Labor Relations Today

Labor Relations Today

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.

General Counsel Urges Board to Disallow Permanent Replacements During Economic Strikes, Absent Employer Proof of Necessity

Posted in NLRA, NLRB Decisions, Strikes, Unfair Labor Practices

In connection with pending exceptions to an ALJ decision in United Site Services of California, the General Counsel has argued that the Board should change existing law to hold that an employer violates the Act when it permanently replaces striking employees without “a legitimate and substantial business justification.”  The case is now fully briefed before the full Board.

Under existing law, an employer that refuses to reinstate economic strikers violates § 8(a)(3) of the National Labor Relations Act unless it can demonstrate that it acted to advance a “‘legitimate and substantial business justification.”  But the hiring of permanent replacement workers in and of itself has generally satisfied that requirement.  As the ALJ explained in his decision in United Site Services of California, Cases 20-CA-139280, -149509, JD(SF)-14-16 (March 17, 2016):

“[w]here employees have engaged in an economic strike, the employer may hire permanent replacements whom it need not discharge even if the strikers offer to return to work unconditionally.” Belknap, 463 U.S. at 493, 103 S.Ct. 3172. At the same time (as the Board recognized), the Act is violated if “an independent unlawful purpose” motivated the hiring of 5 permanent replacements. 1 Bd. Decision at 5; see also Hot Shoppes Inc., 146 NLRB 802, 805 (1964). As with other elements of an unfair labor practice, the General Counsel cannot prevail without a finding that the employer had an independent unlawful purpose. See NLRB v. Transportation Mgmt. Corp., 462 U.S. 393, 401, 103 S.Ct. 2469, 76 L.Ed.2d 667 (1983).

The General Counsel now urges the Board in a brief to depart from these well-established precedents and place the full burden on the employer to establish “necessity” to use permanent replacements during a strike.  The standard urged by the General Counsel would hold that

[an] employers’ permanent replacement of economic strikers is inherently destructive of employees’ statutory rights, and therefore requires a showing by the employer that it is necessary to continuing operations during a strike.

Adoption of this new standard would significantly enhance the power of labor’s main economic weapon — the strike — in economic bargaining.  It has generally been the Board’s tradition to avoid overruling clear precedent in a case without the approval of a three-member majority. Right now, of course, there remain only three Board Members — Chairman Mark Gaston Pearce and Member Lauren McFerran, Democrats; and, Member Philip Miscimarra, Republican. So while a three member consensus on this argument is highly unlikely under the current circumstances, this should be an issue to keep an eye on in 2017.

The full set of briefing papers in the case is available on the Board’s website here.

Board Member Hirozawa Endorses “Members Only” Union Recognition in Concurring Opinion as Term Expires

Posted in Beyond EFCA: Labor's Agenda, Duty to Bargain, Negotiations, NLRA, NLRB Decisions, NLRB Rule-Making

In one of the final decisions of his expired term, Board Member Kent Hirozawa sanctioned a long-rejected interpretation of the National Labor Relations Act which would impose an obligation on employers to bargain with “members only” unions. Endorsing a theory outlined most thoroughly by Professor Charles Morris in his 2005 book, “The Blue Eagle at Work,” Member Hirozawa would not require a union to obtain “exclusive” recognition or majority status before Section 8(a)(5) bargaining obligations attach.

At issue in Children’s Hospital of Oakland, 364 NLRB No. 114 (Aug. 26, 2016), was whether an employer has an obligation to arbitrate earlier arising grievances with a superseded union that no longer represents a majority of the employees. The majority decision, signed by Members Lauren McFerran and Philip Miscimarra, found that such an employer must do so because it has “a continuing duty to arbitrate grievances that arose during its bargaining relationship with the Union.”  Member Hirozawa, however, would go farther than this and require resolution of the grievances regardless of the majority or non-majority status of the union.

Member Hirozawa’s concurrence highlights two sections of statutory text in support of his position.  First, he notes that Section 8(a)(5) simply requires bargaining “subject to the provisions of section 9(a)” — and not specifically only if the union is “the representative of the employees as provided in section 9(a).”  (Emphasis added). Next, he suggests the breadth of Section 7’s text — “Employees shall have the right…to bargain collectively through representatives of their own choosing…” – is unfettered by express reference to Section 9(a) majority status.

The notions laid out in this concurring opinion, however, have found little or no support historically — underscored by the fact that no Board majority has read the largely unchanged statutory text this way in several decades.  In 2006, the Steelworkers filed an unfair labor practice charge against Dick’s Sporting Goods, asserting the employer’s refusal to recognize and bargain with a minority union violated the Act.  The Board’s Division of Advice directed the Regional Office to dismiss the charge, squarely rejecting the arguments advanced in the concurrence here:

We conclude that the Employer did not violate Section 8(a)(1) or (5) because the Employer in these circumstances had no obligation under the Act to recognize the Charging Party in the absence of a Board election establishing that it represented a majority of the Employer’s employees. This principle is well-settled and is not an open issue. Our conclusion is based on the statutory language, the legislative history, and Board and Supreme Court decisions interpreting the Act, which underscore that the statutory obligation to bargain is fundamentally grounded on the principle of majority rule.

Undeterred, the Steelworkers and a consortium of allied labor organizations filed rule-making petitions with the NLRB in 2007 and 2008. Despite the Board’s aggressive rule-making agenda during President Obama’s administration, it has to date declined to modify its “well-settled” principle requiring union majority status before imposing a bargaining obligation.

D.C. Circuit Judge to NLRB: Stop Tolerating Racist and Sexist Behavior by Strikers

Posted in Federal Court Litigation, NLRB, NLRB Decisions, Picket Line Activity

In a strongly penned concurring opinion, a D.C. Circuit Court of Appeals Judge took the National Labor Relations Board to task on Tuesday for

the too-often cavalier and enabling approach that the Board’s decisions have taken toward the sexually and racially demeaning misconduct of some employees during strikes.

The D.C. court’s decision in Consolidated Communications v. NLRB, — F.3d –, Case No. 14-1135 (D.C. Cir. Sept. 13, 2016), largely upheld the findings of the Board that the employer unlawfully terminated and/or suspended a number of employees for strike-related misconduct.  The decision sets forth the Board’s long-standing standards for protecting strike conduct and for disqualification from such protection. Applying these standards to the striker misconduct in the cases at hand, the court concluded that most of these incidents were not severe enough to lost the Act’s protection and warrant the discipline imposed.

In one of the relevant incidents, the Board concluded that a striker did grab his crotch and made obscene and intimidating gestures toward a female employee reporting to work. Nevertheless, the Board also held that this behavior was not sufficiently egregious to warrant the suspension imposed by the employer following the strike. On review, the D.C. Court of Appeals held:

Given the rough-and-tumble nature of picket lines and the fleeting nature of [the striker’s] offensive misconduct, we cannot conclude that the Board erred in its assessment of the objective impact of this particular conduct in this instance. See Allied Indus. Workers, 476 F.2d at 879 (“‘Impulsive behavior on the picket line is to be expected especially when directed against nonstriking employees or strike breakers.’”) (quoting Montgomery Ward & Co., 374 F.2d at 608 ); NMC Finishing v. NLRB, 101 F.3d 528, 532 (8th Cir. 1996) (noting the “rough and tumble economic activity permitted by the policies established by Congress through the NLRA”).

It is this holding that appears to have compelled Circuit Judge Millett to write separately. In a remarkable eight-page concurring opinion, Judge Millett catalogs the recent examples of the Board’s countenance of racial epithets, and older cases permitting misogynous vulgarities directed at women.  In her view: Continue Reading

NLRB Division of Advice Asserts Misclassification of Employees Itself Interferes with Section 7 Rights

Posted in Division of Advice, NLRA, NLRB, Unfair Labor Practices

In a General Counsel Advice Memorandum released in late August 2016, the NLRB Division of Advice found that employers who misclassify employees as independent contractors violate Section 8(a)(1) of the NLRA by restraining the employees’ section 7 rights to engage in concerted, protected activity.  The Memorandum, which is dated December 18, 2015, but was only recently made public, concerned drayage company Pacific 9 Transportation, which operates a fleet of approximately 160 trucks and 180 drivers to transport shipping containers in and around the ports of Los Angeles and Long Beach.

Like many employers who wish to utilize an independent contractor model, Pacific 9 required each driver to sign an agreement that the driver was an independent contractor and that the driver, among other things, could accept or decline any shipment offered, was not required to lease or purchase a truck from Pacific 9, and would acquire his or her own insurance.

In the course of a prolonged corporate campaign to organize the drivers, the Union filed a Charge with the NLRB Regional Office alleging, among other things, that Pacific 9 threatened to close its facility if drivers supported the Union.  Pacific 9 argued that the drivers were not statutory employees and, therefore, the Board lacked jurisdiction.  The Region found that the drivers were statutory employees, and the parties settled the charge. Pacific 9 then distributed a memo to drivers doubling down on its classification position. The memo stated, among other things, that Pacific 9 had no employee drivers, only owner operators and independent contractors, and that only employees have the right to form a union. This resulted in revocation of the settlement and subsequent enforcement proceedings.

But the Union also filed a new Charge alleging that Pacific 9’s misclassification of drivers as independent contractors in itself violated Section 8(a)(1), and the Region submitted the case for advice.  Continue Reading

NLRB Continues to Expand the Reach of the NLRA by Exercising Jurisdiction Over Charter Schools

Posted in NLRA, NLRB, NLRB Decisions

In two decisions issued last month, Pennsylvania Virtual Charter School, 364 NLRB No. 87 (Aug. 24, 2016) and Hyde Leadership Charter School—Brooklyn, 364 NLRB No. 88 (Aug. 24, 2016), the National Labor Relations Board continued to crystallize consensus in its decisions exercising jurisdiction over charter schools.

Under Board precedent, an entity is considered a political subdivision exempt from the coverage of the Act if it is either (1) created directly by the state so as to constitute a department or administrative arm of the government, or (2) administered by individuals who are responsible to public officials or to the general electorate.

The Board noted that it “has routinely found employing entities to be exempt political subdivisions where they were created by legislation or statute in order to discharge a state function” or “created by an act of the judiciary.” However, the Board distinguished the Pennsylvania Virtual Charter School (“PVCS”) and the Hyde Leadership Charter School—Brooklyn (“Hyde”) by finding that private individuals actually bore responsibility for their creation.  Even though by Pennsylvania statute, charters schools must be established and operated under a charter issued by the Pennsylvania Department of Education, in the Pennsylvania case, the Board found that PVCS was not exempt because a group of private individuals organized and filed the application for the charter.  Similarly, even though by New York statute, a charter school must be approved by the Board of Regents and is defined as a political subdivision, in Hyde the Board found that it was a private individual’s “initiative and her and the founding board’s preparatory work . . . that ‘created’ the School.”  The Board also found that the charter schools were not exempt even though they were substantially regulated under state and local laws.  Further, the Board decided that it would not decline to assert jurisdiction over the charter schools under Section 14(c)(1) of the Act despite their local character.

The Board’s decision came despite opposition from the union representing New York school teachers and several amici. Board Member Philip Miscimarra dissented from both decisions, noting that “charter schools operate as K-12 public schools, they are substantially regulated under state and local laws, and they are overseen by state and local authorities.”

Ultimately, these decisions, in combination with the Board’s recent decisions involving university graduate assistants, will continue to facilitate unionization via Board processes in American educational institutions at all levels.

Administration Releases Final Blacklisting Regulations for Government Contractors

Posted in Department of Labor, Executive Orders, Government Contracting, Government Contracts

On Wednesday, August 24, 2016, the President’s administration published the Federal Acquisition Regulatory Council’s final rule and the Department of Labor’s guidance implementing the July 31, 2014 “Fair Pay and Safe Workplaces” Executive Order 13673. The “blacklisting” Order and its implementing regulations subject existing and prospective government contractors to a broad new set of record-keeping, reporting and compliance requirements. Failure to fulfill these obligations and exhibit compliance with all applicable federal and state labor laws would expose the contractor to the prospects of disqualification, suspension, or debarment.

What’s In the Final Blacklisting Rule

The final rule closely tracks the proposed rule issued in May 2015, and thus still requires offerors on contracts or subcontracts estimated to exceed $500,000 must disclose “any administrative merits determination, arbitral award or decision, or civil judgment” against the contractor under the following fourteen enumerated federal statutes and Executive Orders (labor law violations), for the three years preceding the contract bid:

  • the Fair Labor Standards Act (FLSA);
  • the Occupational Safety and Health Act of 1970 (OSHA);
  • the Migrant and Seasonal Agricultural Worker Protection Act (MSPA);
  • the National Labor Relations Act (NLRA);
  • the Davis-Bacon Act;
  • the Service Contract Act;
  • Executive Order 11246 (Equal Employment Opportunity);
  • the Rehabilitation Act of 1973;
  • the Vietnam Era Veterans’ Readjustment Assistance Act of 1972 and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974;
  • the Family and Medical Leave Act (FMLA);
  • Title VII of the Civil Rights Act of 1964 (Title VII);
  • the Americans with Disabilities Act of 1990 (ADA);
  • the Age Discrimination in Employment Act of 1967 (ADEA); and
  • Executive Order 13658 (Minimum Wage for Contractors).

The information must be disclosed when submitting the bid, and then every six months during the term of the contract.

The information reported will then be considered by the contracting agency’s contracting officer when making responsibility determinations during the contract award process. The final rule left unchanged the new categories of labor law violations —i.e., “serious,” “repeated,” “willful,” and “pervasive” violations– that may be considered evidence of “a lack of integrity or business ethics” sufficient to disqualify a contractor from consideration for a contract. Covered contractors and subcontractors are required to update all this information every six months during the term of a contract.

As a result, the final rule establishes a standard in which contract awards, disqualification, and suspension can be based entirely on administrative allegations – before those allegations are fairly and fully adjudicated.  For example, contractors will be required to report NLRB complaints issued against them, but NLRB complaints are not final determinations on the merits. Rather, they are merely preliminary findings of probable cause that a violation has occurred, against which employers have the right to defend themselves, including the right to challenge evidence at a hearing and confront witnesses under oath. Indeed, in some instances, the employer has complied with the law but the regional director issues a complaint in an effort to ask the Board to change the law.

Finally, the final rule also requires inclusion of contract language under which the contractor declines to obtain or enforce pre-dispute arbitration agreements for Title VII, sexual assault or harassment claims; and, would require covered contractors and subcontractors to provide certain employees with additional wage and hour information every pay period.

The notable changes from the proposed rule are:

  1. The reporting of violations of “equivalent” state laws, with a few exceptions, is not covered by this rule, but will be addressed in a separate rulemaking.
  2. Instead of requiring subcontractors to report their violations to the prime contractor, the final rule requires subcontractors to disclose details regarding their labor law violations and remedial actions directly to the DOL for review and assessment. The subcontractor then makes a representation back to the prime contractor regarding the DOL’s response to its disclosure. The prime contractor will then consider any response from DOL in evaluating the integrity and business ethics of subcontractors.
  3. The final rule now compels public disclosure of certain information about violations, and provides the contractors the option to publicly disclose mitigating factors.

The Implementation Schedule

The FAR rule and DOL guidance are being phased in pursuant to the following schedule:

  • Week of September 12, 2016: Preassessment begins, through which current or prospective contractors may come to DOL for a voluntary assessment of their labor compliance history, in anticipation of bids on future contracts but independent of any specific acquisition.
  • October 25, 2016: The final rule takes effect. Mandatory disclosure and assessment of labor law compliance begins for all prime contractors under consideration for contracts with a total value greater than or equal to $50 million. The reporting disclosure period is initially limited to one (1) year and will gradually increase to three (3) years by October 25, 2018.
  • January 1, 2017: The Paycheck Transparency clause takes effect, requiring contractors to provide wage statements and notice of any independent contractor relationship to their covered workers.
  • April 25, 2017: The total contract value threshold for prime contracts requiring disclosure and assessment of labor law compliance is reduced to $500,000.
  • October 25, 2017: Mandatory assessment begins for all subcontractors under consideration for subcontracts with a total value greater than or equal to $500,000.

Key Practical Issues Clarified by the Final Rule

  • Not Retroactive: According to the preamble, the final rule has no retroactive application as the rule will not apply to existing contract options for contracts which do not contain the FAR 52.222–59 clause. Companies will be brought into the labor law decision disclosure process with their first new contract issued after this rule is effective, thus there is no reporting requirements for existing contracts.
  • Related Entities: The reporting requirement applies only to the legal entity submitting the bid/offer and that will be legally responsible for performance of the contract. The reporting requirement will not apply to any parent, subsidiary, or other affiliates of the contractor.
  •  Classified Contracts: In response to comments regarding how to make reports on classified contracts, the rule simply states that it “does not compel the disclosure of classified information.”
  • Confidential Arbitrations: Despite comments opposing the requirement that confidential arbitrations must be reported, the final rule reaffirms that the disclosure of all arbitral awards or decisions must be reported without exception. The rule notes that it only requires contractors to publicly disclose four pieces of information: The labor law that was violated, the case number, the date of the award or decision, and the name of the arbitrator(s).

 

How Can Government Contractors Prepare for Compliance

While there certainly will be litigation challenging the final rule, government contractors should take steps immediately in anticipation of the Rule’s October 25, 2016 effective date. Contractors’ first steps should be to identify which department, group, and/or individual(s) within the organization are responsible for complying with the rule’s requirements. The responsible parties should then begin compiling relevant information regarding any labor law “violations” dating back to October 25, 2015, and develop a process for identifying and tracking future “violations” in a centralized database. The database should also include any mitigating factors and what steps the contractor has or will take to remedy the purported violations that the contractor might want to voluntarily report.

In addition, contractors should then work with their subcontractors to ensure that they understand the requirements of the final rule and to discuss what they can do to minimize delays in the subcontracting process. Contractors should also update their subcontracting agreements to incorporate the disclosure requirements, include any necessary representations, and address the consequences of any adverse responsibility and integrity determinations.

NLRB Axes Traditional Treatment of Search-for-Work and Interim Employment Expenses

Posted in NLRB, NLRB Decisions, Remedies

For nearly eighty years, when awarding back pay to unlawfully terminated employees, the National Labor Relations Board (the “Board”) treated search-for-work and interim employment expenses (“search-for-work expenses”) as an offset to interim earnings. With yesterday’s decision in King Soopers, Inc., 364 NLRB No. 93 (August 24, 2016), the Board announced that it will no longer do so and instead will treat search-for-work expenses as a separate element of damages.  As a result of King Soopers, in addition to back pay, wrongfully terminated employees will be able to recover their reasonable search-for-work expenses, regardless of interim earnings.

Under the Board’s traditional approach, wrongfully terminated employees who were unable to find interim employment did not receive any reimbursement for their search-for-work expenses. Likewise, wrongfully terminated employees whose search-for-work expenses exceeded their interim earnings could not recover the excess.  Explaining that the Board’s traditional approach to search-for-work expenses resulted in less than make-whole relief, the Board invoked its “broad, discretionary” authority to overturn nearly eight decades of precedent and fashion a new remedy.  The Board now will award search-for-work expenses regardless of interim employment earnings and separately from back pay.  Notably, the Board will apply its new approach retroactively in “all pending cases in whatever stage,” unless doing so would cause “manifest injustice.”

Although Member Miscimarra did “not discount the fact that parties and claimants experience substantial, often oppressive non-monetary consequences as the result of unfair labor practices,” he dissented from the Board’s new approach to search-for-work expenses. Noting that the new approach would produce a windfall when a wrongfully terminated employee’s interim earnings exceed his or her back pay, Member Miscimarra concluded that the new approach exceeded the Board’s statutory authority to provide only remedial relief.

On January 30, 2015, Board General Counsel Richard Griffin directed Regional Directors to “affirmatively allege in their initial unfair labor complaint that search-for-work and work-related expenses are being sought regardless of whether they exceed interim earnings.” The Board’s King Soopers decision thus concludes Mr. Griffin’s crusade to effectuate a change in the Board’s treatment of search-for-work expenses.

NLRB Holds That Graduate Teaching Assistants Could Be Employees Under the NLRA

Posted in Bush Board Reversal, NLRA, NLRB, NLRB Decisions

On August 23, 2016, in a 3-to-1 decision, the National Labor Relations Board (“the Board”) overturned long-standing precedent to hold that student graduate teaching assistants  are statutory employees under the National Labor Relations Act (“NLRA”).  The decision, Columbia University, 364 NLRB No. 90, marks a significant change in United States labor law and raises several issues for how private colleges and universities can address a union campaign on their campuses.

In reaching this decision, the Board explicitly overruled existing precedent from Brown University. The Board criticized its decision in Brown University for focusing too heavily on the fact that graduate students had both an employment and educational relationship with their college or university. The Board in Columbia University, instead, created a new, bright-line rule that: “the payment of compensation, in conjunction with the employer’s control, suffices to establish an employment relationship for purposes of the Act,” regardless of whether another non-economic relationship existed between the parties.   From that, the Board reasoned that the Act should cover graduate assistants “unless there are strong reasons not to do so.”

The Board found allowing student employees to unionize promoted the goals of federal labor policy without compromising academic freedom or raising serious concerns under the First Amendment.  In reaching that conclusion, the Board relied on anecdotal evidence to conclude “no major disasters [] have arisen because of [graduate-student] unions” in other settings and that “examples of collective bargaining in practice appear to demonstrate that economic and academic issues on campus can indeed be separated.”  Moreover, the Board noted that there was no empirical evidence showing that collective bargaining would “harm mentoring relationships between faculty members and graduate students.”

The Board declined to address a number of concerns that Columbia University raised about how collective bargaining would play out, including whether student demands would interfere with academic decisions involving class size, time, length, location, and structuring exams.  Instead of addressing these issues, the Board merely noted that, “the Board’s demarcation of what is a mandatory subject of bargaining for student assistants, and what is not, would ultimately resolve these potential problems.”  In conclusion, the Board succinctly held:

There is no compelling reason—in theory or in practice—to conclude that collective bargaining by student assistants cannot be viable or that it would seriously interfere with higher education.

Applying its new standard to the facts of the case, the Board held that the graduate students at issue were common-law employees under the Act.  According to the Board, Columbia University exercised sufficient control over the graduate assistants.  Columbia University, for example, directed and oversaw the assistants’ teaching activities and the assistants were subject to corrective counseling or removal if they did not meet the University’s teaching standards.

The Board also highlighted the fact that the relationship between the parties was economic in nature.  The Board, for example, noted that significant portions of the overall teaching duties conducted by universities are conducted through student assistants, and, “the delegation of the task of instructing undergraduates, one of a university’s most important revenue-producing activities, certainly suggests that the student assistants’ relationship to the University has a salient economic character.”  Moreover, the Board found that the assistants received compensation in the form of either stipends or financial aid, sufficient to trigger an employment relationship.

In a strongly worded dissent, Member Miscimarra argued that the majority’s holding ignored the reality of the university setting and improperly elevated labor issues over countervailing non-employment factors.  The dissent argued that the “paramount goal” for student assistants was to obtain a degree and that labor unrest could seriously undermine the educational experience.

The dissent raised a number of practical concerns – none of which the Board addressed.  Among other things, the dissent questioned whether (and to what degree) the Board’s other precedents would play out in the university setting and how other federal laws (such as FERPA) would be impacted by the decision.

 

NLRB’s Latest Joint Employer Decision Is Problematic for Temporary Staffing Firms and Their Clients

Posted in Joint Employer, NLRB Decisions, Representation Elections

Almost a year after rewriting its decades-old joint employer test in Browning-Ferris Industries of California, Inc., the National Labor Relations Board has finally issued a Board decision providing some guidance on what constitutes a joint employer relationship. To the surprise of no one given the facts of the case, the Board found that a joint employer relationship existed in Retro Environmental, Inc., 364 NLRB No. 70 (2016). Nevertheless, the Board’s Retro decision is alarming because the Board signals that the basic facts of a common and prevalent relationship between temporary staffing firms (supplier employers) and their clients (user employers) will create a joint employer relationship.

In Retro, the union filed a petition to represent demolition and asbestos workers jointly employed by Retro, the user employer, and Green JobWorks, a temporary staffing agency. The two companies had worked together on multiple projects for at least five years and were operating consistent to an expired contract. The Board summarized the facts of the relationship as follows:

When Retro needs temporary labor, [it] contacts Green JobWorks and requests a certain number of laborers. Green JobWorks recruits and hires employees. … Green JobWorks prescreens and drug tests each applicant, provides safety training, ensures that asbestos abatement laborers have current EPA AHERA certification and have passed a physical exam, and represents that all employees are qualified to perform the services. Additionally, Green JobWorks perform background checks and administers safety and general knowledge tests to applicants for demolition positions. Green JobWorks maintains a database of employees and assigns employees to project sites based on Retro’s needs. Green JobWorks determines the rate of pay for each position and issues employee paychecks. Green JobWorks also provides the employees with personal protective equipment.

At the project site, Retro’s superintendent determines the sequence of work, oversees the work, and directs the day-to-day activities of both Retro’s solely employed employees and those employees leased to Retro by Green JobWorks. Retro’s foreman provides more detailed instructions. Retro determines the start and end times of breaks, and Retro is responsible for keeping track of the employees hours. Retro also provides the necessary equipment to perform the assigned work on site.

Green JobWorks’ field supervisor is on site some days (he visits all project sites). He ensures that employees are present, handles concerns regarding particular employees, communicates with teh office, and manages injuries and near misses. Green JobWorks is responsible for disciplining and terminating employees. However, if Retro is unsatisfied with an individual’s performance, it can request a replacement, and Green JobWorks President…testified that Green JobWorks would acquiesce to Retro’s request. (At the time of the hearing, Retro had not exercised this right in the previous 6 months.) Green Jobworks may consult with Retro when reassigning employees to other sites.

Although the Regional Director found a colorable claim of a joint employer relationship, the Regional Director dismissed the petition because he found that a union election would serve no purpose given that there was an imminent cessation of operations between the two employers (the two projects they were working on were coming to an end, and Retro had no future projects or bids that involved Green JobWorks).

Disagreeing with the Regional Director’s imminent cessation finding (it found no evidence that they would not do business together again), the Board majority addressed the joint employer issue. The Board’s finding that Retro and Green JobWorks are joint employers was not unexpected as the facts could have justified such a finding under the Board’s old joint employer standard. What was unexpected, however, was the Board majority’s assertion, in response to Member Miscimarra’s dissent, that only three basic facts–facts that are fairly standard to many relationships involving temporary staffing firms–are needed to create a joint employer relationship.

Specifically, Member Miscimarra asserted that even if Retro and Green JobWorks do continue to work together on future projects, “it is entirely speculative whether they will constitute a joint employer of employees who might be supplied by Green JobWorks” because the “‘specific factual circumstances’ of any future projects are unknown.” In response, the majority opined:

even if the Employers’ relationships were altered on future projects, certain key aspects of their relationship will likely remain stable. For example, while Green JobWorks, as the supplier employer, will retain primary responsibility for hiring, assigning employees to project sites, and firing, Retro will assuredly continue to dictate the number of workers to be supplied by Green JobWorks, continue to impose conditions on Green JobWorks’ hiring to ensure that the workers supplied are adequately trained and qualified, and continue to retain the right to request a replacement if it is unsatisfied with a Green JobWorks-supplied employee. Therefore, given the distinct functions and areas of responsibility of each of the Employers, it is highly doubtful that the Employers’ relationship on future projects could change in such a manner that would render them no longer joint employers of the employees in the petitioned-for unit.

(emphasis added). In other words, the Board majority asserts that how much and to what extent the user employer supervises and directs the temporary employees is irrelevant to finding a joint employer relationship if the user employer simply: 1) states that it needs “x” number of employees with “y” qualifications and certifications and 2) has some ability to ask for a replacement if a particular temporary employee underperforms. Given that all three of those facts likely exist in many, if not most, relationships between supplier and user employers, the Board’s Retro decision certainly portends that the current Board takes the position that most temporary staffing firms and their clients are joint employers. As such, temporary staffing firms and their clients wondering how best to direct their resources–i.e., taking measures to mitigate against a joint employer finding or focusing on the practical implications (see #2-4) of a joint employer finding–may finally have their answer.