Critical developments in labor and employment law



January 09, 2012

Inside The Beltway

Happy new year? . . .

Executive Branch/Administration
National Labor Relations Board—President Obama recess appoints three members to create a full, five-member board

On January 3, 2012, at noon, Craig Becker’s recess appointment as a member of the National Labor Relations Board (Board) ended reducing the Board to two members. In 2010, the U.S. Supreme Court held in New Process Steel v. NLRB, 130 S.Ct. 2635 (2010) that a two-member Board is without statutory authority to render decisions or exercise its delegated powers. 

On January 4, 2010, President Obama recess appointed three new members to the Board: Terence F. Flynn (R), Chief Counsel to former Board Member Schaumber; Sharon Block (D), U.S. Department of Labor Deputy Assistant Secretary for Congressional Affairs and former staff attorney to former Board Chairman Battista; and Richard Griffin (D), International Union of Operating Affairs General Counsel and member of the board of directors for the AFL-CIO Lawyers Coordinating Committee.

The recess appointments undoubtedly will be challenged by any party to a Board decision in which Block, Flynn, and/or Griffin participate on the grounds that the Executive Branch was without authority to make the recess appointments. The U.S. Constitution, Article II, Section 2 grants the President power to fill vacancies occurring only during a Senate recess and Article I, Section 5 states that neither house of Congress may adjourn for more than three days without the consent of the other house. The House of Representatives did not consent to a Senate recess of more than three days and the Senate has continued in pro-forma session.  

National Labor Relations Board—mandatory arbitration agreements violate federal labor law

In D.R. Horton, Inc., 357 NLRB No. 184 (January 3, 2012), the Board (Chairman Pearce and former member Becker, Member Hayes recused) held that an employer’s requirement that, as a condition of employment, employees sign arbitration agreements prohibiting joint, class, or collective actions regarding their wages, hours, or other working conditions against their employer in any forum—arbitral or judicial—violated Section 7 of the National Labor Relations Act. Section 7 gives employees the rights to not only form, join, and assist unions but to engage in concerted activities for their mutual aid and protection. The Board reasoned that when employees pursue class action relief, they are engaged in protected “concerted activity” that goes to the core purposes of the Act. The Board analogized mandatory arbitration agreements to “yellow dog” contracts, which banned employees from forming unions in the early 20th century and which prompted the passage of the Act and other federal labor legislation. 

The Board’s ruling is as significant as it is sweeping. It applies to union and non-union employers alike. The decision runs contrary to Supreme Court decisions including AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (April 27, 2011)[5–4 decision] and Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) rejecting limitations on employment arbitration agreements. An appeal is inevitable. We can expect that this will not be the final word on the enforceability of class action waivers in employment arbitration agreements. Consult your Nixon Peabody attorney for further information and assistance.

National Labor Relations Board—employer’s bad faith bargaining and refusal to comply with settlement agreement requires reimbursement to union of bargaining costs and reimbursement of litigation expenses to union and Board
In Camelot Terrace, 357 NLRB No. 161 (December 30, 2011), the Board held that the employer’s egregious bad faith bargaining to avoid reaching an agreement warranted reimbursement of the union’s negotiating expenses. The Board applied prior precedent, Frontier Hotel & Casino, 318 NLRB 857 (1995), enfd. in part, Unbelieveable, Inc., v. NLRB, 118 F.3d 795 (D.C. Cir. 1997). The Board also held the employer liable for litigation expenses to both the union and the Board for abrogating prior settlement agreements, defying its legal obligation to bargain, and raising non-meritorious defenses.  Member Hayes dissented from the litigation costs remedy contending that such a remedy is appropriate only for constitutional Article III courts or where there is clear congressional authorization. 

National Labor Relations Board—“micro-units” here we go . . .

The Board’s 2–1 decision in Northrop Grumman Shipbuilding, Inc., 357 NLRB No. 163 (December 30, 2011) is an excellent example of the upending in unit determinations caused by the Board’s recent decision in Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB No. 83 (August 26, 2011) By leveraging their new “micro-unit” formula, the Board majority rejected the company’s contention that the Regional Director’s approved unit of one-type of technicians should also include other technical employees.  The majority reasoned that the company failed to meet the new standard that a party claiming a larger unit must demonstrate the larger unit shares an “overwhelming community of interest” with those in the petitioned for unit. The majority’s lengthy discussion is illuminating regarding the extent to which it goes in supporting/justifying the union’s desired, targeted unit. In dissent, Member Hayes minces no words:

The newly-fashioned Specialty Healthcare standard . . . gives the [union’s] views on unit scope nearly dispositive weight, thereby abnegating the role Congress envisioned for the Board in determining appropriate bargaining units. . . . [T]his new standard will encourage petitioning for small, single-classification and/or single department groups of employees . . . [leading] to balkanization of an employer’s unionized workforce, creating an environment of constant negotiation and tension resulting from competing demands of the representatives of numerous micro-units. Such an outcome cannot be reconciled with the statutory goal of facilitating labor relations stability. Id. at 9.

Similarly, in DTG Operations, Inc., 357 NLRB No. 175 (December 30, 2011), the Board reversed a Regional Director’s finding that the employer satisfied the “overwhelming community of interest” burden under Specialty Healthcare and the only appropriate unit was a wall-to-wall unit of all 109 employees at the car rental facility at the Denver International Airport. Instead, the Board majority approved the 31 employee unit of rental service agents and lead rental service agents petitioned for by the union. In dissent, Member Hayes stated:
 As long as a union does not make the mistake of petitioning for a unit that consists of only part of a group of employees in a particular classification, department, or function., i.e., a so-called fractured unit, it will be impossible for a party to prove that an overwhelming community of interests exists with excluded employees.  Board review of the scope of the unit has now been rendered largely irrelevant. It is the union’s choice, and the likelihood is that most unions will choose to organize incrementally, petitioning for units of the smallest scale possible. The days of traditional all-inclusive production and maintenance units, technical units, or service and maintenance units—much less wall-to-wall plant units —are numbered. 

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