The Impact Of Sweeping NLRB Changes On Business

Monday, May 21, 2012 - 10:59

The Editor interviews David I. Rosen, Chair of the Employment and Labor Practice Group, Sills Cummis & Gross P.C.

Editor: Please describe your background in the field of labor and employment law.

Rosen: For more then 34 years, I have represented private sector management clients in labor and employment law matters. Approximately 50 percent of my practice is devoted to traditional labor relations matters, advising companies in representation proceedings and defending unfair labor practice charges before the National Labor Relations Board, representing management at the collective bargaining table, and helping management to structure effective union pre-election campaign themes and communications. The balance of my practice is focused on such employment law matters as restrictive covenant enforcement and defense, jury and bench trials, appellate advocacy, day-to-day counseling on employment law compliance, and managerial training.

Editor: Tell our readers what you consider to be the key traditional labor law issues facing employers today.

Rosen: The NLRB has had a decidedly pro-union tilt over the past four years. Since the 2010 demise of the Employee Free Choice Act, the NLRB has poured its efforts, through rule-making and the reversal of its own established precedents, into expediting union representation elections, limiting management's ability to contest proposed bargaining units, and preserving, to the fullest extent possible, existing collective bargaining relationships. The changing demographics of the workforce and deteriorating economic conditions have created challenges for management – cultural and language differences, widespread layoffs, and spiraling health insurance costs have given unions far greater opportunities than in the recent past to organize. Plus, with increasing employee reliance on social media as a means of communication, it has become easier for employees to exchange information about perceived company injustices, solicit authorization card signings, and engage in "stealth" organizational activity.

Editor: The NLRB recently published a new rule pertaining to the processing of NLRB petitions. Do you predict this rule will enhance the ability of unions to win more representation elections?

Rosen: Absolutely. Though the Board has temporarily suspended its implementation, previously scheduled for April 30, based on a May 14 federal district court decision discussed below, the new rule is designed to speed the processing of election petitions by curbing what the NLRB majority views as abuses by employers in utilizing representation hearing procedures to delay elections. Elections previously were held within a period of approximately six weeks from the representation petition filing date. Because the new rule limits the circumstances under which an employer can compel a pre-election hearing, elections may now be conducted in three weeks or less following a petition's filing. This will severely limit the amount of time management will have to communicate its position on unionization. In an information void, employees may vote in favor of union representation without having the benefit of management's alternative viewpoints. Further, because the supervisory status of certain employees may not be resolved until after the election, companies may now be more vulnerable to unfair labor practice findings based on the conduct of employees whose supervisory status prior to the election was in dispute. On April 26, NLRB Acting General Counsel Solomon issued new guidelines to NLRB Regional Directors governing what some have derisively labeled "quickie elections."

Editor: Is the NLRB's new election rule being challenged?

Rosen: Yes, both in the courts and in Congress. On December 20, 2011, the U.S. Chamber of Commerce and the Coalition for a Democratic Workplace filed an action in the U.S. District Court for the District of Columbia, alleging that the NLRB, by promulgating the rule, exceeded its statutory authority, violated the First and Fifth Amendments to the Constitution, engaged in arbitrary and capricious action, and abused its discretion. On May 14, Judge James E. Boasberg granted plaintiffs' summary judgment motion, declaring that the rule was void because the NLRB was comprised of only three members at the time the rule was promulgated, and only two of those members “participated in the decision” to adopt it.  (The third member, Hayes, did not vote.)  Based on the Supreme Court’s 2010 ruling in New Process Steel, L.P. v. NLRB, Judge Boasberg held that in the absence of three “participating” NLRB members, the Board lacked the necessary three-member quorum to approve the rule. Without a doubt, the NLRB will appeal this decision. In late 2011, the "Workforce Democracy and Fairness Act" (H.R. 3094) was introduced in the House, which would prohibit the NLRB from, among other things, conducting a representation election within 35 days of a petition’s filing date. The outcome of this legislative challenge was thrown into doubt when a majority of the Senate, on April 24, 2012, rejected a resolution of disapproval against the NLRB’s implementation of its new rule.

Editor: What is the status of judicial challenges to the NLRB's "posting rule"?

Rosen: On August 11, 2011, the NLRB published a rule requiring all private employers subject to the NLRB's jurisdiction to physically and, under certain circumstances, electronically post an NLRB-approved notice to employees informing them of their rights under the National Labor Relations Act together with NLRB contact information and information concerning basic NLRB enforcement procedures. The rule's compliance deadline has since been indefinitely suspended. On March 2, Judge Amy Berman of the district court for the District of Columbia, generally upheld the posting rule and rejected the National Association of Manufacturers’ argument that the posting requirement was arbitrary and capricious, finding that the National Labor Relations Act vested the NLRB with a "broad, express grant of rulemaking authority." However, the court ruled that the NLRB exceeded its authority by providing that failure to post the required notice would be an unfair labor practice and that the six-month statutory charge filing deadline may be tolled.  By contrast, on April 13, Judge David C. Norton of the district of South Carolina ruled that the NLRB lacked statutory authority to promulgate any aspect of the notice posting requirement. That decision has been appealed, and the DC Circuit, on April 17, temporarily enjoined the NLRB from implementing the posting rule pending the court’s decision on its merits. The outcome of the appeal remains uncertain.

Editor: What about the status of a proposed NLRB rule that would require employers to disclose additional private information about their employees?

Rosen: The NLRB has long required that employers, prior to a scheduled representation election, disclose to a petitioning union the names and home addresses of all voting-eligible employees to afford the union an opportunity to communicate directly with those employees. In June 2011, the NLRB proposed a rule that would also require in such circumstances the employer’s disclosure of the employees' e-mail addresses and telephone numbers. When the NLRB issued its election reform rule in December 2011, it omitted the e-mail/phone number disclosure provision, but concern remains that the NLRB may again initiate rulemaking on that requirement this year. The U.S. Chamber of Commerce, which has decried the proposed rule as an invasion of the employees' personal privacy, recently launched a campaign to draw further attention to the proposed rule and to mount Congressional lobbying efforts to force the NLRB to keep that proposal on the shelf.

Editor: Will the President's "recess" appointments of three NLRB members hold up in court?

Rosen: The answer, which turns on whether the Senate was in "recess" when the appointments were made, is unclear. As noted above, the Supreme Court in New Process Steel ruled that no fewer than three members of the NLRB constituted a quorum for the Board to act. With the expiration of Board Member Becker's appointment on January 3, 2012, reducing the then existing Board membership to two, and the unlikelihood that additional Board members would be confirmed during a contentious presidential election year, the President made three recess appointments to the NLRB - two Democrats, one Republican - to restore the NLRB to full strength and to keep it operational. Critics argue that the appointments are unconstitutional, because the Senate was still "in session" when the appointments were made (even though the Senate, commencing December 17, 2011, had begun conducting 1 to 2 minute sessions every third day during which no official business was conducted). On March 22, business groups filed a joint motion to intervene, in an appeal pending in the D.C. Circuit entitled Noel Canning v. NLRB, to challenge the constitutionality of the appointments. On May 13, Senate Republicans retained an attorney to file an amicus brief for the same purpose. Other employers, in several courts, have filed judicial challenges to unfair labor practice findings by the NLRB claiming the current Board lacks authority to act notwithstanding the recess appointments. It is likely the Supreme Court will ultimately need to resolve the validity of those appointments.

Editor: What are the implications of the NLRB's decision approving representation elections in smaller bargaining units?

Rosen: On August 26, 2011, the Board, in Specialty Healthcare and Rehabilitation of Mobile, held that a voting unit limited to 53 certified nursing assistants was appropriate for bargaining purposes. Though the decision purportedly set new standards solely for determining the appropriateness of bargaining units in non-acute healthcare facilities, the NLRB announced in that decision that the party contending that a petitioned-for unit of employees was inappropriate (because it failed to include various employees) had the burden of demonstrating that the excluded employees shared an overwhelming community of interest with the included employees. This rule, which the Board has since applied to other non-healthcare industrial, warehousing, and sales units, potentially will lead to an over-proliferation of bargaining units and multiple certified unions at the same employer facilities, and make it far easier for unions to successfully organize smaller employee groups. Once employers start to lose representation elections in Board-approved smaller units and appeal the bargaining unit determinations to the circuit courts, it remains to be seen whether the NLRB’s severe curtailment of "community-of-interest" challenges to petitioned-for bargaining units will be sustained.

Editor: How has the U.S. Department of Labor proposed changing the "advice" exemption under the Labor-Management Reporting and Disclosure Act?

Rosen: The LMRDA requires the public disclosure of agreements between employers and labor relations consultants by which the consultants undertake activities to "persuade" employees whether or not to exercise their rights to organize and engage in collective bargaining. Under current rules, attorneys and law firms do not engage in reportable "persuader activities" if they have no "direct contact" with employees and only provide supervisors and other employer representatives with legal “advice” or materials for use in persuading employees, which the employer is free to accept or reject. On June 21, 2011, USDOL proposed that certain activities - including providing persuader materials to employers for dissemination or distribution to employees, coordinating or directing supervisory activities to engage in the persuasion of employees, and drafting or implementing employer policies that have an object to persuade employees - would no longer be deemed "advice," and that if attorneys went beyond strictly advising employers on statutory compliance issues, they would need to report these "persuader activities." Predictably, labor organizations favor the proposed change; business groups vigorously oppose it. Lawyers fear that the rule would require them to disclose confidential financial information about their clients that bears no reasonable connection to persuader activities. It is not certain whether or when the new rule will be promulgated.

Editor: In the current political climate, what is your greatest disappointment as a labor law practitioner, and do you anticipate the pendulum swinging back if a Republican retakes the White House?

Rosen: Politicizing of the NLRB is nothing new. Since presidents traditionally appoint a majority of Board members from their own parties, changes in Board composition frequently result in precedent reversals and changing decisions that favor management over organized labor and vice versa. But I have never witnessed the level we now have of vitriol, polarization and intensive lobbying efforts from management and union advocacy groups alike either to cripple the NLRB financially or to tilt it dramatically in one direction or the other, and to abolish any semblance whatsoever of balance. The election of a Republican president would likely replace the current “pro-union” bias of the NLRB with a “pro-business” bias, but I fear that continued political wrangling with respect to the Board’s affairs will lead to further disrespect of its actions and to its weakening as an effective and relevant labor relations arbiter.

Please email the interviewee at drosen@sillscummis.com with questions about this interview.