REPORT FROM WORKLAW ® NETWORK’S FALL MEETING
By: Bill Pilchak – 10/27/15
MONTREAL- Two days of meetings with labor and employment attorneys from around the world is sure to result in interesting tidbits for our clients. Here are some of the things learned:
The Ashley Madison Scandal Touches Business In A Special Way: A forensic data examiner described the business implications posed by the hacking and posting of Ashley Madison subscribers. Some companies have realized that subscribers not already “outed” to employers, spouses and significant others pose a blackmail danger that could come to haunt the company. The blackmail could result in sweetheart contracts (pun intended) or revelation of confidential information. Some companies have asked AM subscribers to self-identify in order to address the problem. Others have surveyed the AM postings on-line and then contacted executives who may be vulnerable.
Upcoming Increase In Required Salary Status Provides Unique Chance To Fix Misclassification Problems. One of the most difficult problems an employer can face is how to change an employee mistakenly characterized as salaried-exempt to hourly without telegraphing that two or three years of overtime liability may exist. As most know, the Obama Administration has announced plans to increase the minimum required salary for exempt status from $23,660 to $50,400 in 2016 (although no official date has been set by the regulations). Many businesses will elect to simply pay previously salaried employees overtime rather than giving a $25,000 raise. For any misclassified salaried employees making less than $50,400, the new rules provide a unique “excuse” to reclassify the employee as hourly that will not suggest a prior OT obligation: “As you know, the DOL has raised the salary threshold above your current pay level. Accordingly, starting ___, you will be paid hourly and receive overtime pay…”
After Initial Surge In Petitions, Organizing Efforts Track Prior Levels Despite Quickie Election Rules: Since April, the NLRB has been operating under new election rules that will generally require an election between 11 and 30 days after a petition for election is filed. In April and May, there was a 38% spike in the number of petitions filed. However, since June, organizing efforts fell back to traditional levels. Incidentally, the average time between a petition and election has been 23 days nationwide, down from 37 days under the old rules. However, in Region 7, which includes Michigan, the average is 19 days. Since 2 ½ weeks is not much time to counter back-channel organizing steps, it might be wise to start preparing for a union organizing attempt before the union shows up.
NLRB Will Continue To Prosecute Arbitration Agreements Containing Class Action Waivers Until the Supreme Court Tells Them To Stop: The NLRB has consistently contended in recent years that requiring employees to sign arbitration agreements that waive class action claims chills protected concerted activity. Such agreements are especially important in California, where the threat of a class action tips the balance of power in favor of the employee when claims arise. While the Board endorses this theory, federal Courts of Appeals have consistently refused to enforce Board rulings on this issue, holding that the Federal Arbitration Act controls. Despite several adverse rulings, the NLRB keeps filing ULP Complaints.
Laws Compelling Employers To Hire Incumbents Also Compel Any Union Obligations: New York City’s Displaced Building Service Workers Protection Act and similar laws in California, Washington, D.C., Providence, Rhode Island, San Francisco, Los Angeles, Philadelphia, St. Louis; Newark, Westchester County, New York and Montgomery County, Maryland require some employers taking over the operations (usually government service or janitorial contracts) of other businesses to hire the existing labor force. The Service Contract Act and Executive Order 13495 likewise require incoming federal service contractors to offer employment to the employees of the outgoing contractor. These laws ignore the fact that sometimes the workforce is the problem and assure that the workforce is passed on to another company. An August, 2015 NLRB Board decision, GVS Properties LLC, now holds that such laws automatically saddle an incoming company with any union representing the prior workforce. Generally, if an employer elects to hire more than 50% of a unionized workforce, it becomes a successor, who must bargain with the union. GVS Properties holds that an incoming employer is a successor who must bargain with the union, even if it was compelled to hire the workers.
By: Dan Cohen – 10/21/15
After workers at Fiat Chrysler resoundingly voted down the tentative agreement reached by the Company and UAW on September 15, 2015 the parties came together just before the midnight strike deadline of October 7, 2015 and reached a new tentative agreement. The tentative agreement averted a walk-out by 40,000 unionized workers, which could have cost FCA as much as $300,000,000 per day. The workers started voting on the tentative agreement yesterday and will be completing the voting process today.
The primary difference from the rejected deal lies in the two tier wage policy. This tentative agreement allows the second tier of employees (those hired after 2007) to reach the full contractual wage rate of $29 in eight years. Second tier employees with four years of service will receive more than a $10/hour increase by the end of the contract and those with two years of service will receive more than an $8/hour increase. The UAW had previously indicated that one of its priorities was the elimination of the two tier wage system. If employees ratify this tentative agreement, the UAW will be well on its way to achieving its goal. Nearly half of FCA’s unionized workforce (45%) is part of the second tier.
If ratified, both tiers will receive lump sum ratification bonuses of $4000 for the first tier and $3000 for the second tier. The first tier will receive its first general wage increase in over 9 years and take home nearly $20,000 more over the next 4 years. Health care will not change and all workers will continue to pay no premiums for their healthcare, a rarity in today’s health care world. The profit sharing pool will be funded based on the new formula of $800 for every 1% in North American profit margin and will be based on hours of work. Thus, the more hours an employee works, the bigger his/her share of the profit sharing pool will be. The second tier will receive an increased employer contribution to their 401(k) plans, increased dental and vision insurance. There is also increased pension funding in the tentative agreement. Finally, FCA has agreed to invest $5.3 Billion in its U.S operations and has agreed to a Moratorium on Outsourcing.
Many on the outside consider this a huge win for the second tier, and it probably is. However, keep in mind that the second tier workers have sought to reach full contract wage rates by the end of the 4 year contract. The tentative agreement doubles the time it will take second tier workers to achieve full contract wages. They also do not receive retiree health care benefits. Some close to the industry say that even if all FCA workers were at the Tier One wage, FCA’s union costs would still be less than Ford and GM and in line with costs at Toyota and Honda. Many question whether this tentative agreement will pass. Certainly, the UAW is not taking any chances. It has reduced the ratification process from two weeks after the first tentative agreement was reached to just two days. This should prevent early local results from influencing others. The UAW has also stepped up its social media messaging to further influence the ratification vote. If ratified, it will be on to Ford and GM, which have had higher profits than FCA for much of the post-recession period. If the tentative agreement is rejected, the UAW will be in unchartered territory and things could get quite interesting.
By: Dan Cohen – 10/8/15
It’s been about six weeks since we last posted to the Emplawyers Blawg, not because there has been nothing to write about, but because we have been so darn busy. By no means is this “sour grapes” as we welcome business with open arms, enjoy each and every challenge at work and wouldn’t have it any other way. To complicate matters in my life, I decided to spend the last few weekends of the summer painting my house. By most accounts, everyone thinks I am crazy for taking on such a project. And, while I told everyone who asked, that I enjoy painting and that it was not so bad, the truth of the matter is, I don’t know what I was thinking when I made that decision. It was bad, took longer than I thought it would, and is something I won’t quickly volunteer for again.
So, what has been going on for the last several weeks in the world of labor and employment law? The biggest and probably worst news came from the NLRB in its Browning-Ferris Industries of California, Inc., where the NLRB re-wrote its “joint employer” rule. Anybody following this case as well as the McDonald’s case, which involved the question whether McDonald’s was a “joint employer” with its franchisees, would probably have bet the farm the decision would be anti-business. Sure enough: It was. According to the Browning-Ferris decision, the NLRB may find two or more statutory employers to be joint employers of the same employees if they share control over the terms and conditions of employment. It does not matter if the two employers actually exercise that control According to the NLRB, indirect and even potential control is enough.
There is little doubt that the newly adopted NLRB standard for finding joint employment relationships is a “game changer” and deals a significant blow to the business community, particularly companies outsourcing functions, but retaining control over workers or operating within the franchisor/franchisee model as well as the staffing industry. Franchisors may become financially responsible for unfair labor practices committed by their franchisees and unions will be more motivated than ever before to organize franchisees in hopes of bringing the franchisor (and its much deeper pockets) to the bargaining table. The decision is also likely to result in an expansion of union membership in the private sector as organizing contingent and temporary workers will become far easier.
While I was up on a ladder, the Michigan Employment Relations Commission upheld an earlier ruling by an administrative law judge that the Michigan Education Association’s (“MEA”) “August Window” was illegal. Under its longstanding August Window rule, union members could only resign the membership from the union in August. The obvious intent and effect of the rule was to make it more difficult for teachers and support staff to resign their membership. This has become a hot button item now that Michigan is a right to work state and membership in the union can no longer be a condition of continued employment. I have witnessed first-hand how the MEA has treated some local groups of teachers and support staff who have attempted to resign their memberships and even decertify the MEA as their exclusive bargaining representative. In each case, the story has been the same: the employees have wondered what it is they are actually receiving from the MEA for the amount of union dues they have paid. Having some say in how their hard earned dollars are spent is an extremely important right that these teachers have not experienced with the MEA.
Finally, right about the time I was treating for my aching back, in an unpublished opinion of the Michigan Court of Appeals, the appellate court determined that a reduced limitations period set forth in an employee handbook was to be enforced. See e.g. Hier v. Douglas J. Management L.L.C, Case Number 321792 (September 15, 2015). In that case, the policy handbook required that an employee must commence “any claim, complaint, action or suit relating to their employment with the Company” within 182 days of the event “giving rise to the claim, complaint, action or suit.” Because the employee missed the 182 day deadline, the case was dismissed and upheld on appeal. We have won cases where similar 182 day limitations periods have been contained in the employment application, but this appears to be the first case where the language was set forth in the employee handbook. While we welcome this decision, the decision refers to the handbook provision as contractual, which is inconsistent with our advice that the handbook is not to be construed as a contract. Certainly, the better place for the reduced limitations period is the employment application or a stand-alone agreement. The handbook would be my third choice, but in a pinch might save the day.
By the way, my house looks great now.