NLRB Attacks Another Arbitration Agreement

Employees of UnitedHealth Group, Inc. tried to file a wage and hour class action against the employer but were forced to, instead, arbitrate their claims individually pursuant to the arbitration agreement they signed at the time they were hired. After losing their plea to file a class action, the employees sought – and received – help from the National Labor Relations Board.

According to the NLRB Administrative Law Judge who heard the case, “I am going to conclude that by maintaining its arbitration policy and by enforcing arbitration agreements through court proceedings, UnitedHealth has interfered with the rights of employees to engage in collective actions for their mutual aid and protection.”

While this ruling is not shocking considering that the Board steadfastly rejects all arbitration agreements prohibiting class actions despite federal court law to the contrary, the Judge’s opinion went to a shocking new level. He recommended (in addition to the rescission of the arbitration agreements) that UnitedHealth reimburse the employees for their legal costs in fighting the company’s motions to dismiss or compel arbitration in federal court.

Faucet Company Stopwatches Bathroom Breaks

After losing 120 production hours in May because of unscheduled bathroom breaks, WaterSaver Faucet Co. unilaterally implemented a policy prohibiting employees from taking restroom breaks lasting more than 6 minutes. While draconian on its face, employees are able to use the washroom during their 10-minute morning break, 30-minute lunch break, 15-minute afternoon break, and 5-minute clean-up period at the end of their shift. Keycard swipes monitor when employees enter and exit the restroom and workers spending more than 6 minutes inside the facilities receive a verbal or written warning. Nineteen of the 90 production employees have thus far been disciplined for taking excessive bathroom breaks.

The employees’ union has filed an unfair labor practice charge over this rule alleging that the company unilaterally implemented the policy, refused to bargain over the policy, and excessively used discipline for purported noncompliance with the policy, all in violation of Section 8(a)(1) and (5) of the National Labor Relations Act.

This type of a workplace policy is generally a mandatory subject of bargaining and the company may well have violated the Act by unilaterally implementing and disciplining employees for violating it. However, the employer’s Management Rights Clause in the collective bargaining agreement may be broad enough to allow for this type of activity. Without seeing the specific language of that clause, I’ll have to sit and wait for the NLRB’s ruling…I better get some reading material…

Youngstown Hospital Modifying its Nurse Staffing Model to the Chagrin of the Nurses’ Union

ValleyCare Trumbull Memorial Hospital notified the Service Employees International Union District 1199, covering nurses who work at the Hospital, of its intent to transition to a nurse staffing model that uses only registered nurses (RN) and nursing assistants. The Hospital will lay off over 40 licensed practical nurses (LPN).

LPNs have typically received an associate degree while RNs have earned a bachelor’s degree. According to the Ohio Board of Nursing, RNs can have additional duties that LPNs cannot. Based on information from the U.S. Department of Health and Human Services, the number of RNs is growing faster than LPNs; Ohio has nearly 100,000 more RNs than LPNs working. LPNs appear to be a dying breed.

The SEIU alleges that the Hospital’s elimination of LPNs from its workforce would be a violation of the current collective bargaining agreement that remains in effect through 2016. Generally, employers retain the right to staff and manage the workforce however, they want through the Management Rights Clause of the union contract. How the Hospital’s decision to join the common trend of eliminating LPNs from its workforce violates the contract, I do not know, but it made for a good sound bite when I heard the union leader talking to the local news about the decision.

Grocery Store Maintained an Unlawful “Data Protection” Rule

The Fresh & Easy grocery chain committed an unfair labor practice when it instructed workers to, “Keep customer and employee information secure. Information must be used fairly, lawfully, and only for the purpose for which it was obtained.” The NLRB said employees would reasonably understand the provision as a ban on discussing or disclosing employee wages and employment conditions. Merely maintaining the provision – regardless whether anyone was ever disciplined for violating it – interfered with the employees’ rights.

NLRB Member Harry Johnson, who represented management before joining the Board, dissented from the two union lawyers who ruled that the policy was unlawful. According to Member Johnson, employees who read the Fresh & Easy rule in context would understand the company was not trying to preclude them from talking about wages and working conditions.

NLRB Building a Pathway to Overturn Moore Dry Dock

According to Moore Dry Dock, a case from 1950, unions are required to provide assurances to secondary employers at a “common situs” that might be affected by picketing against a primary employer that their activity will not target the secondary companies. This law, which has been around for over 60 years, will likely soon be overturned.

IBEW Local 357 asked the Southern Nevada Building and Construction Trades Council for a strike sanction against Convention Technical Services (CTS) for its alleged failure to pay “area standard wages and benefits.” CTS furnishes portable electrical services to the Las Vegas Convention Center, which includes common-situs exhibition halls where employees dispatched by the local and other labor organizations perform work.

In its strike sanction request letter to the trades council, Local 357 intentionally did not inform anyone that it would comply with Moore Dry Dock standards if it established a picket line at the Las Vegas Convention Center. CTS filed an unfair labor practice charge over the union’s intentional omission. After a hearing on the matter, the ALJ observed the “purpose of the foregoing sequence of events was to put” the Moore Dry Dock issue “directly before the Board in view of the fact that both the [NLRB] General Counsel and the union believe that current Board law is no longer viable.”

Although the ALJ found the NLRB General Counsel’s position to break unions from the Moore Dry Dock handcuffs persuasive, he said he must nevertheless conclude that Local 357 violated the Act by not providing the required assurances to secondary employers, like the Convention Center, when it sought a strike sanction against CTS, the primary employer. Now, the decision will be appealed to the NLRB who will undoubtedly change the law in favor of unions.

Everyone’s Doing It: NLRB Asserts Jurisdiction Over Pot Processors

Several states and now the NLRB are trying to reap the rewards of the growing legalized marijuana trend across the United States – an industry that is currently worth about $1.5 billion and expected to grow to $6 billion by 2018.

Marijuana remains illegal under federal law despite some states legalizing the growth, cultivation, possession, and/or consumption of the drug. Yet, even after admitting that pot dispensaries are operating in violation of the federal Controlled Substances Act, the NLRB concluded that marijuana processors working for companies that grow and cultivate the herb are employees under the National Labor Relations Act instead of agricultural laborers who fall outside the Act’s protection.

The NLRB’s Division of Advice, which provides guidance to the Board’s Regional Offices, provided input regarding the Wellness Connection of Maine, which processes medical marijuana products at an indoor facility where it employs three production assistants and eight processing assistants. The company also operates four retail dispensaries in the state. Important to whether the workers are able to unionize (a goal of the UFCW union that has created a “Medical Cannabis and Hemp” Division) is whether they are statutory employees or agricultural laborers.

The Act excludes “agricultural laborer” from its definition of a statutory employee. The Board distinguishes between primary agricultural tasks such as cultivation and tilling, which are performed by agricultural laborers who are not covered by the NLRA, and secondary functions that are covered by the Act because they are not established parts of agriculture. Wellness Connection’s processing assistants work by hand to use machines to trim, vacuum, weigh, package, and label marijuana in preparation for sale. They also mix and sift plant matter to create tinctures and marijuana-based foods and beverages. According to the NLRB’s Division of Advice, “the processing operation that transforms the cannabis plants from their raw and natural state is more akin to manufacturing than agriculture.”

Ormet Allowed to Sell Bankrupt Ohio Facility Free and Clear of Unfunded Pension Obligations

Ormet, a Delaware corporation, recently went bankrupt and shuttered its facilities in Ohio and Louisiana. As part of the bankruptcy proceedings, Ormet agreed to sell its Ohio plant for $25 million. The Steelworkers Pension Trust, the union representing Ormet’s employees, tried to delay the closing on the theory that the deal approved by the judge improperly extinguished the Trust’s $5.5 million pension claim and that the Section 363 sale violated the Employee Retirement Income Security Act or the Multiemployer Pension Plan Amendments Act. The Trust lost.

According to the denial opinion, no cases from anywhere in the country deny a debtor the ability to sell assets free and clear of liability under Section 363 of the Bankruptcy Code. This is a good lesson for companies contemplating shutting down or going bankrupt. By filing bankruptcy, Ormet saved over $5 million it would have had to pay if it just shut down.

NLRB’s Recent Ruling Against Macy’s Stinks

In 2011 there was a case called Specialty Healthcare that permitted micro bargaining units in the healthcare industry. Micro bargaining units exist when just a few people in a department, instead of all people in the company, are allowed to be in a union. In a grocery store, this means the frozen food employees can be in one union, the produce boys in another, the cashiers in a third, etc. Specialty Healthcare micro-units have recently crept into the retail industry, in the Bergdorf Goodman and Macy’s cases.

In Bergdorf Goodman, only the full-time and regular part-time women’s shoes associates in a second-floor designer shoes department and a fifth-floor contemporary shoes department sought to unionize. According to the Board, the designer shoe department made up their whole department, but the contemporary shoe employees were carved out from a department called contemporary sportswear. This carve out did not comport withSpecialty Healthcare’s appropriate unit requirements. Without the carve out it is likely that just the designer shoe department clerks maintained the right community of interest to satisfy the micro-unit test. Specialty Healthcare’s “community of interest” test looks almost exclusively at how the employer has chosen to structure its workplace. The Bergdorf decision makes it clear that management can set up operations in ways that avoid unions organizing departmental units. While there is no one-size-fits-all solution, companies need to look at their operations and organizational structures and be aware of the potential consequences that come with different approaches.

For a contrary decision, and one that stinks, just the cosmetic and fragrance department of a Macy’s store sought to unionize. These workers accounted for 41 of 150 store workers. Historically, all 150 employees would have constituted an appropriate bargaining unit, but under Specialty Healthcare, these 41 are appropriate and admittedly larger than a true micro-unit. The Board determined that just the cosmetic and fragrance employees (a) had the same first level supervisor (even though the second level manager and store supervisor exercised control over everyone); (b) worked in connected defined work areas (though on different floors and adjacent to other employees); (c) had limited interaction with other employees (despite having daily all-employee meetings); and (d) they were paid on commission.

Challenging narrowly defined micro-units appears to be almost impossible. Companies that have employees in distinct fields should be diligent to eliminate the types of unique, department-specific management and sales practices that sways the NLRB to permit a small group to organize within the larger workforce. Further, companies should place a premium on how businesses are structured administratively and how employees are integrated in their work functions.