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NAW News

Legal Updates

- January 2015

Antitheft Security Screening Not Compensable Time Under Federal Law

In a unanimous ruling, the U.S. Supreme Court has ruled that time spent by warehouse workers in line for and undergoing antitheft security checks is not compensable time (i.e., time for which wages are owing) under the Fair Labor Standards Act (Act). (Integrity Staffing Solutions, Inc. v. Busk, No. 13-433).

In this case Integrity Staffing Solutions, Inc. required its hourly warehouse workers, who retrieved products from warehouse shelves and packaged them for delivery to Amazon customers, to undergo a security screening before leaving the warehouse each day. Several former employees sued the company alleging that they were entitled to pay under the Act for the roughly 25 minutes each day that they spent waiting to undergo and undergoing those screenings. They also alleged that the company could have reduced that time significantly by adding screeners or staggering shift terminations and that the screenings were conducted to prevent employee theft and, thus, for the sole benefit of the employer and its customers.

The Supreme Court reversed the Ninth Circuit appeals court and held that time spent by employees waiting to undergo and undergoing security screenings is not compensable under the Act. What remains unclear is whether similar claims brought under state wage and hour laws will be resolved by state courts in the same manner.


NLRB Issues “Ambush” Election Rule, Effective April 14, 2015

On a 3-2 vote, the National Labor Relations Board issued a final rule that dramatically alters the Board’s longstanding union election procedures and deletes many of the options that businesses have relied on to protect employer rights and the rights of employees who do not support union representation. (79 Fed.Reg. 74307, Dec. 15, 2014). The rule goes into effect on April 14, 2015.

According to recent data, a union election typically occurs 38 days after the union files a petition with the NLRB and more than 90 percent of elections occur within 56 days of petition filing. Under the new rule the election will occur within 14 to 21 days after the petition is filed, but could happen as quickly as 10-12 days after the petition is filed.

According to the NLRB, the rule:

  • Provides for electronic filing and transmission of election petitions and other documents;
     
  • Ensures that employees, employers and unions receive timely information they need to understand and participate in the representation case process;
     
  • Eliminates or reduces unnecessary litigation, duplication and delay;
     
  • Adopts best practices and uniform procedures across regions;
     
  • Requires that additional contact information (employees’ personal telephone numbers and email addresses) be included in voter lists, to the extent that information is available to the employer, in order to enhance a fair and free exchange of ideas by permitting other parties to the election to communicate with voters about the election using modern technology; and
     
  • Allows parties to consolidate all election-related appeals to the Board into a single appeals process.

The rule makes changes to the union election procedures that are immense in scope, complex and, in effect, will generally reduce the time period before an election is held—and during which employees are allowed to exercise free choice about union representation, and employers are allowed to engage in protected speech to their employees about union representation. As the Board’s dissenting members stated, the rule “has become the Mount Everest of regulations: Massive in scale and unforgiving in its effect.”

Suit Filed to Void Rule:

The Coalition for a Democratic Workplace (NAW is a CDW Management Committee member) and several other national business organizations have filed suit in the U. S. District Court for the District of Columbia to void the rule on grounds that it is: contrary to the National Labor Relations Act; in excess of the Board’s statutory authority; in violation of the U.S. Constitution’s free speech guarantee and procedural due process; and is Board action that is arbitrary, capricious and an abuse of discretion. (Chamber of Commerce of the United States of America, et al. v. National Labor Relations Board). A court ruling will be sought in advance of the rule’s April 14, 2015 effective date.


NLRB Creates New Right for Employee Use of Company Email for Union Activity

The National Labor Relations Board has declared that employees with access to an employer’s email system in the course of their work must, in practically all cases, be allowed to use the employer’s email system during non-work time to engage in union organizing and otherwise communicate about wages, hours and other workplace issues. (Purple Communications Inc., decided Dec. 11, 2014). This decision applies to employers – whether or not the company has a unionized workforce. Any company with a “business use only” policy for its email system now is exposed to possible NLRB adversarial action for having such a restriction.

Email Use Policy:

At issue was the Purple Communications email use policy that provided in part:

INTERNET, INTRANET, VOICEMAIL AND ELECTRONIC
COMMUNICATION POLICY

Computers, laptops, internet access, voicemail, electronic mail (email), Blackberry, cellular telephones and/or other Company equipment is provided and maintained by [Company] to facilitate Company business. All information and messages stored, sent, and received on these systems are the sole and exclusive property of the Company, regardless of the author or recipient. All such equipment and access should be used for business purposes only.

In this case, the union attempting to organize Purple Communication’s workers charged that this policy was unlawful on its face because it prohibited employees from using the company’s email for union organizing communications to co-workers (e.g., sending union authorization cards, flyers, video clips, etc.) and discussing other workplace issues.

NLRB Ruling:

On a 3-2 vote, the NLRB overruled its 2007 decision in the Register Guard case (which approved a company’s email policy with a business use only restriction), and declared:

“[W]e decide today that employee use of email for statutorily protected communications on nonworking time must presumptively be permitted by employers who have chosen to give employees access to their email systems.”

Describing its decision as “carefully limited,” the Board stated: (1) the decision only applies to employees who have already been granted access to the employer’s email system and, importantly, does not require employers to provide such access; (2) an employer may only justify a total ban on non-work use of email by proving in “the rare case” that “special circumstances” make the ban necessary to maintain production or discipline; (3) absent justification for a total ban, an employer may apply uniform and consistently enforced controls if they are proven necessary to maintain production and discipline; and (4) the decision does not address access to a company’s email system by non-employees nor address other types of electronic communications. Proving the existence of “special circumstances” will likely be a heavy burden for the employer.

Also discussed in the decision (although not an issue) is the employer’s monitoring of the electronic communications on its email system, which will be lawful according to the NLRB, so long as the employer “does nothing out of the ordinary,” such as increasing its monitoring during a union organizing drive or focusing its monitoring efforts on union or other protected employee activity. Finally, an employer may still notify employees that it monitors (or reserves the right to monitor) computer and email use for legitimate management reasons and that employees have no expectation of privacy in their use of the employer’s email system.

Conclusion:

The NLRB’s Purple Communications ruling will likely be challenged in the federal appellate courts and perhaps the U.S. Supreme Court. Until modified or reversed by a court, the NLRB will enforce this rule in pending and future cases. Every employer with a policy on the use of its email system by authorized employees is well advised to have its professional advisors review the policy and consider changes as needed to conform to the NLRB’s latest fiat.


NLRB Charges McDonald’s as a “Joint Employer” of its Franchisees’ Workers

The National Labor Relations Board General Counsel has filed 13 consolidated complaints naming McDonald’s Corp. as a “joint employer” of the employees at 78 McDonald’s franchisees across the U.S. Issued on December 19, 2014, each complaint seeks to hold McDonald’s responsible for unfair labor practices allegedly committed by independently owned and operated franchisees.

The complaints ignore existing NLRB precedent and are supposedly justified by the questionable argument that the existing joint employer test inhibits effective collective bargaining by franchisee employees. The NLRB general counsel has also claimed that, in some cases, avoiding unionization is the “driving force” behind the franchising business model.

The new complaints relate to allegations of unlawful terminations, threats and retaliation by certain McDonald’s franchisees in response to their employees participation in a campaign for higher hourly wages organized by a union. McDonald’s has denied that it “directs or co-determines the hiring, termination, wages, hours or any other essential terms and conditions of employment of our franchisees’ employees.” McDonald’s and the franchisee owners have vowed to vigorously contest the NLRB allegations of joint employer status as well as the unfair labor practice charges lodged in the complaints.

Holding a franchisor jointly responsible for the employment practices of its franchisees would abruptly reverse years of NLRB precedent in which a franchisor has generally been viewed as a separate employer from its franchisees.

Existing Joint Employer Test:

For 30 years joint employer status has existed only if the franchisor exerts a direct and immediate control over the franchisee’s employees and the employees’ essential terms and conditions of employment – e.g., hiring, firing, discipline, supervision and direction of employment. Thus the NLRB has long recognized that a franchisor who only sets general guidelines and standards for its franchisees (trademark use, product and service standards, etc.) is not a joint employer, where the franchisee is the one in charge of hiring, termination, setting wages and benefits, and otherwise managing the operation of the workplace.

…The New Test:

The NLRB general counsel now advocates adoption of a more “flexible” test that would consider the “totality of circumstances” in determining joint employer status – taking into account whether an entity wields sufficient influence over the working conditions of another entity’s employees such that meaningful bargaining could not occur in its absence. This approach is not limited to franchise operations – other target areas identified by the general counsel are temporary service workers, outsourced operations and subcontracted services.

Conclusion:

The potential liability impact on franchisors and other businesses is significant. Franchisors would face substantial liability and legal defense costs for the conduct of independent franchisees, unknown to the franchisor, and over which they have no control.

It remains to be seen whether this maneuver will be approved by the NLRB and upheld by the federal appellate courts. This process could take several years. It is another example of a potential pro-labor reversal of long-standing precedents under the National Labor Relations Act to facilitate union organizing attempts.