President Obama has proposed the American Jobs Act as a way to increase employment and head off a double dip recession.  It has five key components, according to an administration briefing to the National Small Business Association this afternoon.  They are 1. Tax Cuts for small business, including significant reductions in payroll taxes; 2. Rebuild and modernize infrastructure, including schools and transportation facilities; 3. Provide pathways back to work for the unemployed; 4. Put more money in the pockets of consumers, including through payroll tax reductions; and 5. Have all of the costs fully paid for as part of long-term deficit reduction.  The administration has stated that the elements of the plan have previously enjoyed bipartisan support, which should make passage logical. There is one element of the package, however, that is new and which has not had bipartisan support.  That is a provision, part of the “Pathways back to work” portion of the package, which, in the words of the Administration, “would make it unlawful to refuse to hire applicants solely because they are unemployed or to include in a job posting a provision that unemployed persons will not be considered.”

While it may at first glance seem “fair” to prohibit, again to quote the Administration, “employers from discriminating against unemployed workers when hiring,” in fact, this provision would discourage employers from going out and seeking a wide range of applicants. Every unemployed worker who is not hired could file a suit claiming that the reason was his or her status as an unemployed worker.  If an unemployed worker is hired, applicants who had been unemployed for a longer time could claim discrimination based on length of unemployment.  The prospect of merely being sued, with all the costs that entails in our judicial system, would discourage hiring.

The new proposal, if enacted, would have perverse effects on hiring, leading to the exact opposite result from what was intended, while adding costs to employers.  These costs would exist regardless of whether the employer actually did anything wrong. In our system of “justice” where the defendant is required to pay its own attorneys fees whether it wins or loses, just being accused of discrimination costs an employer dearly.  When the “protected classification” is something so changeable as being unemployed, this new cause of action will further burden American employers, and, inevitably, those who want to work for them.

Including this “feel good” provision, which has no bipartisan backing, in the proposed American Jobs Act damages the credibility of the Administration and will provide a good reason for legislators to oppose the entire Act.  It does not belong in the package and should be removed if the Adminstration really wants its proposal passed.

The NLRB published today its new poster regarding employees rights to form labor unions under the NLRA, mentioned in our prior blog posting.  A copy is available here. 

Meanwhile, the National Association of Manufacturers has filed a lawsuit in federal court challenging the rule, stating that “[t]he Board’s promulgation of the Rule is in excess of the Board’s statutory jurisdiction, authority, limitation and rights.”  The case is pending in the United States District Court for the District of Columbia.

The Los Angeles Times reported today that a mob of hundreds of International Longshore and Warehouse Union members, alerted by a posting on the Union’s Facebook page, overpowered police and attacked a train carrying grain to a new storage facility in Longview, Washington.  According to the article, the union members cut brake lines on the train, dumped cargo and held the outnumbered law enforcement personnel at bay while they attacked the grain terminal.  The Union had already been subject to a temporary restraining order after the NLRB found that it had engaged in illegal activities, including dumping a bag of manure on the site from an airplane. The work at the grain terminal had been assigned by the operator to the General Construction and Operating Engineers Local 701, which has been criticized by the local branch of the AFL-CIO for accepting the work. The ILWU claimed to have been unaware of what had occurred at the terminal, saying it was looking into the matter.  Union violence is apparently not a thing of the past, at least in the Northwest.  Whether this incident will have any effect on the NLRB’s case against Boeing for electing to expand in another area of the country rather than Washington State remains to be seen.

Yesterday, the NLRB published the final version of its new rule requiring most private employers to post a notice to employees informing workers about their rights to form a labor union.  The posting is similar to the one that government contractors are already required to post. (See DOL Fact Sheet). 

The new rule is significant for several reasons.  First, this is the first time that the Board has extended its reach to the private sector in requiring this type of posting.  Second, the penalty for failing to comply is that the employer will be deemed to have committed an unfair labor practice.  While the rule does not authorize a monetary penalty, the issuance of an unfair labor practice is still significant, especially for an employer that is facing a union organizing campaign.  This is because the Board may use a failure-to-post ULP as a means to extend the 6-month statute of limitations for filing charges involving other alleged unfair labor practices against the employer, as well as grounds for establishing “unlawful motive” in cases involving other alleged violations of the National Labor Relations Act.  Consequently, it is foreseeable that the failure to post—in combination with other alleged unfair labor practices—could result in the issuance of a bargaining order, in which the Board would require an employer to bargain with a union even when the union has not established majority support. The failure to post would also serve as a blocking charge to stop a decertification vote.

Not surprisingly, employers and business groups dislike this rule, and for good reason.  The US Chamber of Commerce views the action as making it appear that the government is encouraging workers to form labor unions. (See Editorial in Las Vegas Review-Journal)  Nathan Koppel of The Wall Street Journal’s Law Blog details the strong reactions from employers regarding the new rule.  

More details on the new rule: 

  • Employers must post the new notice beginning November 14, 2011
  • The new posting will be available from the Board beginning November 2, 2011
  • Employers who post policies on-line must include this notice on-line
  • Employers do not have to keep records showing that they have posted the notice
  • Certain very small employers and the US Postal Service are exempt; otherwise, all employers subject to the NLRA must post
  • The notice must be posted in English and other languages if 20% or more of the workforce speaks another language

Interestingly, the administration just last week announced its new regulatory simplification effort, in which simplifying Department of Labor warnings would purport to save employers more than $2.5 billion over the next five years.  (See Christi Parson’s article in the LA Times).  Ironically, however, this new posting requirement will cost each of the roughly 6 million subject employers at least $64 in just the first year to comply. 

In 1987, the NLRB held that a newspaper did not have to bargain with a union over its ethics policy, on the grounds that ensuring public confidence in its news reporting was a “core function” of the paper. Peerless Publications, 283 NLRB 334 (1987).  In 2006, Virginia Mason Hospital in Seattle unilaterally implemented an infection control policy designed to prevent the spread of the flu.  Among other things, it required nurses who had not been vaccinated to wear a surgical mask or take antiviral medications.  The union filed an unfair labor practice charge and the Board’s General Counsel issued a complaint.

An Administrative Law Judge found that there was “little if anything more central to the Hospital’s ‘entrepreneurial purpose’ than its attempt to keep its patients free of the influenza virus” and threfore dismissed the complaint.  The Board, in a 2-1 decision by Chairman Liebman and Member Pearce, with a dissent by Member Hayes, found that Peerless depended upon the Constitutional principle of freedom of the press and there was no such principle involved in hospital infection control.  The majority said that the Peerless Board was “mindful of” and to some extent influenced by the First Amendment implications of limiting a newspaper’s control over ethical standards for journalists. It then converted that mindfulness into the basis for the Peerless decision and distinguished the Hospital’s concern over the health of its patients as having no Constitutional dimension.  Hence, there was no Constitutionally-based core purpose to influenza control that excused the hospital from having to bargain.  The Board remanded the case to the ALJ for consideration of other defenses raised by the hospital.

As noted in a previous post, Chairman Liebman’s term has expired and she is no longer on the Board.  Member Pearce has been named the Chairman.  The Board is now operating with three members–Chairman Pearce, Member Hayes and Member Becker.  Member Hayes is the sole Republican on the Board and is likely to be dissenting from more cases in the future.  In the meantime, unless reversed, the Virginia Mason case is likely to spell the effective end to the “core purpose” exception to the duty to bargain.

Chairman Wilma Liebman’s term on the National Labor Relations Board ended last Saturday, August 27th.  She was first named to the Board by President Bill Clinton in 1997, and was reappointed in both 2002 and 2006 by President George W. Bush.  President Obama named her Chairman on January 21, 2009, his first full day in office.  She served on the Board longer than all but two other members in the history of the Board.

New Chairman Pearce was first appointed by President Obama and was confirmed by the Senate in 2010.  He had been a partner in a labor-side  law firm in Buffalo, New York, and before that was an attorney with the Board.

With Chairman Liebman’s departure, the Board is now down to three members, the minimum necessary to conduct business.

Like most every other business and agency today, the NLRB is staying on top of social media.  Today, the Board’s acting general counsel issued a summary memo describing recent Board cases dealing with employee postings on Facebook and Twitter, as well as employers’ social media policies.  A copy of the summary is attached here.

The Board’s take on social media comes through clearly:  The current Board is aggressively positioning to find employee social media communications to be protected concerted activity.  The Board makes little distinction as to whether those communications occurred in a traditional way, such as a rally or speech, or through social media vehicles like a tweet or Facebook post.  (See Memo, page 4, relying on definition of concerted activity established in Meyers cases from 1984).

Similarly, the Board has repeatedly criticized employer policies that attempt to curtail what might be considered protected employee speech. 

The summary shows that Board is, however, willing to draw a line.  In determining that a news reporter’s offensive tweets, critical of a local TV station, were not protected, the Board’s summary memo explains: 

His conduct was not protected and concerted: it did not relate to the terms and conditions of his employment or seek to involve other employees in issues related to employment.

There is no question that social media activity in the context of labor relations remains a hot button issue for the Board.  It appears to be a matter of applying old rules and interpretations to new forms of technology.  Thus, electronic communication policies that are too broad in their prohibitions will be challenged by the Board.  Similarly, the Board will closely scrutinize employment decisions based on tweets and Facebook posts.  

Last week, the National Small Business Association (disclosure–I am the Immediate Past Chair of this terrific and effective non-partisan organization) released its semi-annual NSBA small business survey.  The survey showed that small businesses are increasingly pessimistic about the economy’s immediate future (88% thought the economy was going to be either worse or no better in the coming year) and were not making plans to engage in full-bore hiring (less than a third thought they would be increasing their workforces at all). In previous economic downturns, small business hiring has led the nation out of the doldrums.  Why is this one different?

In my view, there are several factors. The most important are lack of capital availability, dramatic uncertainty and doubts about consumer demand.  Significant other factors are currency and trade issues, foreign economic problems and regulatory costs of doing business.  With the devaluation of real estate and the failure of our financial system, money to expand is hard to come by.  Business contraction generally throws off cash as inventories are sold and not replaced.  Expansion does the opposite, as inventories are created before they are sold.  Banks and other lenders have been especially reluctant to lend for working capital, and real estate collateral is fully tapped.  Our reliance on credit ratings as a proxy for likelihood of getting repaid means that businesses that have survived since 2007 are probably not regarded as good credit risks and won’t get the resources they need to make a full recovery. 

Every recent survey by NSBA has revealed that small businesses are uncertain what the government is going to do to them.  Federal agencies are proposing burdensome new rules, the Patient Protection and Affordable Care Act is taking fire and may not survive in its current form (which is not all that clear itself), and the debt issue may or may not lead to new taxes, reduced spending or both.  The crystal balls of entrepreneurs, usually revealing bright futures for those with good ideas and a strong work ethic, are opaque.  That does not encourage expanding commitments to add new employees.

Consumer demand is unpredictable.  Consumers look at their future employment prospects and don’t see reason for optimism.  They hunker down and do not spend freely on the products and services of small businesses.  Small businesses look at consumers and do not see lots of demand, so they hold off on hiring.  Consumers see that and do not spend and so on in a destructive feedback loop. See my Comment on NBC Nightly News on August 10.

The lack of leadership in our nation’s and states’ capitals, the 2011 foreign economic and social problems, the burdens on our businesses and the failures of our support systems–from education to physical infrastructure–all compound the problem.  The way out is not so clear.  One thing ought to be obvious, however:  our employment problems will not be solved without a restoration of national purpose.  That purpose must include renewed support for small business–and that means real support, not just lip service. 

The Labor Depratment’s Office of Labor Management Standards issued a release today, June 20, on its long-anticipated reinterpretation of the “Advice Exception” from mandatory reporting and disclosure requirements. The release announced that the official Proposed Rule would be published on Tuesday, June 21. Interested parties will have a month to provide comments.  Since as we described last February, the rule would drastically increase the scope and reduce the time for reporting, the employer community is likely to have a great deal to say.  The rule’s likely impact on attorney-client privilege is another area of concern for both clients and lawyers.

Meanwhile, the Supreme Court refused to permit a multi-million member class action for employment discrimination to proceed against Wal-Mart.  Finding that there was insufficient proof of uniform policies responsible for all the alleged gender-related actions, the Court reversed the Ninth Circuit’s ruling allowing the case to proceed as a class.  As a practical matter, the decision reduces the leverage enjoyed by the plaintiffs’ lawyers to extract a large settlement from Wal-mart, but does leave Wal-Mart vulnerable to multiple individual actions in courts throughout the country.  The Court also ruled that claims for monetary relief are not properly certifiable under Civil Rule 23(b)(2), but must be handled under Rule 23(b)(3),  The practical meaning of this ruling is that courts must make much more detailed findings to support class certification and cannot simply assume, as did the Ninth Circuit, that representative samples can serve as a bridge among the various plaintiffs.

All in all, June 20, 2011 is a busy Monday in the Employment field.

By a 4-3 vote in Sutton v. Tomco Machining, the Ohio Supreme Court added a new public policy cause of action to the workers compensation system.  The decision, summarized here, allowed an employee to bring a suit for retaliation following his firing after he reported a workplace accident, but before he had done anything to file a workers compensation claim.  The statute allows retaliation claims, but only for retaliation after an employee has filed a claim or engaged in certain other specified activities.  The Court, in a decision written by Chief Justice O’Connor, found that the law as written established a clear public policy and that granting a new right for claims not falling within the law would not interfere with what the legislature intended.  The majority then further ruled that the relief available under the new public policy cause of action would be limited to the relief that could be provided under the statute. 

The dissenters argued that filling in perceived gaps was a legislative function, which the Court was not suited to perform. Even if an expanded right to sue seemed like a good thing, the Court did not have the benefit of the legislative process to enable it to consider all aspects of the issue.  Justice Cupp, who had extensive legislative experience before joining the Court, wrote:

“The conduct that the statute seeks to prohibit is an employer’s retaliating against an employee after the employee takes some action in pursuit of a workers’ compensation claim. This is the entire essence of the statutory proscription. Because the statute does not also proscribe employer conduct that may tend to discourage or prevent the employee from pursuing a claim in the first instance, it is clear that the legislature chose not to include such conduct. If the legislature had so intended, it would have been a simple matter for it to include language proscribing such conduct. … It may be good public policy to include an employer’s preemptive conduct within the statutory proscription, or there may be adverse consequences to such a policy that are not apparent on its face. This court has insufficient information available to it to make such a far-reaching policy choice. In any case, the legislature did not include such wording, which makes it clear that  the legislature intended not to regulate in this area beyond the conduct proscribed in R.C. 4123.90.”

This is another in the line of cases that make it more difficult for employers to operate their businesses, not because they engage in retaliation or other violations of law, but because they are unable to count on what the laws actually say.  As a result, they cannot get cases resolved at an early stage, before expenses pile up. There really is nothing employers need to do differently as a result of this case, other than to make sure their employment practices liability insurance covers the risk, or at least the defense costs.