SPECIAL FOCUS

Vol. 28, No. 1 January 2011
SPECIAL FOCUS
NLRB ACTIVISM UPDATE:
ACTING GC DIRECTS
REMEDIES INITIATIVE,
NLRB PROPOSES
RIGHTS NOTICE
The National Labor Relations Board continues its push to
change the national labor policy administratively. Acting
General Counsel Lafe Solomon, the Board’s chief prosecutor,
has urged regional officials to seek “special remedies” in
unfair labor practices (ULPs) complaints for alleged violations
committed by employers during union organizing drives.
Meanwhile, the NLRB is proposing a rule requiring employers
in a mandatory posting to notify employees of their rights
under the National Labor Relations Act (and how employers
can violate them).
Remedies Recommendation
As a sequel to his recommendation that the agency’s regional
officials prepare promptly to seek federal court injunctions
WHAT’S INSIDE
Electronic I-9’s: What You Need To Know............................................................3
IRS Delays Health Care Reform Nondiscrimination Provisions For
Insured Group Plans ........................................................................................................5
Federal Court Rules Employees Must Behave Civilly While
Engaging In Protected Activity.....................................................................................6
where the evidence obtained during an expedited Board
investigation supports a discriminatory termination charge
(see our article, NLRB to Weigh Injunctions Routinely
for Unlawful Discharges in Organizing Campaigns, Plans
Acting GC at http://www.jacksonlewis.com/resources.
php?NewsID=3432), the NLRB Acting General Counsel has
announced “an initiative to systematically seek appropriate
remedies in response to serious unfair labor practices
committed by employers during the course of an initial union
organizing campaign.”
According to Solomon, in addition to asking for injunctive
relief for nip-in-the-bud discharge cases, the agency’s regional
officials should consider seeking in Board administrative
complaints, where appropriate, stronger “medicine” (in his
view) than thou-shalt-not notice postings. In order to preserve
and promote employees’ interest in and communications
about the exercise of their statutory rights, he recommends
the following:
1. Requiring that Board remedial postings be read to
employees by a high-ranking company official;
2. Requiring that the union be given access to company
bulletin boards and computer networks for union
communications; and
3. Requiring that employee names and addresses be
provided to the union.
The Acting General Counsel also recommends that if the
agency’s regional officials determine the employer’s ULPs
have a “severe impact” on a union’s ability to communicate,
they should seek advice from Washington on allowing union
representatives access to the employer’s premises to meet
with employees in non-work areas during non-work time,
and providing the unprecedented remedy of allowing the
union equal time to respond to company speeches and
deliver speeches of their own, or time to give a pre-election
address to workers.
(Continued on Page 2)
NLRB ACTIVISM UPDATE: ACTING GC DIRECTS REMEDIES INITIATIVE,
NLRB PROPOSES RIGHTS NOTICE (Continued from page 1)
These are extraordinary remedies that have been used only
sparingly, if at all, in the Board’s 75-year history. There has been
no comparable initiative before. Now, these remedies could
be sought almost routinely by Board officials against employers.
Solomon appears to ignore any remedies against unions and
their representatives for their alleged organizing misconduct
that could seriously interfere with employee NLRA rights.
Whether such a correction will materialize remains to be seen.
have the right to act together to improve wages and working
conditions, to form, join and assist a union, to bargain
collectively with their employer, and to choose not to do any
of these activities. Examples of unlawful employer and union
conduct are provided in the notice. It also instructs employees
how to contact the NLRB with questions or complaints. The
DOL notice was one of several controversial labor measures
resulting from Executive Orders issued in the first days of the
current Administration.
Rights Notification Proposal
* * *
Not satisfied with making decisions in cases that nudge the
law in favor of organized labor and its employee advocates
(see our article, NLRB Activism Picks Up Speed at http://
www.jacksonlewis.com/resources.php?NewsID=3448), the
NLRB has proposed a rule that would make employers notify
employees of their rights under the National Labor Relations
Act through a uniform workplace posting. The public has
60 days to comment on the proposed rule following the
December 22, 2010, publication in the Federal Register.
With the apparent encouragement of the NLRB and its
Office of the General Counsel, labor organizers may have
greater incentive to file more unfair labor practices charges
against employers. Among other things, employers should
consider additional appropriate communications with
employees concerning their rights under the NLRA, ensure
their managers are trained to apply company practices and
policies consistently, and review said practices and procedures
in light of recent changes in the law. During any organizing
drive, close communications with Human Resources and legal
counsel prior to taking an adverse employment action against
an employee also is advisable. Employers should consider
“inoculating” their employees with respect to the potential
posting by advising them in advance of the requirement and
adopting a union-free policy statement about why union
representation is unnecessary.
“Believ[ing] that many employees protected by the NLRA
are unaware of their rights under the statute,” the Board
would require “private-sector employers (including labor
organizations) whose workplaces fall under the NLRA . . .
to post the employee rights notice where other workplace
notices are typically posted. If an employer communicates
with employees primarily by email or other electronic means,
the notice would be posted electronically as well.”
The proposal contains sanctions for non-compliance. For
a company’s failure to post the notice, the proposed rule
would extend the six-month statute of limitations for filing an
unfair labor practice charge involving other allegations against
the employer. For an employer’s knowing failure to post the
notice, the failure could be considered evidence of unlawful
motive in an unfair labor practice case involving other alleged
violations of the NLRA.
-- Susan M. Schneider
Omaha Office
[email protected]
-- Michael J. Lotito
SanFrancisco Office
[email protected]
Board Member Brian Hayes dissented from the issuance of
the proposed rulemaking. He believed “the Board lacks the
statutory authority to promulgate or enforce the type of rule
. . . contemplated and which the proposed rule makes explicit.”
-- Philip B. Rosen
New York Office
[email protected]
The NLRB states, partly by way of justification, that its
proposed notice is similar to one by the U.S. Department of
Labor for federal contractors. That notice states employees
-- Harold R. Weinrich
Washington DC Office
[email protected]
2
ELECTRONIC I-9’S: WHAT YOU NEED TO KNOW
for an electronic I-9 system: it must be able to produce “the
electronically stored Forms I-9, any supporting documents,
and their associated audit trails, reports, and other data used
to maintain the authenticity, integrity, and reliability of the
records.” Elsewhere in the regulation, ICE clarifies that an
audit trail is a record showing who has accessed a computer
system and the actions performed within or on the computer
(which is taken to mean that everything that transpires in the
system must be key logged, traceable, and reviewable by an
authorized agent).
IMMIGRATION
UPDATE
Amy Peck is a nationally recognized
immigration attorney practicing out
of the Jackson Lewis LLP Omaha,
Nebraska office.
Increasing worksite investigations, mandated E-Verify
participation at the state and local levels, and the desire for
organizations to streamline their on-boarding operations
have made Form I-9 and E-Verify compliance critical for
employers across the nation. Yet, despite the apparent need,
many employers continue to use the traditional “pen and
paper” method of completing I-9’s, which inevitably causes
mistakes, inefficiencies, and disorganization. If left unresolved,
these problems can lead to government penalties and
discrimination claims by affected workers.
Electronic Signature
Another critical component is the method by which the
software attaches an electronic signature to the I-9 record.
While electronic signatures are technology-neutral, employers
still must demonstrate the trustworthiness of the process
that created and preserved the records in question. To make
this assessment, ICE may evaluate the overall strength of the
signature by examining the method of authentication while
looking for potential security issues.
Fortunately, the regulations enable employers to use an
electronic I-9 system, which automates and streamlines
virtually every step of the I-9 process, including proper
completion, electronic signing, and paperless retention of
the I-9 forms. Many electronic I-9 systems also communicate
seamlessly with E-Verify, include various reporting options,
and send automated reminders of deadlines via e-mail.
Security
Security is another often ignored but critical part of an
I-9 software application. A breach of security can expose
employers to private actions by employees and potential
issues during a government I-9 inspection. Under the
regulations, employers must utilize a secure I-9 system that
limits access to authorized personnel, provides a backup for
recovery of records, ensures that employees are trained to
minimize the risk of alteration of the data, and provides a
detailed audit trail showing the dates of system access, identity
of the users, and the particular action taken. In evaluating an
electronic I-9 system, ensure that all of these elements are
met and exceeded.
While the advantages of I-9 systems are well-founded,
the system must adhere strictly to the final electronic
I-9 regulations which specify standards for authenticity,
recordkeeping, security, and electronic signatures. Since the
government does not offer certification to any one system, it
is our responsibility as attorneys to help our clients choose
the best system on the market that accomplishes all of their
goals while meeting the most conservative interpretation of
the regulations. Failure to do so may cause dire consequences
for employers, as seen in the recent fines upwards of $1
million for some national employers.
Summary
In addition to conducting due diligence, it is important to
scrutinize the market for vendors making overly broad claims
that their electronic I-9 system will guarantee perfect I-9s.
While electronic I-9 systems have many advantages and are
certainly the wave of the future, it is most definitely not a “flip
the switch and you’re done” scenario. Rather, an electronic I-9
system demands several layers of careful planning, thoughtful
discussion, difficult decisions, and, above all, thorough
communication with your departments, worksites, and
trusted immigration counsel.
Electronic Audit Trail
As audits by the U.S. Immigration and Customs Enforcement
(ICE) continue to increase nationwide, employers must
consider how their electronic I-9 system will be viewed and
inspected. Unfortunately, ICE has never published detailed
guidelines for reviewing an electronic I-9 system (even within
the agency itself). Recent reports from employers, however,
have made it clear that ICE agents may scrutinize the
electronic audit trail to look for issues of fraud.To address this
issue, ICE included a fairly broad, yet significant requirement
-- Amy L. Peck
Omaha Office
[email protected]
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4
IRS DELAYS HEALTH CARE REFORM
NONDISCRIMINATION PROVISIONS FOR
INSURED GROUP PLANS
individuals with respect to eligibility or benefits. It further
provides that rules “similar to” Code Section 105(h)(3), (4),
and (8) would apply, but left it to the enforcement agencies
to come up with those rules.
BENEFITS
CORNER
Randy Limbeck is a partner in the
Omaha, Nebraska office of Jackson
Lewis LLP and has spent more than 25
years specializing in representation of
clients in the areas of ERISA, employee
benefits, and executive compensation.
Meanwhile, the Health Care Reform Law would require
sponsors of noncompliant plans to pay a hefty excise
tax ($100 per day per affected individual) beginning, for
most, with the 2011 plan year. For example, if one highly
compensated employee is provided coverage under a plan
that is found to be discriminatory in his or her favor and the
employer employs 100 employees as having been treated as
discriminated against, the employer is subject to an excise tax
of $10,000 per day ($100 x 100 employees), up to an excise
tax cap.
The Internal Revenue Service, the Department of Labor and
the Department of Health and Human Services has given a
last-minute holiday gift to sponsors of insured group health
plans. The IRS announced delayed enforcement for the new
nondiscrimination provisions applicable to insured group
health plans under the Patient Protection and Affordable
Care Act of 2010 (“Health Care Reform Law”).
This seemingly sounded a death knell for many executive
medical arrangements and smaller employer’s insured health
plans. Employers were sent to search alternative ways to
meet contractual obligations and otherwise continue to
provide desired benefits without running afoul of the new
nondiscrimination requirements.
Generally, healthcare benefits are not taxable to the recipient.
However, the Internal Revenue Code has long contained
rules that tax self-insured medical benefits (i.e., plans under
which the employer pays all or most of the benefits out of its
general assets rather than through insurance) that discriminate
in favor of highly compensated individuals. Similar rules did
not apply to fully insured health plans.
The IRS’s December 22, 2010, Notice 2011-1 which provides
relief from the excise tax applicable to the nondiscrimination
provision. As an added token of holiday spirit, the IRS
suggested that the regulations, once issued, would not
apply until the plan year beginning some period thereafter.
Therefore, the new rules have been delayed at least until mid2011.
Employers utilize this special rule for insured medical plans
in two ways. First, many employers provide special, more
valuable, health coverage for executives through insured
plans. Second, small- to medium-sized employers may utilize
insured plans that, intentionally or not, discriminate in favor
of highly compensated employees because of the limited
number of covered employees.
In the same notice, the IRS requested additional public
comments on the application of the nondiscrimination rules
to insured group health plans. Comments must be submitted
not later than March 11, 2011. Regulations, therefore, are not
expected any sooner than April, but probably later.
The Health Care Reform Law requires non-grandfathered
insured group health plans to satisfy the nondiscrimination
requirements of Internal Revenue Code Section 105(h)(2),
previously applicable only to self-funded group health plans.
Thus, the new law effectively prohibits non-grandfathered
insured group health plans from favoring highly compensated
-- Randal M. Limbeck
Omaha Office
[email protected]
5
FEDERAL COURT RULES EMPLOYEES
MUST BEHAVE CIVILLY WHILE ENGAGING
IN PROTECTED ACTIVITY
An employee who engages in protected whistleblowing must
“demonstrate civility and respect for his superiors in voicing
[his] concerns,” the federal appeals court in Chicago has
held in a case brought by a truck driver alleging retaliation
in violation of the federal Surface Transportation Assistance
Act (“STAA”). Formella v. U.S. Dep’t of Labor and Schnidt
Cartage, Inc., No. 09-2296 (Dec. 10, 2010). In addition to
STAA cases, the Court’s decision also may reach cases
involving employees who claim to have suffered retaliation
for engaging in activities protected by the National Labor
Relations Act or federal anti-discrimination law. The Seventh
Circuit has jurisdiction over Illinois, Indiana, and Wisconsin.
Formella alleged that he was fired after he complained to
his employer that the truck assigned to him was unsafe and
refused to drive it. The employer, however, contended he
was boisterous and lost his temper while raising his concerns.
Protected Activity, But...
The Administrative Law Judge (ALJ) found that while Formella
had engaged in protected activity under STAA, the employer
did not terminate his employment for engaging in protected
activity but, rather, for the “provocative, intemperate, volatile,
and antagonistic conduct” he used in expressing his safety
concerns. The ALJ found that even though the employer
admitted the plaintiff made no threatening remarks, did not
threaten violence, did not disobey any orders, and did not
prevent others from doing their jobs, the manner in which
he expressed concern over his truck’s safety was so out-ofline as to deprive him of STAA’s protections.
The Facts
Donald Formella, an experienced truck driver, was working
for Schnidt Cartage, Inc. On February 23, 2006, after
inspecting the truck assigned to him, he complained to his
supervisor about problems with the lights and mismatched
tire treads on his truck. His supervisor asked the head
of maintenance to address the problems as she talked to
Formella. She said that Formella then became both “louder”
and more “vehement” during the discussion, complaining
about the truck and the maintenance department. Indeed,
the employer noted that he was so loud and vehement that
other employees ran to the supervisor’s office to find out if
someone needed help.
The OSHA Administrative Review Board affirmed the ALJ’s
decision, and Formella petitioned the Seventh Circuit for
review of the Board’s order.
Some Indulgence Allowed
The federal appeals court, however, denied the plaintiff ’s
petition for review, relying heavily on cases involving
protected activity under the National Labor Relations
Act. The Court recognized that a worker must be given
“some leeway to stray beyond the boundaries of workplace
proprietary” while engaging in protected activity, but “the
employee’s entitlement to some indulgence for the manner
in which he engages in protected activity must be balanced
against the employer’s right to maintain order and respect.”
The supervisor advised Formella that if he was so unhappy,
he might consider working elsewhere. Formella “kept
pushing and getting more and more volatile and agitated,”
repeatedly asking, “[A]re you telling me I’m fired?” Ultimately,
the supervisor did fire Formella based on Formella’s “volatile
condition, … his anger, [and] his unstableness.”
Implications
In so holding, the Court affirms every employer’s basic right
to maintain order in the workplace by discharging employees
who engage in insubordinate and disruptive behavior.
Employers, in any event, should consult with counsel prior
to terminating any employee who has engaged in protected
activity or whistleblowing. Although an employee must be
Formella subsequently filed a complaint with the
Occupational Safety and Health Administration (OSHA),
alleging he was fired in retaliation for raising safety-related
complaints in violation of STAA. The STAA prohibits
retaliation against commercial truck drivers who express
safety or health-related concerns.
(Continued on Page 7)
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FEDERAL COURT RULES EMPLOYEES MUST
BEHAVE CIVILLY WHILE ENGAGING IN
PROTECTED ACTIVITY (Continued from page 6)
“civil” while engaging in protected activity, courts will provide the employee
with “some leeway” in how the employee voices his or her concerns.
Jackson Lewis attorneys are available to advise employers regarding employees
who have engaged in protected activity or whistleblowing and to defend
employers against charges or complaints of unlawful retaliation.
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