The legal environment for labor unions in Missouri, and across the nation, will change as a result of the 2016 state and national elections. In Missouri, the election of Eric Greitens as Governor and the supermajority of Republicans in the Missouri Senate signal the likely addition of Missouri to the list of states to have passed Right to Work laws. Missouri House Speaker Todd Richardson recently said that passing a Right to Work law “would probably be the No. 1 issue” for the start of the legislative session in January. If enacted, Missouri would become the 27th state to pass Right to Work legislation.

Right to Work laws prohibit the use of “union security” clauses as part of any collective bargaining agreement, meaning union membership cannot be a condition of employment. More significantly if membership is not mandatory, union dues will not be mandatory. For most unions, who receive the majority of their money from dues, this has the capacity to reduce or even eliminate their ability to organize, let alone administrate union contracts.

A Right to Work law in Missouri also has the potential of increasing the amount of leverage employers bring to the bargaining table. If employees begin to resign their union membership at a significant rate, an employer will have an increased ability to negotiate for its own priorities as the fear of a strike will be lessened. Furthermore, each union may have to evaluate at what point continued representation is cost effective if employees choose to leave the union and stop paying dues at a high rate.

Trump’s election to the White House will have a significant effect on national labor policy as well. Trump will nominate two people to fill the vacancies in the National Labor Relations Board (NLRB), thus influencing its direction for years to come. Employers who have transitioned to new rulings on franchises, joint employers, handbook policies and numerous other issues will likely see many of these rulings abandoned or sent to the bottom of the list when it comes to any enforcement agenda. Further, when it comes to the Department of Labor, the new overtime guidelines will likely receive close scrutiny by the new administration and it is likely the proposed changes in the Persuader Rule will be abandoned.

Finally, the executive orders that President Obama has issued over the past 8 years could be rescinded immediately, if a newly inaugurated President Trump decides to take such action. The Fair Pay and Safe Workplaces Executive Order and the Order Prohibiting Discrimination Based on Sexual Orientation and Gender Identity for federal contractors and subcontractors are just two of the likely targets of a Trump administration’s shift in labor and employment policies.

As the newly elected politicians take power, and newly appointment positions are filled, watch the Husch Blackwell Labor Relations Law Insider for updates.

In most situations the NLRB’s long established Weingarten doctrine can be applied in a fairly straight-forward fashion.  But I still get questions regarding the interplay of drug and alcohol testing when it comes to Weingarten.  This is probably due to the fact that the Ralphs Grocery Company decision, which issued in 2014, is a relatively new expansion of the Weingarten doctrine wherein an employee has the right to consult a union steward prior to taking a drug test.  And then more recently, in Manhattan Beer Distributors the Board expanded Weingarten rights further, in the context of drug and alcohol testing, as the Board established that an employee had a right to a union steward to be physically present for the alcohol or drug test.  An employer need only wait a “reasonable amount of time” for the union representative to be physically present; however, that time will be a function of the substance being tested for and the effect of time on the outcome of the test results.  In other words, alcohol will probably have a shorter timeline in terms of what is a reasonable period, versus marijuana, which stays in the system for days, if not weeks.

Again, the employee must request the union representation. There is no duty on the part of the employer, absent a contractual requirement otherwise, to seek out union representation for these circumstances.  So be aware of these new restrictions and apply them wisely, otherwise your discipline will more than likely be found unlawful and an otherwise clean discharge will turn into the nightmare of reinstatement and full backpay.

On Tuesday, October 18, the Occupational Safety and Health Administration announced that it will once again postpone the enforcement date of the “employee involvement” provisions of its new rule on drug-testing, retaliation claims, and accident reporting, entitled “Improve Tracking of Workplace Injuries and Illnesses,” 81 Fed. Reg. 29624 (May 12, 2016).  This is the second such delay since the final rule was published in May.  OSHA had initially planned for the rule to take effect in August, but the agency later announced a delay in enforcement that would last until November 1.  This second, most recent delay in enforcement is set to last until December 1.

 

The agency has implemented the second extension in response to a request from United States District Judge Sam Lindsay to delay the enforcement date. Judge Lindsay is presiding in a case filed in the U.S. District Court for the Northern District of Texas (in Dallas) in which the National Association of Manufacturers and other industry groups and private companies have sought injunctive relief to prevent enforcement of certain provisions in the new rule. TEXO ABC/AGC, et al. v. Thomas, et al., No. 3:16-CV-1998 (N.D. TX July 8, 2016).  Judge Lindsay informed OSHA (and the other parties) that the additional time was necessary for him to consider the plaintiffs’ request for a preliminary injunction, which would result in a nationwide stay in the enforcement of the rule until the rule has been fully litigated in the courts.

 

We will provide updates as this case continues to develop.

On September 2, the Second Circuit Court of Appeals issued its decision in Patterson v. Raymour’s Furniture Co., the most recent case in what has become an all-out war between employers and the NLRB over the use of class-waiver provisions in arbitration agreements.  The decision, consistent with prior Second Circuit precedent enforcing such waivers, maintains the status quo for an issue with a recently-formed circuit split (discussed in our prior post here).

Beginning with its decision in D.R. Horton, the Board has taken the position that class-waiver provisions in arbitration agreements infringe on the rights of employees to engage in concerted activities and, therefore, violate the National Labor Relations Act.  Prior to May 2016, each federal appellate court that addressed the issue had rejected the Board’s reasoning and enforced these types of arbitration agreements.  However, in May and August 2016, the Seventh and Ninth Circuits, respectively, issued decisions finding that such agreements violated the NLRA and were not entitled to enforcement under the Federal Arbitration Act.  These decisions created a circuit split with the Fifth, Eighth, and Second Circuits, each of which had previously enforced these types of agreements.

However, just as the Eighth Circuit doubled-down on its rejection of the NLRB’s position in June (Cellular Sales of Missouri, LLC v. NLRB), the Second Circuit in Patterson has refused to reverse course on the issue.  Unfortunately, the Court’s application of pro-employer precedent on this issue was less than enthusiastic.  First, the Court chose to issue its decision through a “summary order,” which holds no precedential value.  Further, rather than stating its actual agreement with the prior Second Circuit decision enforcing class-waiver provisions in arbitration agreements (Sutherland v. Ernst & Young LLP), the Court merely stated that it was “bound” by that prior holding until it is overruled, perhaps suggesting that an en banc Second Circuit should reevaluate the Court’s position on the issue.  Even more explicitly, the decision states, “If we were writing on a clean slate, we might well be persuaded . . . to join the Seventh and Ninth Circuits and hold that the EAP’s waiver of collective action is unenforceable.”

In sum, employers should be wary of taking too much comfort in the Second Circuit’s decision in Patterson.  Although an immediate reversal of Second Circuit precedent would have been devastating, employers would have preferred a more ringing endorsement of Sutherland’s holding.  Regardless, the enforceability of class-waiver provisions in arbitration agreements is an issue that is far from settled, and given the circuit split, the Supreme Court’s involvement will almost certainly be necessary.

Once again I shake my head at the NLRB’s analysis in their application of the National Labor Relations Act. In the high profile Northwestern University case which issued in August of last year, the Board found that it would not assert jurisdiction over the grant-in-aid scholarship football players of Northwestern University, citing in particular the fact that it would not promote stability in labor relations.  The Board bypassed the issue as to whether the football players were statutory employees and went with a policy oriented approach, finding that it was not in the best interest of all involved to invoke jurisdiction.  As the Board noted “even when the Board has authority to act( which it would in this case, were we to find that the scholarship players were statutory employees) the Board sometimes properly declines to do so”, stating that the policies of the Act would not be effectuated by its assertion of jurisdiction.

In declining jurisdiction the Board focused on the fact that the overwhelming majority of Northwestern’s competitors in football are public colleges and universities over which the Board cannot assert jurisdiction, so it would not promote stability in labor relations to assert jurisdiction in that situation. This underlying theme is restated repeatedly in the Board’s decision in Northwestern University and while there are other distinctions set out by the Board, this is the core determining factor for the Board.  Yet, here we are, a few months later, and the Board holds in Columbia University that graduate students should be protected under the Act even though the Board will not have jurisdiction over the bulk of the universities and colleges who compete for their services, resulting in the same instability in labor relations.  The Board’s reasoning and distinctions simply make no sense.  Indeed, I think that if the matter is taken up on appeal, given the Northwestern University case, grounds for overturning the Board’s Columbia University decision are readily apparent.  There simply is not a rational distinction between the two cases.

So we are going to have to wait this one out and see if there is an appeal and what the courts’ findings may be in this further expansion by the Board of its jurisdiction.

On May 26, the Seventh Circuit Court of Appeals issued its decision in Lewis v. Epic Systems Corporation, another case evaluating the NLRB’s position that class-waiver provisions in arbitration agreements violate the National Labor Relations Act.  However, unlike any other Circuit Court that has addressed this issue thus far, the Seventh Circuit agreed with the NLRB’s position, finding that the company’s arbitration agreement was not entitled to enforcement under the Federal Arbitration Act.

Over the last few years, the Board has consistently taken the position that these class-waiver provisions infringe on the rights of employees to engage in concerted activities.  But federal appellate courts (including the Fifth, Second, and Eighth Circuits) have consistently rejected the Board’s reasoning and enforced these types of arbitration agreements.  However, the Seventh Circuit’s decision in Epic Systems has created a circuit split that will likely require intervention by the United States Supreme Court.

Importantly, the Eighth Circuit recently doubled-down on its rejection of the Board’s position.  On June 2, one week after the Seventh Circuit issued its Epic Systems opinion, the Eighth Circuit announced its decision in Cellular Sales of Missouri, LLC v. NLRB.  In once again rejecting the Board’s position, the Eighth Circuit relied on its prior decision in Owen v. Bristol Care, Inc., finding that the company did not violate the NLRA by requiring its employees to waive collective actions, or by enforcing this arbitration agreement.  However, the Eighth Circuit did give “considerable deference” to the Board’s finding that employees could reasonably construe the company’s arbitration agreement to foreclose their right to file charges with the Board.

Several other cases involving the enforceability of class-waiver provisions are pending on appeal in the various federal appellate courts.  The decisions in those cases will reveal whether the outcome in Epic Systems constitutes merely an outlier or represents a larger shift in thinking on this important issue.

In an unpublished decision, which issued on May 3, 2016, the United States Court of Appeals for the District of Columbia made it clear that there was a “fundamental and long-running disagreement” between the Court and the Board as to the appropriate approach by which to determine whether an employer had violated Section 8(a)(5) of the NLRA when it refuses to bargain with a union over a subject allegedly contained in a collective bargaining agreement.  As the Court put it:

The Board insists such questions turn on whether the union clearly and unmistakably waived its bargaining rights on the subject through the CBA, but we have repeatedly held the proper inquiry is simply whether the subject that is the focus of dispute is covered by the agreement. Under our precedent, if the subject is covered by the contract then the employer generally has no ongoing obligation to bargain with its employees about a subject during the life of the agreement.  (citation omitted)

 

The employer had reduced and reallocated hours of certain of its bargaining unit employees. The Board, finding no clear and unequivocal waiver regarding such action, found an unfair labor practice.  However, the DC Circuit, in reviewing the matter, concluded that the plain language of the CBA extinguished the union’s right to bargain over the subject of the employees’ hours, including any effects of an hourly reduction.  They relied primarily on the management rights clause of the CBA.  But more importantly, the Court also stated that there was no need to effects bargain over the issue.

This obviously is a major loss for the NLRB on this issue and one which the NLRB will do battle on in the future with other courts, but the DC Circuit has made it clear that they are not buying the Board’s waiver argument in these circumstances. Hopefully other courts will follow this same path.

On October 13, an en banc Eighth Circuit Court of Appeals, in Perez v. Loren Cook Company, denied the Secretary of Labor’s petition for review of an order handed down by the Occupational Safety & Health Review Commission (OSHRC). In doing so, the court provided an in-depth discussion of circumstances where the Secretary (and by extension, OSHA) is not entitled to deference in his (or its) interpretation of OSHA regulations.

Loren Cook Company is an industrial manufacturer of air circulating equipment. In May 2009, one of Loren Cook’s lathe operators was killed when a 12-pound rotating metal workpiece broke free from the lathe, flew out of the machine, and struck the operator in the head. The ensuing OSHA investigation resulted in the issuance of two citations, one of which included seven violations of 29 C.F.R. § 1910.212(a)(1), which the Secretary determined was violated by Loren Cook through its “failure to employ barrier guards to prevent the ejection of a workpiece from this kind of catastrophic breakdown of a lathe.” The fine assessed by the Secretary for these seven violations totaled $490,000.

In reviewing these citations, an Administrative Law Judge (ALJ) determined that § 1910.212(a)(1) only considers “routine risks of operation” and does not address “catastrophic failures” that result in the ejection of workpieces. The ALJ vacated the relevant citation, and OSHRC adopted the unmodified recommendation of the ALJ.

Subsequently, the Secretary petitioned the Eighth Circuit for review of OSHRC’s final order. A divided panel of the Eighth Circuit granted the petition for review and reversed OSHRC’s order. However, this panel decision was vacated by the court when it granted Loren Cook’s petition for rehearing en banc.

In denying the Secretary’s petition for review of OSHRC’s decision, the Eighth Circuit’s majority opinion focused almost entirely on the issue of whether the Secretary’s interpretation of § 1910.212(a)(1) was entitled to deference. The court first acknowledged that it “generally afford[s] substantial deference to the Secretary’s interpretation of his own regulations” (citing Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 (1945)) (other citations omitted). However, the court quickly added that “deference to the Secretary’s interpretation is only appropriate when both the interpretation itself and the manner in which the Secretary announces the interpretation are reasonable” (citing Martin v. Occupational Safety & Health Review Comm’n, 499 U.S. 144, 157-58 (1991)). In summarizing the framework provided by precedent, the court announced it would evaluate the Secretary’s interpretation based on three considerations: (1) “fidelity to the text of the regulation itself”; (2) “consistency with prior interpretations”; and (3) “the possibility of unfair surprise.” Revealing its ultimate conclusion, the court then stated, “Under this framework, we conclude that the Secretary’s interpretation of section 1910.212(a)(1) is unreasonable and thus is not entitled to deference” (emphasis added).

 Regarding textual reasonableness, the court determined that the catastrophic failure of a lathe and the ejection of a workpiece is unlike any category of hazard identified by the provision, concluding that the Secretary’s interpretation “strains a commonsense reading of the section” and “does not comport with the language of the regulation itself.” Concerning interpretational consistency, the court found the Secretary had “failed to produce a single citation, publication, or interpretation that could fairly be characterized as similar to the position the Secretary announced in the citation against Loren Cook,” adding that the Secretary’s interpretation was also inconsistent with OSHA’s machine-guarding guidance, “prevailing [judicial] opinion about the scope of this section,” and the Secretary’s (i.e., OSHA’s) prior machine guard investigation of Loren Cook in 2004.

Finally, regarding “unfair surprise,” the court acknowledged “strong reasons” for withholding deference from an agency when the agency has engaged in an extended period of acquiescence, noting that when “an agency’s announcement of its interpretation is preceded by a very lengthy period of conspicuous inaction, the potential for unfair surprise is acute.” Applying these principles to the Loren Cook citations, the Eighth Circuit emphasized the Secretary’s lack of response to a 1982 Second Circuit decision (Carlyle Compressor Co. v. Occupational Safety & Health Review Commission, 683 F.2d 673 (2d Cir. 1982)), noting the Secretary’s “fail[ure] to issue a single citation proclaiming his current interpretation, amend the language of the section to clarify the section’s scope, or issue interpretive guidance indicating his current position.” Thus, the court stated, the Secretary “appeared to agree with the Carlyle Court that the regulation did not require machine guarding to protect operators against the risk of the unexpected ejection of large workpieces.” The court found this “conspicuous inaction” was “amplified” by the Secretary’s history with Loren Cook, where OSHA had not previously cited the company for these issues despite its familiarity with the company’s operations. Therefore, the court concluded that the Secretary’s interpretation in the Loren Cook citation amounted to unfair surprise.

Thus, for these three reasons (textual fidelity, interpretive consistency, and unfair surprise), the Eighth Circuit concluded that the Secretary’s expansive interpretation of § 1910.212(a)(1) was not entitled to substantial deference.

 In conclusion, the Loren Cook decision demonstrates the Eighth Circuit’s willingness to keep OSHA in line when they fail to remain consistent or principled in their interpretation of the regulations, and employers can be encouraged in the majority’s desire to protect companies from unfair surprise and ensure they receive fair warning of citable conduct. On a broader scale, this case provides relevant precedent for cases beyond the OSHA context, as the Eighth Circuit’s discussion of deference principles will apply to other federal agencies seeking to have their regulatory interpretations honored. Given the current climate of far-reaching agency intervention, the Loren Cook decision should be found useful for its broad applicability. A court’s deference determination can significantly impact the outcome of a dispute, and this case offers useful avenues for seeking to prevent the application of substantial deference to an agency’s proffered interpretation. At the same time, however, the outcomes of any future application of these principles by the Eighth Circuit will greatly depend on the factual circumstances of each case, and companies (and their attorneys) should note the four judges who dissented from the majority opinion and prepare accordingly if any of them appear on a future panel for this type of issue.

Business Insights

Fall Labor and Employment Seminar

Seminar
10.15.14  Sheraton Westport Chalet
St. Louis, MO

Please join us for our annual labor and employment law update. This comprehensive half-day seminar will focus on current issues in labor and employment law.
Topics

  • What’s New in Employment Legislation and Case Law
  • FMLA/ADA Advice You Will Use: An Analysis of Real-Life Situations
  • The New Top 30 FLSA Questions You’ll Want Answers To
  • Medical Marijuana in the Workplace

Date & Time Wednesday, October 15, 2014 7:45 a.m. – Registration and continental breakfast 8:30 a.m. – noon – Program
Location Sheraton Westport Chalet 191 Westport Plaza St. Louis, MO 63146
Who Should Attend Business owners, vice presidents, directors, human resource professionals, general counsel and other in-house counsel
Continuing Education Credits Approved for 3.0 Missouri and 3.6 Illinois general CLE credits. Approved for 3.25 hours of HR Certification Institute recertification credits.
Questions? If you have questions about the seminar or would like to be added to our invitation list, contact Stephanie Dorssom at 314.345.6646.

It seems that every time we turn around there is another Executive Order placing additional burdens on federal contractors.  This time it is the Fair Play and Safe Workplace Executive Order which President Obama signed on July 31.  Under this new Executive Order, before prospective contractors can obtain a contract with the federal government, they must disclose “labor law violations” from the past three years encompassing fourteen different federal statutes and equivalent state laws and update this information every six months.  The contracting officers must take into account these violations in the issuance of such contracts.  However, the standards for such review have yet to be established.  Indeed, each agency will have to designate a senior official as a “labor compliance advisor” to provide guidance on whether the contractor’s actions rise to the level of a “lack of integrity or business ethics.”  These are rather broadly stated standards which ultimately will likely result in a great deal of inconsistency and abuse.  What is especially concerning in this situation is that the Executive Order states that companies with workplace violations are more likely to encounter performance problems, and so the Executive Order is being issued to improve the efficiency of federal contracting resulting in a greater return on federal tax dollars.  Well, if performance is really the issue then that should be the topic of discussion, not setting up a whole new level of bureaucracy.  In my experience, I have never known a contracting officer who was not well aware of any ongoing investigations regarding potential labor law violations with their contractors.  Quite frankly, they do a very effective job of being the watchdog over those situations.

Moreover, hidden away in the middle of this Executive Order is a very odd inclusion which specifies that companies with federal contracts of $1 million or more may not require their employees to enter into pre-dispute arbitration agreements arising out of Title VII or from torts related to sexual assault or harassment.  The recent decisions by the Supreme Court clearly indicate support for the arbitration process over burdening the courts with additional matters that are best handled on a private basis through an arbitration procedure in the workplace.  That would be an efficient use of federal tax dollars.  So if your purpose is to save tax dollars, this provision runs totally counter to that goal.

The final key provision of the Executive Order provides that employees shall receive information about their paychecks (hours worked, overtime and deductions) which normally is specified under state law in any event, so this inclusion is of very limited value, especially for federal contractors who have to provide certified payrolls on a regular basis.

The various agencies will have to spend a lot of time and effort on this Executive Order as it places substantial burdens on them in investigating a myriad of potential violations that could potentially effect the contracting company’s ability to obtain a contract to ensure that due process and fair play take place with respect to each of the contractors.  As these standards develop we will keep you informed, but it is obviously going to be a long, slow process.