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NLRB Upholds Standard Applied to Work Rules But Dissent Proposes New Framework

NLRB Upholds Standard Applied to Work Rules But Dissent Proposes New Framework

By: Rob Dare – 4/21/16

It seems that every week brings a new NLRB decision that declares workplace conduct rules unlawful (see the previous blog post). Last week was no different, when the majority of the Board held two rules in a Beaumont Hospital surgical services Code of Conduct to be unlawful. However, the decision is particularly noteworthy because a forceful dissent by a Member of the Board called for the abandonment of the decade-old standard used by both the Board and courts to evaluate workplace rules. The Luther Heritage standard (named for the case in which it was announced), provides that employment policies, work rules, and handbook provisions are unlawful if employees “would reasonably construe” the language to prohibit protected activities under Section 7 of the NLRA, which grants employees the right to engage in union organizing, collective bargaining, and other concerted activities for the purpose of mutual aid or protection.

The rules at issue prohibited:

  1. Employee conduct that, in the context of patient care and hospital operation, “impedes harmonious interactions and relationships.”
  2. “Negative or disparaging comments about the moral character or professional capabilities of an employee or physician made to employees, physicians, patients, or visitors.”

According to the majority, the first rule is unlawfully overbroad because it could “encompass any disagreement or conflict among employees, including those related to discussions and interactions protected by Section 7.” And the second rule is unlawful because it “would reasonably be construed to prohibit expressions of concerns over working conditions.”

Member Miscimarra, however, explained that in his view, the case (and result) illustrates the problematic nature of the Luther Heritage standard – that it places too much emphasis on the effect that facially neutral work rules have on Section 7 rights, while failing to consider any legitimate reasons employers have for implementing the rules in the first place. Listing the “multiple defects” of the standard, Miscimarra essentially argues that the “single-minded focus” of the “reasonably construe” standard “prevents the Board from giving meaningful consideration to the real world ‘complexities’ associated with many employment policies, work rules, and handbook provisions.” Here, he opines, the two rules helped serve the public interest by protecting patients and family members from needless conflict in hospital settings, but that is ignored under Lutheran Heritage.

The solution, according to Miscimarra, is to replace Luther Heritage with a balancing test where employees’ Section 7 interests are weighed against the employer’s particular business justification for the rule in question. Unpersuaded, the majority replied that a finding that “a particular rule threatens to have a chilling effect does not mean, however, that an employer may not address the subject matter of the rule and protect his legitimate business interests [with a] more narrowly tailored rule that does not infringe on Section 7 rights.”

Thus, Luther Heritage remains the standard that will be applied to employer rules. Accordingly, all employers, unionized or not, should continue to carefully craft and narrowly tailor the language within its handbook, code of conduct, etc. But, we will continue to monitor NLRB decisions and any relevant changes, as Member Miscimarra has provided a powerful road map for future work rule challenges.

NLRB Rules Against Quicken Loans

By Dan Cohen – 4/11/16

On April 7, 2016, Quicken Loans and several of Dan Gilbert’s other businesses were ordered to make 24 changes to their employee rules by Administrative Law Judge David Goldman because the rules were overly broad and violated Section 8(a)(1) of the National Labor Relations Act. Section 8(a)(1) prohibits employers from interfering with, restraining, or coercing employees in the exercise of the rights guaranteed in Section 7 of the Act.  According to Judge Goldman, the 24 work rules infringed upon employee rights to engage in concerted activities, including the right to discuss, debate, and communicate with each other regarding their workplace terms and conditions of employment.

Quicken argued that the employee manual (a/k/a “the Big Book”) had limited use, had only been distributed to some employees, was not used or relied upon by managers and that the manual played no active role in the employees’ work life. Quicken’s arguments were rejected because the evidence established that nothing amended or contradicted the offending rules and employees were not advised that they could engage in the conduct prohibited by the manual.  According to ALJ Goldman, “once offending rules are placed in an employer-developed employee rulebook and distributed to employees, it takes forceful and specific countervailing evidence of their disavowal to strip them of their tendency to coerce.”

Turning to the language of the manual, Judge Goldman found 24 rules and statements to violate the NLRA and ordered Quicken and the other companies to cease and desist from maintaining the following overly broad rules that:

  • Prohibit disclosure of unspecified “confidential information” in the employee handbook;
  • Prohibit employees from knowingly making false or misleading EEO complaints or EEO complaints in bad faith;
  • Require employees making complaints or participating in investigations to agree to maintain confidentiality;
  • Require employees to dress and conduct themselves in a professional manner;
  • Require employees to keep non-public financial or operational information confidential;
  • Require employees to resolve work-related concerns by speaking to team leaders and not taking it on-line;
  • Prohibit employees from displaying information that could be deemed harmful or offensive to the reasonable person;
  • Prohibit unauthorized postings and solicitations on company property;
  • Discourage emails that reflect unfavorably on the company and its reputation;
  • Prohibit non-business activities on company property;
  • Prohibit email use for activities other than company business;
  • Require employees to direct all press inquiries about the business and its directors to corporate communications persons;
  • Define confidential information as non-public information about the business, personnel, customers, operations and affairs;
  • Prohibit use of company resources which presents a threat of harm to the company or its reputation;
  • Prohibit conduct that is not in the best interests or the company, its clients or team members;
  • Prohibits signature lines with religious, political, sexual or other inappropriate content;
  • Prohibit employees from using personal web pages or sites that reference the company or which disclose information about the company without the permission of the marketing team;
  • Prohibit employees from sending non-business related attachments to emails or communicating with the media without express authorization from the corporate communications team;

Quicken has indicated it will appeal the ALJ’s decision to the full NLRB, and if necessary, to federal circuit court. Given the track record of the NLRB, I would not expect a reversal.  But, in order to move the case away from the Agency and into court, Quicken must exhaust its administrative remedies.  Thus, taking an appeal to the anti-employer NLRB must occur before Quicken is likely to get a fair shake.

While we applaud Mr. Gilbert and his efforts to fight what is clearly government overreach, we have been advising businesses now for several years on how to re-write many of the above rules in a way that protects important business rights and values without becoming fodder for the NLRB. Employers can still protect confidential information without prohibiting discussions about wages and benefits.  And, employers can still prohibit misconduct without labeling it as unprofessional, not in the company’s best interest or that which reflects unfavorably on the business.  Of course, some of the opinions are more troubling than others and hopefully Mr. Gilbert will have success once he can make his arguments in federal court. However, re-writing many of the work rules will save you defense costs, and disarm unions from using the unfair labor practice findings against your business in a union organizing drive or otherwise.  And, it will spare you the requirement of posting notices at your facilities for 60 days, which advise employees you violated federal law and reminds employees of their right to unionize.


Would a Justice Merrick Garland be Good or Bad for Employers?

Would a Justice Merrick Garland be Good or Bad for Employers?

By: Dan Cohen – 3/17/16

Although it may be nothing more than an academic exercise given the political wrangling that is sure to follow the nomination, I wonder how President Obama’s recent Supreme Court Nominee, Merrick Garland, would decide employment and labor cases. Tom Goldstein, publisher of the SCOTUSBlog, provided a survey of Judge Garland’s decisions in 2010, when he was a contender for the seat that was eventually filled by Justice Elena Kagan. According to Goldstein,

“Judge Garland has not been called upon to decide many civil-rights-related claims of great significance. It is difficult to label him as inclined either towards or against such claims, given that the panels on which he sat in such cases were generally unanimous…
When, however, Judge Garland participated in a divided ruling, it was generally in favor of the plaintiff…The unanimous rulings in which Judge Garland participated similarly reflect a concern that civil rights plaintiffs receive an appropriate day in Court.”

Goldstein also suggested that Judge Garland has strong views favoring deference to federal agency decisions: “In a dozen close cases in which the court divided, he sided with the agency every time.” Others have more recently suggested that he leans heavily towards enforcing decisions of the NLRB, having found in the Board’s favor in 18 of the 22 cases for which he wrote the majority opinion. At 82%, Judge Garland’s tendency of enforcing agency decisions is not far off the national average for all agency decisions, but it is significantly higher than the DC Circuit as a whole, which is far more inclined to second-guess agency decisions than its sister circuits.

The National Federation of Independent Business (NFIB), which has kept its distance from Supreme Court confirmation proceedings throughout its 73 year history, has decided to weigh in on Judge Garland at the urging of its membership. The Nation’s largest advocate for small business owners views Judge Garland as a strong ally of the regulatory bureaucracy and big labor, citing a number of examples of him siding with the NLRB, the EPA and other federal regulators. According to the NFIB, Judge Garland sided with the NLRB in all 16 of the major NLRB decisions it examined, including the D.C. Circuit’s 2009 case of Fed Ex Home Delivery v. NLRB, which overturned the NLRB’s decision that workers were employees and not independent contractors. Much to the chagrin of employers, Judge Garland’s track record strongly suggests how he would cast his vote as Justice Garland for the NLRB on some very significant issues, including the recent joint employment rulings in Browning-Ferris Industries and McDonald’s, which threaten the staffing industry and the franchise model of business with its highly controversial indirect/potential control ruling.

Pundits suggest that Judge Garland would be a “swing vote” on many issues, much like Justice Kennedy and observe that President Obama could have nominated a far more left-leaning judge like Justices Kagan and Sotomayor. However, a Justice Garland is not likely to overturn bad decisions of the NLRB or other federal regulators. While this bodes well for unions and environmentalists, it does not look nearly as promising for employers.

Even worse for employers is that the Republicans could be risking their current Senate majority by refusing to move forward with confirmation proceedings. Surely, with the prospect of even more Supreme Court vacancies in the next four years, losing the majority in the Senate and/or the Presidency to the Democrats will be far worse for employers than a Justice Garland. But, who am I to critique the Washington D.C. elite?

First Kalamazoo; Now Hesston, Kansas

By: Dan Cohen – 2/26/16

I just wonder if there will ever be a day again that I can turn on the news and not hear about an act of terrorism or someone randomly shooting innocent people. The latest victims worked at Excel Industries, which manufactures lawn care equipment in its Hesston, Kansas factory. Yesterday, at about 5:00 p.m., Cedric Ford, returned to Excel’s factory, where approximately 150 of his co-workers were working, and went on a shooting rampage shooting literally anyone who came into his sight. In all, four employees (including Ford) were killed and

another 14 injured (10 critically).

Ford has been described as a “mellow guy,” and “someone I could talk to about anything.” One co-worker indicated that, “never in a million years” would he think Ford was capable of doing something like this. The authorities, however, have indicated that “there [were] some things that triggered this particular individual.” In the coming days, I am sure there will be a whole lot more to this horrific story and what “triggering” factors may have caused Ford to act out as he did. However, it is scary to think that some of Ford’s co-workers did not think he was capable of such violence. Usually, it is just the opposite.

From 2006 to 2010, the last year for which final statistics are available, an average of 551 workers died each year in work-related homicides, according to the Bureau of Labor Statistics. Nearly 20% of those were multiple-fatality homicides in which two or more workers were killed. These numbers compare to the numbers in the 1990s, when I first started counseling employers on workplace violence prevention strategies. It will be interesting to know what risk factors were present and whether they were known to anyone, but certainly, at this point, nobody has come forward with information that Ford was perceived to be a threat, that others were scared of him or they were not surprised.

Employers should be watching this case as it unfolds because of the implications it may have on keeping their own workplaces safe. Often, there are warning signs which exist and which can be managed with proper threat assessment and prevention strategies. Do not misunderstand me: I am not suggesting that Excel missed any opportunities here to detect a problem and prevent the shootings. It is just too early to even raise that question. However, as facts are released, those of us who have experience with threat assessment and workplace violence prevention may be able to offer some constructive ideas for other employers. I don’t like to Monday morning quarterback such incidents, but the reality is that case studies of shootings help employers devise policies, plans and training protocols that can be used to increase their chances of never having to face such a tragedy.

While not all inclusive, some or the recognized risk factors include:

  •  History of violence, including prior threats, incarceration for violence, acts against animals
  • Mental Illness, including paranoia, depression and suicidal tendencies
  • Making or referencing lists or expressing a plan
  • Recent loss at work (discharge, denial of grievance, etc)
  • Lack of support system
  • Financial desperation or feeling of hopelessness
  • Extreme interest in or obsession with weapons and others shootings
  • Excessive discussions about weapons
  • Empathy with other shooters
  • Impulse control problems and willingness to exceed boundaries
  • Others expressing worry, nervousness about the individual

For a complete list of risk factors, please visit our website at www.mi-worklaw.com, and click on resources.



Whistleblower Protection Act Does Not Protect Reports of Suspected Future Violations

Whistleblower Protection Act Does Not Protect Reports of Suspected Future Violations

By:  Rob Dare – 2/11/16

          Plaintiff, sued her former employer, a women’s shelter, its executive director and operations manager, claiming wrongful termination in violation of Michigan’s Whistleblower Protection Act (“WPA”). Plaintiff claimed that the Executive Director told her that she intended to use grant money to purchase a stove for her daughter. Further, according to plaintiff, the Executive Director implied that plaintiff should document the transaction in the name of a specific client to hide the unauthorized purchase. The Executive Director denied using the grant funds for such a purpose, or ever discussing such a purchase with plaintiff.

          Plaintiff testified that she contacted two supervisors about Long’s alleged plan, and after no action was taken, Plaintiff reported the same information to the operations manager. In her deposition, plaintiff stated that at the time of her conversation with the operations manager, she believed the Executive Director had already purchased the stove with the funds, but she did not convey that belief to the operations manager. The operations manager contended that she had no recollection of this discussion with plaintiff.

          A few weeks later, plaintiff was terminated. The stated reason was detailed in a termination letter: plaintiff’s allegedly harassing and intimidating behavior toward a fellow employee in violation of defendants’ employment policies in a January 2012 incident. Plaintiff alleged that she was terminated for reporting her conversation.

          After conflicting conclusions from the trial court and Michigan Court of Appeals, a unanimous Michigan Supreme reversed the Court of Appeals and held that plaintiff’s actions did not constitute protected activity. The pertinent provision of the WPA provides that “an employer shall not discharge, threaten, or otherwise discriminate against an employee . . . because the employee . . . reports or is about to report . . . a violation or a suspected violation of a law.” The Court explained that the reference to “a violation or a suspected violation of law” plainly “envisions an act or conduct that has actually occurred or is ongoing.” Further, the Court noted, the provision “contains no language indicating that future, planned, or anticipated acts amounting to a violation or a suspected violation of a law are included in the scope of the WPA.” Therefore, the court concluded, an employee’s stated intention to commit an act amounting to a violation of a law in the future does not constitute “a violation or a suspected violation of the law” under the WPA.

          However, since the WPA did not apply, it did not pre-empt other possible claims and the Supreme Court remanded the case to the Court of Appeals to consider plaintiff’s claim that the discharge violated public policy. We will of course update this blog when the Court of Appeals decides that issue.



EEOC to Seek Equal Pay Data in 2017

EEOC to Seek Equal Pay Data in 2017

 By: Dan Cohen – 2/4/16

 If there was ever any doubt that the feds still have a bone to pick with employers, that doubt was easily put to rest last week when the EEOC announced its proposal to revise the annual Employer Information Report (EEO-1) to include pay data. Currently, employers with more than 100 employees, and federal contractors or subcontractors with more than 50 employees are required to provide the EEOC information about employee race/ethnicity and sex in each of 10 specific job categories.   The EEOC proposal would also require employers with 100 employees to report pay ranges based upon W-2 income as well as hours worked for all employees by race/ethnicity and sex beginning on or before September 30, 2017.

If your business is not required to file the EEO-1 now, it would not be required to file the EEO-1 with pay data. Under this proposal:

  • Federal contractors with 49 or fewer employees would not file the EEO-1. This is current practice.
  • Federal contractors with 50-99 employees would not report pay data. But they would report ethnicity, race, and sex by job category, like they do now.
  • Private employers with 99 or fewer employees that are not federal contractors would not file the EEO-1 at all. This is the same rule that applies now.

Public comments are due by April 1, 2016. Once the public comment period expires, the EEOC will review the responses. A hearing will be required before anything becomes final. Let’s hope common sense prevails and the feds adjust their proposal or scrap it altogether.

The EEOC has expressly stated that “collecting pay data is a significant step forward in addressing discriminatory pay practices.” Of course, the proposed reporting does not take into account length of service, employee responsibility education, experience, and other legitimate reasons for pay differentials. The EEOC Proposal also focuses on W-2 income rather than actual pay rates, which is the wrong data for ferreting out discriminatory pay practices.  For example, employees with greater productivity or more sales will typically be paid more than others in the same position.  This obviously does not establish an equal pay violation, but the EEOC proposal would lead to suspicion and possibly a costly investigation.  Perhaps the biggest problem with the proposal is the pay ranges themselves, which are based upon the 12 pay bands used by the Bureau of Labor Statistics in the Occupation Employment Statistics Survey.  Use of these 12 pay ranges will group employees together even though they are not similarly situated.  For example, the seventh pay band of $62,920 – $80,079 will tend to capture managers, sales representatives, administrators and even some professionals.  Consequently, employers will be defending their compensation systems at significant cost when the feds use this meaningless data in their targeted witch hunts.

Public comments are due by April 1, 2016. Once the public comment period expires, the EEOC will review the responses.  A hearing will be required before anything becomes final. Let’s hope common sense prevails and the feds adjust their proposal or scrap it altogether.