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Recently, President Obama announced his intention to nominate three members to the National Labor Relations Board (“NLRB”), but the legal status of the NLRB is far from clear.

The five-member NLRB issues decisions that interpret and apply the National Labor Relations Act (“NLRA”) to employers and unions.  The NLRA impacts both union and non-union companies.  The five members of the NLRB serve staggered terms and must be nominated by the President and confirmed by the Senate.  On April 9, 2013, President Obama renominated current Democratic Chair Mark Gaston Pearce, whose term expires on August 27, 2013.  Pearce is a union-side labor attorney from Buffalo, New York.  The President also nominated two management-side labor attorneys, Republicans Philip Miscimarra and Harry I. Johnson III.  Miscimarra is a partner with Morgan, Lewis & Bockius in Chicago, and Johnson is a partner with Arent Fox in Los Angeles.

These three nominees join two other Democrats who were previously nominated, Richard Griffin and Sharon Block.  Griffin is a former General Counsel for the International Union of Operating Engineers, and Block is a former staff counsel to the late Senator Edward Kennedy, and served under former Democratic Secretary of Labor Hilda Solis.  Griffin and Block are currently serving as “recess” appointees to the NLRB.

Part of the problem with the five NLRB nominations is that the recess appointments of Griffin and Block were declared unconstitutional and invalid earlier this year by the District of Columbia Circuit Court of Appeals in Noel Canning v. NLRB.  Under that decision, all of the NLRB decisions issued after Griffin and Block were named recess appointees on January 4, 2012 are void because the NLRB lacked the three-member quorum necessary to issue decisions.  On April 25, 2013, the NLRB recently requested discretionary review of the Noel Canning case by filing a petition for a writ of certiorari with the U.S. Supreme Court.

Some Senate Republicans have declared their intent not to confirm the package of the five NLRB nominations since it includes the two “recess” appointees who were previously declared unconstitutional.  Whether the Senate will actually confirm this package of nominees seems up in the air at this point given the position of many Senate Republicans.

During 2012, the NLRB issued a number of decisions which are viewed as tilting the playing field in favor of unions and employees, and have drawn the ire of employers.  Some of these decisions also impact non-union employers in areas like social media, employment at-will statements, and confidentiality of investigations involving employee misconduct.  But these decisions, for the time being, have been declared void by the D.C. Circuit Court of Appeals.  At the same time, Chairman Pearce has announced his intent to have the NLRB continue with business as usual, even though the D.C. Circuit has ruled that the 2012 decisions were invalidly issued when the NLRB did not have a quorum.

To add greater uncertainty to the mix, the House of Representatives narrowly passed a bill on April 12, 2013, essentially along party lines, that would strip the NLRB of authority to take any substantive action until the Supreme Court rules on the anticipated appeal of the Noel Canning decision, or the Senate confirms a quorum of members to the NLRB.  This bill is HR 1120, titled “Preventing Greater Uncertainty in Labor-Management Relations.”  A similar bill was previously introduced in the Senate.  But the Senate bill died in committee, and was never brought up for vote by the full Senate – which is not surprising given the Senate’s Democratic majority.  Now that the House passed HR 1120, the Senate will likely be forced to at least consider the issue.

Even if the Democratic-controlled Senate were to pass the bill (which seems highly unlikely), President Obama has indicated that he would veto the legislation rather than concede that his recess appointments were unconstitutional and that the NLRB lacks authority to take any action since it does not have a quorum, at least according to the Noel Canning decision.  And it is far-fetched to think that a presidential veto would be overridden by the needed two-thirds majority vote in both the House and the Senate.

Takeaways:

• So where does this leave employers?  Confused about the current state of labor law and waiting for action by the Supreme Court, most likely.  Even if the Supreme Court grants discretionary review of Noel Canning, it is unlikely that the Supreme Court would issue any decision resolving this dispute before sometime next year.
• Why should employers care about this dispute?  Even though the NLRB’s 2012 decisions are void according to the D.C. Circuit, Chairman Pearce is expected to continue to have the various Regional Offices of the NLRB investigate and prosecute violations of the NLRA following the precedents set by 2012 NLRB decisions.  Employers that want to challenge the findings of a Regional Office about alleged unfair labor practices that violate the NLRA will initially go to trial before an NLRB Administrative Law Judge, who will likely follow the 2012 NLRB decisions, at least until the Supreme Court rules otherwise.  Thus, employers would be wise to consult with labor counsel before taking action with respect to unions, or taking action against employees in areas like social media, at-will statements, or confidentiality of investigations, all of which now have the close attention of the NLRB.  Stay tuned.

Consider the following scenario.  An employee complains to a supervisor about harassment by a coworker.  The supervisor refers the complaint to human resources.  An HR supervisor interviews the complainant, the harasser, and the witnesses, and instructs the employees to keep everything discussed confidential – a perfectly acceptable instruction, right?

Not so fast according to the National Labor Relations Board (NLRB).  As part of a continuing series of decisions making life more complex for employers, in Banner Health System, 358 NLRB No. 93 (2012), the NLRB ruled that such a request violated the National Labor Relations Act (NLRA).  In Banner Health, the employer utilized a form that contained an instruction to employees that prohibited talking about the investigation.  Additionally, the HR rep conducting the interviews testified that she gave the instruction not to discuss the investigation while it was ongoing.

The NLRB concluded that the employer’s “blanket” rule approach to confidentiality was overbroad and therefore unlawful because it restrained employees from exercising their Section 7 rights to engage in protected and concerted activity (such as discussing workplace misconduct) under the NLRA.

Takeaway:  When conducting an investigation into possible employee misconduct, an employer must make a case by case assessment of whether there is a need for confidentiality.  Issues such as whether witnesses need protection, there is a danger of evidence being destroyed or testimony being fabricated, or a need to prevent a “cover up,” are issues to be considered in determining whether to instruct employees that the investigation must be kept confidential.  Be sure to consult your labor counsel to determine when it is appropriate and lawful to insist upon employee confidentiality.

The National Labor Relations Board (the “Board”) recently issued a decision that has garnered much attention.  In Banner Health System, the Board opined that an employer may lawfully advise employees to refrain from discussing an ongoing investigation with coworkers only when it has a legitimate business reason that outweighs the employee’s rights under Section 7.

While the Board’s decision in Banner Health is certainly putting the issue of confidentiality instructions on the list of things an employer must worry about when conducting workplace investigations, it may not be the employer’s only labor relations consideration.  For example, where a union is present, and the employer seeks to interview an employee concerning her conduct, the employer must take care not to deny the employee her Weingarten rights.  Thus, in unionized settings, bargaining unit employees may demand to have a union representative present for an investigative interview if the employee reasonably believes she may be disciplined for something she says.  Upon receiving a valid request for union representation, the employer is permitted one of three options: (1) grant the request; (2) cancel the interview; or (3) offer the employee the choice of either continuing the interview without a union representative or pass up the opportunity to give their own side of the story.  However, an employer is under no obligation to permit a union representative to attend a non-investigative meeting solely for the purpose of imposing discipline, or a meeting where an employee cannot form a reasonable belief that the interview may lead to the imposition of discipline.

Finally, where a workplace investigation is conducted in preparation for the trial of an unfair labor practice charge, an employer must notify employee witnesses of the purpose for the interview, and provide assurances as to the employee’s rights and the scope of inquiry.  Generally, the notice will take the form of a written notice of rights – often called a “Johnnie’s Poultry” notice – to be signed by the employee witness and retained by the employer.

Takeaways:  An employer should be aware of the protections afforded union and non-union employees when it plans to conduct workplace interviews.  The employer should prepare in advance for the interview, taking into consideration the circumstances under which the interview will be conducted.  The employer should determine whether the interview is investigative or disciplinary; how it will respond to a demand for representation; and the limits to an employee’s representational rights?

Recent lockouts of NFL referees and NHL players have once again brought labor disputes to the forefront of the media.  Additionally, the lockout of sugar beet processing workers in Minnesota and North Dakota by American Crystal Sugar has continued to drag on for over a year now.  These recent situations highlight a relatively uncommon occurrence in labor disputes – the lockout.

In a labor dispute there are two main economic weapons – the strike and the lockout.  If employees choose to withhold their services and strike, the employer has the right to hire replacement workers.  Replacements may be permanent or temporary, depending upon whether the employees are striking over disputed contract terms or whether the employees are striking in protest of an employer’s unfair labor practice.  Strikers generally may not collect unemployment benefits while they are on strike.  When the employees end their strike, the employer is required to rehire them if there were temporary replacements.  If the employer hired permanent replacements, the strikers are placed on a preferential recall list and may return to work as the permanent replacements resign or are terminated, however many months or years that may take.

In contrast, a lockout occurs when an employer refuses to allow employees to come to work.  The lockout may be offensive to put pressure on employees to accede to the employer’s contract demands, or it may be defensive in response to a threatened strike by employees.  In either situation, the employer may only hire temporary replacements.  Additionally, because the employees are readily available to work and are unable to do so through no fault of their own, locked out employees are generally eligible for unemployment benefits.  The employer must also inform the locked out employees and their union what contract demands the employer has that will end the lockout, if agreed to by the union.

Both the strike and the lockout are akin to high-stakes poker in a labor dispute.  There is risk and the potential for great losses in either event.  Lockouts, however, are far more unusual than strikes, in part because of the greater costs to the employer and the inability to hire permanent replacements.  In a lockout situation, the employer faces potentially high costs associated with replacement workers, added security and transportation costs for replacements, and unemployment benefit costs, among others.  Despite the greater costs, some employers may view a lockout as a viable tool in a labor dispute, particularly where the employer has the economic ability to pay for a lockout, or where an employer may be concerned about its vulnerability to a strike negatively impacting the employer’s ability to meet customer demands, or to care for patient needs in the health care industry.

Takeaway:  The decision to lockout employees during a labor dispute has many significant legal, financial, and practical implications.  An employer contemplating a lockout in a labor dispute would be well served by consulting with counsel far in advance of contract expiration to consider all of the pros and cons of such an action.  A lockout should not be undertaken lightly as miscalculations or rash actions could prove to be very costly.

The National Labor Relations Board (the “Board”) recently issued a decision concerning employee interviews that has garnered much attention.  In Banner Health System, the Board found that an agent of the employer violated the Act by advising an employee witness to refrain from discussing the matter with coworkers while the investigation was ongoing.  The Board opined that an employer may lawfully advise employees to refrain from discussing an ongoing investigation only when it has a legitimate business reason that outweighs the employee’s rights under Section 7.  The Board rejected Banner Health’s argument that its rule served to protect the integrity of the investigation, stating that an employer must first determine whether evidence of concern exists – e.g., that witnesses need protection, evidence is in danger of spoliation, or there is potential for a cover-up.

Takeaways:  Employers should remember that the rule established by the Board in Banner Health will apply to them even if their employees are not represented by a labor union.  Unfortunately, at this early date, it is not clear what kind of evidentiary showing would be sufficient to convince the Board that a confidentiality instruction is warranted, but one must wonder if it will be possible for a concerned employer to put the genie back in the bottle after conduct sufficient to warrant a confidentiality instruction has taken place.

The 26,000 members of the Chicago Teachers’ Union went on strike at the beginning of last week.  A tentative deal to end the strike was announced last Friday, but the strike has not yet been fully resolved.  For many, the strike is interesting because of its political implications.  Chicago is President Obama’s adopted hometown, and its Mayor, Rahm Emmanuel, is a Democrat who counted on organized labor to help him get elected.  These circumstances create real life drama and great fodder for political pundits.  But the strike is also interesting because in many ways it is quite different from the typical high-profile labor dispute.  In Chicago, the primary disputes between the teachers and the School District are over “non-economic” issues.

Generally, when a high profile labor dispute hits the national news, the parties are at odds over wage and benefit provisions – the so-called “economic” issues.  In bargaining, parties frequently bifurcate the bargaining process; getting the “easy” non-economic issues out of the way before tackling the divisive wage and benefit proposals.  However, an employer who focuses exclusively on the economic issues does so at its own peril.  Non-economic issues – including work jurisdiction, bumping and recall rights, seniority, discipline and discharge, and grievance procedures – have significant implications for the operation of a business.

While not directly economic in nature, the non-economic provisions of a labor contract often result in significant cost for employers.  This is because non-economic provisions generally work to limit an employer’s ability to efficiently and profitably manage its business.  For example, many labor agreements contain work jurisdiction provisions that designate the work that can be performed by bargaining unit position.  It is also not unusual to see provisions in contracts that limit an employer’s ability to introduce new technologies or production methods, or that impose staffing and scheduling requirements.  Such provisions hamstring an employer’s ability to timely respond to market trends, and introduce new technology or production methods.  As in Chicago, non-economic provisions can also compromise an employer’s ability to create and manage a high performance work team.  Progressive discipline and grievance provisions can make it difficult, if not impossible, to eliminate poorly performing workers; and seniority provisions often force employers to let ambitious and motivated less senior employees go in favor of employees who may or may not measure up.

Takeaways:

1. In first contract bargaining, fight hard to exclude or at least limit non-economic provisions that make it harder to run your business efficiently and profitably.  First contract bargaining is your best chance to succeed on this front.
2. Don’t ignore non-economic issues when bargaining successor agreements.  While the primary focus may still be on wages and benefits, non-economic terms may also have costs.   They also tend to be more important to the union than they are to management, and should be part your overall bargaining strategy.