When you draft employment arbitration agreements, it’s not enough to know what the law is. You should also know what the law will be at the time that someone challenges the agreement. Since this area of law changes continuously, that’s pretty hard to do without a crystal ball.

For a while, some courts in California were refusing to enforce arbitration agreements that did not attach a copy of the arbitration provider’s procedural rules. More recent cases, including Baltazar v. Forever 21, Inc., decided by the California Supreme Court in March 2016, dismiss that requirement. Now that that issue is supposedly resolved, the issue du jour is whether arbitration agreements can require employees to waive the right to bring a class action.

Last week, the Ninth Circuit issued a split opinion in Morris v. Ernst & Young saying that class action waivers violate the National Labor Relations Act. According to the two-justice majority, class action waivers violate § 7 of the Act, which states that:

“Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

While the National Labor Relations Board has taken the position that arbitration agreements are unenforceable in the non-union employment context, most courts to consider the issue have rejected that position as just another example of the Board going rogue. These include the Second,  Fifth, and Eighth Circuit Courts of Appeal. Even the California Supreme Court, in Iskanian v. CLS Transportation, approved such waivers for class actions (but not for the seemingly analogous claims under California’s Private Attorneys General Act).

Copyright: fergregory / 123RF Stock Photo
Copyright: fergregory / 123RF Stock Photo

So employees can waive their right to present employment claims to a jury individually, but not on a class-wide basis? How can that be? More importantly, what should employers drafting arbitration agreements do about class action waivers?

The split between the circuits makes it increasingly likely that the U.S. Supreme Court will eventually address the issue. When that will happen and how the Court will be composed at the time is entirely unclear. So I plan to continue including class action waivers in arbitration agreements. But I will also include language inviting a court reviewing the agreement to strike any provisions that are inconsistent with applicable law as it exists at the time the agreement is being reviewed. My crystal ball says that’s the best way to go here.

Public employee unions dodged a bulldozer yesterday when the U.S. Supreme Court announced that it had deadlocked 4 to 4 in Freidrichs v. California Teachers Ass’n, the case challenging the constitutionality of compulsory union dues for public employees. On January 12, we wrote that the Supreme Court was poised to end compulsory dues for California teachers, reversing the 9th Circuit decision in Freidrichs and overturning 40 years of the Court’s own precedent. That, of course, was before the death of Justice Antonin Scalia on February 13.

Copyright: moodboard / 123RF Stock Photo
Copyright: moodboard / 123RF Stock Photo

Oh, what a difference an empty chair makes. Scalia was certain to be the fifth vote in favor of ending compulsory dues on First Amendment grounds. Now, with a 4-4 tie, the 9th Circuit opinion stands, and in California (along with 20 other states) public employee unions can continue to force payment of dues under threat of firing.

The unions know that without government coercion, it will be impossible to maintain the cash flow and political influence they currently enjoy. In those states where compulsory dues have been abolished, union collections have dropped by as much as half when dues become voluntary. For now, however, the unions can breathe easy. It will take at least a few years for the issue to percolate back to the Supreme Court, and the result at that time will likely depend on which president fills the empty chair.

Almost 40 years ago, the U.S. Supreme Court in Abood v. Detroit Board of Education ruled that states could require public employees to pay union dues. The Court, however, now seems poised to sidestep, and perhaps even overrule, that decision. On January 11, the Court heard argument in a case brought by dissident teachers in California who claim that compulsory union dues violate their First Amendment rights. In Friedrichs v. California Teachers Association,  the plaintiffs argue that when government requires one to subsidize a particular political cause – i.e., to put one’s money where one’s mouth isn’t – the principle of free speech is violated. The plaintiffs further contend that almost everything about a public employee union is political, and therefore they cannot be compelled to pay dues or even the “agency fees” the teachers’ unions have been allowed to charge non-members. Based upon the comments at the oral argument, it appears that a majority of the Justices may agree.

Copyright: 72soul / 123RF Stock Photo
Copyright: 72soul / 123RF Stock Photo

Justice Kennedy, considered by many observers to be the swing vote on this issue, seemed to tip his hand in questioning the lawyers for the union who argued that the plaintiffs were merely seeking to become “free riders” in the collective bargaining process. He responded, “The union is basically making these teachers compelled riders on issues with which they strongly disagree.”  Justice Scalia drew a distinction between private employment and public employment “where every matter bargained for is a matter of public interest.” Justices Thomas, Roberts and Allito have indicated in other decisions that they may be willing to cast aside Abood.

If the plaintiffs prevail in this case, the cash collecting ability and political clout of the public sector unions in California could be significantly diminished.  A decision is expected in June.

At least some good has come out of the Supreme Court’s finding that President Obama’s recess appointments were invalid in Noel Canning. By virtue of the Supreme Court’s  decision, the Labor Board reconsidered its decision in Fresenius USA (pdf) and concluded that an employer acted lawfully when it discharged a union supporter for lying during an internal investigation into who scribbled vulgar, offensive, and arguably threatening statements on union newsletters in the employer’s break room.

Before you get too excited, the Board took pains to point out that it assumed the employee’s vulgar statements were protected.  Additionally, the Board noted that it will find that an employee is privileged to lie during internal investigations where the employee has a legitimate interest in shielding his section 7 activity from his employer. But the Board said it will recognize an exception to the right to lie about section 7 activity where the questioning and lie relate to the employee’s job performance or the employer’s business.

In this case, the Board found the discharge permissible because the investigation had a legitimate business interest. Specifically, the employer received a number of complaints from female employees that the statements were intimidating, vulgar and offensive and its investigation of those complaints was consistent with its anti-harassment policy and with federal law. The board also noted that the investigation did not pry into the employee’s support for the union, but questioned him solely on the handwritten comments the allegedly harassing comments. Also, the employer’s discharge was consistent with the employer’s past practice.

Takeaways: The Board’s decisions on where to draw the line between permissible and impermissible employee speech are anything but clear. Employers should get experienced legal advice before addressing these issues.

When Cooper Tire & Rubber Company brought in replacement workers during a lockout, picketing strikers shouted a range of obscenities. The NLRB’s tolerance of obscenities in this context is well documented. But on this occasion, the comments were both obscene and racist. Comments directed at African-Americans included things like:

  • “Hey, did you bring enough KFC for everyone?”
  • “Go back to Africa, you bunch of f_____g losers” and
  • “Hey, anybody smell that? I smell chicken and watermelon.”

The company fired an employee who admitted making the first statement and who, despite his denial, was shown on video making the third one. The union grieved the decision and an arbitrator upheld the termination.

The NLRB, however, refused to defer to the arbitrator’s award and ordered the employee who made the racist statements reinstated with back pay. Explaining that conduct on a picket line was judged by a different standard than conduct in the workplace, the Administrative Law Judge said that the employee’s statements, “while racist and offensive,” were still protected by the National Labor Relations Act.”

Takeaways:

  • The NLRB has its own standards for what’s appropriate in the workplace and in what context. It will condone behavior that the rest of the civilized world has decided is contemptible.
  • Employers should seek legal advice before disciplining employees for for conduct that occurred during picketing, bargaining, or any type of protest regarding working conditions.

Thanks to Michael C. Wilhelm at Briggs & Morgan for posting about this case and including a copy of the Administrative Law Judge’s Decision.

Warning: This post contains words that you used to not be able to say on TV.

The NLRB believes that vulgarity in connection with organizing campaigns is A-OK. As reported by Ben James at Law360 (subscription), the Board ruled that buttons and stickers that say “Cut the Crap” and “WTF” are not so offensive as to deprive the wearers of the protections of the National Labor Relations Act.

Copyright: njnightsky / 123RF Stock Photo
Copyright: njnightsky / 123RF Stock Photo

Since the Board previously ruled that it was unlawful for an employer to fire an employee who said on his Facebook page that his boss was a “nasty motherfucker” and “Fuck his mother and his entire fucking family,” this latest ruling shouldn’t surprise anyone. But you have to wonder, at what point, if any, would the NLRB say that vulgarity in connection with an organizing campaign has crossed the line?

In keeping with its clear pro-union agenda, late last year, the NLRB overruled its past precedent and held that employers who grant employees access to their email systems must now allow them to use the email system for Section 7 activity during nonworking time. Under the NLRA, Section 7-protected activity could include such things as emails between employees soliciting support for the union or some other concerted activity for the employees’ mutual aid or protection.

The NLRB will now presume that employees who have been given access to the employer’s email systems in the course of their work have the right to use the email systems to engage in Section 7-protected communications on nonworking time. But an employer may rebut the presumption by demonstrating that special circumstances necessary to maintain production or discipline justify restricting its employees’ usage.

This rule applies to most businesses, whether unionized or not. Employers that did not give employees access to their email systems before do not need to do so now. However, employers that presently restrict access for business purposes only must now give employees access to engage in Section 7 communications during nonworking time, unless they can justify a complete or partial restriction on employee use.

The decision leaves many questions unanswered. For example, what special circumstances are necessary to justify a total ban or partial restriction on email usage?  Also, how can an employer lawfully ensure that its employees are working during working time without conducting unlawful surveillance on the employees—another unfair labor practice under the NLRA?

While waiting for answers to these questions, we will keep you posted of any developments.

Copyright :  Vedran Vukoja (Follow)
Copyright : Vedran Vukoja

Every employer in California needs legal help at some point. The laws are too complex and the penalties too severe for employers to figure it all out on their own. Even the courts and government agencies can’t decide what some of these laws mean.

So the only question for employers is whether you’re going to take preventive steps to avoid legal issues or wait for the legal issues to arise. The former course can be way less expensive, disruptive, and damaging to your reputation. With that in mind, my colleague Nancy Yaffe and I put together a list of 10 things California employers can do to protect themselves in 2015. You can access it here.

And yes, that’s the same Nancy Yaffe who was recently selected by L.A. Biz to receive one of its inaugural Women of Influence Awards. The program honors women business leaders in the LA area who stand out both for their achievements in the marketplace and their commitment to community and mentoring. Way to go Nancy!

On December 15, 2014, in a split decision along party lines, the National Labor Relations Board (“the Board”) in Babcock & Wilcox Construction Co., Inc., overruled 30 year-old precedent that will needlessly undermine the utility and finality of arbitrations that concerned allegations of retaliation, interference and coercion with employees Section 7 rights. The Board did this by imposing a new standard for when it will defer to arbitration decisions alleging violations of Section 8(a)(1) and (3) of the act.

Under the new test, the Board will defer to an arbitration decision only if the arbitration proceeding was fair and regular; the parties agreed to be bound; the party urging deferral shows that the arbitrator was explicitly authorized to decide the unfair labor practice issue; the arbitrator was presented with and considered the unfair labor practice issue or was prevented from considering the unfair labor practice issue by the party opposing deferral; and Board law reasonably permits the award.

The Board’s new approach places the burden on the employer to ensure either that the arbitration agreement incorporates the statutory right at issue in the unfair labor practice allegation or that the parties explicitly agree to address the issue; that the arbitrator considered and addressed the issue in rendering the award. This framework will likely undermine the finality of arbitrations as it provides the Board considerable discretion in determining whether an award/decision is “reasonable.” It also may give unions a second bite at the apple if an arbitrator denies a grievance in an arbitration that deals with allegations such as unlawful/unjust discharge or discipline.

Copyright: ratoca / 123RF Stock Photo
Copyright: ratoca / 123RF Stock Photo

We’ve been expressing concern about the National Labor Relations Board’s efforts to implement “quickie election” rules for over a year. Well, the rules are now in place and they’re part of a double-whammy for employers. First, the NLRB reversed course to decide that unions can require employers to turn over employees’ e-mail addresses. Now, under the new rules, an election can be held as soon as 14 to 21 days after a petition is filed, drastically reducing the time the employer has to educate its workforce about whether the benefits or organizing outweigh the detriments.

Marv Weinberg and Chip Zuver explain the new rules in more detail here. Is there anything employers should do now other than wring their hands and lament their situation? Absolutely. They should:

  • Expect more organizing activity since elections will be easier for unions to win. So they need to realistically evaluate their susceptibility to an organizing campaign and work to identify and eliminate weaknesses. If they wait until a petition is filed to justify unpopular policies, it may be too late.
  • Reconsider whether collecting personal email addresses and cell phone numbers for employees is advisable.
  • Review their nonsolicitation and access policies to see if they’re still enforceable under the new rules.
  • Consider implementing “open door” policies to encourage employees to bring issues and concerns directly to management. Start telling and showing them that they don’t need a union for them to have their voices heard.