NSBA Testifies on DOL and NLRB Issues

September 25, 2013

pic-congress-hearingNational Small Business Association (NSBA) General Counsel David Burton testified Thursday, Sept. 19, 2013 before the House Education and Workforce Committee at a hearing to explore the pressures placed upon small businesses by overreaching and unfair labor policies.

This testimony addressed four issues:

  1. The proposed Department of Labor (DOL) persuader or advice rule;
  2. The withdrawn National Labor Relations Board (NLRB) accelerated union elections rule;
  3. NLRB Micro-union or micro-unit decisions; and
  4. NLRB social media decisions.

To read the testimony, click here.  To watch the testimony, click here.

Persuader Rule

The DOL has proposed a rule that would radically narrow the “advice” exemption of the Labor-Management Reporting and Disclosure Act and jettison the interpretation of that exemption that has been adopted by every administration since the Kennedy administration.  A final rule is expected out in November.

NSBA argues that the proposed rule:

  • is contrary to Congressional intent for at least five reasons;
  • upends a half century of settled law and creates uncertainty;
  • imposes substantially higher costs than the DOL claims;
  • will harm the right of employers to secure advice;
  • violates attorney-client privilege; and
  • lacks an adequate evidentiary basis.

NSBA has therefore urged DOL to withdraw the proposed rule.

For half a century, advisors that did not interact with employees generally did not have to file reports with DOL. In contrast, under the interpretation of section 203(c) contained in the proposed rule, virtually any imaginable activity by almost any consultant or vendor that in any manner, directly or indirectly, relates to a labor dispute or attempted organization of an employer would be reportable. In addition, attorneys, employee benefits consultants and similar human resources type advisors will probably be reportable. Even extremely minor activities must be reported.

The 1959 Conference Committee Report explicitly stated that Congress intended the section 203(c) advice exception to be broad.  It is, however, difficult to conceive of a more narrowly drafted definition of advice than that contained in the proposed rule and given the section 204 exception for attorneys it has effectively been read out of the law.

The DOL cost analysis is off by an order of magnitude or, probably, more.  Instead of 6,000 filers, the DOL may see ten times that many or more. The time estimates (60 minutes for an LM-20 and 120 minutes for an LM-10) are dramatically too low.  Perhaps, a labor lawyer already familiar with the rule and the underlying law who also had taken an Evelyn Wood speed reading course and had highly efficient support staff could meet these times if only one consultant is involved.  Perhaps. The idea that firms are going to be able to comply with this rule for $87 to $175 is simply ludicrous.

 Accelerated Union Elections

In June, 2011, the NLRB published a proposed rule, now withdrawn but likely to be revisited now that the NLRB has a quorum. That rule would revise election procedures so that in most cases elections would be conducted 10 to 21 days after the filing of the petition rather than the 35 to 40 days after filing typical today.

NSBA’s General Counsel invited each member of the committee to undertake a thought experiment.  He said:

Imagine if your opponent was permitted to organize his or her campaign, raise money, hire consultants, recruit volunteers, communicate with voters and only then were you informed that there was an election coming up and it would be in 10 days.  Perhaps I am wrong, but I doubt anyone in this hearing room would regard this as fair in the context of elections for public office.  It is, I submit, no more fair in elections determining whether or not a union will collectively bargain for employees.

Unions will have spent months organizing and laying the groundwork before filing an election petition.  Unions know labor law and have counsel with expertise.  Unions are experts at waging unionization campaigns.  Most small employees, in contrast, do not know anything about the law relating to representation elections, and do not have attorneys on staff. Under the proposed rules, they will be accorded only 10 days to find counsel, inform them of the facts, develop their message and campaign materials and communicate to employees.

Micro Unions

In the Specialty Healthcare case the NLRB started the process of dismantling the traditionally understood “community of interest” rule for determining bargaining units.  The NLRB allowed the initial bargaining unit to be a single job description, namely certified nursing assistants.  The NLRB enunciated a new standard that in effects allows unions to determine the bargaining unit (i..e. the representation election electorate) and the union determination is presumed correct unless the employer “demonstrates that employees in the larger unit share an overwhelming community of interest with those in the petitioned-for unit.” Subsequent NLRB cases have shown that this presumption is virtually irrebuttable.

This line of cases will result in a proliferation of bargaining units and allow unions to balkanize the workplace, forcing employers to deal with a potentially huge number of unions. In addition, it allows unions to organize very small parts of a company’s workforce, even if the overwhelming majority of employees opposed unionization, by picking occupations or departments where they believe they can achieve a narrow majority.  Thus, they would be able to partially organize employers where they would have no chance of prevailing under traditional rules.

The Bergdorf Goodman case is a particularly egregious example. The union sought to represent women’s shoes associates in the 2nd Floor Designer Shoes Department and in the 5th Floor Contemporary Shoes Department. The employer asserted that the smallest appropriate unit must be comprised of a store-wide unit, or in the alternative, all selling associates in the store. The NLRB allowed the union chosen bargaining unit of 46 employees in the 2nd and 5th floor shoe departments to be separately organized.

NLRB Social Media Policies

This protection of “concerted activities” for mutual aid under section 7 of the NLRA has become a priority for the NRLB, particularly in cases involving social media.  NSBA commended the agency in one important respect.  In the most recent Operations-Management memorandum issued May 30, 2012, the NLRB provided a model Social Media Policy that it finds acceptable.  Entirely independent of the merits of the model policy, this is a very constructive step because small business owners, their attorneys and their advocates can read it and know what NLRB finds acceptable.

That said, there are aspects of the current NLRB approach to social media that are very difficult to understand.  For example, the NLRB deems unlawful the seemingly common sense instruction that “[o]ffensive, demeaning, abusive or inappropriate remarks are as out of place online as they are offline.”   It is, to be charitable, doubtful that section 7 protects “offensive, demeaning, abusive or inappropriate remarks.”  It is, in contrast, quite likely that employers that permit the use of such language would find themselves liable under other theories such as sexual harassment, civil rights violations, or the like.  NSBA does not believe that federal law should impose liability on employers whether they prohibit inappropriate speech or permit it.

NSBA believes that the NLRB approach is wrong.  The section 7 analysis should not vary depending on how the speech was made.  If it is inappropriate in one medium, then it is inappropriate in another.  Conversely, speech that is protected is protected whether it is made in person, on-line, over the telephone or by some other mechanism.  It is a mistake for the NLRB to treat speech differently depending on how it is transmitted rather than what it says or to whom it was directed.

The September 28, 2012 NLRB decision in Knauz BMW is based on a similar “analysis” is particularly remarkable.  It shows how unmoored from the underlying purpose or language of section 7 the NLRB has become.  The NLRB has now ruled that requiring courtesy towards customers or other employees is unlawful.  It is utterly implausible that the authors of section 7 intended to prevent employers from requiring employees to be courteous to their customers or fellow employers.