NLRB's Joint-Employer Final Rule

The NLRB's Joint-Employer Final Rule – issued today – will make it significantly easier to find that two entities are both employers of a group of employees.

The biggest change is this: The 2023 rule considers the alleged joint employers’ authority to control essential terms and conditions of employment, whether or not such control is exercised, and without regard to whether any such exercise of control is direct or indirect.

The previous rule provided that a putative joint employer must “possess and exercise . . . substantial direct and immediate control” over essential terms and conditions of employment.

Read the 229-page rule HERE.

Chevron deference in the rear view mirror

The US Supreme Court on October 13 granted certiorari in a second case that will consider overruling Chevron v. Natural Resources Defense Council.  Relentless v. Department of Commerce [Briefs].

Chevron has required courts to defer to federal agencies' interpretation of statutory provisions that are "ambiguous," as long as that interpretation is reasonable. Some Justices have expressed that Chevron is probably wrong, essentially because it is the courts – under Article III of the constitution – that have the power and duty to interpret federal statutes.

It's important to note that the Court previously granted cert in Loper Bright Enterprises v. Raimondo [Briefs], which also challenges the legitimacy of Chevron. Justice Jackson is recused from the Loper case but not from the Relentless case. Therefore, the full Court will be able to weigh in.

The Court ordered fast-tracking of the Relentless case so it can be argued in tandem with the Loper case during the Court's January 2024 argument session.

I think the Court will either overrule Chevron, or sharply limit its reach. We shall see.

SCOTUS opens with 3 employment cases

As the US Supreme Court opens its 2023 session on Monday, October 2, certiorari has been granted in three cases dealing with employment law.

Title VII: Muldrow v. City of St. Louis, Missouri [Briefs]
Issue: Whether Title VII of the Civil Rights Act of 1964 prohibits discrimination in transfer decisions absent a separate court determination that the transfer decision caused a significant disadvantage. Oral argument not scheduled.

Whistleblower: Murray v. UBS Securities, LLC [Briefs]
Issue: Whether, following the burden-shifting framework that governs cases under the Sarbanes-Oxley Act, a whistleblower must prove his employer acted with a “retaliatory intent” as part of his case in chief, or whether the lack of “retaliatory intent” is part of the affirmative defense on which the employer bears the burden of proof. Oral argument on October 10, 2023.

Arbitration: Bissonnette v. LePage Bakeries Park St., LLC [Briefs]
Issue: Whether, to be exempt from the Federal Arbitration Act, a class of workers that is actively engaged in interstate transportation must also be employed by a company in the transportation industry. Oral argument not scheduled.

SCOTUS will decide one more employment arbitration case

On September 28, the US Supreme Court announced that it will take up Bissonnette v. LePage Bakeries [Briefs].

This is another inquiry into the meaning of the Federal Arbitration Act's exemption of "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce."

Neal Bissonnette and others are commercial truck drivers. They haul goods for Flowers Foods. Flowers ships its products across state lines from its manufacturing plants to retail stores. The drivers in this case were responsible for the last leg of that journey—from Flowers’ regional warehouse to stores throughout Connecticut.

The drivers' suit claims that Flowers misclassified them as independent contractors and violated state and federal wage laws.

The district court granted Flowers' motion to compel arbitration, based on an arbitration clause in its contract with the drivers. The 2nd Circuit (2-1) affirmed on the ground that the drivers are not exempt from the FAA "because they are in the bakery industry, not a transportation industry."

The drivers argue that nothing in the FAA specifies that the exemption applies only to workers who are in the transportation industry, and that it is enough that they are workers "engaged in … interstate commerce."

Flowers argues that the exemption applies only to those who are in the transportation industry – similar to "seamen" and "railroad employees."

Flowers also argues that the drivers "are not engaged in interstate commerce for purposes of § 1 because they work exclusively intrastate. [They] own geographically defined territories, and their companies market, sell, and distribute Flowers products only within the borders of Connecticut.”

We expect oral arguments and a decision in 2024.

4 US Supreme Court employment law cases

A quick look at 4 US Supreme Court employment law cases –

Groff v. DeJoy (06/29/2023) [PDF] – Religion.

Glacier Northwest v. Teamsters (06/01/2023) [PDF] – Preemption.

Coinbase v. Bielski (06/23/2023) [PDF] – Arbitration.

Helix Energy v. Hewitt (02/22/2023) [PDF] – FLSA.

Marshals arrest corporate officials

Ignoring a court order is perilous, yet rarely leads to being arrested.

After the NLRB found that an employer committed an unfair labor practice, and a US Court of Appeals affirmed, the employer balked. The court found the employer in contempt of court and imposed daily fines. The employer still balked.

So the court issued a "writ of body attachment" – essentially an arrest warrant – for two corporate officials. The court also ordered the employer to pay the Board over $30,000 in fines and attorney’s fees.

The U.S. Marshals Service for the Eastern District of Wisconsin took the two corporate officials into custody on September 12th for a same-day hearing at which they committed to a United States Magistrate Judge that they would promptly comply with the Court’s orders.

NLRB press release is HERE.

California hammers noncompetes

Employer-employee noncompete agreements are already void in California.
So what's next? More legislation.

1.  Beginning January 1, 2024, out-of-state agreements are void.

"Any contract that is void under this chapter is unenforceable regardless of where and when the contract was signed."

2.  Beginning January 1, 2024, it's unlawful to attempt to enforce a void noncompete.

"An employer or former employer shall not attempt to enforce a contract that is void under this chapter regardless of whether the contract was signed and the employment was maintained outside of California."

3.  Beginning January 1, 2024, it's unlawful to enter into a contract with a void noncompete.

"An employer shall not enter into a contract with an employee or prospective employee that includes a provision that is void under this chapter."

4.  There are remedies for the above.

"An employee, former employee, or prospective employee may bring a private action to enforce this chapter for injunctive relief or the recovery of actual damages, or both." Oh, yes, also attorney fees and costs.

5.  A bill in the works – certain to become law – says
(a) it will be unlawful to include a void noncompete in an employment contract, and
(b) require employers to notify current and former employees in writing by February 14, 2024, that any existing noncompete clause or agreement is void.

NLRB: Why the Wilcox confirmation matters

Gwynne Wilcox was confirmed as an NLRB Member on September 6. Why does it matter?
1. The Board membership is once again 3 Democrats and 1 Republican.
2. The Board makes major changes only when there are 3 votes. Now that there are 3 Democrats, we expect more major changes to come.
3. It's surprising that the Senate confirmed Wilcox without her nomination being paired with a Republican.
4. President Biden has not seen fit to appoint another Republican to the vacant seat that is still there.

5 big NLRB decisions in 2 days

Why 5 big NLRB decisions in 2 days? Well, there's an unwritten NLRB rule: There must be at least 3 votes in order to make a major change. Member Wilcox's term expired August 27, leaving only 3 Members, 2 D's and 1 R, so this became a deadline.

Card check: [Blog] When a union requests recognition on the basis that a majority of employees in an appropriate bargaining unit have designated the union as their representative, an employer must either recognize and bargain with the union or promptly file an RM petition seeking an election.  However, if an employer who seeks an election commits any unfair labor practice that would require setting aside the election, the petition will be dismissed, and—rather than re-running the election—the Board will order the employer to recognize and bargain with the union. Cemex Construction Materials Pacific (NLRB 08/25/2023) [PDF]

Unilateral changes: [Blog] (1) No more unilateral changes affecting a unionized workforce during a contractual hiatus or during negotiations for a first contract. (2) An employer’s past practice of unilateral changes that was developed under a management-rights clause in a collective-bargaining agreement cannot authorize unilateral changes made after the agreement expires and while bargaining for a new agreement is under way.  Wendt Corporation (NLRB 08/26/2023) [PDF] and Tecnocap, LLC (NLRB 08/26/2023) [PDF].

Concerted activity: [Blog] A single employee complaining in front of other employees can support an inference that the employee was seeking to induce group action. If so, that can be "concerted" activity rather than individual "griping" which would not be protected concerted activity. Miller Plastic Products (NLRB 08/25/2023) [PDF]

Mutual aid or protection: [Blog] Concerted advocacy by statutory employees on behalf of nonemployees is protected by the National Labor Relations Act when it can benefit the statutory employees. American Federation for Children (NLRB 08/26/2023) [PDF].

Wright Line: [Blog] NLRB cleared up some confusion that was caused by Tschiggfrie Properties, Ltd., 368 NLRB No. 120 (2019). Intertape Polymer Corp (NLRB 08/25/2023) [PDF].

Board Restores Protections for Employees Who Advocate for Nonemployees

NLRB August 31, 2023 press release:

In a decision issued today in American Federation for Children, Inc. (decided on August 26th), the Board reversed its 2019 decision in Amnesty International, returning to longstanding precedent that concerted advocacy by statutory employees on behalf of nonemployees is protected by the National Labor Relations Act (the Act) when it can benefit the statutory employees.

In Amnesty International, the Board found that the statutory concept of “mutual aid or protection” did not encompass the efforts of statutory employees to help themselves by helping others who are not statutory employees.  This was at odds with consistent prior Board, Circuit Court and Supreme Court precedent.  In reversing Amnesty International, the Board explained that such efforts by employees toward non-statutory individuals can benefit employees by improving their own working conditions or by leading nonemployees to later return the help they have received.

“The previous Board in Amnesty International failed to recognize that ‘mutual aid or protection’ easily covers situations where employees extend help to nonemployees, especially those who work alongside them,” said Chairman McFerran. “Standing in solidarity can be a protected act regardless of the employment status of those you stand with—the question is simply whether, in helping others, employees might help themselves and get help in return.”

The Board also reaffirmed established precedent that job applicants are statutory employees and that the immigration status of workers is typically immaterial to their employee status under the Act,  although in this case, the Board found the activity was protected regardless of whether the applicant was a statutory employee.

Members Wilcox and Prouty joined Chairman McFerran in issuing this decision. Member Kaplan dissented.

NLRB: Individual complaint can be "concerted" activity

A single employee, complaining in front of other employees, can support an inference that the employee was seeking to induce group action. If so, that can be "concerted" activity rather than individual "griping" which would not be protected concerted activity.

In Miller Plastic Products (NLRB 08/25/2023) [PDF] the NLRB made it easier to find that employee action is "protected concerted" action.

The Board overruled Alstate Maintenance, LLC, (2019), which effectively narrowed the test for determining concerted activity.  The Board explained that Alstate Maintenance had adopted an unduly restrictive test for defining concerted activity by introducing a mechanical checklist of factors in place of the Board’s traditional, fact-sensitive approach.

The Board's decision included this unremarkable statement: "The question of whether an employee has engaged in concerted activity is a factual one based on the totality of the record evidence."

NLRB: 2 changes for making unilateral changes

On August 30, 2023, the NLRB issued two full-Board decisions, Wendt Corporation and Tecnocap, LLC, (both decided on August 26, 2023), addressing the statutory duty of employers to bargain with unions before making changes in terms and conditions of work.

The NLRB press release:

In Wendt, the Board overruled Raytheon Network Centric Systems (2017), which had given employers greater latitude to make unilateral changes affecting a unionized workforce during a contractual hiatus or during negotiations for a first contract.  The Board explained that allowing employers to justify discretionary unilateral changes during such time periods as a “past practice” was both inconsistent with the Supreme Court’s decision in NLRB v. Katz, 369 U.S. 736 (1962) and undermined the pro-bargaining policies of the National Labor Relations Act. The Board in Wendt also reaffirmed the longstanding principle that an employer may never rely on an asserted past practice of making unilateral changes before employees were represented by a union (when the employer had no duty to bargain) to justify unilateral changes after the workers select a bargaining representative.

In Tecnocap, the Board overruled a different aspect of Raytheon that had not been addressed in Wendt. The Board held that an employer’s past practice of unilateral changes that was developed under a management-rights clause in a collective-bargaining agreement cannot authorize unilateral changes made after the agreement expires and while bargaining for a new agreement is under way. The Board explained that the Raytheon holding harmed the collective-bargaining process in two ways:  It forced unions to bargain to regain terms of employment lost to post-expiration unilateral changes, and it discouraged unions from agreeing to management-rights clauses in the first place.

Members Wilcox and Prouty joined Chairman McFerran in issuing the decisions. In Wendt, Member Kaplan concurred in finding that the employer acted unlawfully but but did not agree with the majority’s decision to reach the validity of Raytheon upon remand. In Tecnocap, Member Kaplan dissented.  

NLRB clarifies the General Counsel's Wright Line burden

In Intertape Polymer Corp (NLRB 08/25/2023) [PDF] the NLRB cleared up some confusion that was caused by Tschiggfrie Properties, Ltd., 368 NLRB No. 120 (2019).

The Board said:

"In Tschiggfrie, the Board majority, then-Member McFerran concurring in the result, sought to clarify the General Counsel’s burden under Wright Line in response to criticism from the United States Court of Appeals for the Eighth Circuit and what it described as confusion in a number of the Board’s decisions. As discussed below, however, the majority’s clarification was unnecessary and subject to misinterpretation. In our decision today, we explain that the Board in Tschiggfrie did not add to or change the General Counsel’s burden under Wright Line. Rather, the Board merely reaffirmed the principle, already embedded in the Wright Line framework, that the General Counsel is required to establish that protected activity was a “motivating factor” in the adverse employment action alleged to be unlawful. To the extent Tschiggfrie has been interpreted as modifying or heightening the General Counsel’s Wright Line burden, we reject that interpretation, and we reaffirm that the General Counsel’s burden under Wright Line remains the same as it has been throughout decades of Board jurisprudence."

The problem was that Tschiggfrie had suggested that the General Counsel’s burden was to show more than a reasonable inference that animus toward union or other protected activity was a motivating factor in an employer’s decision to take adverse action against an employee, and the GC had to have evidence of “particularized” animus toward the employee’s own protected activity. The Board has now clarified that a “particularized” animus toward the employee’s own protected activity is not part of the GC's burden.

Bargaining without an NLRB election – New framework

The NLRB's new card check decision is not quite Joy Silk, yet it is a major shift.

Here is the NLRB's press release:

Today, the Board issued a decision in Cemex Construction Materials Pacific, LLC announcing a new framework for determining when employers are required to bargain with unions without a representation election.  The new framework will both effectuate employees’ right to bargain through representatives of their own choosing and improve the fairness and integrity of Board-conducted elections.

Under the new framework, when a union requests recognition on the basis that a majority of employees in an appropriate bargaining unit have designated the union as their representative, an employer must either recognize and bargain with the union or promptly file an RM petition seeking an election.  However, if an employer who seeks an election commits any unfair labor practice that would require setting aside the election, the petition will be dismissed, and—rather than re-running the election—the Board will order the employer to recognize and bargain with the union. 

The Board explained that the revised framework represents an effort to better effectuate employees’ right to bargain through their chosen representative, while acknowledging that employers have the option to invoke the statutory provision allowing them to pursue a Board election.  When employers pursue this option, the new standard will promote a fair election environment by more effectively disincentivizing employers from committing unfair labor practices. 

The new Cemex standard differs from the historical Joy Silk standard, which required an employer to bargain with a union unless it had a good-faith doubt of the union's majority status.

“Today’s decision, along with the Board’s recently issued Final Rule on Representation, will strengthen the Board’s ability to provide workers across the country with a timely and fair process for seeking union representation,” said Chairman Lauren McFerran. “The Cemex decision reaffirms that elections are not the only appropriate path for seeking union representation, while also ensuring that, when elections take place, they occur in a fair election environment. Under Cemex, an employer is free to use the Board’s election procedure, but is never free to abuse it—it's as simple as that.”

In Cemex, the Board found that the employer engaged in more than 20 instances of objectionable or unlawful misconduct during the critical period between the filing of the election petition and the election.  Accordingly, the Board found that the employer was subject to a bargaining order under both the Supreme Court’s decision in NLRB v. Gissel Packing Co. and under the newly announced standard, applied retroactively in this case.

Members Wilcox and Prouty joined Chairman McFerran in issuing the decision. Member Kaplan joined the majority in part and dissented in part.

Bye-bye "ultimate employment decision"

The 5th Circuit – en banc – has ruled that a Title VII plaintiff is not required to plead an "ultimate employment decision": hiring, granting leave, discharging, promoting, or compensating. Hamilton v. Dallas County (5th Cir en banc 08/18/2023) [PDF].

The Dallas County Sheriff’s Department gives its detention service officers two days off each week. The department uses an admittedly sex-based policy to determine which two days an officer can pick. Only men can select full weekends off—women cannot. Instead, female officers can pick either two weekdays off or one weekend day plus one weekday. Bottom line: Female officers never get a full weekend off.

The 5th Circuit's response to these facts:

"Today we hold that a plaintiff plausibly alleges a disparate-treatment claim under Title VII if she pleads discrimination in hiring, firing, compensation, or the “terms, conditions, or privileges” of her employment. She need not also show an “ultimate employment decision,” a phrase that appears nowhere in the statute and that thwarts legitimate claims of workplace bias. Here, giving men full weekends off while denying the same to women—a scheduling policy that the County admits is sex-based—states a plausible claim of discrimination under Title VII."

Many courts have adopted the "ultimate employment decision" requirement, even though it has absolutely no connection to the text of the statute. One horrible example is the case in which a Black employee alleged that he and his Black team members had to work outside without access to water, while his white team members worked inside with air conditioning. The 5th Circuit turned him down for lack of an "ultimate employment decision." Peterson v. Linear Controls, 757 F. App’x 370, 373 (5th Cir. 2019) (per curiam), cert. dismissed, 140 S. Ct. 2841 (2020).

The current decision from the "conservative" 5th Circuit is most welcome.

Note: A similar case is pending at the US Supreme Court. A police sergeant alleged that she was the victim of sex discrimination because she was involuntarily transferred from her position in the Intelligence Division to a patrol position because her supervisor wanted to hire a man for her job. The Supreme Court narrowed the question presented to "Does Title VII prohibit discrimination in transfer decisions absent a separate court determination that the transfer decision caused a significant disadvantage?" Muldrow v. City of St. Louis (US Supreme Ct cert granted 06/30/2023) [Briefs]