As we previously noted, the constitutionality of the NLRB is an open question these days.  A few weeks ago, House Republicans jumped into the fray and convened a full-fledged hearing on the matter.   That might have been interesting theatre, but, ultimately it did not mean much as far as figuring out if the current Board is legit or not.  After all, thanks to Justice Marshall, it takes a court to rule that a particular action is unconstitutional.

Well, a federal district court in New York is now facing the issue.  According to Reuters, the court entertained oral arguments last week from the employer Reassiance Equity Holdings, and the Justice Department.  What was interesting was the employer’s choice of legal counsel — Paul Clement, the former Solicitor General of the United States.  Mr. Clement is a constitutional heavyweight (more so than a labor lawyer, though he also represented the NFL in its labor litigation this summer) and his brief will certainly be taken seriously by the court.

Basically, Clement argued that the recess appointments are not valid because the Senate was not really in recess; the Justice Department claimed that the Board previously delegated the authority in question to the General Counsel’s office for the charge in question in the case.   And, in the alternative, that the appointments are legal anyway.

As I stated before, I would not counsel any company to take any labor action with the far-off hope that the appointments will be declared unconstitutional.  But, that being said, this is still a highly interesting intersection between constitutional law and labor law, with major players from both areas now deep into the fray.

Stay tuned….

In what appears to be a strange marriage, the IAM and the NUHW have ” signed a letter of intent concerning a potential affiliation” according to a press release Tuesday.  The press release goes on to say that both sides still need to iron out the details, but one can presume that if they are at the issuing press release stage, this marriage is probably going to happen.

So, what exactly do nurses and machinists have in common?  What does it matter?  Union mergers today are less about whether the two sides’ members actually are the right fit than if each can bring something to the table that the other doesn’t have.  The classic example of this: the UNITE-HERE merger.  UNITE had tons of money, but no members.  HERE had lots of bodies, but no money.  So, they merged.  Of course, as we all know, it turned out to be an absolute disaster.  The Presidents of the respective unions — Bruce Raynor and John Wilhlem — hated each other by the end of it and filed so many lawsuits, injunctions, charges before the Labor Board, etc., that even the most dedicated labor watcher would lose track of it all.

It appears that the IAM and NUHW are merging for the same reason.   The Machinists have money, the NUHW has a good membership base (remember that NUHW was itself born of the divorce between Andy Stern and Sal Roselli).   It remains to be seen whether the IAM-NUHW merger is any more successful than the UNITE-HERE merger, but the UNITE-HERE merger is a cautionary tale, particularly when the presidents of the unions have especially strong personalities.

Many labor unions by-pass the traditional NLRB election process in organizing.  Instead, unions will approach an employer and ask if the employer will agree to recognize the union if the union obtains a majority of signed union authorization cards — i.e. “card check.”   The union will also ask that the employer sign a “neutrality agreement” during the organizing process which forbids the employer from participating in the organizing process.   Failing to sign these agreements can sometimes lead to brutal corporate campaign tactics from unions — just look at the way that Wal-Mart was demonized by labor unions in the press.   Of course, many employers have felt like they are between a rock and a hard place — sign the card check/neutrality agreement and hand over their employees or don’t sign and you are in store for a PR battering.  It’s a Catch-22.

Recently, the 11th Circuit handed down a major decision in Munhall v. UNITE HERE that might make this whole scheme illegal.   Munhall involved the classic card check/neutrality agreement described above.   But in this instance, an employee claimed that it actually violated federal labor law — namely the prohibition in LMRA Section 302 which prevents an employer from giving a “thing of value” to a labor union.

So the main question confronting the Court was — is a “neutrality agreement” a thing of value?  In a 2-1 decision, the 11th Circuit held that such agreements could be things of value.  The majority found that while not all neutrality agreements violate Section 302, “innocuous ground rules can become illegal payments if used as valuable consideration in a scheme to . . . exort a benefit from an employer.”

Translated into plain english: Yes, asking an employer to sign a neutrality agreement is illegal if it is used to extort the employer.

The case is even more important because the Third and Fourth Circuits have reached the opposite conclusion in recent cases.   This whole issue seems ripe for a Supreme Court battle.

Signing a card check/neutrality agreement might make sense for some employers.  But even those employers that agree to such arrangements often have a bad taste afterwards.   The 11th Circuit decision takes a step towards preventing employers from even being placed in this unfair box to start.

In this first edition of Specialty Healthcare Watch, I will examine the first case that applied Specality Healthcare, Odwalla Inc., 357 NLRB No. 132 (2011).

This case starts off by answering an important question that management had following Specialty Healthcare — that is, does Specialty Healthcare apply outside the non-acute healthcare setting?  Remember, Specialty Healthcare was a nursing home case and there was some speculation that perhaps the NLRB intended for that holding to be limited to those facilities.

Odwalla answered that question: Specality Healthcare applies everywhere.   Odwalla involves a juice and fruit bar company in California.   It could not be a  more different work setting than a nursing home. 

Next, let’s delve into the bargaining unit in question.  Possible inclusions fell into the following classifications: 26 route service representatives (RSR’s), who are basically sales and delivery drivers;  an unspecified number of “swing reps” who work as relief drivers and warehouse fill-ins as needed; 3 warehouse associates; 4 cooler technicians — and the controversial group, 5 merchandisers.  The employer has two facilities — a distribution center where it sells and delivers products and a divisional refurbishment center, at which it repairs coolers.

The union wanted the five merchandisers out of the bargaining unit, the employer wanted them in.  The Board looked at the following factors:

Classification — The Board said that the proposed unit excluding merchandisers was not a classification based unit because it “aggregates varied classifications” — RSR’s, swing reps, warehouse associates, cooler techs.    It also includes employees that are considered sales — the RSR’s — and employees considered part of operations, such as warehouse associates and cooler techs.

Function — the Board goes into some detail about what each job classification actually does.   Here, the Merchandisers are described as being assigned to various customer locations, stocking and rotating products, removing expired and unsold products, building and managing displays, hanging price tags, maintaining customer relationships, and communicating service issues to the appropriate managers.  All in all, their work resembled RSRs in many ways.   There were some differences — RSRs for example do not work from home, drive company-owned refrigerated trucks, and do not use handheld computers — but the Board found that, on the whole, the functions are “very similar.”

Supervision — No dice here either for the union.   RSRs and merchandisers have one supervisory structure, whereas, swing reps, warehouse associates and cooler technicians have another.

Pay — The Board found that the RSRs receive a base salary, potentially significant commissions, and sales based bonuses and incentives.  This compensation was “fundamentally different” from the merchandisers, warehouse associates, cooler techcs, and swing reps.

Location — The union almost wins on this argument.  The merchandisers work from home and thus do not spend their time at either facility.   But, the Board found that the “facts sharply reduce the significance of this consideration.”  Which facts?  (1) the cooler techs work in a different building and do not interact with the other employees;  (2) More importantly, the RSRs — which the union wanted to include in the union — spend about 90% of their time away from the facility; (3) Various other employees also spend “significant portions of their worktime” away from the facility.

As a result, the Board found that the merchandisers share an overwhelming community of interest with the recommended unit because “none of the traditional bases for drawing unit boundaries used by the Board supports excluding the merchandisers.”

Some thoughts for employers:

1.) The overwhelming community of interest as applied in this case seems like proving a negative — if you go through all of the traditional bases and there is still no reason to exclude, then you should include, provided the traditional community of interest test is met.   That puts some important meat on the Specialty Healthcare bone that was missing prior to this case.

2.) Classification, Function, Supervision, Pay, and Location — these are five variables that should be considered in a Specialty Healthcare analysis.   If you can make an argument that the excluded employees should not be excluded on any of these bases, this should satisfy the overwhelming community of interest burden.   At least it was enough for the Board in Odwalla. 

In August, the NLRB issued perhaps its most important decision of 2011  in Specialty Healthcare, 357 NLRB No. 83 (2011).   Perhaps the most critical part of any union election is the bargaining unit determination–that is the group of workers who will vote on whether or not to join the union.  To draw an analogy to the current presidential race, if voting was limited to only California and New York — President Obama would be assured a landslide, no matter what happens between now and November.   Traditionally, in a union election, both management and organized labor have fought spirited battles over bargaining units, with both sides trying to obtain bargaining units that look like “California and New York” for their respective sides.

Previously, the Board used a “community of interest” test to determine if workers belonged in the same bargaining unit.  This test looked at a variety of different variables such as pay, job function, supervisors, etc.   The union  must always first petition for a unit, but the final unit was not necessarily what the union wanted.

Specialty Healthcare changed the ballgame.    In that case, a union was attempting to organize a group of Certified Nursing Assistants (CNAs) only.  Usually, CNAs were included in other groupings.  The Board articulated a new rule that a bargaining  unit is appropriate so long as the employees constitute a readily identifible group and share a community of interest.  If the employees could be placed in a larger unit which would also be appropriate or even more appropriate, the burden rests on the employer to demonstrate that these employees share an “overwhelming community of interest.”   The takeaway from the case was that unions could now organize smaller groups of employees, a strategic advantage since smaller groups of employees are more likely to vote in favor of unions and give unions a foothold in a company.

But what does an “overwhelming community of interest” mean?  In August, nobody knew.   It was a legal standard with no substance.   The only way to discern what constitutes an “overwhelming community of interest” is to analyze how the Board has applied that standard in subsequent cases.

In order to give employers guidance on that issue, this blog will start a semi-regular feature called “Specialty Healthcare Watch” — that is, when a new board case comes out applying this “overwhelming community of interest” standard, this blog will quickly analyze the case and give you pointers on what factors the Board considered in making the determination.

The first issue of Specialty Healthcare Watch will be published tomorrow.

Over the years, both the NLRB and the Courts have considered the issue of displaying pro-union insignia in healthcare settings.   The traditional rule was that restrictions on insignia in immediate patient care areas were presumptively valid because such insignia “might be unsettling to patients.”   However, a new NLRB case issued in December casts doubt on this rule and will make it harder for healthcare employers to restrict pro-union messages.

In the case — St. John’s Health Center, 357 NLRB No. 170 (2011) — several nurses wore a ribbon distributed by the union stating “Saint John’s RNs for Safe Patient Care.”   The hospital banned this ribbon in immediate patient care areas.   The hospital issued its own ribbon stating “Saint John’s mission is patient safe care,” which it allowed nurses to wear in immediate patient care areas.   Additionally, the hospital permitted nurses to wear other union buttons in immediate patient care areas—just not the specific ribbon that was considered critical of the hospital.   The NLRB found that the ban was not presumptively valid because it was selectively enforced—in that the hospital allowed the pro-employer ribbon and other union buttons to be worn in immediate patient care areas.

Without a presumption of validity, the Board then considered if “special circumstances” still justified the ban.   The Board will find special circumstances in a healthcare setting where the restriction is “necessary to avoid disruption of health-care operations or disturbance of patients.”   Here, the Board compared the language between the prohibited union ribbon and permitted employer ribbon and found that there was “no difference between the two messages as they would be perceived by a patient.”  Furthermore, the Board stated that the employer presented “no evidence” that patients were aware of the union organizing campaign, to the extent that the ribbon would disturb them or “disrupt healthcare operations.”   Thus, the Board found that the employer’s ban on the union ribbon violated the NLRA.

Employer Takeaway: Any policy or ban on union ribbons must be reconsidered in light of this case.   Such bans will only be entitled to presumptive validity if they are applied to all insignia in immediate patient care areas.   Healthcare employers cannot selectively prohibit either employer or union insignias and expect that such prohibitions will be found presumptively valid under this new rule.   It is possible that even without presumptive validity, “special circumstances”—such as a particularly strong union message—might render the ban lawful, but the employer will need strong evidence that the union insignia will “disturb patients or disrupt healthcare operations” in order to prevail.

Yesterday, the House Education & Workforce Committee jumped into the fray over NLRB recess appointments.  Some brief background: in December, President Obama appointed three new members to the NLRB.   Given the acrimony over the NLRB for the last year, it was unlikely that the Senate would have confirmed the President’s nominees, so a “recess” appointment was the only option.   But what concerned the House on Tuesday and, others since, is that when the President made the appointment, the Senate was not in recess, as that term has been traditionally defined.   As a result, an interesting constitutional question now exists — can the President actually do this?  Are the current NLRB Board members legitimate?   The debate is reiminscient of the controversey a few years ago when the Board attempted to decide cases with only 2 members.  The Supreme Court eventually ruled that the Board needed 3 members to act and invalidated thousands of NLRB decisions.

At the House hearing on Tuesday, Republicans argued that the President was running roughshod over the Constitution with his appointments.  Some of the witnesses also questioned the precedence that the President set with this action.  For sure, the President appointed NLRB members that are ideologically similiar to him, thus giving the NLRB a more pro-union bent.  But what happens if/when a Republicans wins the Oval Office again?  Many of the same people who are cheering the recess appointments now could be disappointed in the future.

One theme that emerged from the hearing is that the very complicated constitutional question involved means that employers are left with uncertainity — as pointed out above, are the Board decisions actually valid right now?  That’s a good point, but I am not sure that employers should overthink this.  After all, even when the Supreme Court invalidated NLRB decisions in New Process Steel, the vast majority of decisions were not controversial and were decided the same exact way with a full three member board.   Thus, while many employers agree with the argument that the appointments are unconstitutional, it might not matter too much at the end of the day.   It is more important that employers work with their lawyers and do their best to follow the law, not depend on exotic constitiutional arguments to escape thorny NLRB issues.

The Bureau of Labor Statistics released its 2011 work stoppage statistics today.   On the whole, 19 major strikes or lockouts occurred in 2011.   These work stoppages impacted 113,000 workers and counted for just over a million lost workhours.

The numbers are interesting from a historical perspective.  On the one hand, the figures represent a dramatic increase if you look at recent history.   This is the largest number of work stoppages since 2007 and represents a huge increase from 2009 when only a paltry five work stoppages occurred.

But if you take a longer view, 19 strikes is nothing.   In 1947, the year that Shawe & Rosenthal was founded, the nation experienced 270 major work stoppages.   That number vacillated from the late 40s to the early 80s — in 1969, an astounding 412 major strikes or lockouts happened; the number stood at 424 in 1974.   A mere seven years later — 1981 — the number plummeted to 145 and within four years of that, following the disastrous air traffic controllers strike, it dropped again by more than half to 54.

The slight uptick in strikes and lockouts means that employers must be mindful of an increased possibility of these work actions.  But the overall numbers are still low from a historical perspective.

Many employers prefer to arbitrate employment disputes rather than have these disputes end up in the traditional courtroom with a jury.   As a result, a fair number of employers require their employees sign arbitration agreements for employment litigation, including class action claims.

The validity of these class action waivers was called into question by the NLRB in a recent case, D.R. Horton.   Basically, under Section 7 of the National Labor Relations Act, employees have a right to join together in “protected concerted activity” (PCA for short).   This protection applies to both unionized and non-unionized employers.    PCA is a fairly broad concept and its intersection with arbitration agreements is what spurred D.R. Horton.  In that case, the employer required – as a condition of employment – that the employees sign an agreement to arbitrate class action claims.  The NLRB cried foul – after all, aren’t employees banding together in a class action lawsuit a form of PCA?  The NLRB said “yes” and made clear that such agreements are illegal under federal labor law.

In what appears to be the first case decided after D.R.Horton, Johnmohammadi v. Bloomingdales, Inc.,  the Central District of California gave a limited reading of Horton and upheld a class action arbitration waiver agreement.  The facts of Bloomingdales are similar but not identical to Horton – the major difference is that instead of being a condition of employment, in Bloomingdales, employees had the option to opt-out of the arbitration agreement within 30 days of being hired.   This was dispositive to the Judge who ruled in Bloomingdale’s favor.

An argument could be made that even with the opt-out, the agreement was still a condition of employment — in that that nobody really reads the opt-out anyway and that employees were under implicit pressure to just agree to the traditional arrangement with Bloomingdales, which included the arbitration agreement.

This argument was rejected by this Court, but I would not say that future judges would reach the same conclusion.   Judges tend to differ in their views as to whether contracts like these – sometimes called contracts of adhesion – should be strictly enforced because one party – big,  bad Bloomingdales – has an unfair advantage of the little guy – in this case, Ms. Johnmohammadi.  Thus, it’s possible, if not likely, that other courts come down a different way.

It still is  wise for employers to include class action waivers in some way, like Bloomingdales did.   But as the this case shows, any such waivers in favor of arbitration will be subject to an argument from the Plaintiff’s bar that Horton controls and the arbitration agreement is invalid as a condition of employment.

The lesson for employers: arbitration agreement cannot be a direct condition of employment, and the less the agreement even appears that way, the better.

As followers of labor law know, the National Labor Relations Board has issued a rule requiring nearly all private sector employers to post a notice about labor unions.   The posting was originally supposed to go into effect last fall, but, after some legal wrangling, the NLRB decided to delay implementation until April 30, 2012.   The legal issues are still being hashed out in federal court and the ultimate fate of the poster is in the air.

The big — and legitimate — complaint from employers is that the poster is one-sided.  It goes on and on about all of your rights to join a union (and does so in a multitude of foreign tounges, including Amrahic, Bosnian, Bengali, Farsi, Haitian Creoli, Lao, Pashto, Somali, and, my personal favorite, Urdu), but only includes one line about an employees’ right not to join a union.   Many law firms — including mine — have developed “counter posters” that employers can post (feel free to email me if you’d like a copy of these posters).

But what if state governments also got into the poster business and started to mandate posters that, are, well, more “balanced”?   The folks down in South Carolina are taking that step.   Last week, every Republican member of the House in South Carolina signed onto its own “union poster” that will inform employees about their rights in Right-to-Work South Carolina.   The exact wording of the poster was not released, but suffice it to say that the final version will be very different from the pro-union NLRB poster.

In discussing this issue with one of my intrepid colleagues, an interesting question came up: would a poster such as this be preempted under the NLRA?  On the one hand, a strong argument can be made that this is simply a state informing its citizens of their rights under state labor law.  On the other hand, the NLRA has a broad preemption provision and it might be argued that the NLRB’s own poster should be the sole word on “labor rights” (even if that poster is not entirely fair).   Watch for this preemption battle to erupt if SC moves forward with this poster idea.