and
expenses, $25,000 in administrations costs and awards to class representative, leave about
65 percent of the total ($4,550,000) to be divided among 915 plaintiffs and 833 Rule 23
class members. The individual plaintiff recovery would be approximately $3,350; the
average Rule 23 class member recovery would come to about $1,800.
Two groups of MLOs would be eligible to participate in the settlement: (1) FLSA opt-in
plaintiffs who filed consent to join forms between November 3, 2011, and July 1, 2013,
who were employed by the bank as a MLO between the earlier of March 19, 2009, or the
date three years prior to the date they filed a consent to join form with the Court, and
April 4, 2011, and who have not otherwise withdrawn their consent forms or been
dismissed by the Court; and (2) putative class members covered by the California,
Illinois, Indiana, Kentucky, Massachusetts, Maryland, Missouri, New Jersey, New York,
Ohio, Pennsylvania, and Washington class action claims in the Amended Complaint, who
are within the relevant statute of limitations.
Continuing initiative nets back wages for workers of Florida hotel, temp agency
deemed joint employers
In another of the DOL’s investigations targeting labor law compliance in Florida’s hotel
and motel industry, the Castillo Real in St. Augustine has paid $17,890 in back wages to
13 employees after the Wage and Hour Division (WHD) identified FLSA violations. The
investigation revealed that the hotel utilized Maja LLC, a staffing company, to obtain
workers for essential hospitality services, but it failed to properly compensate these
employees in violation of FLSA’s minimum wage and overtime provisions. The hotel is
managed by Impact Properties Inc. and is owned by a joint venture partnership consisting
of Impact Properties Inc. and DeBartolo Development LLC.
The WHD’s Jacksonville District Office found that employees from the staffing company
regularly worked more than 40 hours a week — providing services, such as
housekeeping, groundskeeping and laundering — but were paid straight time wages for
all hours worked, rather than time and one-half their regular rates of pay for overtime
hours. Additionally, in some workweeks, employees’ wages fell below the required
minimum wage.
Analyzing the employment relationship between the hotel and the staffing company,
investigators learned that the affected workers performed essential hotel hospitality
services under the supervision and control of hotel management. Based on this and other
relevant factors, the WHD concluded that the hotel was a joint employer of the workers
and, consequently, was liable for the FLSA violations.
56
“Hotels and motels subject to the FLSA cannot use staffing companies to escape their
responsibilities to classify and compensate employees properly for all hours worked,”
said Michael Young, district director of the Jacksonville District Office. “Through the
effort of our ongoing enforcement initiative, the Wage and Hour Division is working to
ensure Florida’s workers are protected against exploitation, and that law-abiding hotel
and motel employers are not placed at a competitive disadvantage for playing by the rules
and paying fair wages. Using an intermediary, or third-party labor provider, is not a way
to avoid liability for back wages.”
Following the investigation, the Castillo Real agreed to comply with the FLSA in the
future and has paid the back wages in full.
The hotel and motel industry is characterized by a wide variety of employment
arrangements, such as subcontracting, franchising, third-party management, and other
practices that obscure the worker-employer relationship, the WHD noted. Its Jacksonville
District Office is conducting an initiative to strengthen compliance in the industry and is
documenting the structure and complexity of employment relationships in the hotel
industry to ensure better targeting of enforcement efforts and accountability in all
industry sectors.
The WHD said it is continuing to provide compliance assistance to employers and
industry associations, including chambers of commerce and the Florida Hospitality
Association, regarding all applicable wage and hour regulations, child labor restrictions,
and joint employer responsibilities. The division is conducting outreach to workers,
community organizations, immigrant rights groups, foreign consulates, and other
stakeholders to inform them of the ongoing initiative and encourage their participation in
promoting industry-wide compliance.
Agency warns employers on exclusive use of payroll cards
The Consumer Financial Protection Bureau (CFPB) is reminding employers that pursuant
to federal law they cannot require their employees to receive wages on a payroll card.
The new release and bulletin explain some of the federal consumer protections that apply
to payroll cards, such as fee disclosure, access to account history, limited liability for
unauthorized use, and error resolution rights.
Payroll cards fall under the CFPB’s jurisdiction under the Electronic Fund Transfer Act
(EFTA) and Regulation E. In addition, state laws typically govern which alternative
payment methods employers must offer. Some employees receiving wages on employersponsored payroll cards have complained of unexpected fees for activities such as ATM
use, teller withdrawals, and checking the balance of a card. Federal law also contains
provisions specific to payroll cards that provide employees with certain consumer
protections, including:

Disclosure of fees: Payroll card holders are entitled to receive disclosures of any
fees that they may incur for electronic transfers of funds to or from the card.
These disclosures must be clear, in writing, and in a form that consumers may
keep.
57

Access to account history: The card issuer must either provide periodic
statements or generally make card holders’s account balances and 60-day account
histories available — by phone for the balance, and online, as well as in writing if
requested, for the account history. The account history must include information
on any fees imposed for fund transfers.

Limited liability for unauthorized use: Payroll card holders’ liability for
unauthorized use of their cards is limited, provided the unauthorized use is
reported within a certain period of time.

Error resolution rights: If a card holder reports a payroll card account error, the
financial institution must respond so long as the report is received within a certain
period of time.
With some limited exceptions, the CFPB has authority to enforce the EFTA and
Regulation E against any employer or financial institution that violates them. According
to the release, CFPB intends to use its enforcement authority to stop violations before
they grow into systemic problems, maximize remediation to consumers, and deter future
violations.
Owner of some McDonalds sued. In a related development, a complaint has been filed
by an employee against the owners of several McDonalds (Gunshannon v Mueller;
PaCtCmPls, 2013). The owners were paying employees through payroll cards. The
complaint asserts that paying through payroll cards violated the Pennsylvania Wage
Payment and Collection Act. The complaint also alleges that the McDonalds policy of
requiring hourly employees to access earned wages through a payroll card, which charges
fees, results in some hourly employees receiving less than the required minimum wage
rate.
President nominates Dr. David Weil for Administrator of DOL’s Wage and Hour
Division
On September 11, President Obama sent to the Senate his nomination of Dr. David Weil
for the DOL’s Wage and Hour Division. He announced the nomination of his pick on
September 10.
Dr. Weil is Professor of Markets, Public Policy, and Law, and the Everett W. Lord
Distinguished Faculty Scholar at Boston University School of Management, where he has
worked since 1992. He is also Senior Research Fellow and Co-Director of the
Transparency Policy Project at the John F. Kennedy School of Government at Harvard
University, a position he has held since 2002.
The nominee has also been a lecturer and Research Fellow at the Harvard Law School
Labor and Worklife Program since 1987. He is the recipient of the Broderick Prize in
Research and the Broderick Prize for Teaching at Boston University, the Shingo Prize for
Research on Manufacturing Innovations, and Boston University School of Management
Best M.B.A. Instructor of the Year in 2011 and 2012.
58
Dr. Weil received a B.S. from the School of Industrial and Labor Relations at Cornell
University, an M.P.P. from the John F. Kennedy School of Government at Harvard
University, and a Ph.D. in Public Policy from Harvard University.
Interfaith Worker Justice quickly issued a statement signaling its approval of the
nominee. Its executive director, Kim Bobo said: “David Weil is known by many of us as
one of the most thoughtful advocates for a strong and effective Wage and Hour Division.
He doesn't want to just pull workers out of a river of abuse, he wants to go upstream and
address the systemic problems. In this current economic environment in which too many
employers shirk responsibilities for their employees, sometimes even pretending they
don't have employees, David Weil will shine a light on the crisis and work with the team
at the Department of Labor to stop wage theft and payroll fraud.”
Bobo also pledged Interfaith Worker Justice’s support for the nominee “in building
partnerships between Wage and Hour investigators and community organizations.”
DOL letter to ABA sets out requirements for permissible use of unpaid interns to do
law firm pro bono work
The American Bar Association has released a DOL letter interpreting the FLSA to
provide that law students can work as unpaid interns on pro bono matters at law firms, so
long as certain conditions are met. The interpretation was provided in response to an
ABA letter seeking assurances that the DOL would read the FLSA to permit such
internships.
According to the DOL’s letter, the FLSA generally requires payment of minimum wage
to anyone who works for a for-profit entity such as law firms. But unpaid internships are
allowed in certain circumstances. One requirement is that the internship must offer
training similar to that gained in an educational environment and the experience must be
for the benefit of the intern.
According to the letter, the DOL understands the ABA’s concerns to address unpaid
internships in which a law school places students with law firms and monitors their
progress as they work exclusively on non-fee-generating pro bono matters. The internship
could be unpaid, according to the DOL letter, if:

The internship involves exclusively non-fee-generating pro bono matters.

The internship is structured to provide the student with professional experience in
furtherance of his or her education.

The hiring of unpaid law student interns does not displace regular employees.

The law student is not necessarily entitled to a job at the conclusion of the
internship.

The law firm and the law student agree that the student is not entitled to wages.
The letter notes that a different analysis would apply to law school graduates.
59
Houston-area health system will pay over $4 million to resolve systemic FLSA
overtime violations
Harris County Hospital District, dba Harris Health System in Houston, will pay more
than $4 million in back wages and liquidated damages to 4,573 technicians and current
and former nurses after an investigation by the DOL’s Wage and Hour Division (WHD)
found systemic FLSA overtime and recordkeeping violations. Harris Health System
provides emergency, outpatient, and inpatient medical and health care services in the
Houston area.
The WHD’s Houston district office found that Harris Health System did not include the
workers’ incentive pay when calculating overtime premiums, according to the agency. As
a result, the employer failed to pay workers the correct overtime rate when they worked
more than 40 hours in a workweek. Harris Health System also purportedly failed to
maintain proper records of weekly hours worked by some of its employees.
The affected employees worked as nurses, lab technicians, respiratory care practitioners,
X-ray technicians, medical technologists, registered pharmacy technicians, eligibility
auditors, and security officers.
The company has agreed to set up measures to fully comply with the FLSA in the future,
according to the WHD. Payment of back wages and liquidated damages is ongoing.
“The investigation by the department revealed systemic wage violations throughout
Harris Health System’s 46 locations,” said Cynthia Watson, the WHD’s regional
administrator for the Southwest. “We are pleased that thousands of hard-working
employees will finally be paid their rightful overtime premiums and that this employer
has agreed to take steps to prevent such violations from occurring in the future.”
Consent judgment requires Queens restaurant to pay $329,000 in back wages for
FLSA violations
The DOL announced on September 17 that it has secured a consent judgment ordering
Panmark Ltd., dba Mythos Restaurant, and two owners to pay a total of $329,000 in back
wages and liquidated damages to 21 restaurant workers. The judgment puts an end to a
lawsuit filed in the Eastern District of New York that charged the Flushing, Queens,
restaurant and its owners with FLSA minimum wage, overtime, and record-keeping
violations.
The legal action was taken after an investigation by the DOL’s Wage and Hour Division
(WHD) found the defendants underpaid 21 low-wage restaurant employees between
August 23, 2008, and August 20, 2011. The wait staff was not paid any wages and
worked for tips only, while busboys and kitchen staff were paid a fixed shift rate, but not
overtime, for hours worked above 40 in a workweek, the DOL said.
In addition to the back wages and liquidated damages, which will be paid to the workers,
the defendants will pay a $7,100 civil money penalty. They are also required to post the
FLSA notice (in English and Spanish) in the workplace; pay proper minimum wage and
60
overtime to workers; maintain adequate and accurate records; and refrain from retaliating
against any employee who files a complaint with, or cooperates in, a WHD investigation.
“Unfortunately, the minimum wage, overtime pay and record-keeping violations that
were found at this restaurant are all too common in the restaurant industry,” said Maria
Rosado, the division’s district director for New York City. “All employers who are
violating the FLSA should know that the department is committed to using all the tools at
its disposal, including collection of liquidated damages and assessment of civil money
penalties, to achieve compliance with the law.”
Consent judgments entered against employers in California, New Hampshire for
FLSA violations
In separate cases, the DOL has obtained consent judgments in federal court against
unrelated employers in California and New Hampshire for FLSA violations, according to
agency announcements.
Interior Magic of California LLC. On September 23, the DOL’s Wage Hour Division
(WHD) announced that under a consent judgment, Interior Magic of California, LLC, and
two of its officers will pay $292,000 in back wages and liquidated damages to 205
current and former employees, as well as $34,408 in civil money penalties. The judgment
follows a WHD investigation that found the Torrance-based company willfully violated
FLSA overtime, minimum wage and recordkeeping provisions.
Interior Magic of California is an automotive detailer that also provides minor cosmetic
repair services to 17 major car dealerships throughout Southern California.
According to investigators, the employer made illegal deductions from employees’ wages
for property damage that resulted in workers being paid less than the federal minimum
wage. The employer also purportedly paid workers straight time for all hours worked and
did not pay an overtime premium for hours worked beyond 40 per week, as required by
the FLSA. Moreover, the investigation revealed that the employer improperly classified
some nonexempt employees as exempt from overtime pay, thereby denying them
appropriate payment for overtime hours worked. The company also failed to maintain
proper payroll records of employees’ daily and weekly hours, in violation of FLSA
recordkeeping provisions.
In addition to requiring payment of back wages and liquidated damages, the consent
judgment prohibits the defendants from violating the FLSA in the future and requires
payment of $34,408 in civil money penalties due to the willfulness of the violations. The
defendants are also required to amend payroll practices to come into compliance and
must display a notice of the department’s findings, in both English and Spanish, in areas
highly visible to employees. In addition, the defendants must hire a third party to train all
supervisors on the FLSA’s minimum wage, overtime, recordkeeping and anti-retaliation
provisions.
The DOL filed its lawsuit in the Central District of California.
61
Legacy Holdings LLC. The DOL has also obtained a consent judgment ordering Legacy
Holdings LLC, dba Ramunto’s Brick Oven Pizza Restaurant in Claremont, New
Hampshire, and two of its owners to pay $30,000 in back wages and liquidated damages
to 32 employees. The judgment resolves a lawsuit alleging violations of FLSA minimum
wage, overtime and recordkeeping provisions.
Investigators from the WHD’s Manchester Area Office found that the defendants paid
employees in cash for hours worked above 40 in a workweek. The defendants would pay
them at their regular hourly rate of pay rather than one and one-half times that rate, as
required by law, according to the WHD. For some restaurant employees, as much as half
their weekly wages were paid off-the-books. The defendants also did not maintain
records of the payments. In addition to the payment of back wages and damages, the
judgment restrains the defendants from future FLSA violations and requires them to
maintain adequate and accurate records of employees’ work hours and wages.
The DOL filed its lawsuit in the District of New Hampshire.
LEADING CASE NEWS:
1stCir: Employer improperly sanctioned; order allowing claimants previously
compelled to arbitrate to join ongoing class action vacated
By Lisa Milam-Perez, J.D.
A district court abused its discretion when it sanctioned an employer by relieving wage
claimants of their obligation to arbitrate a contract and wage suit against it and instead
allowing the claimants to join an ongoing class action, the First Circuit held, reversing the
order (Awuah v Coverall North America, Inc, August 30, 2013, Howard, J). The sanction,
issued sua sponte by the lower court, was based on an erroneous finding that the
employer had violated a court order in an ongoing suit by janitor “franchisees” alleging a
cleaning services company had improperly classified them as independent contractors.
At the core of this long-running case was a dispute between a commercial janitorial
cleaning services “franchisor” and the “franchisees,” who performed the actual janitorial
work for the company’s customers. The janitor “franchisees” brought a nationwide class
action against Coverall North America alleging that the franchisor wrongly classified
them as independent contractors. They asserted numerous state-law claims, including
breach of contract, misrepresentation, deceptive and unfair business practices,
misclassification as independent contractors, and failure to pay wages due under
Massachusetts law.
A key point of contention throughout the litigation had been which members of the
plaintiff class were subject to the arbitration provisions of the company’s janitorial
franchise agreement. In a previous ruling, the First Circuit held a subclass of ten janitors
had to arbitrate their wage and contract claims pursuant to their franchise agreements and
AAA rules. Meanwhile, the class was certified without them.
62
While arbitration proceedings were underway, the district court issued a ruling that
threatened to expand the class. Seeking to explore its options to appeal the ruling,
Coverall asked the arbitrator to impose a 60-day stay of the arbitration as to the ten
“AAA” claimants. The arbitrator granted the stay. Subsequently, the district court issued
an order directing that any motion to delay or prevent the actual arbitration of the dispute
had to be presented first to the court. The order said nothing of the 60-day stay that was
then in effect, though.
Emailing the court’s order to the arbitrator, the plaintiffs asked that the AAA vacate the
stay and proceed with the arbitration. “The judge ruled that all cases that we have filed…
must go forward without any further delay,” the plaintiffs stated.
“That is not what the court said,” Coverall replied in its own correspondence with the
arbitrator. Nowhere did the court lift the temporary stay, the employer insisted. With this,
the plaintiffs filed notice with the court that Coverall was engaged in “ongoing
obstruction of AAA arbitrations,” characterizing the email reply as a request for a delay
and contending that the request should have first been presented to the court. Finding the
email response violated its order by “seeking to continue a stay of arbitration,” the district
court sua sponte sanctioned Coverall by admitting the ten “AAA” claimants to the class
and relieving them of their duty to arbitrate.
Coverall's email to the arbitrator “neither moved for nor requested anything,” the First
Circuit found, concluding that the district court’s order was an abuse of discretion.
Rather, Coverall merely responded to the claimants’ assertion that the court’s order
requiring the employer to obtain judicial permission before making any motion to delay
or prevent arbitration compelled the arbitrator to lift the temporary stay. Consequently,
the court erred in sanctioning Coverall by admitting to the ongoing class action those
individuals who had been pursuing their claims against the company in arbitration.
The case number is 12-2495.
Attorneys: Shannon Liss-Riordan (Lichten & Liss-Riordan) for Pius Awuah. Alexander
Sugerman-Brozan (Segal Roitman) for Stanley Stewart. Norman M. Leon (DLA Piper),
Michael D. Vhay (Ferriter Scobbo & Rodophele), and John F. Dienelt (Quarles & Brady)
for Coverall North America.
2d Cir.: CAFA’s home state exception not jurisdictional; nearly three year delay in
raising it was reasonable
By Kathleen Kapusta, J.D.
Though “skeptical of the contention” that nearly three years was a reasonable time for an
employer to determine where its sales force lived, the Second Circuit nonetheless
affirmed a lower court’s ruling that the Class Action Fairness Act’s “home state
exception” to federal jurisdiction is not jurisdictional and that the employer reasonably
raised the exception nearly three years after an employee’s putative class action
complaint seeking unpaid overtime wages was filed (Gold v New York Life Insurance Co,
September 18, 2013, Parker, B). The appeals court also held that a 2011 amendment to a
63
New York Labor Law provision that increased the amount of recoverable liquidated
damages did not apply retroactively.
Outside salesman. The New York Life Insurance Company employee sold life insurance
as well as products with investment components that permitted him to use the title
“registered representative.” However, throughout his employment, he was classified as an
outside salesman whose main responsibility was to sell insurance. As such, he was not
entitled to overtime pay and his wage consisted solely of commissions. In 2009, he
brought a putative class action lawsuit against his employer predicating jurisdiction on
CAFA. He asserted that because he was responsible for making investment
recommendation to clients, he should not have been classified as an outside salesman. He
further alleged that because New York Life’s payment system involved subtracting costs
incurred from commissions earned, it violated New York Labor Law Sec. 193, which
prohibits employers from making deductions from, and charges against, wages.
Lower court ruling. In 2011, the district court granted summary judgment to New York
Life on the employee’s overtime claim. The court found that his primary duty was sales
and therefore he was properly classified as an outside salesman excluded from overtime
pay. Proceeding on the wage deduction claim alone, the employee moved to add a claim
for liquidated damages under a state law that had been amended in 2011 to increase the
amount recoverable from 25 percent to 100 percent of any underpayment. Although the
district court allowed the employee to add the claim, it ruled that he could not benefit
from the amendment because it was not retroactive. It also denied him summary
judgment on the wage deduction claim, finding that fact disputes remained as to whether
his commission constituted an earned wage from which any deductions would violate
NYLL Sec. 193.
After these rulings, and nearly three years after the complaint had been filed, New York
Life asserted that it discovered that more than two-thirds of the putative class members
were New York citizens. Arguing that the requirements of CAFA’s home state exception
had been met, it moved to dismiss the complaint for lack of subject matter jurisdiction.
The employee, however, contended that New York Life’s delay in raising the issue
constituted waiver. The district court concluded that the exception was not jurisdictional
and that New York Life had not waived the issue because its delay was justified by the
discovery schedule. Thus, the court declined to exercise jurisdiction and dismissed the
complaint.
Home state exception. Noting that the home state exception provides that a “district
court shall decline to exercise jurisdiction” over a class in which two-thirds or more of
the proposed class members are citizens of the state in which the action was originally
filed, the appeals court aligned itself with the Seventh and Eighth Circuits in concluding
that Congress’s use of the term “decline to exercise” means that the exception is not
jurisdictional.
The employee next argued that if the exception is not jurisdictional, it must be raised
within a reasonable time. Here, the court observed that CAFA contains no time limit for
when remand motions must be made. Noting that the Eighth Circuit has held that remand
64
motions based on CAFA must be raised within a reasonable time, the court concluded
that this approach was sound. Thus, it held that motions to dismiss under CAFA’s home
state exception must also be made within a reasonable time. While what is reasonable
will vary depending on the relevant facts, the court noted that such motions should be
made at the earliest practical time.
Here, despite the fact that New York Life did not raise the motion for nearly three years
after the complaint was filed, the court found that application of the exception was, to a
certain extent, complicated by the discovery schedule. Specifically, the employee had
requested that individual discovery proceed first, followed by class discovery; thus class
discovery did not start until 2011. The district court found that because of this bifurcated
discovery schedule, New York Life had not had the opportunity to discover the
citizenship of the class members until it undertook class discovery; thus its delay was
excused. Though the appeals court noted “that there are numerous instances where the
home state exception was raised much more promptly than it was in this case and without
full blown class discovery,” it was not prepared to say that the lower court abused its
discretion. Thus, it affirmed the ruling.
Retroactivity of amendment. As to the retroactive effect of the 2011 amendment to
NYLL’s liquidated damages provision, the court noted that it did not specifically provide
that it would have only prospective effect. Noting that generally, retroactive operation of
statutes is not favored by New York courts, the appeals court found that there was no
clear expression of retroactivity in either the statutory text or the legislative history. The
employee contended that because the statute was remedial, under New York law, any
amendments are presumed to have retroactive effect. Disagreeing, the Second Circuit
pointed found that this contention no longer reflected the current state of New York law.
Rather, a better guide for discerning legislative intent is statutory text and legislative
history. Because there was no support for retroactivity in either the text or the legislative
history, the court held the amendment was not retroactive.
Summary judgment ruling. Turning to the district court’s ruling that there was no fact
dispute as to whether the employee’s primary responsibility was to sell insurance, and
that therefore he was properly classified as an outside salesman not entitled to overtime
pay, the appeals court noted that he was hired and trained to sell insurance. In addition,
his compensation as well as his continued affiliation with the company was tied
exclusively to his sales. Although he argued that research and making investment
recommendations were his primary duties, the court observed that these duties were
merely components of New York Life’s six-step process for selling insurance. As to his
argument that because he was a registered representative subject to FINRA’s
requirements that he provide sound investment advice, he was a financial advisor, not a
salesperson, the court pointed out that he was paid only for selling insurance, not for
offering financial advice. Further, even after becoming a registered agent, 90 percent of
his sales were of traditional life insurance products that did not require the title of
“registered representative” and did require that he comply with FINRA regulations. Thus,
the court affirmed summary judgment on this claim as well.
The case number is 12-2344-cv.
65
Attorneys: John Halebian (Lovell Stewart Halebian Jacobson) for Avraham Gold.
Richard G. Rosenblatt (Morgan Lewis & Bockius) for New York Life Insurance
Company.
2d. Cir.: Highly-compensated pharmacist not entitled to overtime, despite disparity
between guaranteed salary and actual earnings
By Lisa Milam-Perez, J.D.
Parsing several provisions of the FLSA’s Sec. 541 white-collar regulations, the Second
Circuit affirmed a district court’s grant of summary judgment in an employer’s favor on a
pharmacist’s overtime claims, concluding that he was excluded from overtime pay under
the highly compensated employee exemption (Anani v CVS RX Services, Inc, September
20, 2013, Winter, R). The appeals court rejected the pharmacist’s assertion that the whitecollar regulations barred application of the highly-compensated employee exemption
where there is a significant discrepancy between one’s guaranteed salary and one’s actual
pay.
Ample compensation. The pharmacist, classified as an exempt employee, earned a
guaranteed base salary, based on a 44-hour work week, that exceeded $1,250. He also
earned additional pay because he regularly (and voluntarily) worked an additional 16 to
36 hours per week, bringing his total annual compensation to over $100,000. The
additional hours were paid based on an hourly “compensation rate,” which was reached
by dividing the weekly guaranteed salary by 44, multiplying the number of hours worked
over 44 by the resultant amount, then adding premium pay of $6 per hour.
It was undisputed, then, that the pharmacist earned a guaranteed base pay that
substantially exceeded the requisite $455 per week, regardless of the number of hours
actually worked in a 44-hour week. And there was no allegation of impermissible
deductions taken. Thus, the requirements of the regulations, 29 CFR Secs. 541.600 and
541.602 of the salary basis test, were met. The sticking point fell between these two
provisions: whether the highly compensated employee provision at Sec. 541.601 applied
here.
“Extras.” The employee contended that the exemption did not apply because of Sec.
541.604, which governs circumstances where, as here, an exempt employee’s earnings
are computed on an hourly, daily or a shift basis and there is a minimum salary guarantee
“plus extras.” As for those “extras,” Sec. 541.604(a) states that an employer may provide
additional pay to an exempt employee without violating the salary basis requirement if
the employee also had a guarantee of at least the minimum weekly-required amount paid
on a salary basis. This provision allows additional compensation to be computed and paid
in a straight-time hourly amount without forfeiting the exemption, the appeals court
noted, disposing of the employee’s first argument.
Reasonable relationship. Next, the employee cited Sec. 541.604(b) to support his
contention that the highly compensated exemption did not apply. That provision requires
that, if an exempt employee’s earnings are computed on an hourly, daily, or shift basis,
there must be a “reasonable relationship” between the employee’s guaranteed salary and
66
the amount actually earned. The “reasonable relationship” text is satisfied if the weekly
guaranteed pay is “roughly equivalent to the employee’s usual earnings at the assigned”
rate for a normal scheduled workweek. Here, the employee’s total earnings were so
substantially in excess of his guaranteed salary (a slightly less than 2-1 ratio) that the
relationship was not reasonable, he urged.
He was rebuffed again. “We perceive no cogent reason why the requirements of [Sec.]
541.604 must be met by an employee meeting the requirements of [Sec.] 541.601,” the
appeals court said. Sec. 541.601 would be rendered “essentially meaningless” if a highly
compensated employee also had to qualify under Sec. 541.604, the court reasoned. The
latter provision applies to employees who earn the minimum guarantee plus extras, but
every employee with a guaranteed weekly pay higher than $455 who earns over $100,000
(and thus is exempt under Sec. 541.601) also fits this bill, the court noted. A more
sensible reading — one that would give full meaning to both provisions, rather than
render Sec. 541.601 superfluous — is that each provision deals with different groups of
employees who receive a “minimum guarantee plus extras.” The first exemption deals
with those who earn over $100,000 annually, while the second exemption deals with
employees whose guarantee with extras totals less than $100,000 annually, the court
concluded.
Note to future litigants. In a footnote, the appeals court recommended that in future
cases with similar facts (but for the employee’s failure to earn over $100,000, thus
rendering Sec. 541.604 applicable), parties would do well to brief the issue of whether
the “reasonable relationship” must be between the guaranteed “hourly, daily, or shift”
amount reduced to an hourly, daily, or shift rate of pay and the hourly, daily, or shift rate
by which pay for extra work is calculated, or whether the “reasonable relationship”
should instead be determined on the difference between the total of guaranteed earnings
and total earnings.
Future litigants also should consider briefing the effect, if any, of the words “normal
scheduled workweek” in a case where the amount of hours worked varies each week
according to the employee’s voluntary decision to work extra hours, the appeals court
suggested.
Not merely a relaxed standard. Finally, the Second Circuit, rejected as “unsustainable”
the notion that Sec. 541.601’s highly compensated employee exemption was meant only
to provide a “relaxed standard” for determining the duties requirements of the exemption
for employees who earn over $100,000. (Whether the employee in this case satisfied the
duties requirement of the professional exemption was not in dispute.) First, this provision
is contained in the “salary requirements” subpart of the regulations, not in the “duties
requirements” section. Moreover, there was clear evidence that this placement was
deliberate: the introductory statement of the regulations explicitly provide that Subpart
G’s definition of salary requirements includes an “exempt[ion] [for] certain highly
compensated employees.” Also, Sec. 541.601(a) plainly notes that it provides “an overall
exemption from the time-and-a-half requirement to employees who meet the relaxed
duties requirement based on an annual salary of over $100,000.” Thus, both the structure
67
of the regulation and the express language of the particular provision rendered the
employee’s reading implausible.
The case number is 11-2359-cv.
Attorneys: Seth R. Lesser (Klafter, Olsen & Lesser) for Salah Anani. James J. Swartz, Jr.
(Ashe Rafuse & Hill) for CVS Rx Services Inc.
3d Cir.: Voluntary dismissal of actions could not create finality of decertification
orders to gain appellate review
By Ronald Miller, J.D.
In consolidated claims before the Third Circuit, the court ruled that named plaintiffs to an
FLSA collective action who voluntarily dismissed their individual claims with prejudice,
could not appeal a district court order denying final certification of the collective action
(Camesi v University of Pittsburgh Medical Center, September 4, 2013, Rendell, M). In a
case of first impression, the appeals court determined that the plaintiffs’ voluntary
dismissals of their claims constituted impermissible attempts to manufacture finality. The
plaintiffs could not avoid the strong presumption against the interlocutory review of the
decertification orders by voluntarily dismissing all of their claims under Rule 41. Thus,
the Third Circuit dismissed this appeal for lack of appellate jurisdiction.
In the first consolidated action, the plaintiffs alleged that their employer, UPMC, violated
the FLSA by failing to ensure that they were paid for time worked during meal breaks.
After filing their complaint, the plaintiffs moved for expedited conditional certification.
That motion was granted. After preliminary discovery, UPMC moved to decertify the
collective action, while the plaintiff filed a motion for final certification. The district
court granted UPMC’s motion and dismissed the claims of opt-in plaintiffs without
prejudice. The named plaintiffs did not ask the district court to certify an interlocutory
appeal, but moved for “voluntary dismissal of their claims with prejudice in order to
secure a final judgment for purposes of appeal. The district court granted the motion.
In the second consolidated action, the named plaintiffs filed individual and collective
actions against West Penn Allegheny Health System (West Penn), similarly alleging that
they were not compensated for work performed during meal breaks. The district court
conditionally certified the collective action, but later granted West Penn’s motion to
decertify. The plaintiffs here employed the same strategy and filed a Rule 41(a) motion
for voluntary dismissal of their claims with prejudice in order to secure a final judgment
for purposes of appeal. Both sets of named plaintiffs now appeal. The actions were
consolidated because they raise the same issue.
Final appealable order. The Third Circuit initially considered whether the named
plaintiffs’ voluntary dismissal of their claims with prejudice under Rule 41(a) left them
with a final order appealable under 28 USC Sec. 1291. This question of first impression
required the court to consider two strands of Third Circuit authority: Sullivan v Pacific
Indemnity Co, which held that a plaintiff may not obtain appellate review after incurring
a dismissal for failure to prosecute for the purpose of seeking to appeal an interlocutory
68
class-certification order, and Fassett v Delta Kappa Epsilon, which permitted plaintiffs to
voluntarily dismiss a portion of their case in order to appeal an order of the district court
terminating the remainder of their case.
Generally, a dismissal with prejudice constitutes an appealable final order under Sec.
1291. However, in this instance, the Third Circuit agreed with the employers that the
plaintiffs’ voluntary dismissals of their claims constituted impermissible attempts to
manufacture finality under Sullivan. Like the plaintiffs in Sullivan, the plaintiffs in this
case have attempted to short-circuit the procedure for appealing an interlocutory district
court order that is separate from, and unrelated to, the merits of their case. The plaintiffs
could have obtained appellate review of the decertification order by proceeding to final
judgment on the merits of their individual claims. Or, they could have asked the district
courts to certify their interlocutory orders for appeal. Instead they sought to convert an
interlocutory order into a final appealable order by obtaining dismissal under Rule 41.
The appeals court ruled that if it were to allow such a procedural sleight-of-hand to bring
about finality, this would greatly undermine the policy against piecemeal litigation
embodied by Sec. 1291. Here, the subject of the appeal was not the dismissal, but rather,
the decertification order. The Third Circuit cautioned in Fassett that it would not permit
an indirect review of interlocutory rulings that may not be the subject of direct review. In
this instance, the district courts’ orders decertifying the collective actions were
interlocutory. The plaintiffs were not entitled to appeal those orders directly under Sec.
1291. Thus, the appeals court dismissed both appeals for lack of jurisdiction.
The case numbers are 12-1446 and 12-1903.
Attorneys: J. Nelson Thomas (Thomas & Solomon) for Karen Camesi and Andrew
Kuznyetsov. John J. Myers (Eckert, Seamans, Cherin & Mellot) for University of
Pittsburgh Medical Center. David S. Fryman (Ballard Spahr) and Robert B. Cottington
(Cohen & Grigsby) for West Penn Allegeny Health System, Inc.
5th Cir.: As “secondary” employer, company was not required by FMLA to
reinstate worker who was originally assigned by temp agency
By Lorene D. Park, J.D.
Finding that a company had no FMLA obligation, as “secondary” employer, to reinstate a
temporary worker after her maternity leave absent a request by the staffing agency that
placed her there originally, the Fifth Circuit affirmed summary judgment in the
company’s favor (Cuellar v Keppel Amfels, LLC, September 9, 2013, per curiam).
The company, which builds and repairs offshore drilling platforms, relied on temporary
staffing agencies, including Perma-Temp, to staff half of its local assignments (some
placements lasted for years). According to the plaintiff, at the company’s request, PermaTemp would select a few candidates and send resumes, at which point the company
decided who to interview and who would fill an opening. The plaintiff was assigned to
the company in June 2007 as a material information clerk. She went on maternity leave
August 17, 2008, and her supervisor requested a replacement. The personnel requisition
69
form noted that the request was to “temporarily fill in for employee out on maternity
leave and permanently replace employee retiring at end of year.”
On August 20, the company hired the daughter of one of its project managers for the
position; she was told that she was replacing someone on maternity leave. The company
allegedly informed Perma-Temp that it had terminated the plaintiff’s assignment but that
she was eligible to be “re-hired.” It did not hold any position open for her. Unaware of
these events, the plaintiff called her former supervisor when she was released to work and
he transferred her to an HR rep. She was told that the company was “doing fine without
her” and would call her if there was another opening. She called Perma-Temp and was
encouraged to seek unemployment; the staffing agency did not call the company and ask
it to reinstate her or otherwise refer her back to the company.
Trial court proceedings. The plaintiff filed suit against the company, alleging that it
interfered with her FMLA rights by “convincing” the staffing agency not to seek her
reinstatement and retaliated against her based on her exercise of FMLA rights. The
company moved for summary judgment, which the district court granted. It found that the
plaintiff stated a prima facie case, but both her claims failed because there was no
evidence that the company acted with discriminatory animus by terminating her
assignment.
Joint employers. On appeal, the Fifth Circuit explained that two businesses may be joint
employers under the FMLA where both exercise some control over the work or working
conditions of an employee. Under applicable regulations, a joint employer’s obligations
depend on whether it is the “primary” or “secondary” employer. If an employee obtains
work through a temp agency, the agency is generally the primary employer. Only the
primary employer is responsible for providing FMLA leave. The secondary employer “is
responsible for accepting an employee returning from FMLA leave . . . if [it] continues to
utilize an employee from the temporary placement agency, and the agency chooses to
place the employee with the secondary employer.” A secondary employer is also
prohibited from interfering with an employee’s exercise of FMLA rights and from
discriminating against an employee for exercising those rights.
Applying the regulations here, the appeals court concluded that Perma-Temp was the
plaintiff’s primary employer and the company was her secondary employer. Thus, to
succeed, the plaintiff had to show the company interfered with, restrained, or denied her
exercise or attempt to exercise FMLA rights, thereby prejudicing her. This she could not
do. She argued that the company convinced the temp agency it was fruitless to refer her
for reinstatement. She emphasized the course of dealings where Perma-Temp only
referred workers upon the company’s request. She also noted that the company decided
whether she would be allowed to return. In addition, she claimed that by replacing her,
telling the agency her job was terminated, and telling her that she no longer had a
position there, the company prevented her from fully exercising her FMLA right to
reinstatement.
No obligation to reinstate. Rejecting the plaintiff’s arguments, the court found that these
alleged incidents could not constitute “interference” because that would extend FMLA
70
entitlements past their statutory and regulatory limits in the joint-employer context. The
“primary responsibility” for job restoration falls on the primary, not the secondary,
employer. A secondary employer need only accept an employee returning from FMLA
leave if it continues to use an employee from the temp agency and the “agency chooses to
place the employee” there. Thus, the company acted within its rights to replace the
plaintiff and had no obligation to reinstate her absent a request from the temp agency.
The fact that Perma-Temp typically relied on the company to initiate a request could not
create a fact issue because it said nothing about the entities’ expectations when
confronted with an employee’s return from FMLA leave, the court averred. The
plaintiff’s characterization of the company’s actions as “convincing” the agency not to
seek her reinstatement was simply not supported by the facts alleged here. Ultimately, to
hold the company liable on these facts would place it in the position of a primary
employer and thus create a relationship that did not exist prior to the plaintiff’s leave. For
these reasons, summary judgment for the company was affirmed.
The court did not address the parties’ dispute over whether the plaintiff had to establish
discriminatory intent as an element of her claim against the company.
The case number is 12-40165.
Attorneys: Kathryn J. Youker (Texas RioGrande Legal Aid, Inc.) for Jessica Cuellar.
Brian Charles Miller (Royston, Rayzor, Vickery & Williams) for Keppel Amfels, LLC.
5th Cir.: District fire chiefs qualified for the FLSA’s administrative exemption from
overtime
By Ronald Miller, J.D.
A federal district court did not err in finding that two former district fire chiefs were paid
on a salary basis, and so qualified for the FLSA’s administrative exemption from
overtime, ruled the Fifth Circuit in an unpublished decision (Bass v City of Jackson,
Mississippi, September 17, 2013, per curiam). The fire chiefs were unable to present
evidence that because there were policies in place allowing for partial deductions for
missing part of a shift, there was a “significant likelihood” that improper deductions
might occur. Because the chiefs were not subject to salary deductions or suspensions, the
district court did not err in finding that their salary met the statutory exemption
requirements.
After retiring from their positions as district fire chiefs with the fire department, the
employees sued the city alleging that they were entitled to overtime compensation under
the FLSA. While at the fire station, the employees were on a salary and worked shifts of
24 hours on-duty followed by 48 hours off-duty. Their responsibilities included
supervising personnel, staffing the fire stations within their districts, establishing
schedules, and recommending disciplinary action for subordinates. On occasion, due to
shortages of district-level chiefs, the employees would work additional shifts for which
they were compensated a straight-time hourly rate.
71
After a bench trial, the district court granted the city’s motion for judgment as a matter of
law concerning application of the administrative exemption to the fire chiefs. This appeal
followed.
Salary basis test. To qualify under the administrative exemption, an employee must have
supervisory duties and meet the salary basis test. The chiefs challenged only the court’s
holding that their compensation met the salary basis test. As an initial matter, the court
found that paying employees an hourly rate for work done beyond a regular schedule
does not defeat the executive or administrative exemption. Next, the court turned to the
employee’s primary arguments why they did not meet the qualifications of the salary
basis test.
Though the employees conceded that no district chief had ever been docked pay for
missing portions of shifts, they argued that actual deductions are unnecessary to remove
them from exempt status; rather, it was enough that an existing policy countenanced the
possibility of such deductions. Moreover, they alleged that the city’s policy against
firefighters’ being Absent Without Official Leave (AWOL) allegedly infringed upon
DOL regulations construing the salary basis test, 29 CFR Sec. 541.602, because it
presented a substantial likelihood of disciplinary suspensions for district chiefs of less
than a week and it arguably did not apply to all employees of the department and city.
Because the lower court found as a matter of law that the district chiefs were never
subject to the potentially offending policies, the Fifth Circuit rejected both assertions.
Here, it was clear that the district chiefs were not subject to salary deductions or
suspensions. Thus, the district court’s finding that there was no substantial likelihood of
salary deductions or improper suspension was not clearly erroneous. Consequently, the
district chiefs’ salary met the statutory exemption requirements. The judgment of the
district court was affirmed.
The case number is 12-60935.
5th Cir.: Chevron failed to show it would have fired employee for work issues and
faking need for FMLA leave
By Kathleen Kapusta, J.D.
Reversing a district court’s grant of summary judgment in favor of Chevron, the Fifth
Circuit found the company failed to show that, despite its retaliatory motive, it would
have fired an employee who was seeking FMLA leave based on his history of attendance
and performance-related deficiencies, his alleged statements to a coworker about faking a
nervous breakdown in order to take leave, and his abusive conduct toward coworkers (Ion
v Chevron USA, Inc, September 26, 2013, Martinez, P).
Leave request. The employee, a laboratory chemist, began working at a Chevron
refinery in 2006. In late 2008, after he and his wife separated and she moved out of state
with their five-year-old son, he allegedly asked the lead chemist about the company’s
leave policy. On February 5, 2009, he told another supervisor, the chief chemist, that he
had been granted sole custody of his son for six months, that the child was not adjusting
72
well, and that he would be spending more time with him during lunch. He allegedly
asked to meet with the supervisor on February 9 about taking a leave of absence. This
meeting, however, never took place.
Suspension. On March 16, the employee’s supervisors told him that he was being
suspended for five days due to performance deficiencies and excessively long lunch
breaks. He was then placed on a performance agreement and attendance improvement
plan (PIP/AIP). While on suspension, he contacted an EAP counselor, who told him that
FMLA leave might be available and referred him to a doctor. On the day he was
scheduled to return to work, the doctor certified that the employee was incapacitated by
stress. He called in sick that day and the next, as he’d been told to do by the EAP
counselor. On March 24, his supervisor emailed the refinery’s general manager, who
responded that the employee “is playing games with us after his suspension,” and he “is
looking for a doctor to give him some FMLA-qualified time off. What are our options as
we move forward?”
Clinic visit. The next day, the employee went to the company’s clinic to sign FMLA
paperwork. A nurse asked him to sign a form releasing his medical information. Because
the EAP counselor told him that would be confidential, he refused to sign. When clinic
workers reported that the employee made them feel uncomfortable, he was banned from
the premises by a security officer based on concerns of workplace violence. That same
day, a coworker told the supervisor that, after the employee had been questioned about
the length of his lunch breaks, he became angry, talked about quitting, then mentioned
faking a nervous breakdown related to his divorce so he could take a leave of absence
with FMLA and EAP benefits. On March 26, when the employee again called in sick, he
told his supervisor that his FMLA paperwork was ready. He was terminated several days
later for “abuse of management constituting insubordination.” He then sued, asserting
interference and retaliation claims under the FMLA.
Lower court. Granting summary judgment to Chevron, the district court held that while
the employee established a fact dispute regarding Chevron’s motivation, the company
established as a matter of law that it would have terminated him despite any retaliatory
motive. The employee appealed summary judgment as to the retaliation claim. Reversing
the lower court’s decision, the appeals court found that a material fact issue existed under
both the mixed-motive rubric, which the court applied here, and the but-for causation
approach.
Motivating factor. Because both parties assumed the employee established a prima facie
case and that Chevron articulated a nondiscriminatory reason for the termination — the
employee’s unexcused absences, poor performance, statements to his coworker about
faking a nervous breakdown, and his behavior toward clinic employees — the court
looked to whether the employee established that the exercise of his FMLA rights was a
motivating factor in his discharge. While the employee first contended that the use of the
word “insubordination” in his termination letter could only refer to his refusal to sign the
release form, the appeals court found that this allegation was unsupported speculation.
73
The employee next contended that his supervisor’s statement in the termination letter that
“[y]ou haven’t returned to work since your suspension,” indicated that his FMLA-related
absence was a reason for his termination. Here, the court found that the inclusion of this
statement in the same paragraph listing the reasons for his discharge could indicate that
his absence was also a reason. In addition, the court found that the GM’s email, in which
he suggested that the employee was looking for a doctor to give him FMLA-qualified
time off, was sufficient to allow a jury to conclude that the GM was attempting to stop
the employee from taking FMLA leave or punish him for taking it. Thus, the evidence
was sufficient to create a fact issue as to whether the employee’s leave was a motivating
factor in his termination.
Affirmative defense. In its attempt to prove it would have fired the employee despite
retaliatory animus, Chevron again relied on his absences from work, poor performance,
statements about faking a nervous breakdown, and behavior toward clinic employees.
Although the lower court found it persuasive that Chevron had begun the disciplinary
process before the employee applied for FMLA leave, the appeals court found the
company’s claim that it would have fired him based on his absences and poor
performance “disingenuous and contradicted by the evidence.” Chevron had already
elected to suspend the employee and place him on the PIP/AIP and there was no
indication it was considering further discipline for his prior absences and performance.
Rather, it gave him a final warning, implying he had another chance to keep his job.
Moreover, his supervisor testified that had he returned to work following his suspension,
he would have been reinstated. Thus, this evidence did not show that Chevron would
have fired him despite its retaliatory motive.
As for the coworker’s statements and the clinic incident, the court first noted that the
temporal proximity between when the GM’s email was sent, when the coworker came
forward with the employee’s alleged statements, when he was asked to come to the clinic
to sign a medical records release, and when he was fired raised serious questions about
Chevron’s motives. Moreover, based on the coworker’s statements, the company
concluded the employee was faking a medical condition without investigating, despite its
own EAP counselor referring the employee to a licensed professional and that
professional certifying that he suffered from a serious health condition. “Chevron’s
failure to conduct even the most cursory investigation, confront [the employee] about [his
coworker’s]statements, or seek a second opinion under the FMLA calls into doubt
Chevron’s reasonable reliance and good faith reliance on [the coworker’s] statements,
and, at the very least, creates a fact issue as to whether it would have terminated [the
employee] despite its retaliatory motive.”
Turning to Chevron’s contention that it fired the employee because of his behavior at the
clinic, not because he refused to sign the form, the court found this argument to be
without merit. Here, the court found it significant that the termination letter didn’t even
mention the clinic incident. The omission of this incident from the letter “calls into
question whether Chevron truly relied on the clinic incident as a reason for terminating”
the employee, the court observed. In addition, Chevron’s accounts of the incident were
vague and did not describe foul language, physical manifestations of anger, or
descriptions of the employee’s behavior other than asking questions about the form. “The
74
failure to bring forth any evidence about [the employee’s] actual behavior” called into
doubt Chevron’s reasonable belief and good-faith reliance on the clinic employees’
report. Finding that Chevron failed to show that it would have fired the employee despite
its retaliatory motive, the court reversed the judgment in favor of Chevron and remanded
for further proceedings.
The case number is 12-60682.
Attorneys: Michael Farrell (Law Office of Mike Farrell) for Todd W. Ion. Patrick R.
Buchanan (Brown Buchanan) for Chevron USA.
8th Cir.: Production workers not entitled to pay for time spent walking from
clothes-changing stations to time clock
By Ronald Miller, J.D.
Production workers at a ConAgra frozen food facility were not entitled to compensation
for the time spent walking between changing stations, where they don and doff their
uniforms, and the time clock where they punch in and out for the day, ruled the Eighth
Circuit in reversing a district court’s denial of the employer’s motion for summary
judgment (Adair v ConAgra Foods, Inc, August 30, 2013, Colloton, S). Because the
donning and doffing time was excluded from the employees’ compensable time under the
terms of a collective bargaining agreement, it was not a principal activity that began and
ended the workday, concluded the appeals court.
Production workers for ConAgra filed suit alleging that the employer failed to pay for the
time they spent walking between changing stations where they donned and doffed
uniforms and the time clock to punch in and out for the day. ConAgra required the
workers to wear certain protective gear pursuant to the CBA to ensure that the products
made are sanitary. ConAgra was required to “furnish and launder” this gear, which
remained at the facility overnight. Thus, employees must change into and out of their
uniforms at the facility. ConAgra has never compensated the employees for time spent
changing into and out of uniforms, or for time spent walking.
Although the district court ruled that the protective gear worn by the employees
constituted “clothes” under Sec. 203(o) of the FLSA and that the clothes-changing time
was uncompensated by custom or practice under a bona fide CBA, it nevertheless denied
ConAgra’s motion for summary judgment. According to the district court, donning and
doffing uniforms began and ended the workday because wearing those uniforms was
“integral and indispensable to [the laborers’] principal work activity,” whether or not the
employees were compensated for time spent changing clothes. Thus, the district court
denied the employer’s motion for summary judgment.
On appeal, the employees continued to maintain that even though their time spent
changing clothes was not compensable because of a custom or practice under the CBA, it
was still a “principal activity” that began and ended the workday. However, the Eighth
Circuit observed that the FLSA links the concept of principal activity to employment.
Thus, the statute contemplates that a “principal activity is one that an employee “is
75
employed to perform.” If an employee is not “employed to perform” a particular activity,
even if that activity is basic to the employee’s work, then it is not a principal activity that
begins or ends the workday.
Here, the clothes-changing time of the employees was excluded “by custom or practice”
under the CBA, so hours spent changing clothes were not “hours for which an employee
is employed.” Consequently, the changing of clothes was not a principal activity that
begins and ends the workday because it was not an activity the employee is employed to
perform. Moreover, the appeals court was not persuaded by the Department of Labor’s
current position that an activity excluded from the workday under Sec. 203(o) can
constitute a principal activity. Thus, the appeals court determined that donning and
doffing was not an activity that the workers were employed to perform and so was not an
activity that began and ended the workday. As a result, the district court’s denial of
summary judgment was reversed.
The case number is 12-3565.
Attorneys: Michael F. Brady (Brady & Associates) for Cindy Adair. Mark G. Arnold
(Husch & Blackwell) for ConAgra Foods, Inc.
9th Cir.: Employer challenge to class cert based on commonality or predominance
rejected
By Ronald Miller J.D.
A district court did not abuse its discretion in certifying a class of employees who alleged
that their employer committed numerous violations of the California Labor Code,
including failing to provide meal periods, ruled the Ninth Circuit (Abdullah v US Security
Associates, Inc, September 27, 2013, Paez, R). The appeals court found that under
California law the plaintiffs’ meal break claims would yield a common answer that was
“apt to drive the resolution of the litigation.” It also determined that common issues of
law or fact should predominate, and the plaintiffs’ claims “will prevail or fail in unison.”
Thus, the employer’s challenge to certification on grounds of failure to establish
commonality or predominance was rejected.
The employer was a private security guard company servicing over 700 locations. As a
condition of employment, all employees were required to sign “on-duty meal period
agreements.” In other words, they were required to eat meals on the job. The employees
sought to maintain a class action alleging that the employer committed numerous wage
violations requiring them to work through their meal periods. The district court certified
the class and seven sub-classes, pursuant to Rule 23(b)(3), including a meal break subclass. It determined that certifying the class was appropriate in view of the employer’s
uniform policy of requiring putative sub-class members to sign the on-duty meal
agreement. On appeal, the employer challenged certification on grounds that the
employees had not established “commonality” or “predominance.”
In this instance, the appeals court was concerned with two overlapping requirements of
class certification. First, a party must show that there are questions of law or fact
76
common to the class. Second, the proposed class must satisfy at least one of the three
requirements of Rule 23(b)(3). Certification under Rule 23(b)(3) requires the questions of
law or fact common to the class members predominate over any questions affecting only
individual members. Thus, while Rule 23(a)(2) asks whether there are common issues to
the class, Rule 23(b)(3) asks whether these common questions predominate.
Commonality. “The Supreme Court has recently emphasized that commonality requires
that the class members’ claims ‘depend upon a common contention’ such that
‘determination of its truth or falsity will resolve an issue that is central to the validity of
each claim in one stroke.’” Here, the district court concluded that “a common legal
question that is presented and susceptible to class-wide determination” is whether
California’s “nature of the work” exception to Industrial Welfare Commission (“IWC”)
wage order No. 4-2001 (“Wage Order No. 4-2001”) “applies to [USSA]’s single guard
post staffing model.” The employer argued that this question would not generate a
common answer because its “nature of the work” defense required “an individualized
assessment of each employee’s work history.
The appeals court began its analysis by looking to state law to determine whether the
employees’ claims can yield a common answer that is “apt to drive the resolution of the
litigation.” Under California law, an employer may not require any employee to work
during any meal period mandated by an applicable order of the IWC. Wage Order No. 42001 guarantees a 30-minute meal period for every five hours of work. The employee
must be “relieved of all duty” during this break. On-duty meal breaks are permitted only
when the “nature of the work” prevents an employee from being relieved of all duty and
when a written agreement between the parties waives the meal period. Since the
employees signed an agreement, the employer could defeat the class certification by
invoking the “nature of the work” exception.
While California state courts have not addressed the scope of the “nature of the work”
exception, the appeals court looked to California Division of Labor Standards
Enforcement (DLSE) opinion letters for guidance on what an employer must show to
invoke the exception. The DLSE has emphasized that the “on-duty” meal period is a
“limited alternative” to the off-duty meal period requirement. Thus, the employer had the
burden to establish facts justifying an on-duty meal period. Further, the DLSE has found
that the “nature of the work” exception applies in two categories: here the work has some
particular, external force that requires the employee to be on duty at all times, and where
the employee is the sole employee of a particular employer.
Here, the appeals court concluded that the employees’ claims would yield a common
answer that “is apt to drive the resolution of the litigation.” The showing necessary to
establish the “nature of the work” exception is a high one. The employer had to show not
just that its employees’ duties varied, but that they varied to an extent that some posts
would qualify for the “nature of the work” exception, while others would not. It failed to
do so. The only reasons the employees’ duties prevented them from taking a meal break
was because the employer had chosen a single-guard staffing model.
77
Predominance. Next, turning to Rule 23(b)(3), the court concluded that the relationship
between the common and individual issues in this case were sufficiently cohesive to
warrant adjudication by representation. First, it determined that the “nature of the work”
defense can, and will, be applied on a class-wide basis in the case. Because there no
relevant distinctions between the worksites, the appeals court agreed with the district
court that the “nature of the work” inquiry would be a common one, focused on the
legality of the single-guard staffing model, rather than a site-by-site inquiry.
Unlike other cases where district courts were found to have abused their discretion in
granting class certification, in this case, federal or state exemption classifications were
not at issue. Further, the district court did not rely on the existence of the employer’s
uniform on-duty meal period policy to the exclusion of other factors. Thus, the district
court did not abuse its discretion by finding that common issues of law or fact would
predominate.
The case number is 11-55653.
Attorneys: Peter M. Hart (Law Offices of Peter M. Hart) for Muhammed Abdullah.
Morgan Patricia Forsey (Sheppard Mullin Richter & Hampton) for U.S. Security
Associates Incorporated.
11th Cir.: Employee’s claim that employer should be equitably estopped from
denying FMLA for ineligible absence fails
By Ronald Miller, J.D.
An employee who alleged that she was demoted from her 90-day temporary assignment
in retaliation for leaving work to care for her ailing uncle failed to convince the Eleventh
Circuit that her employer should be barred from denying FMLA leave under federal
common law estoppel principles (Dawkins v Fulton County Government, September 30,
2013, per curiam). Although the employee had acknowledged that her absence was not
covered by the FMLA, she nevertheless contended that the employer was equitably
estopped from disputing her FMLA eligibility because her manager approved her FMLA
leave. However, the employee was unable to show that she relied on any
misrepresentation, or that any such reliance was both reasonable and detrimental. Thus,
the appeals court affirmed the district court judgment without deciding whether federal
common law equitable estoppel applies to the FMLA.
Emergency leave. The employee, a building maintenance manager for Fulton County,
was temporarily reassigned to a building mechanic manager position, which carried a ten
percent salary increase. Two weeks after the reassignment, she learned that her uncle was
terminally ill, and requested emergency leave. Her emailed leave request had “FMLA” on
the subject line. Two hours later, her supervisor approved the leave, and the employee
left work.
Four days later, the employer rescinded her temporary assignment due to her absence.
When the employee returned to work she was reinstated to her original position. After
five months had passed, the employee filed an EEOC complaint on an unrelated issue
78
and, at that time, complained about being removed from the temporary assignment.
Following an EEOC investigation, the employer paid her in full the wages she would
have received if the temporary assignment had not been rescinded. Thereafter, she filed a
complaint alleging Title VII retaliation and FMLA retaliation, among other claims.
The employee argued that the employer should be estopped from denying that her leave
was FMLA-qualifying where there was no evidence that her supervisor’s approval was
invalid, and she never had notice that her leave was not counted as FMLA leave.
Equitable estoppel. The Eleventh Circuit has never applied equitable estoppel to expand
FMLA coverage to unqualified absences, a magistrate judge observed, finding in any
event that the elements of estoppel were not met in this case. The employee’s supervisor
was not aware of the true facts regarding the employee’s FMLA eligibility when he sent
the email saying she was “approved.” The district court adopted the magistrate’s
recommendation and granted summary judgment to the employer. The Eleventh Circuit
affirmed, holding that the employer was not equitably estopped from denying the
employee’s FMLA eligibility.
The elements of federal common law equitable estoppel in the Eleventh Circuit are: “(1)
the party to be estopped misrepresented material facts; (2) the party to be estopped was
aware of the true facts; (3) the party to be estopped intended that the misrepresentation be
acted on or had reason to believe the party asserting the estoppel would rely on it; (4) the
party asserting the estoppel did not know, nor should it have known, the true facts; and
(5) the party asserting the estoppel reasonably and detrimentally relied on the
misrepresentation.”
Detrimental reliance. Here, the employee only asserted that she met the second,
“awareness of the true facts,” element of equitable estoppel, and never addressed the
other four elements. Thus, the employee did not meet “the reasonable and detrimental
reliance” element. To establish detrimental reliance, the plaintiff must generally show
that the defendant’s actions caused her to change her position for the worse. Additionally,
the employee had to assert a causal link and show damages from the misrepresentation.
In this instance, the evidence suggested that the employee did not rely on any
misrepresentation. The employee worked in Atlanta, but requested that her employer
send the FMLA eligibility paperwork to her uncle’s address in Florida. This means the
employee had already decided that she would leave work and go to Florida before she
had even requested paperwork to determine whether her leave was covered under the
FMLA.
Even if the employee had relied on a misrepresentation by her supervisor, that reliance
would not have been reasonable, because she had previously taken FMLA leave and
knew the employer’s protocol required her to complete a packet of paperwork with her
doctor for FMLA leave. Because the employee was familiar with the FMLA policy, any
reliance on her supervisor’s email approval would have been unreasonable.
79
Accordingly, because the employee failed to provide evidence of an essential element of
her equitable estoppel claim, the district court correctly granted the employer’s summary
judgment motion.
The case number is 12-11951.
Attorneys: Rory Keven Starkey Sr. (The Starkey Law Firm) for Marlene Dawkins. Kaye
Woodard Burwell, Fulton County Attorney's Office, for Fulton County, Georgia
Government.
80