News & Analysis

The Good, the Bad and the Ugly

NLRB’s Emanuel under fire, and “joint employment” standard is in doubt. After a brief window of time in late 2017 when Republican Members outnumbered Democratic Members on the National Labor Relations Board, the Board is now split at 2-2. President Trump has nominated management labor lawyer John Ring to the seat previously held by former Chairman Philip A. Miscimarra, who has returned to private practice in his old law firm. A date for Mr. Ring’s confirmation hearing has not yet been set.

Meanwhile, new Republican Member William Emanuel has been under attack from Democratic senators, who assert that he committed an ethical violation by participating in a “joint employment” case that we reported on in December. In Hy-Brand, the Board overruled, 3-2, the standard for joint employment in the 2015 Browning-Ferris decision, which was awaiting review by the U.S. Court of Appeals for the District of Columbia Circuit. (After Hy-Brand, the D.C. Circuit remanded Browning-Ferris to the Board at the Board’s request.)

Browning-Ferris was the controversial decision that expanded the basis of joint employment, holding that an entity that had the power to exercise “indirect control” over the workers of another entity was a joint employer under the National Labor Relations Act. Not surprisingly, this expansion was widely criticized by employers, in part because of the threat the new standard posed to franchise relationships; thus, the Hy-Brand decision, which vacated Browning-Ferris, was viewed as a welcome return to business as usual.

Unfortunately, the reprieve was short-lived. Member Emanuel’s former law firm represented a Browning-Ferris contractor in the 2015 case, although Member Emanuel was not personally involved. Nonetheless, the Democratic senators have argued that Member Emanuel should have recused himself from Hy-Brand because of the potential impact on the Browning-Ferris case. (Neither Member Emanuel nor his former law firm had any connections to or past representation of any of the parties in Hy-Brand.)

Now, the NLRB Inspector General has agreed that Member Emanuel should have recused himself. Expert legal commentators disagree as to whether recusal was warranted or required. But on February 26, a three-member panel of the Board took the Inspector General’s advice and vacated the Hy-Brand decision. So Browning-Ferris is resurrected for the time being.

What happens now is anyone’s guess. Browning-Ferris remains the law until another joint employer case comes to the Board. And that assumes that the Republican majority on the Board will be restored and that none of them will be subject to recusal arguments.

This is not to say Browning-Ferris is correct law or that the Inspector General’s Report is correct. We anticipate that the parties affected by the Board’s highly irregular “do-over” will be finding ways to challenge it. Meanwhile, the parties in Browning-Ferris may be in limbo until the case gets back into court. Without Member Emanuel, the Board has an effective 2-1 Democratic majority. Therefore, organized labor and the allied Democrats are likely to get that case primed for court enforcement as quickly as they can, before a Republican can fill the fifth seat on the Board and before a Republican majority Board can reinstitute the traditional longstanding joint employment standard that existed for many years before Browning-Ferris.

NLRB extends period for comment on so-called “quickie election” rule
to March 19. As previously reported, the NLRB, in a 3-2 vote along party lines, has appeared to move toward revising or rescinding the Obama-era regulations governing Board representation elections (the so-called “new,” “quickie,” or “ambush” election rule). As a result of that vote, the Board issued a Request for Information seeking public comment as to whether the Board should revise the regulations or rescind them.

The Board asked for comment on several questions:

  1. Should the Rule be retained without change?
  2. Should the Rule be retained with modifications, and, if so, what should be modified?
  3. Should the Rule be rescinded, and, if so, should the Board revert to the prior regulations, or should the Board make changes to the prior regulations, and, if so, what changes?

The comment deadline was originally February 12. On January 26, the Board extended the period for filing comments through March 19, 2018.

Employers, speak now or forever continue to face representation elections on the uneven playing field the “quickie” rules create.

Board asks for briefs on whether employee misclassification is an independent labor law violation. Acting on a novel theory advanced by former NLRB General Counsel Richard Griffin, an administrative law judge of the Board in Velox Express found last September that an employer violated Section 8(a)(1) of the NLRA by misclassifying medical laboratory drivers as “independent contractors.” Section 8(a)(1) makes it unlawful to interfere with, restrain, or coerce employees in the exercise of their Section 7 rights.

Whether the Board will agree with the ALJ is up in the air. On February 15, the Board invited the parties and interested amici to file briefs on the issue. According to a report in Law 360 (paid subscription required to access), the U.S. Chamber of Commerce and another employer group in December 2017 asked the Board to solicit briefs, asserting that the “case presents the question of whether, for the first time in history, the Board should treat the act of misclassifying statutory employees as a standalone, independent violation of the [NLRA].” As the Chamber argued, the proposed change in the law could “discourage businesses from engaging in legitimate independent contractor arrangements out of fear of making good-faith classification errors that, under the standard proposed in this case, would subject them ipso facto to unfair labor practice charges.”

NLRB Division of Advice sides with Google in James Damore termination. We reported last summer on Google’s termination of engineer James Damore. After he was fired for drafting and distributing a memorandum questioning the effectiveness of Google’s diversity efforts, Mr. Damore filed an unfair labor practice charge, alleging that he was terminated for engaging in protected concerted activity under Section 7 of the NLRA and in retaliation for exercising his rights. (He has since filed a putative class action lawsuit against Google, asserting claims under California state law that include discrimination against white men with conservative political beliefs, retaliation, and violations of laws protecting political activity and speech.)

Under Section 7 of the NLRA, employees have the right to engage in speech or make complaints about workplace conditions that could have an effect on more than just the one employee complaining or speaking. The NLRB in recent years has found that individual complaints about discrimination in the workplace are protected concerted activity. Thus, consistent with those decisions, Mr. Damore argued that his speech about his employer’s handling of diversity in the workplace could also be protected concerted activity. Google responded that Mr. Damore violated its corporate code of conduct and that his memorandum was disruptive. The NLRB Regional Office submitted the charge to the NLRB General Counsel’s Division of Advice.

In an Advice Memorandum issued in mid-January, the Division of Advice directed the Regional Office that the charge should be dismissed if not withdrawn. According to the Division of Advice, although parts of the Damore memorandum were protected activity, Google had terminated Mr. Damore’s employment for divisive and discriminatory statements relying on sex-based stereotypes, which were not protected.  In response, Mr. Damore’s counsel withdrew the charge and says that she plans to focus on the class action lawsuit.

Right-to-work laws decrease Democratic contributions, voter turnout, study finds. A recent study by the National Bureau of Economic Research has found that right-to-work laws decrease campaign contributions by organized labor to Democratic candidates and get-out-the-vote programs. In presidential elections, states with right-to-work laws had a 3.5 percent lower Democratic voter turnout than states that do not have such laws. (Currently, 28 states have right-to-work laws, which make it unlawful for employees to be required to join or belong to unions. In the other 22 states, employees can be compelled to join labor organizations, and they can be forced – directly or indirectly – to contribute to political campaign spending and efforts of organized labor.)

UAW makes inroads at Airbnb contractor: Is Airbnb next? Historically, the business model of Airbnb has clashed with organized labor, as union leaders and pro-union politicians view the digital renting platform as a threat to hospitality-related jobs attached to “brick and mortar” hotels. But now, a UAW local union has entered into a collective bargaining agreement with Bon Appetit, which has about 150 employees and provides cafeteria service for four Airbnb facilities in Northern California and Portland, Oregon. According to news reports, Airbnb instructed Bon Appetit to remain neutral in the UAW organizing effort. Will the UAW use the cafeteria bargaining unit as a beachhead to organize Airbnb workers? We’ll see. Meanwhile, Unite Here is pushing to organize Airbnb’s worldwide workforce and cleaning service employees.

Dangerous deja vu for Staten Island Ferry passengers. A New York judge has upheld an arbitrator’s decision in favor of an engineer on the Staten Island Ferry who was demoted for falling asleep on the job and lost overtime work as a result of the demotion. The employee was caught on video sleeping while he was supposed to have been docking the ferry. In 2003, eleven passengers on the ferry were killed when an engineer fell asleep and the ferry slammed into the docks. Trying to avoid a recurrence of the 2003 tragedy, the City disciplined the employee with a 30-day suspension and demotion to Marine Engineer. The Union filed a grievance, arguing, “there is no prohibition on closing your eyes while on duty.” An arbitrator agreed and sustained the grievance.

In refusing to vacate the arbitrator’s award, the judge noted that courts are reluctant to set aside arbitration awards and that the City failed to show that the employee “imposes a real risk to public safety.” Ferry passengers begged to differ. Employers should take the case as a reminder that the results of arbitration are very hard to overturn and that arbitrations are the forum where the employer has the best and possibly last chance to win on the facts.

More fallout from the Fiat Chrysler-UAW corruption investigation. We have reported on ongoing events in the corruption investigation involving former officials of the UAW and the labor relations staff at Fiat Chrysler and a UAW training center in Michigan. Now, the widow of a UAW vice president has pleaded guilty to federal tax offenses in connection with the investigation. Sentencing has not yet occurred, but news reports indicate that she owes $191,000 in restitution. Her home mortgage was apparently paid in part from training center funds, and possibly other funds unlawfully paid by Alphons Iacobelli, who at the time was a labor official for Fiat Chrysler. According to a plea deal that Mr. Iacobelli has reached with the federal government,  $30,000 in training center funds paid for a lavish party for another UAW vice president, as well as gifts that included a custom-made Italian watch. Based on the corruption allegations, three employees have filed a class action against the UAW and Fiat Chrysler seeking hundreds of millions of dollars in damages. The UAW, for its part, asserts that the scheme was confined to a few bad actors and that no collective bargaining agreements were compromised as a result of the corruption. There will be more to this story, as other indictments are expected and the class action is in its early stages.

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