NLRB - CWA

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American Baptist Homes of the West d/b/a Piedmont
Gardens and Service Employees International
Union, United Healthcare Workers-West. Case
32–CA–063475
June 26, 2015
DECISION AND ORDER
BY CHAIRMAN PEARCE AND MEMBERS MISCIMARRA,
HIROZAWA, JOHNSON, AND MCFERRAN
The issues in this case are whether the Respondent violated Section 8(a)(5) and (1) of the National Labor Relations Act by failing to provide the Union with the names,
job titles, and written statements of three individuals who
claimed that they witnessed an employee engaging in
workplace misconduct that resulted in the employee’s
termination. The judge found that the Respondent violated Section 8(a)(5) and (1) by failing to provide the
requested names and job titles. He dismissed the allegation regarding the witness statements, however, finding
them exempt from disclosure under Anheuser-Busch,
Inc., 237 NLRB 982, 984–985 (1978), in which the
Board held that the general duty to furnish information
“does not encompass the duty to furnish witness statements themselves.”1
We agree with the judge’s findings regarding the
names and job titles, but we disagree as to the witness
statements. For the reasons set forth below, we have
decided to overrule Anheuser-Busch’s blanket exemption
for witness statements. Instead, in future cases when an
1
On April 16, 2012, Administrative Law Judge Gerald M.
Etchingham issued the attached decision. The General Counsel and the
Charging Party filed exceptions and the General Counsel filed a supporting brief; the Respondent filed an answering brief, and the General
Counsel filed a reply brief. Additionally, the Respondent filed limited
cross-exceptions and a supporting brief, the General Counsel filed an
answering brief, and the Respondent filed a reply brief.
On December 15, 2012, the Board issued a Decision and Order in
this proceeding, which is reported at 359 NLRB No. 46 (2012). Thereafter, the Respondent filed a petition for review in the United States
Court of Appeals for the District of Columbia Circuit.
At the time of the Decision and Order, the composition of the Board
included two persons whose appointments to the Board had been challenged as constitutionally infirm. On June 26, 2014, the United States
Supreme Court issued its decision in NLRB v. Noel Canning, 134 S. Ct.
2550 (2014), holding that the challenged appointments to the Board
were not valid. Thereafter, the Board issued an order setting aside the
Decision and Order, and retained this case on its docket for further
action as appropriate.
In view of the decision of the Supreme Court in NLRB v. Noel Canning, we have considered de novo the judge’s decision and the record
in light of the exceptions and briefs. We have also considered the nowvacated Decision and Order.
362 NLRB No. 139
employer argues that it has a confidentiality interest in
protecting witness statements from disclosure, we shall
apply the balancing test set forth in Detroit Edison v.
NLRB, 440 U.S. 301 (1979), as we do in all other cases
involving assertions that requested information is confidential. Under Detroit Edison, the Board balances the
union’s need for requested information against any “legitimate and substantial confidentiality interests established by the employer.” Id. at 318–320. In the present
case, however, we will apply Anheuser-Busch because,
as explained in this decision, we find that retroactive
application of the Detroit Edison test would work a
“manifest injustice” on the Respondent, which expressly
relied on the Anheuser-Busch rule. Consistent with that
rule, we adopt the judge’s finding, as set forth in detail
below, that two of the witnesses’ statements were exempt
from disclosure. Contrary to the judge, however, we find
that Charge Nurse Hutton’s statements were not witness
statements within the meaning of Anheuser-Busch.2
Accordingly, we adopt the judge’s rulings, findings,3
and conclusions in part, reverse them in part, and adopt
the recommended Order as modified and set forth in full
below.
Facts
The Respondent operates a continuing care facility in
Oakland, California, that provides three levels of care for
its residents: independent living, assisted living, and
skilled nursing. The Union represents a unit that includes the facility’s certified nursing assistants (CNAs);
the unit does not include the charge nurses, whose duties
include reporting employee misconduct to management.
In June 2011,4 Charge Nurse Barbara Berg notified the
2
Chairman Pearce, Member Hirozawa, and Member McFerran join
in overruling Anheuser-Busch. Members Miscimarra and Johnson
dissent from this part of the Board’s decision, but they join the majority
in finding that the new rule must be applied prospectively. Chairman
Pearce and Members Hirozawa, Johnson, and McFerran agree that
Hutton’s statements were not witness statements within the meaning of
Anheuser-Busch.
3
The Respondent has excepted to some of the judge’s credibility
findings. The Board’s established policy is not to overrule an administrative law judge’s credibility resolutions unless the clear preponderance of all the relevant evidence convinces us that they are incorrect.
Standard Dry Wall Products, 91 NLRB 544 (1950), enfd. 188 F.2d 362
(3d Cir. 1951). We have carefully examined the record and find no
basis for reversing the findings.
We have modified the judge’s recommended Order to conform to
our findings and to the Board’s standard remedial language. Contrary
to the judge, we find that the violations here do not warrant a public
reading of the notice, and we have modified the Order to reflect that
determination, as well.
We shall substitute a new notice to conform to the Order as modified
and in accordance with Durham School Services, 360 NLRB No. 85
(2014).
4
All dates are in 2011 unless otherwise indicated.
2
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Respondent’s human resources director, Alison Tobin,
that she had seen CNA Arturo Bariuad sleeping on duty.
Tobin asked Berg to prepare a written statement so that
the Respondent could begin an investigation; Tobin informed Berg that her statement would be kept confidential. Berg prepared a statement, as requested.
Charge Nurse Lynda Hutton also allegedly observed
Bariuad sleeping on duty. After learning that Berg had
reported Bariuad’s actions to management, Hutton prepared a statement reporting Bariuad’s conduct, signed it,
and slipped it under Tobin’s door. No one had asked
Hutton for the statement, nor was she given any assurance of confidentiality. Nevertheless, Hutton testified
that she assumed that it would be kept confidential. One
or 2 days later, Hutton submitted a second statement after
Tobin asked her to clarify the date of the alleged incident.
Tobin also asked CNA Ruth Burns, the only other unit
employee working the night shift with Bariuad, to prepare a statement documenting instances when she allegedly witnessed Bariuad sleeping while on duty. Consistent with the Respondent’s general policy, Tobin assured Burns that her statement would be kept confidential. Burns complied with Tobin’s request and prepared a
statement.
After reviewing the witness statements, the Respondent terminated Bariuad’s employment.
Following
Bariuad’s termination, Union Representative Donna
Mapp sent the Respondent’s acting human resources
director, Lynn Morgenroth, an information request seeking, in relevant part, “[a]ny and all statements that [were
used] as part of your investigation into Mr. Arturo
[Bariuad]” as well as “[t]he names and job title of everyone [who] was involved in the investigation.” On June
17, the Union filed a grievance over Bariuad’s termination and, that same day, Morgenroth responded to the
Union’s information request via email. Morgenroth provided the names of the managers who conducted the investigation, but did not provide any of the remaining
information. With respect to the Union’s request for
witness statements, Morgenroth stated:
The employer conducted a confidential investigation
regarding the allegations, as such disclosures of this information would breach witness confidentiality. The
Grievant (whom you represent) was present when the
incident(s) occurred, so you already have this information. The law does not require that we provide you
with witness statements collected during our investigation. See Anheuser-Busch, 237 NLRB 982 (1978);
Fleming Companies, Inc., 332 NLRB 1086 (2000);
Northern Indiana Public Service Company, 347 NLRB
No. 17 (2006). However, the Company would like to
work with the Union regarding an accommodation to
disclosure. Mr. Bariuad’s statement is included in his
HR file, attached.
At no time did the Respondent furnish the requested
names, job titles, or witness statements.
Judge’s Decision and Exceptions
Applying Pennsylvania Power Co., 301 NLRB 1104
(1991), the judge found that the Respondent did not establish a legitimate and substantial confidentiality interest in the witnesses’ names and job titles, and therefore it
violated Section 8(a)(5) and (1) of the Act by failing to
provide them. Applying Anheuser-Busch, supra, he
found that the Respondent was not required to provide
the witness statements. Accordingly, he dismissed the
complaint allegation regarding those statements.
Excepting to the judge’s finding that the witness
statements were exempt from disclosure, the General
Counsel and the Charging Party urge the Board to overrule Anheuser-Busch. They argue that its bright-line rule
is inappropriate and that, instead, the Board should apply
the balancing test articulated by the Supreme Court in
Detroit Edison Co., 440 U.S. 301. In the alternative, the
General Counsel contends that, even under AnheuserBusch, Charge Nurse Lynda Hutton’s statements were
not exempt from disclosure, because the Respondent did
not provide her with an assurance of confidentiality before she provided the statements.
The Respondent cross-excepts to the judge’s finding
that it violated the Act by failing to provide the names
and job titles of the witnesses. The Respondent argues
that, under Detroit Edison, it had a confidentiality interest that outweighed the Union’s need for that information. The Respondent also argues that the Board
should expand the scope of Anheuser-Busch to exempt
the names of witnesses.
Discussion
After careful consideration, we find that the rationale
of Anheuser-Busch is flawed. In our view, national labor
policy will best be served by overruling that decision
and, instead, evaluating the confidentiality of witness
statements under the balancing test set forth in Detroit
Edison.
Section 8(a)(5) of the Act imposes on an employer the
“general obligation” to furnish a union with relevant information necessary to the union’s proper performance of
its duties as the collective-bargaining representative of its
employees, including information that the union needs to
determine whether to take a grievance to arbitration.
NLRB v. Acme Industrial Co., 385 U.S. 432 (1967). In
Acme, the Supreme Court observed that providing a union with information relevant to the processing of griev-
PIEDMONT GARDENS
ances not only aids the union in representing grievants,
but allows it to “sift out unmeritorious claims.” Id. at
438. To that end, the Board applies a liberal test to determine whether information is relevant; the issue is
whether the requested information is of “probable” or
“potential” relevance. Transport of New Jersey, 233
NLRB 694, 694 (1977). As the Board explained in
Pennsylvania Power: “[T]he information need not be
dispositive of the issue between the parties but must
merely have some bearing on it. In general, the Board
and the courts have held that information that aids the
arbitral process is relevant and should be provided.” 301
NLRB at 1105.5
Establishing relevance, however, does not necessarily
end the inquiry. If a party asserts that requested information is confidential, the Board balances the union’s
need for the relevant information against any “legitimate
and substantial confidentiality interests established by the
employer.” See Detroit Edison, supra at 318–320. See
also Pennsylvania Power Co., supra at 1105; Washington
Gas Light Co., 273 NLRB 116, 116 (1984).6 “The confidentiality interest of the employer . . . is not fixed; it
may vary with the nature of the industry or the circumstances of a particular case.” Metropolitan Edison Co.,
330 NLRB 107, 108 (1999), quoting Resorts International v. NLRB, 966 F.2d 1553, 1556 (3d Cir. 1993).
Establishing a legitimate and substantial confidentiality
interest requires more than a generalized desire to protect
the integrity of employment investigations. An employer
must instead “determine whether in any give[n] investigation witnesses need protection, evidence is in danger
of being destroyed, testimony is in danger of being fabricated, [or] there is a need to prevent a cover up.” Hyundai America Shipping Agency, 357 NLRB No. 80, slip
op. at 14–15 (2011). If such showing is made, the Board
then weighs the party’s interest in confidentiality against
the requester’s need for the information. Pennsylvania
5
The duty to provide relevant information is not an obligation imposed on employers alone; a similar duty is owed by unions. Detroit
Newspaper Printing & Graphic Communications Local 13 (Oakland
Press), 233 NLRB 994 (1977), enfd. 598 F.2d 267 (D.C. Cir. 1979).
6
In addition to confidentiality, the employer can assert a number of
other defenses to a union’s request for information, including the workproduct doctrine. For that reason, Member Johnson’s argument that
application of the Detroit Edison test to employer confidentiality claims
will “interfere with an employer’s work product” is unfounded. The
work product doctrine is a separate defense that an employer may raise
in response to a union’s request for information, including witness
statements, and the Board will continue to evaluate that defense on its
own merits. See Central Telephone Co. of Texas, 343 NLRB 987, 988
(2004). We see no basis for Member Johnson’s apparent claim that the
prospect of having to invoke the work product doctrine—a fixture of
American law—will unduly interfere with the employer’s conduct of
investigations.
3
Power, supra at 1105. Even if the Board concludes that
the confidentiality interest outweighs the requester’s
need, the party asserting confidentiality may not simply
refuse to provide the information, but must seek an accommodation that would allow the requester to obtain
the information it needs while protecting the party’s interest in confidentiality. Borgess Medical Center, 342
NLRB 1105, 1106 (2004). Since the Supreme Court’s
decision in Detroit Edison, the Board has applied this test
in all cases where a party has raised a confidentiality
defense to a request for information, except where the
requested information is witness statements.7
Notwithstanding the employer’s general duty to provide relevant information, the Board in Anheuser-Busch
created a broad, bright line exception, holding that “the
‘general obligation’ to honor requests for information, as
set forth in Acme and related cases, does not encompass
the duty to furnish witness statements . . . .” 237 NLRB
at 984–985. In creating that rule, the Board concluded
that witness statements “are fundamentally different from
the types of information contemplated in Acme, and disclosure of witness statements involves critical considerations which do not apply to requests for other types of
information.” Id. at 984. The Board cited NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214 (1978), in which
the Supreme Court held that the Freedom of Information
Act (FOIA), 5 U.S.C. § 552, did not require the Board to
disclose, prior to an unfair labor practice hearing, statements of witnesses whom the Board intended to call at
the hearing. Although acknowledging that Robbins Tire
7
Member Miscimarra contends that by adopting a balancing test for
witness statements, the Board improperly requires the employer to
balance the competing interests, thereby disregarding the Board’s “responsibility to apply the Act to the complexities of industrial life.”
(Citation omitted.) We reject that contention, which, if meritorious,
would bar the Board from doing what every reviewing court has authorized the Board to do: apply the Detroit Edison balancing test to all
other claims of confidentiality in information cases. A union’s request
for witness statements is the only significant exception to that rule, and
the exception was self-imposed. Today’s decision merely brings requests for witness statements under the same rubric as other requests
for allegedly confidential information. Under that rubric, although the
employer must assert a claim of confidentiality (or waive it) in response
to the union’s request for information, the employer is then obligated
only to offer an accommodation. If the union is dissatisfied with the
offer, it is then required to respond and explain why the proffered accommodation is insufficient. See e.g. Metropolitan Edison Co., 330
NLRB at 109. If this bargaining process fails, and an unfair labor practice charge is filed, the Board will then adjudicate the interests of the
parties. This procedure removes the Board from the process, but it
remains available to prevent parties from circumventing their obligation
to share nonconfidential information and to bargain over disputes.
Further, placing the initial burden of invoking a confidentiality interest
on the employer permits it—in the first instance—to identify and justify
its own interests, rather than have the Board make categorical determinations about specific types of confidential matters.
4
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
addressed only the “special danger flowing from prehearing discovery in NLRB proceedings,” 437 U.S. at 239,
the Board relied on the Court’s observations that the
premature release of witness statements risked employer
and union intimidation of potential witnesses, as well as
the possibility that witnesses might be reluctant to give
statements at all absent assurances against prehearing
disclosure. Anheuser-Busch, supra at 984.
Today, we reject the premise of Anheuser-Busch that
witness statements are unique and fundamentally different from the types of information contemplated in Acme.8
If requested information is relevant and necessary to the
union’s representative duties, then the provision of the
requested information serves the purposes of the Act.
And information is particularly helpful in the grievance
context, where the union must decide whether to expend
limited resources processing a grievance at all. The goal
of collectively bargained dispute resolution procedures is
to resolve grievances quickly and economically, and the
sharing of information furthers that goal.9
That is not to say that there are no other factors to consider or that a union is always entitled to receive the information that it seeks. But we are not persuaded that
witness statements are so fundamentally different from
other types of information that a blanket exemption from
disclosure is warranted. In this respect, we find it significant that Anheuser-Busch predated Detroit Edison and,
therefore, was formulated before the Supreme Court articulated the standard broadly applicable in all other confidential information cases.
Nor are we persuaded that Robbins Tire requires or
justifies a blanket rule exempting witness statements
from an employer’s duty to provide relevant information.
As described, Robbins Tire did not involve a union’s
right under the Act to information relevant to its role in
the collective-bargaining process. Rather, Robbins Tire
held only that the FOIA did not require prehearing disclosure of Board affidavits, finding that the affidavits
were covered under the FOIA exemption for records
compiled for law enforcement proceedings. In making
that finding, moreover, the Court relied not only on the
potential for coercion or intimidation of witnesses, as
8
Acme itself concerned information about subcontracting. See 385
U.S. 432. The Court upheld the Board’s finding that the employer was
required to provide information about the removal of certain equipment
from the plant where the information was relevant to grievances the
union had filed. Id.
9
We reject the position of our dissenting colleagues and the Anheuser-Busch Board that the disclosure of witness statements “would
not advance the grievance and arbitration process.” Supra at 984. As
the Supreme Court observed in Acme, arbitration is advanced by prearbitral exchanges of information. Anheuser-Busch frustrates that goal
by maintaining a blanket exemption for witness statements.
noted by the Board in Anheuser-Busch, but also on the
absence of any evidence of Congressional intent to overturn the Board’s longstanding rule against prehearing
disclosure of witness statements in the interest of protecting the Board’s enforcement mechanisms. Robbins Tire,
supra at 242–243.10 Where relevant information is requested in the context of a bargaining relationship, however, the Board’s underlying policies favor disclosure.
See Acme, supra at 437.11 Thus, the policy concerns pull
in opposite directions, further undercutting the rationale
of Anheuser-Busch.
We recognize that, in some cases, there are legitimate
and substantial confidentiality interests that must be accommodated, including the risk that employers or unions
will intimidate or harass those who have given statements, or that witnesses will be reluctant to give statements for fear of disclosure.12 But similar risks are presented by the disclosure of witness names, for which
there is no blanket exemption. In fact, the Board in Anheuser-Busch specifically affirmed the holding of
Transport of New Jersey,13 in which the Board held that
an employer, who claimed that the disclosure of witness
names would expose the witnesses to harassment, had a
duty to produce the requested information. 237 NLRB at
984 fn. 5. The Board found that the employer’s concerns
10
That longstanding rule continues. See Santa Barbara News-Press,
358 NLRB No. 155, slip op. at 2 (2012) (citing cases), incorporated by
reference, 361 NLRB No. 88 (2014).
11
Congressional intent regarding the application of the FOIA clearly
is irrelevant in this context.
12
We reject Member Miscimarra’s belief that this risk is so high
“[w]hen employees step forward to provide information that may involve a coworker’s misconduct” that it is “reason enough to adhere to
the rule of Anheuser-Busch.” We have acknowledged the possibility of
retaliation against employees whose information leads to the investigation and possible discipline of another employee. Our decision allows
parties concerned over a request for witness statements to weigh the
risks of retaliation against the union’s need for the information, just as
parties have been doing for decades when dealing with requests for
witness names. We see no reason to think that the furnishing of witness
statements, in addition to witness names, will increase the risk of retaliatory actions.
Furthermore, nothing in our decision today prevents the parties from
bargaining over a reasonable accommodation, such as a nondisclosure
agreement, when the employer has a legitimate confidentiality concern
regarding the union’s use of the requested information. Finally, we
observe that Member Miscimarra’s discussion of the possibility of
retaliation by supervisors or coworkers is beside the point. If disclosure
is ultimately required under the Supreme Court’s Detroit Edison standard, it is disclosure to the union, not to supervisors or coworkers. And
as the case he cites illustrates, the union can, and almost certainly will,
refuse to provide such statements to involved individuals. See Mail
Handlers Local 307 (Postal Service), 339 NLRB 93, 95 (2003).
13
233 NLRB 694 (1977).
PIEDMONT GARDENS
were speculative and were outweighed by the union’s
need for the information. Id. at 695.14
A review of other Board decisions involving the disclosure of witness names establishes that the flexible
approach of Detroit Edison adequately protects the interests of the employer and witnesses, while preserving the
general right of requesting unions to obtain relevant information. In Pennsylvania Power,15 the Board found
that the employer, which operated a nuclear power generating plant, established a legitimate and substantial
confidentiality interest justifying its refusal to produce
the names of informants who provided information about
suspected employee drug use. In Mobil Oil Corp.,16
where the employer similarly refused to disclose the
identity of the person who provided information that led
to the mandatory drug screening of three employees, the
Board again upheld the employer’s confidentiality
claim.17 In Metropolitan Edison Co.,18 the Board distinguished Pennsylvania Power and Mobil Oil and found
that the employer violated the Act by refusing to disclose
names of two informants who had provided information
that led to the discharge of an employee for stealing food
from the plant cafeteria. The Board assumed that the
employer’s confidentiality claim was legitimate and substantial, but found that the employer’s blanket refusal to
provide information was not justified; the Board then
found that the employer had an obligation to offer an
accommodation with regard to the disclosure of the information. Id. at 107. In the Board’s view, “concerns
about petty cafeteria theft, which poses no apparent
threat to employee or public safety, do not carry the same
unusually great weight as the interests that were found to
be present in Pennsylvania Power and Mobil Oil.” Id. at
108 (internal quotation marks omitted).
Like the disclosure of witness names, the disclosure of
witness statements may raise legitimate and substantial
concerns of confidentiality or retaliation in some cases.
Nothing in our decision today precludes the assertion of
those concerns in response to an information request or
the Board’s (or a reviewing court’s) subsequent consid14
Thus, contrary to the arguments of Member Johnson, the employer
could not, even under the regime of Anheuser-Busch, assure employees
in all investigations that their identity or participation in a workplace
investigation would remain confidential.
15
301 NLRB at 1106-1107.
16
303 NLRB 780, 780-781 (1991).
17
The Board also found that the employer had no right simply to ignore the Union’s information request, and it required the employer to
provide a summary of the informant’s report as an accommodation to
the union.
18
330 NLRB 107 (1999).
5
eration of them.19 But there is no basis for concluding
that all witness statements, no matter the circumstances,
warrant exemption from disclosure.20 Rather, we will
apply the same approach that we apply in cases involving
witness names: if the requested information is relevant,
the party asserting the confidentiality defense has the
burden of proving that it has a legitimate and substantial
confidentiality interest in the information, and that it
19
Our colleagues argue that applying a Detroit Edison balancing test
to requests for witness statements will have adverse consequences,
including increased Board litigation and an inability of employers to
protect employee witnesses from harassment or intimidation. As the
Board stated in response to similar concerns raised by former Member
Hayes’s dissent, the Detroit Edison balancing test takes into account
any legitimate and substantial confidentiality interest that an employer
may have, which would include concerns about witness intimidation.
The Detroit Edison test encourages parties to a collective-bargaining
agreement to work together to accommodate their competing interests.
Thus, the test encourages collective bargaining—not, as our colleagues
assert, needless litigation.
We also reject the dissents’ arguments that our decision will make it
more difficult for employers to conduct effective investigations. Of
course, today’s issue arises where collective-bargaining agreements
have created grievance-arbitration procedures and protections for employees against unjust discipline or discharge. Our dissenting colleagues’ narrow focus on the employer’s interests in conducting investigations obscures this larger context and gives little, if any weight, to
the statutory interest of employees in exercising and preserving their
contractual rights. In any case, given typical management prerogatives
and control over employees’ terms and conditions of employment,
employers continue to have more than adequate tools to conduct effective workplace investigations, notwithstanding the need to comply with
federal labor law. For example, nothing in our decision today diminishes the employer’s ability to require an employee to participate in a
workplace investigation, as the Respondent did in this case. Nor does it
prevent employers from requiring employees to report wrongdoing in
the workplace, on penalty of discipline. Meanwhile, our colleagues
point to no other federal statutory requirement that runs contrary to our
holding today. Nothing in the EEOC order cited by Member Johnson
conflicts with the approach we adopt. Indeed, that order—which addresses Investigations conducted by the Commission of its own employees, not investigations by employers regulated by the Commission—encourages investigators to keep the identity of participants
confidential “to the greatest extent possible . . . except as necessary to
conduct an appropriate investigation into the alleged violations or when
otherwise required by law.” This express qualification reflects the
EEOC’s acknowledgement that confidentiality interests have to be
balanced with the requirements of other laws, such as, in the private
sector, the National Labor Relations Act. In any event, much of the
language Member Johnson quotes concerns witness names, and our
precedent regarding disclosure of names remains unchanged. That an
employer may have legal incentives to conduct a workplace investigation—or even a legal obligation to do so—does not mean that any labor
law requirement applicable to the investigation unjustifiably impedes
the employer’s ability to comply with another statute.
20
We reject Member Johnson’s suggestion that the Board should
provide a “safe harbor” for employers if “serious misconduct” is involved. We find the term “serious misconduct” too vague to offer
meaningful guidance. And even if we could surmount that hurdle, we
discern neither a rationale nor the need to exempt the employer in that
situation from the obligation to make a particularized showing of the
need for confidentiality.
6
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
outweighs the requesting party’s need for the information. See Detroit Edison, 440 U.S. at 318–320; Jacksonville Area Association for Retarded Citizens, 316
NLRB 338, 340 (1995). Whether the information withheld is sensitive or confidential will be assessed based on
the specific facts in each case. See Northern Indiana
Public Service Co., 347 NLRB 210, 211 (2006).21
We find that this approach will effectively protect both
the employer and the witnesses where the employer raises a reasonable concern regarding confidentiality, harassment, or coercion, while also safeguarding the union’s
statutory right to obtain information relevant to grievance
processing. See Fleming Cos., 332 NLRB 1086, 1088–
1091 (2000) (Members Fox and Liebman, concurring).
Prospective Application
The next issue that we confront is whether the foregoing principles should be applied retroactively, i.e., in this
case. The propriety of retroactive application in any particular case is determined by balancing any ill effects of
retroactivity against “the mischief of producing a result
which is contrary to a statutory design or to legal and
equitable principles.” Securities & Exchange Commission v. Chenery Corp., 332 U.S. 194, 203 (1947). Pursuant to this principle, the Board will apply a new rule to
all pending cases, including the case in which the new
rule is announced, so long as this does not work a “manifest injustice.” Pattern Makers (Michigan Model Mfrs.),
310 NLRB 929, 931 (1993). In determining whether
retroactive application will cause manifest injustice, the
Board balances three factors: (1) “the reliance of the parties on preexisting law”; (2) “the effect of retroactivity on
accomplishment of the purposes of the Act”; and (3)
“any particular injustice arising from retroactive application.” SNE Enterprises, 344 NLRB 673, 673 (2005) (citing cases). In this case, we find that it is appropriate to
apply our new rule prospectively only.
The Board’s decision today marks a departure from
longstanding precedent, and the Respondent expressly
relied on preexisting law under which its refusal to provide the witness statements was unquestionably lawful:
in its letter to the Union concerning the witness statements, the Respondent cited Anheuser-Busch. Accordingly, in the present case and all other cases where the
employer’s refusal to provide requested witness statements occurred before the date of this decision, the
21
We reject Member Miscimarra’s suggestion that the Board’s confidentiality standard will never be satisfied. The Board has applied
Detroit Edison in a variety of information cases and has on many occasions vindicated the employer’s assertion of confidentiality. See, e.g.,
Pennsylvania Power, supra; Mobil Oil, supra; and Northern Indiana
Public Services Co., supra.
Board shall apply Anheuser-Busch in evaluating the lawfulness of the employer’s conduct.
Ruling on the Merits22
As stated above, the judge found that the statements of
Berg, Hutton, and Burns were “witness statements” within the meaning of Anheuser-Busch. The judge also
found, applying Pennsylvania Power, supra, that the
names of the witnesses were not confidential, and that
the Respondent violated Section 8(a)(5) and (1) of the
Act by failing to provide them to the Union.
We adopt the judge’s findings with respect to the witnesses’ names and job titles. The Respondent argues that
it has demonstrated a legitimate and substantial confidentiality interest because it has a policy of keeping the
names of witnesses confidential, and because revealing
the names of witnesses could lead to the harassment of
those witnesses. The Respondent also argues that its
confidentiality interest outweighs the Union’s need for
the information because the Union could have easily obtained the names of the employees working the night
shift with Bariuad from the posted work schedules. We
reject those arguments.23 First, the judge properly found
that an employer’s policy of keeping names confidential
does not by itself establish a legitimate and substantial
confidentiality interest.24 Second, the credited evidence
fails to establish any factual basis for the Respondent’s
asserted concern regarding workplace harassment.
Third, as the judge also found, the Union’s ability to obtain the requested information elsewhere does not excuse
the Respondent’s obligation to provide the information.
See King Soopers, Inc., 344 NLRB 842, 845 (2005),
enfd. 476 F.3d 843 (10th Cir. 2007). Moreover, the Respondent’s argument that the names of the witnesses
were easily available from the posted schedule significantly undercuts its argument that the names and job
titles were confidential. For the foregoing reasons, we
adopt the judge’s finding that the Respondent violated
22
Member Miscimarra joins this part of the Board’s decision solely
with respect to the Board’s finding that the Respondent did not violate
the Act by failing to provide the Union with the witness statements of
Charge Nurse Barbara Berg and employee Ruth Burns.
23
We also reject the Respondent’s alternative request that the Board
expand Anheuser-Busch to apply to witness names as well as witness
statements. In addition, we reject Member Miscimarra’s alternative
argument that the Board should expand Anheuser-Busch to apply to any
request for information that seeks the identity of witnesses who participated in the investigation. In our view, the protections afforded by
Detroit Edison rule are sufficient to protect witnesses or the names of
“everyone involved in the investigation,” as the Union requested here.
24
In adopting the judge’s finding, we do not rely on his citation to
Alcan Rolled Products, 358 NLRB No. 11 (2012), a case decided when
the Board lacked a quorum.
7
PIEDMONT GARDENS
Section 8(a)(5) and (1) of the Act by refusing to provide
the requested names and job titles of the witnesses.
Turning to the statements, in the absence of exceptions, we adopt the judge’s finding that the statements of
Berg and Burns were “witness statements” within the
meaning of Anheuser-Busch. We therefore affirm the
judge’s finding that the Respondent did not violate the
Act by failing to provide the Union with their statements.
We find merit, however, in the Acting General Counsel’s argument that Charge Nurse Hutton’s statements
were not “witness statements.” Contrary to the judge, we
find it significant that Hutton’s statements were not provided under an assurance of confidentiality. For a statement to be exempt under Anheuser-Busch, the statement
must be adopted by the witness, and assurances must
have been given to the witness that the statement will
remain confidential. El Paso Electric Co., 355 NLRB
428, 428 fn. 3, 458 (2010), enfd. 681 F.3d 651 (5th Cir.
2012). See also New Jersey Bell Telephone Co., 300
NLRB 42, 43 (1990), enfd. 936 F.2d 144 (3d Cir. 1991).
Here, although Hutton assumed that her statements
would be confidential because of the Respondent’s general policy regarding such statements, she was not
prompted to give the statements by any assurance of confidentiality. In fact, at no time was Hutton given any
affirmative assurance that her statements would be kept
confidential. Rather, the record establishes that Hutton
gave the statements because it was one of her job duties
to do so. Accordingly, we find that Hutton’s statements
were not subject to the Anheuser-Busch exemption and
that the Respondent therefore violated Section 8(a)(5)
and (1) by failing to provide her statements to the Union.
ORDER
The National Labor Relations Board orders that the
Respondent, American Baptist Homes of the West d/b/a
Piedmont Gardens, Oakland, California, its officers,
agents, successors, and assigns, shall
1. Cease and desist from
(a) Failing and refusing to bargain in good faith with
the Union by refusing to provide requested information
that is relevant and necessary to the processing of a
grievance.
(b) In any like or related manner interfering with, restraining, or coercing employees in the exercise of the
rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) Provide the Union with the requested names and
job titles of informants against Mr. Anuro Bariuad.
(b) Provide the Union with the statements of Lynda
Hutton.
(c) Within 14 days after service by the Region, post at
its facility in Oakland, California copies of the attached
notice marked “Appendix.”25 Copies of the notice, on
forms provided by the Regional Director for Region 32,
after being signed by the Respondent Employer’s authorized representative, shall be posted by the Employer and
maintained for 60 consecutive days in conspicuous places, including all places where notices to employees are
customarily posted. In addition to physical posting of
paper notices, notices shall be distributed electronically,
such as by email, posting on an intranet or an internet
site, and/or other electronic means, if the Employer customarily communicates with its employees by such
means. Reasonable steps shall be taken by the Employer
to ensure that the notices are not altered, defaced, or covered by any other material. If the Employer has gone out
of business or closed the facility involved in these proceedings, the Employer shall duplicate and mail, at its
own expense, a copy of the notice to all current employees and former employees employed by the Employer at
any time since June 17, 2010.
(d) Within 21 days after service by the Region, file
with the Regional Director for Region 32 a sworn certification of a responsible official on a form provided by the
Region attesting to the steps that the Respondent Employer has taken to comply.
IT IS FURTHER ORDERED that the complaint is dismissed
insofar as it alleges violations of the Act not specifically
found.
Dated, Washington, D.C. June 26, 2015
(SEAL)
25
Mark Gaston Pearce,
Chairman
Kent Y. Hirozawa,
Member
Lauren McFerran,
Member
NATIONAL LABOR RELATIONS BOARD
If this Order is enforced by a judgment of the United States court
of appeals, the words in the notice reading “Posted by Order of the
National Labor Relations Board” shall read “Posted Pursuant to a
Judgment of the United States Court of Appeals Enforcing an Order of
the National Labor Relations Board.”
8
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
MEMBER MISCIMARRA, dissenting in part.
In this case, my colleagues complete a trilogy of recent
decisions—also including Fresh & Easy Neighborhood
Market1 and Banner Estrella Medical Center2—where
the Board is substantially undermining workforce investigations, to the detriment of employers and employees
alike. Here, the Board majority finds that Section 8(a)(5)
of the Act requires employers to disclose employee witness statements, except in narrow, unusual circumstances. For the reasons expressed in Member Johnson’s
well-reasoned separate opinion, I dissent from the majority’s overruling of Anheuser-Busch, 237 NLRB 982
(1978)—a unanimous five-member decision—which
exempted witness statements from the employer’s duty
to provide relevant requested information.3 I agree with
each of the reasons articulated by Member Johnson that
favor adhering to Anheuser-Busch, with the following
additional observations.
First, similar to what I expressed in Banner Estrella, I
believe the Act requires the Board to balance the importance of taking reasonable measures to foster confidentiality regarding workforce investigations, including
the confidentiality of witness statements, against the impact of nondisclosure on NLRA-protected rights.4 The
majority relegates this balancing to employers with instructions to conduct a de novo case-by-case appraisal of
the need for confidentiality, based on a standard that will
nearly always require disclosure. By requiring employ1
361 NLRB No. 12 (2014). In Fresh & Easy, a divided Board (with
Member Johnson and myself dissenting) found that a single employee’s
individual complaint involving a statute unrelated to the National Labor
Relations Act (NLRA or Act) subjected a workplace investigation to
the full panoply of NLRA restrictions and requirements applicable to
NLRA-protected concerted activity.
2
362 NLRB No. 137 (2015). In Banner Estrella, a divided Board
decided that an employer violated the NLRA based on a narrowly tailored “request” that an employee refrain from repeating what was discussed during an investigative meeting. I dissented from the Board
majority’s decision. 362 NLRB No. 137, slip op. at 5.
3
The majority holds that its new rule will apply prospectively only.
Accordingly, they find under Anheuser-Busch that the Respondent
lawfully refused to produce witness statements from Charge Nurse
Barbara Berg and employee Ruth Burns. Because I would adhere to
Anheuser-Busch, I concur in this result. For the reasons stated below, I
would also find that the statement of Charge Nurse Lynda Hutton qualifies as a witness statement notwithstanding that she was not given an
express assurance of confidentiality, and the Respondent lawfully refused to produce her statement as well.
4
See, e.g., NLRB v. Great Dane Trailers, Inc., 388 U.S. 26, 33–34
(1967) (holding that it is the Board’s “duty to strike the proper balance
between . . . asserted business justifications and the invasion of employee rights in light of the Act and its policy”); NLRB v. Erie Resistor
Corp., 373 U.S. 221, 228–229 (1963) (referring to the “delicate task . . .
of weighing the interests of employees in concerted activity against the
interest of the employer in operating his business in a particular manner
and of balancing . . . the intended consequences upon employee rights
against the business ends to be served by the employer’s conduct”).
ers to perform this balancing on a case-by-case basis, I
believe my colleagues improperly disregard the Board’s
“responsibility” to apply the Act “‘to the complexities of
industrial life.’”5
Second, I agree with Member Johnson that the exemption of witness statements from mandatory disclosure, as
articulated in Anheuser-Busch, serves important purposes. When employees step forward to provide information that may involve a coworker’s misconduct, there
is little question that they risk coercion, intimidation,
harassment, and retaliation, and this risk is especially
high if the employer is required to disclose their witness
statements to a union.6 The rule of Anheuser-Busch protects witnesses from this very real concern. That by itself is reason enough to adhere to the rule of AnheuserBusch, but it begets a further reason to do so: because
the Anheuser-Busch rule enables employers to promise
employees that their witness statements will remain confidential, it encourages employees to step forward in the
first place and participate in investigations of workplace
5
NLRB v. J. Weingarten, Inc., 420 U.S. 251, 266 (1975) (quoting
NLRB v. Erie Resistor Corp., 373 U.S. at 236).
6
The majority rejects my belief that employees risk retaliation when
they report misconduct, a risk that overruling Anheuser-Busch will
exacerbate. I agree with Member Johnson that the Supreme Court’s
decision in NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214 (1978),
in which the Court recognized the danger inherent in the disclosure of
witness statements, supports that belief. So, too, does a recent empirical study. According to the 2013 National Business Ethics Survey
conducted by the Ethics Resource Center (ERC), 21 percent of employees who reported workplace misconduct suffered retaliation from their
superiors or coworkers—a figure the ERC calls “alarmingly high”—
and only 63 percent reported misconduct they had observed, in part
because of fear of retaliation. Ethics Resource Center, 2013 National
Business Ethics Survey of the U.S. Workforce 9, 26–28 (2014), available at http://www.ethics.org/downloads/ 2013NBESFinalWeb.pdf.
My support for the Anheuser-Busch exemption does not stem from a
belief that union representatives routinely support or condone retaliation against employee witnesses. As noted in the text, a significant
factor favoring nondisclosure of witness statements is the reality that,
without an employer’s ability to promise confidentiality, employee
witnesses reasonably fear coworker retribution and may refuse to provide relevant information. Indeed, the Board majority in Fresh & Easy
broadly endorsed a “solidarity principle” that renders conduct protected
when one employee insists on another employee’s help, even when a
reluctant coworker strenuously objects to providing it. As the majority
stated in Fresh & Easy: “‘An injury to one is an injury to all’ is one of
the oldest maxims in the American labor lexicon.” Fresh & Easy, 361
NLRB No. 12, slip op. at 6 (footnote and citations omitted). The principle of “solidarity” is well known in a represented workforce, and it is
especially challenged when employees have knowledge relevant to an
investigation that may uncover misconduct by a coworker. Indeed, the
Board has protected the right of a union not to disclose witness statements based on “the potential for confrontations in the workplace.”
Mail Handlers Local 307 (Postal Service), 339 NLRB 93, 95 (2003).
As the Board properly recognized in Anheuser-Busch, the same consideration warrants affording similar protection to witness statements in
the possession of an employer.
PIEDMONT GARDENS
misconduct.7 This is extremely important because employees are most often the only source of relevant information. And the information is important not only to
employers, but also to employees themselves. As I
pointed out in Fresh & Easy Neighborhood Market, numerous “non-NLRA statutes confer extremely important
protection on employees,” and “[a]n employer is the only
party on the scene, in real time, who can give employees
what is required by . . . numerous employment statutes”—namely, “a legally compliant workplace.”8 By
overruling Anheuser-Busch and subjecting witnessstatement confidentiality to a case-by-case determination,
the majority makes it impossible for employers to promise employee witnesses that their statements will remain
confidential. The predictable result will be far fewer
employees who are willing to provide witness statements, with a corresponding loss of investigative effectiveness and consequent weakening of employers’ ability
to provide a safe workplace—something the vast majority of employers strive to do regardless of their legal obligation to do so—and a legally compliant workplace under federal statutes other than the NLRA. Here, as in
Fresh & Easy, the majority’s decision fails to heed the
Supreme Court’s longstanding admonition to the Board
to accommodate the NLRA to other statutory schemes:
[T]he Board has not been commissioned to effectuate
the policies of the [Act] so single-mindedly that it may
wholly ignore other and equally important Congressional objectives. Frequently the entire scope of Congressional purpose calls for the careful accommodation
of one statutory scheme to another, and it is not too
much to demand of an administrative body that it undertake this accommodation without excessive emphasis upon its immediate task.
Southern Steamship Co. v. NLRB, 316 U.S. 31, 47 (1942).
Third, the change wrought by the majority today is not
a simple matter of substituting a balancing test for a
bright line rule, where witness statements can remain
7
The Board’s General Counsel certainly understands the importance
of protecting the confidentiality of witness statements obtained in
Board proceedings. Parties are not entitled to see witness statements
and affidavits gathered by the General Counsel until after the witness
testifies, often after an investigation spanning months or even years.
See Sec. 102.118(b)(1) of the Board’s Rules and Regulations; Success
Village Apartments, Inc., 347 NLRB 1065, 1065 (2006). Neither are
parties entitled to discover the identity of the General Counsel’s witnesses before (and unless) they testify. See Sec. 102.117 & 102.118 of
the Board’s Rules and Regulations; Sunshine Piping, Inc., 351 NLRB
1372, 1402 (2007). The same concerns underlying the Board’s rules in
this regard are present in an employer’s investigation of workplace
misconduct and argue in favor of retaining the rule of Anheuser-Busch.
8
361 NLRB No. 12, slip op. at 20, 22 (Member Miscimarra, concurring in part and dissenting in part).
9
confidential based merely on a different standard. In the
vast majority of cases, a balancing of competing interests
will never happen at all. Before interests may be balanced, the employer must first establish a legitimate and
substantial confidentiality interest in the witness statement requested by the union. And to do so, according to
the majority, the employer must show that “witnesses
need protection, evidence is in danger of being destroyed, testimony is in danger of being fabricated, [or]
there is a need to prevent a cover up.”9 Predictably, the
majority’s new “confidentiality interest” standard will
never be satisfied except in extremely narrow, infrequent
circumstances. The employer cannot withhold witness
statements based on reasonable concerns about potential
risks that disclosure may create. It must show that one or
more of the specific dangers recited in Hyundai America
presently exists. In other words, forget about Detroit
Edison balancing: in the vast majority of cases, employers will simply fail to establish a confidentiality interest
to the Board’s satisfaction in the first place.
Fourth, coming as it does on the heels of Babcock &
Wilcox Construction Co., 361 NLRB No. 132 (2014),
9
As authority for this standard, the majority cites Hyundai America
Shipping Agency, 357 NLRB No. 80, slip op. at 15 (2011), a case that
dealt not with witness statements, but with an employer prohibition on
disclosure of matters under investigation. The standard itself has an
unsound basis in Board precedent. It was stated for the first time in the
administrative law judge’s decision in Hyundai America. As authority,
the judge relied on Caesar’s Palace, 336 NLRB 271 (2001), but Caesar’s Palace states no such standard. Rather, Caesar’s Palace states a
totality-of-the-circumstances standard: “To strike a proper balance
between the employees’ rights and the [r]espondent’s business justification, we must examine the facts of this case in light of the surrounding
circumstances.” Id. at 272 (emphasis added). The Board then found
that the employer lawfully imposed a confidentiality rule where the
ongoing investigation dealt with suspected illegal drug activity in the
workplace. In so finding, the Board observed that “[b]ecause the investigation involved allegations of a management coverup and possible
management retaliation, as well as threats of violence, the Respondent’s investigating officials sought to impose a confidentiality rule to
ensure that witnesses were not put in danger, that evidence was not
destroyed, and that testimony was not fabricated.” Id. at 272 (emphasis
added). In other words, the reasons that warranted a finding that the
rule was lawful were specific to the facts of that case, reflecting a proper application of the announced standard of “examin[ing] the facts of
this case in light of the surrounding circumstances.” Nonetheless, in
Hyundai America the judge elevated those case-specific reasons into a
standard that must be met in every case where an employer seeks to
justify a rule prohibiting discussion of an ongoing investigation. (It
would make as much sense to say that where, to qualify for a high-jump
competition, competitors must clear 5 feet, and an individual proceeds
to clear a 5-foot bar with a 7-foot jump, all high jumpers must thenceforward clear 7 feet merely to qualify.) And in the instant case, the
majority compounds the error by extending the erroneous Hyundai
America standard to an entirely different issue: not whether an employer may police disclosures concerning an ongoing investigation, but
whether an employer has demonstrated a confidentiality interest in
witness statements gathered during a now-completed investigation.
10
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
this case erects yet another substantial obstacle to a wellfunctioning system of labor arbitration, contrary to federal policy as reflected in Section 203(d) of the Labor
Management Relations Act and the Supreme Court’s
Steelworkers trilogy.10 In Babcock, the Board adopted a
new standard for deciding whether to defer discipline and
discharge cases to arbitration that will predictably increase the incidence of two track litigation before an arbitrator and the Board. 361 NLRB No. 132, slip op. at
15–16 (Member Miscimarra, concurring in part and dissenting in part). Here, the majority creates another opportunity for two track litigation by making every withheld witness statement a potential occasion for Board
litigation. Meanwhile, as recognized by Member Johnson (who quotes former Member Hayes), “the private
grievance arbitration machinery will often grind to a halt
awaiting a final Board decision.” Piedmont Gardens,
359 NLRB No. 46, slip op. at 8 (2012) (Member Hayes,
dissenting).
Fifth, I disagree with the proposition that a documented account of particular events, signed by an employee,
fails to qualify as a “witness statement” unless the employee was given an express assurance of confidentiality.
An affirmative assurance requirement ignores witnesses’
reasonable expectations of confidentiality. The facts
presented here illustrate the problem. Charge Nurse
Lynda Hutton witnessed employee Arturo Bariuad sleeping on duty. After learning that another charge nurse had
reported Bariuad’s misconduct, Hutton decided to submit
a statement of her own. As the judge found, “Hutton
believed that her witness statement would remain confidential under [the] Respondent’s blanket policy that all
witness statements would remain confidential and would
not be produced in response to a relevant information
request.” With that understanding, she slipped a signed
witness statement under Human Resources Director Ali10
Sec. 203(d) provides that “[f]inal adjustment by a method agreed
upon by the parties is hereby declared to be the desirable method for
settlement of grievance disputes arising over the application or interpretation of an existing collective-bargaining agreement.” See Steelworkers v. American Mfg. Co., 363 U.S. 564 (1960) (stating that the “policy” set forth in Section 203(d) “can be effectuated only if the means
chosen by the parties for settlement of their differences under a collective bargaining agreement is given full play”); Steelworkers v. Warrior
& Gulf Navigation Co., 363 U.S. 574 (1960) (“[T]he grievance machinery under a collective bargaining agreement is at the very heart of
the system of industrial self-government. . . . The processing of disputes through the grievance machinery is actually a vehicle by which
meaning and content are given to the collective bargaining agreement.”); Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593
(1960) (noting “[t]he federal policy of settling labor disputes by arbitration”); see also Nolde Brothers, Inc. v. Local No. 358, Bakery & Confectionery Workers Union, 430 U.S. 243, 254 (1977) (noting “wellestablished federal labor policy favoring arbitration”).
son Tobin’s door and later submitted a clarifying statement directly to Tobin.11 Hutton reasonably expected her
statements to remain confidential, and I see no principled
reason why the rule of Anheuser-Busch should not apply
only because no one affirmatively informed her that those
particular statements would be confidential. Accordingly, I would affirm the judge’s finding that the Respondent did not violate Section 8(a)(5) and (1) by refusing to
produce Hutton’s witness statements.12
Finally, I would find that the Respondent did not violate Section 8(a)(5) when it declined to furnish information in response to the Union’s request for “names and
job title [sic] of everyone that was involved in the investigation” of whether employee Bariuad slept on the job.
My disagreement with my colleagues on this issue is a
narrow one. I agree with the Board’s decision in
Transport of New Jersey, 233 NLRB 694 (1977), which
held that the employer must provide, upon request, the
names and addresses of witnesses to an incident at issue
in a grievance or potential grievance. The names of
those who actually witnessed relevant events plainly is
relevant information that a union generally is entitled to
receive upon request, to the extent known by the employer.13 Here, however, the Union did not request the
names of everyone who witnessed Bariuad sleeping on
11
Unlike the majority, I find it immaterial that reporting employee
misconduct was among Hutton’s job duties. The Respondent assigned
her that duty in the context of a workplace where a blanket confidentiality policy protected such reports. I will not assume that her job duty
was severable from her expectation of confidentiality. Moreover, confidentiality may be critical to ensure compliance with the job duty.
12
I do not find persuasive the precedents relied upon by the majority
for the proposition that a witness statement is not a “witness statement”
absent an express assurance of confidentiality. In New Jersey Bell
Telephone Co., 300 NLRB 42 (1990), enfd. 936 F.2d 144 (3d Cir.
1991), the Board found that reports made by respondent’s officials
were not witness statements of the complaining customer, where the
reports contained only the respondent’s “impressions of what transpired
in the conversations with the complaining customer,” and where the
customer “did not review the reports, have them read to her at any time,
or in any manner adopt them as a reflection of any statement or complaint she may have made.” 300 NLRB at 43. In further support of its
finding, the Board added that the customer did not request or receive an
assurance of confidentiality, and the employee accused of misconduct
already knew the substance of the complaint and had already contacted
the customer to intimidate and harass her. Id. The Board by no means
announced that an express assurance of confidentiality is an element
that must be present for Anheuser-Busch to apply. Nonetheless, in El
Paso Electric Co., 355 NLRB 428 (2010), enfd. 681 F.3d 651 (5th Cir.
2012), the administrative law judge misread New Jersey Bell Telephone
as establishing just that, and the Board adopted the judge’s decision
without discussion or analysis. I decline to apply precedent so clearly
lacking any reasoned basis.
13
On a case-by-case basis, I would carve exceptions to disclosing
the names of witnesses where an overriding confidentiality interest is
implicated, such as when a witness observed surreptitious illegal activity.
PIEDMONT GARDENS
the job. Rather, it requested the “names and job title
[sic] of everyone that was involved in the investigation.”
In other words, the Union requested information about
the Respondent’s investigation. In my view, employers
and unions alike are entitled to confidentiality concerning their respective investigations. Moreover, responding to requests like this one would reveal everyone who
is cooperating with the employer’s investigation and, like
disclosing witness statements, give rise to the risk of retaliation, intimidation, and coercion. Accordingly, I
would reverse the judge’s finding that the Respondent
violated Section 8(a)(5) and (1) by refusing to provide
the requested information.
For the foregoing reasons and those expressed by
Member Johnson in his separate opinion, I respectfully
dissent.
Dated, Washington, D.C. June 26, 2015
Philip A. Miscimarra,
Member
NATIONAL LABOR RELATIONS BOARD
MEMBER JOHNSON, dissenting in part.
I would not reverse the longstanding and well-accepted
rule of Anheuser-Busch, 237 NLRB 982, 984–985
(1978), which holds that witness statements are a categorical exception to an employer’s general obligation to
provide relevant information in response to a union’s
request, as set forth in NLRB v. Acme Industrial Co., 385
U.S. 432 (1967).1 The bright line rule of AnheuserBusch, which has been the law of the land since 1978,
promotes long-recognized important labor policies. For
over 30 years, the rule has supported employers’ efforts
1
I agree with the judge and my colleagues that the Respondent unlawfully failed to provide the Union with the names and job titles of
three individuals who claimed that they witnessed an employee engaging in work misconduct that resulted in the employee’s subsequent
termination. Similarly, I agree with the majority that, under AnheuserBusch, as applied in El Paso Electric Co., 355 NLRB No. 71 (2010),
enfd. 681 F.3d 651 (5th Cir. 2012), and New Jersey Bell Telephone Co.,
300 NLRB 42, 43 (1990), enfd. 936 F.2d 144 (3d Cir. 1991), Charge
Nurse Lynda Hutton’s statements were not witness statements exempt
from disclosure because they were not provided under an assurance of
confidentiality. While I express no view as to whether assurances of
confidentiality should be required under Anheuser-Busch, I agree for
institutional reasons to apply El Paso Electric and New Jersey Bell
Telephone here. See also HTH Corp., 361 NLRB No. 65, slip op. at 48
(2014). Finally, while I dissent from the overruling of Anheuser-Busch,
I join the majority in holding that the new majority test applies prospectively only, so that the allegations in this case relating to the Respondent’s refusal to produce witness statements from employees Barbara
Berg and Ruth Burns must be dismissed.
11
to assure employee participation in workplace investigations, protected participating witnesses from intimidation, retaliation or harassment by a union or coworkers,
enabled employers to effectively conduct investigations
of workplace misconduct, and promoted the expeditious
resolution of misconduct issues in grievance-arbitration
systems. Because strong confidentiality concerns are
inherent to all internal employer investigations into employee misconduct, it is my view that an employer
should never be required to disclose witness statements
to the union. Compelling the production of witness
statements will undermine an employer’s ability to investigate claims of workplace violence, harassment, theft,
drug and alcohol use, and other forms of serious misconduct in the workplace.
1. The Anheuser-Busch rule has protected the integrity of
the arbitration process.
The Board has a well-established policy prohibiting
the prehearing disclosure of witness statements. The
confidential witness affidavit is essential to an unfair
labor practice investigation. NLRB Case Handling Manual (Part 1), Unfair Labor Practice Proceedings, Section
10060. In Hilton Credit Corp., 137 NLRB 56, 56 fn. 1
(1962), the Board explained that its nondisclosure policy
seeks to prevent the “inhibitory effect” that an employer’s prehearing request for Board affidavits would have
on employees’ willingness to furnish statements or otherwise cooperate with Board agents. In NLRB v. Robbins
Tire & Rubber Co., 437 U.S. 214 (1978), the Supreme
Court endorsed the Board’s nondisclosure policy, recognizing the danger inherent in the prehearing disclosure of
witness statements. There, the Court held that, prior to
the hearing on an unfair labor practice charge, the Board
was not required under the Freedom of Information Act
to disclose to employers or unions the investigatory
statements of witnesses whom the Board intended to call
at the hearing. The Court explained that disclosing the
witness statements carried several risks to the Board’s
investigation, including the “most obvious risk” of coercion and intimidation of employees who provide statements, as well as the reluctance of witnesses to participate in Board investigations and to give candid statements. Id. at 239. The Supreme Court recognized that
witnesses are particularly likely to fear reprisal and harassment due to the unique character of labor litigation.2
Id. at 240.
2
Because the Supreme Court in 1978 recognized that witness fear of
reprisal and harassment are facts of labor litigation, I cannot agree with
my colleagues’ notion that an employer must set forth specific evidence—and, indeed, the dissenting opinions here need set forth empirical evidence—to show that employees actually fear reprisal and harassment.
12
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
In Anheuser-Busch, the Board, relying on Robbins
Tire, found that requiring the prearbitration disclosure of
witness statements “would diminish rather than foster the
integrity of the grievance and arbitration process.” Anheuser-Busch, 237 NLRB at 984. The Board reasoned
that witness statements are “fundamentally different from
the types of information contemplated in Acme” and requests for their disclosure raise “critical considerations
which do not apply to requests for other types of information.” Id. In this regard, the Board emphasized that
witnesses whose statements are disclosed prior to arbitration hearings could be subject to coercion and intimidation. Id. Further, the Board observed that witnesses may
be hesitant to provide a statement in the first place absent
an assurance that the statement will not be disclosed prior to the hearing. Id. (citing Robbins Tire, 437 U.S. at
240).
Contrary to my colleagues, I agree with the Board in
Anheuser-Busch and its progeny that the same considerations underlying the Court’s decision in Robbins Tire,
apply in the arbitration context. If witness statements are
required to be disclosed prior to the arbitration hearing,
the witness may face harassment and intimidation designed to change the witness’s testimony or to persuade
the witness to refuse to testify at the hearing. Moreover,
like unfair labor practice litigation, the arbitration process typically does not permit pretrial discovery. See,
e.g., California Nurses Assn. (Alta Bates Medical Center), 326 NLRB 1362, 1362 (1998) (no violation of Section 8(b)(3) where union failed to provide names of witnesses and evidence for arbitration because “it is well
settled that there is no general right to pretrial discovery
in arbitration proceedings”). And arbitration proceedings
can be just as contentious as unfair labor practice litigation.3
2. The Anheuser-Busch rule has enabled effective workplace investigations and legal compliance by employers.
Universally, employers are confronted with the phenomenon of workplace misconduct. It is an unfortunate
fact of the modern workplace in our nation. Most employers are naturally inclined to stop misconduct for the
sheer sake of stopping misconduct. But regardless, the
employment relationship in the United States in 2015 is
one of the most regulated relationships that exist. A
large part of that body of regulation is creating categories
of misconduct, e.g., prohibited kinds of worker-on3
See NLRB v. Electronic Workers Local 745, 759 F.2d 533, 534–
535 (6th Cir. 1985) (enforcing order finding that union stewards unlawfully threatened union member with fines for testifying against another
employee in arbitration); Steelworkers Local 5550, 223 NLRB 854, 855
(1976) (finding that local union president made a veiled threat to convince employee not to testify for the employer in arbitration).
worker harassment, that an employer now has no choice
but to try to stop. In other words, American employment
law forces the investigation of many workplace issues,
and employers can no more ignore that law’s commands
than they could the force of gravity.4
Here, many employers rely on witness statements as
their main investigation tool for investigating employee
misconduct and ensuring legal compliance. The full and
candid participation of employees in investigations of
workplace misconduct is essential to employers because
such investigations are necessary to maintain workplace
safety, to identify and address workplace violence, bullying, sexual and other types of harassment. However,
employees are frequently reluctant to cooperate with
workplace investigations which could lead to discipline
against other employees, and the hard feelings or even
perception of outright betrayal that will result from their
coworkers, depending on the situation. Here, some employee-witnesses are reluctant, personality-wise, to essentially blow the whistle on others. And, others may
justifiably believe that, if their identity is revealed to other employees and/or to their particular union, they may
face unwanted confrontations, retaliation, harassment or
other coercive acts. The potential for the coercion and
intimidation of witnesses exists throughout an employer’s investigation of employee misconduct regardless of
whether the matter goes to arbitration.5 As such, it is
supremely important to all employers to have the ability
to assure employees that their participation in workplace
investigations will remain confidential, or at least that the
law will not put a thumb on the scale to require premature disclosure.
The majority apparently does not believe today’s decision will “unjustifiedly impede” an employer’s legal duty
to investigate, finding “no other federal statutory requirement that runs contrary to [their] holding today.” I
would suggest that the Equal Opportunity Commission
(“EEOC”) might have a better view of how crucial confidentiality is to a statutorily mandated investigation and
thus how the majority’s approach directly conflicts with
4
I particularly agree with Member Miscimarra’s arguments on this
point in relation to Southern Steamship Co. v. NLRB, 316 U.S. 31
(1942).
5
My colleagues argue that I do not give adequate weight to collective bargaining rights in my analysis, but their argument is essentially
misguided. First, my approach would not preclude employers and their
employees’ bargaining representatives from mutual agreement concerning their own view of proper witness disclosures/protections by utilizing voluntary collective bargaining. Second, at the end of the day, one
cannot logically “balance” statutory commands (to investigate) against
what the majority calls “the statutory interest of employees in exercising and preserving their contractual rights” in favor of the latter. Parties obviously cannot trump public law mandates with private contractual rights.
PIEDMONT GARDENS
Title VII’s mandate, for instance. In EEOC Order
560.005, August 9, 2006, entitled “Prevention And Elimination Of Harassing Conduct In The Workplace,” the
EEOC highlights its emphasis on confidentiality within
its own investigatory procedures when confronted an
internal complaint:
Maintaining Confidentiality. All reports of hostile or
abusive conduct and related information will be maintained on a confidential basis to the greatest extent possible. The identity of the employee alleging violations
of this Order will be kept confidential, except as necessary to conduct an appropriate investigation into the alleged violations or when otherwise required by law.
Id., Para.8(f)(1),
http://www.eeoc.gov/eeoc/internal/harassment_order.cfm
(last visited June 20, 2015) (emphasis added). The EEOC
uses similar care with identities of complainants from the
private employers it regulates, up until a formal charge is
filed. See “Filing A Charge, Confidentiality” at EEOC
website (“Information obtained from individuals who contact EEOC is confidential and will not be revealed to the
employer until the individual files a charge of discrimination.”), see
http://www.eeoc.gov/employees/confidentiality.cfm (last
visited June 20, 2015)6 The EEOC’s guidance is very persuasive to me. Where the main federal agency charged with
overseeing statutorily-mandated antidiscrimination investigations tells America—and itself—that confidentiality in
investigations is essential, the Board should not institute a
rule that operates in reverse.7
6
Moreover, the importance and necessity of confidentiality to
workplace investigations is reflected in many whistleblower statutes
that contain confidentiality provisions for whistleblowers. For example, the Internal Revenue Service states that “[t]he Service will protect
the identity of the whistleblower to the fullest extent permitted by the
law.” See Confidentiality and Disclosure for Whistleblowers
(http://www.irs.gov/uac/Confidentiality-and-Disclosure-forWhistleblowers).
7
My colleagues’ observation that the EEOC policy applies only to
its own investigations is both technically correct and completely offpoint. The stated purpose of the confidential investigation policy is to
ensure the establishment of “a model workplace for employees” free
from sexual harassment. Id., pars. 2 and 6(a). This obviously represents EEOC’s view of what a private employer’s practice should be
when investigating claims of misconduct under the statute that agency
enforces. Equally misguided is the majority’s view of how that the
policy’s confidentiality concerns must be balanced against the requirements of other laws. Here, the EEOC’s position in applying its own
statute to itself is that “[a]ll reports of hostile or abusive conduct and
related information will be maintained on a confidential basis to the
greatest extent possible” (emphasis in quote added). Logically, then,
we are thwarting Title VII’s purpose if the Board cuts back on its definition of what has for decades been considered “possible.” This is a far
cry from the accommodation required under Southern Steamship.
13
The Board had previously recognized this truth of the
regulated workplace as well. In Northern Indiana Public
Service Co., 347 NLRB 210 (2006), the Board recognized an employer’s inherent need to maintain the confidentiality of its internal investigations to effectively conduct investigations of workplace misconduct. There, the
Board found that the employer did not unlawfully refuse,
on the basis of confidentiality, to furnish the union with a
copy of notes from interviews conducted by the employer in investigating an employee’s complaint about the
threatening conduct of his supervisor. Id. at 214. The
Board observed that “an individual’s participation in
such an investigation, whether as complainant or as witness, may subject the individual to intimidation and harassment by coworkers and/or supervisors” and that
“treating [the] interview notes . . . as confidential . . .
protect[s] . . . witnesses from retaliation because of their
participation.” Id. at 212. The Board further reasoned
that finding the interview notes confidential served the
important objective of “encouraging witnesses to participate in investigations of workplace misconduct.” Id.
The Board stated:
. . . an employer’s inability to reliably assure interviewees of confidentiality is likely to impede its investigations into workplace harassment or threats of violence and to deter the reporting of such incidents. Such
investigations are common and often necessary for
safety in the current workplace. Without them, an employer would be handicapped in protecting its employees from harm by verifying and correcting workplace
misconduct. Similarly, it would be hindered in defending itself against allegations of employer misconduct or
vicarious liability for an employee’s misconduct. Id. at
212, internal citations omitted.8
This common sense observation should go without saying.9
In any case, it should not be fundamentally thwarted, as it is
by today’s astounding decision.
Indeed, in this case, the Respondent, like most employers, has a practice of keeping employee witness
statements confidential. Consistent with its confidentiality policy, when the Respondent’s human resources
8
The Board, in Northern Indiana, further noted that both of the employees whose interview notes were withheld “testified that they would
have provided less information if they had not been assured” that their
interviews would be confidential. Id. at 212.
9
In fact, unions may raise the very same common sense concerns to
justify a refusal to provide witness statements requested by a represented bargaining unit employee. See Local 307, National Postal Mail
Handlers Union, 339 NLRB 93 (2003)(union stated that its general
policy of refusing to provide witness statements in grievance investigatory file to anyone other than a union agent enhanced its “ability to
obtain statements from witnesses who are reluctant to share information.”).
14
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
director requested that two employees provide written
statements to assist in its investigation of an employee’s
alleged misconduct, she informed these employees that
their respective statements would remain confidential.
Further, another employee who provided a witness
statement without being asked, testified that she thought
her statement would be kept confidential. Thus, the rule
of Anheuser-Busch has made it possible for employers,
like the Respondent, to give assurances of confidentiality
to employee witnesses regarding their written statements.10 And it has enabled employees to provide written statements with the security that the information they
gave would not be shared with the union or their
coworkers. The ability to protect witness statements
from disclosure under the Anheuser-Busch exemption
has encouraged employees to participate in investigations
of workplace misconduct and protected these employees
from coercion, intimidation and retaliation because of
their participation. Further, the rule has allowed employers to effectively address workplace harassment, threats,
violence, and other serious issues.
My colleagues say that furnishing a union with a list of
names of employees who were involved in or witnessed
an incident carries the same risk as providing their statements or information concerning their statements. I disagree. Generally, concerns of harassment and intimidation are much greater where the contents of a witness
statement are disclosed than if the union is given only the
names of the witnesses. A union is unaware of what the
witness told the employer with a list of witness names.
Further, the witness can determine what they want to tell
the union if subsequently asked. In contrast, disclosing
the witness statement will alert the union as to whether a
witness informed the employer of the grievant’s misconduct. The union, and anyone the union informs, will
know whether a witness is “for” or “against” the
grievant. Indeed, the Board in Anheuser-Busch recognized this difference by distinguishing its holding from
Transport of New Jersey, where the Board held that an
employer does have a duty to turn over to the union the
names of witnesses to an incident for which the employee was disciplined. 237 NLRB at 985 fn. 5, citing
Transport of New Jersey, 233 NLRB 694, 694–695
(1977).11
10
The majority points out that these assurances are not ironclad even
under Anheuser-Busch, but that does not diminish the point that, under
the new rule, there can now never be an assurance of confidentiality.
11
Boyertown Packaging Corp., 303 NLRB 441, 444–445 (1991), is
instructive. In that case, an employee was terminated due to the inattentive driving of a forklift. The employer furnished the union with the
names of all employees it interviewed, but refused to identify which of
these witnesses complained about the grievant or to provide any state-
3. The Anheuser-Busch rule has not interfered with a
union’s ability to investigate grievances.
My colleagues assert that Anheuser-Busch is inconsistent with the Board’s longstanding policy to favor the
disclosure of information in the interest of promoting
collective bargaining. Yet, my colleagues do not argue
that the Anheuser-Busch rule has impeded a union’s ability to investigate or evaluate grievances. That is because
there is no evidence that, in the 37 years of the AnheuserBusch precedent, unions have had to arbitrate unmeritorious grievances as a result of receiving insufficient information from employers. Under the Anheuser-Busch
rule, unions have been able to obtain more than sufficient
information to conduct their own investigations of alleged employee misconduct and fulfill their duty of fair
representation. In particular, a union can request information to obtain the names of all witnesses involved in
and/or interviewed in an employer’s investigation.
Transport of New Jersey, 233 NLRB at 694–695. This
information permits the union to obtain on its own the
substantive information that it needs.12 Moreover, individual employees can always assist the union in its investigation. In many cases, the Board has required the employer to provide the union with a summary of the substance of the witness statements, without producing the
actual witness statements or revealing the witnesses’
identity. See, e.g., Pennsylvania Power & Light Co., 301
NLRB 1104, 1107 (1991). The union can use the summary in determining whether to arbitrate the matter. In
addition, the parties can always negotiate language in
ments. Id. at 444. The Board affirmed the findings of the judge, who
explained:
Revealing the names of only those who gave evidence damaging to
[the grievant] is little different from delivering the statements of identified witnesses because the employer would, by naming those who
complained, in fact make a statement on their behalf in their names.
Moreover, the singling out of witnesses adverse to a grievance spotlights them as opponents to the grievant’s cause and, by so doing, unnecessarily enhances the possibility they may be subject to coercion or
intimidation in an effort to persuade them to change or retract their oral
reports previously given to the employer. It is precisely this possibility
of coercion and intimidation of witnesses that the Board’s decision in
Anheuser-Busch was designed to prevent, and I perceive no logical
reason why the same policy of preventing coercion and intimidation of
witnesses should not apply to requests limited to the names of employee witnesses who complained.
Id. at 444–445.
See also Northern Indiana, 347 NLRB at 214 (although the employer had disclosed the names of the individuals involved in the incident
and interviewed by the supervisor, these employees would be reasonably concerned about retaliation if the union was provided with the notes
from their interviews).
12
See Northern Indiana Public Service, 347 NLRB at 214 (furnishing the union with the names of the interviewees and those involved in
the incident was a sufficient accommodation; the union could interview
these people).
PIEDMONT GARDENS
their collective-bargaining agreements providing for procedures for disclosure.
4. The Detroit Edison test will have inconsistent and
unpredictable results.
My colleagues have replaced the bright line and wellreasoned rule in Anheuser-Bush with the imprecision of
the case-by-case balancing of interests test articulated in
Detroit Edison v. NLRB, 440 U.S. 301 (1979), to determine whether witness statements obtained during investigations of employee misconduct should be protected on
the basis of confidentiality. The Board has taken a simple standard and replaced it with a fact-intensive, caseby-case analysis that will have inconsistent and unpredictable results. Under the Detroit Edison test, employers can still choose to withhold witness statements on the
basis of confidentiality. However, the burden will now
be on them to substantiate a confidentiality claim. The
Board will have to engage in lengthy, fact specific assessments every time it has to decide whether an employer established a substantial confidentiality interest to
justify its failure to furnish a witness statement. In light
of the Board’s previous decisions, in most cases, employers will not satisfy that burden.13
Under the Detroit Edison balancing test, employers
will have no certainty whether they can show that a legitimate and substantial confidentiality interest exists and
outweighs the union’s need for the information. Further,
going forward, unions, will almost always request witness statements when a unit employee is disciplined.
This will create unnecessary litigation before the Board
and will substantially delay the resolution of grievances
in arbitration. As then-Member Hayes stated in his dissent in the vacated decision, the Detroit Edison balancing
test is likely to turn what is a relatively efficient grievance-arbitration process into protracted litigation before
the Board during which “the private grievance arbitration
machinery will often grind to a halt awaiting a final
Board decision.” Piedmont Gardens, 359 NLRB No. 46,
13
See e.g., Howard University, 290 NLRB 1006, 1007 (1988) (employer failed to carry its burden of proof with respect to the confidentiality of the physicians’ and nurses’ progress notes and the autopsy
protocol report requested by the union in connection with employee’s
discharge); LaGuardia Hospital, 260 NLRB 1455 (1982) (union’s need
for relevant information contained in patient charts for use in evaluating
grievances that had been filed regarding employee discipline, outweighed the employer’s legitimate concerns regarding patient privacy);
Postal Service, 332 NLRB 635, 637 (2000); New Jersey Bell Telephone
Co., 300 NLRB 42 (1990), enfd. 936 F.2d 144 (3d Cir. 1991). Balancing tests are inherently susceptible to results-oriented outcomes, even
when courts call the Board into account for odd results. See Fortuna
Enterprises, L.P d/b/a The Los Angeles Airport Hilton Hotel & Towers,
360 NLRB No. 128 (2014) at 10 fn.3 (Johnson, concurring) (noting
results oriented problems of balancing tests).
15
slip op. at 8 (2012). The Board will now decide this issue using a highly subjective analysis, which substitutes
doubt for certainty. This is contrary to the national labor
policy favoring the prompt resolution of disputes through
the informal process of arbitration. See Fairweather’s
Practice & Procedure in Labor Arbitration, 135–136
(Ray J. Schoonhoven ed., 3d ed. 1991) (“[W]hile the use
of a Section 8(a)(5) or an 8(b)(3) unfair labor practice
proceeding is available in a situation where a party refuses to disclose relevant information, such remedy may be
impractical given the time consuming nature of such a
proceeding, because, if the information is critical, the
arbitration must be put ‘on hold’ until the resolution of
the unfair labor practice charge. Thus, the function of
arbitration, that is, the quick resolution of []employment
disputes, is destroyed.” (footnotes omitted)).
My colleagues cite Board decisions as support for their
position that the Detroit Edison balancing test is a superior approach to the Anheuser-Bush rule.14 The majority
observes that the Board found that the employers in
Pennsylvania Power and Mobil Oil had a stronger confidentiality interest justifying their refusal to produce the
names of informants who provided information about
suspected employee drug use than the employer in Metropolitan Edison, who refused to provide the names of
two informants who provided information about workplace theft. The Board in Metropolitan Edison relied on
the fact that the likelihood of retaliation against the informants was speculative. 330 NLRB at 108. Contrary
to my colleagues, these cases actually illustrate the problems, as discussed above, with applying the Detroit Edison balancing test. The Board’s finding that the employer’s confidentiality interest in Metropolitan Edison was
weaker than in Pennsylvania Power and Mobil Oil, was
completely arbitrary. In his dissent in Metropolitan Edison, former Member Brame addressed the flaws with the
Board’s application of its subjective balancing test. He
observed that:
It would take the wisdom of Solomon and the time of
the ages for the Board, on a case-by-case basis, to attempt to grade and classify all potential forms of employee misconduct and to determine how the gravity of
the offense ranks in the majority’s subjective scale of
various legitimate interests. Moreover, there is no correlation between the majority’s perceptions of the nature of the misconduct and the potential peril to an informer. When the informant gives up information that
results in an employee’s dismissal, it does not matter if
the discharge is because of workplace theft or drug use.
14
Pennsylvania Power, supra, Mobil Oil, 303 NLRB 780, 780–781
(1991), and Metropolitan Edison, 330 NLRB 107 (1999).
16
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
The employee’s job is lost just the same and the resentment of fellow employees toward the informer is
likely to be just as great.
...
An employee contemplating whether to provide
confidential information should not be required to
attempt to predict how the Board will apply its subjective balancing test . . . . Such a rule will have a
chilling effect on informants and employees.15
I also find it troubling that my colleagues have failed
to provide any “safe harbor” in replacing the AnheuserBusch rule with the Detroit Edison standard. For example, it is my view that an employer should not have to
disclose a witness statement where serious misconduct is
involved.
5. The Detroit Edison test will impair employer investigations of workplace misconduct.
Absent a bright line rule exempting witness statements
from disclosure, employers will be unable to effectively
conduct investigations of workplace misconduct. If employers are unable to assure employee witnesses that
their statements will remain confidential, an employer’s
ability to encourage employees to report such misconduct and to secure the cooperation of witnesses in the
investigation process will be severely handicapped. Employees will be deterred from candidly participating in
employer investigations into workplace misconduct.
This will certainly impact employees’ willingness to report incidents of misconduct, particularly those involving
workplace harassment, violence, or other serious threats
to workplace safety. This chilling effect on witness participation will decrease the overall quality of employer
investigations into workplace misconduct. That is why
the Anheuser-Busch Board created “a clear, simple, and
all-encompassing rule rather than one which entails detailed examination and balancing of all the particular
facts.” Whirlpool Corp., 281 NLRB 17, 22 (1986).16
The Board’s decision today continues a recent trend
that, in expanding the Act’s protection, the Board has
made it more difficult for employers to conduct thorough
15
330 NLRB at 114–115.
The majority argues that the Detroit Edison test will effectively
protect both the employer and witnesses where the employer raises a
reasonable concern regarding confidentiality, harassment, or coercion.
However, if witnesses do not believe that the information they disclose
will be kept confidential, they are likely to simply not get involved or
provide less information, regardless of whether any actual threats
against them have been made. And actual evidence of harassment and
coercion may not arise until after confidential witness information has
been revealed, and the union or its members have improperly used it to
intimidate the witness.
16
workplace investigations and has interfered with an employer’s responsibility for enforcing a wide array of federal, state and local statutes and regulations that protect
individual employees. In Fresh & Easy Neighborhood
Market, Inc., 361 NLRB No. 12 (2014), a Board majority
held that an employee’s solicitation of her coworkers to
act as witnesses in her individual complaint of sexual
harassment to the employer was protected concerted activity. Member Miscimarra, in his dissent, astutely observed that the majority’s holding would interfere with
an employer’s ability to investigate sexual harassment
complaints and undermine employees’ interests with
respect to those and other non-NLRA claims. Id., slip
op. at 12. See also my dissenting opinion in Plaza Auto
Centers, Inc., 360 NLRB No. 117, slip op. at 12 (2014)
(by preventing an employer from discharging an employee who made obscene and denigrating remarks to
management during the course of otherwise protected
activity, the Board will impede effective enforcement of
other employment laws). As in the foregoing precedent,
I believe that today’s decision will further hinder the
ability of employers to conduct investigations of workplace misconduct and comply with statutes that require
prompt, thorough investigations.
6. The disclosure of witness statements will interfere
with an employer’s work product.
My colleagues, in creating this new rule, have not defined the parameters of a witness statement. It is my
view that the failure to thoroughly define a witness
statement will unfortunately capture many types of
grievance-preparation materials and thereby interfere
with an employer’s work product. In this regard, in the
course of investigating workplace misconduct, employers
often obtain witness statements because of the prospect
of anticipated litigation. That is, employers often reasonably anticipate that employee discipline for misconduct will trigger a grievance/arbitration proceeding. See
Central Telephone Co. of Texas, 343 NLRB 987, 989
(2004) (noting that “[i]n the world of labor relations, the
discharge of four union officers . . . for actions taken in
their capacity as union officials, would likely (albeit not
inevitably) result in the [u]nion’s pursuing arbitration or
filing an unfair labor practice charge”). Indeed, it would
be an unsurprising truism that—in today’s highly regulated employment relationship, with its concomitant high
incidence of litigation—just about any employmentrelated investigation is undertaken in preparation of litigation. Thus, in many cases, such witness statements
should be protected from disclosure under the attorney
work product privilege. Witness statements are work
product when they contain a manager’s personal
thoughts, mental impressions, strategies, and recommen-
PIEDMONT GARDENS
dations in anticipation of litigation/arbitration. For example, if an employer tells a witness that it would like to
focus on certain topics, then the witness statement would
reveal the employer’s views as to what it considers to be
important. Further, in conducting a workplace investigation, managers often prepare a summary of the witness
statements or interview notes, which may contain the
manager’s opinions and thought processes.
The Board has recognized the importance of the work
product protection. In Central Telephone Co. of Texas,
343 NLRB 987, 988 (2004), the Board stated that “the
essential question in determining whether a document
qualifies as work product is ‘whether, in light of the nature of the document and the factual situation in the particular case, the document can fairly be said to have been
prepared or obtained because of the prospect of litigation.’” (citing Senate of Puerto Rico v. U.S. Dep’t of Justice, 823 F.2d 574, 586 fn. 42 (D.C. Cir. 1987) (quoting 8
Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2024 (1970)) (emphasis in original)). Further, in In re Sealed Case, 146 F.3d 881, 884
(D.C. Cir. 1998), the D.C. Circuit stated that
“[p]rotection is needed because an attorney preparing for
trial must assemble much material that is outside the attorney client privilege, such as witness statements, investigative reports, drafts, pleadings and trial memoranda.”
(emphasis added). The Board and the courts have found
witness statements and related documents prepared in
anticipation of litigation protected from disclosure under
the work product privilege. In Postal Service, 305
NLRB 997, 1000 (1991), the union filed a grievance asserting that nonbargaining unit postal inspectors imposed
limitations on the representative role of a union steward
during their interrogation of a bargaining unit employee
and the inspectors forcibly removed the union steward
from the interrogation. The Board agreed with the judge
that the employer lawfully refused to provide to the union the nonwitness opinions, comments, and recommendations contained in the investigatory file concerning the
interrogation incident. Id. at 997. The judge reasoned
that such material “would bear only on the [employer’s]
internal deliberations . . . and [the employer’s] interest in
maintaining confidentiality of this material seem[ed]
clear.” Id. at 1006.17
17
See also Central Telephone, 343 NLRB at 989 (notes that the employer prepared during the course of its investigation into alleged misconduct by four union officers/employees were protected from disclosure to the union under the attorney work product doctrine); Butler
Manufacturing Co., Inc. v. Americold Corp., 148 F.R.D. 275 (D.Kan.
1993) (a recorded statement that a third-party gave to defendant’s investigator was “clearly work product” because it was taken in anticipation of litigation); SEC v. Cavanagh, No. 98 Civ 1818(DLC), 1998 WL
132842 (S.D.N.Y. Mar. 23, 1998) (notes of SEC attorneys of
17
The Board has further recognized the importance of
protecting a party’s internal strategy and thought process
in an analogous situation. In Berbiglia, Inc., 233 NLRB
1476 (1977), the Board affirmed the judge’s quashing a
subpoena for union documents requested by an employer
asking for records, including communications between
the union and its members. The judge quashed the subpoena for several reasons but primarily because it could
reveal bargaining strategy. The judge commented:
The basic reason for revocation of subpoena as far as
here relevant was my view that requiring the Union to
open its file to Respondent would be inconsistent with
and subversive of the very essence of collective bargaining and the quasi-fiduciary relationship between
the Union and its members. If collective bargaining is
to work, the parties must be able to formulate their positions and devise their strategies without fear of exposure. Id. at 1495.
Thus, another problem created by the abandonment of
the bright line Anheuser-Bush standard is that employers—in addition to having to meet an impossible burden
to substantiate a confidentiality claim—in many cases,
will now have to establish that witness statements are
protected from disclosure under the work product doctrine. As such, the burden will be on the employer to
defend its own work product. This additional hurdle will
interfere with an employer’s thought process in conducting workplace investigations. The disclosure of work
product in the form of the employer’s mental impressions
will hinder the quality of an employer’s workplace investigation. I believe that, in setting forth a new rule, the
majority should have clearly defined the term “witness
statement,” and clarified that it would exclude a manager’s personal thoughts, mental impressions, strategies,
and recommendations in anticipation of litigation/arbitration. While I credit the majority for their
statement that they are not outright abolishing the work
product privilege, it seems fairly obvious to me that this
new doctrine is on a collision course with it.
Conclusion
In sum, for over 30 years, the rule of Anheuser-Busch
has protected the arbitration process, protected employee
witnesses who participate in workplace investigations
from coercion and intimidation and enabled employers to
conduct effective investigations into workplace misconduct. Because confidentiality is universally central to all
employer internal investigation of employee misconduct,
prelitigation interview of defendants were “classic” opinion work product, not discoverable by defendants).
18
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
the Detroit Edison case-by-case balancing of confidentiality interests is inappropriate and unnecessary.
Dated, Washington, D.C. June 26, 2015
Harry I. Johnson, III,
Member
NATIONAL LABOR RELATIONS BOARD
APPENDIX
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD
An Agency of the United States Government
The National Labor Relations Board has found that we violated Federal labor law and has ordered us to post and obey
this Notice.
FEDERAL LAW GIVES YOU THE RIGHT TO
Form, join, or assist a union
Choose representatives to bargain with us on
your behalf
Act together with other employees for your benefit and protection
Choose not to engage in any of these protected
activities.
WE WILL NOT fail and refuse to bargain in good faith
with the Union by refusing to provide requested information that is relevant and necessary to the processing of
a grievance.
WE WILL NOT in any like or related manner interfere
with, restrain, or coerce you in the exercise of the rights
listed above.
WE WILL provide the Union with the requested names
and job titles of informants against Arturo Bariuad.
WE WILL provide the Union with the requested statements of Lynda Hutton.
AMERICAN BAPTIST HOMES OF THE WEST D/B/A
PIEDMONT GARDENS
The
Board’s
decision
can
be
found
at
www.nlrb.gov/case/32-CA-063475 or by using the QR code
below. Alternatively, you can obtain a copy of the decision
from the Executive Secretary, National Labor Relations
Board, 1099 14th Street, N.W., Washington, D.C. 20570, or
by calling (202) 273-1940.
NOTICE: This opinion is subject to formal revision before publication in the
bound volumes of NLRB decisions. Readers are requested to notify the
Executive Secretary, National Labor Relations Board, Washington, D.C.
20570, of any typographical or other formal errors so that corrections
can be included in the bound volumes.
Babcock & Wilcox Construction Co., Inc. and Coletta
Kim Beneli. Case 28-CA-022625
December 15, 2014
DECISION AND ORDER1
BY CHAIRMAN PEARCE AND MEMBERS MISCIMARRA,
HIROZAWA, JOHNSON, AND SCHIFFER
In this case we consider whether to adhere to, modify,
or abandon the Board’s existing standard for deferring to
arbitral decisions in cases involving alleged violations of
Section 8(a)(3) and (1) of the National Labor Relations
Act. The Board’s standard for deferral is solely a matter
for the Board’s discretion. Section 10(a) of the Act expressly provides that the Board is not precluded from
adjudicating unfair labor practice charges even though
they might have been the subject of an arbitration proceeding and award, and the courts have uniformly so
held. International Harvester Co., 138 NLRB 923,
925926 (1962) (footnotes omitted), enfd. 327 F.2d 784
(7th Cir. 1964), cert. denied 377 U.S. 1003 (1964), cited
with approval in Carey v. Westinghouse Electric Corp.,
375 U.S. 261, 271 (1964).
In its seminal decision in Spielberg Mfg. Co., 112
NLRB 1080 (1955), the Board held that it would defer,
as a matter of discretion, to arbitral decisions in cases in
which the proceedings appear to have been fair and regular, all parties agreed to be bound, and the decision of the
arbitrator is not clearly repugnant to the purposes and
policies of the Act. Id. at 1082. The deferral doctrine
announced in Spielberg was intended to reconcile the
Board’s obligation under Section 10(a) of the Act to prevent unfair labor practices with the Federal policy of
encouraging the voluntary settlement of labor disputes.
Thirty years later, in Olin Corp., 268 NLRB 573 (1984),
the Board adopted the current deferral standard, holding
that deferral is appropriate where the contractual issue is
“factually parallel” to the unfair labor practice issue, the
arbitrator was presented generally with the facts relevant
to resolving that issue and the award is not “clearly repugnant” to the Act.
1
On April 9, 2012, Administrative Law Judge Jay R. Pollack issued
the attached decision. The General Counsel filed exceptions and a
supporting brief; the Respondent filed an answering brief; and the
General Counsel filed a reply brief.
The National Labor Relations Board has considered the decision and
the record in light of the exceptions and briefs, and has decided to
affirm the judge’s rulings, findings, and conclusions and to adopt the
recommended Order.
361 NLRB No. 132
The General Counsel contends that the current deferral
standards, as explicated in Olin, are inadequate to ensure
that employees’ statutory rights are protected in the arbitral process. He urges the Board to adopt a more demanding standard in 8(a)(3) and (1) cases, specifically
those alleging that employers have retaliated against employees for exercising their rights under Section 7 of the
Act. Under the General Counsel’s proposed standard,
the Board would defer only if the statutory right was either incorporated in the collective-bargaining agreement
or presented to the arbitrator by the parties, and if the
arbitrator “correctly enunciated the applicable statutory
principles and applied them in deciding the issue.”2 Under the General Counsel’s proposed standard, the party
favoring deferral would have the burden of showing that
those criteria were met. On such a showing, if the proceedings appeared to have been fair and regular, and all
parties agreed to be bound, the Board would defer unless
the award was “clearly repugnant” to the Act, as under
the current standard. See GC Memorandum 11–05 at 6–
7 (January 20, 2011).
On February 7, 2014, the Board invited the parties and
interested amici to file briefs addressing the following
questions.
1. Should the Board adhere to, modify, or abandon its
existing standard for postarbitral deferral under Spielberg Mfg. Co., 112 NLRB 1080 (1955), and Olin
Corp., 268 NLRB 573 (1984)?
2. If the Board modifies the existing standard, should
the Board adopt the standard outlined by the General
Counsel in GC Memorandum 11–05 (January 20,
2011) or would some other modification of the existing
standard be more appropriate: e.g., shifting the burden
of proof, redefining “repugnant to the Act,” or reformulating the test for determining whether the arbitrator
“adequately considered” the unfair labor practice issue?
3. If the Board modifies its existing post-arbitral deferral standard, would consequent changes need to be
made to the Board’s standards for determining whether
to defer a case to arbitration under Collyer Insulated
Wire, 192 NLRB 837 (1971); United Technologies
Corp., 268 NLRB 557 (1984); and Dubo Mfg. Corp.,
142 NLRB 431 (1963)?
4. If the Board modifies its existing postarbitral deferral standard, would consequent changes need to be
made to the Board’s standards for determining whether
2
The General Counsel does not contend that the standard should be
changed for cases involving alleged violations of Sec. 8(a)(5), which
address the employer’s duty to bargain in good faith. Accordingly, our
decision does not address the standard for deferral in 8(a)(5) cases.
2
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
to defer to prearbitral grievance settlements under Alpha Beta, 273 NLRB 1546 (1985), review denied sub
nom. Mahon v. NLRB, 808 F.2d 1342 (9th Cir. 1987);
and Postal Service, 300 NLRB 196 (1990)?
The Board also invited the parties and amici to submit
empirical and other evidence bearing on those questions.3
After careful consideration, we agree with the General
Counsel that the existing deferral standard does not adequately balance the protection of employees’ rights under
the Act and the national policy of encouraging arbitration
of disputes arising over the application or interpretation
of a collective-bargaining agreement. The current standard creates excessive risk that the Board will defer when
an arbitrator has not adequately considered the statutory
issue,4 or when it is impossible to tell whether he or she
has done so. The result is that employees are effectively
deprived of their Section 7 rights if disciplinary actions
that are, in fact, unlawful employer reprisals for union or
protected concerted activity are upheld in arbitration.5
Accordingly, we have decided to modify our standard for
postarbitral deferral in 8(a)(3) and (1) cases, but not precisely along the lines suggested by the General Counsel.
We agree that the burden of proving that deferral is
appropriate is properly placed on the party urging deferral. We also agree that deferral is appropriate only when
the arbitrator has been explicitly authorized to decide the
statutory issue, either in the collective-bargaining agreement or by agreement of the parties in the particular case.
We believe, however, that the General Counsel’s proposal that deferral is warranted only if the arbitrator “correctly enunciated the applicable statutory principles and
applied them in deciding the issue” would set an unrealistically high standard for deferral. Our modified standard, by contrast, will require that the proponent of deferral demonstrate that the parties presented the statutory
3
Briefs were received from the General Counsel, the Respondent,
and amici American Federation of Labor-Congress of Industrial Organizations (AFL–CIO), U.S. Chamber of Commerce (Chamber), National
Association of Manufacturers (NAM), Council on Labor Law Equality
(COLLE), United States Postal Service (USPS), Association for Union
Democracy (AUD), United Nurses Associations of California/ Union of
Health Care Professionals (UNAC/ UHCP), Realty Advisory Board on
Labor Relations (RAB) and League of Voluntary Hospitals and Nursing Homes (LVH), National Elevator Bargaining Association (NEBA),
and the law firm Weinberg, Roger & Rosenfeld.
4
We use the term “statutory issue” interchangeably with, and as
shorthand for, “unfair labor practice issue.” In his dissent, Member
Miscimarra objects to this usage. For the reasons discussed below, we
find no merit in his position.
5
We do not suggest that the current standard constitutes an impermissible construction of the Act. We simply conclude, for the reasons
discussed below, that our modified standard will more effectively protect employees’ exercise of their Sec. 7 rights while continuing to effectuate the national policy favoring the private resolution of workplace
disputes through arbitration.
issue to the arbitrator, the arbitrator considered the statutory issue or was prevented from doing so by the party
opposing deferral, and Board law reasonably permits the
award. On such a showing, the Board will defer.6 Our
reasons follow.
I. DISCUSSION
A. Statutory Background
Before turning to the specific questions presented here,
we examine the statutory background of today’s case.
We begin by recognizing two well-established premises
of American labor law, both of which derive from the
policy of the Act, set forth in Section 1, to “encourag[e]
the practice and procedure of collective bargaining.” The
first is that this system of free and robust collective bargaining cannot exist if employees who seek to participate
in it can be disciplined or discharged for doing so. Recognizing this obvious truth, in Section 1 of the Act, Congress declared it to be the policy of the United States to
eliminate the causes of certain substantial obstructions to
the free flow of commerce and to mitigate and eliminate
these obstructions when they have occurred . . . by protecting the exercise by workers of full freedom of association, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection. 29 U.S.C. §151.
To further that policy, Congress enacted Section 7 of
the Act, which declares that “[e]mployees 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,” 29 U.S.C. §157. To
6
As Member Johnson observes in his dissent, most reviewing courts
have either explicitly or implicitly endorsed the current deferral standard, although as the authors of a leading labor law text have observed,
“with varying degrees of enthusiasm.” Thus, as the authors point out,
Some courts have expressly endorsed the Olin criteria and have held
that the Board must be consistent in adhering to them; others have endorsed those criteria, essentially by way of dictum, while upholding
the Board’s decision not to defer because of noncompliance with
those criteria; and some courts of appeals [have] extended the Olin
reasoning and criteria to apply to grievance settlements between the
union and the employer in advance of the arbitration step in the collective agreement. Other courts have expressly reserved judgment on
whether the Olin doctrine represents a proper exercise of the Board’s
discretion. [] One court of appeals, the Eleventh Circuit, has flatly rejected the Board’s decision in Olin.”
Robert A. Gorman & Matthew W. Finkin, Basic Text on Labor Law
1028 (2d ed. 2004) (citations omitted). To the extent the courts have
approved Olin as a permissible exercise of the Board’s discretion, we
do not disagree. But neither the Board nor any court has held that the
current standard is compelled by anything in the language or purpose of
the Act.
BABCOCK & WILCOX CONSTRUCTION CO.
ensure that employees are free to exercise their Section 7
rights without fear of reprisal, Congress enacted Section
8(a)(1), which provides, as relevant here, that it is unlawful for employers to “interfere with, restrain, or coerce
employees in the exercise of the rights guaranteed in
Section 7,” and Section 8(a)(3), which provides that it is
unlawful for employers to discriminate against employees “to encourage or discourage membership in any labor
organization.” 29 U.S.C. §§158(a)(1), 158(a)(3).
Congress created the National Labor Relations Board
as the sole entity charged with administering the Act and
preventing unfair labor practices. Section 10(a) of the
Act explicitly provides that
The Board is empowered . . . to prevent any person
from engaging in any unfair labor practice [listed in
section 8] affecting commerce. This power shall not be
affected by any other means of adjustment or prevention that has been or may be established by agreement,
law, or otherwise….
29 U.S.C. §160(a) (emphasis added). Thus, Congress
explicitly empowered the Board to protect employees’
statutory rights, even if other entities might also be authorized to do so in other proceedings.
Significantly, the Board performs this function in the
public interest and not in vindication of private rights.
Robinson Freight Lines, 117 NLRB 1483, 1485 (1957)
(footnote omitted), enfd. 251 F.2d 639 (6th Cir. 1958).
As the Supreme Court observed long ago, “The Board as
a public agency acting in the public interest, not any private person or group, not any employee or group of employees, is chosen as the instrument to assure protection
from the . . . unfair conduct in order to remove obstructions to interstate commerce.” Amalgamated Utility
Workers v. Consolidated Edison Co., 309 U.S. 261, 265
(1940). A fundamental premise, then, underlying our
decision today is that enforcement by the Board of the
public rights embodied in the Act is an essential aspect of
the statutory scheme designed by Congress to promote
industrial peace and stability.
The second premise underlying our decision is the central role of arbitration in promoting industrial peace and
stability.7 Section 1 of the Act declares it to be “the policy of the United States to eliminate the causes of certain
substantial obstructions to the free flow of commerce and
to mitigate and eliminate these obstructions when they
7
United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S.
574, 578 fn. 4 (1960) (observing that “[a] major factor in achieving
industrial peace is the inclusion of a provision for arbitration of grievances in the collective bargaining agreement” and “[c]omplete effectuation of the federal policy is achieved when the agreement contains both
an arbitration provision for all unresolved grievances and an absolute
prohibition of strikes”).
3
have occurred by encouraging the practice and procedure
of collective bargaining . . . .” Through collective bargaining, representatives of employers and employees
attempt to reach an agreement that will govern their
workplace relationships. Even when the parties are successful in reaching such an agreement, however, they
recognize that not every contingency can be anticipated
and that disputes may arise over the interpretation of
particular aspects of the agreement, including those concerning discipline and discharge. Accordingly, and to
avoid having to resolve those disputes by recourse to
economic weapons such as strikes and lockouts, the parties typically include in collective-bargaining agreements
a grievance procedure through which their representatives attempt to reach a satisfactory resolution. When
such attempts fail, the agreement generally provides for a
neutral arbitrator or arbitral board to render a final decision that is binding on the parties. Arbitration is a process that has been freely chosen by the parties through
collective bargaining as a means for obtaining a final
resolution of disputes. Indeed, Congress stated in Section 203(d) of the Labor-Management Relations Act that
“[f]inal adjustment by a method agreed upon by the parties is declared to be the desirable method for settlement
of grievance disputes arising over the application or interpretation of an existing collective-bargaining agreement.” 29 U.S.C. §173(d).
As important as arbitration is to the effective functioning of labor-management relations, however, given Congress’ specific statutory direction in Section 10(a), the
Board need not automatically defer to arbitral decisions
when the matter has also been alleged as a violation of
the Act. Rather, deferral is a matter of discretion. As the
Board held long ago,
There is no question that the Board is not precluded
from adjudicating unfair labor practice charges even
though they might have been the subject of an arbitration proceeding and award. Section 10(a) of the Act
expressly makes this plain, and the courts have uniformly so held.
International Harvester Co., 138 NLRB 923, 925–926
(1962) (footnotes omitted), enfd. 327 F.2d 784 (7th Cir.
1964), cert. denied 377 U.S. 1003 (1964), cited with approval in Carey v. Westinghouse Electric Corp., 375 U.S.
261, 271 (1964). Recognizing the discretionary nature of
the Board’s deferral policy, the D.C. Circuit has remarked, “Sec. 203(d) reads most naturally as a general
policy statement in favor of private dispute resolution,
not as any kind of limitation on Board authority.”
Hammontree v. NLRB, 925 F.2d 1486, 1493 (D.C. Cir.
1991). The court also stated that “Sec. 203(d) represents
a quintessential delegation to the Board, not this court, to
4
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
formulate a deferment policy that accommodates all of
its varying statutory responsibilities.” Id.at fn. 12.
In sum, deferral is solely a matter of the Board’s statutory discretion to resolve alleged unfair labor practices
where in its judgment its intervention is necessary to
protect the public rights defined in the Act. Concomitantly, the Board may withhold its authority to adjudicate
alleged unfair labor practices where in its judgment Federal labor policy would be best served by deferring to an
arbitral decision involving the same subject matter.8 As
discussed further below, the discretionary aspect of the
Board’s deferral policy is particularly significant in
8(a)(3) and (1) cases such as this, where employees’ contractual rights, implicated in the grievance, are separate
from their rights under the Act.
B. A Brief History of Postarbitral Deferral
The Board’s postarbitral deferral policy has traveled a
long and winding road.9 The Board began almost 60
years ago, as an exercise of discretion, to defer in what it
deemed appropriate circumstances to arbitral decisions
involving alleged unfair labor practices. In its 1955
Spielberg decision, the Board announced that it would
defer if the proceedings appeared to have been fair and
regular, all parties had agreed to be bound, and the arbitrator’s decision was “not clearly repugnant to the purposes and policies of the Act.” 112 NLRB at 1082. After some years of experience applying Spielberg, the
Board held it improper to defer when the arbitrator had
not considered the unfair labor practice issue, explaining
that “[w]e cannot, in giving effect to arbitration agreements, neglect our function of protecting the rights of
employees granted by our Act.” Raytheon Co., 140
NLRB 883, 886 (1963), enf. denied 326 F.2d 471 (1st
Cir. 1964). The Raytheon rule was extended in Airco
Industrial Gases, 195 NLRB 676, 677 (1972), to cases
where the arbitration award gave no indication whether
the arbitrator ruled on the unfair labor practice issue. Id.
at 677. Then, in Yourga Trucking, the Board held that
the party urging deferral bore the burden of showing that
the deferral standards were met. 197 NLRB 928, 928
(1972).
8
Because of the discretionary character of the Board’s deferral to
arbitration, the Supreme Court’s decisions in such cases as 14 Penn
Plaza LLC v. Pyett, 556 U.S. 247 (2009), and Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), are not controlling here.
In any event, those cases address whether parties may be contractually
required to arbitrate certain statutory claims, not (as here) whether and
when an administrative agency exclusively charged with administering
a statute should exercise its statutory discretion to defer to an arbitral
decision disposing of such claims.
9
See Gorman & Finkin, supra, Basic Text on Labor Law §31.2
(tracing “tortuous history” of Board’s deferral doctrine).
Two years later, however, the Board abruptly reversed
course, citing concern that under the existing standard,
parties would withhold evidence relevant to the unfair
labor practice issue in arbitral proceedings in an attempt
to have the Board decide the issue. Electronic Reproduction Service Corp., 213 NLRB 758, 761 (1974). To
avoid such piecemeal litigation, the Board held that it
would defer to arbitral awards unless the party opposing
deferral could show that special circumstances prevented
that party from having a full and fair opportunity to present evidence relevant to the statutory issue.
Six years later, the Board overruled Electronic Reproduction Service, and returned to the principles laid down
in Raytheon, Airco, and Yourga Trucking. Suburban
Motor Freight, Inc., 247 NLRB 146, 146–147 (1980). In
Suburban Motor Freight, the Board ruled that it would
“give no deference to an arbitration award which bears
no indication that the arbitrator ruled on the statutory
issue of discrimination in determining the propriety of an
employer’s disciplinary actions.” Id. The Board also
returned to the previous burden of proof allocations, under which the party seeking deferral was required to
show that the standards for deferral had been met. Id.
Four years later, however, the Board in Olin overruled
Suburban Motor Freight and held that it would find that
an arbitrator has adequately considered the unfair labor
practice if: (1) the contractual and unfair labor practice
issues were factually parallel, and (2) the arbitrator was
generally presented with the facts relevant to resolving
the unfair labor practice. 268 NLRB at 574, 575. The
Board also placed the burden on the party opposing deferral to demonstrate that the standards for deferral had
not been met. Id.
C. The New Standard for Postarbitral Deferral
Having carefully considered the arguments of the parties and amici, we are persuaded that the existing deferral
standard does not adequately protect employees’ exercise
of their rights under Section 7. In practice, the standard
adopted in Olin amounts to a conclusive presumption
that the arbitrator “adequately considered” the statutory
issue if the arbitrator was merely presented with facts
relevant to both an alleged contract violation and an alleged unfair labor practice. The presumption is theoretically rebuttable, but, as indicated above, the burden is on
the party opposing deferral to show that the conditions
for deferral are not met. In many, if not most arbitral
proceedings, the parties do not file written briefs; there is
no transcript of proceedings; and decisions often are
summarily stated. In such situations, it is virtually impossible to prove that the statutory issue was not considered. For example, in Airborne Freight Corp., 343
NLRB 580, 581 (2004), the Board deferred the 8(a)(3)
BABCOCK & WILCOX CONSTRUCTION CO.
discharge allegation even though the record did not show
what arguments and evidence were presented in the
grievance proceeding, because the General Counsel was
unable to show that the statutory issues were not presented to the grievance panel. In our view, deferral in such
circumstances amounts to abdication of the Board’s duty
to ensure that employees’ Section 7 rights are protected.
Accordingly, we have decided to modify our deferral
standard as follows. If the arbitration procedures appear
to have been fair and regular, and if the parties agreed to
be bound,10 the Board will defer to an arbitral decision if
the party urging deferral shows that: (1) the arbitrator
was explicitly authorized to decide the unfair labor practice issue; (2) the arbitrator was presented with and considered the statutory issue, or was prevented from doing
so by the party opposing deferral; and (3) Board law reasonably permits the award. This modified framework is
intended to rectify the deficiencies in the current deferral
standard in a way that provides greater protection of employees’ statutory rights while, at the same time, furthering the policy of peaceful resolution of labor disputes
through collective bargaining. Thus, as discussed below,
this approach will enable us to determine whether the
arbitrator has actually resolved the unfair labor practice
issue in a manner consistent with the Act, without placing an undue burden on unions, employers, arbitrators, or
the arbitration system itself.
1. The arbitrator must be explicitly authorized to decide
the statutory issue
Arbitration is a consensual matter. The Supreme Court
has expressly held that “arbitration is a matter of contract
and a party cannot be required to submit to arbitration
any dispute which he has not agreed so to submit.”
Steelworkers v. Warrior & Gulf Navigation Co., supra,
363 U.S. at 582 . See also Gateway Coal Co. v. United
Mine Workers, 414 U.S. 368, 374 (1974) (“The law
compels a party to submit his grievance to arbitration
only if he has contracted to do so.”). Further, Section
203(d)’s endorsement of arbitration as “the desirable
method for settlement of grievance disputes” is confined
to disputes “arising over the application or interpretation of an existing collective-bargaining agreement”
10
These traditional requirements, articulated in Spielberg, 112
NLRB at 1082, are not in controversy and need no further explanation.
Amicus AUD suggests that in some cases, notably those involving
union dissidents, union officials may be more closely aligned with
management than with the grievant. In such circumstances, AUD
contends that the Board should not defer where the charging party’s
position vis-à-vis the union is such that an objective observer would
infer an adverse relationship. We think that AUD’s concern can be
effectively addressed when the Board is considering whether arbitral
proceedings have been fair and regular.
5
(emphasis added).11 We agree with the General Counsel,
then, that the Board should not defer to an arbitrator’s
decision unless the arbitrator was specifically authorized
to decide the unfair labor practice issue. The proponent
of deferral can make this showing by demonstrating that
the specific statutory right at issue was incorporated in
the collective-bargaining agreement. If the right was not
incorporated in the contract, the proponent must show
that the parties explicitly authorized the arbitrator to decide the statutory issue.
2. The arbitrator must have been presented with and
considered the statutory issue, or have been prevented
from doing so by the party opposing deferral
Under the current deferral standard, an arbitrator will
be found to have adequately considered the unfair labor
practice issue if it and the contractual issue are “factually
parallel” and if the arbitrator was “presented generally”
with the facts relevant to resolving the statutory issue.
Olin, 268 NLRB at 574. As discussed above, this
amounts to a presumption that if an arbitrator is presented in some fashion with facts relevant to both an alleged
contract violation and an alleged unfair labor practice,
the arbitrator necessarily was presented with, and decided, the latter allegation in the course of deciding the former. We have repeatedly seen the shortcomings of that
presumption, as this case illustrates.
Charging Party Coletta Kim Beneli was a union steward at the Respondent’s workplace. She received a 3-day
suspension without pay, assertedly for failing to fill out a
safety form and for eating a pastry during a safety meeting. On the same day, she was summarily fired, ostensibly for using profanity in response to receiving the suspension. There is evidence to suggest, however, that
Beneli’s profane outburst was provoked by the Respondent’s own wrongful actions and that the Respondent may
have seized on Beneli’s outburst as a pretext for getting
rid of an assertive union steward. In this regard, the record establishes that shortly before her discharge, Beneli
challenged several actions by the Respondent as violative
of the parties’ collective-bargaining agreement. The rec11
As explained in the leading treatise on labor arbitration:
Beginning with its Enterprise Wheel decision [United Steelworkers of
America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960)],
the U.S. Supreme Court limited the arbitrator’s role in rights disputes
to interpretation and application of the collective bargaining agreement. The Court held that although an arbitrator could look outside the
contract for guidance, “he does not sit to dispense his own brand of
industrial justice,” and the arbitrator’s award is therefore legitimate
only insofar as it “draws its essence” from the collective bargaining
agreement.
Frank Elkouri & Edna Elkouri, How Arbitration Works, 143 (5th ed.
1997).
6
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
ord further establishes that only a few hours before suspending Beneli, the Respondent’s project manager told
the Union’s assistant business manager that he wanted to
discharge Beneli because she was raising contractual
issues and trying to tell the Respondent what it was supposed to pay employees.
The Union grieved the discharge, contending that it violated the contractual prohibitions against retaliating
against employees for engaging in union activity and
against termination except for cause. The case was arbitrated before the contractual Grievance Review Subcommittee. But although the Union specifically argued
that Beneli was fired for certain of her steward activities,
in violation of the Act and Board decisions, there is nothing in the Subcommittee’s decision to indicate whether it
gave consideration to any of those matters or to the facts
summarized above. The decision states only that
Beneli’s termination for using profanity did not violate
the contractual prohibition against termination without
just cause; it fails even to mention the statutory issue or
the contractual prohibition against retaliation for union
activity. In denying the grievance, the Subcommittee
may have considered the statutory issue, or it may not
have; there is simply no way to tell.
The Subcommittee’s decision would appear to qualify
for deferral under the current standard, even though it is
impossible to determine whether the Subcommittee considered the statutory issue. As the judge found, it is conceded that the proceedings were fair and regular, and that
all parties agreed to be bound by the panel’s decision.
Further, under Olin, the Subcommittee would be deemed
to have “adequately considered” the unfair labor practice
issue—whether Beneli was discharged for her steward
activities—even if it actually did not consider that issue
at all, because it was “factually parallel” to the contractual issue—discharging Beneli for the use of profanity—
and the Subcommittee was “presented generally” with
the facts relevant to resolving the statutory issue. Additionally, the absence of any evidence that the statutory
issue was considered presents no impediment to deferral
under the current standard because the General Counsel
has the burden to show that the statutory issue was not
considered. See, e.g., Airborne Freight Corp., 343
NLRB at 581. Finally, the decision to deny Beneli’s
grievance was not found to be repugnant to the Act, because it was susceptible to an interpretation consistent
with the Act.
This case is not an isolated example of the uncertainties that exist under the current standard. See, e.g., Andersen Sand & Gravel Co., 277 NLRB 1204 (1985) (deferral appropriate even absent evidence that arbitral panel
either considered or resolved unfair labor practice issue);
Airborne Freight Corp., 343 NLRB at 581 (deferral of
8(a)(3) discharge allegation appropriate, even though the
record did not show what arguments and evidence were
presented in the grievance proceeding, because the General Counsel was unable to show that the statutory issues
were not presented to the grievance panel). Nor is there
any way of knowing how many cases are never brought
to the Board because the General Counsel or the party
who would challenge deferral correctly assumes that,
under our current standard, the Board would defer. Thus,
the standards established in Olin may impede access to
the Board’s remedial processes and leave employees
without any forum for the vindication of their statutory
rights.
We are no longer willing to countenance such results.
In our view, the Board does not fulfill its role under Section 10(a) as the only entity statutorily charged with protecting employees’ Section 7 rights by deferring to decisions that do not indicate whether the arbitrator has even
considered those rights. As the Ninth Circuit put it, “The
Board cannot properly exercise its discretion in deferring
to an arbitration decision when it is ignorant of the . . .
basis for the [arbitral panel’s] decision.” Stephenson v.
NLRB, 550 F.2d 535, 541 (9th Cir. 1977). The Board
exercises its power to prevent unfair labor practices in
the public interest and not simply in vindication of private rights. Robinson Freight Lines, 117 NLRB at 1485.
Similarly, the Eleventh Circuit has stated: “By presuming, until proven otherwise, that all arbitration proceedings confront and decide every possible unfair labor
practice issue, Olin Corp. gives away too much of the
Board’s responsibility under the NLRA.” Taylor v.
NLRB, 786 F.2d 1516, 1521–1522 (11th Cir. 1986). It is
the policy of the Act to ensure—that is, for the Board to
ensure—that employees may engage in union and other
protected concerted activities to improve their lot in the
workplace without fear of retribution; otherwise, the
Act’s policy of encouraging collective bargaining would
soon be a dead letter. In our opinion, deferral under circumstances such as those presented here serves neither
the public interest in protecting the exercise of employees’ Section 7 rights nor, ultimately, the public interest in
promoting industrial peace.
Accordingly, we shall defer to arbitral decisions only
where the party urging deferral demonstrates that the
arbitrator has actually considered the unfair labor practice issue, or that although the statutory issue is incorporated in the collective-bargaining agreement, the party
opposing deferral has acted affirmatively to prevent the
proponent of deferral from placing the statutory issue
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before the arbitrator.12 We emphasize, however, that we
are not returning to the rule of Electronic Reproduction
Services, wherein the Board held that in the absence of
“unusual circumstances” it would defer to arbitral awards
dealing with discharge or discipline so long as there was
an opportunity to present the statutory issue to the arbitrator, even where the record did not disclose whether the
arbitrator had considered, or been presented with, the
unfair labor practice issue involved.13
We shall find that the arbitrator has actually considered the statutory issue when the arbitrator has identified
that issue and at least generally explained why he or she
finds that the facts presented either do or do not support
the unfair labor practice allegation. We stress that an
arbitrator will not be required to have engaged in a detailed exegesis of Board law in order to meet this standard. We recognize that many arbitrators, as well as many
union and employer representatives who appear in arbitral proceedings, are not attorneys trained in labor law
matters. An important and attractive feature of the grievance-arbitration system is that it is less formal, less structured, and in most circumstances less costly than litigation. We do not intend to upset this system by adopting a
deferral standard that would be all but impossible for
participants lacking legal training to meet. In short, we
do not seek to turn arbitrators into administrative law
judges, or human resources representatives and shop
stewards into labor lawyers. Accordingly, we decline to
adopt the General Counsel’s position that deferral is warranted only if the arbitrator “correctly enunciated the
applicable statutory principles and applied them in deciding the issue.” We think that meeting the standard announced today will be well within the capabilities of arbitrators and union and management representatives.
The Respondent and several amici oppose any standard that would encourage unions to withhold evidence
concerning unfair labor practice issues in arbitration proceedings in order to defeat deferral. The new standard
12
We do not expect to be confronted often with the latter circumstance. As discussed below, the employer will typically be able to
present the statutory issue to the arbitrator even if the union fails or
refuses to do so. We include this provision in the revised standard to
ensure that deferral is not precluded if that is not the case.
13
Member Johnson is thus correct in concluding that the Board
would not defer under the new standards merely because a union had an
opportunity to present the statutory issue to an arbitrator, but failed to
do so. However, the new standard is no different from the current
standard in this respect. Olin, 268 NLRB at 575 fn. 10 (“We do not
resurrect that part of Electronic Reproduction which required no more
than an “opportunity” to present the unfair labor practice issue to the
arbitrator to warrant deferral.”). See also Hendrickson Bros., Inc., 272
NLRB 438, 439–440 (1984), enfd. mem. 762 F.2d. 990 (2d Cir. 1985),
overruled on other grounds Don Chavas LLC d/b/a Tortillas Don
Chavas, 361 NLRB No. 10, slip op. at 5 fn. 31 (2014).
7
provides no such encouragement. Under our standard,
either party can raise the statutory issue before the arbitrator; thus, an employer normally can ensure that the
issue receives the arbitrator’s consideration by raising it
even if the union does not.14 Indeed, both parties will
normally be motivated to ensure that the unfair labor
practice issue is presented to the arbitrator, in order to
avoid unnecessary litigation, increased costs, and unwarranted delay in resolving the dispute.15 Under the standard announced today, if the unfair labor practice issue is
placed before an arbitrator and a party has evidence supporting its statutory claim but fails to introduce it in the
arbitral proceeding, the Board will assess whether Board
law reasonably permits the arbitrator’s award in light of
the evidence that was presented. Thus, a party would
gain nothing by withholding evidence supporting its statutory claim. In such circumstances, if the other requirements for deferral are met, the fact that the arbitrator
might have reached a different decision on the basis of
the withheld evidence will not preclude deferral.
3. Board law must reasonably permit the award
If the previous requirements are met, deferral normally
will be appropriate if the party urging deferral shows that
Board law reasonably permits the arbitral award. By
this, we mean that the arbitrator’s decision must constitute a reasonable application of the statutory principles
that would govern the Board’s decision, if the case were
presented to it, to the facts of the case. The arbitrator, of
course, need not reach the same result the Board would
reach, only a result that a decision maker reasonably applying the Act could reach.16 In deciding whether to
defer, the Board will not engage in the equivalent of de
novo review of the arbitrator’s decision.
This standard is more closely aligned with the Board’s
responsibilities under Section 10(a). Under the current
standard, the Board will defer if the party opposing deferral fails to show that the award is “clearly repugnant to
14
Both NEBA and USPS oppose any change in the deferral standard that would require an employer to raise the unfair labor practice if
the union failed to do so. However, satisfying the requirement that the
statutory issue be placed before the arbitrator should not be especially
onerous; in most cases informing the arbitrator of the unfair labor practice allegation in a pending charge would suffice.
15
It is not apparent why a party would deliberately sabotage its own
case before an arbitrator who is likely in a position to afford that party
the relief it seeks, simply in order to have its case decided by the Board,
perhaps much later and with no guarantee of success.
16
An arbitrator need not necessarily provide the exact remedy the
Board would have imposed. For example, the Board might defer to an
award that allowed the respondent to deduct unemployment compensation from backpay, contrary to the Board’s policy. The absence of any
effective remedy, however, would preclude deferral. See, e.g., Joseph
Magnin Co., 257 NLRB 656, 656 fn. 1, enfd. 704 F.2d 1457 (9th Cir.
1983), cert. denied 465 U.S. 1012 (1984).
8
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
the Act,” i.e., “palpably wrong” or “not susceptible to an
interpretation consistent with the Act.” Olin, 268 NLRB
at 574 (fn. omitted). The effect of this standard has been
to require deferral unless there is no conceivable reading
of the facts in a given case that would support the arbitrator’s decision. Thus, in a case such as this one involving
an alleged 8(a)(3) discharge, the Board would routinely
defer to an arbitrator’s decision denying the grievance,
even if there was considerable evidence of retaliatory
motive. Notwithstanding a possibly rapid resolution of
the workplace dispute and the avoidance of duplicative
litigation before the Board, such an approach fails to ensure that employees’ statutory rights are adequately protected. The overriding aim of deferral is not to resolve
disputes quickly or to reduce the Board’s caseload, although those are worthwhile aspects of the policy. The
point, rather, is to give effect to the parties’ voluntarily
chosen process for resolving workplace disputes, provided that process leads to decisions that adequately protect
employees’ statutory rights. Our new standard is more
likely to achieve this goal.
Contrary to the Respondent and several amici, adopting this standard will not necessarily reduce significantly
the incidence of deferral in practice. As stated above, we
are not seeking to turn arbitrators into administrative law
judges, and we do not propose to review their decisions
as though they were. All we require is a showing that the
arbitrator’s decision is one that a decision maker reasonably applying the Act could reach. Moreover, this
should not be a difficult standard to meet. For example,
as COLLE, NAM, NEBA, and our dissenting colleagues
have argued, most collective-bargaining agreements contain provisions prohibiting discipline and discharge except for “just cause,” and arbitrators are well versed in
applying those principles. Thus, an arbitrator typically
should understand that retaliation for the exercise of employees’ Section 7 rights can never constitute “just
cause,” and the award would have to reflect that reasonable application of Board law.
We will not simply assume, however, merely from the
fact that an arbitrator upheld a discharge under a “just
cause” analysis, that the arbitrator understood the statutory issue and had considered (but found unpersuasive)
evidence tending to show unlawful motive. Experience
teaches that no such assumption is warranted. There
have been numerous instances in which the Board declined to defer, even under the current standard, to arbitral decisions that upheld discipline or discharges under a
“just cause” analysis for conduct protected by the Act.
See, e.g., Mobil Oil Exploration & Producing, U.S., 325
NLRB 176, 177–179 (1997), enfd. 200 F.3d 230 (5th Cir.
1999); Garland Coal & Mining Co., 276 NLRB 963,
964–965 (1985) (finding in each case that the arbitrator’s
decision was “repugnant to the Act”); see also Cone
Mills Corp., 298 NLRB 661, 666–667 (1990).17 As two
leading scholars observe, “an arbitrator applying the ‘just
cause’ provision in the contract—and sustaining the discharge—may well depart from the standards that the
NLRB would apply” because they are “issues of legal
characterization, in light of the policies of the NLRA,
and are therefore not likely to have been precisely addressed by the arbitrator.”18
Member Miscimarra rejects this approach. He advances instead a novel theory based on the provision in
Section 10(c) of the Act and its legislative history that
“[n]o order of the Board shall require the reinstatement
of any individual as an employee who has been suspended or discharged, or the payment to him of any backpay,
if such individual was suspended or discharged for
cause.” 29 U.S.C. §160(c). He contends that this provision, and its legislative history, “makes ‘cause’ the relevant statutory issue in all cases involving discharges and
suspensions alleged to violate the Act (emphasis in original).” He further asserts that in enacting Section 10(c),
Congress required that the Board’s General Counsel
prove that an allegedly unlawful suspension or discharge
was not “for cause,” and that deferral is appropriate unless the General Counsel can make that showing. Member Miscimarra claims that our decision today inappropriately treats “cause” as somehow “inferior to a more
rigorous and exacting ‘unfair labor practice’ or ‘statutory’ issue.” There is no merit to any of these assertions.
In cases in which discipline or discharge is alleged to
violate the Act, the Board has long employed the twostage causation analysis first announced in Wright Line,
251 NLRB 1083 (1980), enfd. on other grounds 662 F.2d
899 (1st Cir. 1981), cert. denied 455 U.S. 989 (1982),
and approved by the Supreme Court in NLRB v. Transportation Management Corp., 462 U.S. 393, 402–403
(1983). Under that analysis, the General Counsel first
must prove, by a preponderance of the evidence, that the
employee’s protected conduct was a motivating factor in
the employer’s decision to discipline or discharge him.
17
These decisions also illustrate why it is appropriate to require a
showing that the unfair labor practice issue was presented to the arbitrator and that the arbitrator explained why the facts presented either support or fail to support the statutory allegation. Because it was clear in
each case what facts were presented to the arbitrator and what the basis
for the arbitrator’s decision was, the Board could easily discern that the
arbitrator’s decision was not subject to an interpretation consistent with
the Act. Had either the factual record or the arbitrator’s reasoning been
less fully developed in any of these cases, it might have been impossible for the party opposing deferral to show that the award was “palpably wrong.”
18
Gorman & Finkin, Basic Text on Labor Law, supra, §31.5 at
1037.
BABCOCK & WILCOX CONSTRUCTION CO.
If the General Counsel fails to make that showing, there
is no violation of the Act, regardless of whether the employer’s action was for “cause”—e.g., incompetence,
insubordination, or excessive absenteeism—or for some
other reason. But if the General Counsel does carry his
initial burden, the burden then shifts to the employer to
prove, also by a preponderance of the evidence, that it
would have taken the same action for other reasons
(whether or not based on “cause” or “just cause”), regardless of the employee’s protected activity. 251
NLRB at 1089. Thus, the employer need not assert ‘just
cause” for its decision, but if it does, it must prove not
only that just cause existed, but that it would have taken
the same action even absent the protected conduct. Under Wright Line, then (contrary to our colleague), the
Board may find a violation even if the employer shows
the existence of “cause” for its action.
The Supreme Court’s decision in Transportation Management undermines Member Miscimarra’s Section
10(c) argument not only by endorsing the Wright Line
standard, but in two additional ways. First, the Court
observed that the legislative history of Section 10(c) indicates that Congressional drafters simply assumed that
discharges were either “for cause” or in retaliation for
protected activity; they were “not thinking of the mixed
motive” situation found in some discipline and discharge
cases. 19 The Court remarked that the “for cause” proviso
to Section 10(c)
was sparked by a concern over the Board’s perceived
practice of inferring from the fact that someone was active in a union that he was fired because of antiunion
animus even though the worker had been guilty of
gross misconduct. . . . [It] thus has little to do with the
situation in which the Board has soundly concluded
that the employer had an antiunion animus and that
such feelings played a role in a worker’s discharge.
Id. at 402 fn. 6. Second, the Court specifically rejected
the argument that the General Counsel must show that
the employer would not have taken the same action, regardless of the protected activity: “Section 10(c) places
the burden on the General Counsel only to prove the unfair labor practice, not to disprove an affirmative defense.” Id. at 401 fn. 6. Thus, the Court implicitly rejected our colleague’s contention that Congress meant to
require the General Counsel to prove that the employer’s
action was not for “cause.” In sum, Member Miscimarra
is mistaken in asserting that “cause” is “the relevant stat19
See, for example, Senator Taft’s statement: “If a man is discharged for cause, he cannot be reinstated. If he is discharged for union
activity, he must be reinstated.” 93 Cong. Rec. 6677, reprinted in 2
NLRB, Legislative History of the Labor Management Relations Act,
1947 at 1593.
9
utory issue” in all discipline and discharge cases under
the Act and that deferral is appropriate wherever “cause”
is shown.20
Member Miscimarra’s chief concern seems to be that
the Board will routinely refuse to defer in cases in which
the arbitrator has determined that “cause” existed for
discipline or a discharge. He asserts that under the new
standard, “the Board must independently redecide every
case in which an arbitrator determines only that ‘cause’
existed for a suspension or discharge.” (Emphasis in
original.) These fears are unfounded. As indicated
above, if an arbitrator’s decision can fairly be read as
finding that discipline or discharge was for “cause” and
not for protected activity, the decision would satisfy the
part of the deferral standard requiring that Board law
reasonably permit the award. Moreover, our new deferral standard will be applied only to the tiny fraction of
arbitration decisions that come before the Board and that
involve discipline or discharge alleged to be in retaliation
for employee activity specifically protected by the Act.
And such a case comes before the Board only after: (1)
unfair labor practice charges are filed with the Board’s
regional office alleging violations of Section 8(a)(3) or
(1) (the Board cannot proceed sua sponte); (2) an investigation is conducted and the Regional Director finds the
unfair labor practice allegations meritorious; (3) the dispute is not settled by the parties; (4) the General Counsel
issues a complaint;21 (5) an administrative law judge issues a decision and order in the case; and (6) one or more
parties file exceptions with the Board. In practice, only a
small percentage of cases in which unfair labor practice
20
We also reject our colleague’s view that placing the burden of
proof on the party seeking deferral in a Wright Line case is somehow
inconsistent with Sec. 10(c). There is a basic distinction, of course,
between the standard for deferral and the standard for finding a violation of the Act. Where the Board chooses not to defer to an arbitrator’s
decision, the General Counsel is still required to prove a violation of
the Act under applicable law. As explained, we disagree both with our
colleague’s interpretation of Transportation Management and with his
view that Sec. 10(c), which limits the Board’s remedial authority when
a suspension or discharge is “for cause,” somehow constrains the
Board’s discretion with respect to deferral. Sec. 10(c) clearly contemplates that the Board will determine whether an employer’s action is
“for cause” within the meaning of the statute. Its terms in no way suggest that the Board must always accept an arbitrator’s “for cause” determination (where there is one)—and Sec. 10(a) refutes any such suggestion.
21
The General Counsel’s decision whether to issue complaints in
unfair labor practice cases is final and unreviewable. See Sec. 3(d) of
the Act; NLRB v. Food & Commercial Workers Local 23, 484 U.S.
112, 122 (1987). For a more complete description of the Board’s procedures for processing unfair labor practice charges, see Sec. 102 Part
B of the Board’s Rules and Regulations.
10
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
are filed ever come before the Board. 22 Further, only a
fraction of the cases decided by the Board involve deferral issues. Consequently, there is no reason to fear, as
Member Miscimarra suggests, that the Board will “inject
itself more aggressively in every suspension and discharge case that [is] subject to binding grievance arbitration (or a grievance settlement) regarding the existence
or non-existence of ‘cause.’”
4. The proponent of deferral has the burden to show that
the standards for deferral have been met
Finally, we return to the rule enunciated in Yourga
Trucking, Inc., 197 NLRB at 928, and reaffirmed in Suburban Motor Freight, 247 NLRB at 147, that the party
urging deferral has the burden to prove that the substantive requirements for deferral have been met. It is well
settled that deferral is an affirmative defense. SEIU
United Healthcare Workers-West, 350 NLRB 284, 284
fn. 1 (2007), enfd. 574 F.3d 1213 (9th Cir. 2009). Ordinarily, the proponent of an affirmative defense has the
burden of establishing it.
See, e.g., Broadway
Volkswagen, 342 NLRB 1244, 1246 (2004) (finding the
burden on the party raising an untimely charge defense
under Section 10(b) of the Act), enfd. 483 F.3d 628 (9th
Cir. 2007).23 Moreover, as the Board observed in Yourga
Trucking, the party urging deferral “may be presumed to
have the strongest interest in establishing that the issue
has been previously litigated[,]” and “in the usual case,
that party will have ready access to documentary proof,
or to the testimony of competent witnesses, to establish
the scope of the issue submitted to the arbitrator.” 197
NLRB at 928. 24 Similar considerations apply with regard to the other requirements for deferral (i.e., whether
the arbitrator was explicitly authorized to decide the unfair labor practice issue; whether the arbitrator actually
considered that issue; and whether Board law reasonably
permits the award). In addition, as remarked by Member
22
See the Board’s Performance and Accountability Report for FY
2013 at www.nlrb.gov/reportsandguidance/reports/performance and
accountability reports (PAR).
23
In general, the proponent of a rule has the burden to show that the
rule applies in the circumstances presented; the proponent of an exception to the rule has the burden to show that the exception applies. See,
e.g., 29 Am. Jur. 2d Evidence Sec. 174, 176. Deferral obviously is an
exception to the general rule that if the Board has jurisdiction to decide
an unfair labor practice issue, it will do so.
24
See also Paul Alan Levy, Deferral and the Dissident, 24 U. Mich.
J. Law. Ref. 479, 499 (1991) (noting under Olin that the “burden of
showing the defects in the arbitration is placed on the General Counsel
even when he seeks to enforce the statutory rights … [while]
[i]ronically, it is the parties to the CBA . . . [who] are in the best position to say what actually was litigated and decided.”) Contrary to
Member Johnson’s suggestion, if the General Counsel is in possession
of the facts concerning the arbitration, it is only because he was so
informed by the parties.
Zimmerman in his dissent in Olin, there is “no sound
procedural basis at all for imposing on the General
Counsel—the one party in unfair labor practice litigation
who is not in privity through a collective-bargaining
agreement—the responsibility of producing evidence
about arbitral proceedings under that agreement.” 268
NLRB at 580.
In overruling Yourga Trucking and Suburban Motor
Freight and placing the burden on the party opposing
deferral to demonstrate that the standards for deferral had
not been met, the Board majority in Olin was guided by
its perception that the Board had previously been deferring too infrequently, and that this was inconsistent with
the “goals of national labor policy.” 268 NLRB at 574,
575.25 We find this reasoning unpersuasive. The test of
an appropriate deferral policy is not the frequency or
infrequency with which the Board defers. It is, rather,
whether the Board’s policy gives due consideration to the
vital role that arbitration plays in our national labor policy while ensuring that employees’ statutory rights are
given adequate protection—in the public interest—by
some tribunal, be it the Board or an arbitrator. As we
have stated above, we think that the standard we adopt
today implements that test, and that the current standard
does not. Moreover, we think that by providing guidance
to parties and arbitrators as to the appropriate handling of
unfair labor practice issues in the arbitral process, we
will increase the likelihood that the decisions that result
from that process will be more, not less, likely to be appropriate for deferral.26
D. Rejection of Arguments in Opposition to the New Standard
The Respondent, several amici, and our dissenting colleagues have raised various arguments against changing
the current standard or adopting the standard we endorse
today. We have carefully considered those arguments,
but are not persuaded by them.
The Respondent and several amici oppose changing
the current standard on the ground that it will discourage
parties from settling their disputes informally through the
grievance-arbitration process. Ironically, the same objection to the standard adopted in Olin was raised by dis25
The Olin majority also stated that “[o]ur primary concern is with
the failure of the Board itself to defer in a consistent manner thus setting an improper example for the General Counsel and administrative
law judges.” 268 NLRB at 575 fn. 9 (emphasis added). Although we,
too, favor consistency in deferral cases (and elsewhere), it is unclear to
us what consistency has to do with which party has the burden of proof.
26
COLLE notes that in arbitral proceedings, the employer has the
burden to demonstrate that an employee’s discipline or discharge was
for “just cause.” It would seem no great chore, then, for an employer
that prevailed in arbitration under that standard to show that the facts
and arguments presented to the arbitrator satisfy our deferral standard,
if that is the case.
BABCOCK & WILCOX CONSTRUCTION CO.
senting Member Zimmerman. 268 NLRB at 581. However, the Board has never cited actual evidence of such ill
effects when adopting and revising its deferral standards.
In any event, the standard we adopt today simply requires that parties explicitly decide whether they want an
arbitrator to decide unfair labor practice issues, and if so,
that those issues be actually presented to the arbitrator
and actually decided in a manner reasonably permitted
by Board law. We find it difficult to believe that many
employers or unions will abandon the benefits of arbitration in cases implicating Section 8(a)(3) and (1) of the
Act because of the new standards, but if some parties do
decide not to arbitrate these statutory issues, that is their
privilege. That some may do so because they may no
longer benefit from the defects of the current standard is
hardly a compelling argument against the new standard.
Member Miscimarra fears that our new standard will
essentially force parties either to renegotiate their contractual provisions concerning “cause” and limits on the
scope of the arbitrator’s authority to interpret the collective-bargaining agreement, or to submit to duplicative
litigation when the Board declines to defer to arbitral
awards. Again, these fears are unfounded. As we have
stated, under our standard, even if a particular contract
does not authorize arbitration of unfair labor practice
issues, the parties can still authorize the arbitrator to decide such an issue in a given case; they do not have to
renegotiate their contract to achieve that result. On the
other hand, parties who wish to can draft appropriate
contract language prohibiting retaliation for engaging in
union activity, as the parties did in this case, or authorizing the arbitrator to decide such issues.27 Because arbitration is a consensual matter, all that need be shown
under our standard is that the parties have, in some fashion, explicitly authorized the arbitrator to decide the unfair labor practice issue. Under the new standard, the
Board will not assume such grant of authority—it will be
up to the parties to agree or not. It is not our province to
hold them to a choice they have not made.28
We also disagree with Member Miscimarra’s suggestion that unless parties renegotiate their contractual “just
cause” provisions, the Board will not defer to arbitral
decisions in cases involving discharge or discipline. Our
27
If parties do not wish to reopen their entire collective-bargaining
agreement midterm, they have the option of drafting side agreements or
agreeing on a case-by-case basis.
28
See Raytheon Co., supra, 140 NLRB at 886 (deferral inappropriate where arbitrator had been informed that he could not consider evidence that employees might have been discharged for engaging in
union and other protected activity). As a general matter, the Board has
no remedial authority to impose contract terms on collective-bargaining
parties, including terms affecting the scope of arbitration provisions.
H.K. Porter Co., Inc. v. NLRB, 397 U.S. 99 (1970).
11
colleague himself asserts (as do several amici) that arbitrators know that engaging in activity protected by the
Act can never constitute “just cause” for discipline or
discharge, and therefore that an arbitrator who finds “just
cause” for an employer’s action has implicitly found that
the employer did not retaliate against the employee for
his protected conduct. There is reason to doubt this
claim, as we have suggested. But even if it is correct, it
would seem a simple matter for the arbitrator to say so,
and thus make explicit what is claimed to be implicit. In
short, the policy and practical concerns identified by
Member Miscimarra are more illusory than real and do
not outweigh the Board’s statutory obligation to protect
the public rights defined in the Act.
Member Johnson opposes the new standard for many
of the same reasons as Member Miscimarra. We reject
his position. First, Member Johnson opposes the requirement that the arbitrator must be explicitly authorized to decide the unfair labor practice issue, which he
contends is inconsistent with the presumption of
arbitrability established by the Supreme Court.29 But
Member Johnson is mistaken, as the Supreme Court itself has made clear. In Wright v. Universal Maritime
Service Corp., 525 U.S. 70 (1998), the Court held that an
employee was not required, under the general language
of a collective-bargaining agreement, to submit a claim
alleging a violation of the Americans with Disabilities
Act of 1990 (ADA), 42 U.S.C. §§12101 et seq., to the
arbitration procedure. In the process, the Court explicitly
rejected the employer’s reliance on the presumption of
arbitrability announced in the Steelworkers Trilogy30 and
later decisions. The Court reasoned that “[t]hat presumption . . . does not extend beyond the reach of the principal
rationale that justifies it, which is that arbitrators are in a
better position than courts to interpret the terms of a
CBA.“ 363 U.S. at 78 (emphasis in original). “The dispute in the present case,” the Court observed, “ultimately
concerns not the application or interpretation of any
CBA, but the meaning of a federal statute. “ Id. at 78–
79. Moreover, the Court continued, “Not only is petitioner’s statutory claim not subject to a presumption of
arbitrability; we think any CBA requirement to arbitrate
must be particularly clear,” citing Metropolitan Edison
Co. v. NLRB, 460 U. S. 693 (1983). Id. at 79–80.
29
See Steelworkers v. Warrior & Gulf, supra, 363 U.S. at 582–583
(“An order to arbitrate the particular grievance should not be denied
unless it may be said with positive assurance that the arbitration clause
is not susceptible of an interpretation that covers the asserted dispute.”).
30
Steelworkers v. Enterprise Wheel & Car, supra; Steelworkers v.
American Mfg. Co., 363 U.S. 564 (1960); Steelworkers v. Warrior &
Gulf, supra.
12
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
As stated, the issue in Wright was whether to require
the employee to arbitrate his statutory discrimination
claims—not whether to give effect to an arbitral decision
that may or may not have addressed such claims.31 But
the Supreme Court addressed the latter issue in 14 Penn
Plaza LLC v. Pyett, 556 U.S. 247 (2009); and again, its
decision supports our new standard. In Pyett, the Court
found that , unlike in Wright, the employee was required
to arbitrate his claim arising under the Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C.
§§621 et seq., because the arbitration provision in the
collective-bargaining agreement clearly and unmistakably required employees to arbitrate ADEA claims. 556
U.S. at 258–259. However, the Court distinguished earlier decisions in which it had found that employees had
not waived their right to litigate employment discrimination claims by previously submitting contractual claims
to arbitration, because the arbitration provisions did not
encompass the statutory claims at issue.32 556 U.S. at
260–264. The Court stressed that those decisions
did not involve the issue of the enforceability of an
agreement to arbitrate statutory claims [, but] instead
“involved the quite different issue whether arbitration
of contract-based claims precluded subsequent judicial
resolution of statutory claims. Since the employees
there had not agreed to arbitrate their statutory claims,
and the labor arbitrators were not authorized to resolve such claims, the arbitration in those cases understandably was held not to preclude subsequent statutory actions.”
556 U.S. at 264, quoting Gilmer v. Interstate/Johnson
Lane Corp., 500 U.S. 20, 35 (1991) (emphasis added,
internal citations omitted).33 Thus, contrary to Member
Johnson’s assertion, the new standard’s requirement that
the arbitrator be explicitly authorized by the parties to
decide the statutory issue is solidly in line with Supreme
Court precedent.34
Nor is Member Johnson persuasive when he urges the
Board to give collateral-estoppel effect to arbitrators’
factual findings. He objects that our “new collateralestoppel standard” (i.e., our statement, above, that the
Board will assess an arbitral award in light of the evidence presented during the arbitration) is “nowhere
near[ly] specific or efficient enough to preclude
relitigation of essential fact issues.” This suggestion
misses the point. Our statement does not address collateral-estoppel. It is well settled that the Board does not
give collateral estoppel effect to the resolution of private
claims asserted by private parties, where the Board was
not a party to the prior proceedings. See, e.g., Field
Bridge Associates, 306 NLRB 322, 322 (1992), enfd. 982
F.2d 845 (2d Cir. 1993), cert. denied 509 U.S. 904
(1993).35 We are simply cautioning parties that if they
withhold evidence relative to statutory claims in arbitration proceedings, they do so at their peril.
31
The Court in Wright did not address whether the Federal Arbitration Act (FAA), 9 U.S.C. §§ et seq., was applicable in that case, because the issue had not been raised. The Court did note that it had
previously “discerned a presumption of arbitrability under the FAA,”
citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473
U.S. 614 (1985). 525 U.S. at 77–78 fn. 1. In Mitsubishi Motors, however, the Court expressly relied in part on Steelworkers v. Warrior &
Gulf, supra, 363 U.S. at 582–583, where the Court first announced the
presumption of arbitrability under Sec. 301 of the LMRA. 473 U.S. at
626. It would seem, then, at least where collective-bargaining agreements are concerned, that the presumption of arbitrability under the
FAA would extend no farther than the Court indicated in Wright. That
is, the presumption would extend only to disputes concerning the application or interpretation of a contract, and not to disputes over the meaning or application of a Federal statute.
32
See Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974) (Title
VII); Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728
(1981) (Fair Labor Standards Act); McDonald v. West Branch, 466
U.S. 284 (1984) (42 U.S.C. Sec. 1983).
33
The Court disavowed certain other aspects of the analysis in
Gardner-Denver and its progeny. See 556 U.S. at 265–272. It did not,
however, disturb the reasoning quoted above, which it characterized as
a “legal rule.” Id. at 263.
34
Citing CompuCredit Corp. v. Greenwood, 132 S.Ct. 665 (2012),
Member Johnson contends that a “flurry of FAA [Federal Arbitration
Act] cases” decided since Wright and Pyett, supra, sap those decisions
of their vitality. We disagree. The issue in CompuCredit was whether
a party was contractually bound to arbitrate claims arising under a
Federal statute, not the effect (if any) that an administrative agency
must give to an arbitral award. There is no mention of either Wright or
Pyett in the Court’s opinion, and the Court relied on cases that predate
Wright and Pyett.
Member Johnson also argues that Wright supports, at most, only the
requirement that the arbitrator be explicitly authorized to decide the
statutory issue. But that is the only proposition for which Wright is
cited. It is not otherwise relevant to the Board’s standard for giving
deference to an already issued arbitral decision.
35
To say that the Board will not give collateral estoppel effect to an
arbitrator’s findings does not mean, as Member Johnson suggests, that
they will be “discarded.” Rather, the Board will give them whatever
weight is appropriate. In many labor arbitration cases, of course, there
is no transcript or other evidentiary record and the arbitrator makes no
formal findings.
E. Changes to Prearbitral Deferral Standard
As noted above, when the Board solicited briefs concerning whether to change its postarbitral deferral standard, we asked the parties and amici whether, if the Board
modified its postarbitral deferral standard, changes
would need to be made to the Board’s prearbitral deferral
practices under Collyer Insulated Wire, 192 NLRB 837
(1971), and United Technologies Corp., 268 NLRB 557
(1984). The AFL–CIO argues that the Board should not
defer to the arbitral process unless the first prong of the
postarbitral deferral standard is satisfied, that is, unless
BABCOCK & WILCOX CONSTRUCTION CO.
the arbitrator was explicitly authorized to decide the unfair labor practice issue. We agree. There is no apparent
reason to defer to the arbitral process if it is plain at the
outset that deferral to the arbitral decision would be improper. Thus, we shall no longer defer unfair labor practice allegations to the arbitral process unless the parties
have explicitly authorized the arbitrator to decide the
unfair labor practice issue, either in the collectivebargaining agreement or by agreement of the parties in a
particular case.
COLLE and NAM suggest that if the Board adopts a
more demanding postarbitral deferral standard, it should
also, inter alia, require a completed investigation and
merit determination before deciding whether to defer an
unfair labor practice charge to the arbitral process. These
suggestions are more appropriately addressed to the
General Counsel. The General Counsel has unreviewable discretion as to whether or not to issue complaints in
unfair labor practice cases; it follows that the General
Counsel’s choice of procedures for processing unfair
labor practice charges, including whether and under what
circumstances to defer to arbitration before issuing complaints, are matters left to the General Counsel’s discretion. See BCI Coca-Cola, 361 NLRB No. 75, slip op. at
5 fn. 11 (2014).36
F. Changes to Standard for Determining Whether to Defer to
Settlement Agreements Arising from the Grievance-Arbitration
Process
The Board also asked the parties and amici whether, if
the Board modified its postarbitral deferral standard,
changes would need to be made to the Board’s standards
for determining whether to defer to prearbitral grievance
settlements under Alpha Beta Co., 273 NLRB 1546
(1985), review denied sub nom. Mahon v. NLRB, 808
F.2d 1342 (9th Cir. 1987); and Postal Service, 300
NLRB 196 (1990). In response, the General Counsel and
the AFL–CIO contend that we should apply essentially
the same standard to settlement agreements as to arbitral
decisions. The General Counsel also argues the Board
should decide whether to accept the settlement agreement
under current nonBoard settlement practices, including
review under the standards of Independent Stave Co.,
287 NLRB 740, 743 (1987). COLLE, NAM, and Member Johnson, by contrast, argue that no change should be
made to the Board’s standards for deferring to grievance
settlements. In this regard, COLLE and Member Johnson stress that grievances often are settled by nonlawyer
36
Our approach here is deliberately incremental, to permit fuller experience and deliberation over time. However, the General Counsel’s
suggestion that prearbitral deferral should normally be for no more than
1 year is one that the General Counsel himself may wish to consider
implementing in cases that are in the investigative stage.
13
representatives prior to the filing of Board charges, and
therefore that parties typically do not focus on unfair
labor practice issues when negotiating settlements.
We find it appropriate to apply the same deferral principles to prearbitral settlement agreements as to arbitral
awards (i.e., as the Board has done under the current
standard). See Alpha Beta, 273 NLRB at 1547. Thus, it
must be shown that the parties intended to settle the unfair labor practice issue; that they addressed it in the settlement agreement; and that Board law reasonably permits the settlement agreement. As with arbitral awards,
the Board will not expect the parties to have addressed
the statutory issue in the same manner as administrative
law judges, and the Board will not engage in de novo
review of settlement agreements. Rather, we will assess
such agreements in light of the factors set forth in Independent Stave, as the General Counsel suggests.37 We
specifically reject the argument raised by COLLE and
Member Johnson that we should adopt a different standard merely because nonlawyers typically craft settlement
agreements, often without being advised that an unfair
labor practice charge may be waiting in the wings. We
perceive no reason why settlement agreements that do
not reflect the parties’ consideration of statutory issues
should stand on better footing than arbitral awards with
similar drawbacks.38
II. PROSPECTIVE APPLICATION OF THE NEW STANDARD
We turn now to the question whether to apply the new
standard retroactively (i.e., in all pending cases) or only
prospectively (in future cases). For the reasons explained below, we find prospective application to be appropriate.
The Board’s usual practice is to apply all new policies
and standards in “all pending cases, in whatever stage.”
Levitz Furniture Co. of the Pacific, 333 NLRB 717, 729
(2001), quoting John Deklewa & Sons, 282 NLRB 1375,
1389 (1987), enfd. 843 F.2d 770 (3d Cir. 1988), cert.
37
Under Independent Stave, the Board considers all the circumstances surrounding a settlement agreement, including (1) whether the
charging party(ies), the respondent(s), and any of the individual
discriminatees have agreed to be bound, and the position taken by the
General Counsel regarding the settlement; (2) whether the settlement is
reasonable in light of the nature of the violations alleged, the risks
inherent in litigation, and the stage of the litigation; (3) whether there
has been any fraud, coercion, or duress by any of the parties in reaching
the settlement; and (4) whether the respondent has engaged in a history
of unlawful conduct or has breached previous settlement agreements
resolving unfair labor practice disputes. 287 NLRB at 743.
38
Obviously, then, we also reject NEBA’s contention that the Board
should defer to all settlement agreements voluntarily reached in bargaining by employers and unions.
Member Johnson suggests that the Board should craft “safe harbor”
language for parties to incorporate in settlement agreements. That issue
is better left for a future case, presenting the issue squarely.
14
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
denied 488 U.S. 889 (1988) (internal citation omitted).
However, the effects of retroactive application must be
balanced against “the mischief of producing a result
which is contrary to a statutory design or to legal and
equitable principles.” Levitz, 333 NLRB at 729 (internal
citations omitted).
We think that applying our new standard in pending
cases would be unfair to parties that have relied on the
current deferral standard in negotiating contracts and in
determining whether, and in what manner, to process
cases involving unfair labor practice issues through the
grievance-arbitration process. Granted, retroactive application of the new standard would hasten the day when
arbitral decisions more surely protect employees’ statutory rights. However, a principal purpose of the Act is to
promote collective bargaining, which necessarily involves giving effect to the bargains the parties have
struck in concluding collective-bargaining agreements.
Retroactive application would tend to frustrate that aspect of the Act’s purpose. Thus, we find those concerns
supporting retroactive application are outweighed by the
injustice that would result from applying the new standard in pending cases. Accordingly, we will apply the
new standard only prospectively.
Where parties’ contracts already provide for arbitration
of unfair labor practice issues, or where parties have explicitly authorized arbitrators to consider such issues in
particular cases, the first prong of the new deferral standard has been met. In such cases, applying the remaining
criteria of the new standard in arbitrations that have yet
to take place will not result in injustice because it will
not contravene the parties’ settled expectations. Accordingly, where parties have already, either contractually or
explicitly for a particular case or cases, authorized arbitrators to decide unfair labor practice claims, we shall
apply the new standard to all future arbitrations. By contrast, where current contracts do not authorize arbitrators
to decide unfair labor practice issues, we will not apply
the new standards until those contracts have expired, or
the parties have agreed to present particular statutory
issues to the arbitrator.39
III. DEFERRAL IS APPROPRIATE IN THIS CASE
Having declined to apply our new deferral standard in
pending cases, we must decide whether deferral is appropriate in this case under the current standard. The judge
found, and we agree, that it is. As noted above, it is con39
We recognize that in some instances it will be several years before existing contracts expire and new contracts are concluded. In our
view, however, the resulting delay in applying the new standard in
those instances is justified by the need to avoid unfairness to contracting parties. In any event, by its very nature, this problem will become
less and less serious with the passage of time.
ceded that the arbitral procedure was fair and equitable
and that all parties agreed to be bound. It is also conceded that the contractual issue was factually parallel to the
unfair labor practice issue and that the Subcommittee
was presented generally with the facts relevant to deciding the statutory issue. The General Counsel excepts
only to the judge’s finding that the Subcommittee’s decision was not clearly repugnant to the Act. The General
Counsel asserts that Beneli was discharged primarily
because of her activities as a union steward, and the Subcommittee’s decision upholding her discharge therefore
was “palpably wrong” and not susceptible to any interpretation consistent with the Act. The Subcommittee
phrased the issue before it as whether the Respondent
terminated Beneli without just cause for her use of profanity, and its decision stated only that, having reviewed
the facts presented (which included the facts concerning
Beneli’s steward activities), it found no violation of the
contract. Contrary to the General Counsel, the decision
is arguably consistent with a finding that the Subcommittee considered and rejected the Union’s contention that
Beneli’s discharge was motivated by her steward activities; at least, the General Counsel has failed to prove
otherwise. See, e.g., Airborne Express Corp., 343 NLRB
at 581. The Subcommittee’s finding that Beneli was
discharged for using profanity is therefore susceptible to
an interpretation consistent with the Act. Because the
General Counsel has failed to demonstrate that the Subcommittee’s decision was clearly repugnant to the Act,
we shall defer to the decision and dismiss the complaint.
ORDER
The recommended Order of the administrative law
judge is adopted and the complaint is dismissed.
Dated, Washington, D.C. December 15, 2014
(SEAL)
Mark Gaston Pearce,
Chairman
Kent Y. Hirozawa,
Member
Nancy Schiffer,
Member
NATIONAL LABOR RELATIONS BOARD
MEMBER MISCIMARRA, concurring in part and dissenting
in part.
The majority in this case performs surgery on two venerable institutions—final and binding grievance arbitration and the collectively bargained requirement of
“cause”—that have benefited millions of employees. No
BABCOCK & WILCOX CONSTRUCTION CO.
sickness warrants the majority’s treatment. Labor arbitration and the concept of “cause” have been lauded by
Congress, the Supreme Court, other courts, labor relations scholars, and arbitrators.1 The majority wields a
scalpel whose bluntness will cause injury to employees,
unions and employers alike, particularly those that have
existing collective-bargaining agreements. Worse, the
tissue cut away has existed for decades: the Spielberg
standard has governed this area for nearly 60 years,2 and
the Olin standard for 30 years.3 Most important, in my
view, is the fact that the majority’s changes are contradicted by our statute. Section 10(c) prohibits the Board
from making the very distinction that forms the basis for
the majority’s reformulated deferral standards.
I concur in the outcome here only because the majority
refrains from applying its changed deferral standards to
the instant case.4 However, the changed standards cut a
wide swath, prospectively affecting at least three types of
deferral: (i) deferral to existing arbitration awards (governed by Olin and Spielberg), (ii) deferral to prospective
1
In USWA v. Warrior & Gulf Navigation Co., 363 U.S. 574, 578
(1960), the Supreme Court stated that “arbitration of labor disputes
under collective bargaining agreements is part and parcel of the collective bargaining process itself.” The Court continued: “[T]he grievance
machinery under a collective bargaining agreement is at the very heart
of the system of industrial self-government. Arbitration is the means of
solving the unforeseeable by molding a system of private law for all the
problems which may arise and to provide for their solution in a way
which will generally accord with the variant needs and desires of the
parties. The processing of disputes through the grievance machinery is
actually a vehicle by which meaning and content are given to the collective bargaining agreement.” Id. at 581. See also Labor Management
Relations Act (LMRA) Sec. 203(d) (“Final adjustment by a method
agreed upon by the parties is hereby declared to be the desirable method for settlement of grievance disputes arising over the application or
interpretation of an existing collective-bargaining agreement.”); Collyer
Insulated Wire, 192 NLRB 837, 839 (1971) (“In our view, disputes
such as these can better be resolved by arbitrators with special skill and
experience in deciding matters arising under established bargaining
relationships than by the application by this Board of a particular provision of our statute.”); Archibald Cox, Reflections Upon Labor Arbitration, 72 HARV. L. REV. 1482, 1491 (1959) (“[J]ust cause” provisions
are “an obvious illustration” of the fact that many provisions “must be
expressed in general and flexible terms.”). See generally Triple Play
Sports Bar & Grille, 361 NLRB No. 31, slip op. at 9 (2014) (Member
Miscimarra, dissenting in part), where I stated that “just cause” provisions have been ubiquitous in collective-bargaining agreements
throughout the Act’s history. Id., slip op. at 11 fn. 9, citing Burgie
Vinegar Co., 71 NLRB 829, 840 (1946) (“It is agreed that the right to
discharge employees for just cause is a management prerogative.”);
Solutia, Inc., 357 NLRB No. 15, slip op. at 4 fn. 8 (2011) (contract
reserves to the company the right to “discipline or discharge for just
cause”), enfd. 699 F.3d 50 (1st Cir. 2012).
2
Spielberg Mfg. Co., 112 NLRB 1080 (1955).
3
Olin Corp., 268 NLRB 573 (1984).
4
The majority has announced that their changed deferral standards
will only apply prospectively to cases arising after the issuance of today’s decision.
15
arbitration procedures (governed by Collyer Insulated
Wire, supra, 192 NLRB at 839),5 and (iii) deferral to
grievance settlements reached prior to arbitration (governed by Alpha Beta Co., 273 NLRB 1546 (1985), review denied sub nom. Mahon v. NLRB, 808 F.2d 1342
(9th Cir. 1987), and Postal Service, 300 NLRB 196
(1990)).
For several reasons, I dissent from the changes adopted
by my colleagues in the majority.6
First, the majority’s approach is premised on a false
dichotomy—between “statutory” issues, on the one hand,
and the issue of “cause,” on the other—that is contradicted by the Act’s language. My colleagues preclude deferral in all arbitration cases that determine whether “cause”
supported an employee’s suspension or discharge, unless
the party seeking deferral proves that the arbitrator considered what the majority regards as different and more
onerous “statutory” or “unfair labor practice” issues.
Yet, Section 10(c) precludes the Board from making this
distinction. In Section 10(c), Congress imposed a requirement on the Board prohibiting reinstatement or
backpay whenever “cause” exists for an employee’s suspension or discharge. In other words, the Act makes
“cause” the “statutory issue” as a matter of law in every
discharge and suspension case.
Second, the Board will not defer to grievance arbitration in most cases under the newly adopted standards
unless the parties rewrite their collective bargaining
agreement (CBA) provisions relating to discipline and
grievance arbitration. This aspect of the majority’s approach is objectionable not only because the Act prohibits the Board from imposing substantive contract terms
on parties, but also because my colleagues all but compel
the renegotiation of extremely important contract provisions, which will cause increased conflict among the
parties for whom the Board should most strive to foster
stability—i.e., employers and unions that have existing
collective-bargaining relationships.
Alternatively, if
parties do not rewrite their collective-bargaining agreements, the majority’s new standards make two track arbitration/Board litigation a near certainty, thereby eliminating the benefits previously afforded by “final and bind5
The Board has recognized a variation of Collyer prospective deferral when a pending grievance awaits arbitration. See Dubo Mfg.
Corp., 142 NLRB 431 (1963).
6
In this separate opinion, I occasionally use the phrase “my colleagues” as a shorthand reference to my colleagues in the majority.
However, I do not mean to suggest any disagreement with the separate
opinion authored by another of my colleagues, Member Johnson, who
dissents from the changes in Board deferral standards that have been
adopted by the majority. I agree with the separate reasons articulated
by Member Johnson in his own disagreement with the standards adopted by the majority.
16
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
ing” arbitration. In this respect, the majority deprives
unions of a major benefit they could otherwise offer to
unionized employers and represented employees. In the
same way, because any newly negotiated arbitration and
“cause” provisions will produce greater costs, burdens
and delays (instead of facilitating the quick, inexpensive
and final resolution of workplace disputes), nonunion
employers are likely to more vigorously exercise their
lawful right to oppose union representation during union
organizing campaigns.
Third, I believe the changed deferral standards reflect
an underlying hostility towards final and binding grievance arbitration and “cause” determinations, contrary to
the federal policies favoring arbitration that Congress
incorporated into the Federal Arbitration Act (in 1925)
and into the Labor Management Relations Act (in 1947).
The most important characteristic of “final and binding”
arbitration is the notion that adjudicated outcomes will,
in fact, be “final” and “binding.” Yet, my colleagues
now effectively guarantee that, in most cases involving
existing CBAs, arbitration will not be final and binding.
The outcome will be more work for the Board, at the
expense of speed, predictability, and certainty for the
parties, and the virtual elimination of finality given the
long litigation treadmill that is associated with Board and
court litigation of unfair labor practice claims.
In my view, there is no reason for the Board to deviate
from the well-established deferral standards applicable to
existing arbitration awards (governed by Olin and Spielberg), prospective arbitration procedures (governed by
Collyer), and grievance settlements reached prior to arbitration (governed by Alpha Beta and Postal Service).
These standards are understandable and have been widely applied and enforced. These standards afford appropriate deference to final and binding arbitration and the
concept of “cause.” These standards are consistent with
our statute, including Section 10(c)’s requirement that
makes “cause” a statutory issue binding on the Board in
suspension and discharge cases. Finally, the existing
deferral standards—instead of forcing parties to dramatically change existing labor contracts—would preserve
the substantial benefits that existing arbitration and
“cause” provisions confer on employees, unions and unionized employers.
A. The Majority’s New Deferral Standards Are Improper Because Section 10(c) Requires the Board to Treat “Cause” as a
Statutory Issue in All Suspension and Discharge Cases
Under the new standards established by my colleagues,
the Board will never defer to a determination that
“cause” existed for a discharge or suspension unless the
party urging deferral proves, first, that the parties “explicitly authorized” resolution of “the unfair labor prac-
tice issue,” and second, that the “the statutory issue” was
presented and considered (or any failure on this score
was caused by the party opposing deferral).7 Deferral
cases most often arise from employee discharges or suspensions—subject to challenge in arbitration under a
contractual “cause” standard—that are also alleged in
Board charges to violate Section 8(a)(3) or (1). My colleagues justify a much more narrow deferral standard by
drawing a distinction between the “cause” standard, on
the one hand, and what they apparently view as a more
onerous and demanding “statutory” or “unfair labor practice” standard, on the other. However, the Act prohibits
such reasoning and precludes the Board from making this
distinction. Section 10(c) states: “No order of the Board
shall require the reinstatement of any individual as an
employee . . . or the payment to him of any backpay, if
such individual was suspended or discharged for cause”
(emphasis added).
In other words, the majority today finds the Board
must independently redecide every case in which an arbitrator determines only that “cause” existed for a suspension or discharge. However, the majority presumes, incorrectly, that “cause” is inferior to a more rigorous and
exacting “unfair labor practice” or “statutory” issue
unique to the NLRA. Section 10(c) makes “cause” the
relevant statutory issue in all cases involving discharges
and suspensions alleged to violate the Act. Obviously,
this statutory mandate is binding on the Board, and it
explicitly constrains the Board’s remedial authority.
Congress incorporated the “cause” requirement into
the Act for good reason. The requirement of “cause”—
whether referred to as “cause,” “just cause,” “proper
cause” or similar other phrases8—has been called “the
most important principle of labor relations in the unionized firm.”9 The meaning of “cause” in collectivebargaining agreements was explained nearly 60 years ago
7
My colleagues also impose a third deferral requirement— that
“Board law reasonably permits the award.”
8
Different collective-bargaining agreements articulate “cause” requirements in different ways, referring (for example) to “just cause,”
“proper cause” or “just and proper cause,” but these different formulations are generally regarded as identical. See, e.g., Worthington Corp.,
24 Lab. Arb. (BNA) 1, 6–7 (McGoldrick, 1955) (regarding the right to
suspend and discharge for “just cause,” “proper cause,” “obvious
cause” or “cause,” arbitrator states “[t]here is no significant difference
between these various phrases”); Alan Miles Ruben, ed., Elkouri &
Elkouri, How Arbitration Works 932 fn. 37 (6th ed. 2003) (collecting
decisions “finding no significant difference between these terms”). I
have previously noted that “just cause” provisions have been ubiquitous
in collective-bargaining agreements throughout the Act’s history. See
supra fn. 1.
9
Robert I. Abrams & Dennis R. Nolan, Toward a Theory of “Just
Cause” in Employee Discipline Cases, Duke L.J. 594 (1985).
BABCOCK & WILCOX CONSTRUCTION CO.
in Worthington Corp., 24 Lab. Arb. (BNA) 1, 6–7
(McGoldrick, 1955):
[I]t is common to include the right to suspend
and discharge for “just cause,” “proper cause,” “obvious cause,” or quite commonly simply for “cause.”
There is no significant difference between these various phrases. These exclude discharge for mere
whim or caprice. They are, obviously, intended to
include those things for which employees have traditionally been fired. They include the traditional
causes of discharge in the particular trade or industry, the practices which develop in the day-to-day relations of management and labor and most recently
they include the decisions of courts and arbitrators. . . . Where they are not expressed in posted
rules, they may very well be implied, provided they
are applied in a uniform, non-discriminatory manner.
I am at a loss to understand the majority’s insistence
that the Board must inject itself more aggressively in
suspension and discharge arbitration regarding the existence or nonexistence of “cause.”10 Virtually everybody
understands that “cause” will not exist if an arbitrator
determines an employee’s suspension or discharge–
instead of resulting from legitimate reasons—stemmed
from antiunion discrimination or other protected activities, such that the suspension or discharge, if adjudicated
by the Board, would be a violation of Section 8(a)(3), (1)
or both.
More importantly, the Act clearly establishes that
Congress understood this concept, which is why Congress imposed on the Board a requirement that the issue
of “cause” be deemed controlling and coextensive with
any other “statutory” issues pertaining to employee discharges or suspensions alleged to violate the Act. And
contrary to the majority’s decision, which imposes the
burden on the party seeking deferral to show that deferral
is warranted, Congress prohibited the Board from impos10
The requirement of “cause” has nearly universal acceptance in
most collective-bargaining agreements as a fundamental limitation on
an employer’s authority to discipline or discharge employees. Over 90
percent of all collective-bargaining agreements include an explicit “just
cause” provision for discipline. See Bureau of National Affairs, Basic
Patterns in Union Contracts (BNA, 14th ed. 1995). Just cause provisions have been called “an obvious illustration” of the fact that many
provisions “must be expressed in general and flexible terms.” Archibald
Cox, Reflections Upon Labor Arbitration, 72 HARV. L. REV. 1482,
1491 (1959). To the same effect, the Supreme Court has stated, in
reference to collective-bargaining agreements, that there are “a myriad
of cases which the draftsmen cannot wholly anticipate,” and “[t]here
are too many people, too many problems, too many unforeseeable
contingencies to make the words . . . the exclusive source of rights and
duties.” Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574,
578–579 (1960) (internal quotation omitted).
17
ing the burden of proof on any party to establish “cause”
for discharge. Rather, Congress required that the
Board’s General Counsel prove, by a preponderance of
the evidence, that an alleged unlawful suspension or discharge was not “for cause.”11 When an existing arbitration award indicates an employee was suspended or discharged for “cause,” therefore, I believe this makes deferral appropriate unless the General Counsel satisfies his
or her burden to prove that deferral is unwarranted and
“cause” did not exist.
The “cause” language in Section 10(c) was added as
part of the Labor Management Relations Act (LMRA)
amendments to the NLRA that were adopted in 1947.12
During the Senate debates on the LMRA, Senator Taft—
the legislation’s principal sponsor in the Senate—
commented on the “cause” language set forth in Section
10(c) and stated: “If a man is discharged for cause, he
cannot be reinstated. If he is discharged for union activity, he must be reinstated.”13
The legislative history likewise indicates that the
Board was constrained to accept and apply a “cause”
standard in all discharge and suspension cases. Thus, the
Conference Report—commenting on House changes
adopted by the Conference Committee—stated:
[I]n section 10(c) of the amended act, as proposed in the conference agreement, it is specifically
provided that no order of the Board shall require the
reinstatement of any individual or the payment to
him of any back pay if such individual was suspended or discharged for cause, and this, of course, applies with equal force whether or not the acts consti11
The Supreme Court has reaffirmed the settled principle, stated
explicitly in Sec. 10(c), that the General Counsel has the burden of
proving, “upon the preponderance of the testimony,” the elements of an
unfair labor practice. See, e.g., NLRB v. Transportation Management
Corp, 462 U.S. 393, 401 (1983). In a mixed motive case, where there
is evidence of both discrimination and “cause,” the General Counsel
bears the burden of showing by a preponderance of the evidence that a
suspension or discharge was motivated by animus against the employee’s union or other protected concerted activity. Although the Board
allocates to the employer the burden of proving its affirmative defense,
Wright Line, 251 NLRB 1083, 1088–1089 (1980) (subsequent history
omitted), the ultimate burden of proving a violation remains with the
General Counsel, id. at 1088 fn. 11. Regardless of intermediate burdens, the General Counsel must satisfy his ultimate burden to prove a
violation of the Act. In such cases, it necessarily follows that the employee was not suspended or discharged for “cause.” See also fn. 20
below.
12
See, e.g., Labor Management Relations Act (Taft-Hartley Act or
LMRA), 61 Stat. 136 (1947), 29 U.S.C. §§ 141 et seq.
13
93 Cong. Rec. 6677 (daily ed. June 6, 1947) (statement of Sen.
Taft), reprinted in 2 NLRB, Legislative History of the Labor Management Relations Act, 1947 (hereinafter LMRA Hist.) at 1593.
18
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
tuting the cause for discharge were committed in
connection with a concerted activity.14
The report accompanying the House bill—H.R. 3020,
80th Cong. (1947)—likewise indicated that the “cause”
standard would be binding on the Board in all suspension
and discharge cases:
A third change forbids the Board to reinstate an
individual unless the weight of the evidence shows
that the individual was not suspended or discharged
for cause. In the past, the Board, admitting that an
employee was guilty of gross misconduct, nevertheless frequently reinstated him, “inferring” that, because he was a member or an official of a union,
this, not his misconduct, was the reason for his discharge. Matter of Wyman-Gordon Company, 62
N.L.R.B. 561 (1945), is typical of the Board’s attitude in such cases. . . . The Board may not “infer”
an improper motive when the evidence shows cause
for discipline or discharge.15
The “cause” language in Section 10(c) was not a minor
technical amendment of the Act. Rather, the Section
10(c) language was specifically referenced by President
Truman when he vetoed the LMRA,16 and by Senator
Taft in opposition to President Truman’s veto.17 Senator
Taft reiterated that the “cause” standard—which the
Board would be constrained to accept and apply—was to
be coextensive with the “statutory” standards governing
suspension and discharge cases. Senator Taft stated:
The President says an employer can discharge a
man on the pretext of a slight infraction, even though
his real motive is to discriminate against the em14
H.R. Rep. 80–510 at 39 (1947), reprinted in 1 LMRA Hist. 543
(emphasis added).
15
H.R. Rep. 80–245 at 42 (1947), reprinted in 1 LMRA Hist. 333
(emphasis added).
16
President Truman’s veto message received in House argued that
the “cause” language would be controlling (therefore precluding reinstatement or backpay) even if the evidence established that a suspension or discharge resulted from antiunion discrimination. Thus, President Truman’s veto message stated: “The bill would make it easier for
an employer to get rid of employees whom he wanted to discharge
because they exercised their right of self-organization guaranteed by
the act. It would permit an employer to dismiss a man on the pretext of
a slight infraction of shop rules, even though his real motive was to
discriminate against this employee for union activity.” 93 Cong. Rec.
7501, reprinted in 1 LMRA Hist. 916 (veto message received in the
House).
17
The LMRA was enacted over President Truman’s veto when
two-thirds majorities in the House and Senate voted to override the
President’s veto. 93 Cong. Rec. 7504 (June 20, 1947), reprinted in 2
LMRA Hist. 922–923 (reflecting two-thirds majority vote in the
House); 93 Cong. Rec. 7692 (June 23, 1947), reprinted in 2 LMRA
Hist. 1656–1657 (reflecting two-thirds majority vote in the Senate).
ployee for union activity. This is not so. The Board
decides under the new law, as under the former law,
whether the man was really discharged for union activity or for good cause.18
As noted above, during its deliberations resulting in
the LMRA amendments, Congress also focused on which
party should bear the burden of establishing whether an
employee’s suspension or discharge violated the Act or
was supported by “cause.” Here, the legislation clearly
placed the burden on the Board. Initially, the legislation
stated that the Board could not order reinstatement or
backpay “unless the weight of the evidence shows that
the individual was not suspended or discharged for
cause.”19 This “weight of the evidence” language was
eventually deleted, but only because Section 10(c) independently requires (based on another amendment made
in 1947) that Board determinations generally be supported by a “preponderance” of the evidence.20
18
93 Cong. Rec. S A3233 (daily ed. June 21, 1947) (statement of
Sen. Taft).
19
H.R. Rep. 80–245 at 42 (1947), reprinted in 1 LMRA Hist. 333.
20
See H.R. Rep. –80510 at 55 (1947), reprinted in 1 LMRA Hist.
559 (“The conference agreement omits the ‘weight of evidence’ language, since the Board, under the general provisions of section 10, must
act on a preponderance of evidence, and simply provides that no order
of the Board shall require reinstatement or back pay for any individual
who was suspended or discharged for cause.”).
As noted in the text, Sec. 10(c) and its legislative history reveal that
the General Counsel bears the burden of proof that disputed discipline
violates the Act, which also entails establishing there was no “cause”
for the discipline in question, and this makes in inappropriate for the
majority, when evaluating whether to defer to a “cause” determination
made by an arbitrator, to place the burden of proof on the party seeking
deferral. The decision in Transportation Management, relied upon by
the majority, does not dictate otherwise. Indeed, the Supreme Court in
Transportation Management held that Sec. 10(c)’s “preponderance of
the testimony” language meant the General Counsel has the burden
“throughout the proceedings” of proving “the elements of an unfair
labor practice,” 462 U.S. at 401, and the Court stated that the “preponderance of the testimony” requirement was “closely related” to Sec.
10(c)’s provision “that no order of the Board reinstate or compensate
any employee who was fired for cause,” id. at 401 fn. 6 (emphasis
added). Moreover, Transportation Management did not involve deferral to arbitration; rather, it dealt only with the employer’s intermediate
burden in Wright Line “mixed-motive” cases, where the employer
asserts an “affirmative defense” by “showing what his actions would
have been regardless of his forbidden motivation.” Id. at 401; see also
Wright Line, 251 NLRB at 1088 fn. 11 (“The shifting burden merely
requires the employer to make out what is actually an affirmative defense.”). Not only did the Supreme Court hold that the Wright Line
mixed-motive standard “does not change or add to the elements of the
unfair labor practice that the General Counsel has the burden of proving under § 10(c),” 462 U.S. at 401 (emphasis added; footnote omitted),
the Court held that this mixed-motive issue was unrelated to the
“cause” language set forth in Sec. 10(c), id. at 401 fn. 6 (“the drafters of
§ 10(c) were not thinking of the mixed-motive case”). Therefore, Sec.
10(c) and its legislative history indicate that Congress intended the
General Counsel would bear the burden of proving any alleged viola-
BABCOCK & WILCOX CONSTRUCTION CO.
In my view, the “cause” language set forth in Section
10(c), combined with the Act’s legislative history as described above, warrant two important conclusions.
First, the majority’s changed standards regarding deferral are premised on a misreading of the Act, and the
majority impermissibly disregards the statutory “cause”
standard that Section 10(c) makes binding on the Board
in all suspension and discharge cases. As noted above,
under the new standard the Board will not defer to any
arbitration award finding that “cause” existed for an employee’s discharge or suspension unless the party urging
deferral proves (1) that the parties “explicitly authorized”
resolution of “the unfair labor practice issue,” (2) that
“the statutory issue” was presented and considered (or
any failure on this score was caused by the party opposing deferral), and (3) that “Board law reasonably permits
the award.” In suspension and discharge cases, neither
of the first two requirements is permissible unless (i) the
Board writes out of the Act the statutory “cause” standard set forth in Section 10(c), or (ii) the Board somehow
goes back in time and restores the pre-1947 state of affairs that existed before Congress enacted the LMRA. In
this regard, it is worth noting that Congress enacted the
“cause” language in Section 10(c), as part of the LMRA
amendments, at the same time final and binding arbitration received the unqualified endorsement of Congress in
LMRA Section 203(d).21
Certainly, the Board might resolve the issue of “cause”
differently than an arbitrator. However, this possibility
relates to the majority’s third deferral requirement (that
Board law “reasonably permits” whatever award is rendered by an arbitrator). As to the majority’s first two
deferral requirements, Section 10(c) prohibits what the
Board majority now asserts it will do—i.e., find that employee suspensions or discharges violate the Act, even if
they are supported by “cause,” because the Board determination will be based on a more stringent Board-created
“unfair labor practice issue” or “statutory issue” separate
from “cause.”22
tion, including the statutory requirement that the employee in question
was not disciplined for “cause,” and the Supreme Court regarded this as
separate and distinct from whatever burdens the Board devised or applied in mixed-motive cases. Id.; see also id. at 399 fn. 4 (“[N]owhere
in the legislative history is reference made to any of the mixed-motive
cases decided by the Board or by the Courts.”).
21
LMRA Section 203(d) states that “[f]inal adjustment by a method
agreed upon by the parties is hereby declared to be the desirable method for settlement of grievance disputes arising over the application or
interpretation of an existing collective-bargaining agreement. . . .”
22
I believe Sec. 10(c) also renders implausible the majority’s stated
reason for rewriting the Board’s multifaceted standards regarding deferral. My colleagues maintain that the current deferral standard “creates
an unacceptably high risk that the Board will defer when an arbitrator
has not adequately considered the statutory issue, or when it is impos-
19
There is a second conclusion that, in my view, follows
from Section 10(c) and the Act’s legislative history: they
provide ample support for the longstanding deferral
standards—set forth in Olin and Spielberg, Collyer, Alpha Beta and Postal Service—that my colleagues now
cast aside. Under Olin, as my colleagues note, deferral is
appropriate as long as (1) the contractual issue is “factually parallel” to the unfair labor practice issue and the
arbitrator was presented generally with the facts relevant
to resolving that issue (268 NLRB at 573–574), and (2)
the award is not “clearly repugnant” to the Act (defined
as being “palpably wrong” or “not susceptible to an interpretation consistent with the Act”) (id. at 574). In
addition, the party opposing deferral (e.g., the Board’s
General Counsel) has the burden of proving that deferral
is inappropriate. Id. The first requirement—evaluating
whether the contractual issue is “factually parallel” to the
unfair labor practice issue—recognizes the close relation
between any collectively bargained “cause” standard and
Section 10(c)’s prohibition against backpay or reinstatement where an employee is discharged or suspended for
“cause.” The second requirement recognizes the primary
purpose of deferral, which is to give effect to the parties’
agreement that arbitration shall constitute the final and
binding means of resolving grievances regarding emsible to tell whether he or she has done so” (emphasis added). Because
virtually all arbitrated discipline cases turn on whether “cause” existed
for an employee’s suspension or discharge, and because Sec. 10(c)
makes the presence or absence of “cause” controlling for the Board, the
arbitrator in every case will, by definition, have “adequately considered
the statutory issue” except in a rare case where the arbitrator refuses to
apply the collectively bargained “cause” standard or otherwise resolves
a case based on his or her “own brand of industrial justice.” Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960). In the
latter case, the arbitrator’s award will be clearly repugnant to the Act,
and thus not entitled to deferral under the existing Spielberg and Olin
standards. In my view, therefore, the majority does not identify any
reasons existing deferral standards are insufficient to address such
exceptional cases. I also respectfully disagree with the majority’s reliance on Mobil Oil Exploration & Producing, Inc., 325 NLRB 176
(1997), enfd. 200 F.3d 230 (5th Cir. 1999); Garland Coal & Mining
Co., 276 NLRB 963 (1985); and Cone Mills Corp., 298 NLRB 661
(1990). In each of these cases—decided under the Spielberg/Olin deferral standard—the Board refused to defer to an arbitrator’s decision
on the ground that the award was clearly repugnant to the Act. These
cases, therefore, illustrate the sufficiency of the preexisting Spielberg/Olin deferral standard, pursuant to which the Board has decided
not to defer in appropriate circumstances.
Sec. 10(a) of the Act provides that the Board’s power to prevent unfair labor practices “shall not be affected by any other means of adjustment or prevention that has been or may be established by agreement,
law, or otherwise.” But this statutory language does nothing more than
make clear that the Board retains authority to overturn arbitration decisions that are contrary to the Act. Nothing in Sec. 10(a) indicates or
establishes that the issue of “cause” is different from and inferior to the
“statutory” issue in unfair labor practice cases involving suspensions
and discharges. To the contrary, Sec. 10(c) expressly makes “cause”
the “statutory” issue in such cases.
20
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
ployee suspensions and discharges, even though an arbitrator may resolve some disputes differently than would
the Board, with the caveat that the Board will not defer to
awards that are plainly contrary to the Act.23 The final
requirement—favoring deferral unless the party opposing
it proves that deferral is inappropriate—is consistent with
Section 10(c) and its legislative history, which show that
Congress intended to require the Board’s General Counsel to prove any alleged violation. This allocation of
burdens also recognizes that federal policy, reflected in
LMRA Section 203(d), strongly favors “[f]inal adjustment by a method agreed upon by the parties” over other
means of resolving disputes between employers, unions,
and employees.24
The Board’s traditional standards regarding deferral to
arbitration awards—based on “cause” provisions in collective-bargaining agreements that have been freely negotiated by companies and unions, are easily understood
by employees, and have been interpreted by thousands of
arbitrators—reflect an appropriate balance between our
strong federal policies favoring arbitration and the protection of statutory rights. Conversely, the majority here
announces changed standards that reflect an intention to
find suspensions and discharges unlawful—even if supported by “cause”—based on what the majority believes
must be more stringent scrutiny of “statutory” or “unfair
labor practice” issues. This is precisely what Section
10(c) prohibits because it expressly requires the Board to
treat “cause” as the statutory standard.
I recognize that the majority characterizes deferral as a
matter involving Board “discretion,” but we cannot take
actions that are directly prohibited by the Act. In my
view, this is the problem with the majority’s new deferral
23
See Steelworkers v. American Mfg. Co., 363 U.S. 564, 567
(1960) (The judicial function should be “very limited when the parties
have agreed to submit all questions of contract interpretation to the
arbitrator. It is then confined to ascertaining whether the party seeking
arbitration is making a claim which on its face is governed by the contract. Whether the moving party is right or wrong is a question of contract interpretation for the arbitrator.”). I interpret the majority’s
changed standard as recognizing this same principle, although the majority’s “Board law reasonably permits” standard will predictably permit deferral in fewer cases than the “clearly repugnant” standard.
24
See also Steelworkers v. Warrior & Gulf Navigation Co., 363
U.S. 574, 581 (1960) (Arbitration “should not be denied unless it may
be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts
should be resolved in favor of coverage.”); Nolde Brothers v. Bakery &
Confectionary Works, 430 U.S. 243, 254 (1977) (noting that the Supreme Court “has established a strong presumption favoring
arbitrability” and describing as “noteworthy” the fact that “parties
drafted their broad arbitration clause against a backdrop of well established federal labor policy favoring arbitration as the means of resolving disputes over the meaning and effect of collective bargaining
agreements”) (citations omitted).
standards. I believe the new standards are irreconcilable
with Section 10(c).
B. The Majority Dramatically Curtails Board Deferral
to Arbitration or Requires a Wholesale Rewriting of CBA
“Cause” and Arbitration Provisions
Collective-bargaining agreements typically span multiple years. When arbitration procedures and “cause”
requirements have been agreed upon by employers and
unions in existing collective-bargaining agreements, the
Board should celebrate such agreements, since they are
the successful culmination of good-faith bargaining required by the Act.25 In many cases, existing collectivebargaining agreements also result from longstanding relationships between employers and unions that the Board
should support and encourage.26 And because labor arbitration procedures are mutually agreed upon between
employers and unions, arbitration in this context should
be afforded no less deference than the types of nonunion
arbitration agreements that have received such deferential treatment by the Supreme Court. See, e.g., Circuit
City Stores v. Adams, 532 U.S. 105 (2001) (upholding
binding arbitration agreements in employment contracts
subject to the Federal Arbitration Act); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) (same).
These considerations make it important to examine
how the majority’s changed deferral standards will affect
existing collective-bargaining agreements—specifically,
existing “cause” requirements and labor arbitration provisions. If one looks at existing “cause” requirements,
the majority’s changed deferral standards will basically
25
Sec. 8(a)(5) and 8(b)(3) of the Act impose a duty to bargain collectively on employers and unions, respectively, which Sec. 8(d) defines as “the mutual obligation of the employer and the representative
of the employees to meet at reasonable times and confer in good faith
with respect to wages, hours, and other terms and conditions of employment. . . .”
26
One of the Board’s primary functions is to foster stability in labor
relations, to encourage good-faith negotiation, and to give effect to the
parties’ agreements. See, e.g., Colgate-Palmolive-Peet Co. v. NLRB,
338 U.S. 355, 362–363 (1949) (“To achieve stability of labor relations
was the primary objective of Congress in enacting the National Labor
Relations Act.”); NLRB v. Appleton Electric Co., 296 F.2d 202, 206
(7th Cir. 1961) (“a basic policy of the Act [is] to achieve stability of
labor relations”). Arbitration plays a central role in achieving these
goals. Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. at 578
(“[A]rbitration is the substitute for industrial strife.”). Stability is also
clearly undermined when the Board adopts policies that detract from
final and binding arbitration procedures that have been agreed to by
employers and unions. As the Supreme Court stated in Steelworkers v.
Enterprise Wheel & Car Corp., 363 U.S. at 596, 599: “The federal
policy of settling labor disputes by arbitration would be undermined if
courts had the final say on the merits of the awards. . . . [P]lenary review by a court of the merits would make meaningless the provisions
that the arbitrator’s decision is final, for in reality it would almost never
be final.”
BABCOCK & WILCOX CONSTRUCTION CO.
never permit deferral (because my colleagues believe,
mistakenly, that “cause” is different from and inferior to
the “statutory” and “unfair labor practice” issues uniquely examined in Board litigation). If one looks at existing
arbitration provisions, these typically limit the arbitrator’s authority to the “interpretation and application of
this agreement” and typically prohibit the arbitrator from
“adding to, subtracting from or modifying” the CBA.27
Here too, therefore, the majority’s changed deferral
standards will basically never permit deferral (because
my colleagues would require proof that different and
more onerous “statutory” and “unfair labor practice”
issues were presented and considered by the arbitrator).
In short, therefore, the changed standards mean existing
“cause” and arbitration provisions, in most existing collective-bargaining agreements, will give rise to duplicative NLRB litigation over disputed suspensions and discharges unless, first, the CBA reproduces the text of the
statute or incorporates statutory provisions by reference,
or second, the parties engage in a case-by-case renegotiation of the CBA “cause” provisions, abandon arbitrationclause language limiting the arbitrator’s authority, and/or
explicitly authorize the arbitrator to adjudicate 8(a)(3)
and (1) issues in addition to whatever “cause” and other
contractual issues pertain to the dispute.
In my view, this approach to deferral has several serious infirmities.
The most obvious problem is that the changed standards essentially eliminate Board deferral to arbitration in
the overwhelming majority of cases involving current
collective-bargaining agreements. As noted above, most
current CBAs contain conventional “cause” requirements
and standard restrictions on an arbitrator’s authority—for
example, restricting the arbitrator to the “interpretation
and application of this agreement,” and prohibiting the
arbitrator from “adding to, subtracting from or modifying” the terms of the CBA.28
27
For example, in Steelworkers v. American Mfg. Co., supra, which
dealt with what the Court called the “standard form” of arbitration
agreement (363 U.S. at 565), the contract provided for arbitration only
regarding “disputes, misunderstandings, differences or grievances
arising between the parties as to the meaning, interpretation and application of the provisions of this agreement,” and the contract also stated
that “[t]he arbitrator may interpret this agreement and apply it to the
particular case under consideration but shall, however, have no authority to add to, subtract from, or modify the terms of the agreement.” Id.
at 565 fn. 1.
28
These types of restrictions on an arbitrator’s authority exist in
most CBAs. Elkouri & Elkouri, supra fn. 8, at 1235 (citing “[t]he oftincluded language denying the arbitrator the power to add or subtract
from or modify any of the terms of the agreement”) (internal quotation
omitted); Walter J. Gershenfeld & Gladys Gershenfeld, Current Issues
in Discharge Arbitration, 55 Dispute Resolution Journal 48, 52 (May
2000) (citing “[t]he statement found in most contracts that arbitrators
21
The second infirmity is even more significant. In my
view, the majority fails to appreciate the challenges associated with forcing parties to renegotiate fundamental
contract provisions governing discipline (e.g., “cause”
restrictions on discipline or discharge decisions) and
grievance arbitration (e.g., restrictions on an arbitrator’s
authority). Countless agreements contain discipline and
grievance-arbitration provisions that have remained unchanged for decades. And with all due respect to the
majority, many parties will be reluctant to convert their
grievance-arbitration procedures into something resembling full-fledged NLRB and court litigation. Several
other obvious points also warrant mention here.
1. The Board, of course, lacks authority to impose any
substantive contract terms on any party. Section 8(d)
explicitly states that the duty to bargain “does not compel
either party to agree to a proposal or require the making
of a concession.” And the Supreme Court stated in H. K.
Porter Co., Inc. v. NLRB, 397 U.S. 99 (1970):
It is implicit in the entire structure of the Act that the
Board acts to oversee and referee the process of collective bargaining, leaving the results of the contest to the
bargaining strengths of the parties. . . . The Board’s
remedial powers under § 10 of the Act are broad, but
they are limited to carrying out the policies of the Act
itself. One of these fundamental policies is freedom of
contract. While the parties’ freedom of contract is not
absolute under the Act, allowing the Board to compel
agreement when the parties themselves are unable to
agree would violate the fundamental premise on which
the Act is based – private bargaining under governmental supervision of the procedure alone, without any
official compulsion over the actual terms of the contract.29
may not add to, subtract from, alter, or modify the terms of an agreement”); Ann C. Hodges, The Steelworkers Trilogy in the Public Sector,
66 CHI-KENT L. REV. 631, 652 (1990) (citing “the common contractual
restriction that arbitrators cannot add to, subtract from, or modify the
contract”).
29
Id. at 107–108 (emphasis added). Although the majority may
contend that their changed deferral standards do not require any party
to rewrite their arbitration agreements, this is only true to the extent that
the employer and union are prepared to accept concurrent arbitration
and NLRB/court proceedings whenever the employee or union fears
that an arbitrator will sustain a particular suspension or discharge, or
choose to ignore the new standard and simply forego the possibility of
deferral to arbitration. I respectfully submit that such a Hobson’s
choice is, by definition, no choice at all.
It is no answer to say that, instead of requiring parties to modify existing labor contract discipline provisions so they incorporate the Act
(or portions of the Act), the majority’s standard provides an alternative—i.e., case-by-case authorization of the arbitrator to apply the Act.
As explained elsewhere in the text, the majority’s new deferral standards effectively require major changes in fundamental contract terms,
and this is true regardless of whether one focuses on discipline provi-
22
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
2. For many reasons, companies and unions predictably will have difficulty negotiating new or expanded
standards—separate from a “cause” requirement—
governing employee discipline, such as suspensions or
discharges. Employees, unions and employers already
have access to courts and agencies for the resolution of
legal disputes that arise over discipline. For this reason,
many parties will be reluctant to propose or accept expanded “contractual” discipline standards that duplicate
legal rights and obligations. Unions may also be reluctant to make themselves responsible for pursuing what
would otherwise be statutory claims that individual employees would pursue for themselves.
3. It is even more implausible that companies and unions will freely renegotiate existing grievance-arbitration
provisions. In many cases, these have remained substantially unchanged for many years. Nobody could reasonably suggest it is routine, unimportant, or inconsequential
to substantially revise a collective-bargaining agreement’s labor arbitration procedures. As the Supreme
Court recognized in the Steelworkers Trilogy cases more
than 50 years ago,30 “the grievance machinery under a
collective bargaining agreement is at the very heart of the
system of industrial self-government,” and “arbitration is
the means of solving the unforeseeable by molding a
system of private law for all the problems which may
arise and to provide for their solution in a way which will
generally accord with the variant needs and desires of the
parties.” Steelworkers v. Warrior & Gulf Navigation
Co., 363 U.S. at 581.
4. Parties are likely to be even more reluctant to renegotiate restrictions on an arbitrator’s authority or the
scope of issues that are subject to grievance arbitration.
It is well known that, once a dispute is submitted to arbitration, it is very difficult to obtain meaningful review on
sions (e.g., explicitly expanding contractual remedies to encompass
violations of the Act) or the CBA’s grievance-arbitration process (e.g.,
modifying contract language that states arbitrators may only resolve
questions involving interpretation or application of the CBA, or that
precludes them from “adding to, subtracting from or modifying” the
CBA) (see fn. 28, supra). If anything, however, it is worse to condition
deferral to arbitration on a “case-by-case” departure from the CBA’s
existing grievance-arbitration process, since LMRA Sec. 203(d) explicitly favors the final resolution of disputes based on the “method agreed
upon by the parties” (emphasis added), and the entire point of a CBA’s
dispute resolution procedure is to prevent a case-by-case renegotiation
of grievance-arbitration provisions that constitute the “very heart of the
system of industrial self-government.” Steelworkers v. Warrior & Gulf
Navigation Co., 363 U.S. 574, 581 (1960) (labor arbitration is desirable, in part, because it avoids “leaving each and every matter subject to
a temporary resolution dependent solely upon the relative strength, at
any given moment, of the contending forces”).
30
Steelworkers v. American Mfg. Co., 363 U.S. 564 (1960); Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960);
Steelworkers v. Enterprise Wheel& Car Corp., 363 U.S. 593 (1960).
appeal (putting aside Board review under the changed
standards adopted by my colleagues).31 The great deference afforded to arbitration frequently makes parties devote significant attention to contract provisions identifying those matters that can—and cannot—be submitted to
arbitration or be considered by the arbitrator. The care
exercised by parties in this area is consistent with numerous Supreme Court cases establishing that labor arbitration is a creation of the labor contract, and parties cannot be required to submit a dispute to arbitration absent
an agreement to do so.32
The current deferral standards have provided a stable,
consistent backdrop for the negotiation of collectivebargaining agreements. The concept of deferral originated nearly 60 years ago in Spielberg (decided in 1955),
which remains the controlling case regarding Board deferral to existing arbitration awards. The more refined
Olin standards (adopted in 1984) have governed this area
for the past 30 years. Especially in this area, stability
and consistency are important.
I recognize that my colleagues have a well-intentioned
desire to ensure that the Board satisfies its statutory obligations. Yet, the majority gives inadequate consideration
to the unintended consequences that are likely to follow
31
As the Supreme Court stated in W. R. Grace & Co. v. Local 759,
Int’l Union of Rubber Workers, 461 U.S. 757, 759 (1983): “Under well
established standards for the review of labor arbitration awards, a federal court may not overrule an arbitrator’s decision simply because the
court believes its own interpretation of the contract would be the better
one.” See also Steelworkers v. Enterprise Wheel & Car Corp., 363
U.S. 593, 599 (1960) (“[P]lenary review by a court of the merits would
make meaningless the provisions that the arbitrator’s decision is final,
for, in reality, it would almost never be final. . . . It is the arbitrator’s
construction which was bargained for; and so far as the arbitrator’s
decision concerns construction of the contract, the courts have no business overruling him because their interpretation of the contract is different from his.”); Paperworkers v. Misco, Inc., 484 U.S. 29, 39 (1987)
(“grievous error” and “improvident, even silly fact-finding” is “hardly a
sufficient basis” for overturning an arbitration award).
32
AT&T Technologies Inc. v. CWA, 475 U.S. 643, 648 (1986);
Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. at 582;
Steelworkers v. American Mfg. Co., 363 U.S. at 570–571; Gateway
Coal Co. v. UMW, 414 U.S. 368, 374 (1974). The considerations described in the text render implausible the majority’s suggestion that,
whenever a particular contract does not authorize the arbitration of
unfair labor practice issues, on a case-by-case basis parties can simply
“authorize” the arbitrator to decide such issues. Given the central role
played by grievance arbitration in most collective-bargaining agreements, and given the care and importance that parties, the Board and
courts understandably attach to contractual restrictions on an arbitrator’s authority, it is unreasonable to suggest that parties can or should
deviate from the labor contract provisions that govern and limit the
arbitrator’s authority, particularly since the Board is without authority
to compel parties to do so, Sec. 8(d); H. K. Porter, 397 U.S. at 108–
109, and the Board has the statutory responsibility to foster stability
rather than instability in bargaining relationships. See also fn. 26,
supra.
BABCOCK & WILCOX CONSTRUCTION CO.
from these changed deferral standards. In my view, they
will impose higher costs and delays on parties in mature
bargaining relationships that are covered by collectivebargaining agreements by effectively eliminating the
finality associated with grievance arbitration. The
changed standards will cause substantially greater conflict as parties attempt to renegotiate CBA provisions
that, as noted above, involve the most fundamental aspects of their relationship. Again, I believe there is also
likely to be greater conflict in union organizing campaigns based on employer resistance to the costs and
burdens associated with two-track litigation that, in turn,
would be considered part and parcel of a new union’s
demands for grievance-arbitration procedures and disciplinary “cause” restrictions.
C. The Majority’s Changed Deferral Standards Are IllAdvised as a Matter of Labor Relations Policy
As a final matter, I believe the majority’s changed deferral standards are ill-advised as a matter of public policy because they reflect a deep-seated hostility towards
arbitration that Congress rejected when it adopted the
Federal Arbitration Act (in 1925) and again when it articulated a strong presumption favoring arbitration when
adopting (in 1947) Section 203(d) of the LMRA.
The Federal Arbitration Act (FAA) was enacted to
“reverse longstanding judicial hostility towards arbitration agreements and to place arbitration agreements upon
the same footing as other contracts.” Seawright v. American General Financial Services, Inc., 507 F.3d 967, 979
(6th Cir. 2007) (citing Gilmer v. Interstate/Johnson Lane
Corp., 500 U.S. 20, 24 (1991)). Consistent with the
FAA, the Supreme Court has “rejected generalized attacks on arbitration that rest on suspicion of arbitration as
a method of weakening the protection afforded in the
substantive law to would-be complainants.” Green Tree
Financial Corp. v. Randolph, 531 U.S. 79, 89–90 (2000).
And the Court stated that “arbitral tribunals are readily
capable of handling . . . factual and legal complexities”
and that “there is no reason to assume at the outset that
arbitrators will not follow the law.” 14 Penn Plaza LLC
v. Pyett, 556 U.S. 247, 268 (2009) (citations omitted).
Congress reaffirmed the importance of arbitration in
the Section 203(d) of the LMRA, which states: “Final
adjustment by a method agreed upon by the parties is
declared to be the desirable method for settlement of
grievance disputes arising over the application or interpretation of an existing collective-bargaining agreement.” The unique importance of labor arbitration was
underscored by the Supreme Court in the Steelworkers
Trilogy cases.33 Among other things, the Court stated:
33
Supra fn. 69.
23
In the commercial case, arbitration is the substitute for
litigation. Here, arbitration is the substitute for industrial strife. Since arbitration of labor disputes has quite
different functions from arbitration under an ordinary
commercial agreement, the hostility evinced by courts
toward arbitration of commercial agreements has no
place here. For arbitration of labor disputes under collective bargaining agreements is part and parcel of the
collective bargaining process itself.34
The majority’s adoption of a much more narrow standard governing deferral to arbitration reveals the same
hostility and suspicion towards arbitration that Congress
repudiated and the FAA was enacted to reverse almost a
century ago. In the 30 years since the Board has applied
the Olin standard, no evidence suggests that arbitrators
have declined to follow the law or have failed to protect
employees’ statutory rights.35
The Board’s traditional deferral policies also typically
involve potential Board review at many points in the
grievance-arbitration process. Thus, even with broad
deferral (and without mandating duplicative Board litigation of cases already subject to grievance-arbitration procedures), the Board has been afforded multiple opportunities to review and reconsider the appropriateness of
deferral in particular cases. Disputes not yet the subject
of grievances pending arbitration are reviewed to determine whether deferral is appropriate under Collyer.36
Disputes where there are pending grievances subject to
arbitration are reviewed for possible deferral under
Dubo.37 Settlements can be reviewed by the Board under
Alpha Beta38 and Postal Services.39 Cases previously
deferred under Collyer or Dubo can be (and frequently
are) subject to further postarbitration review under Spielberg and Olin. Finally, the practice of the Regions regarding Dubo and Collyer deferral is to require parties to
provide timely reports regarding whether deferred cases
34
Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. at 579
(emphasis added).
35
My colleagues find that the prior deferral standard created an
“unacceptably high risk” that the Board would defer when an arbitrator
had not adequately considered the statutory issue. However, to illustrate this risk, the majority cited to only two cases from the last 30
years: Airborne Freight Corp., 343 NLRB 580 (2004), and Andersen
Sand & Gravel Co., 277 NLRB 1204 (1985). Further, in the cited
cases, as in the underlying case here, there is no evidence that the arbitrator failed to consider the charging parties’ discrimination or retaliation claims, but only the absence of any explicit statement by the tribunal proving and explaining its consideration of those claims. The majority’s evidence thus reveals no risk at all to employees’ rights.
36
Collyer Insulated Wire, 192 NLRB 837 (1971).
37
Dubo Mfg. Corp., 142 NLRB 431 (1963).
38
273 NLRB 1546 (1985).
39
300 NLRB 196 (1990).
24
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
have proceeded to arbitration, which can (and does) result in the resumption of Board proceedings if arbitration
is not occurring in a timely manner. These safeguards
provide further assurances that employee rights are protected throughout the grievance-arbitration process,
which reinforces the absence of any reasonable need to
change existing deferral policies.
D. Conclusion
Today’s decision disregards nearly a century of support by Congress and the courts for arbitration. It is especially surprising that the Board discredits “cause” requirements and labor arbitration, when both have resulted from good-faith collective bargaining that the Act
requires and the Board should encourage.40 Finally, as
noted previously, the majority’s changed deferral standards are based on the false premise that a difference exists, in cases involving suspensions or discharges, between “cause” determinations, on the one hand, and more
onerous “statutory” and “unfair labor practice” issues, on
the other. In Section 10(c), Congress prohibits the Board
from making this distinction in employee suspension or
discharge cases. In such cases, the Act makes “cause”
the controlling “statutory” issue.
More generally, I believe the majority fails to adequately consider the damage their changed deferral
standards are likely to inflict on “final and binding” arbitration. As the Supreme Court cautioned more than 60
years ago when discussing judicial review, our “federal
policy of settling labor disputes by arbitration would be
undermined if courts had the final say on the merits of
the awards. . . . [P]lenary review . . . of the merits would
make meaningless the provisions that the arbitrator’s
decision is final, for in reality it would almost never be
final.” Steelworkers v. Enterprise Wheel & Car Corp.,
363 U.S. at 596, 599.
The Board’s traditional deferral standards, for good
reasons, have existed without substantial change over the
past three decades. I do not believe any reasonable justification warrants the new standards adopted by the majority. For these reasons, as to the above issues, I respectfully dissent.
Dated, Washington, D.C. December 15, 2014
Philip A. Miscimarra,
40
Member
Sec. 1 of the Act relevantly provides that “[i]t is declared to be
the policy of the United States to eliminate the causes of certain substantial obstructions to the free flow of commerce and to mitigate and
eliminate these obstructions when they have occurred by encouraging
the practice and procedure of collective bargaining . . . .”
NATIONAL LABOR RELATIONS BOARD
MEMBER JOHNSON, concurring in part and dissenting in
part.
The decision to overrule [extant precedent on
Board deferral to arbitration awards] represents yet
another step in the ill-considered retreat from a fair,
balanced, comprehensive, and efficacious accommodation between public and private mechanisms
for the resolution of disputes. Once again, a Board
majority has rendered a decision which will promote
the proliferation of litigation and impede the maturation of peaceable labor-management relations. Once
again, my colleagues have endorsed a policy which
tightens the bureaucratic fetters on employees, unions, and employers alike, and so contravenes the
very purposes of the Act which that policy is meant
to serve. Once again, I must dissent.1
Dissenting Member Penello wrote the foregoing in
1980, protesting what he correctly regarded as an arbitrary and inappropriate retreat by the majority in Suburban Motor Freight from Board precedent implementing a
national labor policy, entrenched in statutory language
and decades of judicial precedent, favoring the resolution
of disputes in collective-bargaining relationships through
mutually agreed private grievance and arbitration procedures. Thankfully, the regressive approach taken in Suburban Motor Freight was overruled only 4 years later in
Olin Corp., 268 NLRB 573 (1984). Regretfully, after 30
years of collective-bargaining relations conducted under
that standard, the majority returns in substantial part to a
significantly more restrictive and inimical deferral policy
towards both arbitration awards and prearbitral proceedings, including settlements. They do so based largely on
the speculative supposition that the policy they overrule
has not adequately protected employees’ statutory rights
in an unknown number of grievance and arbitration proceedings that have never been brought to our attention.
Like Member Penello before me, and for many of the
same reasons as he and my dissenting colleague Member
Miscimarra articulate, I must dissent.2
1
Suburban Motor Freight, Inc., 247 NLRB 146, 147 (1980) (citations and footnotes omitted).
2
I note that I am dissenting from the change in law announced in
this decision. Technically, I concur in the result reached by the majority because it applies the change prospectively while dismissing the
complaint here under extant deferral policy. My colleagues state that
the immediate imposition of their new deferral policy would disrupt
practices under current collectively-bargained agreements and thereby
frustrate the Act’s purpose of promoting collective bargaining. A
cynic might say that this is a convenient way to prevent immediate
judicial review of the change in law, but I will take them at their word.
To that point, not only do I agree that concern about the disruptive
BABCOCK & WILCOX CONSTRUCTION CO.
I. THE CHANGE IN DEFERRAL STANDARDS
For the past 30 years, the standard for Board deferral
to the results of arbitration awards made under collective-bargaining agreements has been that:
The Board will defer to an arbitration award
when the proceedings appear to have been fair and
regular, all parties have agreed to be bound, and the
decision of the arbitrator is not clearly repugnant to
the purposes and policies of the Act. See Spielberg
Mfg. Co., 112 NLRB 1080 (1955). Additionally, the
arbitrator must have considered the unfair labor
practice issue which is before the Board. In Olin
Corp., 268 NLRB 573 (1984), the Board clarified
that an arbitrator has adequately considered the unfair labor practice issue if (1) the contractual issue is
factually parallel to the unfair labor practice issue,
(2) the arbitrator was presented generally with the
facts relevant to resolving the unfair labor practice,
and (3) the decision is susceptible to an interpretation consistent with the Act. Id. at 574. The party
seeking to have the Board reject deferral bears the
burden of proof. Id.3
This Spielberg/Olin standard has been uniformly applied by the Board in all unfair labor practice cases
where a party has urged deferral to an arbitration award.
The Board has also applied this standard in determining
whether to defer to prearbitral grievance settlements.4
Today that longstanding uniform deferral standard is
substantially changed. Under the majority’s new standard, the Board will defer to an arbitral decision in unfair
labor cases addressing alleged violations of Section
8(a)(3) and (1) of the Act only “[i]f the arbitration procedures appear to have been fair and regular, and if the
parties agreed to be bound [traditional Spielberg requirements] . . . [and] the party urging deferral shows
that: (1) the arbitrator was explicitly authorized, either in
the collective-bargaining agreement or by agreement of
the parties in the particular case, to decide the unfair labor practice issue; (2) the arbitrator was presented with
and considered the statutory issue, or was prevented from
doing so by the party opposing deferral; and (3) Board
law reasonably permits the award.” It is the addition of
this three-pronged requirement, and the imposition of the
burden of proof on the party urging deferral, that so substantially departs from the existing deferral standard.
nature of the majority’s change in law is a valid reason for not applying
the new policy retroactively, I find that it is an extremely sound reason
against making the change at all.
3
Smurfit-Stone Container Corp., 344 NLRB 658, 659 (2005).
4
Alpha Beta Co., 273 NLRB 1546 (1985), rev. denied sub nom.
Mahon v. NLRB, 808 F.2d 1342 (9th Cir. 1987).
25
Corollary to the new standard for deferral to arbitration
awards, the majority modifies the Collyer5 standard for
deferral to the grievance and arbitration process. Deferral will no longer be appropriate unless the General
Counsel has sufficient evidence from the party urging
deferral that prong (1) above of the new standard has
been met. Implicitly then, the Board’s deferral policy
under Dubo Manufacturing6 will also be modified to the
same extent, so that even when the parties are already
voluntarily engaged in grievance and arbitration proceedings relevant to conduct alleged as Section 8(a)(3) or (1)
discrimination in an unfair labor practice charge, the
General Counsel will not defer proceeding on that charge
unless he has evidence that the arbitrator has the parties’
express authority to resolve it. Finally, the Board will
not itself defer to prearbitral grievance settlements unless
the party urging deferral can meet its burden of proof
with respect to all three prongs of the new test. Thus,
the majority today overrules in significant part the entire
body of precedent that has governed the Board’s deferral
practices for decades under Spielberg/Olin, Collyer,
Dubo, and Alpha Beta.
II. THE DEPARTURE FROM CURRENT DEFERRAL POLICY IS
UNWARRANTED.
The problems with the majority’s standard are manifold. Among those problems, three are paramount. First,
as with their prohibition of individual class action waiver
agreements,7 the majority’s new deferral standard fails to
make the required accommodation of the national policy
strongly favoring arbitration.
Indeed, as Member
Miscimarra states in his dissent, the new standard reflects
an implicit hostility towards arbitration on matters where
the Board claims jurisdiction. Second, the majority offers no rational basis in law or fact for departing from
longstanding precedent that has been followed regardless
of partisan shifts in Board membership. In particular,
they can point to no nationwide wave of rogue arbitral
decisions that threatens to undermine rights protected by
Section 7 of the Act for workers in the United States. As
such, their complete rewriting of existing deferral standards rests on nothing more than speculation about the
possibility that these standards offer inadequate protection of employees’ statutory rights to be free from retaliation for engaging in Section 7 activity. Speculation is
an inadequate basis for such a wide-ranging revision of
legal standards. Finally, I believe that my colleagues
greatly understate the adverse impact of their new standard on the ability of parties in a collective-bargaining
5
Collyer Insulated Wire, 192 NLRB 837 (1971).
Dubo Mfg. Corp., 142 NLRB 431 (1963).
7
See Murphy Oil, 361 NLRB No. 72 (2014).
6
26
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
relationship to achieve final adjustment of employee
grievances through their mutually agreed grievance and
arbitration procedures. In lieu of a single, more expeditious and less formal procedure for resolution of most
cases addressing adverse employment actions, the majority’s new standard practically guarantees a process in
which almost any employee or his union representative
dissatisfied with the result of grievance and arbitration
can pursue an unfair labor practice claim at public expense with little or no regard for that prior result. Further, as in Murphy Oil, the majority’s action here poses a
significant risk that the Board’s caseload will swell substantially, with a corresponding delay in our own ability
to reach final decision in cases before us.
A. The New Standard Disfavors Arbitration in Contravention of Clear National Policy
“It hardly needs repeating that national policy strongly
favors the voluntary arbitration of disputes. The importance of arbitration in the overall scheme of Federal
labor law has been stressed in innumerable contexts and
forums.” Olin, 268 NLRB at 574 and fn. 5 (citations
omitted). Apparently, the Olin majority was mistaken
about the need for repetition. In spite of the fact that
their decision put an end to several years of back and
forth debate fully addressing the pros and cons of an expansive deferral policy that accords with national policy
favoring arbitration, in spite of a host of Supreme Court
opinions since 1984 that repeatedly endorse and expand
that national policy,8 in spite of the majority’s own lukewarm acknowledgment of the importance of arbitration
in our Act and in the overall scheme of Federal laws, the
majority today finds it appropriate to mount a full retreat
to a past where arbitration is accorded far less importance
and finality in Board proceedings. There is no reason to
disregard this historical record that points only one
way—in favor of recognizing arbitration as the primary,
favored resolution system for labor disputes.
Congressional preference that parties to collectivebargaining agreements resolve their disputes through
mutually agreed procedures was made plain in Section
203(d) of the Labor Management Relations Act: “Final
adjustment by a method agreed upon by the parties is
declared to be the desirable method for settlement of
grievance disputes arising over the application or inter8
See, e.g., American Express Co. v. Italian Colors Restaurant, 133
S.Ct. 2304 (2013). Oxford Health Plans LLC v. Sutter, 133 S.Ct. 2064
(2013), CompuCredit Corp. v. Greenwood, 132 S.Ct. 665 (2012),
AT&T Mobility, LLC v. Concepcion, 131 S.Ct. 1740 (2011), StoltNielsen S.A v. AnimalFeeds International Corp., 559 U.S. 662 (2010),
14 Penn Plaza LLC v. Pyett, 129 S.Ct. 1456 (2009), Gilmer v. Interstate/Johnson-Lane Corp., 500 U.S. 20 (1991), and Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985).
pretation of an existing collective-bargaining agreement.” 29 U.S.C. § 173(d). The addition of this provision to the Act in 1947 was consistent with prior expressions of Federal policy dating back to the enactment of
the Federal Arbitration Act (FAA) in 1925. The central
purpose of the FAA was to force courts to enforce
agreements to arbitrate, just as they would enforce any
other contract provision, and reflects a national policy
favoring arbitration and the enforcement of agreements
to arbitrate disputes. See Southland Corp. v. Keating, 465
U.S. 1, 28 (1984) (“In enacting [the FAA], Congress
declared a national policy favoring arbitration….”);
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,
Inc, above, 473 U.S. at 625 (1985); Gilmer v. Interstate/Johnson Lane Corp., above, 500 U.S. at 25 (1991).
The language of Section 203(d) is also fully compatible
with the statement of general policy and purpose in Section 1 of the National Labor Relations Act, which states
in relevant part:
Experience has proved that protection by law of
the right of employees to organize and bargain collectively safeguards commerce from injury, impairment, or interruption, and promotes the flow of
commerce by removing certain recognized sources
of industrial strife and unrest, by encouraging practices fundamental to the friendly adjustment of industrial disputes arising out of differences as to
wages, hours, or other working conditions, and by
restoring equality of bargaining power between employers and employees. (Emphasis added).
29 U.S.C. § 151.
The central role of arbitration as the means for parties
to collective-bargaining agreements to provide for final
adjustment of their disputes was emphatically confirmed
in 1960 by the Supreme Court in the Steelworkers Trilogy cases. United Steelworkers v. Enterprise Wheel &
Car Corp., 363 U.S. 593 (1960); United Steelworkers v.
Warrior & Gulf Navigation Co., 363 U.S. 574 (1960);
United Steelworkers v. American Mfg. Co., 363 U.S. 564
(1960). The Supreme Court made clear that arbitration
was seen as the preferred mechanism for resolving all
disputes between the parties. Thus, in Warrior & Gulf
Navigation Co., the Court described the grievance procedure and arbitration in a collective-bargaining agreement
as being “at the very heart of the system of industrial
self-government”:
Arbitration is the means of solving the unforeseeable by molding a system of private law for all the
problems which may arise and to provide for their
solution in a way which will generally accord with
BABCOCK & WILCOX CONSTRUCTION CO.
the variant needs and desires of the parties. (Emphasis added).
Warrior & Gulf Navigation Co., 363 U.S. at 580.
The Court further acknowledged the centrality of
“[t]he grievance procedure [a]s…a part of the continuous
collective bargaining process.” Id. at 581–582.
In American Mfg., the Court similarly stated, “Arbitration is a stabilizing influence only as it serves as a vehicle for handling any and all disputes that arise under the
agreement.” 363 U.S. at 567 (emphasis added). The
Court also stressed the importance of finality of arbitration
decisions in Enterprise Wheel & Car holding, “The refusal of courts to review the merits of an arbitration
award is the proper approach to arbitration under collective bargaining agreements.” 363 U.S. at 596.
Soon after the Steelworkers Trilogy, the Board
acknowledged that “the Board, which is entrusted with
the administration of one of the many facets of national
labor policy, should give hospitable acceptance to the
arbitral process . . . .” International Harvester Co., 138
NLRB 923, 927 (1962) (quoted with approval in Carey v.
Westinghouse Elec. Corp., 375 U.S. 261, 271 (1964).
See id. at 925–926 (recognizing “[e]xperience has
demonstrated that collective-bargaining agreements that
provide for final and binding arbitration of grievance and
disputes arising thereunder, ‘as a substitute for industrial
strife,’ contribute significantly to the attainment of th[e]
statutory objective” of “promot[ing] industrial peace and
stability by encouraging the practice and procedure of
collective-bargaining”); Olin Corp., 268 NLRB at 574
(stressing “[t]he importance of arbitration in the overall
scheme of Federal labor law”); see also Boys Markets,
Inc. v. Retail Clerks Union, Local 770, 398 U.S. 235, 252
(1970) (recognizing the importance of “voluntary settlement of labor disputes without resort to self-help and
more particularly to arbitration as a means to this end”
and suggesting that arbitration is the “central institution
in the administration of collective bargaining contracts”).
Though giving a nominal nod to arbitration’s role, the
majority’s return to a more restrictive deferral standard
rests on a suspicion that private arbitration’s assurance of
the Act’s antidiscrimination protections is so inadequate
that the Board may be “abdicating” its enforcement obligations under Section 10(a) by deferring too readily. But
long ago the Court of Appeals for the District of Columbia Circuit “recognized that the Board ‘does not abdicate
its responsibilities to implement the National Labor Relations Act by respecting peaceful resolution of disputes
through voluntarily agreed upon administrative techniques.’” Plumbers & Pipefitters Local Union No. 520
v. NLRB, 955 F.2d 744, 752 (D.C. Cir. 1992) (quoting
27
Associated Press v. NLRB, 492 F.2d 662, 667 (D.C. Cir.
1974)).
To be sure, the Board’s deferral to arbitration awards
must balance two policies in the Act. On one hand, Section 10(a) of the Act gives the Board authority to prevent
and remedy unfair labor practices, unaffected by other
means of dispute resolution including procedures provided for in collective-bargaining agreements. On the other
hand, Section 203(d) expresses the Congressional preference that parties to collective-bargaining agreements
resolve their disputes through their own grievance and
arbitration procedures.
The majority’s standard fails to strike the appropriate
balance between these two policies by imposing significant legalistic impediments to the prospect of achieving
final adjustment of grievances through arbitration. Even
assuming that the parties have authorized an arbitrator to
decide an unfair labor practice issue, and that evidence
relating to the issue has been presented and considered
by the arbitrator, the majority’s new policy provides for
Board review of the reasonableness of the arbitrator’s
award. This is tantamount to requiring de novo review
of the award by an administrative law judge in the unfair
labor practice case and, upon exceptions, by the Board
itself. There may be instances in which an award will
survive this review even if the judge or Board might interpret the facts differently, but it seems far more likely
that the current Board majority will defer only in circumstances where it would reach the same result under the
facts as they would find them and under the law as they
presently construe it.
This is not true deferral in any meaningful sense. The
Board review required under the new deferral standard
will predictably lead again to the “overzealous dissection
of [arbitrators’] opinions by the NLRB” that was criticized in Douglas Aircraft Co. v. NLRB, 609 F.2d 352,
355 (9th Cir. 1979). Other courts of appeals voiced this
same criticism, which in significant part prompted the
Board to adopt the broader deferral policy in Olin. See
Olin Corp., 268 NLRB at 575 fn. 11 (collecting cases),
NLRB v. Pincus Bros., 620 F.2d 367, 367 (3d Cir. 1980),
Liquor Salesmen’s Local 2 v. NLRB (Charmer Industries), 664 F.2d 318, 327, NLRB v. Motor Convoy, Inc.,
673 F.2d 734 (4th Cir.1982), and American Freight Systems v. NLRB, 722 F.2d 828 (D.C. Cir. 1983); see also
Richmond Tank Car Co. v. NLRB, 721 F.2d 499 (5th Cir.
1983).
Notably, there is a sharp contrast between the majority’s deferral standard and the standard for judicial review
of arbitration awards. As summarized by the Supreme
Court, “we have indicated that there is no reason to assume at the outset that arbitrators will not follow the law;
28
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
although judicial scrutiny of arbitration awards necessarily is limited, such review is sufficient to ensure that arbitrators comply with the requirements of the statute.”9
What is the limited judicial review standard that the Supreme Court deemed to be sufficient?: “[u]nder the FAA,
courts may vacate an arbitrator’s decision ‘only in very
unusual circumstances.’”10 Thus, while courts have essentially the same obligation as the Board to ensure that
statutory requirements are met in arbitration proceedings,
that obligation is deemed satisfied by a very limited review. So, too, should it be with the Board.
The Board’s deferral standard under Spielberg/Olin effectively accommodates the arbitral process, which
stands as “the central institution in the administration of
collective bargaining contracts,”11 without jeopardizing,
much less abdicating, the Board’s statutory enforcement
obligation. In contrast, the majority’s new standard falls
far short of striking the appropriate balance, effectively
subordinating private party dispute resolution systems to
final Board de novo review in most cases involving
8(a)(3) and (1) allegations.
B. There Is No Experiential or Legal Justification for
Changing the Deferral Standard.
Certainly, there are circumstances in which the
Board’s expertise and experience under a particular legal
regime may lead it to reconsider and overrule precedent
for sound practical reasons, although I maintain that the
more venerable the precedent, the more cautiously we
ought to approach its revision. In other instances, a
change in law may be viewed as a required response to
intervening Supreme Court precedent or as a rational
response to judicial criticism of extant precedent. However, the majority here has failed to justify overruling
Spielberg/Olin and related deferral standards on either
basis.
9
Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 232
(1987).
10
Oxford Health Plans LLC v. Sutter, 569 U.S. ––––, 133 S.Ct.
2064, 2068 (2013) (quoting First Options of Chicago, Inc. v. Kaplan,
514 U.S. 938, 942 (1995)).
Sec. 10(a) of the FAA permits an award to be vacated only:
(1) where the award was procured by corruption, fraud, or undue
means;
(2) where there was evident partiality or corruption in the arbitrators,
or either of them;
(3) where the arbitrators were guilty of misconduct in refusing to
postpone the hearing, upon sufficient cause shown, or in refusing to
hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced;
or
(4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject
matter submitted was not made.
11
Boys Markets, Inc, supra, 398 U.S. at 252 (1970).
1. Experience with the Spielberg/Olin Deferral Standard. The majority claims that employees may be left
without any forum for the vindication of their statutory
rights because the Spielberg/Olin standard permits deferral when there is no evidence the arbitrator actually considered the unfair labor practice issue. As an abstract
concept, it is difficult to reconcile this claim with the
Supreme Court’s statement that “there is no reason to
assume at the outset that arbitrators will not follow the
law.”12 Consistent with this statement, it was reasonable
for the Board in Olin to place the burden on the party
opposing deferral to prove that which should not be assumed.13 Still, a litany of instances in which arbitration
decisions were in fact shown not to have considered the
statutory issue when resolving a grievance on a factually
parallel contractual issue might support a change in law.
Certainly, if there were an epidemic of labor arbitrators
handing down decisions that let stand obvious employer
8(a)(3) and (1) violations, it would be the Board’s duty to
adjust its deferral standards to put a stop to that. But,
despite over 30 years of experience applying the Spielberg/Olin deferral standard, the majority can cite only
the present case and two past cases—Andersen Sand &
Gravel Co., 277 NLRB 1204 (1985), and Airborne
Freight Corp., 343 NLRB 580 (2004)—as alleged proof
that a grievant was unable to secure arbitral consideration
of the unfair labor practice issue. This hardly suffices to
justify a wholesale change in deferral law, even if the
cases stood for the proposition asserted. One case every
10 or 20 years does not an epidemic make.
Moreover, in Andersen Sand & Gravel Co., the
Board had a reasonable basis for deferring to the arbitration award upholding the termination of employees for
violating a contractual no-strike clause. In light of the
General Counsel’s concession that the contractual and
statutory issues were “coextensive,” the Board found
deferral was “particularly appropriate.” 277 NLRB at
1204. While the arbitration panel did not expressly indicate that it considered and resolved the unfair labor practice issue, the Board reasonably assumed from the evidence presented to the panel and the panel’s resolution of
12
Shearson/American Express Inc., above, 482 U.S. at 232.
The majority now shifts the burden to the party urging deferral.
It is true that deferral must be raised as an affirmative defense, but I
would find the initial burden met by proof of an arbitration decision
adverse to the unfair labor practice claimant. Beyond that, the General
Counsel should have the burden of proving why the Board should not
defer. This is no disadvantage. The General Counsel brings complaint
on behalf of the charging party grievant or union that has participated in
the arbitration proceeding, is in possession of the facts and evidence in
support of the statutory claim, and, as advocate of that claim, is in a
stronger position to pursue it.
13
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the coextensive contractual issue that the statutory issue
was adequately considered. Id. at 1205.
Airborne Freight, the other case cited by the majority,
involved several deferral questions. The majority points
only to the one where the Board panel unanimously deferred to a joint committee’s resolution even though the
hearing record before the administrative law judge did
not show what arguments and evidence had been presented by the parties to the joint committee in that proceeding. 343 NLRB at 581. As I will shortly explain,
the panel’s disposition of other deferral issues in that
case contradicts the majority’s contention that the Spielberg/Olin standard fails adequately to protect statutory
rights. In any event, the fact that the Board in this one
case unanimously deferred to an arbitral award when the
record did not show what evidence was presented and
considered in arbitration is hardly an excuse to ignore a
30-year history in myriad cases where the same perceived shortcoming is not apparent.
To fill a considerable void in actual precedent, the majority relies on makeweight speculation that more cases
challenging deferral to arbitration may have never been
brought to the Board’s attention because challengers
and/or the General Counsel assumed that they could not
meet Olin’s allegedly impossible burden of proof. Thus,
the majority pronounces that “[they] are no longer willing to countenance such results,” albeit those results have
not been shown to exist. Indeed, the Board invited “the
parties and amici . . . to submit empirical and other evidence” in “answering” whether the deferral standard
should be changed in this matter. Notice and Invitation
to File Briefs, February 7, 2014. Given this, where is the
empirical evidence before we undertake this nationwide
reform? Where is the lengthy discussion of how such
evidence points to the need for resetting decades of timehonored rules and policies? Neither is to be found in the
majority’s rationale. The most recent “evidence” they
present, besides the facts themselves of this case, is one
case, Airborne Freight Corp., from 10 years ago. This is
no way to make public policy, especially one that will
fundamentally affect every collective-bargaining relationship in the United States.
Contrary to the majority’s speculative concern, the
Board’s actual experience shows that the Spielberg/Olin
limited review deferral standard has been more than adequate to protect employees’ Section 7 rights. It is not, as
the majority states, “virtually impossible” for the party
opposing deferral to meet the evidentiary burden imposed under that standard. Far from conveying the impression that it would rubber stamp every arbitration
award, the Board has not hesitated to refuse to defer
where the current standards are not met. For instance, as
29
to the other deferral issues presented in Airborne Freight,
the transcript was introduced into the record and showed
that the union had been precluded from arguing or introducing evidence of antiunion motivation. The Board
unanimously agreed that deferral was inappropriate because the grievance committee had not been not generally presented the relevant facts and thus it could not “adequately consider” the statutory issue. 343 NLRB at 582.
See also, ABF Freight System, Inc., 304 NLRB 585, 587
fn.5 (1991) (affirming judge’s refusal to defer to an arbitration award because the record showed there was inadequate consideration of the unfair labor practice issues),
and Dick Gidron Cadillac, 287 NLRB 1107, 1111 (1988)
(affirming without comment judge’s refusal to defer because the record showed evidence on the statutory issue
was not presented to the arbitrator), enfd. mem. 862 F.2d
304 (2d Cir. 1988).
The Board has also declined to defer where it has been
shown that an arbitration award is so clearly contrary to
policy or precedent as to be “repugnant to the Act.” See,
e.g., U.S. Postal Service, 332 NLRB 340, 343–344
(2000) (finding arbitrator’s decision upholding terminations for “insubordination” of employees engaging in
concerted protected activity by attempting to enforce
collective-bargaining agreement provisions was “repugnant to the Act”); Mobil Oil Exploration & Producing,
325 NLRB 176, 177–178, 179 (1997) (reversing judge
and finding inappropriate deferral to arbitration award
upholding employee’s discipline based on his protected
concerted activities); 110 Greenwich Street Corp., 319
NLRB 331 (1995) (agreeing with judge’s failure to defer
to arbitrator upholding discharge of employees for displaying “controversial placards” that were insufficient to
constitute “gross disloyalty” warranting discipline under
the Act); Cirker’s Moving & Storage Co., 313 NLRB
1318, 1318 fn. 2 (1994) (agreeing with judge that deferral inappropriate where contractual issue and statutory
issue are not factually parallel); United Cable Television
Corporation, 299 NLRB 138 (1990) (finding arbitrator’s
denial of backpay to employee disciplined for protected
concerted activity because it was only “partially protected” was repugnant); Barton Brands, 298 NLRB 976,
979–980 (1990) (finding inappropriate deferral to arbitration award because issue not factually parallel with unfair labor practice issue and also repugnant); Key Food
Stores, 286 NLRB 1056, 1056–1057, 1071–1072 (1987)
(finding deferral inappropriate where arbitrator sustained
discharge based on protected activities, including activities as shop steward), Garland Coal & Mining Co., 276
NLRB 963 (1985) (finding deferral inappropriate to
award upholding discipline for “insubordination” issued
to employee “for actions he took in his capacity as union
30
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
representative” was not susceptible to any interpretation
consistent with the Act).
In short, there is no sound basis in the Board’s 30-year
experience operating under the Spielberg/Olin standard
for substantial revision of that standard.
2. Judicial Precedent Weighs in Favor of a Broad Deferral Policy Rather than Against It. As previously discussed, there has been a steady, unrelenting tide of Supreme Court cases favoring private party arbitration as a
preferred means of dispute resolution over which the
judiciary should exercise limited review. The majority
dismisses this precedent out of hand, branding it irrelevant to the question whether an administrative agency
should exercise discretion to defer to arbitral resolution
of statutory employment claims. Obviously, I could not
disagree more, particularly when considering the administration of an Act that affirmatively endorses “final adjustment by a method agreed upon by the parties” as “the
desirable method for settlement of grievance disputes.”
Of course, I could be wrong in my view that the deference accorded arbitration awards under the Spielberg/Olin standard is impermissibly overbroad. If so,
one would expect that 30 years of judicial review of this
standard would produce a cacophony of judicial criticism, especially where this standard gave rise to results
that “one could not countenance,” in the majority’s
words. That cacophony has not sounded. In fact, reviewing federal courts of appeals have routinely approved or applied without adverse comment the Spielberg/Olin standards. See Bakery, Confectionery and
Tobacco Workers v. NLRB, 730 F.2d 812, 815–816
(D.C. Cir. 1984); NLRB v. Aces Mechanical Corp., 837
F.2d 570, 574 (2nd Cir. 1988); NLRB v. Yellow
Freight Systems, 930 F.2d 316, 321 (3rd Cir. 1991);
Equitable Gas Co. v. NLRB, 966 F.2d 861, 864–865
(4th Cir. 1992); NLRB v. Ryder/P.I.E. Nationwide, 810
F.2d 502, 506 (5th Cir.1987); Grand Rapids Die Casting v. NLRB, 831 F.2d 112, 115–116 (6th Cir. 1987);
Doerfer Engineering v. NLRB, 79 F.3d 101, 103 (8th
Cir. 1996); Garcia v. NLRB, 785 F.2d 807, 809–810
(9th Cir. 1986); Harberson v. NLRB, 810 F.2d 977,
984 (l0th Cir.1987). See also Goodwin v. NLRB, 979
F.2d 854 (Table) 1992 WL 337118 at *7 (9th Cir. 1992)
(collecting cases approving Olin standards).
Against this legion of precedent, the majority stands
two court of appeals decisions: Stephenson v. NLRB, 550
F.2d 535 (9th Cir. 1977), and Taylor v. NLRB, 786 F.2d
1516 (11th Cir. 1986). Stephenson, a pre-Olin case, focused on application of a requirement in an earlier Board
deferral standard that “no more than an ‘opportunity’ to
present the unfair labor practice issue to the arbitrator”
was needed to warrant deferral. Electronic Reproduction
Services Corp., 213 NLRB 758 (1974). The Board in
Olin explicitly did not adopt that part of Electronic Reproduction standard. 268 NLRB at 575 fn. 10. In decisions subsequent to Stephenson, the Ninth Circuit has
acknowledged that Board deferral need not be contingent
on proof that an arbitrator has explicitly decided the unfair labor practice issue. See Servair, Inc. v. NLRB, 726
F.2d 1435, 1440–1441 (9th Cir. 1984) (deference warranted when resolution of statutory issue depends on resolution of contractual issue even if arbitrator does not
purport to resolve statutory issue); NLRB v. Max Factor
& Co., 640 F.2d 197, 203 fn. 6 (9th Cir. 1980) (“We see
no useful purpose served, in cases where the arbitral
award is not clearly repugnant to the Act, by precluding
deferral because of uncertainty about whether the arbitrator intended to decide the statutory unfair labor practice
issues.”). Goodwin v. NLRB, 1992 WL 337118 at *5
(“[The Ninth] Circuit has held that deferral may be appropriate even where the arbitrator did not clearly decide
the statutory issue if the statutory issue is primarily factual or contractual and its resolution is dependent on the
resolution of the contractual issue the arbitrator decided.”) (citing Servair, supra, 726 F.2d at 1440–1441).
Thus, the law of this circuit is not contrary to the Spielberg/Olin deferral standard.
It is true that Eleventh Circuit was sharply critical of
the Olin deferral standard in Taylor, finding that it “does
not protect sufficiently an employee’s [statutory] rights.”
786 F.2d at 1521. However, the court’s finding that the
Board had improperly deferred seems also to have been
much influenced by its view that the Board had simply
failed to follow its own Spielberg/Olin standard in the
circumstances of that case. 786 F.2d at 1522. Indeed,
the decision to defer there seems questionable. Employee Taylor first presented evidence in support of his discharge grievance to a multistate joint union-management
committee, which was unable to resolve the matter. The
hearing transcript and issue were then presented to an
area wide joint committee. Only the employer presented
evidence at the hearing before this committee. Taylor
was not permitted to attend, and his union representative
made no statement. The area wide committee summarily
denied his grievance in a terse nine word statement. Reviewing these record facts, the court noted that “the ALJ
found that the statutory issue clearly was considered at
the Multi-State Committee hearing. If that hearing had
produced a dispositive result, then deferral to that result
would have been proper under any of the many variations of the Spielberg standard. It is the Area Committee’s decision, however, that is relevant for deferral purposes and the ALJ had no indication from the transcript
of that proceeding whether the Area Committee consid-
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ered any unfair labor practice claim.” Id. (emphasis added).14
Even accepting the Eleventh Circuit’s broad criticism
of the Spielberg/Olin standard on its face, without reference to the unfavorable facts of the case, this single decision hardly seems sufficient to warrant the majority’s
revisions of the Board’s current deferral practices. On
this point, it is impossible to ignore the contrast between
my colleagues’ willingness to follow the guidance of two
dated court of appeals decisions in this case with their
refusal to “acquiesce” to dozens of federal court decisions that either expressly or implicitly contradict the
position they hold with respect to the legality of individual class action arbitration waivers in their recent Murphy Oil decision. 361 NLRB No. 72 (2014). It would
seem that adverse judicial precedent matters only when it
favors Board adjudication over private arbitration.
C. The Majority’s New Deferral Standard Will Adversely
Impact Both Private Collectively Bargained Dispute
Resolution Systems and Board Unfair Labor Practice
Proceedings.
Let us suppose that the majority had presented a rational basis in Board experience and/or judicial criticism
for changing the Spielberg/Olin deferral standard. I
would then be willing to join in defining a revised standard. But that process would still have to be consistent
with the Supreme Court’s and other federal courts’ endorsement of arbitration as a favored mechanism in dispute resolution. What is presented here would still not
be the way to do that. The majority’s test has a number
of major flaws. I will discuss each of these in turn.
1. The majority’s new test is inconsistent with the
Federal Arbitration Act because of its cramped
view of contract construction
Begin with the majority’s threshold requirement that
the party opposing deferral must show that the arbitrator
was “explicitly authorized,” either in the collectivebargaining agreement or by agreement of the parties in
the particular case, to decide the unfair labor practice
issue. The majority unfortunately does not define “explicit authorization” here. But it is most likely that the
majority would require this authorization to be “clear and
unmistakable,” as a waiver of the statutory right to exclusive Board consideration of a statutory discrimination
claim.15 I assume as well that they reserve to the Board
14
The court also expressed skepticism that a bipartite committee
lacking any neutral member can provide the requisite fair and regular
proceeding for resolution of a grievance. Id.
15
See generally Provena St. Joseph Medical Center, 350 NLRB
808 (2007) (reaffirming clear and unmistakable standard for waiver of
statutory rights). By citing 14 Penn Plaza LLC v. Pyett, 556 U.S. 247
31
final determination of whether an arbitrator has such authority. If this is the majority’s approach, it flies in the
face of the Supreme Court’s long-settled, liberal standard
for construing the coverage of arbitration clauses in collective-bargaining agreements. E.g., AT & T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 650
(1986) (“there is a presumption of arbitrability in the
sense that ‘[a]n order to arbitrate the particular grievance
should not be denied unless it may be said with positive
assurance that the arbitration clause is not susceptible of
an interpretation that covers the asserted dispute. Doubts
should be resolved in favor of coverage.’”) (quoting
Warrior & Gulf Nav. Co., 363 U.S., at 582–583); see
also John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543,
550 fn. 4 (1964) (“[W]hen a contract is scrutinized for
evidence of an intention to arbitrate a particular kind of
dispute, national labor policy requires, within reason, that
an interpretation that covers the asserted dispute ... be
favored” (emphasis deleted; internal quotation marks
omitted)).
The majority’s approach is also directly contrary to the
general arbitration clause construction standard under the
Federal Arbitration Act, which is identically liberal to the
“presumption of arbitrability” of labor contracts. Under
the FAA, the Supreme Court has held “that questions of
arbitrability must be addressed with a healthy regard for
the federal policy favoring arbitration. . . . The Arbitration Act establishes that, as a matter of federal law, any
doubts concerning the scope of arbitrable issues should
be resolved in favor of arbitration, whether the problem
at hand is the construction of the contract language itself
or an allegation of waiver, delay, or a like defense to
arbitrability.” Moses H. Cone Memorial Hospital v.
Mercury Construction Corp., 460 U.S. 1, 24 (1983). See
also Shearson/American Express, Inc. v. McMahon, 482
U.S. 220, 226 (1987) (FAA “mandates enforcement of
agreements to arbitrate statutory claims”); Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.
614, 625 (1985) (“no warrant in [FAA] for implying ...
presumption against arbitration of statutory claims”);
Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 221
(1985) (FAA “requires that [the Court] rigorously enforce agreements to arbitrate”). In the end, “the parties’
intentions control, but those intentions are generously
(2009), infra, the majority presumably would allow a comparable arbitration agreement to serve as a clear and unmistakable waiver. Also, as
discussed below, the majority casts doubt on whether an arbitrator’s
“just cause” determination will suffice to meet the requirement that the
unfair labor practice issue was considered. They do not speak directly
to the fundamental issue of whether an otherwise vanilla “just cause”
contractual provision would suffice as proof that an arbitrator is even
authorized to consider the unfair labor practice issue.
32
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
construed as to issues of arbitrability.” Mitsubishi Motors Corp., 473 U.S. at 626 (italics for emphasis).
The majority cites Wright v. Universal Maritime Service Corp., 525 U.S. 70 (1998), and its arguable reaffirmation in Penn Plaza in claiming that the new deferral
standard is entirely consistent with Supreme Court precedent on arbitration. The majority’s position would be
ironclad if the only issue posed by the new standard was
the “explicit contractual authorization” question, and if
development of the law had stopped in 2009. But neither
of those things is true.
Let’s start with the latter problem with the majority’s
analysis. The Supreme Court has made it increasingly
clear in a flurry of FAA cases, decided after Wright in
1998 and 14 Penn Plaza in 2009, that the burden lies
with the party resisting arbitration to demonstrate, even
for federal statutory claims, either that: a plain-text reading of the arbitration contract’s terms does not require
that contract’s enforcement, or the federal statute at issue
contains an express command disavowing arbitration.
See, e.g., CompuCredit Corp. v. Greenwood, 132 S.Ct.
665, 669 (2012) (“[The FAA] requires courts to enforce
agreements to arbitrate according to their terms. That is
the case even when the claims at issue are federal statutory claims, unless the FAA’s mandate has been overridden by a contrary congressional command.” (internal
quotations and citations omitted; emphasis added)). As
one can read in this precedent, there is no requirement of
showing “explicit contract authorization” before federal
statutory claims go to arbitration. Moreover, as detailed
in my dissent in Murphy Oil, supra, the text of the Act
obviously does not contain a command to override the
FAA—especially in relation to already-completed arbitrations. Indeed, the force of the FAA should be far
greater here, given that we are not dealing with any provision of the Act, but only, as the majority concedes,
with a completely discretionary policy of deferral.
Second, and more importantly, even if the Wright
principle still endures today (independently or as construed in Penn Plaza), it cannot sustain the great weight
that the majority places upon it. Wright stands only for
the proposition that, before a statutory right will be sent
to arbitration, the arbitration contract’s language must
constitute a “clear and unmistakable waiver” of the judicial forum. In other words, Wright conceivably supports
only the first prong of the majority’s test, i.e. a
standalone requirement of “explicit authorization” in the
labor contract. By the same token, Wright actually undercuts the majority’s total deferral standard, because
that standard is “explicit authorization plus two more
prongs.” To wit, Wright looks solely to contract language, and does not require more before effectuating an
arbitration process. Nowhere in Wright or any related
cases does there appear a notion that, in addition, a claim
must still be technically “presented” to an arbitrator and
the arbitrator’s award must be “reasonably permissible.”
These extra conditions go far beyond recognized boundaries. Thus, the majority’s new standard is a sizeable divergence from the standards mandated by the Supreme
Court for construction of both (1) labor agreements specifically and (2) contracts in general under the FAA.
This guarantees the new rule will be disfavored on court
review.
2. The majority’s new test will impede labor peace,
not enhance it, in the long run
Moreover, as more fully explored in Member
Miscimarra’s dissent and accurately predicted by Member Penello 34 years ago, the new standards are guaranteed to produce less labor peace, not more. Why, exactly, would any exclusive collective-bargaining representative be willing to make an agreement that expressly
waives its right to unlimited Board review of a statutory
claim in favor of arbitration with an employer? Absent
such agreement, a represented grievant is guaranteed two
bites of the litigation apple, and the second bite in unfair
labor practice litigation is “on the house,” because the
government will pay for it. The majority’s new standard
simply introduces a new stumbling block to productive
negotiations over a grievance and arbitration procedure.
3. The majority’s new test will still encourage
strategic claim splitting
The same “two bites” problem may apply even in instances where the parties have agreed that an arbitrator
has the authority to consider the statutory claim. The
majority states that deferral remains possible if the arbitrator was presented with and considered the statutory
issue, or was “affirmatively” prevented from doing so by
the party opposing deferral. This suggests a prohibition
against claim splitting, albeit a very limited one. However, the majority then belies this suggestion by stating
that an employer can easily raise the issue by simply informing the arbitrator of the unfair labor practice “allegation.” What if the employer is unaware of any such allegation, because the grievant has not made it yet, i.e. has
effectively decided to reserve it? That is, what if the
grievant and union representative, with a 6-month grace
period in which to file an unfair labor charge under Section 10(b) of the Act, simply keep silent as to the statutory claim while taking the expeditious grievance and arbitration route in pursuit of the contractual claim? Would
this be considered acting “affirmatively” to prevent consideration of the unfair labor practice claim? What if the
employer asks the claimant/grievant—in prearbitral dis-
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covery or during the course of the arbitration case or
hearing—if the grievant intends to initiate any unfair
labor practice claims against the employer as a result of
the same events, and the grievant answers “no”? By
keeping silent or answering “no” at the time of the arbitration, a grievant or claimant could effectively preserve
the second litigation option independent of any adverse
outcome from the first. This is another fault with the
majority’s test.
4. The majority’s new test is an impermissible standard
of de novo review
There is also the adverse impact of the Board’s review
standard to be considered. As previously stated, the
Board will now engage in what is essentially de novo
review of an arbitrator’s award to determine whether
Board law reasonably permits the award. Not only does
the availability of this standard encourage a losing
grievant to pursue this second chance litigation, but it
reduces the arbitration decision to the stature of an administrative law judge’s decision, or even less so if any
credibility resolutions and factual findings made in arbitration may be ignored or rebutted, as I note below. The
limited extent to which actual deference will be given to
the legal reasoning of the arbitrator is best measured by
the majority’s summary rejection of “just cause” as textual protection for statutory rights.16 The majority’s supposition that an arbitrator who is forthrightly applying a
“just cause” provision will somehow likely trample Section 7 rights is unexplained and unwarranted. As more
fully discussed in Member Miscimarra’s dissent, Section
10(c) of the Act and its legislative history show that
Congress was aware that “just cause” provisions in collective-bargaining agreements were interpreted by arbitrators to protect employees’ statutory rights. Thus, even
though an arbitrator is applying a contractual “just cause”
standard, and not Board principles per se, history shows
us that an arbitrator will not uphold discipline issued in
response to union or concerted activities.17 The “reason16
A related problem with the new deferral standard is the assumption that in all instances the statutory issue can be easily separated from
the contractual issue. That is not always the case, as for example, when
the union has waived employees’ statutory rights. American Freight
System, Inc. v. NLRB, 722 F.2d 828, 831–833 (D.C. Cir. 1983) (finding
that the “obvious fallacy in the Board’s analysis is its contention that
there is a statutory issue apart from the contractual issue,” where union
had waived employees’ statutory rights in labor contract); Fournelle v.
NLRB, 670 F.2d 331, 341–345 (D.C. Cir. 1982) (finding Board should
have given precedential effect by deferring to prior arbitration decision
permitting selective discipline of union officials under contract).
17
See Reginald Alleyne, Courts, Arbitrators, and the NLRB: The
Nature of the Deferral Beast, in 33 Proceedings of the National Academy of Arbitrators 249 (1980):
33
ably permissible” standard needs flesh on its bones ensuring that the Board is not simply substituting its afterthe-fact judgment for the arbitrator’s.18 The majority
supplies none.
5. The majority inexplicably fails to assign significant or
specific collateral-estoppel value to any prior
arbitration findings
Further, either when considering whether to defer or in
those cases where deferral is held improper, the majority
has severely cut back the collateral-estoppel impact of
any fact findings by the arbitrator, which are, of course,
made after taking testimony under oath. This unfortunately ensures that the arbitrator’s decision will have
little effect, evidentiary or analytical, on subsequent litigation before the Board. Although the majority seems to
allow a limited form of collateral estoppel, it is nowhere
near specific or efficient enough to preclude relitigation
of essential fact issues, or even seemingly factual representations made 180 degrees different than before the
arbitrator. The majority’s new collateral-estoppel standard merely states that “the Board will assess the arbitrator’s decision in light of the evidence that was presented.” This will apparently preclude a party from withholding evidence in arbitration and then seeking to introduce it in a subsequent unfair labor practice proceeding.19
The majority, however, assigns no inherent deference
to the fact finding or even the credibility determinations
of the arbitrator whom the parties themselves voluntarily
selected, and who will presumably have great experience
[V]irtually every arbitrator who found union activity or concerted
activities to be the motivation behind discipline would sustain a
challenging grievance. Indeed, arbitrators are prone to find just
cause violations for any reason that appears to be arbitrary and without a foundation in fundamental fairness. That would include any
discharge or discipline that had no satisfactory explanation. That is
so much a part of the fabric of grievance arbitration that an arbitrator
who had never heard of the NLRA or read an NLRB decision would
undoubtedly find discipline action based on union or concerted activities to be without just cause.
18
The majority says that their standard means that the “arbitrator’s
decision must constitute a reasonable application of the statutory principles that would govern the Board’s decision, if the case were presented to it, to the facts of the case.” But determining whether the arbitrator
reasonably applied the statutory principles to the “facts” of the case—
particularly since, as noted below, the majority seems unwilling to
consider any deference to the arbitrator’s fact finding—seems a ripe
opportunity to engage in de novo review, despite the majority’s claims
to the contrary.
19
Presumably, this limited preclusion rule applies as well to the
General Counsel, even though he was not a party to the arbitration.
Otherwise, the rule is essentially meaningless. But this is far from
certain given the majority’s pointed assertion that it is “well settled”
that the Board does not give collateral estoppel effect to the resolution
of private litigation, where the Board was not a party to the prior proceedings.
34
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
in fact finding in adversarial proceedings. The majority
merely points to the traditional rule that—for the Board’s
determination of deferral under the traditional standard—
no collateral estoppel attaches. However, the majority
misses that the traditional deferral standard would automatically “weed out” weak arbitrator decisions for collateral-estoppel purposes; decisions that are evaluated
under and fail under the traditional deferral standard
would be unworthy of any collateral-estoppel effect on
any type of issue.
But, that same parallelism does not hold true for the
new deferral standard. For example, an unfair labor
practice issue may not have been technically “presented”
to an arbitrator (in the sense that would satisfy the majority’s new rule and trigger deferral to the arbitrator’s ultimate decision), but that arbitrator may have made very
detailed factual findings and credibility determinations
that bear on the commission of the alleged unfair labor
practice. The majority presents no reason or standards
why, and how, those findings and determinations should
be discarded, under the new rule.20 If the arbitrator firmly considered and decided the issue of whether the stoplight was “red” or “green” and decided that it was “red,”
how does it advance the enforcement of the Act to undermine that determination by allowing it to be
relitigated de novo? In other words, in order to serve
fairness, a wholesale reformulation of one set of legal
standards often requires modification of other, related
legal standards. But, the majority apparently will still
woodenly apply the no-estoppel rule, even though it has
obliterated the underlying deferral precedent that would
supply any logical support for the rule’s premise.
Simply stated, arbitrators deserve far more deference
than this. Indeed, the majority does not even supply a
rule for parties or administrative law judges to determine
how much deference to give the express or implicit fact
finding made by an arbitrator. Nor does the majority
discuss to what extent admissions or representations
made in an arbitral transcript continue to bind a party
before the Board. The majority’s standard guarantees
duplicative, wasteful proceedings and leaves parties in
the dark about how much the workings of the arbitral
process will count before the Board, if they count for
anything at all. The majority’s test needs improvement,
which will probably be supplied by a court, unfortunately, on remand.
20
Any contention by the majority that the arbitrator’s findings will
not be automatically discarded but will be accorded “whatever weight
is appropriate,” besides reinforcing the notion that the review will likely be de novo, provides no guidance to the parties, the presiding administrative law judge, or the arbitrator about what is needed to satisfy the
new standard.
6. The majority’s application of its highly technical new
standards to prearbitral settlements confounds and undermines the settlement process, but the majority inexplicably provides no “safe harbor” for parties to utilize in
settlement agreements whatsoever
The majority’s overreach in reform of our postarbitral
deferral policy becomes even more egregious by its application of the new restrictive standards to prearbitral
grievance settlements, overruling Alpha Beta Co., 273
NLRB 1546. Grievance settlements, including settlement of discipline or discharge disputes, are often
reached at the work site, at the lower informal steps of
the grievance process, and before any unfair labor practice charge is filed. They are agreements between the
employer’s operating managers, supervisors, or human
resources officials, and the local union business representatives, stewards, or grievance committee members,
as well as the employee involved. At this stage, the parties are seeking a compromise that, from the employer’s
perspective, assesses a suitable disciplinary penalty and,
from the union’s perspective, returns the employee to
work with limited or no financial loss. Their concern is a
prompt and final resolution of the matter and not a hypothetical unfair labor practice charge. The settlement itself may be extremely informal, memorialized by little
more than a hand-written statement on a grievance form,
an entry or authorization made in the employer’s payroll
system, and a notation in the employee’s personnel record. Bear in mind that many of the individuals involved
in creating such settlements are laypersons, not lawyers,
and more still are unaware of every specific nuance in
the Board’s Section 7 jurisprudence. They are not wellserved by imposing high standards before any settlement
is given binding weight by the Board.
It is important to remember that “[b]y recognizing the
validity and finality of [grievance] settlements, the Board
promotes the integrity of the collective bargaining process, thereby effectuating a primary goal of the national
labor policy.” Plumbers & Pipefitters Local Union No.
520, 955 F.2d at 752. The majority’s imposition of a
stricter review standard makes little sense in this context.
It simply adds to the heightened degree of uncertainty
about the actual finality of the voluntary adjustment of
disputes, even at the earliest stage of a collectively bargained grievance and arbitration procedure. This is
anathema to our statutory policy of assuring labor relations stability through collective bargaining.
The majority identifies a problem here that does not
exist, and I would not change the Alpha Beta standard.
But, even accepting the ostensible problem on the majority’s terms, one would think the majority could simply
provide a safe harbor by stating that their test would be
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automatically satisfied if the grievance settlement had
particular language in it. At least for some group of employers, this might provide a method to avoid duplicative
litigation. Although I disagree the Alpha Beta standard
should be altered at all, if the majority is going to upend
a 30-year old standard for settlements entered into mostly
by laypeople, it should provide a workable drafting solution rather than leave the details for another day. The
majority’s approach abandons parties to twist in the wind
as they attempt to figure out how to write a settlement
agreement that actually and finally settles their dispute—
which, of course, is supposed to be the core function of
settlement agreements.
Contrary to the majority, giving parties safe harbor
guidance is the rational administrative law approach.
The Board has taken this approach where the ultimate
issue was the Board’s future interpretation of contracts,
just as in this case. See Keystone Coat, Apron & Towel
Supply Co., 121 NLRB 880, 885 (1958) (construction of
maintenance of membership clauses). There, the Board
set forth safe harbor language so that unions could conform their legitimate union security needs to the law, and
have their contracts serve as a valid basis for an election
bar. The Board did not consign these unions to the
“mercy” of a case-by-case Board adjudication process
until the unions eventually stumbled upon language that
would pass Board muster. Surely, we can do the same
for parties who want to settle labor contract disputes with
finality.
Finally, this task is not that hard. I can perform it in 39
words: “The parties realize that this dispute may include
what could be alleged as unfair labor practice violations
of the National Labor Relations Act. Notwithstanding,
the parties intend to fully and finally resolve all such
potential allegations in this settlement.”21 State legislatures have addressed analogous problems using a few
lines of text as well. See, e.g., Cal. Civ. Code § 1542
(language to be used within a general release to effectively release unknown claims). I disagree strongly with the
21
The Board in Keystone Coat managed to craft a 136-word clause
for its safe harbor: “It shall be a condition of employment that all employees of the Employer covered by this agreement who are members
of the Union in good standing on the effective date of this agreement
shall remain members in good standing and those who are not members
on the effective date of this agreement shall, on the thirtieth day [or
such longer period as the parties may specify] following the effective
date of this agreement, become and remain members in good standing
in the Union. It shall also be a condition of employment that all employees covered by this agreement and hired on or after its effective
date shall, on the thirtieth day following the beginning of such employment [or such longer period as the parties may specify] become
and remain members in good standing in the Union.” [note omitted].
121 NLRB at 885.
35
majority’s approach here, and its lack of a valid excuse to
take the same path.
7. The majority’s test is very likely to further delay the
parties and reduce agency efficiency in these and
other matters
The institution of the majority’s new standards also
portends that more and more cases that could and should
be resolved through collective bargaining will now be
dropped on our doorstep. The Board already struggles
with the processing of its current unfair labor practice
caseload, without the extra increment of cases posed
here. For fiscal years 2011 through the last completed
fiscal year 2014, the Board’s production has been at the
following level of contested cases per year: 248 (2014);
213 (2013); 342 (2012); and 368 (2011). Adding a hundred—or even a few dozen—arbitration cases each year
to the Board’s overall case load out of the many arbitration proceedings that are initiated nationwide each year
will seriously detract from the Board’s enforcement of
the Act in other milieus. That is a simple mathematical
fact.
Parties also do not need the extra delay posed by the
prospect of a new, highly technical Board review before
they know that an arbitrator’s decision is final. This is
not an abstract concern; the danger of delay is manifest
in this very case, in the contrast between how quickly an
arbitral process handles a disputed termination and how
fast the Board does. As noted in the amicus brief provided by the Council on Labor Law Equality (COLLE):
The procedural history of the underlying case
here, Babcock & Wilcox Construction Co., JD(SF)15-12, exemplifies [the concern about delay]. Pursuant to the contractual procedure, the union in this
case filed a grievance on behalf of the Charging Party approximately one week after her termination, on
March 19, 2009. The case quickly progressed to Step
4 of the contractual grievance procedure, in which
the parties participated in a hearing before the subcommittee panel and submitted position statements
and documentary evidence. The subcommittee rendered a decision on October 8 of that same year. The
contractual grievance procedure, from start to finish,
thus provided the parties with a resolution less than
seven months after the challenged disciplinary action
took place.
By contrast, the Board proceedings in this case
have prolonged this dispute for almost five years.
The Region issued a complaint in this case on August 29, 2011, almost two years after the subcommittee’s decision. ALJ’s decision issued on April 9,
2012, over three years after the employee’s dis-
36
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
charge, and upheld the subcommittee’s decision. The
case has now been pending at the Board for nearly
two additional years. As of today [March 25, 2014],
the parties have spent five years waiting for this matter to be finally resolved.
COLLE amicus brief at 19–20 (emphasis added). It
makes no sense for us to impose a system that will only
encourage delays of this nature.
There may be occasions when it is nevertheless necessary to take on an increased caseload in order to assure
the prevention of unfair labor practices. This is not such
an occasion, not when we have for 30 years followed a
deferral practice that fulfills our obligation to accommodate arbitration without any proven derogation of our
statutory enforcement obligation. We should not effectively become “the nation’s just cause arbitrator,” when
our own cases take too long to issue, and adding more
will only delay this process and frustrate finality in the
nation’s workplaces whenever a grievance arises.
In conclusion, I note that my colleagues downplay the
possibility that their new deferral standard will have significant ramifications for arbitration, the incidence of
deferral, and Board litigation. I disagree. The new policy virtually guarantees the proliferation of bifurcated,
prolonged litigation in many more cases. Grievants
and/or their union representatives will be encouraged to
split their litigation claims, proceeding first solely on the
contractual issue in arbitration, then, should they lose in
that forum, turning to the General Counsel to proceed
with litigation of the unfair labor practice claim at public
expense. For that matter, even if they do zealously litigate the statutory claim in arbitration, but lose, they will
be encouraged to pursue litigation before the Board with
the prospect that the arbitration decision will be accorded
little deference.
CONCLUSION
Although I dissent from my colleagues’ broadscale revision of Board deferral policy, I do not mean to suggest
that certain refinements of the current policy would be
out of order. If the majority had proposed a rational, less
radical test, the lack of necessity for overall change
would not weigh as heavily from my perspective. Despite the absence of any showing that a drastic departure
was necessary, not only do my colleagues radically revamp the deferral policy, they do so by substantially returning to the regressive approach taken in Suburban
Motor Freight, which the Board wisely overruled 30
years ago in Olin Corp.
I certainly endorse the majority’s general observation
that “[a]n important and attractive feature of the grievance/ arbitration system is that it is less formal, less
structured, and less costly than litigation.” Unfortunately, however, the fundamental problem here, as well as in
the recent Murphy Oil decision, is that the majority’s
decision blights that attractive feature. By subordinating
the arbitral process to Board litigation, rather than accommodating that process, they impose an overall system that is more formal, more structured, and potentially
much more costly.
I yield to no one in faithfully assuring that the Board
meets its statutory obligation to prevent unfair labor
practices. Thirty years of experience under the Spielberg/Olin deferral standard fail to show that our statutory
obligation has not been met. I also strongly adhere to the
view that the Act and Supreme Court precedent mandate
that the Board encourage final adjustment of work disputes through collectively bargained grievance and arbitration procedures. A broad discretionary deferral policy
serves that mandate. The majority’s new restrictive deferral policy does not. Even if there was a basis for
changing all the deferral standards the majority uproots
here, there are too many flaws in the majority’s new test
that will manifest themselves in too many scenarios. I
therefore respectfully dissent.
Dated, Washington, D.C. December 15, 2014
Harry I. Johnson, III,
Member
NATIONAL LABOR RELATIONS BOARD
William Mabry III, for the General Counsel.
Dean E. Westman (Kastner, Westman & Wilkins), of Akron,
Ohio, for the Respondent.
DECISION
STATEMENT OF THE CASE
JAY R. POLLACK, Administrative Law Judge. I heard this
case in trial at Show Low, Arizona, on January 17–18, 2012.
On July 30, 2009, Coletta Kim Beneli (Beneli) filed a charge
alleging that Babcock & Wilcox Construction Co., Inc. (Respondent or the Employer) committed certain violations of
Section 8(a)(3) and (1) of the National Labor Relations Act (the
Act). On September 29, 2009, Beneli filed an amended charge
against Respondent. On August 29, 2011, the Regional Director for Region 28, issued a complaint and notice of hearing
alleging that Respondent violated Section 8(a) (3) and (1) of the
Act. Respondent filed a timely answer to the complaint, denying all wrongdoing.
All parties have been afforded full opportunity to appear, to
introduce relevant evidence, to examine and cross-examine
witnesses, and to file briefs. Upon the entire record, from my
BABCOCK & WILCOX CONSTRUCTION CO.
observation of the demeanor of the witnesses,1 and having considered the post-hearing briefs of the parties, I make the following
FINDINGS OF FACT
I. JURISDICTION
Respondent, a Delaware corporation, at times material here,
was engaged as a construction contractor providing field construction and maintenance service for Arizona Public Service at
Joseph City, Arizona. During the 12 months prior to the filing
of the charge, Respondent received gross revenues in excess of
$50,000 from services provided outside Arizona. Accordingly,
Respondent admits and I find that Respondent is an employer
engaged in commerce within the meaning of Section 2(2), (6),
and (7) of the Act.
Respondent admits and I find, the International Union of
Operating Engineers Local 428 has been a labor organization
within the meaning of Section 2(5) of the Act.
II. THE ALLEGED UNFAIR LABOR PRACTICES
A. Factual Summary
Since 1996, Respondent and the International Union of Operating Engineers (the International) and its Local 428 (the
Union) have been parties to the National Maintenance Agreement, which is currently in effect. Respondent has also been
signatory to a multiemployer association agreement between
the Union and the Arizona Chapter of the Associated General
Contractors of America, Inc. At all times material here, Respondent was performing construction and maintenance work
for Arizona Public Service (APS) at a coal plant in Joseph City,
Arizona.
On January 12, 2009, Beneli began working for Respondent
at the Joseph City jobsite as a utility operator, operating a forklift and a crane. Shortly after beginning work for Respondent,
Beneli became the union job steward for the worksite. On February 2, Respondent brought in a new operator, Ian Christianson, to work at the jobsite. Beneli called the Union and found
out that Christianson had not been dispatched through the Union’s hiring hall. Beneli spoke to Christianson and told the
employee that he needed a dispatch from the Union’s hiring
hall. Christianson told Beneli that he would speak with management and take care of it. Later that day Christianson told
Beneli that he had spoken to Respondent’s timekeeper.
On February 16, Robert Alsop, a foreman and union member, told Beneli that he had not been paid properly for a full 40hour week. Beneli spoke with Christopher Goff, Respondent’s
project superintendent. Beneli told Goff that Alsop was short
10 hours on his paycheck. Goff asked why and Beneli responded that the collective-bargaining agreement guaranteed
1
The credibility resolutions here have been derived from a review of
the entire testimonial record and exhibits, with due regard for the logic
of probability, the demeanor of the witnesses, and the teachings of
NLRB v. Walton Mfg. Co., 369 U.S. 404, 408 (1962). As to those witnesses testifying in contradiction to the findings here, their testimony
has been discredited, either as having been in conflict with credited
documentary or testimonial evidence or because it was in and of itself
incredible and unworthy of belief.
37
foremen 40 hours a week. Goff then asked Beneli to tell the
timekeeper, Rhonda Roberson, to cut Alsop a check for the full
40 hours.
On March 10, Beneli saw another new operator on the job.
Beneli asked the new operator, Heath Riley, whether he was
referred from the Union’s hiring hall. Riley answered that he
had been called directly by Goff. Beneli called the Union and
then had Riley speak with the union dispatcher. Beneli told
Riley that the Union and Respondent would work it out.
On March 11, Alsop told Beneli that Bill Roberson, APS
representative, wanted to speak with her. After a short discussion, Beneli stated that she had spoken to the Union about Alsop’s guaranteed pay. Beneli told Roberson that it would be a
lot better if Goff did not bring operators from outside the State
without using the Union’s hiring hall. Goff walked in at the
end of the conversation.
On March 11, after meeting with Roberson, Beneli was late
for the morning’s job safety analysis (jsa) meeting. Goff told
Beneli that he wanted to speak with her. When Beneli asked if
he wanted to speak at that moment, Goff angrily responded, “I
will take care of you later missy.” After the meeting, Goff
asked Beneli what she had discussed with Roberson. Beneli
said she had told Roberson that Riley had not been dispatched
from the Union’s hiring hall and about Alsop’s pay issue. Goff
asked why Beneli had not discussed the matter with him.
Beneli explained that Roberson had asked her to talk with him.
Goff said that the contract was with Respondent and not with
APS. Beneli said that she had made a mistake and that it would
not happen again. Goff said that he did not say Alsop should
be paid for 40 hours. Beneli disagreed telling Goff where and
when he had told her to tell Rhonda Roberson to pay Alsop the
full amount. Goff said that it was none of Beneli’s business.
Goff told Beneli that she had no business talking to APS.
Beneli stated that she had made a mistake but that Bill Roberson had asked to talk to her. Goff told Beneli that she was
sticking her nose where it does not belong and asking questions
that were none of her business. Goff told Beneli that she was
not supposed to take care of union business on company time.
After this meeting, Beneli called Shawn Williams, union assistant business manager.
Williams testified that at about 8 a.m. on March 11, he received a call from Goff. Ralph McDesmond, safety representative was also on the call. Goff told Williams that he wanted to
terminate Beneli because she had overstepped her boundaries
as the Union’s steward and was crossing the line into management. Williams testified that Goff said Beneli was raising contractual issues and trying to tell Respondent what they are supposed to pay employees. Williams stated that in his view
Beneli was acting as a steward should. Goff stated that Beneli
should not be getting APS, Respondent’s customer, involved by
raising contractual issues with APS. Williams said that in the
future Beneli would raise contractual issues solely with Respondent. Williams stated that if Goff discharged Beneli, the
Union would fight the discharge and file a grievance.
On March 11, sometime after 2 p.m., Alsop told Beneli that
Goff had called him and wanted them both to go to Respondent’s office. Beneli and Alsop went to Goff’s office, where
they found McDesmond and Matt Winklestine, safety repre-
38
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
sentative, waiting. Winklestine told Beneli that she was being
suspended for violating two safety policies earlier that day.
Specifically Winkelstine said Beneli had been observed eating
a pastry during the jsa meeting, and that she had failed to fill
out a separate jsa form. Beneli laughed and asked Winklestine
where it stated she could not eat a pastry during the jsa meeting.
Winklestine said he would look for it. Beneli again asked to
see it in writing. Winklestine said he did not have to show
Beneli anything. Winklestine then stated that Beneli was being
suspended for 3 days without pay for the two safety violations.
Beneli turned to McDesmond and said, “So this is the f—g
game you guys are going to play?” Almost immediately
Winklestine and McDesmond pointed their fingers at Beneli
and stated that she was terminated. McDesmond said that
Beneli had threatened them. Beneli said that she did not threaten anyone but said, “is this the f—g game you are going to
play?” McDesmond stated there you go again and once more
accused Beneli of threatening them. McDesmond then told
Rhonda Roberson to prepare termination papers and to cut
Beneli’s final check. Beneli refused to sign the termination
papers which stated that she was being terminated for “inappropriate conduct.”
Respondent’s Defense
Respondent presented evidence that Beneli was not a safety
conscious employee. She used her cell phone while operating
equipment, moved a crane without a spotter and drove a forklift
through a prohibited area. She was given a written warning on
February 2 for driving through the prohibited area.
Beneli was also late for several joint safety analysis meetings. On March 11, Beneli was late for the jsa meeting. She
also admits to eating a pastry at the meeting. In addition she
failed to fill out a second jsa form that day. Both Goff and
McDesmond deny having a conversation with Williams on
March 11.
On that day, Goff and McDesmond consulted over the telephone with Dave Crichton, Respondent’s corporate manager of
labor relations. They agreed to give Beneli a 3-day suspension
for safety violations. Winklestine filled out the disciplinary
suspension form. When Winklestine began to explain the suspension, Beneli became angry. She said in an angry tone, “if
you guys want to play this f—g game, we’ll see.” Mc Desmond asked what she had said and Beneli repeated it.
McDesmond immediately responded that Beneli was discharged. Respondent contends that Beneli was discharged for
her angry outburst and use of profanity at this disciplinary interview. Respondent denied that Beneli was discharged because of her activities as union steward.
The Grievance
On March 19, the Union filed a grievance over Beneli’s suspension and discharge. The grievance moved through the contractual grievance procedure to step 4, which calls for a hearing
before the grievance review subcommittee (subcommittee). A
quorum of five representatives consisting of at least two management representatives, two labor representatives, and one
NAMPC staff representative considers and decides a grievance
at step 4. All subcommittee determinations are based upon the
facts presented, both written and oral, and any decision ren-
dered is final, binding and not subject to any appeal.
On their step 4 grievance fact form, the Union asserted that
“Beneli’s termination was in violation of the National Maintenance Agreement, NLRA Section 7 . . . and decisions made by
the NLRB.” Additionally, the Union contended that “While
engaged in a representational capacity as a Union steward
[Grievant] made the following statement ‘. . . so this is the f—g
game you guys are going to play.’ She was immediately terminated without further discussion in the process.”
On October 8, the step 4 hearing was conducted before the
subcommittee panel. Both the Respondent and the International Union provided the subcommittee with position statements
and documentary evidence. The International Union submitted
a statement position and provided various documents in support
of the grievance, including a 3-page report setting out a detailed
timeline of Beneli’s extensive union and concerted activities in
the month and a half before her suspension and discharge.
Respondent’s position statement stated in part, that Beneli “was
terminated due to the inappropriate conduct which she engaged
in when the Company Supervisor informed her of their intent to
administer a . . . three day disciplinary suspension for safety
violations.” Respondent also asserted that a supervisor had
complained that “the Steward was disruptive in terms of the
amount of time being spent on Union duties, and had frequently
evidenced a poor attitude toward safety on the job.” Additionally, attached to Respondent’s position statement were statements prepared by Respondent’s witnesses who were present at
the March 11 meeting.
By letter dated October 8, the subcommittee denied the
grievance and upheld Beneli’s discharge. The subcommittee
noted the “issue was the Union’s contention the [Respondent]
violated Article XXIII Management Clause of the National
Maintenance Agreement by terminating the grievant, without
just cause, for the grievant’s use of profanity” and that the subcommittee “reviewed all the information submitted both written
and oral” and determined that “no violation of the National
Maintenance Agreement occurred and therefore, the grievance
was denied.”
On September 30, 2009, Region 28 issued a letter which deferred the charge to the parties grievance/arbitration procedure
pursuant to Dubo Mfg. Corp.,142 NLRB 431 (1963). A portion
of the charge was resolved by a non-Board settlement whereby
Respondent agreed to post a notice for 60 days. The parties
provided the Region with a letter which stated:
At issue was the Union’s contention that Respondent violated
Article XXIII Management Clause of the National Maintenance Agreement by terminating the grievant, without just
cause for the grievant’s use of profanity.
Respondent contends that grievant was terminated for just
cause due to the grievant’s use of profanity and insubordinate
conduct upon receipt of disciplinary action.
After reviewing all the information submitted, both written
and oral, the subcommittee determined that no violation of the
National Maintenance Agreement occurred and therefore, the
grievance was denied. This determination is based on the
facts presented and reviewed in the instant case and only applies to this specific grievance.
BABCOCK & WILCOX CONSTRUCTION CO.
Thereafter Beneli informed the Region that she was not satisfied with the grievance decision and asked that the Region not
defer to it. The Region considered Respondent’s position but
determined that the grievance decision was repugnant to the
Act and reversed the deferral. On August 29, 2011, the Region
issued the complaint in this matter.
Should the Board Defer to the Subcommittee’s Decision?
Under the current Spielberg/Olin standards, the Board defers
to arbitral awards and final disposition of joint employer-union
committees when: (1) all parties agreed to be bound by the
decision of the arbitrator; (2) the proceedings appear to be fair
and regular; (3) the arbitrator adequately considered the unfair
labor practice issue; and (4) the award is clearly not repugnant
to the policies of the Act. Spielberg Mfg. Co., 112 NLRB 1080
at 1082 (1955); Olin Corp., 268 NLRB 573 at 574 (1984). See
also, K-Mechanical Services, Inc., 299 NLRB 114,117 (1990)
(applying Spielberg/ Olin deferral standards to determinations
by joint employer-union committees that are final dispositions
of a grievance).
Here General Counsel concedes that the proceedings were
fair and regular and that all parties had agreed to be bound by
the decision. In addition, the contractual issue presented was
factually parallel to the unfair labor practice issue and the subcommittee was generally presented with the facts relevant to
resolving the unfair labor practice. General Counsel contends
that the subcommittee’s decision was repugnant to the Act.
Here, the subcommittee found that Beleni was discharged for
the use of profanity and insubordination upon receipt of her
39
discipline. Although not stated in its decision, the subcommittee rejected the assertion that Beneli was discharged because of
her duties as steward. While I credited Beneli and Williams,
the subcommittee could have credited Respondent’s witnesses.
While I would reach a different conclusion, I do not find this
factual decision by the subcommittee to be repugnant to the
Act. Accordingly, I recommend that the Board defer to the
arbitration and grievance procedure.
CONCLUSIONS OF LAW
1. Respondent is an employer engaged in commerce within
the meaning of Section 2(2), (6), and (7) of the Act.
2. The Board should defer to the decision of the NAMPC
subcommittee.
3. Respondent did not violate the Act as alleged in the complaint.
On these findings of fact and conclusions of law and on the
entire record, I issue the following recommended.2
ORDER
The complaint should be dismissed.
Dated, Washington, D.C. April 9, 2012
2
If no exceptions are filed as provided by Sec. 102.46 of the Board’s
Rules and Regulations, the findings, conclusions, and recommended
Order shall, as provided in Sec. 102.48 of the Rules, be adopted by the
Board and all objections to them shall be deemed waived for all purposes.
NOTICE: This opinion is subject to formal revision before publication in the
bound volumes of NLRB decisions. Readers are requested to notify the Executive Secretary, National Labor Relations Board, Washington, D.C.
20570, of any typographical or other formal errors so that corrections can
be included in the bound volumes.
Browning-Ferris Industries of California, Inc., d/b/a
BFI Newby Island Recyclery, and FPR-II, LLC,
d/b/a Leadpoint Business Services, and Sanitary
Truck Drivers and Helpers Local 350, International Brotherhood of Teamsters, Petitioner.
Case 32–RC–109684
August 27, 2015
DECISION ON REVIEW AND DIRECTION
BY CHAIRMAN PEARCE AND MEMBERS MISCIMARRA,
HIROZAWA, JOHNSON, AND MCFERRAN
In this case, we consider whether the Board should adhere to its current standard for assessing joint-employer
status under the National Labor Relations Act or whether
that standard should be revised to better effectuate the
purposes of the Act, in the current economic landscape.
The issue in this case is whether BFI Newby Island
Recyclery (BFI), and Leadpoint Business Services
(Leadpoint) are joint employers of the sorters, screen
cleaners, and housekeepers whom the Union petitioned
to represent. The Regional Director issued a Decision
and Direction of Election finding that Leadpoint is the
sole employer of the petitioned-for employees.1 The Union filed a timely request for review of that decision,
contending that (a) the Regional Director ignored significant evidence and reached the incorrect conclusion under
current Board precedent; and (b) in the alternative, the
Board should reconsider its standard for evaluating jointemployer relationships.
In granting the Union’s request for review, we invited
the parties and interested amici to file briefs addressing
the following questions:
1. Under the Board’s current joint-employer standard,
as articulated in TLI, Inc., 271 NLRB 798 (1984), enfd.
mem. 772 F.2d 894 (3d Cir. 1985), and Laerco Transportation, 269 NLRB 324 (1984), is Leadpoint Business Services the sole employer of the petitioned-for
employees?
2. Should the Board adhere to its existing jointemployer standard or adopt a new standard? What
considerations should influence the Board’s decision in
this regard?
3. If the Board adopts a new standard for determining
joint-employer status, what should that standard be? If
it involves the application of a multifactor test, what
1
An election was conducted on April 25, 2014, after which the ballots were impounded.
362 NLRB No. 186
factors should be examined? What should be the basis
or rationale for such a standard?
In response, the General Counsel, a group of labor and employment law professors, and several labor organizations, as
well as other amici, have urged the Board to adopt a new
standard. Employer groups, in contrast, argue that the
Board should adhere to its current standard.
The current standard, as reflected in Board decisions
such as TLI and Laerco, supra, is ostensibly based on a
decision of the United States Court of Appeals for the
Third Circuit, NLRB v. Browning-Ferris Industries of
Pennsylvania, Inc., 691 F.2d 1117 (3d Cir. 1982), enfg.
259 NLRB 148 (1981), which endorsed the Board’s
then-longstanding standard. But, as we will explain, the
Board, without explanation, has since imposed additional
requirements for finding joint-employer status, which
have no clear basis in the Third Circuit’s decision, in the
common law, or in the text or policies of the Act. The
Board has never articulated how these additional requirements are compelled by the Act or by the commonlaw definition of the employment relationship. They
appear inconsistent with prior caselaw that has not been
expressly overruled.
Moreover, these additional requirements—which serve
to significantly and unjustifiably narrow the circumstances where a joint-employment relationship can be
found—leave the Board’s joint-employment jurisprudence increasingly out of step with changing economic
circumstances, particularly the recent dramatic growth in
contingent employment relationships. This disconnect
potentially undermines the core protections of the Act for
the employees impacted by these economic changes.
In the Supreme Court’s words, federal regulatory
agencies “are supposed, within the limits of the law and
of fair and prudent administration, to adapt their rules
and practices to the Nation’s needs in a volatile, changing economy.”2 Having carefully considered the record
and the briefs,3 we have decided to revisit and to revise
2
American Trucking Assns. v. Atchison, T. & S.F. Ry. Co., 387 U.S.
397, 416 (1967). See, e.g., UGL-UNICCO Service Co., 357 NLRB No.
76, slip op. at 1 (2011) (quoting American Trucking Assns., supra, and
revising Board’s successor-bar doctrine).
3
The Union, BFI and Leadpoint each filed an initial brief and a
brief in response to amici’s briefs. Amicus briefs were filed by the
American Federation of Labor and Congress of Industrial Organizations; the American Staffing Association; a group of entities consisting
of the Coalition for a Democratic Workplace and 15 other amici; the
Council on Labor Law Equality; the Driver Employer Council of
America; the Equal Opportunity Employment Commission; the General
Counsel; the International Alliance of Theatrical Stage Employees,
Moving Picture Technicians, Artists and Allied Crafts of the United
States, its Territories and Canada; the International Franchise Association; a group of labor and employment law professors; the Labor Relations and Research Center at the University of Massachusetts, Amherst;
2
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
the Board’s joint-employer standard. Our aim today is to
put the Board’s joint-employer standard on a clearer and
stronger analytical foundation, and, within the limits set
out by the Act, to best serve the Federal policy of “encouraging the practice and procedure of collective bargaining.”4
Today, we restate the Board’s joint-employer standard
to reaffirm the standard articulated by the Third Circuit
in Browning-Ferris decision. Under this standard, the
Board may find that two or more statutory employers are
joint employers of the same statutory employees if they
“share or codetermine those matters governing the essential terms and conditions of employment.”5 In determining whether a putative joint employer meets this standard, the initial inquiry is whether there is a common-law
employment relationship with the employees in question.
If this common-law employment relationship exists, the
inquiry then turns to whether the putative joint employer
possesses sufficient control over employees’ essential
terms and conditions of employment to permit meaningful collective bargaining.
Central to both of these inquiries is the existence, extent, and object of the putative joint employer’s control.
Consistent with earlier Board decisions, as well as the
common law, we will examine how control is manifested
in a particular employment relationship. We reject those
limiting requirements that the Board has imposed—
without foundation in the statute or common law—after
Browning-Ferris. We will no longer require that a joint
employer not only possess the authority to control employees’ terms and conditions of employment, but also
exercise that authority. Reserved authority to control
terms and conditions of employment, even if not exercised, is clearly relevant to the joint-employment inquiry.6 As the Supreme Court has observed, the question
a group of entities consisting of the National Association of Manufacturers and two other amici; a group of entities consisting of the National
Council for Occupational Health and Safety and nine other amici; a
group of entities consisting of the National Employment Law Project
and nine other amici; the Retail Litigation Center; the Service Employees International Union; and the United States Chamber of Commerce.
4
29 U.S.C. §151.
5
Browning-Ferris Industries of Pennsylvania, Inc., supra, 691 F.2d
at 1123. As explained below, we will adhere to the Board’s inclusive
approach in defining the “essential terms and conditions of employment.” The Board’s current joint-employer standard, articulated in TLI,
supra, refers to “matters relating to the employment relationship such
as hiring, firing, discipline, supervision, and direction,” a
nonexhaustive list of bargaining subjects. TLI, supra, 271 NLRB at 798
(emphasis added).
6
See, e.g., Restatement (Second) of Agency §2(1) (“A master is a
principal who employs an agent to perform service in his affairs and
who controls or has the right to control the physical conduct of the
other in the performance of the service.”) (emphasis added); id.,
§220(1) (“A servant is a person employed to perform services in the
is whether one statutory employer “possesse[s] sufficient
control over the work of the employees to qualify as a
joint employer with” another employer.7 Nor will we
require that, to be relevant to the joint-employer inquiry,
a statutory employer’s control must be exercised directly
and immediately. If otherwise sufficient, control exercised indirectly—such as through an intermediary—may
establish joint-employer status.8
The Board’s established presumption in representation
cases like this one is to apply a new rule retroactively.9
Applying the restated joint-employer standard here, we
reverse the Regional Director and find that the Union
established that BFI and Leadpoint are joint employers of
the employees in the petitioned-for unit.
I. FACTS
A. Overview
BFI owns and operates the Newby Island recycling facility, which receives approximately 1,200 tons per day
of mixed materials, mixed waste, and mixed recyclables.
The essential part of its operation is the sorting of these
materials into separate commodities that are sold to other
businesses at the end of the recycling process. BFI solely employs approximately 60 employees, including loader operators, equipment operators, forklift operators, and
spotters. Most of these BFI employees work outside the
facility, where they move materials and prepare them to
be sorted inside the facility. These BFI employees are
part of an existing separate bargaining unit that is represented by the Union.
The interior of the facility houses four conveyor belts,
called material streams. Each stream carries a different
category of materials into the facility: residential mixed
recyclables, commercial mixed recyclables, dry waste
process, and wet waste process. Workers provided to
BFI by Leadpoint stand on platforms beside the streams
and sort through the material as it passes; depending on
where they are stationed, workers remove from the
stream either recyclable materials or prohibited materials.
Other material is automatically sorted when it passes
through screens that are positioned near the conveyor
belts.
affairs of another and who with respect to the physical conduct in the
performance of the services is subject to the other’s control or right to
control.”) (emphasis added).
7
Boire v. Greyhound Corp., 376 U.S. 473, 481 (1964). To be sure,
a joint employer will be required to bargain only with respect to those
terms and conditions over which it possesses sufficient control for
bargaining to be meaningful.
8
See, e.g., Restatement (Second) of Agency §220, comment d
(“[T]he control or right to control needed to establish the relation of
master and servant may be very attenuated.”).
9
See, e.g., UGL-UNICCO, 357 NLRB No. 76, slip op. at 8 & fn. 28
(2011).
BFI NEWBY ISLAND RECYCLERY
As indicated, BFI, the user firm, contracts with
Leadpoint, the supplier firm, to provide the workers who
manually sort the material on the streams (sorters), clean
the screens on the sorting equipment and clear jams
(screen cleaners), and clean the facility (housekeepers).10
The Union seeks to represent approximately 240 fulltime, part-time, and on-call sorters, screen cleaners, and
housekeepers who work at the facility.11
The relationship between BFI and Leadpoint is governed by a temporary labor services agreement (Agreement), which took effect in October 2009, and remains
effective indefinitely. It can be terminated by either party at will with 30 days’ notice. The Agreement states that
Leadpoint is the sole employer of the personnel it supplies, and that nothing in the Agreement shall be construed as creating an employment relationship between
BFI and the personnel that Leadpoint supplies.
B. Management Structure
BFI and Leadpoint employ separate supervisors and
lead workers at the facility. BFI Operations Manager
Paul Keck oversees the material recovery facility and
supervises the BFI employees. BFI Division Manager
Carl Mennie oversees the recycling and compost operations and reports to Keck. Shift Supervisors Augustine
Ortiz and John Sutter supervise BFI employees at the
site, including the control room operator. They also
spend a percentage of each workday in the material
stream areas, monitoring the operation and productivity
of the streams. Ortiz testified that part of his job is to
ensure the productivity of the streams.
Leadpoint employs Acting On-Site Manager Vincent
Haas, three shift supervisors, and seven line leads who
work with the Leadpoint sorters.
Haas oversees
Leadpoint operations at the facility and reports to the
Leadpoint corporate office in Arizona. The shift supervisors, who report to Haas, create the sorters’ schedules,
oversee the material streams, and coach the line leads.
The line leads work on the floor with the sorters and are
Leadpoint’s first-line supervisors.12 Frank Ramirez,
Leadpoint’s CEO and President, visits the facility two or
10
Consistent with previous Board decisions, we refer to the company that supplies employees as a “supplier” firm and the company that
uses those employees as a “user” firm.
11
BFI solely employs one sorter who works alongside the
Leadpoint employees and performs identical job duties. She is part of
the Union’s existing unit of BFI employees and makes approximately
$5/hour more in wages than the Leadpoint employees. BFI asserts that
she was given sorter duties years ago after her position was eliminated
owing to the loss of a municipal contract; she is grandfathered into
BFI’s existing contract with the Union, which otherwise exempts sorters from that bargaining unit.
12
The parties agreed that Leadpoint’s line leads are statutory supervisors.
3
three times per quarter to evaluate whether Leadpoint is
meeting BFI’s expectations and goals; he also meets with
BFI and Leadpoint managers, and addresses any problems.
BFI and Leadpoint maintain separate human resource
departments. BFI does not have an HR manager onsite.
Leadpoint has an onsite HR manager who operates in a
trailer (marked with the Leadpoint logo) outside the facility. Leadpoint employees use the BFI break rooms,
bathrooms, and parking lot.
C. Hiring
The Agreement between BFI and Leadpoint provides
that Leadpoint will recruit, interview, test, select, and
hire personnel to perform work for BFI. BFI Managers
Keck and Mennie, and Shift Supervisors Ortiz and Sutter
testified that they are not involved in Leadpoint’s hiring
procedure and have no input into Leadpoint’s hiring decisions. However, as to hiring, the Agreement requires
Leadpoint to ensure that its personnel “have the appropriate qualifications (including certification and training)
consistent with all applicable laws and instructions from
[BFI], to perform the general duties of the assigned position.” BFI also has the right to request that personnel
supplied by Leadpoint “meet or exceed [BFI’s] own
standard selection procedures and tests.”
The Agreement also requires Leadpoint to make “reasonable efforts” not to refer workers who were previously employed by BFI and were deemed ineligible for rehire. Under the Agreement, Leadpoint must ask workers
if they were previously employed by BFI and verify with
BFI that all workers provided are eligible to work with
BFI. If Leadpoint inadvertently refers an ineligible
worker, it must immediately cease referring her, upon
notification by BFI.
Before it refers a worker to BFI, Leadpoint is also required to ensure, in accordance with the Agreement, that
she has passed, at minimum, a five-panel urinalysis drug
screen, “or similar testing as agreed to in writing with
[BFI’s] safety, legal and commercial group.” Leadpoint
is not permitted to refer workers who do not successfully
complete the drug screen, and BFI may request written
certification of such completion. After Leadpoint has
referred workers, it is responsible for ensuring that they
remain free from the effects of alcohol and drug use and
in condition to perform their job duties for BFI.
When an applicant arrives at the Newby Island facility,
she reports to Leadpoint’s HR department. Leadpoint
tests and evaluates an applicant’s ability to perform the
required job tasks at BFI by giving her a try-out on the
material stream and assessing whether she has adequate
hand-eye coordination. If the applicant passes the test,
4
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
she returns to the Leadpoint HR department for drug
testing and background checks.
D. Discipline and Termination
Although the Agreement provides that Leadpoint has
sole responsibility to counsel, discipline, review, evaluate, and terminate personnel who are assigned to BFI, it
also grants BFI the authority to “reject any Personnel,
and . . . discontinue the use of any personnel for any or
no reason.”
BFI Managers Keck and Mennie, and Shift Supervisors Ortiz and Sutter testified that they have never been
involved in any disciplinary decisions for Leadpoint employees. However, the record includes evidence of two
incidents where discipline of Leadpoint employees was
prompted by BFI action. In a June 2013 email from BFI
Operations Manager Keck to Leadpoint CEO Ramirez,
Keck stated that he observed two Leadpoint employees
passing a pint of whiskey at the jobsite. Keck then contacted Leadpoint Manager Haas, who immediately sent
the two employees for alcohol and drug screening.
Ramirez testified that, in response to Keck’s email “request[ing] [the employees’] immediate dismissal,”
Leadpoint investigated the complaint and terminated one
employee and reassigned the other.
In the same email to Ramirez, Keck indicated that he
had observed damage to BFI property, including a paperwork drop box that had been destroyed. Keck stated
that a surveillance camera recorded a Leadpoint employee punching the box, and that he hoped Ramirez agreed
that “this Leadpoint employee should be immediately
dismissed.” Haas testified that, pursuant to Keck’s email,
he reviewed the video, identified the employee, and
Leadpoint terminated the employee after an investigation. Haas stated that BFI was not involved in the investigation of the employee and was not consulted in the
decision to terminate him.
E. Wages and Benefits
The Agreement includes a rate schedule that requires
BFI to compensate Leadpoint for each worker’s wage
plus a specified percentage mark-up; the mark-up varies
based on whether the work is performed during regular
hours or as overtime. Although the Agreement provides
that Leadpoint “solely determines the pay rates paid to its
Personnel,” it may not, without BFI’s approval, “pay a
pay rate in excess of the pay rate for full-time employees
of [BFI] who perform similar tasks.” Mennie testified
that Leadpoint has never made such a request. Leadpoint
issues paychecks to employees and maintains their payroll records.
The record includes a Rate Schedule Addendum between BFI and Leadpoint executed in response to a min-
imum wage increase from $8.75 to $10 by the City of
San Jose. Pursuant to the Addendum, the parties agreed
that BFI would pay a higher hourly rate for the services
of Leadpoint employees after the minimum wage increase took effect.
Leadpoint employees are required to sign a benefits
waiver stating they are eligible only for benefits offered
by Leadpoint and are not eligible to participate in any
benefit plan offered by BFI. Leadpoint provides employees with paid time-off and three paid holidays after
they have worked for 2,000 hours, and the option to purchase medical, life, and disability insurance.
F. Scheduling and Hours
BFI establishes the facility’s schedule of working
hours. It operates three set shifts on weekdays: 4 a.m.—
1 p.m., 2 p.m.—11:30 p.m., and 10:30 p.m.—7 a.m.
Leadpoint is responsible for providing employees to cover all three shifts. Although Leadpoint alone schedules
which employees will work each shift,13 Leadpoint has
no input on shift schedules. Keck testified that any modification in shift times would require modifying the facility’s hours of operation and the work schedules for all
BFI employees.
BFI will keep a stream running into overtime if it determines that the material on a specific stream cannot be
processed by the end of a shift. A BFI manager will
normally convey this decision to a Leadpoint shift supervisor; Leadpoint, in turn, determines which employees
will stay on the stream to complete the overtime work.
BFI also dictates when the streams stop running so that
Leadpoint employees can take breaks. Keck has instructed Leadpoint employees to spend 5 minutes gathering the debris around their stations before breaking. Although Keck asserted that this assignment would not affect the length of breaks, sorter Andrew Mendez testified
that, as a practical matter, the clean-up requirement has
cut into employees’ break time.
The Agreement requires that Leadpoint employees
must, at the end of each week, submit to Leadpoint a
summary of their “hours of services rendered.” Employees must obtain the signature of an authorized BFI representative attesting to the accuracy of the hours on the
form. BFI may refuse payment to Leadpoint for any
time claimed for which a worker failed to obtain a signature.
G. Work Processes
BFI determines which material streams will run each
day and provides Leadpoint with a target headcount of
13
shift.
Leadpoint must also supply housekeepers to work a Saturday
BFI NEWBY ISLAND RECYCLERY
workers needed. BFI also dictates the number of
Leadpoint laborers to be assigned to each material
stream, but Leadpoint assigns specific Leadpoint employees to specific posts. The record includes an email
from Keck to Haas directing Haas to reduce the number
of sorters on a specific line by two per shift. The email
detailed what positions sorters should occupy on the
stream, what materials should be prioritized, and whether
a right-handed or left-handed sorter was preferred.14 The
email concluded by stating “[t]his staffing change is effective Monday, August 5, 2013.” Ramirez testified that
the sorters occupy set work stations along each stream
and that BFI dictates the location of these stations. During a shift, BFI might direct Leadpoint supervisors to
move employees to another stream in response to processing demands.
Before each shift, BFI’s Shift Supervisors Ortiz and
Sutter hold meetings with Leadpoint supervisors—the
onsite manager and leads—to present and coordinate the
day’s operating plan. During those meetings, BFI’s managers dictate which streams will be operating and establish the work priorities for the shift. Ortiz testified that
he uses the preshift meeting to advise Leadpoint supervisors of the specific tasks that need to be completed during the shift, i.e. maintenance, quality, and cleaning issues. Ortiz indicated that Leadpoint supervisors assign
employees so as to accomplish these designated tasks.
BFI managers set productivity standards for the material streams. BFI Division Manager Mennie testified that
BFI tracks the tons per hour processed on each stream,
the proportion of running time to downtime on each
stream, and various quality standards. BFI has sole authority to set the speed of the material streams based on
its ongoing assessment of the optimal speed at which
materials can be sorted most efficiently. If sorters are
unable to keep up with the speed of the stream, BFI—but
not Leadpoint—can make various adjustments, such as
slowing the speed of the stream or changing the angle of
the screens. The record indicates that the speed of the
streams has been a source of contention between BFI and
Leadpoint employees. For instance, former-sorter Clarence Harlin described an incident during which BFI Shift
Supervisor Sutter stood across the stream from sorters
and criticized them for failing to remove a sufficient
amount of plastic. Harlin responded that it was not possible to pull that much material unless the stream was
slowed down or stopped. Sutter responded by calling the
entire line of sorters to the control room, where he di14
For instance, the email stated that “[t]wo of your employees
should be positioned at the east end of the presorts focusing primarily
on glass. Their secondary picks should be plastics into the Recycling
Stream drop chute.”
5
rected them to work more efficiently and dismissed their
requests to slow down or stop the line.
Leadpoint employees are able to stop the streams by
hitting an emergency stop switch. Sutter testified that he
has instructed Leadpoint supervisors on when it is appropriate for Leadpoint employees to use the switch. A BFI
employee who works in the control room monitors the
operating status of the streams and is required to restart a
stream after it has been stopped. Sorter Travis Stevens
testified that he has been instructed by BFI managers on
multiple occasions not to overuse the emergency stop
switch. He stated that BFI Operations Manager Keck
and BFI Shift Supervisor Ortiz held a meeting with an
entire line of Leadpoint employees to call attention to the
frequency of their emergency stops and to direct
Leadpoint employees to minimize the number of stops to
reduce downtime.
BFI’s managers testified that when, in the course of
monitoring stream operation and productivity, they identify problems, including problems with the job performance of a Leadpoint employee, they communicate their
concerns to a Leadpoint supervisor. The Leadpoint supervisor is expected to address those issues with the employees. According to the testimony of Leadpoint employees, BFI managers have, on occasion, addressed
them directly regarding job tasks and quality issues.
Leadpoint Housekeeper Clarence Harlin testified that he
receives work directions from BFI managers and employees at least twice a week. Sorters Mendez and Stevens both testified that they have received specific assignments from BFI managers that took priority over the
tasks assigned by their immediate Leadpoint supervisors.
Sorter Marivel Mendoza testified that Sutter has directed
him to remove more plastic from the stream, and has
moved him to other streams where assistance was needed.
H. Training and Safety
When Leadpoint employees begin working at the facility, they receive an orientation and job training from
Leadpoint supervisors. Periodically, they also receive
substantive training and counseling from BFI managers.
For instance, following customer complaints about the
quality of BFI’s end product, Keck held two or three
educational meetings with Leadpoint employees and supervisors who worked on the wet waste stream. During
the meetings, Keck highlighted the objectives of the operation to make sure that Leadpoint employees understood BFI’s goals. He also explained the difference between organic and nonorganic materials and specified
which materials should be removed from the line. Keck
held a similar meeting with Leadpoint employees who
worked on the commercial single stream because he was
6
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
concerned that sorters were allowing too many materials
to pass by on the stream without being sorted.15 With
regard to one line, Keck told the sorters that BFI would
only be able to cover the labor expenses for the line if the
processed material generated revenue for BFI. As noted
above, BFI Shift Supervisor Sutter similarly called a
meeting with a group of sorters to direct them to work
more productively.
As to safety, the Agreement mandates that Leadpoint
require its employees to comply with BFI’s safety policies, procedures, and training requirements. For all employees working in positions deemed safety-sensitive by
BFI, Leadpoint must obtain a written acknowledgement
that they have read, understand, and agree to comply
with BFI’s safety policy. BFI also “reserves the right to
enforce the Safety Policy provided to [Leadpoint] personnel.”16
New Leadpoint employees attend a safety orientation
that is presented by Leadpoint managers. The record
shows that, on occasion, BFI also provides safety training to Leadpoint employees.
I. Other Terms
According to the terms of the Agreement, Leadpoint
personnel shall not be assigned to BFI for more than 6
months. Ramirez testified that Leadpoint employees
have been assigned to BFI for more than 6 months, and
BFI has never invoked this provision. The Agreement
also allows BFI to examine “[Leadpoint’s] books and
records pertaining to the Personnel, [Leadpoint’s] obligations and duties under this Agreement, and all services
rendered by [Leadpoint] or the Personnel under this
Agreement, at any time for purposes of auditing compliance with this Agreement, or otherwise.” Mennie testified that he has never asked to inspect Leadpoint’s personnel files.
II. THE REGIONAL DIRECTOR’S FINDINGS
The Regional Director, applying TLI, supra, found that
BFI is not a joint-employer of the Leadpoint employees
because it does not “share or codetermine [with
Leadpoint] those matters governing the essential terms
and conditions of employment” of the sorters, screen
cleaners, or housekeepers. First, the Regional Director
found that Leadpoint sets employee pay and is the sole
provider of benefits. He acknowledged that, under the
Agreement, Leadpoint is prevented from paying employ15
Ortiz indicated that he also held educational sessions with
Leadpoint employees after he became concerned that sorters were not
removing a sufficient amount of contaminants from the stream.
16
Leadpoint employees’ personal protective equipment—a safety
vest, a hardhat, safety glasses, ear plugs, and gloves—is provided by
Leadpoint and differs from the gear that BFI employees use.
ees more than BFI pays employees who perform similar
work. But he found that this provision was not indicative
of BFI’s control over wages because it limits only employees’ maximum wage rate; it would not prevent
Leadpoint from lowering wages or offering more benefits. Moreover, he found that the provision only applies
to Leadpoint sorters, since BFI does not employ any
screen cleaners or housekeepers.
Next, the Regional Director found that Leadpoint has
sole control over the recruitment, hiring, counseling, discipline, and termination of its employees. He noted that
there was no evidence to suggest that BFI participates in
any of these decisions. With regard to Keck’s email reporting the misconduct of Leadpoint employees, the Regional Director found that Keck merely requested that
the employees be terminated; he did not order or direct
Leadpoint to terminate them. He thus concluded that
BFI does not possess the authority to terminate
Leadpoint employees.
Finally, the Regional Director found that BFI does not
control or codetermine employees’ daily work. He found
that Leadpoint employees were supervised solely by the
Leadpoint onsite manager and leads, and that nothing in
the record supported the Union’s argument that BFI controls employees’ daily work functions. While acknowledging BFI’s control over the speed of the material
stream, the Regional Director found that BFI does not
mandate how many employees work on the line, the
speed at which the employees work, where they stand on
the stream, or how they pick material off the stream.17
The mere ability to control the speed of the stream, he
stated, does not “create a level of control that is sufficiently direct or immediate” to warrant a finding of joint
control.
The Regional Director also stated that if BFI has a
problem with a Leadpoint employee, it complains to a
Leadpoint supervisor who takes care of the matter using
her own discretion. To the extent that BFI has directly
instructed Leadpoint employees, he found “the instruction was merely routine in nature and insufficient to warrant a finding that BFI jointly controls Leadpoint employees’ daily work.” Although BFI sets the work hours
and shifts of the facility’s operation, the Regional Director observed that Leadpoint is solely in control of scheduling its own employees’ shifts, scheduling employees
for overtime, and administering requests for sick leave
and vacation.
17
Based on our review of the record, we disagree with the Regional
Director’s factual findings that BFI does not mandate how many employees work on the line, the speed at which they work, where they
stand, or how they pick material.
BFI NEWBY ISLAND RECYCLERY
III. POSITIONS OF THE PARTIES AND AMICI
A. The Union
The Union argues first that, under the Board’s current
joint-employer standard, BFI constitutes a joint employer
of the Leadpoint employees because it shares or codetermines the following essential terms and conditions of
employment: employment qualifications, work hours,
breaks, productivity standards, staffing levels, work rules
and performance, the speed of the lines, dismissal, and
wages. BFI’s direct control over employees is evinced
by its regular oversight of the employees and its constant
control of their work. BFI, it argues, demands compliance with “detailed specifications, including the number
of employees on each line, where they stand, what they
pick, and at what rate they sort.” BFI also trains and
instructs employees as to how to do their jobs, directing
them on picking techniques, what to prioritize, how to
clear jams, and when to use the emergency stop.
Alternatively, the Union contends that the Board
should adopt a broader standard to better effectuate the
purpose of the Act and respond to industrial realities.
The Union states that the Board’s current emphasis on
whether an employer exercises direct and immediate
control over employees conflicts with the language and
purpose of the Act, which is focused on ensuring employees’ bargaining rights to the fullest extent. Further,
the Union argues that the Board must consider all indicia
of control in its joint-employer analysis, rather than the
narrow subset of criteria set forth in TLI, supra, 271
NLRB at 798 (hiring, firing, discipline, supervision, and
direction). It observes that “a myriad of other essential
terms that are mandatory subjects of bargaining may []
also be pertinent to the employees involved.” Based on
these concerns, the Union recommends that the Board
find joint-employer status where an employer “possesses
sufficient authority over the employees or their employer
such that its participation is a requisite to meaningful
collective bargaining. Such authority can be either direct
or indirect.”
Finally, the Union asserts that absent a change in the
joint-employer standard, a putative employer, like BFI,
that is a necessary party to meaningful collective bargaining will continue to insulate itself by the “calculated
restructuring of employment and insertion of a contractor
to insulate itself from the basic legal obligation to recognize and bargain with the employees’ representative.”
B. BFI and Leadpoint
BFI argues that, under the Board’s current jointemployer test, the Regional Director correctly found that
BFI is not a joint employer of Leadpoint’s employees.
To this end, BFI contends that the Regional Director
7
properly concluded that Leadpoint has sole authority to
hire, fire, discipline, supervise, direct, assign, train, and
schedule its employees. It further contends that the Union points to only a handful of instances in which BFI
managers gave routine instructions to Leadpoint employees, evidence that falls far short of establishing that BFI
exerted any meaningful control over them. Although
BFI’s physical plant dictates where Leadpoint employees
must work, BFI does not decide where particular employees work. Likewise, despite the fact that BFI managers meet with Leadpoint supervisors daily to discuss
operations, Leadpoint supervisors are solely responsible
for controlling and directing their employees. Finally,
contrary to the Union, meaningful control cannot be established by a contractual right or its occasional exercise;
instead the Board properly looks to the actual practice of
the parties.
BFI also urges the Board not to modify its jointemployer standard. It contends that the Union has not
presented any compelling reason to revisit Board policy.
Any modification, it argues, would undermine the predictability of the law in this area, which the Board has
applied uniformly for over 30 years. The Union’s proposed standard, in its view, imposes “no meaningful limit
on who could be deemed a joint employer of another’s
workers.” Thus, a regional director “would be free to
exercise her substantial discretion to determine that completely separate companies constituted a joint employer
simply because she believes that bargaining would be
more effective if both companies were at the table.”
Leadpoint echoes the arguments presented by BFI: that
Leadpoint is the sole employer of its employees, and that
the Board should not modify its joint-employer standard.
In support of the current standard, Leadpoint contends
that it is a clear and understandable approach that has not
proven overly onerous for parties seeking to establish a
joint-employer relationship. Leadpoint argues that the
“vague and ambiguous” standard proposed by the Union
lacks clarity and provides minimal, if any, guidance as to
what factors are significant for evaluating joint-employer
status.
C. The General Counsel
The General Counsel urges the Board to abandon its
existing joint-employer standard because it “undermines
the fundamental policy of the Act to encourage stable
and meaningful collective bargaining.”18 The Board,
since TLI, supra, has significantly narrowed its approach
by (a) requiring evidence of direct and immediate control
over employees; (b) looking only to the actual practice of
18
The General Counsel’s brief takes no position on the merits of
this representation proceeding.
8
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
the parties rather than their contract; and (c) requiring an
employer’s control to be substantial and not “limited and
routine.” He posits that this approach is not consistent
with the Act, which broadly defines the term “employer.”
Moreover, the contingent work force has grown significantly over the past several decades. The General Counsel submits that in many contingent arrangements, the
user firm only has limited and routine supervision over
employees, and indirect or potential control over terms
and conditions of employment. Nonetheless, the user
firm can influence the supplier firm’s bargaining posture
by threatening to terminate its contract with the supplier
if wages and benefits rise above a set cost threshold.
The General Counsel recommends that the Board find
joint-employer status where an employer “wields sufficient influence over the working conditions of the other
entity’s employees such that meaningful bargaining
could not occur in its absence.” Such an approach would
make no distinction between direct, indirect, and potential control, and would find joint-employer status where
industrial realities make an entity essential for bargaining.
D. Other Amici
Amici in support of the Union uniformly urge the
Board to adopt a more inclusive joint-employer standard
that would give dispositive weight to more forms of employer control. Specifically, they urge the Board to
abandon its recent focus on direct and immediate control
and consider instead the totality of a putative employer’s
influence over employees’ working conditions, including
control that is exercised indirectly or reserved via contractual right. They also argue that the Board should
evaluate a putative employer’s control over a broad range
of terms and conditions of employment rather than the
limited set of factors enumerated in TLI, supra. In urging
the Board to modify its approach, many amici note that
that the number of contingent employment relationships
has grown significantly in recent years, and that a sizeable proportion of the labor force now works for staffing
agencies. They posit that the Board’s current narrow
focus on direct control absolves many user employers of
bargaining responsibilities under the Act despite the fact
that their participation is required for meaningful bargaining to occur.
Amici in support of BFI uniformly contend that BFI is
not a joint-employer of Leadpoint’s employees, and urge
the Board not to modify its existing approach. They argue primarily that the Board’s standard—which has been
applied consistently for over 30 years—has provided
employers with stability and predictability in entering
into labor supply arrangements in response to fluctuating
market needs. Any change, they contend, would destabi-
lize these relationships and undermine the expectations
of the contracting parties. A more inclusive standard,
they argue, would also widen the scope of labor disputes
and force firms to participate in bargaining even where
they have no authority to set or control terms and conditions of employment. Some amici contend that a broader
standard could potentially include—and consequently
disrupt—any contractual relationship involving labor.
Other amici argue that a broader standard would expose
employers to unwarranted liability for unfair labor practices committed by the other firm. Some argue too that
the common law of agency prohibits the Board from
adopting an open-ended approach that considers all of
the economic realities of the parties’ relationship.
IV. THE EVOLUTION OF THE BOARD’S
JOINT-EMPLOYER STANDARD
In analyzing the joint-employer issue, and evaluating
the various arguments raised by the parties and amici, it
is instructive to review the development of the Board’s
law in this area. Three aspects of that development seem
clear. First, the Board’s approach has been consistent
with the common-law concept of control, within the
framework of the National Labor Relations Act. Second,
before the current joint-employer standard was adopted,
the Board (with judicial approval) generally took a
broader approach to the concept of control. Third, the
Board has never offered a clear and comprehensive explanation for its joint-employer standard, either when it
adopted the current restrictive test or in the decades before.
The core of the joint-employer standard, which we
preserve today, can be traced at least as far back as the
Greyhound case, a representation proceeding that involved a company operating a bus terminal and its cleaning contractor. There, the Board in 1965 found two statutory employers to be joint employers of certain workers
because they “share[d], or codetermine[d], those matters
governing essential terms and conditions of employment.”19 Significantly, at an earlier stage of that case, the
Supreme Court explained the issue presented—whether
Greyhound “possessed sufficient control over the work
of the employees to qualify as a joint employer with” the
cleaning contractor—was “essentially a factual issue” for
the Board to determine.20
19
Greyhound Corp., 153 NLRB 1488, 1495 (1965), enfd. 368 F.2d
778 (5th Cir. 1966). See also Franklin Simon & Co., Inc., 94 NLRB
576, 579 (1951) (finding joint-employer status where “a substantial
right of control over matters fundamental to the employment relationship [was] retained and exercised” by both department store and company operating shoe department).
20
Boire v. Greyhound Corp., 376 U.S. 473, 481 (1964). The Supreme Court reversed a district court injunction against the Board pro-
BFI NEWBY ISLAND RECYCLERY
During the period after Greyhound but before the
Third Circuit’s 1982 decision in Browning-Ferris Industries of Pennsylvania, supra, some (though certainly not
all) of the Board’s joint-employer decisions used the
“share or co-determine” formulation.21 But regardless of
the wording used, the Board typically treated the right to
control the work of employees and their terms of employment as probative of joint-employer status. The
Board did not require that this right be exercised, or that
it be exercised in any particular manner. Thus, the
Board’s joint-employer decisions found it probative that
employers retained the contractual power to reject or
terminate workers;22 set wage rates;23 set working
hours;24 approve overtime;25 dictate the number of workers to be supplied;26 determine “the manner and method
of work performance”;27 “inspect and approve work,”28
and terminate the contractual agreement itself at will.29
The Board stressed that “the power to control is present
by virtue of the operating agreement.”30 Reviewing
courts expressly endorsed this approach.31
ceeding, rejecting Greyhound’s argument that the Board was acting in
excess of its powers under the Act, given the exclusion of independent
contractors from the statutory definition of “employee.”
21
See, e.g., C.R. Adams Trucking, Inc., 262 NLRB 563, 566 (1982),
enfd. 718 F.2d 869 (8th Cir. 1983); Springfield Retirement Residence,
235 NLRB 884, 891 (1978); Greenhoot, Inc., 205 NLRB 250, 251
(1973).
22
See Ref-Chem Co., 169 NLRB 376, 379 (1968), enf. denied on
other grounds 418 F.2d 127 (5th Cir. 1969); Jewel Tea Co., 162 NLRB
508, 510 (1966).
23
See Ref-Chem, supra, 169 NLRB at 379; Harvey Aluminum, 147
NLRB 1287, 1289 (1964).
24
See Jewel Tea, supra, 162 NLRB at 510; Mobil Oil Corp., 219
NLRB 511, 516 (1975), enf. denied on other grounds sub nom. Alaska
Roughnecks and Drillers Assn. v. NLRB, 555 F.2d 732 (9th Cir. 1977),
cert. denied 43 U.S. 1069 (1978).
25
Ref-Chem Co. v. NLRB, 418 F.2d 127, 129 (5th Cir. 1969).
26
See Harvey Aluminum, supra, 147 NLRB at 1289; Mobil Oil, supra, 219 NLRB at 516.
27
Value Village, 161 NLRB 603, 607 (1966).
28
Ref-Chem Co. v. NLRB, supra, 418 F.2d at 129.
29
Value Village, supra, 161 NLRB at 607; Mobil Oil, supra, 219
NLRB at 516.
30
Value Village, supra, 161 NLRB at 607. See also Jewel Tea, supra, 162 NLRB at 510 (“That the licensor has not exercised such power
is not material, for an operative legal predicate for establishing a jointemployer relationship is a reserved right in the licensor to exercise such
control”); Lowery Trucking Co., 177 NLRB 13, 15 (1969), enfd. sub
nom. Ace-Alkire Freight Lines v. NLRB, 431 F.2d 280 (8th Cir. 1970)
(observing that “[w]hile [putative employer] never rejected a driver
hired by [supplier], it had the right to do so”).
31
See Ref-Chem Co. v. NLRB, supra, 418 F.2d at 129 (affirming the
Board’s joint-employer finding where “[t]he terms of the agreements
with these two companies gave [putative employer] the right to approve
employees, control the number of employees, have an employee removed, inspect and approve work, pass on changes in pay and overtime
allowed”). See also Ace-Alkire Freight Lines, Inc. v. NLRB, 431 F.2d
280, 282 (8th Cir. 1970) (same where putative employer “retained the
right to reject drivers sent to them”); Carrier Corp. v. NLRB, 768 F.2d
9
In addition to recognizing the right to control as probative, the Board gave weight to a putative joint employer’s
“indirect” exercise of control over workers’ terms and
conditions of employment.32 In so doing, the Board emphasized that, in order to exercise significant control, a
putative employer need not “hover over [workers], directing each turn of their screwdrivers and each connection that they made.”33 Instead, the Board assessed
whether a putative employer exercised “ultimate control”
over their employment.34
Consistent with this principle, the Board in certain cases found evidence of joint-employer status where a putative employer, although not responsible for directly supervising another firm’s employees, inspected their
work, issued work directives through the other firm’s
supervisors, and exercised its authority to open and close
the plant based on production needs.35 Likewise, the
Board found significant indicia of control where a putative employer, although it “did not exercise direct supervisory authority over” the workers at issue, nonetheless
held “day-to-day responsibility for the overall operations” of the worksite and determined the scope and nature of the contractors’ work assignments.36 Contractual
arrangements under which the user employer reimbursed
the supplier for workers’ wages or imposed limits on
wages were also viewed as tending to show jointemployer status.37
The Third Circuit’s Browning-Ferris decision did not
question, much less reject, any of these lines of Board
precedent. That decision, rather, carefully untangled the
778, 781 (6th Cir. 1985) (same where, under parties’ agreement, putative employer “had the authority to reject any driver that did not meet
its standards and it could also direct [supplier firm] to remove any
driver”).
32
Floyd Epperson, 202 NLRB 23, 23 (1973), enfd. 491 F.2d 1390
(6th Cir. 1974).
33
Sun-Maid Growers of California, 239 NLRB 346, 351 (1978),
enfd. 618 F.2d 56 (9th Cir. 1980) (finding joint-employer status).
34
Int’l Trailer Co., 133 NLRB 1527, 1529 (1961), enfd. sub nom.
NLRB v. Gibraltar Industries, 307 F.2d 428 (1962) (finding jointemployer status), cert. denied 372 U.S. 911 (1963).
35
Id. See also Hamburg Industries, 193 NLRB 67, 67 (1971) (finding joint-employer status where putative employer’s superintendents
checked the performance of supplier’s workers and the quality of their
work, and communicated work directions via supplier’s supervisors).
36
Clayton B. Metcalf, 223 NLRB 642, 643 (1976).
37
See Hamburg Industries, supra, 193 NLRB at 67–68 (assigning
weight to putative employer’s “indirect control over wages” via costplus arrangement); Hoskins Ready-Mix, 161 NLRB 1492, 1493 (1966)
(same, noting that user employer would be the “ultimate source of any
wage increases” for workers); Ref-Chem Co., supra, 169 NLRB at 379
(supplier could not make any wage modification without securing approval of the user). See also Industrial Personnel Corp. v. NLRB, 657
F.2d 226, 229 (8th Cir. 1981) (relying on the Board’s finding that user
employer reimbursed supplier for employees’ wages), cert. denied 454
U.S. 1148 (1982).
10
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
joint-employer doctrine from the distinct singleemployer doctrine (which addresses integrated enterprises only nominally separate), endorsed the Board’s “share
or codetermine” formulation, and enforced the Board’s
order finding joint-employer status. The Third Circuit
explained:
The basis of the [joint employer] finding is simply that
one employer while contracting in good faith with an
otherwise independent company, has retained for itself
sufficient control of the terms and conditions of employment of the employees who are employed by the
other employer. . . .Thus, the “joint employer” concept
recognizes that the business entities involved are in fact
separate but that they share or codetermine those matters governing the essential terms and conditions of
employment.
691 F.2d at 1123 (citations omitted; emphasis added).
The Board subsequently embraced the Third Circuit’s
decision, but simultaneously took Board law in a new
and different direction. Laerco and TLI, both decided in
1984, marked the beginning of a 30-year period during
which the Board—without any explanation or even
acknowledgement and without overruling a single prior
decision—imposed additional requirements that effectively narrowed the joint-employer standard. Most significantly, the Board’s decisions have implicitly repudiated its earlier reliance on reserved control and indirect
control as indicia of joint-employer status. The Board
has foreclosed consideration of a putative employer’s
right to control workers, and has instead focused exclusively on its actual exercise of that control—and required
its exercise to be direct, immediate, and not “limited and
routine.”38
The Board has thus refused to assign any significance
to contractual language expressly giving a putative employer the power to dictate workers’ terms and conditions of employment. In TLI, for instance, the parties’
contract provided, among other things, that the user employer “at all times will solely and exclusively be responsible for maintaining operational control, direction
and supervision over said drivers”.39 Although prior
precedent found this type of contractual authority probative of joint employer status, the TLI Board found it irrelevant, absent evidence that the putative employer “affect[ed] the terms and conditions of employment to such
a degree that it may be deemed a joint employer.”40 The
38
AM Property Holding Corp., 350 NLRB 998, 1001 (2007), enfd.
in relevant part sub nom. Service Employees Int’l Union, Local 32BJ v.
NLRB, 647 F.3d 435 (2d. Cir. 2011)
39
TLI, supra, 271 NLRB at 803.
40
Id. at 799.
Board later emphasized this narrowed approach in AM
Property Holding Corp., a 2007 decision, supra, where it
stated that “[i]n assessing whether a joint employer relationship exists, the Board does not rely merely on the
existence of such contractual provisions, but rather looks
to the actual practice of the parties.”41
In Airborne Express,42 a 2002 decision, the Board held
that “[t]he essential element in [the joint-employer] analysis is whether a putative joint employer’s control over
employment matters is direct and immediate.”43 This
restrictive approach has resulted in findings that an entity
is not a joint employer even where it indirectly exercised
control that significantly affected employees’ terms and
conditions of employment. For example, the Board refused to find that a building management company that
utilized employees supplied by a janitorial company was
a joint employer notwithstanding evidence that the user
dictated the number of workers to be employed, communicated specific work assignments and directives to the
supplier’s manager, and exercised ongoing oversight as
to whether job tasks were performed properly.44 Likewise, the Board has found, contrary to its earlier approach, that cost-plus arrangements between the employing parties are not probative of joint-employer status.45
Even where a putative joint employer has exercised direct control over employees, the Board has given no
weight to various forms of supervision deemed “limited
and routine.” In TLI, for instance, the user employer instructed contract drivers as to which deliveries were to be
made on a given day, filed incident reports with the supplier when drivers engaged in conduct adverse to its operation, received accident reports, and maintained driver
logs and records.46 Nonetheless, the Board concluded
that “the supervision and direction exercised by [the us41
350 NLRB at 1000. The AM Property Board refused to give
weight to a contractual provision requiring that the supplier plan, organize, and coordinate its operations “in conjunction with the directions, requests and suggestions” of the user’s management, and that all
new hires were subject to the initial approval of the user. Id. at 1019.
42
338 NLRB 597, 597 fn. 1 (2002).
43
The Board in Airborne Express added this element in a footnote
without any explanation; it cited only TLI as support. But the TLI Board
did not use the phrase “direct and immediate control,” let alone identify
that concept as the “essential element” in the Board’s test. The Airborne Express majority also asserted that the Board in TLI “abandoned
its previous test in this area, which had focused on a putative joint
employer’s indirect control over matters relating to the employment
relationship.” 338 NLRB at 597 fn. 1. But TLI did not, in fact, purport
to overrule any precedent or alter the Board’s approach.
44
Southern California Gas Co., 302 NLRB 456, 461–462 (1991).
45
See Goodyear Tire and Rubber Co., 312 NLRB 674, 677–678
(1993) (rejecting the argument that participation in a cost-plus contract
represented a form of codetermination).
46
271 NLRB at 799.
BFI NEWBY ISLAND RECYCLERY
er] on a day-to-day basis is both limited and routine.”47
The Board elaborated on this concept in AM Property,
supra, where it stated that “[t]he Board has generally
found supervision to be limited and routine where a supervisor’s instructions consist primarily of telling employees what work to perform, or where and when to
perform the work, but not how to perform the work.”48
There, the Board found that the user’s oversight of a
supplier’s cleaning employees was “limited and routine”
where the user distributed supplies to workers, prepared
their timecards, ensured that their work was done properly, and occasionally assigned work.49
V. REVISITING THE JOINT-EMPLOYER STANDARD
As the Board’s view of what constitutes joint employment under the Act has narrowed, the diversity of workplace arrangements in today’s economy has significantly
expanded. The procurement of employees through staffing and subcontracting arrangements, or contingent employment, has increased steadily since TLI was decided.50
The most recent Bureau of Labor Statistics survey from
2005 indicated that contingent workers accounted for as
much as 4.1 percent of all employment, or 5.7 million
workers.51 Employment in the temporary help services
industry, a subset of contingent work, grew from 1.1 million to 2.3 million workers from 1990 to 2008.52 As of
August 2014, the number of workers employed through
temporary agencies had climbed to a new high of 2.87
million, a 2 percent share of the nation’s work force.53
Over the same period, temporary employment also expanded into a much wider range of occupations.54 A recent report projects that the number of jobs in the em47
Id. The Board also discounted the user’s role in influencing bargaining where user attended the supplier’s collective bargaining negotiations and explained that the contract was in jeopardy if the supplier
failed to achieve cost savings. 271 NLRB at 798–799.
48
350 NLRB at 1001. See also Flagstaff Medical Center, 357
NLRB No. 65 slip op. at 9 (2011), enfd. in part 715 F.3d 928 (D.C. Cir.
2013).
49
350 NLRB at 1001.
50
The Board previously recognized the “ongoing changes in the
American work force and workplace and the growth of joint employer
arrangements, including the increased use of companies that specialize
in supplying ‘temporary’ and ‘contract workers’ to augment the workforces of traditional employers.” M. B. Sturgis, Inc., 331 NLRB 1298,
1298 (2000).
51
Bureau of Labor Statistics, U.S. Department of Labor, “Contingent and Alternative Employment Arrangements, February 2005,” (July
27, 2005).
52
See Tian Luo, et al., “The Expanding Role of Temporary Help
Services from 1990 to 2008,” Monthly Labor Review, Bureau of Labor
Statistics, August 2010 at 12.
53
Steven Greenhouse, “The Changing Face of Temporary Employment,” NY Times website, August, N.Y. TIMES, Aug. 31, 2014, at
http://www.nytimes.com/2014/09/01/upshot/the-changing-face-oftemporary-employment.html
54
See Luo et al., supra at 5.
11
ployment services industry, which includes employment
placement agencies and temporary help services, will
increase to almost 4 million by 2022, making it “one of
the largest and fastest growing [industries] in terms of
employment.”55
This development is reason enough to revisit the
Board’s current joint-employer standard. “[T]he primary
function and responsibility of the Board . . . is that ‘of
applying the general provisions of the Act to the complexities of industrial life.’”56 If the current jointemployer standard is narrower than statutorily necessary,
and if joint-employment arrangements are increasing, the
risk is increased that the Board is failing in what the Supreme Court has described as the Board’s “responsibility
to adapt the Act to the changing patterns of industrial
life.”57 As we have seen, however, the Board has never
clearly and comprehensively explained its joint-employer
doctrine or, in particular, the shift in approach reflected
in the current standard.58 Our decision today is intended
to address this shortcoming. For the reasons that follow,
we are persuaded that the current joint-employer standard
is not mandated by the Act and that it does not best serve
the Act’s policies.
We begin with the obvious proposition that in order to
find that a statutory employer (i.e., an employer subject
to the National Labor Relations Act) has a duty to bargain with a union representing a particular group of
statutory employees, the Act requires the existence of an
employment relationship between the employer and the
employees. Section 2(3) of the Act provides that the
“term ‘employee’ . . . shall not be limited to the employees of a particular employer, unless the Act explicitly
states otherwise.”59 Section 9(c) authorizes the Board to
process a representation petition when it alleges that
“employees . . . wish to be represented for collective bargaining . . . and their employer declines to recognize
their representative.”60 Section 8(a)(5), in turn, makes it
an unfair labor practice for an employer “to refuse to
55
Richard Henderson, “Industry Employment and Output Projections to 2022,” Monthly Labor Review, Bureau of Labor Statistics,
December 2013.
56
Ford Motor Co. v. NLRB, 441 U.S. 488, 496 (1979), quoting
NLRB v. Insurance Agents, 361 U.S. 477, 499 (1960); NLRB v. Erie
Resistor Corp., 373 U.S. 221, 236 (1963); and NLRB v. Steelworkers,
357 U.S. 357, 362–363 (1958).
57
See NLRB v. J. Weingarten, Inc., 420 U.S. 251, 266 (1975).
58
It is well established that even when an agency is creating policies
to fill a gap in an ambiguous statute, the agency has a responsibility to
explain its failure to follow established precedent. Atchison, T. & S.F.
Ry. v. Wichita Bd. of Trade, 412 U.S. 800, 807–809 (1973).
59
29 U.S.C. §152(3) (emphasis added).
60
29 U.S.C. §159(c) (emphasis added).
12
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
bargain collectively with the representatives of his employees.”61
In determining whether an employment relationship
exists for purposes of the Act, the Board must follow the
common-law agency test. The Supreme Court has made
this clear in connection with Section 2(3) of the Act and
its exclusion of “any individual having the status of an
independent contractor” from the Act’s otherwise broad
definition of statutory employees.62 In determining
whether a common-law employment relationship exists
in cases arising under Federal statutes like the Act, the
Court has regularly looked to the Restatement (Second)
of Agency (1958) for guidance.63 Section 220(1) of the
Restatement (Second) provides that a “servant is a person
employed to perform services in the affairs of another
and who with respect to the physical conduct in the performance of the services is subject to the other’s control
or right to control.”
The Board’s joint-employer doctrine is best understood as always having incorporated the common-law
concept of control—as the Supreme Court’s one decision
involving the doctrine confirms. In the Greyhound case,
as we have seen, the Court framed the issue presented as
whether one statutory employer “possessed sufficient
control over the work of the employees to qualify as a
joint employer with” another statutory employer.64 Thus,
the Board properly considers the existence, extent, and
object of the putative joint employer’s control, in the
context of examining the factors relevant to determining
the existence of an employment relationship.65 Accord61
29 U.S.C. §158(a)(5) (emphasis added).
See NLRB v. United Insurance Co. of America 390 U.S. 254,
256–258 (1968). See also FedEx Home Delivery, 361 NLRB No. 55,
slip op. at 1–2 (2014) (reviewing Supreme Court’s application of common-law test in independent-contractor cases arising under Federal
statutes). See also NLRB v. Town & Country Electric, Inc., 516 U.S. 85,
92–95 (1995) (where Congress has used the term “employee” in a
statute without clearly defining it, the Court assumes that Congress
“intended to describe the conventional master-servant relationship as
understood by common-law agency doctrine”); Community for Creative Non-Violence v. Reid, 490 U.S. 730, 739–740 (1989) (same).
63
See, e.g., Nationwide Mutual Insurance Co. v. Darden, 503 U.S.
318, 323–324 (1992) (interpreting Employee Retirement Income Security Act). See also Restatement (Second) of Agency §220, comment g
(“Under the existing regulations and decisions involving the Federal
Labor Relations Act, there is little, if any, distinction between employee and servant as here used.”).
64
Boire v. Greyhound Corp., supra, 376 U.S. at 481.
65
See generally Vizcaino v. U.S. District Court of the Western District of Washington, 173 F.3d 713, 723 (9th Cir. 1999) (describing
Restatement (Second) Sec. 220 factors as “useful” in determining
whether common-law employment relationship existed between worker
and client firm of temporary employment agency for purposes of
ERISA).
Section 220(2) of the Restatement (Second) provides that:
62
ingly, mere “service under an agreement to accomplish
results or to use care and skill in accomplishing results”
is not evidence of an employment, or joint-employment,
relationship.66
Deciding the joint-employer issue under common-law
principles is not always a simple task, just as distinguishing between employees and independent contractors in
the common law can be challenging (as the Supreme
Court has recognized).67 In cases where the common law
would not permit the Board to find joint-employer status,
we do not believe the Board is free to do so. Even where
the common law does permit the Board to find jointemployer status in a particular case, the Board must determine whether it would serve the purposes of the Act to
do so, taking into account the Act’s paramount policy to
“encourage[] the practice and procedure of collective
bargaining” (in the words of Section 1). In other words,
the existence of a common-law employment relationship
is necessary, but not sufficient, to find joint-employer
status.68 As the Supreme Court has explained, “[o]ne of
In determining whether one acting for another is a servant or an independent contractor, the following matters of fact, among others, are
considered:
(a) the extent of control which, by the agreement, the master may exercise over the details of the work;
(b) whether or not the one employed is engaged in a distinct occupation or business;
(c) the kind of occupation, with reference to whether, in the locality,
the work is usually done under the direction of the employer or by a
specialist without supervision;
(d) the skill required in the particular occupation;
(e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
(f) the length of time for which the person is employed;
(g) the method of payment, whether by the time or by the job;
(h) whether or not the work is a part of the regular business of the employer;
(i) whether or not the parties believe they are creating the relation of
master and servant; and
(j) whether the principal is or is not in business.
66
Restatement (Second) of Agency §220, comment e (addressing
distinction between employees and independent contractors).
67
United Insurance, supra, 390 U.S. at 258 (noting the “innumerable situations which arise in the common law where it is difficult to say
whether a particular individual is an employee or an independent contractor”). See also Restatement (Second) of Agency §220, comment c
(“The relation of master and servant is one not capable of exact definition. . . . [I]t is for the triers of fact to determine whether or not there is
a sufficient group of favorable factors to establish the relation.”).
68
The General Counsel urges the Board to find joint-employer status:
where, under the totality of the circumstances, including the way the
separate entities have structured their commercial relationship, the putative joint employer wields sufficient influence over the working
conditions of the other entity’s employees such that meaningful collective bargaining could not occur in its absence. Under this approach,
the Board would return to its traditional standard and would make no
BFI NEWBY ISLAND RECYCLERY
the primary purposes of the Act is to promote the peaceful settlement of industrial disputes by subjecting labormanagement controversies to the mediatory influence of
negotiation.”69 To best promote this policy, our jointemployer standard—to the extent permitted by the common law—should encompass the full range of employment relationships wherein meaningful collective bargaining is, in fact, possible.70
The core of the Board’s current joint-employer standard—with its focus on whether the putative joint employer “share(s) or codetermine(s) those matters governing the essential terms and conditions of employment”—
is firmly grounded in the concept of control that is central to the common-law definition of an employment redistinction between direct, indirect, and potential control over working
conditions and would find joint employer status where “industrial realities” make an entity essential for meaningful bargaining.
Amicus Brief of the General Counsel at 17. We decline to adopt this test
insofar as it might suggest that the applicable inquiry is based on “industrial
realities” rather than the common law. To be sure, however, we agree with
the General Counsel that “direct, indirect, and potential control over working conditions”—at least as we have explained those concepts here— are all
relevant to the joint-employer inquiry.
We also agree with the General Counsel that the “way the separate
entities have structured their commercial relationship” is relevant to the
joint-employer inquiry. Its relevance depends on whether the entities’
relationship tends to show that the putative joint employer controls, or
has the right to control—in the common-law sense—employees’ essential terms and conditions of employment. “Sufficient influence” is not
enough, however, if it does not amount to control.
As explained, we will not find joint-employer status where a putative joint-employer—despite the existence of a common-law employment relationship—could not engage in meaningful collective bargaining. But we reject any suggestion that such status should be found only
where meaningful collective bargaining over employees’ terms and
conditions could not occur without the participation of the putative joint
employer. Where two entities “share or codetermine those matters
governing the essential terms and conditions of employment,” they are
both joint employers—regardless of whether collective bargaining with
one entity alone might still be regarded as meaningful, notwithstanding
that certain terms and conditions controlled only by the other entity
would be excluded from bargaining.
69
Fibreboard Corp. v. NLRB, 379 U.S. 203, 211 (1964).
70
See Management Training Corp., 317 NLRB 1355, 1357 (1995)
(recognizing, with regard to employers with close ties to government
entities, that an employer may engage in meaningful bargaining with
employees even where it does not exercise control over the full range of
economic issues).
Our dissenting colleagues cite Management Training for the proposition that the bargaining obligation should be limited to the employees’
most proximate employer because “employees and their exclusive
bargaining representatives can still engage in meaningful bargaining
under the Act even with an employer who lacks control over a substantial number of essential terms of employment.” But the Board approved
of such limited bargaining in Management Training only because some
terms of employment were controlled by a government entity that was
outside of the Board’s jurisdiction. No such obstacle to bargaining
exists here. Moreover, the thrust of Management Training was that an
employer subject to the Act is required to bargain over the significant
terms of employment that it does control.
13
lationship. The Act surely permits the Board to adopt that
formulation. No federal court has suggested otherwise,
and the Third Circuit in Browning-Ferris, of course, has
endorsed this aspect of the standard.
The Board’s post-Browning-Ferris narrowing of the
joint-employer standard, however, has a much weaker
footing. The Board has never looked to the common law
to justify the requirements that a putative joint employer’s control be exercised and that the exercise be direct
and immediate, not “limited and routine.” This aspect of
the current standard is not, in fact, compelled by the
common law—and, indeed, seems inconsistent with
common-law principles. Because the Board thus is not
obligated to adhere to the current standard, we must ask
whether there are compelling policy reasons for doing so.
The Board’s prior decisions failed to offer any policy
rationale at all, and we are not persuaded that there is a
sound one, given the clear goals of the Act.
Under common-law principles, the right to control is
probative of an employment relationship—whether or
not that right is exercised. Sections 2(2) and 220(1) of
the Restatement (Second) of Agency make this plain, in
referring to a master as someone who “controls or has the
right to control” another and to a servant as “subject to
the [employer’s] control or right to control” (emphasis
added). In setting forth the test for distinguishing between employees and independent contractors, Restatement (Second) Section 220(2), considers (among other
factors) the “extent of control which, by the agreement,
the master may exercise over the details of the work”
(emphasis added). The Board’s joint-employer decisions
requiring the exercise of control impermissibly ignore
this principle.
Nothing about the joint-employer context suggests that
the principle should not apply in cases like this one. Indeed, the Supreme Court’s decision in Greyhound, supra,
was entirely consistent with the Restatement (Second)
when it described the issue as whether one firm “possessed [not exercised] sufficient control over the work of
the employees to qualify as a joint employer.”71 Where a
user employer reserves a contractual right (emphasis
added) to set a specific term or condition of employment
for a supplier employer’s workers, it retains the ultimate
authority to ensure that the term in question is administered in accordance with its preferences. Even where it
appears that the user, in practice, has ceded administration of a term to the supplier, the user can still compel
the supplier to conform to its expectations. In such a
case, a supplier’s apparently independent control over
hiring, discipline, and work direction is actually exer71
Boire v. Greyhound Corp., supra, 376 U.S. at 481.
14
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
cised subject to the user’s control. If the supplier does
not exercise its discretion in conformance with the user’s
requirements, the user may at any time exercise its contractual right and intervene. Where a user has reserved
authority, we assume that it has rationally chosen to do
so, in its own interest. There is no unfairness, then, in
holding that legal consequences may follow from this
choice.72
Just as the common law does not require that control
must be exercised in order to establish an employment
relationship, neither does it require that control (when it
is exercised) must be exercised directly and immediately,
and not in a limited and routine manner (as the Board’s
current joint-employer standard demands). Comment d
(“Control or right to control”) to Section 220(1) of the
Restatement (Second) observes that “the control or right
to control needed to establish the relation of master and
servant may be very attenuated.”73 The common law,
indeed, recognizes that control may be indirect. For example, the Restatement of Agency (Second) §220, comment l (“Control of the premises”) observes that
[i]f the work is done upon the premises of the employer
with his machinery by workmen who agree to obey
general rules for the regulation of the conduct of employees, the inference is strong that such workmen are
the servants of the owner...
and illustrates this principle by citing the example of a coal
mine owner employing miners who, in turn, supply their
own helpers. Both the miners and their helpers are servants
of the mine owner.74 As the illustration demonstrates, the
common law’s “subservant” doctrine addresses situations in
which one employer’s control is or may be exercised indirectly, where a second employer directly controls the em72
The dissent observes that the Board has assigned probative weight
only to evidence of actual authority or control in its assessment of
various statutory exclusions, including independent contractors and
supervisors. But the guiding policy in those areas, as here, is to ensure
that statutory coverage is fully effectuated. See FedEx Home Delivery,
361 NLRB No. 55, slip. op. at 9 (2014), quoting Holly Farms Corp. v.
NLRB, 517 U.S. 392, 399 (1996), (“[A]dministrators and reviewing
courts must take care to assure that exemptions from NLRA coverage
are not so expansively interpreted as to deny protection to workers the
Act was designed to reach.”). To recognize the significance of the right
to control in the joint employment context, in which two putative employers are involved, both serves that policy and is consistent with the
common law.
73
“[I]t is not so much the actual exercise of controls as possession
of the right to control which is determinative. In other words, ‘subject
to the control of the master’ does not mean that the master must stand
over the servant and constantly give directions.” The Law of Agency
and Partnership Sec. 50 (2nd ed. 1990).
74
See also Restatement (Second) of Agency, Sec. 5, comments e &
f, & illustration 6 (discussing subservant relationship between mine
owner and miner’s helper).
ployee.75 The Federal courts have applied the “subservant”
doctrine in cases under Federal statutes that incorporate the
common-law standard for determining an employment relationship76—including the National Labor Relations Act.77
The most recent authoritative effort to restate the common
law related to employment is consistent with traditional
doctrine and similarly makes clear that direct and immediate
control is not required.78
In this respect, too, nothing supports the view that
common-law principles can or should be ignored in the
Board’s joint-employer doctrine. Board case law suggests that in many contingent arrangements, control over
employees is bifurcated between employing firms with
each exercising authority over a different facet of decision making. Where the user firm owns and controls the
premises, dictates the essential nature of the job, and
imposes the broad, operational contours of the work, and
the supplier firm, pursuant to the user’s guidance, makes
specific personnel decisions and administers job performance on a day-to-day basis, employees’ working conditions are a byproduct of two layers of control. The
75
See Restatement (Second) of Agency, Sec. 5 (“Subagents and
Subservants”) (1958); Warren A. Seavey, Subagents and Subservants,
68 Harv. L. Rev. 658, 669 (1955) (in subservant situation, the “employing servant . . . is in the position of a master to those whom he employs
but they are also in the position of servants to the master in charge of
the entire enterprise”). The Restatement (Second) Sec. 5, comment e
observes that:
Illustrations of the subservant relation include that between
the mine owner and the assistant of a miner who furnishes his
own tools and assistants, the latter, however, being subject to the
general mine discipline; the relation between the owner of a
building and an employee of a janitor; the relation between the
employees of a branch manager of a corporation where the branch
manager is free to control and pay his assistants, but where all are
subject to control by the corporation as to their conduct.
76
See, e.g., Schmidt v. Burlington Northern & Santa Fe Railway
Co., 605 F. 3d 686, 689–690 (9th Cir. 2010) (applying Federal Employers’ Liability Act and finding evidence sufficient to establish employment relationship between railroad line and employee of railroadcar maintenance and repair company). Cf. Williamson v. Consolidated
Rail Corp., 926 F.2d 1344, 1350 (3d. Cir. 1991) (observing that use of
subservant doctrine is unnecessary where there is evidence of direct
control). See generally Kelley v. Southern Pacific Co., 419 U.S. 318,
325 (1974) (recognizing subservant doctrine for purposes of Federal
Employers’ Liability Act).
77
Allbritton Communications Co. v. NLRB, 766 F.2d. 812, 818–819
(3d Cir. 1985) (upholding Board’s determination that newspaper was
statutory employer of mailroom employees, although second employer
operated mailroom).
78
See Restatement of Employment Law, Section 1.04(b) (June 2015)
(“An individual is an employee of two or more joint employers if (i) the
individual renders services to at least one of the employers and (ii) that
employer and the other joint employers each control or supervise such
rendering of services as provided in § 1.01(a)(3).”)(emphasis added).
(In relevant part, Sec. 1.01(a)(3) defines an employee as an individual
who renders service to an employer who “controls the manner and
means by which the individual renders service.”)
BFI NEWBY ISLAND RECYCLERY
Board’s current focus on only direct and immediate control acknowledges the most proximate level of authority,
which is frequently exercised by the supplier firm, but
gives no consideration to the substantial control over
workers’ terms and conditions of employment of the user.79
The common-law definition of an employment relationship establishes the outer limits of a permissible
joint-employer standard under the Act. But the Board’s
current joint-employer standard is significantly narrower
than the common law would permit. The result is that
employees covered by the Act may be deprived of their
statutory right to bargain effectively over wages, hours,
and working conditions, solely because they work pursuant to an arrangement involving two or more employing
firms, rather than one. Such an outcome seems clearly at
odds with the policies of the Act.
VI. THE RESTATED JOINT-EMPLOYER STANDARD
Having fully considered the issue and all of the arguments presented, we have decided to restate the Board’s
legal standard for joint-employer determinations and
make clear how that standard is to be applied going forward.
We return to the traditional test used by the Board (and
endorsed by the Third Circuit in Browning-Ferris): The
Board may find that two or more entities are joint employers of a single work force if they are both employers
within the meaning of the common law, and if they share
or codetermine those matters governing the essential
terms and conditions of employment. In evaluating the
allocation and exercise of control in the workplace, we
will consider the various ways in which joint employers
may “share” control over terms and conditions of employment or “codetermine” them, as the Board and the
courts have done in the past.80
79
As noted in several briefs in support of the Union, the Board’s
longstanding legal formulation for joint-employer status, even post-TLI,
nominally acknowledges this bifurcated dynamic by covering employers that “codetermine” employees’ terms and conditions of employment. But the Board’s restrictive application of the test, which precludes any holistic assessment of the way control is allocated between
the contracting parties, undermines this aspect of the joint-employer
standard.
80
In some cases (or as to certain issues), employers may engage in
genuinely shared decision-making, e.g., they confer or collaborate
directly to set a term of employment. See NLRB v. Checker Cab Co.,
367 F.2d 692, 698 (6th Cir. 1966) (noting that employers “banded
themselves together so as to set up joint machinery for hiring employees, for establishing working rules for employees, for giving operating
instructions to employees, for disciplining employees for violation of
rules, for disciplining employees for violation of safety regulations”).
Alternatively, employers may exercise comprehensive authority over
different terms and conditions of employment. For example, one employer sets wages and hours, while another assigns work and supervises
employees. See D & F Industries, 339 NLRB 618, 640 (2003). Or
15
We adhere to the Board’s inclusive approach in defining “essential terms and conditions of employment.” The
Board’s current joint-employer standard refers to “matters relating to the employment relationship such as hiring, firing, discipline, supervision, and direction” a nonexhaustive list of bargaining subjects.81 Essential terms
indisputably include wages and hours, as reflected in the
Act itself.82 Other examples of control over mandatory
terms and conditions of employment found probative by
the Board include dictating the number of workers to be
supplied;83 controlling scheduling,84 seniority, and overtime;85 and assigning work and determining the manner
and method of work performance.86 This approach has
generally been endorsed by the Federal courts of appeals.87
Also consistent with the Board’s traditional approach,
we reaffirm that the common-law concept of control informs the Board’s joint-employer standard. But we will
no longer require that a joint employer not only possess
the authority to control employees’ terms and conditions
employers may affect different components of the same term, e.g., one
employer defines and assigns work tasks, while the other supervises
how those tasks are carried out. See Hamburg Industries, supra, 193
NLRB at 67. Finally, one employer may retain the contractual right to
set a term or condition of employment. See Hoskins Ready-Mix Concrete, supra, 161 NLRB at 1493.
81
TLI, supra, 271 NLRB at 798 (emphasis added). After TLI, the
Board has continued to take a broad, inclusive approach to determining
the relevant object of a putative joint employer’s control, i.e., which
terms and conditions of employment matter to the joint-employer inquiry. See Aldworth Co., 338 NLRB 137, 139 (2002) (the “relevant
facts involved in [the joint-employer] determination extend to nearly
every aspect of employees’ terms and conditions of employment and
must be given weight commensurate with their significance to employees’ work life”), enfd. sub nom. Dunkin’ Donuts Mid-Atlantic Distribution Center v. NLRB, 363 F.3d 437 (D.C. Cir. 2004).
82
Sec. 8(d), defining an employer’s duty to bargain, specifically refers to the obligation to “confer in good faith over wages, hours, and
other terms and conditions of employment.” 29 U.S.C. Sec. 158(d)
(emphasis added).
83
Mobil Oil, supra, 219 NLRB at 516.
84
Continental Winding Co., 305 NLRB 122, 123 fn. 4 (1991).
85
D&F Industries, supra, 339 NLRB at 649 fn. 77.
86
DiMucci Const. Co. v. NLRB., 24 F.3d 949, 952 (7th Cir. 1994)
(“Factors to consider in determining joint employer status are: (1) supervision of employees’ day-to-day activities; (2) authority to hire or
fire employees; (3) promulgation of work rules and conditions of employment; (4) issuance of work assignments; and (5) issuance of operating instructions”).
87
See, e.g., Tanforan Park Food Purveyors Council v. NLRB, 656
F.2d 1358, 1361 (9th Cir. 1981); Sun-Maid Growers of California v.
NLRB, 618 F.2d 56, 59 (9th Cir. 1980) (“A joint employer relationship
exists when an employer exercises authority over employment conditions which are within the area of mandatory collective bargaining.”);
Cabot Corp., 223 NLRB 1388, 1389-1390 (1976), enfd. sub nom.
International Chemical Workers Union Local 483 v. NLRB, 561 F.2d
253 (D.C. Cir. 1977) (labor relations policies of the contractor or impact over the wages, hours, and working conditions of the contractor’s
employees).
16
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
of employment, but must also exercise that authority, and
do so directly, immediately, and not in a “limited and
routine” manner. Accordingly, we overrule Laerco, TLI,
A&M Property, and Airborne Express, supra, and other
Board decisions, to the extent that they are inconsistent
with our decision today. The right to control, in the
common-law sense, is probative of joint-employer status,
as is the actual exercise of control, whether direct or indirect.
The existence, extent, and object of a putative joint
employer’s control, of course, all may present material
issues. For example, it is certainly possible that in a particular case, a putative joint employer’s control might
extend only to terms and conditions of employment too
limited in scope or significance to permit meaningful
collective bargaining. Moreover, as a rule, a joint employer will be required to bargain only with respect to
such terms and conditions which it possesses the authority to control.
The dissent repeatedly criticizes our decision as articulating a test under which “there can be no certainty or
predictability regarding the identity of the ‘employer.’”
But we do not and cannot attempt today to articulate every fact and circumstance that could define the contours of
a joint employment relationship. Issues related to the
nature and extent of a putative joint-employer’s control
over particular terms and conditions of employment will
undoubtedly arise in future cases—just as they do under
the current test—and those issues are best examined and
resolved in the context of specific factual circumstances.
In this area of labor law, as in others, the “‘nature of the
problem, as revealed by unfolding variant situations,’
requires ‘an evolutionary process for its rational response, not a quick, definitive formula as a comprehensive answer.”’88
Further, while our dissenting colleagues concede that
the common law must form the basis of the Board’s
joint-employer test, they seem unwilling to apply its
mode of analysis. As the Supreme Court has acknowledged, multifactor common-law inquiries are inherently
nuanced and indeterminate: “In such a situation as this
there is no shorthand formula or magic phrase that can be
applied to find the answer, but all of the incidents of the
relationship must be assessed and weighed with no one
factor being decisive. What is important is that the total
factual context is assessed in light of the pertinent common-law agency principles.”89 Accordingly, the nuanced
approach that the dissent decries is a longstanding neces88
Eastex, Inc. v. NLRB, 437 U.S. 556, 574–575 (1978), quoting
Electrical Workers v. NLRB, 366 U.S. 667, 674 (1961).
89
United Insurance, supra, 390 U.S. at 258.
sity of our common-law mandate, and not a novel or discretionary feature that we introduce here.
Our dissenting colleagues also accuse us of articulating
a test “with no limiting principle” that “removes all limitations on what kind or degree of control over essential
terms and conditions of employment may be sufficient to
warrant a joint-employer finding.” This is simply not the
case. The dissent ignores the limitations that are inherent
to the common law, particularly those set forth in the
Restatement provisions enumerated above. Instead, the
dissent suggests that, under the revised joint-employer
test, a homeowner who hires a plumber or a lender who
sets the homeowner’s financing terms may each be
deemed a statutory employer. But by any common-law
analysis, these parties will not exercise, or have the right
to exercise, the requisite control over the details of employees’ work to forge common-law employment relationships. It should therefore come as no surprise that
the annals of Board precedent contain no cases that implicate the consumer services purchased by unsuspecting
homeowners or lenders.
The dissent is particularly pointed in its criticism of
our assignment of probative weight to a putative employer’s indirect control over employees; it contends that
“anyone contracting for services, master or not, inevitably will exert and/or reserve some measure of indirect
control by defining the parameters of the result desired to
ensure he or she gets the benefit of his or her bargain.”
We do not suggest today that a putative employer’s bare
rights to dictate the results of a contracted service or to
control or protect its own property constitute probative
indicia of employer status. Instead, we will evaluate the
evidence to determine whether a user employer affects
the means or manner of employees’ work and terms of
employment, either directly or through an intermediary.
In this case, for instance, BFI communicated precise directives regarding employee work performance through
Leadpoint’s supervisors. We see no reason why this obvious control of employees by BFI should be discounted
merely because it was exercised via the supplier rather
than directly.
Finally, the dissent asserts that today’s decision gives
the Board license to find joint-employer status based on
only the slightest, most tangential evidence of control
and “any degree of indirect or reserved control over a
single term . . . may suffice to establish joint-employer
status.” Today’s decision, however, makes clear that “all
of the incidents of the relationship must be assessed.”90
Here, for example, our conclusion that BFI is a joint employer is based on a full assessment of the facts (set forth
90
United Insurance, supra, 390 U.S. at 258.
BFI NEWBY ISLAND RECYCLERY
below) that reveals multiple examples of reserved, direct,
and indirect control over Leadpoint employees.
VII. RESPONSE TO DISSENT’S ARGUMENTS REGARDING THE
COMMON LAW
Notwithstanding the strong basis in common law for
the standard we adopt, our dissenting colleagues assert
repeatedly that the Board is not applying common law
but instead reverting to the “economic realities” test that
was once applied by the Supreme Court in NLRB v.
Hearst Publications, 322 U.S. 111 (1944). In Hearst, the
Court interpreted the Act to include “employees (who)
are at times brought into an economic relationship with
employers who are not their employers”; to “reject conventional limitations” in defining an employee or employer; and to intend that those definitions be applied
“broadly . . . by underlying economic facts.”91 Our dissenting colleagues also assert that while the Hearst
standard would include indirect control over terms of
employment within the definition of joint employer,
common law does not.
Both of these assertions are incorrect. As we have already made clear, our revised standard considers—as
does common law—only an entity’s control over terms
of employment, not the wider universe of all “underlying
economic facts” that surround an employment relationship.92 Moreover, courts applying the “economic realities” test for an employer under the Fair Labor Standards
Act and the Agricultural Workers Protection Act
(AWPA) have recognized that although that test is significantly more expansive than the common-law test, indirect control over terms of employment is clearly a factor
in the common-law test.93
91
Id. at 129.
Citing Justice Stewart’s concurrence in Fibreboard Corp. v.
NLRB, 379 U.S. 203 (1964), the dissent sets up a straw man suggesting
that our test encroaches on an employer’s decisions concerning the
volume and kind of advertising expenditures, product design, the manner of financing, and sales. Here, we are dealing only with subjects that
are indisputably bargainable.
93
“[The factor of] ‘degree of supervision by the grower, direct or
indirect, of the work’ [regulation citation omitted] . . . like the growers’
control over the workers, has more to do with common-law employment concepts of control than with economic dependence.” Antenor v.
D & S Farms, 88 F.3d 925, 934 (11th Cir. 1996) (applying AWPA,
emphasis added). “[I]n considering a joint-employment relationship
[under the AWPA] . . . our inquiry looks not to the common law definitions of employer and employee (for instance, to tests measuring the
amount of control an ostensible employer exercised over a putative
employee), but rather to the ‘economic reality’ of all the circumstances
concerning whether the putative employee is economically dependent
upon the alleged employer.” Id. at 933, quoting Aimable v. Long &
Scott Farms, 20 F.3d 434, 439 (11th Cir. 1994) (emphasis added). See
also Williamson v. Consolidated Rail Corp., supra, 926 F.2d at 1350 (in
the common-law test for an employment relationship under FELA, “the
92
17
The dissent also insists that the “current test is fully
consistent with the common law agency principles” and
should not be revisited or altered. But it fails to dispute
or even acknowledge the extensive legal authority we
cite to establish the common-law foundation of our approach.94
factual issue before the jury included direct control, as well as indirect
control through sub-agency.”)
94
Even where our dissenting colleagues cite case law, their efforts
are wholly unpersuasive. In support of their contention (notwithstanding their acknowledgment to the contrary) that the common law requires proof of direct and immediate control to substantiate employer
status, our colleagues rely on a number of early common-law decisions
that merely confirm the traditional legal distinction between an employer’s control over the final product and an employer’s control over
the work of employees, which we do not dispute. Our colleagues also
cite various independent-contractor decisions to support their proposition that courts have “implicitly limited their analysis to looking for
direct and immediate control.” But none of these decisions hold, even
implicitly, that the existence of indirect control would not be probative
of employer status; they are merely garden-variety independentcontractor cases in which courts found that individuals were not employees based on the totality of the circumstances. The dissent’s attempt to glean any kind of general principle disfavoring indirect control
as a relevant factor from these decisions—without citing any specific
facts—is tenuous at best. Likewise, the comments from Sec. 220 of the
Restatement (Second) of Agency on which our colleagues rely do not
state or suggest that the consideration of indirect control is proscribed
under the common law.
As to the more recent circuit court decisions that our colleagues cite,
the dissent’s assertions regarding direct control depend largely on the
quotation of key phrases taken out of context. In Gulino v. N.Y. State
Education Dept., 460 F.3d 361 (2d Cir. 2006), for instance, the court
found that the Education Department was not a joint employer (subject
to Title VII liability) because it did not hire, promote, or demote teachers, or determine their pay, tenure or benefits. Id. at 379. Although the
court stated that it was looking for a “level of control [that] is direct,
obvious, and concrete, not merely indirect or abstract”, it did so only to
emphasize that all of the evidence presented to support a joint-employer
finding was attenuated and insubstantial. Id. In Doe I v. Wal-Mart
Stores, Inc., 572 F.3d 677 (9th Cir. 2009), the plaintiffs were overseas
employees who alleged that Wal-Mart was their joint employer because
it contracted with their local employers for production of goods. The
court emphasized that Wal-Mart contracted with the factories only
regarding prices, the quality of products, and the materials used. Id. at
683. As in Gulino, the court’s statement that Wal-Mart did not have the
right to exercise an “immediate level of day to day control” over employees was a reflection of Wal-Mart’s total lack of control over working conditions rather than a specific holding on the probative value of
indirect control evidence. Id. Indeed, neither of these cases were close,
and the courts’ decisions did not turn on any refusal to assign weight to
indirect control; rather, in both decisions, there was little if any relevant
evidence of control of any sort. In Patterson v. Domino’s Pizza, LLC,
333 P.3d 723, 740 (Cal. 2014), while the Supreme Court of California
stated that its employer standard required “a comprehensive and immediate level of day-to-day authority over matters such as hiring, firing,
direction, supervision, and discipline of the employee” (internal quotations omitted), the court was expressly relying on precedent under the
California Fair Employment and Housing Act. That decision also addressed the particularized features of franchisor/franchisee relationships, none of which are present here.
18
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
VIII. APPLICATION OF THE RESTATED TEST
With the above principles in mind, we evaluate here
whether BFI constitutes a joint employer under the Act.
As always, the burden of proving joint-employer status
rests with the party asserting that relationship.95 Having
assessed all of the relevant record evidence, we conclude
that the Union has met its burden of establishing that BFI
is a statutory joint employer of the sorters, screen cleaners, and housekeepers at issue. BFI is an employer under
common-law principles,96 and the facts demonstrate that
it shares or codetermines those matters governing the
essential terms and conditions of employment for the
Leadpoint employees. In many relevant respects, its right
to control is indisputable. Moreover, it has exercised that
control, both directly and indirectly. Finding jointemployer status here is consistent with common-law
principles, and it serves the purposes of the National Labor Relations Act. We rely on the following factors in
reaching this conclusion.
A. Hiring, Firing, and Discipline
BFI possesses significant control over who Leadpoint
can hire to work at its facility. By virtue of the parties’
Agreement, which is terminable at will,97 BFI retains the
right to require that Leadpoint “meet or exceed [BFI’s]
own standard selection procedures and tests,”98 requires
that all applicants undergo and pass drug tests, and proscribes the hiring of workers deemed by BFI to be ineligible for rehire.99 Although BFI does not participate in
95
See, e.g. Flagstaff Medical Center, supra, 357 NLRB No. 65 slip
op. at 9.
96
It is clear that Leadpoint employees are, in the words of Restatement (Second) of Agency §220(1) “employed to perform services in the
affairs of” BFI and “with respect to the physical conduct in the performance of the services” are “subject to [BFI’s] control or right to control.” The record shows that BFI engages in “de facto close supervision” of the work of Leadpoint employees; that the work of Leadpoint
employees “does not require the services of one highly educated or
skilled;” that Leadpoint employees have “employment over a considerable period of time with regular hours;” and that the work of Leadpoint
employees “is part of the regular business” of BFI. Restatement (Second) of Agency Sec. 220, comment h (“Factors indicating the relation
of master and servant”). As a general matter, this case closely resembles the situation addressed in Restatement (Second) Sec. 220, comment l, which explains that where “work is done upon the premises of
the employer with his machinery by workmen who agree to obey general rules for the regulation of the conduct of employees, the inference
is strong that such workmen are the servants of the owner.” Finally, the
record here fairly permits categorizing the Leadpoint employees as
subservants of BFI, as well as servants of Leadpoint.
97
See Value Village, supra, 161 NLRB at 607; Mobil Oil, supra,
219 NLRB at 516 (relying on user’s right to terminate contract at will
as evidence of control).
98
Applicants are tested on BFI’s equipment and are required to
meet specific productivity benchmarks in order to qualify for hire.
99
See K-Mart, 159 NLRB 256, 258 (1966) (relying, in part, on contract language stating that contracting parties would not “hire an em-
Leadpoint’s day-to-day hiring process, it codetermines
the outcome of that process by imposing specific conditions on Leadpoint’s ability to make hiring decisions.
Moreover, even after Leadpoint has determined that an
applicant has the requisite qualifications, BFI retains the
right to reject any worker that Leadpoint refers to its facility “for any or no reason.”100
Similarly, BFI possesses the same unqualified right to
“discontinue the use of any personnel” that Leadpoint
has assigned.101 Although BFI managers testified that
they have never discontinued use of a Leadpoint employee or been involved in disciplinary procedures, record
evidence includes two specific instances where BFI Operations Manager Keck reported employees’ misconduct
to Leadpoint and “request[ed] their immediate dismissal.” In response to Keck’s directive, Leadpoint officials
immediately removed the employees from their line duties and dismissed them from the BFI facility shortly
thereafter. Though the evidence shows that Leadpoint
conducted its own investigation of the alleged misconduct, it is also plain that the outcome was preordained by
BFI’s ultimate right under the terms of the Agreement to
dictate who works at its facility.102
B. Supervision, Direction of Work, and Hours
In addition, BFI exercises control over the processes
that shape the day-to-day work of the petitioned-for employees. Of particular importance is BFI’s unilateral control over the speed of the streams and specific productivity standards for sorting.103 BFI argues that, although it
controls the pace of work, Leadpoint supervisors alone
decide how employees will respond to BFI’s adjustments. This characterization of the process, however,
discounts the clear and direct connection between BFI’s
decisions and employee work performance. The eviployee or former employee of the other without first checking” with the
other party).
100
See Pacemaker Driver Service, 269 NLRB 971, 975 (1984),
enfd. 768 F.2d 778 (6th Cir. 1985) (relying on user’s unilateral right to
reject any driver referred by contractor); Lowery Trucking, supra, 177
NLRB at 15 (noting that “while [the user] never rejected a driver hired
by [the supplier], it had the right to do so.”).
101
See Ref-Chem Co., supra, 169 NLRB at 379 (emphasizing user’s
“virtually unqualified right to request the removal of an employee of
the contractor.”); Hamburg Industries, supra, 193 NLRB at 67 (relying
on user’s right to force supplier to remove employees from its plant).
102
As Keck stated in his e-mail to Leadpoint on this matter, the
misconduct Keck witnessed “is all I need to proceed.” See Grand
Central Liquors, 155 NLRB 295, 297 (1965) (noting that where the
user requested the discharge of employees, the supplier complied).
103
Clayton B. Metcalf, supra, 223 NLRB at 644 (emphasizing that
putative employer had “day-to-day responsibility for the overall operation of the [facility] and all . . . operations were performed in accordance with [its] . . . plan” and that it “exercised considerable control over
the manner and means by which [the subcontractor] performed its
operations.”)
BFI NEWBY ISLAND RECYCLERY
dence reveals that the speed of the line and the resultant
productivity issues have been a major source of strife
between BFI and the workers. BFI managers have directly implored workers to work faster and smarter; likewise,
they have repeatedly counseled workers, in the interest of
productivity, against stopping the streams. Tellingly,
there is no evidence that Leadpoint has had any say in
these decisions. Indeed, given BFI’s “ultimate control”
over these matters, it is difficult to see how Leadpoint
alone could bargain meaningfully about such fundamental working conditions as break times, safety, the speed
of work, and the need for overtime imposed by BFI’s
productivity standards.104
BFI managers also assign the specific tasks that need
to be completed, specify where Leadpoint workers are to
be positioned, and exercise near-constant oversight of
employees’ work performance.105 The fact that many of
their directives are communicated through Leadpoint
supervisors hardly disguises the fact that BFI alone is
making these decisions.106 Further, in numerous instances, BFI has dispensed with the middleman altogether.
BFI managers have communicated detailed work directions to employees on the stream; held meetings with
employees to address customer complaints and business
objectives, and to disseminate preferred work practices;
and assigned to employees tasks that take precedence
over any work assigned by Leadpoint.107 We find that all
of these forms of control – both direct and indirect – are
indicative of an employer-employee relationship.
In addition, BFI specifies the number of workers that it
requires,108 dictates the timing of employees’ shifts,109
104
Int’l Trailer, supra, 133 NLRB at 1529. See also Carrier Corp. v.
NLRB, supra, 768 F.2d at 781 (finding substantial evidence in support
of the Board’s joint-employer finding where putative employer “exercised substantial day-to-day control over the drivers’ working conditions.”).
105
See Hamburg Industries, supra, 193 NLRB at 67 (finding indicia
of control where putative employer instructed supplier on the work to
be performed and “constantly check[ed] the performance of the workers and the quality of the work.”)
106
See Int’l Trailer, supra, 133 NLRB at 1529 (noting that, although
putative employer did not directly supervise employees, it issued orders, through the other firm’s supervisor, as to how employees should
perform their duties).
107
See Sun-Maid Growers, supra, 239 NLRB at 350 (finding indicia
of control where putative employer’s supervisors “occasionally provided specifications and instructions regarding the manner in which the
work could be performed” and directly assigned work that took precedence over other assignments).
108
See Mobil Oil, supra, 219 NLRB at 516 (relying on user’s ability
to dictate the size of the supplier’s crew); Hamburg Industries, supra,
193 NLRB at 67 (same).
109
BFI also affects the length of break periods by requiring employees to clean around their work stations before releasing them on break.
19
and determines when overtime is necessary.110 Although
Leadpoint is responsible for selecting the specific employees who will work during a particular shift, it is BFI
that makes the core staffing and operational decisions
that define all employees’ work days. In turn, Leadpoint
employees are required to obtain the signature of an authorized BFI representative attesting to their “hours of
services rendered” each week; failure to do so permits
BFI to refuse payment to Leadpoint for time claimed by
a Leadpoint worker.
C. Wages
We find too that BFI plays a significant role in determining employees’ wages. Under the parties’ contract,
Leadpoint determines employees’ pay rates, administers
all payments, retains payroll records, and is solely responsible for providing and administering benefits. But
BFI specifically prevents Leadpoint from paying employees more than BFI employees performing comparable work.111 BFI’s employment of its own sorter at $5
more an hour creates a de facto wage ceiling for
Leadpoint workers. In addition, BFI and Leadpoint are
parties to a cost-plus contract, under which BFI is required to reimburse Leadpoint for labor costs plus a
specified percentage markup.112 Although this arrangement, on its own, is not necessarily sufficient to create a
joint-employer relationship,113 it is coupled here with the
apparent requirement of BFI approval over employee pay
increases.114 Thus, after new minimum wage legislation
went into effect, BFI and Leadpoint entered into an
agreement verifying that BFI would pay a higher rate for
the services of Leadpoint employees.115
110
Sun-Maid Growers, supra, 239 NLRB at 351 (finding indicia of
control where the user dictated employees’ “basic workweek” and
number of overtime hours available based on its production schedule);
Floyd Epperson, supra, 202 NLRB at 23 (user established work schedules).
111
See K-Mart, 161 NLRB 1127, 1129 (1966) (relying on the fact
that putative employer directed other firm to start full-time employees
at no less than the rate that it paid to certain categories of its employees).
112
See CNN America, 361 NLRB No. 47 slip op. at 6 (2014) (relying on parties’ cost-plus arrangement as evidence of joint-employer
status); Hoskins Ready-Mix Concrete, supra, 161 NLRB at 1493, and
the cases cited in footnote 37.
113
See Pulitzer Publishing Co., 242 NLRB 35, 36 (1979), enf. denied 618 F.2d 1275 (8th Cir. 1980), cert. denied 499 U.S. 875 (1980)
(assessing parties’ cost-plus contract as one factor among many).
114
See Hoskins Ready-Mix Concrete, supra, 161 NLRB at 1493 (relying on the fact that supplier was required to consult with user and
obtain clearance before changing pay rates or hiring new employees at
a rate above a specified level).
115
In addition to the factors stated, we rely on the fact that BFI, by
the terms of the Agreement, compels Leadpoint and its employees to
comply with BFI’s safety policy, and reserves the right to enforce its
safety policy as to the workers. See Hamburg Industries, 193 NLRB at
67 (user requires all employees to follow its own safety rules); Man-
20
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
We find BFI’s role in sharing and codetermining the
terms and conditions of employment establishes that it is
a joint employer with Leadpoint.116 Accordingly, we
reverse the Regional Director and find that BFI and
Leadpoint are joint employers of the sorters, screen
cleaners, and housekeepers at issue.117
VIII. THE IMPLICATIONS OF TODAY’S DECISION
Today’s decision is grounded firmly in the common
law, while advancing the policies of the National Labor
Relations Act. In both respects, its approach is superior
to prior law, which, as we have explained, imposed restrictions on the joint-employer standard that have no
common-law basis and that foreclosed collective bargaining even in situations where it could be productive.
Certainly, we have modified the legal landscape for employers with respect to one federal statute, the National
Labor Relations Act.118 But “reevaluating doctrines,
refining legal rules, and sometimes reversing precedent
are familiar parts of the Board’s work—and rightly
so.”119 As recognized by the Supreme Court:
The use by an administrative agency of the evolutional
approach is particularly fitting. To hold that the Board’s
earlier decisions froze the development . . . of the national labor law would misconceive the nature of administrative decisionmaking.
power, 164 NLRB 287, 287–288 (1967) (user gives employees safety
instruction and conducts periodic safety meetings). We also note that
BFI and Leadpoint have jointly determined, also by terms of the
Agreement, that employees cannot work at BFI for more than 6
months. We find that these terms are further indicative of BFI’s status
as an employer of the employees at issue.
116
See Hamburg Industries, supra, 193 NLRB at 67 (finding user to
be joint-employer, in substantially similar factual scenario, where user
had “considerable control over [supplier’s] operations in such critical
areas as work instructions, quality control and the right to reject finished work, work scheduling, and indirect control over wages”).
117
The dissent, in its brief discussion of the facts in this case, contends that “the majority’s evidence amounts to a collection of general
contract terms or business practices . . . plus a few extremely limited
actions that had some routine impact on Leadpoint employees.” In so
doing, however, the dissent cannot avoid setting out a list of nine specific ways in which BFI has exercised or reserved control over
Leadpoint employees. In our view, our colleagues’ accounting of these
factors makes a persuasive case for BFI’s joint-employer status. Nonetheless, we note that the dissent’s analysis excludes or downplays several additional critical factors, including BFI’s control over the speed of
the lines, productivity standards, and the use of the stop switches, as
well as BFI’s direct and ongoing instruction of Leadpoint employees in
the details of job performance.
118
The Board’s joint-employer standard, of course, does not govern
joint-employer determinations under the many other statutes, federal
and state, that govern the workplace and that use a variety of different
standards to determine whether a particular business entity has legal
duties with respect to particular workers.
119
UGL-UNICCO Service Co., 357 NLRB No. 76, slip op. at 5
(2011).
NLRB v. J. Weingarten, supra, 420 U.S. at 265–266.
Our colleagues’ long and hyperbolic dissent persistently mischaracterizes the standard we adopt today and
grossly exaggerates its consequences, but makes no real
effort to address the difficult issue presented here: how
best to “encourag[e] the practice and procedure of collective bargaining” (in the Act’s words) when otherwise
bargainable terms and conditions of employment are
under the control of more than one statutory employer.
Instead, the dissent puts the preservation of the current
status quo far ahead of any cognizable statutory policy.
Our colleagues never adequately explain why the Board
should adhere to an approach that they essentially concede is not compelled by the common law and that demonstrably fails to fully advance the goals of the Act.120
As a practical matter, the criticisms that our colleagues
level at our joint-employer standard could be made about
the concept of joint employment generally—which has
been recognized under the Act for many decades and
which has long been a familiar feature of labor and employment law. The law-school-exam hypothetical of
doomsday scenarios that they predict will result from
today’s decision is likewise based on an exaggeration of
the challenges that can sometimes arise when multiple
employers are required to engage in collective bargaining. The potential for these types of challenges to arise
has existed for as long as the Board has recognized the
joint-employer concept. Nonetheless, employers and
unions have long managed to navigate these challenges,
and the predicted disasters have not come to pass.121
120
The dissent is simply wrong when it insists that today’s decision
“fundamentally alters the law” with regard to the employment relationships that may arise under various legal relationships between different
entities: “lessor-lessee, parent-subsidiary, contractor-subcontractor,
franchisor-franchisee, predecessor-successor, creditor-debtor, and contractor-consumer.” None of those situations are before us today, and we
decline the dissent’s implicit invitation to address the facts in every
hypothetical situation in which the Board might be called on to make a
joint-employer determination. As we have made clear, the commonlaw test requires us to review, in each case, all of the relevant control
factors that are present determining the terms of employment. In this
case we are specifically concerned with only two employers: BFI and
Leadpoint.
Likewise, we need not address the dissent’s assertion that the decision somehow undermines other rules under the Act that are not at issue
here, such as the prohibition on secondary boycott activity, other than
to emphasize that our decision today does not modify any other legal
doctrine, create “different tests” for “other circumstances,” or change
the way that the Board’s joint-employer doctrine interacts with other
rules or restrictions under the Act.
121
For example, 20 years ago, the Board changed its approach in
cases involving government contractors, rejecting the position that the
Board should assert jurisdiction only where the contractor controlled
economic terms and conditions of employment. Management Training
Corp., supra. The dissent insisted that the Board had “radically
change[d] extant law,” adopting a “doctrine that ha[d] virtually no
BFI NEWBY ISLAND RECYCLERY
It is not the goal of joint-employer law to guarantee the
freedom of employers to insulate themselves from their
legal responsibility to workers, while maintaining control
of the workplace. Such an approach has no basis in the
Act or in federal labor policy.
DIRECTION
IT IS DIRECTED that the Regional Director for Region
32 shall, within 14 days of this Decision on Review and
Direction, open and count the impounded ballots cast by
the employees in the petitioned-for unit, prepare and
serve on the parties a tally of ballots, and thereafter issue
the appropriate certification.
Dated, Washington, D.C. August 27, 2015
______________________________________
Mark Gaston Pearce,
Chairman
______________________________________
Kent Y. Hirozawa,
Member
______________________________________
Lauren McFerran,
Member
(SEAL)
NATIONAL LABOR RELATIONS BOARD
MEMBERS MISCIMARRA AND JOHNSON, dissenting.
The National Labor Relations Act (the Act) establishes
a comprehensive set of rules for industrial relations in
this country, and a primary function of the Board is to
foster compliance with those rules by employees, unions,
and employers. To comply with these rules, as they have
grown and evolved over the last eight decades, substantial planning is required. This is especially true in regard
to collective bargaining, a process that is central to the
Act. The Act’s bargaining obligations are formidable—
as they should be—and violations can result in significant liability. When it comes to the duty to bargain, the
resort to strikes or picketing, and even the basic question
of “who is bound by this collective-bargaining agreement,” there is no more important issue than correctly
identifying the “employer.” Changing the test for identifying the “employer,” therefore, has dramatic implications for labor relations policy and its effect on the economy.
Today, in the most sweeping of recent major decisions,
the Board majority rewrites the decades-old test for determining who the “employer” is. More specifically, the
limitation” and would “cause more problems than it solve[d].” 317
NLRB at 1360–1362. These dire predictions did not come to pass, and
Management Training remains the law today.
21
majority redefines and expands the test that makes two
separate and independent entities a “joint employer” of
certain employees. This change will subject countless
entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential
joint liability for unfair labor practices and breaches of
collective-bargaining agreements, and to economic protest activity, including what have heretofore been unlawful secondary strikes, boycotts, and picketing.
Our colleagues are driven by a desire to ensure that the
prospect of collective bargaining is not foreclosed by
business relationships that allegedly deny employees’
right to bargain with employers that share control over
essential terms and conditions of their employment.
However well intentioned they may be, there are five
major problems with this objective.
First, no bargaining table is big enough to seat all of
the entities that will be potential joint employers under
the majority’s new standards. In this regard, we believe
the majority’s new test impermissibly exceeds our statutory authority. From the majority’s perspective, the
change in the joint-employer analysis is an allegedly
necessary adaptation of Board law to reflect changes in
the national economy. In making this change, they purport to operate within the limits of traditional commonlaw principles by restoring and clarifying what they
claim to be the law applied by the Board prior to 1984.
In actuality, however, our colleagues incorporate theories
of “economic realities” and “statutory purpose” that extend the definitions of “employee” and “employer” far
beyond the common-law limits of agency principles that
Congress and the Supreme Court have stated must apply.1 Their decision represents a further expansion of
revisions made in the majority decisions in FedEx,2
which similarly revised the Board’s longstanding definition of independent contractor status in a way that will
predictably extend the Act’s coverage to many individuals previously considered to be excluded as independent
contractors, and in CNN,3 which imposed after-the-fact
joint-employer obligations contrary to the parties’ 20year-bargaining history, applicable collective-bargaining
agreements (CBAs), relevant services contracts and the
Board’s own prior union certifications.
Second, the majority’s rationale for overhauling the
Act’s “employer” definition—to protect bargaining from
limitations resulting from third-party relationships that
indirectly control employment issues—relies in substan1
The common-law agency principles are also known as “masterservant” principles in the older cases and literature, and these terms are
used interchangeably both in the doctrine and here.
2
FedEx Home Delivery, 361 NLRB No. 55 (2014).
3
CNN America, Inc., 361 NLRB No. 47 (2014).
22
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
tial part on the notion that these relationships are unique
in our modern economy and represent a radical departure
from simpler times when labor negotiations were unaffected by the direct employer’s commercial dealings with
other entities. However, such an economy has not existed in this country for more than 200 years.4 Many forms
of subcontracting, outsourcing, and temporary or contingent employment date back to long before the 1935 passage of the Act. Congress was obviously aware of the
existence of third-party intermediary business relationships in 1935, when it limited bargaining obligations to
the “employer,” in 1947, when it limited the definition of
“employee” and “employer” to their common-law agency meaning, and in 1947 and 1959, when Congress
strengthened secondary boycott protection afforded to
third parties who, notwithstanding their dealings with the
“employer,” could not lawfully be subject to picketing
and other forms of economic coercion based on their
dealings with that “employer.”5 This is not mere conjecture; it is the inescapable conclusion that follows from
Supreme Court precedent recognizing that the Act did
not confer “employer” status on third parties merely because commercial relationships made them interdependent with an “employer” and its employees.6
Third, courts have afforded the Board deference in this
context merely as to the Board’s ability to make factual
distinctions when applying the common-law agency
4
If our colleagues desired to return to a time when labormanagement relations were insulated from third-party business relationships and competitive pressures, they would need to go back to our
country’s origins. The work of labor economists John R. Commons
and Selig Perlman, who are perhaps the two most authoritative historians of the American labor movement, indicates that unions expanded
and contracted for the first several centuries of economic development
in the United States, and the transition to national markets, combined
with unprecedented business competition, caused extensive labormanagement instability. See 1 John R. Commons, HISTORY OF LABOUR
IN THE UNITED STATES 25–30 (1918); Selig Perlman, A HISTORY OF
TRADE UNIONISM IN THE UNITED STATES 36–41 (1922); see also Philip
S. Foner, THE HISTORY OF THE LABOR MOVEMENT IN THE UNITED
STATES: FROM COLONIAL TIMES TO THE FOUNDING OF THE AMERICAN
FEDERATION OF LABOR 338–340 (1947).
5
See, e.g., Sec. 8(b)(4) and (e).
6
See, e.g., NLRB v. Denver Building Trades Council, 341 U.S. 675,
692 (1951) (holding that construction industry general contractors have
no “employer” relationship with the employees of subcontractors, notwithstanding the general contractor’s responsibility for the entire project). In Fibreboard Corp. v. NLRB, 379 U.S. 203 (1964), an employer
contracted out the maintenance work and “merely replaced existing
employees with those of an independent contractor,” and even though
the subcontractor’s employees continued “to do the same work under
similar conditions of employment” and the “maintenance work still had
to be performed in the plant,” id. at 213, Fibreboard ceased being the
“employer.” Indeed, the premise of Fibreboard and comparable decisions is that the outsourcing of work may “quite clearly imperil job
security, or indeed terminate employment entirely” for employees of
the contracting employer. Id. at 223 (Stewart, J., concurring).
standard.7 However, our colleagues mistakenly interpret
this as a grant of authority to modify the agency standard
itself. This type of change is clearly within the province
of Congress, not the Board. Thus, in Yellow Taxi Co. of
Minneapolis v. NLRB,8 in which the D.C. Circuit denounced the Board majority’s “thinly veiled defiance” of
controlling precedent regarding the “common law rules
of agency,” the court of appeals stated that “[n]o court
can overlook an agency’s defiant refusal to follow well
established law,” and it observed:
The Board here is acting in an area where it is called
upon to apply common law principles that have been
established since 1800 and where the application of that
law under the National Labor Relations Act has been
declared by Congress and settled by the courts, including the Supreme Court, for some 36 years. In this area,
there is no dispute as to the governing principles of
law; what is involved is the application of law to facts.
“[S]uch a determination of pure agency law involve[s]
no special administrative expertise that a court does not
possess.” [NLRB v. United Ins. Co. of America, 390
U.S. 254, 260 (1968).]
To be specific, we understand the common-law standard as
codified by the Act to put a premium on direct control before making an entity the joint employer of certain workers.
Our fundamental disagreement with the majority’s test is
not just that they view indicia of indirect, and even potential,
control to be probative of employer status, they hold such
indicia can be dispositive without any evidence of direct
control. Under the common law, in our view, evidence of
indirect control is probative only to the extent that it supplements and reinforces evidence of direct control.
Fourth, the majority abandons a longstanding test that
provided certainty and predictability, and replaces it with
an ambiguous standard that will impose unprecedented
bargaining obligations on multiple entities in a wide variety of business relationships, even if this is based solely
on a never-exercised “right” to exercise “indirect” control over what a Board majority may later characterize as
“essential” employment terms. This new test leaves employees, unions, and employers in a position where there
can be no certainty or predictability regarding the identi7
The Supreme Court’s decision in Boire v. Greyhound Corp., 376
U.S. 473, 481 (1964), speaks directly only to the Board’s ability to
make factual distinctions under the common-law agency standard. The
determination of whether two entities are joint employers “is essentially
a factual issue.” Id.
8
721 F.2d 366 (D.C. Cir. 1983). See also NLRB v. Town & Country
Electric, Inc., 516 U.S. 85, 94 (1995) (“In some cases, there may be a
question about whether the Board’s departure from the common law of
agency with respect to particular questions and in a particular statutory
context, renders its interpretation unreasonable.”).
BFI NEWBY ISLAND RECYCLERY
ty of the “employer.” Just like the test of employee status rejected by the Supreme Court in Nationwide Mutual
Insurance Co. v. Darden, 530 U.S. 318, 326 (1992), the
majority’s new joint-employer standard constitutes “an
approach infected with circularity and unable to furnish
predictable results.” This confusion and disarray threatens to cause substantial instability in bargaining relationships, and will result in substantial burdens, expense, and
liability for innumerable parties, including employees,
employers, unions, and countless entities who are now
cast into indeterminate legal limbo, with consequent delay, risk, and litigation expense. Nor can this type of
fundamental uncertainty be positively regarded by the
courts.9
Fifth, to the extent the majority seeks to correct a perceived inequality of bargaining leverage resulting from
complex business relationships, where some entities are
currently nonparticipants in bargaining, the “inequality”
addressed by the majority is the wrong target, and collective bargaining is the wrong remedy. As noted above,
the inequality targeted by the new “joint-employer” test
is a fixture of our economy—business entities have diverse relationships with different interests and leverage
that varies in their dealings with one another. There are
contractually “more powerful” business entities and “less
powerful” business entities, and all pursue their own interests. The Board needs a clear congressional command—and none exists here—before undertaking an
attempt to reshape this aspect of economic reality. The
Act does not redress imbalances of power between employers, even if those imbalances have some derivative
effect on employees. As Justice Stewart observed 50
years ago:
[I]t surely does not follow that every decision which
may affect job security is a subject of compulsory collective bargaining. Many decisions made by management affect the job security of employees. Decisions
concerning the volume and kind of advertising expenditures, product design, the manner of financing, and
sales, all may bear upon the security of the workers’
jobs. Yet it is hardly conceivable that such decisions so
involve “conditions of employment” that they must be
negotiated with the employees’ bargaining representative.
Fibreboard Corp. v. NLRB, 379 U.S. 203 (1964) (Stewart,
J., concurring) (emphasis added); see also First National
Maintenance Corp. v. NLRB, 452 U.S. at 676 (In adopting
9
See, e.g., First National Maintenance Corp. v. NLRB, 452 U.S.
666, 678-679, 684–686 (1981), and other cases discussed in part V,
subpart B of this opinion, emphasizing the need for certainty, predictability, and stability.
23
the NLRA, Congress “had no expectation that the elected
union representative would become an equal partner in the
running of the business enterprise in which the union’s
members are employed.”). Requiring collective bargaining
wherever there is some interdependence between or among
employers is much more likely to thwart labor peace than
advance it.
Indeed, on matters of economic power and relative inequality, the Board is not even vested with “general authority to define national labor policy by balancing the
competing interests of labor and management.” American Ship Building Co. v. NLRB, 380 U.S. 300, 316
(1965). “It is implicit in the entire structure of the Act
that the Board acts to oversee and referee the process of
collective bargaining, leaving the results of the contest to
the bargaining strengths of the parties.” H. K. Porter Co.
v. NLRB, 397 U.S. 99, 107–108 (1970). Therefore, we
are certainly not vested with general authority to define
national economic policy by balancing the competing
interests of different business enterprises.
The Act encourages collective bargaining, but only by
an “employer” in direct relation to its employees. Our
colleagues take this purpose way beyond what Congress
intended, and the result unavoidably will be too much of
a good thing. We believe the majority’s test will actually
foster substantial bargaining instability by requiring the
nonconsensual presence of too many entities with diverse
and conflicting interests on the “employer” side. Indeed,
even the commencement of good-faith bargaining may
be delayed by disputes over whether the correct “employer” parties are present. This predictable outcome is
irreconcilable with the Act’s overriding policy to “eliminate the causes of certain substantial obstructions to the
free flow of commerce.”10
In sum, today’s majority holding does not represent a
“return to the traditional test used by the Board,” as our
colleagues claim even while admitting that the Board has
never before described or articulated the test they announce today. Contrary to their characterization, the new
joint-employer test fundamentally alters the law applicable to user-supplier, lessor-lessee, parent-subsidiary, contractor-subcontractor, franchisor-franchisee, predecessorsuccessor, creditor-debtor, and contractor-consumer
business relationships under the Act. In addition, because the commerce data applicable to joint employers is
combined for jurisdictional purposes,11 the Act’s coverage will extend to small businesses whose separate operations and employees have until now not been subject to
Board jurisdiction. As explained in detail below, we
10
11
Sec. 1 (emphasis added).
Valentine Properties, 319 NLRB 8 (1995).
24
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
believe the majority impermissibly exceeds our statutory
authority, misreads and departs from prior case law, and
subverts traditional common-law agency principles. The
result is a new test that confuses the definition of a joint
employer and will predictably produce broad-based instability in bargaining relationships. It will do violence
as well to other requirements imposed by the Act, notably including the secondary boycott protection that Congress afforded to neutral employers. For all of these reasons, we dissent.
I. THE CURRENT JOINT-EMPLOYER TEST
The Act does not expressly define who is an employer,
whether joint or sole. In relevant part, Section 2(2) states
only that “[t]he term ‘employer’ includes any person
acting as an agent of an employer, directly or indirectly.”
In cases decided prior to 1984, both the Board and courts
occasionally confused resolution of the issue whether
two entities are joint employers by, among other things,
blurring the distinction between the test for determining
“single employer” and the test for determining “jointemployer” status.12 In two cases decided in 1984—
Laerco Transportation13 and TLI, Inc.14—the Board clarified the law by expressly adopting the Third Circuit’s
joint-employer standard in NLRB v. Browning-Ferris
Industries of Pennsylvania, Inc., 691 F.2d 1117, 1124
(3d Cir. 1982): “The basis of the [joint-employer] finding
is simply that one employer while contracting in good
faith with an otherwise independent company, has retained for itself sufficient control of the terms and conditions of employment of the employees who are employed
by the other employer. Thus, the ‘joint employer’ concept recognizes that the business entities involved are in
fact separate but that they share or co-determine those
matters governing the essential terms and conditions of
employment.” Applying this test as to “essential terms”
in both Laerco and TLI, the Board stated it would focus
on whether an alleged joint employer “meaningfully affects matters relating to the employment relationship
such as hiring, firing, discipline, supervision, and direction.”15
Both TLI and Laerco were cases applying the jointemployer test to the relationship between a company
supplying labor to a company using it, the same business
relationship at issue in the present case. The Board
found that evidence of the “user” employer’s actual but
“limited and routine” supervision and direction would
12
See, e.g., Parklane Hosiery Co., 203 NLRB 597, amended 207
NLRB 991 (1973).
13
269 NLRB 324 (1984).
14
271 NLRB 798 (1984), enfd. mem. 772 F.2d 894 (3d Cir. 1985).
15
Laerco, 269 NLRB at 325; TLI, 271 NLRB at 798.
not suffice to establish joint-employer status.16 Subsequently, in AM Property Holding Corp., 350 NLRB 998,
1001 (2007), the Board further explained that it has
“generally found supervision to be limited and routine
where a supervisor’s instructions consist primarily of
telling employees what work to perform, or where and
when to perform the work, but not how to perform the
work.”
In Airborne Express, 338 NLRB 597, 597 fn. 1 (2002),
the Board explained that under the existing jointemployer test, “[t]he essential element in [the jointemployer] analysis is whether a putative joint employer’s
control over employment matters is direct and immediate.”17 Consistent with this rationale, in AM Property the
Board found that a contractual provision giving the user
company (AM) the right to approve hires by the supplier
company (PBS) to work at AM’s office building was not,
standing alone, sufficient to show AM’s status as a joint
employer. Instead, “[i]n assessing whether a joint employer relationship exists, the Board does not rely merely
on the existence of such contractual provisions, but rather looks to the actual practice of the parties.”18
The AM Property distinction between potential authority and the actual exercise of authority is a commonplace,
well-established fixture in Board jurisprudence. For example, in the Board’s single-employer test, we have repeatedly required proof that “one of the entities exercises
actual or active control [as distinguished from potential
control] over the day-to-day operations or labor relations
of the other.”19 In other contexts where a party bears the
burden of proving that an entity falls within a particular
statutory definition, members of today’s majority have
endorsed this evidentiary distinction, giving weight only
to the actual exercise of authority or control.20
16
Laerco, 269 NLRB at 326; TLI, 271 NLRB at 799. Laerco and
TLI were decided by different 3-member panels of a Board then comprised of four sitting members. As such, they collectively represented
the unanimous opinion of the full Board at that time.
17
We note that, although concurring Member Liebman advocated
revisiting the joint-employer standard represented by TLI, she expressly
agreed with the majority that Board decisions applying this precedent
“have required that the joint employer’s control over these matters be
direct and immediate.” 338 NLRB 597, 597 fn. 1. The majority here is
completely mistaken in asserting that the focus on “direct and immediate control” was a new addition to the Browning-Ferris joint-employer
test in Airborne. Further, as we shall later explain, there is ample precedent in the common law for this requirement predating 1984.
18
350 NLRB at 1000.
19
Mercy Hospital of Buffalo, 336 NLRB 1282, 1284 (2001). See
also, e.g., Dow Chemical Co., 326 NLRB 288 (1998); Gerace Construction, Inc., 193 NLRB 645 (1971); Los Angeles Newspaper Guild,
Local 69, 185 NLRB 303, 304 (1970).
20
E.g., FedEx Home Delivery, 361 NLRB No. 165, slip op. at 14
(2014) (“The Board has been careful to distinguish between actual
opportunities, which allow for the exercise of genuine entrepreneurial
BFI NEWBY ISLAND RECYCLERY
As discussed in section III below, the current test is
fully consistent with the common-law agency principles
that the Board must apply in determining joint-employer
status. Further, as an administrative law judge has accurately summarized, the test reflects a commonsense,
practical understanding of the nature of contractual relationships in our modern economy. “An employer receiving contracted labor services will of necessity exercise
sufficient control over the operations of the contractor at
its facility so that it will be in a position to take action to
prevent disruption of its own operations or to see that it
is obtaining the services it contracted for. It follows that
the existence of such control, is not in and of itself, sufficient justification for finding that the customer-employer
is a joint employer of its contractor’s employees.”21
II. THE MAJORITY’S NEW JOINT-EMPLOYER TEST
The majority today expressly overrules TLI, Laerco,
Airborne Express, AM Property, supra and related precedent, and purports to return to a joint-employer test that
allegedly applied prior to this line of precedent. Their
analysis begins in a manner that is consistent with the
Board’s modern precedent: “The Board may find that
two or more entities are joint employers of a single work
force if they are both employers within the meaning of
the common law, and if they share or codetermine those
matters governing the essential terms and conditions of
employment.” The “share or codetermine” language is
the general statement of the joint-employer test in
Browning-Ferris that was adopted and applied by the
Board in both TLI and Laerco. Our colleagues go on to
adopt TLI and Laerco’s description of essential terms and
conditions of employment as “matters relating to the employment relationship such as hiring, firing, discipline,
supervision, and direction.” If this was the extent of the
majority’s holding, there would be no need to overrule
precedent.
However, the majority’s decision makes clear that the
new test expands joint-employer status far beyond anything that has existed under current precedent and, conautonomy, and those that are circumscribed or effectively blocked by
the employer.”); Pacific Lutheran University, 361 NLRB No. 157, slip
op. at 24 (2014) (“In order for decisions in a particular policy area to be
attributed to the faculty, the party asserting managerial status must
demonstrate that faculty actually exercise control or make effective
recommendations.”); and Lucky Cab Co., 360 NLRB No. 43, slip op. at
3 (2014) (“We reject, therefore, the judge’s reliance on ‘paper authority’ set forth in the handbook, in light of the contrary evidence of the
road supervisors’ actual practice. Schnurmacher Nursing Home v.
NLRB, 214 F.3d 260, 265 (2d Cir. 2000), enfg. in relevant part 327
NLRB 253 (1998) (no authority to discipline, despite statement in job
description, where the alleged supervisors did not actually discipline or
recommend discipline).”).
21
Southern California Gas Co., 302 NLRB 456, 461 (1991).
25
trary to the majority’s claim, under precedent predating
TLI and Laerco. In a two-step progression, the first of
which misleadingly depicts the limits of common law,
the majority removes all limitations on what kind or degree of control over essential terms and conditions of
employment may be sufficient to warrant a jointemployer finding:
[W]e will no longer require that a joint employer not
only possess the authority to control employees’ terms
and conditions of employment, but must also exercise
that authority, and do so directly, immediately, and not
in a “limited and routine” manner. . . . The right to control, in the common-law sense, is probative of jointemployer status, as is the actual exercise of control,
whether direct or indirect.
Moreover, the new test will evaluate the exercise of control
by construing “share or codetermine” broadly:
In some cases (or as to certain issues) employers may
engage in genuinely shared decision-making, e.g., they
confer or collaborate to set a term of employment. . . .
Alternatively, employers may exercise comprehensive
authority over different terms and conditions of employment. For example, one employer sets wages and
hours, while another assigns work and supervises employees. . . . Or employers may affect different components of the same term, e.g. one employer defines and
assigns work tasks, while the other supervises how
those tasks are carried out. . . . Finally, one employer
may retain the contractual right to set a term or condition of employment. [Emphasis added.]
Our colleagues concede “it is certainly possible that in a
particular case a putative joint employer’s control might
extend only to terms and conditions of employment too
limited in scope or significance to permit meaningful collective bargaining.” However, the majority fails to provide any
guidance as to what control, under what circumstances,
would be insufficient to establish joint-employer status.
What do the preceding passages and the overruling of
cited precedent indicate? First, in any particular case, the
majority may consider evidence about virtually any aspect of employment and may give dispositive weight to
an employer’s control over any essential term and condition of employment in finding a joint-employer relationship. Second, there will be no requirement that control
over any essential term of employment be “direct and
immediate” in order for it to be probative and potentially
determinative. Indirect control, even a power reserved
by contract but never exercised, will be considered and
may suffice, standing alone, to find joint-employer sta-
26
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
tus. Finally, while the majority purports to base its
standard on the common law and “sufficient control . . .
to permit meaningful collective bargaining,” it remains to
be seen whether even the occasional limited and routine
discussion or collaboration about a single essential term
of employment may suffice to establish joint-employer
status. The majority repeatedly states that almost every
aspect of a business relationship may be probative, but it
provides no significant guidance as to what may or
should be determinative.
The majority’s new test represents a major unexplained departure from precedent. This test promises to
effect a sea change in labor relations and business relationships. Our colleagues presumably do not intend that
every business relationship necessarily entails the joint
employment of every entity’s employees, but there is no
limiting principle in their open-ended multifactor standard. It is an analytical grab bag from which any scrap of
evidence regarding indirect control or incidental collaboration as to any aspect of work may suffice to prove that
multiple entities—whether they number two or two dozen—“share or codetermine essential terms and conditions
of employment.”
III. THE MAJORITY’S NEW TEST IMPERMISSIBLY DEPARTS
FROM THE COMMON-LAW AGENCY TEST AND RESURRECTS
THE CONGRESSIONALLY-REJECTED ECONOMIC REALITY
AND BARGAINING INEQUALITY THEORIES
A. The Majority’s Implicit Reliance on Economic Reality
and Statutory Purpose Theory Directly Contravenes
Congressional Intent
The threshold insurmountable problem with the majority’s reformulated joint-employer test is that it far exceeds the limits of our statutory authority.22 In fact, this
is the third case decided recently where Board majorities
have tested or exceeded those limits when dramatically
expanding “employer” and “employee” status.
In FedEx Home Delivery, 361 NLRB No. 55 (2014),
the majority claimed to be applying the common law
when it broadened the Act’s definition of “employee,”
which (based on language added in 1947 as part of the
Taft-Hartley amendments) explicitly excludes any “independent contractor.”23 In altering the analysis for distin22
The majority cites the following passage from American Trucking
Assns. v. Atchison, T. & S.F. Ry. Co., 387 U.S. 397, 416 (1967), purporting to justify the change in the joint-employer standard: “[Regulatory agencies] are supposed, within the limits of the law and of fair and
prudent administration, to adapt their rules and practices to the Nation’s needs in a volatile, changing economy.” Id. (emphasis supplied).
As hereafter discussed, the change in the joint-employer standard is
neither within the limits of the law nor representative of fair and prudent administration.
23
Sec. 2(3).
guishing employees from independent contractors, the
majority distorted the common-law test to emphasize the
perceived economic dependency of the putative employee on the putative employer. Member Johnson’s dissent
explained that the majority’s treatment of “employee”
and “independent contractor” status in FedEx was contrary to the Act and its legislative history, and the majority’s factual findings were contrary to the record.24
In CNN America, Inc., 361 NLRB No. 47 (2014), the
majority concluded that a client (CNN) was a joint employer of technical employees supplied by a contractor
(TVS), although CNN undisputedly had no direct role in
hiring, firing, disciplining, discharging, promoting, or
evaluating TVS’ employees, and CNN’s “employer”
status was contrary to the TVS collective-bargaining
agreements, the services agreement entered into between
CNN and TVS, two decades of bargaining history and
CBAs (all identifying the contractor as the only “employer”), and prior union certifications by the Board.
The Board majority, though ostensibly applying the traditional joint-employer test, relied on factors similar to
those emphasized by the majority here (e.g., finding that
CNN’s services agreement gave it “considerable authority” over “staffing levels”). Member Miscimarra’s dissent
explained that the Board and the courts had long dealt
with situations where contractor employees worked at
client locations, with substantial interaction between the
client and contracting employer, without conferring
“employer” status on the client. CNN America, Inc., slip
op. at 28, 31–32 (citing NLRB v. Denver Building Trades
Council, supra, 341 U.S. at 692; and Fibreboard Corp. v.
NLRB, supra, 379 U.S. at 203 (other citations omitted)).25
In this case, our colleagues abandon extant jointemployer law, which had already been strained beyond
its rational breaking point in CNN. Instead, similar to
what was done in FedEx for the definition of a statutory
employee, they have announced a new test of jointemployer status that, notwithstanding their adamant disclaimers, effectively resurrects and relies, at least in substantial part, on intertwined theories of “economic realities” and “statutory purpose” endorsed by the Supreme
Court in NLRB v. Hearst Publications, 322 U.S. 111
(1944), which Congress expressly rejected in the TaftHartley Amendments of 1947. In Hearst, the Court ap24
Member Miscimarra did not participate in FedEx, but he agrees
with Member Johnson’s criticism of the economic realities test applied
by the majority and the analysis of “employee” and “independent contractor” issues addressed in Member Johnson’s dissent.
25
Member Johnson did not participate in CNN, but he agrees with
the criticism of the majority’s joint-employer finding as expressed in
Member Miscimarra’s dissent.
BFI NEWBY ISLAND RECYCLERY
27
plied the same rationale for the definitions of employee
and employer under the original Wagner Act.
common law agency test here in distinguishing an employee from an independent contractor.27
To eliminate the causes of labor disputes and industrial
strife, Congress thought it necessary to create a balance
of forces in certain types of economic relationships.
These do not embrace simply employment associations
in which controversies could be limited to disputes over
proper “physical conduct in the performance of the service.” On the contrary, Congress recognized those
economic relationships cannot be fitted neatly into the
containers designated “employee” and “employer”
which an earlier law had shaped for different purposes.
Its Reports on the bill disclose clearly the understanding that “employers and employees not in proximate relationship may be drawn into common controversies by
economic forces, and that the very disputes sought to
be avoided might involve “employees (who) are at
times brought into an economic relationship with employers who are not their employers.” In this light, the
broad language of the Act’s definitions, which in terms
reject conventional limitations on such conceptions as
“employee,” “employer,” and “labor dispute,” leaves
no doubt that its applicability is to be determined
broadly, in doubtful situations, by underlying economic
facts rather than technically and exclusively by previously established legal classifications.26
In reaction to Hearst, Congress expressly excluded
“independent contractors” from the Act’s definition of a
statutory employee in the Taft-Hartley Amendments of
1947. The purpose of this revision was manifest in the
legislative history of the Amendments and repeatedly
acknowledged thereafter by the Supreme Court, which
stated in one case that
Our colleagues nevertheless cling to the notion that
economic and policy considerations may determine the
definition of employee and employer. Even assuming
that may be true in some cases not dealing with the right
to control under common law,28 the Supreme Court
squarely rejected reliance on these considerations in
Darden, stating that
[in Hearst] the standard was one of economic and policy considerations within the labor field. Congressional
reaction to this construction of the Act was adverse and
Congress passed an amendment specifically excluding
‘any individual having the status of an independent
contractor’ from the definition of ‘employee’ contained
in s 2(3) of the Act. The obvious purpose of this
amendment was to have the Board and the courts apply
general agency principles in distinguishing between
employees and independent contractors under the Act. .
. . Thus there is no doubt that we should apply the
26
322 U.S. at 128–129. See also United States v. Silk, 331 U.S. 704
(1947), applying the same economic realities and statutory purpose
theories to the definition of employee under the Social Security Act.
Hearst and Silk, which interpreted “employee” for purposes of the National Labor Relations Act and Social
Security Act, respectively, are feeble precedents for
unmooring the term from the common law. In each
case, the Court read “employee,” which neither statute
helpfully defined, to imply something broader than the
common-law definition; after each opinion, Congress
amended the statute so construed to demonstrate that
the usual common-law principles were the keys to
meaning. . . . To be sure, Congress did not, strictly
speaking, “overrule” our interpretation of those statutes, since the Constitution invests the Judiciary, not
the Legislature, with the final power to construe the
law. But a principle of statutory construction can endure just so many legislative revisitations, and Reid’s
presumption that Congress means an agency law definition for “employee” unless it clearly indicates otherwise signaled our abandonment of Silk’s emphasis on
construing that term “‘in the light of the mischief to be
corrected and the end to be attained.’” [503 U.S. at
324–325 (footnote and citations omitted).]
Accordingly, the inescapable conclusion to be drawn
from the Taft-Hartley legislation repudiating the Hearst
opinion is that Congress must have intended that common-law agency principles, rather than the majority’s
much more expansive policy-based economic realities
and statutory purpose approach, here govern the definition of employer as well as employee under the Act.
Even if Congress had not been so clear, “it is . . . well
established that ‘[w]here Congress uses terms that have
accumulated settled meaning under . . . the common law,
a court must infer, unless a statute otherwise dictates,
that Congress means to incorporate the established meaning of these terms.’” Community for Creative NonViolence v. Reid, 490 U.S. 730, 739 (1989) (quoting
NLRB v. Amax Coal Co., 453 U.S. 322, 329 (1981)).
27
NLRB v. United Insurance Co. of America, 390 U.S. 254, 256
(1968). See also Boire v. Greyhound, supra, 376 U.S. at 481 fn. 10, and
Nationwide Mutual Insurance Co. v. Darden, supra, 503 U.S. at 324.
28
See, e.g., Allied Chemical Workers Local Union 1 v. Pittsburgh
Plate Glass Co., 404 U.S. 157, 168 (1971).
28
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Thus, the majority’s new joint-employer test is invalid if
it does not comport with the common-law agency principles.
Nevertheless, our colleagues now expand the definition of employer by redefining the joint-employer doctrine in unstated—but unmistakable—reliance on the
rationale of Hearst that was repudiated by Congress.29
Our colleagues are motivated by a policy concern that an
imbalance of leverage reflected in commercial dealings
between the undisputed employer and third-party entities
prevents “meaningful bargaining” over each term and
condition of employment and is therefore in conflict with
the statutory policy of encouraging collective bargaining.
This approach reflects a desire to ensure that third parties
that have “deep pockets,” compared to the immediate
employer, become participants in existing or new bargaining relationships, and that they will also be directly
exposed to strikes, boycotts and other economic weapons, based on the most limited and indirect signs of potential control.30 Whether this is good or bad policy—
and we think it is bad for numerous reasons discussed
below—this fundamental balancing of interests has already been done by Congress. And the simple fact is that
Congress has forbidden the Board from applying an eco29
An unacknowledged antecedent for the joint-employer theory
adopted here is the concurring opinion of then-Member Liebman in
Airborne Express, supra, 338 NLRB at 597–599, who contended that
“[g]iven business trends driven by accelerating competition, highlighted by this case, the Board’s joint-employer doctrine may no longer fit
economic realities.” See also AM Property Holding Co., supra, 350
NLRB at 1012 (Member Liebman, concurring in part and dissenting in
part).
We note as well that the General Counsel relies on Hearst and economic reality theory in his amicus brief. The majority expressly rejects
the General Counsel’s argument, but implicitly relies on much of it.
While we disagree with the General Counsel as to the need and basis
for overruling the existing joint-employer test, we respect his efforts to
address these important issues, which have broad ramifications that
extend well beyond this particular case. We also commend his substantial public outreach efforts regarding these important proposed
changes.
30
See Michael Harper, Defining the Economic Relationship Appropriate for Collective Bargaining, 39 Boston College L. Rev. 329, 348
(1998) (“[I]f workers are to be assured the opportunity to utilize collective bargaining leverage to extract a greater share of the returns from
their labor, they must be able to bargain with the firms that provide the
capital.”); see also Craig Becker, Labor Law Outside the Employment
Relation, 74 Texas L. Rev. 1527 (1996) (“At bottom, my intent is to
inquire how the principles of labor law might be freed from the limits
of outmoded definitions of the employment relationship. That effort
involves questioning the sanctity of the doctrine of privity of contract
as well as departing from the common-law paradigm of master-servant
as foundations for rights and duties in the workplace. Above all, it
requires rethinking the nature of power at stake in labor relations so as
to bring legal doctrine in line with contemporary economic realities.”)
(Emphasis added).
nomic realities or statutory purpose rationale in defining
employer and joint-employer status under the Act.
B. The Majority’s New Test does not Comport with
Common-Law Agency Principles
Our colleagues do not acknowledge the Congressional
rejection of Hearst’s economic realities theory for defining “employee” and “employer” under the Act. Neither
do they acknowledge their implicit reliance on this theory in announcing a new joint-employer test. Instead,
they attempt, as they must, to persuade that their test of
joint-employer status is consistent with common-law
agency’s master-servant doctrine. The attempt fails.
The “touchstone” at common law is whether the putative employer sufficiently controls or has the right to
control putative employees. See Clackamas Gastroenterology Associates, P.C. v. Wells, 538 U.S. 440, 448–
449 (2003); Restatement (Second) of Agency §§ 2, 220
(1958). Without attribution, our colleagues state that the
common law considers as potentially dispositive not only
direct control, but also indirect control and even “reserved” control that has never been exercised. They
would accordingly jettison the joint-employer test’s requirement of evidence that the putative employer’s control be “direct and immediate.” As explained below,
however, “control” under the common-law principles
requires some direct-and-immediate control even where
indirect control factors are deemed probative. The Act,
and its incorporation of the common law, does not allow
the Board to broaden the standard to include indirect
control or an inchoate right to exercise control, standing
alone, as a dispositive factor, which the majority does
today.
Long before Congress anchored “employer” in the
common law, courts applying those principles focused on
discerning whether the putative master had control over
the details of the work (master) or only the results to be
achieved (not master). See, e.g., Singer Mfg. Co. v.
Rahn, 132 U.S. 518, 522 (1889) (“[T]he relation of master and servant exists whenever the employer retains the
right to direct the manner in which the business shall be
done, as well as the result to be accomplished, or, in other words, ‘not only what shall be done, but how it shall
be done.’” (quoting New Orleans, M&CR Co. v.
Hanning, 82 U.S. 649, 657 (1872).) Further, the Supreme Court has for over a century adhered to the proposition that “under the common law loaned-servant doctrine immediate control and supervision is critical in determining for whom the servants are performing services.”31 Lower courts as well implicitly limited their
31
Shenker v. Baltimore & Ohio R. Co., 374 U.S. 1, 6 (1963), citing
and applying the analysis in Standard Oil Co. v. Anderson, 212 U.S.
BFI NEWBY ISLAND RECYCLERY
analysis to looking for direct-and-immediate control.
See, e.g., Dimmitt-Rickhoff-Bayer Real Estate Co. v.
Finnegan, 179 F.2d 882 (8th Cir. 1950) (not attaching
any importance to indirect control in finding real estate
agents were not employees), cert. denied 340 U.S. 823
(1950); Glenn v. Standard Oil Co., 148 F.2d 51 (6th Cir.
1945) (not attaching any importance to indirect control in
finding operators of Standard Oil’s bulk distribution
plants were not employees); Spillson v. Smith, 147 F.2d
727 (7th Cir. 1945) (not attaching any importance to indirect control in finding the musicians of an orchestra
were the employees of its leader and not the restaurant
where they played).
As courts undoubtedly realized, anyone contracting for
services, master or not, inevitably will exert and/or reserve some measure of indirect control by defining the
parameters of the result desired to ensure he or she gets
the benefit of his or her bargain. For example, Judge
Learned Hand wrote, in a case applying common-law
principles to decide a production company was not the
employer of the entertainers in vaudeville acts under the
Social Security Act, that
[i]n the case at bar the plaintiff did intervene to some
degree; but so does a general building contractor intervene in the work of his subcontractors. He decides
how the different parts of the work must be timed, and
how they shall be fitted together; if he finds it desirable
to cut out this or that from the specifications, he does
so. Some such supervision is inherent in any joint undertaking, and does not make the contributing contractors employees. By far the greater part of [the putative
employer’s] intervention in the ‘acts’ was no more than
this. It is true, as we have shown, that to a very limited
extent he went further, but these interventions were
trivial in amount and in character; certainly not enough
to color the whole relation.
29
work, did not eliminate the status of each as an independent contractor or make the employees of one the
employees of the other. The business relationship between independent contractors is too well established in
the law to be overridden without clear language doing
so.32
To aid in applying this well-established common law
for employer-employee relationships, the Supreme Court
largely adopted the Restatement (Second) of Agency §
220’s nonexhaustive list of factors to be considered.
Community for Creative Non-Violence v. Reid, 490 U.S.
at 751–752; see also Nationwide Mutual Insurance Co. v.
Darden, 503 U.S. at 323–324. The Reid Court wrote:
In determining whether a hired party is an employee
under the general common law of agency, we consider
the hiring party’s right to control the manner and means
by which the product is accomplished. Among the other factors relevant to this inquiry are the skill required;
the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right
to assign additional projects to the hired party; the extent of the hired party’s discretion over when and how
long to work; the method of payment; the hired party’s
role in hiring and paying assistants; whether the work is
part of the regular business of the hiring party; whether
the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.
We agree with the Board also in its conclusion that the
fact that the contractor and subcontractor were engaged
on the same construction project, and that the contractor had some supervision over the subcontractor’s
Reid, 490 U.S. at 751–752. The inquiry remains the same.
The factors provide useful indicia of the putative employer’s
direct-and-immediate control, or its right to such control.
The comments to Section 220 of the Restatement clarify that the listed factors are not looking to indirect control. Comment j, on the duration of the relationship, provides: “If the time of employment is short, the worker is
less apt to subject himself to control as to details and the
job is more likely to be considered his job than the job of
the one employing him.”33 Comment k, on the source of
the instrumentalities and tools, states it is understandable
that the owner would regulate such instrumentalities because “if the worker is using his employer’s tools or instrumentalities, especially if they are of substantial value,
it is normally understood that he will follow the direction
of the owner in their use.” The same should hold true
where one employer establishes rules for the use of its
property. Comment l, on the location of work, informs
215 (1909). See also Kelly v. Southern Pacific Co., 419 U.S. 318, 329–
330 (1974), cited with approval in Community for Creative NonViolence v. Reid, 490 U.S. at 739–740, and in Nationwide Mutual Insurance Co. v. Darden, 503 U.S. at 323.
32
NLRB v. Denver Building Trades Council, supra, 341 U.S. at
689–690 (emphasis added).
33
We note here that Leadpoint is not supposed to keep its employees assigned long term to the BFI project.
Radio City Music Hall Corp. v. United States, 135 F.2d 715,
717–718 (2d Cir. 1943).
The Supreme Court subsequently addressed the same
point in construing the coverage of the Act’s prohibition
of coercive secondary activity against neutral construction employers by unions:
30
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
that although the putative employer’s controlling the
location of work usually raises an inference of employer
status, “[i]f, however, the rules are made only for the
general policing of the premises, as where a number of
separate groups of workmen are employed in erecting a
building, mere conformity to such regulations does not
indicate that the workmen are” employees.
Recently, courts applying the common law have continued to make it unmistakably clear that the employer
standard requires sufficient proof of direct-andimmediate control. In finding that the New York State
Education Department was not the employer of teachers
under Title VII, the United States Court of Appeals for
the Second Circuit wrote: “[The common-law standard]
focuses largely on the extent to which the alleged master
has ‘control’ over the day-to-day activities of the alleged
‘servant.’ The Reid factors countenance a relationship
where the level of control is direct, obvious, and concrete, not merely indirect or abstract. . . . Plaintiffs in
this case could not establish a master-servant relationship
under the Reid test. [The State Education Department]
does have some control over New York City school
teachers—e.g., it controls basic curriculum and credentialing requirements—but SED does not exercise the
workaday supervision necessary to an employment relationship.” Gulino v. N.Y. State Education Department,
460 F.3d 361, 379 (2d Cir. 2006) (emphasis added), cert.
denied 554 U.S. 917 (2008). Similarly, the United States
Court of Appeals for the Ninth Circuit found, applying
common-law principles, that Wal-Mart was not the joint
employer of its suppliers’ employees where Wal-Mart
did not have the right to an “immediate level of ‘day-today’ control.” Doe I v. Wal-Mart Stores, Inc., 572 F.3d
677, 682–683 (9th Cir. 2009) (quoting Vernon v. State,
10 Cal. Rptr. 3d 121 (Cal. Ct. App. 2004)). A few years
later, the Supreme Court of California used the same
language in finding a franchisor not liable under the California Fair Employment and Housing Act for a franchisee supervisor’s harassment of an employee:
“[T]raditional common law principles of agency and
respondeat superior supply the proper analytical framework . . . . This standard requires ‘a comprehensive and
immediate level of ‘day-to-day’ authority’ over matters
such as hiring, firing, direction, supervision, and discipline of the employee.” Patterson v. Domino’s Pizza,
LLC, 333 P.3d 723, 740 (Cal. 2014) (quoting Vernon,
supra).34
34
In TLI, supra, 271 NLRB at 798, the Board stated that “there must
be a showing that the employer meaningfully affects matters relating to
the employment relationship such as hiring, firing, discipline, supervision, and direction.” We read that passage to provide a nonexclusive
list of direct-and-immediate control factors to consider, and hereafter
Contrary to our colleagues’ characterization, the
above-quoted language from Gulino and Wal-Mart cannot be dismissed as meaningless statements made “in
cases where there was little if any relevant evidence of
control of any sort.” This begs the question why either
court felt the need to specifically mention the absence of
immediate control. As for Patterson, the majority states
(as do we) that the case was decided under a California
statute, but they fail to acknowledge that the court’s
opinion is founded on “traditional common law principles of agency and respondeat superior.”35 The salient
point is that the cases we cite do indicate that evidence of
direct and immediate control is essential to a finding of
joint-employer status under the common law. By contrast, the majority does not and cannot cite a single judicial opinion that even implicitly affirms its concededly
novel two-step version of an alternative common-law test
or the proposition that a finding of a joint employer relationship under the common law can be based solely on
indirect control.
In re Enterprise Rent-A-Car Wage & Employment
Practices Litigation, 683 F.3d 462, 468–469 (3d Cir.
2012), provides a useful contrast between the commonlaw test of joint-employer status and the economic realities test that Congress expressly authorized by the unique
language of the Fair Labor Standards Act (FLSA), but
rejected in the Taft-Hartley Amendments of our Act.
we discuss cases decided after TLI that did examine factors other than
those enumerated in that case. However, evidence of control over the
specific factors referred to in TLI is usually most relevant to the jointemployer analysis. It is no coincidence that the Supreme Court of
California used a similar list in Patterson, as did the Ninth Circuit in
EEOC v. Pacific Maritime Assn., 351 F.3d 1270 (9th Cir. 2003). Discussing the Supreme Court’s Clackamas decision in this Title VII case,
the Court stated:
The Supreme Court seems to suggest that the sine qua non of determining whether one is an employer is that an “employer can hire and
fire employees, can assign tasks to employees and supervise their performance.” Logically, before a person or entity can be a joint employer, it must possess the attributes of an employer to some degree.
Numerous courts have considered the key to joint employment to be
the right to hire, supervise and fire employees.
Id. at 1277. The Board’s task is to weigh all of the incidents of the relationship to determine the sufficiency of the control, and that analysis necessarily
includes qualitative assessments of the general significance of specific factors. The new test discards this safeguard against overinclusion in favor of
finding any sporadic evidence or tangential effect on working conditions to
be potentially sufficient to prove joint-employer status.
35
The majority also distinguishes Patterson on the ground that it
involves “the particularized features of franchisor/franchisee relationships, none of which are applicable here.” As we state elsewhere in
this opinion, the Board has heretofore maintained a unitary jointemployer test for all types of employer relationships. The suggestion
that the test will vary from one type of relationship to another is unprecedented, and certainly has no foundation in the common law.
BFI NEWBY ISLAND RECYCLERY
With respect to the economic realities test, the Third Circuit stated:
When determining whether someone is an employee
under the FLSA, “economic reality rather than technical concepts is to be the test of employment.” Goldberg v. Whitaker House Co-op., Inc., 366 U.S. 28, 33,
81 S.Ct. 933, 6 L.Ed.2d 100 (1961) (internal quotation
marks omitted). Under this theory, the FLSA defines
employer “expansively,” Nationwide Mut. Ins. Co. v.
Darden, 503 U.S. 318, 326, 112 S.Ct. 1344, 117
L.Ed.2d 581 (1992), and with “striking breadth.”
Rutherford Food Corp. v. McComb, 331 U.S. 722, 730,
67 S.Ct. 1473, 91 L.Ed. 1772 (1947). The Supreme
Court has even gone so far as to acknowledge that the
FLSA’s definition of an employer is “the broadest definition that has ever been included in any one act.”
United States v. Rosenwasser, 323 U.S. 360, 363 n. 3,
65 S.Ct. 295, 89 L.Ed. 301 (1945).36
The issue in Enterprise was whether the district court below
erred in granting summary judgment against the plaintiff
employees’ claim that the parent company of their wholly
owned rental car subsidiary was their joint employer with
shared liability for alleged overtime wage violations. The
district court had relied on a traditional common-law test
developed under the ADEA and Title VII. However, the
Third Circuit opined that
[b]ecause of the uniqueness of the FLSA, a determination of joint employment “must be based on a consideration of the total employment situation and the economic realities of the work relationship.” A simple application of the [district court’s] test would only find
joint employment where an employer had direct control
over the employee, but the FLSA designates those entities with sufficient indirect control as well. We therefore conclude that while the factors outlined today in
[that test] are instructive they cannot, without amplification, serve as the test for determining joint employment under the FLSA.37
It is readily apparent from the distinctions underscored by
the Enterprise court that the new joint-employer test announced by our colleagues is rooted in economic reality and
statutory purpose theory, not in the “technical concepts” of
common-law agency. Indeed, their new definition of employer equals or exceeds the “striking breadth” of the FLSA
36
Id. at 467–468.
Id. at 469. The court nevertheless affirmed the grant of summary
judgment, finding insufficient proof that the parent company was a
joint employer even under the expansive FLSA standard. It is not clear
whether the same evidence considered under the majority’s test here
would lead to the same result.
37
31
standard, and it cannot stand in the face of express Congressional disapproval.
The majority’s explication of its new joint-employer
test erases any doubt that the test is the analytical stepchild of Hearst, rather than being founded in common
law. Our colleagues posit that as a first step they must
determine whether an employment relationship exists at
all between the alleged joint employer and an employee.
Here, the majority does no more than acknowledge the
obvious: an entity with no control whatsoever over a
person performing services in that entity’s affairs cannot
be that person’s employer. But the majority incorrectly
sets this “zero control” state as the outer limit of common
law master-servant agency, that is, if there is some control over any aspect of the performance of services, then
common law would allegedly permit finding an employment relationship. Of course, if that were true, it
would obliterate the common-law concept of an independent contractor and erase the distinction at common
law between servant and nonemployee agent. The majority seems vaguely to recognize this, but as far as deciding whether it should find that a separate business is a
joint employer with an undisputed employer of an undisputed employee, the majority nevertheless looks to
whether it would serve the purposes of the Act to expand
the joint-employer definition to serve the Act’s policy of
“encouraging the practice and procedure of collective
bargaining” (in the words of Sec. 1). In their view, it is
necessary to do so because the current test’s “requirements—which serve to significantly and unjustifiably
narrow the circumstances where a joint employment relationship can be found—leave the Board’s joint employment jurisprudence increasingly out of step with changing economic circumstances, particularly the recent dramatic growth in contingent employment relationships.
This disconnect potentially undermines the core protections of the Act for the employees impacted by these
economic changes.”
Compare the majority’s reasoning to the following
passages from Hearst concerning the test for determining
whether newsboys were employees or independent contractors under the Wagner Act:
Congress had in mind a wider field than the narrow
technical legal relation of “master and servant,” as the
common law had worked this out in all its variations,
and at the same time a narrower one than the entire area
of rendering service to others. The question comes
down therefore to how much was included of the intermediate region between what is clearly and unequivocally ‘employment,’ by any appropriate test, and what
is as clearly entrepreneurial enterprise and not em-
32
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
ployment. . . . Myriad forms of service relationship,
with infinite and subtle variations in the terms of employment, blanket the nation’s economy. Some are
within this Act, others beyond its coverage. Large
numbers will fall clearly on one side or on the other, by
whatever test may be applied. But intermediate there
will be many, the incidents of whose employment partake in part of the one group, in part of the other, in
varying proportions of weight, . . . Unless the commonlaw tests are to be imported and made exclusively controlling, without regard to the statute’s purposes, it cannot be irrelevant that the particular workers in these
cases are subject, as a matter of economic fact, to the
evils the statute was designed to eradicate and that the
remedies it affords are appropriate for preventing them
or curing their harmful effects in the special situation.
322 U.S. 124–127 (fns. omitted). The only significant difference between the majority’s reasoning here and the
Court’s reasoning in Hearst is that the Court at least candidly recognized the “intermediate region” into which it extended the Wagner Act’s definition of covered employees
was beyond the scope of common law, while the majority
blandly and disingenuously assures that the intermediate
region into which they extend the definition of joint employer stays well within the limits of that law. Clearly it
does not. Contrary to our colleagues, we believe the
Board’s traditional joint-employer test accurately reflects
common law, and we disagree with any suggestion that their
new test constitutes an appropriate way under common law
to advance the statutory goal of promoting collective bargaining. Indeed, as we discuss below in section V, we find
their test is more likely to destabilize collective bargaining
than to promote it.
IV. EVEN IF THE NEW TEST WERE PERMISSIBLE, THE
MAJORITY FAILS TO IDENTIFY SUFFICIENT REASONS TO
OVERRULE PRECEDENT AND ADOPT A NEW JOINTEMPLOYER TEST
A. The Majority’s Alleged Return to the Alleged “Traditional Standard” Relies on a Selective Misreading of
Precedent Before and After TLI and Laerco
The majority states that the TLI and Laerco decisions
“significantly and unjustifiably” narrowed the Board’s
“traditional” joint-employer standard. This standard allegedly encompassed far more factors, including those
related to indirect control and reserved contractual control, and more comprehensively analyzed employment
relationships to determine whether an entity was a joint
employer. However, in selecting only the few cases allegedly supporting this view of traditional practice, the
majority has neglected others where the Board found no
joint-employer relationship, despite the presence of the
“traditional” or “indirect control” factors that the majority claims justify a finding of such a relationship. Contrary to the majority, the Board’s prior cases did not manifest an intention to apply a broad analytical framework in
which indirect control played a determinative role in
joint-employer cases. We agree with the majority that
the Board has traditionally carried out a fact-intensive
assessment of whether a putative employer exercised
sufficient control over, or retained the right to control,
the employees at issue. We disagree, however, with the
notion that prior to TLI and Laerco the Board, as a rule,
gave much probative weight to evidence of “indirect control,” or that such evidence, standing alone, was routinely
determinative. 38 We will now turn to a discussion of
these factors of “indirect control.”
This sentence is emblematic of the majority’s attempt
to prove too much by the citation of the older cases:
Thus, the Board’s joint-employer decisions found it
probative that employers retained the contractual power
to reject or terminate workers; set wage rates; set working hours; approve overtime; dictate the number of
workers to be supplied; determine “the manner and
method of work performance”; “inspect and approve
work,” and terminate the contractual agreement itself at
will. [Footnotes omitted.]
The foregoing statement includes footnote citations to
precedent that allegedly shows that “the Board typically
treated the right to control the work of employees and
their terms of employment as probative of joint-employer
status. The Board did not require that this right be exercised, or that it be exercised in any particular manner.”
The majority fails to mention that in many of the cited
cases there was evidence that the contractual rights were
exercised, and there was other evidence of direct control
over employees’ work. The majority’s statement also
fails to account for all the Board cases that reach the contrary result with similar contractual provisions. Thus, we
can paraphrase the majority’s statement, with appropriate
citations, that during the period preceding TLI and
Laerco, the Board found no joint-employer status where
putative “employers retained the contractual power to
reject or terminate workers;39 set wage rates;40 set work38
Apart from our disagreement with the majority’s characterization
of the joint-employer tests that existed prior to 1984, we note that in
one major respect TLI and Laerco undisputedly broadened the circumstances in which a joint-employer relationship could be found. That is,
by adopting the Third Circuit’s Browning-Ferris joint-employer test,
the Board made clear that the more restrictive single-employer test,
requiring a showing of less than an arms-length relationship between
employers, did not apply.
39
Cabot Corp., 223 NLRB 1388, 1390 fn. 10 (1976), affd. sub nom.
Chemical Workers Local 483 v. NLRB, 561 F.2d 253 (D.C. Cir. 1977);
BFI NEWBY ISLAND RECYCLERY
33
ing hours;41 approve overtime;42 determine ‘the manner
and method of work performance’;43 ‘inspect and approve work,’44 and terminate the contractual agreement
itself at will.”45 Additionally, prior to TLI and Laerco
the Board found that employers who conferred over the
number of employees needed and the hours to be worked
were not joint employers.46
The majority also states that prior to TLI and Laerco
“the Board gave weight to a putative joint employer’s
‘indirect’ exercise of control over workers’ terms and
conditions of employment,” citing Floyd Epperson, 202
NLRB 23, 23 (1973), enfd. 491 F.2d 1390 (6th Cir.
1974). However, it is readily apparent that, while the
Board noted anecdotal evidence of the employer’s indirect control over wages and discipline in that case, its
joint-employer finding was primarily based on evidence
of direct and immediate supervision of the employees
involved.47 Accordingly, in Fidelity Maintenance &
Construction Co., supra, 173 NLRB at 1037, the Board
emphasized direct control, saying that “the determinative
factor in an owner contractor situation is whether the
owner exercises or has the right to exercise sufficient
direct control over the labor relations policies of the contractor, or over the wages, hours and working conditions”
(emphasis added). Likewise, in The John Breuner Co.,
supra, 248 NLRB at 989, the Board affirmed without
comment the administrative law judge’s observation that
in prior truck delivery cases where the Board found jointemployer status, “there have always been supporting
findings that the retailer or distributor by its supervisors,
directly supervised and controlled the employees of his
trucking contractor in the performance of their work”
(emphasis added). Thus, contrary to the majority, Epperson and like precedent support the proposition that
findings of joint-employer status in cases prior to TLI
and Laerco that mention evidence of indirect control
nevertheless turn on sufficient proof of direct control.
The majority also contends that “[c]ontractual arrangements under which the user employer reimbursed
the supplier for workers’ wages or imposed limits on
wages were also viewed as tending to show jointemployer status,” citing Hamburg Industries, 193 NLRB
67 (1971). Hamburg concerned a typical cost-plus contract where the user employer reimbursed the supplier
employer for wages and then paid an additional fee. The
Board has cited this factor in cases where the Board
found joint-employer status. However, the Board has
also found that this factor did not establish jointemployer status.48 In any event, as explained in a subsequent case, the facts in Hamburg clearly demonstrated
significant direct and immediate control of essential
terms was exercised by the disputed employer. Specifically, “one employer, a manpower supplier, furnished
another employer’s entire work force, including firstlevel supervisors. That work force was subject to virtually complete control of the second employer. The second
employer determined which tasks were to be performed
and how they were to be performed. He also, in practice,
set the wage rates.”49 Again, before TLI and Laerco,
there was no established rule that cost-plus contracts
should be given determinative weight in finding jointemployer status.
In sum, the precedent cited by the majority falls well
short of showing that prior to TLI and Laerco there was a
consistently applied “traditional joint-employer test”
remotely equivalent to the one they announce today. The
indirect control factors cited by the majority existed in
many cases where the Board refused to find jointemployer status and thus were not frequently, much less
routinely, determinative of joint-employer status. Evidence of direct and immediate control was far more often
referenced as determinative in finding such status.50 The
interpretive key to different outcomes in this precedent is
not due to a markedly different legal test; it is simply that
Hychem Constructors, Inc., 169 NLRB 274, 276 (1968); Westinghouse
Electric Corp., 163 NLRB 914 (1967); Space Services International
Corp., 156 NLRB 1227, 1232 (1966).
40
Cabot, supra; Hychem, supra at fn. 4; Fidelity Maintenance &
Construction Co., 173 NLRB 1032, 1037 (1968).
41
S. G., Tilden, Inc., 172 NLRB 752 (1968).
42
Hychem, supra at 276.
43
S. G., Tilden, Inc., supra.
44
Cabot, supra at 1392; Westinghouse, supra at 915.
45
Space Services, supra at fn. 23.
46
The John Breuner Co., 248 NLRB 983, 989 (1980); Furniture
Distribution Center, 234 NLRB 751, 751–752 (1978).
47
Id. (“United establishes the work schedule of the drivers, has the
authority to make changes in the drivers’ assignments, selects routes for
the drivers, and generally supervises the drivers in the course of their
employment.”).
48
See Hychem, supra at 276 (referring to controls under a cost-plus
contract as a “right to police reimbursable expenses under its cost-plus
contract and do not warrant the conclusion that [user] has hereby forged
an employment relationship”); Westinghouse, supra at 915 (cost-plus
contract and no joint-employer finding); Space Services, supra at 1232
(cost-plus and no joint-employer finding); Cabot, supra at 1389
(“[C]ost plus contracts merely insured that Cabot obtain a satisfactory
work product at cost and protected it against unnecessary charges being
incurred.”); International House, supra at 914 (cost-plus “purely arms
length dealing”); John Breuner, supra at 988 (cost-plus insufficient to
find joint employer).
49
Cabot, supra, 223 NLRB at 1391 fn. 11.
50
We recognize that dictum in Airborne Freight stated that “approximately 20 years ago, the Board, with court approval, abandoned
its previous test in this area, which had focused on a putative joint
employer’s indirect control over matters relating to the employment
relationship.” 338 NLRB at 597 fn. 1. For the reasons just stated, we
find this dictum to be a mistaken characterization of general precedent.
34
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
“minor differences in the underlying facts might justify
different findings on the joint-employer issue.” North
American Soccer League v. NLRB (NASL), 613 F.2d
1379, 1382 (5th Cir. 1980), cert. denied 449 U.S. 899
(1980); see also Carrier Corp. v. NLRB, 768 F.2d 778,
781 fn. 1 (6th Cir. 1985) (distinguishing TLI and Laerco
by noting that a slight difference between two cases can
tilt one toward a joint-employer finding, and the court
was not deciding those other cases).
B. There Is No Judicial Precedent Adverse to the
Board’s Current Joint-Employer Standard or Supportive
of the Majority’s New Standard
It is reasonable to assume that if TLI, Laerco, and
progeny departed abruptly from Board precedent without
explanation, reviewing courts would by now have had
the opportunity to criticize those decisions and would
certainly have done so. After all, the Supreme Court and
various appellate courts have warned the Board against
such unexplained changes. See Allentown Mack Sales &
Services v. NLRB, 522 U.S. 359, 375 (1998) (“The evil
of a decision that applies a standard other than the one it
enunciates spreads in both directions, preventing both
consistent application . . . and effective review of the law
by the courts.”); NLRB v. Curtin Matheson Scientific,
Inc., 494 U.S. 775, 799 (1990) (Blackmun, J., dissenting)
(finding the Board had departed from prior standard
“without explanation”); Bath Marine Draftsmen’s Assn.
v. NLRB, 475 F.3d 14, 25 (1st Cir. 2007) (stating that
when “the Board has not been consistent in its choice of
standard, as explained above . . . . the Board is not entitled to the normal deference we owe it”); LeMoyne-Owen
College v. NLRB, 357 F.3d 55, 61 (D.C. Cir. 2004) (“Requiring an adequate explanation of apparent departures
from precedent thus not only serves the purpose of ensuring like treatment under like circumstances, but also facilitates judicial review of agency action in a manner that
protects the agency’s predominant role in applying the
authority delegated to it by Congress.”). As LeMoyne
noted, courts are duty-bound to strike down Board decisions that lack explanation or are otherwise arbitrary and
capricious in their exercise of statutory authority.
In this context, the Board’s direct and immediate control standard has held up well over the last 30 years.
While some courts may vary from the Board as to the
particulars of a joint-employer test, others have expressly
approved or applied the Board’s test, and none have directly criticized that test or reversed a Board decision
based on application of that test.
Significantly, two of the four Board decisions expressly overruled by the majority today were reviewed by a
court of appeals, and both decisions were upheld. The
decision in TLI was reviewed by a panel of the Third
Circuit, the original Browning-Ferris circuit, and summarily affirmed in an unpublished decision.51 Likewise,
the decision in AM Property was reviewed and affirmed
by a panel of the Second Circuit.52 In accord with its
own precedents, which date to before the issuance of TLI
and Laerco, the court expressly endorsed the Board’s
standard requiring that “‘an essential element’ of any
joint-employer determination is ‘sufficient evidence of
immediate control over the employees.’”53 The court
specifically supported the Board’s finding that “limited
and routine” supervision is insufficient to establish jointemployer status.
The cases the Board relied on broadly support the
proposition that ‘limited and routine’ supervision, G.
Wes Ltd., 309 NLRB at 226, consisting of ‘directions
of where to do a job rather than how to do the job and
the manner in which to perform the work,’ Island
Creek Coal, 279 NLRB at 864, is typically insufficient
to create a joint employer relationship. See also Local
254, Serv. Emps. Intern. Union, AFL–CIO, 324
N.L.R.B. 743, 746–49 (1997) (no joint employer relationship where employer regularly directed maintenance employees to perform specific tasks at particular
times but did not instruct employees how to perform
their work); S. Cal. Gas Co., 302 N.L.R.B. 456, 461–
62 (1991) (employer’s direction of porters and janitors
insufficient to establish joint employer relationship
where employer did not, inter alia, affect wages or benefits, or hire or fire employees).
Id. at 443.
Thus, the Second Circuit has explicitly endorsed the
Board’s joint-employer standard. Further, as noted in an
earlier case from the same circuit, other courts of appeals
have varying standards for determining joint-employer
status, but “[w]e see no need to select among these approaches or to devise an alternative test, because we find
that an essential element under any determination of
joint-employer status in a sub-contracting case is distinctly lacking in the instant case—some evidence of immediate supervision or control of the employees.”54
It is most noteworthy that, in addition to the absence of
any circuit court precedent in conflict with the Board’s
current legal test of joint-employer status, there also is
no circuit court precedent in support of the new two-step
51
Teamsters Local 326 v. NLRB, 772 F.2d 894 (3d Cir. 1985).
Service Employees, Local 32BJ v. NLRB, 647 F.3d 435 (2d Cir.
2011), aff. in relevant part, enf. in part and denying in part on other
grounds 350 NLRB 998.
53
Id. at 443 (quoting Clinton’s Ditch Co-op Co. v. NLRB, 778 F.2d
132, 138 (2d Cir.1985)).
54
International House v. NLRB, 676 F.2d 906, 913 (2d Cir. 1982)
(emphasis added).
52
BFI NEWBY ISLAND RECYCLERY
legal test articulated by our colleagues. That test, without any requirement that an alleged joint employer’s control over those terms be significant or substantial, much
less direct and immediate, most closely resembles a single Board decision’s bizarre distortion of dictum from an
Eighth Circuit opinion in NLRB v. New Madrid Mfg. Co.,
215 F.2d 908 (1954).
In New Madrid, the court denied enforcement of a
Board order to the extent that it relied on finding that a
company selling its business to an individual remained a
coemployer with him. Finding no substantial evidence to
support the Board’s contrary finding, the court reasoned,
inter alia, that provisions in the contract of sale did not
demonstrate a retention of control over the successor’s
operations. In particular, the court stated that the contract did not “either expressly or by implication, purport
to give New Madrid any voice whatsoever in the selecting or discharging of Jones’ employees, in the fixing of
wages for such employees, or in any other element of
labor relations, conditions and policies in the plant purchaser’s business.” Id. at 913.
Thereafter, in Hoskins Ready-Mix Concrete, 161
NLRB 1492 (1966), a Board panel affirmed an administrative law judge’s finding that a cement company and a
company leasing trucks and drivers to it were joint employers. In doing so, the Board focused on the lessee’s
controls in the parties’ lease and operating agreements.
In a footnote citation to New Madrid, the Board converted the aforementioned dictum from negative to positive,
incorrectly claiming that the court’s test of co-ownership
was whether a contract gave the disputed employer “any
voice whatsoever” over terms and conditions of employment.55 This was not then and is not now the jointemployer test of the Eighth Circuit56 or any other court of
appeals. It was not then the Board’s joint-employer test,
and has not thereafter been the test. Until now, that is.
Of course, the Board is free to go its own way and determine its own standards, but only within the statutory
framework and with adequate explanation of the reasons
for departing from long-established precedent. The majority claims that 30 years ago the Board departed without explanation from prior precedent by drastically restricting its test in a way that denies many workers their
Section 7 rights. However, the absence of any judicial
criticism of the legal test consistently applied since then
undermines this claim. It is simply impossible that all
the courts of appeals would have missed this train wreck.
55
Id. at 1493 fn. 2.
The Eighth Circuit uses a four-factor test similar to a singleemployer analysis. E.g., Industrial Personnel Corp. v. NLRB, 657 F.2d
226, 229 (8th Cir. 1981).
56
35
In any event, it remains the majority’s burden to rationalize its new test.
V. THE MAJORITY’S NEW JOINT-EMPLOYER TEST IS
IMPERMISSIBLY VAGUE AND OVERBROAD AND WILL HAVE
SUBSTANTIAL ADVERSE CONSEQUENCES
A. The New Test Is Fatally Ambiguous, Providing No
Guidance as to When and How Parties May Contract for
the Performance of Work Without Being Viewed as Joint
Employers
Multifactor tests, like the common-law agency standard that we must apply here, are vulnerable to an analysis
that can be impermissibly unpredictable and resultsoriented. As then-Judge Roberts remarked about the
standard for determining whether college faculty are
managerial employees under the Act:
The need for an explanation is particularly acute when
an agency is applying a multi-factor test through caseby-case adjudication. The open-ended rough-andtumble of factors on which Yeshiva launched the Board
and higher education can lead to predictability and intelligibility only to the extent the Board explains, in applying the test to varied fact situations, which factors
are significant and which less so, and why. . . . In the
absence of an explanation, the totality of the circumstances can become simply a cloak for agency whim—
or worse.57
Our colleagues’ new multifactor test, in which any degree of indirect or reserved control over a single term is
probative and may suffice to establish joint-employer
status, is woefully lacking the required explanation of
“which factors are significant and which less so, and
why.” They provide no meaningful guidelines as to the
test’s future application. Further, they acknowledge no
legitimate grounds for parties in a business relationship
to insulate themselves from joint-employer status under
the Act.
The new test stands in marked contrast to the current
test’s focus on evidence of direct-and-immediate control
of essential terms of employment, thereby establishing a
discernible and rational line between what does and does
not constitute a joint-employer relationship under the
Act. The current longstanding test thereby recognizes
that “[s]ignificant limits . . . exist upon what actions by
an employer count as control over the means and manner
of performance. Most important, employer efforts to
monitor, evaluate, and improve the results or ends of the
worker’s performances do not make the worker an em57
LeMoyne-Owen College v. NLRB, supra, 357 F.3d at 61 (citations
and quotations omitted).
36
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
ployee. Such global oversight, as opposed to control
over the manner and means of performance (and especially the details of that performance), is fully compatible
with the relationship between a company and an independent contractor.”58
By comparison, our colleagues reference as probative
all evidence of indirect control for such factors as the
place of work, defining the work and how quickly it will
need to be done, prescribing the hours when work will
need to be performed, setting minimum qualifications for
the individuals that the contractor provides and reserving
the right to reject an individual (even though the contractor may assign its employee to a different job), inspecting
the contractor’s work, giving results-oriented feedback to
the contractor that the contractor’s supervisors use in
their directions to the contractor’s employees, agreeing to
a price for the services that happens to be in the form of a
cost-plus formula, and reserving the right to cancel the
arrangement. Under the majority’s test, the homeowner
hiring a plumbing company for bathroom renovations
could well have all of that indirect control over a company employee! By adopting such an overbroad, allencompassing and highly variable test, our colleagues
extend the Act’s definition of “employer” well beyond its
common-law meaning, and beyond its ordinary meaning
as well. Cf. Allied Chemical Workers Local 1 v. Pittsburgh Plate Glass Co., supra, 404 U.S. at 168 (1971)
(admonishing the Board for extending “employee” in the
Act beyond its ordinary meaning by attempting to include retired employees in its scope).
The expansive nature of the new test is demonstrated
by the evidence relied upon by the majority to find jointemployer status in this case, which involves a “cost-plus”
arrangement that is common in user-supplier contracts
between separate employers.59 The sum total of this evi58
North American Van Lines, Inc. v. NLRB, 869 F.2d 596, 599
(D.C. Cir. 1989) (citations omitted).
59
The Board and the courts have uniformly concluded that cost-plus
arrangements do not automatically render the contracting client an
“employer” of the vendor’s employees. Therefore, our colleagues
concede (as they must) that a cost-plus “arrangement, on its own, is not
necessarily sufficient to create a joint-employer relationship.” Indeed,
the Board and the courts have uniformly concluded that nothing in costplus arrangements necessarily renders the contracting client an “employer” of the vendor’s employees. In Fibreboard, for example, the
contracting client (Fibreboard) arranged for employees of the contractor
(Fluor) “to do the same [maintenance] work under similar conditions of
employment,” where Fibreboard was committed to pay the “costs of the
operation plus a fixed fee.” 379 U.S. at 206–207. As noted previously
(see fn. 6, supra), Fibreboard was clearly treated as a distinct “employer” (having no employment relationship with the subcontractor’s employees), even though the reasons underlying the subcontracting decision were almost exclusively based on employment-related considerations. Indeed, the Supreme Court noted that Fibreboard “was induced
to contract out the work by assurances from independent contractors
dence is (1) a few contract provisions that indirectly affect the otherwise unfettered right of Leadpoint (the supplier-employer) to hire its own employees; (2) reports
made by BFI representatives to Leadpoint of two incidents—one where a Leadpoint employee was observed
passing a “pint of whiskey” at the jobsite, and another
where a Leadpoint employee “destroyed” a drop box—
that understandably resulted in discipline; (3) one contractually-established pay rate ceiling restriction for
Leadpoint employees (obviously stemming from the
cost-plus nature of the contract); (4) BFI’s control of its
own facility’s hours and production lines; (5) a recordkeeping requirement for Leadpoint employee hours
(again, obviously stemming from the cost-plus nature of
the contract); (6) a sole preshift meeting to advise
Leadpoint supervisors of what lines will be running and
what tasks they are supposed to do on those lines; (7)
monitoring of productivity; (8) establishment of one type
of generally applicable production assignment scheme
for Leadpoint; and (9) “on occasion,” addressing
Leadpoint employees about productivity directly. That is
all there is, and the Regional Director correctly decided
under extant law that it was not enough to show BFI was
the joint employer of Leadpoint employees.60
The majority’s evidence amounts to a collection of
general contract terms or business practices that are
common to most contracting employers (discussed below), plus a few extremely limited BFI actions that had
some routine impact on Leadpoint employees. It would
be hard to find any two entities engaged in an arm’slength contractual relationship involving work performed
on the client’s premises that lack this type of interaction.
Again, we suppose that our colleagues do not intend that
every business relationship necessarily entails jointemployer status, but the facts relied upon here demonstrate the expansive, near-limitless nature of the majority’s new standard.
that economies could be derived by reducing the work force, decreasing
fringe benefits, and eliminating overtime payments.” Id. at 213 (emphasis added).
The majority nevertheless attempts to distinguish the instant case
because there was an “apparent requirement of BFI approval over employee pay increases.” In this respect, the majority potentially confers
“employer” status on every client/user company that enters into a costplus arrangement, because few, if any, clients will give a blank check
to supplier-employers regarding wages when the full cost will be
charged to the client. This is but one illustration of the multitude of
ways that our colleagues fail to appreciate the “complexities of industrial life,” which is one of the Board’s most important functions and
responsibilities. NLRB v. Insurance Agents, 361 U.S. 477, 499 (1960).
60
Although we might differ from the Regional Director as to the
weight assigned to certain evidence, we find no need to do so where we
agree with his ultimate finding. We note that the majority does not
argue that the Regional Director erred in making this finding.
BFI NEWBY ISLAND RECYCLERY
There is a further fundamental problem with the new
joint-employer test. The majority states that its goal is to
reach a large number of employees that they feel have
been left unprotected by Section 7 because they work on
a contingent or temporary basis. According to the majority, the number of workers so employed has dramatically
risen since TLI and Laerco were decided and will predictably continue to rise. Further, the majority asserts
that “[t]he Board’s current focus on only direct and immediate control acknowledges the most proximate level
of authority, which is frequently exercised by the supplier firm, but gives no consideration to the substantial control over workers’ terms and conditions of employment
of the user.”
Thus, not only is the majority’s legal justification for a
new joint-employer test impermissibly based on economic reality theory, as previously discussed, but its factual
justification is flawed as well. The majority focuses on
facts limited to a particular type of business model—the
user/supplier relationship involving the use of contingent
employees—but they rely on these facts to justify a
change in the statutory definition of employer, or joint
employer, for all forms of business relationships between
two or more entities.
The number of contractual relationships now potentially encompassed within the majority’s new standard appears to be virtually unlimited:
• Insurance companies that require employers to take
certain actions with employees in order to comply
with policy requirements for safety, security, health,
etc.;
• Franchisors (see below);
• Banks or other lenders whose financing terms may
require certain performance measurements;
• Any company that negotiates specific quality or
product requirements;
• Any company that grants access to its facilities for a
contractor to perform services there, and then continuously regulates the contractor’s access to the
property for the duration of the contract;
• Any company that is concerned about the quality of
the contracted services;
• Consumers or small businesses who dictate times,
manner, and some methods of performance of contractors.
Our point is not that the majority intends to make all players
in the economy, no matter how small, necessary parties at
the bargaining table (although as discussed below, they may
well become targets of economic protest in support of bargaining or other union causes), but that the majority’s new
standard foreshadows the extension of obligations under the
37
Act to a substantial group of business entities without any
reliable limitations.61 This kind of overbroad and ambiguous government regulation is necessarily arbitrary and capricious. “In the absence of an explanation, the ‘totality of
the circumstances’ can become simply a cloak for agency
whim—or worse.” LeMoyne-Owen College v. NLRB, supra, 357 F.3d at 61.
Our colleagues make this sweeping change in the law
without any substantive discussion whatsoever of significant adverse consequences raised by BFI, Leadpoint, and
amici. Indeed, they profess to limit themselves to the
issue of joint bargaining obligations in the user-supplier
context, with a disclaimer that their decision “does not
modify any other legal doctrine or change the way that
the Board’s joint-employer doctrine interacts with other
rules or restrictions under the Act.” However, such a
disclaimer cannot possibly be valid, because applying
different tests in other circumstances would mark an unprecedented and unwarranted break from the unitary
joint-employer test under our Act that has applied to all
types of business relationships, each of which is affected
by changing the basic joint-employer test. We therefore
believe it is necessary to specifically address these consequences, and we do so below.
B. The New Test Will Cause Grave Instability in Bargaining Relationships, Contrary to One of the Board’s
Primary Responsibilities Under the Act
Our colleagues greatly expand the joint-employer test
without grappling with its practical implications for realworld collective-bargaining relationships. They purport
to be following the command in Section 1 of the Act to
“encourag[e] the practice and procedure of collective
bargaining.” Congress did not mean, however, to blindly
expand collective-bargaining obligations whether or not
they are appropriate. The Act aims to “achiev[e] industrial peace by promoting stable collective-bargaining
relationships.” Auciello Iron Works, Inc. v. NLRB, 517
U.S. 781, 790 (1996) (emphasis added). Indeed, one of
the Board’s primary responsibilities under the Act is to
foster labor relations stability. Colgate-Palmolive-Peet
Co. v. NLRB, 338 U.S. 355, 362–363 (1949) (“To
achieve stability of labor relations was the primary objective of Congress in enacting the National Labor Relations
Act.”); NLRB v. Appleton Electric Co., 296 F.2d 202,
206 (7th Cir. 1961) (“A basic policy of the Act [is] to
achieve stability of labor relations.”). And the Supreme
Court has stressed the need to provide “certainty before61
The majority correctly states that “the annals of Board precedent
contain no cases that implicate the consumer services purchased by
unsuspecting homeowners or lenders.” We hope that continues to be
the case, but there is no guarantee that what is past is prologue under
their new and impermissibly expansive test.
38
DECISIONS OF THE NAT
NATIONAL LABOR RELATIONS BOARD
hand” to employers and unions alike. Employers must
have the ability to “reach
reach decisions without fear of later
evaluations labeling . . . conduct an unfair labor pra
practice,” and a union similarly must be able to discern “the
limits of its prerogatives, whether and when it could use
its economic powers . . . , or whether, in doing so, it
would trigger sanctions from the Board..” First National
Maintenance Corp. v. NLRB, supra, 452 U.S. at 678
678–
679, 684–686 (emphasis added).
Collective bargaining was intended by Congress to be
a process that could conceivably produce agreements.
One of the key analytical problems in widening the net of
“who must bargain” is that, at some ppoint, agreements
predictably will not be achievable because different pa
parties involuntarily thrown together as the “bargainers”
under the majority’ss new test will predictably have wid
widely divergent interests. Today’ss marked expansion of
bargaining obligations
ons to other business entities threatens
to destabilize existing bargaining relationships and co
complicate new ones. Even if one takes an extremely si
simplistic user-supplier
supplier scenario, the new standard
standard’s conferral of joint-employer status—making
making many clients an
“employer” of contractor employees, while making co
contractors an “employer” jointly with the clients
clients—will produce bargaining relationships and problems unlike any
that have existed in the Board’ss entire 80
80-year history,
which clearly were never contemplated
ted or intended by
Congress.
Consider the following diagram, which depicts a single
cleaning company named “CleanCo,” which has cleaning
contracts with three clients. CleanCo employees work at
each client’ss facilities in circumstances similar to the
instant
stant case, and CleanCo periodically adds future cl
clients.
Assuming circumstances like those presented here, the
majority would find that CleanCo and Client A are a
“joint employer” at the Client A location; CleanCo and
Client B are a “joint employer” at the Client B location;
and CleanCo and Client C are a “joint
joint employer
employer” at the
Client C location. Such a situation—involving
involving a single
vendor and only three clients, each with only one loc
loca-
tion—creates
creates all of the following problems under the
majority’s test:
1. Union Organizing Directed at CleanCo. If
CleanCo employees are currently unrepresented and a
union seeks to organize them, this gives rise to the folfo
lowing issues and problems:
• What Bargaining Unit(s)? Although CleanCo directdirec
ly controls all traditional indicia of employer status,
the new majority test establishes that three different
entities—Clients
Clients A, B, and C—have
C
distinct “employer” relationships with discrete and potentially
overlapping groups of different CleanCo employees.
It is unclear
ar whether a single bargaining unit consistconsis
ing of all CleanCo employees could be considered
appropriate, given the distinct role that the new mam
jority test requires each client to play in bargaining.
• What “Employer” Participates in NLRB Election
Proceedings? If the union files a representation petipet
tion with the Board, the Act requires the Board to afa
ford “due notice” and to conduct an “appropriate
hearing” for the “employer.” Sec. 9(c)(1). Currently, the Board has no means of identifying—much
identifying
less providing “due notice” and affording the right of
participation to—“employer” entities like Clients A,
B, and C, even though they would inherit bargaining
obligations if CleanCo employees select the union.
• Who Does the Bargaining? If the union wins an
election involving all CleanCo employees, the mam
jority test would require participation in bargaining
by CleanCo and Clients A, B, and C. Here, the mam
jority test provides that each party “will be required
to bargain only with respectt to such terms and conditions
tions which it possesses the authority to control”
control
(emphasis added). However, because the majority’s
majority
standard is so broad—spanning
spanning “direct control,”
“indirect control” and the “right
right to control”
control (even if
never exercised in fact)—nobody
obody could ever reasonreaso
ably know who is responsible for bargaining what.62
• CleanCo-Client
Client Bargaining Disagreements. The majority standard throws into disarray the manner in
which “employers” such as CleanCo and Clients A,
B, and C can formulate coherent proposals and provide meaningful responses to union demands, when
they will undoubtedly disagree among themselves
regarding many, if not most, matters that are the subsu
ject of negotiation. Here, the majority disregards the
fact that CleanCo’ss client contract
contr
will most often
62
We discuss this aspect of the “authority problem” in more detail
below.
BFI NEWBY ISLAND RECYCLERY
have resulted from equally difficult negotiations
with Clients A, B, and C. Therefore, the “joint” bargaining contemplated by the majority will involve
significant disagreements between each of the employer entities (i.e., Clean Co and Clients A, B, and
C) with no available process for resolving such disputes.63
each client location as a separate bargaining unit,
then there presumably would be separate negotiations—and separate resulting CBAs—covering the
CleanCo employees assigned to Client A, Client B,
and Client C, respectively. In this case, however,
the duration of each CBA might vary, depending on
each side’s bargaining leverage, and a further complication would arise where CBA termination dates
differ from the termination dates set forth in the various CleanCo client contracts.
• CleanCo “Confidential” Information—Forced Disclosure to Clients. The most contentious issue between CleanCo and Clients A, B, and C is likely to
involve the amounts charged by CleanCo, which
predictably could vary substantially between Clients
A, B, and C, depending on their respective leverage,
the need for CleanCo’s services, the duration of their
respective client contracts (i.e., whether short-term
or long-term), and other factors. If a union successfully organizes all CleanCo employees, the resulting
bargaining—since the majority test requires participation by Clients A, B, and C—will almost certainly
require the disclosure of sensitive CleanCo financial
information to Clients A, B, and C, which is likely to
enmesh the parties in an array of disagreements with
one another, separate from the bargaining between
the union and the “employer” entities.
• We have already found, in many prior cases, that
this information is sensitive and is not necessary to
employees’ exercise of rights under the Act. See,
e.g., Flex Frac Logistics, 360 NLRB No. 120 (2014)
(detailing disruption occurring when contractor,
which “was particularly concerned to maintain the
confidentiality of the rates it charges its clients,” had
rates disclosed to clients by employee). The majority’s new standard basically guarantees such economic disruption for no legitimate purpose.
• How Many Labor Contracts? If a single union organizes all CleanCo employees, the above problems
might be avoided if CleanCo engages in three separate sets of bargaining—each devoted to Client A,
Client B, and Client C, respectively—resulting in
three separate labor contracts. However, this would
be inconsistent with the CleanCo bargaining unit if it
encompassed all CleanCo employees, and CleanCo
would violate the Act if it insisted on changing the
scope of the bargaining unit, which under wellestablished Board law is a nonmandatory subject of
bargaining.
• What Contract Duration(s)? If a union represented
all CleanCo employees, and if the Board certified
63
We also discuss this aspect of the “authority problem” in more
detail below.
39
• Do Client Contracts Control CBAs, or Do CBAs
Control Client Contracts? Regardless of whether the
CleanCo CBA(s) have termination dates that coincide with the expiration of the CleanCo client contracts, the majority’s new test leaves unanswered
whether CleanCo and Clients A, B, and C could renegotiate their client contracts, or whether the
“joint” bargaining obligations—and the CBA(s)—
would effectively trump any potential client contract
renegotiations, even though this would be contrary
to the Supreme Court’s indication that Congress, in
adopting the NLRA, “had no expectation that the
elected union representative would become an equal
partner in the running of the business enterprise in
which the union’s members are employed.” First
National Maintenance, supra, 452 U.S. at 676.
Likewise, similar to what the majority held in CNN
(see discussion infra), the majority would impose its
new joint-employer bargaining obligations on Clients A, B, and C, even where the client contracts explicitly identified CleanCo as the only “employer”
and stated that CleanCo had sole and exclusive responsibility for collective bargaining.
•
New Clients (Possibly With Their Own Union Obligations). If a union represented all CleanCo employees, and if (under the majority’s new test) all
CleanCo clients were deemed joint employers with
CleanCo, what happens when Clean Co obtains new
clients that previously had cleaning work performed
by in-house employees or a predecessor contractor,
and those in-house or contractor employees were unrepresented or represented by a different union? If,
based on CleanCo’s existing union commitments,
CleanCo refused to consider hiring or retaining the
employees who formerly did the new client’s cleaning work, the refusal could constitute antiunion discrimination in violation of Sec. 8(a)(3). If CleanCo
hired the new client’s former employees (or the former employees of a predecessor contractor), then
CleanCo could run afoul of its existing union obligations. See Whitewood Maintenance Co., 292 NLRB
40
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
1159, 1168–1169 (1989), enfd. 928 F.2d 1426 (5th
Cir. 1991). Alternatively, this situation could require further Board proceedings for resolution.64
• Non-Consensual Multiemployer Bargaining. The
Board has held that employees solely employed by a
supplier employer combined with employees jointly
employed by the supplier employer and a single user
employer (e.g., CleanCo and either Clients A, B, or
C) must be considered inappropriate as a matter of
law, absent the consent of the parties. Oakwood
Care Center, 343 NLRB 659, 661–663 (2004). A
unit consisting of employees jointly employed by the
supplier employer and multiple user employers (e.g.,
CleanCo and Clients A, B, and C) would likewise be
inappropriate absent consent, unless the majority is
overruling (sub silentio) the Oakwood consent requirement.
• Potential Board Jurisdiction Over Some Entities
and Not Others. The Board does not have jurisdiction over governmental employers and employees,
over railways or airlines that are subject to the Railway Labor Act, or—in a variety of circumstances—
religiously-affiliated educational institutions or certain enterprises operated by Indian tribes.
If
CleanCo is subject to the NLRA, but Clients A, B,
or C fall within one or more of the exempt categories
identified above, the majority’s new standard will
create complex questions about whether the Board
may lack jurisdiction over particular “joint” employer(s).
2. Union Organizing Directed at Client(s). If two
different unions, rather than targeting CleanCo, engage
in organizing directed at Client A and Client B, respectively, with Client C remaining nonunion, this gives rise
to additional issues and problems:
• All of the Above Issues/Problems. If the CleanCo
employees at Client A are organized by one union,
and if the CleanCo employees at Client B are organized by a different union, then the majority test
would make CleanCo and Client A the “joint employer” of the CleanCo/Client A employees, and
CleanCo and Client B the “joint employer” of the
CleanCo/Client B employees. In both cases, the
“joint employer” status would give rise to all of the
above problems and issues, in addition to those described below.
64
Such a resolution might result, for example, from a unit clarification petition seeking to add the new employees to the bargaining unit
without an election under the Board’s accretion doctrine, or jurisdictional dispute proceedings pursuant to Sec. 10(k) of the Act.
• Employee Interchange and Multilocation Assignments. If different unions represent the employees of
CleanCo/Client A and CleanCo/Client B, and if
CleanCo/Client C employees were nonunion, this
would create substantial potential problems and potential conflicting liabilities regarding CleanCo employees assigned to work at all three client locations
or transferred from one client’s facility to another.
This is a common situation, arising, for example,
where one CleanCo client simply was unhappy with
the productivity or attitude of the assigned employee.65
• Strikes and Picketing—“Neutral” Secondary Boycott Protection Eliminated. Sections 8(b)(4) and 8(e)
of the Act protect neutral parties from being subjected to “secondary” picketing and other threats, coercion and restraint that have an object of forcing one
employer to cease doing business with another.
Therefore, if the CleanCo/Client A and
CleanCo/Client B employees were involved in a labor dispute, under the Board’s traditional jointemployer standard Clients A and B (as nonemployers) would be neutral parties protected from
“secondary” union activity. Under the majority’s
standard, however, Clients A and B would be employers right along with CleanCo and thus subject to
picketing.
• Renegotiating or Terminating Client Contracts. It is
well established that “an employer does not discriminate against employees within the meaning of Section 8(a)(3) by ceasing to do business with another
employer because of the union or nonunion activity
of the latter’s employees.”66 However, to the extent
that CleanCo and Clients A, B, and C are joint employers, then any client’s termination of CleanCo’s
65
The potential problems caused by multilocation assignments or
employee interchange between locations could arise, for example, from
CBA provisions restricting such assignments or transfers, from unionsecurity provisions in different CBAs requiring dues payments based
on a person’s employment without regard to where they were employed, or from conflicting wage rates and benefits applicable at each
location. Although these issues might depend on what particular CBA
or other policies were in effect, they would obviously cause significant
burdens and potential confusion for the employees and each entity
considered a joint employer under the majority’s new standards.
66
Plumbers Local 447 (Malbaff Landscape Construction), 172
NLRB 128, 129 (1968). See also Computer Associates International,
Inc., 324 NLRB 285, 286 (1997) (“[F]inding a violation of Section
8(a)(3) on the basis of an employer’s decision to substitute one independent contractor for another because of the union or nonunion status
of the latter’s employees is inconsistent with both the language of Section 8(a)(3) . . . and with legislative policies underlying Section 8(b) of
the Act aimed at protecting the autonomy of employers in their selection of independent contractors with whom to do business.”).
BFI NEWBY ISLAND RECYCLERY
services based on potential union-related considerations would create a risk that the Board would
find—as it did in CNN, supra—that the contract termination constituted antiunion discrimination in violation of Sec. 8(a)(3). CNN, supra, slip op. at 40–42
(Member Miscimarra, dissenting).
3. Existing CleanCo-Union and/or Existing ClientUnion Relationships. Additional issues and problems
result from the impact of the majority’s new jointemployer test on existing union relationships and CBAs:
• All of the Above Issues/Problems. It is clear, under
the majority’s test, that existing collectivebargaining agreements and union relationships involving CleanCo, with no mention of Clients A or B,
do not prevent Clients A and B from having jointemployer status with CleanCo, which would give
rise to all of the issues and problems described
above. Again, in CNN, discussed infra, the Board
majority found that the client (CNN) was a joint employer, even though any bargaining between CNN
and the unions representing employees of contractor
TVS would have departed from applicable labor
contracts, prior Board certifications, the services
agreements between CNN and its vendor (TVS), and
20 years of bargaining history in which the employer-party was always TVS (or its predecessor contractors), and not CNN.
• Existing CleanCo CBA: Prospective Four-Party
Bargaining. If CleanCo was party to an existing
company-wide collective-bargaining agreement, in
which CleanCo was identified as the only “employer,” the majority’s new test clearly imposes an obligation to engage in bargaining on all joint-employer
entities—i.e., CleanCo and Clients A, B, and C—
even though such bargaining would depart from explicit CBA language and the past practice of
CleanCo and the union.
• “Mandatory” Arbitration, Yet Never Agreed To? If
CleanCo had an existing company-wide CBA, the
majority’s imposition of “employer” status on Clients A, B, and C would not necessarily bind them to
the terms of the existing CleanCo CBA. This would
mean that, even though a particular grievance may
pertain to essential employment terms that, in the
majority’s view, Clients A, B, and C have the right
to “share or codetermine,” the CBA’s grievance arbitration procedure would not necessarily bind Cli-
41
ents A, B, and C, since they had never agreed to
submit to the procedure.67
• Benefit Fund Contributions and Liabilities—Who
Pays? Many existing collective-bargaining agreements contain extensive provisions regarding benefit
fund contributions and benefit liabilities. If such
provisions were contained in the CleanCo CBA, then
Clients A, B, and C—when participating in the new
four-way bargaining described above—would predictably be confronted with demands to assume liability for such provisions. Although the majority
test suggests that Clients A, B, and C “will be required to bargain only with respect to such terms and
conditions which it possesses the authority to control,” it appears clear that they would face economic
demands and potentially be subject to a strike based
on a refusal to agree to such demands.
• Joint Bargaining Versus “Add-On” CBAs.
If
CleanCo employees assigned to Clients A, B, or C
were organized for the first time by one or more unions, the majority clearly imposes a new mandatory
bargaining obligation on all joint employer entities.
Although an existing collective-bargaining agreement generally suspends a party’s obligation to bargain for the agreement’s term, the majority’s new
test, as noted above, imposes an independent duty to
bargain on every joint employer “with respect to
such terms and conditions which it possesses the authority to control,” which may result in separate sets
of negotiations and potential “add-on” CBAs that
deviate from the existing union agreements.
The foregoing is only a selection of the complications
that may arise. And the example is obviously simplistic
because it relates only to one service company, which
has only three clients—and in the real world, by comparison, (i) many businesses, large and small, rely on services provided by large numbers of separate vendors, and
(ii) many service companies have dozens or hundreds of
separate clients. Time will no doubt reveal more as employers and unions attempt to apply the limitless jointemployer standard to even more complicated settings
than the above example. The only thing that is clear at
present is that the new standard does not promote stable
collective-bargaining relationships. There is no way that
it could, and simple mathematics shows us why.
On its face, the majority’s broad test can find up to 18
“joint” employers per work force. How? The majority
67
AT&T Technologies Inc. v. CWA, 475 U.S. 643, 648 (1986);
Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. at 582;
Steelworkers v. American Mfg. Co., 363 U.S. at 570–571; Gateway
Coal Co. v. UMW, 414 U.S. 368, 374 (1974).
42
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
finds that there are at least six essential terms and conditions of employment (wages, hours, hiring, firing, discipline, and direction of work). According to the majority,
an “employer” is an entity that exercises—even on a limited and routine basis—any one of three forms of putative control (direct control, indirect control, or potential
control) over any one of these terms. Six times 3 is 18,
which leaves us with a model where there could be up to
18 employers for a single workforce. See Appendix A
(“Why There Are At Least 18 Potential Employers”). In
truth, the test can find more than 18 employers because
the majority has not limited itself to the specified 6 supposedly essential terms, and the majority has not unqualifiedly represented that there can be only one controller
per category of control, e.g., there could be two “indirect
controllers,” for example. We do not know the exact
limit to the multiplicity of putative employers arising
from the majority’s new joint-employer test. But it is
surely common sense that placing 18 different cooks
involuntarily in a single kitchen will lead to a terrible
meal. That is the recipe for dyspeptic collective bargaining that the majority has cooked up.
The majority states that “a joint employer will be required to bargain only with respect to such terms and
conditions which it possesses the authority to control.”
This does not temper the impact of the new standard; it
only makes matters worse. The majority assumes these
bargaining issues are severable, as if the resolution of
one issue is not dependent on the resolution of another.
This is not how contract negotiations work. And underscoring the irrationality of the majority’s rule here, the
Board has traditionally denounced this type of segmented
issue-by-issue negotiating, when unilaterally undertaken
by a party, as unlawful “fragmented bargaining.”68
Moreover, how exactly are joint user and supplier employers to divvy up the bargaining responsibilities for a
single term of employment that they will be deemed un68
See, e.g., E.I. Dupont de Nemours & Co., 304 NLRB 792, 792 fn.
1 (1991) (“What we find unlawful in the Respondent’s conduct was its
adamant insistence throughout the entire course of negotiations that its
site service operator and technical assistant proposals were not part of
the overall contract negotiations, and, therefore, had to be bargained
about totally separately not only from each other but from all the other
collective bargaining agreement proposals. We find this evinced fragmented bargaining in contravention of the Respondents duty to bargain
in good faith.”); see also NLRB v. Patent Trader, 415 F.2d 190, 198 (2d
Cir. 1969), modified on other grounds 426 F.2d 791 (2d Cir. 1970)
(When a party “removes from the area of bargaining . . . [the] most
fundamental terms and conditions of employment (wages, hours of
work, overtime, severance pay, reporting pay, holidays, vacations, sick
leave, welfare and pensions, etc.),” it has “reduced the flexibility of
collective bargaining, [and] narrowed the range of possible compromises with the result of rigidly and unreasonably fragmenting the negotiations.”).
der the new standard to codetermine, one by direct control and the other by indirect control? How does one
know who has authority at all over a term and condition
of employment, under the majority’s vague formulation?
What if two putative employer entities get into a dispute
over whether one has authority over a certain term or
condition of employment? What if the putative employers are competitors? Taking the diagram above, what if
Client A and Client B are competitors and have no real
economic interest in the other client coming to a goodfaith agreement with CleanCo on how much it pays employees working for that other client? Does it make
sense for the law to attempt to create such an interest?
What if there are too many entities to come to an agreement? How does bargaining work in this circumstance?
Further, this purported division of bargaining responsibility creates conflicts between alleged violations of Section 8(a)(5), which requires employers to bargain in
good faith with a certified or recognized union, and Section 8(a)(2), which makes such bargaining unlawful if the
union lacks majority support among the entity’s employees.69 If multiple entities arguably constitute a “joint
employer,” and one entity is alleged to have unlawfully
failed to bargain over particular terms of employment,
the majority’s standard effectively places the burden of
proof on the respondent-employer to establish that it did
not control those particular employment terms.70 So
questions exist as to (i) which entities are the “employer,” (ii) which entities must (or must not) engage in bargaining over particular employment terms, and even (iii)
what party—the respondent(s) versus the General Counsel—bears the burden of proof regarding this assortment
of issues.
69
The conflict between Sec. 8(a)(5) and Sec. 8(a)(2) results from
the Hobson’s Choice that confronts multiple entities that control different aspects of employment for one or more different employee groups.
Potential joint-employer entities risk violating Sec. 8(a)(5) if they fail
or refuse to bargain over certain matters because Sec. 8(a)(5) obligations apply generally to “wages, hours, and other terms and conditions
of employment.” See Sec. 8(d) (defining the phrase “to bargain collectively,” which is required under Sec. 8(a)(5)). Conversely, potential
joint-employer entities risk violating Sec. 8(a)(2), which makes it unlawful for an employer to bargain with a union that does not validly
represent its employees, if the Board determines that the entities engaged in bargaining when, in fact, they were not an “employer” as to
employment terms not within their control. In other words, not only
does the majority’s standard promise to create confusion about who is
an “employer,” but the majority’s patchwork allocation making different entities responsible for different issues creates confusion about
which “employer” entity may or must bargain over what particular
employment terms. As with other aspects of the majority’s new standard, definitive answers will be available only after years of Board and
court litigation.
70
See, e.g., Hobbs & Oberg Mining Co., 297 NLRB 575, 586
(1990) (General Counsel’s burden to prove joint-employer status), enfd.
940 F.2d 1538 (10th Cir. 1991), cert. denied 503 U.S. 959 (1992).
BFI NEWBY ISLAND RECYCLERY
This scenario is made all the worse by the need for
years of Board litigation before third parties will actually
learn whether (i) they unlawfully failed to participate in
bargaining between another employer and its union(s), or
(ii) the third parties unlawfully injected themselves into
such bargaining when their commercial relationship was
insufficient to make them a joint employer. Nor is the
Board permitted to engage in the economic analysis
needed to sort out the plethora of arm’s-length companyto-company relationships affected by the majority’s new
joint-employer test. The Board’s Division of Economic
Research was abolished 75 years ago, and Section 4(a) of
the Act—adopted by Congress in 1947—prohibits the
Board from having any agency personnel engage in
“economic analysis.”71 Additionally, we note that the
Board lacks the authority to impose labor contract terms
on parties,72 and nothing in the Act authorizes the Board
to impose requirements on companies regarding how
they must arrange or rearrange themselves.
The majority even acknowledges some turmoil will result from its decision, but largely dismisses it as being
outweighed by the need to protect contingent workers’
Section 7 rights.
Certainly any doctrinal change in this area will modify
the legal landscape for employers with respect to the
National Labor Relations Act. However, given the
centrality of collective bargaining under the Act, we
must ensure that the prospect of collective bargaining is
not foreclosed by business relationships that effectively
deny employees’ right to bargain with employers that
share control over essential terms and conditions of
their employment. [(Footnote omitted.)]
Contrary to our colleagues’ assertion, we are not slavish
defenders of the status quo. We would support revisiting
any Board doctrine that systemically fails to protect Section
7 rights, but we would not do so without evidence of that
failure. The majority cites no evidence, and none has been
presented, showing that employees in contingent or any
comparable employment situations have been unable to
bargain with their undisputed employer. The majority uses
71
Sec. 4(a) states in part: “Nothing in this Act shall be construed to
authorize the Board to appoint individuals . . . for economic analysis.”
This language was added to the NLRA as part of the Labor Management Relations Act (LMRA), 61 Stat. 136, Sec. 101 (amending NLRA
Sec. 4(a)) (1947). The enactment of Sec. 4(a) occurred after the Board
abolished its Division of Economic Research in 1940. See 93 Cong.
Rec. 6661, reprinted in 2 LMRA Hist. 1577 (June 6, 1947) (analysis of
H.R. 3020). See generally John E. Higgins, Jr., Labor Czars–
Commissars–Keeping Women in the Kitchen–The Purpose and Effects
of the Administrative Changes Made by Taft-Hartley, 47 CATH. U. L.
REV. 941, 951–952 (1998).
72
Sec. 8(d); H.K. Porter Co. v. NLRB, 397 U.S. 99 (1970).
43
the phrase “meaningful bargaining” numerous times, but the
majority’s premise is that bargaining fails to be “meaningful” whenever the employer’s business relationships influence the matters under negotiation. Our colleagues on this
front simply cite the large number of employees whose
terms and conditions of employment might be affected in
some way by a user employer and Board cases finding no
duty to bargain with these user employers, and assert that
rights have been denied. How do we know that employees
have been unable to engage in “meaningful bargaining”
with the supplier employer? Under the majority’s test, it is
possible to find that “meaningful bargaining” cannot take
place with a supplier employer alone if it lacks meaningful
control over even a single “essential” facet of employment.
Such a definition of meaningful bargaining has never been
the law, and it cannot be reconciled with business practices
that have been in existence since before the Act.
It is difficult, if not impossible, to reconcile this reasoning with the Board’s rationale in Management Training, 317 NLRB 1355 (1995), addressing whether to assert discretionary jurisdiction over a private employer
contracting for business with an exempt governmental
entity. The Board there modified prior caselaw and held
that it would no longer decline to assert jurisdiction in
circumstances where the private employer lacked control
of what had been deemed essential terms of employment.
It reasoned that “[b]ecause of commercial relationships
with other parties, an inability to pay due to financial
constraints, and competitive considerations which circumscribe the ability of the employer to grant particular
demands, the fact is that employers are frequently confronted with demands concerning matters which they
cannot control as a practical matter or because they
have made a contractual relationship with private parties or public entities.” Id. at 1359 (emphasis added).
Quite obviously, under Management Training, the Board
believes that employees and their exclusive bargaining
representative can still engage in meaningful bargaining
under the Act even with an employer who lacks control
over a substantial number of essential terms of employment.
C. The New Test Will Dramatically Change Labor Law
Sales and Successorship Principles, and Will Discourage
Efforts to Rescue Failing Companies and
Preserve Employment
Expanding the definition of employer will also alter
the landscape of successorship law under the Act. It is
well established that successor employers,73 although
73
An employer is a successor of its predecessor under the Act when
there is a “substantial continuity between the enterprises,” the successor
hired a majority of its predecessor’s employees, and the unit is still
44
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
they must recognize and bargain with the union representing the predecessor’s employees in certain circumstances, are not obligated to adopt the preexisting collective-bargaining agreement and have the right to unilaterally set different initial terms and conditions of employment.74 NLRB v. Burns International Security Services,
Inc., 406 U.S. 272, 287–288, 294–295 (1972). This rule
“careful[ly] safeguards the rightful prerogative of owners
independently to rearrange their businesses.” Fall River
Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 40
(1987) (internal quotations omitted). But the policy concerns behind the rule are even deeper than that:
[H]olding either the union or the new employer bound
to the substantive terms of an old collective-bargaining
contract may result in serious inequities. A potential
employer may be willing to take over a moribund business only if he can make changes in corporate structure,
composition of the labor force, work location, task assignment, and nature of supervision. Saddling such an
employer with the terms and conditions of employment
contained in the old collective-bargaining contract may
make these changes impossible and may discourage
and inhibit the transfer of capital. On the other hand, a
union may have made concessions to a small or failing
employer that it would be unwilling to make to a large
or economically successful firm. The congressional
policy manifest in the Act is to enable the parties to negotiate for any protection either deems appropriate, but
to allow the balance of bargaining advantage to be set
by economic power realities. Strife is bound to occur if
the concessions that must be honored do not correspond to the relative economic strength of the parties.
Burns, 406 U.S. at 287–288.
Under the majority’s expansive joint-employer standard, many user employers will now be considered joint
employers of their supplier employers’ employees. Rebidding contracts has been a common feature of the user—and supplier—employer market. Going forward, it
may be less common because deeming the user employer
to be a joint employer will make terminating or rebidding
the contract with the supplier employer much more diffiappropriate. Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S.
27, 43–52 (1987).
74
There is a limited exception to this general rule when “‘it is perfectly clear that the new employer plans to retain all of the employees
in the unit,’” unless the successor “clearly announce[s] its intent to
establish a new set of conditions prior to inviting former employees to
accept employment.” Spruce Up Corp., 209 NLRB 194, 195 (1974)
(quoting Burns, 406 U.S. at 294–295), enfd. 529 F.2d 516 (4th Cir.
1975). However, a so-called “perfectly clear” successor employer is
still not bound by the predecessor contract itself. It must only adhere to
terms established by the contract while negotiating new terms with the
incumbent union.
cult. The user employer will often have a duty to bargain
the decision to lay off the employees or to subcontract
those jobs to another supplier employer. See Fibreboard
Corp. v. NLRB, supra, 379 U.S. at 215 (1964); CNN,
supra, 361 NLRB No. 47, slip op at 17. Assuming the
user employer does contract with a new supplier employer that would otherwise be a Burns successor able to set
its own terms, the user employer, under the broadened
standard, will likely be deemed a joint employer with the
new supplier employer as well. That user employer’s
ongoing bargaining obligation spanning the two supplier
employers prevents the new supplier employer from setting different terms and conditions of employment than
its predecessor had. See Whitewood Maintenance Co.,
supra, 292 NLRB at 1168–1169 (contractor that substituted one subcontractor for another jointly employed
both the old and new subcontractors’ employees, so the
new subcontractor could not set its own initial terms),
enfd. 928 F.2d 1426 (5th Cir. 1991).
Similarly, when a predecessor’s union-represented
employees apply for employment with a successor, the
successor cannot lawfully extend recognition unless and
until it has hired a “substantial and representative complement” of employees and has received a demand for
recognition from the predecessor union(s).75 In CNN,
supra, two unions already represented employees of
CNN’s contractor, TVS, as part of a 20-year history in
which unionized contractors supplied technical employees to CNN, where only the contractor—and not CNN—
was considered the “employer.” When CNN decided to
terminate its use of contractor employees and directly
hire its own technical workforce, CNN as a successor
would have violated the Act if it engaged in bargaining
with the TVS unions before it hired a “substantial and
representative complement” of its own employees.
However, the majority’s expansive joint-employer finding converted CNN into an “employer” before it hired
any of its own technical employees. And, based on its
expansive joint-employer finding, the Board majority
determined that CNN—even before it decided to terminate the TVS relationship (and before it notified TVS)—
was required to notify the TVS unions and engage in
bargaining with them over whether CNN might terminate
the TVS relationship and hire its own work force.
Member Miscimarra stated, in his CNN dissent, that
employer status “does not arise as the result of spontaneous combustion,” and he explained that the expansive
joint-employer finding—applied to CNN before it hired
its own workforce—was irreconcilable with the parties’
understandings and existing agreements:
75
Fall River Dyeing Corp. v. NLRB, 482 U.S. at 47–48.
BFI NEWBY ISLAND RECYCLERY
Nothing in such a scenario would promote stable bargaining relationships. Rather, CNN’s actions—taken
as an “employer” of the TVS technical personnel—
would have directly contradicted the then-existing
TVS-NABET collective-bargaining agreements (which
identified TVS, not CNN, as the employer). CNN’s actions would have violated the CNN-TVS Agreements,
which stated . . . that TVS employees “are not employees of [CNN], and shall not be so treated at any
time”. . . . Finally, CNN’s actions would have exhibited
a total disregard for the elaborate body of law regarding
“successorship” and related business changes that has
been the subject of nearly a dozen Supreme Court cases
and innumerable Board decisions.76
The inability of user employers to freely terminate or
rebid client contracts and of new supplier employers to
set different initial terms will inhibit our economy and
lead to labor strife. The new standard sends a message to
user employers to never contract with unionized firms in
the first place to avoid being trapped in “permanent”
client contracts that cannot be terminated without bargaining to agreement or impasse. On the other side, the
supplier-employer market will become uncompetitive as
potential bidders for contracts where the incumbent supplier employer is unionized will be unable to compete
with the incumbent employer on labor costs, as the new
supplier employer will likely be beholden to the same
terms. The Act is being applied in a manner Congress
could not conceivably have intended.
D. The New Test Threatens Existing Franchising Arrangements in Contravention of Board Precedent and
Trademark Law Requirements
Of the thousands of business entities with different
contracting arrangements that may suddenly find themselves to be joint employers, franchisors stand out. According to amicus International Franchise Association
(IFA), “in 2012 there were 750,000 franchise establishments in the United States employing 8.1 million workers, generating a direct economic output of $769 billion.
These businesses account for approximately 3.4 percent
of America’s gross domestic product.”77
For many years, the Board has generally not held franchisors to be joint employers with franchisees, regardless
of the degree of indirect control retained.78 The majority
76
CNN, supra, slip op. at 38–39 (Member Miscimarra, dissenting)
(footnote and emphasis omitted).
77
Br. of IFA at 1.
78
See, e.g., Speedee 7-Eleven, 170 NLRB 1332 (1968) (franchisor
not a joint employer despite a policy manual that described “in meticulous detail virtually every action to be taken by the franchisee in the
conduct of his store”), and Tilden, S. G., Inc., 172 NLRB 752 (1968)
(franchisor not a joint employer, even though the franchise agreement
45
does not mention, much less discuss, the potential impact
of its new standard on franchising relations, but it will
almost certainly be momentous and hugely disruptive.
Indeed, absent any discussion, we are left to ponder
whether the majority even agrees with the statement of
the General Counsel in his amicus brief that “[t]he Board
should continue to exempt franchisors from joint employer status to the extent that their indirect control over
employee working conditions is related to their legitimate interest in protecting the quality of their product or
brand. See, e.g., Love’s Barbeque Rest., 245 NLRB 78,
120 (1978) (no joint-employer finding where franchisees
were required to prepare and cook food a certain way
because, inter alia, the franchisor established the requirements to ‘keep the quality and good will of [the
franchisor’s] name from being eroded’ (internal quotations and citations omitted), enforced in rel. part, 640
F.2d 1094 (9th Cir. 1981).” (Amicus Br. at 15–16 fn.
32). Given the breadth of the majority’s test and rationale, we are concerned that the majority effectively
finds that a franchisor even with this type of indirect control would be deemed a joint employer.
The majority’s new test appears to require specific
analysis of whether the franchisor shares or codetermines
“the manner and method of performing the work.” However, in many if not most instances, franchisor operational control has nothing to do with labor policy but rather
compliance with federal statutory requirements to maintain trademark protections. “It is required that the owner
of the mark should set up the standards or conditions
which must be met before another is permitted to use the
certification mark and the owner should permit the use of
the mark by others only when they meet those standards
or conditions.” State of Fla. v. Real Juices, Inc., 330 F.
Supp. 428, 432 (M.D. Fla. 1971). As one court explained:
Without the requirement of control, the right of a
trademark owner to license his mark separately from
the business in connection with which it has been used
would create the danger that products bearing the same
trademark might be of diverse qualities. If the licensor
is not compelled to take some reasonable steps to prevent misuses of his trademark in the hands of others the
public will be deprived of its most effective protection
against misleading uses of a trademark. The public is
hardly in a position to uncover deceptive uses of a
trademark before they occur and will be at best slow to
detect them after they happen. Thus, unless the licendictated “many elements of the business relationship,” because the
franchisor did not “exercise direct control over the labor relations of
[the franchisee]”).
46
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
sor exercises supervision and control over the operations of its licensees the risk that the public will be unwittingly deceived will be increased and this is precisely what the Act is in part designed to prevent. Clearly
the only effective way to protect the public where a
trademark is used by licensees is to place on the licensor the affirmative duty of policing in a reasonable
manner the activities of his licensees.
Stanfield v. Osborne Indus., Inc., 839 F. Supp. 1499, 1504
(D. Kan. 1993), affd. 52 F.3d 867 (10th Cir. 1995), abrogated on other grounds by Lexmark Int’l, Inc. v. Static Control
Components, Inc., 134 S.Ct. 1377 (2014). If a franchisor
fails to maintain sufficient control over its marks, it is considered to have engaged in “naked franchising” and thereby
abandoned the mark.79 “The critical question in determining whether a licensing program is controlled sufficiently by
the licensor to protect his mark is whether the licensees’
operations are policed adequately to guarantee the quality of
the products sold under the mark.” General Motors Corp. v.
Gibson Chem. & Oil Corp., 786 F.2d 105, 110 (2d Cir.
1986). The necessity of the franchisor to police the “manner and method” of the franchisee is paramount. “‘The purpose of the Lanham Act . . . is to ensure the integrity of registered trademarks, not to create a federal law of agency.’
The scope of a licensor’s duty of supervision of a licensee
who has been granted use of a trademark must be commensurate with this limited goal.” Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1018 (9th Cir. 1985)
(quoting Oberlin v. Marlin American Corp., 596 F.2d 1322,
1327 (7th Cir. 1979)).
These cases demonstrate that one important aspect of
the franchising relationship is the franchisee’s ability to
reap the benefits of manifesting to the customer the appearance of a seamless enterprise through the use and
maintenance of the franchisor’s trademark. Federal franchise law recognizes this benefit and requires that the
franchisor maintain the mark by maintaining enough
control over the franchisee to protect consumers. However, even while franchise law requires some degree of
79
Id.; see 15 U.S.C. § 1064(5)(A). See also Barcamerica International USA Trust v. Tyfiled Importers, Inc., 289 F.3d 589, 596 (9th Cir.
2002) (“It is well-established that ‘[a] trademark owner may grant a
license and remain protected provided quality control of the goods and
services sold under the trademark by the licensee is maintained.’
Moore Bus. Forms, Inc. v. Ryu, 960 F.2d 486, 489 (5th Cir.1992). But
‘[u]ncontrolled or “naked” licensing may result in the trademark ceasing to function as a symbol of quality and controlled source.’ McCarthy on Trademarks and Unfair Competition § 18:48, at 18–79 (4th ed.
2001). Consequently, where the licensor fails to exercise adequate
quality control over the licensee, ‘a court may find that the trademark
owner has abandoned the trademark, in which case the owner would be
estopped from asserting rights to the trademark.’ Moore, 960 F.2d at
489.”).
oversight and interaction, it was never the intent of Congress, by that interaction, to make a franchisee the agent
of its franchisor for any purpose. Thus, the new jointemployer standard portends unintended consequences for
a franchisor’s compliance with the requirements of another Federal act that are totally unrelated to labor relations. The Board has been repeatedly reminded that it
“has not been commissioned to effectuate the policies of
the Labor Relations Act so single-mindedly that [we]
may wholly ignore other and equally important Congressional objectives.” Southern Steamship Co. v. NLRB,
316 U.S. 31, 47 (1942). Rather than providing a “careful
accommodation of one statutory scheme to another,” the
majority’s new standard places “excessive emphasis upon [the Board’s] immediate task.” Id.
E. The New Test Undermines the Parent-Subsidiary Relationship in Contravention of Board Precedent
In most areas of the law, it is widely recognized that
parent and subsidiary corporations are indeed separate
entities. The Board, which has developed whole legal
doctrines devoted to detecting ostensibly separate companies that are in truth either created to evade obligations
under the Act (the alter ego doctrine) or so integrated that
they function as one (the single employer doctrine), has
recognized this principle repeatedly. For example, in
Dow Chemical, 326 NLRB 288 (1998), a bipartisan
Board majority reaffirmed the longstanding rule under
the single employer doctrine that typical parents and subsidiaries are not considered a sole “employer” for bargaining purposes. See also, e.g., Western Union, 224
NLRB 274 (1976), affd. sub nom. United Telegraph
Workers v. NLRB, 571 F.2d 665 (D.C. Cir. 1978), cert.
denied 439 U.S. 827 (1978). Indeed, the presumption of
separateness for purposes of the Act is so strong that it
extends also to unincorporated divisions that are operated
independently from the company as a whole. See, e.g.,
Los Angeles Newspaper Guild, Local 69 (Hearst Corp.),
185 NLRB 303, 304 (1970), enfd. 443 F.2d 1173 (9th
Cir. 1971). And here, the Board’s honoring of corporate
separateness occurs even as the Board simultaneously
recognizes that a subsidiary is, of course, under the potential control of its parent. In other words, potential
control is not enough to find that a parent is the same
employer with its subsidiary for purposes of labor law:
Common ownership by itself indicates only potential
control over the subsidiary by the parent entity; a single-employer relationship will be found only if one of
the companies exercises actual or active control over
the day-to-day operations or labor relations of the other.
BFI NEWBY ISLAND RECYCLERY
Dow, 326 NLRB at 288 (emphasis in original). The majority now turns this principle on its head, and its wholesale
adoption of the “potential control” standard would treat
parents and subsidiaries as joint-employing entities for purposes of labor law. To our reckoning, no Board has ever
taken this leap before. Indeed, the majority’s new test—
which applies to admittedly separate and independent companies—applies a more onerous “control” standard than the
one that the Board uses to find control where a company is
actually integrated with another. This makes no sense.
Whatever the contradiction in the majority’s logic, the
result is serious. The upshot is that the majority’s new
test threatens to automatically sweep every parent or affiliate company in America into being the “employer” of
a subsidiary’s employees, with the concomitant bargaining obligations, the loss of secondary-employer protection from union strikes discussed below, and all the other
deleterious results mentioned above. If this is the outcome intended, upending decades of precedent of labor
law and probably centuries of precedent in corporate law,
we need a mandate from Congress before we purport to
“find” it in our decisional case law. The majority here
identifies no such mandate, and its test should be invalidated on this basis alone. If Congress had wanted us to
turn the world of corporate identity upside down, it
would have expressly told us so.
VI. THE NEW TEST CONFLICTS WITH CONGRESSIONAL
INTENT TO INSULATE NEUTRAL EMPLOYERS FROM
SECONDARY ECONOMIC COERCION
Not only does the majority’s new test impermissibly
expand and confuse bargaining obligations under Sections 8(a)(5) and 8(d), it also does violence to other provisions of the Act that depend on the “employer” definition. Chief among them is the Section 8(b)(4)(ii)(B)
prohibition on secondary economic protest activity such
as strikes, boycotts, and picketing. That section “prohibits labor organizations from threatening, coercing, or
restraining a neutral employer with the object of forcing
a cessation of business between the neutral employer and
the employer with whom a union has a dispute,” but it
does not prohibit striking or picketing the primary employer, i.e., the employer with whom the union has the
dispute. Teamsters Local 560 (County Concrete), 360
NLRB No. 125, slip op. at 1 (2014). Congress intended
to “preserv[e] the right of labor organizations to bring
pressure to bear on offending employers in primary labor
disputes and . . . [to] shield[] unoffending employers and
others from pressures in controversies not their own.”
NLRB v. Denver Building Trades Council, supra, 341
U.S. at 692.
An entity that is a joint employer with the employer
subject to a labor dispute is equally subject to economic
47
protest. See Teamsters Local 688 (Fair Mercantile), 211
NLRB 496, 496–497 (1974) (union’s picketing of a retailer did not violate Section 8(b)(4)(ii)(B) because it was
the joint employer of a delivery contractor’s employees).
To put this in a practical terms, before today’s decision at
least, a union in a labor dispute with a supplier employer
typically could not picket a user employer urging clients
to cease doing business with that user employer—the
object there being that the user employer would in turn
cease doing business with the supplier employer.80
Likewise, a union with a labor dispute with one franchisee typically could not picket the franchisor and all of its
other franchisees.
Today’s expansion of the joint-employer doctrine will
sweep many more entities into primary-employer status
as to labor disputes that are not directly their own. Unions will be able to freely picket or apply other coercive
pressure to either or both of the joint employers as they
choose. This limits the Act’s secondary-boycott prohibitions in a manner Congress did not intend. The targeted
joint employer may not have direct control or even any
control over the particular terms or conditions of employment that are the genesis of the labor dispute. Here,
the economic consequences are far reaching. For example, a union could picket all of the user employer’s facilities even though the supplier employer only provides
services at one. Further, assuming that a franchisor exerts similar indirect control over each franchisee, as the
majority here may often find to be the case, a union
could picket the franchisor and all franchisees even
though its dispute only involves the employees of one.81
It does not end there. As previously stated, numerous
provisions relied upon by the majority are typically included in a residential renovation contract— i.e., the contractor’s employees cannot start work before a certain
hour, they must finish work by a certain hour, they cannot use the bathrooms in the house, they have to park
their vehicles in certain locations. Suppose that the annual revenues of the company with whom the homeowners
contract meet the Board’s discretionary standard for asserting jurisdiction, not an unlikely possibility. Then
80
Of course, the user- and supplier-employer scenario often raises
common situs issues as addressed in Sailors Union (Moore Dry Dock),
92 NLRB 547 (1950), and its progeny, but explicitly targeting the secondary employer is blatantly unlawful.
81
Going back to the CleanCo diagram above for an example, Client
A likely has no control over what goes on upon the premises of Client
C. More importantly, there is no underlying economic relationship
between the two that could supply even a remotely rational foundation
for the Act to allow economic weapons like strikes, picketing, etc. at
Client A to convince it to use its obviously nonexistent “power” over
Client C in a labor dispute involving CleanCo employees posted at
Client C.
48
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
suppose that a union initiates an area standards wage
protest against this contractor. One day, the homeowners
open their front door to discover pickets patrolling the
sidewalk in front of their house. In the new jointemployer world, they are a lawful target for this protest
activity. Unions may not have any interest in bringing
them into any bargaining process, but they may be more
than eager to maximize economic injury to the primary
employer by expanding the cease-doing-business pressure to as many clients as possible. Congress did not
intend that every entity with some degree of economic
relationship with the employer-disputant be thrown into
its labor dispute. The Act is supposed to encourage labor
peace, and to this end Congress enacted Sections 8(b)(4)
and 8(e), demonstrating its intent to avoid limitless economic warfare based on dealings between employers and
other persons.
The majority’s expansive definition of joint-employer
status poses particular questions about its applicability to
common situs work in the construction industry. As previously stated, the Supreme Court has expressly held that
the fact “the contractor and subcontractor were engaged
on the same construction project, and that the contractor
had some supervision over the subcontractor’s work, did
not eliminate the status of each as an independent contractor or make the employees of one the employees of
the other.”82 We presume that our colleagues do not intend to act in direct contravention of an express holding
of the Supreme Court, but the breadth of their test and
their emphasis on contractual control as probative of
joint-employer status seems to pose a dilemma: either
they must articulate an exception to a statutory definition
that seems to require uniform treatment of employers in
all industries, or they must place limits on their test they
obviously wish to avoid.83
VII. CONCLUSION
The Board is not Congress. It can only exercise the
authority Congress has given it. In this instance, our
colleagues have announced a new test of joint-employer
status based on policy and economic interests that Congress has expressly prohibited the Board from considering. That alone is reason enough why the new test
82
Denver Building Trades, 341 U.S. at 692.
There is a further question. Denver Building Trades involved a
situation in which a subcontractor was the primary employer target of
protest, and the general contractor was the neutral employer. In Markwell & Hartz, the Board applied the same principles of separateness and
neutrality when the general contractor was the primary employer in a
labor dispute, thereby finding all subcontractors at the common situs to
be neutrals. Building & Construction Trades Council (Markwell &
Hartz), 155 NLRB 319 (1965), enfd. 387 F.2d 79 (5th Cir. 1967). The
breadth of our colleagues’ test raises a genuine concern that they might
use it to undermine this decision.
83
should not stand. Even more troubling from an institutional perspective, however, is the nature of the new test.
The negative consequences flowing from the majority’s
new test are substantial. It creates uncertainty where
certainty is needed. It provides no real standard for determining in advance when entities in a business relationship will be viewed as independent and when they will
be viewed as joint employers.
Moreover, as noted previously, the resulting confusion
will cause damage both ways: (i) too many parties will
discover after the fact, following years of litigation, they
were unlawfully absent from negotiations in which they
were legally required to be participants; and (ii) countless
other parties will discover they unlawfully injected themselves into collective bargaining involving another entity
and its union(s), based on a relationship that was insufficient, after all, to result in joint-employer status. The
majority essentially says that the Board will look at every
aspect of a relationship on a case-by-case basis, in litigation, and then decide the limited issue presented. We
owe a greater duty to the public than to launch some
massive ship of new design into unsettled waters and tell
the nervous passengers only that “we’ll see how it
floats.”
Accordingly, we here defend a standard that serves labor law and collective bargaining well, a standard that is
understandable and rooted in the real world. It recognizes joint-employer status in circumstances that make
sense and would foster stable bargaining relationships.
Indeed, in the Board’s history of applying this traditional
joint-employer test, there have been many cases where
two or more employers were found to exercise sufficient
control over a common group of employees to warrant
joint bargaining obligations and shared liability for unfair
labor practices.84 Our quarrel with the majority stems not
84
Our colleagues fault us for making “no real effort to address” the
issues they have asserted. But today’s legal framework for bargaining
(which they dismissively refer to as “the current status quo”) already
supplies the answer. That is, economic interdependence and indirect
influence work both ways. Current law offers unions great flexibility
when dealing with employers that happen to be interdependent with
another entity. As long as the union respects secondary boycott principles, leverage applied to the immediate “employer” is all the more
likely to affect suppliers, vendors, and other parties having closely
aligned economic interests, which predictably may lead to meaningful
discussions and changes across the various entities. Such discussions
are likely to occur even “without the intervention of the Board enforcing a statutory requirement to bargain,” and there is an “important
difference” between such discussions being “permitted” as opposed to
making them “mandatory.” First National Maintenance v. NLRB, 452
U.S. 666, 681 fn. 19, 683 (1981). Here, if the Union organizes
Leadpoint, then, depending on its actual bargaining strength, it can
engage in activities that lead to modifications in BFI’s contract with
Leadpoint to accommodate those Union demands. And the Board’s
successorship case law permits the Union to remain on the scene even
BFI NEWBY ISLAND RECYCLERY
from any disagreement about the concept of joint employment status but rather from their imposition of a test
that we firmly believe cannot be reconciled with the
common-law agency standard the Board is compelled to
apply, based on a statute the Board is duty-bound to enforce.
The Supreme Court has recently cautioned that a federal agency must explain itself when departing from interpretation of well-established rules that have governed
business practices for long periods, even when the rules
are of the agency’s own making. In Christopher v.
SmithKline Beecham Corp., 132 S.Ct. 2156 (2012), the
Court reviewed the Department of Labor’s (DOL) new
interpretation that pharmaceutical sales representatives
would no longer be considered outside salesmen exempt
from the FLSA’s overtime provisions. The Court emphasized that its usual deference to such an agency action
was not warranted because of the “potentially massive”
economic implications of the new interpretation “for
conduct that occurred well before that interpretation was
announced,”85 and because deference “would seriously
undermine the principle that agencies should provide
regulated parties ‘fair warning of the conduct [a regulation] prohibits or requires.’”86 The Court also noted that
DOL’s “longstanding practice” of exempting detailers
went back to the beginning of the FLSA, and that there
were currently 90,000 detailers working for pharmaceutical companies with the understanding that they were exempt outside sales reps.87
Because DOL’s new interpretation would be so disruptive to the regulated industry, the Court could not simply
defer to it:
It is one thing to expect regulated parties to conform
their conduct to an agency’s interpretations once the
agency announces them; it is quite another to require
regulated parties to divine the agency’s interpretations
in advance or else be held liable when the agency announces its interpretations for the first time in an enforcement proceeding and demands deference.
if BFI attempts to switch contractors. The flaw with our colleagues’
approach is that, regardless of the strength of the union, it gives that
union an artificial place at the table where there is any interdependency
between the employer and other entities. See H. K. Porter Co., 397
U.S. at 107–108 (“It is implicit in the entire structure of the Act that the
Board acts to oversee and referee the process of collective bargaining,
leaving the results of the contest to the bargaining strengths of the
parties.”)
85
Id. at 2167.
86
Id. (quoting Gates & Fox Co. v. Occupational Safety and Health
Review Comm’n, 790 F.2d 154, 156 (D.C. Cir. 1986)).
87
Id. at 2167–2168.
49
Accordingly, whatever the general merits of . . . deference, it is unwarranted here. We instead accord the Department’s interpretation a measure of deference proportional to the “‘thoroughness evident in its consideration, the validity of its reasoning, its consistency with
earlier and later pronouncements, and all those factors
which give it power to persuade.’” United States v.
Mead Corp., 533 U.S. 218, 228, 121 S.Ct. 2164, 150
L.Ed.2d 292 (2001) (quoting Skidmore v. Swift & Co.,
323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124
(1944)).88
What the majority has done here is far broader in
scope than DOL’s invalidated interpretive change. Instead of overturning one discrete longstanding agency
interpretation that affects a statutory exemption for a
single category of employer, the Board has substantially
altered its interpretation of joint-employer status across
the spectrum of private business relationships subject to
our jurisdiction. Despite the majority opinion’s description, this case is not merely about whether the Board
should overturn thirty years of precedent based on the
TLI and Laerco decisions. That would be serious
enough.
Our greater concern is the impact of the majority’s reformulation on a much broader body of law, affecting
multiple doctrines central to the Act that have been developed and refined through decades of work by bipartisan Boards, the courts, and Congress. As in Christopher,
the majority here gives insufficient consideration to the
“potentially massive” economic implications of its new
joint-employer standard, and it requires innumerable
parties to “divine the agency’s interpretations in advance
or else be held liable when the agency announces its interpretations for the first time in an enforcement proceeding.” We believe that the Board should adhere to the
“joint-employer” test that has existed for 30 years without a single note of judicial criticism. In our view, the
Regional Director correctly applied that test in concluding that Leadpoint was the sole employer of employees
in the petitioned-for unit.
Accordingly, we respectfully dissent.
Dated, Washington, D.C. August 27, 2015
______________________________________
Philip A. Miscimarra,
Member
______________________________________
Harry I. Johnson, III,
Member
88
Id. at 2168–2169.
50
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
NATIONAL LABOR RELATIONS BOARD
NOTICE: This opinion is subject to formal revision before publication in the
bound volumes of NLRB decisions. Readers are requested to notify the Executive Secretary, National Labor Relations Board, Washington, D.C.
20570, of any typographical or other formal errors so that corrections can
be included in the bound volumes.
Lincoln Lutheran of Racine and Service Employees
International Union Healthcare Wisconsin,
SEIU-HCWI. Case 30–CA–111099
August 27, 2015
DECISION AND ORDER
BY CHAIRMAN PEARCE AND MEMBERS MISCIMARRA,
HIROZAWA, JOHNSON, AND MCFERRAN
The issue in this case is whether the Respondent unlawfully ceased checking off union dues after its contract
with the Charging Party Union expired.1 The judge dismissed the complaint, citing Bethlehem Steel, 136 NLRB
1500 (1962), remanded on other grounds sub nom. Shipbuilding v. NLRB, 320 F.2d 615 (3d Cir. 1963), cert. denied 375 U.S. 984 (1964), which held that an employer’s
obligation to check off union dues ends when its collective-bargaining agreement with the union expires. The
judge did not rely on WKYC-TV, Inc., 359 NLRB No. 30
(2012), which overruled Bethlehem Steel and its progeny,
and held that an employer’s obligation to check off union
dues survives contract expiration. As the judge noted, at
the time of the Decision and Order in WKYC-TV, the
composition of the Board included two persons whose
appointments to the Board had been challenged as constitutionally infirm. On June, 26, 2014, the United States
Supreme Court issued its decision in NLRB v. Noel Canning, 134 S.Ct. 2550 (2014), holding that the challenged
appointments to the Board were not valid.
In light of the Supreme Court’s decision in NLRB v.
Noel Canning, we reexamine in this case whether an employer’s obligation to check off union dues from employees’ wages terminates upon expiration of a collective-bargaining agreement. Having considered the issue
de novo, we hold today that, like most other terms and
conditions of employment, an employer’s obligation to
check off union dues continues after expiration of a collective-bargaining agreement that establishes such an
arrangement. However, because we find that it would be
unjust to apply our new holding in this case or in other
1
On August 11, 2014, Administrative Law Judge Paul Bogas issued
the attached decision. The General Counsel and the Charging Party
filed exceptions and supporting briefs, and the Respondent filed answering briefs. The National Right to Work Legal Defense Foundation,
Inc. (NRWLDF) filed a brief amicus curiae. The Charging Party filed
reply briefs.
The National Labor Relations Board has considered the decision and
the record in light of the exceptions and briefs and has decided to affirm the judge’s rulings, findings, and conclusions only to the extent
consistent with this Decision and Order.
362 NLRB No. 188
pending cases, we shall apply our holding only prospectively.
Background
Since at least 2007, the Respondent has collectively
bargained with Service Employees International Union
Healthcare Wisconsin, SEIU-HCWI. The Union and the
Respondent have entered into successive collectivebargaining agreements, the most recent of which was
effective by its terms from June 1, 2011, to December
31, 2012. The parties agreed to extend the terms of that
agreement to February 19, 2013. The agreement included a dues-checkoff provision in which the Respondent
agreed to deduct union initiation fees and membership
dues from the paychecks of participating unit employees
and to transmit those funds to the Union.2
On December 17, 2012, the Respondent and the Union
began negotiations for a successor to the expiring contract. On February 12, 2013, the Respondent informed
the Union that it intended to terminate the dues-checkoff
provision effective February 19, the date the contract was
to expire. However, at the next bargaining session on
February 18, the Respondent stated that dues-checkoff
and union-security provisions would expire after the next
bargaining session. The Respondent discontinued dues
checkoff on March 19, 2013. The Respondent resumed
dues checkoff on November 21, 2013.
2
The provision states as follows:
(a) Upon receipt from a team member, Worksite Leader and/or Union
Representative of a lawfully executed written authorization, Lincoln
Lutheran agrees, until such authorization is revoked in accordance
with its terms, to deduct the initiation fees and regular monthly Union
membership dues of such team members from the team member’s
first two paychecks of each month and to promptly remit such deductions to the Union, the list outlining dues payments and initiation fees
will be provided to the Union by electronic mail The Union will notify Lincoln Lutheran, in writing, of the exact amount of such regular
monthly membership dues to be deducted. Team members shall be
provided Union authorization forms at time of hire along with other
appropriate forms of employment. The authorization provided for by
this Section shall conform to all applicable Federal and State laws.
The Union agrees to indemnify and hold Lincoln Lutheran
harmless against any and all claims, suits, orders, or judgments
brought or issued against Lincoln Lutheran as a result of any action taken or not taken by Lincoln Lutheran pursuant to any written communication from the Union under the provisions of this
article.
(b) The Employer agrees to deduct and transmit to SEIU COPE, $
_____ per pay period, from the wages of those team members who
voluntarily authorize such contributions on the forms provided for that
purpose by SEIU HEALTHCARE WISCONSIN. These transmittals
shall occur for each payroll period. A list of names shall be sent via
electronic mail/media of those team members for whom such deductions have been made. The list will include the amount deducted for
each team member.
2
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Discussion
In holding that an employer has an obligation to continue dues checkoff after the expiration of a collectivebargaining agreement establishing that arrangement, we
overrule Board law set forth in Bethlehem Steel and its
progeny, which held that the employer’s obligation ceases when the contract expires. Although this rule is
longstanding, the Board had never provided a coherent
explanation for it, as the Ninth Circuit noted in refusing
to enforce the Board’s decision in Hacienda Resort Hotel
& Casino, 355 NLRB 742 (2010), a case in which the
Board deadlocked on whether to overrule Bethlehem
Steel. Local Joint Executive Board of Las Vegas v.
NLRB, 657 F.3d 865 (9th Cir. 2011). On review, the
Ninth Circuit observed that the Board “continue[d] to be
unable to form a reasoned analysis in support of” the
Bethlehem Steel rule and, applying its own analysis, the
court found the Bethlehem Steel rule unsupportable in the
case before it. 657 F.3d at 867.
After careful consideration, we find sound reasons to
overrule Bethlehem Steel and adopt the rule we articulate
today. Although our dissenting colleagues suggest that
it is improper for the Board, as opposed to Congress, to
change the Bethlehem Steel rule regarding dues checkoff,
the Board “is free to change its mind on matters of law
that are within its competence to determine, provided it
gives a reasoned analysis in support of the change.” Auto Workers Local 1384 v. NLRB, 756 F.2d 482, 492 (7th
Cir. 1985). Thus, the Supreme Court has made clear that
“a Board rule is entitled to deference even if it represents
a departure from the Board’s prior policy,” as long as it
is “rational and consistent with the Act.” NLRB v. Curtin
Matheson Scientific, Inc., 494 U.S. 775, 787 (1990).
Accord: NLRB v. Ironworkers Local 103, 434 U.S. 335,
350–351 (1978). For the reasons articulated below, we
find that requiring employers to honor dues-checkoff
arrangements after contract expiration serves the Act’s
goal of promoting collective bargaining, consistent with
longstanding Board precedent proscribing postcontract
unilateral changes in terms and conditions of employment.
I.
The declared policy of the Act, as stated in Section 1,
is to “encourag[e] the practice and procedure of collective bargaining” and protect the “full freedom” of workers in the selection of bargaining representatives of their
own choice. Section 8(a)(5) makes it an unfair labor
practice for an employer “to refuse to bargain collectively with the representatives of his employees.” It has long
been established that an employer violates Section
8(a)(5) when it unilaterally changes represented employ-
ees’ wages, hours, and other terms and conditions of employment without providing their bargaining representative prior notice and a meaningful opportunity to bargain
about the changes. NLRB v. Katz, 369 U.S. 736, 742–
743 (1962). As the Supreme Court explained in Katz,
such unilateral action “amount[s] to a refusal to negotiate
about the affected conditions of employment under negotiation, and must of necessity obstruct bargaining, contrary to the congressional policy.” Id. at 747.
Under this rule, an employer’s obligation to refrain
from unilaterally changing these mandatory subjects of
bargaining applies both where a union is newly certified
and the parties have yet to reach an initial agreement, as
in Katz, and where the parties’ existing agreement has
expired and negotiations have yet to result in a subsequent agreement, as in this case. Litton Financial Printing Division v. NLRB, 501 U.S. 190, 198 (1991). In the
latter circumstances, an employer must continue in effect
contractually established terms and conditions of employment that are mandatory subjects of bargaining, until
the parties either negotiate a new agreement or bargain to
a lawful impasse. Id. at 198–199.
An employer’s decision to unilaterally cease honoring
a dues-checkoff arrangement established in an expired
agreement obstructs collective bargaining just as other,
prohibited unilateral changes do. Under settled Board
law, widely accepted by reviewing courts,3 dues checkoff
is a matter related to wages, hours, and other terms and
conditions of employment within the meaning of Section
8(a)(5) and (d) of the Act and is therefore a mandatory
subject of bargaining. See, e.g., Tribune Publishing Co.,
351 NLRB 196, 197 (2007), enfd. 564 F.3d 1330 (D.C.
Cir. 2009).4 As the Supreme Court explained long ago,
an employer’s unilateral action regarding its employees’
terms and conditions of employment, by definition, frustrates the statutory objective of establishing terms and
conditions of employment through collective bargaining
and interferes with employees’ Section 7 rights by em3
See Steelworkers v. NLRB, 390 F.2d 846, 849 (D.C. Cir. 1967),
cert. denied 391 U.S. 904 (1968); NLRB v. Reed & Prince Mfg. Co.,
205 F.2d 131, 136 (1st Cir. 1953), cert. denied 346 U.S. 887 (1953);
Caroline Farms Division of Textron, Inc. v. NLRB, 401 F.2d 205, 210
(4th Cir. 1968); NLRB v. J. P. Stevens & Co., 538 F.2d 1152, 1165 (5th
Cir. 1976); Operating Engineers Local 571 v. Hawkins Construction
Co., 929 F.2d 1346, 1350 (8th Cir. 1991).
4
Mandatory subjects of bargaining contained in a collectivebargaining agreement that survive contract expiration include a wide
range of terms and conditions of employment, e.g., union bulletin
boards, hiring halls, work rules, seniority in assignments. Beverly
Health & Rehabilitation Servicesv. NLRB, 317 F.3d 316, 322 (D.C. Cir.
2003); NLRB v. Southwest Security Equipment Corp., 736 F.2d 1332,
1334, 1337–1338 (9th Cir. 1984), cert denied 470 U.S. 1087 (1985);
NLRB v. Unbelievable, Inc., 71 F.3d 1434, 1439 (9th Cir. 1995); L & L
Wine & Liquor Corp., 323 NLRB 848, 852–853 (1997)
3
LINCOLN LUTHERAN OF RACINE
phasizing to employees that there is no need for a bargaining agent. Katz, supra, 369 U.S. at 744; May Department Stores Co. v. NLRB, 326 U.S. 376, 385 (1945).5
An employer’s unilateral cancellation of dues checkoff
when a collective-bargaining agreement expires both
undermines the union’s status as the employees’ collective-bargaining representative and creates administrative
hurdles that can undermine employee participation in the
collective-bargaining process. Cancellation of dues
checkoff eliminates the employees’ existing, voluntarilychosen mechanism for providing financial support to the
union. By definition, it creates a new obstacle to employees who wish to maintain their union membership in
good standing. This is significant, because employees
who fail to take proactive steps to maintain their membership in the face of this new administrative hurdle lose
their right to participate in the union’s internal affairs,
including matters directly related to the negotiations,
such as the choice of a bargaining team, setting bargaining goals, and strike-authorization and contractratification votes.6 Such a change also interferes with the
union’s ability to focus on bargaining, by forcing it to
expend time and resources creating and implementing an
alternate mechanism for dues collection during a critical
bargaining period. Finally, an employer that unilaterally
cancels dues checkoff sends a powerful message to employees: namely, that the employer is free to interfere
with the financial lifeline between employees and the
union they have chosen to represent them.
Because unilateral changes to dues checkoff undermine collective bargaining no less than other unilateral
5
Our dissenting colleagues maintain that dues checkoff is less important to unions than it once was, because “unions now have more
options for collecting union dues without the employer’s assistance
than at any other time in history” (emphasis in original). Correct or
not, that claim is irrelevant to the legal issue presented here. Dues
checkoff is indisputably a term and condition of employment for purposes of the duty to bargain under Sec. 8(a)(5). If our colleagues are
correct about the relative administrative convenience of checkoff, then
the importance of the issue in bargaining presumably would be in decline—but our colleagues cite no evidence that this is so, and, indeed,
they make dire predictions about the effect on collective bargaining of
the new rule adopted today.
6
As the Supreme Court has observed:
[A] union makes many decisions that “affect” its representation of
nonmember employees. It may decide to call a strike, ratify a collective-bargaining agreement, or select union officers and bargaining representatives.
....
[T]he [National Labor Relations] Act allows union members to control the shape and direction of their organization, and “[n]on-union
employees have no voice in the affairs of the union.”
NLRB v. Financial Institution Employees Local 1182, 475 U.S. 192,
205 (1986) (reversing Board decision requiring that nonmembers be
permitted to vote in union’s affiliation election).
changes, the status quo rule should apply, unless there is
some overriding ground for an exception. As the Katz
Court observed, an employer’s unilateral change “will
rarely be justified by any reason of substance.” 369 U.S.
at 747. We see no such reason here.7
It is true that a few contractually established terms and
conditions of employment—arbitration provisions, nostrike clauses, and management-rights clauses—do not
survive contract expiration, even though they are mandatory subjects of bargaining. In agreeing to each of these
terms, however, parties have waived rights that they otherwise would enjoy in the interest of concluding a collective-bargaining agreement, and such waivers are presumed not to survive the contract. See, e.g., HiltonDavis Chemical Co., 185 NLRB 241, 242 (1970) (no
postexpiration duty to honor contractual agreement to
arbitrate because agreement “is a voluntary surrender of
the right of final decision which Congress has reserved to
the[ ] parties,” characterizing arbitration as “a consensual
surrender of the economic power which the parties are
7
To the extent that our dissenting colleagues argue that an employer’s unilateral cessation of dues checkoff must be treated by the Board
as a permissible economic weapon, they run afoul of Supreme Court
and Board precedent. The Katz Court explained that while the Board is
not “empowered . . . to pass judgment on the legitimacy of any particular economic weapon used in support of genuine negotiations,” the
Board “is authorized to order the cessation of behavior which is in
effect a refusal to negotiate, or which directly obstructs or inhibits the
actual process of discussion, or which reflects a cast of mind against
reaching agreement”—such as a unilateral change in terms and conditions of employment. 369 U.S. at 747 (emphasis added). Simply put,
“unilateral action is not a lawful economic weapon.” Daily News of
Los Angeles, 315 NLRB 1236, 1242 (1994), enfd. 73 F.3d 406 (D.C.
Cir. 1996), cert. denied 519 U.S. 1090 (1997). “To condone such a
proposition,” in the words of the District of Columbia Circuit, “would
make a mockery of the bargaining process.” Daily News of Los Angeles v. NLRB, 73 F.3d at 414.
We also reject our colleagues’ related assertion that the bargaining
process is somehow facilitated by permitting employers to unilaterally
eliminate dues checkoff when a contract expires. The dissent’s argument boils down to “random speculation”—of precisely the type that
the dissent disdains—suggesting that giving employers free rein to
make unilateral changes in dues checkoff will reduce employers’ incentive to lock out workers during difficult negotiations, and/or that denying employers the ability to cease checkoff will make routine bargaining more difficult because employers will feel compelled to bargain for
such authority. The dissent offers no empirical evidence to support
either of these speculative assertions. Certainly, a lockout is a more
consequential tool for employers in difficult negotiations than the elimination of dues checkoff, and it is also possible that some employers
may feel that it is in their interest to seek the elimination of dues
checkoff. But the need to improve employers’ bargaining options in
either of these scenarios is not an argument for authorizing a unilateral
change that is otherwise inconsistent with the policies of the Act. Cf.
Daily News of Los Angeles, supra, 315 NLRB at 1242–1243 (rejecting
argument that where employer’s lockout would have been lawful under
Sec. 8(a)(3), unilateral decrease in wages and benefits should be permitted under Sec. 8(a)(5)).
4
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
otherwise free to utilize”); Indiana & Michigan Electric
Co., 284 NLRB 53, 58 (1987) (“because an agreement to
arbitrate is a product of the parties’ mutual consent to
relinquish economic weapons, such as strikes or lockouts, otherwise available under the Act to resolve disputes . . . the duty to arbitrate . . . cannot be compared to
the terms and conditions of employment routinely perpetuated by the constraints of Katz”)8; Litton Financial
Printing, supra, 501 U.S. at 199 (“in recognition of the
statutory right to strike, no-strike clauses are [also] excluded from the unilateral change doctrine”); Beverly
Health & Rehabilitation Services, 335 NLRB 635, 636
(2001) (“[T]he essence of [a] management-rights clause
is the union’s waiver of its right to bargain. Once the
clause expires, the waiver expires, and the overriding
statutory obligation to bargain controls.”), enfd. in relevant part 317 F.3d 316 (D.C. Cir. 2003).9
Unlike no-strike, arbitration, and management-rights
clauses, a dues-checkoff provision in a collectivebargaining agreement does not involve the contractual
surrender of any statutory or nonstatutory right by a party
to the agreement. Rather, as the courts have recognized,
such a provision simply reflects the employer’s agreement to establish a system for employees who elect to
pay their union dues through automatic payroll deduction, as a matter of administrative convenience to a union
and employees.10 Payments via a dues-checkoff arrangement are similar to other voluntary checkoff agreements, such as employee savings accounts and charitable
contributions, which the Board has recognized also create “administrative convenience” and, notably, survive
the contracts that establish them. Quality House of
8
In Litton Financial Printing, supra, the Supreme Court approved
the Board’s decision to exempt arbitration agreements from Katz,
agreeing that the exemption “is grounded in the strong statutory principle, found in both the language of the NLRA and its drafting history, of
consensual rather than compulsory arbitration.” 501 U.S. at 200 (emphasis added).
9
As we discuss below, union-security clauses do not survive contract expiration because the proviso to Sec. 8(a)(3) of the Act limits
such provisions to the term of the contracts containing them. Bethlehem Steel, supra.
10
As the Fifth Circuit has explained, union-security agreements are
governed by a section of the Act totally removed from the section
governing dues checkoff, and ... have a totally different purpose ....
[D]ues checkoff . . . far from being a union security provision, seems
designed as a provision for administrative convenience in the collection of union dues.
NLRB v. Atlanta Printing Specialties & Paper Products Union, 523
F.2d 783, 786 (5th Cir. 1975). See Food & Commercial Workers District Union Local One v. NLRB, 975 F.2d 40, 44 (2d Cir. 1992); Anheuser-Busch, Inc. v. Teamsters Local 822, 584 F.2d 41, 43 (4th Cir.
1978); Associated Builders & Contractors v. Carpenters Vacation &
Holiday Trust Fund, 700 F.2d 1269, 1277 (9th Cir. 1983), cert. denied
464 U.S. 825 (1983).
Graphics, 336 NLRB 497, 497 fn. 3 (2001).11 In light of
the Board’s treatment of these similar checkoff procedures, it seems anomalous to hold that they survive contract expiration, but that dues-checkoff arrangements,
which directly assist employees in their voluntary efforts
to support their designated bargaining representatives
financially, do not.12
Nothing in Federal labor law or policy, meanwhile,
suggests that dues-checkoff arrangements should be
treated less favorably than other terms and conditions of
employment for purposes of the status quo rule. That
includes Section 302 of the Taft-Hartley Act, which, at
the very least, creates no obstacle to finding that an employer violates the Act by unilaterally discontinuing dues
checkoff after contract expiration.13 Section 302(c)(4),
an exception to the prohibition on employer payments to
unions in Section 302(a) of the Act, specifically permits
dues checkoff and further states, “Provided, That the
employer has received from each employee, on whose
account such deductions are made, a written assignment
which shall not be irrevocable for a period of more than
one year, or beyond the termination date of the applicable collective agreement, whichever occurs sooner” (emphasis added).14 The plain terms of this provision indicate that Congress contemplated that a dues-checkoff
arrangement could continue beyond the life of the collective-bargaining agreement establishing it, as it contains
11
See also King Radio Corp., 166 NLRB 649, 653 (1967), enfd. 398
F.2d 14 (10th Cir. 1968) (employer violated Sec. 8(a)(5) where, following union’s election win, it unilaterally canceled its practice of permitting employees to purchase savings bonds through payroll deductions).
12
We reject our dissenting colleagues’ suggestion that an employee’s dues-checkoff authorization is a waiver of the Sec. 7 right to refrain from supporting a labor organization and is therefore analogous to
cases where the Board has created exceptions to the status quo rule.
Properly understood, an employee’s voluntary execution of a duescheckoff authorization is an exercise of Sec. 7 rights, not a waiver of
such rights. When an employee authorizes other types of checkoff
provided for by a collective-bargaining agreement, he is exercising a
right under the agreement—and thus engaging in protected, concerted
activity. See generally NLRB v. City Disposal Systems, 465 U.S. 822
(1984). Exercising that right does not mean waiving the corresponding
right to refrain from engaging in protected concerted activity, not least
because Sec. 302(c)(4) guarantees that an employee may revoke duescheckoff authorization when the contract expires.
13
Although the Board is not responsible for enforcing Sec. 302,
“neither does the statute bar the Board, in the course of determining
whether an unfair labor practice has occurred, from considering arguments concerning Sec[.] 302 to the extent they support, or raise a defense to, unfair labor practice allegations.” BASF Wyandotte Corp.,
274 NLRB 978, 978 (1985), enfd. 798 F.2d 849 (5th Cir. 1986). Accord: NLRB v. Oklahoma Fixture Co., 332 F.3d 1284, 1287 (10th Cir.
2003) (en banc) (concluding that the Board’s interpretation of Sec. 302
insofar as it affects labor law issues is entitled to “some deference,”
provided that the Board’s interpretation is reasonable and “not in conflict with interpretive norms regarding criminal statutes”).
14
This is the only provision in the Act that regulates dues checkoff.
5
LINCOLN LUTHERAN OF RACINE
no language making dues-checkoff arrangements dependent on the existence of a collective-bargaining
agreement. Rather, the only document necessary for a
legitimate dues-checkoff arrangement, under the unambiguous language of Section 302(c)(4), is a “written assignment” from the employee authorizing deductions.15
Had Congress intended for dues-checkoff arrangements
to automatically expire upon contract expiration, there
would have been no need to say that employees can revoke their checkoff authorizations at contract expiration
because there would be nothing left thereafter for an employee to revoke.16 Further, the proviso to Section
302(c)(4) is concerned only with an individual employee’s right to withdraw his checkoff authorization; nothing therein suggests that Congress intended to permit
employers to unilaterally revoke checkoff arrangements.17
15
As discussed in more detail later in this decision, the Act’s treatment of dues-checkoff arrangements is in sharp contrast to its treatment
of union-security agreements. Sec. 8(a)(3) of the Act conditions the
life of a union-security agreement on the term of the collectivebargaining agreement that establishes it.
16
The District of Columbia Circuit and the Ninth Circuit have
agreed with this interpretation of Sec. 302(c)(4). See Tribune Publishing, supra, 564 F.3d 1330; Local Joint Executive Board of Las Vegas,
supra, 657 F.3d 865. In Local Joint Executive Bd., the Ninth Circuit
held that there is “nothing in the NLRA that limits the duration of duescheckoffs to the duration of a CBA.” Id. at 875. The court described
Sec. 302(c)(4) as “surplusage” if Congress intended dues checkoff to
terminate upon the expiration of a contract. Id. In Tribune Publishing,
the District of Columbia Circuit reasoned that Sec. 302 “does not require a written collective bargaining agreement” for dues checkoff to be
lawful, but merely an employee’s “written consent that is revocable
after a year.” 564 F.3d at 1335.
We are cognizant of conflicting circuit court decisions on this issue,
some of which are cited by the Respondent on brief. See, e.g., U.S.
Can Co. v. NLRB, 984 F.2d 864, 869–870 (7th Cir. 1993); McClatchy
Newspapers, Inc. v. NLRB, 131 F.3d 1026, 1030 (D.C. Cir. 1997), cert.
denied 524 U.S. 937 (1998). For the reasons discussed above, we
respectfully disagree with those decisions (most of which relied in part
on Bethlehem Steel). Moreover, neither the Seventh Circuit in U.S.
Can Co. nor the District of Columbia Circuit in McClatchy Newspapers
was presented with the issue of whether dues checkoff survives contract
expiration. Nor, significantly, was the Supreme Court in Litton Financial Printing, supra; the Court merely noted that it was the Board’s
position that checkoff did not survive. 501 U.S. at 199.
17
Further support for our interpretation of Sec. 302(c)(4) is found in
its legislative history. Sec. 302(c)(4) was enacted in 1947 as part of the
Taft-Hartley Amendments to the Act. Senator Taft, Chairman of the
Senate Labor Committee, spoke in support of this amendment and
explained its purpose as it related to the then-prevailing industry practice concerning dues checkoff. Clearly, Senator Taft was of the view
that Sec. 302(c)(4) permitted dues checkoff to continue indefinitely
until revoked by an individual employee:
If [an employee] once signs such an assignment [authorizing dues
checkoff] under the collective-bargaining agreement, it may continue
indefinitely until revoked, and it may be irrevocable during the life of
the particular contract, or for a period of 12 months. That, I think, is
substantially in accord with nine-tenths of all check-off agreements,
Congress’ treatment of employer payments to employee trust funds further illustrates that Congress contemplated that dues-checkoff arrangements could survive
contract expiration. In addition to exempting dues
checkoff, Section 302(c) exempts a variety of trust fund
payments from the general prohibition against employer
payments to unions. Pertinently, Section 302(c)(5)–(8)
provides that this exemption applies only if “the detailed
basis on which such payments are made is specified in a
written agreement with the employer” (emphasis added).
Congress’ explicit decision to condition the lawfulness of
trust fund payments on a “written agreement with the
employer”—but the conspicuous absence of this requirement in Section 302(c)(4)—is evidence that Congress did not intend the viability of a dues-checkoff arrangement to depend on the existence of an unexpired
collective-bargaining agreement.18
Moreover, while Section 302(c)(5)–(8) conditions the
lawfulness of trust fund payments on the existence of a
“written agreement,” the law is clear that under Katz, an
employer’s obligation to make these payments does not
terminate upon expiration of a collective-bargaining
agreement that establishes that obligation. See Laborers
Health & Welfare Trust Fund for Northern California v.
Advanced Lightweight Concrete Co., 484 U.S. 539, 544
fn. 6 (1988) (citing, inter alia, Peerless Roofing Co. v.
NLRB, 641 F.2d 734 (9th Cir. 1981)). To the contrary,
the “written agreement” requirement in Section
302(c)(5)–(8) is satisfied by an expired collectivebargaining agreement establishing trust fund payments,
together with the underlying trust agreements. Id. at 736;
Made 4 Film, Inc., 337 NLRB 1152, 1152 fn. 2 (2002).
An employer accordingly has an obligation, pending negotiations, to honor contractually established trust fund
payments until the parties have reached a successor
agreement or a valid impasse. See Advanced Lightweight Concrete, 484 U.S. at 544 fn. 6. Thus, even if
Section 302(c)(4) could be read as making dues-checkoff
arrangements dependent on the existence of a collectivebargaining agreement, parity of reasoning would require
a finding that dues-checkoff arrangements can survive
the expiration of such an agreement.
and simply prohibits a check-off made without any consent whatever
by the employees.
93 Cong.Rec. 4876 (1947), reprinted in 2 NLRB, Legislative History of
the Labor Management Relations Act, 1947, at 1311 (1948) (emphasis
added).
18
See Russello v. U.S., 464 U.S. 16, 23 (1983) (“[W]here Congress
includes particular language in one section of a statute but omits it in
another section of the same Act, it is generally presumed that Congress
acts intentionally and purposely in the disparate inclusion or exclusion.”).
6
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
II.
As the foregoing discussion makes clear, the policies
of the Act strongly support a finding that dues checkoff
should be included with the overwhelming majority of
terms and conditions of employment that remain in effect
even after the contract containing them expires. We now
turn to the Board’s contrary holding in Bethlehem Steel.
The principal issues before the Board in Bethlehem
Steel were whether the employer had violated Section
8(a)(5) by unilaterally ceasing to observe and implement
both the union-security and the dues-checkoff provisions
of the parties’ expired contract. The Board first held—
quite correctly—that both union security and dues
checkoff involve wages, hours, and terms and conditions
of employment that are mandatory subjects of bargaining. 136 NLRB at 1502. Even so, the Board held that
the employer acted lawfully in unilaterally ceasing to
honor the contractual union-security clause. In reaching
that conclusion, the Board relied on the proviso to Section 8(a)(3), which states in relevant part that “nothing in
this Act . . . shall preclude an employer from making an
agreement with a labor organization . . . to require as a
condition of employment membership therein.” The
Board found that because the proviso explicitly conditions the legitimacy of a union-security agreement on the
existence of a contract, parties can impose a unionsecurity agreement only “[s]o long as such a contract is
in force.” Id. Thus, once a contract expires so, too, does
a union-security agreement established in that contract.
As the Board explained, when an employer, following
contract expiration, refuses to honor a union-security
agreement established in that contract, the employer acts
“in accordance with the mandate of the Act,” and thus
does not violate Section 8(a)(5). Id. This finding, compelled by the Act’s plain language, is not in dispute today.
The Bethlehem Steel Board’s treatment of dues checkoff stands on a different footing. The Board found that
because of “[s]imilar considerations,” dues-checkoff arrangements, like union security, also do not survive contract expiration. Id. In the Board’s view, the duescheckoff arrangement “implemented the union-security
provisions” of the parties’ contract, and therefore the
union’s right to checkoff, like its right to impose union
security, was “created by the contracts and became a
contractual right which continued to exist so long as the
contracts remained in force.” Id. In essence, then, the
Board appeared to posit that union-security agreements
and dues-checkoff arrangements are so similar or interdependent that they must be treated alike: because the
Act mandates termination of union-security agreements
following contract expiration, so too must a dues-
checkoff arrangement terminate. The Board further
found that the language of the checkoff clause—“the
Company will, . . . so long as this Agreement shall remain in effect, deduct from the pay of such Employee
each month . . . his periodic Union dues for that month”
—linked the employer’s checkoff obligation with the
duration of the contract. Id.19
The Bethlehem Steel Board’s reasoning is flawed in
several respects. First, the Board ignored Section
302(c)(4) —the only provision of the Act that addresses
dues checkoff—which clearly contemplates that checkoff
normally does survive the expiration of a collectivebargaining agreement. Second, the Board apparently
reasoned that because the checkoff provisions in the contract “implemented” the union-security provisions, the
proviso to Section 8(a)(3) dictated that dues checkoff, as
well as union security, expired upon contract termination. If so, the Board’s finding is a non sequitur, because
the fact that dues checkoff normally is an arrangement
created by contract simply does not compel the conclusion that checkoff expires with the contract that created
it.20 Although the contracts in Bethlehem Steel contained
both union-security and dues-checkoff provisions, that is
by no means true of all collective-bargaining agreements.
Parties have the option of negotiating either without the
other: they may agree to union security, but not to dues
checkoff, and vice versa.21
Third, the Bethlehem Steel Board mistakenly ignored
that the provisos to Section 8(a)(3) and to Section
302(c)(4)—enacted by the same Congress at the same
time—treat union security and dues checkoff quite differently. The language of the 8(a)(3) proviso makes
19
See Quality House of Graphics, supra, 336 NLRB at 511 (adopting, without comment, judge’s interpretation of Bethlehem Steel’s
rationale that “union-security and dues-checkoff arrangements are so
interrelated, that to enforce dues checkoff in the absence of a contract
would constitute a violation of Sec[.] 8(a)(3) which requires a contract
for the enforcement of union security, even though Sec[.] 8(a)(3) does
not explicitly mention dues checkoff”).
20
As shown, unlike no-strike, arbitration, and management-rights
clauses, a dues-checkoff provision in a collective-bargaining agreement
does not involve the contractual surrender of any statutory or
nonstatutory right by a party to the agreement.
21
The independence of union-security agreements from duescheckoff provisions is illustrated most clearly in “right-to-work” States,
which, pursuant to Sec. 14(b), bar union-security agreements. Duescheckoff arrangements exist in these States, even though union-security
clauses are prohibited. Notably, that was the circumstance in Tampa
Sheet Metal Co., 288 NLRB 322 (1988). There, the Board held, without explanation, that a dues-checkoff arrangement did not survive contract expiration, even though union security was prohibited under a
State “right-to-work” law. Id. at 326 fn. 15. The facts of Tampa Sheet
Metal demonstrate the fallacy of Bethlehem Steel’s premise that dues
checkoff “implements” a union-security agreement, and exposes the
fundamental infirmity of the Bethlehem Steel holding.
7
LINCOLN LUTHERAN OF RACINE
clear that when Congress wanted to make an employment term, such as union security, dependent on the existence of a contract, Congress knew how to do so. Yet
the Section 8(a)(3) proviso does not mention dues
checkoff, let alone limit the effectiveness of a duescheckoff provision to the life of a collective-bargaining
agreement. Further, the language and the legislative history of Section 302(c)(4) unambiguously indicate that
Congress contemplated that dues checkoff would survive
contract expiration.
Fourth, Bethlehem Steel failed to acknowledge another
crucial dissimilarity between dues checkoff and union
security: the fundamental difference between their compulsory and voluntary natures. Under a union-security
agreement, employees are compelled to pay union dues
or agency fees, or face discharge. By contrast, an employee’s participation in dues checkoff is entirely voluntary; “employees cannot be required to authorize dues
checkoff as a condition of employment,” even where a
contract contains a union-security agreement. Bluegrass
Satellite, Inc., 349 NLRB 866, 867 (2007).22 Although
an employee who is subject to a union-security agreement may be more likely to choose dues checkoff, participation in dues checkoff still is in no way compelled. An
employee has a right under Section 7 to select or reject
dues checkoff as the method by which to pay union dues,
and may choose to pay dues by another method. Contrary to Bethlehem Steel then, as the Board has since
acknowledged, union security and dues checkoff are
“distinct and separate matters.” American Nurses’ Assn.,
250 NLRB 1324, 1324 fn. 1 (1980).23 As noted above,
the unique administrative nature of a dues-checkoff ar22
See also IBEC Housing Corp., 245 NLRB 1282, 1283 (1979)
(“[a]n employee has a Sec[.] 7 right to refuse to sign a checkoff authorization as a method [of] fulfilling his membership obligation under a
lawful union-security agreement”); Electrical Workers Local 601
(Westinghouse Electric Corp.), 180 NLRB 1062, 1062 (1970) (an employee has the “right to select or reject the checkoff system as the
method by which to pay his periodic dues to the Union”).
23
As stated above, the Bethlehem Steel Board seemingly based its
decision in part on the language of the contractual-checkoff clause in
that case, i.e., that checkoff would continue “so long as this Agreement
shall remain in effect[.]” If so, that reasoning is inconsistent with the
long-established principle that any waiver of a statutory right must be
“clear and unmistakable.” Metropolitan Edison Co. v. NLRB, 460 U.S.
693, 708 (1983). Language such as appeared in Bethlehem Steel’s
contracts has repeatedly been held not to constitute a waiver of the
union’s statutory right to bargain over changes in terms and conditions
of employment after contract expiration. See, e.g., Finley Hospital, 362
NLRB No. 102, slip op. at 3–4 (2015); Allied Signal, Inc., 330 NLRB
1216 (2000), review denied sub nom. Honeywell International, Inc. v.
NLRB, 253 F.3d 125 (D.C. Cir. 2001); General Tire & Rubber Co., 274
NLRB 591, 593 (1985), enfd. 795 F.2d 585 (6th Cir. 1986).
rangement further distinguishes it from a union-security
agreement.24
Last, developments in the Board’s case law since Bethlehem Steel cast further doubt on its reasoning. For example, if union security and dues checkoff are governed
by “similar considerations,” presumably it would be as
unlawful for an employer, postcontract expiration, to
continue to honor a dues-checkoff arrangement as it
would be to continue to honor a union-security arrangement. Yet the Board has long held that an employer
“does not violate the Act by voluntarily continuing dues
checkoff after a collective-bargaining agreement has expired,” and that “after a contract has expired and the employer has terminated dues checkoff, the employer may
lawfully agree to resume deducting union dues.” Tribune Publishing, supra, 351 NLRB at 197 fn. 8.25 The
incompatibility of the two lines of cases demonstrates
that the connection between union security and dues
checkoff cannot bear the burden the Board assigned to it
in Bethlehem Steel.
III.
The Respondent and amicus NRWLDF nevertheless
contend that an employer has no duty to check off union
dues in the absence of an existing collective-bargaining
agreement. We turn now to the arguments made by the
Respondent and/or NRWLDF that have not already been
addressed. They do not persuade us.
24
Our dissenting colleagues insist that “dues checkoff is a form of
union security” (emphasis in original), but their effort to equate dues
checkoff and a union-security clause necessarily fails, for reasons already demonstrated. Dues checkoff is voluntary; union security, compulsory. Dues checkoff can, and does, exist in the absence of a unionsecurity clause—whether because the collective-bargaining agreement
never contained such a clause or because the clause necessarily expired
with the agreement. Sec. 8(a)(3) governing union-security clauses is
totally removed from Sec. 302(c)(4) governing dues checkoff. Employees can never be compelled to authorize dues checkoff. If employees do voluntarily authorize checkoff, they remain free to revoke that
authorization when the collective-bargaining agreement expires. See
Sec. 302(c)(4) (dues-checkoff authorization “shall not be irrevocable
for a period of more than one year, or beyond the termination date of
the applicable collective agreement, whichever occurs sooner”). Here,
of course, we are dealing precisely with the postcontract expiration
period. Requiring the employer to honor dues checkoff for employees
who have authorized it during the postcontract period in no way involuntarily compels employees to provide financial support to the union—
in obvious contrast to a union-security clause, which requires only the
agreement of the union and the employer, not the consent of individual
employees. In short, the dissent’s contention—that dues checkoff is a
form of union security—is simply “flaw[ed].” NLRB v. Atlanta Printing Specialties supra, 523 F.2d at 786.
25
See also Lowell Corrugated Container Corp., 177 NLRB 169, 173
(1969), enfd. on other grounds 431 F.2d 1196 (1st Cir. 1970) (employer
did not violate Sec. 8(a)(2) and (3) by continuing to honor unrevoked
checkoff authorizations after contract expiration); Frito-Lay, 243
NLRB 137, 138 (1979).
8
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
First, the Respondent argues that dues-checkoff arrangements do not substantially affect employees’ terms
and conditions of employment. The Respondent characterizes dues checkoff as essentially an administrative
convenience for unions alone, arising out of the relationship between an employer and a union, as opposed to
that between the employer and its employees. This argument, however, is supported by nothing in the policies
of the Act, or its legislative history, or relevant Board or
court precedent. The asserted dichotomy between “employer-employee” and “employer-union” arrangements
in this context is a false one. Although checkoff clearly
benefits unions, it also benefits employees by giving
them a simple and reliable means of supporting the unions that represent them, and this is true whether financial support is mandatory (under a union-security arrangement) or not.
That employees benefit from
checkoff is clear from the fact that many employees participate in the system, even though participation is entirely voluntary and even in the absence of union security.
Second, the Respondent and NRWLDF contend that
unlike wages, benefits, working hours, and certain other
terms and conditions of employment, which exist in the
absence of collective-bargaining agreements, dues
checkoff comes into existence only through collectivebargaining agreements, and exists only for the duration
of the contract. As shown, however, the fact that dues
checkoff normally is an arrangement created by contract26 simply does not compel the conclusion that
checkoff expires with the contract that created it. Moreover, the purported distinction between checkoff and
other terms and conditions of employment ignores the
fact that virtually all, if not all, of employees’ terms and
conditions of employment are the result of collective
bargaining between their union and employer. “[T]he
economic terms of a collective-bargaining agreement,
such as wage rates, are no less contractual requirements
than is a dues-checkoff obligation. The agreement is the
only source of the employer’s obligation to provide those
particular wages and benefits.” Hacienda Resort Hotel
& Casino, 355 NLRB at 743 (concurring opinion of
Chairman Liebman and Member Pearce).
Next, NRWLDF asserts that permitting employers not
to collect dues absent a contract protects the Act’s fundamental principle of voluntary unionism.
In
NRWLDF’s view, forcing employers to continue to implement a dues-checkoff clause when there is no contract
26
This is not always the case, however. See Tribune Publishing Co.
v. NLRB, supra, 564 F.3d at 1335. Interestingly, although the Respondent here resumed checking off union dues in November 2013, there is
no record evidence that it did so pursuant to a successor collectivebargaining agreement.
in place is inconsistent with the principles of employee
free choice that the Act promotes. NRWLDF further
contends that employees who signed dues-checkoff authorizations merely to comply with union-security clauses, and not because they support unions, would not want
employers to continue to deduct dues after a unionsecurity clause has expired. Finally, NRWLDF argues
that employees’ right to refrain from supporting unions is
not adequately protected by the right to revoke their
dues-checkoff authorizations when the contract expires.
We find no merit in any of these arguments. First,
there is no reason to suppose that employees who voluntarily support their unions cease to do so simply because
a collective-bargaining agreement has expired. As for
employees who authorize dues checkoff only to comply
with union-security provisions, Section 302(c)(4) explicitly states that they can revoke their authorizations when
the union-security clause expires. And we reject the unsupported assumption that employees are not capable of
understanding their right to revoke dues-checkoff authorizations. The language and legislative history of Section
302(c)(4), discussed above, indicate that Congress had
more confidence in employees than that. In any event, as
the Supreme Court put it in another context, “[t]he Board
is . . . entitled to suspicion when faced with an employer’s benevolence as its workers’ champion against their
certified union. . . . There is nothing unreasonable in giving a short leash to the employer as vindicator of its employees’ organizational freedom.” Auciello Iron Works,
Inc. v. NLRB, 517 U.S. 781, 790 (1996). In short, there
is no reason why employees who wish to support their
union financially should be denied the administrative
convenience of voluntary dues checkoff, simply because
the collective-bargaining agreement has expired.
IV.
For all the reasons discussed above, we have determined that Bethlehem Steel and its progeny should be
overruled to the extent they stand for the proposition that
dues checkoff does not survive contract expiration under
the status quo doctrine.27 As shown, the Board’s holding
to that effect in Bethlehem Steel is inconsistent with established policy generally condemning unilateral changes
in terms and conditions of employment, is contradicted
by both the plain language and legislative history of the
only statutory provision addressing dues checkoff, and
finds no justification in the policies of the Act. We recognize, as the Respondent argues, that today’s decision
represents a change in Board policy that has remained
intact for some 50 years. We do not lightly abandon that
27
See Goya Foods of Florida, 356 NLRB No. 184, slip op. at 3
(2011) (explaining decision to overrule precedent).
9
LINCOLN LUTHERAN OF RACINE
policy. But we decline to keep following a course that
has never been cogently explained—and, in our view,
cannot be. Accordingly, we now hold that an employer,
following contract expiration, must continue to honor a
dues-checkoff arrangement established in that contract
until the parties have either reached a successor collective-bargaining agreement or a valid overall bargaining
impasse permits unilateral action by the employer.28
V.
We must now decide whether to apply our new rule
retroactively, i.e., in all pending cases (including this
one), or only prospectively. The Board’s usual practice
in unfair labor practice cases is to apply new policies and
standards retroactively “to all pending cases in whatever
stage,” unless retroactive application would work a
“manifest injustice.” SNE Enterprises, 344 NLRB 673,
673 (2005). In determining whether retroactive application would result in “manifest injustice,” the Board considers “the reliance of the parties on preexisting law, the
effect of retroactivity on accomplishment of the purposes
of the Act, and any particular injustice arising from retroactive application.” Id. at 673.
Having considered these principles, we conclude that
finding a violation under a retroactive application of this
rule would work a manifest injustice. Today’s ruling
definitively changes longstanding substantive Board law
governing parties’ conduct, rather than merely changing
a remedial matter. See SNE Enterprises, supra, 344
NLRB at 673; cf. Kentucky River Medical Center, 356
NLRB No. 8, slip op. at 5 (2010). Employers relied upon Bethlehem Steel for 50 years when considering
whether to cease honoring dues-checkoff arrangements
following contract expiration. As the Board has done in
other cases involving departures from longstanding precedent, we conclude that this reliance interest warrants
prospective application only of today’s decision.29 We
therefore shall decide this case and all other cases where
the employer’s unilateral cessation of contractually established dues-checkoff arrangements, following contract
expiration, occurred before the date of this decision, un28
Today’s holding does not preclude parties from expressly and unequivocally agreeing that, following contract expiration, an employer
may unilaterally discontinue honoring a dues-checkoff arrangement
established in the expired contract, notwithstanding the employer’s
statutory duty to maintain the status quo. That is, a union may choose
to waive its postexpiration, statutory right to bargain over this mandatory subject of bargaining. Of course, for such a waiver to be valid, it
must be “clear and unmistakable.” Metropolitan Edison, supra, 460
U.S. at 708.
29
See Piedmont Gardens, 362 NLRB No. 139, slip op. at 6 (2015);
Levitz Furniture Co. of the Pacific, 333 NLRB 717, 729 (2001).
der Bethlehem Steel. Accordingly, we agree with the
judge that the complaint in this case should be dismissed.
ORDER
The recommended Order of the administrative law
judge is adopted and the complaint is dismissed.
Dated, Washington, D.C. August 27, 2015
______________________________________
Mark Gaston Pearce,
Chairman
______________________________________
Kent Y. Hirozawa,
Member
______________________________________
Lauren McFerran,
Member
(SEAL)
NATIONAL LABOR RELATIONS BOARD
MEMBER MISCIMARRA and MEMBER JOHNSOn, dissenting in part.
In 1962, the Supreme Court endorsed the Board’s rule
that an employer violates Section 8(a)(5) of the Act by
unilaterally changing terms and conditions of employment without first providing the union with notice and an
opportunity to bargain, unless the parties have first
reached lawful impasse. See NLRB v. Katz, 369 U.S.
736 (1962). But the Board has always recognized, as it
must, that not all terms and conditions of employment
are subject to this rule. Indeed, a month before the Court
decided Katz, the Board held in Bethlehem Steel that a
dues-checkoff arrangement was among those exceptions.1 While binding for the term of the contract that
contains it, dues checkoff could lawfully be unilaterally
discontinued at contract expiration. For the entire time
that the Katz rule has been in effect, this principle has
been an established part of the collective-bargaining process.
The majority today abandons that longstanding precedent and instead subjects dues checkoff, following contract expiration, to the Katz rule requiring postcontractexpiration bargaining over other terms and conditions of
employment. As explained below, the Bethlehem Steel
exception is justified by statutory and policy considerations that warrant its continuation, and the primary con1
Bethlehem Steel Co., 136 NLRB 1500 (1962), remanded on other
grounds sub nom. Shipbuilding v. NLRB, 320 F.2d 615 (3d Cir. 1963),
cert. denied 375 U.S. 984 (1964).
10
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
sequence of this change is to substantially alter the current balance that exists between the interests of employers and unions upon contract expiration. In our view,
this type of change should be the province of the Congress, not the Board. Accordingly, we respectfully disagree with our colleagues’ decision to overrule Bethlehem
Steel. We concur in the outcome only because our colleagues refrain from applying their changed standard
retroactively to the parties in the instant case.2
Discussion
The National Labor Relations Act permits, and regulates, union-security arrangements, which obligate employees to provide financial support to their exclusive
representative as a condition of employment. From the
earliest days of the Act, employers have agreed to provide payroll deduction services, or “dues checkoff,” as a
method by which employees could satisfy their unionsecurity obligations.3 Unions and employers found it
mutually advantageous to agree to dues checkoff, where
union security was in place, to reduce the administrative
burden of collecting dues and avoid the burden of discharging employees who become delinquent in their dues
payments.4 Indeed, dues checkoff was arguably the only
reasonable means by which such payments could be
made in the 1930s and 1940s, a time when most households did not have checking accounts.5 The Board has
always recognized that dues-checkoff obligations are
closely related to an employee’s contractual unionsecurity obligations, when they exist,6 which makes dues
checkoff a form of union security itself.7
2
The majority concludes, correctly, that the change in the law they
have wrought should not be applied retroactively, and so they dismiss
the complaint. We agree that the complaint should be dismissed, but
for very different reasons.
3
See, e.g., M. T. Stevens & Sons, Co., 68 NLRB 229, 230 (1946);
United States Gypsum Co., 94 NLRB 112, 113 (1951), enfd. as modified 206 F.2d 410 (5th Cir. 1953), cert. denied 347 U.S. 912 (1954).
4
Electrical Workers Local 20188 (Lockheed Space Operations), 302
NLRB 322, 326 fn. 12 (1991).
5
Only 34 percent of households had checking accounts in 1946.
Klebaner, Benjamin J., American Commercial Banking: A History
(Beard Books, 1990) at 214. In 2013, 88 percent of households had
checking accounts, and 80 percent of those accounts had direct deposit
or automatic debit transactions. 2013 FDIC Survey of Unbanked and
Underbanked Households (October 2014) at 4.
6
Penn Cork & Closures, Inc., 156 NLRB 411 (1965) (where contract included both union-security and dues-checkoff clauses, “it would
be unreasonable to infer that all employees who authorized the checkoff
would have done so apart from the existence of the union-security
provision and the necessity of paying union dues, or to infer that these
same employees would, as a whole, wish to continue their checkoff
authorizations even after the union security provision was inoperative.”), enfd. 376 F.2d 52 (2d Cir. 1967), cert. denied 389 U.S. 843
(1967).
7
Bedford Can Mfg. Co., 162 NLRB 1428, 1431 (1967). See also H.
Report No. 245 on HR 3020 (80th Cong. 1st Sess.) at 29 (Dues
The Board held in Bethlehem Steel that a unionsecurity clause becomes “inoperative” upon contract expiration as a matter of law, such that it is not an unfair
labor practice for the employer to cease applying it. 136
NLRB at 1502.8 “Similar considerations prevail with
respect to the Respondent’s refusal to continue to
checkoff dues after the end of the contracts,” the Board
ruled. “The Union’s right to such checkoffs in its favor,
like its right to the imposition of union security, was created by the contracts and became a contractual right
which continued to exist so long as the contracts remained in force.” Id. And because dues checkoff is “an
implementation” of union security, checkoff authorizations become revocable regardless of their terms when
employees vote to deauthorize union security. Bedford
Can Mfg. Co., above; see also Penn Cork & Closures,
Inc., above (same). This is true for checkoff authorizations executed before the union-security clause was in
place as well as those first executed while the unionsecurity clause was in force. Bedford Can Mfg. Co.,
above.
Other terms and conditions of employment likewise
fail to survive contract expiration. For example, arbitration clauses are not subject to the Katz postexpiration
bargaining requirement. As the Board recognized in
Indiana & Michigan Electric Co., 284 NLRB 53, 58
(1987),
[t]o conclude otherwise flies in the face of the specific
admonition of the Court and the clear intent of Congress that submission to arbitration is purely a matter of
consent and cannot be mandated by operation of the
Act. Rather, we find, because an agreement to arbitrate
is a product of the parties’ mutual consent to relinquish
economic weapons, such as strikes or lockouts, otherwise available under the Act to resolve disputes, that
the duty to arbitrate is sui generis. It cannot be compared to the terms and conditions of employment routinely perpetuated by the constraints of Katz.
No-strike and no-lockout clauses likewise fail to survive
contract expiration, “in recognition of the statutory right
to strike.” Litton Financial Printing Division v. NLRB,
501 U.S. 190, 199 (1991). Finally, the Board has also
exempted management-rights clauses from Katz, on the
theory that such clauses waive the union’s right to bargain, and “[o]nce the clause expires, the waiver excheckoff “is a form of ‘union security’ that is in effect at many plants,
where it has proved popular with employers, employees, and unions,
saving time and trouble for all of them.”), I Legislative History of the
Labor Management Relations Act, 1947 320 (GPO 1985).
8
The majority correctly recognizes that this holding is “compelled
by the Act’s plain language.”
11
LINCOLN LUTHERAN OF RACINE
pires. . . .” Beverly Health & Rehabilitation Services,
335 NLRB 635, 636 (2001), enfd. in relevant part 317
F.3d 316 (D.C. Cir. 2003).
Holding that these contractual provisions do not automatically continue under Katz is consistent with the Act
because it frees the parties to apply economic pressure
during negotiations for a new agreement. See NLRB v.
Insurance Agents’ International Union, 361 U.S. 477,
489 (1960) (“The presence of economic weapons in reserve, and their actual exercise on occasion by the parties, is part and parcel of the system that the Wagner and
Taft-Hartley Acts have recognized.”). Similar considerations apply to dues-checkoff clauses, consistent with the
principle that “an employer is not required to finance a
strike against itself. . . .” Texaco, Inc., 285 NLRB 241,
245 (1987).9
Both the District of Columbia and Seventh Circuits
have endorsed Bethlehem Steel.10 The Ninth Circuit has
stated that the dues-checkoff obligation survives contract
expiration in right-to-work states, where, in the court’s
view, “dues checkoff does not exist to implement union
security.”11 However, regarding situations like the instant case, where the collective-bargaining agreement
contained dues checkoff and union-security provisions,
the Ninth Circuit has stated, “[W]e see why the Board
would treat dues-checkoff in the same manner as union
security. . . .”12
Now, the majority overrules this 50-year-old arrangement and holds that employers must continue dues
checkoff after a contract expires, until the parties reach
9
While Texaco involved violations of Section 8(a)(3), we believe
the principle stated above is applicable to the issue presented in this
case as well.
10
See Office Employees Local 95 v. Wood County Telephone Co.,
408 F.3d 314 (7th Cir. 2005); McClatchy Newspapers, Inc. v. NLRB,
131 F.3d 1026, 1030 (D.C. Cir. 1997), cert. denied 524 U.S. 937
(1998); U.S. Can Co. v. NLRB, 984 F.2d 864, 869-870 (7th Cir. 1993);
Microimage Display Division of Xidex Corp. v. NLRB, 924 F.2d 245,
254–255 (D.C. Cir. 1991); Southwestern Steel & Supply, Inc. v. NLRB,
806 F.2d 1111, 1114 (D.C. Cir. 1986).
The Supreme Court has likewise acknowledged the special status of
dues-checkoff provisions as an exception to the Katz rule. See Litton
Financial Printing Division v. NLRB, above, 501 U.S. at 199.
11
Local Joint Executive Board of Las Vegas v. NLRB, 657 F.3d 865,
876 (9th Cir. 2011), denying enf. to Hacienda Resort Hotel & Casino,
355 NLRB 742 (2010) (Hacienda).
12
Id. at 875. We disagree with any implication in the majority opinion that the Ninth Circuit rejected Bethlehem Steel in cases where, as
here, a union-security obligation was in force, or found its holding
“unsupportable” in that context.
As noted herein, dues checkoff is a form of union security even
when the payment of dues is not required as a condition of employment. For this reason, and for the reasons stated in Members
Schaumber and Hayes’ joint concurrence in Hacienda, we respectfully
disagree with the view of the Ninth Circuit that dues checkoff survives
contract expiration in cases where there is no union-security clause.
impasse or an agreement to discontinue dues checkoff.
The majority suggests this is necessary to protect the
bargaining process, and posits that the “unilateral cancellation” of dues checkoff pursuant to Bethlehem Steel interferes with employees’ ability to maintain their union
membership and undermines the union by cutting off its
“financial lifeline.” Our colleagues further assert that the
other exceptions to the Katz rule involve the waiver of
statutory rights and, finding no such waiver in the case of
dues checkoff, conclude that the Katz rule must apply. In
this regard, our colleagues unreasonably deny that dues
checkoff is itself a form of union security. We believe
they also unreasonably contend that, if dues checkoff
were considered a type of union-security arrangement,
then its postexpiration continuation by employers, on a
voluntary basis, would be as unlawful. We respectfully
disagree with these propositions for several reasons.
First, dues checkoff is a form of union security. Union-security clauses insure that the exclusive representative of bargaining unit employees receives a steady
source of funds, by subjecting the employees to discharge if they fail to pay. Dues checkoff serves precisely
the same function, by creating an automatic deduction
from employees’ pay for the benefit of the union. That
wage assignment may lawfully be made irrevocable for
the periods of time defined in Section 302(c)(4), as is the
case with the dues-checkoff authorizations used in this
case.13 During those periods of irrevocability, employees
are contractually required to continue their financial support of the union much as if a union-security clause were
in place. And dues checkoff provides union-security
benefits even when revocable because the deduction continues unless and until employees take affirmative action
to cancel it. Congress has plainly stated that dues
checkoff is a form of union security for these very rea13
Those forms provided:
You are hereby authorized and directed to deduct from my wages an
amount equal to the initiation fee and dues as those amounts are established from time to time by SEIU Healthcare Wisconsin, and to remit
all such deductions so made to SEIU Healthcare Wisconsin no later
than the fifth day of each month immediately following the date of
deduction or following the date provided in the collective bargaining
agreement for such deduction. I authorize these deductions for and in
consideration of the Union’s activities in representing me with respect
to collective bargaining and without regard to my present or future
membership in SEIU. This authorization and assignment shall be irrevocable for one year from the date of this authorization or the term
of the applicable collective bargaining agreement whichever is less,
and shall be automatically renewed and irrevocable for successive
yearly or applicable contract periods thereafter, whichever is less, unless I revoke by giving written notice to SEIU Healthcare Wisconsin
and my employer at least 30 days immediately preceding any periodic
renewal date of this authorization and assignment.
12
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
sons, and our colleagues present no valid reason for their
contrary view.14
Second, we believe our colleagues in the majority incorrectly reason that dues checkoff involves no waiver of
statutory rights, which therefore makes dues checkoff
“similar to other voluntary checkoff agreements, such as
employee savings accounts and charitable contributions.”
Like union-security agreements, dues-checkoff arrangements limit the Section 7 right of employees to refrain
from supporting a labor organization. As such, a wage
deduction for the purpose of paying union dues and
fees—unlike deductions related to employee savings
accounts, charitable contributions, or health insurance,
for example—violates the Act absent a valid duescheckoff authorization as required by the Act. Industrial
Towel & Uniform Service, 195 NLRB 1121 (1977), enf.
denied other grounds 473 F.2d 1258 (6th Cir. 1973).
Moreover, coercing employees to sign a checkoff authorization violates the Act. Rochester Mfg. Co., 323 NLRB
260 (1997), affd. sub nom. Cecil v. NLRB, 194 F.3d 1311
(6th Cir. 1999), cert. denied 529 U.S. 1066 (2000);
Steelworkers (American Screw Co.), 122 NLRB 485
(1958) (union unlawfully required employees to travel to
another city to tender dues as only alternative to use of
dues checkoff). Accordingly, dues checkoff cannot validly be compared to deductions from employees’ pay for
other purposes.
It is important to recognize that the majority’s conclusion that Katz exceptions are limited to those provisions
that waive “statutory or nonstatutory rights” is an afterthe-fact recharacterization of Board precedent. Prior
cases have instead focused on the “contractual” nature of
no-strike and arbitration clauses, acknowledging that for
purposes of the Katz rule they are “sui generis” and
therefore “cannot be compared to the terms and conditions of employment routinely perpetuated by the constraints of Katz.” Indiana & Michigan Electric Co., 284
NLRB at 58 (reaffirming Bethlehem Steel). Indeed,
submission to dues checkoff, like submission to arbitration, “is purely a matter of consent and cannot be mandated by operation of the Act.” Id. Even accepting at
face value the majority’s newly fashioned “waiver-only”
characterization, however, dues checkoff fits well within
that description because, as discussed above, dues
checkoff does involve a waiver of statutory rights.15
14
The majority’s insistence that dues checkoff and union security are
“distinct and separate matters” severely erodes the holdings in Penn
Cork & Closures, Inc., above, and Bedford Can Mfg. Co., above, and
leaves open the question of whether those cases remain good law in the
majority’s view.
15
It is true that dues checkoff is a waiver of employee Sec. 7 rights,
rather than employer or union rights, but that is no reason to give them
Nor do we agree that Bethlehem Steel erroneously held
dues-checkoff clauses present “similar considerations” to
union-security clauses, which cannot lawfully be given
effect following contract expiration. Of course, neither a
union-security clause nor dues checkoff can exist absent
the employer’s consent. H. K. Porter Co. v. NLRB, 397
U.S. 99 (1970) (Board lacks authority to compel party to
agree to any specific bargaining proposal, including dues
checkoff at issue in that case). Moreover, Congress has
established special rules—not applicable to other terms
and conditions of employment—that pertain to dues
checkoff and union-security clauses.16 Those rules are
not identical, but Bethlehem Steel never stated that they
were. Instead, Congress prohibited employers from consenting to postexpiration demands that employees be
discharged for nonpayment of dues. However, duescheckoff arrangements involve a ministerial deduction
from wages of dues obligations payable to the union,
less weight. The Supreme Court’s holding in NLRB v. Magnavox Co.
of Tennessee, 415 U.S. 322 (1974), is precisely to the contrary. There,
the Court held that an employer and union could not lawfully agree to
waive employees’ Sec. 7 right to solicit and distribute literature in the
plant absent production considerations necessitating special restrictions.
16
Sec. 8(a)(3) of the Act prohibits discrimination by employers to
encourage or discourage union membership, but with an exception that
permits employers to make an agreement with a union “to require as a
condition of employment membership therein” (subject to various
requirements not relevant here). Sec. 302 of the Labor Management
Relations Act broadly prohibits employers from making payments to
any union, but with an exception in Sec. 302(c)(4) that permits employers to deduct union dues from employees’ pay and forward them to the
union if the employee has executed a “written assignment which shall
not be irrevocable for a period of more than one year, or beyond the
termination date of the applicable collective bargaining agreement,
whichever occurs sooner.” Sec. 302(c)(4) obviously limits the
postexpiration irrevocability of written dues-checkoff assignments.
This provision also permits employers to continue dues checkoff after
contract expiration, unlike with union-security clauses. But it does not
require employers to do so. Indeed, because Sec. 302(c)(4) is an exception to the general prohibition on payments by employers to unions, it
would be unreasonable to construe it to require employers to do anything.
The majority’s reliance on Secs. 302(c)(5)-(8) is likewise unavailing.
Those provisions authorize employer payments to union-sponsored
pension and welfare benefit funds under certain circumstances and, as
the majority notes, the obligation to continue such payments survives
contract expiration under Katz. Unlike Sec. 302(c)(4), however, Secs.
302(c)(5)-(8) do not posit the existence of an “applicable collective
agreement” or provide that the obligation to make the payments authorized therein becomes revocable when such an agreement expires. In
addition to this critical difference in the statutory text, the nature of the
payments is different as well. The payments to the pension and benefit
plans are the means by which the employer provides the relevant fringe
benefits and thus are part of the Katz status quo obligation to the same
extent as if those benefits were provided by some other method, such as
an employer-sponsored plan. Those payments are “for the sole and
exclusive benefit of the employees,” 29 U.S.C. § 302(c)(5), unlike
payments to the union by employees through dues checkoff, which are
for the direct benefit of the union.
13
LINCOLN LUTHERAN OF RACINE
with no risk of discharge. This makes it understandable
that Congress imposed no absolute bar, after contract
expiration, on an employer’s voluntary continuation of
dues-checkoff deductions. Rather, Congress made the
judgment (in Sec. 302(c)(4) of the Labor Management
Relations Act) that employees were adequately protected
by the requirement that, upon contract expiration, each
employee be permitted to choose to revoke his or her
dues-checkoff authorization.17 Again, as the Board
properly reasoned in Bethlehem Steel, union security and
dues checkoff present similar considerations in that both
implicate employee Section 7 rights and are, accordingly,
subject to comparable restrictions under Federal law.
Although the restrictions are not identical, the differences
in treatment, described above, were clearly within the
province of Congress and do not invalidate the holding in
Bethlehem Steel that neither union security nor dues
checkoff is among the terms and conditions of employment that cannot be changed, following contract expiration, without bargaining.
Third, we also disagree with the majority’s argument
that the postexpiration discontinuance of dues checkoff
improperly obstructs employees’ ability to maintain union membership or undermines the union by cutting off
its “financial lifeline.” For one thing, the consequences
of an employer’s discontinuing dues checkoff are no different in regard to the ease or difficulty of paying or collecting dues than the consequences of an employer’s refusal to agree to dues checkoff in the first place. As noted above, the Supreme Court has squarely held that the
Act does not compel an employer to agree to dues
checkoff. H. K. Porter, above.18 Our colleagues’ view
that an employer, having once agreed to dues checkoff,
can never discontinue it without thereby interfering with
employees’ union membership and undermining the union cannot be reconciled with this principle.19 Additionally, we believe the majority overstates the consequences
17
See fn. 16 supra.
In so holding, the Court rejected an underlying court of appeals
opinion that reached the opposite conclusion relying on the same considerations our colleagues advance today. See Steel Workers v. NLRB,
389 F.2d 295, 302 and fn. 15 (D.C. Cir. 1967) (noting that “collection
of dues without a checkoff would have presented the union with a
substantial problem of communication and transportation,” and stating
that “the checkoff provision . . . is likely to be of life or death import to
the fledgling union, while it is of no consequence whatever to the employer”) (footnotes omitted). Our colleagues resurrect this discredited
position.
19
The majority presumably agrees that an employer may lawfully
cease dues checkoff after bargaining in good faith to impasse, but it is
difficult to see how the prior occurrence of such bargaining would
change the impact that our colleagues claim the cessation of dues
checkoff would have on the “financial lifeline” of unions and employees’ ability to maintain their union membership.
18
of discontinuing dues checkoff. As explained below,
employees and unions have many options besides dues
checkoff for the collection of dues in today’s workplace.
And the impact of any employee’s failure to remit dues
in the absence of dues checkoff is solely a consequence
of the employee’s choice or the union’s application of its
own internal rules. It is misdirected to attribute that consequence to the employer, especially given that the employer agreed to whatever dues-checkoff provisions were
contained in the expired collective-bargaining agreement,
nor do we believe the Board should dictate any particular
treatment of dues-checkoff provisions during the period
in which there is no applicable agreement.
The practical result of the majority’s new rule will be
to increase the difficulties parties will face when attempting to reach agreements in collective bargaining. For
starters, it bears emphasis that the majority’s new standard only affects parties that have already enjoyed past
success in bargaining, as reflected in the expiring collective-bargaining agreement that contains a dues-checkoff
arrangement. Moreover, under the prior Bethlehem Steel
standard (a) most employers do not propose to change or
discontinue dues checkoff in their initial proposals, and
most employers do not immediately stop dues checkoff
once the agreement expires; (b) the employer retains the
right at any time—in the event of protracted bargaining
without an agreement, for example—to unilaterally discontinue dues checkoff, which obviously is much less
destructive to employees than a lockout; and (c) any new
agreement will contain a dues-checkoff provision unless
the employer has taken the unusual step of formulating,
presenting and engaging the union in bargaining over the
discontinuation of dues checkoff.
By comparison, our colleagues’ new standard will
have the short-term consequence of mandating the indefinite continuation of dues checkoff upon contract expiration unless and until the employer has taken the “unusual
step” described in the preceding paragraph (i.e., where
the employer formulates, presents and bargains over a
proposal to discontinue dues checkoff). The likely outcome is entirely predictable: it will adversely affect current bargaining practices that, as described above, have
promoted labor relations stability. Regarding point “(a)”
in the preceding paragraph, and in contrast to current
bargaining practice, it is a near-certainty that more employers will routinely include in their initial proposals
the proposed discontinuation of dues checkoff; and since
dues checkoff is obviously important to the union, such a
proposal will substantially impede bargaining over all
14
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
other issues.20 Regarding point “(b),” overruling Bethlehem Steel eliminates the postexpiration discontinuation
of dues checkoff as a form of incremental leverage, leaving the employer with the option of implementing a
lockout, which has much more onerous consequences for
employees, the union, and the employer. Alternatively,
upon reaching an impasse in bargaining, the employer
may lawfully discontinue dues checkoff and make other
unilateral wage and benefit changes, which would also
have a greater adverse impact on employees. Regarding
point “(c),” in contrast to the status quo—where employers almost never propose the discontinuation of dues
checkoff, which means dues checkoff will continue in
successive new agreements—one can expect to see a
substantial increase in new agreements that do not provide for dues checkoff because so many more employers
will have already bargained over its discontinuation.
We believe our colleagues’ insistence on this state of
affairs is misguided for another reason: unions now have
more options for collecting union dues without the employer’s assistance than at any other time in history.
Today, nothing about the collection of dues requires it to
be done through the employer. Most employees have
checking accounts, and a wide variety of direct debit
arrangements are available through which employees
could direct the automatic payment of union dues. These
payment methods would afford unions most, if not all, of
the administrative benefits of employer-provided duescheckoff arrangements, including the security of having
such payments continue unless the employee affirmatively acts to stop them.
The majority’s position here is likely to produce a situation that resembles the dog in Aesop’s fable, which had
20
Our prediction that more employers will routinely include the proposed discontinuation of dues checkoff in their initial bargaining proposals is not random speculation. Rather, this follows directly from
other Board principles that govern good-faith bargaining. Most employers would be reluctant to incur an indefinite obligation to finance a
union’s potentially lengthy postexpiration labor dispute against the
employer. Under the majority’s new standard, this can be avoided only
if the employer bargains to impasse over an employer-formulated proposal to discontinue dues checkoff when the contract expires (or refuses
to agree to dues checkoff in the first place). Yet, if an employer delays
proposing discontinuation of dues checkoff until some midpoint in
bargaining, this would create a substantial risk that the Board would
find the employer to have engaged in “regressive” proposals (where the
employer formulates more onerous proposals than those preceding
them), which the Board has often viewed as a hallmark characteristic of
bad-faith bargaining that violates Sec. 8(a)(5). See, e.g., Quality House
of Graphics, Inc., 336 NLRB 497, 515 (2001) (“regressive proposal . . .
calling for the elimination of the dues-checkoff clauses” was “strongly
suggestive that the Respondent bargained in bad faith with the Union”
based on the “timing of [the] proposal, its drastic, unprecedented nature
and the fact that the Respondent had not raised this issue previously in
bargaining”).
a self-destructive “desire for more, rather than being content with what one has.”21 The Board can require parties
to negotiate over mandatory bargaining subjects, but we
cannot impose specific contract terms on parties.22 Consequently, we suspect our colleagues will be disappointed in the outcome of the bargaining that they now require: we will have more bargaining over proposals to
eliminate dues checkoff, even though such proposals
have been extremely rare in the past, and we are likely to
see more agreements that have no dues-checkoff provisions, especially given the array of options enabling employees to directly control whether and how they make
union dues payments. This outcome will depend on the
parties, not the Board, but the process by which parties
sort out these issues is likely to undermine bargaining
relationships and cause more contentious bargaining,
contrary to the Act’s objective of fostering labor relations
stability.23
Our final concern relates to the fundamental nature of
the change our colleagues adopt today. We do not favor
the discontinuation of dues checkoff any more than we
favor strikes, lockouts and other types of threatened or
inflicted economic injury that are protected under our
Act. Our statute protects these types of economic weapons.24 Their availability, combined with their “actual
21
Wikipedia,
The
Dog
and
Its
Reflection
(http://en.wikipedia.org/wiki/The_Dog_and_Its_ Reflection) (viewed
June 11, 2015) (“If a dog swims across a river carrying a piece of meat
. . . and sees its shadow, it opens its mouth and in hastening to seize the
other piece of meat, it loses the one it was carrying.”) (citation omitted).
22
Sec. 8(d) (duty to bargain “does not compel either party to agree to
a proposal or require the making of a concession”); H. K. Porter Co.,
Inc. v. NLRB, above, 397 U.S. at 107–108 (“It is implicit in the entire
structure of the Act that the Board acts to oversee and referee the process of collective bargaining, leaving the results of the contest to the
bargaining strengths of the parties.”).
23
One of the Board’s primary functions is to foster stability in labor
relations, to encourage good-faith negotiation, and to give effect to the
parties’ agreements. See, e.g., Colgate-Palmolive-Peet Co. v. NLRB,
338 U.S. 355, 362–363 (1949) (“To achieve stability of labor relations
was the primary objective of Congress in enacting the National Labor
Relations Act.”); NLRB v. Appleton Electric Co., 296 F.2d 202, 206
(7th Cir. 1961) (“[A] basic policy of the Act [is] to achieve stability of
labor relations.”). Our colleagues do not meet the substance of our
discussion of the predictable consequences of the change they make
today. Instead, they fault us for not offering empirical evidence that
cannot possibly exist, given that the precedent they overrule has been in
place since 1962.
24
There is no merit to the majority’s view that the discontinuance of
dues checkoff authorized by Bethlehem Steel is not a legitimate economic weapon simply because it involves a unilateral change in a term
or condition of employment. Unlike the discontinuance of merit pay at
issue in Daily News of Los Angeles, 315 NLRB 1236 (1994), enfd. 73
F.3d 406 (D.C. Cir. 1996), cert. denied 519 U.S. 1090 (1997), cited by
our colleagues, dues checkoff does not involve “wages and benefits”
paid to employees but is instead a provision under which an employer
15
LINCOLN LUTHERAN OF RACINE
exercise on occasion by the parties,”25 has produced virtually all of the agreements reached in the Act’s history.
The Board is entrusted with the “responsibility to adapt
the Act to changing patterns of industrial life.”26 However, our colleagues do not identify any “changing pattern” that warrants the abandonment of Bethlehem Steel,
which has permitted the unilateral discontinuation of
dues checkoff upon contract expiration for a period exceeding five decades. As noted previously, this spans the
entire time that the Supreme Court, starting with Katz,
has recognized a statutory obligation to have postexpiration bargaining over other employment terms.
Shortly before Bethlehem Steel and Katz were decided,
the Supreme Court held it is improper for the Board to
function “as an arbiter of the sort of economic weapons
the parties can use in seeking to gain acceptance of their
bargaining demands.”27 This was reinforced when the
Supreme Court reiterated, shortly after Bethlehem Steel
and Katz, that the Board is not vested with “general authority to assess the relative economic power of the adversaries in the bargaining process and to deny weapons
to one party or the other because of its assessment of that
party’s bargaining power.”28 Absent a compelling reason
for making this change, we believe the majority’s decision to overrule Bethlehem Steel, though cloaked in the
language of our statute, modifies one of the established
“substantive aspects of the bargaining process to an extent Congress has not countenanced.” 29
makes its payroll system available to assist the union in collecting dues.
Moreover, their argument that our position “run[s] afoul” of Katz begs
the question by taking as its premise the conclusion it reaches—
namely, that dues checkoff is to be subjected to the rule of Katz. Obviously, if dues checkoff is held exempt from that rule—as, until today, it
has been for more than 50 years—its unilateral cessation is a lawful
economic weapon.
25
NLRB v. Insurance Agents’ International Union, above, 361 U.S.
at 487–489.
26
NLRB v. J. Weingarten, 420 U.S. 251, 266–267 (1975).
27
Insurance Agents, 361 U.S. at 497.
28
American Ship Building Co. v. NLRB, 380 U.S. 300, 316 (1965).
29
Insurance Agents, 361 U.S. at 497–498. Indeed, as recognized in
Insurance Agents, when Congress added to the Act Sec. 8(d), which
precludes the Board from imposing substantive contract obligations on
the parties in the guise of enforcing the duty to bargain, this was a
response to the fact that the Board had “gone very far, in the guise of
determining whether or not employers had bargained in good faith, in
setting itself up as the judge of what concessions an employer must
make and of the proposals and counterproposals that he may or may not
make.” Id. at 486 (quoting H.R. Rep. No. 245, 80th Cong., at 19, reprinted in 1 NLRB, Legislative History of the Labor Management
Relations Act (LMRA Hist.), at 310 (1948)). Significantly, the specific
example referenced in the House Report was the Board’s insistence that
employers violated the duty to bargain if they failed to require employees “to become and remain members of unions” (commonly referred to
as a “closed shop”). H.R. Rep. No. 245, at 19, reprinted in 1 LMRA
Hist. at 310. Here, instead of requiring employees to “remain members
Conclusion
Congress determined that it furthers the national labor
policy to permit employers and unions to agree to both
union-security clauses, under which an employee is obligated to pay union dues as a condition of employment,
and dues-checkoff arrangements, by which unions can
rely on an employer to collect and transmit union dues.
At the same time, based on the right of employees to
refrain from engaging in protected activity, Congress has
imposed statutory limits on both of these forms of union
security. In our opinion, Bethlehem Steel reflects the
national labor policy Congress has established better than
the alternative our colleagues endorse today. Accordingly, as to these issues, we respectfully dissent.
Dated, Washington, D.C. August 27, 2015
______________________________________
Philip A. Miscimarra,
Member
______________________________________
Harry I. Johnson, III,
Member
NATIONAL LABOR RELATIONS BOARD
Angela B. Jaenke, Esq., for the General Counsel.
John H. Zawadsky, Esq. (Reinhart, Boerner, Van Deuren, S.C.),
of Madison, Wisconsin, for the Respondent.
DECISION
STATEMENT OF THE CASE
PAUL BOGAS, Administrative Law Judge. This case was tried
in Milwaukee, Wisconsin, on April 28, 2014.1 Service Employees International Union Healthcare Wisconsin, SEIUHCWI (the Union or the Charging Party) filed the charge on
August 13, 2013, and the Regional Director for Region 18 of
the National Labor Relations Board (the Board) issued the
complaint and notice of hearing on December 19, 2013.2 The
of unions,” id., the majority makes it unlawful not to continue postcontract expiration remittance of union dues deducted from their pay.
For the reasons explained in the text, given the five decades in which
the Bethlehem Steel rule has existed, we believe this is the type of
change that would more appropriately be addressed by Congress and
not the Board.
1
The two witnesses and counsel for the parties were present in Milwaukee, Wisconsin. With the agreement of the parties, and given that
stipulations had alleviated the need for all but very brief testimony, I
conducted the hearing by teleconference in the interests of preserving
governmental resources.
2
The complaint as issued on December 19 consolidated a case from
Subregion 30 (Case 30–CA–111099) and a case from Region 18 (Case
18–CA–112504). On March 27, 2014, following a partial settlement
reached by the parties, all the allegations in the complaint that did not
16
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
complaint alleges that Lincoln Lutheran of Racine (the Respondent) violated Section 8(a)(5) and (1) when, on March 19,
2013, it ceased dues checkoff for unit employees after the collective-bargaining agreement between the parties expired. The
Respondent filed a timely answer it which it denied that it violated the Act.
On the entire record, including my observation of the demeanor of the witnesses, and after considering the briefs filed
by the General Counsel3 and the Respondent, I make the following
FINDINGS OF FACT
I. JURISDICTION
The Respondent, a corporation, operates a nursing home
providing in-patient medical care in Racine, Wisconsin. In
conducting its operations, the Respondent annually derives
gross revenues in excess of $100,000 and purchases and receives at its facility in Racine, Wisconsin products, goods, and
materials valued in excess of $5000 directly from points outside
the State of Wisconsin. The Respondent admits, and I find, that
it is an employer engaged in commerce within the meaning of
Section 2(2), (6), and (7) of the Act and that the Union is a
labor organization within the meaning of Section 2(5) of the
Act.
II. ALLEGED UNFAIR LABOR PRACTICES
The Respondent is a nursing home operator with facilities in
Racine, Wisconsin. Since at least 2007, the Respondent has
recognized the Union as the collective-bargaining representative of a unit comprised of certified nurse aides, maintenance
employees, laundry employees, housekeeping employees, and
certain other employees. The Union and the Respondent have
entered into successive collective-bargaining agreements covering the unit, the most recent of which was effective by its terms
from June 1, 2011, to December 31, 2012. The parties agreed
to extend the term of that agreement to February 19, 2013. The
agreement includes a dues-checkoff provision in which the
Respondent agrees to deduct union initiation fees and membership dues from the paychecks of participating unit employees
and to transmit those funds to the Union.4
pertain to the Respondent’s cessation of dues checkoff were dismissed.
In addition, the two cases were severed and the Region 18 case is not
part of the proceeding before me.
3
The Respondent moved to strike portions of the General Counsel’s
brief because “rather than presenting only the General Counsel’s argument, the General Counsel took advantage of Lincoln Lutheran having
filed its brief earlier in the day by responding to Lincoln Lutheran’s
arguments.” The General Counsel opposed the motion and it is hereby
denied. I set a June 2, 2014, due date for both parties’ briefs, but did
not order that the briefs be filed simultaneously or otherwise foreclose
one party from responding directly to arguments in the other party’s
earlier filed brief. The Respondent cites no authority at all for striking
a brief, in whole or in part, under such circumstances.
4
The provision states as follows:
(a) Upon receipt from a team member, Worksite Leader and/or Union
Representative of a lawfully executed written authorization, Lincoln
Lutheran agrees, until such authorization is revoked in accordance
with its terms, to deduct the initiation fees and the regular monthly
Union membership dues of such team members from the team mem-
On December 17, 2012, the Respondent and the Union began
negotiations for a successor to the expiring contract. The Respondent’s lead negotiator was Butch Patterson, the Respondent’s vice president for human resources. The Union’s lead
negotiator was Bonnie Strauss, a union project director. In the
parties’ written proposals during negotiations for a successor
contract, both the Respondent and the Union proposed the
samee dues-checkoff language that was present in the expiring
contract. In a February 12, 2012 email, Patterson for the first
time informed Strauss that the Respondent was proposing to
terminate the due-checkoff provision effective upon the expiration of the contract on February 19. Patterson stated that the
Respondent was prepared to discuss the dues-checkoff proposal
at the negotiating session scheduled for February 18. Patterson
further stated that the contract’s union-security clause and arbitration provisions would also terminate on February 19. Later
that day, Strauss responded to Patterson by email as follows:
Butch,
So why the heavy hand? This seems out of character given
our working relationship. Please advise.
Patterson responded by email:
Hi Bonnie,
We do have a positive working relationship and I hope it continues. We simply need to move forward quickly with our
economic proposals because of continued fiscal issues. We
especially need to achieve the projected labor savings regarding the shift reduction proposal. January financials did not
meet budget. I am concerned that further delaying the process
will make the negotiation process even more difficult. I’m
looking forward to a productive session on the 18th.
The parties met to negotiate on February 18. Present for the
Respondent were Patterson and three other company officials,
ber’s first two paychecks of each month and to promptly remit such
deduction to the Union, the list outlining dues payments and initiation
fees will be provided to the Union by electronic mail. The Union will
notify Lincoln Lutheran, in writing, of the exact amount of such regular monthly membership dues to be deducted. Team members shall
be provided Union authorization forms at time of hire along with the
other appropriate forms of employment. The authorization provided
for by this Section shall conform to all applicable Federal and State
laws.
The Union Agrees to indemnify and hold Lincoln Lutheran
harmless against any and all claims, suits, orders, or judgments
brought or issued against Lincoln Lutheran as a result of any action taken or not taken by Lincoln Lutheran pursuant to any written communication from the Union under the provisions of this
article.
(b) The Employer agrees to deduct and transmit to SEIU
COPE, $ ____ per pay period, from the wages of those team
members who voluntarily authorize such contributions on the
forms provided for that purpose by SEIU HEALTHCARE
WISCONSIN. These transmittals shall occur for each payroll
period. A list of names shall be sent via electronic mail/media
of those team members for whom such deductions have been
made. The list will include the amount deducted for each
team member.
17
LINCOLN LUTHERAN OF RACINE
one of whom, the Respondent’s chief executive officer, left
early in the meeting. Present for the Respondent were Strauss
and a union staff representative. The session lasted from approximately 9 a.m. to 4 p.m. The parties did not discuss the
dues-checkoff issue until the end of that period. At that time,
Patterson stated that when the contract expired—which was set
to occur the next day—the Respondent would no longer honor
the union arbitration procedure, and that “after the next bargaining session,” which was set for March 5, “the union security and union check off would discontinue.” Strauss responded
to Patterson by stating that this “was not a good way to have a
good relationship, and that it would not in any way, shape or
form change the way that we would represent our members, nor
would it change the way that we would approach the bargain.”
Then Strauss asked Patterson to reconsider. At that point the
management team left the session.5
Patterson subsequently canceled the March 5 bargaining session. In a February 28 email to Strauss, he proposed alternative
dates for negotiations in March and April and stated that the
Respondent “proposes the termination of the check off provision of the Agreement (see art. 18 of the contract) effective on
the next day immediately following the date of our next bargaining session” and that the Respondent “w[ould] be prepared
to discuss this proposal at the next meeting.” The parties held
their next bargaining session for a successor contract on March
14. During that session neither side raised the subject of dues
checkoff or the discontinuation of dues checkoff.
Patterson, in a March 18 email to Strauss, stated that “As
previously notified (2/28/2013), Lincoln Lutheran is confirming
the termination of the union-checkoff provision of the Agreement . . . effective Tuesday, March 19, 2013.” On March 19,
the Respondent carried through with this action, and discontinued checkoff for unit employees. As of that time, the Union’s
written proposal still included the dues-checkoff language contained in the expired agreement. During negotiations, the Respondent never claimed to the Union that administering dues
checkoff was a financial hardship for the Company.
5
Of the persons who attended the meeting, only Strauss and Patterson were called to testify. Regarding what Patterson said at the meeting, the testimony of Strauss and Patterson was consistent and I credit
that testimony. I also credit Strauss’ testimony regarding what she said
in response to Patterson, and that is the basis for the version of her
response that is set forth above. Based on Strauss’ demeanor and testimony as a whole, and after considering the documentary evidence
regarding the February 18 meeting, I find that testimony credible.
Patterson’s very minimal testimony on the subject of what Strauss said
does not corroborate Strauss’ testimony, but also does not directly
contradict it. When Patterson was asked whether there was any response from the Union to his statement that the Respondent would
cease honoring the arbitration, union security, and dues-checkoff provisions, he testified, “[N]ot regarding the union dues.” This nonspecific
testimony does not directly contradict Strauss’ testimony because
Strauss did not claim that she explicitly mentioned union dues. Patterson was not asked to recount exactly what Strauss said to him at the end
of the meeting or to confirm or deny Strauss’ testimony about what she
said.
After March 19, 2013, the parties continued to negotiate for
a successor to the collective-bargaining agreement. On about
November 21, 2013, the Respondent resumed dues checkoff.
III. ANALYSIS AND DISCUSSION
The Respondent stopped following the dues-checkoff provision in the contract on March 19, 2013, subsequent to the expiration of that contract on February 19, 2013. At the time the
Region issued the complaint in this case, as well as at the time
of trial, the Board’s most recent ruling on the subject was that
an employer’s obligation to adhere to a contractual duescheckoff provision continues after the expiration of the contract. See Alamo Rent-A-Car, 359 NLRB No. 149, slip op. at 4
(2013), decision set aside by 2014 WL 2929754 (NLRB June
27, 2014), and WKYC-TV, Inc., 359 NLRB No. 30 (2012). In
WKYC-TV, the Board stated, “[T]hat, like most other terms and
conditions of employment, an employer’s obligation to check
off union dues continues after expiration of a collectivebargaining agreement that establishes such an arrangement.
Slip op. at 1. The Board acknowledged in WKYC-TV that it
was overturning the rule set forth in Bethlehem Steel,6 and its
progeny, which was that the “obligation to check off union dues
from employees’ wages terminates upon expiration of a collective-bargaining agreement that establishes such an arrangement.” Id. The Board explained that a coherent explanation for
the Bethlehem Steel rule had never been provided, and noted
that the U.S. Court of Appeals for the Ninth Circuit had recently refused to enforce a Board decision following the Bethlehem
Steel rule because, in the court’s words, the Board “‘continue[d] to be unable to form a reasoned analysis in support of’”
that rule. Id., quoting Local Joint Executive Board of Las Vegas v. NLRB, 657 F.3d 865, 867 (9th Cir. 2011).
Subsequently, the U.S. Supreme Court issued its decision in
NLRB v. Noel Canning, 134 S.Ct. 2550 (2014), holding that the
Board lacked the quorum necessary for the issuance of decisions from January 4, 2012, through August 4, 2013. Both
Alamo and WKYC-TV, supra, and WKYC-TV, supra, were issued during the period when the Board lacked the necessary
quorum and neither decision is currently valid precedent. I find
that the Board’s prior rule, as set forth in Bethlehem Steel, is
therefore controlling and that the Respondent did not violate
Section 8(a)(5) and (1) on March 19, 2013, by ceasing to follow
the dues-checkoff provision after expiration of the collectivebargaining agreement.7
6
136 NLRB 1500 (1962), remanded on other grounds sub nom.
Shipbuilding v. NLRB, 320 F.2d 615 (3d Cir. 1963), cert. denied 375
U.S. 984 (1964).
7
The parties presented evidence going to the question of whether the
Union waived bargaining regarding the Respondent’s discontinuation
of dues checkoff. Given the applicability, at least until further notice,
of the Bethlehem Steel rule, it is not necessary for me to reach the
waiver issue. Nevertheless, in the previous section of this decision, I
have included all the factual findings relating to the waiver issue that
are supported by the record.
I also note that in the stipulation of facts the parties entered into on
April 14, 2014, they stipulated to the following: “[N]o historical information regarding the parties’ bargaining history on dues check off
has been set forth as it is not relevant to the current discontinuation of
18
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
For the reasons discussed above, the allegation that the Respondent violated Section 8(a)(5) and (1) of the Act when it
discontinued dues checkoff should be dismissed.
CONCLUSIONS OF LAW
1. The Respondent is an employer engaged in commerce
within the meaning of Section 2(2), (6), and (7) of the Act.
2. The Union is a labor organization within the meaning of
Section 2(5) of the Act.
3. The Respondent was not shown to have violated Section
8(a)(5) and (1) of the Act.
On these findings of fact and conclusions of law and on the
entire record, I issue the following recommended8
ORDER
The complaint is dismissed.
Dated, Washington, D.C. August 11, 2014.
8
dues check off or the Employer’s affirmative defenses thereto.”; and
“[N]o past practices regarding discontinuation of dues check off has
been set forth as it is not relevant to the current discontinuation of dues
check off or the Employer’s affirmative defenses thereto.”
If no exceptions are filed as provided by Sec. 102.46 of the Board’s
Rules and Regulations, the findings, conclusions, and recommended
Order shall, as provided in Sec. 102.48 of the Rules, be adopted by the
Board and all objections to them shall be deemed waived for all purposes.
NOTICE: This opinion is subject to formal revision before publication in the
bound volumes of NLRB decisions. Readers are requested to notify the Executive Secretary, National Labor Relations Board, Washington, D.C.
20570, of any typographical or other formal errors so that corrections can
be included in the bound volumes.
Macy’s, Inc. and Local 1445, United Food and Commercial Workers Union. Case 01–RC–091163
July 22, 2014
DECISION ON REVIEW AND ORDER
BY CHAIRMAN PEARCE AND MEMBERS HIROZAWA,
MISCIMARRA, AND SCHIFFER
On November 8, 2012, the Acting Regional Director
for Region 1 issued a Decision and Direction of Election
in which he found that a petitioned-for departmental unit
of cosmetics and fragrances employees, including counter managers, employed by the Employer at its Saugus,
Massachusetts store, was appropriate. Thereafter, in accordance with Section 102.67 of the Board’s Rules and
Regulations, the Employer filed a timely request for review. The Employer contends that the smallest appropriate unit must include all employees at the Saugus store
or, in the alternative, all selling employees at the store.
The Petitioner filed an opposition. On December 4,
2012, the Board granted the Employer’s request for review. Thereafter, the Employer and Petitioner filed
briefs on review. Several amici curiae were also granted
special permission to file briefs.1
The Board has carefully considered the entire record in
this proceeding, including the briefs on review and amicus briefs.2 For the reasons set forth below, we affirm
the Acting Regional Director’s finding that, under Specialty Healthcare & Rehabilitation Center of Mobile, 357
NLRB No. 83 (2011), enfd. sub nom. Kindred Nursing
Centers East, LLC v. NLRB, 727 F.3d 552 (6th Cir.
2013), the employees in the petitioned-for unit are a
readily identifiable group who share a community of
interest, and that the Employer has not met its burden of
demonstrating that the other selling and nonselling em1
The National Retail Federation (NRF) filed an amicus brief. A
joint amicus brief was filed by Retail Industry Leaders Association and
Retail Litigation Center (RILA-RLC). A joint amicus brief was also
filed by the Chamber of Commerce of the United States of America,
Coalition for a Democratic Workplace, American Hotel & Lodging
Association, HR Policy Association, International Council of Shopping
Centers, International Foodservice Distributors Association, International Franchise Association, National Association of Manufacturers,
National Association of Wholesale-Distributors, National Council of
Chain Restaurants, National Federation of Independent Business, and
Society for Human Resource Management (Chamber of Commerce et
al.). Pursuant to Reliant Energy, 339 NLRB 66 (2003), the Petitioner
filed a postbrief letter calling the Board’s attention to recent case authority.
2
Member Johnson is recused from participating in this case, and he
took no part in the consideration or disposition of this case.
361 NLRB No. 4
ployees it seeks to include share an overwhelming community of interest with the petitioned-for employees so
as to require their inclusion in the unit. Our decision
today is based solely on the facts before us in this case,
and we do not reach the question of whether other subsets of selling employees at this, or any other, retail department store may also constitute appropriate units.
FACTS
The Employer operates a national chain of department
stores, including one in Saugus. Store Manager Danielle
McKay is the highest executive at the Saugus store, and
she oversees 7 sales managers who oversee 11 primary
sales departments:3 juniors, ready-to-wear, women’s
shoes, handbags, furniture (also known as big ticket),
home (also referred to as housewares), men’s clothing,
bridal, fine jewelry, fashion jewelry, and cosmetics and
fragrances.4 Kelly Quince is the sales manager for cosmetics and fragrances.5 Quince has no regular responsibilities for the other primary sales departments, nor do
the other sales managers have any regular responsibilities
for the cosmetics and fragrances department.6 Of 150
total employees at the store, 120 are selling employees,
and of these, 41 work in cosmetics and fragrances.
The Petitioned-For Unit: Cosmetics and
Fragrances Employees
The Petitioner seeks to represent all full-time, parttime, and on-call employees employed in the Saugus
store’s cosmetics and fragrances department, including
counter managers, beauty advisors, and all selling employees in cosmetics, women’s fragrances, and men’s
fragrances. The parties agree that these employees
3
These primary sales departments are subdivided into other “departments,” but these sub-departments are not separately supervised.
Instead, employees in these subdepartments report to their primary
sales department’s sales manager. For the purposes of this decision, we
use “department” to refer to the 11 primary sales departments.
4
The ready-to-wear, home/housewares, men’s, big ticket, and cosmetics and fragrances departments have their own individual sales
manager. A sixth sales manager oversees women’s shoes and handbags, and a seventh sales manager oversees juniors and fine jewelry.
The record does not indicate which, if any, sales managers oversee
fashion jewelry and bridal. In addition to the sales managers, the record refers to a selling floor supervisor “whose responsibility is also fine
jewelry,” but there is no additional information about how this position
fits within the store’s management structure.
5
The dissent states that Quince oversees “more than one functional
area” and at several points refers to the petitioned-for employees as a
“combined cosmetics and fragrances group.” We emphasize that the
Employer treats cosmetics and fragrances as a single primary selling
department with its own sales manager.
6
Sales managers may cover for each other due to absences, but the
record does not indicate whether this happens with any frequency.
2
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
should be included in the unit.7 Of the 41 employees in
the petitioned-for unit, 8 are counter managers, 7 are oncall employees, and the remaining employees are cosmetics or fragrances beauty advisors.8
The cosmetics and fragrances department is situated in
two areas. The first, which consists of cosmetics and
women’s fragrances, is located on the first floor. It is
framed on one side by the store entrance, which it faces,
and on the other by escalators that lead up to the second
floor. Surrounding the escalator bank on the second
floor is the second area, which consists of men’s fragrances. In addition to the women’s fragrances counter,
the first floor cosmetics area is divided into eight counters, each of which is dedicated to selling products from
one of the eight primary cosmetics vendors: Shiseido,
Elizabeth Arden, Chanel, Clarins, Lancôme, Clinique,
Estée Lauder, and Origins.9 As shown on the store’s
floor plan, each of these two selling areas is spatially
distinct from—although adjacent to several of—the other
primary sales departments.10
Cosmetics beauty advisors are specifically assigned to
one of the eight cosmetics vendor counters. They typically sell only that vendor’s products, although from time
to time they may sell other cosmetics vendors’ products
(for example, an Estée Lauder beauty advisor might assist customers at the Clinique counter when the Clinique
beauty advisor is on break). Cosmetics beauty advisors
demonstrate products by giving customers makeovers
and by otherwise applying products to a customer’s skin.
Fragrances beauty advisors are assigned to either the
men’s or women’s fragrances counter, and sell all available men’s or women’s products, regardless of the vendor.
The Shiseido, Chanel, Lancôme, Clinique, Estée Lauder,
Origins, women’s fragrances, and men’s fragrances
counters each have a counter manager who, in addition to
selling products, helps organize promotional events,
7
The parties also agreed that the unit should exclude MAC employees, sprayers, the cosmetics fragrances manager, the store manager and
assistant store managers, department managers, account coordinators,
selling floor supervisor, merchandise team managers, receiving team
manager, visual manager, administrative team manager, human resource manager, operations manager, loss prevention manager, clerical
employees, guards, and supervisors as defined in the Act.
8
The record does not break down how many beauty advisors work
in cosmetics and how many work in fragrances. It appears that there are
more cosmetics beauty advisors, as there are eight total cosmetics counters and two fragrances counters.
9
There is also a cosmetics counter for MAC in this area, but that
counter is staffed entirely by individuals employed directly by Estée
Lauder.
10
Although the map is not clear, it appears that the first floor cosmetics and fragrances area is adjacent to the juniors, fine jewelry,
women’s shoes, and ready-to-wear departments. The second floor
men’s fragrances counter is adjacent to men’s clothing.
monitor the counter’s stock, coach beauty advisors on
customer service and selling technique, ensure that their
counter is properly covered by beauty advisors, and
schedule visits by vendor employees (such as sprayers
and makeup artists).11 Counter managers also assist
Quince in evaluating beauty advisors. Although cosmetics and fragrances beauty advisors do not usually work at
each others’ counters, the seven on-call employees may
work at any of the ten counters.
Besides the petitioned-for employees, two types of
vendor representatives—account coordinators and account executives—are frequently present in the cosmetics and fragrances department. Most of the primary
cosmetics vendors have account coordinators, who are
employed by Macy’s.12 Account coordinators coach
beauty advisors on selling and customer service, provide
in-store training for beauty advisors who work at that
vendor’s counter, and forward product-related training
materials to their beauty advisors. The highest volume
cosmetics vendors also have account executives—
employed directly by the vendors—who visit the Saugus
store to ensure that their beauty advisors have what they
need; they also organize off-site training for beauty advisors who sell that vendor’s products.13 Fragrances vendors also have vendor representatives, but it appears that
they do not visit the store as frequently as the cosmetics
vendor representatives.
Account coordinators and executives are also involved
in hiring cosmetics beauty advisors. Typically, a vendor
representative will interview an applicant along with the
Employer, and the Employer will consult the vendor representative to ensure that mutually acceptable applicants
are hired. Vendor representatives are not, however, involved in hiring fragrances beauty advisors or on-call
employees. With respect to the petitioned-for employees, prior experience in selling cosmetics or fragrances is
desirable, but not required.
The in-store and offsite training provided to beauty
advisors covers selling techniques and product
knowledge. For fragrances beauty advisors, product
knowledge training involves topics such as ingredients,
11
Sprayers, who are employed directly by fragrances vendors, dispense fragrance samples to customers. Makeup artists, who are employed directly by cosmetics vendors, train cosmetics beauty advisors
and give customers makeovers at special events.
12
Elizabeth Arden apparently does not have an account coordinator
for the Saugus store.
13
It is not clear in the record exactly which vendors have account
executives, but the record shows that Clinique, Estée Lauder, and
Lancôme do.
3
MACY’S, INC.
scents, and notes.14 For cosmetics beauty advisors, product knowledge training mainly involves products in their
vendor’s line, but they also receive training in
interselling so that they can assist customers at another
vendor’s counter. Cosmetics beauty advisors are also
trained in skin tones, skin types, skin conditions, and use
of color. Unlike the beauty advisors, on-call employees
receive no training beyond what they learn on the selling
floor.
Beauty advisors are paid an hourly wage, plus a 3 percent commission on products sold from their own counter. Cosmetics beauty advisors receive a 2 percent commission when they sell cosmetics from other counters.
Counter managers also receive an hourly wage plus a 3
percent commission, as well as a .5 percent commission
on all sales made at their counter. On-call employees
receive a 2 percent commission regardless of what they
sell. The exact mechanism by which the commission is
paid depends on the vendors and is negotiated between
the store and the vendor. The record does not contain
any details of specific commission arrangements different vendors have with the store. Petitioned-for employees may, on occasion, ring up items from other sales
departments, but they receive no commission on these
items.
Cosmetics beauty advisors keep lists of their regular
customers.15 These lists are used to book appointments
to give customers makeovers, to invite them to try new
products, to presell products, and to notify them of special promotions or events. Customers may also contact
their cosmetics beauty advisor to ask for product refills
or to schedule a makeover. One cosmetics beauty advisor specified that she calls her regular customers about
five times a year to tell them about new products, to ask
if they need any products replenished, and to offer them
free gifts. Fragrances beauty advisors also keep client
lists, which they use to invite customers to new fragrance
launches. The record does not indicate whether on-call
employees maintain client lists.
Most of the cosmetics vendors provide distinctive uniforms for the beauty advisors who staff their counters.
Clinique, Origins, Estée Lauder, Lancôme, Clarins, and
Elizabeth Arden beauty advisors all have their own uniforms. The remaining (Shiseido and Chanel) cosmetics
beauty advisors and the fragrances beauty advisors, how14
The Employer’s Brief on Review states that fragrances beauty advisors do not receive offsite training. Store Manager McKay, however,
expressly testified that fragrances beauty advisors may receive onsite or
offsite training from vendor representatives.
15
The two cosmetics beauty advisors who testified estimated that
they had lists of 200 and 400 clients, respectively.
ever, simply follow the Employer’s “basic black” dress
requirement.
Other Employees
The Employer argues that the only appropriate unit
must include all other employees of the Saugus store, or
at least all of the selling employees at the Saugus store.16
The record contains scant evidence regarding the 30
nonselling employees employed at the store: there is a
receiving team (with its own manager) and a merchandising team (with two managers), who are collectively referred to as stock employees, and there are also staffing
employees.
The evidence concerning selling employees in other
primary sales departments is also generally less specific
than the evidence concerning the petitioned-for employees. There is, for example, no indication of how the 80
remaining selling employees are distributed across the 10
primary sales departments. Similarly, there is far less
information on how these other selling departments are
structured. In this regard, the record reveals only that
most (but not all) primary sales departments have their
own sales manager, and that at least some of them are
divided into subdepartments, which do not have supervision separate from the sales manager. There is no indication that the other primary sales departments have the
equivalent of counter managers, and the record is unclear
as to whether the other primary sales departments utilize
the equivalent of on-call employees.17
Certain other primary sales departments do, however,
have some specialist sales employees who, like the cosmetics beauty advisors, specialize in selling a particular
vendor’s products. For instance, specialists sell Guess
products in shoes and men’s clothing, North Bay in
shoes, and Polo in men’s clothing. Levi’s, Lacoste, Buffalo, and INC (the Employer’s private brand) also have
specialists who sell their products. Likewise, vendor
representatives operate in certain other sales departments,
monitoring stock and training selling employees on selling technique and product knowledge. Guess, Polo, Buffalo, North Face, Nautica, Lacoste, and Hilfiger all have
vendor representatives operating in sales departments
that sell their products, and Lenox has representatives
who operate in the home/housewares department. Ven16
The Petitioner is unwilling to proceed in an election in any unit
other than the petitioned-for unit.
17
The record is clear that the cosmetics and fragrances on-call employees do not work in other departments. The only other testimony
about the use of on-call employees (or their equivalent) in other departments consists of Human Resources Director Gina DiCarlo’s statement that there are no on-call employees “specifically assigned to those
departments” that sell North Face products (which apparently include
the juniors, men’s clothing, and ready-to-wear departments).
4
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
dors including Polo, North Face, and Levi’s have conducted both in-store and offsite training for those specialists who sell their products.18
Aside from specialists, employees in other sales departments receive training through product information
sheets, conversations with management, and offsite vendor training. Selling employees are also trained in relevant product-related matters. For example, employees
who sell shoes are trained on fit, type, fabric, and color,
and employees who sell dresses are trained on silhouette,
fabrics, and fit. Further, other sales departments hold
various seminars during the year that train employees in
their departments in selling technique, product
knowledge, and related topics. For example, juniors
conducts back-to-school and newborn training seminars;
big ticket has biannual training seminars where vendor
representatives instruct employees on product
knowledge, selling technique, clientelling, and selling
protection plans; and fine jewelry conducts at least three
annual seminars on product knowledge, clarity, cut, color, and weight.
In hiring, there are situations in which other sales departments consult with vendor representatives in selecting an applicant. Specifically, the Employer consults
Levi’s, Polo, Buffalo, and Guess vendor representatives
when hiring sales specialists in those brands, and these
representatives also interview applicants for specialist
positions. As in cosmetics and fragrances, prior selling
experience in the department’s product is desirable, but
not required.
Not all selling employees are paid on the base-pluscommission formula used in cosmetics and fragrances,
but selling employees in the fine jewelry, men’s clothing,
men’s shoes, and big ticket departments are paid on that
basis.19 At least some specialists in other departments
also receive a base wage plus commission, but specific
arrangements vary. For instance, the record suggests that
Guess and Buffalo specialists are paid a base wage plus
commission, but Levi’s specialists receive a bonus rather
than a commission, and Polo specialists receive no com18
Although there are specialist selling employees scattered across
some other primary selling departments, the record does not establish
how many other primary selling departments have specialist sales employees; further, there is no indication as to how many selling employees in any of those departments are specialists. Additionally, although
there is evidence that selling employees (specialist and otherwise)
outside of cosmetics and fragrances interact with vendor representatives, the record does not establish that a significant number of these
other selling employees do so, insofar as it does not reveal the number
of other specialist employees or the number of employees who interact
with vendor representatives.
19
Not all of these employees specialize in selling a particular vendor’s products.
mission at all. As with the cosmetics beauty advisors,
the precise mechanism by which a commission is paid to
specialist selling employees varies by vendor.
Some selling employees outside of cosmetics and fragrances also keep customer lists. Selling employees in
the fine jewelry, men’s clothing, big ticket, and bridal
departments all maintain such lists,20 which are apparently used to invite customers to special events, such as a
particular vendor event in the jewelry or bridal department.
Shared Community of Interest Factors and
Bargaining History
There is some degree of contact between the cosmetics
and fragrances department and other sales departments.
As noted above, from time to time merchandise from
other sales departments may be rung up in cosmetics and
fragrances. But because various employees earn commission, the Employer does not “like to make a habit” of
merchandise from one department being rung up in another; there is no evidence as to how frequently it occurs.21 Although various witnesses indicated that they
had seen merchandise from other departments occasionally being rung up in cosmetics and fragrances (usually
due to long lines in adjacent departments), two cosmetics
beauty advisors stated that they had never seen cosmetics
or fragrances rung up in a different department.22
There is some incidental contact between cosmetics
and fragrances employees and other selling employees,
given the proximity of the cosmetics and fragrances
counters to other departments,23 as well as daily morning
rallies attended by all employees whose shifts correspond
with the store’s opening. These rallies—which review
the previous day’s sales figures and any in-store events
taking place that day—are no longer than 15 minutes,
and at times individual departments will have their own
20
The dissent states that these four departments have “already” used
client lists to invite customers to special events. The record does not
suggest that these four departments use these lists to the degree the
cosmetics beauty advisors do (i.e., these other departments apparently
do not use their client lists to book appointments, replenish products, or
presell items). Contrary to the dissent, we do not think that Store Manager McKay’s testimony suggests that there is any imminent plan to use
client lists in the remaining primary sales departments
21
In this regard, McKay testified that nobody receives commission if
a cosmetics item is rung up in the shoe department. The Employer
accordingly prefers to have each department ring up its own products
so that commission is properly allocated.
22
One beauty advisor commented that if customers want to purchase
products, but also want to look in other departments, the beauty advisors will hold the cosmetics products for the customers until they are
ready to check out.
23
As noted above, the cosmetics and fragrances selling areas are adjacent to several other departments.
5
MACY’S, INC.
meetings in place of the rally. The record indicates that
selling employees are expected to help each other out and
to assist customers, and that this may lead to contact between the petitioned-for and other selling employees, but
there is no indication of how often this happens or how
extensive these interactions may be. Similarly, the record refers to cosmetics and fragrances personnel recruiting customers in other areas of the store (such as women’s shoes), but the testimony on this count was vague
and limited, so it is not clear how regularly this takes
place, nor is it clear how much actual contact between
petitioned-for and other selling employees results from
these customer recruitment efforts.24
There is little evidence of temporary interchange between the petitioned-for employees and other selling
employees. Petitioned-for employees are neither asked
nor required to work in other departments, aside from
assisting in periodic inventory.25 Other selling employees are “not regularly” asked to work in cosmetics and
fragrances, and although one witness stated that other
selling employees might occasionally do so, her subsequent testimony limits such interchange to other selling
employees helping out from a “recovery standpoint” or
to assist a customer when a cosmetics or fragrances
counter is temporarily unattended. There are no examples of (1) other selling employees actually assisting the
cosmetics and fragrances department, (2) cosmetics and
fragrances employees actually assisting other departments, or (3) a selling employee from one department
picking up shifts in another department. In the last 2
years, there have been eight permanent transfers from
other areas of the store into the cosmetics and fragrances
department,26 and one permanent transfer out of the department to a supervisory position.
24
It is not even clear that such activity involves petitioned-for employees. The relevant testimony begins with a discussion of sprayers—
who are not among the petitioned-for employees—recruiting customers
in other areas of the store, followed by the unelaborated statement that
“cosmetics associates go into the shoe department to recruit.”
25
All employees participate in inventory, which consists of counting, scanning, and organizing products. Cosmetics and fragrances
employees may be assigned to inventory work in other departments, or
may end up conducting inventory in other departments if they finish
their own inventory work early. Cosmetics and fragrances employees
may, and have, requested inventory work in other departments as well.
As inventory work involves no selling, cosmetics and fragrances employees receive only their base wage when performing such work. The
record does not indicate the frequency of inventory work, which in any
event is clearly incidental to the primary function of both the petitioned-for and other selling employees.
26
Seven of these transfers involved an employee from another sales
department transferring into cosmetics and fragrances; the eighth involved a staffing, i.e., nonselling, employee transferring to the
Lancôme counter.
The petitioned-for employees as well as the other selling employees work shifts during the same time periods,
use the same entrance, have the same clocking system,
and use the same break room. As noted above, there is
no prior experience required for any selling position. All
selling employees who are present at the start of the day
attend the morning rallies. All selling employees enjoy
the same benefits, are subject to the same employee
handbook, and have access to the same in-store dispute
resolution program. All selling employees are evaluated
based on the same criteria (their “sales scorecard,” customer service, and teamwork).27 And all selling employees are coached through My Products Activities, a program consisting of exercises designed to improve selling
techniques and product knowledge.
There is no bargaining history at the Saugus store. The
Employer and Petitioner have two collective-bargaining
agreements covering employees at six other stores. One
agreement covers selling, support, and alterations employees at a store in Boston, but does not cover that
store’s cosmetics and fragrances department. The Petitioner organized the Boston store sometime before 1970,
when it was a Jordan Marsh store, but the record contains
no further evidence as to how that unit came into existence. The second agreement covers employees at the
Employer’s stores in Braintree, Natick, Peabody, and
Belmont, Massachusetts, as well as one in Warwick,
Rhode Island. That unit apparently has existed for decades, but was organized under Filene’s, whose parent
company the Employer acquired through a stock acquisition in 2005, and there is also no indication how this unit
came into existence. This unit appears to include selling
and support employees at the five stores, but does not
cover cosmetics and fragrances employees at any of the
stores,28 with the exception of the Warwick cosmetics
and fragrances employees, who had been historically
excluded and voted to unionize and join the existing fivestore unit in 2005 (when the store was still a Filene’s
location). The Warwick cosmetics and fragrances employees are now covered by the five-store contract, although the contract sets forth a number of provisions applicable only to the Warwick cosmetics and fragrances
employees.
27
The precise evaluation forms differ from department to department, and each department has its own sales goals (which are factored
into the “sales scorecard”). Within the cosmetics and fragrances department, cosmetics beauty advisors and counter managers have their
own evaluation forms. The “scorecard” is less heavily weighted for
counter managers (55 percent) than for other employees (70–80 percent).
28
Unlike the other four stores, there apparently are no cosmetics and
fragrances employees at the Belmont store.
6
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
On March 24, 2011, the Petitioner filed a petition seeking a self-determination election to determine whether
Saugus employees wished to join the existing five-store
unit; the petition covered all full-time and regular parttime employees at the Saugus store. See Macy’s, Inc.,
Case 01-RC-022530 (2011) (not reported in Board volumes).29 The Employer, however, argued that adding the
Saugus employees to the existing five-store unit would
be inappropriate. The Regional Director agreed with the
Employer, and instead directed an election to determine
whether the Saugus employees wished to be represented
in a single-store unit. The Petitioner agreed to move
forward with the election, but lost.30
THE ACTING REGIONAL DIRECTOR’S
DECISION
Applying Specialty Healthcare, supra, the Acting Regional Director first found that the employees in the petitioned-for unit are readily identifiable as a group and that
they share a community of interest because the petitioned-for employees work in one of two distinct areas of
the store, they work in one of two job classifications
(beauty advisor and counter manager), and cosmetics
beauty advisors can substitute for one another. Further,
the Acting Regional Director found that the unit was not
a “fractured” unit because it tracks a departmental line
drawn by the Employer. The Acting Regional Director
also found that this departmental line was further reflected by differences between the petitioned-for and other
selling employees.
The Acting Regional Director then found that although
the petitioned-for employees share some common interests with other selling employees, the Employer had not
established that they share an overwhelming community
of interest because there are “meaningful differences”
between the petitioned-for employees and other selling
employees. The Acting Regional Director found that the
petitioned-for employees are paid differently, hired differently, trained differently, make heavier use of client
lists, constitute their own department, are not functionally integrated with other selling employees, are subject to
a different supervisory structure because they answer to
counter managers, have little contact or interchange with
other selling employees, and for the most part wear distinctive uniforms. The Acting Regional Director found
29
Although not part of the record in this case, we take administrative
notice of the Decision and Direction of Election in Case 01–RC–
022530, which fully explains the nature of the unit sought in that case
and the unit the Regional Director found appropriate.
30
The Petitioner’s willingness to proceed to an election in that case
does not suggest that it did not believe that a separate unit of cosmetics
and fragrances employees would also be an appropriate unit.
that these differences distinguished this case from Wheeling Island Gaming, 355 NLRB 637 (2010), cited by the
Employer. The Acting Regional Director also distinguished this case from a line of retail industry cases the
Employer contends are relevant, stating that those cases
predated Specialty Healthcare, applied a different standard from that in Specialty Healthcare, and that even before Specialty Healthcare the petitioned-for unit would
have been appropriate as it is a departmental unit. Finally, the Acting Regional Director stated that because any
relevant bargaining history was imprecise and nonbinding, he was not basing his decision on that factor.31
Position of the Parties and Amici
The Employer contends that the petitioned-for employees do not constitute an appropriate unit. Regarding
Specialty Healthcare, the Employer argues that the petitioned-for employees are not “readily identifiable as a
group” and do not share a community of interest. The
Employer further argues that even if the petitioned-for
employees are readily identifiable as a group and share a
community of interest, they share an overwhelming
community of interest with selling employees in other
sales departments because they are otherwise a “fractured” unit. The Employer acknowledges that there are
differences between the petitioned-for employees and
other selling employees, but the Employer asserts that,
under Wheeling Island Gaming, supra, these differences
are too minor to render the petitioned-for unit appropriate. Aside from Specialty Healthcare, the Employer contends that in the retail industry, a storewide unit is presumptively appropriate, and that although the Board has
deviated from this standard to allow units of selling employees, it has never “approved a unit which departs
from the storewide presumption as dramatically as the
unit sought here.” The Employer also suggests that by
deviating from the storewide presumption, the Acting
Regional Director essentially allowed the extent of organization to control his decision, in violation of Section
9(c)(5) of the National Labor Relations Act. Finally, for
the first time in its brief on review, the Employer argues
that the Board should overrule Specialty Healthcare, or
at least should not apply it to the retail industry, because
applying it here will allow “a proliferation of micro31
The Acting Regional Director also found that the facts of this case
are “indistinguishable” from those of Neiman Marcus Group, Inc. d/b/a
Bergdorf Goodman, Case 02–RC–076954 (May 4, 2012), a case that
involved a petitioned-for unit of employees who sold shoes. As the
Board granted review in that case on May 30, 2012, and the case remains pending before the Board, neither the Acting Regional Director’s
discussion of Bergdorf Goodman nor the Employer’s attempts to distinguish it play any role in our analysis and conclusions in this case.
7
MACY’S, INC.
units” based solely on the product sold by employees,
which will in turn lead to “competitive” bargaining
among these small units, potentially leading to “chaos
and disruption of business.” The Employer therefore
contends that the only appropriate unit would be a storewide unit, or else a unit of all selling employees.
The Petitioner argues that the Acting Regional Director’s decision should be affirmed because the parties
have treated cosmetics employees separately from other
selling employees at other unionized stores, because the
petitioned-for employees are readily identifiable as a
group and share a community of interest, and because the
petitioned-for employees share no “significant” community of interest with employees in other departments.
The Petitioner contends that because the petitioned-for
unit tracks an employer-created departmental line, finding it appropriate would not be out of step with preSpecialty Healthcare cases involving retail department
stores. Finally, the Petitioner states that decisions since
Specialty Healthcare “have followed the historic trend of
Board decisions finding less than a wall to wall unit appropriate.”
Amici curiae Chamber of Commerce et al. argue that
the Board should overrule Specialty Healthcare.32 In
particular, they assert that applying Specialty Healthcare
to this case will depart from Board precedent holding
that a storewide unit is presumptively appropriate in the
retail industry, and that applying Specialty Healthcare to
the retail industry will result in proliferation that will in
turn cause administrative burdens, allow “gerrymandering,” negatively impact employee skill development and
customer service, and create employee dissatisfaction
that will lead to work stoppages that could “cripple” retail establishments.
Amicus curiae NRF also joins the Employer in arguing
that Specialty Healthcare should be overruled and that
the Acting Regional Director’s decision is contrary to
retail industry precedent. NRF concedes that the petitioned-for unit is readily identifiable as a group within
the meaning of Specialty Healthcare, but asserts that the
overwhelming community of interest standard, as applied
32
All amici, as well as our dissenting colleague, contend that the
standard articulated in Specialty Healthcare (1) runs counter to Sec.
9(b)’s requirement that the Board determine the appropriate unit “in
each case”; (2) is at odds with Sec. 9(b)’s statement that unit determinations must “assure to employees the fullest freedom in exercising the
rights guaranteed” by the Act because it disregards the right of employees to refrain from organizing; and (3) is contrary to Sec. 9(c)(5)’s
requirement that “the extent to which the employees have organized
shall not be controlling.” Amici Chamber of Commerce et al. and NRF
also contend that Specialty Healthcare represents an abuse of discretion
because the standard articulated therein should have been adopted
through rulemaking instead of adjudication.
here, shows that Specialty Healthcare should not be applied to the retail industry because it contradicts the presumptive appropriateness of storewide units and will lead
to “destructive factionalization” of the retail workforce.
Amici curiae RILA-RLC similarly argue that Specialty
Healthcare should be reversed or limited to the nonacute
healthcare context. RILA-RLC also suggest that the petitioned-for unit is not readily identifiable as a group, and
expressly contend that the petitioned-for employees share
an overwhelming community of interest with other selling employees. Finally, RILA-RLC argue that the Acting Regional Director improperly disregarded retail industry precedent, and predict that approving units like
the petitioned-for unit will have a harmful effect on the
retail industry by decreasing employee flexibility, increasing tension among employees, and permitting
“harmful gerrymandering.”
ANALYSIS
The Board’s decision in Specialty Healthcare sets
forth the principles that apply in cases like this one, in
which a party contends that the smallest appropriate bargaining unit must include additional employees beyond
those in the petitioned-for unit. As explained in that decision, when a union seeks to represent a unit of employees, “who are readily identifiable as a group (based on
job classifications, departments, functions, work locations, skills, or similar factors), and the Board finds that
the employees in the group share a community of interest
after considering the traditional criteria, the Board will
find the petitioned-for unit to be an appropriate unit ….”
357 NLRB No. 83, supra, slip op. at 12. If the petitioned-for unit satisfies that standard, the burden is on the
proponent of a larger unit to demonstrate that the additional employees it seeks to include share an “overwhelming” community of interest with the petitioned-for
employees, such that there “is no legitimate basis upon
which to exclude certain employees from” the larger unit
because the traditional community of interest factors
“overlap almost completely.” Id., slip op. at 11–13, fn.
28 (quoting Blue Man Vegas, LLC v. NLRB, 529 F.3d
417, 422 (D.C. Cir. 2008)). Applying this framework to
the particular facts of this case,33 we find that the petitioned-for unit is an appropriate unit.
33
This is in contrast to our dissenting colleague, who states that he
“would refrain from applying Specialty Healthcare in this or any other
case,” although he acknowledges that (1) Specialty Healthcare was
enforced by the U.S. Court of Appeals for the Sixth Circuit, see Kindred Nursing Centers East, supra, and (2) the D.C. Circuit has also
upheld the “overwhelming community of interest” standard. See Blue
Man Vegas, supra. In its decision, the Sixth Circuit considered arguments, similar to those presented by our dissenting colleague, that the
8
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
A. Cosmetics and Fragrances Employees are a Readily
Identifiable Group and Share a
Community of Interest
The cosmetics and fragrances employees are “readily
identifiable as a group.” They are all the employees in
the three nonsupervisory classifications in the cosmetics
and fragrances department—beauty advisors, counter
managers, and on-call employees—who perform the
function of selling cosmetics and fragrances at the Saugus store. Thus, the petitioned-for employees are readily
identifiable based on classifications and function. Moreover, the petitioned-for unit is coextensive with a departmental line that the Employer has drawn. Cf.
Northrop Grumman Shipbuilding, Inc., 357 NLRB No.
163, slip op. at 3 (2011) (finding petitioned-for employees “readily identifiable as a group” because they belonged to the same department and performed a unique
function), enf. denied on other grounds sub nom. NLRB
v. Enterprise Leasing Co. Southeast, LLC, 722 F.3d 609
(4th Cir. 2013), petition for writ of cert. filed, No. 13-671
(2013). Significantly, this is a primary selling department, not a sub-department within a primary selling department.
The petitioned-for employees also share a community
of interest. In determining whether employees in a proposed unit share a community of interest, the Board examines:
whether the employees are organized into a separate
department; have distinct skills and training; have distinct job functions and perform distinct work, including
inquiry into the amount and type of job overlap between classification; are functionally integrated with
the Employer’s other employees; have frequent contact
with other employees; interchange with other employees; have distinct terms and conditions of employment;
and are separately supervised.
Specialty Healthcare, supra, slip op. at 9 (quoting United
Operations, 338 NLRB 123, 123 (2002)).
Here, all of the petitioned-for employees work in the
same selling department and perform their functions in
two connected, defined work areas. They have common
supervision, as they are all directly supervised by Sales
Manager Kelly Quince. Their work also has a shared
purpose and functional integration, as they all sell cosmetics and fragrances products to customers. This functional integration is exemplified by the on-call employees, who sell both cosmetics and fragrances products
Specialty Healthcare test constituted a material change in the law, and
concluded that “this is just not so.” 727 F.3d at 561.
throughout the department, depending on staffing needs.
Further, the petitioned-for employees are the only employees who sell cosmetics and fragrances. The only
regular contact the petitioned-for employees have with
other employees appears to be limited to the brief morning “rallies.” What other daily contact they have is incidental, as they are not expected to work in other departments, apart from periodic inventory assistance. As the
Employer does not “like to make a habit” of merchandise
from one department being rung up in another, it does
not appear that the petitioned-for employees come into
frequent contact with the products sold in other departments. Additionally, there are only nine examples of
permanent transfers into, or out of, the cosmetics and
fragrances department over the last 2 years. And all of
the petitioned-for employees are paid on a base-pluscommission basis, receive the same benefits, and are
subject to the same Employer policies.
The Employer and amici RILA-RLC contend that the
petitioned-for employees are not readily identifiable as a
group and do not share a community of interest, but the
Employer and amici offer no support for this argument
aside from pointing to the fact that the cosmetics and
fragrances department is split between two separate
floors and that there are certain differences among the
petitioned-for employees. It is true that the cosmetics
and fragrances department is split between two floors,
but the two areas that house the department are nevertheless connected by a bank of escalators. More importantly, a petitioned-for unit is not rendered inappropriate
simply because the petitioned-for employees work on
different floors of the same facility. See D.V. Displays
Corp., 134 NLRB 568, 569 (1961).34
Although there are some differences among the petitioned-for employees, we find, in contrast to our dissenting colleague, that they are insignificant compared to the
strong evidence of community of interest that they share.
On-call employees earn a slightly smaller commission
than beauty advisors and counter managers, but minor
differences in compensation among petitioned-for employees do not render a petitioned-for unit inappropriate.
Cf. Hotel Service Group, 328 NLRB 116 (1999) (petitioned-for unit did not possess separate community of
interest from other employees despite difference in hourly pay rates, commissions, gratuities). Beyond this insignificant difference, cosmetics beauty advisors sell one
vendor’s products and give makeovers whereas fragrances beauty advisors sell all vendors’ products and do not
give makeovers; on-call employees do not attend training
34
The fact that the petitioned-for employees also work at different
counters is therefore also analytically insignificant.
9
MACY’S, INC.
events that other beauty advisors attend; most cosmetics
beauty advisors wear distinct uniforms; and vendor representatives are consulted in hiring cosmetics beauty
advisors, but not fragrances or on-call employees. In
most other respects, however, the interests of the petitioned-for employees are identical.35 See DTG Operations, Inc., 357 NLRB No. 175, slip op. at 5 (2011); see
also Guide Dogs for the Blind, Inc., 359 NLRB No. 151,
slip op. at 5 (2013) (petitioned-for employees readily
identifiable as a group and shared a community of interest where unit consisted of all employees in two classifications of same administrative department).36
B. Other Employees do not Share an Overwhelming
Community of Interest with Cosmetics
and Fragrances Employees
In Specialty Healthcare, the Board held that two
groups share an overwhelming community of interest
when their community-of-interest factors “overlap almost completely.” Specialty Healthcare, supra, slip op.
at 11. The Employer has failed to establish that the petitioned-for employees and the nonselling employees share
an overwhelming community of interest; in fact, there is
virtually no record evidence concerning the nonselling
employees. The Employer alternatively argues that the
smallest appropriate unit must include all selling employees. Accordingly, we consider next whether the
Employer has met its burden to establish that the petitioned-for employees share an overwhelming community
of interest with the other selling employees. Contrary to
our dissenting colleague, we find that the Employer has
not done so.
It is readily apparent that there are clear distinctions
between the petitioned-for employees and other selling
employees. First and foremost, there is no dispute that
the petitioned-for employees work in a separate department from all other selling employees and that the peti35
Unlike our dissenting colleague, we do not regard the fact that the
two selling areas are adjacent to different departments as a “substantial”
dissimilarity in working conditions among the petitioned-for employees. They share common supervision and function and constitute all of
the selling employees within the Employer’s separately-defined department.
36
Amici RILA-RLC argue, and our dissenting colleague appears to
agree, that the fact that different petitioned-for employees work under
different counter managers is a “significant” difference among the
petitioned-for employees. As the counter managers are included in the
petitioned-for unit, that argument is meritless. Further, it is undisputed
that counter managers are not supervisors, and it is also undisputed that
all petitioned-for employees report directly to Sales Manager Quince.
Thus, the counter managers provide no evidence of separate supervision among the petitioned-for employees. As stated above, the shared
community-of-interest factors outweigh any other distinction among
the petitioned-for employees that could be based on the counter managers.
tioned-for unit consists of all nonsupervisory employees
in that department. The fact that the petitioned-for unit
tracks a dividing line drawn by the Employer is particularly significant. See Fraser Engineering Co., 359
NLRB No. 80, slip op. at 1 (2013); Specialty Healthcare,
supra, slip op. at 9 fn. 19 (quoting International Paper
Co., 96 NLRB 295, 298 fn. 7 (1951)). In the context of
this case, it is also significant that the cosmetics and fragrances department is structured differently than other
primary sales departments, as there is no evidence that
other departments have the equivalent of counter managers.37 Likewise, there is no evidence that other departments have the equivalent of on-call employees. Second,
there is no dispute that the petitioned-for employees are
separately supervised by Sales Manager Quince. Although the petitioned-for employees and the other selling
employees are commonly supervised at the second (and
highest) level by Store Manager McKay, such common
upper-level supervision can be—and in this case is—
outweighed by other factors favoring a separate unit.
See, e.g., Grace Industries, 358 NLRB No. 62, slip op. at
6 (2012).38 Third, there is no dispute that the petitionedfor employees work in their own distinct selling areas.
Cf. DTG Operations, supra, slip op. at 5 (finding no
overwhelming community of interest where, inter alia,
petitioned-for employees worked behind sales counters
in rental buildings “separate from virtually all of the other hourly employees”).39 Taken together, the fact that the
petitioned-for employees work in a separate department,
report to a different supervisor, and work in separate
physical spaces supports our finding that the petitionedfor employees do not share an overwhelming community
of interest with other selling employees. Cf. Guide Dogs
for the Blind, supra, slip op. at 6 (finding factors did not
“overlap almost completely” where employees sought to
be added to petitioned-for unit worked in separate administrative departments, reported to different managerial
chains, and worked in separate physical spaces).
Further, the record before us does not show any significant contact between the petitioned-for employees and
37
To be clear, and in contrast to the Acting Regional Director, we do
not find that counter managers constitute a separate level of supervision.
38
Although the dissent states that Store Manager McKay “exercises
control over and oversees all salespeople across the store, both directly…and indirectly,” aside from her role in leading the morning “rallies,” the record is almost entirely silent as to McKay’s day-to-day
interactions with cosmetics and fragrances or any other selling employees.
39
The fact that the cosmetics and fragrances selling areas are adjacent to other selling areas does not, in our view, reduce the significance
of the fact that the petitioned-for employees have their own distinct
selling areas.
10
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
other selling employees. The Employer claims that there
is “regular” contact because the petitioned-for employees
recruit customers in other sales departments, work in
close proximity to other departments, and all store employees attend daily morning rallies. The testimony regarding customer recruitment, however, is exceptionally
vague and consists of a single statement, never elaborated upon, that “cosmetics associates go into the shoe department to recruit.”40 Further, there is no indication
how frequently petitioned-for employees engage in such
recruitment, nor is there any indication that this leads to
anything more than incidental contact with other selling
employees. Likewise, notwithstanding the possibility of
some informal contact with selling employees in neighboring departments, there is no record evidence as to the
frequency or extent of any such interactions. As for the
15-minute rallies at the start of the day, there is no indication of any employee interaction beyond simply being
in attendance, and the rallies do not involve the employees performing their main selling function. Thus, the
record simply does not support a finding of regular, significant contact between the petitioned-for employees
and other selling employees.
Likewise, the record does not show significant interchange between the petitioned-for employees and other
selling employees. The Employer asserts that there is
significant interchange based on nine permanent transfers
into and out of the cosmetics and fragrances department
over the last 2 years, and also claims that the petitionedfor employees assist other departments. We do not
agree. Nine permanent transfers over a 2-year period do
not establish significant interchange between petitionedfor and nonpetitioned-for employees, particularly in this
relatively large unit of 41 employees, as all but one of
those transfers was into the petitioned for unit, and the
sole transfer out was to a supervisory position. Further,
evidence of permanent interchange is a less significant
indicator of whether a community of interest exists than
is evidence of temporary interchange. See, e.g., Bashas’,
Inc., 337 NLRB 710, 711 fn. 7 (2002). As for temporary
interchange, the record is clear that cosmetics and fragrances employees are never asked to sell in other departments, nor are other selling employees asked to sell
in the cosmetics and fragrances department. The petitioned-for employees do assist other departments with
inventory, but there is no indication that this involves a
significant portion of the petitioned-for employees’ time,
and in any event inventory work is incidental to the peti40
As noted above, this statement also appears in the context of a discussion about how fragrance vendor-employed sprayers recruit customers in other departments.
tioned-for employees’ selling function. Further, there is
no evidence that other selling employees assist the cosmetics and fragrances department with inventory. Although there was, as the dissent points out, testimony that
other selling employees might be expected to assist customers at a temporarily unattended cosmetics or fragrances counter, there was no indication that this occurs
more than sporadically.41 Accordingly, the available
evidence shows that any temporary interchange is infrequent, limited, and one-way. Such “interchange” does
not require including the other selling employees in the
petitioned-for unit. See DTG Operations, supra, slip op.
at 7.
Regarding functional integration, the Employer and
our dissenting colleague are correct that in Wheeling Island Gaming, the Board found significant functional integration between poker dealers and other table games
dealers because they were “integral elements of the Employer’s gaming operation,” as reflected in common second-level supervision. 355 NLRB at 642. But the significance of functional integration is reduced where, as
here, there is limited interaction between the petitionedfor employees and those that the employer seeks to add.
The Board has emphasized this point in two recent cases
applying Specialty Healthcare.42 In DTG Operations,
the Board stated that the employer’s facility was functionally integrated as “all employees work[ed] toward
renting vehicles to customers,” but that because each
classification had a separate role in the process, the classifications had only limited interaction with each other,
thus reducing the significance of the functional integration. DTG Operations, supra, slip op. at 7. Similarly, in
Guide Dogs for the Blind, the Board specified that functional integration does not establish an overwhelming
community of interest where each classification has a
separate role in the process and only limited interaction
and interchange with each other. See Guide Dogs for the
Blind, supra, slip op. at 7–8. Accordingly, even if the
petitioned-for employees are functionally integrated with
the other selling employees, the petitioned-for employees
have a separate role in the process, as they sell products
no other employees sell, and they have limited interaction and interchange with other selling employees. Thus,
in this case, the Employer “has failed to demonstrate”
41
Similarly, the evidence regarding cosmetics and fragrances products being rung up in other departments, and other products being rung
up in cosmetics and fragrances, is at best inconclusive. McKay testified that this happens from “time to time,” but two beauty advisors
claimed that they were not aware of cosmetics ever being rung up in
other departments.
42
Wheeling Island Gaming predated Specialty Healthcare, and did
not apply the framework of that decision.
11
MACY’S, INC.
that the petitioned-for employees and all other selling
employees “are so functionally integrated as to blur” the
differences between the two groups. Id. at 8.
Nor does the fact that the petitioned-for employees
perform tasks similar to those performed by other selling
employees—i.e., selling merchandise—establish an
overwhelming community of interest. In Guide Dogs for
the Blind, the Board observed that certain petitioned-for
employees provided physical care to dogs in a manner
that resembled dog care provided by excluded kennel
employees, but the Board found that the similarity of
function was offset by the fact that these two groups of
employees worked in different departments under different managers, dealt with different dog populations, and
had little formal contact or interchange. See id. at 6. The
Board also found that other petitioned-for employees
performed training duties similar to those performed by
excluded field service managers, but found that this functional similarity was also offset because the two groups
of employees worked toward distinct goals in disparate
locations, and worked in distinct departments under different managers. See id. Here, too, we find that although the petitioned-for employees and the other selling
employees perform similar, related duties, this overlap is
offset by the fact that the petitioned-for employees work
in different departments, report to different immediate
supervisors, have their own distinct work areas, and have
little formal contact or interchange with the other selling
employees.
The factors we have discussed to this point demonstrate that, contrary to the Employer and amici, the petitioned-for unit is not a “fractured” unit. A unit is “fractured” when it is an “arbitrary segment” of what would
be an appropriate unit, or is a combination of employees
for which there is “no rational basis.” Specialty
Healthcare, supra, slip op. at 13. In Odwalla, Inc., 357
NLRB No. 132, slip op. at 4–6 (2011), the Board applied
Specialty Healthcare and found the petitioned-for unit
was fractured because it did not track any lines drawn by
the employer, such as classification, departmental, or
functional lines, and also was not drawn according to any
other community of interest factor. Here, by contrast, the
petitioned-for unit tracks a departmental line drawn by
the Employer itself. See, e.g., Fraser Engineering, supra, slip op. at 8. Similarly, the petitioned-for unit contains all beauty advisors and counter managers, rather
than a subset of these classifications. Cf. Specialty
Healthcare, supra, slip op. at 13 (unit might be fractured
if it included only a select group of a given classification,
such as CNAs who work on the first floor). The Employer and amici argue that the petitioned-for unit is fractured because it is smaller than the “presumptively ap-
propriate” storewide unit; we address this alleged presumption below, but for now it is sufficient to reiterate
that a unit is not fractured simply because a larger unit
might also be appropriate, or even more appropriate. See
id.
To be sure, there are—as the dissent emphasizes—
similarities between the petitioned-for employees and
other selling employees. The petitioned-for employees
and all other selling employees work shifts during the
same store hours, are subject to the same handbook, are
evaluated based on the same criteria, are subject to the
same dispute-resolution procedure, receive the same benefits, use the same entrance and break room, attend brief
morning rallies (although some are departmental), and
use the same clocking system. It is also true that no prior
experience is required for any selling position. But the
fact that two groups share some community of interest
factors does not, by itself, render a separate unit inappropriate. Cf. Specialty Healthcare, supra, slip op. at 10
(once Board has determined petitioned-for employees
share a community of interest, “it cannot be that the mere
fact that they also share a community of interest with
additional employees renders the smaller unit inappropriate”). Given the distinctions we have noted above, we do
not find that these similarities establish an “almost
complet[e]” overlap, and thus they do not establish an
overwhelming community of interest. Id. at 11.
We agree with the Employer that several of the “meaningful differences” identified by the Acting Regional
Director are not fully supported by the record, insofar as
they do not distinguish all petitioned-for employees from
all other selling employees. In this regard: (1) vendor
representatives play a role in hiring some specialist selling employees, just as they play a role in hiring (most,
but not all) cosmetics beauty advisors; (2) vendor representatives provide training to some (but not all) other
selling employees (including specialist selling employees), just as they provide training to cosmetics beauty
advisors, and all such training involves selling technique
and product knowledge; (3) some (but not most) of the
other sales departments and certain specialist selling employees are paid a base wage plus commission, as are all
of the petitioned-for employees; (4) some other selling
employees maintain client lists, just as most of the petitioned-for employees, and the record does not support a
finding that petitioned-for employees’ use of these lists
differs from those kept by other selling employees;43 and
43
That said, as described above, it appears that the cosmetics beauty
advisors make heavier use of these lists than do other selling employees, insofar as they use them not just to inform clients of special events,
but also to presell products, offer them free gifts, and book makeover
appointments.
12
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
(5) some (but not necessarily most) of the petitioned-for
employees are subject to the same dress code as the other
selling employees.44
These circumstances do not, however, assist the argument that the selling employees share an overwhelming
community of interest with the cosmetics employees. In
this regard, we emphasize that the Employer does not
argue that some, but not all, of the other selling employees share an overwhelming community of interest with
the cosmetics and fragrances employees; rather, the Employer argues that the smallest appropriate unit includes
all selling employees—i.e., that all selling employees
share an overwhelming community of interest with all of
the petitioned-for employees. See DTG Operations, supra, slip op. at 5. The factors just enumerated, however,
show only that some petitioned-for employees share similarities with some other selling employees. Thus, it is
not the case that all selling employees have vendor input
in hiring, or receive training from vendor representatives.
Similarly, although some employees are, like the petitioned-for employees, paid on a base-plus-commission
basis, it is undisputed that other selling employees are
compensated by other methods.45 Likewise, not all other
selling employees maintain client lists. And although
some petitioned-for employees are subject to the same
dress code as all other selling employees, it remains the
case that many petitioned-for employees do wear distinctive uniforms. In sum, the mere fact that all petitionedfor employees share certain community of interest factors
with some (but not all) other selling employees, or that
some (but not all) petitioned-for employees share similarities with some (but not all) other selling employees,
does not demonstrate the “almost complet[e]” overlap of
factors required to establish an overwhelming community of interest between all the petitioned-for employees
and all the other selling employees.
Specialty
Healthcare, supra, slip op. at 11.46 In any event, even if
we were to find that all of the foregoing considerations
do support the Employer’s argument, we would nevertheless find that they are outweighed by the separate department, the structure of the department that includes
counter managers, separate supervision, separate work
areas, and lack of significant contact and meaningful
interchange. These considerations alone clearly show
that the community of interest factors do not “overlap
almost completely,” and therefore the Employer has not
established that the petitioned-for employees and other
selling employees share an overwhelming community of
interest. Id.
Finally, Wheeling Island Gaming, supra, does not warrant a different result.47 In that case, the majority found
that a unit limited to poker dealers was inappropriate
because the poker dealers were not sufficiently distinct
from other table games dealers. See id. at 637. More
specifically, the Wheeling Island Gaming Board found
that although poker dealers and other table games dealers
had separate immediate supervision, an absence of daily
interchange, and little permanent interchange, these distinctions were outweighed by other factors showing the
two groups shared a community of interest. See id. at
641–642. Wheeling Island Gaming is relevant here inasmuch as the Specialty Healthcare Board adopted, as an
“integral part of [its] analysis,” Specialty Healthcare,
supra, slip op. at 13 fn. 32, several well-established legal
principles articulated in Wheeling Island Gaming: (1)
“the Board looks first to the unit sought by the petitioner,
and if it is an appropriate unit, the Board’s inquiry ends;”
(2) “[t]he issue…is not whether there are too few or too
many employees in the unit;” (3) the Board “never addresses, solely and in isolation, the question whether the
employees in the unit sought have interests in common
with one another” but also determines “whether the interests of the group sought are sufficiently distinct from
those of other employees;” and (4) a unit might be frac-
44
The Acting Regional Director also found that the petitioned-for
employees differ from other selling employees because counter managers provide an extra level of supervision. As the counter managers are
not supervisors, but are instead part of the petitioned-for unit, the record does not support a finding that they provide an extra level of supervision. But as we have explained above, the presence of counter managers in the cosmetics and fragrances department is by itself a factor
that distinguishes the petitioned-for employees from other selling employees, even if the counter managers are not supervisors.
45
Even if all employees were paid in the same manner, similarity of
wages does not render a separate petitioned-for unit inappropriate. See
id. at 7.
46
This is especially so where, as here, the record contains no breakdown of the number of other selling employees who, for instance, are
compensated on a base-plus-commission basis. That is, because we do
not know how many other selling employees are paid base-pluscommission, or are subject to vendor input in hiring, or maintain client
lists, we cannot draw firm conclusions as to whether these circumstances establish the requisite overwhelming community of interest. This
state of affairs must be construed against the Employer, as the party
arguing that an overwhelming community of interest exists. See id. at
12–13.
47
The Employer has also cited two unpublished, and therefore
nonprecedential, Regional decisions that the Employer claims show
that the petitioned-for employees cannot be separate from other selling
employees. Both of these cases are clearly factually distinguishable
from this case, as they indicate evidence of interchange and/or common
supervision of the cosmeticians and other selling employees, and both
cases involved a different issue (whether cosmeticians should be excluded from a petitioned-for unit) than the current case (whether cosmetics and fragrances employees constitute an appropriate unit. See
Jordan Marsh Co., Case 01–RC–019262 (1989) (not reported in Board
volumes); Jordan Marsh Co., Case 01–RC–015563 (1978) (not reported in Board volumes).
13
MACY’S, INC.
tured if it is limited to the members of a classification
working on a particular floor or shift. Id. at 12, fn. 28;
11; 8; 13.
These legal principles, articulated in Wheeling Island
Gaming and reaffirmed in Specialty Healthcare, are consistent with our decision today. Moreover, the application of those principles to the particular facts of Wheeling
Island Gaming is also consistent with our conclusion in
this case. The Employer and our dissenting colleague
contend that the distinctions between the petitioned-for
employees and the other selling employees in this case
are no greater than those between the poker dealers and
other table games dealers in Wheeling Island Gaming.
We do not agree. Wheeling Island Gaming, decided before Specialty Healthcare, did not apply the Specialty
Healthcare framework, and Specialty Healthcare gave
no indication how the overwhelming community of interest framework might have been applied in Wheeling
Island Gaming. More important, Wheeling Island Gaming is distinguishable on its facts from this case – unsurprisingly, perhaps, given the differences between a gaming operation and a retail store.48
In Wheeling Island Gaming, the only significant distinctions between the poker dealers and the other table
games dealers were separate immediate supervision, separate work locations, and an absence of significant interchange. See id at 640, 642. Here, however, there are
two further important distinctions. First, the petitionedfor unit in this case is not simply separately supervised,
but also conforms to a separate, Employer-drawn department. By contrast, there is no indication that the
poker dealers in Wheeling Island Gaming constituted a
separate administrative department. Although the poker
dealers were separately supervised, there was accordingly a much less defined demarcation between the poker
dealers and other dealers than is the case between the
petitioned-for employees and the other selling employees
here. Second, the cosmetics and fragrances department
is itself structured differently from other departments, in
that there is no evidence that other selling departments
have the equivalent of a counter manager. Accordingly,
Wheeling Island Gaming does not require finding that an
overwhelming community of interest exists in this case.49
For all the foregoing reasons, we find that the Employer has failed to establish that the petitioned-for employ48
Unlike the Acting Regional Director, we do not distinguish Wheeling Island Gaming merely on the ground that it predated Specialty
Healthcare. See Fraser Engineering, supra, slip op. at 2 fn. 4.
49
The Acting Regional Director distinguished Wheeling Island
Gaming on several other factual grounds, but not all of his distinctions
(method of compensation, vendor input in hiring and training, different
uniforms) are, as discussed above, fully supported by the record.
ees share an overwhelming community of interest with
the other selling employees. Due to the fact that the petitioned-for employees work in a separate department under separate supervision, have only limited interchange
and contact with other selling employees, have distinct
work areas, and work in a differently-structured department, it simply cannot be said that their community of
interest factors “overlap almost completely” with those
of the other selling employees.50
C. Board Precedent Concerning the Retail Industry
does not Require a Unit of all Employees,
or of all Selling Employees
Our inquiry, however, does not end here. In Specialty
Healthcare, supra, slip op at 13 fn. 29, the Board noted
that there are “various presumptions and special industry
and occupational rules,” and stated that its holding “is
not intended to disturb any rules applicable only in specific industries.” The Employer contends—and amici, as
well as our dissenting colleague, argue at length—that
there is a line of precedent setting forth unit determination considerations specific to the retail industry. More
specifically, the Employer, amici, and our dissenting
colleague argue that in the retail industry, a storewide
unit is presumptively appropriate and that finding the
petitioned-for unit appropriate would be an unprecedented departure from the Board’s approach to this industry.
We agree that there is a line of cases dealing with unit
determinations in retail department stores. Under Specialty Healthcare, this line of cases remains relevant.
That said, we find that the retail industry precedent does
not mandate finding the petitioned-for unit inappropriate.
Instead, the “presumption” the Employer, amici, and our
dissenting colleague refer to has evolved into a standard
for retail unit determinations that, in this case, complements the Specialty Healthcare analysis set forth above.
To begin, the Board has referred to a “presumptively
appropriate” storewide unit in two retail industry con50
In addition to the foregoing, the Petitioner argues that bargaining
history favors finding the petitioned-for unit appropriate. The relevant
bargaining history does not involve the employees at the Saugus store
and does not necessarily implicate the Employer as it is currently constituted, so it is not binding. Even so, this bargaining history may be
regarded as evidence of area practice and the history of bargaining in
the industry, which are relevant considerations. See Grace Industries,
supra, slip op. at 7. As noted above, the cosmetics employees are excluded from agreements covering other selling employees at the Employer’s Boston, Natick, Belmont, Braintree, and Peabody stores, and
the cosmetics and fragrances employees at the Warwick store were
organized separately from the other employees at that location. As the
evidence shows that cosmetics and fragrances employees have been
treated as a distinct group at other area retail department stores, we find
that the bargaining history provides limited additional support for the
Petitioner’s position. We would find the petitioned-for unit appropriate
without that evidence.
14
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
texts. The first involves situations where a petitioner
seeks a unit consisting of all employees at one store in a
retail chain and another party argues that the unit must
include other stores. In such cases, the petitioned-for
storewide unit is presumptively appropriate, although
this presumption can be rebutted by a showing that the
day-to-day interests of the employees in a particular store
have merged with those of employees of other stores.
Haag Drug, 169 NLRB 877 (1968); Sav-On Drugs, 138
NLRB 1032 (1962).51 This line of cases, which references a “presumptively appropriate” storewide unit, does
not apply here, however, because the Petitioner is not
requesting a storewide unit, nor is there any contention
that employees at other stores must be included in the
petitioned-for unit.52
There are also cases in which the Board has referred to
a “presumptively appropriate” storewide unit when a
petitioner seeks a unit limited to only certain employees
at a retail department store. See Sears, Roebuck & Co.,
184 NLRB 343, 346 (1970); G. Fox & Co., 155 NLRB
1080, 1081 (1965); Bamberger’s Paramus, supra at 751;
51
Of course, the single-facility presumption is applied outside the retail store context. See, e.g., Rental Uniform Service, 330 NLRB 334,
335 (1999).
52
The dissent’s reliance on Haag Drug and related cases is misplaced. None of those cases addressed whether a subset of employees
at a single store could be an appropriate unit. The issue, rather, was
whether a single store, apart from other stores, was an appropriate unit.
See NLRB v. J. W. Mays, Inc., 675 F.2d 442 (2d Cir. 1982), enfg. 253
NLRB 717 (1980); Gimbels Midwest, Inc., 226 NLRB 891 (1976);
Davison-Paxon Co., 185 NLRB 21 (1970); Hochschild, Kohn & Co.,
184 NLRB 636 (1970); Allied Stores of Ohio, Inc., 175 NLRB 966
(1969); The M. O’Neil Co., 175 NLRB 514 (1969). Although the
dissent properly acknowledges that Haag Drug and related cases involve an issue not present in this case, he nevertheless argues that these
cases “remain relevant in the instant case because they recognize that
employees in a storewide unit are likely to share a community of interests that renders such a unit presumptively appropriate.” As we explain
below, under Board law, the rule that a certain unit is presumptively
appropriate in a single store does not entail that a different unit is not
also appropriate. Tellingly, none of the cases involving a petitioned-for
unit consisting of a subset of employees at a single department store
discussed below—or cited by the dissent—rely on the Haag Drug
passage that the dissent quotes. For example, as further explained
below, Charrette Drafting Supplies, 275 NLRB 1294 (1985), cited by
the dissent, like Haag Drug, involved the issue of whether employees
at a second location had to be included in the single-location petitionedfor unit. Although several cases we discuss below cite Sav-On Drugs,
they do so either in the context of a party arguing that a single-location
unit is inappropriate, see J. W. Mays, Inc., 147 NLRB 968, 970 fn. 3
(1964), or for reasons unrelated to any retail industry presumptions.
See John’s Bargain Stores Corp., 160 NLRB 1519, 1522 fn. 6 (1966)
(Board considers “all relevant factors” for unit determinations “in a
variety of industries”); Bamberger’s Paramus, 151 NLRB 748, 751 fn.
9 (1965) (labor organization not compelled to seek representation in
most comprehensive grouping of employees unless that is only appropriate unit); Montgomery Ward & Co., Inc., 150 NLRB 598, 601 fn. 9
(1964) (same).
Montgomery Ward, supra at 600. Even in these cases,
however, the Board has emphasized that a storewide unit
is not the only appropriate unit.53 And subsequent to all
these cases, the Board has made clear that if there ever
was a presumption that “only a unit of all employees” is
appropriate, it is “no longer applicable to department
stores.” Saks Fifth Avenue, 247 NLRB 1047, 1051
(1980). Indeed, the Board has not applied a presumption
of appropriateness to storewide units in department
stores since Saks Fifth Avenue.54
Even during the period when the Board expressed a
policy or preference favoring storewide units in retail
department stores, it nevertheless always permitted lessthan-storewide units. And over time, the overall trend
has been an unmistakable relaxation of a presumption in
favor of a storewide unit. In older cases, the Board stated that in the absence of storewide bargaining history or
a labor organization seeking to represent employees on a
storewide basis, a less-than-storewide unit was appropriate if the employees shared “a mutuality of employment
interests not shared by other department store employees,
which existed by reason of their singularly different work
and training skills” or if the employees constituted a
“homogenous group” possessing “sufficiently distinctive
skills.” May Department Stores, supra at 1008. This
focus on skills was soon softened: In I. Magnin, supra at
643, the Board stated that a smaller unit was appropriate
“when comprised of craft or professional employees or
where departments composed of employees having a
mutuality of interests not shared by other store employees are involved” (emphasis added). In other words, a
53
For example, in Montgomery Ward, supra at 600, the Board observed that because Sec. 9(b) of the Act empowers the Board to decide
the appropriate unit in each case and directs it to make unit determinations that will “assure to employees the fullest freedom” in exercising
their rights, the Act accordingly “does not compel labor organizations
to seek representation in the most comprehensive grouping of employees”—that is, just because a storewide unit might be appropriate does
not mean that other, smaller units might not also be appropriate. Further, the precedent these cases cite for the “presumptive appropriateness” of a storewide unit does not use that phrase, but instead refers to
the storewide unit as “basically appropriate” or the “optimum unit.”
See, e.g., Stern’s, Paramus, 150 NLRB 799, 803 (1965); Polk Brothers,
Inc., 128 NLRB 330, 331 (1960); I. Magnin & Co., 119 NLRB 642,
643 (1957); May Department Stores Co., 97 NLRB 1007, 1008 (1952);
see also Sears, Roebuck & Co., 227 NLRB 1403, 1404 (1977); Sears,
Roebuck & Co., 178 NLRB 577, 577 (1969).
54
In one case, the Board adopted an administrative law judge’s decision that mentioned the presumptive appropriateness of storewide units
in a case involving meatcutters in a grocery store context. Wal-Mart
Stores, Inc., 348 NLRB 274, 287 (2006), enfd. 519 F.3d 490 (D.C. Cir.
2008). Even if the dissent is correct in inferring that the Board there
“reaffirmed the presumptive appropriateness of storewide units in the
retail industry”—a view we do not share—the case in no way suggests
that a less-than-storewide unit is presumptively inappropriate.
15
MACY’S, INC.
smaller unit, not limited to a craft or professional unit,
was appropriate so long as the interests of the employees
in that unit were “sufficiently different” from those of
other employees. Id. The Board employed similar formulations for several years,55 but also emphasized that in
determining whether a less-than-storewide petitioned-for
unit was appropriate, the issue was whether such a unit
“is appropriate in the circumstances of this case and not
whether another unit consisting of all employees…would
also be appropriate, more appropriate, or most appropriate.” Bamberger’s Paramus, supra at 751 (citing Montgomery Ward, supra at 601).
Then, in John’s Bargain Stores, supra at 1522, the
Board clarified that it had “reexamined and revised” the
“previous policy favoring” storewide units in the retail
industry, and the “new policy,” articulated in cases such
as Stern’s, Paramus, supra, “calls for a careful evaluation
of all relevant factors in each case.” Shortly thereafter,
in Sears, Roebuck & Co., 160 NLRB 1435, 1436 (1966),
the Board further commented that cases such as Lord &
Taylor, supra:
have applied the long-established principles that the
appropriate unit for self-organization among the employees of a given employer is generally based upon a
community of interest…as manifested, inter alia, by
their common experiences, duties, organization, supervision, and conditions of employment.
In other words, by 1966 the Board had essentially stated that
less-than-storewide units were appropriate so long as such
units were based on the usual community-of-interest considerations and sufficiently distinct from other employees.
The Board went still further in Sears, Roebuck and Co., 261
NLRB 245, 246 (1982), stating, when confronted with a
petitioned-for unit limited to automotive center employees
at a retail department store, that “the sole inquiry here is
whether” the petitioned-for unit “is appropriate in the circumstances of this case.” After reiterating that “it is irrelevant whether another unit would also be appropriate, more
appropriate, or most appropriate,” the Board went on to find
that the petitioned-for unit was appropriate because the petitioned-for employees had limited contact with other employees and constituted a “functionally integrated group
working in a recognized product line under separate supervision who share a community of interest that sufficiently
55
See, e.g., J. W. Mays, Inc., 147 NLRB at 972 (unit must “comprise
a homogenous group which can justifiably be established as a separate
appropriate unit”); Lord & Taylor, 150 NLRB 812, 816 (1965) (unit
must be “sufficiently distinct, homogenous, and identifiable”); Stern’s,
Paramus, supra at 802 (employees in less-than-storewide units must be
“sufficiently different from each other as to warrant establishing separate units”).
differentiates them from other store employees and functions.” Id. at 246-247. Aside from a few cases dealing with
separate units of warehouse employees, which are governed
by a standard not applicable here,56 this is the Board’s latest
word on the standard for finding a less-than-storewide unit
appropriate in the retail department store setting.57
Considering these unit determination cases as a whole,
it is evident that the Board has moved away from any
presumption favoring storewide units in retail department
stores. Similarly, if the standard for deviating from a
storewide unit was ever, as amicus NRF suggests, “fairly
strenuous,” that is clearly no longer the case. Rather, the
Board has, over time, developed and applied a standard
that allows a less-than-storewide unit so long as that unit
is identifiable, the unit employees share a community of
interest, and those employees are sufficiently distinct
from other store employees. That, of course, is almost
precisely the standard articulated in Specialty
Healthcare.58 As we have explained above, the petitioned-for employees in this case are identifiable as a
separate group, they share a community of interest, and
because they do not share an overwhelming community
of interest with other selling employees, they are also
sufficiently distinct from other selling employees to constitute an appropriate unit. See Specialty Healthcare,
supra, slip op. at 13 (explaining “overwhelming community of interest” standard clarifies “what degree of difference renders the groups’ interests ‘sufficiently distinct’”).
Further, our foregoing analysis shows that the petitioned-for unit is appropriate under retail department
store precedent even without reference to Specialty
Healthcare. The petitioned-for unit appears to meet the
standard articulated in I. Magnin, supra at 643, as the
petitioned-for employees have a “mutuality of interests”
not shared by all other selling employees (they share
56
See A. Harris & Co., 116 NLRB 1628, 1631-1632 (1956). Contrary to amici RILA-RLC, the Board has never held that A. Harris
articulates an overall test for deviating from a storewide unit. That case
applies to “the establishment of warehouse units in retail department
stores only.” See Lily-Tulip Cup Corp., 124 NLRB 982, 984 fn. 2
(1959) (emphasis omitted).
57
Our dissenting colleague suggests that the “competitive challenges” retail establishments face “should render inappropriate any bargaining unit consisting of less than a storewide selling unit, especially
where the record does not contain compelling evidence of distinctions
unique to a particular subset of retail store salespeople.” The Board has
never articulated such a restrictive standard applicable to retail establishments, and we decline our colleague’s invitation to impose such a
standard here.
58
Furthermore, Specialty Healthcare clarified that—contrary to the
position argued by NRF—“[a] party petitioning for a unit other than a
presumptively appropriate unit . . . bears no heightened burden to show
that the petitioned-for unit is also an appropriate unit.” Supra, slip op at
7.
16
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
most community-of-interest factors, work in their own
department, the department is structured unlike other
departments due to the presence of counter managers,
and have separate supervision), and are “sufficiently different” from the other selling employees so as to justify
representation on a separate basis (in addition to the
foregoing, they work in distinct areas and also have little
contact or interchange with the other employees). Further, our analysis comports with John’s Bargain Stores,
supra at 1522, as we have found that the petitioned-for
unit is appropriate based on a careful evaluation of all the
relevant factors of this case. And as in Sears, Roebuck,
261 NLRB at 246-247, the petitioned-for unit in this case
is a “functionally integrated group working in a recognized product line under separate supervision who share
a community of interest that sufficiently differentiates
them” from other selling employees.
To summarize, Board precedent regarding retail department stores has evolved away from any presumptions
favoring storewide units, and the current standard for
determining whether a less-than-storewide unit comports
with, and is in fact complementary to, the framework
articulated in Specialty Healthcare. Both the retail industry standard and Specialty Healthcare are concerned
with ensuring that petitioned-for employees are separately identifiable and share a community of interest, and
that they are also sufficiently distinct from other employees. We therefore do not agree with the claims of amici
and our dissenting colleague that applying Specialty
Healthcare to find this petitioned-for unit appropriate is
directly contrary to retail industry precedent, undermines
that body of precedent, or is otherwise inconsistent with
it.59
In discussing the storewide “presumption,” the Employer, amici, and our dissenting colleague argue that the
Board has never deviated from a storewide unit to the
extent it is being asked to do here. But as in Sears, Roebuck, 261 NLRB at 247, the sole question here is whether the petitioned-for unit is appropriate in the circumstances of this case. So long as the petitioned-for unit is
appropriate—as we have found that it is—it is not significant that in other cases, based on different facts, the
Board has previously approved units of all selling or
nonselling employees,60 or that other less-than-storewide
59
We also reject NRF’s argument that Specialty Healthcare should
not be applied to the retail industry because tests for unit determination
should not be applied outside the specific industry at issue. As Specialty Healthcare made clear, it was articulating generally applicable unit
determination principles, not principles limited to a particular industry.
357 NLRB No. 85, slip op. at 8.
60
See, e.g., Wickes Furniture, 231 NLRB 154, 154–155 (1977) (approving unit of selling employees); Lord & Taylor, supra at 816 (direct-
units have involved groups of employees not involved in
selling merchandise.61 See Specialty Healthcare, supra,
slip op. at 6 fn. 11. Further, the various cases cited by
the Employer, amici, and our dissenting colleague do not
demonstrate that the Board has rejected a petitioned-for
unit similar to the one at issue here. Indeed, there are no
published decisions involving a petitioned-for unit limited to a cosmetics and fragrances department. Amici
RILA-RLC cite a case in which cosmetics demonstrators
were included in a larger unit, but in that case, the petitioned-for unit was a storewide unit and the issue was
whether cosmetics demonstrators were employees of the
employer, which the Board found they were. Burrows &
Sanborn, Inc., 81 NLRB 1308, 1309 (1949).62 Similarly,
the Employer, amici, and our dissenting colleague have
not cited a case that rejects a departmental unit like the
one sought here. In I. Magnin, supra at 643, the store in
question was a clothing store with 105 departments, four
of which were shoe selling departments scattered through
the store.63 The petitioner sought a unit covering the 23
employees in the four shoe selling departments. See id.
In finding the petitioned-for unit inappropriate, the Board
particularly emphasized that employees from other departments had been assigned to work as shoe sellers and
that shoe sellers were actively encouraged to sell items
throughout the store. See id. Thus, I. Magnin is distinguishable based on the contours of the unit, which was
not defined as a single primary selling department, as
well as the significant interchange between petitioned-for
and other selling employees, which is absent in this
case.64 Further, it is telling that even in I. Magnin, the
ing election in unit of nonselling employees); Stern’s, Paramus, supra
at 808 (approving separate units of selling, nonselling, and restaurant
employees).
61
See, e.g., Super K Mart Center, 323 NLRB 582, 586–589 (1997)
(approving separate meat department unit); W & J Sloane, Inc., 173
NLRB 1387, 1389 (1968) (finding display employees need not be included in nonselling unit due to distinct community of interest); Arnold
Constable Corp., 150 NLRB 788, 795 (1965) (approving separate units
of office, cafeteria, and selling employees); Foreman & Clark, Inc., 97
NLRB 1080 (1952) (approving unit of tailor shop/alterations employees).
62
RILA-RLC also cite R. H. Macy & Co., 81 NLRB 186 (1949),
claiming that here, too, cosmetic demonstrators were included in a
broader unit. In that case, however, the Board found—in “substantial
agreement” with the parties—that the appropriate unit included “all
staff employees,” but excluded a variety of other classifications, one of
which was “demonstrators (except those who demonstrate cosmetics
and beauty preparations).” See id. at 186–187.
63
I. Magnin does not reveal whether these four departments were
each separately supervised.
64
I. Magnin overruled May Department Stores Co., 39 NLRB 471
(1942), in which the Board found appropriate a unit limited to the shoe
department. The Board’s factual findings in May Department Stores
are vague and limited to stating that (1) “the shoe department is distinct
17
MACY’S, INC.
Board did not dismiss the petitioned-for unit out of hand,
but instead proceeded to consider the usual communityof-interest factors.65
Our dissenting colleague cites, and several amici discuss at length, the Board’s decision in Kushins and
Papagallo Divisions of U.S. Shoe Retail, Inc., 199
NLRB 631 (1972) (U.S. Shoe). However, that decision
does not warrant a different result here. U.S. Shoe involved a store that mainly sold shoes, rather than a variety of products such as the Employer’s Saugus store. See
id. at 631. Further, in U.S. Shoe, the store was divided
into four selling areas, three operated by the Kushins
division, one by the Papagallo division. All four areas
primarily sold shoes and related accessories, although the
Papagallo division also sold dresses. The Kushins and
Papagallo divisions had separate sales managers, different compensation, slightly different benefits, and minimal interchange. See id. Although Papagallo employees
had a separate sales manager, a Kushins manager set the
hours, holidays, and regulations for all store employees
and could require the discharge of Papagallo employees.
See id. At the time the store opened (February 1971),
Kushins and Papagallo were separate corporate entities,
but by the time the petition was filed (sometime before
May 12, 1972), this was no longer the case. See id. at
631 fn. 2. In rejecting a unit limited to the Kushins division employees, the Board acknowledged the foregoing
differences but found that there was no basis to exclude
the Papagallo employees because “consistent with our
unit policy in department store cases, the unit must be
broadened in scope to include all store employees.” Id.
at 631–632. This statement is, of course, out of step with
the Board’s earlier statement in John’s Bargain Stores,
and is also at odds with the Board’s subsequent statement
that the presumption that “only a unit of all employees”
is appropriate is “no longer applicable to department
from the other departments;” (2) “the retail sale of shoes is often operated as a separate business by many companies”; (3) the duties and
skills of shoe sellers are different from other employees; and (4) the
“self-organization of the employees” favored a separate unit of shoe
sellers. Id. at 477. As the foregoing discussion makes clear, our holding in this case is based on a more specific discussion of the community-of-interest factors than, and relies on many community-of-interest
considerations not present in, May Department Stores.
65
Indeed, the analysis in I. Magnin generally comports with the contemporary use of presumptions in Board representation case law. That
a unit is presumptively appropriate in a particular setting does not mean
that a different unit is presumptively inappropriate. Specifically, when
a petition is filed in a “presumptively appropriate” unit, the burden is
on the party contesting the unit to show why it is not appropriate. In
contrast, when a petitioned-for unit does not fit within an existing presumption, the petitioner must demonstrate why the unit is appropriate,
but does not bear a heightened burden to do so because of the presumption. See, e.g., Capital Coors Co., 309 NLRB 322 fn. 1 (1992), citing
NLRB v. Carson Cable TV, 795 F.2d 879, 886–887 (9th Cir. 1986).
stores.” Saks Fifth Avenue, supra at 1051. Accordingly,
U.S. Shoe appears to have misarticulated the relevant
policy.66 But in any event, although not explicitly stated,
the Board’s rationale in U.S. Shoe appears to have turned
on the fact that most of the differences between the
Kushins and Papagallo employees were based on historical accident. That is, the differences existed only because the two divisions had once been, but no longer
were, separate corporate entities. Setting aside the differences in compensation and benefits, and considering
the fact that the Kushins sales manager dictated certain
terms and conditions for the Papagallo employees, the
only distinction between the two groups was that they
had different sales areas and some sold dresses in addition to shoes. On a fundamental level, however, all of
the employees were shoe sellers. This is clearly distinguishable from the situation in this case, where there are
various differences between the petitioned-for employees
and other selling employees, who may all be engaged in
sales, but are nevertheless selling different types of products in different departments.
The remaining cases cited by the Employer and amici
are easily reconcilable with our decision today. In Sears,
191 NLRB 398, 399–400 (1971), the Board refused to
divide a store into three separate units, in part because all
employees worked in close proximity to each other and
attended regular storewide meetings. But unlike this
case, there was also substantial integration and overlap
between the three petitioned-for groups; further, the
Board found that the Sears store at issue was smaller and
more highly integrated than a typical Sears location, and
there is no basis for making a similar finding about the
Macy’s store at issue here. See id. at 404–406.67 In
Levitz Furniture Co., 192 NLRB 61, 62 (1971), the
66
We note that U. S. Shoe has never been cited by another Board decision. One of the cases it cites for the “unit policy in department store
cases” does not even involve the issue of whether a less-than-storewide
unit is appropriate. See Zayre Corp., 170 NLRB 1751 (1968) (finding
respondent violated Section 8(a)(5) by refusing to bargain with the
union and clarifying the unit to include several formerly leased departments). The other case it cites merely states that a less-than-storewide
unit is appropriate so long as the excluded employees have a separate
and distinct community of interest. See Bargain Town U.S.A. of Puerto
Rico, Inc., 162 NLRB 1145, 1147 (1967). And Member Jenkins concurred in the result, but did not rely on either of these cases. 199
NLRB at 632 fn.3.
67
Contrary to amici RILA-RLC, the Board in Sears did not simply
accept the conclusory statement that the store should not be divided
into separate units because a high degree of compartmentalization
could not be utilized in “this kind of retail operation.” Id. at 403. Although the Board agreed with the employer’s position, it also examined
the interchange and overlap of employees in the three proposed units in
detail (finding, for example, that the selling employees also performed
warehouse functions and regularly relieved nonselling employees). See
id. at 404–406.
18
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Board found petitioned-for units68 limited to certain
nonselling employees at a retail furniture store inappropriate, in part because all store employees shared the
same benefits and participated in inventory. But unlike
this case, there was frequent regular and temporary interchange between the petitioned-for employees and the
store’s other employees, such that nonselling employees
would occasionally perform selling functions and selling
employees would perform nonselling functions. See id.
at 62–63. And in Saks & Co., 204 NLRB 24, 25 (1973),
there was similarly evidence of close integration between
the petitioned-for nonselling employees69 and the store’s
selling employees, as transfers between the two groups
were common.70
We need only briefly address the remaining arguments
advanced by the Employer and amici. First, we decline
the invitation to revisit or overrule Specialty Healthcare.
The Employer did not raise this argument in its request
for review. Moreover, the Employer does not articulate
any persuasive grounds for overruling Specialty
Healthcare, and the arguments advanced by amici and
the dissent were recently rejected by the Sixth Circuit in
Kindred Nursing Centers, 727 F.3d at 559–565.71 In any
68
One petitioner sought what amounted to a warehouse unit, which
the Board found inappropriate based on an application of the A. Harris
test. See id. at 62–63. A second petitioner sought a unit limited to
truckdrivers and helpers, and both petitioners argued that a combined
“nonselling” unit of both petitioned-for units would also be appropriate.
See id. at 61.
69
In addition, the Board also found that the petitioned-for unit in
Saks & Co. was inappropriate because although it was claimed to be a
unit of nonselling employees, it in fact excluded a number of nonselling
employees. See id. at 25. The petitioner also contended that the petitioned-for employees shared a common function, but the Board found
this was not so because the petitioned-for employees had disparate
interests and were not even commonly supervised. See id. at 24–25.
Saks & Co. is therefore also distinguishable on these grounds.
70
Amici RILA-RLC also contend that Charrette Drafting Supplies,
275 NLRB 1294, shows that the petitioned-for unit is inappropriate,
and the dissent also mentions that case. Charrette Drafting Supplies,
however, involved a petitioned-for warehouse unit, and the Board accordingly analyzed the unit under the A. Harris standard, which is not
applicable here. See id. at 1295–1296. Further, Charrette Drafting
Supplies also implicated Haag Drug, because the employer contended
that employees at a second location should be included in the petitioned-for unit. See id. at 1296–1297. And even if Charrette Drafting
Supplies applied to this case, there too the petitioned-for employees and
the employees the employer sought to add performed each other’s
functions, unlike in this case. See id. at 1297.
71
The Sixth Circuit explicitly rejected arguments that Specialty
Healthcare violates Sec. 9(c)(5) and that the Board abused its discretion by making policy through adjudication rather than rulemaking.
See id. at 563–565. Further, the Sixth Circuit rejected the argument
that Specialty Healthcare represented a material change to the Board’s
jurisprudence and was therefore an abuse of discretion. In rejecting this
argument, the court cited with approval the same statement by the
Board that amici here mistakenly invoke to argue that Specialty
event, as our analysis makes clear, our decision in this
case fully complies with Section 9(b)’s requirement that
the Board decide the appropriate unit “in each case,” as
well as Section 9(c)(5)’s command that a unit determination not be controlled by “the extent to which the employees have organized.”72 Additionally, the fact that the
Petitioner was previously a party to an election involving
a storewide unit, but in this case has petitioned for a
smaller unit, in no way runs afoul of Section 9(c)(5) or
any other statutory requirement. Indeed, this situation
was also present in Stern’s, Paramus, a case cited by the
Employer, our dissenting colleague, and all amici. 150
NLRB at 808–809 (Member Jenkins, dissenting) (noting
that petitioner lost a 1960 election in a storewide unit
before filing petitions for separate units of selling,
nonselling, and restaurant employees sometime between
mid-1962 and 1964); see also Fraser Engineering, supra,
slip op. at 1 (stipulation for larger unit in previous election union lost does not invalidate appropriateness of
smaller unit subsequently sought) (citing Macy’s San
Francisco, 120 NLRB 69, 71–72 (1958)).73 See generalHealthcare ignored the right of employees to refrain from organizing.
See id. at 560–561 (quoting Specialty Healthcare, supra, slip op. at 12
(the “first and central right set forth in Section 7 of the Act is the employees’ ‘right to self-organization’”)). Finally, the Sixth Circuit observed that the Board must decide the appropriate unit “in each case,”
id. at 559, but at no point suggested that the standard in Specialty
Healthcare runs afoul of this statutory command, as argued by the
employer in Kindred Nursing Centers. See Br. of Petitioner CrossRespondent at 55–56, Kindred Nursing Centers, 727 F.3d 552.
72
The dissent likewise asserts that Specialty Healthcare is “irreconcilable” with the requirement that the Board decide the appropriate unit
“in each case” and that, in doing so, the Board assure employees the
“fullest freedom” in exercising their statutory rights. The framework
for unit determinations in Specialty Healthcare is fully consistent with
these requirements, and we have, consistent with Sec. 9(b), applied the
Specialty Healthcare framework to the particular facts of this case.
See generally American Hospital Assn. v. NLRB, 499 U.S. 606, 610–
614 (1991) (“in each case” simply means that whenever parties disagree over unit appropriateness, Board shall resolve the dispute, and
imposition of rule defining appropriate units in acute care hospitals
does not run afoul of “in each case” command so long as Board applies
the rule “in each case”). We also reject the dissent’s view that by according the petitioned-for employees their fullest freedom to organize,
we have somehow denied the excluded employees (who have not
sought representation) their fullest freedom. The proper understanding
of the statutory language on which the dissent relies has been explained
in detail by the Board in Specialty Healthcare and by the U.S. Court of
Appeals for the Sixth Circuit in its decision enforcing the Board’s order. See Specialty Healthcare, supra, slip op. at 8 and fn. 18; Kindred
Nursing Centers East, supra, 727 F.3d at 563–565. Those discussions
are reprinted in full in Member Hirozawa’s concurring opinion, with
which we agree.
73
May Department Stores Co. v. NLRB, 454 F.2d 148, 150 (9th Cir.
1972), cert denied 409 U.S. 888 (1972), cited by the Employer, involved refusal-to-bargain charges. In the underlying representation
case (May Department Stores Co., 186 NLRB 86 (1970)), the Board
had approved a unit of warehouse employees, but three years earlier the
19
MACY’S, INC.
ly Overnite Transportation Co., 322 NLRB 723 (1996)
and 325 NLRB 612 (1998) (finding of different units in
the same factual setting does not mean that the decision
is based on extent of organization); Specialty Healthcare,
supra, slip op. at 6 fn. 11 (“prior precedent holding a different unit to be appropriate in a similar setting is not
persuasive”).
We are not persuaded that applying Specialty
Healthcare to retail department stores, or finding the
petitioned-for unit appropriate, will, as the Employer and
amici predict, harm the retail industry through “destructive factionalization.” First, our only finding today is
that, based on the particular facts of this case, this petitioned-for unit is appropriate. Whether any other subset
of selling employees at this store, or any other retail department store, constitutes an appropriate unit is a question we need not and do not address.74 As always, such
determinations will depend on the individual circumstances of individual cases. Second, we find it significant that this petitioned-for unit consists of 41 employees, more than one-third of all selling employees, and
nearly one-third of all employees, at the Saugus store.
This unit is also significantly larger than the median unit
size from 2001 to 2010, which was 23 to 26 employees.
See Specialty Healthcare, supra, slip op. at 10 fn. 23 (citing 76 Fed. Reg. 36821 (2011)). These statistics belie
amicus NRF’s description of the petitioned-for unit as a
“micro-union,” and refute the Employer’s and amici’s
assertion that finding this unit appropriate will result in
“dozens” of units within a single store. Third, neither the
Employer nor amici have offered any evidence in support
of their claims that finding the petitioned-for unit appropriate will result in administrative burdens, “competitive
bargaining,” destructive work stoppages, or reduced employee productivity, opportunity, and flexibility. All of
these arguments are pure speculation and many of them
rely on characterizations of the retail industry that are not
supported by the record here, such as frequent employee
interchange. Finally, we note that the Board has long
approved multiple units in a single department store,
apparently without the harmful effects forecast by the
union had lost an election in a larger unit. 454 F.2d at 149–150. The
Ninth Circuit criticized the Board for failing to provide any explanation
for why both units were appropriate, rejected the Board’s “after-the-fact
attempts to explain the record,” and held that the Board had allowed the
extent of organization to control its decision. Id. at 150–151. Here, of
course, we have explained why this smaller unit is appropriate. Thus,
contrary to the Employer, there is no “compelling inference” that we
have allowed the extent of unionization to control our decision.
74
We note, however, that many of the scenarios predicted by RILARLC—such as units of “second floor designer men’s socks” or “third
floor TVs”—might well involve fractured units, which the Board has
always rejected.
Employer and amici. See, e.g., Stern’s, Paramus, supra
(approving separate units of selling, nonselling, and restaurant employees).
CONCLUSION
For the reasons explained above, we find that the cosmetics and fragrances employees are a readily identifiable group who share a community of interest among
themselves. We further find that the Employer has not
demonstrated that its other selling employees share an
overwhelming community of interest with the cosmetics
and fragrances employees. Under Specialty Healthcare,
the petitioned-for unit thus constitutes an appropriate unit
for bargaining. This result is consistent with Board precedent concerning retail department stores.
ORDER
The Acting Regional Director’s Decision and Direction of Election is affirmed. This proceeding is remanded to the Regional Director for appropriate action consistent with the Decision and Order.
Dated, Washington, D.C. July 22, 2014
______________________________________
Mark Gaston Pearce,
Chairman
______________________________________
Kent Y. Hirozawa,
Member
______________________________________
Nancy Schiffer,
Member
(SEAL)
NATIONAL LABOR RELATIONS BOARD
MEMBER HIROZAWA, concurring.
In this decision, the Board correctly applies the analytical framework set forth in Specialty Healthcare and
Rehabilitation Center, 357 NLRB No. 83 (2011), enfd.
sub nom. Kindred Nursing Centers East, LLC, v. NLRB,
727 F.3d 552 (6th Cir. 2013), to the question whether the
petitioned-for unit is appropriate. I concur in the Board’s
decision in all respects. I write separately to offer a brief
observation apropos of the dissent.
It might surprise a reader of the dissent to learn that the
provisions of the Act for unit determinations in representation cases are short and simple. The Act’s direction to
the Board concerning unit determinations for most employees covered by the Board’s jurisdiction, unchanged
since 1947, consists of a single sentence: “The Board
shall decide in each case whether, in order to assure to
employees the fullest freedom in exercising the rights
20
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
guaranteed by this Act, the unit appropriate for the purposes of collective bargaining shall be the employer unit,
craft unit, plant unit, or subdivision thereof.”1 The inquiry mandated by this sentence, whether a proposed unit
is “appropriate for the purposes of collective bargaining,”
is aptly framed in the Board’s community-of-interest test,
applied in Specialty Healthcare and innumerable decisions going back over 60 years, which essentially asks
whether the employees in the proposed unit have enough
in common for it to make sense for them to bargain together as a group. To the extent that the dissent’s objections are based on the text of the Act, they rely on the
requirement, contained in the Act’s directive sentence,
that the Board designate a unit that will “assure to employees the fullest freedom in exercising the rights guaranteed by this Act,” or on Section 9(c)(5). In both instances, the dissent misconstrues the statutory language.
The Board’s decision does not address this language in
detail, appropriately since it has already been explicated
authoritatively in Specialty Healthcare and elsewhere
and is fully accounted for in the Specialty Healthcare
standard that the Board has applied in this decision. For
the convenience of the reader, the Board’s explanation
from Specialty Healthcare follows:
(b) [Determination of bargaining unit by Board] The Board shall decide in each case whether, in order to assure to employees the fullest
freedom in exercising the rights guaranteed by this Act [subchapter],
the unit appropriate for the purposes of collective bargaining shall be
the employer unit, craft unit, plant unit, or subdivision thereof: Provided, That the Board shall not (1) decide that any unit is appropriate for
such purposes if such unit includes both professional employees and
employees who are not professional employees unless a majority of
such professional employees vote for inclusion in such unit; or (2) decide that any craft unit is inappropriate for such purposes on the
ground that a different unit has been established by a prior Board determination, unless a majority of the employees in the proposed craft
unit votes against separate representation or (3) decide that any unit is
appropriate for such purposes if it includes, together with other employees, any individual employed as a guard to enforce against employees and other persons rules to protect property of the employer or
to protect the safety of persons on the employer’s premises; but no labor organization shall be certified as the representative of employees
in a bargaining unit of guards if such organization admits to membership, or is affiliated directly or indirectly with an organization which
admits to membership, employees other than guards.
The Act . . . declares in Section 9(b) that “[t]he
Board shall decide in each case whether, in order to
assure to employees the fullest freedom in exercising
the rights guaranteed by this Act, the unit appropriate for the purposes of collective bargaining shall be
the employer unit, craft unit, plant unit, or subdivision thereof.” The first and central right set forth in
Section 7 of the Act is employees’ “right to selforganization.” As the Board has observed, “Section
9(b) of the Act directs the Board to make appropriate
unit determinations which will ‘assure to employees
the fullest freedom in exercising rights guaranteed
by this Act.’ i.e., the rights of self-organization and
collective bargaining.” Federal Electric Corp., 157
NLRB 1130, 1132 (1966).
The Board has historically honored this statutory
command by holding that the petitioner’s desire
concerning the unit “is always a relevant consideration.” Marks Oxygen Co., 147 NLRB 228, 229
(1964). See also, e.g., Mc-Mor-Han Trucking Co.,
166 NLRB 700, 701 (1967) (reaffirming “polic[y] . .
. of recognizing the desires of petitioners as being a
relevant consideration in the making of unit determinations”); E. H. Koester Bakery Co., 136 NLRB
1006, 1012 (1962). Section 9(c)(5) of the Act provides that “the extent to which the employees have
organized shall not be controlling.” But the Supreme Court has made clear that the extent of organization may be “consider[ed] . . . as one factor” in
determining if the proposed unit is an appropriate
unit. NLRB v. Metropolitan Life Insurance Co., 380
U.S. 438, 442 (1965). In Metropolitan Life, the
Court made clear that “Congress intended to overrule Board decisions where the unit determined
could only be supported on the basis of the extent of
organization.” Id. at 441 (emphasis added). In other
words, the Board cannot stop with the observation
that the petitioner proposed the unit, but must proceed to determine, based on additional grounds
(while still taking into account the petitioner’s preference), that the proposed unit is an appropriate unit.
Thus, both before and after the adoption of the
9(c)(5) language in 1947, the Supreme Court had
held, “[n]aturally the wishes of employees are a factor in a Board conclusion upon a unit.” Pittsburgh
Plate Glass Co. v. NLRB, 313 U.S. 146, 156 (1941).
We thus consider the employees’ wishes, as expressed in the petition, a factor, although not a determinative factor here.2
(c)(5) In determining whether a unit is appropriate for the purposes
specified in subsection (b) the extent to which the employees have organized shall not be controlling.
2
357 NLRB No. 83, slip op. at 8–9 (footnote omitted). In enforcing
the Board’s Specialty Healthcare decision, to which it referred as “Spe-
1
NLRA, § 9(b), 29 U.S.C. § 159(b). In 1947, Congress added to
Sec. 9(b) provisos applicable to professional employees, guards, and
craft units that include employees covered by a prior unit determination, along with a new subdivision, Sec. 9(c)(5), discussed below, limiting the weight to be given to the extent of organization in making unit
determinations. These two subdivisions of section 9, reprinted here in
full, constitute the entirety of the Act’s provisions concerning unit
determinations:
21
MACY’S, INC.
cialty Healthcare II,” the United States Court of Appeals for the Sixth
Circuit further discussed Sec. 9(c)(5):
We now turn to [the employer]’s argument that Specialty
Healthcare II’s application of either the American Cyanamid
community-of-interest test, or of the overwhelming-communityof interest test, violates section 9(c)(5) of the Act by making it
impossible for an employer to challenge the petitioned-for unit.
In section 9(c)(5), Congress provided a statutory limit on the
Board’s discretion to define collective-bargaining units. Section
9(c)(5) states that “the extent to which the employees have organized shall not be controlling” in determining whether a unit is
appropriate. 29 U.S.C. § 159(c)(5). The Supreme Court has interpreted section 9(c)(5) as showing Congress’ intent to prevent
the Board from determining bargaining units based solely upon
the extent of organization, while at the same time allowing the
Board to consider “the extent of organization as one factor,
though not the controlling factor, in its unit determination.”
N.L.R.B. v. Metro. Life Ins. Co., 380 U.S. 438, 441–42, 85 S.Ct.
1061, 13 L.Ed.2d 951 (1965) (footnote omitted; emphasis added).
But courts have struggled with what Congress meant by this
provision; one court even famously commented that “[s]ection
9(c)(5), with its ambiguous word ‘controlling,’ contains a warning
to the Board almost too Delphic to be characterized as a standard.” Local 1325, Retail Clerks Int’l Ass’n, AFL–CIO v. N.L.R.B.,
414 F.2d 1194, 1199 (D.C.Cir.1969). Nevertheless, the court added, section 9(c)(5) “has generally been thought to mean that there
must be substantial factors, apart from the extent of union organization, which support the appropriateness of a unit, although extent of organization may be considered by the Board and, in a
close case, presumably may make the difference in the outcome.”
Id. at 1199–[1200].
Section 9(c)(5) appears to have been added to prevent the
Board from deciding cases like Botany Worsted Mills, 27 NLRB
687 (1940), in which the Board deemed a bargaining unit appropriate without applying any kind of community-of-interest analysis, but solely on the basis that the workers wanted to organize a
union. The Board at that time acted as a union partisan, encouraging organizing. In Botany Worsted Mills, the Board explained,
in the course of deeming that a bargaining unit of workers in two
job classifications (wool sorters and trappers) constituted an appropriate bargaining unit, that “[w]herever possible, it is obviously desirable that, in a determination of the appropriate unit, [it]
render collective bargaining of the [c]ompany’s employees an
immediate possibility.” Botany Worsted Mills, 27 NLRB at 690.
The Board thus made clear that it based its determination that the
bargaining unit was appropriate on the mere fact that the employees wanted to engage in collective bargaining. The Board observed that there was “no evidence that the majority of the other
employees of the [c]ompany belong[ed] to any union whatsoever;
nor has any other labor organization petitioned the Board for certification as representative of the [c]ompany’s employees on a
plant-wide basis.” Id. The Board said that “[c]onsequently, even
if, under other circumstances, the wool sorters or trappers would
not constitute the most effective bargaining unit, nevertheless, in
the existing circumstances, unless they are recognized as a separate unit, there will be no collective bargaining agent whatsoever
for these workers.” Id. The Board concluded by stating that “in
view of the existing state of labor organization among the employees of the [c]ompany, in order to insure to the sorters or trappers the full benefit of their right to self-organization and collective bargaining and otherwise to effectuate the policies of the
Act,” it found that the wool sorters or trappers of the company
“constituted an appropriate bargaining unit.” Id. [The employer]
characterizes Specialty Healthcare II‘s certification of a CNA-
The dissent regards with suspicion the approval of any
unit requested by a petitioner, discerning therein a dereliction of the Board’s imagined duty to find fault with
any grouping that a petitioner might choose, simply because the petitioner chose it. I take a different view. The
commands of the Act in this area are short and simple.
While they are general, and meant to be elaborated, the
Board ought to be able to do that in a manner simple
enough to permit a reasonably intelligent lay person to
identify a grouping of workers that makes sense for collective bargaining. I believe Specialty Healthcare does
that by clearing away needlessly confusing variations in
the standard for answering a common question, and settling on a formulation that is relatively easy to understand and apply. If the result is that parties are better
able to predict which potential units will be found appropriate, and consequently more petitioned-for units are
approved, we should view that not as suspicious, but as a
success.
Dated, Washington, D.C. July 22, 2014
______________________________________
Kent Y. Hirozawa,
Member
NATIONAL LABOR RELATIONS BOARD
only unit as “a throw-back to the discredited Botany Worsted
Mills analysis.”
But [the employer]’s argument misses the mark, because
here, in Specialty Healthcare II, the Board did not assume that the
CNA-only unit was appropriate. Instead, it applied the community-of-interest test from American Cyanamid to find that there
were substantial factors establishing that the CNAs shared a
community of interest and therefore constituted an appropriate
unit—aside from the fact that the union had organized it. Indeed,
nowhere in its briefs, nor before the Board, did [the employer]
dispute that the CNAs shared a community of interest. Therefore,
the Board’s approach in Specialty Healthcare II did not violate
section 9(c)(5).
Nor does the overwhelming-community-of-interest test violate section 9(c)(5). In this regard, we find persuasive the District
of Columbia Circuit’s analysis in Blue Man, which Specialty
Healthcare II relied upon and quoted as holding that “ ‘[a]s long
as the Board applies the overwhelming community of interest
standard only after the proposed unit has been shown to be prima
facie appropriate, the Board does not run afoul of the statutory injunction that the extent of the union’s organization not be given
controlling weight.’ ” Specialty Healthcare II, 357 NLRB No.
83, 2011 WL 3916077 at *20 n. 25 (quoting Blue Man, 529 F.3d
at 423) (emphasis added).
Here, in Specialty Healthcare II, the Board followed the Blue
Man approach, conducting its community-of-interest inquiry before requiring [the employer] to show that the other employees
shared an overwhelming community of interest with the CNAs. It
would appear, then, that Specialty Healthcare II does not violate
section 9(c)(5) of the Act.
Kindred Nursing Centers East, LLC v. NLRB, 727 F.3d 552, 563–565
(6th Cir. 2013).
22
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
MEMBER MISCIMARRA, dissenting.
My colleagues find that a petitioned-for bargaining
unit limited to department-store salespeople who sell
cosmetics and fragrances, and excluding all other salespeople in a Macy’s full-service department store, constitutes an “appropriate” bargaining unit.1 I dissent because, in my view, the facts establish that such a bargaining unit is not appropriate under any standard. More
generally, I believe this case illustrates the frailties associated with the Specialty Healthcare2 standard regarding
what constitutes an appropriate bargaining unit. Accordingly, for the reasons expressed below, I would refrain
from applying Specialty Healthcare in this or any other
case.
Unlike the majority, I believe the smallest “appropriate” unit here consists of all salespeople in the Employer’s Saugus, Massachusetts department store. In my
view, finding a combined cosmetics and fragrances unit
excluding all other salespeople (a “C&F unit”) to be an
appropriate unit has a triple infirmity: (a) such a unit
disregards wide-ranging similarities that exist among
sales employees generally throughout the store; (b) the
unit focuses on distinctions between C&F unit employees and other salespeople while disregarding the same
types of distinctions that exist between sales employees
who work within the C&F unit; and (c) the unit would be
irreconcilable with the structure of the work setting
where all salespeople are employed and would give rise
to unstable bargaining relationships. In my opinion, the
outcome here departs from the Board’s long-held retail
industry standards that ostensibly were left undisturbed
by Specialty Healthcare. More generally, as demonstrated by the majority’s application of Specialty Healthcare
in the instant case, I believe Specialty Healthcare affords
too much deference to the petitioned-for unit in derogation of the mandatory role that Congress requires the
Board to play “in each case” when making bargainingunit determinations.
FACTS
The Employer’s full-service, two-story department
store in Saugus, Massachusetts, is an extremely complex
operation. While broadly sharing many common working conditions throughout the store, there are also many
differences between and among salespeople in many
different departments, including substantial differences
between and among salespeople in the C&F unit. The
differences are driven by the wide variety of products,
1
NLRA Sec. 9(a), 29 U.S.C. § 159(a).
357 NLRB No. 83 (2011), enfd. sub nom. Kindred Nursing Centers
East, LLC v. NLRB, 727 F.3d 552 (6th Cir. 2013).
2
customers, and types of information needed to address
customer needs and questions.
In 2011, the Petitioner Union and the Board took the
position that a bargaining unit consisting of all salespeople in the Saugus store was appropriate (there was a 2011
election among these employees, and the Union lost).3
There are 11 sales departments in the Saugus store,
collectively overseen by 7 sales managers who report to
a single store manager. The 11 sales departments consist
of (1) juniors, (2) ready-to-wear, (3) women’s shoes, (4)
handbags, (5) furniture (also known as big ticket), (6)
home (also referred to as housewares), (7) men’s clothing, (8) bridal, (9) fine jewelry, (10) fashion jewelry, and
(11) cosmetics and fragrances. The store has a total of
120 salespeople, of whom 41 work in the cosmetics and
fragrances department.4
A. Shared Working Conditions and Benefits
Common to all Salespeople
All salespeople at the store are subject to the same policies set forth in the same employee handbook, they participate in the same benefit plans, they staff shifts that
occur during the same time periods, they use the same
employee entrance(s), they use the same timeclock system, they share the same breakroom(s), and they are subject to the same in-store dispute resolution program.
All selling employees, including sales managers, attend daily rallies typically conducted by Store Manager
Danielle McKay, the purpose of which is to motivate
employees and to inform them of the previous day’s
sales totals, special events, and any other pertinent news.
All salespersons throughout the store receive performance evaluations under the same storewide evaluation
system, based on the same criteria (sales, customer feedback, and teamwork). Each department utilizes the same
“sales scorecard” to rate employees’ overall sales performance. These scorecards measure four criteria: the
number of items sold per customer transaction, average
sale amount per customer transaction, overall sales per
hour, and the number of store credit cards opened. The
most heavily weighted criterion is actual sales (i.e., their
“sales scorecard” performance).5
3
The Union represents sales employees at other Macy’s stores in
Massachusetts. At the Belmont store, the Union represents a bargaining unit consisting of all salespersons, although there are no cosmetics
employees at that store. At the Braintree, Natick, and Peabody stores,
the Union represents salespersons, except cosmetics sales employees
are excluded from the units.
4
Employees in the petitioned-for unit are primarily known as “beauty advisors.”
5
The Employer’s 2012 performance reviews reveal that 70–80 percent of an employee’s overall appraisal is based on their “sales scorecard.” Scorecard performance carries less weight (55 percent) for
23
MACY’S, INC.
Although non-C&F salespeople do not regularly work
in the cosmetics and fragrances department, and vice
versa, McKay testified that there are “opportunities” for
selling employees to “help out” in other departments.
More generally, the record reveals that the Employer
expects selling employees to assist all customers regardless of the customer’s needs, even if the customer’s request does not pertain to the particular employee’s assigned department.6 McKay testified that there are occasions where C&F employees conduct inventory for nonC&F departments.7
During the past 2 years, the Employer has permanently
transferred nine employees from other sales positions
into C&F sales positions, and one C&F employee (who
worked in cosmetics) was promoted to a supervisory
position in a different department.
B. Similarities and Differences Between and Among
C&F Employees
As my colleagues note, the Employer maintains a
cosmetics and fragrances “department,” but the record
also demonstrates that substantial dissimilarities in compensation and working conditions exist among and between these employees.
(a) Physical Locations. For starters, the C&F salespeople work in the same store, but they are separated into
two different areas located on two different floors. Cosmetics and women’s fragrances are located on the first
floor. Men’s fragrances are located on the second floor.
(b) Layout/Organization. The first floor cosmetics area
is divided into eight counters, each of which is dedicated
to selling products from a specific vendor. Cosmetics
“beauty advisors” work at specific counters and typically
only sell products associated with their assigned vendor.
Fragrances “beauty advisors” sell all products, regardless
of vendor. Seven of the cosmetics counters and the two
fragrance areas (women’s and men’s fragrances, respectively) also have “counter managers” who, in addition to
selling, coach beauty advisors on service and selling
techniques. The Employer utilizes seven “on-call” employees who are assigned as needed to any of the cosmetics counters or fragrance areas.
counter managers, who account for only 9 of the 140 selling employees.
6
McKay further testified that all selling departments, including the
cosmetics and fragrances department, had rung up products from other
departments. McKay explained, however, that the Employer’s policy
provided that departments should ring up only their own products so
that the Employer could properly track sales for commission purposes.
7
For example, McKay explained that the Employer granted a beauty
counter employee’s request to perform inventory in a noncosmetics
area, and cosmetics beauty advisor Maria Francisco testified that, during the past year, a manager in the jewelry department asked that a few
cosmetics employees assist with that department’s inventory.
(c) Proximity to Different Salespeople/Departments.
The first-floor cosmetics and women’s fragrances area is
surrounded by several other departments: women’s and
juniors’ clothing, fine jewelry, and fine watches. The
second-floor men’s fragrances area is surrounded by the
men’s clothing department.
(d) Complex On-Site “Vendor” Relationships and
Training. Cosmetics “beauty advisors” have frequent
contact with two types of “vendor” representatives: vendor account executives (who are employed by vendors)
and vendor account coordinators (who are employed by
the Employer). These vendor representatives provide instore and offsite training for beauty advisors assigned to
their brands. Training sessions cover product knowledge
and selling techniques, and may deal with topics such as
skin tones, skin types, use of color, and for fragrances,
ingredients, scents, and notes. Because each cosmetics
“beauty advisor” typically sells only one vendor’s products, the advisor has significant interaction with that
vendor’s representatives while other cosmetics “beauty
advisors” have significant interaction with others, creating further differences in working conditions within the
C&F unit.
(e) Hiring. Significantly, vendor account coordinators
and executives participate in hiring cosmetics beauty
advisors. They typically interview job candidates along
with the Employer. The Employer and these vendor representatives then consult with each other to ensure that
mutually acceptable applicants are hired. There are also
vendor representatives associated with fragrances, but
the record suggests they do not visit the store as consistently as cosmetics vendor representatives. Unlike the
hiring process applicable to “cosmetics” beauty advisors,
vendor representatives do not participate in the hiring of
“fragrances” beauty advisors or on-call employees. For
all beauty advisor applicants, however, prior experience
in selling relevant products is desirable, but not required.
(f) Attire. Several of the cosmetics vendors provide
distinctive uniforms for their beauty advisors. All other
beauty advisors adhere to the Employer’s storewide
“basic black” uniform policy.
(g) Compensation. Beauty advisors receive an hourly
wage, plus a 3 percent commission on all sales. “Cosmetics” beauty advisors (but not “fragrances” beauty
advisors) receive a 2 percent commission when they sell
cosmetics outside of their assigned product line, which
happens on occasion. “Counter managers” also receive
an hourly wage, a 3 percent commission on their own
sales, and a .5 percent commission on all sales made at
their counter. “On-call” employees receive a 2 percent
commission regardless of what they sell. The Employer
negotiates with vendors to determine the exact mecha-
24
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
nism by which beauty advisors receive commissions.
The record does not reveal specific information about the
details of these arrangements, save that vendors generally
pay these commissions.
(h) Importance of Customer Relationships. Cosmetics
beauty advisors maintain lists of their regular customers,
which they use to track customer purchases and to call
customers to book appointments for makeovers, invite
them to try new products, or notify them of special promotions or events. Fragrances beauty advisors also
maintain customer lists, which they utilize to invite customers to new fragrance launches.
C. Comparable Similarities and Distinctions
Among Non-C&F Sales Employees
The remaining selling employees work in ten other departments: women’s shoes, handbags, women’s clothing, men’s clothing and shoes, juniors, fine jewelry, fashion jewelry, home, furniture, and bridal. The record reveals that these other sales employees (non-C&F salespeople) have responsibilities, working conditions, hiring
procedures, and compensation arrangements that are
comparable and dissimilar in varying degrees, in line
with the similarities and distinctions that exist among
C&F sales employees.
(a) Physical location. The non-C&F salespeople are
located on the first or second floor of the Saugus store.
(b) Layout/Organization. The 10 non-C&F departments feature products made by a variety of vendors or
manufacturers, including both “vendor specific” and
“Macy’s private brand” products such as “Levi’s; INC.;
Buffalo; Polo; LaCoste; Guess shoes; [and] North Bay
shoes.”8 As noted above, the salespeople are managed
by at least six managers who, like the C&F department
manager, report to the single store manager; and also like
the C&F department manager, it appears that at least two
of the six other managers oversee more than one functional area.9
(c) Proximity to Other Salespeople/Departments. Like
the C&F salespeople, the non-C&F sales employees
work in designated locations on the first and second
floors. As one would expect in any full-service department store, the different sales areas are adjacent to one
another. The record reveals that four or five of the nonC&F product areas are physically adjacent either to the
first floor cosmetics and women’s fragrances area or the
second floor men’s fragrances area.
8
Employer Macy’s, Inc.’s Brief on Review, at 3 (citing Hearing
Transcript at 104–109).
9
A single manager is responsible for the juniors and fine jewelry
salespeople, and a single manager is responsible for women’s shoes and
handbags salespeople.
(d) Complex On-Site “Vendor” Relationships and
Training. As the Regional Director found, “like cosmetics employees,” selling employees in other departments
(referred to as specialists) are also assigned to sell a specific vendor’s products, which requires specialized familiarity with that vendor’s product lines. These specialists
sell Guess shoes and men’s clothing, North Bay shoes,
and Polo men’s clothing. Levi’s, Lacoste, Buffalo, INC,
the North Face, Lenox, and Hilfiger also have specialists
at the Saugus store. As the Regional Director further
found, “like their colleagues in Cosmetics/Fragrances,”
selling employees in other departments also have contact
with vendor representatives. These representatives
monitor stock and conduct onsite and offsite training for
both specialists and nonspecialist employees who sell
their products. Selling employees also receive training
through product information sheets and conversations
with management. District Human Resources Director
Gina DiCarlo testified that the Employer and its many
vendors organize this training for “virtually . . . every
category of associates within our organization.” Departments also hold special seminars during the year
concerning product knowledge, selling techniques, and
other related topics.10
(e) Hiring. Like cosmetics vendors, multiple non-C&F
vendors are involved in hiring the sales specialists assigned to their particular products. Store Manager
McKay testified that the Employer and these vendors
jointly interview applicants to ensure that they hire the
best specialists. Again, prior experience in selling a given department’s products is desirable, but not required.
(f) Attire. As noted above, the Employer maintains a
storewide “basic black” uniform policy, and there were
no other required uniforms for C&F or non-C&F employees, with the exception of some (but not all) cosmetics salespeople who were required, by certain vendors, to
wear a vendor-specific uniform.
(g) Compensation. Selling employees outside the
cosmetics and fragrances department also receive salesbased incentives. Selling employees in fine jewelry,
men’s clothing and shoes, furniture, and bridal receive
commissions. Specialists selling products for Levi’s,
10
DiCarlo testified that the Employer and its vendors, during the
first 10 months of 2012, held 47 of these training seminars. And, much
like cosmetics beauty advisors are trained on skin types and fragrance
scents, selling employees who deal with dresses are trained on silhouette, fabrics, and fit; selling employees in shoes are trained on fit, type,
fabric, and color; and fine jewelry employees are trained on clarity, cut,
color, and weight of gemstones. McKay testified that the Employer
regularly utilizes a storewide coaching program (My Product Activities) to ensure that all selling employees maintain the highest level of
product knowledge and sales techniques.
25
MACY’S, INC.
Guess, Buffalo, and Polo receive bonuses from their assigned vendors. The record does not reveal the precise
details of these arrangements.
(h) Importance of Customer Relationships. Non-C&F
salespeople also maintained customer lists. McKay testified that the Employer has developed a program called
“My Client” to facilitate such lists because they have
“become much more of a focus to the company.” Selling
employees in fine jewelry, men’s clothing, big ticket,11
and bridal have already utilized these lists to invite customers to special events.12
ANALYSIS
The starting point for evaluating the Board’s role in
bargaining-unit determinations is the Act itself. Here,
three points are clear from the statute and its legislative
history.
First, Section 9(a) provides that employees have a right
to representation by a labor organization “designated or
selected for the purposes of collective bargaining by the
majority of the employees in a unit appropriate for such
purposes.”13 Thus, questions about unit appropriateness
are to be resolved by reference to the “purposes” of representation, should a unit majority so choose—namely,
“collective bargaining.”
Second, Congress contemplated that whenever unit
appropriateness is questioned, the Board would conduct a
meaningful evaluation. Section 9(b) states: “The Board
shall decide in each case whether, in order to assure to
employees the fullest freedom in exercising the rights
guaranteed by this Act, the unit appropriate for the purposes of collective bargaining shall be the employer unit,
craft unit, plant unit, or subdivision thereof.”14 Referring
to the “natural reading” of the phrase “in each case,” the
Supreme Court has stated that
whenever there is a disagreement about the appropriateness of a unit, the Board shall resolve the dispute.
Under this reading, the words “in each case” are synonymous with “whenever necessary” or “in any case in
which there is a dispute.” Congress chose not to enact a
11
The record reveals that big ticket items are sold in the furniture
department.
12
My colleagues state that the Employer has no “imminent plan to
use client lists in the remaining primary sales departments,” but
McKay’s testimony suggests otherwise. McKay testified that it was
important to have client lists “throughout the store” (emphasis added).
13
29 U.S.C. § 159(a) (emphasis added). The Supreme Court has indicated that Section 9(a) “suggests that employees may seek to organize
‘a unit’ that is ‘appropriate’—not necessarily the single most appropriate unit.” American Hospital Assn. v. NLRB, 499 U.S. 606, 610 (1991)
(emphasis in original; citations omitted). See also Serramonte Oldsmobile, Inc. v. NLRB, 86 F.3d 227, 236 (D.C. Cir. 1996) (the NLRB “need
only select an appropriate unit, not the most appropriate unit”).
14
29 U.S.C. § 159(b) (emphasis added).
general rule that would require plant unions, craft unions, or industry-wide unions for every employer in
every line of commerce, but also chose not to leave the
decision up to employees or employers alone. Instead,
the decision “in each case” in which a dispute arises is
to be made by the Board.15
Third, the language in Section 9(b) resulted from intentional legislative choices made by Congress over time.
Regarding unit determinations, earliest versions of the
Wagner Act legislation, introduced in 1934, did not contain the phrase “in each case,” nor did they state that the
Board must “assure to employees the fullest freedom in
exercising the rights guaranteed by this Act.” The initial
wording simply stated: “The Board shall determine
whether eligibility to participate in elections shall be determined on the basis of the employer unit, craft unit,
plant unit, or other appropriate grouping.”16
When reintroduced in 1935, the legislation added a
statement that unit determinations were “to effectuate the
policies of this Act.”17 When reported out of the Senate
Labor Committee, the legislation stated that the Board
“shall decide in each case” the appropriateness of the
unit.18 Regarding this language, a House report stated:
15
American Hospital Assn. v. NLRB, 499 U.S. at 611 (emphasis
added). See also id. at 614 (Section 9(b) requires “that the Board decide the appropriate unit in every case in which there is a dispute”).
16
See, e.g., S. 2926, 73d Cong. § 207 (1934), reprinted in 1 NLRB,
Legislative History of the National Labor Relations Act, 1935 (hereinafter “NLRA Hist.”) 11 (1949). See also S. 2926, 73d Cong. § 10(a)
(1934), reprinted in 1 NLRA Hist. 1095 (“The Board shall decide
whether eligibility to participate in a choice of representatives shall be
determined on the basis of employer unit, craft unit, plant unit, or other
appropriate unit.”).
17
See S. 1958, 74th Cong. § 9(b) (1935), reprinted in 1 NLRA Hist.
1300 (“The Board shall decide whether, in order to effectuate the policies of this Act, the unit appropriate for the purposes of collective bargaining shall be the employer unit, craft unit, plant unit, or other unit.”).
18
See S. 1958, 74th Cong. § 9(b) (1935), reprinted in 2 NLRA Hist.
2291 (emphasis added). The full provision stated: “The Board shall
decide in each case whether, in order to effectuate the policies of this
Act, the unit appropriate for the purposes of collective bargaining shall
be the employer unit, craft unit, plant unit, or other unit.” Id. See also
H.R. 7937, 74th Cong. § 9(b), reprinted in 2 NLRA Hist. 2850 (same);
H.R. 7978, 74th Cong. § 9(b), reprinted in 2 NLRA Hist. 2862 (same).
The Senate report accompanying S. 1958 explained: “Obviously, there
can be no choice of representatives and no bargaining unless units for
such purposes are first determined. And employees themselves cannot
choose these units, because the units must be determined before it can
be known what employees are eligible to participate in a choice of any
kind.” S. Rep. 74–573, at 14 (1935), reprinted in 2 NLRA Hist. 2313
(emphasis added). The language remained unchanged when adopted by
the Senate. See S. 1958, 74th Cong. § 9(b) (1935), reprinted in 2
NLRA Hist. 2891 (version of S. 1958 passed by the Senate and referred
to the House Committee of Labor). The same language was contained
in H.R. 7978, 74th Cong. § 9(b) (1935), reprinted in 2 NLRA Hist.
2903 (version of Wagner Act legislation reported by the House Committee on Education and Labor).
26
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Section 9(b) provides that the Board shall determine
whether, in order to effectuate the policy of the bill . . . ,
the unit appropriate for the purposes of collective bargaining shall be the craft unit, plant unit, employer unit,
or other unit. This matter is obviously one for determination in each individual case, and the only possible
workable arrangement is to authorize the impartial
governmental agency, the Board, to make that determination.19
Section 9(b) in the final enacted version of the Wagner Act
stated that the Board’s unit determinations “in each case”
were “to insure to employees the full benefit of their right to
self-organization, and to collective bargaining, and otherwise to effectuate the policies of this Act.”20
In 1947, as part of the Labor Management Relations
Act,21 Congress devoted more attention to the Board’s
unit determinations. The LMRA amended Section 7 so
that, in addition to protecting the right of employees to
engage in protected activities, the Act protected “the
right to refrain from any or all of such activities.”22 The
LMRA added Section 9(c)(5) to the Act, which states:
“In determining whether a unit is appropriate . . . the extent to which the employees have organized shall not be
controlling.”23 A House report—though recognizing the
Board had “wide discretion in setting up bargaining
units”—explained that this language
strikes at a practice of the Board by which it has set up
as units appropriate for bargaining whatever group or
groups the petitioning union has organized at the time.
Sometimes, but not always, the Board pretends to find
19
H.R. Rep. 74–969, at 20 (1935), reprinted in 2 NLRA Hist. 2930
(emphasis added).
20
S. 1958, 74th Cong. § 9(b) (1935), reprinted in 2 NLRA Hist.
3039 (emphasis added) (Senate-passed bill reported by the House
Committee on Education and Labor). The same language was contained in the version adopted by the House, see S. 1958, 74th Cong. §
9(b) (1935), reprinted in 2 NLRA Hist. 3244, in the version adopted by
the Conference Committee, see H.R. Rep. 74–1371, at 2, reprinted in 2
NLRA Hist. 3253–3254, and in the version that was enacted. See 49
Stat. 449, S. 1958, 74th Cong. § 9(b) (1935), reprinted in 2 NLRA Hist.
3274.
21
Labor Management Relations Act (Taft-Hartley Act or LMRA),
61 Stat. 136 (1947), 29 U.S.C. §§ 141 et seq.
22
NLRA Sec. 7, 29 U.S.C. § 157 (emphasis added). See also H.R. Rep.
80–245, at 27 (1947), reprinted in 1 NLRB, Legislative History of the
Labor Management Relations Act, 1947 (hereinafter LMRA Hist.) 318
(1948) (“A committee amendment assures that when the law states that
employees are to have the rights guaranteed in section 7, the Board will
be prevented from compelling employees to exercise such rights
against their will . . . . In other words, when Congress grants to employees the right to engage in specified activities, it also means to grant
them the right to refrain from engaging therein if they do not wish to do
so.”).
23
29 U.S.C. § 159(c)(5).
reasons other than the extent to which the employees
have organized as ground for holding such units to be
appropriate. . . . While the Board may take into consideration the extent to which employees have organized,
this evidence should have little weight, and . . . is not to
be controlling.24
Finally, the LMRA also amended Section 9(b) to state—as
it presently does—that the Board shall make bargaining-unit
decisions “in each case” in “order to assure to employees
the fullest freedom in exercising the rights guaranteed by
[the] Act.”25
This legislative history demonstrates that Congress intended that the Board’s review of unit appropriateness
would not be perfunctory. In the language quoted above,
Section 9(b) mandates that the Board determine what
constitutes an appropriate unit “in each case,” with the
additional mandate that the Board only approve a unit
configuration that “assures” employees their “fullest
freedom” in exercising protected rights. Although more
than one “appropriate” unit might exist, the statutory
language plainly requires that the Board “in each case”
consider multiple potential configurations—i.e., a possible “employer unit,” “craft unit,” “plant unit” or “subdivision thereof.”
It is also well established that the Board may not certify petitioned-for units that are “arbitrary” or “irrational”—for example, where integration and similarities between two employee groups “are such that neither group
can be said to have any separate community of interest
justifying a separate bargaining unit.”26 However, it appears clear that Congress did not intend that the petitioned-for unit would be controlling in all but a few extraordinary circumstances when contrary evidence is
overwhelming, nor did Congress anticipate that every
petitioned-for unit would be accepted unless it is “arbitrary” or “irrational.” Congress placed a much higher
burden on the Board “in each case,” which was to determine whether and which unit configuration(s) satisfy the
24
H.R. Rep. 80–245, at 37 (1947), reprinted in 1 LMRA Hist. 328
(emphasis added), citing Matter of New England Spun Silk Co., 11
NLRB 852 (1939); Matter of Botany Worsted Mills, 27 NLRB 687
(1940).
25
29 U.S.C. § 159(b) (emphasis added). See, e.g., S. 1126, 80th
Cong. § 9(b), reprinted in 1 LMRA Hist. 117; H.R. 3020, 80th Cong. §
9(b), reprinted in 1 LMRA Hist. 244–245.
26
Trident Seafoods, Inc. v. NLRB, 101 F.3d 111, 120 (D.C. Cir.
1996). See generally Kindred Nursing Centers East, LLC v. NLRB, 727
F.3d 552, 558–559 (6th Cir. 2013); Mitchellace, Inc. v. NLRB., 90 F.3d
1150, 1157 (6th Cir. 1996); Bry–Fern Care Ctr., Inc. v. NLRB, 21 F.3d
706, 709 (6th Cir. 1994); NLRB. v. Hardy-Herpolsheimer, 453 F.2d
877, 878 (6th Cir. 1972).
27
MACY’S, INC.
requirement of assuring employees their “fullest freedom” in exercising protected rights.
A. The C&F Salespeople are not Sufficiently Distinct
from Non-C&F Sales Employees
to be an Appropriate Unit
The record uniformly establishes two things that, in
my view, preclude an “appropriate” unit determination
other than one consisting of all salespeople storewide.
First, the evidence shows that salespeople across all departments have multiple important interests in common
(including the Employer’s rules and policies as reflected
in the employee handbook, the same evaluation system,
the same or similar compensation arrangements, participation in the same daily rallies regarding storewide sales
issues, and—most important—the overriding responsibility to sell assigned products and create an environment
encouraging customers to purchase products throughout
the store). Second, to the extent there are dissimilarities
between the working conditions of sales employees in a
combined cosmetics and fragrances group and those of
sales employees outside cosmetics and fragrances, these
same dissimilarities exist between and among the salespeople within the combined cosmetics/fragrances group.
In short, as the Board has held in numerous other retail
cases (see part B below), the record demonstrates here
that a unit other than all salespeople storewide is not
“appropriate” for purposes of the Act.
A bargaining-unit analysis in any retail setting must relate to the nature of the business. In Allied Stores of New
York, Inc.,27 the Board recognized the importance of a
retail employer’s overriding business objective—
selling—when evaluating what constitutes an “appropriate” bargaining unit in a retail setting. The Board stated:
“We perceive a great difference between a retail store,
like the Employer, that employs salespeople to serve the
public and one where the public serves itself without the
aid of sales personnel.”28 The Board rejected the employer’s argument for a combined unit of selling and
nonselling employees and reasoned:
The Employer’s argument . . . minimizes the significance of the Employer’s main venture—to sell—and
the salespeople whose ability to sell plays a large part
in the success of its business. Certainly the obvious job
qualifications of the competent salesperson—pleasing
personality, poise, self-confidence, ease in dealing with
strangers, imagination, ability to speak well, and to persuade—are not demanded of nonselling personnel. The
latter’s work is largely manual in bringing merchandise
27
28
150 NLRB 799 (1965).
Id. at 804.
in and out of the store, does not involve meeting the
public, knowing desirable features and construction of
merchandise, and showing initiative in marketing a
product. Failure to appreciate the difference between a
salesperson’s job and that of other store employees is to
disregard the obvious.29
Allied Stores was decided more than 50 years ago,
which was long before bricks-and-mortar retail stores
faced anything resembling modern-day competitive pressures resulting from Internet sales, global price competition, and smartphone price-matching. In the present day,
these competitive challenges confront retail employers
and their sales employees alike, and these challenges
constitute an overriding common concern that should
render inappropriate any bargaining unit consisting of
less than a storewide selling unit, especially where the
record does not contain compelling evidence of distinctions unique to a particular subset of retail store salespeople.30
The specific facts here reveal that all selling employees share significant common interests and working conditions. If the following matters involved differences,
there is no doubt that they would be emphasized and discussed prominently in any discussion of the “appropriate” unit (i.e., as evidence that a discrete subset of employees, rather than a storewide unit, should be deemed
appropriate). The significance of these factors is not
diminished merely because they undermine rather than
support the petitioned-for unit:
29

Within and outside the C&F area, some salespeople participated in a hiring process that involved
outside vendors, and other salespeople were hired
without input from outside vendors.

All salespeople across the store—within and outside the C&F area—are covered by the same policies expressed in the same employee handbook.

All salespeople storewide participate in the same
benefits plans that are administered by the same
human resources representatives and plan administrators.
Id. (emphasis added).
The instant case does not present any issue regarding the appropriateness of a single-store retail salesperson unit in comparison to a
multistore, regional or nationwide salesperson units, and I do not express any view regarding issues that may be relevant in these other
contexts. Likewise, because I would find that the petitioned-for unit is
not appropriate, I do not reach the Employer’s alternative argument
regarding the appropriateness of a unit consisting of all selling and
nonselling employees. See, e.g., Sears, Roebuck & Co., 184 NLRB
343, 346 (1970).
30
28
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD

All salespeople storewide receive the same types
of performance evaluations, based on the same criteria, and the same “sales scorecard” is used for
rating purposes.31

All salespeople storewide are subject to the same
in-store dispute resolution procedure.

All salespeople share other important matters associated with their day-to-day existence at work,
including the time periods they work, the
timeclock system, the breakroom(s), and participation in the same “daily” rallies regarding salesrelated totals and special events.
The nature of the employer’s business leaves no doubt
why all salespeople storewide have so many of these
things in common: these shared working conditions are
consistent with the Employer’s singular focus, which is
to ensure that all salespeople—working separately and in
coordination one another—can maximize sales across the
store. To the extent there are distinctions between a
combined C&F salespeople unit and the non-C&F salespeople who work at the same store, (i) such distinctions
also exist between and among the C&F salespeople, and
(ii) any distinctions pale in comparison to the interests
that all salespeople storewide have in common.
As noted previously, C&F and non-C&F selling employees perform the same basic job function of selling
merchandise to customers, without a requirement that the
salespeople have specific selling experience before working for the Employer. Within and outside the C&F
group, many salespeople are assigned to sell particular
vendor brands, and other salespeople sell multiple vendor
brands. Salespeople across the store must have specialized, technical knowledge about the products they sell.
Regarding compensation, the record reveals that C&F
salespeople have a variety of commission arrangements,
salespeople in at least 4 of the remaining 10 departments
(fine jewelry, men’s clothing and shoes, furniture, and
bridal) also receive commissions, and sales-related bonuses are provided to non-C&F salespeople employed to
sell four major brands (Levi’s, Guess, Buffalo, and Polo). Although C&F and non-C&F salespeople do not all
receive the same commission rates, the Board has held
that differences in commissions and related pay incen31
This weakens the Petitioner’s request to represent just C&F employees. See Wheeling Island Gaming, 355 NLRB 637, 642 (2010)
(poker dealers not distinguishable from other table game dealers where
they were “evaluated using the same performance appraisal”); TDK
Ferrites Corp., 342 NLRB 1006, 1009 (2004) (petitioned-for unit inappropriate where the employer evaluated the performance of included
and excluded employees “based on the same factors”).
tives are insufficient to render inappropriate a bargaining
unit that is otherwise appropriate.32 The important overriding factor here is that salespeople across the store—
not just C&F salespeople—receive sales-based incentive
pay that significantly supplements their base wages.33
The record further reveals that salespeople within and
outside the C&F department participate in training and
other storewide programs designed to maximize sales,
and have significant interaction with the many vendors
that sell products in the store. This shared emphasis on
training reinforces the appropriateness of a unit of all
salespersons storewide rather than the petitioned-for subset of salespersons. See Boeing Co., 337 NLRB 152, 153
(2001) (petitioned-for unit deemed inappropriate where,
among other things, included and excluded employees
shared “similarity in training” and attended the same
employer-provided classes). There is also evidence of
integration and interaction among salespeople within and
outside the C&F group. Most important, salespeople
across the store develop customer relationships and
maintain customer lists—undoubtedly involving many of
the same customers—to maximize sales.
The facts also reveal that the Union and the Board—at
this same store—have deemed a storewide salesperson
unit appropriate. In Allied Stores of New York, Inc.,34 the
Board supported its unit determination in part by evaluating the “pattern of organizing” in the retail industry. The
Petitioner Union in the instant case itself previously attempted (unsuccessfully) to organize a storewide salesperson unit that the Board deemed appropriate, and the
same Union represents employees in other storewide or
multidepartment salesperson units. This pattern, though
not controlling, “demonstrates the understanding” of the
Union and the Employer that “singular differences” have
not been relied upon in the past in favor of a unit limited
to a narrow subset of selling employees who share broad
commonalities with sales colleagues storewide.
In the instant case, the record compels a conclusion
that the petitioned-for subset of C&F salespeople is inappropriate because the unit would arbitrarily include some
salespeople and exclude others, when the included and
32
See, e.g., Wheeling Island Gaming, 355 NLRB at 642 (“fact that
poker dealers keep individual tips and the other table games dealers
share tips appear to be a minor difference”); Hotel Services Group, 328
NLRB 116, 117 (1999) (petitioned-for unit of salon’s massage therapists did not possess a separate community of interest because, among
other things, they had “similar” compensation as other salon employees
despite differences in commission and gratuity rates).
33
See Coca-Cola Bottling Co., 229 NLRB 553, 554–555 (1977)
(unit limited to certain salesmen deemed inappropriate where all salesmen were paid on “a salary-plus-commission basis”).
34
150 NLRB at 804.
29
MACY’S, INC.
excluded are all engaged in selling merchandise to the
same customers in a full-service department store. This
conclusion is reinforced by the fact that all salespeople,
throughout the store, are covered by the same or similar
hiring procedures, the same handbook and policies, the
same dispute resolution procedure, the same performance
evaluation criteria and tools, and similar commission
arrangements (with pay differences that exist both within
and outside the petitioned-for unit). In these respects, the
Employer’s operation resembles that of the employer in
Wheeling Island Gaming,35 where a petitioned-for group
consisting of poker dealers was deemed inappropriate
because excluded employees (other table game dealers)
were “integral elements of the Employer’s business of
operating a casino.”36 Here, as in Trident Seafoods, Inc.
v. NLRB,37 the integration and similarities between C&F
and non-C&F salespeople “are such that neither group
can be said to have any separate community of interest
justifying a separate bargaining unit.”38
For these reasons alone, even if Specialty Healthcare
were applied, I would find that C&F employees do not
constitute an appropriate unit. Using the language of
Specialty Healthcare, the record establishes that the ex-
cluded non-C&F salespeople share an “overwhelming”
community of interests with the C&F salespeople employed in the petitioned-for unit.39 I would find that the
smallest appropriate unit in the instant case must include
all salespeople at the Employer’s store.40
B. A Unit Limited to C&F Salespeople Contradicts
Longstanding Board Standards Regarding
the Retail Industry
In Specialty Healthcare, the Board dealt with the appropriateness of a particular bargaining unit in a
nonacute healthcare setting. However, the Board
acknowledged the existence of “various” presumptions
and rules governing other industries, and it expressly
stated that Specialty Healthcare was “not intended to
disturb” those standards.41
Some of these standards, which reflect the development of Board law over many decades, relate specifically
to the retail industry. Specifically, the Board has held
that “storewide” bargaining units are presumptively appropriate in the retail industry.42
There are substantial reasons for the Board’s presumption in so many cases that storewide retail units are appropriate. In Haag Drug Co.,43 the Board explained:
35
355 NLRB at 642. Specialty Healthcare explicitly reaffirmed
Wheeling Island Gaming. See 357 NLRB No. 83, slip op. at 13 fn. 32.
36
355 NLRB at 642. See also Allied Stores, 150 NLRB at 804 (selling employees’ ability to sell, an employer’s “main venture,” “plays a
large part in the success of its business”).
37
101 F.3d at 111.
38
Id. at 120 (emphasis added). Two considerations emphasized by
my colleagues—the fact that the C&F salespeople comprise a single
“department” presided over by a single supervisor—do not in my view
adequately support a C&F-only unit. The complexity of the Employer’s store clearly requires some delineation of particular product areas,
and department stores traditionally delineate those areas by departments; but the considerations that directly bear on unit “appropriateness” are those that directly affect employees, and as noted in the text at
length, (i) broad commonalities in terms and conditions of employment
among all selling employees storewide favor a storewide salespersons
unit, and (ii) to the extent that differences exist between C&F salespeople and those in other “departments,” the same types of differences
exist between and among salespeople working within the combined
C&F unit. For similar reasons, although common immediate supervision is relevant to the appropriate-unit determination, it is only one
factor, and it is outweighed here by the common working conditions
that cut across departmental lines, as well as the fact that Store Manager McKay exercises control over and oversees all salespeople across the
store, both directly (through the daily rallies) and indirectly (through
her oversight of the store’s sales managers, who report to McKay). See
Hotel Services, 328 NLRB at 117 (multiple supervisors does “not necessarily mandate excluding differently supervised employees” from a
unit); Haag Drug Co., 169 NLRB 877, 877–888 (1968) (“the community of interest of the employees in a single store takes on significance”
when the store is “under the immediate supervision of a local store
manager”). Moreover, counter managers oversee the work of discrete
groups of employees within the C&F group, and there are other significant differences in working conditions between and among C&F employees, as detailed above.
The employees in a single retail outlet form a homogeneous, identifiable, and distinct group, physically separated from the employees in the other outlets of the
39
Specialty Healthcare, 357 NLRB No. 83, slip op. at 12–13.
My colleagues cite a single case—Sears, Roebuck & Co., 261
NLRB 245 (1982)—for the proposition that the Board has found a
subset of salespeople within a department store to be an appropriate
unit. However, Sears is plainly distinguishable because the unit there
was limited to auto center employees who were physically separated
from other retail departments (the repair shop was separated from the
main store by a wall), they had different working hours and vacation
schedules, and they were only encouraged to attend monthly storewide
meetings. Id. at 246–247. The Board noted that interaction between
auto center salespeople and other salespeople was isolated to “rare
situations,” which reflected the “absence of any close relationship”
between the two groups of employees. Id. at 247. Most importantly,
the Board in Sears emphasized that the petitioned-for unit centered
around “a nucleus of craft employees (the mechanics) around whom the
other auto center employees are organized,” and only 7 people in the
33-employee unit were “sales employees.” Id. at 245. Therefore, Sears
involved a traditional “craft” exception to the retail industry presumption of a storewide bargaining unit, and a majority of the unit employees were not even salespeople. These considerations are completely
absent in the instant case.
41
357 NLRB No. 83, slip op. at 13 fn. 29.
42
See May Department Stores Co., 97 NLRB 1007, 1008 (1952)
(“storewide unit” called “the optimum unit for the purposes of collective bargaining”); I. Magnin & Co., 119 NLRB 642, 643 (1957) (the
Board regards storewide unit “as a basically appropriate unit in the
retail industry”); Sears, Roebuck, 184 NLRB at 346 (calling a storewide
unit “presumptively appropriate”).
43
169 NLRB at 877-878 (1968) (emphasis added).
40
30
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
chain; they generally perform related functions under
immediate supervision apart from employees at other
locations; and their work functions, though parallel to,
are nonetheless separate from, the functions of employees in the other outlets, and thus their problems and
grievances are peculiarly their own and not necessarily
shared with employees in the other outlets.
The presumed appropriateness of a storewide unit can be
especially clear where, as in the instant case, “a local store
manager . . . is involved in rating employee performance, or
in performing a significant portion of the hiring and firing of
the employees, and is personally involved with the daily
matters which make up their grievances and routine problems.”44 The Board elaborated in Haag Drug: “It is in this
framework that the community of interest of the employees
in a single store takes on significance.”45 See also Allied
Stores of New York, 150 NLRB at 804 (Board finds storewide unit of retail sales employees appropriate based on
“pattern of organiz[ing]” and given the “great difference
between a retail store . . . that employs salespeople to serve
the public and one where the public serves itself without the
aid of sales personnel”).
The Board’s cases regarding unit appropriateness in
the retail industry involve a number of issues that have
been handled in a consistent manner.
First, as noted previously, the Board has indicated that
unique characteristics shared by sales employees have
warranted findings that storewide sales employee bargaining units are appropriate.46 In I. Magnin,47 the Board
found that a union was not justified in seeking to represent a unit limited to a retail clothing store’s shoe salesmen.48 Like all the store’s salespeople, the shoe sales44
Id. at 878.
Id. (emphasis added). Although cases such as Haag Drug arose in
the context of evaluating whether a storewide unit was appropriate,
rather than a multistore unit, these cases remain relevant in the instant
case because they recognize that employees in a storewide unit are
likely to share a community of interests that renders such a unit presumptively appropriate. See also Dixie Belle Mills, Inc., 139 NLRB
629, 631 (1962).
46
See, e.g., Allied Stores of New York, Inc., 150 NLRB at 804. See
also Wickes Furniture, 231 NLRB 154, 154–155 (1977) (“selling employees have a sufficiently distinct community interest apart from other
[nonselling] store employees . . . [t]hey are under separate immediate
supervision, spend the large majority of their time on the selling floor
initiating virtually all sales, alone receive commissions for their sales,
and have minimal contacts with warehouse employees”); Sears, Roebuck & Co., 174 NLRB 941, 941–942 (1969) (because “display department employees, receivers, shippers, stockmen, unit control employees, auditing department, and credit department employees . . . do
no selling . . . we shall exclude them from the unit” of petitioned-for
salesmen).
47
119 NLRB at 642.
48
Id. at 643.
45
men were hired through the same personnel department,
worked the same number of hours, enjoyed the same
benefits, and shared the same general sales skills. The
Board found that the shoe salesmen were not craft or
professional employees and thus were not “sufficiently
different” from other selling employees to warrant their
segregation in a separate unit. Likewise, in Kushins &
Papagallo,49 the Board held that a petitioned-for unit was
not appropriate where it was limited to one division of
sales employees in a multidepartment retail store that
sold shoes, dresses, and accessories.50
Second, the Board has found less-than-storewide retail
units of “craft or professional employees” to be appropriate.51
The Supreme Court has indicated that the Board’s bargaining-unit determinations can appropriately “be guided
not simply by the basic policy of the Act but also by the
rules that the Board develops to circumscribe and to
guide its discretion . . . in the process of case-by-case
adjudication,” and “the Board has created many such
rules in the half-century during which it has adjudicated
bargaining unit disputes.”52 In the circumstances presented here, a bargaining unit limited to C&F salespeople
is not only inappropriate given the facts of this case, such
a unit is contrary to standards developed and recognized
by the Board in numerous other retail industry cases.
49
199 NLRB 631, 631 (1972).
The Board has also been unwilling to separate selling employees
into separate bargaining units in other industries where the employer’s
primary goal is to sell its products. See, e.g., Coca-Cola Bottling Co.,
229 NLRB at 553–555 (separate unit comprised of a subset of an employer’s soft drink and vending machine product salesmen inappropriate; all sales employees had the same duty “to sell and/or deliver the
Employer’s products”); Larry Faul Oldsmobile Co., Inc., 262 NLRB
370, 371 (1982) (finance and insurance salespersons should be included
in a petitioned-for unit of automobile salespersons because both groups
of employees were “primarily engaged in selling”); Liberty Mutual
Insurance Co., 185 NLRB 734, 735 (1970) (personal and business
insurance salesmen belonged in a single unit).
51
I. Magnin, 119 NLRB at 643. See, e.g., Goldblatt Bros., Inc., 86
NLRB 914, 915–916 (1949) (window and interior display personnel
warranted a separate unit; they exercised artistic ability, used specialized tools, and completed a 2-year training program before beginning
work); May Department Stores Co., 97 NLRB at 1008–1009 (hair
stylists, beauticians, and manicurists constituted an appropriate, separate unit; they completed training, obtained licenses, and had specialized knowledge); Foremen & Clark, Inc., 97 NLRB 1080, 1081–1082
(1952) (tailor shop employees warranted a separate unit; they “engaged
in manual work, much of it highly skilled, which is easily differentiated
from the duties of selling personnel”); J.L. Hudson Co., 103 NLRB
1378, 1380–1383 (1953) (carpet and upholstery installers warranted
separate units because they composed functional groups “possessing
predominantly craft skills”); Rich’s, Inc., 147 NLRB 163, 164–165
(1964) (bakery employees constituted an appropriate unit).
52
American Hospital Assn. v. NLRB, 499 U.S. at 611-612 (emphasis
added; citations omitted).
50
31
MACY’S, INC.
These retail industry standards have been applied consistently and exist for good reasons.53 Like the rules developed by the Board for other industries, our retail industry standards should “circumscribe” and “guide” our
resolution of the instant case.
C. Specialty Healthcare
As noted above, a wide array of undisputed facts renders inappropriate a bargaining unit limited to C&F employees. My colleagues, like the Acting Regional Director, reach a contrary conclusion based on the Board’s
decision in Specialty Healthcare.54 In most cases, under
Specialty Healthcare, the petitioned-for unit of employees will be deemed appropriate, instead of a larger unit,
unless the opposing party proves that the excluded employees “share an overwhelming community of interest”
with the petitioned-for group.55
Contrary to my colleagues, I would not apply Specialty
Healthcare here or in any other decision. Three considerations, in my view, suggest that Specialty Healthcare is
inconsistent with the role that the Board has been admonished to play “in each case” when deciding the appropriate unit.
First, Specialty Healthcare constitutes an unwarranted
departure from standards developed over the course of
decades that have long governed the Board’s bargainingunit determinations. Rather than upholding petitioned53
Unlike my colleagues, I do not believe Saks Fifth Avenue, 247
NLRB 1047, 1051 (1980), supports the proposition that the presumption favoring storewide units is “no longer applicable to department
stores.” This statement in Saks Fifth Avenue related to a successorship
situation, where the new employer argued it could refuse to recognize
and bargain with the union that previously represented a preexisting
unit of “alterations” employees. These employees were employed in a
less-than-storewide “craft” unit that traditionally has been considered
appropriate by the Board. See cases cited in fn. 50, supra. Moreover,
the above-quoted statement from Saks Fifth Avenue was accompanied
by a citation to Allied Stores, 150 NLRB at 803, where the Board upheld the appropriateness of a storewide salesperson unit. Neither Saks
Fifth Avenue nor Allied Stores supports a less-than-storewide unit that
selectively includes some salespeople and excludes other salespeople at
the same store. Also, as my colleagues concede, subsequent to Saks
Fifth Avenue, the Board has reaffirmed the presumptive appropriateness
of storewide units in the retail industry. See Wal-Mart Stores, 348
NLRB 274, 287 (2006), enfd. 519 F.3d 490 (D.C. Cir. 2008). See also
Charrette Drafting Supplies, 275 NLRB 1294, 1297 (1985).
54
357 NLRB No. 83.
55
Id., slip op. at 1. In addition to the holding that a petitioned-for
unit will be accepted unless the opposing party proves that excluded
employees share an “overwhelming” community of interest with employees in the proposed unit, Specialty Healthcare also states that,
within the proposed unit, employees must be “readily identifiable as a
group (based on job classifications, departments, functions, work locations, skills, or similar factors),” and they must “share a community of
interest” based on “traditional criteria.” Id., slip op. at 12 (citing
Wheeling Island Gaming, 355 NLRB at 637 fn. 2) (other citations omitted). These other standards existed long before the Board issued its
Specialty Healthcare decision, and I agree with them.
for units except when there is proof that excluded employees share an “overwhelming” community of interest
with employees in the proposed unit, I believe the
Board’s responsibility is to evaluate whether a unit’s
appropriateness is supported based on a careful examination of what interests are shared within and outside the
proposed unit. The Board reaffirmed this approach in
Wheeling Island Gaming,56 which, though cited with
approval in Specialty Healthcare,57 examined “whether
the interests of the group sought are sufficiently distinct
from those of other [excluded] employees to warrant
establishment of a separate unit.”58 I believe the same
type of examination, if conducted here, warrants a conclusion that the petitioned-for unit is not appropriate.
Second, the Board in Specialty Healthcare stated that
its decision was “not intended to disturb” rules developed
by the Board regarding particular industries.59 Yet, the
instant case involves precisely the type of industry—and
a classification of employees within that industry—
warranting a continuation of the consistent treatment that
the Board has applied to similar facts in other cases. As
applied in the instant case, Specialty Healthcare detracts
from the type of employer and industry-specific standards that remain applicable to bargaining unit determinations, particularly since the Board in Specialty
Healthcare expressly stated that these standards remain
intact.
56
355 NLRB at 641–642.
357 NLRB No. 83, slip op. at 13 fn. 32.
58
355 NLRB at 637 fn. 2 (emphasis in original). My colleagues
quote the Sixth Circuit appeal of Specialty Healthcare for the proposition that it is “just not so” that Specialty Healthcare represented a material change in the law. Yet although the Sixth Circuit indicated that the
phrase “overwhelming community of interest” appeared in some Board
decisions, see Kindred Nursing Centers East, LLC v. NLRB, 727 F.3d
552, 561–562 (6th Cir. 2013) (citing two examples), the Board in Specialty Healthcare acknowledged that other prior cases had used “different words” when describing when excluded employees rendered inappropriate the petitioned-for unit, or evaluated whether employee interests were “sufficiently distinct,” or even failed to articulate “any clear
standard,” Specialty Healthcare, 357 NLRB No. 83, slip op. at 11–12,
and the Fourth Circuit squarely rejected the “overwhelming community
of interest” standard in NLRB v. Lundy Packing Co., 68 F.3d 1577,
1581 (4th Cir. 1995). Additionally, my colleagues suggest the Sixth
Circuit rejected arguments “similar to those presented” in this dissent,
but nothing in Kindred suggests that the Sixth Circuit evaluated the
considerations expressed here—especially that Specialty Healthcare
improperly limits the Board’s statutory role, contrary to the Act and its
legislative history, by affording too much deference to the petitionedfor unit in derogation of Section 9(b)’s requirement that the Board “in
each case” undertake a broader and more refined analysis, play a more
active role, and consider the Section 7 rights of included and excluded
employees when determining the appropriate unit. See fns. 60–67 and
accompanying text, infra.
59
357 NLRB No. 83, slip op. at 13 fn. 29.
57
32
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Third, and most important, I believe the Specialty
Healthcare standard is irreconcilable with the role that
Congress intended that the Board would play “in each
case” regarding bargaining unit questions,60 and Specialty Healthcare renders “controlling” the “extent to which
the employees have organized” contrary to Section
9(c)(5).61 As recited at some length above, the Act and its
legislative history indicate that Congress requires the
Board—as reflected in mandatory statutory language—to
undertake an active inquiry that is twofold: (a) the Board
“shall decide in each case whether” the appropriate unit
“shall be the employer unit, craft unit, plant unit, or subdivision thereof”;62 and (b) when making such a decision
in each case, the Board must determine which of these
competing groupings operates “to assure to employees
the fullest freedom in exercising the rights guaranteed by
[the] Act.”63 By its terms, Specialty Healthcare appears
to guarantee that the Board will not “in each case” decide
which of the unit configurations enumerated in the statute (i.e., the “employer unit,” “craft unit,” “plant unit,” or
“subdivision thereof”) operates to “assure employees the
fullest freedom in exercising the rights” associated with
union elections. Under Specialty Healthcare, the petitioned-for unit “in each case” will govern, except in the
rare and unusual situation where an opposing party
proves the existence of an “overwhelming community of
interests” between excluded employees and those in the
proposed unit. I believe Congress has required that the
Board “in each case” will undertake a broader and more
refined analysis, and play a more active role, when determining whether or not a unit is “appropriate” than is
permitted under the Specialty Healthcare standard.
In my view, the “overwhelming community of interests” standard also improperly focuses solely on the Section 7 rights of employees in the petitioned-for unit, and
it disregards the Section 7 rights of excluded employees
except in a rare case where the excluded employees’ interests “overlap almost completely” with those of included employees.64 All statutory employees have Section 7
rights, whether or not they are initially included in the
petitioned-for unit. And the Act’s two most important
core principles governing elections—the concepts of
“exclusive representation” and “majority rule,” both set
60
NLRA Sec. 9(b), 29 U.S.C. § 159(b).
29 U.S.C. § 159(c)(5). See NLRB v. Lundy Packing Co., 68 F.3d
at 1581 (“overwhelming community of interest” requirement “effectively accorded controlling weight to the extent of union organization”).
62
NLRA Sec. 9(b), 29 U.S.C. § 159(b) (emphasis added).
63
Id. (emphasis added).
64
Specialty Healthcare, 357 NLRB No. 83, slip op. at 11 (quoting
Blue Man Vegas, LLC v. NLRB, 529 F.3d 417, 422 (D.C. Cir. 2008))
(internal quotation marks omitted).
61
forth in Section 9(a)—are completely dependent on the
scope of the unit. For these reasons, the Board’s unit
determinations must, in part, consider whether the rights
of nonpetitioned-for employees warrant their inclusion in
any bargaining unit. Yet, such inquiry is effectively precluded under Specialty Healthcare. As stated in the dissenting opinion authored by former Member Hayes, Specialty Healthcare makes “the relationship between petitioned-for unit employees and excluded coworkers irrelevant in all but the most exceptional circumstances.”65
In short, the Act requires the Board to approach unit
determinations with vigilance and some reasonably broad
range of vision regarding alternative unit configurations.
In this regard, Specialty Healthcare affords too much
deference to the petitioned-for unit in derogation of the
mandatory role that Congress requires the Board to play.
I believe this will necessarily result in bargaining units
not decided upon by the Board based on criteria specified
in the Act, but instead units will mostly result from
“whatever group or groups the petitioning union his organized at the time,”66 contrary to Section 9(c)(5) and
Sections 9(a) and 9(b) of the Act.67
CONCLUSION
The Employer here—like countless others in the retail
industry—operates a store that involves enormous complexity: an array of products and brands, with salespeople who have overlapping relationships with customers
65
Id., slip op. at 15 (Member Hayes, dissenting). See also DTG Operations, Inc., 357 NLRB No. 175, slip op. at 8–9 (2011) (Member
Hayes, dissenting); Northrop Grumman Shipbuilding, Inc., 357 NLRB
No. 163, slip op. at 6–9 (2011) (Member Hayes, dissenting). In my
view, the mere possibility that excluded employees may seek separate
representation in one or more separate bargaining units does not solve
the problem caused by the Board’s failure to give reasonable consideration to their inclusion in a larger unit. The Act’s requirement that the
Board “assure to employees the fullest freedom” in exercising protected
rights requires the Board “in each case” to consider the interests of all
employees—whether or not they are included in the petitioned-for
unit—so the Board can “decide” whether the unit should be the “employer unit, craft unit, plant unit, or subdivision thereof.” NLRA Sec.
9(b), 29 U.S.C. § 159(b).
66
H.R. Rep. 80–245, supra fn. 23, at 37.
67
I recognize that Specialty Healthcare was enforced by the Court of
Appeals for the Sixth Circuit, which held—as did the D.C. Circuit in
Blue Man Vegas, LLC v. NLRB, 529 F.3d 417 (D.C. Cir. 2008)—that
the Board’s “overwhelming community of interest” standard does not
violate Section 9(c)(5). As referenced in fn. 58, supra, and with due
respect for these court decisions, I believe Specialty Healthcare affords
too much deference to the petitioned-for unit in derogation of the role
that Congress requires the Board to play when making unit determinations, contrary to Section 9(c)(5), Section 9(a) and Section 9(b). However, to the extent that Specialty Healthcare is considered to be within
the discretion that Congress prescribed for the Board, I would still
decline to apply or rely on that decision for the reasons stated in the
text.
33
MACY’S, INC.
and one another, with innumerable additional details regarding commissions and compensation, common performance criteria, onsite vendor representatives, and
nonsales personnel. The record reveals that all salespeople storewide have the same or similar working conditions, employment policies, job responsibilities, performance criteria, benefit plans, and commission and compensation arrangements. To the extent that cosmetics
and fragrances salespeople are dissimilar from other
salespeople in the same store, there are comparable dissimilarities among and between the C&F employees
themselves. Moreover, if a unit limited to C&F salespeople is deemed appropriate, that will raise the prospect
of one or more additional separate bargaining units for
other segments of sales personnel at the same store, and
the resulting multiplicity of bargaining relationships
would create even more complexity that would be at
odds with the Employer’s overriding business objective:
to attract and retain customers who purchase products
throughout the store.
I would find that the petitioned-for C&F salesperson
unit is not appropriate, and that the smallest potential
appropriate unit would consist of all salespeople storewide. I believe the contrary result my colleagues reach is
inconsistent with the Board’s traditional standards governing retail operations. Finally, I believe the Specialty
Healthcare standard, as applied in the instant case, highlights important shortcomings that render Specialty
Healthcare inappropriate and contrary to the Act, and I
would refrain from applying or relying on Specialty
Healthcare in any case.
Accordingly, I respectfully dissent.
Dated, Washington, D.C. July 22, 2014
______________________________________
Philip A. Miscimarra,
Member
NATIONAL LABOR RELATIONS BOARD
NOTICE: This opinion is subject to formal revision before publication in the
bound volumes of NLRB decisions. Readers are requested to notify the Executive Secretary, National Labor Relations Board, Washington, D.C.
20570, of any typographical or other formal errors so that corrections can
be included in the bound volumes.
Murphy Oil USA, Inc. and Sheila M. Hobson. Case
10–CA–038804
October 28, 2014
DECISION AND ORDER
BY CHAIRMAN PEARCE AND MEMBERS MISCIMARRA,
HIROZAWA, JOHNSON, AND SCHIFFER
For almost 80 years, Federal labor law has protected
the right of employees to pursue their work-related legal
claims together, i.e., with one another, for the purpose of
improving their working conditions. The core objective
of the National Labor Relations Act is the protection of
workers’ ability to act in concert, in support of one another. Section 7 of the Act implements that objective by
guaranteeing employees the “right . . . to engage in . . .
concerted activities for the purpose of collective bargaining or other mutual aid or protection.”1 Our national
labor policy—aimed at averting “industrial strife and
unrest” and “restoring equality of bargaining power between employers and employees”2—has been built on
this basic premise. In protecting a substantive right to
engage in collective action—the basic premise of Federal
labor policy—the National Labor Relations Act is unique
among workplace statutes.3
The Section 7 right to act concertedly for mutual aid
and protection is not limited to supporting a labor union
and pursuing collective bargaining with employers. The
Supreme Court has made clear that Section 7 protects
employees “when they seek to improve working conditions through resort to administrative and judicial forums. . . .”4 The Court stated that “Congress knew well
enough that labor’s cause is advanced on fronts other
than collective bargaining and grievance settlement within the immediate employment context” and that failing to
protect such conduct “could ‘frustrate the policy of the
Act to protect the right of workers to act together to better their working conditions.’”
Early in the Act’s history, the Court’s decisions established that individual agreements between employees and
employer cannot restrict employees’ Section 7 rights.
The Court in 1940 struck down individual employment
contracts that required employees to present their discharge grievances individually (foreclosing any role for a
union or other representative), describing the contracts as
a “continuing means of thwarting the policy of the Act.”5
The principle that individual agreements could not be
treated as waivers of the statutory right to act collectively
was soon reaffirmed, with the Court observing that
“[w]herever private contracts conflict with [the Board’s]
functions [of preventing unfair labor practices], they obviously must yield or the Act would be reduced to a futility.”6 And even before the Act was passed, Congress had
declared in the Norris-LaGuardia Act that individual
agreements restricting employees’ “concerted activities
for the purpose of . . . mutual aid or protection” —
expressly including concerted legal activity—violated
federal policy and were unenforceable.7
In D. R. Horton, Inc., a case of first impression decided in 2012, the Board applied these well-established
principles to hold that an employer violates the National
Labor Relations Act “when it requires employees covered by the Act, as condition of their employment, to
sign an agreement that precludes them from filing joint,
class, or collective claims addressing their wages, hours,
or other working conditions against the employer in any
forum, arbitral or judicial.”8 The Board reached this result relying on the substantive right, at the core of the
Act, to engage in collective action to improve working
conditions. It did so “notwithstanding the Federal Arbitration Act (FAA), which generally makes employmentrelated arbitration agreements judicially enforceable,”
finding no conflict, under the circumstances, between
Federal labor law and the FAA.9 “Arbitration [under the
FAA] is a matter of consent, not coercion,”10 and a valid
arbitration agreement may not require a party to prospectively waive its “right to pursue statutory remedies.”11
5
National Licorice Co. v. NLRB, 309 U.S. 350, 361 (1940).
J.I. Case Co. v. NLRB, 321 U.S. 332, 337 (1944).
7
29 U.S.C. §§ 102–104.
8
D. R. Horton, Inc., 357 NLRB No. 184, slip op. at 1 (2012), enf.
denied in relevant part 737 F.3d 344 (5th Cir. 2013), petition for rehearing en banc denied (5th Cir. No. 12-60031, April 16, 2014) .
9
Id.
10
Stolt-Nielsen, S.A. v. AnimalFeeds International Corp., 559 U.S.
662, 681 (2010), quoting Volt Information Sciences, Inc. v. Board of
Trustees of Leland Stanford Junior University, 489 U.S. 468, 479
(1989).
11
American Express Co. v. Italian Colors Restaurant, ___ U.S. ___,
133 S.Ct. 2304, 2310 (2013) (emphasis omitted), quoting Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 637 fn.
6
1
29 U.S.C. § 157. Sec. 8(a)(1) of the Act, in turn, makes it an “unfair labor practice for an employer . . . to interfere with, restrain, or
coerce employees in the exercise of the rights guaranteed in [S]ection
7.” 29 U.S.C. § 158(a)(1).
2
29 U.S.C. § 151.
3
See Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S.
728, 739 (1981) (“In contrast to the [NLRA], which was designed to
minimize industrial strife and to improve working conditions by encouraging employees to promote their interests collectively, the [Fair
Labor Standards Act] was designed to give specific minimum protections to individual workers…”) (emphasis in original).
4
Eastex, Inc. v. NLRB, 437 U.S. 556, 566 (1978) (footnote omitted).
361 NLRB No. 72
2
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
But arbitration agreements that are imposed as a condition of employment, and that compel NLRA-covered
employees to pursue workplace claims against their employer individually, do require those employees to forfeit
their substantive right to act collectively—and so nullify
the foundational principle that has consistently informed
national labor policy as developed by the Board and the
courts. To be clear, the NLRA does not create a right to
class certification or the equivalent, but as the D. R. Horton Board explained, it does create a right to pursue
joint, class, or collective claims if and as available, without the interference of an employer-imposed restraint.12
This case turns on the issue decided in D. R. Horton.
The Respondent urges us to overrule that decision, which
has been rejected by the U.S. Court of Appeals for the
Fifth Circuit13 and viewed as unpersuasive by decisions
of the Second and Eighth Circuits (although the analysis
by those courts was abbreviated).14 Scholarly support for
the Board’s approach, by contrast, has been strong.15 We
19 (1985). See also Gilmer v. Interstate/Johnson Lane Corp., 500 U.S.
20, 26 (1991).
12
357 NLRB No. 184, slip op. at 10 & fn. 24.
13
D. R. Horton, Inc. v. NLRB, 737 F.3d 344 (5th Cir. 2013).
14
Sutherland v. Ernst & Young LLP, 726 F.3d 290, 297–298 fn. 8
(2d Cir. 2013); Owens v. Bristol Care, Inc., 702 F.3d 1050, 1053–1054
(8th Cir. 2013). In a Ninth Circuit decision, the court declined to address an argument predicated on D. R. Horton as untimely raised, but
noted other courts’ disagreement with the Board’s decision. Richards
v. Ernst & Young, LLP, 744 F.3d 1072, 1975 & fn. 3 (9th Cir. 2013) (as
amended). Several Federal district court decisions have addressed D.
R. Horton, as well, most rejecting the Board’s view. We do not address
those adverse decisions individually here, but the arguments they reflect are examined. With very limited exceptions, the Board’s decisions are reviewable solely in the Federal courts of appeals, and the
district courts accordingly play a limited role in the interpretation and
enforcement of the National Labor Relations Act. See 29 U.S.C. §
160(e). Finally, the California Supreme Court has endorsed the Fifth
Circuit’s position, albeit in a case involving an arbitration agreement
less restrictive than the one at issue in D. R. Horton. Iskanian v. CLS
Transportation Los Angeles, LLC, 327 P.3d 29, 137–143,173 Cal. Rptr.
3d 289, 299–305 (2014). State courts do not review the Board’s decisions and play no role in the administration of the Act.
15
See, e.g., Catherine L. Fisk, Collective Action and Joinder of Parties in Arbitration: Implications of D. R. Horton and Concepcion, 35
Berkeley J. Emp. & Labor L. 175 (2014); Charles A. Sullivan & Timothy P. Glynn, Horton Hatches the Egg: Concerted Activity Includes
Concerted Dispute Resolution, 64 Ala. L. Rev. 1013 (2013); Katherine
V.W. Stone, Procedure, Substance, and Power: Collective Litigation
and Arbitration under the Labor Law, 61 U.C.L.A. L. Rev. Discourse
164 (2013); Stephanie Greene & Christine Neylon O’Brien, The NLRB
v. The Courts: Showdown over the Right to Collective Action in Workplace Disputes, 52 Am. Bus. L. J. No. 4 (2014) (forthcoming) (available at SSRN: http:/ssrn.com/abstract=2406577); Michael D. Schwartz,
Note, A Substantive Right to Class Proceedings: the False Conflict
between the FAA and NLRA, 81 Fordham L. Rev. 2945 (2013). See
also Ann C. Hodges, Can Compulsory Arbitration Be Reconciled with
Section 7 Rights?, 38 Wake Forest L. Rev. 173 (2003) (effectively
anticipating Board’s D. R. Horton decision). Professors Greene and
O’Brien observe that “[a]lthough most courts have chosen to discredit
have independently reexamined D. R. Horton, carefully
considering the Respondent’s arguments, adverse judicial
decisions, and the views of our dissenting colleagues.16
Today we reaffirm that decision. Its reasoning and its
result were correct, as we explain below,17 and no decision of the Supreme Court speaks directly to the issue we
consider here. “The substantive nature of the right to
group legal redress is what distinguishes the NLRA from
every other statute the Supreme Court has addressed in
its FAA jurisprudence,”18 and the Fifth Circuit itself
acknowledged the “force of the Board’s efforts to distinguish the NLRA from all other statutes that have been
found to give way to requirements of arbitration.”19
Having reaffirmed the D. R. Horton rationale, we apply it here to find that the Respondent has violated Section 8(a)(1) of the Act by requiring its employees to
agree to resolve all employment-related claims through
individual arbitration, and by taking steps to enforce the
unlawful agreements in Federal district court when the
Charging Party and three other employees filed a collective claim against the Respondent under the Fair Labor
Standards Act.
the Board’s D. R. Horton decision, few have given serious consideration to the merits of the Board’s analysis and the fact that the case
raises issues that have not been addressed by the Supreme Court.” Id.
at 32.
16
The Respondent argues that D. R. Horton was not a valid decision
of the Board, asserting that the Board lacked a quorum because the
recess appointment of then-Member Becker was constitutionally invalid and because Member Becker’s appointment had in any case expired
before the decision issued. We reject those arguments. Member Becker’s appointment was constitutionally proper, see NLRB v. Noel Canning, 134 S.Ct. 2550 (2014), and, for the reasons explained in Entergy
Mississippi, Inc., 358 NLRB No. 99, slip op. at 1–2 (2012)—which we
find persuasive and endorse—his appointment had not expired. In any
case, the Respondent’s arguments (and other procedural attacks on D.
R. Horton) are now moot, given our independent reexamination of D.
R. Horton today. Putting aside any question of whether the Board can,
must, or should treat D. R. Horton as precedential, we agree with the
decision and subscribe to its reasoning.
17
The Board is not required to acquiesce in adverse decisions of the
Federal courts in subsequent proceedings not involving the same parties. See, e.g., Enloe Medical Center v. NLRB, 433 F.3d 834, 838 (D.C.
Cir. 2005); Nielsen Lithographing Co. v. NLRB, 854 F.2d 1063, 1066–
1067 (7th Cir. 1988). As the Seventh Circuit explained, because only
the Supreme Court is authorized to interpret the Act with “binding
effect throughout the whole country,” the Board is “not obliged to
accept [the] interpretation” of any court of appeals. Nielsen Lithographing, supra, 854 F.2d at 1066–1067. See generally Samuel
Estreicher & Richard L. Revesz, Nonaquiescence by Federal Administrative Agencies, 98 Yale L. J. 679, 705–713 (1989).
18
Fisk, Collective Action and Joinder of Parties in Arbitration, supra, 35 Berkeley J. Emp. & Labor L. at 186.
19
D. R. Horton, supra, 737 F.3d at 362.
MURPHY OIL USA, INC.
FINDINGS OF FACT20
I. JURISDICTION
The Respondent, a Delaware corporation, with a place
of business in Calera, Alabama, has been engaged in the
operation of retail gasoline and diesel fueling stations.
During the 12-month period prior to the Joint Motion and
Stipulation, the Respondent, in conducting its business,
purchased and received at its Calera, Alabama facility
goods valued in excess of $50,000 directly from points
outside the State of Alabama. The Respondent has been
an employer engaged in commerce within the meaning of
Section 2(2), (6), and (7) of the Act.
II. ALLEGED UNFAIR LABOR PRACTICES
A. Facts
The Respondent operates over 1000 retail fueling stations in 21 States. Prior to March 6, 2012, the Respondent required all job applicants and current employees, as
a condition of employment, to execute a “Binding Arbitration Agreement and Waiver of Jury Trial” (the
Agreement). The Agreement provides in relevant part as
follows:
Excluding claims which must, by statute or other law,
be resolved in other forums, Company and Individual
agree to resolve any and all disputes or claims each
may have against the other which relate in any manner
whatsoever as to [sic] Individual’s employment, including but not limited to, all claims beginning from the period of application through cessation of employment at
Company and any post-termination claims and all related claims against managers, by binding arbitration
. . . . Disputes related to employment include, but are
not limited to, claims or charges based upon federal or
state statutes, including, but not limited to, the Age
Discrimination in Employment Act, Title VII of the
Civil Rights Act of 1964, as amended, and any other
civil rights statute, the Americans with Disabilities Act,
the Family and Medical Leave Act, the Fair Labor
Standards Act or other wage statutes, the WARN Act,
claims based upon tort or contract laws or common law
or any other federal or state or local law affecting employment in any manner whatsoever.
20
On November 29, 2012, the Respondent, the Charging Party, and
the General Counsel filed with the Board a joint stipulation of facts and
a motion to transfer this proceeding to the Board. The parties waived a
hearing before an administrative law judge and agreed to submit the
case directly to the Board for findings of fact, conclusions of law, and a
Decision and Order based on the stipulated record. On February 11,
2013, the Board approved the stipulation of facts and granted the motion. We reaffirm and ratify those actions now. Thereafter, the Respondent, the Charging Party, and the General Counsel filed briefs.
3
....
Individual understands that he/she will not be considered for employment by the Company unless he/she
signs this Agreement.
....
By signing this Agreement, Individual and the Company waive their right to commence, be a party to, or [act
as a] class member [in, any class] or collective action in
any court action against the other party relating to employment issues. Further, the parties waive their right
to commence or be a party to any group, class or collective action claim in arbitration or any other forum.
The parties agree that any claim by or against Individual or the Company shall be heard without consolidation
of such claim with any other person or entity’s claim.
....
INDIVIDUAL AND COMPANY UNDERSTAND
THAT, ABSENT THIS AGREEMENT, THEY
WOULD HAVE THE RIGHT TO SUE EACH
OTHER IN COURT, TO INITIATE OR BE A
PARTY TO A GROUP OR CLASS ACTION
CLAIM, AND THE RIGHT TO A JURY TRIAL,
BUT, BY EXECUTING THIS AGREEMENT, BOTH
PARTIES GIVE UP THOSE RIGHTS AND AGREE
TO HAVE ALL EMPLOYMENT DISPUTES
BETWEEN THEM RESOLVED BY MANDATORY,
FINAL AND BINDING ARBITRATION. ANY
EMPLOYMENT RELATIONSHIP BETWEEN
INDIVIDUAL AND COMPANY IS TERMINABLE
AT-WILL, AND NO OTHER INFERENCE IS TO
BE DRAWN FROM THIS AGREEMENT.
The Respondent required the Charging Party, Sheila
M. Hobson, to sign the Agreement when she applied for
employment in November 2008. Hobson was employed
by the Respondent at its Calera, Alabama facility from
November 2008 to September 2010. In June 2010, Hobson and three other employees (the plaintiffs) filed, in the
United States District Court for the Northern District of
Alabama (the district court), a collective action pursuant
to 29 U.S.C. § 216(b) on behalf of themselves and other
employees similarly situated, alleging violations of the
Fair Labor Standards Act (FLSA). The complaint alleged that the Respondent failed to compensate the plaintiffs for overtime and for various required work-related
activities performed off the clock, including driving to
the fuel stations of the Respondent’s competitors to monitor fuel prices and the accuracy of their signage.
In July 2010, the Respondent filed a motion to compel
the plaintiffs to arbitrate their claims on an individual
basis and to dismiss the FLSA collective action in its
4
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
entirety, based on the plaintiffs having executed the
Agreement. The Respondent continued to seek to enforce the Agreement in approximately eight separate
court pleadings and related filings made between September 2010 and February 2012.
Hobson filed an unfair labor practice charge in January
2011, and the General Counsel issued a complaint and
notice of hearing in March 2011. The complaint alleged
that the Respondent had been violating Section 8(a)(1) of
the Act by maintaining and enforcing a mandatory arbitration agreement that prohibits employees from engaging in protected, concerted activities. The complaint
further alleged that the Agreement violated Section
8(a)(1) because its language would lead employees reasonably to believe that they were prohibited from filing
unfair labor practice charges with the Board. In April
2011, the Respondent filed an answer. Later that month,
the Regional Director issued an Order postponing the
hearing indefinitely.
On or around March 6, 2012, the Respondent revised
the Agreement. The Revised Agreement consists of the
initial Agreement with the following paragraph inserted
between the eighth and ninth paragraphs:
Notwithstanding the group, class or collective action
waiver set forth in the preceding paragraph, Individual
and Company agree that Individual is not waiving his
or her right under Section 7 of the National Labor Relations Act (“NLRA”) to file a group, class or collective
action in court and that Individual will not be disciplined or threatened with discipline for doing so. The
Company, however, may lawfully seek enforcement of
the group, class or collective action waiver in this
Agreement under the Federal Arbitration Act and seek
dismissal of any such class or collective claims. Both
parties further agree that nothing in this Agreement
precludes Individual or the Company from participating in proceedings to adjudicate unfair labor practices
charges before the National Labor Relations Board
(“NLRB”), including, but not limited to, charges addressing the enforcement of the group, class or collective action waiver set forth in the preceding paragraph.
The Respondent has maintained and enforced the Revised
Agreement, as a condition of employment, for employees
hired after March 6, 2012. Employees hired before that date
remain subject to the Agreement.
On September 18, 2012, the district court granted the
Respondent’s motion to compel individual arbitration of
the plaintiffs’ FLSA claims and further ordered that their
lawsuit be stayed pending arbitration. Hobson v. Murphy
Oil USA, Inc., No. CV-10-HGD-1486-S (N.D. Ala.
2012). The plaintiffs have not appealed this decision,
and the Respondent has refused to arbitrate the plaintiffs’
claims on a collective basis.
In October 2012, the General Counsel issued an
amended complaint that includes the same allegations as
the original complaint regarding the maintenance of the
Agreement and further alleges that the Respondent’s
efforts to enforce the Agreement in court also violated
Section 8(a)(1). The Respondent filed an answer to the
amended complaint.
B. The Parties’ Contentions
The General Counsel contends that the Agreement and
Revised Agreement violate Section 8(a)(1) because they
prohibit employees from exercising their Section 7 right
to litigate employment-related claims concertedly, and
that the Agreement is also unlawful because it would
lead employees reasonably to believe that they were prohibited from filing unfair labor practice charges with the
Board. The General Counsel contends that the Respondent further interfered with employees’ Section 7 rights by
applying the Agreements to restrict employees’ exercise
of Section 7 activity. Specifically, it sought to enforce
the Agreement against the plaintiffs through its motion to
dismiss their collective FLSA action and compel individual arbitration of their claims. The General Counsel
argues that the Respondent’s motion and subsequent
court filings had an illegal objective and thus enjoy no
protection under the Petition Clause of the First Amendment.
The Respondent argues that the Board should reconsider and overrule D. R. Horton, which it also contends is
procedurally invalid.21 The Respondent argues that, in
any case, its Agreement and Revised Agreement do not
restrict the exercise of the Section 7 right to engage in
collective legal activity under the Board’s statement in
D. R. Horton that “[s]o long as the employer leaves open
a judicial forum for class and collective claims, employees’ NLRA rights are preserved . . . .” 357 NLRB No.
184, slip op. at 12. The Respondent contends that the
Agreement and Revised Agreement preserve employees’
NLRA rights, as D. R. Horton requires, because they do
not preclude employees from filing complaints with Federal administrative agencies that have the power to file
court actions on behalf of a class of employees. The Respondent further contends that because its motion to dismiss the plaintiffs’ FLSA claim was successful, the motion obviously was not objectively baseless and thus was
protected under the Petition Clause of the First Amend21
See fn. 14. supra (rejecting procedural arguments).
MURPHY OIL USA, INC.
ment and cannot be held to constitute an unfair labor
practice.22
The Charging Party contends that the Respondent violated Section 8(a)(1) by maintaining its arbitration
agreements because they bar joint or collective action in
any forum and that the Respondent’s motion to dismiss
the plaintiffs’ FLSA action constitutes a separate unfair
labor practice because seeking to enforce an unlawful
prohibition of collective action is as much a violation of
the Act as the maintenance of the prohibition itself.
C. Discussion
We begin our discussion with an examination of D. R.
Horton and the arguments raised against it. We explain
why, notwithstanding judicial criticism of the decision,
echoed by the dissents, we endorse that decision. Next,
applying the D. R. Horton rationale, we conclude that the
two arbitration agreements at issue here, original and
revised, violate Section 8(a)(1) of the Act as interpreted
in D. R. Horton, contrary to the Respondent’s assertions.
Finally, we conclude that the Respondent’s efforts to
enforce its unlawful agreements also violated Section
8(a)(1).
1. D. R. Horton was correctly decided
The rationale of D. R. Horton was straightforward,
clearly articulated, and well supported at every step:
(1) Mandatory arbitration agreements that bar
employees from bringing joint, class, or collective
workplace claims in any forum restrict the exercise
of the substantive right to act concertedly for mutual
aid or protection that is central to the National Labor
Relations Act. D. R. Horton, supra, 357 NLRB No.
184, slip op. at 2–3 & fn. 4 (collecting cases). Board
and court decisions throughout the Act’s history
have recognized that right on facts comparable to the
present case. In 1942, for example, the Board held
that the filing of a Fair Labor Standards Act suit by
three employees was protected concerted activity.23
In a later case, the Ninth Circuit agreed with the
22
The Respondent argues that the allegation in the amended complaint that its motion to dismiss violated the Act is moot because the
only relief sought by the General Counsel in the amended complaint
was an order enjoining the Respondent from prosecuting the motion,
and no further prosecution is possible: the court has issued its order
granting the motion, and the plaintiffs did not appeal. We reject this
argument. The Board has broad discretionary authority under Sec.
10(c) to fashion appropriate remedies, see Indian Hills Care Center,
321 NLRB 144, 144 fn. 3 (1996), and our discretion is not limited by
the remedies the General Counsel seeks. Moreover, contrary to the
Respondent’s representations, the amended complaint does not limit the
remedies sought to injunctive relief; the General Counsel’s brief to the
Board seeks additional remedies.
23
Spandsco Oil & Royalty Co., 42 NLRB 942, 949–950 (1942).
5
Board that an employee’s circulation of a petition
among coworkers, designating him as their agent to
seek back wages under the FLSA, was protected
concerted activity.24 In fact, the Board’s position
that litigation pursued concertedly by employees is
protected by Section 7 has been upheld consistently
by the Federal appellate courts,25 and the Supreme
Court has explained that the Act protects employees
“when they seek to improve working conditions
through resort to administrative and judicial forums.”26 Such peaceful collective action, of course,
is to be preferred to the forms of economic disruption and industrial strife that Federal labor policy
aims to prevent.
(2) Employer-imposed individual agreements
that purport to restrict employees’ Section 7 rights,
including agreements that require employees to pursue claims against their employer individually, violate the National Labor Relations Act, as the Board,
the courts of appeals, and the Supreme Court have
held. See 357 NLRB No. 184, slip op. at 4–5 & fn.
7 (collecting cases). In an early decision under the
NLRA, the Seventh Circuit upheld the Board’s finding unlawful a clause in individual employment contracts that required employees to attempt to resolve
disputes individually with the employer and then
provided for arbitration.27 In National Licorice, supra, the Supreme Court found unlawful individual
employment contracts restricting a discharged employee from presenting his grievance to the employer “through a labor organization or his chosen representatives, or in any way except personally.”28 And
in J.I. Case, supra, the Court held that individual
employment contacts predating certification of a union could not limit the scope of an employer’s statutory duty to bargain with the union.29 As these cases
make clear, employers may not condition employment on the waiver of employees’ right to take collective action by seeking class certification or the
equivalent.30
24
Salt River Valley Water Users’ Assn. v. NLRB, 206 F.2d 325 (9th
Cir. 1953).
25
See, e.g., Brady v. National Football League, 644 F.3d 661, 673
(8th Cir. 2011); Mohave Electric Cooperative, Inc. v. NLRB, 206 F.3d
1183, 1188 (D.C. Cir. 2000).
26
Eastex, supra, 437 U.S. at 566.
27
NLRB v. Stone, 125 F.2d 752 (7th Cir. 1942).
28
309 U.S. at 360.
29
321 U.S. at 339.
30
In D. R. Horton, the Board was unequivocal that what Sec. 7 guarantees is the right to pursue class certification or the equivalent, not
class certification itself:
6
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
(3) Finding a mandatory arbitration agreement
unlawful under the National Labor Relations Act, insofar as it precludes employees from bringing joint,
class, or collective workplace claims in any forum,
does not conflict with the Federal Arbitration Act or
undermine its policies, because:
(a) such a finding treats an arbitration agreement
no less favorably than any other private contract that
conflicts with federal law;
(b) the NLRA Section 7 right to pursue joint,
class, or collective legal action is a substantive right,
and not merely a procedural right of the sort found in
other statutes, and which arbitration agreements may
effectively waive under the FAA;
(c) not only does the text of the FAA fail to establish that an arbitration agreement inconsistent
with the NLRA is nevertheless enforceable, but the
savings clause in Section 2 of the FAA affirmatively
provides that such a conflict with federal law is
grounds for invalidating the agreement; and
(d) even if there were a direct conflict between
the NLRA and the FAA, the Norris-LaGuardia
Act—which by its terms prevents enforcement of
any private agreement inconsistent with the statutory
policy of protecting employees’ concerted activity,
including an agreement that seeks to prohibit a “lawful means [of] aiding any person participating or interested in a” lawsuit arising out of a labor dispute31—indicates that the FAA would have to yield
insofar as necessary to accommodate Section 7
rights.
Id., slip op. at 7–12.
With due respect to the courts that have rejected D. R.
Horton, and to our dissenting colleagues, we adhere to its
essential rationale for protecting workers’ core substantive right under the National Labor Relations Act, and we
[T]here is no Section 7 right to class certification. . . . Whether a class
is certified depends on whether the requisites for class certification
under Rule 23 have been met. But that is not the issue in this case.
The issue here is whether the [employer] may lawfully condition employment on waiving their right under the NLRA to take the collective
action inherent in seeking class certification, whether or not they are
ultimately successful under Rule 23.
. . . .Nothing in our holding guarantees class certification; it guarantees
only employees’ opportunity to pursue without employer coercion, restraint or interference such claims of a class or collective nature as
may be available to them under Federal, State or local law. Employees who seek class certification in Federal court will still be required
to prove that the requirements for certification under Rule 23 are met,
and their employer remains free to assert any and all arguments
against certification (other than the [arbitration agreement]).
D. R. Horton, supra, 357 NLRB No. 184, slip op. at 10 & fn. 24.
31
29 U.S.C. § 104(d).
now explain why. Our primary focus is properly on the
decision of the Fifth Circuit, the only Federal appellate
court to have examined D. R. Horton directly on review
and to have fully articulated its view that the Board
erred. We also address the separate views of our dissenting colleagues, Member Johnson and Member
Miscimarra, who essentially endorse the Fifth Circuit’s
decision.
a. The Fifth Circuit’s decision in D. R. Horton
We first summarize the decision of a divided panel of
the Fifth Circuit in D. R. Horton, then explain those aspects of the court’s reasoning that prevent us from agreeing with the panel majority.
(1)
Preliminarily, the Fifth Circuit majority acknowledged
that “cases under the NLRA give some support to the
Board’s analysis that collective and class claims, whether
in lawsuits or in arbitration, are protected by Section 7.”
But the court concluded that “[c]aselaw under the FAA
points . . . in a different direction than the course taken
by the Board”—despite conceding “that none of those
cases considered a Section 7 right to pursue legal claims
concertedly.” 737 F.3d at 357 & fn. 8. The court observed that the “use of class action procedures [and presumably similar claims-aggregating devices] is not a
substantive right” even with regard to the NLRA, citing
decisions involving “various employment-related statutory frameworks”32 and dismissing the claim “that the
NLRA is essentially sui generis.” Id. at 357.
The court then examined the Board’s reasoning by applying a framework derived from the Supreme Court’s
FAA jurisprudence. The court’s starting premise was the
“requirement under the FAA that arbitration agreements
must be enforced according their terms,” subject to two
exceptions: (1) that an arbitration agreement may be invalidated under the grounds recognized under the FAA’s
savings clause;33 and (2) that another statute’s “contrary
congressional command” may preclude application of the
32
The primary authority cited by the Fifth Circuit was the Supreme
Court’s decision in Gilmer, supra, which involved the Age Discrimination in Employment Act. The D. R. Horton Board addressed Gilmer
and distinguished it from cases like this one. 357 NLRB No. 184, slip
op. at 9–10. In the present case, the issue is not whether access to class
or collective procedures is necessary to effectively vindicate rights
under the statute that authorized the underlying legal claims (the Fair
Labor Standards Act). The question, rather, is whether the mandatory
arbitration agreements “violate[d] the substantive rights vested in employees by Section 7 of the NLRA” to pursue their FLSA claims collectively. Id. at 9 (emphasis added).
33
Sec. 2 of the FAA provides for revocation of an arbitration agreement “upon such grounds as exist at law or in equity for the revocation
of any contract.” 9 U.S.C. § 2.
MURPHY OIL USA, INC.
FAA. Id. at 358. Neither exception applied, the court
concluded.
First, invoking the Supreme Court’s decision in Concepcion,34 the court held that while the Board’s interpretation of the FAA “savings clause” was “facially neutral
[,] requiring only that employees have access to collective procedures in an arbitral or judicial forum,” it had
the impermissible effect of “disfavoring arbitration,”
because “[r]equiring a class mechanism [in some forum]
is an actual impediment to arbitration.” Id. at 359–360.
Second, the court concluded that the NLRA did not
“contain[ ] a congressional command to override the
FAA,” whether in its text or its legislative history or because of an “inherent conflict” between the FAA and
NLRA’s purpose. Id. at 360–361. Section 7 of the
NLRA was not such a command because it was merely
“general language” that did “not explicitly provide for a
collective [legal] action, much less the procedures such
an action would employ” and, indeed, did not even create
a private cause of action against employers. Id. at 360 &
fn. 9. In turn, there was no inherent conflict between the
FAA and the NLRA, because “courts repeatedly have
understood the NLRA to permit and require arbitration”
—here, the Fifth Circuit panel cited only decisions involving collectively bargained arbitration provisions35—
and because the “right to collective action . . . cannot be
successfully defended on the policy ground [that] it provides employees with greater bargaining power,” in light
of decisions applying the FAA in cases involving enforcement of other Federal workplace statutes. Id. at
361.36 The court accorded “some importance” to the fact
that the NLRA was enacted and reenacted “prior to the
advent in 1966 of modern class action practice.” As for
the Board’s reliance on the Norris-LaGuardia Act, the
court—in a footnote observing that this statute is “outside the Board’s interpretive ambit” —summarily rejected the “Board’s reasoning” as “unpersuasive.” Id. at 362
fn. 10.37
34
AT & T Mobility LLC v. Concepcion, ___ U.S. ___, 131 S.Ct.
1740 (2011).
35
The court relied primarily on the Supreme Court’s decision in 14
Penn Plaza LLC v. Pyett, 556 U.S. 247 (2009).
36
The court’s principal authority was the Supreme Court’s decision
in Gilmer, supra.
37
Circuit Judge Graves dissented in relevant part, endorsing the
Board’s position in substantially all respects. 737 F.3d at 364 (dissenting opinion). He agreed with the Board that the mandatory arbitration
agreement interfered with employees’ substantive rights under Sec. 7 of
the NLRA; that there was no conflict between the NLRA and the FAA,
given that statute’s savings clause; and that if there were a direct conflict between the NLRA and the FAA, the Norris-LaGuardia Act indicated that the FAA would have to yield. Id. at 364–365.
7
(2)
The Supreme Court has, in its own words, “emphasized often that the NLRB has the primary responsibility
for developing and applying national labor policy.”38 We
begin, then, with those aspects of D. R. Horton that turn
on the understanding of national labor policy, which is
built on the principle that workers may act collectively—
at work and in other forums, including the courts—to
improve their working conditions. The Fifth Circuit’s
decision gives too little weight to this policy. We reiterate a crucial point made by the D. R. Horton Board: that
the Board, like the courts, must carefully accommodate
both the NLRA and the FAA. 357 NLRB No. 184, slip
op. at 8 & fn. 19. The Fifth Circuit’s decision does not
reflect such an accommodation. It views the National
Labor Relations Act and its policies much more narrowly
than the Supreme Court has, while treating the Federal
Arbitration Act and its policies as sweeping far more
broadly than that statute or the Supreme Court’s decisions warrant. “[N]o legislation pursues it purposes at all
costs,”39 and the FAA is no exception. The costs to Federal labor policy imposed by the Fifth Circuit’s decision
would be very high. The substantive right at the core of
the NLRA would be severely compromised, effectively
forcing workers into economically disruptive forms of
concerted activity and threatening the sort of “industrial
strife” that Congress recognized as harmful. There is
nothing in the text of the FAA, in its policies, or in the
Supreme Court’s jurisprudence that compels those costs.
The Fifth Circuit understood D. R. Horton as simply
another in a series of cases to be decided under the established framework of the Supreme Court’s Federal Arbitration Act jurisprudence, and not as a case presenting
novel questions. The court’s first step was to determine
that the pursuit of legal claims concertedly is not a substantive right under Section 7 of the NLRA. We cannot
accept that conclusion; it violates the long-established
understanding of the Act and national labor policy, as
reflected, for example, in the Supreme Court’s decision
in Eastex, supra. Rather, we think the D. R. Horton
Board was clearly correct when it observed that the
“right to engage in collective action—including collective legal action—is the core substantive right protected
by the NLRA and is the foundation on which the Act and
Federal labor policy rest.” 357 NLRB No. 184, slip op.
at 11 (emphasis added in part).40
38
NLRB v. Curtin Matheson Scientific, Inc., 494 U.S. 775, 786–787
(1990).
39
Italian Colors, supra, 133 S.Ct. at 2309, quoting Rodriguez v.
U.S., 480 U.S. 522, 525–526 (1987) (per curiam).
40
The source of the language of Sec. 7, as the Supreme Court has
explained, is the Norris-LaGuardia Act, and that statute expressly pro-
8
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
Section 7 provides that “[e]mployees shall have the
right . . . to engage in . . . concerted activities for the purpose of … mutual aid or protection.” 29 U.S.C. § 157.
Under Section 8(a)(1) of the Act, it is an unfair labor
practice “for an employer . . . to interfere with, restrain,
or coerce employees in the exercise of the rights guaranteed in section 7.” 29 U.S.C. § 158(a)(1). Under the
NLRA’s statutory scheme, employees’ Section 7 rights
are enforced solely by the Board—there is no private
right of action under the Act—through the procedures
established by Section 10. 29 U.S.C. § 160. Notably,
Section 10(a) provides that the Board’s authority to prevent and remedy unfair labor practices “shall not be affected by any other means of adjustment or prevention
that has been or may be established by agreement, law,
or otherwise.” 29 U.S.C. § 160(a).
The rights uniquely guaranteed by Section 7 (with the
exception of the right to refrain from concerted activity)
are, as the Supreme Court has observed, “collective
rights,”41 and all of them are substantive rights. As the
D. R. Horton Board indicated, Section 7 protects a wide
range of concerted activity by employees who, like those
here, seek to compel their employer’s compliance with
the Fair Labor Standards Act. 357 NLRB No. 184, slip
op. at 3–4. Section 7 protects picketing. It protects a
consumer boycott. It protects a strike. And as numerous
Board and judicial decisions make quite clear, it protects,
as a substantive right, workers joining together to pursue
legal redress in a State or Federal court. There is no basis in the Act or its jurisprudence to carve out concerted
legal activity as somehow entitled to less protection than
other concerted activity. Indeed, concerted legal activity
would seem, if anything, to be a favored form of concerted activity under the Act because it would have the least
potential for economic disruption, the harm that Congress sought to prevent in enacting the NLRA, as Section
1 of the Act explains. 29 U.S.C. § 151. Blocking this
channel would only push employees toward other, more
disruptive forms of concerted activity. We doubt seritects “[b]y all lawful means aiding any person participating or interested in any labor dispute who is . . . prosecuting, any action or suit in any
court of the United States or of any State.” 29 U.S.C. § 104. See
NLRB v. City Disposal Systems, Inc., 465 U.S. 822, 834–835 (1984)
(upholding Board rule that individual employee’s assertion of right
under collective-bargaining agreement was protected concerted activity). After tracing the origins of Sec. 7, the City Disposal Court observed that “[t]here is no indication that Congress intended to limit this
protection to situations in which an employee’s activity and that of his
fellow employees combine with another in any particular way.” Id. at
835.
41
Emporium Capwell Co. v. Western Addition Community Organization, 420 U.S. 50, 62 (1975) (emphasis added) (Sec. 7 rights “are, for
the most part, collective rights, rights to act in concert with one’s fellow
employees”).
ously, meanwhile, that any court, would uphold—or
could uphold, consistent with either the NLRA or the
Norris-LaGuardia Act, with its longstanding prohibition
against “yellow dog” contacts—a mandatory, individual
arbitration agreement that compelled employees to give
up the right to strike or picket, to hold a march or rally,
to sign a petition, or to seek a consumer boycott, as a
means to resolve a dispute with their employer over
compliance with a federal statute. All of these forms of
concerted activity are protected by Section 7, as is concerted legal activity.
Section 7, then, does not create procedural rights in
the sense that the Fifth Circuit invoked. The collective
rights created by Section 7, by definition, necessarily
involve group action, and all are enforced one way: by
the Board, through its processes. This is in clear contrast
with statutes like the Fair Labor Standards Act or the
Age Discrimination in Employment Act, which establish
purely individual rights, create private rights of action,
and authorize group litigation only as a means to vindicate individual rights. Enacted after the NLRA, these
statutes provide additional legal rights and remedies in
the workplace, but in no way supplant, or serve as a substitute for, workers’ basic right under Section 7 to engage
in concerted activity as a means to secure whatever
workplace rights the law provides them. In this case, for
example, while the underlying legal claims involved the
FLSA, it is the NLRA that is the source of the relevant,
substantive right to pursue those claims concertedly. In
short, contrary to the Fifth Circuit’s view, the National
Labor Relations Act is not simply another employmentrelated Federal statute. “[I]t is protection for joint employee action that lies at the heart of the Act.”42 The
NLRA, then, is sui generis, and its special character must
be taken into account in cases like this one.
Because mandatory arbitration agreements like those
involved in D. R. Horton purport to extinguish a substantive right to engage in concerted activity under the
NLRA, they are invalid. The Supreme Court has explained recently that the Federal policy favoring arbitration, however liberal, does have limits. It does not permit a “prospective waiver of a party’s right to pursue
statutory remedies,” such as a “provision in an arbitration
agreement forbidding the assertion of certain statutory
rights.”43 Insofar as an arbitration agreement prevents
employees from exercising their Section 7 right to pursue
legal claims concertedly—by, as here, precluding them
42
Meyers Industries, 281 NLRB 882, 883 (1986) (Meyers II), affd.
sub nom. Prill v. NLRB, 835 F.2d 1481 (D.C. Cir. 1987), cert. denied
487 U.S. 1205 (1988).
43
Italian Colors, supra, 133 S.Ct. at 2310, quoting Mitsubishi, supra,
473 U.S. at 637 (emphasis in original).
MURPHY OIL USA, INC.
from filing joint, class, or collective claims addressing
their working conditions in any forum, arbitral or judicial—the arbitration agreement amounts to a prospective
waiver of a right guaranteed by the NLRA. (The Act, of
course, does not create an entitlement to class certification or the equivalent; it protects the right to seek that
result.) Being required to proceed individually is no
proper substitute for proceeding together, insofar as otherwise legally permitted,44 and only channels employee
collective activity into disruptive forms of action. The
“remedial and deterrent function”45 of the NLRA, which
protects the right to concerted legal action, cannot possibly be served by an exclusive arbitral forum that denies
the right of employees to proceed collectively.
But even applying the framework utilized by the Fifth
Circuit, D. R. Horton was correctly decided. The court
stated that the FAA requires that arbitration agreements
must be enforced according to their terms, with two exceptions. Both exceptions apply here. First, the mandatory arbitration agreement is invalid under Section 2 of
the FAA, the statute’s savings clause, which provides for
revocation “upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. The
Supreme Court’s decisions in National Licorice and J.I.
Case, supra, establish that any individual employment
contract that purports to extinguish rights guaranteed by
Section 7 of the National Labor Relations Act is unlawful. If such contracts were allowed to stand, then (in the
Supreme Court’s words) the Act “would be reduced to a
futility.”46 “It is . . . well established,” the Supreme
Court explained later, “that a federal court has a duty to
determine whether a contract violates federal law before
enforcing it”—holding that illegality under the NLRA is
a valid defense.47 In rejecting the Board’s position in D.
R. Horton, the Fifth Circuit failed even to cite National
Licorice or J.I. Case, much less attempt to reconcile
them with the result reached by the court.
Instead, the Fifth Circuit relied on the Supreme Court’s
decision in Concepcion, which held that the FAA
preempted a California State law doctrine finding classaction waivers in consumer contracts unconscionable.
There the court stated that requiring the availability of
class procedures “interfere[d] with the fundamental attributes of arbitration,” and was an impermissible obsta44
As explained, the NLRA forecloses employers from imposing on
employees a waiver of the right to seek to pursue their legal claims
together. It does not prevent employers from opposing class certification or the equivalent of grounds other than waiver. See D. R. Horton,
supra, 357 NLRB No. 184, slip op. at 10 & fn. 24.
45
Gilmer, supra, 500 U.S. at 28, quoting Mitsubishi, supra, 473 U.S.
at 637.
46
J.I. Case, supra, 321 U.S. at 337.
47
Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 83–84 (1982).
9
cle to the pro-arbitration objectives of the FAA.48 Cases
like D. R. Horton, however, present no issue of Federal
preemption. Rather, they require accommodating two
Federal statutory schemes: the NLRA and the FAA. The
D. R. Horton Board explained, with care, why in the context of cases like this one, the NLRA and the FAA are
“capable of co-existence.”49 The Fifth Circuit, in contrast, did not explain how upholding the mandatory arbitration agreement could be reconciled with the NLRA.
Nor did the court explain why, in the event of a conflict
between the NLRA and the FAA, it would be the NLRA
that would be required to yield. The Federal “courts are
not at liberty to pick and choose among congressional
enactments.”50
Assuming, again, that the Fifth Circuit’s analytical
framework was appropriate, the D. R. Horton Board was
correct that the second exception to application of the
FAA was implicated here, because Section 7 of the
NLRA amounts to a “contrary congressional command”51 overriding the FAA. We see no compelling
basis for the court’s conclusion that to override the FAA,
Section 7 was required to explicitly provide for a private
cause of action for employees, a right to file a collective
legal action, and the procedures to be employed. That
standard, as already suggested, reflects a fundamental
misunderstanding of the NLRA and the collective, substantive rights it creates for the Board to enforce. The
right to engage in concerted legal activity is plainly authorized by the broad language of Section 7, as it has
been authoritatively construed by the Supreme Court in
Eastex, supra, as part of the protected “resort to administrative and judicial forums.”52 And Section 10(a) of the
Act, as pointed out, provides that the Board’s authority
“shall not be affected by any other means of adjustment
or prevention that has been or may be established by
agreement, law, or otherwise.” An arbitration agreement
like the one here, even if it did not run afoul of the
FAA’s savings clause, would seem to be precisely the
sort of “means of adjustment . . . established by agreement” that cannot affect the Board’s enforcement of Section 7. However, the Fifth Circuit’s treatment of the
agreement produces that precise result.53 Under the
court’s view, because (and only because) the employer’s
restriction on protected concerted activity is embodied in
an arbitration agreement, it is lawful and cannot be inval48
Concepcion, supra, 131 S.Ct. at 1748.
Morton v. Mancari, 417 U.S. 535, 551 (1974).
50
Id.
51
CompuCredit Corp. v. Greenwood, ___ U.S. ___, 132 S.Ct. 665,
668–669 (2012).
52
437 U.S. at 566.
53
Cf. CompuCredit, supra, 132 S.Ct. at 672 (examining statutory
provisions specifically addressing predispute arbitration).
49
10
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
idated by the Board. To be sure, the NLRA does not
explicitly override the FAA—but for an obvious reason:
neither when the NLRA was enacted in 1935, nor when
it was reenacted in 1947, had the FAA ever been applied
in connection with individual employment contracts.
The issue of the FAA’s applicability, in fact, was not
resolved until much later, when the Supreme Court read
the exemption in Section 1 of the FAA (which excludes
from coverage “contracts of employment of seamen, railroad employees, or any other class of workers engaged in
foreign or interstate commerce”) to refer only to transportation workers.54
Nor are we persuaded by the Fifth Circuit’s view that
there is no inherent conflict between the NLRA and the
FAA. That the courts have understood the NLRA to
permit collectively bargained arbitration provisions is
irrelevant to the proper treatment of employer-imposed
mandatory individual arbitration agreements. Section 1
of the NLRA explicitly declares that the “policy of the
United States” is to “encourage[e] the practice and procedure of collective bargaining.” 29 U.S.C. § 151. That
policy is explicitly based on the Congressional finding
that:
NLRA.56 The Board’s decision in D. R. Horton is
grounded in NLRA, Section 7, but it was entirely appropriate for the Board to look to the Norris-LaGuardia Act
both in identifying Federal labor policy and in seeking an
accommodation between Federal labor policy and the
Federal policy favoring arbitration. That the Board may
not be entitled to judicial deference in interpreting the
Norris-LaGuardia Act cannot mean that the Board’s statutory interpretation is somehow illegitimate or necessarily incorrect. The court, for its part, did not explain why
the Norris-LaGuardia Act—enacted in 1932, 7 years after enactment of the FAA—has no bearing on a case like
this one, given that the statute’s explicit language
(1) declares that the “public policy of the United
States” is to insure that the “individual unorganized
worker” is “free from the interference, restraint, or
coercion of employers . . . in . . . concerted activities
for the purpose of . . . mutual aid or protection;”57
(2) specifies that protected activities include
“[b]y all lawful means aiding any person participating or interested in any labor dispute who . . . is
prosecuting, any action or suit in any court of the
United States or any state;”58
(3) provides that “[a]ny undertaking or promise
. . . in conflict with the public policy declared [in the
Act] is declared to be contrary to the public policy of
the United States [and] shall not be enforceable in
any court of the United States;”59 and
(4) repeals “[a]ll acts and parts of acts in conflict
with” its provisions.60
The inequality of bargaining power between employees
who do not possess full freedom of association or actual liberty of contract and employers who are organized
in the corporate or other forms of ownership association substantially burdens and affects the flow of commerce. . . .
Id. Section 7 of the NLRA, the Supreme Court has explained, embodies the effort of Congress to remedy this
problem.55 An individual arbitration agreement, imposed
by employers on their employees as a condition of employment and restricting their rights under the NLRA, is the
antithesis of an arbitration agreement providing for union
representation in arbitration that was reached through the
statutory process of collective bargaining between a freely
chosen bargaining representative and an employer that has
complied with the statutory duty to bargain in good faith.
The Fifth Circuit, in our view, failed to come to terms with
the unique provisions and policies of the NLRA.
Also troubling was the Fifth Circuit’s treatment of the
Norris-LaGuardia Act. As explained, that statute provided the source for the language of Section 7 of the
It is hardly self-evident that the FAA—to the extent that it
would compel Federal courts to enforce mandatory individual arbitration agreements prohibiting concerted legal activity by employees—survived the enactment of the NorrisLaGuardia Act and its sweeping prohibition of “yellow
dog” contracts. “[T]he [Norris-LaGuardia Act’s] language
seemingly requires a textualist to find that it trumps the
FAA where the two conflict.”61
For all of these reasons, we are not persuaded by the
Fifth Circuit’s view that the D. R. Horton Board erred.
We turn next to the decisions of two other Federal appellate courts, which have also rejected D. R. Horton, but
provided much less comprehensive rationales for doing
so.
56
54
Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) (construing 9 U.S.C. § 1).
55
City Disposal, supra, 465 U.S. at 835 (“[I]t is evident that, in enacting §7 of the NLRA, Congress sought generally to equalize the
bargaining power of the employee with that of his employer by allowing employees to band together in confronting an employer regarding
the terms and conditions of their employment.”).
See id; Eastex, supra, 437 U.S. at 564 fn. 14.
Norris-LaGuardia Act, Sec. 2, 29 U.S.C. § 102.
58
Norris-LaGuardia Act, Sec. 4, 29 U.S.C. § 104.
59
Norris-LaGuardia Act, Sec. 3, 29 U.S.C. § 103.
60
Norris-LaGuardia Act, Sec. 15, 29 U.S.C. § 115.
61
Sullivan & Glynn, Horton Hatches the Egg, supra, 64 Ala. L. Rev.
at 1039.
57
MURPHY OIL USA, INC.
b. The decisions of the Eighth and Second Circuits
rejecting D. R. Horton
Among the reasons given by the Fifth Circuit for not
adopting the Board’s view was a reluctance “to create a
circuit split,” citing decisions from three other circuits.
737 F.3d at 362. Those decisions, however, add little to
the equation here, given their limited analysis of the issue. Nothing in the two other court of appeals decisions
that reject D. R. Horton persuades us here.
To begin, the Fifth Circuit court cited, as having rejected D. R. Horton, a Ninth Circuit decision that was
later amended so that it specifically refrained from deciding the issue.62 A cited Second Circuit decision, in turn,
addressed D. R. Horton only in a footnote that offered
virtually no analysis of the issue beyond endorsing the
decision of the Eighth Circuit in Owen v. Bristol Care,
supra.63 We now turn to that decision.
In Owen v. Bristol Care, the court reversed a district
court’s denial of a motion to compel arbitration in a suit
asserting FLSA claims and seeking class action certification. The court rejected an argument that the legislative
history of the NLRA “indicated a congressional command to override the FAA.” 702 F.3d at 1053. The
Board’s decisions, by contrast, are predicated on the text
of the NLRA and longstanding constructions of the Act
by the Board and the Supreme Court, not on legislative
history.
Without referring to the Board’s analysis in D. R. Horton, the Eighth Circuit also rejected the employees’ argument based on the Norris-LaGuardia Act, observing
that the 1947 “decision to reenact the FAA suggests that
Congress intended its arbitration protections to remain
intact even in light of the earlier passage of three major
labor relations statutes.” 702 F.3d at 1053. With respect,
that conclusion is untenable. 64 First enacted in 1925, 43
Stat. 883—before passage of the Norris-LaGuardia Act
(1932) and the National Labor Relations Act (1935)—the
FAA was reenacted and codified in 1947 as Title 9 of the
United States Code. But that action had no substantive
effect. “Under established canons of statutory construction, ‘it will not be inferred that Congress, in revising and
consolidating the laws, intended to change their effect
unless such intention is clearly expressed.’”65 There is
62
See Richards, supra, 744 F.3d at 1075 & fn. 3 (amended decision).
The Fifth Circuit cited the original Ninth Circuit decision, reported at
734 F.3d 871.
63
Sutherland, supra, 726 F.3d at 297 fn. 8.
64
For an exhaustive critique of the Eighth Circuit’s view, see Sullivan & Glynn, Horton Hatches the Egg, supra, 64 Ala. L. Rev. at 1046–
1051. Professors Sullivan and Glynn advisedly describe the theory that
the FAA is the later enacted law as “nonsensical.” Id. at 1020.
65
Finley v. U.S., 490 U.S. 545, 554 (1989), quoting Anderson v. Pacific Coast S.S. Co., 225 U.S. 187, 199 (1912). See also Bulova Watch
11
no such clearly expressed Congressional intention either
in the statute codifying the FAA, see 61 Stat. 669, or in
its legislative history, nor did the Eighth Circuit point to
one. It seems inconceivable that legislation effectively
restricting the scope of the Norris-LaGuardia Act and the
NLRA could be enacted without debate or even notice,
especially in 1947, when those labor laws were both relatively new and undeniably prominent.
As for D. R. Horton itself, the Eighth Circuit stated
that the decision “carries little persuasive authority in the
circumstances presented.” 702 F.3d at 1053. The court
rejected the holding of D. R. Horton because it “owe[d]
no deference to [the Board’s] reasoning.” 702 F.3d at
1054. That bare rationale cannot be sufficient. First, to
the extent that the issue cannot be properly decided without weighing the National Labor Relations Act and its
policies, the Board is demonstrably entitled to some deference, as the primary interpreter of Federal labor law.
Second, the Board’s understanding of Federal law outside the NLRA may in fact be correct, regardless of
whether deference is claimed by the Board or owed by
the courts. The issue of deference, in other words, is not
the ultimate one.
The Eighth Circuit’s Owen decision thus adds little by
way of legal analysis to the decision of the Fifth Circuit,
and the Second Circuit’s unelaborated endorsement of
the Eighth Circuit’s view adds even less.
c. Member Johnson’s dissent
The separate dissents of our colleagues, Member Johnson and Member Miscimarra level many and varied criticisms at D. R. Horton, the most substantial of which we
have already addressed in responding to the decisions of
the Fifth and Eighth Circuits. We therefore confine ourselves to the novel points made by our colleagues. They
leave us unpersuaded.
We address Member Johnson’s dissent first. For
Member Johnson, the Board’s overriding concern should
be to avoid, at all costs, a conflict with the Federal courts
and instead to acknowledge the extraordinary strength of
the Federal policy favoring arbitration, reflected (in our
colleague’s view) in a long string of Supreme Court decisions. That path of least resistance, however, amounts
both to abdicating the Board’s responsibility to administer the National Labor Relations Act as Congress intended—by permitting Section 7 to be effectively nullified—
and to adopting a view of the Federal Arbitration Act that
Co. v. U.S., 365 U.S. 753, 758 (1961) (rejecting argument that particular statute was later enactment where its predecessor provision “had
long been on the books”).
12
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
goes far beyond anything the Supreme Court has held.66
As two scholars recently stated, the “expansion of the
FAA cannot continue indefinitely,” because “[a]t some
point, the irresistible force of that statute must meet the
immovable object of federal labor law.”67 Nor can we
accept the strong implication in Member Johnson’s dissent that concerted legal activity to protect employees’
rights, at least when it takes the form of a class action, is
somehow illegitimate because it may result in significant
legal liability for employers.68 Our analysis surely must
presume that employees will join together (in some cases, if not all) to pursue claims against their employers
that are well grounded in Federal or State laws protecting
American workers and that they will properly seek to use
existing legal rules that authorize joint, collective, or
class actions. That concerted legal activity may be a
successful means of vindicating employees’ legal rights
cannot be a legitimate reason to disfavor it.69
(1)
Member Johnson’s position here rests, in important
part, on the remarkable premise that employees’ concerted legal activity deserves very little, if any, protection
under Section 7 of the NLRA. Such an argument has
virtually no support in the text of Section 7, in Board
doctrine, in the decisions of the Federal appellate courts
(including the decisions that reject D. R. Horton), or in
Supreme Court jurisprudence.
To begin, we reject the suggestion that filing joint,
class, or collective claims is rarely, if ever, protected by
Section 7. By its terms, Section 7 protects employee
activity that is “concerted” and engaged in “for the purpose of . . . mutual aid or protection.” 29 U.S.C. § 157.
66
To quote one scholar, “[n]one of the Court’s class-action waiver
jurisprudence under the FAA addresses a case in which the fundamental statutory protection is the right of employees to act as a group in
improving their working conditions; all of them addressed situations in
which the underlying right was an individual right to be free from unfair market behavior.” Fisk, Collective Actions and Joinder of Parties
in Arbitration, supra, 35 Berkeley J. Emp. & Lab. L. 175, 186.
67
Sullivan & Glynn, Horton Hatches the Egg, supra, 64 Ala. L. Rev.
at 1020.
68
It seems plausible, at least, that the “notion of collective power is
precisely what underlies Section 7,” but that “[t]his power is the source
of much resistance to class actions and the efforts to use arbitration to
eliminate class actions.” Hodges, supra, Can Compulsory Arbitration
Be Reconciled with Section 7 Rights?, supra, 38 Wake Forest L. Rev. at
216 (footnotes omitted).
69
Member Johnson says that we “totally misapprehend the interest
at issue here.” To the contrary, we understand Member Johnson’s
position that the abuse of class actions and similar procedural mechanisms threatens to impose large and unwarranted liability on employers.
If his position were correct, then it would be for Congress, the State
legislatures, and the courts to address those abuses directly, not for the
Board to distort Federal labor law and policy in an effort to provide an
alternative solution.
Under the Board’s well-established test, concerted activity includes cases “where individual employees seek to
initiate or to induce or to prepare for group action, as
well as individual employees bringing truly group complaints to the attention of management.”70 The Supreme
Court has observed, however, that “[t]here is no indication that Congress intended to limit [Section 7] protection to situations in which an employee’s activity and
that of his fellow employees combine with one another in
any particular way.”71 The requirement of “mutual aid or
protection,” in turn, is satisfied when, in the words of the
Supreme Court, employees “seek to improve terms and
conditions of employment or otherwise improve their lot
as employees through channels outside the immediate
employee-employer relationship,” such as “resort to administrative and judicial forums.”72
Entirely consistent with these principles, the Board in
Salt River Valley, more than 60 years ago, had no difficulty finding that an individual employee had engaged in
protected concerted activity when he circulated a petition
among coworkers seeking designation as their agent to
pursue Fair Labor Standards Act claims against their
employer.73 Rejecting the employer’s argument, the
Board observed that “[g]roup action is not deemed a prerequisite to concerted activity for the reason that a single
person’s action may be the preliminary step to acting in
concert.”74 The Board also rejected the assertion that the
employee’s activity “was not for ‘mutual aid or protection,’” “because the statutory rights under the Fair Labor
Standards Act are individual rights not increased by joint
action”; the “end effect” of the employee’s activity, the
Board pointed out, might well be a successful lawsuit for
backpay benefitting other employees.75 The Board’s
decision was affirmed in its entirety by the Ninth Circuit.
Much of Member Johnson’s criticism is focused on the
D. R. Horton Board’s statement that “an individual [employee] who files a class or collective action regarding
wages, hours, or working conditions, whether in court or
before an arbitrator, seeks to initiate or induce group action and is engaged in conduct protected by Section 7.”
357 NLRB No. 184, slip op. at 3 (emphasis added). Today’s case, of course, involves an FLSA collective action
filed by three employees. This would seem to fit even
70
Meyers Industries, 281 NLRB 882, 887 (1986) (Meyers II), affd.
sub nom. Prill v. NLRB, 835 F.2d 1481 (D.C. Cir. 1987), cert. denied
487 U.S. 1205 (1988).
71
NLRB v. City Disposal Systems, Inc., supra, 465 U.S. at 835.
72
Eastex, supra, 437 U.S. at 565.
73
Salt River Valley Water Users Assn., 99 NLRB 849 (1952), enfd.
206 F.2d 325 (9th Cir. 1953). The D. R. Horton Board correctly relied
on this decision. 357 NLRB No. 184, slip op. at 2.
74
Id. at 853.
75
Id. at 853–854.
MURPHY OIL USA, INC.
Member Johnson’s restrictive view of concerted activity,
which (to quote the Supreme Court’s decision in City
Disposal) would limit the concept to cases “in which two
or more employees are working together at the same time
and the same place toward a common goal.”76 The City
Disposal Court rejected such a “narrow meaning” of
concert, upholding the Board’s position that an individual employee who singly asserts his right under a collective-bargaining agreement is engaged in concerted activity. Indeed, the filing of a class or collective action by an
individual employee is analogous to the individual conduct at issue in City Disposal. By definition, such an
action is predicated on a statute that grants rights to the
employee’s coworkers, and it seeks to make the employee the representative of his colleagues for the purpose of
asserting their claims, in addition to his own. Plainly, the
filing of the action contemplates—and may well lead
to—active or effective group participation by employees
in the suit, whether by opting in, by not opting out, or by
otherwise permitting the individual employee to serve as
a representative of his coworkers. It is this potential “to
initiate or to induce or to prepare for group action,” in the
phrase of Meyers II, supra—collectively seeking legal
redress—that satisfies the concert requirement of Section
7. There is no sound reason, then, to hold that only faceto-face activity preparatory to filing a suit can be protected by Section 7.77
In any case, Member Johnson also neglects the
Board’s approach to the concert requirement in situations
like that posed in D. R. Horton, which involved only a
facial challenge to a mandatory arbitration agreement,
76
City Disposal, supra, 465 U.S. at 831.
To the extent that Member Johnson argues that his own, narrow
view of concerted activity is mandated by the Act, we disagree. “City
Disposal makes unmistakably clear that . . . neither the language nor
the history of [S]ection 7 requires that the term ‘concerted activities’
be interpreted to protect only the most narrowly defined forms of common action by employees, and that the Board has substantial responsibility to determine the scope of protection in order to promote the purposes of the NLRA.” Prill v. NLRB, 755 F.2d 941, 952 (D.C. Cir.
1985). Member Johnson misunderstands our discussion of City Disposal when he insists that we somehow seek “to resurrect the Alleluia
Cushion theory of implied concertedness.” That case involved an individual employee who—without the involvement of any other employee—filed an individual complaint with the California Occupational
Safety and Health Administration. There was “no evidence that [the
employee] purported to represent the other employees” or that he made
any “efforts . . . to seek his fellow employees’ aid in pursuing the complaints.” Alleluia Cushion Co., 221 NLRB 999, 1000 (1975). The
Alleluia Cushion Board did not view the complaint as an attempt to
induce group action, nor did it consider whether the administrative
process contemplated participation by multiple employees. Instead,
citing public policy, the Board found the employee’s activity concerted
because he invoked a statute that was intended to benefit his coworkers,
whose consent to his actions was presumed. Id. Neither D. R. Horton
nor our decision today relies on this rationale.
77
13
i.e., the unfair labor practice alleged was the mere
maintenance of the agreement as a term and condition of
employment. Consistent with Board precedent, the D. R.
Horton Board properly treated the arbitration agreement
as a workplace rule restricting Section 7 activity. 357
NLRB No. 184, slip op. at 4.78 The vice of maintaining
such a rule is that it reasonably tends to chill employees
in the exercise of their statutory rights. As a result, the
rule may be unlawful even if there is no showing that a
covered employee ever engaged in the protected concerted activity prohibited by the rule, precisely because the
rule itself discourages employees from doing so.79
Member Johnson asserts that “a particular litigation
mechanism is, at most, a peripheral concern to the Act,
especially where the mechanism is established and defined by statutes different than the Act, to handle claims
under different statutes than the Act,” because the Act is
intended to remedy the inequality of bargaining power
between employees and employers and litigation involves adjudication, not bargaining. Here, too, Member
Johnson’s narrow position is fundamentally mistaken.
We are dealing with litigation that seeks to change employees’ terms and conditions of employment. In an
unorganized workplace, those terms and conditions—
including, for example, both wages and mandatory arbitration agreements—are established unilaterally by the
employer. The employer’s imposition of a mandatory
arbitration agreement requiring employees to bring all
workplace claims individually—and forbidding them
access to any group procedure—reflects and perpetuates
precisely the inequality of bargaining power that the Act
was intended to redress. Precluding employees from
joining together to press their workplace claims strips
them of the collective, equalizing power that Section 7
envisions. Of course, as a practical matter, litigation
routinely does involve not only adjudication by a court or
arbitrator, but also bargaining between the parties: that is
how cases settle, as most of them do.
There is no merit, in turn, to Member Johnson’s claim
that “D. R. Horton attempts to transform Section 7 into a
‘procedural superhalo’ that authorizes class and collec78
See U-Haul Co. of California, 347 NLRB 375, 377 (2006), enfd.
255 Fed. Appx. 527 (D.C. Cir. 2007) (employer policy unlawful because reasonably interpreted to require resort to arbitration and to preclude filing of Board charges).
79
See World Color (USA) Corp., 360 NLRB No. 37, slip op. at 2
(2014) (“[A]n employer may violate Section 8(a)(1) even where an
employee has not engaged in protected concerted activity—if, for example, the employer maintains a rule that reasonably would be interpreted by employees as prohibiting Section 7 activity. . . .”), citing
Lutheran Heritage Village-Livonia, 343 NLRB 646, 646–647 (2004).
See also Lafayette Park Hotel, 326 NLRB 824, 825 (1998) (mere
maintenance of work rule by employer will violate Act where rule
likely to have chilling effect), enfd. 203 F.3d 52 (D.C. Cir. 1999).
14
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
tive litigation even where Congress and the courts do
not.” On this point, D. R. Horton could not have been
clearer, taking care to explain that “there is no Section 7
right to class certification” and that the Board’s holding
does not “guarantee[ ] class certification, . . . [but] only
employees’ opportunity to pursue without employer coercion, restraint or interference such claims of a class or
collective nature as may be available to them under Federal, State or local law.” 357 NLRB No. 184, slip op. at
10 & fn 24. What D. R. Horton prohibits is unilateral
action, by an employer, that purports to completely deny
employees access to class, collective, or group procedures that are otherwise available to them under statute
or rule. The Board did not (and, of course, could not)
require a court or arbitrator to certify a class in a particular case, to permit a collective action to go forward, or to
allow joinder. Nor did the Board require Congress or the
States to create or maintain any type of group procedure
at all.
Member Johnson claims to find support for his views
in the assertion that “there was no such thing as a class or
collective action in any modern sense when the [NLRA]
was passed in 1935.” But the suggestion that Section 7
covers only those types (or subtypes) of protected concerted activity that existed in 1935 is untenable. The
language of Section 7 is general and broad; there is no
indication in the statutory text, in the legislative history,
or in the Supreme Court’s decisions that the 1935 Congress intended to fix, for all time, the ways in which employees would be able to engage in protected efforts to
improve their working conditions. To take one obvious
example, the use of modern communication technologies
such as social media to pursue unionization is obviously
protected, regardless of whether workers during the Depression had access to Facebook. But more to the point,
concerted legal activity by employees was hardly unknown in 1935. It was specifically protected by Section
4(d) of the Norris-LaGuardia Act. And while it is true
that the collective-action provision of the Fair Labor
Standards Act was not adopted until 1938, that device,
insofar as it permitted one employee to assert claims on
behalf of similarly-situated employees, was hardly an
extraordinary innovation—one scholar, indeed, describes
it as “traditional.”80 Group litigation was not invented in
1938 or in 1966; it has long been part of the AngloAmerican legal tradition, reflected (for example) in the
Federal Equity Rules even before the Federal Rules of
80
Elizabeth K. Spahn, Resurrecting the Spurious Class: Opting-In to
the Age Discrimination in Employment Act and the Equal Pay Act
through the Fair Labor Standards Act, 71 Georgetown L. J. 119, 124
(1982).
Civil Procedure were first adopted.81 “Long before crystallization of the national labor policy . . . [in the NorrisLaGuardia Act and the NLRA], employees had resorted
to lawsuits to vindicate their rights against employers,
although those rights were considerably narrower than
they are today.”82
Finally, we cannot agree with Member Johnson’s argument that in assessing mandatory arbitration provisions like the one involved in D. R. Horton, the Board
not only must engage in a balancing test, but must conclude that an employer’s supposedly legitimate interest
in completely preventing employees from seeking to
pursue their legal claims against the employer jointly, in
any judicial or arbitral forum, actually outweighs employees’ Section 7 rights. To state the argument is to
refute it. Here, again, Member Johnson distorts D. R.
Horton, which properly acknowledged the obvious: that
employees have no Section 7 right to class certification
and, in turn, that employers may lawfully oppose class
certification on any legally available ground other than
an unlawful waiver in a mandatory arbitration agreement.
357 NLRB No. 184, slip op. at 10 fn. 24. That holding,
of course, reflects a proper balancing of the respective
rights of employees and employers. It is untenable to
claim, as Member Johnson does, that prohibiting employees from pursuing their workplace claims collectively results only in “relatively slight” interference with
Section 7 rights, when it actually extinguishes them.
Just as mistaken are Member Johnson’s arguments that
attempt to equate the situation in D. R. Horton, where an
employer has imposed arbitration agreements on individual employees who lack union representation, with a
situation in which a labor union has exercised its statutory authority to permit the individual presentation of
grievances to the employer or has agreed in collective
bargaining to an arbitration provision covering employees’ statutory claims. Neither Section 9(a) of the Act83 or
81
See G.W. Foster, Jr. Jurisdiction, Rights, and Remedies for Group
Wrongs under the Fair Labor Standards Act: Special Federal Questions, 1975 Wis. L. Rev. 295, 323 & fn. 100 (1975).
82
Sullivan & Glynn, Horton Hatches the Egg, supra, 64 Ala. L. Rev.
at 1015–1016 & fn. 5–8 (collecting cases).
83
Sec. 9(a), which grants properly chosen unions exclusive status as
the representative of bargaining unit employees, also contains a proviso
permitting individual employees to “present grievances to their employer and have such grievances adjusted, without the intervention” of
the union “as long as the adjustment is not inconsistent with the terms”
of an existing collective-bargaining agreement. 29 U.S.C. § 159(a).
The language of Sec. 9(a) demonstrates that “Congress clearly indicated an intent to ensure that the institutional role of the collectivebargaining representative of all the employees in a bargaining unit is
not subordinated to that of individual employees.” Postal Service, 281
NLRB 1015, 1016 (1986). Member Miscimarra’s dissent relies heavily, but mistakenly, on Sec. 9(a), and we address his arguments (which
Member Johnson joins) below.
MURPHY OIL USA, INC.
the Supreme Court’s decision in 14 Penn Plaza, supra,
has any bearing here. To posit that they do is to say that
union representation makes no difference in the workplace—the antithesis of the NLRA. That an employer
may collectively bargain a particular grievance-andarbitration procedure with a union is not to say that it
may unilaterally impose any dispute-resolution procedure it wishes on unrepresented employees, including a
procedure that vitiates Section 7 rights, simply because it
takes the form of an agreement.
In National Licorice and J.I. Case,84 supra, the Supreme Court long ago made clear that individual agreements between employers and employees may not extinguish rights under the Act. Member Johnson’s attempt to
distinguish these cases is unavailing. In his view, both
decisions are essentially limited to their facts, prohibiting
individual agreements restricting Section 7 rights only
where employees had designated a union as their collective-bargaining representative or a union had been certified. There is no sound basis for reading the two decisions so narrowly. The implicit premise of such a reading is that Section 7 protects only the right to engage in
collective bargaining, but the statutory text proves otherwise—as the Supreme Court in Eastex, supra, observed, pointing out that Congress chose “to protect concerted activities for the somewhat broader purpose of
‘mutual aid or protection’ as well as for the narrower
purposes of ‘self-organization’ and ‘collective bargaining.’”85
(2)
In addition to disputing the D. R. Horton Board’s analysis of Section 7, Member Johnson rejects its accommodation of the NLRA and the Federal Arbitration Act.
How those two statutes must be accommodated, of
course, depends on how each is interpreted. We have
explained why Member Johnson’s interpretation of the
NLRA is seriously mistaken, and so his view of the
proper accommodation required here is also flawed. In
addressing the Fifth Circuit’s decision in D. R. Horton,
we have addressed most of the points made by Member
Johnson with respect to the FAA and the Supreme
84
Member Johnson implies that the D. R. Horton Board deliberately
omitted language from the Court’s J.I. Case decision because it undercut the Board’s analysis there. In fact, the language has no such effect.
The Court observed that an employee was free to make “any contract
provided that it is not inconsistent with a collective agreement or does
not amount to or result from or is not part of an unfair labor practice.”
321 U.S. at 339 (emphasis added). The arbitration agreement in D. R.
Horton, of course, amounted to an unfair labor practice. Nor, in any
case, could it fairly be said to have been made by the employee in the
sense contemplated by the Court, when it was unilaterally imposed by
the employer as a term and condition of employment.
85
Eastex, supra, 437 U.S. at 565.
15
Court’s jurisprudence under that statute. Our dissenting
colleague points to no Supreme Court decision that directly answers the question posed in D. R. Horton. Nor
does he point to any language in either the text of the
FAA or its legislative history that even hints that Congress could have envisioned the result Member Johnson
would reach here.
For reasons already offered, we disagree with Member
Johnson’s view that (1) the FAA’s savings clause does
not apply, even though both the NLRA and the NorrisLaGuardia Act provide grounds for revoking any private
agreement that is inconsistent with those statutes; and (2)
neither the NLRA nor the Norris-LaGuardia Act amounts
to a “contrary Congressional command” invalidating
arbitration agreements like the one at issue in D. R. Horton. It is certainly true that the Supreme Court’s decisions have construed Section 2 of the FAA to exclude
particular judicially created grounds for revocation—
State law unconscionability doctrine in Concepcion and
the “effective vindication” principle applied by some
Federal judges in Italian Colors. But here we deal not
with State statutes or judge-made rules, but with the core
provisions and policies of two Federal labor-law statutes.
Unless the FAA is treated as a super “super statute,” this
distinction matters.86
Nor can we agree with Member Johnson that the principle that an arbitration agreement is invalid if it divests a
party of substantive rights refers exclusively to rights
“arising under the statute that gave rise to the claim” —
here (in his view) the FLSA, but not the NLRA, even
though the necessary and intended effect of the mandatory arbitration agreement is to defeat the exercise of Section 7 rights.87 Member Johnson views the Section 7
86
See William N. Eskridge & John Ferejohn, Super-Statutes, 50
Duke L. J. 1215 (2001). The two scholars define a “super-statute” as a
“law or series of laws that (1) seeks to establish a new normative or
institutional framework for state policy and (2) over time does ‘stick’ in
the public culture such that (3) the super-statute and its institutional or
normative principles have a broad effect on the law—including an
effect beyond the four corners of the statute.” Id. at 1216. They go on
to identify the Norris-LaGuardia Act, the NLRA, and the FAA all as
“super statutes” (see id. at 1227, 1260) and observe that when “super
statutes” are in conflict, the Supreme Court “will trim back the superstatute whose policy and principle would be relatively less impaired by
nonapplication.” Id. at 1260. To us, it seems clear that in a case like
D. R. Horton, it is the FAA that would be “relatively less impaired by
nonapplication.”
87
Member Johnson insists that the Supreme Court’s decision in Italian Colors, supra, demonstrates that the NLRA Sec. 7 right to pursue
legal claims concertedly cannot be a substantive right, because the
Supreme Court has upheld a class-arbitration waiver in the context of
Federal antitrust law. But Federal antitrust law has no provision comparable to Sec. 7. Indeed, to restate the obvious, none of the Supreme
Court decisions on which Member Johnson relies addresses, even indirectly, the issue posed here.
16
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
right to engage in concerted legal activity as exceptionally narrow, but a long line of cases proves him wrong.
Member Johnson also errs in rejecting our view that
Section 10(a) of the Act—which provides that a “means
of adjustment . . . established by agreement” cannot affect the Board’s authority—presents an obstacle to the
enforcement of mandatory arbitration agreements. In
arguing that Section 10(a) has no application to such
agreements, because it lacks the specificity “necessary to
override the FAA” and creates “no substantive right,”
Member Johnson misses the point. It is Section 7 that
creates the relevant substantive right here, and Section
10(a) that demonstrates the intent of Congress not to
permit private agreements to supersede the protections of
the Act. Inasmuch as no individual agreement between
an employer and an employee can restrict Section 7
rights—the teaching of the Supreme Court’s decisions in
National Licorice and J.I. Case, supra—our dissenting
colleague’s demand for specificity is misplaced.
Finally, Member Johnson’s effort to explain why the
Norris-LaGuardia Act has no bearing here falls far short.
Member Johnson acknowledges the language of that
statute, at once sweeping and detailed, but he fails to
come to terms with it. To cite cases involving collectively-bargained arbitration provisions, as Member Johnson
does,88 is to miss the crucial point, for reasons we have
stated. And, given the language of the Norris-LaGuardia
Act—which not only protects concerted activity generally, but takes care to identify a wide range of specific examples in Section 4—it is demonstrably wrong to assert
that the “true focus” of the statute was limited to “strike
activity.” Section 13 of the statute, notably, defines “labor dispute” very broadly, to include “any controversy
concerning terms and conditions of employment.” 29
U.S.C. § 113. Nor is this a case where the language of
the Norris-LaGuardia Act must be accommodated to the
more specific provisions of another Federal labor law.89
Member Johnson, in turn, is mistaken when he argues
that the language of the Norris-LaGuardia Act itself
demonstrates its inapplicability here. As we have explained, that statute makes unenforceable “any undertak88
Member Johnson quotes a 1956 First Circuit decision stating that
an “agreement to arbitrate is not one of those contracts to which the
Norris-LaGuardia Act applies.” Electrical Workers Local 25 v. General Electric Co., 233 F.2d 85, 90 (1st Cir. 1956). But that case involved a union’s effort to compel an employer to arbitrate disputes in
accordance with a collective-bargaining agreement. The decision says
nothing about mandatory individual arbitration agreements, imposed on
workers as a condition of employment, prohibiting concerted legal
activity of the sort that the Norris-LaGuardia Act expressly protected.
89
See Pittsburgh & Lake Erie Railroad Co. v. Railway Labor Executives Assn., 491 U.S. 490 , 513–514 (1989) (Norris-LaGuardia Act not
required to yield to Interstate Commerce Act, distinguishing cases
involving Railway Labor Act and NLRA).
ing or promise . . . in conflict with the public policy declared” in the Act.”90 That policy is defined as insuring
that the “individual unorganized worker” is “free from
the interference, restraint, or coercion of employers . . . in
concerted activities for the purpose of . . . mutual aid or
protection.”91 And among the activities specifically protected is “[b]y all lawful means aiding any person participating or interested in any labor dispute who . . . is prosecuting, any action or suit in any court.”92 In the face of
this language—and ignoring Section 15 of the NorrisLaGuardia Act, which repeals all conflicting statutes93—
Member Johnson asserts that employees who disregard a
mandatory arbitration agreement to pursue concerted
legal activity are not, in fact, using “lawful means” to aid
persons prosecuting a lawsuit—because they have somehow “violated” the FAA. This assertion obviously begs
the question here. If the arbitration agreement violates
the policy of the Norris-LaGuardia Act (as we have
demonstrated), then it is unenforceable, and employees
have no legal duty to comply with it. To the extent that
the FAA would suggest otherwise, it would conflict with
the Norris-LaGuardia Act—and so cannot survive under
Section 15 of that statute.
d. Member Miscimarra’s dissent
In dissent, Member Miscimarra specifically endorses
Member Johnson’s view that the FAA precludes the rule
of D. R. Horton, invalidating arbitration agreements that
are imposed on employees as a condition of employment
and that compel them to pursue their claims against their
employer individually. We confine our response, then,
to other points raised by Member Miscimarra, none of
which persuade us that D. R. Horton was incorrectly decided.
We begin by reiterating an essential point made by the
D. R. Horton Board and already repeated here: the
NLRA does not create a right to class certification or the
equivalent; rather, it creates a right to pursue joint, class,
or collective claims if and as available, without the interference of an employer-imposed restraint. There should
be no doubt on this score, but Member Miscimarra’s dissent might inadvertently cause confusion for some readers. Contrary to any suggestion in the dissent, we make
no “assumption that Congress, in the NLRA, vested authority in the Board to guarantee that . . . claims [will] be
afforded ‘class’ treatment in litigation.” We do not
“suggest that Congress, in 1935, incorporated into the
NLRA a guarantee that non-NLRA claims will be af90
29 U.S.C. § 103 (emphasis added).
29 U.S.C. § 102.
29 U.S.C. § 104.
93
29 U.S.C. § 115.
91
92
MURPHY OIL USA, INC.
forded ‘class’ treatment.” We do not hold that “Section
7 guarantee[s] class-type procedures relating to claims
brought under non-NLRA statutes.” This case, like D. R.
Horton, is not about guaranteeing class treatment. It is
about the legality of mandatory waivers of employees’
right to seek class treatment or the equivalent for their
workplace claims (where that potential exists as a matter
of law) in any forum, judicial or arbitral. Such employer-imposed restraints, as we have shown here, violate the
Act because they purport to preclude all forms of group
litigation or arbitration, regardless of whether they would
otherwise be available to employees. Our dissenting
colleague’s exposition of the many forms of group litigation that exist under American law is beside the point.
Nothing in D. R. Horton purports to affect those mechanisms in any way. The Board’s concern is entirely with
employer-imposed restraints that would preclude employees from seeking to use such mechanisms. To hold
such restraints unlawful is hardly to create a “regulatory
scheme” (in the dissent’s words).
Member Miscimarra mistakenly argues that the proviso to Section 9(a) of the Act presents an obstacle to the
holding of D. R. Horton. According to our colleague,
“Section 9(a) of the Act explicitly protects the right of
every employee as an ‘individual’ to ‘present’ and to
‘adjust’ grievances ‘at any time.’” D. R. Horton, the
argument continues, interferes with this “right,” by preventing an individual employee from agreeing with his
employer to resolve his workplace claim on an individual
basis. Of course, the premise of the argument—that
employees have agreed to pursue their claims individually—is false. Here, as in D. R. Horton, mandatory arbitration agreements were imposed on employees as a condition of employment by their employer. In any case, the
language of Section 9(a), viewed and understood in context, and the teachings of the Supreme Court refute our
colleague’s position.
We start with the statutory text. Section 9(a), in its entirety, reads:
Representatives designated or selected for the purposes
of collective bargaining by the majority of the employees in a unit appropriate for such purposes, shall be the
exclusive representatives of all the employees in such
unit for the purposes of collective bargaining in respect
to rates of pay, wages, hours of employment, or other
conditions of employment: Provided, That any individual employee or a group of employees shall have the
right at any time to present grievances to their employer and to have such grievances adjusted, without the
intervention of the bargaining representative, as long as
the adjustment is not inconsistent with the terms of a
17
collective-bargaining contract or agreement then in effect: Provided further, That the bargaining representative has been given [the] opportunity to be present at
such adjustment.
29 U.S.C. § 159(a) (emphasis added in part). This is the
provision of the Act that makes a duly recognized or certified union the exclusive representative of all employees in
the bargaining unit. The language upon which Member
Miscimarra relies comes from a proviso to this provision
that permits represented employees to present grievances
directly to their employer.
By its clear terms, neither Section 9(a) nor the proviso
relied on by Member Miscimarra has any bearing on any
issue at stake in D. R. Horton. We are not concerned
here with the exclusive-representative status of a labor
union or the ability of individual employees to “present
grievances to their employer and to have such grievances
adjusted” notwithstanding their union’s exclusive bargaining right. As the Supreme Court explained in Emporium Capwell, supra, the “intendment of the proviso is to
permit employees to present grievances and to authorize
the employer to entertain them without opening itself to
liability for dealing directly with employees in derogation of the duty to bargain only with the exclusive bargaining representative, a violation of [Section] 8(a)(5)”
of the Act.94 Only in this very limited respect does the
proviso create a “right”; indeed, the Emporium Capwell
Court pointed out that the NLRA “nowhere protects this
‘right’ by making it an unfair labor practice for an employer to refuse to entertain such a presentation.”95
Moreover, the “right” is limited further because it exists
largely at the sufferance of the union, which may negate
it through a collective-bargaining agreement.
94
420 U.S. at 61 (emphasis added). Sec. 8(a)(5) of the Act makes it
an unfair labor practice for an employer “to refuse to bargain collectively with the representatives of his employees, subject to the provisions of section 9(a).” 29 U.S.C. § 158(a)(5). The issue in Emporium
Capwell was whether the employer had lawfully discharged a group of
union-represented, minority employees who had sought to bargain
separately with their employer over alleged racially discriminatory
practices. The Court held that Sec. 7 did not protect the employees’
effort.
95
Id. The Court went on to endorse a Second Circuit decision that
“fully explicated the matter.” Id., citing Black-Clawson Co., Inc. v.
Machinists Lodge 355, 313 F.2d 179 (2d Cir. 1962). There, the Second
Circuit held that Sec. 9(a) did not entitle an individual employee to
compel his employer to arbitrate a grievance. “Despite Congress’ use
of the word ‘right,’” the court observed, “which seems to import an
indefeasible right mirrored in a duty on the part of the employer, . . . the
proviso was designed merely to confer upon the employee the privilege
to approach his employer on personal grievances. . . .” 313 F.2d at 185.
The Sec. 9(a) proviso did not create a substantive right, the court explained, but rather carved out an exception to the rule of union exclusivity. Id.
18
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
But even accepting Member Miscimarra’s argument at
face value, it proves too much. The hypothetical “right”
of the 9(a) proviso is granted not only to “any individual
employee,” but also, expressly, to a “group of employees.” The proviso, then, can hardly be said to protect an
employer who, as here, seeks to preclude a “group of
employees” from presenting and pursuing their grievances together. The Supreme Court, meanwhile, has made
clear as a general matter that the 9(a) proviso is not a
shield for employers who seek to circumvent other requirements of the Act, holding that the proviso does not
permit an employer to deal with a company-dominated
employee committee in contravention of Section 8(a)(2)
of the Act.96
Finally, we reject our colleague’s related suggestion
that the Section 7 “right to refrain” from protected concerted activity is implicated here. In prohibiting employers from requiring employees to pursue their workplace
claims individually, D. R. Horton does not compel employees to pursue their claims concertedly.
In sum, we have carefully considered, and fully addressed, the views of both the Federal appellate courts
that have rejected D. R. Horton and the views of our dissenting colleagues. We have no illusions that our decision today will be the last word on the subject, but we
believe that D. R. Horton was correctly decided, and we
adhere to it.
2. The Respondent’s Arbitration Agreements violate
Section 8(a)(1)
Having reaffirmed the rationale and holding of D. R.
Horton, we turn to the facts of this case, which is easily
disposed of. Both the original and the revised arbitration
agreements here are unlawful under D. R. Horton.
We find that the Agreement violates Section 8(a)(1)
because it explicitly prohibits employees from concertedly pursuing employment-related claims in any forum. By
virtue of the Agreement, the Respondent conditions employment on a waiver of employees’ right “to commence, be a party to, or act as a class member in, any
class or collective action in any court action . . . relating
to employment issues,” and “to commence or be a party
to any group, class or collective action claim in arbitration or any other forum.” The Agreement limits the resolution of all employment-related disputes to binding individual arbitration, and provides that any claim “shall be
heard without consolidation of such claim with any other
person or entity’s claim.” The Agreement thus clearly
and expressly bars employees from exercising their Section 7 right to pursue collective litigation of employmentrelated claims in all forums.
96
NLRB v. Cabot Carbon Co., 360 U.S. 203, 214–218 (1959).
The Respondent argues that the Agreement conforms
to D. R. Horton by virtue of its exclusion of “claims
which must, by statute or other law, be resolved in other
forums.” According to the Respondent, this exclusion
provides an avenue for employees to file administrative
claims with Federal agencies that have the power to seek
relief on a classwide basis. Thus, the Respondent posits,
the Agreement satisfies the Board’s requirement in D. R.
Horton that employers “leave[] open a judicial forum for
class and collective claims” so that “employees’ NLRA
rights are preserved.” 357 NLRB No. 184, slip op. at 12.
We reject this contention.
First, the provision excluding claims that must be resolved in other forums appears in and modifies the section of the Agreement dealing with choice of forum—
i.e., the selection of an arbitral forum and the waiver of
the right to a judicial forum. It does not, by its terms,
modify the separate provisions waiving the right to litigate concertedly—i.e., “to commence, be a party to, or
act as a class member in, any class or collective action in
any court action against the other party relating to employment issues”; to “commence or be a party to any
group, class or collective action claim in arbitration or
any other forum”; or to consolidate one’s “claim with
any other person or entity’s claim.” Even assuming the
Agreement could be read to allow administrative agencies to seek classwide relief in court on the basis of a
claim filed by an employee, it still prohibits employees
from “be[ing] . . . part[ies] to” or “act[ing] as . . . class
member[s] in” such a case. Indeed, one could argue that
the Agreement prohibits individual employees from filing administrative claims to begin with, since such a
claim could be construed as having “commence[d]” a
class action in the event that the agency decides to seek
classwide relief. And the Agreement certainly prohibits
two or more employees from filing a joint claim in “any
. . . forum,” including an administrative agency.
Second, this provision exempts from mandatory individual arbitration only those claims that “must, by statute
or other law, be resolved” in forums other than arbitration (emphasis added). The Respondent provides no
examples of such claims, and absent any examples, we
are unconvinced that this exemption has any content
whatsoever. The Supreme Court has made it abundantly
clear that claims arising under a variety of laws, including Federal employment laws, may be resolved in an
arbitral forum.97 Even unfair labor practice claims,
which must be filed in an administrative forum, may be
resolved in an arbitral forum. See Collyer Insulated
97
See Gilmer, supra, 500 U.S. at 26 (“It is by now clear that statutory claims may be the subject of an arbitration agreement, enforceable
pursuant to the FAA.”).
MURPHY OIL USA, INC.
Wire, 192 NLRB 837 (1971) (prearbitral deferral); United Technologies Corp., 268 NLRB 557 (1984) (same);
Spielberg Mfg. Co., 112 NLRB 1080 (1955) (postarbitral deferral); Olin Corp., 268 NLRB 573 (1984)
(same).98 Moreover, the Agreement strongly suggests
that claims under the Age Discrimination in Employment
Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Family and Medical
Leave Act, the Fair Labor Standards Act, and the WARN
Act are not so exempted, inasmuch as they are specifically listed as examples of claims that are subject to mandatory arbitration. Whatever claims this provision may
exempt, if any, it does not countermand the plain meaning of the Agreement’s broad mandatory arbitration and
concerted-litigation waiver provisions.
The Revised Agreement also unlawfully interferes
with the exercise of Section 7 rights.99 While it states
that employees do not waive their Section 7 right “to file
a group, class or collective action in court” and will not
be disciplined or threatened with discipline if they do so,
the Revised Agreement leaves intact the entirety of the
original Agreement, under which employees explicitly
waive their right “to commence, be a party to, or [act as
a] class member [in, any class] or collective action,” and
“to commence or be a party to any group, class or collective action claim in arbitration or any other forum.” And
the Revised Agreement goes on to state that the Respondent may “seek enforcement of the group, class or
collective action waiver . . . and seek dismissal of any
such class or collective claims.” This additional language makes clear that the Revised Agreement does not
negate the Agreement’s provisions waiving all rights to
litigate employment-related disputes concertedly. Employees would thus reasonably read the Revised Agreement as merely stating that the Respondent will not retal98
Because the exemption for claims that must be “resolved” in another forum does not encompass unfair labor practice claims, and because nothing else in the Agreement excludes such claims from the
scope of the provisions mandating arbitration of all claims, the Agreement also violates Sec. 8(a)(1) because employees reasonably would
construe it as prohibiting them from filing unfair labor practice charges
with the Board.
99
The amended complaint does not specifically allege that the Revised Agreement violates Sec. 8(a)(1). It does, however, allege that the
Respondent, since July 28, 2010, has violated Sec. 8(a)(1) by maintaining and enforcing an agreement titled “Binding Arbitration Agreement
and Waiver of Jury Trial.” The Revised Agreement, like the Agreement, has that title. And the Respondent has maintained and enforced
the Revised Agreement “since July 28, 2010,” because the Revised
Agreement became effective after that date on March 6, 2012. The
General Counsel’s arguments on brief make clear that he considers the
amended complaint to challenge the lawfulness of the Revised Agreement, and the Respondent does not contest this. Consistent with the
positions of the parties and language of the amended complaint, we find
that the lawfulness of the Revised Agreement is properly before us.
19
iate against them if they file a class or collective action.
The right “to commence, be a party to, or [act as a] class
member in” the action itself remains waived.
The Respondent argues that the Revised Agreement is
nonetheless lawful because it permits employees to file
Board charges “addressing the enforcement” of the
Agreement. The Board, however, rejected this very argument in D. R. Horton. See 357 NLRB No. 184, slip
op. at 7. As the Board explained, such language does not
cure the Agreement’s restriction on exercising Section 7
rights because “[e]mployees still would reasonably believe that they were barred from filing or joining class or
collective action, as the arbitration agreement . . . still
expressly state[s] that they waive the right to do so.” Id.
At best, the language added to the Agreement in the Revised Agreement creates an ambiguity, which must be
construed against the Respondent as the drafter of the
Revised Agreement. See Lafayette Park Hotel, 326
NLRB 824, 828 (1998), enfd. 203 F.3d 52 (D.C. Cir.
1999). Thus, even assuming that the Revised Agreement
does not expressly prohibit the exercise of Section 7
rights, it still violates Section 8(a)(1) because employees
subject to the Revised Agreement would reasonably construe it as waiving their right to pursue employmentrelated claims concertedly in all forums. See Lutheran
Heritage Village, supra, 343 NLRB at 647.
3. The Respondent’s efforts to enforce its unlawful
Agreements also violate Section 8(a)(1)
We further find that the Respondent violated Section
8(a)(1) by enforcing the Agreement through its motion to
dismiss the plaintiffs’ FLSA collective action and to
compel them to arbitrate their claims individually. It is
well settled that an employer violates Section 8(a)(1) by
enforcing a rule that unlawfully restricts Section 7 rights.
See, e.g., NLRB v. Washington Aluminum Co., 370 U.S.
9, 16–17 (1962); Republic Aviation Corp., 324 U.S. 793
(1945). That is precisely what the Respondent did
through its motion to dismiss. Moreover, the Supreme
Court long ago recognized the authority of the Board to
prevent an employer from benefitting from “contracts
which were procured through violation of the Act and
which are themselves continuing means of violating it,
and from carrying out any of the contract provisions, the
effect of which would be to infringe the rights guaranteed by the National Labor Relations Act.” National
Licorice Co., supra, 309 U.S. at 365 (enforcing Board
order requiring employer to cease enforcing individual
contracts under which employees waived rights under the
Act). Our determination that the Respondent violated the
Act by its court motion to enforce its unlawful Agree-
20
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
ment is consistent with these principles and precedents.100 The Respondent contends, however, that the
First Amendment as construed by the Supreme Court in
BE & K Construction Co., 536 U.S. 516 (2002), precludes us from finding that the Respondent violated the
Act by litigating its motion in court. We have carefully
considered this contention in light of the important First
Amendment interests at stake, and we conclude that it is
unavailing.
The First Amendment protects the right to petition the
Government for redress of grievances. Although by its
wording this protection seems to extend only to parties in
an offensive litigating posture—e.g., plaintiffs—courts
have construed the First Amendment as extending this
protection to defendants as well,101 and we will assume
likewise. To safeguard this constitutional right, the Supreme Court has held that the Board may find the filing
and prosecution of an ongoing or completed lawsuit to be
an unfair labor practice only if the lawsuit is both objectively baseless and subjectively motivated by an unlawful purpose—i.e., if it lacks a reasonable basis in fact or
law and was prosecuted with a retaliatory motive. Bill
Johnson’s Restaurants v. NLRB, 461 U.S. 731 (1983)
(ongoing actions); BE & K Construction, above (completed actions).
In Bill Johnson’s, however, the Court carved out an
exception for two situations in which a lawsuit enjoys no
such First Amendment protection: where the action is
beyond a State court’s jurisdiction because of Federal
preemption, and, as pertinent here, where “a suit . . . has
an objective that is illegal under federal law.” 461 U.S.
at 737 fn. 5. Thus, the Board may restrain litigation efforts that have an illegal objective, even if—like the Respondent’s successful motion before the court—those
efforts are “otherwise meritorious.” See Teamsters Local
776 v. NLRB, 973 F.2d 230, 236 (3d Cir. 1992).102
Under settled law, a party acts with an illegal objective
when it seeks to enforce an agreement that is unlawful
100
See also Kaiser Steel Corp. v. Mullins, supra, 455 U.S. at 83
(“[A] federal court has a duty to determine whether a contract violates
federal law before enforcing it.”).
101
See Freeman v. Lasky, Haas & Cohler, 410 F.3d 1180, 1184 (9th
Cir. 2005) (stating that “asking a court to deny one’s opponent’s petition is also a form of petition”); In re Burlington Northern, Inc., 822
F.2d 518, 532 (5th Cir. 1987) (“We perceive no reason to apply any
different [First Amendment protection] standard to defending lawsuits
than to initiating them.”).
102
Contrary to the Respondent’s suggestion on brief, the Court’s decision in BE & K “did not alter the Board’s authority to find court proceedings that have an illegal objective under federal law to be an unfair
labor practice.” Dilling Mechanical Contractors, 357 NLRB No. 56,
slip op. at 3 (2011); see also Can-Am Plumbing v. NLRB, 321 F.3d 145,
151 (D.C. Cir. 2003); Small v. Plasterers Local 200, 611 F.3d 483, 492
(9th Cir. 2010).
under the Act. For example, in Elevator Constructors
(Long Elevator), the Board found that a union violated
Section 8(b)(4)(ii)(A) by filing a grievance “predicated
on a reading . . . of the collective-bargaining agreement
that would convert it into a de facto hot cargo provision,
in violation of Section 8(e).” 289 NLRB 1095, 1095
(1988), enfd. 902 F.2d 1297 (8th Cir. 1990). The Board
enjoined the union from pursuing its grievance, explaining that “[b]ecause we have concluded that the contract
clause as construed by the [union] would violate Section
8(e), we may properly find the pursuit of the grievance
coercive, notwithstanding the Supreme Court’s decision
in Bill Johnson’s.” Id.103 Notably, the Board broadly
clarified the difference between a retaliatory motive,
which by itself does not remove a party from First
Amendment protection, and an illegal objective of “seeking to enforce an unlawful contract provision.” Id. (citing Teamsters Local 705 v. NLRB (Emery Air Freight),
820 F.2d 448 (D.C. Cir. 1987)). Reviewing courts have
uniformly accepted this reasoning.104
So also, as the Court recognized in Bill Johnson’s, the
Board may find unlawful under the Act, without impinging on the First Amendment, union lawsuits to collect
fines imposed on employees who crossed a picket line
after resigning from the union. The Court observed that
it had previously enforced Board orders in such cases.105
103
See also Longshoremen Local 1291 (Holt Cargo Systems), 309
NLRB 1283 (1992); Service Employees Local 32B-32J (Nevins Realty
Corp.), 313 NLRB 392 (1993), enfd. in relevant part 68 F.3d 490 (D.C.
Cir. 1995); Iron Workers (Southwestern Materials), 328 NLRB 934
(1999).
104
See NLRB v. Local 1131, 777 F.2d 1131, 1141 (6th Cir. 1985)
(“[W]here, as here, the object of the grievance is to enforce an illegal
contractual provision, the Board is fully empowered to enjoin the party
from pursuing the grievance.”); Nelson v. Electrical Workers Local 46,
899 F.2d 1557, 1562–1563 (9th Cir. 1990) (finding that because there
were “substantial grounds to believe the Agreement, as construed by
the Union, violates section 8(e), Bill Johnson’s does not preclude the
Board or the court from enjoining the Union’s attempts to enforce the
contract”); Local 32B-32J v. NLRB, 68 F.3d 490, 495–496 (D.C. Cir.
1995) (finding that union’s pursuit of arbitration had an illegal objective “from the start” because its sole purpose was to enforce the union’s
interpretation of a contract that would “necessarily result in an illegal
hot cargo agreement”).
105
See 461 U.S. at 737 fn. 5 (citing Booster Lodge No. 405, IAM
(Boeing Co.), 185 NLRB 380 (1970), enfd. in relevant part 459 F.2d
1143 (D.C. Cir. 1972), affd. 412 U.S. 84 (1973); and Granite State
Joint Board, 187 NLRB 636 (1970), enf. denied 446 F.2d 369 (1st Cir.
1971), revd. 409 U.S. 213 (1972)). In Booster Lodge, the Board found
that a union’s postresignation fines unlawfully restrained employees in
the exercise of their Sec. 7 right to refrain from concerted activities
because the fines were “inherently coercive” and “calculated to force an
individual both to pay money and to engage in particular conduct
against his will.” 185 NLRB at 381–382. Subsequently, in Granite
State Joint Board, the Board found that a union violated Sec.
8(b)(1)(A) when it sought to enforce unlawful fines in state court. 187
NLRB at 636, 643. The Board ordered that union to take “all necessary
MURPHY OIL USA, INC.
As the Court explained in Bill Johnson’s, such lawsuits
have an illegal objective because they seek “enforcement
of fines that could not lawfully be imposed under the
Act.” 461 U.S. at 737 fn. 5. Thus, litigation has an illegal objective and may properly be found to violate the
Act where it is “simply an attempt to enforce an underlying act that is itself an unfair labor practice.” Regional
Construction Corp., 333 NLRB 313, 319 (2001).
Consistent with this analysis, we find that the Respondent acted with an illegal objective when it moved
to compel arbitration of the plaintiffs’ FLSA claims and
to dismiss their collective action, and when it continued
to maintain that position in subsequent court filings, to
enforce an underlying act—the Agreement—that is itself
an unfair labor practice. This motion had the illegal objective of “seeking to enforce an unlawful contract provision.” See Long Elevator, 289 NLRB at 1095. And, like
the union fine litigation condemned by the Court in
Granite State Joint Board and Bill Johnson’s, the motion
was an attempt to enforce an agreement that interfered
with employees’ exercise of their Section 7 rights and
thus “could not lawfully be imposed under the Act.” Bill
Johnson’s, 461 U.S. at 737 fn. 5. Accordingly, our finding that the Respondent violated Section 8(a)(1) by maintaining its motion is fully consistent with the principles
established in Bill Johnson’s and BE & K.
CONCLUSIONS OF LAW
1. The Respondent is an employer within the meaning
of Section 2(2), (6), and (7) of the Act.
2. By maintaining a mandatory arbitration agreement
that employees reasonably would believe bars them from
filing charges with the National Labor Relations Board,
and by maintaining and/or enforcing a mandatory arbitration agreement under which employees are compelled, as
a condition of employment, to waive the right to maintain class or collective actions in all forums, whether
arbitral or judicial, the Respondent has engaged in unfair
labor practices affecting commerce within the meaning
of Section 2(6) and (7) of the Act, and has violated Section 8(a)(1) of the Act.
REMEDY
Having found that the Respondent has engaged in certain unfair labor practices, we shall order it to cease and
desist and to take certain affirmative action designed to
effectuate the policies of the Act. Consistent with the
Board’s usual practice in cases involving unlawful litigation, we shall order the Respondent to reimburse the
plaintiffs for all reasonable expenses and legal fees, with
action” in the State court “to withdraw and give up all claims for said
fines.” Id. at 637, 645.
21
interest,106 incurred in opposing the Respondent’s unlawful motion to dismiss their collective FLSA action and
compel individual arbitration. See Bill Johnson’s, 461
U.S. at 747 (“If a violation is found, the Board may order
the employer to reimburse the employees whom he had
wrongfully sued for their attorneys’ fees and other expenses” and “any other proper relief that would effectuate the policies of the Act.”). We shall also order the
Respondent to rescind or revise the Agreement and Revised Agreement, to notify employees and the district
court that it has done so, and to inform the district court
that it no longer opposes the plaintiffs’ claims on the
basis of the Agreement.
ORDER
The National Labor Relations Board orders that the
Respondent, Murphy Oil USA, Inc., Calera, Alabama, its
officers, agents, successors, and assigns, shall
1. Cease and desist from
(a) Maintaining a mandatory arbitration agreement that
employees reasonably would believe bars or restricts the
right to file charges with the National Labor Relations
Board.
(b) Maintaining and/or enforcing a mandatory arbitration agreement that requires employees, as a condition of
employment, to waive the right to maintain class or collective actions in all forums, whether arbitral or judicial.
(c) In any like or related manner interfering with, restraining, or coercing employees in the exercise of the
rights guaranteed to them by Section 7 of the Act.
2. Take the following affirmative action necessary to
effectuate the policies of the Act.
(a) Rescind the Binding Arbitration Agreement and
Waiver of Jury Trial (Agreement and Waiver) in all of its
forms, or revise it in all of its forms to make clear to employees that the Agreement and Waiver does not constitute a waiver of their right to maintain employmentrelated joint, class, or collective actions in all forums,
and that it does not restrict employees’ right to file
charges with the National Labor Relations Board.
(b) Notify all applicants and current and former employees who were required to sign the Agreement and
Waiver in any form that the Agreement and Waiver has
been rescinded or revised and, if revised, provide them a
copy of the revised agreement.
106
Interest shall be computed in the manner prescribed in New Horizons for the Retarded, 283 NLRB 1173 (1987), compounded daily as
prescribed in Kentucky River Medical Center, 356 NLRB No. 8 (2010).
See Teamsters Local 776 (Rite Aid), 305 NLRB 832, 835 fn. 10 (1991)
(“[I]n make-whole orders for suits maintained in violation of the Act, it
is appropriate and necessary to award interest on litigation expenses.”),
enfd. 973 F.2d 230 (3d Cir. 1992), cert. denied 507 U.S. 959 (1993).
22
DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD
(c) Notify the United States District Court for the
Northern District of Alabama that it has rescinded or
revised the mandatory arbitration agreements upon which
it based its motion to dismiss Sheila Hobson’s and her
coplaintiffs’ FLSA collective action and to compel arbitration of their claims, and inform the court that it no
longer opposes the plaintiffs’ FLSA action on the basis
of those agreements.
(d) In the manner set forth in the remedy section of this
decision, reimburse the plaintiffs for any reasonable attorneys’ fees and litigation expenses that they may have
incurred in opposing the Respondent’s motion to dismiss
their wage claim and compel individual arbitration.
(e) Within 14 days after service by the Region, post at
its Calera, Alabama facility copies of the attached notice
marked “Appendix A” and at all other facilities nationwide copies of the attached notice marked “Appendix
B.”107 Copies of the notice, on forms provided by the
Regional Director for Region 10, after being signed by
the Respondent’s authorized representative, shall be
posted by the Respondent and maintained for 60 consecutive days in conspicuous places including all places
where notices to employees are customarily posted. In
addition to physical posting of paper notices, notices
shall be distributed electronically, such as by email, posting on an intranet or an internet site, or other electronic
means, if the Respondent customarily communicates
with its employees by such means. Reasonable steps
shall be taken by the Respondent to ensure that the notices are not altered, defaced, or covered by any other material. In the event that, during the pendency of these proceedings, the Respondent has gone out of business or
closed the facility involved in these proceedings, the Respondent shall duplicate and mail, at its own expense, a
copy of the notice marked “Appendix A” to all current
employees and former employees employed by the Respondent at any time since July 28, 2010.
(f) Within 21 days after service by the Region, file
with the Regional Director for Region 10 a sworn certification of a responsible official on a form provided by the
Region attesting to the steps that the Respondent has
taken to comply.
Dated, Washington, D.C. October 28, 2014
______________________________________
Mark Gaston Pearce,
Chairman
107
If this Order is enforced by a judgment of a United States court of
appeals, the words in the notices reading “Posted by Order of the National Labor Relations Board” shall read “Posted Pursuant to a Judgment of the United States Court of Appeals Enforcing an Order of the
National Labor Relations Board.”
______________________________________
Kent Y. Hirozawa,
Member
______________________________________
Nancy Schiffer,
Member
(SEAL)
NATIONAL LABOR RELATIONS BOARD
MEMBER MISCIMARRA, dissenting in part.
The English poet John Donne wrote that “[n]o man is
an island, entire of itself; every man is a piece of the continent, a part of the main.”1 So too is the National Labor
Relations Act (NLRA or the Act). The NLRA coexists
with a broad array of other Federal statutes, in addition to
State and local laws. In today’s decision, my colleagues
treat our statute as the protector of “class” action procedures under all laws, everywhere. However, it does no
disrespect to the Act to recognize its reasonable limitations.
When adopting the NLRA, Congress intended to protect employees from retaliation for engaging in certain
concerted activities for mutual aid and protection. This
can include protection against retaliation based on concerted activities that relate to non-NLRA claims or complaints against an employer or union.2 Yet, I believe
Congress did not vest the NLRB with authority to dictate
what internal procedures must govern non-NLRA claims
adjudicated by courts and agencies other than the NLRB.
Nor can it be correct to suggest that the NLRA in this
area “trumps all other Federal statutes.”3 The Act cannot
reasonably be interpreted as giving employees a broadbased right to “class” treatment under other Federal,
State, and local laws. Indeed, as noted below, most of
these other laws—and the modern treatment of “class”
litigation—did not even exist until long after the NLRA
was enacted. And one can hardly attribute to Congress a
decision, as part of the NLRA, to protect “class” litigation under all kinds of other laws when those other
laws—even at present—do not attach a common meaning to what constitutes “class” litigation.
As indicated in part A below, I agree with the majority
that the NLRA affords protection to two or more employees who, while acting in concert, initiate or partici1
John Donne, Meditation XVII from Devotions Upon Emergent Occasions, and severall steps in my Sicknes (1624).
2
Eastex, Inc. v. NLRB, 437 U.S. 556, 565 (1978).
3
Electrical Workers Local 48 (Kingston Constructors), 332 NLRB
1492, 1501 (2000), supplemented 333 NLRB 963 (2001), enfd. 345
F.3d 1049 (9th Cir. 2003)
MURPHY OIL USA, INC.
pate in one or more non-NLRA legal claims for the purpose of mutual aid or protection.4 However, I respectfully dissent from the majority’s finding here—and I disagree with the Board’s holding in D. R. Horton5—that
Section 8(a)(1) of the Act prohibits employees and employers from entering into agreements that waive “class”
procedures in litigation or arbitration.
Four considerations warrant a conclusion, in my view,
that the Act does not prohibit or contemplate any particular treatment of “class” procedures and waivers relating
to non-NLRA claims.
First, as indicated in part B below, nothing reasonably
supports a conclusion that Congress, in the NLRA, vested the Board with authority to dictate or guarantee how
other courts or other agencies would adjudicate nonNLRA legal claims, whether as “class actions,” “collective actions,” the “joinder” of individual claims, or otherwise. Rather, Congress clearly contemplated that such
procedural details would be adjudicated in accordance
with procedures prescribed in non-NLRA statutes, supplemented by procedural rules authorized or adopted by
Congress, State legislatures, and the courts and agencies
charged with enforcing non-NLRA claims.6 Because the
NLRA does not dictate or prescribe any particular procedures governing non-NLRA claim adjudications, I believe the Board lacks authority to conclude that “class”
waivers constitute unlawful restraint, coercion, or interference in violation of Section 8(a)(1).
Second, Section 9(a) protects the right of employees
and employers “at any time” to adjust “grievances” on an
“individual” basis.7 Therefore, as indicated in part C
below, I believe Section 9(a) protects the right of individual employees and their employer to enter into a
“class” waiver agreement and other agreements to adjust
claims on an “individual” basis.
Third, as described in the separate dissenting opinion
by Board Member Johnson, it is likewise clear that the
Act does not prohibit “class” waivers in employment
agreements providing for the arbitration of non-NLRA
legal claims consistent with the Federal Arbitration Act
4
I also agree with the majority’s finding that—separate from the
“class” waiver contained in Respondent’s arbitration agreement—the
original agreement violated Sec. 8(a)(1) by indicating that disputes
arising under the NLRA, instead of being the subject of charges resolved by the Board, had to be resolved in mandatory arbitration.
5
357 NLRB No. 184 (2012), enf. denied 737 F.3d 344 (5th Cir.
2013).
6
In the remainder of this opinion, the following abbreviations are
used: Federal Rules of Civil Procedure (FRCP or Federal Rules), Equal
Employment Opportunity Commission (EEOC); the Fair Labor Standards Act (FLSA); and Title VII of the Civil Rights Act of 1964 (Title
VII).
7
Sec. 9(a) (emphasis added).
23
(FAA). As to this issue, among others, I agree with
Member Johnson’s dissenting opinion and the dozens of
court cases that have refused to apply D. R. Horton, supra.
Fourth, as indicated in part E below, I believe the Act
and its legislative history render inappropriate the remedies ordered by the Board here, especially the required
payment of attorneys’ fees incurred by the Charging Party in opposing Respondent’s meritorious motion to dismiss, which the district court granted.
Discussion
A. The NLRA Protects Concerted Employee Activities for
Mutual Aid or Protection that Relate to the Pursuit of
Non-NLRA Legal Claims
This case turns on the interpretation of Section 8(a)(1)
and Section 7 of the Act. Section 8(a)(1) states it is unlawful for an employer to “interfere with, restrain, or
coerce employees in the exercise of the rights guaranteed
in section 7.” In relevant part, Section 7 states:
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.8
The scope of Section 7 was discussed at length in our
recent decision in Fresh & Easy Neighborhood Market.9
On its face, Section 7 contains “words of limitation.”
Fibreboard Paper Products Corp. v. NLRB, 379 U.S.
203, 220 (1964) (Stewart, J., concurring). Statutory language must be construed as a whole, and particular
words or phrases are to be understood in relation to associated words and phrases.10
Section 7 enumerates three specific types of protected
employee activity:
“self-organization,” “form[ing],
join[ing], or assist[ing] labor organizations,” and “bargain[ing] collectively through representatives.” It then
enumerates a fourth category, encompassing “other con8
Sec. 7 (emphasis added).
361 NLRB No. 12 (2014) (Fresh & Easy). In Fresh & Easy, I authored a partial dissenting opinion based on my view that the record did
not support a conclusion that the employee there engaged in protected
Sec. 7 activity (by insisting that two coemployees, over their objection,
sign a paper that di