Welcome to The Labor Leader – a weekly recap of the most valuable content on labor relations from an employer’s perspective. The National Labor Relations Act covers both union and non-union private-sector employers. This newsletter is a digest of my views on labor laws, the National Labor Relations Board, and unions.
Email about Mark of the Beast and Covid Vaccine not Protected Activity
The NLRB often flip-flops on whether employers can limit the use of company email for only Company purposes, only.
Boards serving under Republican Presidents of the United States give employers more leeway in implementing workplace policies that restrict certain types of communication via work email. Boards under Democrat Presidents do the opposite.
The NLRB Division of Advice – a part of the NLRB that does not typically change when the political party of the President changes, recently ruled that a Seattle hospital lawfully disciplined a worker for emailing coworkers a letter that contained apocalyptic prophecies, Bible verses, and a warning about a “’Mark of the Beast’ Covid-19 vaccine” that would doom a recipient’s soul.
This letter was not related to the workplace. It was purely personal. Personal emails with no real connection to the workplace are not generally protected by the National Labor Relations Act.
There may be some other protections for this email outside of the NLRA that permits this type of email, i.e. Title VII of Civil Rights Act (i.e., could stifling this letter or disciplining the employee who sent it be considered religious discrimination).
For now, under the NLRA, because a corporate email system is the employer’s property, an employer may ban all non-business email communications, including communications protected by Section 7 unless email is the only reasonable means for employees to communicate with each other. See, Caesars Entertainment.
This law will probably change within the next two years while the Democrats hold a majority of the seats on the NLRB. I expect the Board to return to the holding in Purple Communications which said that workplace rules prohibiting employee email use for union activity were presumptively invalid under Section 7 of the NLRA.
Because Section 7 applies to all employers, not just unionized ones, these laws affect almost every U.S. employer that provides a corporate email system.
NLRB Orders Reinstatement and 4 Years Back Pay to a Job that Doesn’t Exist
The collective bargaining agreement between the Pittsburgh Post-Gazette and the union representing some of its employees guaranteed those employees five (5) shifts each payroll week until the agreement ended. Pretty straight forward, right?
If it was, I wouldn’t be writing about it.
While the parties negotiated a successor agreement, the CBA expired. Fifteen months later the Post-Gazette made the business decision to transition to an all-digital format. This this reduced the number of print days from seven (7) to five (5) and resulted in the lay-off of two pressmen.
The union filed an unfair labor practice charge alleging that the layoff violated the CBA’s “five shifts per week” guarantee. Per the union, the Post-Gazette should have maintained the status quo until either impasse was reached or the parties executed a new CBA.
In other words, the union’s position was that the Post-Gazette could not modernize, make process improvements, become more efficient, or streamline its production until it negotiated a new CBA that did not guarantee five shifts per week for every employee represented by the union.
The ULP took four years to work its way to the NLRB.
The Board ruled that the contract language was not sufficiently clear and unmistakable that the union waived its statutory right to the maintenance of the status quo, and that the five-shift guarantee should have remained in place.
Notably – the NLRB held that the two laid off pressmen should be reinstated, with four years of backpay, even though there was no work for them to do.
This case may not be over, yet. In reaching this conclusion, the current NLRB rejected the decision of the previous Republican Board in MV Transportation. It also did not follow the Eighth Circuit’s refusal to enforce a similar case in Finely Hospital. This case may be ripe for appeal.
This case is also a good reminder that sometimes the NLRB rules as it wishes without regard to case precedent. Had this case not taken four years to ultimately reach the Biden NLRB, the Trump Board (with a majority of Republican Board Members) probably would have followed MV Transportation’s holding and dismissed the charge.
NLRB Poised to Implement E-Voting for Union Elections
Last week I posted about the NLRB ordering union-friendly, mail-ballot elections at an increased rate despite in-person voting being the preferred method of elections by previous NLRBs for decades.
The current NLRB may be poised to take it one step further and replace mail-ballot elections with an e-voting system.
President Obama’s NLRB, in 2010, sought solutions regarding “capacity, availability, [and] methodology” for implementing an e-voting system. Nothing happened beyond that inquiry, though. President Trump’s NLRB did not pursue e-voting. President Biden’s NLRB seems ready to pick up where Obama’s left off.
As a reminder, unions covet mail-ballot elections. They win about 20% more mail-ballot elections than in-person elections.
Covid-19 helped move the e-voting ball toward the goal line. The NLRB has long-held that in-person voting is the preferred method for determining whether employees want to be represented by a union. In-person voting became infeasible during the early stages of Covid, and a shift to mail-ballot elections became normal.
The next logical step for the Biden NLRB – which has on a near daily basis sought to make union organizing easier – is to shift to purely electronic voting and dispense mailing ballots to voters’ homes and harvesting employees’ votes.
Biden’s NLRB can easily do this through rulemaking. Once done, this should give unions an ever bigger advantage to organizing employees.
If unions win mail-ballot elections 20% more times than they win in-person elections, I am curious to see the impact e-voting will have on union organizing.
Local Governments Help Unions Organize Cannabis Industry Employees
Unions have targeted the cannabis industry and rightfully so. Unions are businesses. They see the growing number of employees working from the fields to the dispensaries as perfect candidates to join unions and pay union dues.
Several states have embraced cannabis. Some states even make it easier for unions to organize cannabis workers.
The Connecticut legislation that legalized cannabis also strongly encouraged any cannabis-related employer to permit unionization of its workforce. Similar laws promoting the recognition of unions and collective bargaining in the cannabis industry have been passed in New York, New Jersey, California, and other states.
Connecticut’s law requires cannabis establishments – as a condition of becoming licensed to do business – to enter into a Labor Peace Agreement (LPA) with a union.
I have dealt with labor peace agreements in several industries all across the United States. LPAs do the union organizing for unions.
The Connecticut law defines an LPA as:
An agreement between a cannabis establishment and a bona fide labor organization under Section 21a-421d pursuant to which the owners and management of the cannabis establishment agree not to lock out employees and that prohibits the bona fide labor organization from engaging in picketing, work stoppages, or boycotts against the cannabis establishment.
The law also requires that:
Any such labor peace agreement shall contain a clause that the parties agree that final and binding arbitration by a neutral arbitrator will be the exclusive remedy for any violation of such agreement.
That’s it: the LPA prohibits work stoppages, lock-outs, and requires binding arbitration for disputes between the company and the union.
In reality, unions that I have dealt with view the no work stoppage, no lockout, and arbitration as the minimum to what should be in an LPA. Unions always require much, much, much more.
And why shouldn’t they? As written the law requires an LPA before a company can get a license to do business. Unions capitalize on this to get what they want out of the LPA before agreeing to it, and before the company can commence doing business.
One major demand in most LPAs is card check. Card check is where an employer must recognize a union as the representative of its employees without the employees voting for union representation. A simple signature on a piece of paper indicating an employee wants to be in the union is sufficient – regardless of whether the employee knew what he was signing, knew the legal ramifications of her signature, thought they were signing up for the union’s newsletter, or signed their names after a night of pizza and beer provided by the union.
Once a majority of names appear on the paper, the company is union and must commence negotiating a collective bargaining agreement. Another element of the LPA is now triggered: the clause requiring the agreement to a union contract within 90 days or submit proposals to an arbitrator.
The National Labor Relations Act does not limit the time it takes to negotiate a union contract. First contracts usually take about a year to negotiate. After a year of good-faith bargaining, employees can decertify the union. Labor Peace Agreements that require a contract within 90 days force employers to agree to terms they otherwise would not agree to and prevent employees from decertifying the union.
As a side note – Cannabis-related employers should be mindful of Section 280E of the Internal Revenue Code. This Section it titled “Expenditures in Connection with the Sale of Illegal Drugs.” It reads in total:
No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.
This law prohibits business deductions for the expenses of selling marijuana. Some deductions that other employers can make for things like employee salaries, benefits, legal fees, etc. are not allowed in the cannabis industry.
Margins in the cannabis industry are razor-thin because of high taxes and increased competition. Unionization increases employee costs. These cost increases, which are not deductible, could drive profitable companies into the red and force struggling companies to close.
With unions staunchly focused on organizing employees in the cannabis industry, and the proliferation of Labor Peace Agreements doing the organizing for the unions, cannabis-related employers should take proactive steps now to be better positioned to defend themselves against this one-two punch.
Prepare for Micro-Unit Union Organizing
Unions are now able to pick just a small group of employees to join their union. Since it is easier to convince 3 out of 5 employees to join a union instead of 30 out of 50 or 300 out of 500 employees, this change should result in skyrocketing petitions for union elections.
The easiest way to illustrate this is to consider a grocery store. The store has several departments, i.e. produce, cashier, deli, stockers, floral, etc. The law used to favor wall-to-wall bargaining units – all employees at the grocery store were in the same union. Under the NLRB’s latest change of law, each of those departments can join separate unions.
Previously, if the floral department wanted a union, it needed to convince employees in the other departments to vote for union representation. Now just the few employees in the floral department can join a union on their own.
Think of your own workplace as you read the rest of this. The many different departments and job classifications identified in your handbook. Employees who work in distinct environments or locations within the same facility. Employees who work on the same machines or use the same tools or equipment. Each of these are ripe for joining their own micro bargaining units.
Unions file petitions for elections for the smallest group possible (just the few floral employees). This gives the union the biggest chance of winning. Unions then hope to expand their representation into other areas of the workforce.
Employers often want to expand the group of voters to include others who should logically also be included with the union’s petitioned-for group. Expanding the group oftentimes aligns with the structure of the operation. It could also substantially change the number of votes a union needs to win the election.
In American Steel, 372 NLRB No. 23 (Dec. 2022), the National Labor Relations Board held that employers seeking to enlarge the scope of a petitioned-for bargaining unit must demonstrate that excluded employees share an “overwhelming” community of interest with the group the union seeks to represent. This places a significant burden on employers that seek to demonstrate that additional employees must be included to make the unit appropriate for bargaining. I anticipate the proliferation of “micro units” because of this change.
Under American Steel, the Board will approve a petitioned-for subset of a classification of employees if the petitioned-for unit:
- shares a community of interest;
- is readily identifiable as a group based on job classifications, departments, functions, work locations, skills, or similar factors; and
- is sufficiently distinct.
Employers that contest the “sufficiently distinct” element and argue that the smallest appropriate unit should include additional employees will need to show that there is an “overwhelming community of interest” between the petitioned-for unit and the excluded employees. This is a heightened showing that requires the interests of the petitioned-for and excluded employees to overlap almost completely to mandate inclusion in the proposed bargaining unit.
Employers will have added time, expense, and the disruption of responding to organizing campaigns in discrete micro-units of pro-union employees. Employers may have to negotiate multiple union contracts for different groups of employees in the same facility. While multiple collective bargaining agreements covering hundreds of union members is common for employers with thousands of employees; it is virtually unheard of for small employers like grocery stores.
Employers should asses their risk of a successful union campaign and consider operational and structural changes that could minimize susceptibility to micro-unit organizing. This should focus on enhancing the likelihood of meeting the “overwhelming community of interest” test. These changes may include:
- Flattening the hierarchy of the department or operation
- Expanding the supervisory span of control to a larger number of departments or job classifications;
- Combining departments or job classifications;
- Cross-training employees in multiple classifications and jobs;
- Rotating employees among classifications or jobs; and
- Increasing the degree of interchange among departments and classifications.
Not all of these suggestions are feasible for every company. Creative, pro-active planning and implementing changes focused on meeting the “overwhelming community of interest” test is the best (and perhaps only) way to defend against several small unions at your company.
Union Pension Withdrawal Liability Attaches to Company without the Union
Every company I represent that has a union pension plan is concerned about withdrawal liability.
In a nutshell, withdrawal liability occurs when an employer exits a pension plan and must pay its “proportionate share” of the underfunded plan.
Exiting generally occurs when: 1) employers negotiate out of the plan, 2) a company is sold and the new employer does not elect to be in the plan, or 3) when employees decertify the union.
Depending on the number of employees and years spent paying into the plan, withdrawal liability could be a massive, crippling amount.
Withdrawal liability can attach to personal assets of the company’s owner regardless of the corporate structure or taxing entities. It can also attach – as we see below – to companies other than the one paying into the pension plan.
The Seventh Circuit recently ruled that a Teamsters pension fund (Teamsters have the most notoriously underfunded pension plan) could seek $312,252 in withdrawal liability and related amounts from the owners of an Illinois trucking company that operated rent-free on the owner’s property.
Anthony and Pat Pitello could be held personally liable for the pension obligation of Gradei’s Express Co. simply because the Pitellos allowed Gradei’s to operate rent-free on land the Pitellos owned.
This was enough of a connection to find the Pitellos were engaged in a trade or business under common control with the Gradei’s for purposes of pension liability.
“Land owned by a firm’s equity investors and used by that firm in its business is itself a form of equity investment in the firm. Logically, that means that the land should be treated as part of the business,” the court said.
I try really hard to find creative solutions for my clients. My success is dependent on finding ways for companies to achieve their objectives. When it comes to union pension plans and withdrawal liability, there is rarely any room for creativity.
Business owners who have multiple businesses with different FEINs and who are used to having one of their businesses do business with another one of their businesses must remember to do business at an arms length.
Labor law – more so than other areas of the law – requires verifiable arms-length business transactions. I know this often defeats the purpose of the different FEINs. While there are some creative ways around this, they are heavily fact-specific and cannot be applied to all businesses.
Matt Austin is a nationwide management labor lawyer. Labor laws govern virtually all private-sector employees regardless of union membership. Proactive management of labor relations is critical to maintaining flexibility and increasing profit.
Matt also runs Austin Legal’s HR Legal Compliance Program that, for a small monthly fee, ensures HR decisions are protected by the attorney-client privilege.
Matt’s experience is deeply rooted in helping manage many aspects of his clients’ businesses. To effectively manage labor relations, he must also manage budgets, forecasts, new growth areas, and projected market corrections. High emotional intelligence is also critical to negotiating union contracts and to properly advise HR Legal Compliance members through the nuances of the law, its application to their companies, and how it will be received by employees.
You can reach Matt via email at Matt@MattAustinLaborLaw.com.