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NAW News

Legal Update

- January 2014

Labor Department Launches Online Form For Workers to File Retaliation Claims Against Employers

The Occupational Safety and Health Administration (OSHA) has implemented a new system allowing workers to file whistleblower retaliation claims with the agency online. Previously an employee had to file a written complaint with OSHA or call the agency hotline or a regional office. Complaints filed using the online system will be automatically routed to the proper regional office for investigation.

OSHA enforces the whistleblower protection provisions in 22 federal laws, protecting employees who report alleged violations of workplace safety and health, Obamacare, securities, trucking, environmental, motor vehicle safety, pipeline, food safety and consumer protection laws.

The deadline for an employee to file a complaint ranges from 30 to 180 days after the alleged retaliation, depending on the specific federal law involved. Allowable remedies include an award of back pay, reinstatement, compensatory damages and in some cases punitive damages. Employer retaliation against an employee may include firing, layoff, demotion, denial of overtime or promotion, reducing pay or hours, discipline, intimidation and threats.

Whether the online system will result in an increase in the number of complaints filed is uncertain. In 2012 OSHA processed 2,764 complaints of which 1,660 were without merit and dismissed.

NLRB Abandons Its Controversial Notice Posting Rule

The National Labor Relations Board (NLRB) has abandoned its controversial rule that would have required nearly all private sector employers to post notices in the workplace, informing employees of their right to form or join a union and other rights under federal labor law. In mid-2013 two federal appeals courts invalidated the NLRB rule on statutory and constitutional grounds. The agency let the January 2, 2014 deadline pass without seeking U.S. Supreme Court review of these adverse rulings.

In the District of Columbia case several business organizations, including the Coalition for a Democratic Workplace (CDW) which NAW helps manage, argued that the NLRB rule violated the First Amendment rights of employers against government “compelled speech.” The court agreed, noting that the U.S. Supreme Court’s “leading First Amendment precedents have established the principle that freedom of speech prohibits the government from telling people what to say.” The NLRB rule – issued in August 2011 – has never gone into effect as a result of favorable federal court injunctions.

Most federal contractors and subcontractors are required by the Labor Department to post a similar employee notice in the workplace. The NLRB’s decision does not affect a covered federal contractor’s obligations under the Labor Department rule (29 CFR Part 471).

Despite this setback, the NLRB is expected to pursue its pro-labor agenda in 2014. The agency now has a fully confirmed five-member board for the first time in a decade. In a recent release, the Board reaffirmed its commitment to ensure that “workers, businesses and labor organizations are informed of their rights and obligations under the National Labor Relations Act” and promised the “NLRB will continue its national outreach program to educate the American public about the statute.”

FTC Challenges Competitors’ Exchange of Sensitive Business Information

A mere discussion about pricing with a competitor may violate the Federal Trade Commission Act’s prohibition against “unfair methods of competition,” even if the exchange does not result in price fixing or cause any actual harm to competition. (Federal Trade Commission v. Bosley, No. 121-0184.) The Commission has authority to issue a complaint when it has reason to believe the Act has been or is being violated.

In this case the FTC charged Bosley – the nation’s largest manager of hair restoration procedures – with an illegal exchange of competitively sensitive, nonpublic information about its business practices directly with a competitor, Hair Club, Inc. The exchanges over a four year period were reciprocal and included product price floors and discounts, future product offerings, plans for business expansion/contraction and current business operational performance. These exchanges occurred directly between the CEOs of the two rival firms. Bosley also allegedly shared such information with other unnamed competitors.

The FTC identified three plausible risks to competition associated with sharing this kind of information:

  • a discussion of competitively sensitive prices, output, or strategy may mutate into a conspiracy to restrict competition;
  • an information exchange may facilitate coordination among rivals that harms competition, even in the absence of any explicit agreement regarding future conduct; and
  • knowledge of a competitor’s plans reduces uncertainty and enables rivals to restrict their own competitive efforts, even in the absence of actual coordination.

Without admitting liability, Bosley agreed to an FTC consent order that (1) required the company to cease all direct or indirect exchanges of “sensitive information” with any competitor or soliciting sensitive information from a competitor; (2) mandated the company to maintain a formal antitrust compliance program for 20 years; and (3) provided the FTC with access to its U.S. facilities, records and employees with five days’ notice. The order defined “sensitive information” to include nonpublic information relating to pricing, costs, revenues, profits, margins, output, business plans, marketing, advertising, promotion or research and development. The order contains a number of permitted exchanges, including ordinary and customary communications with vendors and independent contractors, and ordinary participation in trade associations.

While the exchange of such information is certainly not advisable, the FTC did not allege that Bosley engaged in an open invitation to collude and fix prices similar to earlier cases. This indicates that the FTC will expand and use its enforcement authority to halt information sharing between competitors despite the lack of harm to competition or an unequivocal invitation to collude.