New Union Organizing Tactics
Union membership rates have been falling for decades. Despite a union-friendly NationalLabor Relations Board and supportive Obama Administration, organized labor has failed to mean- ingfully increase membership levels. In 1983, the rate was 20.1 percent of the workforce. The Bureau of Labor Statistics reports that in 2013, union members made up 11.3 percent of the workforce. The membership rate in the private sector was 6.7 percent, while the rate in the public sector was 35.3 percent. Unable to convince workers to unionize in any significant numbers, and fighting for their own relevancy, unions have refined their strategy. They are campaigning to change workplace laws, in major part, to foster greater union density and increase pressure on non-union employers to deal with them. Garnering national media attention, the new SeaTac, Washington, ordinance imposing a $15 minimum wage presents unions’ new blueprint to unionize non-union employers or, at least, to increase their costs of doing business, which benefits other, union- ized, employers.
After the most expensive per-vote-earned election in Washington history and a hand recount, SeaTac vot- ers approved Proposition One by 77 votes (50.6 per- cent to 49.4 percent) in 2013. Labor unions, includ- ing Unite Here, Service Employees International Union and the Teamsters, initiated and financially supported the ordinance. The union-led campaign raised more than $1.4 million; the business-led opponents raised less than half that amount. The ordinance took effect on January 1, 2014, and has been subject to legal challenge ever since.
The ordinance mandates a $15-per-hour minimum for workers at SeaTac International Airport and airport-related businesses outside of the airport (including hotels with more than 100 rooms, airline service contractors and rental car companies). Additionally, it requires that businesses provide 6.5 days of paid sick leave a year to full-time employees, that businesses offer additional hours to part-time employees before hiring more workers, that tips and service charges be allocated only to certain employees, and that successor employers retain the predecessor’s employees for at least 90 days after an ownership change (this is to limit the new employer’s ability to set initial terms and conditions of employment following a purchase or an owner- ship change).
The new law has strong enforcement mechanisms, including allowing labor organizations the right to sue for violations. Further showing organized labor’s influence and the law’s “carrot” to unionize, all provisions of the new law may be waived in a “bona fide collective bargaining agreement.”
Striking down part of the law in late-December, state court Judge Andrea Darvis concluded that state law gives the Port of Seattle exclusive jurisdic- tion over all operations at the airport, preempting enforcement of the new law there. Further, she found the National Labor Relations Act preempted the part of the ordinance that makes it unlawful to retaliate against an employee for informing a union about an alleged violation of the ordinance, finding it void as a supplemental sanction for violations of the NLRA. However, in relevant part, Judge Darvis found the ordinance lawful for covered SeaTac workers working outside of the airport’s grounds. The judge’s ruling has been appealed.
The City of Seattle appears headed toward a $15- per-hour minimum wage. Promptly after taking office on January 1, Mayor Ed Murray directed his departmental leaders to develop strategies for paying city workers at least $15 per hour. The higher mini- mum wage was a major plank in Mayor Murray’s campaign, which was backed and supported by organized labor. Similarly, new Seattle City Council member Socialist Kshama Sawant ran and won on a $15-per-hour minimum wage platform. Meanwhile, the state legislature is considering raising the state minimum wage to $12 per hour by January 2017 and tying subsequent increases to inflation. Washington is one of 30 states considering minimum wage increases.
Employers in the Pacific Northwest must prepare to deal with the new union challenges through train-ing and positive employee relations. Moreover, employers need to become active politically — directly or through associations — to have their voices heard as these and other workplace changes are being considered.
Portland Sick Leave – Five Traps
Under the Portland Sick Leave Ordinance, effec- tive January 1, 2014, employees who work part-time, full-time, or occasionally within the city of Portland for at least 240 hours in a year accrue one hour of protected sick time, up to 40 hours per year, for every 30 hours worked. For employers with at least six employees, the sick time must be paid. For employers with five or fewer employees, the protected sick time may be unpaid.
Straightforward on its face, the Ordinance is compli- cated by entitlements, obligations, and restrictions outlined in the City’s final Administrative Rules (released November 1, 2013) and on-going interpre- tations from City administrators (including FAQs released on December 24, 2013, and January 13, 2014). These can trap employers as they begin administering the Portland Sick Leave. Below are five potential traps all employers should keep in mind.
First, there is no waiting period for accrual of the sick leave entitlement, so employees begin accruing leave time well before they are eligible to use it. Employees must work 240 hours in Portland before they can use sick leave. The Administrative Rules clarify that accrual begins the later of January 1, 2014, or an employee’s date of hire. Employers that typically begin benefit accruals after an initial introductory period, therefore, should update their new-hire policies
Second, the benefit must be calculated for commis- sioned employees. The Administrative Rules pro- vide that employees are entitled to receive only their “base rate of pay” for a qualifying absence, without accounting for, among other things, commissions. In its December 24 FAQs, however, the City indi- cated that employees paid by commission only still must receive minimum wage for any absences covered by the Ordinance. While the FAQs are not requirements, they reflect the City’s interpretation to which a court may defer.
Third, employers need to monitor sick leave for salaried employees. The Ordinance expressly extends paid sick leave to salaried employees. Employers that traditionally do not monitor salaried employees’ sick leave use because state and federal wage laws generally prohibit salary deductions for such absences must now establish and monitor a sick leave plan for their exempt staff. Nothing in the Ordinance alters existing wage laws, and salaried employees remain entitled to their full salary for partial-day absences, regardless of whether they have accrued Portland Sick Leave or not.
Fourth, human resources, legal, and managerial staff should be trained to ensure compliance in administering the Ordinance and to avoid statutory retaliation claims and other penalties. In addition to a general prohibition on retaliating against employees who take sick leave, and the accompany- ing serious penalties, employers who refuse a valid request for sick leave may be liable for up to the greater of $250 or three times the dollar amount of sick time the employee was refused.
Finally, the Administrative Rules require employers to post a notice of employee rights and provide written notice to all eligible employees of their rights by the end of the first pay period in 2014. The Ordinance authorizes the Bureau of Labor and Industries to assess $1,000 fines for violations of the posting and notice requirements. The required poster is available free at www.portlandoregon.gov/sicktime.
Limiting Statutes of Limitations in Arbitration Agreements
To mitigate risks associated with employment-related law- suits, many employers have relied on arbitration agreements for dispute resolution to ensure confidentiality and avoid a jury trial. Some employers, however, have realized the downside to these agreements: they had to pay most of the arbitration costs and rulings were not necessarily more favorable than those from civil court. Some employers also felt arbitrators were unwilling to dismiss weak cases in lieu of conducting a hearing. Employers began using other types of agreements, including those designed to limit the scope of available remedies (which were largely unsuccessful), bar class action lawsuits, eliminate the right to a jury trial, and contractually limit the statute of limitations.
Recently, increased attention has been paid to the last-mentioned alternative, with good reason. As time goes by, a lawsuit becomes more difficult to defend because evidence is lost, witnesses move away, and memories fade. If a potential plaintiff must file his or her lawsuit within a shortened period, the employer likely will be in a better position to investigate the claims and have more success gathering evidence to build a strong defense.
Case law on an employer’s ability to limit the statute of limita- tions for employment-related lawsuits by contract is developing, but, at this point, agreements are not required to be freestanding. Courts have held that an employer may include a contractual statute of limitations period in an application for employment or an employee handbook, provided there is an acknowledgement of receipt. The agreement must be clear, leave the potential plaintiff reasonable time to file a lawsuit, and cover all claims arising out of employment or termination.
As this area of law is evolving rapidly, employers should work with competent counsel to institute a contractual limitations period for job applicants or employees
Employer’s Mandatory Arbitration Clause Waiving Employee’s Right to Sue in Court Upheld
In a significant decision, the U.S. Court of Appeals for the Fifth Circuit, in New Orleans, has upheld an employer’s arbitration agreement requiring the resolution of workplace controversies by arbitration and banning class actions in any forum, overturning the National Labor Relations Board’s controversial 2012 ruling. D.R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013). The Fifth Circuit has given the Board until March 20, 2014, to file a petition for re-hearing of the 2-1 panel decision or seek U.S. Supreme Court directly.
The “Mutual Arbitration Agreement” in this case required employees (who were not represented by a union) to agree to waive their right to resort to a judicial forum and to resolve employment-related disputes only through individual arbitration. It further limited the arbitrator’s authority to decide only indi- vidual claims, preventing the arbitrator from “fashion[ing] a proceeding as a class or collective action or award[ing] relief to a group of employees in one arbitration proceeding.” In other words, employees could not pursue class or collective litigation of covered claims in any forum. The Agreement also did not identify unfair labor practice (ULP) complaints as an exception to arbitration.
The Board ruled the Agreement violated the NLRA because it required workers to waive their right to join together to challenge the employer’s decisions. It concluded that the NLRA confers on employees the right to pursue discrimination, wage and hour and other workplace-related claims in a joint, class, or collective fashion as “protected concerted activity.” The Board also concluded the Agreement violated the NLRA because its language barring employees from starting “a lawsuit or other civil proceedings” could lead employees reasonably to believe they also were prohibited from filing ULP charges with the Board.
The Court rejected the Board’s conclusion that invalidating class action waivers would not conflict with the Federal Arbitration Act’s requirement that arbitration agreements be enforced “according to their terms,” unless Congress specified otherwise. It found the Board failed to give “proper weight” to the FAA. The Fifth Circuit, however, agreed with the Board that the Agreement was impermissibly broad because employees could reasonably believe it barred them from filing ULP charges. It thus held the employer must clarify the Agreement so it does not appear to prohibit such a right.
While it is not yet certain if the Fifth Circuit’s panel decision will stand, the number of other courts rejecting the Board’s position continues to increase (e.g., Richards v. Ernst & Young, LLP, 2013 U.S. App. LEXIS 24562 (9th Cir. Dec. 9, 2013); Zabelny v. CashCall, Inc., 2014 U.S. Dist. LEXIS 2626 (D. Nev. Jan. 7, 2014); Sylvester v. Wintrust Fin. Corp., 2013 U.S. Dist. LEXIS 140381 (N.D. Ill. Sept. 30, 2013)). Employers should review their arbitration agreements with counsel to ensure they clearly do not impinge on an employee’s right to file ULP charges, make any necessary changes in light of this decision, and continue to monitor the D.R. Horton litigation.