Since our last summary, the Obama Board has taken significant steps to further outgoing Chairman Liebman’s1 stated goal of bringing the Board “back to life after a long period of dormancy.” Among other things, the Board has issued decisions (i) changing bargaining unit determination guidelines, (ii) protecting unions against challenges to their representative status, (iii) confirming off-duty third-party employees’ right to handbill, (iv) upholding the display of an inflatable rat on a neutral and secondary employer’s property, and (v) expanding the scope of an employer’s duty to supply information in bargaining.

Additionally, the Board has promulgated final rules requiring employers to post a notice of employees’ rights under the NLRA, and proposed comprehensive rules altering election procedures. On the prosecutorial front, the NLRB’s Acting General Counsel has enhanced the Board’s focus on social media, expressed a willingness to reconsider the rights of economic strikers, and issued a complaint accusing Boeing Company of retaliating against unionized workers in Washington by locating a new non-union facility in South Carolina. Given the volume of recent developments, our roundup will be addressed in two parts. Part one, that follows, addresses Board decisions and case law developments. Part two will address other issues involving the current Board and its effect on the labor law landscape.  

Board Makes it More Difficult to Challenge a Bargaining Unit that is too Small or that Excludes Certain Employees

When an election petition is filed, the NLRB is required to determine whether the petitioned-for unit is an appropriate one. This can have significant practical consequences for both election and bargaining purposes. The appropriate unit defines those employees who are entitled to vote and also who will be covered in collective bargaining if the union is selected as the representative of the employees. In late August, immediately before Chairman Liebman’s departure the Board issued its decision in Specialty Healthcare and Rehabilitation Center of Mobile2, altering the standards for making appropriate unit determinations in cases where an employer objects to a union’s proposed unit because it excludes certain employees or parts of an employer’s operations, i.e., as some have called it, micro vs. macro unit.

The specific issue in Specialty Healthcare was whether certified nurse aides in a nursing home must be grouped with other service and maintenance employees as provided for under the rules governing hospitals or instead could be separately grouped in a unit by themselves. The employer had argued that such a grouping of employees was too narrow a slice of its operations to be considered an appropriate unit. The Board rejected this contention, holding that the petitioned-for unit was appropriate because the employees shared a community of interest even though a unit including the service and maintenance employees would have also been appropriate.

Although Specialty Healthcare dealt with nursing homes its holding has consequences for all employers contesting a union’s petitioned-for unit as being too small or improperly excluding certain employees. The Board held that if the petitioned-for unit contains “employees readily identifiable as a group who share a community of interest” (which would likely include workers sharing a job title or classification), “the burden is on the party so contending to demonstrate that the excluded employees share an overwhelming community of interest with the included employees.” The party seeking a larger unit – i.e., the employer – will be able to rebut this presumption only by demonstrating an “overwhelming community of interest” among the excluded employees and the petitioned-for unit.  

The Board suggested that proof of “an overwhelming community of interest” would require showing that the excluded employees were essentially identical to those in the petitioned-for unit as revealed by their functional integration and shared terms and conditions of employment. According to the Board, a unit would not be appropriate, however, if it sought to group together an arbitrary segment of the work force – a fractured classification – or if it lacked a rational combination of employees. The Board also emphasized that deference must be given to the union’s requested unit, and that the burden to show that a unit should be broader is a very heavy one.  

Given the heavy burden placed on an objecting employer, Specialty Healthcare may aid unions in organizing efforts. It is often easier to secure authorization cards and the necessary number of votes in small or discrete groups within a larger workforce. As a result, some commentators have predicted that the Board’s decision could have both significant election and bargaining consequences where organizing is involved.

Successor and Recognition Bars Modified to Expand Protections to Union Representative Status

In two other late August decisions, the Board reversed prior precedent and made it more difficult to challenge a union’s representative status. The Board has stated that it intends to apply these two decisions retroactively.

The Board’s decision in Lamons Gasket,3 addressed whether an employer’s voluntary card check recognition of a union would bar an employee’s subsequent decertification petition. In Dana Corp.,4 a 2007 decision, the Bush Board held that a decertification petition could be filed up to 45 days after an employer’s voluntary recognition of a union if certain requirements were met. Lamons Gasket reversed this ruling and reverted to the “recognition bar” doctrine, which bars a representation or decertification petition for a “reasonable period of time” following voluntary recognition.The practical consequence of Lamons Gasket is thus to bar a petition filed by employees for a vote on unionization if an employer has already voluntarily recognized a union based on a card check.

The Board addressed a similar issue in UGL-UNICCO Service Company5. In this case, a successor employer had voluntarily recognized and began bargaining with the incumbent union (which had represented the employees for nearly 20 years) for a new collective bargaining agreement when a rival union filed a petition for an election. The Board ruled that the election petition should not be processed, reversing MV Transportation, a 2002 Bush Board decision,6 that had held that an incumbent union recognized by a successor enjoys only a rebuttable presumption of majority status. In reversing MV Transportation, the Board restored the “successor bar” doctrine, which protects an incumbent union from challenges to its majority status for a “reasonable period” for bargaining (as explained in more detail below). While the immediate practical effect of UGL-UNICCO was to bar the processing of a petition by a rival union, the restored successor bar would also apply to efforts by employees hired by a successor employer to oust the recognized union by filing a decertification petition. Under UGL-UNICCO, such a petition would be barred for a reasonable period notwithstanding the interest of the employees.  

In both Lamons Gasket and UGL-UNICCO, the Board defined the requisite reasonable time before a decertification petition or petition by a rival union could be filed. In the recognition bar setting, petitions would be prohibited for no less than six months and no more than one year following the parties’ first bargaining session. In the successor bar setting, the challenges to majority status are prohibited for up to six months if the employer adopts the existing contract, and up to one year if the successor recognizes the union, but establishes new terms and conditions of employment.7  

Board Clears the Way for Off-Duty Third Party Employees’ Handbilling

In late March 2011, the Board issued its long-awaited decision in New York, New York Hotel and Casino,8 broadening the access rights of a third party’s employees at the expense of property owners’ rights. While the Board’s decision acknowledges the possibility of lawful restrictions that are narrowly tailored to prevent significant interference with property use or where the exclusion is justified by another legitimate business reason, this minimal guidance does not reveal what such a restriction would look like. Accordingly, employers should continue to monitor the Board’s activity on this developing issue.  

Factual Background

The Ark Las Vegas Restaurant Corporation (“Ark”) contracted to provide food services to guests and customers of The New York New York Hotel & Casino (“NYNY”) in restaurants, a food court, and through banquet catering and room service. In 1997, Ark employees working on NYNY’s premises initiated a union-organizing campaign. On three occasions, off-duty Ark employees came on NYNY’s property to distribute union literature to casino and hotel patrons, requesting that patrons tell Ark’s managers that Ark should “recognize and negotiate a fair contract with its workers.” The employees distributed this literature at NYNY’s porte-cochere (the covered sidewalk and driveway just outside the main entrance), and directly in front of two Ark-operated restaurants in the hotel. On each occasion, NYNY requested that the Ark employees leave the property, and the employees refused. NYNY then called the Las Vegas police, who issued trespassing citations to the employees and escorted them off the property.

The NLRB Establishes Two Principles that Significantly Affect a Property Owners’ Ability to Prohibit its Contractors’ Employees from Handbilling on its Property.

The union filed unfair labor practice charges against NYNY, alleging that it violated the Act by prohibiting Ark’s employees from distributing handbills on its premises. NYNY denied that its conduct violated the NLRA, and argued that because it had no employment relationship with Ark’s employees, it could treat off-duty Ark employees as trespassers and prohibit them for accessing its property to handbill unless they had no other reasonable means to communicate their message. The union countered that because the Ark employees worked exclusively at NYNY, they should be treated the same NYNY’s own employees (who can engage in organizational activities in non-work areas during non-working time so long as they do not unduly disrupt NYNY’s business). After a long procedural history that dragged on for a decade, the NLRB finally issued its ruling, rejecting NYNY’s arguments, and concluding that NYNY violated the NLRA. In reaching its conclusion, the Board established two principles that will have a significant impact on a property owner’s ability to prevent its contractors’ employees from handbilling on its property.  

The first principle established by the Board is that an employer can violate the NLRA “not only with respect to its own employees but also by actions affecting employees who do not stand in such an immediate employer/employee relationship.” In other words, it doesn’t matter that Ark’s employees were not NYNY’s employees. Ark’s employees are protected employees under the NLRA, whose labor law rights can be violated by NYNY under certain circumstances.  

The second principle established by the Board is that a contractor’s off-duty employees are not akin to non-employee union organizers, who have limited access to an employer’s premises. Nevertheless, the Board also recognized that a contractor’s off-duty employees are not the same as employees of the property owner, and may not be entitled to all the rights available to a property owner’s employees. In its attempt to strike an appropriate balance between a property owner’s right to exclude unwanted persons from its property and a contractor’s employees’ rights under the NLRA, the Board created the following rule: “a property owner may lawfully exclude [its contractors’] employees only where the owner is able to demonstrate that their activity significantly interferes with his use of the property or where exclusion is justified by another legitimate business reason, including, but not limited to, the need to maintain production and discipline.” The Board noted that this rule is limited to a situation “where a property owner seeks to exclude, from nonworking areas open to the public, the off-duty employees of a contractor who are regularly employed on the property in work integral to the owner’s business, who seek to engage in organizational handbilling directed at potential customers of the employer and the property owner.” Because NYNY did not demonstrate that the handbilling significantly interfered with its use of the property or that exclusion was justified by some other legitimate business reason, the Board concluded that NYNY violated the NLRA.  

Practical Effects for Employers

The NYNY case is one of the most significant decisions handed down by the Obama Board. Unions are likely to use this case to encourage contractors’ employees to handbill in shopping malls, hotels, casinos, office buildings, and other places open to consumers. Although the NYNY case forecloses a property owner’s ability to have a blanket prohibition on the distribution of union literature by its contractors’ employees, it recognizes that a property owner could implement “reasonable, nondiscriminatory, narrowly-tailored restrictions on the access of contractors’ off-duty employees.” At this point, it is unclear what types of restrictions will survive scrutiny. These restrictions could potentially limit handbilling or solicitations by off-duty employees to certain areas or times. However, until additional cases are decided that apply the NYNY case, it is unclear how these types of restrictions will be treated by the Obama Board and the courts. Therefore, the only clear guidance for now is that property owners may not wholly exclude or prohibit its contractors’ off-duty employees from distributing organizational handbills on its property, unless it can show that such handbilling significantly interferes with its use of the property.  

Unions’ Use of Inflatable Rats Upheld by NLRB

Labor unions have long used large, inflatable rats to draw attention to labor protests and the use of non-union contractors. Nevertheless, when the protest site was the property of a neutral “secondary employer,” meaning it was not the true target of the protest, the unions’ ability to deploy these inflatable rats was subject to certain rules and restrictions. With its recent decision in Brandon Regional Medical Center, 356 NLRB No. 162 (May 26, 2011), the Board enlarged the boundaries of what it considers to be lawful conduct by a union engaged in a labor dispute at a neutral employer’s worksite.

In Brandon Regional, the union was engaged in a labor dispute with a sheet metal contractor, which used non-union, temporary workers for a project at the Brandon Regional Medical Center, and the staffing agency that provided the workers. In order to persuade the hospital to cease doing business with the contractor and the staffing agency, the union erected a 16-foot-high, 12-foot-wide inflatable rat with a sign identifying the staffing agency, passed out leaflets saying “There’s a rat at Brandon Regional Hospital,” and later staged a mock funeral in front of the hospital.  

A 3-1 Board majority held that the union did not violate the NLRA by: (1) displaying the large, inflatable rat at the hospital worksite of a secondary employer; and (2) stationing, at the vehicle entrance of the hospital, a union member who displayed leaflets and offered them to passing vehicles. Recalling its decision in Eliason & Knuth of Arizona, Inc., 355 NLRB No. 159 (2010), which found large stationary banners more like protected handbilling than picketing, the Board held that neither the rat nor the leaflets involved prohibited elements of coercion or intimidation, “as they were stationary and located at sufficient distances from the vehicle and building entrances to the hospital that visitors were not confronted by an actual or symbolic barrier as they arrived at, or departed from, the hospital.” Further, the Board held that the use of a rat balloon to publicize a labor protest is constitutionally-protected expression within the boundaries of the First Amendment.

In his dissent, Member Brian E. Hayes compared the rat to an invisible picket line and noted that the majority’s decision “further departs from the scope of the secondary coercion of neutral employers that Congress intended to prohibit through section 8(b)(4)(ii)(B).” With these recent decisions upholding the use of stationary banners and inflatable rats, the Board has chipped away at the secondary boycott protections designed to protect neutral employers from labor disputes they did not cause.  

Employer’s Duty to Provide Information in Bargaining Expanded

In A-1 Door and Building Solutions,9 a case that builds on the Board’s earlier decision in Stella D’Oro,10 the NLRB further refined an employer’s duty to supply information in bargaining when an employee claims an inability to compete, rather than a plea of poverty. This distinction is significant because a plea of poverty obligates an employer to supply information on request to a union, while an unwillingness to pay generally does not. In A-1 Door, the NLRB held that an employer could be required to supply information on request to the union where it asserted an inability to compete, just as it would be required to do so where it claimed an inability to pay. The Board made clear that the inability to pay defense was not applicable where the employer’s bargaining claim was that it was unable to compete. In this case the employer was ordered to provide copies of bid documents, including copies of bids not awarded, an explanation of reasons why bids were not awarded, cost comparisons with competitor bids information on non-bargaining unit employee compensation, and net profit information.

The Board’s acting General Counsel, in a guideline memorandum regarding the duty to disclose information, cited the A-1 Door decision as governing an employer’s obligation to supply information where the employer claims an inability to compete. Accordingly, employers engaged in bargaining should recognize the possibility of close scrutiny of their responses to union information requests. Employers in future bargaining should assess how they couch their claims or be prepared potentially to supply substantial amounts of financial information to back up claims that hinge on an inability to compete.  

Board Requests Briefing on Arbitration Waivers

In AT&T Mobility v. Concepcion,11 the Supreme Court upheld the use of class arbitration waivers under the Federal Arbitration Act (FAA) in consumer contracts, even when such waivers conflict with state law. The FAA applies to employment cases, and therefore the Supreme Court’s holding in AT&T Mobility would also be applicable to class action waivers in the employment setting. In D.R. Horton, Inc., the Board requested briefing on whether a similar waiver would violate the National Labor Relations Act, a move that may signal an intent to examine AT&T Mobility’s applicability in the labor context.

When the employees in D.R. Horton sought unpaid overtime through a class-wide arbitration, the employer invoked the class action waiver in the employees’ arbitration agreements. The employees then filed an unfair labor practice charge with the NLRB, alleging that the waiver violated the NLRA by preventing them from engaging in concerted activities. The administrative law judge concluded that the class action waivers in this case did not violate the NLRA, and the Board’s acting General Counsel filed exceptions to this decision. The Board’s resolution of this complaint will hinge on its balancing of the Federal Arbitration Act, which expresses the federal government’s preference for arbitration, and the National Labor Relations Act, which guarantees workers the right to act collectively and enforcement of arbitration agreements for their mutual aid or protection. This development has the potential to affect both union and non-union employers’ ability to require and enforce class arbitration waivers. Because the ultimate implications of D.R. Horton will depend on the Board’s decision, employers should continue to monitor this case.