Mark A. Spognardi

Arnstein & Lehr Partner Mark Spognardi recently wrote the article, “Employers’ Summer of Disconnect: Obama Labor Board pushes anti-employer agenda,” which appeared in the September 20 issue of the Westlaw Journal. In the article Mr. Spognardi discusses how the National Labor Relations Board (NLRB) has had a busy summer proposing and implementing rules and issuing decisions designed to promote the unionization of America’s workforce.

In the article, Mr. Spognardi states that the board has issued a final regulatory rule requiring employers to notify employees of their rights under the National Labor Relations Act. He comments that the Obama NLRB has been “delivering victories to organized labor at a time when the public sentiment toward unions has become, at best, distrustful and at worst, disdainful.”

To read further about the NLRB’s recent rules, proposals and decisions please click here.

Mark A. Spognardi

While employers have been increasingly worried about a double dip recession, the National Labor Relations Board has had a busy summer proposing and implementing rules and issuing decisions designed to promote the unionization of America’s workforce. The Obama Labor Board has taken over where the President has failed, delivering victories to organized labor at a time when the public sentiment towards unions has become, at best, distrustful, and at the worst, disdainful.

Applicable to all employers falling under the Board’s jurisdiction, the Board has issued a final regulatory rule requiring employers to notify employees of their rights under the National Labor Relations Act. The Notice informs employees that they have a right to act together to improve wages and working conditions, to form, join, and assist a union, to bargain collectively with their employer, and to refrain from these activities. Employers will be required to post the notice where other workplace notices are typically posted, by November 11, 2011. The rule also specifies when the notice must be posted in a foreign language. The notice, on an 11 by 17 inch poster, is now available from the Board’s website at www.nlrb.gov, and in the future from the Board’s regional offices. A failure to post the notice is an unfair labor practice.

Early in the administration, the President attempted to enact the Employee Free Choice Act, also known as “card check,” as a payback for the enormous support organized labor provided during the election. The legislation would have provided for the certification of a union on the basis that a majority of the employer’s workforce signed union authorization cards, and would have provided for binding interest arbitration for first contracts. For a number of reasons, that legislative effort failed.

Again, however, the Obama Labor Board came to the rescue. This summer the Board proposed regulatory amendments to representation election procedures to provide for “quickie elections. Officially, the proposed rules are intended to reduce unnecessary litigation, streamline pre- and post-election procedures, and facilitate the use of electronic communications and document filing. In reality, the proposed rules will limit an employer’s ability to respond to organizing campaigns and for employees to become educated about the advantages and disadvantages of union representation and collective bargaining.

Under current procedures, the Board strives to hold representation elections within 42 days after the representation petition is filed. However, the Board’s proposed amendments will shorten that period by days, if not weeks, by deferring most eligibility and bargaining unit issues until after the election and eliminating the parties’ ability to request review of a Regional Director’s decision prior to the election.

Specifically, the proposed amendments will require the Regional Director to schedule the pre-election hearing to begin within seven days after a hearing notice is served. By the start of the hearing, the employer must state its position on the election issues that it intends to raise at the hearing, including, among other things, the appropriateness of the bargaining unit sought by the union, and the type, date, and location of the election. The union will then respond to the positions taken by the employer. After hearing the parties’ positions, the hearing officer will identify their disagreements and accept evidence only on genuine issues of material fact affecting those issues. However, and most importantly, unless the issues affect 20 percent or more of the unit, the litigation of those disputes will be deferred until after the election by the challenged ballot procedure. Moreover, even if the unit issues are litigated prior to the election, the parties cannot request review from the Board prior to the election.

Once the Regional Director issues his or her direction of election, the employer will have only two days, rather than seven days, to provide the list of eligible voters to the union. The new rules will require the employer to provide phone numbers and email addresses when possible, rather than just names and addresses. In addition, the new rules will allow petitioners to file election petitions electronically and for the NLRB to provide notices directly to employees through email when addresses are available.

The Board received comments and replies through September 6, 2011, and had two full days of hearing testimony. Whether the proposed rules become law will depend on how quickly the Board acts and whether the President can successfully make recess appointments. The proposed rule can be found at 76 Fed. Reg. 36812 (2011) or on-line at http://federalregister.gov/a/2011-15307.

On August 26, 2011, the Board decided three cases of importance to organized labor, just prior to the expiration of Chairman Wilma B. Liebman’s term at midnight, August 27.

In Lamons Gasket Co., 357 N.L.R.B. No. 72 (Aug. 26, 2011), the NLRB expressly overruled the 2007 decision in Dana Corp., 351 N.L.R.B. 424 (2007), and reestablished a recognition bar that blocks any challenge to a labor organizations majority status for a “reasonable period of time” following the employer’s voluntary recognition of the union following a “card check.” Dana Corp. had changed the law regarding voluntary recognition after a card check, by providing for a 45-day window period during which employees, or another union, to challenge the recognized union’s majority status. The window period commenced upon the employer’s posting of an official NLRB notice informing employees of their newly created right to seek a secret ballot election.

Clarifying the phrase “reasonable period of time,” the Board concluded that the recognition bar was no less than 6 months after the parties’ first bargaining session and no more than 1 year. During this period, no employer, employee, or union may petition the Board for a secret ballot election and the employer may not withdraw recognition from the union. The specific length of this voluntary recognition bar depends on a multiple factors, including whether the parties are bargaining for an initial contract; the complexity of the issues being negotiated and the parties’ bargaining processes; the amount of time elapsed since bargaining commenced and the number of bargaining sessions; the amount of progress made in negotiations and how near the parties are to concluding an agreement; and whether the parties are at impasse.

The Board also reversed current law to provide a union with more protection from being removed due to a lack of majority support after a new owner/successor employer buys the business. In UGL-UNICCO Service Company, 357 N.L.R.B. No. 76 (Aug. 26, 2011), the Board considered how long a union should have a presumption of majority status when the enterprise whose employees they represent is purchased by a new employer. Where the purchaser becomes a “successor” employer (i.e., hires at least 51% of the sellers employees), it must recognize and bargain with the union. However, the successor does not always have to adopt the existing labor agreement and, in many cases, has the right to establish its own initial terms and conditions of employment and then bargain with the union for a new collective bargaining agreement.

The Board reversed existing law which had that with a successor employer, the union only enjoys a rebuttable presumption of majority support, and that clear evidence that the union no longer had majority support justified the successor employer’s refusal to recognize and bargain with the union. Rather, the Board resurrected the “successor bar” doctrine, providing the union with an irrebuttable presumption of majority support for a minimum of six months and a maximum of one year, measured from the date of the first bargaining meeting between the union and the successor employer. In situations where the successor employer chooses to continue the existing terms and conditions of employment as the starting point for bargaining, the presumed majority support will be for six months. In situations where the successor employer exercises its right to reject existing terms and conditions and implement its own initial terms and conditions while bargaining proceeds, the presumed period of majority support will be no less than six months and no more than one year. In determining when the presumption elapses, the Board will consider the complexity of the issues being negotiated; the time elapsed since bargaining began and the number of bargaining sessions; the amount of progress made in the negotiations and how near the parties are to concluding an agreement; and whether the parties are at impasse.

The Obama National Labor Relations Board could be limited soon in its efforts to help labor, foster collective bargaining, promote organized labor. With Chairman Liebman’s departure, the Board is now down to three members: Newly designated Chairman Mark Pearce, Member Craig Becker and Member Brian Hayes. Member Becker’s recess appointment to the NLRB will end in December, 2011. The U.S. Supreme Court has held that the Board does not have the authority to issue decisions with less than three members. New Process Steel, LP v. NLRB, 130 S. Ct. 2635 (2010). Thus, employers should be hopeful that President Obama’s pro-big labor efforts will stall.

Mark A. Spognardi

Arnstein & Lehr Chicago Partner Mark Spognardi was quoted in the February 18 Corporate Counsel magazine article, “Judge OKs Wal-Mart’s firing of Medical Marijuana User.”  Mr. Spognardi discussed a Michigan federal judge’s decision to dismiss Joseph Casias’ wrongful termination claim against Wal-Mart.

To read the article in full, click here.

Mark A. Spognardi

In January of this year, the Supreme Court, in a 8-0 decision (Kagan abstaining), ruled that medical residents were not students, and not exempt from paying FICA taxes. Mayo Foundation for Medical Education & Research v. U.S., No. 09-837, (January 11, 2011). However, this narrow holding does not convey the real importance of the Mayo decision and its substantial impact on judicial deference to administrative regulations.

Mayo paid its medical residents a stipend during their residency programs which entail formal educational training as well as 50 to 80 per week caring for patients. For years it treated its residents as exempt from FICA taxation based upon federal statute and Treasure Department regulations. In 2004, the Treasury Department issued regulations providing that individuals normally scheduled to work 40 hours or more per week are not students exempt from FICA taxation. Mayo filed suit claiming that the rule was invalid and the District Court agreed, concluding that the “unambiguous” text of the statute provided that the “employee” was a “student” so long as the education aspects predominate over the service aspect to the employer. The Government appealed and the Eighth Circuit Court of Appeal reversed, concluding that the statute was silent or ambiguous as to whether a medical resident working full-time for a school is a student for FICA purposes. The Eighth Circuit found that the Treasury Department’s newly amended regulation was a “permissible” interpretation of the statute.

Before the Supreme Court was the issue of which standard of deferential review to apply to administrative regulations. Mayo urged use of the standard adopted in 1979 in National Muffler Dealers Association. Under the National Muffler, the Supreme Court used a multi-factor analysis, examining whether the regulation was issued substantially contemporaneously with the statute; the length of time the regulation had been in effect; the reliance placed on it; the consistency of interpretation; and the degree of scrutiny that Congress had placed upon the regulation during re-enactments of the statute. The Government argued that the National Muffler standard had been superseded by the Court’s 1984 decision in Chevron U.S.A. v. Natural Resources Defense Council. Under the Chevron two-part framework, a court first asks whether Congress has “directly addressed the precise issue at question,” i.e., is the statute clear, or is it ambiguous or silent. Under the second part, a court examines whether the regulation is a permissible interpretation of the statutory text.

However, an agency rule will not be disturbed unless it is “arbitrary or capricious in substance, or manifestly contrary to the statute.” The Court also expressly stated that it would not apply a less deferential standard of review for tax regulations than it would use for review of other agency rules. The Court concluded that where an agency issues a regulation pursuant to an explicit authorization of Congress, and after notice-and-comment procedures, the rule merits Chevron deference. The Court concluded that the regulation was a reasonable interpretation of the statute, and that medical residents working full-time were not exempt from FICA taxation.

Mayo and the Future of Judicial Administrative Deference

At first glance, the Mayo decision is a large hammer and sword for administrative agencies seeking further judicial deference to their rules and regulations. The Court indicated that where the regulation is a result of rulemaking authority, and subject to notice-and-comment, the rule will be subject to Chevron deference, and upheld as long as it is a permissible or reasonable interpretation, and not manifestly contrary to statute, or arbitrary or capricious.

However, it appears that the Court may be faced with issues of congressional intent and legislative history in fleshing out its Mayo standard, given that this has played a role in Chevron deference in the past. The Court itself left open the issue of the amount of deference that should be accorded regulations issued to contravene Supreme Court rulings. Practitioners of all areas of substantive law can expect Mayo to be quickly winnowed and chiseled in future litigation.

EFCA

While the Employee Free Choice Act (“EFCA”) received front page treatment immediately after the November ’08 elections and through the spring, 2009, it has slowly lost its life force, so as to become moribund.  While quickly introduced into the House, it rapidly lost support among key Democratic Senators, including Sen. Arlen Specter (D – Pa.) and Sen. Dianne Feinstein (D – Ca.).  By June, the Senate Democrats and labor were at least six votes short of that needed for cloture and to end debate.  Since then, the bill has been comatose, on a deathbed.  While the bill is labor’s priority, it has received much less attention from President Obama, who has focused his energy on health care, climate change, and the great recession.

Many commentators have speculated that labor has a fighting chance to revive and pass EFCA if it pushes hard in 2010 before the mid-term elections, with compromises in mind.  Such compromises would include super majority card checks, quickie elections, or some combination of both; elimination or modification of mandatory interest arbitration for first time labor agreements, and implementing financial penalties and fines for employers who fail to bargain in good faith, or engage in surface bargaining; guaranteeing unions access to employees at the workplace, and limiting or restricting the employer’s right to engage in captive audience speeches; and imposing civil monetary penalties for unfair labor practices.

The chances of passage could be enhanced if a compromise version was tacked on as an amendment to a job creation or other large bill.  But the compromise would have to be just that, and not hand either management or labor a lopsided win.  Such an effort will have to begin now, as the midterm elections are only 10 months away, and all indications are that Democrats in both Houses will lose a significant number of seats.  One can imagine the frustration of SEIU President Andrew Stern as he reviews union expenditures after his weekly visits to the White House.

This next two quarters, Arnstein & Lehr will be conducting several seminars to educate employers on how to remain union free, no matter what happens with card check at the end of the day.   We will keep you informed of developments, and look forward to seeing you there.  Happy New Year to all.

Mark A. Spognardi is a partner in Arnstein & Lehr’s Labor and Employment Law Department.  His practice is devoted exclusively to representing management in  traditional and non-traditional labor and employment law litigation and counseling.

Rep. George Miller (D-Calif.) Nov. 3 introduced legislation (H.R. 3991) that would guarantee five paid sick days for workers sent home or told to stay home by their employer in relation to a “contagious” illness, such as the H1N1 virus.

Miller (D-Calif.), chairman of the House Education and Labor Committee, introduced the “Emergency Influenza Containment Act”with seven co-sponsors, including Rep. Lynn Woolsey (D-Calif.), chairman of the Workforce Protections Subcommittee. The bill was referred to Miller’s committee.

Under the legislation, employees who follow their employer’s direction to stay home because of contagious illness could not be fired, disciplined, or made subject to retaliation for following directions. Employers who fail to provide the leave or retaliate against employees would be subject to penalties under the Fair Labor Standards Act.

“Sick workers advised to stay home by their employers shouldn’t have to choose between their livelihood, and their co-workers’ or customers’ health,” Miller said. “This will not only protect employees, but it will save employers money by ensuring that sick employees don’t spread infection to co-workers and customers, and will relieve the financial burden on our health system swamped by those suffering from H1N1.”

The bill would guarantee a sick worker up to five paid sick leave days a year if an employer “directs” or “advises” a sick employee to stay home or to go home.

The legislation would cover full- and part-time workers in businesses that have 15 or more workers and do not currently provide at least five days of paid sick leave.

The bill would allow employers to end paid sick leave at any time by informing the employee that the employer believes the worker is well enough to return to work. Under the bill, employees could continue on unpaid leave under the Family and Medical Leave Act or other existing sick leave policies.

The legislation defines “contagious illness” as “influenza-like illnesses such as the novel H1N1 virus.”

The bill would take effect 15 days after being signed into law and would sunset two years after enactment.

Hearing Expected Week of Nov. 16
The House Education and Labor Committee is expected to hold a hearing on the legislation the week of Nov. 16.

“To help control the spread of the H1N1 flu virus, workers who are sick should stay at home,” Woolsey said. “This bill will ensure that workers who are directed to stay home by their employers can do so without paying a financial penalty.”

The Centers for Disease Control estimates that a sick worker will infect one in 10 co-workers, according to Miller.

Debra L. Ness, president of the National Partnership for Women and Families, said her group wants the bill to allow workers to decide when to take the leave.

“The paid sick days law America needs will go further than this initial bill,” Ness said. “The Emergency Influenza Containment Act is a first step, and we look forward to working with Congressman George Miller to ensure that this legislation provides workers with the right to decide when to take a paid sick day, allows working parents to care for sick children, and protects workers’ jobs when they are sick.”

Ness’s group estimates that the economy loses $180 billion in productivity a year when sick employees show up to work.

The Pros and Cons of Recruiting Via Social Media – HR Wire 9-2-09

Federal Construction Contractors

In May, 2009, the Office of Federal Contract Compliance Programs (OFCCP) issued its Technical Assistance Guide for Federal Construction Contractors.  The OFCCP is responsible for ensuring that contractors doing business with the federal government do not discriminate and take affirmative action.
The OFCCP also recently announced that it will begin conducting compliance reviews of construction contractors who receive funding and grants from the American Recovery and Reinvestment Act of 2009 (ARRA). According to the OFCCP, the majority of ARRA funding and grants will provide direct funding or federal assistance to construction projects and therefore,  the OFCCP will place a special emphasis on the construction industry.  Beginning in July 2009, OFCCP will begin to review a minimum of 360 construction contractors and 90 supply and service contractors, including at least 10% of first-time federal contractors.  These reviews will be followed by quarterly compliance evaluations through September 30, 2010.
To help contractors achieve compliance, OFCCP plans to host a series of  compliance seminars and webinars specifically for federal construction contractors and new federal contractors.  The schedule of events can be found at www.dol.gov/dol/calendar/.

Politicians don’t typically broadcast their defeat, and when they do it pays to watch for the blindside hit. That’s surely the case with last week’s reports that six liberal Senators are abandoning part of labor’s top priority, “card check” legislation.

The legislation to eliminate secret ballots in union elections has in fact been comatose for weeks, since Pennsylvania’s Arlen Specter and Blanche Lincoln of Arkansas declared their opposition. So the real purpose of this “concession” is to shift to Plan B, which is to repackage most of what labor wants with new ribbons and wrapping. The bill that Senators Tom Harkin (Iowa), Mark Pryor (Arkansas), Mr. Specter and others are now considering would still give unions the whip hand in negotiations with management.

One proposal would slash the time for an organizing vote, requiring that it be held within five or 10 days after 30% of workers had signed cards asking for a union. The median time today is 38 days. Organizers want the rush because they know the more time workers have to learn about a union, the less they usually want one. Once employees hear the other side of the story, support dwindles.

This also explains a Big Labor demand to bar companies from requiring their workers to hear management’s side during a union campaign. Labor supporters say this creates a “captive audience,” but these meetings are one of management’s few opportunities to address workers, since companies are barred from the sort of outreach allowed to union organizers — such as visiting employees at home. At the same time, Senators want to give union organizers access to company property.

Democrats also aren’t giving up on binding arbitration, which would let a federal arbitrator impose a contract if management and a newly established union at a work site aren’t able to agree within 90 days. The provision would encourage unions to make maximum demands and play for time, knowing that an arbitrator could force management’s hand. Binding arbitration also denies employees a vote on a contract.

Labor is desperate to rig the bargaining rules because most workers show time and again that they don’t want a union. Americans know unions promise higher wages and benefits and more job security. But workers can also see what has happened to such highly unionized industries as steel, autos, airlines and many others. Unions couldn’t save those jobs, and in fact they contributed to their demise with contracts that made the industries uncompetitive. Most workers would also rather not hand over a chunk of their paycheck in mandatory dues to finance the political agenda of labor leaders.

Democrats and the AFL-CIO are hoping that if they dump the unpopular secret ballot ban from card check, they can get to their magic number of 60 Senators. The business community and Republicans shouldn’t be fooled and let Democrats from swing states off the hook. Card check under any cover is still a job killer.

On August 19, Arnstein & Lehr’s Labor & Employment Law Practice Group is hosting a full day seminar entitled Taming Technology: Risks and Rewards of Workplace Blogs, Twittering and Social Networking.