News & Analysis

The Good, the Bad and the Ugly

Death of Justice Antonin Scalia may create 4-4 split in case involving public employee union agency fees - In January, the U.S. Supreme Court heard oral argument in Friedrichs v. California, a case in which non-union public school teachers in California contended that they should not be required to pay "agency fees" to a union for its bargaining activity. The Supreme Court is reviewing a decision by the U.S. Court of Appeals for the Ninth Circuit, which had upheld provisions in collective bargaining agreements that required payment of the fees and had rejected the teachers' arguments that the provisions violated their First Amendment rights by requiring them to support an organization that engaged in the political activity of dealing with the government. The Ninth Circuit agreed with the state and the unions, who argued that allowing the teachers to escape fees would let them be "free riders" and gain the benefits of the union bargaining activity without bearing any of the costs. (The state and the unions contend that the mandatory agency fees are used only for bargaining and related union activity that is not directly political or ideological.)

Based on the questioning at the Supreme Court oral argument, and the reputations and prior rulings of the members of the Court, commentators speculated that the Ninth Circuit decision would be reversed 5-4, with Chief Justice Roberts, and Justices Alito, Kennedy, Scalia, and Thomas in the majority. Now, with the recent death of Justice Scalia, commentators predict a 4-4 split, which would leave the Ninth Circuit decision in place. If that happens, Friedrichs will be the rule in all Ninth Circuit states unless the Ninth Circuit itself overrules the decision or a majority of the Supreme Court rules to the contrary in another case involving the same issue.

Friedrichs may be the most important labor and employment case to be affected by the death of Justice Scalia. The Court could go forward with a decision of eight justices, or delay a decision until another justice can participate in the decision, a delay that may reach well into 2017 if the Republicans have their way. In the meantime, unions are expected to keep trying to require agency fees from employees of state and local governments, organized labor's biggest growth sector, while non-union employees are expected to continue challenging contract provisions that require them to pay union dues or agency fees. Given the publicity the case has generated and the widening political divisions across the country, we expect no shortage of plaintiffs ready to challenge forced agency fee payments.

Expansive "Persuader Rule" should be imminent - As we have previously reported, the U.S. Department of Labor is in the process of revising its "persuader" reporting rule under the Labor Management Reporting and Disclosure Act. The DOL announced late in 2015 that it expected to issue the new rule in March 2016, and as we went to press the final rule was with the Office of Management and Budget, the last step before issuance.

Current regulations require employers and their labor consultants who engage in any "persuader activity" to file extensive reports about their use of consultants and lawyers. But the current regulations contain an "advice exemption" for attorneys and consultants who assist employers in labor relations activities so long as the activities are "advisory" to the employer (that is, the attorneys and consultants communicate with the employer and not directly with employees).

The final regulations are likely to attempt to narrow the advice exemption, essentially to limit exempt "advice" to providing representation in labor-related legal and administrative proceedings. Other "advice" will be labeled by the new regulations as "persuader activity" and not "advice." Such a narrowing contrary to the plain meaning of the word "advice" will largely swallow the "advice exemption" and mean that many more entities — employers, attorneys, and consultants — will have an obligation to report financial information on labor relations activity, expansively defined, on mandatory DOL forms, one of which is currently unsuited to the anticipated regulations. The reporting obligations are huge and come with potential criminal sanctions for failure to comply.

The DOL has held back on issuing the rule, presumably because of the anticipated political and legal firestorm. The new interpretation of the advice exemption is expected to encroach on the attorney-client privilege and may deter smaller employers from seeking legal advice in labor matters. This is expected to hinder employer effectiveness in union campaigns while increasing the risk that some employers will commit unfair labor practices because they don't have the benefit of legal advice. Court challenges to the rule are likely. We will keep you posted.

West Virginia goes "right-to-work" - A Republican-majority legislature overrode a veto by Democratic Governor Earl Ray Tomblin and passed a right-to-work law on February 12, making West Virginia the 26th right-to-work state. (Right-to-work laws prohibit employers from requiring union membership or payment of union dues as a condition of employment.) Employers with collective bargaining agreements applicable to employees based or working substantial amounts of time in West Virginia should be aware of the new law and its effect on union security clauses requiring union membership. The law is expected to diminish the power of unions to police their membership in strike situations through fines and other discipline. Whether this will draw new business to West Virginia remains to be seen. The law will take effect July 1.

Employer free speech in representation elections under assault? - Declining to follow many years of precedent, a panel of the National Labor Relations Board voted 3-1 to further limit the period for so-called "captive audience" speeches when mail ballots are to be used in a Board election. Since 1959, the rule, originally established in Peerless Plywood, allowed employers to make captive audience speeches until the day that the ballots were due to be mailed by the NLRB Regional Office handling the case. But in Guardsmark, the Board majority cut that period by another 24 hours, ruling that captive audience speeches must end 24 hours before the ballots are due to be mailed by the Regional Office (what the majority finds is the "scheduled time" for the election within the meaning of the Peerless Plywood case).

In cases involving manual ballots, all captive audience speeches must end at least 24 hours before the voting period begins.

Under any of the rules, regardless of type of ballot, there is no statutory or Board-created constraint whatsoever on unions' ability to meet with employees outside of the workplace.

Meanwhile, on January 15, a group of 106 college and law school professors petitioned the NLRB to adopt a new rule that would allow "equal time" for unions in representation elections to give captive audience speeches in the workplace. ("Interested persons" are allowed to petition the Board for changes to the Board's rules or regulations.) Among other things, the academics assert that an employer who has not given a union an equivalent opportunity to talk with employees has interfered with the "laboratory conditions" necessary for a fair election. They also advocate setting aside any election in which a union loses after not being given equal time.

Under current Board law, employers are permitted to give such speeches to employees while they are at work, provided the speeches are not given within the 24-hour period before voting starts. Employers regularly do so, and pay the employees for the time spent in the meetings. Unions are not normally offered on-site, on-the-clock access to communicate their message, but they typically have unfettered access to employees outside of work and fewer restrictions regarding what they can say.

The academics' proposal, if adopted, would change the current balance and force employers to give up property rights and employer-control rights during employees' paid time at work.

Here, there, "joint employers" everywhere! - As we have previously reported here and here, the NLRB ruled in August 2015 that Browning Ferris Industries of California, Inc., was a joint employer of workers directly employed by a contractor at a waste recycling facility in California. After a Teamsters local prevailed in a representation election, it apparently sought to bargain with BFI and the contractor. To test the Board's ruling, BFI refused to bargain. The Teamsters local filed an unfair labor practice charge, and the Board's General Counsel issued a complaint. On January 12, the Board found that BFI's refusal to bargain was unlawful. On January 20, BFI filed for review of the Board decision by the U.S. Court of Appeals for the District of Columbia Circuit. A ruling from the appeals court can be expected late this year or in 2017, provided the matter is not resolved.

Meanwhile, on January 20, the U.S. Department of Labor's Wage and Hour Division issued an Administrator's Interpretation that the the word "employ" under the Fair Labor Standards Act and the Migrant and Seasonal Agricultural Worker Protection Act should be given an expansive interpretation to "ensure[] that the scope of employment relationships and joint employment" under those laws "is as broad as possible." According to the Interpretation, two methods should be applied to determine whether joint employment exists: (1) a horizontal analysis of two or more entities acting in relation to the same employee, such as two or more restaurants each sharing economic ties and management; or (2) a vertical analysis looking at economic dependency between employers, such as exists in subcontractor and general contractor situations. (To repeat, "as broad as possible"!)

UAW files more charges against Volkswagen in Chattanooga - On the heels of an unfair labor practice charge that the United Auto Workers Local 42 filed in December 2015 alleging refusal to bargain at Volkswagen's plant in Chattanooga, the local has filed additional charges and threatens yet more. On February 9, the local filed two charges after Volkswagen terminated an employee who was taking photographs in the facility, apparently trying to provide documentation that the company discriminatorily enforced its "company-attire-only" policy. One allegation is that the "company-attire-only" policy unlawfully interferes with employees' rights to wear UAW insignia. Another is that the "no-photography" policy is unlawful and that the photographer-employee was unlawfully terminated. In comments provided to Bloomberg BNA, the UAW's Secretary-Treasurer indicated that the union was disappointed that the company was not bargaining with it and threatened that "more and more charges will accumulate and the company will further damage its relations with employees" if the company does not come to the bargaining table.

Based on published reports, Volkswagen apparently is denying at least some of the most recent allegations and is seeking an NLRB ruling that the maintenance worker bargaining unit is inappropriate for bargaining because the maintenance employees share an overwhelming community of interest with the other employees in a wall-to-wall unit at the Chattanooga plant. In February 2014, the UAW suffered a well-publicized defeat in an election in that wall-to-wall unit, even as press reports circulated that Volkswagen was cooperating with the UAW in its organizing effort.

Longshoremen shut down New York, New Jersey ports in wildcat strike - Classical economic theory was on display on January 29, when more than 4,000 International Longshoremen's Association workers exercised their monopoly power and unexpectedly walked off the job, shutting down the Ports of New York and New Jersey for the better part of a day. ILA officials were quoted as saying they did not know why the workers had gone on strike. In any event, the ILA leadership ordered them back to work after an arbitrator issued an emergency ruling that the stoppage violated the no-strike provision in the current collective bargaining agreement. Work resumed about 8 p.m.

The ILA represents employees of members of the New York Shipping Association under a contract covering operations of the Port Authority of New York and New Jersey. The workers were reportedly protesting alleged "interference" by the Waterfront Commission of New York Harbor, which deals with crime on the waterfront — remember the investigation of Lee J. Cobb as mob-connected union boss Johnny Friendly in On the Waterfront? — but it wasn't clear exactly what that "interference" was.

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