NLRB Receives Spirited Debate Over Ambush Election Rules During Public Meeting

For 2 days, the National Labor Relations Board (NLRB) heard from speakers on its proposed rules to accelerate the processing of union representation petitions and quicken the timing of elections. The speakers ranged from several labor unions, including the UFCW, SEIU, CWA and AFL-CIO as well as a number of trade associations, including National Federation of Independent Businesses, Coalition for a Democratic Workplace, National Association of Manufacturers, U.S. Chamber of Commerce, and EBG client, National Grocers Association (NGA). The positions of the parties were largely split between the labor unions applauding the NLRB’s proposed rule on making elections faster; whereas, the trade associations and management attorneys emphasizing that the NLRB’s proposed rule was unnecessary and a solution in search of a problem.

EBG attorney, Kara M. Maciel, represented the voice of NGA on three separate panels. First, she argued that the NLRB’s proposed rule requiring employers – for the first time – to submit a written position statement within 7 days of the union’s petition setting forth the employer’s entire legal argument, or risk waiver later, is unduly burdensome and risks that the process leading to a pre-election hearing will become more adversarial and less focused on reaching a negotiated pre-election stipulation. Under current procedures, over 90% of petitions are stipulated to without a pre-election hearing, but under the NLRB’s proposed rule, employers could feel pressured to go to a hearing in light of the written position statement requirement.

Second, Maciel testified that the election date should not be accelerated from the current 34 day median to 10-21 days contemplated by the rule. “Hasty decisions are not good decisions” and she noted that “common sense dictates that the greater the time an individual has to inform himself, and to reflect upon and consider all aspects of a decision, the more likely the decision will be a true reflection of the individual’s interests.” NGA is concerned about the due process rights impairing an employer’s protected 8(c) rights under the National Labor Relations Act if there is not sufficient time to communicate with employees about a union petition for representation.

Finally, Maciel expressed concern over the proposed rules compulsory disclosure of employee’s personal and confidential e-mail accounts and phone numbers on voter lists. The non-consensual disclosure constitutes a gross invasion of employees’ privacy and opens employees up to potential use and abuse of their personal information.

The NLRB will now consider all the written and oral comments submitted by the public on the proposed rules; however, it is widely expected that the NLRB will adopt the rules as proposed. Following the rule-making process, it is likely that trade associations could seek to enjoin implementation of the rule through a court challenge. In the meantime, all employers should brace themselves for the rule and implement training and education for their management team on how to respond to union organizing.

For more information on NLRB's two-day public meeting, please click here.

NLRB Public Meeting: Kara Maciel to Speak on Ambush Election Rules

Our colleague Kara Maciel will speak on behalf of EBG client, National Grocers Association (“NGA”), at the National Labor Relations Board’s public meeting, scheduled for April 10-11, 2014 regarding the Notice of Proposed Rulemaking (“NPRM”) on the “ambush election” representation procedures.

The panels will address the following topics:

  • Panel B.2: Requirement for written statement of position
    Address issues related to the proposed requirement for a written statement of position.
  • Panel E.1 & E.3: Election date
    Please describe the standard to be applied for scheduling an election. The proposed rules state that the regional director should select an election date which is “as soon as practicable.” If you disagree with this standard, please describe the standard you would apply. Specify whether you think the rules should include a minimum or maximum time between the filing of the petition and the election, and, if so, how long this time should be. Also address whether the proposed rules adequately protect free speech interests; if you believe they do not, please state specifically how the proposal can be adapted to adequately address the matter.
  • Panel C: Voter lists
    Address whether or how the rules should address voter lists.

During the open meeting, April 10 and 11, catch the live stream at http://www.nlrb.gov/openmeeting.
 

How Hoteliers Must Comply With WARN

By Kara M. Maciel

When hoteliers are considering purchasing, selling or remodeling hotels, one of the most overlooked issues during the due diligence and planning phases relates to the Worker Adjustment and Retraining Notification Act.

This statute requires covered employers to provide 60 days’ notice to employees, union representatives, state agencies and localities before carrying out plant closings or mass layoffs.[1] Congress intentionally devised WARN to provide affected employees adequate time to prepare for employment loss, seek and obtain alternative employment, and/or arrange for skill training or retraining to compete successfully in the job market.

Accordingly, hotel buyers, sellers, owners and management companies should be mindful of WARN’s obligations and be aware of potential liability for failure to provide written notice.

WARN’s Threshold Requirements

To fall under WARN, a hotel must employ at least 100 full-time employees, or employ 100 or more full-time and part-time employees who work at least 4,000 hours per week (exclusive of overtime). In determining whether a hotel has the requisite number of employees, hotels must count temporary employees and individuals who are temporarily laid off or on a leave of absence but who have a reasonable expectation of recall toward the threshold number of “full-time” employees.

In contrast, part-time employees are excluded from determining if a hotel satisfies the threshold levels. Part-time employees are individuals who work on average fewer than 20 hours per week, or who have been employed fewer than six of the 12 months preceding the date on which notice is required (e.g., recent hires working full-time schedules and seasonal workers).

Covered Employees and Content of Notices

Hotels covered by WARN must provide 60 days’ notice of a qualifying termination event to each hourly and salaried employee, manager and supervisor who may reasonably expect to experience employment losses. This notice requirement applies to both full-time and part-time employees.

Although temporary employees are counted for purposes of determining coverage under WARN, they are not entitled to advance notice so long as they were hired with the clear understanding that their employment was limited in duration.

The required content of written WARN notifications vary depending on whether the hotel is notifying employees, union representatives or government entities. Nevertheless, common to all notifications are (1) a description of the termination event and a statement as to whether the event is expected to be permanent or temporary; (2) the expected date(s) when the layoffs will commence; and (3) the name and telephone number of a hotel official to contact for further information.

Triggering WARN Notice Requirements

Fundamentally, three types of termination events trigger WARN notification requirements where 50 or more full-time employees experience employment losses. Those events are:

  • A plant closing that is a permanent or temporary shutdown of a “single site of employment” or one or more facilities or distinct operating units within a single site of employment that results in an employment loss during any 30-day period for 50 or more full-time employees.
  • A mass layoff (exclusive of a plant closing) of at least 50 full-time employees where the employment loss consists of at least 33 percent of the full-time employees at the single site.
  • A mass layoff of 500 or more full-time employees at a single site of employment, regardless of its proportion of the total employment at the site or if the employment loss is part of a plant closing.

Additionally, WARN defines “employment loss” as involuntary separations of workers exceeding six months; or a reduction in hours worked of at least 50 percent during each month for a six-month period. Any employment losses during a 30-day period are considered a single event for the purposes of the WARN Act.

Notably, even if a hotel’s initial terminations during a 30-day period do not constitute a covered termination event, WARN may be retroactively applied under certain circumstances. If two or more groups of employees suffer employment losses at a single site of employment during a 90 day period, and each group alone does not meet the threshold employee levels, the groups can be aggregated and treated as a single event.

Thus, when smaller layoffs that occur within 90 days collectively satisfy the WARN threshold level, each affected employee must receive 60 days’ notice prior to his or her date of termination. To avoid treating group terminations as a single event, hotels must establish that (1) the employment losses are unrelated and distinct; and (2) they have not structured or phased the terminations to avoid the WARN requirements.

Additionally, if a hotel announces a non-WARN covered layoff of six-month or less but subsequently extends the layoff past six months, the hotel may have WARN notification responsibilities. Unless the hotel can establish that the layoff extension was due to unforeseeable circumstances at the time of the original layoff, the matter is treated as if notice was required for the original layoff.

Finally, plant closing or mass layoff stemming from a relocation or consolidation of all or part of a hotel’s business is not considered an “employment loss,” if before the event (1) the hotel offers to transfer an employee to another site within a reasonable commuting distance and not more than a six-month break in employment occurs (regardless of whether the employee accepts or rejects the offer); or (2) the employee accepts a transfer to another site (regardless of distance) with no more than a six-month break in employment, within 30 days of the hotel’s offer or the closing or layoff, whichever is later.

Notification Exceptions

The WARN Act specifies exceptions in which hotels may provide less than 60 days’ notice to employees, state agencies and localities affected by an employment loss. The primary exceptions are:

  • Faltering Company Exception. Hotels can provide reduced notice for plant closings — but not mass layoffs — where they are actively seeking new capital or business to prevent the closing, have a realistic chance of obtaining sufficient funds or new business, and believe in good faith that giving notice would prevent it from obtaining the necessary capital or business to remain open.
  • Unforeseeable Business Circumstances Exception. Hotels can provide reduced notice where plant closings and mass layoffs are caused by business circumstances that were not reasonably foreseeable at the time notice would otherwise have been required (e.g., swift onset of a deep economic downturn, a nonnatural disaster).
  • Natural Disaster Exception. Hotels can provide reduced notice if a natural disaster, such as hurricane, flood or earthquake, directly causes a plant closing or mass layoff. Although this exception does not apply when the natural disaster indirectly causes the closing or layoff, the unforeseen business circumstances exception above might.

If the hotel provides less than 60 days’ notice under one of the aforementioned exceptions, it must explain in the notice the reason for the reduced notice period.

Who Must Give Notice in Shutdown: Owner or Operator?

Although hotel owners more often decide to shut down operations permanently rather than the managing entities that operate the hotels, the managing entity bears the primary responsibility for giving WARN notices.[2]

Accordingly, in negotiating management agreements, prudent hotel managers should secure protection from the owner against WARN liability for a permanent shutdown. That protection may be requiring the employer to notify the manager of a shutdown with sufficient time for the manager to comply with the WARN Act and securing indemnification against WARN liability if the owner gives insufficient notice to allow for WARN compliance.

Sale of Hotels

The general rule under WARN is that the responsibility to notify affected employees of a mass layoff or plant closing shifts at the time of sale. In this regard, when part or all of a business is sold and WARN’s threshold requirements are satisfied, the seller is responsible for providing notices to affected employees for any closing or layoff, up to and including the effective date of the sale. After the effective date of the sale, however, the buyer is responsible for providing notice for any such event.

Under WARN, however, employees who are merely transferred from the seller to buyer as part of the sale are not deemed to have suffered an employment loss.[3] In other words, the obligation to notify affected employees of a mass layoff is not triggered by the actual sale but by the employment loss.

The U.S. Department of Labor’s corresponding regulations further provide that employees who remain the sellers’ employees until the effective date of the sale and then are terminated, even if on account of the sale, will be treated as if they are employed by the buyer thereafter.

Thus, as the seller’s employees are treated as employed by the buyer after the sale, the seller will have no WARN responsibilities in connection with the post-sale termination of employees incident to the sale. The buyer will be responsible for WARN compliance if it elects not to retain those employees.[4]

If the seller has knowledge that a significant number of employees might be terminated within the first 60 days after the sale is consummated and the seller can identify those affected employees, the seller, although not required to do so, may send WARN notices to the affected employees as the agent of the buyer.[5] The regulations also encourage the parties to discuss and arrange who will bear the WARN obligations and include the specifics in the purchase agreement with appropriate indemnity language.

For the seller to avoid WARN obligations and liabilities, the seller should, to the extent possible, postpone any terminations incident to the sale until after the effective date of the transaction. In addition, a seller should notify employees who are laid off prior to completion of the transaction if their layoffs are temporary, (i.e., expected to be for less than six months), and that the buyer expects to hire some or all of them.

Under these circumstances, short-term layoffs incident to the sale do not constitute an employment loss under WARN and do not trigger WARN notice requirements. The notice obligations would only arise if the buyer fails to rehire a sufficient number of the seller’s employees. In this case, however, the buyer is solely responsible for giving any WARN notices.

It would therefore be prudent for the seller to obtain a provision in the purchase agreement that indemnifies the seller and obligates the buyer to comply with WARN under such circumstances. If, of course, the seller assumes WARN obligations, then it must also comply with WARN’s specific notice requirements.

Enforcement and Penalties

Federal courts enforce WARN through private right of actions, as the U.S. Department of Labor lacks investigative and enforcement authority for the act. Since district court lack injunctive authority to stop a plant closing or mass layoff, a plaintiff’s remedies are limited to statutory damages, attorneys’ fees and costs, and/or civil penalties.

In sum, in light of WARN’s potential for significant financial exposure, hoteliers should carefully plan in advance any notice requirements prior to the purchase, sale or remodel of a hotel.

[1] See 29 U.S.C. §§ 2101-2109 (1988). Many states have mini-WARN laws which may provide more generous notice to employees; therefore, it is critical that hoteliers check state law in addition to the federal notice provisions under WARN.

[2] See Local 217, Hotel and Restaurant Employees Union v. MHM Inc., 976 F.2d 805 (2d Cir. 1992) (finding the hotel’s management company to be liable under WARN for firing its staff in the wake of the hotel’s closing, even though the hotel owner ordered the shutdown).

[3] See Wiltz v. MG Transport Servs., 128 F.3d 957 (6th Cir. 1997) (holding that the actual sale was not a WARN event and that employees who the buyer retained did not fall under WARN).

[4] See Local 54, Hotel Employees International Union v. Elsinore Shore Associates, 724 F. Supp. 333 (D.N.J. 1989) (holding that whoever is the employer at the time of the plant closing or mass layoff is responsible for notifying the employees 60 days in advance).

[5] 29 C.F.R. § 639.4(1).
 

Persuader Rule Postponed: Employers Get Temporary Reprieve from Assault on Attorney-Client Privilege

On Epstein Becker Green’s Management Memo blog, our colleague Adam C. Abrahms writes about the Department of Labor’s delay, once again, of its timeline for finalizing the Persuader Rule.

Below is an excerpt from the blog post:

As we noted in “First Kill All The Lawyers,” last November the DOL announced its intention to move forward this month with the Administration’s Proposed Rule change which would eviscerate the Advice Exemption to the Persuader Rule . Yesterday, the DOL again delayed its timeline for finalizing the Rule.

In November the DOL’s announcement asserted that it intended to publish a Final Rule in March. On March 6, according to Bloomberg BNA, a DOL spokesman asserted that the Proposed Rule would NOT be made final this month. The DOL did not give a new target date for finalizing the Rule, rather it stated it would provide a new date in its Spring Regulatory Agenda which is not scheduled to be released for some months.

Read the full blog post, “Persuader Rule Postponed: Employers Get Temporary Reprieve from Assault on Attorney-Client Privilege.”

 

Groundhog Day: Pro-Labor NLRB Again Attempts to Put The "Fix" In Union Elections: Reissues Discredited "Ambush" Election Rules

By Steven M. Swirsky, Adam C. Abrahms, Kara M. Maciel and Casey M. Cosentino

As previously predicted by the Management Memo on August 1, 2013 and October 30, 2013, the National Labor Relations Board (the “Board”) issued a second Notice of Proposed Rulemaking (“NPRM”) to amend its existing rules and regulations governing union elections procedures. If they look familiar when you see them, there is a good reason for that: you have seen them before.

As readers of the Management Memo are well aware, the NPRM is the latest development in the long saga of organized labor’s attempts to “fix” the representation election process in its favor. Most significantly, the Board’s current attempt only comes after having its more modest 2011 attempt struck down by a federal judge.

The present proposal is identical “in substance” to the Board’s original proposals first contemplated on June 22, 2011, and as such are more aggressive than the Rules ultimately adopted on December 21, 2011, and later struck down. The Board claims the proposed amendments are necessary to, among other things, facilitate the swift resolutions of questions concerning representation, simplify representation-case procedures, eliminate needless litigation, and consolidate all requests for review of regional directors’ determinations into one post-election request. However, if adopted as written, the proposed rules will radically up-end 75 years of Board practice and make it considerably easier for unions to organize employees and win elections.

History of Proposed Rule

The Board first contemplated the proposed amendments in a notice of proposed rulemaking on June 22, 2011. Following a period of public comment, the Board issued a final rule on December 22, 2011, that adopted some of the proposed amendments but deferred other more controversial aspects of the proposed amendments for further consideration. The final rule was immediately challenged in federal court. See Chamber of Commerce of the U.S. v. NLRB, 879 F. Supp. 2d 18, 21, 24 (D.D.C. 2012). In May 2012, the D.C. District Court struck down the final rule on procedural grounds. In response, the Board suspended the implementation of changes to its election representation case process.

Proposed Amendments to the Election Procedure

To the favor of unions, the proposed amendments announced this week would significantly change the existing procedures for union elections in the following ways:

  • Permit electronic filing of election petitions.
  • Require pre-election hearings to be held within 7 days after a hearing notice is served, shortening the time period between the petition and election.
  • Require employers to file a detailed statement of position on any and all issues involved in the petition before the hearing commences (i.e., within 7 days of first receiving notice of the petition). Failure to present an issue in the statement would constitute waiver of the issue in all future proceedings.
  • Grant hearing officers the authority to limit the issues to be heard at the hearing, depriving employers of their ability to litigate valid legal/factual positions prior to an election.
  • Defer resolution of voter-eligibility issues to post-election challenges until after an election, replacing the longstanding practice of having a pre-election hearing to determine such issues. This will allow unions to claim that some supervisors should be included in the bargaining unit, which could prevent an employer from utilizing them in the campaign to communicate its own position to the employees they supervise.
  • Grant hearing officers the authority to deny an employer the ability to file a post-hearing brief.
  • Eliminate an employer’s ability to seek Board review of a Regional Director’s rulings, which would also reduce the time between the petition and election.
  • Shorten the time for holding an election to as early as 10 days after the Regional Director’s direction of election (down from the typical 25 to 30 day minimum that now exists)
  • Require an employer to provide the NLRB with the list of voters’ names and addresses within 2 days after the Regional Director’s direction of an election instead of 7 days.
  • Require employers to provide the phone numbers and email addresses of all eligible voters as well as specifying each employee’s work location, shift, and classification. Currently, employers must only provide name and mailing address to the NLRB, which it then provides to the union. Since unions will use be able to use this information during the days before the election, it is feared that instances of organizers harassing and coercing employees will significantly increase.
  • Grant the Board discretion to deny review of post-election rulings. Currently, the Board is required to decide post-election disputes.

The Board’s False Pretenses and True Intended Harm of “Ambush” Elections

The Board asserts these election “fixes” are necessary to address alleged long delays in the representation process; however, such delays are rare. To the extent that the NPRM seeks to address election delays, objective data of NLRB elections conducted between 2008 and 2010 shows that such delays occurred less than 10 percent of the time. In fact, currently median time between petition and election is only 38 days and almost all elections occur within 56 days. The Board’s current proposal, however, could shorten that period to 10 to 21 days, which essentially eliminates the ability for employers to make a full and meaningful presentation of their position or employees to make a truly informed choice.

Typically, union organizers campaign under the radar for months before a petition is filed and unions wait until they believe that they have the support of the majority of the employees in a unit before they file a petition. Shortening the election period so drastically will erode an employer’s ability to respond to the union’s propaganda and communicate its position on union representation. Employees will vote without having the benefit of hearing the employer’s position. This contravenes the express purpose of the Act, which is to protect employee rights— not union rights and would gut the right that employers are granted by the Act to communicate their positions to employees. This one-sided campaign will almost certainly result in more election victories for unions and less real choice for employees.

Management Missives

It is with intention that the Board’s proposed rules will significantly alter the entire union representation election process in favor of unions. Although it is a proposed rule at this point, and the Board will be accepting public comment through April 7, 2014, with a public hearing that same week, it is likely that the final rule will be issued not long thereafter. To prepare for the Board’s “ambush” election rules, employers should promptly adopt any or all of the following strategies:

  • Examine your workforce for potential vulnerability to union organizing, including wage and hour violations or uncompetitive wages or benefits.
  • Review and update workplace policies that become relevant during union organizing such as solicitation/distribution, electronic communications, and social media.
  • Assess your workforce for potential bargaining unit issues like identifying who are supervisors and which employees share a “community of interest.”
  • Train your managers and supervisors on recognizing early warning signs of union organizing and responding lawfully to union campaigns.
  • Contact legal counsel with any questions or for any assistance with ensuring you are prepared to respond to an organizing campaign consistent with the proposed rules.

Hospitality Employers: Prepare for NLRB Social Media Policy Scrutiny

In a recent Law360 article, "NLRB Social Media Push Looms Large for Hospitality Sector" (subscription required), our colleague Mark Trapp comments on the importance for unionized and non-unionized hospitality employers to review their social media policies.

Following is an excerpt:

With the National Labor Relations Board increasingly interjecting into non-union issues, hotels, restaurants and other labor-intensive hospitality companies need to brace for potential claims and tread carefully when crafting social media policies for employees, experts say.

Over the last few years, the NLRB has been extending its reach — traditionally centered on union or collective bargaining matters — to include the actions and speech rights of groups of employees, even when those groups are not unions, according to a report released Wednesday by the the Cornell Institute for Hospitality Labor and Employment Relations. In these actions, the NLRB often targets companies' broad social media policies for limiting the rights of employees to band together over wrongful job conditions, wages or terms, experts say.

"Certainly you want to take a look at your policies for social media, take a look at your handbook ... and take a look at disciplinary policies," said Mark Trapp of Epstein Becker & Green PC. "It used to be that you didn't have to pay attention to that as a non-union employer, but now you do."

NLRB Member Hirozawa Provides 2014 Preview at EBG Client Briefing

By: Adam C. Abrahms

Yesterday, in his first public address since being confirmed by the Senate, NLRB Board Member Kent Y. Hirozawa shared with the attendees of EBG’s 32nd Annual Client Labor and Employment Briefing his views on the current Board and what to expect from it.

His address, coming the day before Halloween, had all the “BEWARE” foreshadowing of a good ghost story; unfortunately for employers, the potential horrors may not be tricks or treats.

Board Poised For an Active and Productive 2014

As we noted here, when Hirozawa was confirmed as part of a package deal in July the Board had its first full complement of 5 confirmed members in over a decade. During his address Hirozawa explained how important it is for the Board to have confirmed members as it provides them a greater ability to efficiently and freely issue decisions without disruptions. He also noted that having a full complement of 5 members enables the Board to be 67% more productive.

Although acknowledging that the new Board has needed some time to get up to speed, something certainly not helped by the government shut down, Hirozawa asserted it is now poised for action. Hirozawa commented that the Board has a large backlog and that the Board is committed to reducing it quickly. He made it clear to the audience in attendance that there were cases in the pipeline and that parties and practitioners should expect the decisions to start issuing.

Given its current composition, an active and productive Board is likely not a good thing for employers.

Hirozawa Discloses Board Agenda

Hirozawa’s remarks went on to discuss the areas where the Board was likely to focus in the coming months and into 2014. Specifically, he noted that Chairman Pearce was likely to drive the Board back towards rule-making. As we discussed here and here, the Board has previously attempted to impose a requirement that employers post a Notice of Emplooyee Rights but the rule was rejected by the Courts. A new fully confirmed Board may take another stab at it.

Hirozawa specifically noted that the Board is likely to readdress election procedure regulations. Although Hirozawa did not talk is such terms, the attendees understood this meant that the so called “Ambush Election” may be on the horizon again. As readers will recall the Board’s last attempt at streamlining the election proceduce was invalidated on a technicality. Again, now with a fully confirmed, and arguably more pro-labor, Board, employers need to beware of what new election regulations might look like.

In addition to rule-making, according to Hirozawa, the Board is likely to continue addressing (and likely expanding on) the same issues that plagued employers under the unconstitutionally consisted Board of the last couple years. Specifically, Hirozawa noted that the Board is likely to issue more rulings on asserted infringements on Section 7 rights in arbitration agreements under D.R. Horton, Inc. and work rules like at-will, off-duty access, social media, confidentiality and other policies. In fact, the clear implication was that the Board very well may find even more categories of seemingly benign employer policies which “chill” or interfere with an employee’s exercise of Section 7 rights.

Ultimately, Hirozawa’s first public address established him as firmly in control of his new role, informed and engaged, however, it also made clear that employers could expect an active and likely unfriendly 2014 from the Board.

Management Missive

  • Employers should expect the frequency of Board decisions to pick significantly in the coming months and those with cases pending should be prepared to receive their ruling sooner than they may have expected.
  • With NLRB rule-making back on the front-burner, non-union employers should examine their union avoidance strategies and programs and explore proactively inoculating against organizing before the rules shift even more in favor of labor.
  • All employers should take a close look at their policies and work rules from a Section 7 perspective.

Government Shutdown and the NLRB: An Update

Our Epstein Becker Green colleagues have posted an NLRB update on the Management Memo blog: “Impact of Government Shutdown on NLRB, Part II: Some Proceedings Delayed Indefinitely, Extensions to Serve and File Documents Granted, New Charges Must Be Filed Within Six Months,” by Steven M. Swirsky, Adam C. Abrahms, and D. Martin Stanberry.

Following is an excerpt:

On Monday October 1, 2013, the Board published a Notice in the Federal Register to the NLRB’s website that supplements the effects of the Contingency Plan that we examined at outset of the government shutdown and NLRB furlough. Significantly, the Notice answers some of the important practical questions confronting employers, unions and employees with business before the Board.

Read the full post here.

Government Shutdown "Closes" NLRB: 1600 of 1611 Employees Furloughed

We recommend this post that was recently published on October 1st, 2013 on the Management Memo blog: “Government Shutdown “Closes” NLRB: 1600 of 1611 Employees Furloughed,” by Steven M. Swirsky, Adam C. Abrahms, and D. Martin Stanberry, our colleagues at Epstein Becker Green.

Following is an excerpt:

The shutdown of the federal government that took effect at 12:01 a.m. Tuesday October 1st has shut down all non-essential operations of the US government, including those of the National Labor Relations Board (Board or NLRB).

The Board’s Contingency Plan for Shutdown in the Absence of Appropriations (“Contingency Plan”) is now in effect, effective today. It details how the shutdown will impact the NLRB’s operations and what the shutdown means for employers, employees and unions with unfair labor practice and representation cases now pending. Our biggest take away: as of midnight, operations at the NLRB have virtually ceased.

Read the full post here.

Administration Rejects Labor's ObamaCare Demands

by: Adam C. Abrahms, Kara M. Maciel, Adam C. Solander, and Steven M. Swirsky

On September 13, 2013, the Obama Administration rejected the union movement’s intense lobbying efforts to seek a waiver, so that their members would be able to receive tax subsidies in the Affordable Care Act (“ACA”) Marketplaces for those of their members who will be offered “affordable coverage” from their employers.

Beginning January 1, 2015, the ACA requires that large employers offer affordable health coverage that provides minimum value to their “full-time employees” (those working 30 hours or more per week) or pay a penalty. If an employee is not offered health insurance, or if the coverage offered does not meet the definition of “affordable” or does not provide minimum value, the employee may go to the Marketplace (formerly known as the Exchanges) to purchase coverage. In such cases, certain employees may receive a tax credit or premium subsidy in the Marketplace to help defray the cost of obtaining health coverage.

For many unionized employees, health care is provided through a Taft-Hartley multi-employer plan. Such plans will be required to be affordable and comply with the ACA’s plan design obligations, just like private employer-sponsored health plans. Employees who reject employer-sponsored coverage that complies with the ACA in order to obtain cheaper coverage through the Marketplace are not entitled to the same tax breaks as uninsured employees.

Labor lobbied hard for the ACA and spent millions getting President Obama elected several years ago. Now, much of labor has grown disenchanted by the Administration’s regulatory rulings and ObamaCare as a whole. This summer, labor union leaders from UFCW, UNITE-HERE, and the Teamsters sent a scathing letter to Congressional leaders criticizing the ACA’s new definition of a “full-time employee,” stating that “it will destroy the American workforce.” Labor unions – who depend on the promise of free or cheap health care to attract members – fear they will lose members and their leverage to organize new dues-paying members if employees can go to the Marketplace to obtain less expensive health care.

Big labor, however, wants to have its cake and eat it too. While the Taft-Hartley plan trust funds continue to unilaterally impose annual premium cost increases for the health and welfare plans covering many unionized employees, in recent weeks, labor has demanded ACA reforms providing tax breaks for unionized employees who receive coverage under these plans. Under their waiver plan, unionized employees (but not non-unionized employees) would get the same tax breaks as uninsured workers if their members want to purchase coverage in the Marketplace. Last week during the AFL-CIO Quadrennial Convention, the labor giant adopted a harsh resolution calling for these and other pro-labor changes to the ACA.

Days before, in anticipation of the AFL-CIO Resolution, Senator Orrin Hatch (R-UT) and Representative Dave Camp (R-MI) sent a letter to the Obama Administration cautioning that any such pro-labor carve outs to the ACA would be ill-advised and unconstitutional. On Friday, in a letter responding to Senator Hatch and Congressman Camp, the Administration rejected the labor movement’s proposal and responded with the message that union-represented employees should be treated the same under the ACA as any other employee offered affordable coverage from his or her employer. According to the Administration’s letter, [t]he conclusion that an individual cannot benefit from both the exclusion from taxable income for employer-provided health coverage under such a plan and the premium tax credit provided by the ACA applies whether the individual is covered by a single-employer plan or a multi-employer Taft-Hartley plan.

It is unclear whether organized labor will respond with formal calls for repeal or amendment of the ACA, but with this issue of a potential double standard sought by labor unions currently behind them, employers should focus on future compliance obligations under the ACA. Such compliance obligations include the upcoming October 1 Marketplace notice deadline, the creation of the Marketplaces, the Individual Mandate taking effect in 2014, and the Employer Mandate and associated reporting requirements in 2015.

Senate Confirms a "Full" 5 Member NLRB That Includes 3 Union Lawyers - Are You Ready?

A post on our colleagues' Management Memo blog will be of interest to hospitality employers: "The Senate Has Confirmed a 'Full' 5 Member NLRB That Includes 3 Union Lawyers – Are You Ready?" by Adam C. Abrahms and Steven M. Swirsky of Epstein Becker Green.

Following is an excerpt:

On July 30th the Senate confirmed career union lawyer Kent Hirozawa (D) and retired AFL-CIO Associate General Counsel Nancy Schiffer (D) as well as seasoned management labor lawyers Philip Miscimarra (R) and Harry Johnson (R) to serve on the National Labor Relations Board. The Senate also confirmed current NLRB Chairman Mark Gaston Pearce (D).

The confirmations are of course the result of the Senate Republicans backing down in the face of the threat by Senate Democrats to change Senate rules so that they could force a vote, up or down, on President Obama’s nominations for the Board and other positions. The “deal”, inspired by the threat, included the withdrawal of President Obama’s nomination of his recess appointees, Sharon Block and Richard Griffin , whose appointments were held unconstitutional recess. The President, however, merely replaced Block and Griffin with Hirozawa and Miscimarra, and only after consultation with and approval from AFL-CIO President Richard Trumka and Organized Labor.

So with the first fully confirmed five member Board in ten years, the question for employers is now what? Unfortunately the answer is it is probably going to get worse.

Read the full post on the Management Memo blog.

Court of Appeals Rules NLRB Notice Posting Violates Employer Free Speech Rights

By Adam C. Abrahms and Steven M. Swirsky

In another major defeat for President Obama’s appointees to the National Labor Relations Board (NLRB or Board), the US Court of Appeals for the DC Circuit found that the Board lacked the authority to issue a 2011 rule which would have required all employers covered by the National Labor Relations Act (the “Act”), including those whose employees are not unionized, to post a workplace notice to employees. The putative Notice, called a “Notification of Employee Rights Under the National Labor Relations Act,” is intended to ostensibly inform employees of their rights to join and be represented by unions and to engage in other activity protected by the Act. The rule would also have made it an unfair labor practice for an employer to fail to post the required notice and such failure also could be considered proof of anti-union animus in other Board proceedings.

Although proposed in 2011 and scheduled to become effective on April 30, 2012, the requirement has yet been put into effect. As we discussed previously, last year, the US District Court for the District of Columbia had held that the Board lacked the authority to make it an unfair labor practice for an employer to fail to post the notice, holding that this exceeded the Board’s authority under the Act. Just prior to the rule going into effect, the DC Court of Appeals issued an emergency injunction in support of the District Court’s opinion and the NLRB opted to not enforce the rule pending the appeal.

Perhaps what is most noteworthy about the Court’s recent opinion, authored by Senior Circuit Judge Randolph, is the Court’s reliance on employers’ free speech rights which are protected by Section 8(c) of the Act. That section of the Act ensures employers the right to communicate their views concerning unions to their employees. The Court noted that while Section 8(c) “precludes the Board from finding non coercive employer speech to be an unfair labor practice, or evidence of an unfair labor practice, the Board’s rule does both.” That is because under the rule an employer’s failure to post the required notice would constitute an unfair labor practice and the Board’s rule would have allowed the Board to “consider an employer’s ‘knowing and willful’ noncompliance to be ‘evidence of anti union animus in cases in which unlawful motive [is] an element of an unfair labor practice.”

The Court focused on the question of the right of employers to “free speech,” under both Section 8(c) of the Act and under the First Amendment to the Constitution, noting that the rule would have required employers to disseminate information and that “the right to disseminate another’s speech necessarily includes the right to decide not to disseminate it,” relying on analysis from prior Supreme Court and appellate court decisions which it referred to as “compelled speech” cases.

Interestingly, the Court’s conclusion that the Board’s rule violates Section 8(c) because it makes an employer’s failure to post the Board’s notice an unfair labor practice, and because it treats such a failure as evidence of anti-union animus, suggests the Board might be able to find an alternate route to a notice posting requirement if it did not seek to create such a remedy for an employer’s failure to post the notice. However, the Court refused to leave the portion of the Board’s rule requiring the Notice posting in effect even without the enforcement and remedial provisions, because they were an inherent part of the Board’s purpose in adopting the rule. For now the beleaguered Board will need to decide whether it wishes to appeal this decision to the Supreme Court, attempt to craft a new rule with the currently constituted Board that this same Court of Appeals has ruled was unconstitutionally appointed in its Noel Canning decision or postpone any action until a new Board is confirmed by the Senate.

What To Know About ACA Collective Bargaining, in Employment Law360

Evan Rosen and Mark M. Trapp of the Labor and Employment practice co-wrote an article titled “What To Know About ACA Collective Bargaining.”

Following is an excerpt:

 

For the unionized employer, the advent of the Affordable Care Act requires careful strategic thought about its impact on upcoming collective bargaining negotiations. Indeed, for companies with a unionized workforce, the ACA poses additional challenges and strategic considerations above and beyond those confronting nonunionized workforces.

 

Click here to read the full article.

President Obama Nominates Three Members to National Labor Relations Board - But Will the Senate Confirm?

by: Adam C. Abrahms, James S. Frank, Kara M. Maciel, and Steven M. Swirsky

President Obama has taken action designed to bolster the National Labor Relations Board’s continuing move to bolster unions and take the National Labor Relations Act further into non-union workplaces. On April 9, 2013, President Obama announced his plan to submit three more nominees to serve the National Labor Relations Board (“NLRB”). If these and the two other pending nominations are confirmed this would bring the NLRB to its full complement of five Members. 

These new nominations – who must be confirmed by the U.S. Senate – were announced against the backdrop of the NLRB v. Noel Canning decision in which the U.S. Court of Appeals for the D.C. Circuit ruled that the NLRB now lacks constitutional authority to act because the recess appointments previously made by President Obama in January 2012 were not valid. The NLRB plans to appeal the D.C. Circuit’s decision to the U.S. Supreme Court by April 25, 2013. 

The three new nominations include the current NLRB Chairman, Mark Gaston Pearce, and two Republicans, Harry I. Johnson, III, and Philip A. Miscimarra, both lawyers in private practice. While Mr. Johnson and Mr. Miscimarra both have represented management over their careers, Chairman Pearce came to the NLRB from a practice representing unions.

Mr. Pearce has served as NLRB Chairman since August 2011, and has been a Board Member since March 2010.  Previously, Mr. Pearce, who started his career at the Board’s Buffalo, New York Regional Office in 1979, was a founding partner of Creighton, Pearce, Johnsen & Giroux from 2002 to 2010.  Before founding the Creighton, Pearce firm, Mr. Pearce worked as an associate and junior partner at Lipsitz, Green, Fahringer, Roll, Salisbury & Cambria LLP from 1994 to 2002.

Harry I. Johnson, III is a partner with Arent Fox LLP. Previously, Mr. Johnson worked at Jones Day from 1994 to 2010. Mr. Johnson received a B.A. from Johns Hopkins University, an M.A.L.D. from Tufts University’s Fletcher School of Law and Diplomacy, and a J.D. from Harvard Law School.

Philip A. Miscimarra is a partner with Morgan Lewis & Bockius LLP, a position he has held since 2005. Since 1997, Mr. Miscimarra has also been a senior fellow at the University of Pennsylvania's Wharton Business School.  Mr. Miscimarra received a B.A. from Duquesne University, an M.B.A. from the University of Pennsylvania’s Wharton School of Business, and a J.D. from the University of Pennsylvania Law School.

President Obama previously submitted the nominations of Richard F. Griffin, Jr. and Sharon Block, who are currently serving as Board Members but whose recess appointments were struck down as invalid by the D.C. Circuit in Noel Canning. Member Block came to the NLRB from the US Department of Labor. Both of those nominations are before the Senate.

WHAT HOSPITALITY EMPLOYERS SHOULD DO NOW

Considering that all five nominations must now be confirmed by the Senate, where the Republican minority has frequently blocked the President’s nominations, it is unclear how and when the Senate will respond, and whether the NLRB will enjoy a full complement of Members in order to conduct lawful business any time soon. Merely announcing the nominations will not pave the way immediately for a full, validly appointed NLRB. Indeed, it may not be until the next Congress, following the 2014 mid-term elections that the Senate even considers a package deal with the White House.  

If a compromise could be achieved and all five Members were sworn-in this year or next, the Board would continue with a liberal, union-friendly majority with Chairman Pearce and Members Griffin and Block. They could be expected to continue a pro-union agenda, which would certainly bring continued aggressive enforcement and further broadening of the Board’s view of protected, concerted activity and the Act’s application in non-union workplaces. Moreover, there will be many questions about whether a new NLRB will be able to cure prior decisions that were put into doubt by Noel Canning.   

For now, our advice and recommendations to hospitality employers remains the same as following the ground-breaking decision of Noel Canning. Employers should closely monitor how courts in their jurisdictions decide similar cases challenging the recess appointments, and watch how the Supreme Court will address it next term, should it take the NLRB’s petition for certiorari, while watching to see what happens in the Senate.   

The NLRB--Organizing by Pop-Up Unions in Break-Out Units

By: Allen B. Roberts

I wrote the February 2013 version of Take 5 Views You Can Use, a newsletter published by the Labor and Employment practice of Epstein Becker Green. In it, I discuss an alternative view of five topics that are likely to impact hospitality employers in 2013 and beyond. One topic involved the potential for labor organizing by pop-up unions in break-out units.  

Despite some perceptions of cohesiveness and political acumen, influence and wherewithal following the 2012 election cycle, labor unions represent only about 7.3 percent of the private sector workforce in the United States, and only 6.6 percent of workers are actually union members. When concentrations in certain industries and geographic areas are factored, that leaves entire swaths entirely union-free, or substantially so.

Foreseeably for the next four years, unions will continue to benefit from a National Labor Relations Board ("NLRB") that has innovated changes in substantive law and introduced procedures during the past four years that facilitate organizing and restrict the time for responsive employer communications. That advantage has not yet translated into material membership gains by "Big Labor"—although it may still.

However, together with other breakthroughs by way of social media and electronic and physical access to employer premises and communications systems, expanded interpretations of protected concerted activity, and such movements as Occupy Wall Street and grass roots organizations, conventional unions may be eclipsed, if not displaced, by one-off, special purpose organizations formed solely to serve discrete affinity groupings of employees in new bargaining units. If this occurs, it will be enabled by two bedrock principles of the National Labor Relations Act ("NLRA"), aided by a recent interpretation in case law.

First, notwithstanding the attention given by supporters and critics alike to large, well-financed conventional unions with institutionalized structures and processes, the NLRA defines a "labor organization," capable of winning certification as the exclusive representative of employees, to mean any body that exists, in whole or in part, for the purpose of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work. This means that an outside force, planning and funding offsite meetings and campaigns, is not necessary; something as simple as a homegrown pairing or grouping of workers having common interests or worries could qualify as a labor organization.

Second, with respect to the NLRB's formulation of a unit appropriate for collective bargaining purposes, it is not necessary that the unit be the most appropriate or that it conform to management's organizational structure. Historically, the NLRB has been mindful of its authority to make determinations of the unit appropriate for purposes of collective bargaining, consistent with legislative policy assuring that employees have the "fullest freedom" in exercising statutory rights to organize. If it survives Circuit Court of Appeals challenge on review, an NLRB standard adopted in 2011 could lead to a proliferation of small, fractionated bargaining units; it would place the burden on an employer contesting the appropriateness of a labor organization's preferred bargaining unit to show that employees excluded from the unit sought by the petitioning labor organization share an "overwhelming community of interest" with another readily identifiable group. If a readily identifiable group exists based on such factors as job classification, department, function, work location, and skills, and the NLRB finds that the employees in the group share a community of interest, the petitioned-for unit will be an appropriate unit, despite an employer's contention that employees in the unit could be placed in a larger unit that also would be appropriate—or even more appropriate.

Much as the NLRB's approach has been perceived to benefit large, established unions, it may not be surprising if employee groups, newly aware of the NLRB's outreach and enlargement of rights to engage in protected concerted activity through social media and other means, realize also that they are capable of becoming homegrown, single-purpose labor organizations with authorization from the NLRB to define a bargaining unit by its lowest common denominator—or to invade and fractionate existing bargaining units currently represented by Big Labor.

For more Take 5 Views You Can Use, read the full version here.

NLRB Recess Appointments "Invalid From Their Inception" and "Void" for Lack of Constitutional Authority Rules the D.C. Circuit

 by: Adam C. Abrahms, Kara M. Maciel, Evan J. Spelfogel and Steven M. Swirsky

In a time when employers do not receive much good news out of Washington D.C., the U.S. Court of Appeals for the D.C. Circuit may have given some very welcome relief to employers facing issues before the National Labor Relations Board (“NLRB” or “the Board”) in light of recent precedent reversing NLRB decisions.  Quoting from early Constitutional authority including The Federalist Papers and Marbury v. Madison, the D.C. Circuit ruled today that President Obama’s “Recess Appointments” of three new NLRB members in January 2012 were unconstitutional and as a result the Board lacked any constitutional authority to act since that time. Noel Canning v. NLRB

 

In a unanimous panel decision written by Chief Judge Sentelle that The New York Times called “an embarrassing setback for the President,” the Court analyzed two constitutional questions, both focusing on whether the Board lacked authority to act because three Board members were never validly appointed. The first issue examined whether the Senate was “in Recess” when the appointments were made, and the second whether the vacancies these three members purportedly filled “happen[ed] during the Recess of the Senate,” as required for recess appointments under the Constitution.

 

As to the first issue, after dissecting the Board’s arguments, the Court ruled that “the Recess” referred to in the Constitution to permit a presidential recess appointment is limited to the Recess between Sessions of the Senate and does not include brief adjournments or other intrasession recesses. Likewise, the Court ruled that the power to appoint during the Recess was limited and could only be issued if the vacancy both first arises (i.e, “happened”) during the Recess and also was filled during that Recess.

 

Noting that the Board conceded on appeal that the appointments at issue were not made during the intersession Recess because the President made them on January 4, 2012, after Congress began a new Session on January 3, 2012 and while that new Session continued, the Court held that “[c]onsidering the text, history and structure of the Constitution, these appointments were invalid from their inception.”

 

The Court also found, and the parties did not dispute, that based on the Supreme Court’s ruling in New Process Steel, L.P. v. NLRB,if the vacancies were not properly and lawfully filled, the Board would only be left with two valid members and would therefore be left without a quorum to act. Consequently, the Court ruled conclusively that the Board’s order in the underlying case was “outside the orbit of the authority of the Board because the Board had no authority to issue any order [because] it had no quorum,” stating that the “lack of quorum raise questions that go to the very power of the Board to act and implicate[s] fundamental separation of powers concerns.”

The Court further rejected any argument that its ruling otherwise would make government inefficient through an ineffectual federal agency, stating: “The power of a written constitution lies in its words. It is those words that were adopted by the people. When those words speak clearly, it is not up to us to depart from their meaning in favor of our own concept of efficiency, convenience, or facilitation of the functions of government.”

 

In short, the Court vacated the Board’s order, finding that the company’s “understanding of the constitutional provision is correct, and the Board’s is wrong. The Board had no quorum, and its order is void.” 

 

This decision, which certainly will be appealed to the U.S. Supreme Court, provides much anticipated relief to business groups and employers who have been struggling with the aggressive, pro-labor agenda of the current Board. It also leaves the Board with only one validly appointed member, Chairman Mark Pearce, whose term is set to expire in August 2013, effectively shutting the Board down with respect to any ongoing activity. That’s good news for employers who were anticipating new regulations on the speedy election rule or the notice posting requirement. In addition, for those Board rulings that have been issued since January 4, 2012, there is a strong argument that those decisions are similarly invalid, certainly if those cases are pending within the jurisdiction of the D.C. Circuit. 

 

WHAT EMPLOYERS SHOULD DO NOW

All employers with cases pending before the Board or on appeal should review this decision closely with legal counsel to examine its impact on current cases and potentially cases recently decided but yet appealed. NLRB Chairman Mark Pearce issued a statement today in response to and disagreeing with the Court’s decision, “the Board will continue to perform our statutory duties and issue decisions."

Epstein Becker Green will follow future developments.

Webinar Recording: Employment Practices Facing NLRB Scrutiny

Steve M. Swirsky

By Steven M. Swirsky

On Friday, November 16, I participated in a free 75-minute webinar discussion with Lafe E. Solomon, Acting General Counsel of the National Labor Relations Board.  The webinar was moderated by Terence H. McGuire of the Practical Law Company.  We discussed:

  • Factors that the NLRB considers when deciding whether to prosecute unfair labor practices based on these employment practices.
  • Legal considerations surrounding these employment practices besides compliance with the National Labor Relations Act.
  • The NLRB’s stance on what is and is not a lawful at will disclaimer.
  • Social Media and communications policies.
  • The NLRB’s position on employer requirements for confidentiality in connection with workplace investigations.
  • Waivers of the right to pursue claims in class actions.
  • What's next on the NLRB's prosecutorial agenda and how employers can prepare.

Click here to view this complimentary webinar, “Employment Practices Facing NLRB Scrutiny.” 

Requiring Confidentiality During HR Investigations May Violate National Labor Relations Act

By:  Steven M. Swirsky, Adam C. Abrahms, Donald S. Krueger, and D. Martin Stanberry

In another foray by the National Labor Relations Board (“NLRB” or the “Board”) into new territory affecting non-union workplaces, a divided three-member Board panel found that an employer’s direction that employees not discuss matters under investigation with their co-workers violated Section 8(a)(1) of the National Labor Relations Act (the “Act”) because it “had a reasonable tendency to coerce employees in the exercise of their rights” under the Act. Banner Health System, 358 NLRB No. 93 (July 30, 2012).

In concluding that the request for confidentiality “had a reasonable tendency to coerce employees,” the majority gave no weight to the fact that the request was not tied to a threat of discipline. Instead, without offering any explanation, the Board held that “[t]he law… does not require that a rule contain a direct or specific threat of discipline in order to be found unlawful.”

Read the full advisory online

Employment "At-Will": What UK Companies Doing Business in the US Need to Know

By Matthew Sorensen and Dana Livne

One of the major ways in which American employment law has traditionally differed from its British counterpart has been its entrenched employment “at-will” doctrine. The “at-will” employment doctrine provides employers with the right to terminate their relationships with their employees at any time, with or without notice or cause.  UK companies doing business in the US are often relieved to be advised that they become “at-will” employers to their US-based employees. In the US, unless an employer has entered an employment contract or collective bargaining agreement that expressly limits the employer or employee’s rights to terminate the employment relationship, employment is considered “at-will.” 

In the UK, on the other hand, under the Employment Rights Act 1996 (ERA), every employee must be provided with a written statement of the terms and conditions governing their employment within two months of commencing work. In fact, under the Common Law, some changes to working conditions cannot be made without the employee’s consent.  The controversial Beecroft Report, commissioned by the UK government, has recently called for changes in the dismissal procedures in Britain to mimic the American “at-will” doctrine.  The theory is that if employers are permitted to terminate workers with more ease and less “red tape,” it will encourage the UK’s financial growth, support business, and boost the economy. Indeed, according to the Institute of Directors, the UK business community is supportive of these measures, with a third of companies surveyed claiming that it would lead them to hire more workers.

However, the experience of “at-will” employers in the US has been not without its challenges. Although employers in the US who are not parties to employment contracts or collective bargaining agreements have a significant amount of discretion in determining whether and how to discharge an employee, the freedom afforded by “at-will” employment has been eroded in many respects by robust anti-discrimination laws.  Even in the context of “at-will” employment relationships, employers must remain cautious when disciplining and terminating employees.  A misstep can potentially lead to costly discrimination claims.

The US has developed a comprehensive body of law that places a number of limitations on employers’ rights to terminate “at-will” employees.  Title VII of the Civil Rights Act of 1964 (“Title VII”) prohibits employment discrimination on the basis of the individual’s race, color, sex, religion, or national origin (the “protected classes”).  The Age Discrimination in Employment Act (ADEA), prohibits discrimination against individuals that are older than 40 years old on the basis of their age.  Individuals with disabilities are protected under the Americans with Disabilities Act (“ADA”), and the Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits discrimination on the basis of genetic information. In addition to the protections established by these federal laws, many US states have also enacted their own state-specific statutes that provide additional protections to employees, such as prohibiting discrimination on the basis of sexual orientation, political affiliation, and physical appearance.  Enforcement of these statutes has led to a long line of cases in which state and federal courts in the US have found that employers wrongfully terminated “at-will” employees based on protected characteristics.  Even layoffs or termination policies that seem neutral on their face have been found to be discriminatory when they had a disproportionately negative impact on a “protected class” of employees. 

Charges of discrimination can be damaging to workplace morale, public relations, productivity and the company’s bottom line.  Indeed, even in cases involving baseless claims of discrimination, employers may be forced to expend significant resources to defend themselves in administrative and court proceedings.  Employers in the US must implement creative strategies to thwart potential claims of discrimination before they arise, and to best position themselves to defend any claims of discrimination that do arise. The first step in protecting against claims of discrimination related to termination decisions is to ensure that the employer has a clear policy governing employee conduct and discipline that specifically reminds employees that their employment remains terminable “at-will.” The policy should provide a uniform and fair manner to respond to performance failures and misconduct by employees. For example, it may be appropriate to implement a progressive discipline policy.  Such policies typically establish a schedule of progressively severe disciplinary sanctions for performance failures or acts of misconduct, often beginning with oral warnings and ending in termination. However, entities that establish progressive discipline policies should reserve their rights to short-circuit the progressive disciplinary process and immediately terminate the employment relationship or take other appropriate disciplinary action as they deem necessary.

In addition, employers must ensure that they follow their discipline and termination policies consistently.  Those companies that do not consistently apply their rules to similarly situated employees can frequently encounter problems in discrimination lawsuits where it can be essential to have evidence that a worker was treated the same as other employees holding his or her position who are not members of the worker’s “protected class.” Companies are advised to maintain clear and consistent documentation of all disciplinary actions. A trail of properly documented disciplinary actions is always the best evidence to defend against allegations that an employee was terminated or subjected to other disciplinary action for discriminatory reasons. Employers should also conduct periodic anti-discrimination training for their employees and managers. For managers, particular attention should be given to reinforcing the need for consistent and non-discriminatory application of the company’s disciplinary policies.

In a competitive economy, the benefits to an “at-will” employment setting are clear.  Employers can quickly dismiss workers who fail to comply with the company’s disciplinary rules or who do not add the expected value to business operations.  However, to protect against charges of discrimination, companies operating in the US should carefully craft their discipline and termination policies and ensure that their managers are properly trained in the application of those policies. A proactive approach to planning and implementing uniform and fair procedures governing discipline and discharge will help companies avoid costly discrimination claims and focus on the continued success of their business in the US.

NLRB Launches Website Targeting Non-Union Employees

by Adam C. Abrahms

Continuing its effort to “outreach” to non-union employees and educate them on their rights under the National Labor Relations Act, the NLRB has launched a new webpage on Concerted Activity.  The NLRB’s announcement  of its new webpage made clear the page is designed to inform employees of their rights “even if they are not in a union.”   

The webpage, in addition to giving basic descriptions of concerted activities, asserts that “The law we enforce gives employees the right to act together to try to improve their pay and working conditions or fix job-related problems, even if they aren’t in a union.”  The main feature of the webpage is an interactive map of the United States which highlights cases from various regions as examples of the Board’s activities on behalf of non-union employees who were engaged in activity the Board considers protected even though it is unrelated to union organizing.  Examples include cases involving employees complaining about safety issues, employees posting statements on Facebook and videos on YouTube critical of the employer, employees discussing workplace issues with the news media, employees “violating” an employer handbook’s unlawful confidentiality policy and employees  signing letters to management complaining about wage cuts.

The new webpage is part of the NLRB’s concentrated effort to inform non-union employees of the rights protected by the Act and the availability of the agency as a resource to employees who feel they had their rights violated.  This new webpage should be viewed in the same vein as the Board’s parallel efforts to require all employers to post  a “Employee Rights Notice Posting,”  print and distribute brochures and bring media attention to its aggressive pursuit of cases involving employers’ social media policies.  While the posting requirement has been enjoined by the U.S. Court of Appeals, the other more informal efforts of education and outreach like the webpage, brochures and media attention cannot be challenged and are likely to continue to expand.

In announcing the new webpage NLRB Chairman Mark Gaston Pearce made the agency’s goal clear, stating:

A right only has value when people know it exists…  We think the right to engage in protected concerted activity is one of the best kept secrets of the National Labor Relations Act, and more important than ever in these difficult economic times. Our hope is that other workers will see themselves in the cases we’ve selected and understand that they do have strength in numbers.

Given the NLRB’s continuing efforts, hospitality employers must be more mindful than ever that their policies and actions could be scrutinized by an aggressive National Labor Relations Board even if they do not have a union.  As the agency’s efforts continue, employers should expect more employees to be aware of their option to bring complaints to the Board for adjudication.  When employees do so, employers can also expect for the agency’s investigation to reach not only the specific incident involving the complaining employee but potentially the lawfulness of the employers’ general policies and procedures.  Either way, employers must consider whether their policies and actions impact or interfere with protected concerted activity even where there is no union present. 

Preparing for Non-Compete Litigation

We are pleased to announce that “Preparing for Non-Compete Litigation,” a guide published by The Practical Law Company and authored by EpsteinBeckerGreen’s Peter A. Steinmeyer and Zachary C. Jackson, is now available in PDF format. The guide is a valuable discussion of the primary considerations for employers seeking to initiate legal action to enforce a non-compete agreement.

DOJ Postpones ADA Compliance Date for Pool Lifts

By:  Kara Maciel

On March 15, 2012, the U.S. Department of Justice (“DOJ”) had temporarily postponed compliance with the 2010 ADA Standards as it relates to providing accessible entries and exits to pools and spas.  That day was set to expire later this month, on May 21, 2012, but the DOJ has announced that it will extend that compliance date to January 31, 2013 – a nine month extension from the original compliance date of March 15, 2012.

This extension to January 31, 2013, however, does not change the substance of the DOJ’s requirement that lifts be “fixed.”  The DOJ failed to address concerns raised by the lodging industry and associations through the public comment period that fixed lifts could increase liability to operators from children or misuse around unattended pools, that lifts should be able to be shared between multiple pools and spas, or the concerns over extensive electrical and construction work that would be associated with installing a fixed lift. 

What this means for pool and spa operators is that, while they now have additional time to bring their property into compliance, the requirement that a single fixed lift be installed for every pool and spa on the facility remains firm, and non-compliance could subject the owner and operator to liability under the ADA from a DOJ investigation or from a private lawsuit. 

Doing It Right: New Considerations for International Hospitality Groups

By: Jay P. Krupin and Dana Livne

Historically, the United States has continuously attracted international commerce and investment. In recent years, in spite of a challenging economic situation, international hospitality groups continue to seek opportunities in the US for financial growth, promotion, and strategic reasons. When they do so, they must comply with unfamiliar and complex labor and employment laws which are constantly changing. In the US especially, the increasingly litigious environment can affect every step of the enterprise – right from the start. Particularly, in a presidential election year, international hospitality groups that are planning to hire and employ a workforce in the US are advised keep apprised of legal shifts in these three important areas:

Health Care Reform

The Patient Protection and Affordable Care Act, also known as “Health Care Reform,” was enacted into law to extend and amend health insurance coverage to employees in the United States. Earlier this month, the U.S. Supreme Court heard oral arguments on the law’s validity, and a decision is expected in June 2012. Hospitality groups, in particular, will need to plan ahead in light of the decision and prepare to manage significantly increasing costs of coverage.

Management-Labor Relations

In the United States, trade unions have reemerged as a power base to ostensibly represent employees’ interests. The current state of the US economy, concerns about job security, the critical status of pension funds, and recent health care reforms will continue to collectively strengthen the unions’ hands in 2012 and 2013. Unsurprisingly, there have been recent waves of pressure from the National Labor Relations Board (“NLRB”) on employers.

A number of updates in this area will have major implications for hospitality providers in the US, including:

  • New notice posting requirements obliging employers to display posters informing workers of their right to unionize.
  • The appropriate standard to be applied in determining the scope of a bargaining unit is undergoing radical changes.
  • The NLRB amending its rules to make it easier for unions to organize employees through changing its election process.

Social Media

No business sector is immune to the profound impact social media is having on the workplace. Hospitality employers seeking to hire may be tempted to base employment assessments on data attained through social media. However, there is a very thin line that must be carefully navigated when basing employment decisions on information gathered through the use of social media. Any social media policies an employer may wish to enforce on its workforce in the US will also need to be crafted creatively and be cognizant of content which is legally protected “concerted activity.” Such a policy will ensure that seemingly disproportionate social media policies do not result in charges of discrimination on the basis of union membership, while effectively protecting the valid business interests of the employer.

It is no surprise that international hospitality groups can become the target of government scrutiny, especially in the run-up to the Presidential Elections. When setting up operations in a new country, hiring and employing a new workforce is a crucial process. Early planning and preparation will put the employer in a much stronger position to steer these upcoming waves of change and ensure the success of the operation in the US. Doing it right – from the start – will have positive consequences for business productivity and, ultimately, the bottom line.

Off-Site Union Elections Could Place Hospitality Employers at a Disadvantage

By:  Paul Rosenberg

As described in our blog on January 5, 2012, the National Labor Relations Board’s (“NLRB”) new rules governing union elections introduce a host of changes which will place employers at a disadvantage.  The new rules will go into effect on April 30, 2012, subject to a legal challenge pending in federal court.  However, they are seemingly just the beginning of the NLRB’s concerted effort to drastically change a process which has been in place for several decades.  A recent decision ignoring 75 years of precedence is illustrative.

In 2 Sisters Food Group, Inc., 357 NLRB No. 168 (2011) the United Food and Commercial Workers International Union asked that an election be overturned because the election took place on the employer’s premises. While the Board did not grant the request, it remanded the matter to a regional director, the local official of the NLRB, in charge of administering union elections. In its remand the NLRB laid out four factors for the regional director to consider:

1)            the union’s objection to having the rerun election on the employers' premises against the employer's request that it be held on-site;

2)            the employer's alleged "prior unlawful and objectionable conduct";

3)            the advantage the employer would enjoy based on the election being held on premises it owns or controls; and

4)            potential alternative sites.

Viewed in context with the upcoming rules, the decision in 2 Sisters Food Group, paves the way for off-site elections to become the norm.  The rules’ underlying purpose is to streamline the election process by eliminating an employer’s ability to litigate pre-election unit composition questions. In that same vein, the NLRB will not want to prolong an election’s outcome via litigation over situs issues. As such, to avoid having to determine if a rerun election is appropriate because an election was held on an employer’s premise, it is hardly a leap of faith to see how the Board will rely upon 2 Sisters  Food Group to justify “off-site” elections in the first instance.           

Off-site elections will favor the union. Prior to filing a petition with the NLRB for an election, a union must obtain signatures from 30% of the workers in unit which it seeks to represent. Given this fact, employers rely upon a high voter turnout to surpass the support the union garnered prior to the petition being filed. Off-site elections, however, will decrease voter turnout as some employees will view leaving the workplace to vote as an inconvenience. 

The decision in 2 Sisters Food Group combined with the new rules signal an obvious intent from the Board to preclude employers from participating in the union election process and educating their workers about the potential pitfalls of unionization. UNITE HERE – the largest hospitality union in the United States - will surely ramp up its organizing efforts to capitalize on its new found advantages. Thus, if you have not already done so it is imperative to put together an action plan to ensure that you are equipped with the proper “tool kit” to defeat an organizing drive.

Mandatory Employee Arbitration Agreements: The NLRB Throws a Wrench into Their Enforceability

By:  Forrest G. Read, IV

Arbitration agreements can be an effective way for employers in the hospitality industry to streamline and isolate an employee’s potential claims on an individual basis and protect themselves from a proliferation of lawsuits with many plaintiffs or claimants. But the National Labor Relations Board’s (“Board”) January 6, 2012 decision in D.R. Horton, Inc. and Michael Cuda, notably finalized by two Board Members on departing Member Craig Becker’s final day, has caused significant confusion as to how employers can enforce such arbitration agreements with their employees over employment claims, including wage and hour disputes. 

In D.R. Horton, the Board concluded that an employer commits an unfair labor practice under the National Labor Relations Act (“NLRA”) when it requires, as a condition of employment, its employees to sign an arbitration agreement that precludes them from filing, in any forum, any class or collective claims addressing their wages, hours or other working conditions against the employer. However, the Board’s decision in D.R. Horton appears to be inconsistent with, if not directly contradicts, a recent U.S. Supreme Court decision upholding the validity of class action waiver provisions in consumer arbitration agreements under the Federal Arbitration Act, which many employers and members of the labor and employment bar interpreted as extending to waiver provisions in employment-related agreements.

Notwithstanding the Supreme Court’s unmistakable and consistent pro-arbitration stance, the Board in D.R. Horton directly concluded that Supreme Court precedent regarding arbitration agreements did not apply to the employment context.  The Board’s decision is controversial because it was issued by two Members leaving employers left to question its validity and confused as to which precedent to follow.  In addition, it represents another example of the Board’s willingness to insert itself into matters outside the traditional unionized workplace and find NLRA violations outside the labor-management realm.

D.R. Horton is also controversial because it places courts at an intersection of whether to follow and apply Board or Supreme Court precedent.  Indeed, since the Board’s ruling in D.R. Horton, at least one court in New York weighed in on the issue and, in following Supreme Court precedent, tentatively ruled that D.R. Horton does not apply in the wage-hour context where the employee had voluntarily entered into an arbitration agreement not as a condition of employment. But the court noted that D.R. Horton may have applied and led to a different conclusion if the argument had been made that the arbitration agreement had been presented to the employee in a confusing fashion or had operated through compulsion by the employer (even if presented voluntarily).

In short, the question of whether employment-related arbitration agreements are enforceable will remain a murky one until D.R. Horton, currently a hindrance to hospitality employers that seek to compel individual arbitration of wage and hour claims with their employees, is appealed and decided upon by an appellate court. In the meantime, employers should be cautious about the application of such agreements. Any current arbitration agreements (particularly those that include class action waivers) should be reviewed for enforceability, and perhaps suspended depending on how the waiver provisions were worded and the circumstances under which they were agreed to. In addition, hospitality employers should carefully consider whether and how to present new arbitration agreements to employees and scrutinize the agreement’s waiver provisions before they are executed.

NLRB Increases Scrutiny of Employer Restrictions on Employee Social Media Usage

By:      Ana S. Salper

No governmental body has been more active in addressing social media’s impact on the workplace than the National Labor Relations Board (“Board”). For both unionized and non-unionized employers, the Board has been aggressively scrutinizing the contours of employer discipline of employees for their activities on social media sites, and has regulated and constricted the scope and breadth of employer social media policies. Following his first report in August 2011, National Labor Relations Board Acting General Counsel Lafe Solomon has now released a second report describing social media cases reviewed by his office.

Solomon’s report covers 14 cases, half of which address issues regarding employer social media policies, the other half of which involve discharges of employees after they posted comments to Facebook. The report underscores two main points:   

1)      Employer social media policies must be narrowly tailored enough so as not to prohibit protected concerted activity under the National Labor Relations Act (the “Act”), such as the discussion of wages or working conditions among employees, and

2)      Mere “gripes” made by an employee on a social media site are generally not protected if they are not made in relation to group activity among employees.  

One of the cases highlighted by the report is of particular relevance to hospitality industry employers.  The employer, a restaurant chain operator, had a section in its employee handbook entitled “Team Member Conduct & Work Rules.” The rules provide that “insubordination or other disrespectful conduct” and “inappropriate conversation” are subject to disciplinary action. The Charging Party was a bartender at one of the employer’s restaurants. The employer hired a new General Manager for the restaurant, who in turn hired a personal friend as a bartender.   The Charging Party and other bartenders immediately began having various problems with the new bartender. One such problem involved the new bartender receiving preferential shifts over the Charging Party, who was the most senior bartender and until then had been able to secure the more profitable weekend shifts based on her seniority. 

A few months after the new bartender began working at the restaurant, the Charging Party learned that the new bartender was serving customers drinks made from a pre-made mix while charging them for drinks made from scratch with more expensive premium liquor. The new bartender was spoken to about this and a note was made in his personnel file. Following this incident, the Charging Party posted various updates on her Facebook page indicating that a coworker was a “cheater” who was “screwing over” the customers, and that dishonest employees and management that “looks the other way” will be the “death of business.” The Charging Party was Facebook “friends” with coworkers, former coworkers, and customers. 

In the days that followed, several coworkers complained to the General Manager about the Charging Party’s Facebook posts, worried that customers would see them. The Employer then discharged the Charging Party for violation of the work rules, specifically for communicating unprofessionally to fellow employees on Facebook. 

In reviewing the case, the Board concluded that the employer’s work rules were unlawfully overbroad because the prohibitions on “disrespectful conduct” and “inappropriate conversations” would reasonably be construed by employees to preclude protected activity under Section 7 of the Act. “Protected concerted activity” is generally found when an employee is engaged in discussions about his or her wages, hours, and terms and conditions of employment with, or on the authority of, other employees, and when such activity is the logical outgrowth of concerns expressed by the employees collectively. The Board upheld the Charging Party’s discharge, however, because it found that her posts on Facebook regarding her fellow bartender’s job performance had only an attenuated connection with terms and conditions of employment.

The case accentuates the line the Board has drawn between: 

1)                          employee protests over quality of service provided by an employer, which are unprotected where such concerns only have a tangential relationship to employee terms and conditions of employment, and

2)                          employee protests addressing the job performance of their coworkers or supervisors that adversely impacts their working conditions, which are protected under the Act.  

If, for example, in this case, the Charging Party had made the posts because she had a reasonable fear that her failure to publicize her coworker’s dishonesty could lead to her own termination, her activity would have been protected. Instead, the Board found that she made the posts because she was upset that he was passing off low-grade drinks as premium drinks and management condoned the action. 

Thus, hospitality employers should be on notice: if you have not done so already, it is time to carefully craft and review your social media policies and any other handbook policy that is broad enough to encompass social media site usage. In addition, be mindful of your disciplinary and discharge decisions based on employee conversations that you may deem inappropriate or unprofessional – for the Board may view them otherwise. 

NLRB Recess Appointments Challenged -- Could Further Postpone Notice Posting

By:  Evan Rosen

As Hospitalty Labor and Employment Law Blog readers are aware, on August 30, 2011, the National Labor Relations Board (the “Board”) issued a rule requiring employers to post notices informing employees of their right to join or form a union.  We blogged about the impact of the notice and its requirements on hospitality employers here.  The rule was originally supposed to go into effect in November, but was subsequently pushed back to January 31, 2012 as a result of mounting criticism against the rule.  Indeed, several lawsuits have been filed by business groups alleging that the Board overstepped its discretion in imposing the rule on employers.  A federal judge in one of the cases recently asked the Board to further postpone the posting requirement so that the legal challenges could be heard, and the Board agreed, this time postponing the rule’s implementation to April 30, 2012

The rule's implementation could be further complicated by President Obama's recent recess appointments to the Board.  On January 5, 2011, three new members were appointed to the NLRB bringing it up to its full compliment of 5 members.  Because the recess appointments were appointed while the Senate conducted pro forma sessions -- and thus was not technically in recess -- several business groups and Congressional leaders have criticized the appointments.  In the lawsuit filed by the National Federation of Independent Business challenging the NLRB's posting requirement, the NFIB, last week, filed an amended complaint asserting new claims that the recess appointments were unconstitutional and illegal.  If the claims are successful, the Board could lose its three recess appointments, leaving it down to only 2 members which would fall below quorum and prevent the Board from issuing any rules or decisions. 

Whether the recess appointments stand and the notice posting is implemented remains to be seen but it brings a lot of uncertainly to hospitaity employers with respect to NLRB compliance.  This is particularly true where unions have been aggressively seeking new hospitality employers to organize.  Stay tuned! 

Top Legal Issues for the Hospitality Industry to Watch in 2012

by:  Matthew Sorensen

 1.      Deadline For Compliance With New ADA Accessibility Rules Approaching:

 On March 15, 2012, hospitality establishments will be required to be in compliance with the standards for accessibility set by the Department of Justice’s final regulations under Title III of the ADA (2010 ADA Standards). The regulations made significant changes to the requirements for accessible facilities, and will require additional training of staff on updated policies and procedures in response to inquiries from guests with disabilities. Among the most significant changes for hospitality businesses are:           

·         New structural and communication-related requirements for automatic teller machines (“ATMs”);

·         Accessible means of entry for pools and spas – for pools, a sloped entry or a pool lift is required for the primary method of entry, and for spas, the means of entry may be a pool lift, transfer wall, or transfer system;

·         At least 60% of public entrances must be accessible as compared with 50% under the former standards;

·         A new requirement to modify hotel policies to ensure that individuals with disabilities can make reservations for accessible guest rooms during the same hours and in the same manner as individuals who do not need accessible rooms;

·         Golf facilities must have either an accessible route or golf cart passages with a minimum width of 48 inches connecting accessible spaces of the golf course.

2.      Tip Credit and Tip Pooling Lawsuits Remain The Lawsuit Du Jour:

 In recent years, the number of individual and collective action lawsuits involving allegations of tip credit and tip-pooling violations by hospitality businesses has significantly increased. Given the ever changing web of state, federal and local laws regarding tip credit and tip pooling arrangements, it is important that hospitality employers with tipped employees periodically audit their pay practices to ensure compliance with all applicable rules. To minimize the risk of tip credit and tip pooling violations employers should ensure that:

·         They inform tipped employees of any tip credit claimed against their wages;

·         Employees report their tips and that proper records of tips are maintained; and

·         Management and other categories of workers who are precluded from participating in tip pools by federal, state or local law do not participate in such pools.

3.      Increase In Organizing Efforts By UNITE HERE:

The NLRB’s new rule amending the procedures for union election cases introduces a number of union-friendly changes to the election process, including the elimination of the right to seek NLRB review of regional directors’ pre-election rulings. These changes increase the risk that unions will seek approval of smaller units for elections that are based on the extent to which employees in such units support union representation. 

In addition, the NLRB has also announced that its new rule requiring employers to post a notice describing employee rights under the NLRA will go into effect on April 30, 2012. The notice has the potential of generating more discussion of unionization among employees as well as more employee and union-initiated representation campaigns. 

It is anticipated that groups like UNITE HERE will likely attempt to capitalize on these recent changes to increase unionization in the hospitality sector.

4.      Social Media Remains A Hot Topic With The NLRB:

As the use of social media has steadily grown among restaurants and hoteliers, so too has the NLRB’s interest in cases involving social media policies and social media-related discipline. While employees do not receive protection under the NLRA merely by posting a work-related complaint on a social media website, under some circumstances employee complaints made using social media may be found to constitute protected concerted activity. 

As such, hospitality employers need to remain cautious when crafting social media policies and any time they contemplate taking adverse action against an employee for social media activity. 

5.      U.S. Supreme Court to Address The Patient Protection and Affordable Care Act (PPACA):

The U.S. Supreme Court is scheduled to address the challenges to the constitutionality of PPACA in 2012 and it is possible that the Court will issue an opinion on the matter before its June break. If the statute, or at least the portion of the statute that applies to employers and insurance companies, is found to be constitutional, hospitality employers with more than 50 employees will be required to provide certain mandated levels of healthcare coverage to all employees who regularly work more than 30 hours per week by 2014, or face penalties. 

Lessons Learned: 

In light of these issues, it is important that hospitality employers take action to evaluate their policies and practices, including those related to pay, social media, employee handbooks, and health insurance to ensure that they are compliant with applicable legal requirements. It is equally important that they plan proactively to address the potential business challenges posed by the NLRB’s new union-friendly election and notice rules and PPACA.