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Labor Relations News Update June 10, 2014

Today’s Labor Updates:

Labor Pains: A Rising Threat to Stability in China

UK Employees Entitled To Extra Pay During Annual Leave

Board GC Hints At Big Changes

Courts agree: Union’s latest tactics are illegal

Healthcare Employers Must Be Consistent When Restricting Union Buttons and Other Insignia



June 10, 2014, 11:16 AM HKT.

Labor Pains: A Rising Threat to Stability in China

Workers protest during a strike as police stand guard outside a shoe factory in Dongguan, Guangdong province on April 18.Reuters

By Stanley Lubman

Chinese authorities greeted the 25th anniversary of the 1989 crackdown on protesters in Tiananmen Square by detaining dozens of activists and lawyers, proving that Beijing continues to be haunted by the specter of those protests a quarter century after they ended. But another, less eye-catching series of detentions and convictions highlights a separate source of concern for the central government: swelling dissatisfaction among workers.

In April, a labor activist in Dongguan, in southern China’s Guangdong Province, was detained by police and accused of “causing a disturbance” for distributing information online about a strike by workers at a local factory. In the same month, a court in Guangzhou convicted 11 security guards for “disturbing public order” following a dispute with their hospital employers.

As workers’ demands for expanded social and economic rights continue to grow, the party-state’s long-standing anxiety over threats to overall “stability maintenance” is bound to increase.

The Hong Kong-based China Labor Bulletin (CLB), in a recent report (pdf), sees Chinese workers “emerging as a strong, unified and increasingly active collective force. “The report notes the relatively recent rise of labor NGOs that provide workers with advice and support. The NGOs train  workers in negotiation strategy and techniques, including how to resist pressure from management and local governments report on sexual harassment in factories, advise on collective bargaining and provide legal advice.

As illustrated by an excellent recent study by the University of Michigan’s Mary Gallagher, the growth of the labor movement traces its roots to the beginning of China’s economic reforms in the late 1970s and early 1980s. As the state sector shrank and the private sector swelled, vast numbers of rural citizens left subsistence agriculture to move to factory jobs.  The overwhelming majority of these workers lacked education and received no social security; at the same time, a growing number of urban workers were employed without labor contracts.

In 1994, the party-state began to regulate labor relations by enacting the Labor Law, which was followed by the Labor Contract Law in 2005 and the Mediation and Arbitration Law of 2007.  The latter provides for mediation and arbitration by special commissions with the right of appeal to the courts, both of which have increased the role of the state while also empowering workers.

The number of labor disputes handled yearly has grown steadily from 200,000 in 2005 to approximately 1,500,000 in 2012. As Gallagher notes, the number of strikes likewise grew, from 10 per month in February 2011 to almost 50 in February 2013.  The party-state’s concerns have grown along with labor disputes, especially when workers have taken to the streets in protest, which often provokes local governments to call out the police.

In recent years emphasis has increased on spurring quick ad hoc settlement of collective action through coordination by local governments and courts that often bypasses established legal procedures. Gallagher describes the current system as “an unstable mixture of half-hearted adoption of ‘legality’—bottom-up legal mobilization by aggrieved workers disappointed in the gap between law on the books and law in action.”

The CLB report notes that workers are increasingly conscious of their rights and willing to act against exploitative management. In addition, the weakness of the only legal trade union, the state-controlled All-China Federation of Trade Unions (ACFTU), is a weak tool of the party and usually remains inactive in the face of protests.

The rise of social media and availability of inexpensive smartphones makes it easier for workers to organize and initiate collective action.  The CLB report also notes that although protests by factory workers attract the most publicity in the press, more workers’ protests occur outside factories, such as demonstrations by taxi drivers, teachers and sanitation workers.

The report concludes by predicting continued strikes and collective protests that will force more employers to respond to collective demands.  While the report emphasizes developments in relatively liberal Guangdong, it predicts that support from civil society organizations, media and the public will expand elsewhere in China. It predicts, too, that local governments will “play a difficult balancing act,” and that pressure will grow on the ACFTU to increase efforts to protect and promote workers’ interests.

The agencies of the party-state are always watching for stirrings of unrest.  If they detect growing strength — especially if it reflects increasing links among labor unions, NGOs and social media —  there will be efforts to suppress it.  Moreover, concern about worker unrest cannot be separated from the party’s unrelenting focus on stability.

Recent news reports tell of an aggressive “stability maintenance campaign”  against Internet references to Tiananmen as the 25th anniversary of that tragedy approached. The present concerns of workers, though less often noted in the media, could easily be represented as a threat to requiring a strong repressive response.

Much depends on whether the party can be resilient rather than rigid.  Professor Russell Leigh Moses has noted a recent commentary in the People’s Daily that criticized the “pursuit of stability,” which compels officials “to simply stay with the status quo,”  and “shouldn’t be something blindly sought, or be without brave advances and progress.” Labor will be the sector of the economy to watch for the ability to meet this challenge.

Stanley Lubman, a long-time specialist on Chinese law, is a Distinguished Lecturer in Residence at the University of California, Berkeley, School of Law. He is the author of “Bird in a Cage: Legal Reform in China After Mao” (Stanford University Press, 1999) and editor of “The Evolution of Law Reform in China: An Uncertain Path” (Elgar, 2012).


UK Employees Entitled To Extra Pay During Annual Leave


Authors: Peter Talibart, Ming Henderson, Tessa Cranfield

Statutory Holiday Pay Should Include Variable Pay and Allowances

In a highly significant decision, the European Court of Justice (“ECJ”) has decided in the case of Lock v. British Gas Trading Ltd. that an employee should receive “normal pay” during their five weeks of UK statutory annual leave. “Normal pay” is not limited to base pay, but includes compensation for commission and allowances which the employee would have received had they been working during the leave. This decision has major implications for employers who operate variable pay programs, or pay overtime or attendance allowances. Employees could potentially bring claims for the difference between their base pay and these additional elements of their total pay package for accrued leave as far back as 1998, when the UK Working Time Regulations became law.

The case concerned a salesman whose pay consisted of basic salary plus variable commission worth around 60% of his overall package. He claimed that UK rules allowing employers to pay base salary only during annual leave breached the European Working Time Directive. Under the UK rules, he was worse off, because his commission payments suffered when he took his statutory annual leave, and UK law did not require his employer to compensate him for this.

The ECJ agreed that UK law was in breach of the European Directive. Pay during the statutory annual leave period should reflect the employee’s total pay which is directly linked to work done under their contract. If the employee lost out on commission either during the leave period, or following the return from leave because of a loss of “pipeline” sales, this could deter employees from exercising their right to take their statutory holiday under the European Directive.

Where are we now?

The case has now been sent back to the UK courts to make a decision based on the guidance from the ECJ. The UK courts are increasingly willing to “bend” UK rules to fit them within European law—even reversing a provision of the Equality Act recently where they decided it contained a mistake. If the courts are not willing to “re-write” the current UK rules, employees will be left without any recourse against their employers until the UK government amends current legislation.

What are the risks for employers?

Potential liability for extra holiday pay could date back to 1998, and can only be closed down in very limited circumstances. Whether employees can sue their employers now, or whether they will have to wait for the UK government to change the legislation, will depend on the approach the UK courts take when they re-hear the Lock case in the next few months.

Although the ECJ decision is clear on the broad legal principle to be applied, questions remain as to the amount of the extra holiday pay due, such as:

  • What pay or allowances count towards an employee’s “normal pay”? The ECJ has held that “normal pay” includes those elements which are intrinsically linked to the performance of the employee’s duties. It is clear that for an employee in a sales-based role this will usually include commission; it is likely also to include regular overtime, shift and other attendance allowances regularly paid to the employee when in work. Our view is that it should exclude pure “ex gratia” payments or expenses. Further court decisions due in July 2014 in two overtime cases (the Employment Appeals Tribunal in Neal v. Freightliner Ltd. and Fulton v. Bear Scotland Ltd.) should provide more guidance.
  • If employees do miss out on sales opportunities while on leave, how is this quantified? The ECJ suggested a reference period of 12 months to assess usual earnings, compared with a usual reference period of 12 weeks under English law. Both of these could be misleading, however, where sales are cyclical or vary year to year. The loss in commission relates not only to the annual leave period itself, but any knock-on effect following the return to work.

Next steps for employers

Employers should assess which of their employees would be covered by this ruling, whether because of variable pay, overtime or other allowances. Employers may want to begin assessing the potential extra costs involved, and take advice as to whether they can pursue the limited options available to close off liability.

Going forward, employers may need to consider these extra annual leave costs when agreeing to extra pay elements such as variable pay, paid overtime or allowances.

We will closely monitor the developments in this area and will issue a further Alert in the coming months.





Board GC Hints At Big Changes

By Cary Burke on June 9, 2014

This past Friday, National Labor Relations Board General Counsel Richard F. Griffin, Jr. participated in a conference on labor relations law at New York University School of Law.  During the conference GC Griffin made several comments that should make labor counsel sit up and take notice.

During his remarks, Griffin made it clear that one of his major focuses for the next term would be eliminating workplace rules stating that employees cannot discuss wages.

“That would be my priority, are these kind of rules, only because they are surprisingly ubiquitous,” he said. “My feeling is that we should at least make a priority, and make noise about, rules that are clearly unlawful. The ones I am focusing on are the rules that forbid talking about compensation.”

Griffin also stated that his office would be filing a brief arguing that the Bush-era Register Guard decision should be overturned.  In that case, the Board concluded that employees do not have an inherent right to use their employer’s email system for Section 7 activities.

As a former union lawyer and Board member, it is not surprising that Griffin is seeking to expand an employee’s Section 7 protections at the expense of management prerogatives.  Stay tuned to @LRToday, where we report on all major Board related activities.


June 09, 2014, 04:00 pm

Courts agree: Union’s latest tactics are illegal

By Ryan Williams

This week Walmart shareholders and employees will once again gather in Bentonville, Ark. for the company’s annual meeting. However, one group that’s had a notable presence at previous meetings will not be there. Last year the state’s Benton County Circuit Court issued a restraining order prohibiting the United Food and Commercial Workers International Union (UFCW) and its “subsidiary” OUR Walmart from any actions on company property or at Walmart events. As a result, labor activists will be unable to disrupt the company’s annual meeting like the protests recently led by the Service Employees International Union against McDonald’s in Oak Brook, Ill.

While the Benton Circuit Court’s order may seem like home-team favoritism, courts and authorizes in at least five other states have similarly recognized the need to rein in union-led demonstrations. Last year a Maryland judge barred OUR Walmart and the UFCW from trespassing on company property as part of the union’s Black Friday campaign. The judge further upheld the injunction by declaring that activists taking part in the anti-Walmart campaign had to post a $10,000 bond forfeited “for the payment of any damage” if they refused to obey the order. The company has also sued to keep labor activists out of its Florida locations after the UFCW continued to illegally trespass in stores, disrupt customers, and even such low-brow tactics as handing “a rotten pumpkin painted in support of OUR Walmart” to a store manager in Orlando.

More recently, a Texas appeals court ruled that labor unions and protesters behind mass demonstrations at Walmart must face trespass allegations. The company filed suit last year after the UFCW and OUR Walmart repeatedly entered stores, ignored no-solicitation signs, blocked access to parking lots, screamed through bullhorns and staged flash mobs. As a result of protests last year in Michigan, the National Labor Relations Board ordered the UFCW to stop “restraining and coercing employees” while protesting.  According to an NRLB complaint released on March 29, two UFCW officials stormed into a Dearborn store’s electronics department with “50 to 80 unknown individuals” and interfered with shoppers while intimidating employees. Eight other protesters, including one man, then barged into the women’s rest room and “coercively interrogated an employee regarding her wages, hours and working conditions.

Federal labor law prohibits unions from interfering in business operations directly during strikes and protests, but those have been common tactics used by the UFCW and SEIU against Walmart and fast food brands over the last several years. Protesters have gone largely unpunished because unions tap non-profit worker centers like OUR Walmart and Fight for 15 to serve as front groups for the rallies. Worker centers are not subject to the laws that limit unions, despite the millions of dollars the groups receive from organized labor.

But the tide may be turning against the UFCW’s use of OUR Walmart. Recent court rulings (and findings by the NLRB) have forced the union to issue a public disclaimer pledging to abandon its organizing campaigns in Arkansas, California, Colorado, Florida, Maryland and Texas. In other words, courts across the country agree that the UFCW’s newest method for organizing via OUR Walmart is illegal. What remains to be seen is however is when – if ever – other companies will call Big Labor’s bluff and take legal action to stop the use of worker centers to attack corporate brands and dodge federal laws restricting union campaigns.

Williams is an adviser to Worker Center Watch, a group dedicated to exposing Big Labor’s abuse of the worker center organizational model. He formerly served as a spokesman for Govs. Mitt Romney (R-Mass.) and John Sununu (R-N.H.).


Healthcare Employers Must Be Consistent When Restricting Union Buttons and Other Insignia

June 9, 2014

Louis P. Britt, III, Bari L. Goldstein

Executive Summary:  The National Labor Relations Board (“NLRB” or “Board”) recently held that a healthcare employer violated the National Labor Relations Act (NLRA) by prohibiting employees from wearing union protest stickers. See HealthBridge Mgmt., LLC, 360 N.L.R.B. No. 118 (June 22, 2014). In the 2-1 decision, the Board found that HealthBridge could not prohibit employees from wearing union protest stickers inside or outside patient care areas because its rules were only selectively enforced, and HealthBridge could not establish “special circumstances” to justify the ban.

Background:  In response to an earlier complaint issued against HealthBridge, the union prepared flyers and stickers stating that HealthBridge had been “busted” by the NLRB for violating federal labor law. The “busted” flyers subsequently were posted on the union’s bulletin boards at each of HealthBridge’s six Connecticut health care facilities, and employees at each of the facilities wore the “busted” stickers. HealthBridge immediately removed the flyers from the union bulletin boards and instructed employees at four of the six facilities to remove the stickers when in patient care areas or while providing patient care. Employees at the remaining two facilities were prohibited from wearing the stickers in all areas.

It is well-established that employees, including nonunion employees, have the right to wear union pins, stickers, buttons and other union insignia at work in the absence of “special circumstances.” In healthcare facilities, however, the NLRB and the courts have refined that rule because of concerns about the possibility of disruption to patient care. In nonpatient care areas, restrictions on wearing union pins, stickers, buttons and other union insignia are presumptively invalid, and it is the employer’s burden to establish special circumstances justifying such decisions. Restrictions on wearing insignia in patient care areas are presumptively valid; however, that presumption does not apply if the restriction is a selective ban on only certain pins, buttons and other union insignia. In those circumstances, it remains the employer’s burden to establish special circumstances to justify its action and prove that the action was “necessary to avoid disruption of health-care operations or disturbance of patients.” Beth Israel Hospital v. NLRB, 437 U.S. 438, 507 (1978).

Employers’ Bottom Line: Consistent application of workplace rules is critical. An employer cannot prohibit employees from wearing union buttons – even when “special circumstances” exist – if the employer permits employees to wear political or other buttons or stickers in the workplace. Moreover, according to the Board, healthcare facilities must establish “special circumstances” with specific evidence, not general or speculative testimony regarding how patients may be affected. In the end, absent “special circumstances,” it is an unfair labor practice for employers to prohibit employees from wearing union pins, stickers, buttons and other union insignia.

If you have any questions regarding this Alert or other labor or employment related issues, please contact Louis Britt,, a partner in our Memphis & Nashville offices or Bari L. Goldstein,, counsel in our West Palm Beach office. You may also contact the FordHarrison attorney with whom you usually work.

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