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Legal Updates

Labor Law In Flux: Looking Back And Ahead

Throughout President Obama’s final year in office, the National Labor Relations Board (the “NLRB” or “Board”) continued to apply the federal National Labor Relations Act (the “NLRA” or “Act”) in a strongly pro-union fashion. The Board issued a number of significant decisions in 2016 holding employer personnel policies unlawful and strengthening workers’ ability to organize.

The unexpected election of President Trump, however, portends potentially dramatic changes in the course of labor law over the next four years. Some of those anticipated developments are outlined below, following a look back at some of the major Board and court decisions under the NLRA over the past year.

Employee Concerted Activities

Several notable decisions issued by the NLRB in 2016 broadened employees’ rights to engage in concerted activities aimed at bettering terms and conditions of employment. For instance:

Non-Compete Agreements. In a July 2016 decision, the Board found an employer’s standard non-compete agreement unlawful, on the ground that it interfered with employees’ rights, under Section 7 of the Act, to engage in protected concerted activity. Minteq International, Inc., 364 NLRB No. 63 (July 29, 2016). In particular, the agreement – which all employees, union and non-union, were required to sign – prohibited employees from interfering with the employer’s business relationships with its customers. The Board held that this provision unlawfully restricted employees from seeking to “improve terms and conditions of employment,” such as by asking customers to boycott the employer’s products or services.

Social Media. The Board also continued to strike down employer personnel policies on the basis that they improperly restricted employees’ Section 7 rights. For instance, in Chipotle Services LLC, d/b/a Chipotle Mexican Grill, 364 NLRB No. 72 (Aug. 18, 2016), the Board found fault with Chipotle’s social media policy, which prohibited employees from posting “incomplete, confidential, or inaccurate information” or making “disparaging, false, [or] misleading” statements, because the term “confidential” was not defined and the prohibition on “false” statements was overly broad. Even though Chipotle had included a disclaimer in the policy specifically carving out protected activity under the NLRA, the Board held that the disclaimer was insufficient to cure the unlawful provisions.

Employer Intellectual Property. In addition, the Board took issue with Chipotle’s prohibition on employees’ “improper use of Chipotle’s name, trademarks, or other intellectual property.” The Board found that this provision could unlawfully prohibit employees from using Chipotle’s name in connection with protected concerted activities, such as wearing a T-shirt with the company’s name or logo during a group protest of working conditions. While leaving open the possibility that an employer could prohibit specific, unprotected uses of its logo or other trademarks, the Board held that a general prohibition on employees’ use of its name or logo is unlawful.

Union Organizing

Similarly, a number of important 2016 Board and court decisions strengthened union organization rights. In particular:

Striker Replacements. In May 2016, the Board issued a ruling making it more difficult for employers to permanently replace workers who strike in support of economic demands. Under longstanding Board precedent, the hiring of permanent replacement workers has been deemed a legitimate economic weapon that an employer may exercise in order to maintain its normal operations during a strike and force the union to compromise on economic demands. But in American Baptist Homes of the West, d/b/a Piedmont Gardens, 364 NLRB No. 13 (May 31, 2016), the Board held that an employer violates the Act if its hiring of permanent replacements is also motivated by “an independent unlawful purpose.” In the case at hand, the Board found that the employer was motivated by two such unlawful purposes: to punish the strikers and to dissuade them from engaging in future strikes.

Union Election Rules. In June 2016, the Board obtained a favorable ruling from the U.S. Court of Appeals for the Fifth Circuit, which upheld the Board’s 2015 amendments to its union election rules, known as the “quickie election” rules. Associated Builders & Contractors of Texas, Inc. v. NLRB, 826 F.3d 216 (5th Cir. 2016). The Fifth Circuit held that the amendments were neither arbitrary nor capricious, and did not impermissibly limit parties from litigating pre-election issues.

“Micro” Bargaining Units. The Fifth Circuit gave the NLRB another victory by upholding the Board’s Specialty Healthcare decision allowing “micro-units” to organize. Macy’s v. NLRB, 824 F.3d 557 (5th Cir. 2016). The Fifth Circuit held that a group of employees at Macy’s comprising only of cosmetics and fragrance employees was an appropriate unit for a union representation election. Employers have argued that Specialty Healthcare opens the door to chaos in the work environment by permitting any number of bargaining units to exist within a single work facility. Like several other federal appeals courts, the Fifth Circuit rejected this argument, finding that any potential disruption to Macy’s business was immaterial.

Unionization of Temporary Workers. In July 2016, the Board held that employer consent is no longer required for a union to organize a single bargaining unit consisting of both the employer’s regular employees and temporary workers supplied by third parties, such as staffing agencies. Miller & Anderson, Inc., 364 NLRB No. 39 (July 11, 2016). As is frequently the case in labor law, the Board has gone back and forth on this issue numerous times in recent years. For approximately 30 years, beginning in the 1970s, the Board took the position that bargaining units containing both permanent and temporary employees required the consent of both the permanent employer and the staffing agency. In 2000, under a majority-Democrat Board, the Board overruled those precedents, finding that employer consent is not required if the permanent and temporary employers are “joint employers” and the employees share a community of interest. Four years later, a majority-Republican Board overturned that decision and returned to the prior standard. With the Miller & Anderson decision, the Board’s pendulum has now swung back again.

Graduate Assistants. Finally, the Board overruled its 2004 Brown University decision by holding that graduate teaching assistants at Columbia University were employees within the meaning of the Act, and thus had a right to unionize. Columbia University, 364 NLRB No. 90 (August 23, 2016). The Board found that Columbia exercised sufficient control over the graduate assistants to make them employees, emphasizing the degree of oversight provided by the university and its right to dismiss graduate assistants from their teaching responsibilities. The Board also stressed that graduate assistants perform the overwhelming bulk of Columbia’s undergraduate teaching, finding that this placed graduate assistants in a primarily economic relationship with the university.

Possible Changes Ahead

With the advent of the Trump Administration, federal labor law is likely to begin taking a sharply different course from the past eight years, in a number of areas.

NLRB Composition. President Trump recently elevated current Board Member Philip Miscimarra to Chairman of the NLRB, replacing Mark Gaston Pearce, who will remain on the Board until his term expires on August 27, 2018. In addition, there are currently two vacancies among the NLRB’s five slots, which the President is expected to fill with Republican appointees.

Prospective Reversals of Recent Board Rulings. Once a Republican majority takes control of the NLRB, numerous pro-union rulings handed down by the Board during the Obama years are likely to be overturned or substantially narrowed. For example, the Miller & Anderson decision, relating to bargaining units containing both permanent and temporary workers, seems primed for reversal when this issue reaches a Republican-majority Board. The NLRB could also reconsider its 2014 Purple Communications decision, under which employees generally have a right to use an employer’s e-mail system for purposes of union organizing. In addition, it will not be surprising if the Board begins giving much more leeway to employer social media, confidentiality and similar personnel policies than was the case under the Obama Administration.

Election Rules. It also seems possible that a GOP-majority Board could seek to rescind the recent changes to the NLRB’s union election rules. If so, employers would be given more time and potential legal avenues for fighting union election campaigns.

Expansion of Right-to-Work Laws. Many states have “right to work” laws, under which employees cannot be forced to pay union dues or fees, even if they are part of a bargaining unit represented by a union. In recent years, a number of states (including Michigan, Indiana, Wisconsin and Kentucky) have joined the ranks of those with right-to-work laws, and other states are considering similar bills. It is even possible that the GOP-controlled Congress could pass a federal right-to-work statute, which could lead to a profound shift in the labor-management power balance nationally. Democrats and their union allies can be expected to resist any such effort with all of their might.

On a similar note, in November 2016, the U.S. Court of Appeals for the Sixth Circuit upheld right-to-work measures passed by a number of Kentucky counties (prior to the adoption of Kentucky’s statewide right-to-work law). The Sixth Circuit’s decision is significant, because unions have argued that under the NLRA, only states, and not municipal subdivisions, may adopt right-to-work legislation.

Persuader Rule. Finally, the Department of Labor’s (“DOL”) “persuader rule,” under the Labor-Management Reporting and Disclosure Act, has long required employers to disclose certain information related to consultants hired to assist with opposition to union organizing efforts. For many years, the DOL recognized an “advice exemption” to the persuader rule, under which assistance provided by consultants (including attorneys) who simply advise management and have no direct employee contact need not be reported. In 2015, the DOL issued a new rule aimed at gutting the advice exemption by requiring employers to report all communications with legal counsel and other consultants aimed at persuading employees not to unionize, regardless of whether consultants communicate directly with employees.

The DOL’s revised persuader rule was challenged by numerous employer groups, and was struck down, on a nationwide basis, by a Texas federal district court in June 2016. Although the DOL appealed that decision to the Fifth Circuit, the DOL is expected to drop the appeal under the Trump Administration. If so, the persuader rule will revert to its previous, more employer-friendly form.

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If you have any questions about these developments or other anticipated changes under the NLRA, please feel free to contact one of our experienced labor lawyers. We regularly assist employers with all types of union-related issues and would be pleased to help.