Labor Relations Today

Labor Relations Today

District Court Permanently Enjoins Department of Labor’s Persuader Rule

Posted in Beyond EFCA: Labor's Agenda, Department of Labor, Federal Court Litigation, Representation Elections, Unions

The United States District Court for the Northern District of Texas has made permanent its June 27, 2016 nationwide preliminary injunction against the Department of Labor’s March 2016 Persuader Rule. The rule would, among other things, require financial reporting and disclosure by employers and their consultants of any agreement or arrangement by which the consultant will undertake activities, directly or indirectly, to persuade employees whether or not to exercise their right to organize and bargain collectively. Contrary to decades of precedent, and the sanctity afforded the attorney-client relationship, the new rule would require extensive reporting by employers and their lawyers regarding the nature of their relationship and the content of the legal services provided. The June 2016 temporary injunction branded this new rule “not merely fuzzy around the edges,” but rather, “defective to its core….” National Federation of Independent Businesses et al. v. Perez, 5:16-cv-66 (N.D. Tex. June 27, 2016).

The Department of Labor filed an interlocutory appeal to the Fifth Circuit challenging the preliminary injunction order. On August 22, 2016, Plaintiffs, consisting of business federations, national trade associations, and other employer organizations, filed for summary judgment, seeking a judgment declaring the new Persuader Rule unlawful and a permanent injunction against Defendants on a nationwide basis preventing them from enforcing the rule. Then, on September 28, 2016, ten states, who intervened as Plaintiffs in the action, also filed a motion for summary judgment seeking a permanent injunction against the rule. In their motion for summary judgment briefing, the states argue that the new rule unconstitutionally invades a state’s right to regulate the practice of law:

[T]he New Rule goes well beyond what Congress ever envisioned and presents the classic case of an administrative diktat in search of a problem that the law never sought to solve. In a time of labor relations far removed from the 1950’s, the New Rule turns LMRDA on its head and now functionally enjoins the guarantees of confidentiality, loyalty, and candor that are central to the very existence of attorney-client relationships. Though LMRDA expressly exempts from its scope an intent to interfere with the attorney-client relationship, the New Rule breaches that accord by classifying as public the information shared only between attorney and client, creating impossible circumstances of conflict, and transforming lawyers into vending machines of law rather than the confidants, counsellors, and advisors required by the canons.

In its quest for “transparency,” the New Rule runs roughshod over the foundations of the legal profession and the fundamental right of everyone to be able to confidentially consult with counsel about anything….

In a brief Order, dated November 16, 2016, the Court has denied the Government’s motion, and has granted summary judgment to the Plaintiffs and Intervenors.  Incorporating its Preliminary Injunction Order by reference, the Court has ruled that the March 24, 2016 “Persuader Advice Exemption Rule” should “be held unlawful and set aside,” and has converted the injunction into “a permanent injunction with nationwide effect.”  Presumably withdrawal of all appeals by the incoming administration would effectively terminate the rule once and for all, but either way, for the time being, there is no need for employers – or their counsel – to comply with the enjoined regulations.

Does Trump’s Election Signal the Demise of Recent Labor Regulations?

Posted in Department of Labor, NLRB, NLRB Administration, NLRB Rule-Making, Persuader Rules, White House

The election of Donald Trump places numerous regulations issued under the Obama administration in jeopardy, including the Department of Labor’s Persuader Rules, the National Labor Relations Board’s “Quickie” Election Rules, and the Department of Labor & FAR Council’s Fair Pay & Safe Workplaces Regulations.

Currently, these rules are essentially immune from Congressional challenge given President Obama’s veto power. Although the Congressional Review Act (“CRA”) gives Congress 60 legislative days after the effective date of a new rule to invalidate the rule, any Congressional action under the CRA can be vetoed by the sitting President.  Similarly, although Congress can overturn agency rulemaking through explicit statutory mandates, any such measures will again be subject to President Obama’s veto.  The President has already exercised his veto power to block Congressional attempts to invalidate the Board’s modified election rules.  It is unlikely that Republicans could muster the 2/3rds vote required in both chambers to overcome a Presidential veto.

Once President-Elect Trump takes office in January, these rules can be more easily removed through either Congressional action or agency action. As discussed above, Congress can overturn agency rulemaking through the CRA or through explicit statutory mandates.  With Republicans dominating both houses and Trump in office, successful Congressional reversal is more likely — although still subject to the political pressure of the filibuster in the Senate where Democrats will hold 48-49 votes in their caucus.

Trump can also rescind any executive orders issued by Obama, including the Fair Pay & Safe Workplaces Executive Order; however, such rescission has no effect on the rules which implement the executive orders. For rules that have not yet gone into effect, Trump can suspend them, essentially postponing their effective date.  Unfortunately, the official effective dates for the Persuader Rules, the NLRB Election Rules, and the Fair Pay & Safe Workplaces Rules have passed.  For these and other similar rules, the Trump Administration can reverse or revise them, but must do so through the extensive rulemaking process, which includes a notice and comment period, the need for a reasoned analysis for why the repeal or revision was necessary, and a 60-day waiting period.  The rulemaking process will take time and will likely be subject to judicial challenge by pro-labor entities.  In the meantime, the Obama Administration rules remain “on the books,” subject to judicial review.

Both the Persuader Rules and the Fair Pay & Safe Workplaces Rules are currently being challenged through court litigation and have been preliminary enjoined.  Once Trump takes office, the Department of Justice could decide not to defend these rules and could consent to a settlement and court order reversing the implementation of these rules.

Ultimately, the lengthy list of regulations finalized during the Obama presidency are at risk of being undermined, and it remains to be seen what major labor law changes might result from a Trump presidency.

Despite Injunction of the Blacklisting Rule’s Reporting Requirements, NLRB Will Continue to Request ‘Blacklisting Information’ from Employers

Posted in Executive Orders, Federal Court Litigation, Government Contracting, Government Contracts, NLRB, NLRB Administration

As we noted this summer, on July 1, 2016, the National Labor Relations Board issued Memorandum OM 16-23 specifying that it would begin collecting data for a federal database to comply with the Fair Pay and Safe Workplaces Executive Order despite the fact that the final rule implementing the EO had not been approved. Specifically, the NLRB announced that, beginning July 1, it would request the following information from employers once the Regional Director decided to issue a complaint based on an unfair labor practice charge:

  1. Is the charged party employer a federal contractor now or in the past? If so, its Commercial and Government Entity (“CAGE”) number;
  2. The charged party employer’s Data Universal Numbers System (“DUNS”) number, if it has one;
  3. The charged party employer’s four-character DUNS number suffix (DUNS+4), if it has one; and
  4. The charged party employer’s Employer Identification Number (EIN) or Taxpayer Identification Number (TIN).

On August 24, 2016, the administration published the Federal Acquisition Regulatory (FAR) Council’s final rule implementing the EO with an effective date of October 25, 2016. However, on October 24, 2016, a federal judge in Texas enjoined the reporting requirements of the final rule pending further litigation.

Despite that injunction, on November 7, 2016, the NLRB’s General Counsel issued Memorandum OM 17-03 expressing its intent to continue collecting the four data points from employers:

On October 24, 2016, the United States District Court for the Eastern District of Texas issued an order, preliminarily enjoining implementation of key aspects of EO 13673 (Fair Pay and Safe Workplaces). While the eventual outcome of the underlying suit in that case, Associated Builders and Contractors of Southeast Texas v. Rung, Civil Action No. 1:16-CV-425, is unknown, the Agency is not proceeding with sharing information with other Agencies in the manner contemplated by the Executive Order while the injunction is in effect.

Having developed an infrastructure to collect and enter the CAGE, DUNS,DUNS+4, and EIN/TIN, and since such information is useful for internal Agency purposes, Regions should continue to request that employers, other than the United States Postal Service, complete and return Form NLRB-5554. Regions should also enter responses they receive into the NxGen electronic case-management system. The language attached should be used to solicit employers to complete Form NLRB-5554. If you have any questions regarding the foregoing, please contact your Deputy or AGC.

The memorandum, however, does not specify how the requested information is “useful for internal Agency purposes,” but the supplied transmittal language for Form NLRB-5554 suggests that the usefulness is very limited:

Greetings – The Region has made a determination to issue a complaint in the above-referenced case, absent prompt settlement. You are requested to complete the Form 5554 and submit it to the Agency, preferably through the Agency’s e-filing portal. This information will help the Agency avoid confusing similarly-named entities.

(emphasis added).

Federal District Court Enjoins Reporting and Arbitration Requirements in Administration’s Contractor Blacklisting Rules; Allows Paycheck Transparency Provisions to Stand

Posted in Davis-Bacon, Department of Labor, Executive Orders, Federal Court Litigation, Government Contracting, Government Contracts, NLRA, White House

On the eve of its effective date, a federal judge in Texas has enjoined most parts of the Federal Acquisition Regulatory (FAR) Council’s final rule implementing President Obama’s “Fair Pay and Safe Workplaces” executive order.  The court’s Order in Associated Builders and Contractors of Southeast Texas et al. v. Rung et al., Case No. 1:16-cv-00425 (E.D. Tex. Oct. 24, 2016) blocks the reporting and arbitration agreement provisions, pending further litigation of the case; but, declines to enjoin the “paycheck transparency” provisions of the rule.

As outlined in greater detail here, the rule would require offerors on contracts or subcontracts estimated to exceed $500,000 to disclose “any administrative merits determination, arbitral award or decision, or civil judgment” against the contractor under fourteen enumerated labor and employment statutes and Executive Orders (“labor law violations”), for the three years preceding the contract bid. These disclosures, and any additional information supplied, would be taken into account by contracting officers in making responsibility determinations and awarding contracts.

In issuing the injunction, U.S. District Judge Marcia Crone asserted that Plaintiff’s enjoy a likelihood of success on the merits insofar as the implementation of this regulatory scheme exceeds the authority granted to the President and executive branch agencies. Not only do the named labor laws provide their own respective enforcement procedures and penalties, the Judge noted:

The Order and Rule appear to conflict directly with every one of the labor laws they purport to invoke by permitting disqualification based solely upon ‘administrative merits determinations’ that are nothing more than allegations of fault asserted by agency employees and do not constitute final agency findings of any violation at all.

The Judge found merit too in the Plaintiffs’ arguments that the rule violates a contractor or bidder’s First Amendment rights to be free from “compelled speech,” and their Due Process rights, including under the Fifth Amendment to the U.S. Constitution. The court found infringement of these constitutional rights sufficient to establish irreparable harm, while noting the government will suffer no harm by simply being required to continue to administer the procurement process in the same manner as it has for decades.   Moreover, Judge Crone held that the rule’s prohibition against arbitration agreements likely conflicts with the Congressional enactments contained in the Federal Arbitration Act. Thus, all these provisions are enjoined by the Order.

Without much further detailed explanation, the Order simply indicates that the Plaintiffs failed to establish a substantial likelihood of success on their challenge to the paycheck transparency provisions, on the other hand, and thus, an injunction was denied as to that portion of the final rule.  Accordingly, contractors should prepare for the January 1, 2017 effective date of those provisions barring further address by the court.  These provisions of the final rule require the contractor to provide a wage statement document each pay period to each employee showing:

  • The total number of hours worked in the pay period;
  • The number of those hours that were overtime hours;
  • The rate of pay;
  • The gross pay; and
  • Any additions or deductions, itemized and separately identified.

Moreover, if the contractor is treating an individual performing work as an “independent contractor” as opposed to an employee, the contractor must provide a separate written document to the individual notifying the individual of this classification by the contractor.  The full text of the paycheck transparency provisions is located at Section 52.222-60 of the Federal Acquisition Regulation.

ALJ Strikes Down (Another) Workplace Civility Rule and Ban on Photographs at Las Vegas Casino

Posted in NLRA, Unfair Labor Practices, Workplace Rules

On September 26, 2016, an ALJ struck down several workplace rules at a casino in Las Vegas, including two rules that prohibited “inappropriate conduct” and taking photographs on the casino floor.  The ALJ found that, although the rules did not violate Section 7, a reasonable employee could interpret the rules as prohibiting them from engaging in concerted, protected activity and, therefore, were unlawful under the Act.

This decision marks yet another ruling striking down workplace civility rules. In this latest case, the ALJ found that the casino’s rule encouraging employees to “[d]isplay[] appropriate behavior at work” and prohibiting employees from “engaging in misconduct on or off-duty that (as determined by [the casino]) materially and adversely affects job performance or tends to bring discredit to [the caisno]” was ambiguous and overbroad.

The ALJ found the a reasonable employee could construe the rule as prohibiting discussions about supervisory or management decisions and could ultimately “chill” employees’ Section 7 rights.  The ALJ further found that the rule contained a “patent ambiguity.” The ALJ reasoned that the rule could be “easily interpreted” to prohibit an untold number of activities that might “affect job performance” or “bring discredit to the casino,” including protesting working conditions or talking about terms and conditions of employment.  Although the ALJ recognized that some forms of speech can be prohibited – such as abusive, injurious, or threatening language – the ALJ found that this rule failed to make clear that it was limited to such non-protected speech.

The ALJ also found that the casino’s rule prohibiting employees from taking photographs or making recordings on the casino floor was overbroad and not narrowly tailored.  The rule prohibited employees from actively taking photos and from using personal devices, such as cell phones with cameras, while on duty.  The ALJ found that employees have a right to photograph working conditions in furtherance of concerted activity, including, among other things, to record images of protected picketing, document unsafe workplace equipment or hazardous working conditions, document and publicize discussions about terms and conditions of employment, document inconsistent application of employer rules, or record evidence to preserve it for later use in administrative or judicial forums in employment related actions.

Although such bans on photographs are common at casinos to protect patron privacy, the ALJ found that the rule was not narrowly tailored to protecting patron privacy.  Instead, the ALJ found that the rule was overbroad and would lead a reasonable employee to interpret the rule as prohibiting photographs of working conditions.

NLRB’s Coffin Corner Punt Pins Private Universities’ Sports Programs in Perilous Spot

Posted in NLRA, Social Media, Unfair Labor Practices

In an advice memorandum issued on September 22, 2016, the National Labor Relations Board’s Office of the General Counsel declined to issue a complaint against Northwestern University for certain football team rules despite finding those rules violative of the National Labor Relations Act. Unlike the Board’s decision not to assert jurisdiction over the unionization effort of scholarship football players at Northwestern University last year, the General Counsel’s Division of Advice’s decision does not purport to be based on the potential complexities created by finding student athletes to be statutory employees under the Act. Instead, the Division of Advice asserts that “it would not effectuate the policies and purposes of the NLRA to issue complaint in this case because the Employer, although still maintaining that athletic scholarship football players are not employees under the NLRA, modified the rules to bring them into compliance with the NLRA and sent the scholarship football players a notice of the corrections, which sets forth the rights of employees under the NLRA.”

The rules at issue were a social media policy, a policy limiting disclosure of strategies and player injuries, a dispute resolution procedure, and a rule for communicating with the media set forth in the University’s Football Handbook applicable to members of the team. The Division of Advice, assuming for purposes of its memorandum that scholarship athletes are statutory employees, found that each policy as originally drafted violated the Act. While the Division of Advice found that the university corrected the violations by revising or striking the policies in response to the unfair labor practice charge, the Division of Advice concluded that the university did not adequately repudiate the unlawful rules under the Board’s Passavant standard. Nevertheless, the General Counsel’s Division of Advice advised the regional office to dismiss the unfair labor practice charge.

Given that the General Counsel believed that it had sufficient basis to issue a complaint, what might explain this uncharacteristic decision? First, given that such gracious gestures by the NLRB are few and far between (as evidenced by its aggressive tactics), the reason may be that the NLRB remains hesitant, for the time being, to find that student athletes are statutory employees given that it is an election year. Second, the NLRB may be battling for field position by using this advice memo to set up such a decision in the future, as the advice memo certainly puts private universities on notice that while the NLRB may not be willing to let student athletes unionize–at least not yet–the NLRB is poised to treat student athletes as statutory employees for all other purposes under the Act. Accordingly, while private universities currently do not have to worry about unionization of their scholarship athletes, they should prepare themselves for potential challenges under the NLRA to their rules governing the conduct of student athletes, as well as how the NLRB’s position might impact other aspects of their relationships with student athletes (e.g., wage and hour issues, workers’ compensation, etc.).

Eleventh Circuit Finds Error in National Labor Relations Board’s “Mixed-Use” Analysis

Posted in Federal Court Litigation, NLRA, NLRB

In a 2-1 decision, the Eleventh Circuit Court of Appeals (the “Eleventh Circuit”) largely upheld the National Labor Relations Board’s (the “Board”) decision that an automobile manufacturer violated the National Labor Relations Act (the “Act”) by 1) maintaining an overly broad rule prohibiting solicitation and distribution and 2) prohibiting employees not on working time from distributing union literature in its mixed-use atrium. Mercedes-Benz U.S. International, Inc. v. NLRB, Case No. 15-10291 (11th Cir. October 3, 2016).  The Eleventh Circuit, however, reversed the Board’s conclusion that the automobile manufacturer unlawfully barred distribution of union literature in its team centers, finding that the Board engaged in a faulty mixed-use analysis and ordered an overly broad remedy.

The automobile manufacturer maintained a rule that prohibited solicitation and/or distribution of non-work related materials during work time or in working areas. The Board found this rule presumptively unlawful because it could reasonably be read to prohibit solicitation in work areas by employees not on working time.  The Board also found that the automobile manufacturer failed to rebut the presumption of unlawfulness even though it “generally allowed employees to discuss the union in the workplace” and “truly sought to be neutral” toward the union.  The Eleventh Circuit agreed, concluding that the automobile manufacturer’s attitude of neutrality did not “clearly convey” its intent to permit protected solicitation in work areas by employees not on working time.  Although it affirmed the Board’s finding, the Eleventh Circuit explicitly rejected the General Counsel’s argument that the “mere maintenance” of an overly broad non-solicitation policy violates the Act without regard to an employer’s communications permitting protected solicitations.

The Eleventh Circuit also affirmed the Board’s finding that the automobile manufacturer violated the Act when it reprimanded two employees for distributing handbills in the atrium even though the automobile manufacturer subsequently rescinded the reprimand and informed the employees that it would permit distribution in the atrium. Before the administrative law judge, the automobile manufacturer argued that any interference with the employees’ rights under the Act was de minimis because it was corrected within hours.  On appeal to the Eleventh Circuit, however, the employer argued that the conclusion that the atrium was a mixed-use area was erroneous.  The Eleventh Circuit declined to consider this argument because the automobile manufacturer waived it by failing to raise it before the Board.

The appellate court, however, held that the Board erred in concluding that the automobile manufacturer unlawfully barred employees from distributing literature in one of its team centers and compounded its error by imposing its remedial order on all nineteen team centers at the plant. The manufacturer’s team centers, the majority of which are located adjacent to the production line, serve several functions, including offices for line-level managers, observation posts for engineers and quality control personnel, “second offices” for human resources staff and upper management, and rooms for pre-production meetings.  The team centers also are equipped with refrigerators, microwaves, and picnic tables, and employees occasionally use the team centers during shift and meal breaks.  Based on evidence pertaining to one team center, the administrative law judge concluded, and the Board agreed, that all of the team centers are mixed-use areas, such that the automobile manufacturer could not prohibit distribution of union literature.  The Eleventh Circuit disagreed with both the Board’s analysis and its remedy.

Reviewing Board and federal court precedent, the Eleventh Circuit faulted the Board for failing to recognize the difference between “converted” and “permanent” mixed-use areas. The appellate court explained that when a production area is converted to a non-work area (e.g., during lunch), an employer cannot prohibit distribution during the non-work period.  “This is the essence of the distinction between converted mixed-use areas and permanent mixed-use areas,” the Eleventh Circuit stated.  The court concluded that the Board erroneously treated the team center as a permanent mixed-use area without making the requisite findings as to the volume and nature of work and non-work activity.  Noting that Board precedent may support a finding that the team centers were converted mixed-use areas during certain non-work times, the Eleventh Circuit remanded the case for the Board to consider whether the evidence supports such a finding.  The Eleventh Circuit also found the Board’s remedy of requiring the automobile manufacturer to cease and desist prohibiting the distribution of literature in all nineteen team centers was overly broad “by a factor of 19,” as the Board considered evidence pertaining to one team center only.

Judge Martin dissented from the majority opinion on the grounds that “[t]he Board does not impose this distinction [between converted and permanent mixed-use areas] on its factfinders” and that it was beyond the court’s “institutional role to create these categories and require the Board to apply them.”

D.C. Circuit Scolds NLRB for ‘Bad Faith’, ‘Abusive Tactics’ and ‘Extremism’

Posted in Duty to Bargain, Federal Court Litigation, NLRA, NLRB

The United States Court of Appeals for the District of Columbia Circuit issued a scathing rebuke to the National Labor Relations Board for “abusive tactics and extremism” and ordered the Board to pay an employer nearly $18,000 in legal fees incurred due to the Board’s “bad faith litigation” in Heartland Plymouth Court MI, LLC v. NLRB, No. 15-1034, decided September 30, 2016.

The Board sued employer Heartland on the theory that the employer unlawfully refused to bargain on a matter allegedly within the scope of a collective bargaining agreement without a “clear and unmistakable” waiver.  D.C. Circuit precedent has consistently rejected that theory, regarding the contents of a CBA to be a question of “contract coverage.”  Heartland appealed the Board’s adverse order to the D.C. Circuit in 2013. That decision was held in abeyance pending the Supreme Court’s ruling in NLRB v Noel Canning. When the Supreme Court found the recess appointments of two Board members unconstitutional, the Board set aside its order against Heartland. A new Board panel readopted its prior order.  Heartland appealed the order again.

Rather than attempting to transfer the appeal to the Sixth Circuit — which embraces the Board’s “clear and unmistakable” waiver policy and covers Michigan where the conduct underlying the dispute occurred — the Board doubled down on its challenge to the D.C. Circuit’s precedent and cross-petitioned for enforcement in that Court.  “In lieu of its legitimate options,” the D.C. Circuit wrote, “the Board chose obstinacy.”

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Business Organizations and Ten States Move for a Nationwide Permanent Injunction Against DOL’s New Persuader Rule

Posted in Department of Labor, NLRB Rule-Making, Persuader Rules

In June 2016, the United States District Court for the Northern District of Texas entered a nationwide preliminary injunction against the Department of Labor’s new Persuader Rule, finding that the “DOL’s New Rule is not merely fuzzy around the edges. Rather, the New Rule is defective to its core because it entirely eliminates the LMRDA’s Advice Exemption.” National Federation of Independent Businesses et al. v. Perez, 5:16-cv-66 (N.D. Tex. June 27, 2016).  Defendants in that case have filed an interlocutory appeal to the Fifth Circuit challenging the preliminary injunction order.  For a more detailed discussion about the new Persuader Rule and the preliminary injunction, see our June 28th post.

On August 22, 2016, Plaintiffs, consisting of business federations, national trade associations, and other employer organizations, filed for summary judgment, seeking a judgment declaring the new Persuader Rule unlawful and a permanent injunction against Defendants on a nationwide basis preventing them from enforcing the rule.

On September 28, 2016, 10 states, who have intervened as Plaintiffs in the action, also filed a motion for summary judgment seeking a permanent injunction against the rule. The ten states include Alabama, Arkansas, Indiana, Michigan, Oklahoma, South Carolina, Texas, Utah, West Virginia, and Wisconsin.  In their motion for summary judgment briefing, the states argue that the new rule unconstitutionally invades a state’s right to regulate the practice of law:

[T]he New Rule goes well beyond what Congress ever envisioned and presents the classic case of an administrative diktat in search of a problem that the law never sought to solve. In a time of labor relations far removed from the 1950’s, the New Rule turns LMRDA on its head and now functionally enjoins the guarantees of confidentiality, loyalty, and candor that are central to the very existence of attorney-client relationships. Though LMRDA expressly exempts from its scope an intent to interfere with the attorney-client relationship, the New Rule breaches that accord by classifying as public the information shared only between attorney and client, creating impossible circumstances of conflict, and transforming lawyers into vending machines of law rather than the confidants, counsellors, and advisors required by the cannons.

In its quest for “transparency,” the New Rule runs roughshod over the foundations of the legal profession and the fundamental right of everyone to be able to confidentially consult with counsel about anything. Intervenors joined this lawsuit because they possess a sovereign interest in regulating the practice of law within their borders, as well as the right of their judiciaries to promulgate and maintain the longstanding ethical responsibilities owed by attorneys to their clients, and the public at large. Intervenors are committed to protecting the sanctity of the attorney-client relationship—something that “has existed since time immemorial” and “was designed to protect the client against harassment in case somebody tried to compel him by process or otherwise to disclose conversations, confessions, and statements which might have been interchanged between lawyer and client.”

As previously discussed, given the ongoing litigation and appeals, the fate of the DOL’s new Persuader Rule remains uncertain, and it would be prudent for employers to continue to prepare for the possibility of enforcement of the new Persuader Rule in the future.

Federal Judge Upholds Wisconsin Right to Work Law, But State Court Challenge is Still Pending

Posted in Federal Court Litigation, NLRA, Right to Work, State/Local Issues

In another “chapter in the ongoing, national debate about the role that labor unions play in the modern workplace and the extent to which they may be regulated by both state and federal governments, on Monday, September 26, U.S. District Judge J.P. Stadtmueller entered an order upholding Wisconsin’s right to work law that was enacted in 2015. The lawsuit was brought by two local unions of the International Union of Operating Engineers claiming that the law violated the National Labor Relations Act and unconstitutionally took something of value from the unions without compensation. The union’s latter claim was based:

on the interplay between: (1) the union’s obligation under federal law to fairly represent all persons in the bargaining unit, and (2) Wisconsin’s prohibtion on the collection of representation fees. … In other words, the plaintiffs claim that in being compelled to provide equal representational services to non-dues-paying and non-representation fee-paying persons within their bargaining unit, [the Wisconsin law] effectuates a “taking” of their property.

Relying on the Seventh Circuit’s recent decision upholding Indiana’s right to work law, Sweeney v. Pence, 767 F.3d 654 (7th Cir. 2014), Judge Stadtmueller granted judgment in favor of the state. In Sweeney, the Seventh Circuit, in a 2-1 decision, affirmed dismissal of the challenge to Indiana’s similar right to work law on the grounds that it was not preempted by the NLRA, and while not necessary to its decision, concluded that the statute did not constitute a taking. The Seventh Circuit concluded that the Indiana law did not constitute an unconstitutional taking because:

“the union is justly compensated by federal law’s grant to the Union the right to bargain exclusively with the employer.” … In other words, Indiana’s right to work law did not constitute a taking because, under the NLRA, the plaintiffs’ federal duty to fairly represent all unit employees during the collective bargaining process was “compensated” by their exclusive “seat at the negotiation table.”

As the parties did not dispute, and the Court agreed, that Sweeney all but controlled the disposition of the case, the court found that the Wisconsin law was not preempted by the NLRA and did not work an unconstitutional taking.

Interestingly, a state circuit court struck down the law as unconstitutional in April, but the state appeals court put that ruling on hold in May as it considers the case.