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Labor Relations News Update August 25, 2014

Today’s Labor Update:

Increased NLRB use of section 10(j) injunctions interferes with employer rights in collective bargaining

Asia-Pacific Labor & Employment News Summer 2014

Colombia’s state oil firm Ecopetrol reaches accord to avoid strike


Increased NLRB use of section 10(j) injunctions interferes with employer rights in collective bargaining

Epstein Becker Green

Peter M. PankenSteven M. Swirsky and Adam C. Abrahms

August 14 2014

In May, we cautioned employers that the NLRB would be increasing its aggressive pursuit of injunctions under Section 10(j) of the Act to pressure employers in a range of unfair labor practice cases.  The Board’s aggression and apparent overreach is clearly revealed in one recent case in which the Board petitioned for and was granted an injunction to end a lockout, only to have the underlying unfair labor practice allegation dismissed eight days later when the Administrative Law Judge who heard the case found that the parties had indeed reached impasse as the employer claimed, and thus, that the lockout was lawful.

In NLRB v. Kellogg Company, No.14-2272, (W.D. Tenn. July 30, 2014), the General Counsel sought a Section 10(j) injunction in response to the union’s 8(a)(5)  charges alleging that there was not an impasse and the employer’s lockout of its employees was an unfair labor practice.  On July 30, 2014, U.S. District Judge Samuel H. Mays, Jr. in Memphis issued an injunction ordering Kellogg Company to reinstate over 200 employees at a plant who it had locked out on October 22, 2013, after their union rejected the employer’s “last, best and final offer,” in negotiations over a local supplement to the parties’ Master Agreement.

After investigating ULP charges filed by the Bakery, Confectionary, Tobacco Workers and Grain Millers International Union, and Local Union 252-G, the NLRB’s Regional Director for Region 15 in Memphis, TN issued a Complaint alleging that the company had violated Section 8(a)(5) by declaring impasse unlawfully and then locking out the employees at the plant and by failing to provide the union with information that it had requested and needed to carry out its role as the bargaining representative.  The NLRB alleged that the employer was not bargaining in good faith but was instead seeking an interim change in wages in violation of a Master Agreement which had not expired.

On April 15, 2014, after the Complaint was issued but before a hearing was conducted on the merits, at which evidence would be presented and the Union, the employer and the Board’s General Counsel would be able to argue their positions to the Administrative Law Judge who would decide whether the General Counsel had proven that Kellogg had committed ULPs as alleged in the Complaint, the Regional Director for the NLRB’s Memphis Office filed an action in the District Court for an injunction under Section 10(j) of the Act.  In the petition for an injunction, the Regional Director asked the Court for an order directing Kellogg to end the lockout and to reinstate the employees, pending the outcome of the underlying ULP case.  Rather than holding an evidentiary hearing on the petition, Judge Mays waited for the ULP hearing, so that he could make his decision based upon his review of the record.

A five day hearing on the ULP Complaint was conducted from May 5-9, 2014 before ALJ Ira Sandron, and Kellogg, the Union and Counsel for the Board’s General Counsel submitted briefs to the ALJ in June 2014.  After the hearing closed, the record was submitted to the District Court, and on July 30, 2014, Judge Mays issued his Order, granting the Board its injunction and ordering Kellogg to end the lockout and reinstate the employees who had been out since October.

The Section 10(j) injunction was not based on findings that the employer had committed ULPs, that there was not an impasse or that the lockout was unlawful.   Rather, as the Order explained it was based on his finding that the NLRB as petitioner had met an extremely low standard necessary for it to secure the injunction.  Judge Mays found that the Regional Director, as the petitioner, had “reasonable cause” to believe that the company had violated the Act in the manner alleged in the charges filed by the union, and that an injunction was “just and proper” based on the facts as the Regional Director alleged.

To meet this burden, the Court noted that all the NLRB was required to do was to produce “some” evidence in support of the petition.  The Court noted that in seeking an injunction, the NLRB “need not even convince the Court of the validity of the Board’s theory.”  Instead, all it had to do was show that its theory was “substantial and not frivolous”.

To satisfy the requirement that issuance of an injunction was “just and proper,” the Court stated that all the Board had to show was that such relief was “necessary to return the parties to status quo pending the Board’s proceedings in order to protect the Board’s remedial powers under the Act.”

Indeed, the Judge even opined that in applying the reasonable cause/just and proper standard, “fact finding is inappropriate.” District Courts “should not resolve conflicting evidence or make credibility findings.”

Just 7 days later, the Administrative Law Judge issued his Decision and proposed order, in which he found that the allegations that Kellogg had illegally declared an impasse and locked out the employees should be dismissed.  He rejected the Board’s central premise and concluded that Kellogg had bargained to impasse over a mandatory term and condition of employment and therefore had the right to lock out its Memphis employees in support of its bargaining position.  (Kellogg Company and Bakery, Confectionary, Tobacco Workers & Grain Millers International Union and its Local 252. 15 CA 115259)

The Administrative Law Judge’s decision came after a full evidentiary hearing where factual evidence was presented and the NLRB’s evidence in support of the allegations could be heard and considered, and perhaps most importantly, the employer had the right to present its evidence and argue its case.

What is so unique and troubling about the Board’s pursuit of an injunction in this case is the fact that a full trial on the underlying ULP complaint was about to take place when the Board filed its petition, that trial had been completed by the time that the District Court considered the petition and granted the injunction and that the results were so diametrically opposed because of the undue deference commonly granted to the NLRB when it petitions for an injunction under Section 10(j).  When the Administrative Law Judge heard the case, evaluated the evidence and considered the employer’s legal theories and not just those of the NLRB, he quickly found that there was no violation and the employer had the right to lock its employees out in support of its bargaining position.  When the District Court considered the petition, it was essentially directed to simply take the Board’s word for it that ULPs had been committed and that an injunction was appropriate.

These contrasting results confirm the seriousness of the potential for an aggressive NLRB to over use and misuse discretionary injunctive relief under Section 10 (j) – a tool that has been used sparingly for most of the Board’s history.  The fact that many District Judges consider applications under Section 10(j) without a full or even partial evidentiary record and afford immense deference to the NLRB’s legal theories, however novel or misdirected they may be demonstrates the risks that employers face.

For these reasons employers facing the prospect of such injunction proceedings should not hesitate to urge the courts to require evidence to back up the NLRB’s claims and should point out when the legal theories underlying such cases are not based on well recognized principles and should therefore be weighed with appropriate skepticism.

This document has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please consult your attorneys in connection with any fact-specific situation under federal law and the applicable state or local laws that may impose additional obligations on you and your company. © 2014 Epstein Becker & Green, P.C.


Asia-Pacific Labor & Employment News Summer 2014

Read the Asia-Pacific Labor & Employment News – Summer 2014.

Asia-Pacific labor & employment news – summer 2014

Michael J. Gray, Elaine Ho, Jean Kuo, Vincent Li, John C. Lin and David P. Longstaff

Upcoming and Recent Changes in the Law

Taiwan: Legislative changes to regulate use of agency workers

According to the statistics published in May 2013, Taiwan has more than 590,000 agency workers and that number is continually rising at an unprecedented rate. As such, existing labor laws governing agency workers have become both inadequate and outdated. To address this issue, Taiwan’s Ministry of Labor approved the submission of the draft Protection of Agency Workers Bill on February 6, 2014.

In essence, the draft bill seeks to discourage the use of agency workers as a matter of principle, The bill achieves this by limiting the types of work in which an agency worker can engage, and by setting a maximum percentage of agency workers that an enterprise (“User”) may employ. The draft bill also affords agency workers the same rights as the full-time employees of the User, such as the agency worker’s right to tender a formal labor contract to the User if he or she continues to work at the User after one year. The agency and the User will be jointly and severally liable if the agency worker is not duly paid or suffers damages due to work performed.

China: Government limits opportunity for the use of contractors by foreign corporations

On March 1, the Interim Provisions on Labor Dispatch (“Interim Provisions”), which were promulgated by the Chinese Ministry of Human and Social Security on January 24, came into effect. This move demonstrates the intention of the Chinese legislature to limit the use of dispatch workers, whose rights are akin to those of contract workers in common law countries, by Foreign Invested Enterprises (“FIEs”). The history of dispatch labor can be traced back to the early stage of China’s opening to foreign investment more than three decades ago. Initially, measures were adopted to restrict the development of representative offices set up by foreign investors and to control the scale of their local employment. The representative offices of foreign entities are not allowed to engage employees directly but may have certain government-appointed employment service agencies, such as the Foreign Enterprises Human Resources Service Company Limited, to hire and then dispatch local employees to them.

By using labor dispatch workers, FIEs can circumvent the operation of the Employment Contract Law, which took effect January 1, 2008. The Employment Contract Law includes rigorous dismissal requirements, but these do not apply to dispatch workers, who have only limited protections. To remedy the situation, the Chinese legislature has promulgated the Decision regarding the Modification of Employment Contract Law (“Decision”) and its associated Regulations to provide greater protection to these workers. The Decision and the Regulations expressly provide that labor dispatch shall be an ancillary method of employment and be confined to the temporary and substitutable positions. Moreover, the Decision places a cap on the number of labor dispatch workers that an FIE may employ: 10 percent of the total headcount.

Singapore: Government balances needs of employers with the rights of employees

The Employment, Parental Leave and Other Measures Act 2013 (“EPLOM Act”) makes significant changes to the Singapore Employment Act (“EA”), extending protection for workers and improving employment standards, while recognizing that employers have practical business concerns and a need to remain competitive. The EPLOM Act also introduces certain amendments to the Child Development Co-Savings Act. Most of the changes, with the exception of Section 45 of the EA relating to retrenchment benefits, took effect on April 1, 2014.

The key amendments to the EA include: (i) extending EA protection to more workers by increasing the income ceiling for employees to which the EA in general and Part IV of the EA apply; (ii) improving employment standards and benefits for employees in the areas of certain deductions from salaries, retrenchment benefits, and collective agreement for union representation; (iii) reducing rigidity and augmenting flexibility for employers in the areas of overtime pay, redress for unfair dismissal, working on public holidays, and sick leave and medical expenses for cosmetic consultations and procedures; and (iv) enhancing enforcement and compliance with employment standards by increasing certain penalties and granting more power to employment inspectors.

Key Decisions of Local Courts and Regulators

Japan: Mass redundancy vindicated on account of economic necessity

Japan Airlines International Co., Ltd. (“JALI”), the core airline business company of the JAL Group, filed an application for the commencement of corporate reorganization proceedings together with Japan Airlines and JAL Capital Co., Ltd. in January 2010. After the commencement of these proceedings, and as a part of the corporate reorganization plan, the JAL Group made a decision to reduce its workforce by approximately 16,000 employees within its group companies, including JALI, by the end of March 2011.

Based on this decision, JALI began its workforce reduction by repeatedly offering an early retirement program with favorable conditions (such as additional special severance) to its employees, including cockpit crew members and flight attendants. Despite JALI’s efforts to achieve its workforce reduction target by holding explanatory meetings and collective bargaining sessions with the labor unions (to explain the corporate reorganization plan and the necessity of workforce reduction), and having individual meeting with employees, the number of employees who applied for the early retirement program did not meet JALI’s target number.

Accordingly, at the end of December 2010, JALI dismissed 81 cockpit crew members and 84 flight attendants (all of whom were indefinite term employees). Among those who were dismissed, 76 cockpit crew members and 72 flight attendants filed separate suits against JALI in the Tokyo District Court, claiming that their dismissal by JALI was void, seeking affirmation of the existence of employment relationship and back pay including wages to the date of confirmation of the court’s judgment.

Both of the district court judgments indicated that the requirements for dismissal under Article 16 of the Labor Contract Act also apply to a company under corporate reorganization or rehabilitation proceedings. Article 16 of the Labor Contract Act provides that any dismissal of an employee that is “deemed to be objectively lacking reasonable grounds and socially unacceptable” will be void. Further, under Article 16, in order for termination of employment due to business necessity (“economic dismissal”) to be effective, the following four factors should be considered: (i) the necessity of decreasing employment levels, (ii) the necessity of choosing dismissal as means of restructuring, (iii) the fairness in selecting employees to be dismissed, and (iv) whether the procedure was fair. It should be noted that the district courts considered these four factors to be factors that should be considered overall and not as four separate conditions which must be met for an economic dismissal to be valid. In March 2012, the Tokyo District Court rejected the plaintiffs’ claims in both cases on the basis that there was a valid “economic dismissal”.

The plaintiffs in both cases appealed to the Tokyo High Court. On June 3 and 5, 2014, the Tokyo High Court rejected both appeals. The plaintiffs made a final appeal to the Supreme Court of Japan on June 17, 2014. A decision from the Supreme Court remains pending.

Australia: Full Bench of the Fair Work Commission confirms that multinational employers not obligated to relocate employees overseas in the event of Australian redundancies

The claimant in Murray v Ventyx Pty Ltd [2014] FWCFB 2143 was employed as a technical project manager by Ventyx Pty Ltd pursuant to a Modern Award and was one of nine employees made redundant in Australia. Ventyx notified Murray of the redundancy on July 1, and was told that it was to occur the next day. On that date there was a meeting at which Murray was told he should supply Ventyx with any additional information relevant to the decision. Despite expressing an interest in relocating overseas during that discussion, Murray was made redundant. Murray challenged the decision in the Fair Work Commission on the basis that the dismissal was unfair.

The Fair Work Commission held that Ventyx ought to have considered options for redeployment and discussed those options as early as practicable, as set out in the Modern Award. The Full Bench of the Fair Work Commission upheld an appeal by Ventyx for the reason that the cost of relocation was prohibitive and the discussion was in fact held as early as possible, having regard to the importance of keeping client data, that Murray had been working with, confidential. The employer was not obliged to redeploy Murray overseas. The obligation to notify an employee of redundancies ‘as early as practicable’ as prescribed in a Modern Award is tempered by security and confidentiality considerations and does not mean “immediately.” The Full Bench also held that relocation must be practical. Accordingly, an employer could decline to fund a relocation overseas in the event of redundancy were there no business case for it.

Australia: Competition watchdog at last confronts union misbehavior

The Australian Competition and Consumer Commission (“ACCC”) has recently confirmed that it is investigating two separate instances of trade union misconduct. These investigations are occurring against the background of recent criticism of the ACCC in its approach to these matters and a Royal Commission into Union Governance and Corruption.

The first investigation relates to one union’s conduct of a secondary boycott of one company for the reason that it supplied goods to another company, with which that union had a dispute. This conduct is in breach of the Australian Competition and Consumer Act 2010 (Cth), which prohibits unions and their members from acting so as to prevent one party from supplying goods to another.

The second investigation is into the lawfulness of an agreement between a transport company and the trade union for that industry. The agreement allegedly provided for payment from the transport company to the union. In return, the union would instigate safety complaints about the operations of competitors of the transport company. Both investigations are ongoing and illustrate the aggressive investigative posture that the Australian Federal Government and its agencies are taking toward union misconduct.


Colombia’s state oil firm Ecopetrol reaches accord to avoid strike

Sun, Aug 24 2014

BOGOTA, Aug 24 (Reuters) – Colombian state oil company Ecopetrol reached agreement with two of its main labor unions to avoid possible strike action that could have reduced output from the Andean nation, the company said late on Saturday.

Ecopetrol reached an accord that runs until 2018 on pay and social benefits with the USO and ADECO unions which represent the bulk of its 8,800 workers. It reached partial agreement with the SINDISPETROL union but was unable to settle with a fourth group, ASPEC, it said in a statement.

Oil is one of Colombia’s main drivers of economic expansion, but the government has expressed concern in recent months that revenue from the sector is beginning to decline and that this could impact the nation’s future growth.

Attacks by Marxist rebels on pipelines and increased operating costs have slowed output from Latin America’s fourth biggest producer.

Ecopetrol produced about 750,200 barrels per day through the first half of the year and plans to build output to 1.3 million bpd by 2020. Colombia produced just over 1 million bpd in 2013. (Reporting by Helen Murphy; Additional reporting by Luis Jaime Acosta; Editing by Raissa Kasolowsky)


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