Unionization Rate Increases, Decreases, and Stays the Same

According to the United States Bureau of Labor Statistics, the percent of American workers belonging to labor unions in 2013 was the same as in 2012 – 11.3%. Pretty amazing that the number remained steady considering all the people in the workforce. By peeling back the numbers, we get a better look at what is happening in labor relations. 

Today there are about 14.5 million union workers, a number that is down from 17.7 million in 1983 when this statistic was first reported. So, about 3,000,000 less workers belong to a union now than 30 years ago – a sharp 17% decline. While readers of this blog are encouraged by an overall shrinking union force (well, readers who are not part of organized labor trolling this site), keep in mind that unionization did not shrink from last year, it remained the same. And there is at least one sector that has seen an increase in union membership.

The percent of construction workers who were members of unions increased from 13.2 to 14.1 percent. This represents 95,000 warm bodies joining construction unions. The cost of building a new building just went up.

As usual, public-sector workers were more likely to be in a union. The unionization rate for them was 35.3% last year, more than 5 times higher than the paltry sub-7% unionization of private sector workers. And Thomas Perez, U.S. Secretary of Labor, is not happy with such a low number.

Secretary Perez issued the following advertisement statement:

Today the Bureau of Labor Statistics announced that, in 2013, the unionization rate of employed wage and salary workers was 11.3 percent. Among private-sector employees, the rate was 6.7 percent.

The data also show [sic] that among full-time wage and salary workers, union members have a higher median weekly earning than nonunion workers. The median weekly earnings of union members were $950, compared to $750 for nonunion workers.

Along with higher wages, other data show that union members have greater access to employment-based benefits, such as health insurance, a retirement savings plan, and sick and vacation leave.

Workers’ ability to form unions and engage in collective bargaining has been a cornerstone of a strong middle class. The decline in union membership over the last few decades has contributed to more working families struggling to get by. When workers have a seat at the table, they are better able to bargain for their fair share of the value they helped create; and that leads to greater economic security and economic mobility for everyone. As our economy continues to recover and we work to create good jobs, we need to ensure workers can lift their voices to raise wages, reduce inequality and help more people climb ladders of opportunity.

Wow, there is so much fodder for commentary, but in the interest of keeping this blog post at a manageable length, I will just hit the highlights.

  • Median – to arrive at a median number, salaries are lined up in descending order and the middle number is the median (or the average of the middle two numbers if the list contains an even number of salaries). This number does account for different industries, full time versus part time occupations, or geographic location (with New York state having the highest percent of union workers, a high cost of living, and above average wages to begin with, geographic location is important). Using the median is more than comparing apples to oranges; it’s like comparing apples to the whole fruit market.
  • Health Care – doesn’t ObamaCare make union health care obsolete, and haven’t most unions jumped off the ObamaCare bandwagon even denouncing it in some respects?
  • Retirement Savings – do I need to remind Secretary Perez how most union pension plans are critically underfunded and retiree benefits are being reduced, health insurance costs and co-pays are going up despite promises to the contrary, and workers are forced to work longer to qualify for those reduced benefits?
  • Fair Share – are we still talking about this?

We already knew that President Obama and the National Labor Relations Board were doing all they could to increase unionization among private sector companies. Now that the Secretary of Labor – who had an extremely pro-union agenda before becoming Secretary last year – is also publically advocating for higher unionization rates, companies are in for a horribly rough next few years.

Helping M&A Lawyers Through Union Due Diligence

A fair amount of work is referred to me from business lawyers who need help navigating the complex world of traditional labor law when structuring a merger or acquisition of a unionized company.

A few recent examples of how this happens this include: 

  • A real estate development company that purchased a building where the janitors, elevator operators, and HVAC employees were unionized, but the developer wanted to outsource those jobs and eliminate the unions.
  • A  manufacturing client purchased a company whose employees were represented by a union and wanted to ensure that all of the employees continued working for the company.
  • A franchisee client that purchased several facilities from another franchisee and wanted to eliminate the union at the only unionized facility.

In each of these examples, the purchasing companies faced liability for back wages to employees and other penalties under the National Labor Relations Act if they did not comply with often counter-intuitive labor laws. If the sellers did not comply with the law, the purchasers could easily have become successor employers with successor liability to the employees.

As a fellow labor lawyer puts it: A company usually has a management right to sell a business. However, there are important exceptions, especially when the company has the intent to end the union’s representation of the employees. Even if the seller has the statutory right not to bargain about the decision to sell, the company has the obligation to give notice of the sale to the union and also give the union an opportunity to bargain about the effects of the sale. Further, if requested by the union, the seller may have an obligation to give the union information and documents about the sale. These statutory rights may be altered by a union contract.

Purchasers, on the other hand, must determine their goal. They can acquire a company:

  1. Without an obligation to a union;
  2. With an obligation to bargain with the union but provide different wages, benefits and working conditions; or
  3. With unchanged wages, benefits, and working conditions and a continuing relationship with the union.

Each of these goals requires different actions by the purchasers before and during the acquisition of a unionized company.

That fellow labor lawyer from above says it best:

A purchaser’s liability to the union and employees depends whether the purchaser is a “perfectly clear” or “not a perfectly clear” successor to the unionized company. The smoothest transition occurs when the purchaser adopts the union contract. It is perfectly clear that the purchaser is the successor. In addition, it is perfectly clear when the purchaser retains a majority of the employees; workers perform the same or similar job duties; manufactures the same or similar products; and has the same or similar vendors and customers. However, the purchaser may not be a perfectly clear successor if the company, prior to the closing, sets new wages, benefits, and working conditions, and interviews but does not hire a majority of the seller’s employees. A purchaser cannot conduct interviews with the intent to not hire a majority of the seller’s employees. In this situation, the purchaser may not have the legal obligation to recognize and bargain with the union and to comply with the seller’s contract with the union. In either case, the purchaser needs to perform due diligence to determine if a legal obligation to recognize and bargain with a union exists and if a contract exists. Most importantly, the purchaser has to take those actions in compliance with the rules set forth in numerous cases decided by the National Labor Relations Board addressing when obligations continue and do not continue.

As with other due diligence, companies protect themselves from liability the earlier they engage and seek the advice of counsel.

Matt Austin is a Columbus, Ohio lawyer who owns Austin Legal, LLC, a boutique law firm with offices in central and northeast Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. Austin Legal’s Concierge Legal Services program is relied upon by companies to remain compliant and competitive. If you have employees, you need Concierge Legal Services. You can call Matt at (614) 285-5342 or email him at Austin@LaborEmploymentOSHA.com.

Employer Liability for Distracted Workers and Drivers is Plentiful

Last week I published one of my most popular blog posts: Remote Text Sender Now Liable for Distracted Driver’s Crash. Most people who read that post probably thought about employment laws – since that seems to be the thought process of most of my readers. But distracted driving also implicates other areas of law, too. 

To date, more than 40 states, the District of Columbia, and Puerto Rico have passed laws banning all drivers from texting. Twelve states, the District of Columbia, and Puerto Rico also ban hand-held cell phone use for all drivers, while 37 states have banned all cell phone use for novice drivers. And nearly all states – 48 to be exact – now include at least some form of distracted driving as a causal category on police accident investigation forms.

OSHA has threatened to cite employers for violating the “general duties clause” of the OSH Act for workplace related hazards arising out of distracted workers. After all, distractions related to texting are not limited to drivers on public roads. Consider the forklift driver who reads an email message while moving and stacking 5,000 pound pallets around your warehouse. Or the construction or utility worker who takes a call while positioned 40 feet up on a ladder or utility pole. Or the person in the booth who is supposed to be watching the pressure gauge or computer readouts but is busy ordering a pizza online. Did you consider the nurse who is having an ongoing text conversation while simultaneously charting or transcribing a doctor’s prescription and treatment orders into the computer?

Think of how workers at your company could injure themselves, co-workers, or the public because their attention was more focused on their phone than the task at hand. These types of day-to-day risks don’t receive the same level of media hype as distracted driving does, but they are more prevalent and could be just as dangerous.

An example of how many laws are involved in distracted driving that I recently read about involves a floral delivery driver. Assume the driver was distracted enough that he didn’t see the motorcyclist with enough time to stop and the two vehicles collided. The delivery driver is injured.

  • The florist immediately faces a workers compensation claim, loses a worker for a period of time, has to record a lost work time incident on the OSHA 300 logs, and has a wrecked van. The florist also suffers a dip in revenues and profit because deliveries are curtailed until both the driver and the van can be replaced.
  • The police investigate and determine that the accident occurred because the delivery driver was distracted by his attempt to use the phone to find the delivery location. The results of that investigation are detailed on the police report and distracted driving and cell phone use violations are issued to the driver.
  • OSHA learns of the incident through a police referral, conducts its own investigation, and finds that the florist knew – or maybe even implicitly encouraged – its drivers to use cell phones to effectuate deliveries, but provided no training or instructions on cell phone safety or the dangers while driving. OSHA issues a willful violation under the general-duty clause with a $70,000 proposed penalty.
  • In the meantime, the motorcyclist dies from the severity of his injures. An aggressive district attorney wanting to make a point about distracted driving and joining the growing trend of criminal enforcement elects to charge the florist’s driver with criminally negligent homicide and also charges the florist as an accessory.
  • The motorcyclist’s family hires a lawyer and sues the florist and the driver. The florist, however, has limited insurance that may not cover the eventual civil judgment and now the business and its assets are at risk.
  • Due to the circumstances, the florist’s liability and worker compensation insurers also either substantially raise premiums or decline to renew.

While this may seem extreme to some, it really isn’t. These facts could reasonably happen. Employers must recognize how far and wide the exposure can extend and that every workplace that fails to ban cell phone use and texting while working likely faces some level of risk.

At a minimum, employers should implement a formal distracted driving / distracted working policy prohibiting cell phone use, texting, messaging, and other distracting behaviors while working. Where the use of such technology is necessary, the employer should develop and train employees on acceptable and appropriate protocol for how and when the employee may utilize these technologies in a safe manner.

Matt Austin is a Columbus, Ohio lawyer who owns Austin Legal, LLC, a boutique law firm with offices in central and northeast Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. Austin Legal’s Concierge Legal Services program is relied upon by companies to remain compliant and competitive. If you have employees, you need Concierge Legal Services. You can call Matt at (614) 285-5342 or email him at Austin@LaborEmploymentOSHA.com.

Illinois Non-Competes Require Promise of Two Years of Employment

Last fall the Illinois Supreme Court decided to not review an appellate court’s decision holding that (absent other conditions) two years of employment is required for a restrictive covenant to be deemed supported by adequate consideration – even where the employee signed the restrictive covenant as a condition of his employment offer and even where the employee voluntarily resigned.

Illinois used to be like Ohio and many other states in consistently holding that an offer of employment by itself is sufficient consideration for a restrictive covenant. But now Illinois has this one outlier case that will likely trip up a lot of unsuspecting and well-intentioned employers

Illinois employers hoping to enforce restrictive covenants within two years of the signing date should provide some consideration in addition to the offer of employment or continued employment in the case of current employees. Alternatively, employers could also consider offering a mandatory notice period at the end of employment during which the employee remains on the payroll (and therefore owes a fiduciary duty of loyalty of the employer when paying her) but is not expected to perform any services.

Without a doubt, this rogue decision is not welcome news to companies with employees in Illinois.

Matt Austin is a Columbus, Ohio lawyer who owns Austin Legal, LLC, a boutique law firm with offices in central and northeast Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. Austin Legal’s Concierge Legal Services program is relied upon by companies to remain compliant and competitive. If you have employees, you need Concierge Legal Services. You can call Matt at (614) 285-5342 or email him at Austin@LaborEmploymentOSHA.com.

NLRB OK’s Aggressive Union Organizing Tactics

A union seeking to organize a construction employer’s drywall workers did not violate the National Labor Relations Act (NLRA) by following the employer’s supervisors and managers aggressively in cars – including running red lights to maintain pace – from the employer’s main office to various jobsites.

Section 8(b)(1)(A) of the NLRA prohibits unions from restraining or coercing a company’s employees. The National Labor Relations Board has previously found that throwing rocks, placing tacks in the roads assaulting supervisors, damaging vehicles, preventing people and vehicles from entering onto company property, threats from pickets, fights, and mass picketing activity directed to non-union employees violate Section 8(b)(1)(A) as restraining or coercing a company’s employees.

But the Board did not find lesser conduct to violate the Act though directed at employees when no one was injured, nothing was thrown, no one was prevented from going to work or leaving, and no vehicle was damaged.

The NLRB decided that the Union’s conduct did not rise to the requisite level of unlawful restraint or coercion because the union organizers did not verbally threaten the employer’s managers of supervisors or engage in any other intimidating conduct toward them. Call me a wimp, but being trailed and chased by a car that is running red lights to keep up with me could be intimidating.

Worth noting, the Board also said that no violation of the Act occurred because no employee covered by the Act was followed. Supervisors are not covered by the NLRA. If you’re thinking that this case gives union organizers the right to threaten, intimidate, stalk, scare, and shadow a company’s management team hoping to “convince” the team to not oppose unionization, you’re right. Welcome to life under the new NLRB.

Matt Austin is a Columbus, Ohio lawyer who owns Austin Legal, LLC, a boutique law firm with offices in central and northeast Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. Austin Legal’s Concierge Legal Services program is relied upon by companies to remain compliant and competitive. If you have employees, you need Concierge Legal Services. You can call Matt at (614) 285-5342 or email him at Austin@LaborEmploymentOSHA.com.

Why You Must Care that OSHA Now Targets Exit Routes

To be honest, I was a monkee for not thinking there was much to this target. But now, I’m a believer.

A few months ago, OSHA directed its inspectors to scrutinize whether employers provide and maintain adequate means of egress, i.e. unlocked, unobstructed, and clearly marked exit doors and exit routes. Those inspectors have taken this directive seriously, and many unsuspecting companies – my clients included – are being cited for not knowing OSHA’s regulations on exit doors and exit routes.

Here are the basic requirements for complying with OSHA’s rules on exit routes:

  1. Employers must determine how many exit routes are required in its building. As a general rule, workplaces must have a minimum of two exits, and possibly more based on the number of employees, the size of the building, and the arrangement of the workplace. One exit route may be allowed if the size of the building, its occupancy, or arrangement allows all employees to evacuate safely.
  2. Exit routes must be maintained unobstructed and the exit doors must remain unlocked from the inside. Specifically, exit routes must be free of stored materials, equipment, and especially explosive or highly flammable furnishings. Exit doors must be conspicuous, visible, free of decoration, and unlocked from the inside.
  3. Exit routes and doors must be properly labeled and maintained. Proper labels include signs that read “EXIT” or “TO EXIT” in plain legible letters, and maintained with adequate lighting. Doors or passages along the exit route that are not exits and do not lead to exits must be marked as “NOT AN EXIT” or labeled such that their non-exit purpose is obvious, i.e. store room, office, etc.

Retailers like grocery stores and convenience stores and hospitality companies like restaurants, hotels, and hospitals should pay particular attention to these rules. Emergency exits in those industries are for both employees and patrons. And even without OSHA’s recent directive, egress issues are one of the most frequently cited OSHA standard every year.

Although egress-related violations are typically only a few thousand dollars or less, OSHA now treats related workplaces within a corporate family as a single workplace for purposes of issuing Repeat violations. Repeat violations carry penalties of up to $70,000 per violation. If you have heard me speak on OSHA over the past year you know that OSHA has issued over 200% more Repeat and Willful citations costing employers millions more dollars in penalties and fines. Finding Repeat violations appears to be a goal of OSHA, and it appears OSHA is meeting its goal.

Matt Austin is a Columbus, Ohio lawyer who owns Austin Legal, LLC, a boutique law firm with offices in central and northeast Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. Austin Legal’s Concierge Legal Services program is relied upon by companies to remain compliant and competitive. If you have employees, you need Concierge Legal Services. You can call Matt at (614) 285-5342 or email him at Austin@LaborEmploymentOSHA.com.

Critical Immediate Steps to Help Stay Union Free in 2014

Micro-units and the National Labor Relations Board’s “overwhelming community of interest” standard are here to stay. Persuader rules and quickie ambush elections are right around the corner. An aggressive pro-union NLRB will make sure that 2014 is the year that unionization proliferates.

Companies wanting to remain union free must at least do the following immediately:

  1. Examine your organization to determine which job classifications or departments share skill levels so that they can be combined to make broad identifiable groupings.
  2. Flatten your management organizing so that more employees report to the same managers.
  3. Develop incentive plans or productivity measurements that cover the larger grouping.
  4. Cross-train employees in the larger group so that they can move easily across traditional job classifications and departments.
  5. Establish compensation grids and promotional opportunities that are common for all employees in the larger unit.

I know this is asking a lot and most companies think it is problematic and disruptive to the way they’ve always done business. But believe me, negotiating and administering a union contract and dealing with a union business agent is much more problematic and disruptive. 

Clients who have preemptively contacted me to help examine their company’s organization charts for union susceptibility are light years ahead of companies who think that their workers won’t go union. It only takes a few workers – literally 2 or 3 friends can get together – to get a union into your workplace.

Take proactive steps today to protect what you have spent years to build.

Matt Austin is a Columbus, Ohio lawyer who owns Austin Legal, LLC, a boutique law firm with offices in central and northeast Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. Austin Legal’s Concierge Legal Services program is relied upon by companies to remain compliant and competitive. If you have employees, you need Concierge Legal Services. You can call Matt at (614) 285-5342 or email him at Austin@LaborEmploymentOSHA.com.