Today’s Labor Updates:
DOL announces that most American workers should properly be classified as employees under the FLSA
USW: Concessions at heart of U.S. Steel contract offer
Effects of NLRB’s Adoption of “Quickie Election” Rules
Summary of NLRB Decisions for Week of July 13 – 17, 2015
DOL announces that most American workers should properly be classified as employees under the FLSA
USA July 15 2015
U.S. Department of Labor (“DOL”) today issued an Administrator Interpretation Memorandum announcing its position that most American workers are employees (as opposed to independent contractors), and thus are covered by the Fair Labor Standards Act (FLSA). The announcement comes exactly two weeks after the DOL issued a Notice of Proposed Rulemaking that would significantly change the legal requirements for an employee to qualify as exempt from the overtime requirements of the FLSA.
According to the Memo, employers are intentionally misclassifying workers as independent contractors to cut costs and avoid compliance with various laws, which deprives workers of certain benefits of employment. Taken together, the two recent DOL actions make the DOL’s true intentions abundantly clear: to sweep more American workers under the umbrella of the FLSA, and in turn, have more of those covered employees earning overtime compensation (or significantly higher salaries).
In the Memorandum, the DOL sets forth its interpretation of the FLSA’s definition of “employ” and the multi-factored “economic realities test” utilized by the courts to guide the analysis of whether a worker is properly classified as an independent contractor under the law. According to the DOL, applying the economic realities test in view of the FLSA’s expansive definition of “employ” will result in most workers being employees, and not independent contractors. In other words, a worker is an employee unless a convincing argument can be made that the worker is properly classified as an independent contractor.
While the “economic realities test” might vary somewhat depending on the court applying the test, the traditional questions considered are:
- Is the work done by the worker an integral part of the employer’s business?;
- Does the worker’s managerial skill affect the worker’s opportunity for profit or loss?;
- How does the worker’s relative investment compare to the employer’s investment?;
- Does the work performed require special skill and initiative?;
- Is the relationship between the worker and the employer permanent or indefinite?; and
- What is the nature and degree of the employer’s control over the worker?
These questions should be considered under the guiding principle that workers who are economically dependent on the employer are employees, and only workers who are really in business for themselves are independent contractors. All factors must be considered in each case, no one factor is determinative, and the ultimate determination must be the degree of the worker’s economic independence from the employer.
USW: Concessions at heart of U.S. Steel contract offer
By Karen Caffarini Post-Tribune
The United Steelworkers union said the concessions U.S. Steel has asked for would erode decades of contractual improvements and benefits.
United Steelworkers said it has received an outline of an initial new contract proposal from U.S. Steel that includes dozens of demands for concessions.
The union said the concessions would erode decades of contractual improvements and benefits won for members and their families.
“While we have yet to receive a formal, detailed proposal from the company, it’s clear from this initial outline that U.S. Steel is attempting to use the current industry downturn to gut our contract and weaken our union,” the USW stated on its website.
According to USW, U.S. Steel is proposing major changes to health care that would increase costs for active and retired members. The union said the company also wants to reduce vacation pay and reduce the union’s role in health and safety issues, among other issues.
The union said active workers at U.S. Steel would have $2,600 minimum annual deductibles and out-of-pocket maximums up to $13,100 per year for families. The company also is seeking to eliminate the current retiree medical plan and force Medicare-eligible retirees to shop for their own supplemental coverage through a private exchange, according to USW.
A spokeswoman for U.S. Steel said Monday the company doesn’t generally comment on ongoing negotiations.
U.S. Steel and ArcelorMittal, both with mills in Northwest Indiana that employ thousands of area residents, are negotiating separate contracts with the USW.
Both contracts expire Sept. 1.
Negotiations are taking place as the U.S. steel industry continues to be hurt by illegal steel dumping by foreign countries, which has resulted in mass layoffs at mills across the country and in Northwest Indiana.
U.S. Steel, which has mills in Gary, Portage and East Chicago, reported more than 750 layoffs this spring.
The USW said last week that ArcelorMittal, which has more than 7,000 employees in mills in East Chicago and Burns Harbor, has proposed a three-year contract with no wage increases and reductions in incentive payments, vacation pay and sickness and accident benefits, among other concessions.
ArcelorMittal said last week that the initial proposals were made in an effort to close the labor cost gap with the company’s competitors without reducing wage rates, which the company said are among the highest in the industry.
According to a 2014 ArcelorMittal fact sheet, the average annual wage for its union-represented employees is $97,946.
Karen Caffarini is a freelance reporter for the Post-Tribune.
Effects of NLRB’s Adoption of “Quickie Election” Rules
Article By: Henry W. Sledz Jr.
Amendments to the National Labor Relations Board’s (NLRB) election rules went into effect on April 14, 2015. The new rules have already had a major impact on the timing of and procedures for union elections.
The history leading up to the adoption of these amendments was discussed in Schiff Hardin’s February 7, 2014 and December 15, 2014 Labor & Employment Alerts. As noted in those alerts, the practical effect of these amendments will be to shorten the time between the filing of a petition for an election and the actual election, thus giving employers less time to communicate with their employees about issues relating to unionization. As we predicted, the time between the filing of a petition and the actual election has decreased significantly. According to statistics recently released by the NLRB, since the rules took effect, the average time between the petition and the election was about 23 days. Prior to the new rules, the average time between petition and election was 38 days. Thus, as a result of the new rules, the employer’s time to communicate with its employees prior to the election has been shortened, on average, by about 2 weeks.
Changes to the election process as a result of the adoption of these amendments include:
- Petitions and related documents may be filed electronically.
- Employers are required to post a Notice of Petition within 2 business days of receipt of the election petition.
- A hearing to resolve any representational issues will be scheduled within 7 days of the filing of the petition.
- At least one business day prior to the hearing, the non-petitioning party is required to file a written statement of position outlining any issues to be litigated at the hearing. Any issues not so identified would not be litigated.
- Pre-election rulings by a regional director will not be reviewable prior to the election, and any such rulings would only be reviewable post-election if the issues were not rendered moot by the results of the election.
- The employer is required to provide electronically to the regional director and to the petitioning union a list of employees eligible to vote in the election within 2 days of the direction of election. The list must contain the home addresses, home telephone numbers and personal email addresses (if available to the employer) of the eligible employees.
Legislative efforts to block the new rules failed as a result of President Obama’s pocket veto in March, 2015.
Business groups have filed two separate lawsuits seeking to overturn the new rules. In one case,Baker DC v. NLRB, 2015 WL 1941516 (D.D.C. 2015), the U.S. Chamber of Commerce has filed a motion for summary judgment seeking to void the rules and a decision should be rendered soon. In the other case, Associated Builders & Contractors of Texas, Inc. v. NLRB, 2015 WL 3609116 (W.D. Texas 2015), a judge ruled in June in favor of the NLRB, finding that the new rules did not violate either the National Labor Relations Act or the federal Administrative Procedure Act.
© 2015 Schiff Hardin LLP
Summary of NLRB Decisions for Week of July 13 – 17, 2015
The Summary of NLRB Decisions is provided for informational purposes only and is not intended to substitute for the opinions of the NLRB. Inquiries should be directed to the Office of Public Affairs at Publicinfo@nlrb.gov (link sends e-mail) or 202‑273‑1991.
Summarized Board Decisions
NCR Corporation (01-CA-150154; 362 NLRB No. 146) Boston, MA, July 13, 2015.
The Board granted the General Counsel’s motion for summary judgment in this test-of-certification case on the ground that the Respondent failed to raise any issues that were not, or could not have been, litigated in the underlying representation proceeding in which the Union was certified as the bargaining representative. Accordingly, the Board found that the Respondent had violated Section 8(a)(5) and (1) by refusing to recognize and bargain with the Union. Charge filed by International Brotherhood of Electrical Workers Local 2222. Chairman Pearce and Members Hirozawa and McFerran participated.
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Love Culture Inc. (18-CA-132084; 362 NLRB No. 145) St. Louis, Park, MN, July 13, 2015.
The Board granted the General Counsel’s motion for default judgment based on the Respondent’s failure to file an answer to the consolidated complaint and compliance specification. The Board found that the Respondent violated Section 8(a)(1) by maintaining and enforcing a confidentiality rule prohibiting employees from discussing wage rates with each other, and further found that the Respondent violated Section 8(a)(1) by discharging an employee for violating the rule. The Board ordered the Respondent to offer the unlawfully discharged employee full reinstatement to her former job, to make her whole for any loss of earnings and other benefits suffered as a result of its discrimination against her by paying her the amount set forth in the compliance specification, to compensate the employee for any adverse tax consequences of receiving a lump-sum backpay award, file a report with the Social Security Administration allocating the backpay award to the appropriate calendar quarters, and remove references to the unlawful discipline and discharge from the employee’s file. In addition, the Respondent was ordered to rescind the unlawful rule and to advise its employees in writing of such rescission. Charge filed by an individual. Members Hirozawa, Johnson, and McFerran participated.
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VCNL, LLC d/b/a Vineyard Court Nursing and Rehabilitation Center (15-CA-144945; 362 NLRB No.147) Columbus, MI, July 14, 2015.
The Board granted the General Counsel’s motion for summary judgment in this test-of-certification case on the ground that the Respondent failed to raise any issues that were not, or could not have been, litigated in the underlying representation proceeding in which the Union was certified as the bargaining representative. Accordingly, the Board found that the Respondent violated Section 8(a)(5) and (1) by refusing to recognize and bargain with the Union. Charge filed by Retail Wholesale and Department Store Union. Chairman Pearce and Members Johnson and McFerran participated.
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Wilkes-Barre Hospital Company, LLC d/b/a Wilkes-Barre General Hospital (04-CA-123748; 362 NLRB No. 148) Wilkes-Barre, PA, July 14, 2015.
The Board affirmed the Administrative Law Judge’s conclusion that the Respondent violated Section 8(a)(5) and (1) by ceasing to pay longevity-based wage increases after the collective-bargaining agreement expired, without providing the Union with prior notice and an opportunity to bargain. In addition to the rationale set forth by the Judge, Members Hirozawa and McFerran found that Finley Hospital, 362 NLRB No. 102 (2015), supports the Judge’s conclusion. Further, Members Hirozawa and McFerran found it unnecessary to pass on the Judge’s finding that the Respondent did not have a contractual obligation to pay longevity-based wage increases in January 2014. Member Johnson concurred in finding a violation based on the specific facts presented in the instant case. Charge filed by Pennsylvania Association of Staff Nurses and Allied Professionals, AFL-CIO. Administrative Law Judge Susan A. Flynn issued her decision on November 17, 2014. Members Hirozawa, Johnson, and McFerran participated.
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Unpublished Board Decisions in Representation and Unfair Labor Practice Cases
R Cases
OK Foods, Inc. (14-RC-124829) Heavener, OK, July 15, 2015. The Board adopted the hearing officer’s finding that, during an exchange between the Employer’s vice president and a labor consultant at a captive-audience meeting with employees, the Employer implied that employees would receive raises if they voted against the Union, and therefore the Employer interfered with employee free choice. Accordingly, the Board set aside the election held on May 1, 2014, and ordered that a new election be held. Petitioner—United Food and Commercial Workers, Local 1000, AFL-CIO. Members Miscimarra, Hirozawa, and Johnson participated.
C Cases
S.E. Clemons, Inc. (31-CA-127976 and 31-CA-130804) Adelanto, CA, July 14, 2015. Order denying the petition filed by Pacific Empire Builders, Inc., to revoke an investigative subpoena duces tecum. The Board found that the subpoena sought information relevant to the matters under investigation and described with sufficient particularity the evidence sought. Further, the Board held that the petitioner failed to establish any other legal basis for revoking the subpoena. The Board denied the petitioner’s request to make its petition to revoke a part of the official record, finding that the request was premature, but stated that its ruling was without prejudice to the petitioner’s renewing the request if the investigative proceedings progressed to the stage where an official record would be created. Members Hirozawa, Johnson, and McFerran participated.
Brookdale Senior Living, Inc. d/b/a Emeritus Senior Living (28-CA-134729) Phoenix, AZ, July 15, 2015. No exceptions having been filed to Administrative Law Judge Amita Baman Tracy’s June 2, 2015 decision finding that the Respondent had engaged in certain unfair labor practices, the Board adopted the Judge’s findings and conclusions, and ordered the Respondent to take the action set forth in the Judge’s recommended Order. Charge filed by an individual.
Onyx Management Group LLC (29-CA-132441, et al.) Jericho, NY, July 17, 2015. Decision and Order approving a formal settlement stipulation between the Respondent Employer, the Charging Party Union, and the General Counsel, and specifying actions that the Employer must take to comply with the National Labor Relations Act. Charge filed by International Union of Operating Engineers, Local 30, AFL-CIO. Members Hirozawa, Johnson, and McFerran participated.
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Appellate Court Decisions
Northeastern Land Services, Ltd., Board Case No. 01-CA-039447 (unreported Order, dated Sept. 4, 2013) (D.C. Circuit decided under the name Dupuy v. NLRB, July 17, 2015)
In a published opinion, the court granted in part the petition for review filed by a discriminatee who had opposed a post-enforcement settlement agreement. The court found that the backpay calculations were supported by substantial evidence, but vacated and remanded the Board’s rulings concerning certain comparable employment terms and conditions because the Board did not adequately explain or substantiate those aspects of its decision.
Previously, the First Circuit enforced the Board’s order in Northeastern Land Services, Ltd. v. NLRB , 645 F.3d 475 (1st Cir. 2011), against the employer. Among other remedies, the order required the employer to make the discriminatee whole for unlawfully discharging him, by compensating him for lost wages and benefits and offering him full reinstatement to his former job or one with substantially equivalent terms and conditions. During the ensuing compliance stage, the employer complied with all other aspects of the Board’s order and thereafter the Region entered into a settlement agreement with the employer that provided for a reinstatement offer, $201,788.50 in compensation, comprising $124,115.33 in backpay and $77,673.17 in interest, and required monthly installment payments of $1,500 to be mailed to the Region over a period of 11 years, but waiving interest during the payment period unless the employer defaulted.
The discriminatee opposed the settlement arguing, among other things, that the agreement improperly waived $41,906.78 in interest that would accrue during the payment period, and that the terms and conditions accompanying the reinstatement offer would not fully compensate him. After the discriminatee refused to further discuss the settlement terms, the Regional Director adopted the agreement over his objections. Subsequently, the discriminatee filed an appeal with the Acting General Counsel, who denied the appeal. The discriminatee then filed for Board review. In September 2013, the Board (Chairman Pearce and Members Miscimarra and Hirozawa) issued an order denying the appeal, ruling that under the circumstances, the Regional Director did not err in accepting the settlement, and noting that “the waiver of interest during the payment period is expressly conditioned on the timely receipt of every payment, and the settlement does not reduce or compromise the backpay due in any other manner.” The discriminatee filed a motion for reconsideration, which was denied.
On review, the court stated that “[h]owever broad the Board’s discretion may be to settle its cases prior to their embodiment in a court order, once the Board turns to the task of ensuring an employer’s compliance with a final court judgment, the Board’s own precedent has disclaimed any authority to modify the court’s order.” Citing Independent Stave Co., 287 NLRB 740 (1987), the court noted that the Board “has wide latitude to settle cases at that prosecutorial stage,” but, in contrast, when enforcing compliance after a court judgment, the Board must “ground its factual findings in substantial evidence, and give reasoned explanations for any departure” from the court order. The court then held that the Board’s backpay calculations were supported by substantial evidence, but that in upholding the agreement’s waiver of interest during the installment payment period, the Board did not explain “the source of its authority” for altering court-ordered interest. Regarding the terms and conditions related to reinstatement, the court found that the Board “has more work to do,” because “nothing in the record substantiates the assertion that the other terms of employment are consistent with what other similarly situated employees receive.” The court stated that, “on remand, the Board must consider all material terms and conditions of employment, not just compensation, in deciding whether [the employer]’s offer of reinstatement was sufficient.” Given its remand of those issues, the court also remanded to the Board questions concerning the disposition of the installment checks and the default collection procedure for the Board’s determination in the first instance.
The Court’s opinion is here (link is external).
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Administrative Law Judge Decisions
Eastern Essential Services, Inc. (22-CA-133001; JD(NY)-29-15) Fairfield, NJ. Administrative Law Judge Steven Davis issued his decision on July 13, 2015. Charge filed by Service Employees International Union, Local 32BJ.
Compass Group USA, Inc., d/b/a Chartwells Dining Services (25-CA-134883, et al.; JD-40-15) Anderson, IN. Administrative Law Judge David I. Goldman issued his decision on July 14, 2015. Charges filed by United Food and Commercial Workers Union, Local 700, AFL-CIO.
Taylor Motors, Inc. ( 10-CA-141565, et al.; JD(ATL)-12-15) Fort Campbell, KY. Administrative Law Judge Keltner W. Locke issued his decision on July 14, 2015. Charges filed by American Federation of Government Employees (AFGE), AFL-CIO, Local 2022.
The Boeing Company (19-CA-128941; JD(SF)-26-15) Puget Sound, WA. Administrative Law Judge Dickie Montemayor issued his decision on July 14, 2015. Charge filed by Society of Professional Engineering Employees in Aerospace, affiliated with International Federation of Professional & Technical Engineers, Local 2001.
U.S. Xpress Enterprises, Inc. and U.S. Xpress, Inc., a single employer (10-CA-141407; JD(ATL)-14-15) Chattanooga, TN. Administrative Law Judge Ira Sandron issued his decision on July 16, 2015. Charge filed by an individual.