On April 13, 2012, the U.S. District Court for the District of South Carolina held that the National Labor Relations Board's rule requiring private sector employers to post a notice of employee rights under the National Labor Relations Act is invalid, because the NLRB did not have the authority under the NLRA to promulgate the rule. There are now conflicting decisions of U.S. District Courts in two separate jurisdictions regarding the validity of the notice posting rule. The U.S. District Court for the District of Columbia previously held that the NLRB had the authority to require employers to post the notice, but also found that certain enforcement provisions of the rule were invalid.
In the case filed by the U.S. Chamber of Commerce and the South Carolina Chamber of Commerce, the U.S. District Court Judge noted that the NLRA grants the NLRB authority to promulgate rules that are "necessary to carry out" the provisions of the NLRA. The Judge held that the NLRB failed to demonstrate that the notice posting rule is "necessary" to carry out any provisions of the NLRA.
The decision of the U.S. District Court for the District of Columbia upholding the validity of the notice posting rule has already been appealed by the plaintiffs to the District of Columbia Circuit Court of Appeals, and it is likely that the NLRB will appeal the recent decision of the U.S. District Court for the District of South Carolina to the Fourth Circuit Court of Appeals. If the two Circuit Courts of Appeals reach conflicting decisions, it is possible that the U.S. Supreme Court may eventually address the validity of the NLRB's notice posting rule.
The notice posting rule was scheduled to take effect on April 30, 2012. At this point, it is not clear whether the NLRB will suspend enforcement of the notice posting rule for employers across the nation pending appeal, or whether the NLRB will take the position that enforcement of the rule is suspended only for employers within the jurisdiction of the U.S. District Court for the District of South Carolina. Stay tuned for further updates on this blog as they become available.
In a recent decision that will likely have positive implications for similarly-situated public employers across New York State, the Appellate Division for the Second Department reversed a lower court ruling and held that the City of Yonkers' refusal to reimburse new employees for their statutorily-required Tier V retirement plan contributions was not arbitrable. The appellate court also issued a permanent stay of arbitration. The City of Yonkers ("City") was represented by Bond, Schoeneck & King in the litigation.
The dispute arose in connection with the 2009 enactment of Article 22 of New York's Retirement and Social Security Law ("Tier V"). Among other changes, Tier V provides that those who join the Police and Fire Retirement System ("PFRS") on or after January 10, 2010 must "contribute 3% of their salary towards the . . . retirement [plan] in which they are enrolled." Prior to the enactment of Tier V, the City and the Yonkers Fire Fighters ("Union") were parties to a collective bargaining agreement which expired on June 30, 2009. Like many other firefighter contracts in the state, the contract required the City to provide a "non-contributory" retirement plan to its firefighters.
In late 2009, the City hired several firefighters who, because of a "gap" in the law, had the option of joining the PFRS as either members of Tier III or Tier V -- both contributory (3%) tiers. In an attempt to apply the terms of the expired contract to relieve its Tier V members of the statutorily-required 3% member contribution, the Union filed a grievance and sought arbitration based upon the contractual obligation to provide a non-contributory requirement plan. The Union relied on an exception in the law creating Tier V, which provides that members of the PFRS need not join the contributory Tier V if there is an alternative retirement plan available to them under a collective bargaining agreement that "is in effect on the effective date" of Tier V. The appellate court found that the Union's reliance on this exception was misguided, because the collective bargaining agreement at issue had expired on June 30, 2009 and, therefore, was not "in effect" as of January 10, 2010, the effective date of Tier V.
The Union also asserted in its grievance that even if their new members were not eligible to join the non-contributory plan, the City was nevertheless obligated under the collective bargaining agreement to pay the new members' 3% contributions. The appellate court found that this claim was not arbitrable because Civil Service Law Section 201(4) and Retirement and Social Security Law Section 470 prohibit the negotiation of changes to benefits or fund payments related to a public retirement system.
As of the date of this blog post, the New York Court of Appeals is considering a motion filed by the Union for leave to appeal the decision. Regardless of whether our state's highest court chooses to hear the case or not, this issue is sure to surface again. Governor Cuomo's recent deal with the Legislature to establish a Tier VI in the various state retirement systems includes, among other things, a sliding-scale of increased employee contributions based upon annual salary (beginning at 3% and topping out at 6%). Thus, in some ways, the already high -- and very costly -- stakes have doubled.
On March 7, 2012, the U.S. District Court for the District of Columbia denied a request made by the National Association of Manufacturers and other business groups to prohibit the NLRB from enforcing its rule requiring employers to post a notice of employee rights under the National Labor Relations Act, pending their appeal of the District Court's March 2, 2012 decision upholding the rule.
The District Court held that there would be no irreparable harm to employers if the NLRB's notice posting rule were permitted to become effective prior to the issuance of a decision by the U.S. Court of Appeals for the District of Columbia regarding the appeal, because the posting of the notice only makes employees aware "of the rights that they are already guaranteed by law." The District Court further stated: "If the Court of Appeals ultimately determines that the Board exceeded its authority in promulgating the Rule, the employers can take the notice down."
Accordingly, although an appeal of the District Court's March 2 decision has been filed, employers are required to post the notice beginning on April 30, 2012.
On March 2, 2012, the U.S. District Court for the District of Columbia issued a decision in the lawsuit filed by the National Association of Manufacturers ("NAM") and the National Right to Work Legal Defense and Education Fund ("NRTW") challenging the notice posting rule promulgated by the National Labor Relations Board ("NLRB"). The Court held that the NLRB had the authority to require employers to post a notice informing employees of their rights under the National Labor Relations Act ("NLRA"), but did not have the authority to issue a blanket rule that failure to post the required notice will be considered an unfair labor practice and did not have the authority to permit tolling of the six-month statute of limitations for unfair labor practice charges in situations where an employer fails to post the required notice.
Although the Court determined that the NLRB exceeded its authority by promulgating a blanket rule that an employer's failure to post the required notice will in all cases constitute an unfair labor practice, the Court held that the NLRB is nevertheless free to determine on a case by case basis whether an employer's failure to post the notice interfered with employees' exercise of their rights under Section 7 of the NLRA. The Court stated that the NLRB can "make a specific finding based on the facts and circumstances in the individual case before it that the failure to post interfered with the exercise of his or her rights."
In addition, the Court also upheld the portion of the rule providing that the NLRB may consider an employer's failure to post the required notice as evidence of the employer's unlawful motive in unfair labor practice cases where motive is an issue. The Court found that the NLRB had the authority to issue this portion of the rule because the rule "does not make a blanket finding that will govern future individual adjudications or create a presumption of anti-union animus wherever an employer fails to post the provision." Therefore, although some of the NLRB's enforcement tools were struck down by the U.S. District Court for the District of Columbia, there could still be significant negative consequences to employers who fail to post the required notice.
It is not clear at this point whether the plaintiffs or the NLRB intend to appeal the Court's decision, or if an appeal will result in a delay of the effective date of the notice posting rule. Accordingly, employers should be prepared to post the required notice by the April 30, 2012 effective date.
Last month, the Acting General Counsel for the National Labor Relations Board ("NLRB") issued a second report on 14 social media cases recently reviewed by his office. Although the report does not have the force of law, the report offers some insight into the NLRB's ongoing efforts to reconcile decades of federal labor law on protected employee speech under the National Labor Relations Act ("NLRA") with the new frontier of Twitter, Facebook, and other social media. Until the NLRB has issued more definitive rulings on the subject, employers should be mindful of the following in crafting their social media policies.
First, a broad "non-disparagement" clause in a social media policy is likely to be considered per se unlawful. For example, the Acting General Counsel found a policy that prohibited "making disparaging comments about the company through any media . . ." to be unlawful because it could reasonably be construed by employees to restrict their right under Section 7 of the NLRA to discuss wages and working conditions, and it contained no disclaimer language that made clear the policy was not intended to restrict such protected activity. Employers should avoid using broad and vague terms such as "disparaging," and should instead provide examples of prohibited conduct whenever possible.
Second, even a detailed disclaimer may not save an overly restrictive policy. In one case, the policy instructed employees not to identify themselves as working for the employer unless they were discussing terms and conditions of employment in an "appropriate" manner. The Acting General Counsel found the policy to be unsalvageable despite a lengthy disclaimer stating that the policy was not intended to restrict NLRA Section 7 rights and quoting NLRA Section 7 verbatim. The Acting General Counsel determined that employees still could not discern what types of discussions the employer considered to be "appropriate" or "inappropriate."
Third, restrictions on the disclosure of confidential or other non-public information should be worded such that they cannot be reasonably interpreted to impinge upon an employee's right to discuss wages, working conditions, and other subjects protected by NLRA Section 7. In rejecting one employer's policy which prohibited disclosure of "confidential, sensitive or non-public information concerning the company on or through company property," the Acting General Counsel determined that the language could reasonably be understood to prohibit employees from discussing subjects protected by NLRA Section 7. In contrast, the Acting General Counsel approved a pharmaceutical employer's policy prohibiting disclosure of confidential or proprietary information, including customers' personal health information and "embargoed information" such as product launch and release dates and pending reorganizations. He reasoned that an employee has no right to disclose "embargoed" corporate information and would understand that the remainder of the rule was intended to protect customer privacy interests and not to prohibit discussion about working conditions.
Fourth, a policy that requires employees to expressly state that their comments are their personal opinions, and not those of their employer, each and every time they post on social media sites, is regarded by the Acting General Counsel as an unlawful burden on employees' exercise of their NLRA Section 7 rights. However, the Acting General Counsel appears to have carved out an exception for policies that require such disclaimers where an employee's post involves the endorsement or promotion of the employer's products or services.
Prior blog posts regarding the NLRB's treatment of social media cases can be found here, here, here, and here.
The U.S. Chamber of Commerce and the Coalition for a Democratic Workplace filed a motion for summary judgment on February 3 in their court challenge to the National Labor Relations Board's final rule amending the procedures applicable to representation elections. In their motion for summary judgment, the business groups requested that the United States District Court for the District of Columbia invalidate the NLRB's amendments to the representation election procedures on several grounds, including: (1) the amendments were adopted by only two members rather than a three-member quorum; and (2) the final rule is inconsistent with the provisions of the National Labor Relations Act.
The NLRB also filed its own motion for summary judgment in the case on February 3, defending its rule-making process and seeking dismissal of the business groups' complaint.
Each party now has the opportunity to respond to the other party's motion by February 28. The NLRB's final rule is currently scheduled to go into effect on April 30. It is not clear at this point whether oral argument will be scheduled by the court or whether a decision will be issued by the effective date of the final rule.
New York's highest court recently ruled that a provision in the collective bargaining agreement between the Village of Johnson City and its firefighters' union which states that the Village will not "lay-off any member of the bargaining unit during the term of this contract" is not explicit enough to prevent the Village from abolishing the positions of six firefighters and terminating their employment.
Under New York law, a "job security" provision in a public sector collective bargaining agreement violates public policy and is unenforceable unless, among other requirements, it explicitly prohibits the public employer from abolishing positions even due to budgetary constraints and the collective bargaining agreement that contains the provision is reasonable in duration. The public policy rationale for this stringent requirement is that public employers should not be hamstrung in their efforts to eliminate positions for economic reasons unless they have clearly promised to maintain employment levels for some reasonable period of time.
In the Village of Johnson City case, the Court of Appeals determined that the provision in the collective bargaining agreement prohibiting layoffs did not explicitly prohibit the Village from abolishing firefighter positions out of budgetary necessity. Accordingly, the Court of Appeals upheld the layoffs of the six firefighters and denied the union's application to compel the Village to submit to the arbitration process.
Arbitration agreements are a common tool that employers use to manage EEO and wage/hour litigation risk. Those agreements often include a provision that an employee who wishes to submit an employment-related claim to arbitration may do so only on behalf of himself or herself, and may not do so as part of a class or collective action. On January 3, 2012, Member Becker's last day on the National Labor Relations Board ("NLRB"), Members Becker and Pearce dealt a blow to employers seeking to create or expand arbitration agreements that employees are required to sign as a condition of employment. In D.R. Horton, Inc., the NLRB held that mandatory arbitration agreements that include a class action waiver are unlawful under the National Labor Relations Act ("NLRA").
In D.R. Horton, Inc., the employer (a home builder with operations in more than 20 states) instituted a corporate-wide policy that required new and current employees, as a condition of employment, to sign an arbitration agreement. The agreement required all disputes arising from each employee's employment to be resolved by an arbitrator, rather than in a judicial forum. The agreement further provided that the arbitrator had no authority to consolidate the claims of other employees, to hear any class or collective action, or to award relief to a class or group of employees.
The charging party, Michael Cuda, was a superintendent with the home building company. Cuda's attorney notified the company that his firm represented Cuda and a nationwide class of similarly situated employees. He asserted that the company was misclassifying the superintendents as exempt under the Fair Labor Standards Act ("FLSA") and gave notice that he intended to initiate an arbitration proceeding on behalf of the class of superintendents. The company responded that such a collective action was prohibited under the arbitration agreement that Cuda and other employees signed.
Cuda then filed an unfair labor practice charge with the NLRB, alleging, among other things, that the arbitration agreement violated Section 8(a)(1) of the NLRA as it prohibited employees from engaging in concerted activity for their mutual aid and protection.
The NLRB agreed with Cuda that the arbitration agreement violated Section 8(a)(1) of the NLRA. The NLRB held that employees have the right to attempt to improve their working conditions through judicial, administrative, and arbitral proceedings. The NLRB further held that employees' collective efforts to pursue rights or improve working conditions are "at the core of what Congress intended to protect" in Section 7 of the NLRA. The Board concluded that, because the arbitration agreement at issue prohibited employees from pursuing class or collective actions in either an arbitral or judicial forum, it violated Section 8(a)(1) of the NLRA.
The company argued that a decision holding its arbitration agreement to be unlawful would conflict with the provisions of the Federal Arbitration Act ("FAA") and the Supreme Court's 2011 decision in AT&T Mobility LLC v. Concepcion. However, the NLRB rejected these arguments.
The FAA was enacted to prevent courts from treating arbitration agreements less favorably than other private contracts. The NLRB reasoned that its decision was not in conflict with the FAA because it was treating the arbitration agreement no worse than any other private agreement. The NLRB stated that it would have reached the same conclusion had the agreement not mentioned arbitration, but required employees to pursue only individual claims -- rather than collective claims -- in a judicial or other type of forum.
In AT&T Mobility, a class action was brought against AT&T by a group of customers who alleged that AT&T's offer of a "free" telephone to anyone who signed up for its service was fraudulent to the extent that AT&T still charged new subscribers sales tax on the retail value of the "free" telephone. AT&T demanded that each plaintiff's claim be submitted to individual arbitration because its arbitration agreement with its customers barred class actions. The plaintiffs argued that such a class action waiver was unconscionable under California law. The Supreme Court rejected the plaintiffs' argument, and held that the class action waiver contained in the arbitration agreement was enforceable. The NLRB distinguished the Supreme Court's AT&T Mobility decision, principally on the basis that the arbitration agreement at issue in that case involved customers of AT&T rather than employees, and therefore, the issue of whether the arbitration agreement violated the NLRA was not presented.
The D.R. Horton case will likely be appealed to a U.S. Circuit Court of Appeals, and may eventually be heard by the Supreme Court. However, in the meantime, employers looking to create or expand an arbitration agreement that employees must sign as a condition of employment should be cautious not to prohibit employees from pursuing class or collective actions in an arbitral forum.
