Employment Law Alert : Gibbons P.C.: Labor Relations, Employment Contracts, Employee Benefits, & Wrongful Discharge Lawyers & Attorneys

The Word “Recess” Itself

The Third Circuit initially focused on the meaning of word “recess” at the time the Constitution was written. The Court concluded that the word “recess” on its face could be read to include all proposed definitions, and, therefore, shed no insight on the question. In this regard the Third Circuit disagreed with the Canning decision in which the D.C. Circuit reasoned that the definitive article “the” preceding “recess” in the Recess Appointments Clause, meant that the clause only permitted appointments during the Senate’s formal intersession recess.

The Court then examined the historic use of “recess” in State constitutions at the time of the Constitution’s ratification. The Third Circuit explained that officials in some States interpreted the word “recess” to mean intersession recesses only, while officials in other States interpreted the word to include intra-session recesses lasting considerable lengths of time. Accordingly, while the historic use of the word “recess” failed to resolve the issue for the Court, it did lead the Court to discount the Board’s “anytime the Senate is unavailable for business” interpretation.

Constitutional Context

The Court then examined the Recess Appointments Clause in its Constitutional context, and concluded that the drafters of the Constitution intended for the President to make recess appointments only during intersession Senate recesses. The Third Circuit noted that the primary way for the President to appoint “Officers of the United States” (such as Board Members) is “by and with the Advice and Consent of the Senate,” whereas the Recess Appointments Clause provides an auxiliary method when the appointments cannot be made with the Senate’s approval. The Court pointed out that the only time the Senate definitively cannot give its approval is during an intersession recess, and that the Senate may, and, in fact, has taken action during intra-session breaks, even when it had agreed not to conduct business during such breaks. The Third Circuit further reasoned that the auxiliary nature of the Recess Appointments Clause is consistent with the Constitutional requirement that recess appointments expire at the end of “at the End of [the Senate’s] next Session,” which ensures that the appointments only last until the President can make appointments using the primary method.

Historic Practice

The Third Court found additional support for its conclusion by examining the President’s historic practice of making recess appointments. The Court highlighted that no President made an intra-session recess appointment for more than a century after the Constitution was written, few Presidents made intra-session appointments prior to World War II (one of whom was impeached), and intra-session recess appointments only became common in the past 30 years.

Separation of Powers

The Court ended its opinion by reasoning that its interpretation of the Recess Appointments Clause is needed to safeguard the separation of powers between the executive and legislative branches inherent in the President’s appointment powers. In the Court’s view, limiting the President’s ability to make recess appointments to intersession recesses of the Senate provides the “high walls” and “clear distinctions” required by separation of powers principles, whereas permitting the President to make recess appointments during “long” intra-session breaks of the Senate, or whenever the Senate is unavailable for business falls far short of providing these structural safeguards.

What’s Next?

Employers who have received unfavorable decisions from the Board since April 5, 2010 should consider appealing those decisions to the D.C. Circuit (which has jurisdiction over all NLRB decisions) or the Third Circuit (which covers Delaware, New Jersey, Pennsylvania and the U.S. Virgin Islands) if the decision in question was rendered by an improperly-constituted Board. Moreover, any actions taken by “agents” of the NLRB (e.g., Regional Directors), at a time when the Board had less than three-validly appointed Board Members are arguably invalid as well. (The Third Circuit has stayed a case involving such an allegation pending the Board’s appeal to the Supreme Court in Canning.) Notably, there is no time limit on appealing NLRB decisions, although a court might dismiss an appeal due to undue delay.

We now must await a decision on the meaning of “recess” by the Supreme Court. If the Court affirms the decisions of the Third and D.C. Circuits, the Board may have to re-decide hundreds of decisions just as it was required to do only a few years ago when the NLRB issued decisions with only two sitting Members. Meanwhile, despite these decisions, arguably improperly-appointed Board Members continue to participate in Board rulings. Fortunately for the NLRB, this saga may soon come to an end. Recently, the Senate HELP Committee (on Health, Education, Labor and Pensions) held a hearing on five pending nominations of Board Members. It is anticipated that these five nominees will be presented to the Senate as a package for its “Advice and Consent” this coming Wednesday, May 22, although a filibuster is possible.

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For answers to any questions about potentially improperly issued Board rulings or other NLRB issues, please feel free to contact an attorney in the Gibbons Employment & Labor Law Department.

James J. LaRocca is an Associate in the Gibbons Employment & Labor Law Department.

Summary of the Decision

The D.C. Circuit’s decision to invalidate the Board’s rule was premised on the penalties associated with an employer’s failure to post the notice, some of which ran afoul of employer rights. Under the rule, a failure to post could subject an employer to: (1) an unfair labor practice; (2) a finding of anti-union motivation where other alleged violations of the Act are asserted against an employer; and/or (3) a tolling of the NLRA’s 6-month statute of limitations. The D.C. Circuit reasoned that the first two potential penalties were inconsistent with an employer’s explicit right to express and disseminate “any views, argument, or opinion” on unions to its workers as long as those messages are not coercive. The Court reasoned that just as an employer has this broad right to share information about unions with its workforce, an employer has the reciprocal right not to express or disseminate such information, and penalizing them for exercising this right defies the express language of the Act. The D.C. Circuit added that the tolling penalty ran afoul of the NLRA because the drafters of the Act could not have possibly contemplated an expansion of the limitations period based upon an employer’s failure to post a notice about unionization, as no such equitable tolling had ever been recognized as of the time Congress enacted the 6-month statute of limitations.

Notably, the D.C. Circuit’s decision comes only a few months after Canning v. NLRB, 705 F.3d 490 (D.C. Cir. 2013) where the same court decided that the Board has lacked the power to act since at least January 4, 2012 due to invalid “recess” appointments by President Obama. (We previously reported on the Canning decision in detail. And, as anticipated, the Board petitioned the Supreme Court to review the D.C. Circuit’s decision in Canning about 2 weeks ago.) In its more recent decision about the workplace posting, the D.C. Circuit noted that the NLRB actually has lacked the power to act since August 27, 2011, but clarified it was not this lack of power that rendered the posting rule invalid.

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For answers to any questions concerning the workplace posting or other issues involving the NLRB, please feel free to contact an attorney in the Gibbons Employment & Labor Law Department.

James J. La Rocca is an Associate in the Gibbons Employment & Labor Law Department.

The Third Circuit’s Decision

In affirming the Board’s determination that Grane and Cambria are a single employer subject to liability under the Act, the three-judge panel noted that the Board appropriately made detailed factual findings related to each of the four factors normally implemented to determine single employer status: (1) functional integration of operations; (2) centralized control of labor relations; (3) common management; and (4) common ownership. The Court also noted that the Board’s findings “describe two deeply integrated companies with centralized control emanating from Grane.”

The Court also affirmed the Board’s decision that the Company had a duty to bargain with Local 1035 and explained that the successorship doctrine requires a new employer to bargain with an incumbent union that represented the predecessor’s employees when there is substantial continuity between the predecessor and successor enterprises. The Court rejected the Company’s argument that the successorship doctrine cannot be applied as a matter of law where the predecessor employer is a state entity not subject to the Act. The Court held that the successorship doctrine applied because the doctrine's purpose is to encourage stability at a time of transition, and there is nothing in the Act precluding the Board from finding that union certification under the Pennsylvania law is sufficient to establish a presumption of majority support under federal law consistent with the Act. Accordingly, the Company had a duty to bargain with Local 1035. Finally, the Court affirmed the Board’s decision that the Company had engaged in unfair labor practices by refusing to hire the five employees based on antiunion animus. The panel found the Board’s credibility determinations as to the testimony of two Grane representatives was not patently unreasonable and supported the view that the justifications for not hiring the five employees were pretextual, and therefore, the Court declined to disturb the Board’s decision.

Conclusion

The Third Circuit’s opinion in Crane Health Care should remind employers (1) when acquiring businesses subject to collective bargaining agreements, they have a duty to bargain in good faith with the pertinent unions, and (2) there are circumstances in which they will be liable under the NLRA for the actions of their affiliated companies which are otherwise distinct corporate entities. 

For questions regarding the National Labor Relations Act, please feel free to contact an attorney in the Gibbons Employment & Labor Law Department.

Lindsay J. Jarusiewicz is an Associate in the Gibbons Employment & Labor Law Department.

The President’s Appointments

On January 4, 2012, the President filled three Board vacancies purportedly by “recess appointment.” The Senate was on a break when the President made the appointments, but was not in formal recess between Senate sessions, when the Senate is unavailable to receive and act upon the President’s nominations of officers. The vacancies filled by the President had occurred in the preceding year-and-a-half, when the Senate was also not in formal recess.

The Constitutional Provisions at Issue

The Appointments Clause provides that the President “shall nominate, and by and with the Advice and Consent of the Senate, shall appoint…Officers of the United States,” which process includes the appointment of NLRB members. The provision commonly referred to as the “Recess Appointments Clause” adds that, “[t]he President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their Next Session.”

The Canning Decision

In Noel Canning, 358 NLRB No. 4 (Feb. 8, 2012), the Board had ruled that the employer violated the National Labor Relations Act by failing to draft and execute a collective bargaining agreement that the union alleged the parties had reached during their last bargaining session. On appeal, the employer challenged the NLRB’s decision on both statutory and constitutional grounds. Although the Court of Appeals rejected the employer’s arguments that the Board’s decision was not supported by the evidence and ran afoul of contract law principles, the Court agreed with the employer that the Board lacked the authority to issue its decision in the first place, because only two NLRB members were validly appointed. Absent a quorum of at least three Board members, the Board has no power to act, as the Supreme Court has recently made clear.

The Court’s decision turned on a painstaking analysis of the phrase in the Recess Appointments Clause: “that may happen during the Recess of the Senate.” First, the Court reasoned that “the Recess” referred to in this clause means the time between Senate sessions when the Senate is unavailable to receive and act upon the President’s nominations, as opposed to mere intra-session breaks. The Court emphasized that the framers of the Constitution used the definitive article “the” before the word “Recess,” evidencing that they were contemplating the formal break between Senate sessions, and not merely an “adjournment.” The Court relied upon contemporaneous writings from the time the Constitution was drafted as well, and highlighted that no President even attempted an intra-session appointment for the first 80 years of the country’s existence, further demonstrating that the authors of the Constitution did not intend such appointments. The Court buttressed its interpretation by reasoning that to uphold the appointments in question would effectively eviscerate the fundamental constitutional principle of separation of powers explicitly found in Appointments Clause’s requirement that the Senate approve presidential nominations. The President could simply bypass Senate approval by waiting for a Senate break to make appointments.

Additionally, the Court determined that the Recess Appointments Clause authorizes the President to fill only those vacancies that actually occur during a formal recess of the Senate. The Court reasoned that a contrary interpretation would render superfluous the Clause’s “that may happen” language. Here, the Court looked to contemporaneous writings from the time the Constitution was written that used the word “happen,” including dictionaries that explain the word “happen” requires an action. The Court also noted there is evidence that the nation’s founders interpreted the word “happen” to mean “arise,” including George Washington in his interpretation of the Senate Vacancies Clause. Here, too, the Court noted that, absent its interpretation, the President could delay making appointments until the Senate went into formal recess, thereby avoiding the need for Senate approval and skirting the separation of powers contemplated by the Appointments Clause.

Now What?

As noted, the Board most likely will seek Supreme Court review of the Canning decision. And, based upon the NLRB’s press release, the Board will continue acting on the assumption that the Supreme Court will uphold the appointments at issue. But, should the Supreme Court affirm the Canning decision, hundreds of Board decisions may be invalidated. This, of course, will not be anything new for the Board recently, which has been down this road once before. In 2010, the Supreme Court invalidated hundreds of Board decisions that were rendered by only two Board members. The Board had to re-decide many cases, creating a backlog that took well over a year to clean up.

For now, however, it may be an employer’s best bet to adhere to the Board’s recent rulings pending future developments in the Supreme Court. Please feel free to contact an attorney in the Gibbons Employment & Labor Law Department for answers to questions regarding a case pending before the Board, a decision the NLRB issued against your company this past year, or to help you navigate your options in light of the Canning decision.

James J. La Rocca is an Associate in the Gibbons Employment & Labor Law Department.

The “Non-Disparagement” section barred employees from publicly criticizing, ridiculing, disparaging, or defaming “the Company, its products, services, [and] policies . . . through any written or oral statement . . . .”

Language Deemed Unlawful

The ALJ opined that there was “no doubt” these provisions violated the NLRA. More specifically, he decided that the confidentiality provision was unlawful because it prohibited employees from discussing “wages and other benefits they receive” as well as “the names, wages, benefits, addresses or telephone numbers of other employees” with fellow employees and union representatives. And, he concluded that the non-disparagement provision also violated the law because “[w]ithin certain limits, employees are allowed to criticize their employer and its products” through appeals to the public and fellow workers.

Takeaway

Many companies, including non-union employers, have handbooks, policies, and employment agreements that contain language similar to that in the confidentiality and non-disparagement provisions at issue in the Quicken Loan case. Employers should consider reviewing these policies and agreements in light of the NLRA’s protections, as recently interpreted by the Board. For answers to questions regarding whether the language in handbooks, policies and employment agreements would withstand scrutiny from the Board, please feel free to contact an attorney in the Gibbons Employment & Labor Law Department.

James J. La Rocca is an Associate in the Gibbons Employment & Labor Law Department.

The judge decided that the policy was unlawful because it required employees to obtain authorization before speaking about the employer to the media or at public meetings, which, the judge found, “unduly interfere[s]” with workers’ rights to seek outside assistance to improve workplace conditions and terms of employment.

The Contact with Government Agencies Policy stated:

• Phone calls or letters from government agencies may occasionally be received . . . . The General Counsel must be notified . . . of any communication . . . concerning the Company . . . .
• If written correspondence is received, notify your manager immediately and forward the correspondence to the General Counsel . . . . The correspondence should not be responded to unless directed [to do so] . . . .
• If phone contact is made . . . [p]rovide the individual with the General Counsel’s name and number . . . if requested, but do not engage in any further discussion . . . .
• Immediately . . . notify a supervisor . . . .

The ALJ opined that this policy also was unlawful because workers could construe it as a ban on communications between NLRB agents and workers – thereby interfering with union activity.

Employers throughout the country have workplace policies similar to the Contact with the Media and Government Agencies policies at issue in this case. In light of this new ruling, and recent Board trends, employers conducting periodic review of their employee handbooks and other workplace policies should carefully review policies that could be misconstrued as restrictions upon employee rights under the National Labor Relations Act, and consider tailoring them accordingly.

For answers to questions regarding employers and their workplace policies, please feel free to contact an attorney in the Gibbons Employment & Labor Law Department.

James J. La Rocca is an Associate in the Gibbons Employment & Labor Law Department.

The Board’s Division of Advice (which provides guidance to the various Regional offices throughout the United States that take in unfair labor practice charges) recently issued memoranda that found two at-will clauses lawful. The first clause stated that the at-will relationship only could be changed by the employer’s president, and the other clause said that no representative of the employer could enter into an agreement contrary to the at-will relationship. The Division of Advice explained that the first provision acknowledged that the company president could change the at-will relationship, and the second provision did not prohibit an employee from trying to change the at-will relationship. It distinguished the ALJ’s decision noted above by emphasizing that the language in that case involved an acknowledgment that used the personal pronoun, “I,” which the Division of Advice interpreted as an unlawful waiver of an employee’s right to engage in union activity. The Division of Advice has instructed the Regional offices to direct unfair labor practice charges involving at-will language to it. For now, employers may be best suited not to dot their “I’s,” but to delete them.

James J. La Rocca is an Associate in the Gibbons Employment & Labor Law Department.

Pre-Election Appeals to the Board Extremely Limited

Under the new rule, the parties must wait until after the election to appeal pre-election determinations to the Board absent special permission. Special permission is limited to extraordinary circumstances when it appears the determination at issue would evade review unless addressed pre-election. Previously, a party could file a pre-election request for review to the Board and another request for review after the election. Additionally, parties now only can appeal a Hearing Officer’s rulings during the pre-election hearing to the Regional Director and only if the Regional Director allows the appeal.

Post-Hearing Briefs Subject to Hearing Officer’s Discretion

Under the new rule, parties can file post-hearing briefs only if the Hearing Officer allows them to do so. Where Hearing Officers permit briefs, they can limit the scope of the brief and set forth deadlines for the submissions, thereby, further expediting the process.

No More Waiting Period After Direction of Election

An employer has up to seven days after the direction of an election to supply the Regional Director with a list of eligible voters. The union has a right to have this list (referred to as the Excelsior List) for at least 10 days prior to the election. The General Counsel memorandum highlights that the union can waive this right. Accordingly, the Regional Director can schedule the election less than 10 days after deciding to hold the election because the new rule eliminates a previous recommendation that the Regional Director schedule an election no sooner than 25 days after directing an election.

Limited Ability to Challenge Votes at Post-Election Hearing

Post-election hearings to address ballot challenges and objections are more limited now. For instance, the General Counsel memorandum explains that the Regional Director may schedule a hearing only if the objecting party offers evidence that could overturn the election, or that raises material and substantial issues about a voter’s eligibility. Additionally, the Regional Director, not the Board, will decide all exceptions to a Hearing Officer’s post-election report. (However, the Board still could grant a request for review of the Regional Director’s decision on the exceptions.)

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Employers potentially subject to union organizing should speak with a lawyer in Gibbons Employment & Labor Law Department about implementing a contingency plan that would enable them to effectively respond to an organizing campaign in light of the new rule, which may require them to act very swiftly if they want to provide their workers with the facts about unions prior to an election. We will update you regarding the court’s upcoming decision about the rule’s legality.

James J. La Rocca is an Associate in the Gibbons Employment & Labor Law Department.