Executive Labor Summary

News & Analysis

What are the labor implications of Supreme Court’s decision in King v.  Burwell?  
Current NLRB majority seeking big changes for joint employer bargaining units 
Federal court in Texas rejects challenge to new NLRB “quickie” election rules, employer groups appeal 
The first two months of life with the NLRB’s quickie election rules – what’s happening? 
New “Persuader Regulations” are on the way, probably at the end of the year

The Good, the Bad and the Ugly

Is this good, bad, or ugly? NLRB says it will have all Noel Canning-affected cases cleared by June 26  
Machinists union agent to worker: “Shut up, or IAM going to beat your a**, and IAM going to get you fired, too!” 

What are the labor implications of Supreme Court’s decision in King v. Burwell? - On June 25, the U.S. Supreme Court upheld the Affordable Care Act (also known as “Obamacare”) in a 6-3 decision written by Chief Justice John Roberts. Legal analysis seemed to take a back seat to practicalities – primarily, concern about the chaos that might ensue if the law were stricken down at this late date. The majority essentially found that the four-word phrase “established by the State” meant “established by the state and the federal government.” Apparently, the majority found that the law needed to be saved if it was to be a law and that it couldn’t survive if interpreted as written. In dissent, Justice Antonin Scalia blasted the majority for its “jiggery-pokery,” which is defined in the dictionary as “dishonest or suspicious activity.” (But when “state” means “state and federal,” maybe dictionaries just get in the way.)

The labor issues? The decision means that ACA tax credit subsidies will be available to health insurance consumers in the many states that do not have exchanges. Employers will continue to deal with the legal and regulatory landscape of the ACA, with some continuing questions about how the law is going to be applied. Several challenges to parts of the ACA are still pending, but the structure of the law will probably stay intact absent legislative action, which is unlikely as long as President Obama remains in office.

In 2018, the so-called “Cadillac plan” tax will take effect. This is a 40 percent tax on insureds for employer-paid health insurance plans that are too “rich” (that is, they exceed a cost of $10,200 for an individual and $27,500 for a family). The tax applies to every dollar of insurance cost above the thresholds. The idea is to penalize “wealthy” employees who buy extravagant plans and to encourage cost-conscious shopping for plans with more limited benefits. A “Corolla plan” would mean less demand for medical services and less growth in medical costs.

But this “Cadillac plan” tax will not affect only the wealthy. Many participants in jointly-managed Taft-Hartley Fund health insurance plans (sometimes called “union plans”), as well as participants in typically generous government employee benefit plans, will be hit by the tax, absent reductions in the cost of the plans they currently have. Reports are already circulating that, to avoid the Cadillac plan tax, many union and state employee plans are increasing deductible levels and out of pocket maximums to bring plan premiums below the thresholds.

The Cadillac plan tax has the attention of organized labor and its lobbyists. Even before the effective date of the ACA, labor unions began lobbying the White House to give union plans an exemption, but to date they have had no luck. Some Republicans in Congress may be on their side, given that the U.S. Chamber of Commerce has opposed the tax. Watch for more efforts from organized labor and business interests opposed to the tax to try eliminate it. Nothing new there, except for the possible “strange bedfellow” relationship between unions and pro-business interests.

Current NLRB majority seeking big changes for joint employer bargaining units. - The National Labor Relations Board recognizes the concept of joint employment – that a single employee can have more than one “employer.” As we have previously reported, the Board is considering arguments that the standard for "joint employment" status should be loosened and is expected to relax the standard in one of several pending cases. Countless business and operations models based on use of contingent, leased, or temporary employees, contract operations, franchises, and similar relationships are likely to be disrupted as a result. This is part of the multi-faceted attack on what Obama administration representatives and appointees have called “fissured industries.”

Now, foreshadowing another change in established Board law, the Board has granted a petition for review of a Regional Director’s unit determination in a representation case, Miller & Anderson, Inc., raising the following issue: if an entity is found to be a joint employer with its contractor-supplier, can a union organize and represent employees in a unit where some of the employees are jointly employed and some are not? Under current law, the answer is “No,” on a theory that such a situation involves multiple employers and that multiemployer bargaining requires the “consent” of all employers.

Many commentators suggest the Board will use the Miller & Anderson case to find “appropriate” bargaining units consisting of a mix of jointly employed and non-jointly-employed workers. If so, the Board will probably overrule its 2004 Oakwood Care Center decision and return to the M.B. Sturgis rule that Oakwood Care overruled.

In 2004, the Board in Oakwood Care found that proposed bargaining units combining (1) directly-employed employees of one employer and (2) temporary (or contract) employees employed by two or more joint employers were inappropriate unless all affected employers consented. Oakwood Care represented a return to the law as it existed before a Board decision in M. B. Sturgis, which reversed longstanding Board precedent in 2000 by holding that such a “mixed” bargaining unit could be appropriate without both employers’ consent, so long as the employees had a community of interest.

The Board, in its May 18, 2015, Order granting review of the Regional Director’s decision in Miller & Anderson, indicated that it will be requesting amicus briefs on the issue, possibly following the well-traveled path of first asking for such briefs and then making big changes in established Board law. Given the current makeup of the Board, we anticipate that the Board majority will resurrect the M.B. Sturgis rule and overrule Oakwood Care. Such a result, coupled with the Board’s expected loosening of the standard for finding joint employment, will give unions seeking representation in jointly employed workforces many more options to target for organizing. Organized labor argues that the M.B. Sturgis rule better takes into account the realities of the modern workplace. Employers, on the other hand, argue that the National Labor Relations Act specially mentions the “employer unit” and that the M.B. Sturgis rule ignores conflicts inherent between “user” and “provider” employers and their employees. Businesses using temporary or contractor employees side by side with their own employees should be prepared for a likely change in the law.

Federal court in Texas rejects challenge to new NLRB “quickie” election rules, employer groups appeal. - On June 1, Judge Robert E. Pittman of the U.S. District Court for the Western District of Texas rejected a challenge by several employer groups to the new NLRB “quickie” election rules that went into effect on April 14. The plaintiffs are appealing Judge Pittman’s decision to the U.S. Court of Appeals for the Fifth Circuit.

This is one of three well-publicized challenges to the rules filed by employers and employer groups (and, in one case, by several employees). The other two challenges are pending in federal court in Washington, D.C.

Judge Pittman, in granting the NLRB’s motion for summary judgment, ruled that the plaintiffs failed to show that “no set of circumstances exists” under which the NLRB rules would be valid. In so ruling, he rejected arguments that the rules denied employers a right to an “appropriate hearing” and violated employers’ rights to free speech. He held that the Board regulations allowed employers to raise legal issues related to voter eligibility post-election and that employers had time to get their message out to voters before the elections and could even begin “talking” about elections before a petition was filed. He also rejected the employers’ claims that the rules were arbitrary and capricious, noting that the Board adopted them only after a long process.

The Texas decision is a setback to those challenging the rules, and the judge in Washington, D.C., who is hearing similar challenges, sent notice to the parties in those cases that she is aware of the Texas decision and needs no supplemental briefing on it. Employers and their representatives will be watching the D.C. cases and the appeal of this Texas decision. Even if all the challenges to the rule fail, there may be opportunities to challenge the application of the rules in specific circumstances. Employers and their representatives are expected to raise challenges to the rules in any contested election proceedings before the Board, in order to preserve the argument that the rules are invalid.

The first two months of life with the NLRB’s quickie election rules – what’s happening? - Data and reports about the impact of the new NLRB quickie election rules are coming in. So far, it appears that unions are filing petitions at an unprecedented rate now that the path to election is shorter, and streamlined to the advantage of union organizers. A backlog of union “petitions-in-waiting” may be clearing out.

Early reports also indicate that unions are frequently filing petitions and then withdrawing them before any election, raising the question whether these are “tactical” filings intended to get organizing information from employers through the Board’s new information disclosure requirements.

Finally, the predictions of shorter petition-to-election times have come true. Several reports have attempted to calculate average time from petition to election. The methodologies are subject to “wrinkles” caused by various factors (including somewhat tricky and ambiguous Board data), but the early reports indicate that the time from petition to election is averaging less than 30 days, and is probably about 24 days. Expect this number to tighten even more as Regional Offices of the Board get accustomed to the new rules and get better at cutting days out of the process. Before the new rules, the time from petition to election generally was in the range of 35 to 42 days, so it appears that about two weeks of the typical “old school” campaign are gone. This is not a surprise, given that many possible issues for contested hearings are gone and employers are thus stipulating to election agreements, making the best of the situation presented by the new Board rules and NLRB Regional Offices that are taking their cue from the current pro-organizing Board majority.

New “Persuader Regulations” are on the way, probably at the end of the year. - As we have previously reported, the U.S. Department of Labor has long wanted to revise the persuader rules under the Labor Management Reporting and Disclosure Act. The regulations require employers and their labor consultants engaged in “persuader activity” to file extensive reports about use of consultants and lawyers. There is an “advice exemption,” but the DOL in proposed regulations has indicated that it wants to narrow the exemption, which would mean that many more entities will have an obligation to report. The DOL has held back on issuing new final regulations, and in its Spring 2015 Unified Agenda it listed December 2015 as the earliest date for issuance of new regulations. Rumor has it that the new rules will be effective by year end. If the rumors are true, the proposed rule should be released in the fall.

Is this good, bad, or ugly? NLRB says it will have all Noel Canning-affected cases cleared by June 26. - NLRB Chair Mark Gaston Pearce testified before a Senate subcommittee on May 14 and said the Board was on track to clear the last 16 of 103 cases on its docket that were affected by the U.S. Supreme Court decision in Noel Canning, which held that the “recess” appointments of Richard Griffin Jr. and Sharon Block were unconstitutional. That may be good news to some, but still percolating through the system are Board cases and decisions by administrative law judges that have been affected by the invalidity of those decisions from the Noel Canning period. For example, ALJs of the Board in several cases have found that the decision in Alan Ritchey (finding a duty to bargain over disciplinary matters before an employer and the union enter into an initial collective bargaining agreement) was not binding precedent because it was issued by an invalid Board panel. Similarly, just beating the stated June 26 date, a panel of the current Board “reversed” a decision by an invalid panel in Fresenius USA Mfg., Inc. Who is going to make restitution to the economy and to employers, employees, unions, and the Board itself for these duplicative and wasteful proceedings? Apparently, it seems, no one.

Machinists union agent to worker: “Shut up, or IAM going to beat your a**, and IAM going to get you fired, too!” - Two union dissidents prevailed before a Board ALJ on their unfair labor practice charge that their union, a local of the International Association of Machinists, had threatened bodily harm and helped get them fired from Spirit AeroSystems in Kansas. The dissidents had forwarded a video clip of a motor vehicle accident to a number of people inside and outside the company. A union’s in-plant representative apparently got the email and sent it to company officials, asserting that it violated various company policies, including privacy, security, photography, and computer use at the facility. The company fired the employees, and one of the terminated employees then came to the plant to campaign for a dissident union candidate in an internal union election. The IAM agent allegedly told the former employee “to shut up before I beat your a**” and that he would make sure the employee was not reinstated.

The union has indicated that it is disappointed with the ruling and will seek review by the NLRB. No surprise there. The real surprise will be if the Board agrees that the Union should be held accountable.

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