NLRB

Catch-22: Government Customer “Suggests” Terminating an Employee

Robert C. Lockwood
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What should government contractors do when their customer “suggests” terminating an employee?

In many government contracts, a contractor provides personnel who work for the government.  In most government contracts, the federal government Contracting Officer or Contracting Officer’s Representative (“COR”) does not have the power to require removal of employees of a government contractor.   In short, the COR can’t order that an employee be terminated.  But, a COR, or another government employee, can express displeasure with an employee.  As a result, my government contractor clients frequently ask me what to do when a COR, or other government employee, “suggests,” but does not require, that an employee be terminated.

Those clients are placed in a Catch-22 situation with no easy answer.  They want to keep the government customer happy to help ensure that they win renewals of the contract.  But, without explicit instructions, those contractors do not have a completely solid basis for termination.

That’s the situation that one government contractor faced in Security Walls, Inc. v. National Labor Relations Board, No. 17-13154, 2019 WL 1771291 (11th Cir. Apr. 23, 2019).  Security Walls, Inc. provided security guards to the Internal Revenue Service for its facility in Austin, Texas.  Three security guards negligently allowed visitors to enter the facility undetected.  In response, the Contracting Officer Representative wrote to Security Walls and said:  “If individual guards do not have the character and self-discipline to work at a federal installation and comply with the responsibilities associated, they will need to be removed.”

That seems like a pretty clear mandate.  Yet, the COR never explicitly said that the three guards, in particular, needed to be fired.  In fact, he suggested that the guards’ conduct did not constitute “careless behavior.”  Nevertheless, Security Walls conducted an investigation and determined that the guards violated two standards from its Performance Work Statement with the IRS.  Based on those violations, Security Walls terminated the guards.

But, the guards were members of a union, and Security Walls had a progressive discipline policy, which only permitted, at most, a two-day suspension for the guards’ conduct.  As a result, the Union filed an unfair labor practices charge with the National Labor Relations Board.  An Administrative Law Judge and the NLRB both ruled against Security Walls.  Thus, Security Walls appealed to the Eleventh Circuit Court of Appeals.

At the Eleventh Circuit, Security Walls argued that its Performance Work Statement with the IRS superseded its collectively-bargained progressive discipline policy.  The Eleventh Circuit was not persuaded.  Judge Tjoflat was skeptical that Security Walls held “a get-out-of-jail-free care when it cannot simultaneously comport with both the PWS and the NLRA.”  In fact, he found that Security Walls “might have voluntarily put itself between a rock and hard place from which there is no painless resolution.”  Nevertheless, he found that nothing in the Performance Work Statement required the guards’ termination.  Arguably, they violated the Performance Work Statement, but there was nothing in that statement mandating termination for violations.  As a result, Security Walls could comply with both the PWS and the NLRA, and the Eleventh Circuit affirmed the decision of the NLRB.

The Security Walls decision is a classic example of the difficulties faced by government contractors when a government agency suggests, but does not require, termination of an employee.  Those difficulties were compounded by collective bargaining issues.  It’s easy to “Monday Morning Quarterback” Security Walls’ termination decision and conclude that they should have followed their progressive discipline policy rather than jumping straight to termination.  But, in the heat of the moment with the IRS expressing clear displeasure over the guards’ performance, I can’t say that Security Walls’ decision was “wrong” from a business perspective.

From a business (rather than legal) perspective, Security Walls demonstrated to the IRS that they took their security obligations seriously and implemented prompt, serious consequences for breakdowns in security.  In the long-run, that business decision may outweigh the legal risks and costs associated with terminating the guards.  That risk/reward analysis must be conducted on a case-by-case basis by other contractors faced with similar dilemmas in the future.  Naturally, I recommend that contractors include their attorneys in any such analysis.

11th Circuit Extends Epic Systems to Interrogation Claims

Robert C. Lockwood
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If an employee waives the right to a collective action, an employer does not violate the NLRA by interrogating the employee about conversations concerning collective actions.

On May 21, 2018, the United States Supreme Court issued its decision in Epic Systems Corp. v. Lewis, 138 S.Ct. 1612 (2018).  The Court held that employer-employee agreements do not violate the National Labor Relations Act (“NLRA”), even if they contain class and collective action waivers and stipulate that employment disputes must resolved by individualized arbitration.  On July 31, 2018, the Eleventh Circuit Court of Appeals logically extended Epic Systems to interrogation claims under the NLRA.  See Franks v. National Labor Relations Board, No. 16-10644, 2018 WL 3640818 (Jul. 31, 2018).

While employed by Samsung Electronics America (“Samsung”), Jorgie Franks spoke to multiple co-workers about the possibility of filing a collective action against Samsung for failing to pay overtime.  Those conversations made their way to ear of Samsung’s Human Resources Business Partner, who called and e-mailed Franks about her communications with co-workers.

In January 2015, long before the Supreme Court released Epic Systems, Franks filed a claim with the National Labor Relations Board asserting three violations of the NLRA.  First, she claimed that her employment agreement impermissibly required her to waive class and collective actions.  Second, she claimed that Samsung’s Human Resources Business Partner interrogated her in violation of the NLRA.  Finally, she claimed that the Human Resources Business Partner wrongfully issued a “do not talk order.”  On February 3, 2016, the NLRB found in Ms. Franks’s favor on the first two claims, but ruled that Samsung did not issue a “do not talk order.”

Samsung and Franks both appealed to the Eleventh Circuit, but the focus of the Franks opinion was the NLRA interrogation claim.  The Eleventh Circuit relied upon Epic Systems to quickly reverse the NLRB on the issue of waiving collection action rights.  Then, the court focused on the interplay between Epic Systems and Section 8(a)(1) of the NLRA.  “An employer violates section 8(a)(1) of the Act by coercively interrogating its employees about their [protected] activities.”  “An interrogation is coercive if, in light of ‘all the surrounding circumstances, ‘its probable effect’ tends to interfere with the employees exercise of their [rights under § 7 of the NLRA.]”

In Franks, the Section 7 right in question was “the ‘protected activity of bringing a collective action lawsuit’ against Samsung.”  Yet, under Epic Systems, “Franks validly forfeited the right to pursue a collective action against Samsung when she signed Samsung’s employment agreement.”  “Put simply, Franks’ interference claim fails because she had already given up the very right with which Samsung allegedly interfered.”

In a footnote, the Eleventh Circuit was careful to limit its decision to “the protected activity of filing and participating in a collective action lawsuit.”  Nevertheless, Franks is an important extension of Epic Systems and suggests that employees can be interrogated about any NLRA rights that they have waived in their employment agreements.

 

Recording Conversations: Employment Law and Legal Ethics

Robert C. Lockwood
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Employees can use various electronic devices to secretly record conversations in the workplace.

I frequently get calls from clients who suspect that their employees are recording conversations in the workplace.  Those clients almost always ask whether it is “legal” for employees to secretly record conversations.  To that question, I always give the same lawyerly answer:  “It depends.”

Generally, it is not a crime in Alabama for a person who is a party to a conversation to secretly record that conversation.  It is generally illegal for a non-party to record a conversation.  Thus, in general terms, an employee can secretly record any conversation that they take part in.  But, the employee cannot “bug” an office and secretly listen to discussions between other people.

The bigger question is:  What can be done about employees who are making secret recordings?  For the risk-adverse employer, the answer is:  very little.  An employer might attempt to adopt a “no recording” policy.  But, the National Labor Relations Board has found that such policies restrict the ability of employees to engage in protected, concerted activity for formation of unions.  Here is a good discussion from the Society for Human Resource Management on the NLRB’s decision:  Employers Can’t Prohibit Recording  So, if an employer prohibits recordings in the workplace, it risks violating the National Labor Relations Act.

The issue of secret recordings also became an issue in a recent case before United States District Court Judge David Proctor:  Smith v. Haynes & Haynes, No. 2;14-cv-01334-RDP, 2017 WL 3613045 (N.D. Ala. Aug. 22, 2017).  In that case, the issue did not involve secret recording of employees.  Instead, the employee’s lawyer secretly recorded the employer’s lawyer as they discussed the merits of the case.  Judge Proctor clearly was not happy:  “Surreptitious taping of anyone in a case before the undersigned by an officer of this court is not appropriate. … [T]he court considers it a violation of the ethical duties of counsel admitted to this court.”  In short, at least in Judge Proctor’s court, lawyers will be held to a higher standard than employees in the workplace.

NLRB: Drop the F-Bomb and Keep Your Job

Robert C. Lockwood
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The NLRA may protect an employee who drops an F-Bomb about his supervisor.

What would you do if one of your employees made the following comment about a manager on Facebook?

Bob is such a NASTY MOTHER F!$%@& don’t know how to talk to people! ! ! ! ! ! F!@$ his mother and his entire f!@$ng family! ! ! ! What a LOSER! ! ! ! Vote YES for the UNION! ! ! ! ! ! !

Most employers would probably fire the employee, and that’s exactly the course of action taken by the employer in NLRB v. Pier Sixty, LLC, No. 15–1841–ag (L), 2017 WL 1445028 (7th Cir. Apr. 21, 2017).  But, the National Labor Relations Board (“NLRB”) found that the employee engaged in protected, concerted activity and ordered his reinstatement with back pay.  The Seventh Circuit Court of Appeals affirmed last week.

Section 7 of the National Labor Relations Act grants employees the right to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection. That right applies to non-unionized workers as well as unionized workers.   Sections 8(a)(1) and 8(a)(3) of the NLRA, prohibit employers from discharging employees for participating in protected, union-related activity under Section 7.

But, not all statements made in the course of union activity are protected.  “[E]ven an employee engaged in ostensibly protected activity may act ‘in such an abusive manner that he loses the protection’ of the NLRA.”  Pier Sixty, 2017 WL 1445028 at *5.  Nevertheless, the Seventh Circuit in Pier Sixty found that the employee’s statements were not sufficiently “abusive” for him to lose the NLRA’s protection.  The Court relied upon three factors in affirming the NLRB.  First, the “subject matter” of the statement concerned workplace conditions — treatment of employees by management and a union election.  Second, Pier Sixty consistently tolerated profanity from employees, and never sanctioned an employee for profanity before this occasion.  Third, the “location” of the employee’s comments was an online forum, “which a key medium of communication among coworkers and a tool for organization in the modern era.”  Id. at *8.

The Court tried to limit the impact of its ruling by finding that this case involved the “outer-bounds of protected, union-related comments, and any test for evaluating ‘opprobrious conduct’ must be sufficiently sensitive to employers’ legitimate disciplinary interests.”  Id.

Obviously, context is key.  A employee who randomly complains about a manager’s deficiencies on Facebook will almost have less protection than an employee who is engage in union-organizing activities.  And, the union organization was clearly the factor that tipped the scale in Pier Sixty.  Even so, Pier Sixty provides a cautionary tale for employers, who should proceed cautiously before terminating an employee on the basis of Facebook comments.

 

Union Efforts Under the NLRA Just Got Easier at Mercedes

Robert C. Lockwood
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Union efforts at the Mercedes plant in Vance, Alabama just got easier under the NLRA.

Efforts to unionize the Mercedes plant in Vance, Alabama just got easier under the National Labor Relations Act (“NLRA”).  See Mercedes-Benz U.S. Int’l, Inc. v. UAW, No. 15-10291, 2016 WL 5728329 (11th Cir. Oct. 3, 2016).  In the Mercedes opinion, the Eleventh Circuit reviewed a decision by the National Labor Relations Board and focused on union solicitation by employees and distribution of union literature by employees.

Generally, under the NLRA, employers like Mercedes cannot prohibit employees, who are not on working time, from soliciting other employees to join a union.  Also, an employer cannot prohibit distribution of union literature by employees in non-working areas on non-working time.  Nevertheless, an employer may prohibit distribution of union literature in working areas.

The Eleventh Circuit first found that the following Mercedes policy improperly restricted union solicitation:

MBUSI prohibits solicitation and/or distribution of non-work related materials by Team Members during work time or in working areas.

Mercedes, 2016 WL 5728329 at *2.  The Court found that employees would reasonably understand that policy to prohibit union solicitation.  Such a policy is presumed to be unlawful, but an employer like Mercedes can rebut that presumption by proving that it clearly conveyed its intent to permit solicitation — despite the language of the policy.  The Eleventh Circuit found that Mercedes did not meet its burden, and enforced the NLRB’s order holding the policy unlawful.

The Eleventh Circuit gave Mercedes a minor win with regard to distribution of union literature.  The Mercedes facility has 19 “Team Centers” which are adjacent to the Mercedes production line.  For brief periods each day, those centers are used as break areas for employees.  At all other times, the “Team Centers” are work areas.  A Mercedes employee was verbally reprimanded for distributing union literature in a “Team Center” during a break period.  Based upon that reprimand, the NLRB found that Mercedes was violating the NLRA in each of its 19 Team Centers.

The Eleventh Circuit modified that result.  The Court found that the Team Center where the employee was reprimanded might be a non-work area during the brief break periods.  Therefore, the Court remanded the case to the NLRB to determine if that Team Center could be a non-work area (called a “converted mixed-use area”) during the breaks.  Yet, the Court also found that it was improper to characterize all 19 “Team Centers” as non-work areas.  Instead, the NLRB only presented evidence regarding one “Team Center” and declined to present evidence on the other 18.  The Eleventh Circuit ruled that it was improper to characterize the other 18 “Team Centers” as non-work areas in the absence of additional evidence.

The Mercedes opinion provides a reminder to Alabama employers to review their policies to ensure that the policies do not restrict union solicitation in violation of the NLRA.  It also provides guidance on mix-used work areas, and employers should be careful in applying their non-distribution rules in those areas.

Employers Relocating a Unionized Facility Have a Duty To Bargain in New Location

Robert C. Lockwood
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Employers relocating a unionized facility have a duty to collectively bargain with the union at the new location.  See National Labor Relations Board v. Gaylord Chemical Co., No. 15-10006, 2016 WL 3127087 (11th Cir. Jun. 3, 2016).   “Generally, if an employer relocates and the new plant is considered merely a continuation of the old one, the employer must continue to recognize and bargain with the union which represented the employees at the old plant.”  Gaylord Chemical, 2016 WL 3127087 at *4.  In determining if a new plant is a “continuation” of a closed facility, the NLRB and Courts look “to whether the employer has maintained the same ‘operational methods, managerial hierarchy, customers, and services or products,’ as well as ‘changes in either the size, makeup, or the identity of the employee complement.'”  Id. at *5.  Generally, if employees transferring from the closed plant constitute 40% of the new facility’s workforce, the NLRB and courts will find a continuity of workforce.  Id.

In Gaylord Chemical, the employer closed a plant in Bogalusa, Louisiana and relocated it to a new plant inTuscaloosa, Alabama.  Ninety percent of the employees at the Tuscaloosa plant were former Bogalusa employees.  The United Steel Workers were the collective bargaining unit for the Bogalusa plant, but Gaylord Chemical refused to bargain with the USW in Tuscaloosa.  In an extensive analysis, the Eleventh Circuit found that the Tuscaloosa plant was a continuation of the Bogalusa facility and that Gaylord Chemical had an obligation to bargain with the USW.

Certain parts of Alabama are perceived to be less “union friendly” than others.  Thus, there might be a temptation for some employers to close unionized plants and move to those parts of Alabama.  Nevertheless, Gaylord Chemical demonstrates that merely relocating a facility cannot achieve elimination of a union.

“No Recording Policies” — 3 Lessons From the NLRB’s Most Recent Decision

Robert C. Lockwood
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In Alabama, any party to a conversation can record that conversation without the consent of the other party.  In short, if you and I are talking, I can secretly record the conversation without violating any Alabama law.

Many employers try to combat that general rule by implementing “No Recording” policies, which prohibit any type of audio or video recording in the workplace.  While secret recording does not violate Alabama law, it could violate a company policy and therefore serve as a ground for termination of employment.

In 2015, the National Labor Relations Board issued a decision finding that such a policy by Whole Foods Market violated the National Labor Relations Act.  The NLRB theorized that broad “No Recording” policies would prevent employees from engaging in conduct protected by the Act — such as making images of protected picketing, documenting unsafe work conditions, and making recordings for use in future administrative or judicial actions.

The NLRB’s decision has been appealed to the Second Circuit Court of Appeals.  Nevertheless, there are three key lessons that employers can learn:

1. Broad policies that impose a complete ban on any kind of recording in the workplace will be found by the NLRB to violate the National Labor Relations Act.

2. It may be possible craft a narrowly-tailored “No Recording” policy that will satisfy the NLRB.  The NLRB left some room in its decision to allow restrictions on recordings.  At this point, however, the NLRB has not provided clear guidance on the scope of such restrictions.

3. Before disciplining an employee for recording a workplace conversation, employers should consult with their attorney to ensure they do not accidentally violate the Fair Labor Standards Act.

How “Independent” Are Your Independent Contractors?

Robert C. Lockwood
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Frequently, clients will say to me:  “If I just call my employees ‘independent contractors,’ I won’t have to (pay benefits, withhold taxes, comply with Obamacare, etc.)”  If legal compliance was that easy, I would be out of a job.  Judges don’t care what you call the people who work for you.  Instead, they will examine the totality of the relationship to determine if an individual is an “employee” or “independent contractor.”

The key issue in this analysis is control.  There are many factors that can indicate whether a person is an employee, but the most important factor is control.  Recently, the Eleventh Circuit Court of Appeals found that stagehands (for concerts, plays and other entertainment events) were not employees of a referral service.  Crew One Productions, Inc. v. National Labor Relations Board, No. 15-10429, 2016 WL 403201 (11th Cir. Feb. 3, 2016).  In that case, Crew One referred stagehands to producers of events.  Crew One required the stagehands to attend an orientation session and comply with producer policies, and also provided workers’ compensation insurance.  The NLRB found that the stagehands were employees of Crew One and entitled to form a union, but the Eleventh Circuit reversed that determination.  While the Court reviewed numerous factors, it emphasized Crew One’s lack of control over the means by which stagehands performed their work.  That control was exercised by the producers, not Crew One.  As a result, the Court found that the stagehands were independent contractors who were not entitled to form a union.

In contrast, the Alabama Court of Civil Appeals found evidence that a truck driver was an employee for purposes of the Alabama Workers’ Compensation Act in Jenkins v. American Transport, Inc., No. 2140153, 2015 WL 6111 840 (Ala. Civ. App. Oct. 16, 2015).  In that case, the truck driver signed an agreement expressly declaring that he was an independent contractor.  But, the Court looked beyond that agreement and found that American Transport controlled the manner in which the truck driver performed his job.  Among other things, the Court found that American Transport prohibited truck drivers from loading and unloading cargo, or allowing anyone to touch cargo on their trucks.  The Court also found that American Transport provided license plates and trailers to the drivers.  Thus, the Court found sufficient evidence of control to require a trial on whether the truck driver was an employee.

The Jenkins and Crew One cases demonstrate that your independent contractors must be truly “independent.”  Even if you and your worker sign an agreement calling them an “independent contractor,” a court can look beyond that agreement, and particularly examine control, to determine if they are an employee.