On June 8, 2012, the U.S. Court of Appeals for the D.C. Circuit refused to enforce a decision and order of the National Labor Relations Board ("Board") on the ground that the Board had "departed, without giving a reasoned justification, from its precedent . . . ." Prior to the Board's 2010 decision and order in E.I. Du Pont de Nemours v. NLRB, Board law had, for almost a decade, allowed an employer to make certain unilateral changes in terms and conditions of employment, both during the term of a collective bargaining agreement and after expiration of a collective bargaining agreement, provided that the changes are consistent with an established past practice. However, in its 2010 Du Pont decision, the Board held that Du Pont's unilateral changes to its health plan constituted unfair labor practices in violation of the National Labor Relations Act ("Act"), despite the undisputed existence of a past practice permitting such changes. The D.C. Circuit Court of Appeals rejected the Board's change of direction on this subject.
In the Du Pont case, the Board acknowledged that Du Pont had annually and consistently revised the terms of its health plan -- which applied both to union and non-union employees -- each year during an annual enrollment period, under the terms of the plan. These changes typically included revised coverage terms, changed options, and increased premiums. The management rights clause in the collective bargaining agreement with the union also encapsulated the employer's right to make these changes.
When Du Pont continued this annual practice of revising its health plan in 2004 following expiration of the collective bargaining agreement, the union filed an unfair labor practice charge, and the Board found that Du Pont had violated Sections 8(a)(5) and 8(a)(1) of the Act by making impermissible unilateral changes in the terms and conditions of employment. The Board distinguished the employer's past practice of similar annual revisions to the health plan, noting that those prior occasions had occurred during the term of the collective bargaining agreement, not after the expiration of the collective bargaining agreement. The Board also held that Du Pont could not rely on the expired management rights clause to justify the post-expiration unilateral changes.
In rejecting the Board's holding, the D.C. Circuit Court of Appeals observed that, under the Board's existing precedent, the undisputed existence of a past practice permitting similar changes served to immunize those changes from scrutiny under the Act, regardless of whether the changes were made during the term of a collective bargaining agreement or after the expiration of a collective bargaining agreement. The Court also noted that this immunity did not turn on the existence of a management rights clause in an unexpired collective bargaining agreement. The Court stated:
Under the Board's precedent, therefore, Du Pont's making annual changes to [its health plan] became a term and condition of employment the Company could lawfully continue during the annual enrollment period, irrespective of whether negotiations for successor contracts were then on-going.
The Court's refusal to enforce the Board's Du Pont decision signals some judicial impatience with the Board's deviation from existing precedent without providing a well-reasoned justification for the sudden change in policy.
On May 30, the NLRB's Acting General Counsel ("GC") issued a third report on social media cases. We have addressed the NLRB's treatment of social media cases in several prior blog posts, including a summary of the GC's second report on social media cases. The focus of this third report is social media policies, and for the first time, the GC has provided the full text of a social media policy that was determined to be lawful under the National Labor Relations Act ("NLRA"). In addition, the report addresses six other cases in which the GC concluded that at least some of the provisions of employers' social media policies were overly broad and unlawful under the NLRA. The following summary touches on just a few of the highlights contained in the GC's 24-page report.
A number of the provisions of social media policies that were found to be unlawful were restrictions on communicating confidential information. Where a social media policy simply prohibits the disclosure of confidential information, the GC has determined that such a prohibition is overly broad because it could reasonably be interpreted to prohibit employees from discussing and disclosing information regarding their own and their co-workers' conditions of employment. For example, the GC indicated in the report that the following provisions were found to be unlawful:
"Don't release confidential guest, team member or company information. . . ."
"Make sure someone needs to know. You should never share confidential information with another team member unless they have the need to know the information to do their job. If you need to share confidential information with someone outside the company, confirm there is proper authorization to do so. If you are unsure, talk to your supervisor."
"Watch what you say. Don't have conversations regarding confidential information in the Breakroom or in any other open area. Never discuss confidential information at home or in public areas."
"Employees are prohibited from posting information regarding [Employer] on any social networking sites . . . that could be deemed material non-public information or any information that is considered confidential or proprietary. Such information includes, but is not limited to, company performance, contracts, customer wins or losses, customer plans, maintenance, shutdowns, work stoppages, cost increases, customer news or business related travel plans or schedules."
The GC also found unlawful a provision of a social medial policy prohibiting "offensive, demeaning, abusive or inappropriate remarks" in social media communications. According to the GC, this provision "proscribes a broad spectrum of communications that would include protected criticisms of the Employer's labor policies or treatment of employees." Similarly, the GC found that provisions of an employer's social media policy that cautioned employees not to "pick fights" and to avoid "topics that may be considered objectionable or inflammatory" when communicating on social media sites were unlawful. The GC reasoned that discussions about working conditions or unionism have the potential to become heated or controversial, and that "without further clarification of what is 'objectionable or inflammatory,' employees would reasonably construe this rule to prohibit robust but protected discussions about working conditions or unionism."
The GC also addressed provisions regarding the "friending" of other employees on social media sites. In general, the GC has found such provisions to be unlawful because they may be interpreted to restrict concerted activity. For example, the GC concluded that the following provision was overly broad because it could potentially discourage employees from engaging in discussions and communications with their co-workers:
"Think carefully about 'friending' co-workers . . . on external social media sites. Communications with co-workers on such sites that would be inappropriate in the workplace are also inappropriate online, and what you say in your personal social media channels could become a concern in the workplace."
Provisions restricting the use of company logos or trademarks in an employee's social media posts were also generally found by the GC to be unlawful. According to the GC, such provisions are overly broad because an employee could reasonably interpret them to prohibit the use of photos or videos of employees engaging in union activities such as holding picket signs with the employer's logo or trademark.
In the report, the GC also addressed again an employer's use of a "savings clause" in a social media policy (which essentially provides that the policy should not be interpreted or applied in a way that would interfere with an employee's rights under the NLRA). As in previous reports, the GC reiterated that such clauses do not cure other provisions of the policy that are found to be unlawful.
In general, the GC advises employers to include limiting language and definitions in social media policies in order to give context to provisions that might otherwise be overly broad. For example, instead of simply prohibiting the disclosure of confidential information, an employer should define what is deemed to be confidential information to ensure that an employee could not reasonably interpret the prohibition to apply to information about the employee's terms and conditions or employment. The GC also suggests that an employer's social media policy should contain specific examples of activities that would be prohibited by the policy.
As a result of this report and the GC's prior reports on social media cases, it is now extremely difficult for employers to create a lawful and meaningful social media policy that adequately protects its own interests with minimal risk that the policy will be found to violate employee rights under the NLRA. Employers who wish to create a new social media policy or wish to revise their existing policy would be well-advised to consult with their legal counsel.
On May 14, 2012, a federal district court judge invalidated new regulations intended to streamline union representation elections, finding that the National Labor Relations Board lacked a proper three-member quorum when it voted on the controversial final rule in December of 2011. The final rule, which has commonly been referred to as the "ambush" or ""quickie" election rule, went into effect on April 30, 2012. The same federal district court judge had previously denied a request for a stay of the final rule, stating that he intended to issue a decision on the merits of the case by May 15.
Judge James Boasberg of the U.S. District Court for the District of Columbia found that the required three members necessary to establish a quorum were not present when the rule was adopted on December 16, 2011 because Member Hayes failed to participate in the final vote. Hayes had previously voted against initiating the rulemaking process and against proceeding with the final rule. Because of this prior opposition, the two other members issued the final rule without Member Hayes' participation.
Judge Boasberg rejected the Board's argument that Member Hayes had "effectively indicated his opposition" and that his participation in the final vote was not necessary. In rejecting this argument, Judge Boasberg cited to an unlikely source:
According to Woody Allen, eighty percent of life is just showing up. When it comes to a quorum requirement, though, showing up is even more important than that. Indeed, it is the only thing that matters -- even when the quorum is constituted electronically. In this case, because no quorum ever existed for the pivotal vote in question, the Court must hold the challenged rule is invalid.
Judge Boasberg further reasoned that Member Hayes could not be counted toward a quorum particularly because no one on the Board reached out to him to ask for a response, as is the agency's usual practice where a member has failed to vote. Judge Boasberg stated that if Hayes had affirmatively expressed his intent to abstain or acknowledged receiving notification that the final rule had been circulated, he may have been counted in the quorum; however, because none of those things happened, Judge Boasberg found that Member Hayes failed to "show up -- in any literal or even metaphoric sense." Because the Board failed to meet the quorum requirement, Judge Boasberg refused to address the plaintiffs' challenge to the final rule on various procedural and substantive grounds.
It remains to be seen whether the newly constituted Board -- complete with three controversial and challenged recess appointees -- will be assembled to take final action on the "quickie" election rule. In his decision, Judge Boasberg noted that nothing appears to prevent a properly constituted quorum of the Board from voting to adopt the rule if the Board desires to do so. In addition, an appeal of Judge Boasberg's decision is likely. If a new vote on the rule is held, it is likely that the rule will once again be challenged.
The Board has announced that, at least for now, all union representation elections based on petitions filed on or after April 30, 2012 will proceed under the old rules.
The U.S. Court of Appeals for the D.C. Circuit issued an Order today granting an injunction precluding the National Labor Relations Board from implementing its notice posting rule, pending appeal of a lower court decision upholding the validity of the rule. The notice posting rule was scheduled to go into effect on April 30, 2012, but employers will not be required to comply with the rule until the D.C. Circuit Court of Appeals has had the opportunity to determine whether the NLRB exceeded its authority under the National Labor Relations Act by issuing the rule.
In its Order granting the injunction, the D.C. Circuit Court of Appeals noted that the NLRB voluntarily postponed implementation of the notice posting rule during the pendency of the proceedings before the U.S. District Court for the District of Columbia, which seemed to undercut the NLRB's argument that the rule should take effect during the pendency of the appeal. The D.C. Circuit Court of Appeals also noted that the NLRB indicated an intent to cross-appeal the portion of the District Court's decision that invalidated certain enforcement provisions of the rule, which created some uncertainty regarding the manner in which the rule will be enforced.
Prior to the issuance of this injunction, U.S. District Courts in two separate jurisdictions had issued conflicting decisions regarding the validity of the notice posting rule. The U.S. District Court for the District of Columbia held in March that the NLRB had the authority to require employers to post the notice, 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. However, the U.S. District Court for the District of South Carolina held on April 13, 2012 that the NLRB did not even have the authority to require employers to post the notice. In its Order granting the injunction, the D.C. Circuit Court of Appeals cited the recent U.S. District Court for the District of South Carolina decision.
According to the D.C. Circuit Court of Appeals Order, briefing of the appeal is expected to be completed by June 29, 2012, and oral argument is expected to be scheduled in September 2012.
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.
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.
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.
As New York employers should be aware, the first annual notice to employees required by the Wage Theft Prevention Act ("WTPA") must be distributed by February 1, 2012. Although the requirements of the WTPA have been grabbing recent headlines, this post addresses one unavoidable by-product of the annual notice requirement -- the reality that the distribution of these annual notices is likely to lead to workplace discussions among co-workers regarding wage and salary information. As a reminder, blanket rules -- whether formal or informal -- prohibiting employees from discussing their pay and benefits with their co-workers are unlawful under the National Labor Relations Act ("NLRA").
The NLRA provides private sector employees the right to engage in protected concerted activity regarding their terms and conditions of employment. This includes, as a general rule, employees' right to share and discuss information with their co-workers about their wages, benefits, and other working conditions. This protection extends to both union and non-union workplaces. Accordingly, employers may not promulgate or enforce any type of policy that prohibits such discussions. Even a broadly-written confidentiality policy may be found to violate the NLRA if an employee could reasonably view the policy as restricting discussions with co-workers about wages and other working conditions.
Employers should review their policies to ensure that there are no explicit or implicit prohibitions on wage discussions among employees that might be found to violate the NLRA. In addition, managers should be careful to avoid knee-jerk reactions to hearing such discussions that will inevitably arise from the distribution of the annual WTPA notice to employees.
On January 4, 2012, President Obama announced his intent to make three recess appointments to the National Labor Relations Board (“NLRB”), restoring the quorum that the NLRB had lost a day earlier when Member Becker’s recess appointment expired. The three recess appointees are: (1) Sharon Block, a Democrat who is currently the Deputy Assistant Secretary for Congressional Affairs at the U.S. Department of Labor; (2) Richard Griffin, a Democrat who is currently General Counsel for the International Union of Operating Engineers; and (3) Terence Flynn, a Republican who is currently Chief Counsel to NLRB Member Hayes.
Republican Senators have complained that these recess appointments bypass the Constitutionally-mandated Senate confirmation process for Presidential nominees. According to a press release issued by Senator Mike Enzi (R-Wyo.), two of the three nominees were presented to the Senate on December 15, 2011, only one day before the Senate adjourned for the year, which provided the Senate with little time to consider and review the nominations.
