Steptoe Labor And Employment | Traditional Labor Blog
The Steptoe Labor & Employment Blog covers labor and employment law and class action issues. Labor & Employment Blog written by Steptoe & Johnson’s Labor Practice Attorneys offers helpful insights on workforce strategic planning and talent management, compliance programs, investigations, counseling and training, and litigation and labor relations needs.
On January 11, 2019, the National Labor Relations Board issued a decision narrowing the scope of what qualifies as “protected concerted activity” under the National Labor Relations Act. With this decision, the Board reversed course on a long line of Obama-era cases expanding the scope of when an employee’s complaints could be considered to be protected concerted activity, under the Act. The Board also stated its desire to overrule other cases that previously expanded the definition of protected activity.
In Alstate Maintenance, LLC, 367 NLRB No. 68, an airport skycap complained to fellow employees and a supervisor about being asked to handle the baggage for a large group of passengers, stating: “We did a similar job a year prior and we didn’t receive a tip for it.” When the group of passengers arrived, the group of employees walked away and refused to handle their bags. The employer discharged the complaining employee (as well as the other skycaps involved) for “indifferen[ce] to the job” and the complaint about the tip. The Administrative Law Judge dismissed the complaint, finding no violation of the Act, and the Board agreed.
In Alstate, the Board held that the use of the word “we” in the employee’s complaint did not qualify the complaint as protected concerted activity because no evidence showed the employee (1) brought a truly group complaint, as opposed to a personal gripe; and (2) sought to induce group action with his statement. The Board also noted the lack of evidence that the employees discussed the issue beforehand or sought to petition management for a change in policy or practice. As the employee himself testified, it was “just a comment.”
In its decision, the Board listed several non-exhaustive factors that would lead to a reasonable inference that the employee truly sought to initiate group action:
The statement was made in an employee meeting called by the employer to announce a decision affecting wages, hours, or some other term or condition of employment;
The decision affects multiple employees attending the meeting;
The employee who speaks up in response to the announcement did so to protest or complain about the decision, not merely to ask questions about how the decision has been or will be implemented;
The speaker protested or complained about the decision’s effect on the work force generally or some portion of the work force, not solely about its effect on the speaker him- or herself; and
The meeting presented the first opportunity employees had to address the decision, so that the speaker had no opportunity to discuss it with other employees beforehand.
The Board also stated its desire to reconsider, in the appropriate case, prior decisions where the Board deemed statements about certain subjects “inherently” concerted, such as statements about wages, schedules, and job security.
The Alstate decision is positive for employers because it narrows the scope of protected concerted activity to those comments and actions that truly seek to (1) bring a group complaint, or (2) induce group action for the purpose of mutual aid or protection. While the decision provides more specific guidance to use in evaluating whether an employee’s complaint would be considered protected concerted activity, cautious employers should continue their current, more conservative, approach, as the Board’s position could shift in another election year. It can often take several years before a case reaches a Board decision, and the composition of the Board can change by then.
On January 25, the National Labor Relations Board (NLRB) reversed an Obama-era decision addressing the standard for distinguishing between independent contractors and employees. The prior NLRB held that if a worker is economically dependent on the business providing the work (i.e., the business provides most or all of the work done by that worker), then that person is most likely an employee, not an independent contractor. The Trump-appointed NLRB majority reversed that “economic dependence” standard in its recent Super Shuttle decision, 367 NLRB No. 75 (Jan. 25, 2019), holding instead that it will analyze independent contractor vs. employee status using the traditional 10-factor common law test viewed through the prism of “entrepreneurial opportunity.”
That means the Trump Board will likely find independent contractor (and not employee) status if the putative contractor has the independence to make more or less by doing more or less either within the contractual relationship at issue or with other businesses (i.e., a broad “scope for entrepreneurial initiative”). The more control a single business exercises over a putative contractor, the narrower the scope for enhanced money-making initiative, and the more likely the NLRB will find employee status.
Human Resource and Labor Relations professionals (HR/LR) normally take the lead on workplace investigations of employee misconduct. Given that, they may also bear the blame for investigations that result in adverse employment actions that do not withstand litigation scrutiny. If a current or former employee challenges an adverse employment action via an EEOC or NLRB charge, a DOL complaint, a CBA grievance, or court action, the employer incurs significant expense and disruption simply defending the action. The employer’s exposure increases exponentially if the employer loses the case on the merits before a regulator or court. Consequently, HR/LR should devote sufficient time and attention to workplace investigations to avoid challenge in the first place, where possible, and to ensure the best chance of winning on the merits if a challenge does take place. But where to look for guidance? This blog answers that question and provides a checklist for HR/LR to follow to conduct employee misconduct investigations that will withstand litigation scrutiny.
What’s at stake? Not just discharge investigations
As a threshold matter, HR/LR should not take short cuts when conducting workplace investigations involving non-discharge offenses. We have handled hundreds of expensive EEOC/NLRB/DOL charges challenging progressive discipline, failure to transfer, failure to promote, increased supervision, shift assignments, reduced hours, and pay issues. Thus, HR/LR should test every adverse employment action investigation against the checklist items discussed here, with one basic question in mind: Will this investigation stand up to scrutiny by someone who is skeptical of everything you do?
Who do we focus on?
Recent events, including the #MeToo movement, rightly focus HR/LR on protecting the rights of an accuser, ensuring a timely and effective response, when dealing with employee complaints against co-workers, managers, or third-parties. But when HR/LR professionals think about conducting investigations that will withstand litigation scrutiny, they must focus on the rights of accused. Any reviewing regulator or court will bring that focus to the table given that the accused will become the charging party, complainant, or plaintiff.
What do we focus on?
Should HR/LR focus on the legal elements of the McDonald Douglas or Wright Line burden shifting analysis when analyzing investigation steps and conclusions? No. Instead, HR/LR should focus on principles of basic fairness. If HR/LR ensures that every adverse employment action withstands the “fairness” test, they will significantly reduce the chance that the affected employee will challenge the decision in the first place and will significantly increase the chance that the employer will win if there is a challenge. Indeed, applying basic fairness in the disciplinary investigation process will go a long way to helping your management team establish one of the seven key skills for supervisor success that we cover during our full-day supervisor training programs.
Where do we focus our attention?
Where do we find guidance on what “fairness” means in the workplace context? We look to 100 years of private judicial decisions applying the “Law of the Shop” in the unionized workforce context where every adverse employment decision requires “just cause” to survive litigation scrutiny.
Note that you must evaluate “fairness” principles in addition to the specifics of particular potential causes of action that may require an analysis of “legal” factors like protected class/activity, employer knowledge, temporal relationship, animus, adverse action, serious/pervasive conduct (harassment), replacement/selected candidates, and statute of limitations issues; all of which present myriad different analytical issues under, e.g., Title VII, NLRA, DOL, ADEA, FMLA, ADA, PDA, WC, USERRA, and state/federal whistleblower, retaliation, Sick Leave, and Parental Leave statutes, in addition to Employment Contract and CBA questions
Also note that you must apply “fairness” principles in addition to analyzing investigation mechanics; e.g., who does it (Ops/HR/LR/3p), should it be directed by counsel for the attorney-client privilege, how to message to the alleged wrongdoer during investigation, investigation timing (day of week, time of day), physical location, interview timing, witness order/sequencing, timing for obtaining witness statements, witness instructions (confidentiality), time adjustments for off-duty participants, role/identity of decision maker, audio/video recording, electronic records search, records retention, and interviewee requests for a witness/attorney.
What are the keys to a fair investigation distilled from the “Law of the Shop”?
I. Reasonable Rule or Order
Was the policy/supervisor rule or order at issue reasonably related to the orderly, efficient, and safe operation of the business?
Don’t assume! Ask why do we have that rule or why did you give that order? Be able to explain it to the affected employee.
If it is a stated goal or objective, be ready to point out where that goal/objective is found to the affected employee.
If it is not a stated goal or objective, ask Why Not? If an oversight, fix it; update policies/procedures.
If not, ask yourself again whether the rule or order will withstand skeptical scrutiny; it cannot be arbitrary or capricious or lack a clear connection to workplace objectives.
II. Prior notice to affected employee
Notice of rule: Did the employer/supervisor explain the rule, its meaning, it purpose, and application to the affected employee in advance?
An employee can’t be expected to comply (or come into compliance/improve in the progressive discipline context) without notice.
Notice of consequence for failure to follow rule: Did the employer/supervisor explain the likely/potential consequences for not following the rule or order, e.g. next level of discipline?
Notice is a key advantage of a progressive discipline policy.
Is the rule clear, understandable, and understood? Use training/orientation to ensure this factor.
Did the employer communicate the rule in the employee’s first language?
Need evidence of notice, usually through acknowledgement forms (updates too!); remember Steve’s Second Rule of Employment law (if it is not in writing, it does not exist).
Exception: Conduct so egregious that societal norms will establish notice.
III. Timing of Investigation
Did the employer conduct an investigation before making a decision?
Did the employer conduct the investigation in a timely manner (Steve’s 72 hour rule to avoid claims of loss of memory and documentation)?
Delay: degrades reliability of investigation (memories fade, witnesses leave, documents get lost); undermines idea that the employee is not qualified.
Did the employer “stockpile” violations, claiming “this one” broke the camel’s back? Stockpiling is just a form of delay.
Did the employer collect and analyze all relevant evidence before making decision (no rush to judgment)?
No predetermined result! (Check emails! Supervisors are terrible at jumping to conclusions and then putting them in writing before an investigation even starts; if you see that happened, you must correct it in writing).
IV. Thorough Investigation (not just going through the motions; you must protect the right of the accused to a “fair” process)
Did the employer appoint a qualified investigator with responsibility to oversee the entire investigation?
Did the employer collect and analyze all relevant evidence? For example: audio/video recordings, business records (hardcopy and electronic), witness interviews of the accuser, percipient witnesses, the accused, follow up interviews on new/additional information.
Did the employer obtain comprehensive witness statements?
Did the employer investigate with an open mind? i.e., An honest explanation about the purpose of the investigation? Open ended questions? No pressure on witnesses for particular responses?
Did the employer give the accused adequate information to give a meaningful response? i.e., notice to accused of (a) accusations, (b) applicable rule/order, (b) prior notice of rule/order, (c) reason for rule/order, (d) evidence in support of the accusation, (e) reason warranting a potential adverse action, and (f) right to respond.
Did the employer give the accused notice of any new accusations/witnesses?
Did the employer follow up on new information or new witnesses disclosed during investigation?
Did the employer analyze and consider the accused response/explanation?
Did the employer look for exculpatory evidence; i.e., the other side of the coin? Particularly where a second language is at issue or the accused refuses to respond or defend himself/herself.
Did the employer evaluate witness input for: admissions against interest; content (level of detail, relevance); reliability (perception, encoding, recall); consistency (logic; common sense; witness’ own knowledge, belief, motive; external sources such as other witnesses, documents, records, recordings); prejudice/bias?
Did the employer retain all relevant evidence/integrity of evidence?
Did the employer appoint the appropriate person to make the decision?
Did the employer appoint a single decision maker in advance (no final decisions by committee; must have a witness that says, “I decided, and here is why; Ok to have a committee for input)?
Did the employer present/explain/discuss all relevant evidence and proposed conclusions to/with decision maker?
Did the employer follow up on any questions or concerns by the decision maker?
Remember Steve’s Employment Law Rule #2.
Confirm you have shaken all the trees; looked under all the rocks.
Don’t assume! Test all assumptions for factual basis/evidence.
Truly substantial; what does that mean? 70% sure, at least; if not, give a “reminder” warning and notice (again) of the rule, the reason for the rule, and the consequence of further violations.
Indicia of a lack of proof; i.e., an unsupported investigation/decision:
Different reasons/different times; Shifting explanations.
Rushed paper trail right before adverse action (e.g., to comply with progressive discipline policy).
Setting unattainable or unrealistic goals (designed failure).
Deviation from policy.
Inaccuracies in the employer’s story; particularly in position statements submitted to regulatory agencies (that is why we treat position statements as mini motions for summary judgment; penny/pound).
Failure to document investigation or discipline.
Lack of documentation for “facts” relied on for adverse action.
Inconsistent with performance history.
Reliance on totally subjective criteria.
Steve’s Employment Law Rule #1 (no good deed goes unpunished).
Did the employer treat similarly situated employees the same (easy to say)?
Look back period: two-three years
Scope of comparison: same decision maker, same department (prior decision makers), same group, same facility, same area.
What does “similar” mean? Same prior record/tenure/position/etc.
Did the employer give “equal” evidence from accuser and accused the same weight?
Is the penalty reasonably related to seriousness of the offense? i.e., does the penalty fit the offense?
Corrective, not punitive.
No double jeopardy.
Don’t aggregate offenses (a form of delay).
Generally use progressive discipline (expected unless really egregious offense); helps with the prior notice factor.
Prior discipline for same type of offense?
If not same type of offense, did the employer give the employee notice that it would impose next-level discipline for any additional offense, regardless of type?
Did the employer consider the tenure/seniority of the employee (fairness generally dictates that long-tenured employees get a little extra consideration)?
Were there mitigating circumstances?
Judges and arbitrators have applied various versions of the seven steps of industrial due process described above to answer the “fairness” question for over a hundred years. Sometimes, to see the way forward, we must look back. That maxim applies here for HR/LR professionals who want to protect their businesses from litigation risk.
This month, NLRB GC Peter Robb issued guidance on work rules under the Board’s new Boeing standard and on the kinds of cases appropriate for injunction proceedings.
Work Rule Clarity
In Boeing, the Board articulated a new standard for when the mere maintenance of work rules violates the NLRA and identified three categories of rules. In GC Memo 18-04, Robb laid out guidance for Regions (the investigators and prosecutors of the NLRB) on how to interpret Boeing and what kinds of rules fall into which categories. Although the GC’s guidance does not represent Board law, the memo identifies the kinds of cases Regions should/should not prosecute, thus providing helpful direction to employers trying to draft work rules and revise handbooks.
Of note, under “Category 1: Rules that are Generally Lawful to Maintain,” Robb placed the following kinds of rules:
Rules against insubordination
Some confidentiality rules
The inclusion of all no-recording rules in Category 1 is interesting because in Boeing, the employer showed significant, industry-specific justifications for its no-recording rule that included national security concerns. Not all employers may have such weighty interests in preventing recording, but Robb’s memo tells Regions not to prosecute such cases anyway.
Under Category 2, rules which require a case-by-case determination, Robb placed:
Broad conflict-of-interest rules
Broad confidentiality rules
Rules on off-duty conduct
Rules against speaking to the media or third parties
Employers should thus carefully scrutinize those kinds of rules for compliance.
In Category 3 (automatically-unlawful rules), Robb identified rules that will come as no surprise to NLRA-savvy employers (e.g., bans on discussing wages).
No Change to Injunction Philosophy
Robb also issued GC Memo 18-05, which provides Regions guidance on what kinds of cases in which to seek temporary injunctive relief under Section 10(j) of the NLRA. The guidance does not deviate from longstanding practice of seeking injunctions in cases where a failure to obtain quick relief might make any relief meaningless. Such cases include employee discharges during organizing campaigns, violations that occur soon after a new union wins certification, and cases involving a successor-employer’s refusal to hire or bargain.
The NLRB’s Office of Inspector General issued a report finding that Member Emanuel should have recused himself from the Hy-Brand decision in light of the close connection between his prior law firm, which represented one of the parties in Browning-Ferris, and the issues in Hy-Brand. The Board noted that report when it issued its Order vacating the decision.
Today, the United States Supreme Court ruled in Epic Systems Corp. v. Lewis, No. 16-285that employers could lawfully require employees to waive their rights to pursue employment-related class actions through arbitration agreements providing for individualized proceedings. In a 5-4 decision, the Court ruled that such waivers do not violate the National Labor Relations Act.
The Court noted the Federal Arbitration Act’s strong policy in favor of arbitration, including agreements to arbitrate disputes using individualized rather than class or collective action procedures. The Court rejected the employees’ argument that the FAA’s savings clause creates an exception because the NLRA makes class and collective action waivers for their wage-hour claims illegal. The Court reasoned that the FAA’s exception clause applies only to defenses that apply to “any” contract—not to “defenses that apply only to arbitration” or that “interfere with the fundamental attributes of [traditionally individualized and informal] arbitration.”
The Court then found no clear Congressional intent that the NLRA displace the FAA. The Court noted that if Congress intends to alter the fundamentals of a statutory scheme like the FAA, it will do so expressly; it will not “hide elephants in mouseholes.”
Finally, the Court found no conflict between the NLRA and the FAA, because Section 7 of the NLRA does not encompass class or collective actions. The Court rejected the employees’ argument that the “catchall” phrase at the end of Section 7 “other concerted activities for the purpose of … other mutual aid or protection” includes class and collective actions. The Court noted that the phrase “appears at the end of a detailed list of activities speaking of ‘self-organization,’ ‘form[ing], join[ing], or assist[ing] labor organizations’ and ‘bargain[ing] collectively.’” Thus, the Court reasoned, the catchall phrase must be read to include only conduct “similar in nature” to the subjects that proceed it, and those subjects did not include “courtroom-bound ‘activities’ of class and joint litigation.”
The Supreme Court’s decision may have broader implications for the NLRA given the Court’s narrow interpretation of Section 7’s catch-all phrase.
Employers should revisit their arbitration agreements and determine whether class and collective action waivers make sense for their business. Indeed, such waivers can provide significant risk-mitigation and cost-savings to employers given the thousands of wage-hour class actions filed each year, many of which “unfairly ‘plac[e] pressure on [employers] to settle even unmeritorious claims.'” Please contact us if we can assist in analyzing or drafting such waivers.
On May 3, 2018, at our 15th Annual Labor Relations Conference, both the current and immediate-past Chairmen of the National Labor Relations Board will provide in-house counsel and human resources and labor relations professionals a special opportunity to see “behind the curtain.” Hear direct from these Presidential-appointees about where the NLRB has been and where it is going. Co-hosted with the Arizona Society for Human Resources Management at the Phoenician in Scottsdale, this full-day program features speakers from Steptoe’s Labor & Employment group, as well as:
Today, the NLRB issued two landmark cases reversing precedent on the Board’s test for work rules and joint employment. In The Boeing Company, 365 NLRB No. 154, the Board reversed a 2004 decision that prior Boards used to find unlawful “a large number of common-sense work rules and requirements that most people would reasonably expect every employer to maintain.” In Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156, the Board overruled the Browning-Ferris joint-employment test and returned to requiring direct control over essential terms and conditions of employment before it will find joint employment status.
Boeing – Work Rules
In the 3-2 Boeing decision, the Republican majority overruled Lutheran-Heritage Village-Livonia, 343 NLRB No. 646 (2004), which held unlawful all facially neutral work rules that employees could “reasonably construe” to prohibit Section 7 activity. The Board established a new test for evaluating work rules that requires the Board to “evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.”
The majority emphasized its “duty to strike the proper balance” between employee rights and legitimate business justifications and noted the problems with the Lutheran Heritage standard, including that it gave no consideration to an employer’s legitimate business justifications and that it was “exceptionally difficult to apply.” The majority also noted that its decision focused only on the maintenance of rules, not the application of those rules, setting aside situations where employers apply lawful policies in an unlawful way.
The majority applied the new test to find lawful Boeing’s no-camera policy lawful. The policy prohibited employees from using cell phone cameras, webcams, and other photographic devices to take images or video without management’s permission. The Board found that policy justified as an “integral component of Boeing’s security protocols,” which were necessary to comply with government rules for performing classified work, protect highly sensitive proprietary information, and “limit the risk of Boeing becoming a target of a terrorist attack.”
Significantly, the majority also expressly overruled cases holding “that it violates the Act to maintain rules requiring employers to foster ‘harmonious interactions and relationships’ or to maintain basic standards of civility in the workplace.” (Footnote 15.)
When Democrats controlled the Board, Chairman Miscimarra frequently dissented from rulings applying Lutheran Heritage, and we anticipated that he would overrule it with a Republican majority.
Hy-Brand– Joint Employment
In another 3-2 decision, the Republican majority overruled the controversial Obama-Board decision in Browning Ferris Industries of California, Inc., 362 NLRB No. 186 (2015). Browning-Ferris dramatically changed the joint employment test under the NLRA, making two entities joint employers if one entity “reserved” control over terms and conditions of another’s employees, even if that entity never exercised that control. Critics railed the decision as making joint-employers between every entity’s vendors or independent contractors. Indeed, the majority in Hy-Brand devoted 24 pages to describing all of the problems with the Browning-Ferris test, calling it a “vague and ill-defined standard.”
In returning to the common law standard that existed for more than 30 years before Browning-Ferris, the Board wrote: “a finding of joint-employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’”
Even under that standard, however, the Board found the two employers at issue in Hy-Brand qualified as joint employers because of the significant and substantial overlap between their operations, including that an officer at one company made hiring and firing decisions at both companies, employees of both companies participated in the same benefit plans, and the same policies applied to employees at both companies.
More Landmark Decisions Expected
We expect additional landmark decisions tomorrow, as Chairman Miscimarra’s turn ends Saturday, December 16.
Notably, today’s decisions knock two key issues off newly-appointed NLRB GC Peter Robb’s priority list, which he issued December 4.
On Monday, December 11, 2017, the Board issued a decision holding that Administrative Law Judges can approve an employer’s offer to settle unfair labor practice charges so long as the settlement offer is “reasonable,” even if the general counsel and charging party object to the settlement. The case reverses Obama-era precedent that held that an ALJ can approve a settlement only if the settlement provides “complete relief” for every alleged unfair labor practice. That standard made it impractical for employers to settle unfair labor practice charges because employers received no compromise in exchange for foregoing full-blown litigation.
In the 3-2 decision in UPMC, 365 NLRB No. 153 (2017), the newly-formed Republican majority returned to the multi-factored “reasonableness” standard set out in Independent Stave, 287 NLRB 740 (1987). Under that standard, an ALJ will approve settlements that “effectuate the purposes and policies of the Act,” considering factors like whether the charging party or GC object to the settlement, whether the settlement is reasonable in light of the alleged violations, and whether the employer has engaged in a history of violations or breached previous settlement agreements. The UPMC decision makes it easier for employers to settle unfair labor practice charges short of full litigation.
The decision could be the first of many significant decisions this week, as Chairman Miscimarra’s term ends December 16, 2017.
This case follows on the heels of the new NLRB General Counsel’s Advice Memo announcing a significant policy shift in the GC’s office. It also follows on Miscimarra’s separate opinions in two other NLRB decisions involving settlements of unfair labor practice charges.
In its fifth major decision in five days, the Board overruled a 2016 decision that limited what changes to terms and conditions of employment that an employer can make without bargaining. In so doing, the Board returned to a broader view of what it means to maintain the “status quo.” In Raytheon Network Centric Systems, 365 NLRB No. 161 (Dec. 15, 2017), the Board held that employers do not need to bargain when “the employer takes actions that are not materially different from what it has done in the past.” In Raytheon, that meant the employer lawfully modified employee medical benefit plans after the CBA expired because the employer had made similar modifications annually for 11 years.
The 3-2 Republican majority overruled the Obama-Board’s decision in E.I. du Point de Nemours, 364 NLRB No. 113 (2016). That case held that an employer must bargain over changes to terms and conditions of employment, even if the employer had a past practice of making the changes, if (1) “a CBA permitted the past actions and the CBA is no longer in effect,” or (2) “the employer’s actions involved some type of discretion.” The Raytheon majority described E.I. du Pont as “distort[ing] the long-understood, commonsense understanding of what constitutes a ‘change.’”
The majority returned to “the dynamic status quo” doctrine, which “makes clear that conditions of employment are to be viewed dynamically and that the status quo against which an employer’s ‘change’ is considered must take account of any regular and consistent past pattern of change. An employer modification consistent with such a pattern is not a ‘change’ in working conditions at all.” (Quoting Gorman & Finkin, Labor Law Analysis and Advocacy (Juris 2013)).
As applied to the facts in Raytheon, the majority held the employer did not unlawfully implement a unilateral change when it modified union and non-union employees’ health benefits just as it had done every January from 2001 to 2012. Those modifications included increased premiums and changes to available benefits—changes that the majority characterized as “typical of the changes one regularly sees from year to year in cafeteria-style benefit plans.” The fact that the union had specifically requested to re-negotiate health benefits did not change the majority’s analysis.
Recently-appointed Member Kaplan wrote separately to opine that the Act not only permitted the employer to make the changes but required it to do so as part of its duty to maintain the status quo.