Working Through an Action-Packed Year: Top Ten Labor Law Developments for Employers to Watch and Manage in 2011

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1 Working Through an Action-Packed Year: Top Ten Labor Law Developments for Employers to Watch and Manage in 2011 Apr 01, 2011 Top Ten By Gregg Formella, Senior Attorney, American Airlines, Inc. Thomas J. Kassin, Ford & Harrison LLP This resource is sponsored by: Gregg Formella, Senior Attorney, American Airlines, Inc. Thomas J. Kassin, Ford & Harrison LLP From a labor relations law standpoint, 2011 is shaping up to be at least as action-packed as Even considering only the labor issues on which the media have been focusing things like the NFL s efforts to reach a new collective bargaining agreement with the Players Association amidst unfair labor practice charges, and the debate in Wisconsin concerning public sector unions major labor law issues have been front and center. And there is a lot more transpiring, or imminent, that has not yet received extensive press. So, what kinds of developments can employers expect in 2011? Without a doubt, the National Labor Relations Board (NLRB) and the National Mediation Board (NMB) the two federal agencies charged with administering the nation s labor relations laws will continue to be very busy this year. And as discussed below, actions that the NLRB has already taken or is contemplating suggest that 2011 indeed will present employers with an ambitious agenda of activist rulemaking and pro-union decisions. Highlighted below are ten of the most important labor law issues or developments that employers are facing in 2011 under the National Labor Relations Act (NLRA) and the Railway Labor Act (RLA): Developments Impacting Employers Covered by the National Labor Relations Act 1. Presidential Nominations of Craig Becker and Terence Flynn to be NLRB Members, and of Lafe Solomon to be General Counsel On January 26, 2011, President Obama re-nominated Board Member Craig Becker for a term that would end on December 16, The President previously nominated Becker, who was formerly a lawyer for the AFL-CIO and SEIU, for a Board position in July 2009; however, the Senate failed to pass a cloture vote on his nomination. The President then recess-appointed him in 2010 for a term that expires at the end of 2011, if no further action is taken.

2 The President s original nomination of Becker generated strong opposition from business groups, based primarily on his controversial writings discussing his view of the appropriate role of employers in union organizing campaigns. Since his recess appointment, Becker has been criticized for failing to recuse himself from some cases involving the SEIU or AFL-CIO. (Becker has stated he will recuse himself from cases in which the SEIU or the AFL-CIO is a party, but not from cases involving a subordinate chapter or local.) After the President resubmitted Becker s nomination, Republican Senators Michael Enzi and Orrin Hatch sent President Obama a letter, signed by all 47 Republican Senators, asking the President to withdraw Becker s nomination. On January 27, 2011, President Obama announced his intent to nominate Terence Flynn to be a Board Member and Lafe Solomon to be General Counsel. Flynn is currently serving as Chief Counsel to Board Member Brian Hayes; he previously was Chief Counsel to former Board Member Peter Schaumber and, prior to that, was an attorney with law firms focusing in the area of labor and employment law. Solomon has been serving as Acting General Counsel since June As the NLRB s top investigative and prosecution officer, the General Counsel has supervisory authority over all Regional Offices and guides policy on issuance of complaints, seeking injunctions, and enforcing NRLB decisions. Solomon s career with the NLRB began as a field examiner in Seattle in After taking a break to pursue a law degree and subsequently returning to the NLRB, he eventually joined the staff of former Board Member Don Zimmerman and subsequently worked directly for nine other Board Members, including, at one time, now-chairman Liebman. 2. Proposed Rule Requiring Employers To Post Notices Regarding Employees NLRA Rights In December 2010, the NLRB published a proposed rule that would require all employers covered by the NLRA to post official NLRB notices of employee rights under the labor law including, of course, the right to organize and form unions. The proposed notice would also set forth Board contact information and reference Board enforcement procedures. See 75 Fed. Reg (proposed Dec. 22, 2010) (to be codified at 29 CFR pt. 104). Under the proposed rule, the official notices are to be posted in conspicuous places at each worksite, including all places where notices to employees are customarily posted. In addition, employers that customarily communicate with their employees electronically would also be required to supply the notice by or in a prominent way on the employer s internet/intranet sites for employees. However, the proposed rule also provides that a federal contractor s compliance with a similar notice requirement issued last year by the U.S. Department of Labor (see 75 Fed. Reg , 29 CFR pt. 471) would also satisfy the NLRB s proposed notice requirement. In discussing employee rights, the proposed rule focuses more on unlawful employer conduct than on unlawful union conduct; the official notice even provides specific examples of unlawful employer conduct. The Board also proposed the following sanctions for a covered employer s failure to post the notice: (1) finding the failure to post the required notices to be an unfair labor practice; (2) tolling the statute of limitations for filing unfair labor practice charges against employers who fail to post the notices; and (3) considering the knowing failure to post the notices as evidence of unlawful motive in unfair labor practice cases. 3. NLRB Challenges to Alleged Preemptive Firings and Nip-It-In-The-Bud Actions in Union-Organizing Situations In late 2010, Acting General Counsel Solomon directed the NLRB s Regional Directors to use the NLRA s Section 10(j) provisions to seek federal court injunctions in all unfair labor practice cases regarding the allegedly discriminatory termination of an employee in connection with a union organizing drive. Solomon also directed Regional Directors to seek additional remedies to remove the impact of the discharges as well as the other Section 8(a)(1) violations.

3 Consistent with Solomon s focus on the organizing context, the Board earlier this year significantly expanded the scope of the NLRA s protection in holding that an employer s discharge of an employee to prevent her from discussing her wages and conditions of employment with other employees was a preemptive strike that was unlawful under the NLRA regardless of whether the employee had actually engaged in protected concerted activity. See In re Parexel Int l, LLC, 356 NLRB No. 82 (January 28, 2011). Section 7 of the NLRA gives employees the right to engage in protected concerted activity. The NLRA also prohibits employers from interfering with or chilling employees Section 7 rights. Protected concerted activities involve employees joining in concert to affect wages, hours, and other terms and conditions of employment. These activities are not limited to union organizing efforts; and the prohibition on interference with these rights applies to all employers covered by the NLRA regardless of whether their employees are unionized. Previous Board decisions held that an employee must have already engaged in protected concerted activity in order to find that she was unlawfully discharged to prevent protected concerted activity. In Parexel, the Board held that if an employer acts to prevent protected concerted activity to nip it in the bud that action interferes with and restrains the exercise of Section 7 rights and is unlawful without more. By imposing liability without a finding that the employee actually engaged in protected concerted activity, the Board s decision essentially creates a new unfair labor practice the preemptive strike. Employers can expect to see more Board decisions imposing liability under this new theory. 4. Requirement For Settlement Agreement Default Provisions In January 2011, Acting General Counsel Solomon issued a notice instructing all Regional Counsels to routinely include default language in all informal settlement agreements and all compliance settlement agreements. The default language will apply in cases where an employer fails to comply with the terms of such a settlement agreement. In that event, the default language provides, among other things, that the allegations against the employer in the original complaint will be deemed admitted (emphasis added), and the only issue before the Board will be whether the employer in fact defaulted on the terms of the settlement agreement. Clearly, this will present employers with a disincentive to entering into such settlement agreements. 5. Guideline Memorandum Proposing More Limited Deferral to Arbitration Awards and Grievance Settlements Also in January 2011, Acting General Counsel Solomon issued a guideline memorandum proposing that the Board limit its deferral to arbitration awards and grievance settlements in cases involving Sections 8(a)(1) and 8(a)(3), by refusing to defer to the arbitrator s decision unless it is shown that the statutory rights have adequately been considered by the arbitrator. Moreover, the party seeking deferral (normally, the employer) will have the burden of showing that this standard has been met. This obviously presents additional risks and adds more costs for employers who now will more often be required to defend themselves in both an arbitration forum and at the NLRB, concerning essentially the same alleged improper conduct. In effect, it will give discharged claimants, for example, an extra bite at the apple of reinstatement and/or back-pay. 6. NLRB to Revisit Recognition Bar and Successor Bar Doctrines The NLRB has granted Requests for Review and consolidated two cases, Rite Aid Store #6473 and Lamons Gasket Company, 355 NLRB No. 157 (2010), which raise substantial issues concerning voluntary recognition under the Board s 2007 decision in Dana Corp., 351 NLRB 434 (2007). Prior to Dana Corp., when an employer voluntarily recognized a union based on signed authorization cards from a majority of employees, usually pursuant to a card-check neutrality agreement, both decertification and rival union petitions challenging this representation could not be filed for a reasonable time. In Dana Corp., the NLRB modified this doctrine and held that a decertification petition or rival union

4 petition could be filed within 45 days of a company s voluntary recognition of a union. The NLRB also required the employer to post a notice for the 45-day period informing the employees of their right to either file a decertification petition or a petition in favor of another union. If the notice is posted and no petition is filed within 45 days, no decertification or rival union petitions can thereafter be filed for a reasonable time. The NLRB has also granted a Request for Review in UGL-UNICCO Service Company, 335 NLRB No. 155 (August 27, 2010), and other consolidated cases that raise substantial issues regarding whether the Board should modify or overrule MV Transportation, 337 NLRB No. 129 (2002), regarding the duration of a successor employer s obligation to negotiate with the predecessor s incumbent union. In MV Transportation, the Board re-established its long-standing position that when a company buys another employer s unionized work force, the previously recognized union is only entitled to a rebuttable presumption of majority support among the workforce. 337 NLRB 770 (2002). This presumption can be rebutted by a decertification petition, an employer petition, or a rival union petition, and none of these efforts are barred by the presumption. MV Transportation overturned St. Elizabeth Manor, Inc., 329 NLRB No. 36 (1999), and its successor-bar doctrine, under which the successor employer stands in the shoes of the predecessor vis-à-vis the union and thus incurs an obligation to bargain with the incumbent union for a reasonable period of time, during which the union s majority status is immune to challenge through a decertification effort, an employer petition, or a rival union petition. 7. Likely Expansion of Persuader Reporting Requirements The director of the Department of Labor s Office of Labor Management Standards (OLMS) has stated that the OLMS plans to publish a proposed rule expanding the scope of employer reporting requirements under Section 203 of the Labor Management Reporting and Disclosure Act (LMRDA). Under the LMRDA, employers must report any agreement or arrangement with a third-party consultant whose purpose is to persuade employees regarding their collective bargaining rights or to supply the employer with certain information about employee activities or a labor organization in connection with a labor dispute. The LMRDA provides an exemption for the giving or agreement to give advice. Previously, the OLMS has interpreted this to mean that employers are not required to report payments to consultants, such as law firms, who devise personnel policies to discourage unionization, as long as the work product is submitted to the employer and the employer is free to accept or reject the submission. According to the director of the OLMS, the agency plans to publish a proposed rule by June 2011 that would narrow the scope of the advice exemption and, thus, expand the persuader reporting requirements. This could significantly impact employers ability to obtain legal counsel and direction during a union organizing campaign. Developments That May Impact Employers Covered by the RLA 8. Proposed Reversal of NMB Voting Rule Legislation has been proposed to reverse the NMB s recent change to its longstanding rule regarding representation elections. The NMB s new rule, which took effect June 30, 2010, changed the way RLA elections have been determined for over 75 years. Since the NMB's inception, the agency has repeatedly held that, in order for a union to be certified as the bargaining representative for a craft or class, a majority of the potential voter population would have to actually vote for representation. The NMB s new rule substantially changed this requirement, allowing a union to be certified as the bargaining representative if a majority of the employees who vote (which could be a small minority of the potential voter population) cast ballots for representation. Thus, for example, if there are 1000 employees who are eligible to vote but only 200 vote and 101 of them vote for a union, the union will very likely be certified. Section 903 of the House of Representative s version of the FAA Reauthorization and Reform Act of 2011 (H.R.658), released Feb. 11, 2011, would make the NMB s rule have no force or effect. The House bill has 32 co-sponsors and is likely to pass; however, it may not pass the Senate. Last year, the Senate voted against a Joint Resolution to express congressional disapproval of the NMB s rule.

5 9. Modification of NMB Write-in Vote Procedures In a notice issued February 16, 2011, the NMB announced that it will eliminate the silence option for write-in votes. 38 NMB No. 31. According to the notice, voters who select the write-in option must affirmatively speak-in (telephone) or write-in (internet) the name of an individual or organization for the vote to be counted as valid. If a telephone vote is silent or a write-in vote is blank, the system will not allow the voter to register a valid vote. Additionally, if a voter enters a vote for any other organization or individual it will be considered a void vote and will not be counted. 10. Court Order Directing Union to Seek Representative Determination from NMB A recent decision by the Seventh Circuit ordering a union to seek a single carrier determination from the NMB as a condition for the continuance of a status quo injunction could have an impact on airline employers in light of the significant amount of airline mergers that have recently taken place in the airline industry. In International Brotherhood of Teamsters Airline Division v. Frontier Airlines, Inc. and Republic Airways Holding, Inc. (7th Cir. Dec ), the trial court issued an injunction prohibiting Republic Airways from unilaterally altering the mechanics pay, work rules or working conditions unless and until the NMB rules that the Teamsters is not the mechanics lawful representative. Because the RLA does not permit anyone other than a union or someone seeking to represent the employees to request a representation determination from the NMB, and because no one, including the Teamsters, had any incentive to request such a determination in this case, the impact of the trial court s order was to enforce what may well have been an unlawful status quo. Accordingly, the Seventh Circuit ordered the court to modify the injunction to condition its continuance on the union's prompt application to the Board for a ruling on the representation of Frontier's mechanics: are they represented by the union, or by no one? Conclusion Of course, there are various other pending issues and developments that that are also sure to affect employers in 2011, such as the backlog created by the Supreme Court s invalidation of hundreds of decisions issued by a two-member NLRB, the agency s still-evolving treatment of social media policies and even more rule-making initiatives. Such issues and developments make it more important than ever for employers to maintain open lines of communication with their employees, to help ensure that workplace issues are resolved early. The information in this Top Ten should not be construed as legal advice or legal opinion on specific facts and should not be considered representative of the views of its authors, its sponsors, and/or the ACC. This Top Ten is not intended as a definitive statement on the subject addressed. Rather, it is intended to serve as a tool providing practical advice and references for the busy in-house practitioner and other readers.