News & Analysis

The Good, the Bad and the Ugly

Better times ahead at the NLRB, but it may take a while - For nearly eight years, the National Labor Relations Board has been in the majority control of Democratic appointees of President Obama. During this period, the NLRB has aggressively pursued a pro-organized-labor agenda in interpreting and enforcing the National Labor Relations Act.

Generally, the NLRB, when at full strength, consists of three Members of the President’s political party and two from the opposing party. Currently, however, the NLRB has only three of the five seats filled, with the two Democratic Members outnumbering a lone Republican (more on him in a minute). President Obama’s Board Chairman, Mark Gaston Pearce, was relegated to “Member” status on January 23, when President Trump appointed Philip Miscimarra, the “lone Republican,” as Acting Chairman. Chairman Miscimarra’s current term ends December 16, 2017. He dissented from many of the Board’s more “excessive” decisions, so his appointment as Acting Chairman is as welcome as the first crocus in spring. Member Pearce’s term runs through August 27, 2018. The term of the third current Board member – Democrat Lauren McFerran, an Obama appointee – ends December 16, 2019.

Based on press reports, none of the current Board Members plan to resign before completing their terms. Nevertheless, President Trump is in a position to nominate two new Republican Members to the two empty seats on the Board. The nomination and confirmation process may take several months, but assuming the nominees are confirmed by the Senate, which has a Republican majority, the Board will again have a Republican majority for the first time since the early days of the Obama Administration.

A recent report from Bloomberg BNA indicates that three people have been short-listed for nomination to the two vacant seats on the Board: Marvin Kaplan, currently serving as counsel to a Commissioner of the Occupational Safety and Health Review Commission and a former Republican staffer on workforce issues on Capitol Hill; William Emanuel, a management-side labor lawyer based in California; and Douglas Seaton, a management-side labor lawyer based in Minnesota.

In addition to the Board members, the General Counsel has an active role in shaping policy. Somewhat unique among federal agencies, the NLRB’s General Counsel is not merely the legal advisor to the agency, but instead serves as both the investigator and prosecutor for violations of the NLRA. Additionally, the General Counsel supervises the activities of the Board’s many regional offices. In this role, the General Counsel has the ability to affect policy at the Board level and select cases to attempt “to make new law.” The current General Counsel is Richard F. Griffin, Jr., an Obama appointee, whose term will expire November 4, 2017. According to news reports, General Counsel Griffin also does not intend to resign early.

Until the nomination and confirmation process has concluded, the Democrats retain control of the Board and the General Counsel’s prosecutorial power. Thus, for the next several months, we expect Board decisions and General Counsel actions to remain consistent with the approach that has prevailed during the Obama years.

President Trump nominates R. Alexander Acosta as Secretary of Labor - While draining the Washington “swamp,” President Trump has reached to the edge of the Everglades to find Alex Acosta, Dean of the Florida International University School of Law in Miami, as his replacement nominee for Andrew Puzder. Mr. Puzder, whose confirmation hearing was delayed several times, withdrew from consideration after several Republican Senators on the Senate Health, Education, Labor and Pensions Committee indicated that they could not support him. Mr. Acosta is expected to face smooth sailing through the confirmation process, as he has been through it successfully three times before as the nominee for U.S. Attorney for the Southern District of Florida, head of the Civil Rights Division of the U.S. Department of Justice, and Member of the National Labor Relations Board. He appears to have bipartisan support, including the support of at least one union. Former NLRB Chairman Wilma Liebman (D), a Clinton appointee, has also spoken positively about him. He is a native of Miami, a graduate of Harvard University for both his undergraduate and law degrees, and a former law clerk of Justice Samuel Alito when the Justice served on the U.S. Court of Appeals for the Third Circuit. While the confirmation process plays out, the U.S. Department of Labor is being managed by Acting Secretary of Labor Edward Hugler, a career government employee since 1978. Expect no major policy changes from the department until the Acosta team is in place.

Compulsory union membership on the way to becoming history? - The new year started out with a bang, as Kentucky and Missouri both enacted right-to-work laws, which prohibit unions from negotiating mandatory union membership provisions into collective bargaining agreements. The Kentucky law became effective on January 7, and Missouri’s law will become effective on August 28. Many opponents of compulsory union membership had hoped that New Hampshire would join the list this month as the 29th state with a right-to-work law, but that wasn’t to be, as nearly 15 percent of Republicans in the state House voted with Democrats to kill the legislation. Federal right-to-work legislation has been introduced in Congress, and its prospects for enactment possibly have never been better, given Republican control of both houses of Congress and the White House. Observers expect a filibuster by Senate Democrats to be the key holdup. A relatively large number of Democratic Senate seats are up for grabs in 2018, in states with right-to-work laws or states that President Trump carried in November 2016. Thus, proponents of the federal legislation are hopeful that some Democrats might be forced by political winds to vote against a filibuster. Time will tell, but don’t count on Democrats to oppose the organized labor lobby.

Whether or how the increase in right-to-work states is directly affecting union membership is difficult to measure. Union membership numbers and the percentage of union membership in the private sector both declined in 2016. The number of workers represented by unions (both members and non-members) increased slightly, but the percentage of workers represented by unions in the private sector decreased. Thus, it appears that absolute increases in numbers of employees represented by unions is not translating into increased numbers of dues-paying members. Employees who are represented by unions but can choose not to join – which generally may be employees in right-to-work states – may be saying “no” in greater percentages than in the past. New right-to-work laws, along with the economic realities of the modern U.S. workplace, may be pushing this trend forward.

The Democratic majority on the National Labor Relations Board and the U.S. Department of Labor under President Obama, despite their best efforts, apparently did not change these dynamics. President Trump’s focus on job creation and overtures to union leaders may “lift all boats” and result in increases in employment and in union membership.

Meanwhile, the issue of compulsory union membership in public sector unions may be coming again soon to the U.S. Supreme Court. Last year, the Supreme Court in Friedrichs v. California Teachers Association split 4-4 shortly after the death of Justice Antonin Scalia, and left in place a decision from the U.S. Court of Appeals for the Ninth Circuit that it was not unlawful for teachers in Los Angeles to be required to pay union dues or the equivalent for collective bargaining costs. But with Judge Neil Gorsuch on the way as Justice Scalia’s likely successor, the Friedrichs result may not stand for long. At least one other case raising the same issue is pending. If the Supreme Court ultimately finds that compulsory union membership for public sector workers is unconstitutional, that could sap much of the financial lifeline of organized labor as well as some of its political leverage over governmental units nationwide.

Legions of laborers leaving employers in a left-leaning lurch? - Most employers are aware of the general strikes and mass protests that have taken place or are planned as opposition to future perceived actions of the Trump Administration or Republican majorities in Congress and various states. Reports in the media indicate that further strike actions are being planned for March 8, May 1, and continuing through the summer.

Some of these protest actions involve employee walkouts that leave employers in a bind, with customers and clients to be served, work to be done, safety to be ensured, and, in some cases, loss of business and thus loss of jobs. To date, the broad economic effects of the actions have been minimal. But some protesters have reportedly lost their jobs for failing to show up for work. Reports in the news indicate that some protesting workers were discharged for “no-call/no-show” violations of attendance policies. For employers, employees, and unions, the protest actions raise many business, public relations, and legal issues.

For private sector employers with collective bargaining agreements that have “no-strike” provisions, a walkout or other action by bargaining unit employees to participate in a protest strike may be a violation of the collective bargaining agreement. Unfortunately, a definitive answer may not be known until after (1) the employer takes some action based on the CBA provision and (2) an arbitrator, the National Labor Relations Board, or a court interprets the provision and answers the question.

For non-union employers in the private sector, the range of lawful responses to the walkouts may be constrained by the National Labor Relation Act’s protection of “concerted activity.”

For both union and non-union employers in the private sector, federal, state, and local laws may come into play. For example, discrimination in the application of discipline or other treatment, or discriminatory impact, can be alleged. More directly, some state and local laws prohibit employment discrimination based on political activity, any lawful off-duty activity, or political affiliation.

Employer options (not necessarily all lawful in all circumstances) in the event of a “protest” strike include (1) discipline/discharge of the employee; (2) permanent replacement of the employee (with preferential recall rights upon the employee’s offer to return); (3) temporary replacement; (4) assessing attendance points or infraction instances under an attendance policy; (5) non-disciplinary counseling; (6) encouragement of the protest action; (7) doing nothing.

Which choice? Here, “no one size fits all.” The legal minefield is wide, uncertain, and subject to changing administrative and judicial actions and political winds.

As we have previously warned here and here, private sector employers should be generally aware that the protections of the NLRA are not limited to employees seeking or having union representation. The NLRA also protects concerted activity unrelated to union activity that is engaged in for “other mutual aid or protection.” Planned protest actions may or may not be protected concerted activity depending on the purpose and type of the actions. For legal protection, the actions generally must somehow, even tangentially, relate to terms and conditions of employment. Political protest action by employees may or may not be protected concerted activity, and whether it is may depend largely on the view of the case taken by the then-current NLRB majority or court.

The protection afforded by the NLRA generally restricts employers from taking or threatening any disciplinary action against employees for engaging in protected concerted activity. Thus, when an employer disciplines or threatens to discipline an employee for engaging in protected concerted activity, it generally commits an unfair labor practice unless the right to engage in the activity has been waived – for example, by a “no-strike provision” in a collective bargaining agreement that prohibits the activity, as mentioned above.

In short, the mass protests present extremely tricky business, public relations, and legal issues for employers. We recommend that employers consult with legal counsel familiar with labor law and strike issues before taking any actions with respect to protesting employees.

Supreme Court to decide validity of class waivers in arbitration agreements - On January 13, the Supreme Court granted certiorari in three cases involving the validity of class waivers in arbitration agreements between employees and employers. Currently, some courts have held that waivers of class or collective actions are valid, while other courts agree with the position taken by the Obama-era NLRB that such agreements violate the National Labor Relations Act. (As noted above, Democrats still have a 2-1 majority on the NLRB, and that may not change for several months.)

In response to the grant of certiorari, on January 26, the NLRB’s Office of the General Counsel instructed the Board’s regional offices to settle unfair labor practice cases with terms conditioned on a Supreme Court victory for the Board’s side. According to a Law360 report, General Counsel Richard F. Griffin, Jr., decided on the settlement strategy to limit the potential for unnecessary litigation. The General Counsel’s policy is usually not to settle only “parts” of a case, but here the Board apparently will settle out the class waiver/arbitration issue.

The parties, many employers, and legal observers (and possibly NLRB Regional Office Directors) were eagerly awaiting a decision from the Supreme Court, but they now will have to wait a bit longer. In early February, the Court announced that the cases have been pushed to the Court’s October 2017 term. By then, the Court may have a new “Justice Neil Gorsuch,” and he may cast a pivotal vote. Employers are hoping the vote goes “their way” and against the Board.

Giving it the old college try - With a term winding down to a November 2017 ending, NLRB General Counsel Griffin on February 1 issued a “Report on the Statutory Rights of University Faculty and Students in the Unfair Labor Practice Context.” The report’s issuance may be without statutory or regulatory authority, and without legal effect. General Counsel Griffin asserts that the purpose of the report is to assist private colleges and universities in complying with the NLRA by making his “prosecutorial view” known. But his “prosecutorial view” is not the law, and with the anticipated swing of the Board to Republican-majority, his view may not matter. Indeed, his “prosecutorial view” may be wrong, in whole or in part.

Nevertheless, the General Counsel is now on record that he (1) wants collective bargaining rights for college football players and would extend that to other college athletes; and (2) wants an expansion of Board authority over religious institutions of higher learning when no union is on the scene. Upon the report’s rather “gratuitous” eleventh-hour issuance, two Republican House members promptly released the following statement: “This partisan memorandum puts the interests of union leaders over America’s students, and it has the potential to create significant confusion at college campuses across the nation. It’s an affront to hardworking Americans for Griffin to double down on his extreme, Big Labor agenda, especially at a time when a new president is entitled to move the NLRB in a new direction.” The two House Republicans – Virginia Foxx (R-NC) and Tim Walberg (R-MI) – called for the General Counsel to rescind the report or resign.

Trickle-down economics or hipster horror? - USA Today reported in January that a robotic barista named Gordon, “who” can serve up to 120 coffee drinks per hour, has positioned “himself” a few thousand feet from a Starbucks location in San Francisco. Henry Hu, Chief Executive Officer of startup company Café X Technologies, reportedly tired of waiting in line for coffee and took action with the creation of Gordon. The robotic barista with kiosk café offers seven espresso and latte-type drinks, with fresh-ground beans. You can even order through an app. If Gordon makes a mistake, he/she/it tosses the drink. Prices for the eight-ounce offerings range from $2.25 to $2.95, leaving customers plenty of extra money for Gordon’s tip – not that “he” needs one. According to the story, most humans’ barista jobs are safe for now, and Starbucks has no plans to use robots, instead touting its personal touch across its 25,000 locations.

“Hey, Gordon -- look out! Oh, never mind.” - Apparently undeterred by Brexit and other challenges to its existence, the European Parliament’s Legal Affairs Committee in early January issued a proposal to mandate that all robots to have “kill switches.” The proposal is intended to prevent the robots from causing excessive damage. The author of the regulatory proposal said that, “To ensure that robots are and will remain in the service of humans, we urgently need to create a robust European legal framework.” The proposal gives some examples of the need, and engineers/designers are to include the kill switches so that the robots can be turned off in emergencies. They also need to make certain that robots can be reprogrammed if they do not work as designed. According to a report in CNN’s, designers, producers, and operators of robots will generally be governed by the “laws of robots” of science fiction writer Isaac Asimov. The author of the proposal gives a cautionary note that is central to the proposal, “You must never think the robot is human and that he loves you.” And yes, the proposal talks about insurance, and would confer rights and obligations upon the robots. Finally, under the proposal, owners of robots would face taxes and social security payment obligations for replacing humans. But wait – where does HR fit in all this?

(At last report, the tax and social security proposal was rejected by European parliament. But it has recently been reported widely that Microsoft founder Bill Gates advocates just such a tax for the United States. We hear that Gordon opposes the measure. And no, this is not “fake news.” Well, except for that last part about Gordon.)

Nice worker (if you can find him) – BART janitor getting $162K in overtime in one year seen going into closet while on the clock - In our last Executive Labor Summary, we reported on the cash-strapped Bay Area Rapid Transit District, a regional commuter rail agency in the San Francisco Bay Area, which employed a janitor who was paid $270,000 (wages and benefits) in 2015. The story then was that the janitor in question apparently accepted nearly every work opportunity available to him and “racked up” $162,000 in overtime. Press reports indicated that the gross pay that year for Liang Zhao Zhang was about four times his base pay. Comments in social media ranged from various versions of “why am I in grad school? Never too late for a career change . . .” to “given how gross BART is . . . he deserves the money.”

But as it turns out, although Mr. Zhang may be at the workplace, he may not necessarily be working. According to a report this month by KTVU Fox 2 of San Francisco, BART security surveillance videos on two days showed the janitor going into in a closet for at least two hours without coming out. (The camera was apparently not inside the closet, so it is possible that Mr. Zhang was working while he was in there.) A review of timecards from 2015 showed a stretch when he recorded 17 hours a day for 18 days straight and was paid for 365 days in the year, using vacation and PTO to cover some days, but having overtime most days.

A representative of public interest group Transparent California termed the situation “absolutely outrageous . . . For Janitors that’s obscene! It’s unconscionable!” But a representative of the Service Employees International Union said the work is “backbreaking” and “involves cleaning up after the hundreds of thousands of workers that rely on BART to get to and from work every day.” A representative of BART was quoted as saying that he does not believe an audit is needed and that “the population of homeless people who spend time in the Powell Street station means the janitorial staff spends much of their time cleaning up urine, feces, and needles, which he calls ‘totally unacceptable.’”

Nonetheless, it appears that the BART managers have some housekeeping to do. How about promoting Mr. Zhang to management and making him overtime-exempt? (Just kidding.)

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