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Micro-Unit Union Battle Brewing

 

Last month, unions across America received a significant boost when the Sixth Circuit Court of Appeals upheld a 2011 ruling by the National Labor Relations Board that allowed unions to organize smaller “micro units” of workers.

The 2011 case, Specialty Healthcare, 357 NLRB No. 83 (Aug. 25, 2011), aff’d sub nom, 727 F.3d 552 (2013), involved a union that wanted to try and organize a group of nonprofessional nursing assistants—despite the employer’s argument that other nonprofessional employees should have been included in the unit. In its ruling, the Board upheld the union’s position, while noting that if an employer believes employees should be included in a particular unit, it is the employer’s burden to demonstrate those workers “share an overwhelming community of interest.”Unions

In its review of the Specialty Healthcare decision, the Sixth Circuit determined that the Board has “wide discretion,” in determining the constitution of a bargaining unit”—unless “the employer establishes that [the Board’s decision] is arbitrary, unreasonable, or an abuse of discretion.” 

The Board’s decision in Specialty Healthcare turned 75 years of labor law on its head.  And now, the Sixth Circuit has doubled-down on this seismic legal shift by affirming the Board’s decision. Yet, these rulings might still backfire on organized labor.  Often, unions use micro units to gain a foothold in an employer’s workforce—the proverbial camel’s nose under the tent.  In order to prevent unions from using the Specialty Healthcare decision to establish organizing beachheads, employers are now going to fight harder to keep their companies union-free.

Such an unanticipated consequence might toss a bit of cold water on organized labor’s post-Specialty Healthcare celebrations, but employers should still be wary.  The Sixth Circuit’s decision will not only pave the way for an increase in union organizing activity; it will likely also embolden a National Labor Relations Board that already seems intent on giving organized labor an unfair advantage. 

Photo credit: Breitbart.com

Criminal Background Checks and the EEOC: Where's the Evidence?

 

Do pre-employment criminal background checks discriminate against minorities? Not according to the U.S. District Court for the District of Maryland.

Last week, the U.S. District Court for the District of Maryland ruled that the Equal Employment Opportunity Commission failed to show that a nationwide event planning company’s use of criminal background and credit-checks resulted in a disparate impact against black and make job applicants.

In a stunning rebuke to the controversial Enforcement Guidance Regarding Consideration of Arrest and Conviction Records in Employment Decisions, the District Court hammered the EEOC’s evidence, dismissing its analyses as “flawed,” “skewed,” “rife with analytical errors,” “laughable,” and “an egregious example of scientific dishonesty.” Specifically, the court determined that one EEOC expert’s analysis focused on an unrepresentative section of applicants to fit the commission’s theory that pre-hire employee criminal background checks have a disparate impact on minorities. 

EEOC:  Where's the Evidence?  EEOC

The reports furnished by the EEOC were not the only thing that concerned the court; the EEOC also failed to meet its burden of raising triable disparate impact claims because “the commission did not identify a specific employment practice responsible for the alleged impact.” Citing Wards Cove Packing Co. v. Atonio, the court held that “under Title VII, it is not enough to show that ‘in general’ the collective results of a hiring process cause disparate impact. Statistical analysis must isolate and identify the discrete element in the hiring process that produces the discriminatory outcome.”

While the EEOC is still considering an appeal, the court’s ruling was clear: “it is simply not enough to demonstrate that criminal history or credit information has been used,” to advance a discrimination claim based on disparate impact. Granted, the issue of criminal background checks and disparate impact claims remains far from settled, last week’s U.S. District Court ruling should offer encouragement to employers drowning in red tape and over-zealous regulation.

 

High Court Ruling Bars Backpay for Undocumented Workers

 

Earlier this month, the United States Court of Appeals for the Second Circuit upheld a controversial NLRB decision—Mezonos Maven Bakery, 357 NLRB No. 47—regarding the award of backpay to undocumented aliens. Specifically, this case considered whether “undocumented workers who have engaged in fraud or criminal activity in violation of the Immigration Reform and Control Act (IRCA) in obtaining or continuing their employment are entitled to backpay where their employer…hired and retained them knowing they were undocumented.”NLRB

Finding that the instant matter was materially different from the Board’s decision in Hoffman Plastic, the administrative law judge initially found in favor of the employees. In Hoffman Plastic, the Board‘s holding precluded backpay in a scenario where the  alien “violates the IRCA by presenting the employer with fraudulent documents,” and the “employer is unaware of the fraud.”

Specifically, the ALJ ruled that the instant matter was materially different from Hoffman Plastic because the employer—not the employee—violated the IRCA. As a result, the ALJ concluded that a backpay remedy was necessary. The Board, however, disagreed.

The Board Applies Hoffman Plastic

In August 2011, the Board declined to adopt the ALJ Order. According to the Board, Hoffman Plastic’s “holding is categorically worded” with “no distinction based on the identity of the IRCA violator.” As a result, Hoffman Plastic “broadly precludes backpay awards to undocumented workers regardless of whether it is they or their employer who has violated the IRCA. Indeed, “regardless of which party violated the IRCA, the result is an unlawful employment relationship.

A Matter of Public Policy

The Second Circuit Court of Appeals has weighed in as well, upholding the Board’s interpretation of Hoffman Plastic. In its decision, the Second Circuit places particular emphasis on public policy concerns: “Awarding backpay would ‘not only trivialize the immigration laws,” but would also “condone and encourage future violations.” Quoting Hoffman Plastic, the Second Circuit addressed the ALJ’s suggestion that aliens who did not present fraudulent documents but who are in the U.S. illegally, noting that it sees “no reason to think that Congress nonetheless intended to permit backpay where but for an employer’s unfair labor practices, an alien-employee would have remained in the United States illegally, and continued to work illegally, all the while successfully evading apprehension by immigration authorities. “

The Second Circuit did. However, remand the matter back to the Board for consideration of one additional issue: Whether to grant petitioners requested remedy of reinstatement contingent on the production of work authorization documents.

Obama NLRB Recess Appointments Unconstitutional

 

The Fourth Circuit Court of Appeals has joined the DC Circuit and Third Circuit in holding President Barack Obama’s recess appointments of three NatioObama NLRBnal Labor Relations Board members were unconstitutional.

The dispute arises from three NLRB appointments the President made on January 4, 2012—appointments made while the Senate was on a holiday break but still in session. Although the administration claimed that “the break qualified as a recess because there were not enough senators at work to conduct business,” the Fourth Circuit—in addition to previous holdings by the DC Circuit and the Third Circuit—disagreed. Specifically, the court held that “the framers of the Constitution meant to limit recess appointments to the period between congressional sessions, and that’s how it was done until a 1921 attorney general’s opinion.”

As a result of this decision, and the previous circuit court decisions, hundreds of NLRB decisions may possibly be invalidated.  

The U.S. Supreme Court has agreed to hear the D.C. case.

Connecticut Legislature Restricts the Use of Non-Compete Agreements

 

Connecticut Legislature Restricts the Use of Non-Compete Agreements:  Late last month the Connecticut General Assembly passed “An Act Concerning Employer Use of Noncompete Agreements” (the “Act”). 

CT non-compete law

Effective October 1, 2013, the Act will dramatically alter how employers approach mergers and acquisitions.  Specifically, under this new law:  If, after a merger or an acquisition, an employee is being hired by, or continuing his or her employment with, the surviving entity, and the surviving entity intends to bind the employee to non-competition restrictions, then the employer must provide the employee with a written copy of the non-compete agreement and at least seven (7) days to consider signing the agreement.

While inconvenient for employers, the Act, on its face, isn’t particularly alarming.  However, the practical implications are considerable.  For example, as a result of this new law, employers may be forced to inadvertently give employees advance notice of possible business transactions, such as closings or consolidations.  Ultimately, notice of plant closings resulting from mergers or acquisitions will be dictated by legislative fiat—not business necessity or the unique culture of each organization.

Furthermore, employers must also now consider the possibility that an existing employee might balk at signing a new non-compete agreement, thereby complicating—and perhaps even jeopardizing—a merger or acquisition.

Bottom Line for Employers:  Effectively navigating a business merger or acquisition has never been easy.  And with passage of the new Act, life for Connecticut’s employers just became a bit more complicated.  For assistance in adhering to this new law, contact Bud O’Donnell.

U.S. DISTRICT COURT OF APPEALS INVALIDATES NLRB'S NOTICE-POSTING RULE

 

National Labor Relations Board, May 7, 2013On Tuesday, May 7, 2013, the United States Court of Appeals for the District of Columbia issued another decision against the National Labor Relations Board.  This time, the court found that the NLRB had exceeded its authority when it issued the rule requiring employers covered by the National Labor Relations Act to post a notice informing workers of their right to unionize.  (This same court, in January, 2013, invalidated the NLRB recess appointments made by President Obama; the NLRB has appealed that decision, Noel Canning v. NLRB, to the U.S. Supreme Court.)

In this most recent decision, National Association of Manufacturers v. NLRB, 717 F.3d 947 (2013), the court concluded that the NLRB’s rule was in violation of the National Labor Relations Act because it subjected an employer to an unfair labor practice for the failure to post this notice; and because it infringed upon the First Amendment right to free speech by forcing a company to disseminate a view that it did not agree with (i.e., the right to unionize).

Section 8(c) of the National Labor Relations Act grants employers the right to express “any view, argument or opinion, or dissemination thereof, whether in written, printed, graphic or visual form.”  As long as there is no threat of reprisal, these communications are protected from being treated as unfair labor practices.  The court stated that the NLRB’s rule violated Section 8(c) because “the right to disseminate another’s speech necessarily includes the right to decide not to disseminate it.”

While this decision represents another significant setback to the NLRB, the court’s decision also raises the possibility that its rationale could be extended to other federal notice-posting requirements that have been imposed on employers by various agencies (i.e., OSHA and the EEOC).  It remains to be seen whether this decision will generate that type of litigation.

FMLA Posting Requirement Update

 

describe the image

The DOL’s Wage and Hour Division has released a new FMLA Poster, which reflects the FMLA Final Rule to Implement Statutory Amendments.  Changes to the FMLA regulations made in this Final Rule, including military caregiver leave for a veteran, qualifying exigency leave for parental care and the special leave calculation method for flight crew employees, become effective on March 8, 2013.  (NB:  Some provisions of the FY 2010 NDAA and the Airline Flight Crew Technical Corrections Act, such as the expansion of qualifying exigency leave to families of members of the Regular Armed Forces and the special eligibility hours of service requirement for flight crew employees, became effective as of the enactment date of those statutes.  See 77 FR 8962 (Feb. 15, 2012)).

The new FMLA poster may be posted immediately, and must be posted to replace the existing FMLA poster by March 8, 2013.

Tip Credit Litigation: A Disturbing Restaurant Industry Trend

 

One of my first jobs was that of a dishwasher.  In the “back of the house,” I learned that cleanliness was most important to the servers—those who made the “big money.”  I heard their talk, how attentive they need to be to their customers, and how every little effort counted toward the almighty tip.  It was all about the tip.  Every server hustled to be attentive, to run to their guests with extra forks, knives, spoons, plates and napkins. 

From there, I became a cook’s assistant.  As the restaurant showcased the kitchen in the “front of the house,” I could see the servers greeting guests, and doing everything in their power to be gracious and attentive.  If the plates were not perfect in appearance, the server would carefully adjust the plate’s content for the best presentation.  I was told, again, that it was all about the tip.tip prague restaurant resized 600

Next, I bussed tables.  Not only did I clean and re-set the tables swiftly to help the servers turn the tables for more guests, but I filled water glasses and bread baskets.  When I noticed a customer looking for their server, I would approach to see if I might be of assistance.  Usually an extra plate, fork or napkin was the cure.  Other times, the steak might need a bit more fire.  Improving the guests’ dining experience trickled down to me: the servers showed their appreciation for my attentiveness by tipping out to me.  Yes, I had come to appreciate that it was all about the tip. 

My promotion to server was big—now I could earn tips.  The small hourly wage reduced by the tip credit was important, but it paled in comparison to the tips.  I worked hard and strived to be the best server in the restaurant.  I worked with professional servers.   For me, it was a job to get me through the end of high school, then college and then law school.  Nevertheless, I saw the importance of guest service and winning the big tip.

It has been many years since I waited tables.  The perpetual dream of forgetting to bring something to some table never goes away.  Now, as an attorney, I represent the restaurant industry that taught me values such as guest attentiveness and the goal of prompt service. 

Claims by some servers suggesting that many of their duties are not service-related or are “incidental” to service, so that they may void the tip credit and permit their counsel to recover fees in class actions, are troublesome.  Have they forgotten what goes into securing the big tip?  I haven’t. 


Glenn Duhl represents restaurants and restaurant groups in defense of employment-related claims, including tip credit litigation under the Fair Labor Standards Act and corresponding provisions of state law.

Job-Targeting Programs: Another Advantage for Organized Labor

 

In a critical new ruling, the National Labor Relations Board held that “union job targeting programs, including those funded in part by voluntary deductions from the wages of union members employed on State-funded public works projects, are clearly protected under Section 7 of the Act.” This latest ruling throws up yet another roadblock in front of contractors already contending with a stagnant economy and burdensome regulations.  

Job targeting programs, also known as market recovery funds, are yet another one of the economic weapons organized labor can deploy against non-union contractors. As part of these programs, unions collect dues which are then used to subsidize “union friendly” contractors. Yet, job targeting programs aren’t just about keeping organized labor’s allies in business; these subsidies put non-union contractors on the defensive, as the union shops are able to lower the gap between union and non-union contractors.

In this case (J.A. Croson Company, 359 NLRB No.2, 2012), the collective bargaining agreement contained a dues-checkoff provision requiring member employers to “deduct and remit to the Union, pursuant to voluntary authorizations signed by unit employees, due in the amount of 1.75 percent of the employees’ gross wages as a “Market Recovery Assessment.” The money collected was then used to fund the union’s “job targeting program, which funneled money to unionized contractors. The purpose of this program was clear: to “lower union contractor’s overall costs to complete targeted projects, enabling union contractors to submit competitive bids.”

job targeting NLRB

In response to the union’s job targeting program, J.A. Croson Company, an ABC member, filed a lawsuit charging that the wage deductions violated state law. The Ohio Supreme Court eventually held that this lawsuit was preempted by the National Labor Relations Act (Act), and an administrative law judge found that Croson’s lawsuit did not violate the Act. The Board, however, reversed the judge’s ruling, holding instead that union job targeting programs are “clearly protected by Section 7 of the Act.” Consequently, the Board also held that Croson’s state court lawsuit was preempted by the Act, and that Croson’s lawsuit did not garner First Amendment protection: Indeed, by merely filing the lawsuit, Croson violated Section 8(a)(1) by interfering with union activity.

As a result of the Board’s J.A. Croson Company decision, the playing field has, once again, been titled in favor of organized labor.

Hurricane Sandy and Employer's Wage Obligations

 

In the wake of Hurricane Sandy, a frequent question is whether an employer must pay wages to employees who did not work due to a storm closing. While you should consult with counsel for a specific answer in light of your pay policies and practices, there are two answers for salaried exempt and hourly non-exempt employees.

Employers do not have to pay non-exempt, hourly, employees when no work has been performed as, by definition, they are “hourly” and only to be paid for hours worked. r HURRICANE SANDY COST large570 resized 600

Employers must continue to pay salaried, exempt, employees if they work any time during a work week and are available to work the remaining days, whether they work or not.  In other words, if the worksite is closed for less than a week, and a salaried exempt employee has worked part of the week, s/he must be paid for the week. As Hurricane Sandy hit at the beginning of the work week, if the employee did not work at all during the week, no pay is earned and none need be paid. See Conn. Regs. §§ 31-60-14, 15 (the employee need not be paid for any workweek in which s/he performed no work).  However, be careful as some salaried, exempt employees may claim to have worked from home. If they did work at home, they would be due their salary for the week. 

Other than what the law provides, there is one additional consideration:  is not paying the employees for the storm closing going to hurt employee morale?  That remains as a business decision that you will have to consider.  If a written policy is currently in place that informed employees that they might not be paid during the week in which the employer is closed, this may not be as much of a concern. However, with employees returning to work after having been living without power, they may not fully appreciate that the storm also caused the employer to suffer financial losses.  Day to day events in the workplace may be dangerous.  Be safe!   


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