Given the Democratic Party’s loss of a filibuster-proof majority in the Senate and the potential results of the upcoming midterm elections, the likelihood that the proposed Employee Free Choice Act (EFCA) will pass has virtually evaporated. But recent actions of the National Labor Relations Board (NLRB, or Board) suggest that employers haven’t dodged the bullet. Indeed, increased risks of unionization still abound and will continue even if Republicans regain both houses of Congress in next week’s elections. A majority of the Board’s current membership are former union lawyers who have been aggressively acting to institute new policies that are highly favorable to unions – and dangerous for unionized and non-unionized employers alike.
Recent Pro-Union Decisions
In a speech on October 21, 2010, NLRB member Mark Gaston Pearce said the Board must seek to make the time period between the filing of a union petition and the holding of an election “as brief as possible” – as little as five to 10 days. He also said the NLRB was considering requiring compound interest on monetary remedies it orders in unfair labor practice cases, and requiring employers to post remedial notices electronically.
The very next day, Member Pearce’s latter two recommendations were heeded. In Jackson Hospital Corp. d/b/a Ky. River Med. Ctr., 356 N.L.R.B. No. 8 (Oct. 22, 2010), the Board unanimously ruled that all back pay and other monetary awards it issues will be subject to interest compounded daily rather than to the simple interest formula it has used for 50 years. And on the same day, in a 3-1 decision, the Board ruled that it now will require employers and labor organizations who customarily distribute messages to employees electronically to post and/or distribute remedial notices related to unfair labor practice findings electronically. J & R Flooring Inc. d/b/a J. Picini Flooring, 356 N.L.R.B. No. 9 (Oct. 22, 2010). We would not want to bet against his third recommendation coming true in the near future.
Standing alone, these decisions increase the risks for both unionized and non-unionized employers – remember, non-union employers can be subject to unfair labor practices as well. The Board’s aggressive efforts to change the law to favor unions, coupled with Member Pearce’s statements, also require all employers to take seriously the possibility that the Board will significantly shorten the time before a union election, as he suggested. His proposal to reduce that time to five to 10 days would leave employers almost no time to campaign against a union.
Employers also should be aware that the Board has recently adopted a policy of requesting a federal court to order the reinstatement of any employee discharged during a union organizing campaign whom the NLRB believes was discharged because of union activity. All employers – again, unionized and non-unionized – need to audit their compliance with federal labor laws to ensure that they have taken the steps necessary to protect themselves against union organizing.
Adoption of Daily Compound Interest for Monetary Penalties
When the NLRB determines that an individual has been discharged or denied work in violation of the National Labor Relations Act (NLRA), it orders that individual reinstated with back pay. Similarly, the Board orders monetary remedies when it determines that an employer has wrongfully changed or denied benefits in a way that hurts employees monetarily.
For nearly 50 years, the NLRB has imposed only simple interest on such monetary awards. But in May 2010, the Obama-appointed Board invited employers, business groups and unions to submit briefs about the appropriate interest rule. In the Jackson Hospital decision, the Board unanimously ruled that given that its “primary focus must be on making employees whole,” the Board will require all monetary penalties it imposes to carry interest compounded on a daily basis. The new interest policy will be applied in all pending cases “in whatever stage, given the absence of any ‘manifest injustice’ in doing so.”
Notably, the Board rejected the employer’s arguments that the agency should address the interest issue on a case-by-case basis rather than stating a general principle for all cases, and that it should follow the rulemaking process if it wants to issue a blanket rule. “The reasons supporting our new policy apply categorically wherever a backpay award is appropriate; they do not depend on the specific circumstances of an individual employee in a given Board case,” the Board said.
Board Requires Electronic Posting of ULP Notices
As part of its remedy for an unfair labor practice, the NLRB requires the guilty employer or union to post a NLRB-prepared notice that explains to employees the practices the NLRB found to be unlawful and directs the employer to cease those unlawful practices. For many years, the Board has required that paper copies of these notices be posted and maintained for 60 days in “conspicuous places” where notices to employees or union members are customarily posted. It has required employers to distribute the notice to employees electronically only in cases of egregious or repeated unlawful conduct or where employees are unlikely to see a centrally-posted paper notice.
In J.R. Flooring, however, the Board ruled 3-1 that it now will require electronic distribution of ULP remedial notices as a general rule. The new policy will apply “to all respondents, employer and union, without differentiation” if they customarily use intranets, websites, e-mail or other electronic communications to communicate with employees or union members, and will apply to all pending cases. As with the interest policy, this decision followed a May 2010 invitation for employers and unions to submit briefs addressing whether electronic distribution of Board ULP notices should be required.
The Board majority rejected employers’ arguments that electronic posting of remedial notices should be required only in cases involving egregious or repeated unfair labor practices. The majority essentially concluded that employers and unions that customarily distribute messages to employees electronically have decided that is the best way to communicate, and they should be required to communicate Board remedial notices the same way. The majority also rejected employer arguments that a general electronic posting requirement could lead to postings beyond the facility in which the unfair labor practice occurred, thereby broadening the existing notice requirement; it also rejected arguments that electronic posting invited people to misuse and distribute the notices beyond their intended scope and purpose.
Dissenting from the ruling, Board Member Brian E. Hayes stated that “my colleagues transform what has heretofore been an extraordinary remedy into a routine remedy” that would arbitrarily impose more onerous posting requirements on those that have adopted electronic communications – most likely, employers. He noted that the majority had not identified any federal agency or court that regularly requires the use of electronic communications as a “remedial matter.” He also cautioned that unlike paper notices, which are designed to be viewed principally at the locations where unfair labor practices occurred, it would be difficult to similarly limit electronic postings. Therefore, “electronic posting would entail a posting obligation far broader than current practice and much more in line with current special remedies.” And he noted that “[o]nce in cyberspace,” an NLRB notice “is at much greater risk of being anonymously altered and broadly distributed to nonemployees, customers, stockholders, or competitors, or, in the case of union respondents to rival unions, and potential members, perverting the remedial purposes of the Act, and become punitive.” In addition, he concluded that because it is likely that more employers communicate electronically with their employees than do unions, the Board’s rule effectively imposes a more onerous, and more punitive, notice posting obligation on employers with no rational basis to do so.
NLRB Member Pearce Urges Reduction in Time for Holding Representation Elections
Unions seek an election by filing a petition with the NLRB. Over the past year, the NLRB has held elections a median of 38 days after the petition was filed, and its policy is to hold elections within 42 days. Thus, employers usually have five to six weeks to respond to a union election campaign.
At an October 21, 2010 labor law conference at Suffolk University Law School in Boston, Obama-appointed NLRB Member Pearce stated that the NLRB must seek to make the time period between the filing of a union election petition and the holding of an election “as brief as possible,” because the longer the period before the vote, the greater the likelihood of unfair labor practices from both sides. He described as “intriguing’’ the Canadian process of holding elections within five to 10 days after the union files an election petition and postponing eligibility issues until after the vote. If such a proposal were adopted, employers would have virtually no time to respond to a union organizing campaign.
NLRB Requiring Injunctions for Employee Reinstatements
Normally an employee who claims he or she was discharged for engaging in union activity remains out of the workplace until the NLRB decides the case – which could take years. In egregious cases, the NLRB may ask a federal court to order such an employee reinstated while the Board is deciding the case. In a September 30, 2010 memo, the NLRB’s General Counsel stated that the Board is likely to seek such federal court reinstatement orders in every case in which it finds reason to believe that an employee was discharged because of his or her union activity during a union organizing campaign. The NLRB will seek such orders even if the employee does not want reinstatement and the union has abandoned its organizing campaign. More generally, the NLRB will more aggressively investigate any employee’s claim that he or she was discharged because of union activity during a union organizing campaign.
Significantly Increased Risks for Employers
To summarize, these decisions show that regardless of broader political developments, risks are increasing for both unionized and non-unionized employers. Two recent decisions show that the Obama-appointed Board is reaching out to create broad general rules that favor unions. They also suggest that the Board majority will accept Member Pearce’s suggestion and sharply reduce the time between a union election petition and the election.
If the Board adopts the Canadian model of holding an election only five to 10 days after the union seeks an election, employers will have virtually no time to respond. Oftentimes, the union’s NLRB election petition is the first time an employer even knows a union is seeking to organize its employees. Five to 10 days is not enough time for any employer to respond to a union organizing drive from scratch.
These changes and trends mean that employers need to act now if they want to remain union-free and avoid greater union liabilities. All employers – unionized and non-unionized – need to audit their compliance with federal labor laws and ensure that they have taken the steps necessary to protect themselves against union organizing.