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UnStacking the Deck – Keys to Staying Union-Free in 2014


Since 2009, employers that are union-free (and intend to stay that way) have had to deal with a blizzard of new decisions and rules by agencies of the Obama Administration to make union organizing easier and more difficult to resist.  It appears that the final pieces of a grand payback to organized labor, in lieu of the Employee Free Choice Act, will fall into place in 2014.  As a result, employers will have to reinvent their union-free strategies to meet game-changing challenges.  Employers that do not change and retool their union-free strategies dramatically will find that organized labor has been dealt all of the winning cards.  .Future court decisions may block some but not all of the changes that the National Labor Relations Board (Labor Board) and Department of Labor (DOL) are poised to implement.  Prudence dictates, however, that employers should prepare for the worst – a world where the balance between labor and management rights is tipped decisively in favor of labor.  This shifted balance can be effectively countered only if employers do several important things, most of them before union organizing is detected.  Once union organizing is underway, there will not be time to make and the Labor Board’s law will prevent most of the most essential and effective changes.

The Capstone Changes Expected in early 2014

Employers cannot overlook the sincerity of the current Administration’s strongly held belief that employees are always better when represented by unions and that union representation is necessary to revitalize and reestablish a strong Middle Class.  Implementation of this belief has evidenced itself in the appointment into key administrative positions of zealots who feel they are on a country-saving mission.  Theirs, they believe, is a grand and noble mission where nearly any means will justify the end.

The Labor Board will almost certainly republish its new election rules and, in doing so, all but erase the ability of employers to respond effectively to union organizing post- petition.  This may come as early as April.  By that time, in March, the DOL will have issued its new interpretations of the Labor Management Reporting and Disclosure Act (LMRDA) that will redefine the public reporting requirements for employers who use third-party consultants or attorneys to establish and implement union-free strategies or combat active organizing.  These are the remaining two pieces that will complete the Obama Administration’s rescue plan for big labor.  When combined with the reinterpretations of the law already made by the Labor Board, union organizing will not only be easier but nearly irresistible…unless non-union employers learn to operate in this entirely new environment.  Yet, there are things that can be done to create a winning strategy to remain union-free.  

NLRB Election Rules Changes:

In April of 2012, the Board published a series of rule changes to force speedy representation elections and to restrict (some would say eliminate) the ability of employers to affect issues such as the appropriateness of the requested unit and voter eligibility  These changes were enjoined by a court in May of 2012 because at the time the Rules were issued, the court said the Board lacked the necessary quorum to engage in rule-making.  As a result of the court’s action, the Board withdrew the new rules.  The technicality relied on by the court has now been cured and now, with a full slate of members, the Chairman has signaled that that he wants to reissue the Rules, including, perhaps, even those portions that were removed from the original version during negotiations to avoid the resignation of the opposing member.  There is no doubt that when the Rules are proposed to the other members by Board by the Chairman, the pro-union majority will act quickly and favorably.

One combination of these Rule changes will shorten the time between the filing of a petition and an election.  Under some circumstances, they would permit an election to be conducted as soon as fourteen days after the petition, only one week after the hearing where the Regional Director sets the date of the date of the election and the voting unit.  These changes would make “organizing by ambush” more than a catch-phrase.

Another group of changes, when combined with substantive law modifications that will be discussed later, would nearly eliminate the ability of employers to litigate the appropriateness of the bargaining unit requested by the union and voter eligibility in the hearing on the union’s petition.  As a consequence, an employer may be unable to stop an election in a unit that is as small as a single classification or makes no operational sense merely because it was requested by the union (usually based on support for the union).  The employer also would not be certain who would be considered to by the Board to be supervisory and, therefore, would not know who could be required to participate on behalf of the employer in the campaign to combat the union’s drive and provide information with regard to voter concerns and attitudes. 

 Board Decisions

The Obama Board has already made it a protected right for employees to use social media to disparage their employer, prohibited instructions to keep the existence and content of an investigation of employee misconduct confidential, placed extreme limits on restrictions on off duty access to the employer’s property and, soon, is likely to open the email system of employers to use by union organizers.  The Labor Board has also been quick to use injunctions against alleged wrongful conduct during organizing and imposing enhanced remedial orders, such as the reinstatement of discharged employees pre-election before it is finally determined that the discharge was due to union activity, access to the employer’s premises for union organizers, in-facility speeches by union organizers, and attendance by union organizers at captive audience meetings.

Three decisions make resistance to the union organizing especially difficult.  The first relates to proposed bargaining units, the second to the definition of supervisor and the third to the use of neutrality agreements.

Specialty Healthcare:

In Specialty Healthcare (357 NLRB No. 83 (2011)) the Labor Board held that a unit of certified nurse assistants in a nursing home constituted an appropriate unit for an election and bargaining.  The employer had argued that a unit limited to CNAs was inappropriate and should include all non-professional employees, a common unit in nursing homes.  In making its decision, the Labor Board rejected its long-standing presumption in favor of wall-to-wall or large units, against the proliferation of units and against “extent of organizing units”.  In the future, it said, units, perhaps even as small as a single job classification, would be found appropriate.  Not less significant was the Board’s declaration on the burden of proof necessary for an employer to prove that the unit requested by the union was inappropriate.  Going forward, the employer’s burden will not just be persuasion, but the employer would be required to establish by “overwhelming evidence” that the requested unit would be inappropriate unless it included (or excluded) certain other employees.  This unprecedented and extraordinarily high burden is expected to be carried only rarely.  The result is that the appropriate unit for the election will almost always be the unit desired by the union and the issue of appropriateness of the unit is effectively off the table prior to the election. 

Specialty Healthcare cleared the way for multiple “micro-units” within a single workplace and balkanized workforces where several different unions may each represent only small groups of employees.  The dysfunction that would result from a state of nearly constant bargaining, constant risk of strikes and constant “one-upsmanship” would be dramatic, costly and debilitating.  At a minimum, a single union could obtain a foothold in the workplace by organizing a single, small group of employees. At its worse, movements between classifications, job flexibility, cross-training and a host of other operational imperatives would be either impossible or come at great and unnecessary cost to efficiency.

This operational nightmare is a significant and real consequence of this Board’s decision and not fear-mongering.  Since Specialty Healthcare, Regional Directors have directed elections in such units as the cosmetics and scents employees at Macy’s and the women’s shoes at Bergdorf-Goodman.  Different unions and different contracts for each department in a department store is not far from different unions and different contracts for each classification in a manufacturing facility.

Oakwood Healthcare and Croft Metals, Inc.

While these two cases (Oakwood Healthcare, 348 NLRB No. 37 (2006); Croft Metals, Inc. 348 NLRB No. 38 (2006)) predate the Obama Labor Board, they are now being applied much more vigorously.  In these two cases the Labor Board narrowed the definition of “supervisor” significantly.  Supervisors are not “employees” under the NLRA and, therefore, are not entitled to the protections of the Act.  That means, supervisors have no protected right to engage in or to support a union and employers may count them on supervisors to resist union organizing and can interrogate them with regard to what they know about such activity in the workplace.  If the supervisors do not cooperate, they can be discharged from their employment without violating the National Labor Relations Act.  By narrowing the definition of a supervisor, employers are limited in who they can rely on during the course of a campaign.

Under these cases, for example, the Board will not consider the assignment of work to be an indicia of supervisory authority unless the exercise of this authority is not routine (not pursuant to detailed employer guidelines) and requires the exercise of independent judgment.  Other critical points of examination are the amount of time spent supervising, as opposed to doing employee work, and whether the supervisors are held accountable for the performance of those who are supervised.

Equally problematic with regard to the supervisory issue is that the likely new Rules will prohibit the litigation of whether an employee is or is not a supervisor pre-election, unless the number of the individuals involved is more than 10% of the proposed unit.  As a consequence of the narrowing of the definition of supervisor and the likelihood that the supervisory issue will not be decided pre-election, employers are left uncertain as to whether a particular individual is a supervisor until after the election, when the issue may be the subject of  an unfair labor practice charge alleging that the employer interfered with the protected rights of “an employee” when it included the “supervisor” in strategy sessions regarding union activity.  Including them as employer representatives during a campaign because the employer, in good faith, believes they are supervisors, therefore, places the employer at risk of having the election results overturned and other remedial Board orders.  Further, fearing that an employee may be improperly classified as a supervisor may push an employer to reduce the number of individuals it may use as advocates against unionization and as sources of information, only to find that the votes of those whom the employer was conceding to be employees are challenged by the union on the basis that they are, in fact, “supervisors.”  Unsure employers are placed in a classic “damned if you do and damned if you don’t” dilemma with some individuals feeling demoted when the employer, out of an abundance of caution, tells them that they being excluded from the “inner process” because they are not supervisors. 

Dana Corp, 356 NLRB No. 49 (2010)

In Dana Corp.  ( 356 NLRB No. 49 (2010), the Labor Board approved of a neutrality and cooperation agreement between Dana and the UAW.  The UAW had induced Dana not only to be neutral (not oppose the union’s organizing effort and agree to a card check) to union representation of the employees at a particular plant, but also to facilitate the organizing drive by providing the names and contact information of the employees to the Union and issuing a statement that the Company believes that it can work cooperatively and positively with the Union.  In return, the UAW agreed that, when it obtained the collective bargaining rights, it would not oppose in principle the productivity and incentive plans the Company felt were important. 

In this case, the UAW induced the Company’s neutrality and cooperation agreement with promises related to a subsequent collective bargaining agreement.  Some unions have achieved neutrality agreements by agreeing to back legislation favorable to the employer.  Other unions have coerced neutrality agreements through picketing, adverse publicity and/or regulatory (e.g., OSHA, EPA) complaints.[1]

At first blush, combatting a the neutrality and card check strategy does not appear to be relevant to a discussion of election-based strategies.  However, neutrality and card check agreements are not effective if the union is unable to obtain signatures on authorization cards from a majority of the employees.[2]  The subject also is relevant because the neutrality strategy has become the preferred method of organizing by some unions and employers must be prepared to combat it.  Many of the elements of a union-free strategy to resist traditional union organizing discussed below are also effective to neutralize or eliminate the desire of employees for union representative. 

New Persuader Rules

The Labor Management Reporting Act of 1959 requires that any third party hired by an employer to persuade employees with regard to union representation must report the nature of the activities and the amount paid to them by the employer.  Employers have a similar reporting requirement.  The reports must be filed with the Department of Labor and are available to the public on the DOL website.  The law contains an exception for “advice” and, historically, the DOL has defined “advice” as not including strategic, training and campaign-related services if those services were not rendered in direct contact with employees.  Services that are only indirect in that they involve only working with managers and supervisors of the employer who would then have direct contact with the employees would not have to be reported.  This is a bright-line rule that has prevailed for the last forty years. 

The DOL has announced that in March of this year it will issue a new interpretation of the law so that now only strictly legal advice will be considered to be within the advice exception and not reportable.  That is, if an employer sends a document to a lawyer for advice concerning its compliance with the law (as distinguished from its effectiveness or advisability), the activity and fee paid would not have to be reported.  However, if the employer asks the lawyer for advice concerning whether it would be a good thing to use the document in a campaign or for modifications that do not relate directly to the law, that advice would fall outside the advice exception and have to be reported.  Services that consist of the creation of a union-free strategy, training supervisors with regard to union organizing, and/or creating documents or speeches for use during a campaign and the fees charged for those services would have to be reported by both the employer and the service provider.  As noted above, those reports would be published on the DOL website for viewing by an interested union or any other person. 

Under the rule as it was proposed first in 2012 (and it is likely that the rule that will be published will be at least as far-reaching as the proposed rule, regardless of the numerous objections from employers and employer representatives), if a consultant or lawyer engages in any reportable activity, all labor services provided by that consultant/lawyer (and all others in the firm with which the consultant/lawyer is associated) to the employer, even if not directly related to a union-free strategic plan or a union campaign, would have to be reported along with the amounts paid.  This would include the development of or advice concerning policies, reviews of handbooks, and training.  Only actual work in connection with litigation and other direct legal advice would be excluded from the mandate. 

The bottom line is that, unless enjoined (there is likely to be a court challenge at least on the issue of whether the new rules violate attorney-client privilege), any employer using any third party consultant or lawyer to assist it to remain or to become union-free will have to make public that it is doing so, what it is doing and how much it is paying for the service.  Once reported, the information can be republished by a union to employees in an effort to discredit the employer or impugn the employer’s motives.

Since most employers do not have the resources to have strategic union-free specialists on staff, the new persuader rules may diminish the use of third party specialists.  Since studies historically confirm that employers who use third party union free specialists are significantly more successful than those who don’t, the persuader rules are viewed by some labor commentators as a way to clear the field for union organizers.  This consequence would be exacerbated if unions turn the reports into the moral equivalent of Megan’s Law (and they very well may).  Thus, employers that may be reluctant to obtain the services they need to combat union organizers, would be left to deal with the guile of professional organizers alone. 


Unstacking the Deck

In spite of the Obama Administration’s apparent determination to do everything possible – short of legislation – to assist unions to obtain new members, employers are still in control of their own destiny when it comes to remaining union-free…if they are willing to make the effort.  In addition, if  these employers act before the new persuader rules are promulgated in March, they may keep their strategic planning confidential. 

While not an exhaustive list, here are some things that employers should be doing now to stay union-free:

Neutralize the Desire for Third Party Representation (It will be too late after organizing begins)

·                     Have wages and benefits that are competitive with unionized companies in the area.  The value of being union-free lies elsewhere and if you are significantly under market, you will likely fail.

·                     Enable employees to have a stake in the organization’s success.  When the company’s success is “our” success, outsiders are not welcome.

·                     Have an effective communication program.  Employee security often depends on their knowledge of how you and they are doing and why things are happening that change or may change their lives.

·                     Make safety and equal/fair treatment important.  Besides keeping you on the right side of the law, it communicates that you care.

·                     Have a credible/legal problem solving system.  Employees with unresolved problems beg for help.

·                     Provide employees with due process.  If you provide protections from unfair treatment, employees do not need to find it elsewhere.

·                     Train supervisors how to manage employees and employee performance.  Supervisory failings in performance management frequently stimulates looking to the outside for help.

·                     Give supervisors time to supervise.  If supervisors do not have time to see and solve employee problems, employees have nowhere to turn but out.  Lean operations are sometimes anorexic .

Have a Strong and Communicated Union-Free Philosophy (You may not have time after a petition is filed)

·                     Communicate that you think it is important for the company to be union-free and why, avoiding reasons that can be twisted to appear exploitive.  “We don’t need a union because we need flexibility” can be heard as “we don’t want a union because we want to jerk you around.”

·                     Communicate what you are doing to make unions unnecessary.  If someone does not make the connections for them, employees may not see or appreciate it.


Educate Supervisors, They Need to Know[3]  

·                     Reasons why employees seek union representation and how to avoid or eliminate them.

·                     How unions organize employees.

·                     What unions are and can/can’t do.

·                     What supervisors can/can’t do with regard to protected activity.

·                     What their responsibilities are to recognize, report and respond to suspected union organizing without violating the law.


Structure Operations to Have Desired Employee Units

·                     Know what you need to show to have the employee units you desire and then adjust your operation (if necessary) to create “over-whelming evidence” that make undesirable and micro-units inappropriate.

·                     Collect and have easily retrievable documentary evidence to assure that you will be able to present within seven calendar days all that is necessary to carry your burden of “overwhelming evidence.”


Make Sure Those You Want to be Supervisors Will Meet the Board’s New Definition

·                     Prepare job descriptions that contain the indicia of supervisory status.

·                     Establish wage, evaluation and other policies and systems that establish that your supervisors are, under the law, supervisors.


Have a Rapid Response Plan

·                     Be prepared to respond effectively and quickly (within 24 hours) to credible union organizing.

·                     Be prepared to prove what is necessary to be proven at a post-petition hearing.


The reality is that the agencies of the Obama administration are stacking the deck in favor of unions and making it easier for unions to organize employees.  They are doing this by


·                     depriving employers of the time to educate employees effectively once a petition is filed,

·                     limiting the rights of employers to challenge and avoid election/bargaining units chosen by unions solely on the basis that they will be the easiest to organize.

·                     restricting the definition of “supervisor” and denying employers the ability to have that issue resolved pre-election.

·                     encouraging “card-check” strategies that include coerced or purchased neutrality and cooperation agreements. 

·                     expanding the public reporting of the nature and cost of union-free services provided to employers who use non-employee experts, encouraging employers without on-staff union-free specialists to remain vulnerable.


As a result of these administrative actions, keeping your workplace union-free in 2014 and for the foreseeable future will require more urgency and very specialized efforts.  Hopefully, this list of things you must do will be a guide.  Another word to the wise -- if you do not feel you have the in-house capability of meeting the challenge and wish to create your strategies within the confidentialities of your own company, you should consider seriously doing, at least, the most important strategic work prior to the March publication of the new rules for non-employee specialists who will then be required, as will you, to file public reports for inclusion on organized labor’s version of its own “Megan’s Law” type list of despicable offenders.

[1] Neutrality agreements have been challenged in the federal courts as providing something of value to unions in violation of Section 302 of the Labor Management Relations.  Two Circuit Courts of Appeals have reached opposite conclusions and the issue is now pending before the U.S. Supreme Court (Hollywood Greyhound Track, Inc.) and a decision should be made in this term.


[2] It is worth noting that the attack against the neutrality and cooperation agreement in the Dana case was brought by an anti-union employee and majority of the employees rejected the union.

[3] You won’t have time after a petition is filed


Making Union Organizing Easy and Managing a Business Almost Impossible

In the waning days of Wilma Liebman's tenure as Chairperson of the National Labor Relations Board, the Board overturned twenty years of labor law history and held in Specialty Healthcare that a group of employees as small as a single classification can be separately unionized (See Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB No. 83 (2011)).  In August of this year, the Sixth Circuit Court of Appeals affirmed the Board decision, deferring to the Board's "expertise" in such matters.

We have a perfect storm brewing.  

Micro-units are vastly more easily organized than plant-wide or store-wide units.  It's just arithmetic.  Two of five dock workers (shipping and receiving employees) in a bar drinking after work can sign cards on which a valid petition for an election can be based and all they need is one more to vote for the union and it's done.  If the appropriate unit consists of 100 employees, the union's task is much more difficult. 

Micro-units may sound too fantastic to be true.  It's not.  The Board is turning its back on well-established rules, such as single plant and single store presumptions, and subjecting employers to the real risk of dealth by a thousand cuts.  

Regional Directors of the Board have been applying the new rules for the last two years.  Among their decisions has been to certify the employees in the women's shoe department at a Bergdorf Goodman in New York and the cosmetics and fragrance department employees at a Macy's in Massachusetts as appropriate units for bargaining.  How many departments in a department store?  How many classifications in workplace?  How many groupings of similar skill-sets are there?  The application of the new rule may result in union representation and union contract for each of those departments, classifications and groupings.  The result is chaos.  When last I looked, chaos does not produce productive workers.

The storm fronts also converging are the likelihood of quickie elections reducing the time to election from petition date to two weeks or less and the Department of Labor's revision of persuader rules so that obtaining confidential legal advice concerning the application of Labor Board rules much more complicated and difficult.

There are things that an employer can do to meet its new burden of showing that the employees in other classifications or departments have an "overwhelming community of interest" with the employees subject to the petition so that a unit of just those employees would be inappropriate. A short list that will be expanded to meet an individual employer's situation and methods of operation are  

  • examine your organization to determine which job classifications or departments share skill levels so that they can be combined to make broad identifiable groupings;
  • flatten your management organizing so that more employees report to the same managers;
  • develop incentive plans or productivity measurements that cover the larger groupings;
  • cross train employees in the putative larger unit so that they can move easily across traditional job classifications/departments; and
  •  establish compensation grids and promotional opportunities that are common for all employees in the larger unit.
Clearly, things are going to become more difficult as time goes by as more and more Regional Directors are asked to apply the Board's new rules.  What an employer that wishes to remain union free or, at least, does not want to be paralyzed by the balkanization of its workforce cannot do is ignore the signs of the perfect storm and take action to protect against them.


Labor Board Launches Website Aimed at Non-Union Employees



On June 18, the National Labor Relations Board launched its new website directed at non-union employees.  The website,, is attached and directs readers to the Board’s agency website.  The agency website,, details the employee rights that are protected by the National Labor Relations Act (e.g., the right to belong to and promote union representation) and provides instructions about how to access the Board to obtain redress for employer violations of the law.


The website was originally intended to accompany the Employee Rights poster that the NLRB was set to require employers to post on April 30.  The Employee Rights poster is hung-up in litigation.


Visitors to the website are given eleven examples of instances where non-union employees sought assistance from the Labor Board and achieved reinstatement to employment and damage awards.  The examples all involve instances when the Labor Board was successful in getting discharged employees reinstated to their employment with full back pay or obtained significant settlements (in one case, $900,000) in return for refusing reinstatement.  These examples were as follow:


·                     An employee was discharged for posting on her Facebook page criticisms of her supervisor.


·                     An employee was discharged to keep her from talking to other employees about perceived wage rate unfairness.


·                     Employees were discharged for walking off the job in protest of a change in work rules.


·                     Employees who signed a petition protesting working and living conditions were threatened with deportation and then discharged.


·                     Employees were disciplined for asking to meet with a human resource representative to complain about a supervisor who they had discovered was a registered sex offender.


·                     Employees were discharged for sending a protest letter about a wage cut.


·                     Employee who discussed her wages with another employee was discharged


·                     An employee was discharged for refusing to divulge the names of the authors of an anonymous petition critical of senior management.


·                     Employees who signed a protest letter complaining about a wage cut were fired.


·                     Employees who raised safety concerns were fired.


·                     Employees were discharged for complaining on You Tube about unsafe working conditions.


Presumably, the Labor Board will add new examples with even more captivating fact patterns as they occur.  


Employers have been conditioned to examining each instance of discipline or discharge to ensure that the decision has not been tainted by illegal bias against a member of a protected class.  Employers must now include in that examination whether the decision implicates rights protected by the National Labor Relations Act.  The Labor Board is anxious to find as many examples as possible. 


Untrained managers and supervisors and rules of conduct that, for example, prohibit the disparagement the employer, use of the company logo, or inappropriate conduct risk place their employers at risk of another pin in the Labor Board’s map of malefactors.

Read my new article on the Labor Board's current campaign -- and how far it will go -- to educate non-union employees on their rights under the National Labor Relations Act in the June 15 issue of HREonline. 










































Judge David Norton of the federal district court in South Carolina in a case brought by the South Carolina Chamber of Commerce on Friday, April 13, held that the rule announced by the NLRB in September of last year that employers must post a Notice of Employee Rights under the National Labor Relations Act exceeded the Board’s statutory authority and is, therefore, unlawful.  Judge Norton held:


Based on the statutory scheme, legislative history, history of evolving congressional regulation in the area, and a consideration of other federal labor statutes, the court finds that Congress did not intend to impose a notice-posting obligation on employers, nor did it explicitly or implicitly delegate authority to the Board to regulate employers in this manner.”


In the opinion, the Judge excoriated the Board by noting that:,


“The Board also went seventy-five years without promulgating a notice-posting rule, but it has now decided to flex its newly-discovered rulemaking muscles,”


As noted in my blog last fall when the proposed rule was first published, nothing in the National Labor Relations Act mentions, let alone authorizes the Board to compel employers to post, a notice advertising the protections of the Act for those employees who engage in or contemplate engaging in union activity.  Simply, even the Obama Board cannot ignore the law to further its partisan agenda.


The Board’s action was contrasted to the explicit authority granted by Congress to various other agencies to publish and require notices in non-remedial situations, e.g., employment discrimination, workplace safety.


This decision conflicts with an earlier holding by Judge Amy Berman Jackson of the federal district court of the District of Columba that upheld the Board’s authority to require the posting. 


Unfortunately, it is not entirely clear what the Board or the courts will do now.  The South Carolina decision is just that, a South Carolina decision.  It is possible that the Board may take the position that its effect will not go beyond that court's jurisdiction.  The district court of South Carolina is in the Fourth Circuit (Virginia, West Virginia, Maryland, North Carolina, South Carolina).  Consequently, unless you are in one of those states, the decision may not shield you from the obligation to post the notice by April 30.  However, it is possible that the South Carolina decision will be construed to have a broader application because it appears to enjoin the Board and its General Counsel from doing anything to enforce the rule.  

For now, employers who do not wish to voluntarily post the notice should wait until their obligation, if any, is further clarified or, at least, until after the Board indicates what it believes the application of the South Carolina decision should be.     


Hopefully, the Board will suspend generally the obligation to post the notice, pending the resolution of the discrepancy between the holdings of the District of Columbia and South Carolina district courts and other outstanding issues.  Most certainly, the Board will appeal the South Carolina decision, just as the DC decision has already been appealed.  What it will do or be permitted to do in the meantime is still unclear.


One can hope the Board will again delay the application of the rule to permit time for these issues to be resolved, but prudence suggest that we not depend on the realization of our hopes when it comes to this Labor Board. 

















There is no question that the Camelot Terrace had violated its statutory duty to bargain with the Service Employees International Union (SEIU) in good faith.  Meetings were canceled, agreements were reneged, the number and length of negotiation sessions were limited without good cause, economic proposals were not made, settlements of unfair labor practice charges were violated and other delaying tactics were used over period of more than two years.  Even at trial, the Employer failed or refused to contest most of the charges.  It was not surprising, therefore, that the Board ordered the Employer to reimburse the Union for the time and expense of failed bargaining.  This has been part of the established remedy for such conduct. 


Assessment against the Employer of the Union’s costs and legal fees associated with the bringing, investigation, prosecution and trial of the unfair labor practice charge, however, is a different thing. 


Part of the “inherent powers” of a court established by Article III of the Constitution has been found to be the ability to assess costs and legal fees against a party in outrageous cases.  However, a governmental agency is not an Article III court and only has those powers given to it by its enabling statute. 


There has been no granting of the power to assess litigation costs and fees by the National Labor Relations Act to the National Labor Relations Board.  Nevertheless, the current Board (majority of Pearce and Becker…again, with dissent by Hayes…again) assessed these costs and fees against the Employer in this case, arguing that the Board has an inherent power to fashion appropriate remedies to remedy conduct that has “infected the core” of the bargaining process and that the assessment of costs and fees was necessary in this case to maintain the integrity of their proceedings and manage their affairs.


This is another stretch of authority by an out-of-control Labor Board.  Hopefully, this case will be appealed and a court will take the opportunity to get them under control, at least in this area.  What is “outrageous conduct” is a judgment call that may be tolerably made by a court, but should not be made by political appointees, particularly those who have not been vetted and confirmed by the Senate.

















In what could be a stunning upset of private arbitration agreements, the National Labor Relations Board (“NLRB”) has held that provisions in an arbitration agreement that prevent an arbitrator from considering a group, class or collective action violates the National Labor Relations Act and are unenforceable.


As a condition of employment, D. R. Horton, Inc., a national home builder, required employees to sign an arbitration Agreement by which the employees agreed to submit all employment disputes to final and binding arbitration.  In addition, the Agreement provided that, while the arbitrator would have the right to resolve an individual’s claim, he/she would not have jurisdiction to resolve group, class or collective disputes. 


The limitation on the arbitrator’s authority in the Horton Agreement is a common method by which employers seek to avoid the expensive process of litigating class and collective lawsuits without limiting the ability of the employee to have his/her individual claim or dispute resolved.


Shortly after signing one of these agreements, an employee filed a complaint alleging that he had been misclassified as exempt from overtime under the FLSA.  The complaint also asserted that there were other employees who were similarly situated and that the employee’s claim was in the nature of a nationwide class action.  The Employer, while permitting the employee to submit his individual complaint to an arbitrator, denied the arbitration demand as it related to the class allegations.  The employee filed an unfair labor practice charge with the NLRB, alleging that the limitation in the arbitration Agreement was an unlawful restriction on the employee’s right to engage in concerted activity and that the employer’s refusal to permit the case to proceed as a class action violated his rights under the NLRA. 


The case was heard first by an Administrative Law Judge.  The ALJ found that the Agreement was unlawfully vague in that the employee could believe that his right to submit any statutorily-based complaint to a relevant governmental administrative agency (e.g., EEOC, DOL) was prohibited.  Based on established judicial authority, the ALJ held that the right to file a complaint with a governmental administrative agency charged with the responsibility of administering a particular statute cannot be limited by an arbitration agreement, while the denial of access to a court to resolve a complaint based on an alleged violation of a statutory right may be permissible under the Federal Arbitration Act (“FAA”).  The confusion in the Agreement on that issue made the Agreement invalid.  That’s an established principle and not particularly noteworthy.


With regard to the limitation concerning group, class and collective actions, however, the ALJ found that the protection of concerted action provided by the NLRA was not violated by a private contract that did not impinge on the employee’s right to have the claim resolved by an otherwise lawful arbitration complying with the FAA.  This holding was consistent with a 2006 Memorandum by the General Counsel of the Board addressed to Regional offices as guidance (GC Memo 10-06).


On appeal to the Labor Board, a majority of a three member panel (Board, Chairman Pearce and Member Becker) upheld the ALJ’s decision regarding vagueness but reversed the ALJ on the issue of whether the arbitration Agreement violated the NLRA.  The Agreement’s limitation with regard to class and collective actions, they said, prohibited protected concerted activity.  As a consequence, the Agreement was unenforceable and either must be rescinded or modified to permit class and collective actions.  Member Hayes did not join the majority in the decision.


At its core, the case involved an apparent clash between the FAA that preserves the right of individual contracts to resolve disputes through arbitration and the NLRA that protects employee rights to engage in concerted actions with regard to terms and conditions of their employment. 


On the way to considering the core dispute, the Board said first that, even if the employee had not consulted with any other employee prior to his assertion of the class status of his complaint, the fact that he said that his complaint was on behalf of others as well as himself made his conduct concerted activity and protected by the NLRA.  The resolution of this preliminary issue was, by itself, a caution to employers that, when assessing the risk of any employment decision, regardless of whether the employee is represented by a union or not, the NLRA also must be considered.  While the Board will find that many actions by employees are on behalf of themselves alone and not protected by the NLRA, the Board defines “concerted” activity broadly and will stretch to find many actions that an employer may believe to be purely individual to the employee to be protected concerted activities.


As to the core issue, the Board held that the NLRA’s protection of concerted activity is not a procedural right but a substantive right and, therefore, the limitation on an arbitrator regarding class actions wais a waiver of a substantive right.  Since the intent of the FAA was to leave substantive rights undisturbed, the FAA would not be violated by the Board’s protection of the right to exercise a substantive right (in this case engaging in concerted activity).  Consequently, enforcement of the NLRA does not conflict with the FAA.  Besides, they said, the NLRA was passed after the FAA and contained a repealer of all inconsistent prior laws.  Therefore, conflicts between the two statutes have to be resolved in favor of the NLRA.


The subtlety in this case is that, while an employee’s access to a governmental agency statutorily charged with the responsibility of administering a particular law, such as the EEOC or DOL, cannot be taken away and replaced by arbitration, arbitration can replace adjudication of the substantive claim by a court where an arbitrator has the same rights and powers of a court to determine the merits of the claim and to fashion an appropriate remedy.  Here, however, while the arbitrator had the right to decide and remedy the claim of the individual, the arbitrator could not decide the claims of others that were brought on their behalf.  It was this right to state claims on behalf of others, that the Board said was a substantive right protected by the NLRA. 


This case is most certainly going to be appealed and the last word on the issue will be a court’s, perhaps even the Supreme Court’s.  In the meantime, however, employers who seek to limit their expense and risk of class and cooperative actions by foreclosing those kinds of cases from arbitration and restricting proceedings to individual matters need to be aware that the Labor Board would consider such limitations to violate the NLRA.  The conservative remedy would be to permit class and cooperative actions to be litigated in arbitration, at least until the issue is finally resolved by a court. 


Again, a decision of the Labor Board is having a direct and significant effect on non-union employers and there appears to be no let-up in the Board’s campaign to inject the NLRA into all aspects of all workplaces.  Employers considering employment decisions who limit their risk assessments to Title VII, the ADEA, the ADA, the FLSA and the state equivalents are dangerously short-sighted.  The current Labor Board is making it clear in case after case that the NLRA will be applied to all workplace decisions without regard to whether the workforce is represented by a union or not.




The impact of the NLRA on non-union workplaces will be discussed in greater detail and depth in my webinar on February 21.  To register for the webinar follow this link:  NLRB Rules for Non-Union Employers.












































In the waning days of Member Becker’s term on the National Labor Relations Board, the Board majority decided a case based on the underlying proposition that unions and employers are to be held to different standards when assessing the legality of pre-election literature and tactics. Enterprise Leasing Company and Teamsters Local 391, December 29, 2011.  


Teamsters Local 391 was seeking to represent the employees of an Enterprise Leasing operation.  A union supporter took a photograph of another employee with seven other employees of Enterprise in a nearby food court.  Subsequently, the photograph was printed on a flyer surrounding the words “Yes. Everybody can make the right choice?”  The other side of the flyer said the employees should vote for the Union to be their voice for better pay, better benefits and better treatment.”  


After losing the election, 44 to 41, with two challenged ballots, Enterprise filed an objection which alleged that one of the employees in the photograph had not agreed to permit his picture to be used on the union flyer and, therefore, there was a misperception created that the Union had the support of the employee and that the employee had been unlawfully subjected to coercion by being publically identified as a union supporter.  This, the employer asserted, was enough to warrant a new election, especially in light of the closeness of the vote.  


In finding that the flyer, at most, implied that the Union had the employee’s permission to use the photograph, a majority of the Board majority consisting of Chairman Pearce and Member Becker held that the other employees could easily recognize the flyer as campaign propaganda and, therefore, the election process had not been tainted.  The employer was not entitled to a rerun election. Citing a 2001 case that was enforced by the Third Circuit Court of Appeals, Allegheny Ludlum, Member Hayes, in his dissent, argued that the established rule that an employer cannot use the image of an employee in campaign material without the employee’s consent should be applied equally to the union in this case.  Elemental fairness, he reasoned, required the equal application of the rule to both the employer and union. In response, the majority cited a 1969 Fifth Circuit Court of Appeals decision in which the court wrote: “An employer in an unorganized plant, with his almost absolute control over employment, wages, and working conditions, occupies a totally different position in a representation contest than a union, which is merely an outsider seeking entrance to the plant.”  


So, for this Labor Board, there are two standards.  Because one of the objectives of the National Labor Relations Act is to equalize power in the workplace and to achieve this objective of the law, according to the current majority, one side should be permitted to spread misperceptions of support and coerce employees while the other should not.  Machiavelli cheers.  


The lesson: Do what you can keep a union from gaining sufficient support to compel a representation election in the first place by having a well-crafted union-free strategy with specifically designed policies and training.  If a union gets the support necessary to have an election, this Labor Board will not judge the pre-election campaign conduct of an employer and a union by the same rules, to the disadvantage of the employer. 


















The good news is that the National Labor Relations Board has postponed the date by which employers must post an Employee Rights Under the NLRA poster from January 15 to April 30.  Of course, the postponement was at the request of the federal judge hearing the complaint brought by various employer groups to have the posting enjoined completely.


The bad news is that Obama continues to take an extreme pro-labor position when it comes to the membership of the NLRB.  The Constitution requires that presidential appointments to the NLRB must be confirmed by the Senate.  A president may by-pass the process by appointing the nominee to the position for a term that must expire at the end of the next Senate session.  A president usually does this when he believes that his nominee will not be able to garner the approval of the 60 votes necessary to end a filibuster.


Last Spring, Obama, unable to get his appointment of Craig Becker through the Senate, used the recess-appointment process made him a Board member which would have an expiration date of the adjournment of the Senate at the end of the calendar year.  Becker was the first appointee to the NLRB in history who came directly from an in-house position with a labor union, in this case the Service Employees International Union.  At about that time, the President’s nomination of Mark Pearce (D) and Brian Hayes (R) were confirmed.


With a three to one majority of pro-labor members on the Board, the NLRB has issued rules, proposed rules and made decisions that have helped union organizing and increased the power of labor unions.  With the expiration of Chairman Liebman’s (D) term in August and the expiration of Becker’s recess appointment at the end of the calendar year, the Board was left with only two members and, due to a 2010 decision by the U.S. Supreme Court, the Board became unable to decide cases or issue new rules.


On December 14, 2011, Obama announced his intent to nominate Sharon Block and Richard Griffin to the Board.  On December 19, 2011, all 47 Senate Republicans sent a letter to the President asking him not to make Block and Griffin recess appointments because to do so would violate the long history of appointments being negotiated between the Administration and the Senate to come up with individuals at least palatable to both parties.  On December 19, 2011, 11 Republican Senators also wrote Obama asking that he withdraw the nomination of acting General Counsel of the NLRB,Lafe Soloman, to the full position of General Counsel. 


On January 4, 2012, Obama officially ignored the Senate Republicans and made recess appointments of both Block and Griffin (along with Terence Flynn (R)).  If the appointments hold, the Board will be at full strength with two Republican (presumably pro-business) and three Democratic (presumably pro-labor) members.


Both Block and Griffin can be expected to pick up right where Leibman and Becker left off since they are of the same philosophical cloth.  Block came from the Department of Labor where she had been the Deputy Assistant Secretary for Congressional Affairs.  Prior to that, Block had been the Senior Labor and Employment Counsel for the Senate HELP Committee where she worked for the late Senator Edward Kennedy.  Reports have been circulating  that Block was the center of the current proposal by the DOL to severely restrict the definition of “advice” for the purposes of required reporting to the DOL of union prevention activities.  Under the proposed rule change, virtually every non-employee, including attorneys, who provides assistance to a company to preserve its union-free workforce would have to report all financial payments and arrangements for those activities to the DOL for publication on the DOL website.  In the words of Secretary of Labor Hilda Solis, “she will be sorely missed” by the Department of Labor.  Solis supported the Employee Free Choice Act and is one of the most vocal advocates in government for organized labor.


Griffin is the second person to be placed on the NLRB directly from a labor union (Becker being the first).  Griffin was the General Counsel for the International Union of Operating Engineers (IUOE).  Since 1994, he also has been on the board of directors for the AFL-CIO Lawyers Coordinating Committee. 


Actions have already been filed to block these recess appointments, as well as that for the head of the Consumer Financial Protection Bureau.  The challenges have been on the basis that the Senate technically has not gone into recess, because every three days since Christmas a senator has appeared in the chamber to gavel a session into order and, with no business to conduct, within a minute, gavels the session closed.  Technically, the filings assert, because the Senate is not in recess, no recess appointments can be made. 


Of course, if the suits are successful and the appointments are held to be invalid because the Senate is not in recess, will Craig Becker still be a member?


Stay tuned.


At a minimum, businesses cannot expect any relief from the barrage of pro-union actions and decisions by the NLRB, particularly those that assist unions in their organizing efforts.  Since one of the changes that has already occurred may cut the time between a petition and election by as much as half, employers who wish to remain union-free must continue to hone and implement their Rapid Response Plans






























As predicted in my blog on Tuesday, a majority of the current Board (Chairman Pearce and Member Becker) adopted the Chairman's proposed changes to the rules governing elections without change.  Also as predicted, Member Hayes voted against the Proposal.  Consequently, the details of the proposed changes contained in Tuesday's blog continue to be accurate.

Significantly, only the Proposal was adopted and a draft of the new rules has not yet been published and no implementation date has been set. 

Something to watch in the draft of the new rules and future Board conduct is what the Board will do with the elimination of the 25 day wait between the direction of an election and the election.  The Proposal stated that the reason for the existing rule requiring the waiting period was to permit parties whose positions on issues raised in the representation hearing sufficient time to file petitions for review.  Since the Board was moving the resolution of almost all contested issues to post-election hearings, the purpose of the existing rule had been obviated.  Under the changes, pre-election Board reviews would be limited to extraordinary cases only involving whether a legitimate question of representation had been raised by the union's petition.

The devil is always in the details.  If the removal of the mandatory waiting period is used by the Regions to order quicky elections, the announced rationale for the change will have been a smoke-screen to hide the accomplishment of one of the Board majority's and organized labor's principal objectives, shortening the time between a petition and an election to limit or eliminate the ability of unprepared employers to mount effective counter-campaigns. 

The first evidence that we may see of whether the real motive for the removal of the waiting period following the direction of an election is to bring in quicky elections will likely be an internal change in instructions to Regional Directors, reducing the outside date by when elections should be scheduled from the current 42 days.

Reasonable business prudence dictates that employers should anticipate the possibility of quicky elections and not be caught unprepared to take immediate and effective action to combat organizing attempts. 






On June 22, the National Labor Relations Board published a Notice of Proposed Rulemaking as the first step in its massive overhaul of election procedures.  This overhaul was obviously calculated to advantage organized labor’s organizing and disadvantage employers who wish to remain union free.


Between June 22 and August 22, the Board received over 65,000 comments and heard testimony from 65 witnesses, many, if not most, objecting to the proposed rule changes.


On August 23, then Chairman of the Board, Wilma Liebman’s term expired, leaving the Board with only three members, Democrats Becker and Pearce and Republican Hayes.  At the end of the current legislative session, Becker, a recess appointment, will have his term expire.  Upon the expiration of Becker’s term, the Board will lose the quorum (three) required for decisions and other official actions.  In short, the Board will be out of business.


Two weeks ago, the Board gave notice that it would issue a modified set of new rules governing election procedures on November 30, to beat the deadline before it loses its ability to act due to a loss of quorum. 


Hayes threatened to resign before November 30, claiming that the contemplated action was without his knowledge or participation in the process of determining what the new rules would be.  His resignation would deny the Board the legal ability to adopt the new rules because it would cease to have the necessary quorum.


Today the Chairman of the Board, Pearce, released the details of the rule changes that will be presented for final adoption tomorrow.  Hayes has not resigned and, in light of the lateness of the hour, it is unlikely that he will resign.  Consequently, the Board will have a quorum and the proposed rule changes in the Chairman’s Resolution will become final with Pearce and Becker passing them over the expected dissent by Hayes. 


In short, they rule changes that will be made final tomorrow are of only minor moment, especially when compared to what Becker, Pearce (and previously Liebman) and organized labor really wanted.  It appears that Becker and Pearce blinked in the face of Hayes’s threatened resignation and have deleted almost all of the most controversial changes that were proposed in June. 


The new rules will:


1.   Give the Board’s hearing officer the authority to limit evidence introduced at a representation hearing only to what the officer believes is material to whether a question of representation exists.  Issues ancillary to that question, such as those having to do with supervisory status or other questions challenging the eligibility of some employees to vote may not be permitted and certainly will not be allowed to delay the process.


2.   Give the hearing officer the authority to deny requests to file a brief on an issue raised at a representation hearing where the officer believes that a brief is not necessary to assist in making a decision on whether a question of representation exists.


3.   Delay the review of issues that are excluded by the hearing officer at a representation hearing until the post-election hearing, when, presumably, most would have been rendered moot by the election.


4.   Delete from the existing Rules the provision that provides for additional time between a representation hearing and an election to permit petitions to the Board to review decisions by the hearing officer.


5.   Permit appeals to the Board from decisions made at a representation hearing only in extraordinary situations where the appeal would otherwise evade review.


6.   Give the Board discretion to hear appeals in representation cases, regardless of whether the decision from which the appeal is taken is pre or post-election.


Not included in the rule changes to be finalized tomorrow (November 30) are the most controversial changes proposed on June 22:


·                     Electronic filing of petitions


·                     Requirement that representation hearings must be held within 7 days from the date of the notice of the hearing


·                     Requirement of a position statement at the outset of a hearing


·                     Preclusion of issues for trial post-election that were not included in the position statement filed at the representation hearing


·                     Inclusion of email addresses and phone numbers on voter lists


·                     Reduction in time for providing the voter list to the union from the current 7 work days to 2 work days



Chairman Pearce emphasized in his press release today, however, that the additional changes are still on the table and “remain under consideration by the Board for possible future action.”  Stay tuned. 


While the Board can be criticized for making decisions that do not reflect the real world, this much we now know – they have learned the definition of “hard bargaining,” thanks to Brian Hayes.


Even though the threat of the Board using its rule-making authority to tilt the field favorably in the direction of organized labor apparently has subsided for the time-being, we should be keeping a wary eye on Lafe Solomon, the General Counsel, and other actions the Board may take that do not rise to the level of formal rulemaking.  For example, the current guideline for Regional directors that elections must be held within 42 days from the date of a petition, absence extraordinary circumstances, is not part of any formal rule.  It is a guideline that can be changed without a lengthy hearing or comment process. 


Because of the continuing threat that the Board, either through its members or General Counsel, will take some action that will prejudice the ability of employers to combat union organizing, employers who wish to remain union-free should be doing those things now that are designed to neutralize and combat any appeal that a union may have to its employees.
































Nichole Wright-Gore, a supply clerk in a non-union nursing home, had a bad hair day.  To hide her embarrassment, she wore a hat.  An executive of the nursing home told her that wearing a hat in the workplace violated the company’s dress code and she was told to take off the hat or go home.  She went home rather than suffer the embarrassment of having other employees see her bad hair. 

The following day, Wright-Gore returned to work, again wearing a hat.  Presumably, she thought that the fact that employees were invited to wear Halloween costumes that day would give her greater latitude.  Again, she was told to remove the hat.  As she took off the hat, she complained that the company was unevenly enforced its dress code.  Her complaint generated a written warning for insubordination.

Over the next two weeks, Wright-Gore talked to other employees about her bad hair days and the disparate enforcement of the dress code.  The other employees “generally” agreed and sympathized with her.  She also used her cell phone to take pictures of other employees who appeared to be out of compliance with the dress code.  As she talked to other employees about her alleged mistreatment, she showed the pictures as “proof” of the validity of her complaint.  When one employee complained to his manager that Wright-Gore had taken his photograph without his consent and had shown it to other employees, Wright-Gore was fired for taking photographs inside the nursing home in violation of the facility’s no photograph rule.

Wright-Gore filed an unfair labor practice charge, alleging that her discharge violated the National Labor Relations Act.  Her charge asserted that her taking of photographs was protected as “concerted activity” in protest of a work rule.  The Board filed a complaint against the nursing home and an Administrative Law judge of the Board agreed with the Board.  The nursing home was ordered to reinstate Wright-Gore with full back pay. 

The employer appealed the case to the full Board, which, expectedly, affirmed the ALJ.  The employer then filed an appeal with the Federal Court of Appeals for the Fourth Circuit.  Both before the Board and in its appeal to the Court, the employer argued that the employee was motivated solely by self-interest and had been engaged in a personal, rather than group, campaign.  Therefore, contended the employer, Wright-Gore was not engaged in concerted activity protected by the National Labor Relations Act. 

In an unpublished opinion filed on October 28, 2011 (NLRB v. White Oak Manor, 4th Cir. No. 10-2122), the Court affirmed the Board’s decision and ordered Wright-Gore reinstated to her job and made whole for any losses due to her discharge.  In deciding the case, the Court agreed with the Board that, when the employee sought the support of co-workers, her conduct went beyond her self-interest and became protected by the law.  The fact that she was not asked by the employees to be a spokesman on their behalf was not fatal to her claim.  Further, the fact that she was not fired for violating the dress code but for violating the rule against taking photographs was not a sufficient defense because there was evidence that other employees had taken, posted and circulated photographs taken within the facility in the past without being disciplined and the taking of photographs was part of a related sequence of events. 

The employee’s personal protest involving the disparate enforcement of the dress code, of which the violation of the no-photograph rule was a part, had morphed into concerted activity protected by the National Labor Relations Act. 

There are several lessons to be learned from this case:

  • A Court on review will give significant deference to the Board’s interpretation of the law.  As a consequence, goofy Board decisions may survive judicial review.
  • The employee’s complaint about the dress code began as something very personal, but the mere fact that the employee sought emotional support from other employees was sufficient for the Board to conclude that the employee was engaged in concerted activity.  That’s the goofy part.
  • Once protected conduct is found, the Board will find subsequent related but different events to be protected as well.  Here, the employee was discharged for violating a rule that was different from the rule she was protesting because the violation of the no-photograph rule was linked to the events about which the employee was protesting. 

What is “common” about this case is that the failure to enforce a rule consistently always raises the question of “why in this case?” 

This question is at the heart of many complaints brought under many laws, including Title VII, state civil rights laws and, as here, the federal labor law.  Employers must account for inconsistencies in enforcement of rules at the time the rule is enforced if the inconsistencies are not to be the basis for subsequent liability. 

When deciding issues of discipline and discharge particularly, employers can no longer restrict their analyses to protections afforded under the civil rights laws.  Now, the investigations must include whether the employee’s conduct may be protected concerted activity under the National Labor Relations Act.

What is not “common” about this case is the a frighteningly broad definition given by the Board to what constitutes protected concerted activity.  While employers may assume that courts will ultimately bring reason into play and correct the Board’s excesses, the assumption is often wrong because courts will give the Board’s interpretations of the Act, even the goofy ones, great deference on appeal. 





Governor Jerry Brown assured California’s position as one of the most regulated states for employers by signing 22 new employment laws earlier this month.  Most of the laws will take effect on January 1, 2012.  Some of the more significant of these new laws:


·                     Require that all new hires must be given a statement by the employer of their rate of pay, allowances that will be taken as part of the minimum wage (if any), the pay day, the name and address and telephone number of the employer and the name and contact information for the company’s workers’ compensation carrier.  In addition, employers will be required to notify existing employees of any change to any of the information within seven days of the effective date of the change.


·                     Prohibit credit checks on applicants for employment unless the job for which they are applying is within specified categories, largely either required by some other law or within a position of trust.


·                     Redefine “gender” for purposes of California’s discrimination laws to include gender identity and gender expression.


·                     Make it unlawful for any individual to prevent or attempt to prevent the exercise of rights under the California Family Rights Act.


·                     Enhances penalties for the denial of insurance coverage to same-sex domestic partners if the coverage would have been provided to spouses in different-sex unions.


·                     Requires paid leave for employees who become organ donors (30 days per year) and for employees who become bone marrow donors (5 days per year).


None of the new laws adds as many complexities or will have as significant an effect as S.B. 459, however.  This new law creates civil penalties of $5,000 to $15,000 per violation if a court or the California state enforcement agency concludes that an employer doing business in California has misclassified employees as independent contractors.  If the finding is that the employer engaged in a pattern or practice of willfully misclassifying employees, the penalties increase to as much as $25,000 per violation.


In addition to the financial penalties, the law would require employers who are found to have misclassified workers to do the functional equivalent of a “perp walk-” posting on the company’s website (or, if the company has no website, by written notice to employees and the public) a notice that the employer had been found to have “committed a serious violation of the law.


Employers in every state have been struggling with understanding the definition of an independent contractor.  Using independent contractors is substantially less expensive than having employees do the work.  With employees come taxes, workers compensation, overtime wages, retirement plans and health/disability insurance.  All of these can be avoided by using independent contracts.  As a bonus, employers have less emotional attachment to independent contractors, making a reduction force less costly, both financially and emotionally. 


Misclassifying an employee as an independent contractor, however, results in huge liability which not only will wipe out all cost savings but also result in penalties.  Complicating the decisional process is that various government agencies, both state and federal, use different tests to determine whether a worker is an independent contractor or employee.  Some agencies and courts have gone to the three factor test, while others continue to hang on to the IRS’s list of 22 factors. 


California, in its new law, had the opportunity to bring some clarity to the issue, at least in that state.  Unfortunately, the new statutory definition succeeds only to muddy the already opaque water by being not only imprecise but circular:  willful misclassification “means avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.”  Well, duh.


The best the California’s Division of Labor Standards Enforcement can do is say that the term “independent contractor” has no set definition and that the determination requires an examination of court decisions and guidelines from regulatory agencies.


Employers everywhere, not just in California, must be very careful when making a decision to classify a worker as an independent contractor because the stakes are so high and getting higher.  The slake of class actions alleging violations of the wage and hour law now popular among plaintiff’s lawyers is spreading full force into the area of misclassification of workers. 


Nowhere is the danger of private class, cooperative and representative lawsuits more extreme than in California because of that state’s Private Attorney Generals Act of 2004.  Under that law, private citizens (“bounty hunters”) may obtain 25% of the penalties assessed by the state agency for raising labor code violations.  As passed, S.B. 459 does not authorize private causes of action and it is not clearly covered by the Private Attorney Generals Act of 2004.  However, the failure to include the misclassification of workers as one of the labor code violations subject to the Private Attorneys General Act of 2004 may have been a legislative oversight, which may soon be corrected either by the legislature itself or the courts.  Without question, there will be plaintiffs’ lawyers who will try. 


Also unknown is the probative effect of an employer’s entry into the current IRS voluntary settlement program.  Under that relatively new program, an employer with workers which it suspects may be misclassified can avoid a significant part of the potential IRS back tax liability by agreeing to cure the difficulties and paying a small portion of the tax due.  The new California law does not carve out special treatment for these employers and, as a result, plaintiff’s lawyers may attempt to use that voluntary act as, at least, an implied admission, if not a roadmap to an easy payday.


The California legislature also made it more difficult for employers to avoid liability for willful violations by asserting that they relied on the advice of an outside “expert.”  Indeed, finding an expert in California willing to take the risk of providing such advice may be difficult.  Under S.B. 459, anyone who is paid for an opinion that an individual is an independent contractor for the purpose of avoiding the costs attached to employment may be jointly and severally liable for the penalties assessed if the Division of Labor Standards Enforcement or a court concludes that the individuals were misclassified. 


California has just become less friendly to employers…even more less friendly. 





The Board issued a press release today that its Notice of Employee Rights is now available at 

The poster must be placed on a bulletin board with the other government-mandated posters or posted on an electronic bulletin board, if that is the way the employer communicates policies to its employees.  The posting must occur on or before November 14, 2011.  If 20% or more of the employee population communicates in a language other than English, the employer is required to post the notice in that other language.  If the Board does not have a poster in the other language, the employer may post a notice only in English until the Board creates one in the other language.  Government contractors that have been posting the DOL notice of Employee Rights directed by Executive Order do not have to post both the DOL and nlrb posters.  One or the other will suffice.  A failure/refusal to post the poster may result in a delay in the running of the statute of limitations for the filing of unfair labor practices, a finding of the commission of an unfair labor practice and/or a presumption of unlawful union animus.

Those are the bare facts and the bare minimum of what must be done, assuming that the current lawsuit by the NAM requesting that the posting be enjoined is unsuccessful. 

The posting of the Employee Rights poster may be ignored by your employees, as they probably ignore the other government-mandated posters.

However, in part because of its newness and in part because of buzz, employees may not ignore it and employers may expect questions and discussion in the workplace around the issue of unions and union representation.  Some employers fear that the poster will promote unionization.

If the latter possibilities are of concern, you should do the following:

·                     Prior to posting, provide it to your supervisors and train them concerning what it is, what it means and what to say to employees who express interest in the possibility of organizing into a union.

·                     At the time of posting, create and publish in your handbook or other similar cache of policies a statement of why you wish to remain union free and why a union is not necessary in your workplace.  Of course, such a statement will require you to define your position on each of the relevant issues and enumerate the policies you have that make a union unnecessary.  In addition to the union-free statement, I recommend a short description of what a union authorization card is and means to give you a leg up in the event of organizing.


I have recently been asked whether an employer should post next to the NLRB Poster or otherwise distribute a memo which more fully explains employee rights not to engage in union activity, contains a discussion about what a union can and cannot do and states the value of remaining union free.  While this is appealing, it would be risky.

Currently, there are only two types of NLRB notices: notice of an upcoming election and a notice of employee rights and employer requirements following the settlement or adjudication of an unfair labor practice charge (remedial notices).  Since the mid-sixties, the NLRB has taken the position that any memorandum or other communication that attempts to explain or expand upon one of their remedial notices violates the law.  Whether the Board will take the same position with regard to explanatory memos relating to the Employee Rights poster is unknown.  Until that issue is resolved at someone else’s expense, I think it is too risky.  

A better course of action would be to ensure that your union-free systems are well designed and operating as intended.  Most of all, your supervisors need to know what to say when an employee asks, at a time they least expect it, “do you think we should have a union?”  If you are not sure that your supervisors will respond positively and effectively, without violating the law, you need to consider doing now whatever may be necessary to cure the deficiency.

One would like to think that employees will pay no more attention to the Employee Rights poster than any other government-mandated poster.  Each workplace has its own personality and that may occur in many places.  Waiting to do something until you know just how your employees will react to the posting, however, may put you behind the curve.  Union activity may have already taken hold. 


DOL and NLRB Propose Rule Changes to Silence Employers and Help Unions Organize Workers



In a run-up to the 2012 election, organized labor will be pleased by two proposed rule changes, one by the Office of Labor-Management Standards of Department of Labor (OLMS)and one by the National Labor Relations Board, that will aid Unions in their organizing activities. 


OLMS proposes to narrow the advice exception to Section 203, LMRDA.


In 1959, Congress passed the Labor-Management Reporting and Disclosure Act (“LMRDA”).  Section 203(a) of the LMRDA requires employers to disclose in a public report filed with the OLMS any agreements or arrangements they may have with a labor relations consultant/lawyer to provide services that seek to directly or indirectly persuade workers in connection with a representation election or with regard, generally, to union organizing or bargaining.  Section 203(b) places a similar requirement on the consultant/lawyer.  Section 203(c), however, carves out an exception to the reporting obligation where the services rendered to the employer are for giving or agreeing to give “advice” to the employer regarding employee/employer rights with respect to union organizing or bargaining.


The extent and meaning of the advice exception has been hotly debated since the Acts passage.  Currently, and since 1962, OLMS’s interpretation and application of the exception has settled in to be that the only consultant/lawyer agreements and activities that have to be reported are those that involve direct contact with the employees…so-called “direct persuader” activities.  Advising an employer about union prevention and the engineering of a pre-election campaign, including the preparation of materials for use by the employer, are considered to be within the advice exception and not reportable, so long as the consultant/lawyer did not have direct contact with the employees and the employer had the right to accept or reject what the consultant/lawyer prepared.


It is this currently settled interpretation of the advice exception that OLMS seeks to change.  Under the proposed rule, any agreement with any consultant/lawyer for activities that include actions, conduct or communications on behalf of an employer that would directly or indirectly persuade workers concerning the employees’ rights to organize and bargain, regardless of whether or not the consultant/lawyer has direct contact with the employees or the employer has the right to reject the materials and activities provided by the consultant/lawyer, must be reported to the OLMS within 30 days from the date of the agreement.  The reports would be in the public domain and available on the OLMS’s website. 


OLMS, in a 160 page tirade against employers who seek to remain union-free, cites to numerous union-sponsored and academic studies that detail employer abuses as justification for the draconian narrowing of the advice exception it is proposing.  The premise underlying the entire report is the myopic view of organized labor that any effort by an employer through the use of external advice to remain union-free is an “interference” with the right of employees to engage in union or other concerted activity.  In reading the report, I was unable to find any recognition that many consultants/lawyers assist employers to create workplaces that are good places to work where employees feel no need for third party representation.  Further, I was unable to find any recognition that one of the services provided by the consultants/lawyers is to educate employees regarding what unions are, what unions can do and what unions cannot do as a counter weight to the propaganda and misstatements by union organizers. 


One of the most alarming aspects of the proposed expanded reporting requirement is that its application is not limited to consultants/lawyers who plan or orchestrate a campaign in response to active union organizing.  As is clear from the explanation, even such things as the cost of union-free training seminars, the development of personnel policies, and design of personnel systems at times when there is no active union organizing would be reportable as programs to avoid union organizing.  Only specific advice with regard to whether an identifiable course of conduct or employer-drafted policy/system comports with the law would be within the exception to the reporting rule.  The preparation of any document or speech intended in any form to be given to employees, together with the fees charged for such service or product, would have to be reported by both the employer and the consultant/lawyer, identifying each other. 


The Department of Labor OLMS takes particular aim at lawyers who engage in activities calculated to increase employee resistance to unions and specifically rejects the notion that an attorney’s business relationship with a client, as well as the identity of the attorney’s clients, is not covered by the attorney-client privilege. 


The stated justification for the need to change the OLMS’s interpretation of the statute is that the amount paid by an employer in union prevention activities and the source of the advice purchased by the employer will assist employees to assess the credibility/sincerity of the information, policy, or system and will enable the employees to make better and more informed decisions about union representation. 


If the proposed rule becomes a reality, unions will be able to publicize to the employees and the public any union avoidance efforts that an employer may undertake with the advice of a consultant/lawyer, the identity of both the employer and consultant/lawyer, and the amounts paid to the consultant/lawyer for his/her services in an effort to impugn the employer’s, the system’s and the material’s credibility.  Further, unions will be able to identify which consultant/lawyers are being used by which employers and seek, through publicity attacks, to interfere with what both the employer and the consultant/lawyer are seeking to accomplish.  By identifying the clients of specific consultant/lawyers, unions may launch negative campaigns against employers who use them for no better reason than that the consultant/lawyer has been effective and should be “shut down.”  By tracking the activities of specific consultant/lawyers, unions will gain information regarding employers that are engaged in activities that seek to neutralize the appeal of union representation.  Being thus “branded” as a “union-busting” employer, employers can be intimidated into ceasing such efforts and exposing their workforces to unopposed union organizing.


Of particular note is OLMS’s estimated cost of their proposed revision of the rule.  Currently, 191 employers file reports.  This number is estimated to swell to 2,601 employers.  930 consultants/lawyers file reports.  This number is estimated to become 3,414.  The time for completing the new and more involved report is estimated for employers to increase from 22 minutes to one hour and for consultants/lawyers from 35 minutes to 2 hours.  The cost to all employers is estimated to grow from $24,378 to $825,866.  Most staggering, however, is the increased cost to the government.  Currently, the Office of Labor-Management Standards spends about $6.5 million administering the collection and dissemination of all forms, including those filed by unions.  The cost of the new regulation for just the collection and dissemination of employer and consultant/lawyer forms is $185,719,212 due primarily to an increase in employee hours 4,420,458 hours, an FTE of 2,125 employees!

A failure to file the required reports carries criminal penalties and may subject the employer to civil enforcement.

A payback that keeps paying.


Public comments can be filed with the OLMS online at by August 22, 2011.



NLRB proposes rule to “streamline” and shorten union representation process:


On June 21, 2011, the majority of the National Labor Relations Board (Member Brian Hayes dissented) proposed what were termed “reforms” to the Board processes that are used to determine through a secret ballot election whether employees wish to be represented by a union.  The proposed reforms are intended to reduce “unnecessary” litigation, streamline procedures and facilitate efficiency by the wider use of electronic communications and filings.  What these reforms actually do is shorten the time between the filing of a petition for an election and the hearing to determine if an election should be held, increase the amount of information about the employees that an employer must give a petitioning union, shorten the time by which the employer must provide the information, limit the ability of employers to have issues resolved prior to the election and restrict access to the Board to review the issues decided prior to and after the election.


Electronic filings and transmittal of documents:  While we have found the practice of accepting documents electronically varies by Regions, the Board make the electronic acceptance of notices and documents, such as voter lists, to be standard at all Regions.  The most significant change here is with the filing of petitions and other notices.  Currently, petitions from unions seeking representation rights cannot be transmitted and filed electronically, although faxes may be used to send new petitions to employers.  Also, notices of hearings, both pre and post election, can be sent to the parties electronically.  Compelling electronic communications, the Board argues, will speed the process. 


Time for initial hearing on the election petition is shortened dramatically:  Currently, the initial hearing concerning the petition must be conducted within 12 days from the date of the service of the petition, absent highly unusual circumstances.  The proposal is to reduce that time period to 7 days (5 business days, assuming no holidays).  This shortening of the time to have the initial hearing is significant because of the importance of the issues that may be raised and resolved in that forum.  The union’s petition will identify the unit of employees it wishes to represent.  The employer may believe that the requested unit is inappropriate.  At the hearing, the employer must put on the record for decision of the Regional Director the reasons why it believes the requested unit is inappropriate and the evidence that supports that position.  The description of the employee unit may spell the difference between winning or losing an election.  In the time between the petition and hearing, therefore, the employer must decide whether the requested unit is appropriate for bargaining, whether the correct employees are included or excluded from the requested unit, assemble the evidence to support its various positions and prepare exhibits and witnesses for litigation.  If, at the time of the receipt of the petition, an employer has yet to identify its lawyer or other representative for the hearing, the time to define the issues and positions and trial strategy may be so short that the employer may find it impossible to advance its legitimate positions effectively at the hearing.  For the unsuspecting, unprepared and untutored employer, the short time between receipt of a petition and the establishment of when critical issues are resolved and an election date is set will probably mean that the employer will not have an effective voice and the process will be driven almost exclusively by the Board and the union.  This is not surprising since Board Member Becker is already on the record saying that he does not believe an employer has any place at the table when the definition of the voting group and date and time of the election are decided. 



Date specified for post-election hearing:  As noted later, the Board is pushing as many issues that require resolution, particularly the identity of eligible voters and determination of who is who is not a supervisor, to after the election is over.  While objections and challenged ballots are now handled routinely post election, it is noteworthy that objections need not be filed for seven calendar days after the election.  Hearings on the objections are often delayed for weeks to permit the Board to investigate the charges and the parties prepare for the hearing.  The Board proposes to require post-election hearings on all unresolved issues, including challenged ballots and objections to the conduct of the election, within fourteen days after the election, significantly hindering an employer’s ability to do investigations, discover evidence and prepare witnesses to testify.


Creation of a “statement of position form:”  The proposed rule would require both the union and the employer to file with the Board a written statement of their positions on issues that may be in dispute, presumably appropriateness of target unit, who is and who is not a supervisor, voter eligibility and date/time/place of an election.  This statement of positions must be filed with the Board no later than the start of the hearing, prior to the presentation of any evidence.  The failure to raise an issue in the statement of position would, in all likelihood, preclude the employer from raising it earlier or, at least, prejudice the employer in raising the issue after the election.


Delay of voter eligibility issues to post-election determination:  At the initial hearing, employers currently will seek to have issues of voter eligibility resolved, particularly those concerning the supervisory status of questionable classifications of workers, such as leads and head nurses.  Whether an individual is or is not a supervisor is critical to an employer at the outset of a campaign because the employer needs to know how to converse with and treat the individuals.  If the workers are employees under the law, there are significant restrictions in what and how things can be said to or asked of them.  If supervisors are not employees under the law, these restrictions do not exist.  The wrong choice by an employer and treatment of an employee as if he/she were a supervisor may invalidate an election that had been won.  Further, dealing with workers as supervisors may result in their not voting and the loss of “No” votes.  Under the new rule, questions of voter eligibility involving 20% or fewer of the proposed unit would be deferred until after the election and then in the context of challenged ballots.  Ballots not cast, of course, cannot be challenged.  By doing this, the Board places on the employer the greatest risk.  Employers faced with this risk often choose not to treat any of the individuals at issue as supervisors, thereby hampering the employer’s ability to campaign effectively.


Requests for review of Regional Director decisions:  Currently, if a Regional Director makes a decision at the initial hearing, for example a decision about the appropriateness of a unit for voting, the employer may appeal to the Board for a review.  Typically, an election will be delayed for a short time to permit the Board to rule on the appeal, even though an election date is set.  Under the proposed rule, all requests for review of Regional Director decisions would have to be delayed until post-election proceedings.  Consequently, employers will be denied certainty on important issues before employees vote on the question of representation. 


Board will have discretion not to review post-election decisions:  Not only would employers be required to wait until after an election to have Regional Director decisions reviewed, under the proposed rule the Board will have the discretion to refuse to review all pre and post election decisions by a Regional Director, effectively denying employers recourse to a review on the merits and leaving the only method of challenge to the expensive unfair labor practice process following a refusal to bargain.


The Excelsior List must include employee phone numbers and, when available, email addresses and must be supplied electronically within two days:  Currently, employers are obligated to provide to the Regional Office within seven days from the date of the direction of an election (or stipulation for a consent election) a list of employees in the proposed unit with their mailing addresses.  This list is then communicated by the Board to the union to enable the union to contact employees in their homes.  The proposed rule will not only require the employer to include in the list the employees’ telephone numbers and, when available, email addresses, but also require that the list be transmitted electronically to the Region within two days from the direction of an election (or stipulation to have an election).  The effect of this rule change is obvious: unions will have the list of employees earlier and be given an enhanced ability to campaign to employees in their homes. 




The take-away from both the OLMS and the NLRB proposed rule changes for employers is that both government agencies are intent on making union avoidance harder and union organizing easier.  What is most alarming, especially with the OLMS proposal and supporting material, is this apparently philosophical underpinning that any effort by an employer to create policies, systems or materials in an effort to educate employees about unions and to make unions unnecessary is, at its core, an effort to interfere with the right of employees to engage in union activity.  This apparent belief is not only wrong, but also is an outrageous denigration of the good faith and honest activities of employers who wish to build workplaces free of the economic drain and adversarialism that often accompanies unionization. 


Employers and employer organizations need to be vigilant and vocal about the further erosion of employer rights and the continuing interference in the way they choose to do business within the law.  Clearly, it is incumbent on employers to redouble their efforts to create personnel systems to educate employees about and to neutralize any interest employees may have in union representation.  If the employees see no value to union representation, the OLMS and Board processes are rendered irrelevant. 




On April 25, the Tenth Circuit Court of Appeals decided a “why now?” case with facts that are all too common for employers who are too lenient with problem employees.  The cause for the leniency – fear of litigation, good intentions, inattention – is irrelevant.  The fact that an employee is permitted to continue to underperform or engage in unacceptable conduct can cause real and expensive problems, not only while employed but also after the employer finally is driven to the brink and terminates the employment altogether. 


The Plaintiff in this case was an African-American who was employed in 1999.  Between the date of hire and mid 2007 when he was discharged, he had accumulated a record of twenty-three disciplines, five of which were for sexual harassment.  In December of 2006, the Plaintiff, with two co-workers, complained that there were too few African-Americans in management.  Within two months thereafter, the Plaintiff was disciplined twice more, one for unprofessional conduct in response to a supervisor’s instruction and the other, a final warning, for disrespect to a supervisor.  In addition, a co-worker requested to move away from the Plaintiff because of his constant criticism of female supervisors.


After the final warning, a human resource manager examined the Plaintiff’s entire work record and recommended that he be fired, both because the discipline was not having a corrective effect and because he would be a negative comparator in the event of a need to discharge another employee for conduct similar to that he had exhibited.  The recommendation was followed and the Plaintiff was discharged.


The Plaintiff’s allegation was that he was discharged in retaliation for his complaint about the lack of African-Americans in management.  His proof was that he had been disciplined often, including several final warnings, before his complaint and his conduct apparently had been tolerated by his employer because he was only disciplined.  After the complaint, however, the same kind of conduct resulted in his discharge.  The “Why Now” question, in his mind, was answered by the fact that he had lodged a race discrimination complaint.  In support, the Plaintiff cited a prior case in which the same court had found that the use of criticisms of recent performance as a basis for a discharge was suspect, requiring trial, because similar performance in the past resulted only in minor critiques.


The District Court didn’t buy the Plaintiff’s argument and granted Summary Judgment.  The Court of Appeals affirmed, distinguishing the case cited by the Plaintiff as having involved perceptions and judgments while many of the Plaintiff’s disciplines were due to objective behavior and complaints from other employees.


The employer in this case won, so to speak.  It still had the litigation costs associated with both the district court and court of appeals proceedings.  Also, a few different facts (e.g., the prior disciplines being opinion based) or a different court and the employer would have had the expense of a full-blown trial, in not liability predicated on the employer’s prior leniency.


I draw your attention to this case not because it established some great or new legal principle.  Rather, this case demonstrates the danger of what I see time and time again in my practice -- excessive leniency and misplaced problem avoidance – two conditions that cause employers unnecessary angst and expense.


There is a danger to discharging employees without due process, usually defined in terms of progressive discipline.  There is also danger in giving an employee too many breaks or delaying discharge decisions endlessly out of a fear of being sued.  Employees who are unsatisfactory must be told and helped to correct their problems.  However, when the employee demonstrates an inability or unwillingness to improve, the employment should be terminated.  Keeping an employee on too long risks keeping in the workplace someone who not only is or may become a mischief-maker, but also may become a negative comparator in other discharge situations.  Finally, keeping nonperformers or bad actors in the workplace will depress good workers and promote an environment of mediocrity, something no employer should desire.


One final note about mischief-makers.  Mischief-making is in the eye of the beholder and much of what some employers would see as mischief is actually protected by a law.  The National Labor Relations Board recently decided a case (Perexel) in which it found that an employer who preemptively discharged an employee out of fear that the employee would engage in union activity violated the National Labor Relations Act.  The violation, the Board majority held, was that the discharge was in retaliation for a possible exercise of protected rights.  Although the case is outrageous, it cannot be ignored.  The Perexel principle has to be factored into any future analysis regarding employee discipline/discharge.  Extending the principle a tad, it’s possible to imagine a court adopting a similar theory of retaliation in the civil rights, safety, wage and any other area of the law which protects employees who exercise the rights granted by that law. 




James Redeker

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.