|
|
|
|
Labor Relations & Wages Hours Update
May 2010
Hot Topics in LABOR LAW REPORTS:
Final rule amending NMB election procedures
published
The National
Mediation Board’s long-anticipated final rule
amending union election procedures in the rail and airline industries was
published the May 11 edition of the Federal
Register. The controversial rulemaking amends NMB’s Railway Labor Act
regulations at 29 CFR part 1202, which have been in place for 75 years. The new
rule provides that, in representation disputes in the airline and railroad
industries, a majority of valid ballots cast will determine the craft or class
representative—a marked departure from the current rule in which a union must
receive a majority of votes among the entire population of eligible voters, not
just those who have cast their vote, to be certified as bargaining rep. The
agency said the change in election procedures “will provide a more reliable
measure/indicator of employee sentiment in representation disputes and provide
employees with clear choices in representation matters.” The final rule will be
effective 30 days after publication in the Federal Register.
The NMB proposed
the rule revision in November 2009, and the agency received 24,962 submissions
during the official comment period, which ran through January 4, 2010, the
majority of which were in favor of the proposed change, according to the NMB.
In a letter sent to Senate Republicans, however, NMB Chair Elizabeth Dougherty
said the process used by her colleagues to draft the proposal was
"flawed" and that she had been frozen out of deliberations.
Dougherty, the only Republican on the three-member panel, dissented from the
proposed change, which was favored by Linda Puchala, a former president of the
Association of Flight Attendants, and Harry Hoglander, a former airline pilot,
both Democrats.
Not surprisingly,
labor and management had sharply different opinions on the wisdom of the rule
change. Supporters claimed the NMB has the statutory authority to make the rule
change and that the legislative history of the RLA supports the change. They
also argued the rule revision was essential because the current procedure
“handicaps unions that must achieve what amounts to a ‘supermajority’ in order
to secure representation.” In testimony before the NMB at a December 2009
hearing on the proposed rulemaking, the Air
Line Pilots Association stated it was strongly in support of “remov[ing]
the current significant bias against union representation in the balloting
rules…that the Board’s proposal is a long overdue step to level the playing
field in union elections by counting the wishes of the majority of voters
participating rather than presuming, as the rule does today, that every worker
who does not participate is voting against union representation.” The ALPA
testimony pointed out that while opponents had argued that the new procedures
will lead to more unionizing and “there will be more strikes if we have more
unions,” ALPA found this reasoning “[n]ot only is…speculative, it also
undermines the RLA’s foundation.”
Dougherty once
again dissented from the agency majority’s adoption of the final rule. Among
her concerns, she noted: “(1) the timing and process surrounding this rule
change harm the agency and suggest the issue has been prejudged; (2) the
majority has not articulated a rational basis for its action; (3) the
majority’s failure to amend its 82 decertification and run-off procedures in
light of its voting rule change reveals a bias in favor of representation and
is fundamentally unfair; and 4) the majority’s inclusion of a write-in option
on the yes/no ballot was not contemplated by the Notice of Proposed Rulemaking
and violates the notice-and-comment requirements of the Administrative Procedure
Act.” Dougherty also noted that several portions of the rule conflicted with
its preamble.
NMB stays implementation of rule revising
RLA election procedures
Facing a storm of
protest, the National Mediation Board has agreed to stay implementation of its recently
issued final
rule revising union election procedures, a substantial procedural change
that would allow for easier unionization of air and rail workers. The rule was
scheduled to go into effect on June 10, but the Air Transportation Association
has challenged the rulemaking, seeking to enjoin the measure from taking
effect, in a complaint filed May 17 in the
federal district court in the
In the meantime,
the parties on June 3 will present their arguments on ATA’s motion for
expedited discovery and a final hearing on the merits. The June 3 court date
was intended to be a hearing on ATA’s motion for a
preliminary injunction. Judge Paul L. Friedman moved the hearing on the
preliminary injunction motion to June 14.
“We are pleased
that the effective date of the new rule has been delayed,” said David A Castelveter,
ATA’s vice president for communications. “This gives the court a more
reasonable time frame to hear arguments and render a decision on our motion for
a preliminary injunction.”
Judge Friedman
also on Wednesday ruled the US Chamber of Commerce and the International
Brotherhood of Teamsters could intervene in the dispute. "The National
Mediation Board's partisan new rule gives organized labor an unfair advantage
in unionizing," said Robin S. Conrad, executive vice president of the
Chamber's public policy law firm, which moved
to intervene as a party-plaintiff on May 24. “Under the confusing new rule,
even if a majority of workers oppose unionizing, a union could be
certified." (The announced rule would change the manner in which the NMB
counts votes, as the NMB would no longer consider votes not cast as a vote
against unionization.)
According to
Randel K. Johnson, the Chamber’s senior vice president of Labor, Immigration,
and Employee Benefits: “Not only has the Board been so bold as to throw out 75
years of precedent to tip the scales in favor of organized labor, it has done
so in a manner that was inherently defective and makes a mockery out of the
administrative process.”
Senate resolution would overturn NMB final
rule on union election procedures; transportation unions praise the rule change
A final rule
issued earlier this week by the National Mediation Board that revises the
agency’s union election procedures to effectively allow for easier unionization
of air and rail workers quickly sparked controversy, with unions lined up in
support of the rulemaking while opponents promptly committed to overturning the
final rule through judicial and legislative means. Senator Johnny Isakson
(R-Ga) this week introduced Senate Joint Resolution 30, which, if
passed, would result in an expression of official Congressional disapproval of
the NMB rule, a necessary first step to overturning it. “The National Mediation
Board simply does not have the legal authority to make such a radical change,” said Isakson. “I
will not stand by and let this administration compromise fairness to grant
favors to labor unions.” JR 30 has been referred to the Senate Committee on
Health, Education, Labor and Pensions and, according to Isakson, has 25
cosponsors. The Air Transport Association also threatened
action, promising to seek judicial review of a rule that it claims “undoubtedly
will lead to more labor discord.”
The final rule —
which affects more than 570,000 airline and railway employees — ends the policy
of counting workers who do not cast ballots in an election as having cast a
“no” vote against the union. The outcome of an NMB election is now based on
majority of votes actually cast, with the final rule discarding the presumption
that those who do not cast ballots are voting against union representation. As
such, the rule change, of course, has its staunch supporters. “ALPA has long
favored removing this fundamental bias, which is unique to railroad and airline
employees,” said
Air Line Pilots Association president Capt. John Prater. “No other group of
private sector employees in the
The old election
rules created a climate of voter suppression, contended several unions that
represent transportation workers, because transportation companies could
prevent unions from forming by encouraging workers to simply sit out the
election. "Outdated and unreliable voting procedures have fostered a
unique culture of voter suppression as companies understand that impeding union
organizing merely requires preventing employees from voting,” claimed
Patricia Friend, international president of the Association of Flight
Attendants (AFA-CWA). “Employers and their outside union busting companies
engaged in the most undemocratic of practices by openly encouraging workers to
destroy ballots and to not vote. Those days are now over.”
Edward Wytkind,
president of the AFL-CIO’s Transportation Trades Department, noted
the rules under which the NMB was previously operating “were more onerous than
those used in the elections of Governors or members of Congress.” Under the new
election procedures, “union elections in the airline and rail industries stand
a real chance of reflecting the true will of the employees that vote.” The
AFA’s Friend urged opponents to accept the change to the “archaic” voting
procedures, urging “airline management and their third-party supporters… not to
bog down this significant achievement in legal appeals.”
Airline umbrella group seeks
to enjoin NMB from enforcing new rule
The American
Transport Association (ATA) has filed suit asking the federal district court in
the District of Columbia to enjoin the National Mediation Board from enforcing
a new rule that would allow for easier unionization of air and rail workers ( Air Transport Ass’n v Nat’l
Mediation Bd, case no. 1:10-cv-00804, complaint filed May 17, 2010).
Adopted to “more accurately ascertain employee desires regarding
representation” according to the NMB, the rule announced last week replaced a
process that counted non-votes by eligible voters as votes against
unionization. Instead, under the NMB’s new rule, the agency will now consider
only the votes actually cast in an election. Thus, if a union wins the majority
of votes cast, it wins the election.
The former
election process ensured the stability of the employer-union relationship, thus
furthering the Railway Labor Act’s goal of avoiding interruptions to commerce,
the ATA contends in its complaint. The suit, which seeks declaratory and
injunctive relief against the NMB, alleges the new rule will allow for more
disruptions to air and rail commerce. Among the assertions it raises to
challenge the rulemaking, the ATA claims:
·
the
agency “failed to identify any material change in circumstances to support the
new election procedure” and that the rule therefore is invalid;
·
NMB’s
failure to include similar procedures for decertification attempts
“capriciously discriminates against employees’ right…to reject union
representation”;
·
the
rule was promulgated now in order to influence ongoing organizing campaigns,
including one at Delta;
·
the
new rule conflicts with the RLA’s requirement that the majority of a craft of
workers will determine representation;
·
the
rule is arbitrary and capricious, as the NMB disregarded its previous factual
determinations.
“This new rule
turns 75 years of history on its head without compelling justification,”
according to the ATA, in a press
release announcing the filing.
The ATA is an
airline trade organization representing a number of US airlines. ATA member
companies participating in the lawsuit are: ABX Air, AirTran Airways, Alaska
Airlines, ASTAR Air Cargo, Atlas Air, Delta Air Lines, Evergreen International
Airlines, Federal Express Corp, Hawaiian Airlines, and JetBlue Airways Corp.
US Chamber of Commerce seeks
to join lawsuit against National Mediation Board over rule change
The US Chamber of
Commerce is the latest entity to judicially challenge the National Mediation
Board’s recent rule change intended to allow for easier unionization of the air
and rail industries. On May 24, the Chamber moved
to intervene as a party-plaintiff in Air Transport Assoc v. National
Mediation Board, a recently filed lawsuit that challenges the NMB’s
decision to only consider actual votes cast in representation elections, a
change that the Chamber claims undoes 75 years of stability and precedent. “The
National Mediation Board’s partisan new rule gives organized labor an unfair
advantage in unionizing, and makes it all but impossible for workers to
decertify a union,” said Robin S. Conrad, executive vice president of the
National Chamber Litigation Center, the Chamber’s public policy law firm.
“Under the confusing new rule, even if a majority of workers oppose unionizing,
a union could be certified. And a union may not be decertified even if a
majority of workers vote to remove the union.” Before the rule change, the NMB
counted votes not cast as votes against unionization; the NMB will continue to
conduct only decertification elections in that way. The NMB has yet to comment
on the suit.
Frontier flight attendants choose AFA-CWA in
first election since NMB rule change
In the first
election since the National Mediation Board announced its revised procedures
for conducting elections, 456 of 879 Frontier Airlines flight attendants who
voted have selected the Association of Flight Attendants-CWA as their exclusive
bargaining representative in a NMB-conducted election held Thursday, only nine
days since the NMB announced the rule change, the union announced. “As AFA-CWA members, we will
finally have a legally recognized voice to negotiate with management and gain
protections that are specific to the needs of Frontier flight attendants,” said
Erika Schweitzer, the union’s transitional president. Frontier Airlines had no
comment on the election results.
Final rule on labor rights posting
requirement published May 20; OLMS, OFCCP will have enforcement authority
The Labor
Department will publish the final rule
on its regulations to implement President Obama’s Executive
Order 13496 in tomorrow’s Federal Register and the rule will take
effect on June 19, 2010. The final rule prescribes the notice to inform
employees of their rights under the NLRA to organize and bargain collectively
with their employers and to engage in other protected concerted activity. The
notice provides examples of illegal conduct by employers and unions, and it
provides contact information to the NLRB. In addition, EO 13496 requires federal
contractors to include a clause in federally connected subcontracts and
purchase orders requiring subcontractors and vendors to post the notice. Read more
NLRB invites amicus briefs in
pending cases addressing electronic posting of notices, compound interest
The National Labor
Relations Board is inviting all interested parties to file briefs in two sets
of pending cases that involve significant issues for employees, employers and
unions, the agency announced on Friday. One set of cases raises
the question of whether Board-ordered remedial notices should be posted electronically,
such as via a company-wide e-mail system, and if so, what legal standard should
apply. Such notices, which announce steps taken to remedy violations, are now
typically posted on workplace bulletin boards. The pending cases are Arkema,
Inc, 16-CA-26371; Stevens Creek Chrysler Jeep Dodge, Inc,
20-CA-33367, and Custom Floors, Inc, 28-CA-21226.
A change in
posting policy would require the Board to reconsider its 2006 decision in Nordstrom,
Inc, in which a 2-1 panel held an employer was not required to post
notice of a remedial order on the company intranet, as there was no evidence
presented at hearing that the employer customarily used the intranet to
communicate with employees. The panel majority was unwilling to depart from its
standard notice-posting methodology without the benefit of a fact pattern.
Noting there may be material differences among intranet systems, the majority
did not want to endorse a "one size fits all" approach to electronic
noticing. Member (and current NLRB Chair) Liebman, dissenting, would hold that
the current language in the Board's standard notice of posting order,
referencing all places where notices to employees are customarily posted,
encompasses electronic posting.
Another set of
cases in which amicus briefs are invited asks whether the Board should
routinely order compound interest on back pay and other monetary awards in
unfair labor practice cases, and if so, what the standard period should be for
compounding (daily, quarterly, or annually). The cases are Bashas’ Food City,
28-CA-21435; Atlantic Scaffolding Co, 16-CA-26108; and Kentucky River
Medical Center, 9-CA-42249.
Briefs must be
filed on or before June 11, and should be no longer than 25 pages. For further
information, contact the office of the NLRB Executive Secretary Lester A.
Heltzer at (202) 273-1067.
Boeing Machinists authorize
strike at St. Louis
Members of the
International Association of Machinists have voted to authorize a strike at
Boeing’s Defence Systems plant in
NYU graduate students demand
right to unionize; will likely challenge 2004 NLRB ruling that denied NLRA
coverage to teaching assistants
The Graduate
Student Organizing Committee/UAW Local 2110 (GSOC) has submitted a petition asking New York
University to voluntarily recognize the union as the exclusive bargaining
representative of more than 1,000 teaching and research assistants. The
petition comes after the American Arbitration Association issued a finding that
the assistants want to unionize and that they want the GSOC to represent them.
The university sharply rejected the request, saying that changes over the last
ten years have made the issue moot. “In recent years,” John Beckman, a
spokesperson for the university, told CCH, “we have eliminated teaching assistantships
and graduate assistantships for most graduate students and replaced these with
fellowships, which do not include any responsibilities, such as teaching.”
The university’s
stance is likely to lead to a showdown at the NLRB over whether the assistants
are “employees” under the NLRA, as the union would have it, or students, as the
university argues. If the union files an election petition with the NLRB, as
expected, it would be the first NLRB election request, among graduate students,
since President Obama’s recess appointments of labor lawyers Craig Becker and
Mark Pearce altered the political makeup of the Board. In 2004, under former
NLRB Chair Robert Batista, the Board issued a controversial ruling
that NYU graduate students were students, not workers, and, thus, had no right
to unionize. That decision had reversed a previous Board ruling that research
assistants were NLRA-covered employees and could unionize. In a statement,
the union declared that its prospective members are asking for the right to
bargain, “but time and again, the university has blatantly ignored our
preferences and denied our rights. Like any other workers, we want a union so
that we can bargain collectively around wage, benefit and workplace issues, and
achieve security and stability in the workplace.”
American Airlines, TWU reach
tentative agreement
American Airlines
has reached a tentative agreement with the union representing its ground
workers that, if ratified, would deter a threatened strike. According to a
company statement, the airline and the Transport
Workers Union reached a contract agreement that will enhance certain benefits,
including holiday and sick leave. The TWU previously petitioned the National
Mediation Board to release the parties from mediation—a request the NMB tabled,
ordering the parties to return to negotiations. “Both parties worked hard and
put a significant amount of time and effort into this negotiating process to
reach a tentative agreement that recognizes the interests of our
TWU-represented employees and the company,” said Missy Latham, a spokesperson
for American.
NMB to investigate election
among Delta’s flight simulator technicians
The National
Mediation Board’s General Council, in a May 5 letter, has notified the International
Association of Machinists of its intention to investigate the union’s charges
that Delta Air Lines illegally interfered in a representation election for 91
flight simulator technicians, finding that the union, in its allegations and
supporting evidence, made out a prima facie case of election interference.
Alleged examples of interference include Delta announcing a pay raise for
noncontract employees on the first full day of voting in the election, holding
one-on-one meetings with workers to influence how employees will vote, and
conducting surveillance on employees to discourage employees from talking about
the benefits of a union. If the Board concludes there was interference, it is
likely to order a new election. In such circumstances, the Board may modify the
balloting procedures.
Boeing workers go on strike after bargaining
breaks down
The United Auto
Workers local representing Boeing workers employed on the C-17 military
transport jet line at the company’s
NMB releases Spirit and ALPA
into cooling off period; strike looms
The National
Mediation Board today released the Airline Pilots Association and Spirit
Airlines from federal mediation, the next step towards a threatened strike by
Spirit’s pilots. After three years of bargaining failed to result in an
agreement, the NMB confirmed a 30-day cooling off period and has given the two
sides until June 12 to reach an agreement. If no agreement is reached by that
date, the pilots would be allowed to strike. ALPA called the move necessary, in
a statement
by Capt. Sean Creed, head of ALPA’s Spirit unit. “During the past three years
of negotiations, Spirit management has done everything imaginable to avoid
giving our pilots a new contract that is in line with our peers at other
low-cost carriers,” said Creed, “but the clock is now ticking.” In a separate
statement, Spirit said it was “committed to working with ALPA” and that it
trusts the union shares its “commitment” to reaching a mutually beneficial
agreement.
OLMS launches website
“advisor” on union officer elections
The Department of
Labor has unveiled its Union Elections Advisor, a new interactive website designed to
help union members, union officers, union election committees and candidates in
union elections better understand their rights and responsibilities under the
Labor-Management Reporting and Disclosure Act, the agency announced.
“This site is a very valuable tool,” said Dr. John Lund, director of the DOL’s
Office of Labor-Management Standards, which enforces most provisions of the
LMRDA. “It provides straight answers and practical examples on each step of
union officer election procedures.”
Users are
presented with menu options and can access information on various topics. After
a user responds to questions regarding the type of union and the purpose of the
election in which the user is interested, the OLMS Union Elections Advisor will
then:
·
Determine
whether the LMRDA covers the union officer election;
·
Help
union members and election officials understand their roles and
responsibilities in conducting union officer elections;
·
Summarize
the requirements and procedures for planning and conducting union officer
elections;
·
Help
candidates and union members understand their rights through the election process;
·
Outline
the timetable and requirements for protesting an election.
OLMS public
meeting. In related
news, OLMS has announced it will hold a public meeting
on Monday, May 24 to seek input on a proposed change to the regulations
regarding reporting requirements for employers and consultants pursuant to
section 203 of the LMRDA, specifically with regard to the scope of the “advice
exception” in section 203(c). In its recent semiannual agenda, the agency noted
its intention to promulgate rulemaking related to section 203, which
establishes reporting and disclosure requirements for employers and labor
relations consultants. Pursuant to section 203, employers must file a Form
LM-10, Employer Report; consultants must file a Form LM-20, Agreement and
Activities report, disclosing the agreement or arrangement. OLMS seeks input on
the so-called “advice exception” of section 203(c), which excepts employers and
consultants from the reporting requirement if the consultant is simply giving
“advice” to the employer. The agency views its current policy as overbroad. It
intends to take regulatory action to craft a narrower construction that will
result in reporting “that more closely reflects the employer and consultant
reporting intended by the LMRDA.”
OLMS also will
seek comments on several other significant matters concerning employer and
consultant reporting pursuant to section 203.
Wisconsin
Wisconsin Governor
Jim Doyle signed a bill
last week prohibiting public employers in the state from using state funds to
pay for anti-unionization efforts. The bill, SB 523, provides that employers
cannot use state funds to either discourage, or train other employees to
discourage, workers in the exercise of their right to collectively bargain. The
law covers all state employees, including the academic staff and faculties at
the state’s various public universities. The bill garnered
praise from a major
Kroger,
UFCW reach tentative contract covering 10,000 employees in Texas
The Kroger Co and
Local 1000 of the United Food and Commercial Workers have reached a tentative
agreement on a new four-year contract covering approximately 8,000 Kroger
employees in 87 stores in and around
Twin Cities nurses vote overwhelmingly to
authorize largest nurse strike in US
Registered nurses
in the Minneapolis-St. Paul area voted overwhelmingly to authorize what would
be the largest nursing strike in the nation’s history on Wednesday, with more
than 12,000 RNs ready to walk off the job if their union cannot reach a new
contract agreement with six Twin Cities hospital systems before June 1, when
the current labor deal expires. Of the 9,000-plus RNs who voted, more than 90
percent voted to reject the hospitals’ contract and pension proposals, according
to the Minnesota Nurses Association, which represents the nurses. The union
has been negotiating since mid-March with six different Twin Cities hospital
systems for a new contract.
The union will
formally submit a 10-day strike notice to the Twin Cities hospitals within the
next few days, according to MNA president Linda Hamilton, an RN in the
Children's Hospital System. (The NLRA mandates that healthcare-related strikes
include a formal 10-day notice so that hospitals can have ample time to make
contingency plans for patient care.) The nurses plan to stage a one-day strike
with a formal request to return to work the following day. "We want to
have the maximum impact on our employers in terms of letting them know Twin
Cities nurses are serious about standing up for patient safety,"
The largest
previous nursing strike to take place in the
National
Nurses United wins union election at University
of Chicago Medical Center
In an election
between two unions that were once part of the same organization, registered
nurses at the University of Chicago Medical Center chose National Nurses United, the
petitioning union, over the incumbent Il linois Nurses Association by a vote
of 627 to 335, the NLRB announced. Another 22 votes were cast
against representation. There were a total of 1261 eligible voters.
The INA had been
the representative of the
Flight attendants union says it won’t accept
binding arbitration in dispute with American Airlines
The union
representing flight attendants at American Airlines announced, on May
24, its intention to decline any offer of binding arbitration from the National
Mediation Board, the next step towards a possible strike. Jeff Pharr, a
spokesman for the Association of Professional Flight Attendants said, “The
APFA’s opinion is that we are at an impasse. And we have no intention of
accepting the proffer of binding arbitration.” In March, the union asked the
NMB to release it into a 30 day cooling off period, which the NMB would do in
the event that the APFA declines the offer of binding arbitration. The union
has been increasing the pressure on the airline, with its president, Laura
Glading, attacking the airline last week for what she claimed were
misrepresentations of the airline’s financial health. “American obviously
believes if you say something over and over eventually it becomes true,” said
Glading. “It’s time they come clean and show the world how they calculate these
figures. We have said for a longtime that their labor costs are not the highest
in the industry but are in the middle.”
Teamsters members reject changes to
agreement intended to help company, save jobs
Union members at
ABF Freight System have rejected proposed modifications to the current National
Master Freight Agreement aimed at helping the company survive what their own
union, the International Brotherhood of Teamsters, calls the “worst economic
recession since the Great Depression,” casting doubt on the future viability of
those jobs. The proposed agreement, which would have reduced gross wages and
mileage rates by 15 percent through the end of the current agreement on March
31, 2013, was crafted to assist the company, to protect the jobs of more than
7,000 workers, and to secure their health, welfare and pension benefits,
according to a May 24 statement
by the Teamsters. Negotiated wage increases and cost of living adjustments
would have remained in effect. The final count of 3764-2936 was a resounding
defeat for the plan. “We took a proactive approach to help ABF get through the
worst economic recession since the Great Depression, but our members have
rejected the plan,” said Tyson Johnson, Director of the Teamsters National
Freight Division. “The union will regroup to determine if there are other means
to protect jobs and benefits.” Judy R. McReynolds, the company’s president,
sounded a dire note, saying, “Going forward, we will evaluate our
various options in dealing with our cost structure and the other issues we face
during this challenging freight environment.”
New Kroger, UFCW Local 1000 contract
features pay raises, increased benefit coverage
On May 23 and 24,
United Food and Commercial Workers, Local 1000, ratified a four-year contract
with Kroger Texas, LP, which covers approximately 6,000 Kroger associates in 87
stores in the Dallas, Texas area. While holding the line on health care costs,
the new contract includes pay raises up to $1.71 an hour and increases company
pension contributions over the course of the contract. Other highlights include
night shift, lead and manager differentials, increased vacation/holiday
accessibility and improved dental coverage.
“Our members
stayed active and interested over a very long bargaining period,” said Local
1000 President Ricky Burris, adding that “this is a good agreement and
continues to provide our members with one of the best compensation packages in
our industry and region.”
“The company and
the union worked together to reach an agreement that is good for our
associates, good for our customers and good for our company,” said Bill Breetz,
President of Kroger Southwest. “We look forward to continuing to provide quality
jobs for our associates and a great shopping experience for our customers.”
Kroger Southwest
is headquartered in
SEIU selects Mary Kay Henry as its next
president
The Service
Employees International Union has selected its next president, choosing Mary
Kay Henry as the tenth — and first female — president of the nation’s fastest
growing labor union. Chosen by the 73-member International Executive Board,
Henry most recently served as the SEIU’s executive vice president, where she
also was head of the union’s health care division and its organizing director.
According to a statement
released by the union, Henry helped broker agreements between SEIU and various
hospital chains, including Beverly Enterprises, Catholic Healthcare West, and
Tenet, while also playing a major role in creating the national
Labor-Management Partnership at Kaiser Permanente.
Her controversial
predecessor, Andy Stern, praised the selection, saying that Henry will “be an
incredible president of our union, as well as an important and impassioned
voice for working people.” Despite his glowing words, it was widely speculated
that Henry was not Stern’s choice to succeed him and that he had hand-picked
SEIU secretary-treasurer and Change to Win Chair Anna Burger to replace him.
Burger’s candidacy was effectively over weeks ago, when powerful Local 1199
endorsed Henry. The rise of Henry over Burger has created a guessing game about
SEIU’s future direction, with the National
Legal and Policy Center stating that “rivalry between her and Anna Burger
is cosmetic” and questioning the ability of Henry who, unlike Stern and Berger,
was not a working member of the union, to continue its organizing efforts.
According to the pro-labor In
These Times blog, Henry was selected due to concerns about Burger’s ability
to unify the union after contentious internal debates over its future and rifts
between SEIU, UNITE HERE and the AFL-CIO. Under Stern, the union split off from
the AFL-CIO to help form the rival mega-union Change to Win and engaged in
bitter representation disputes with UNITE HERE and United Health Care West. The
union clearly hopes to send a more conciliatory message by not elevating
Stern’s protégé.
LEADING CASE NEWS
In Becker’s first decision, Board finds unlawful
refusal to bargain
In the first
three-member NLRB ruling with newly appointed Member Craig Becker on the panel,
the Board has ruled a retail chain violated Section 8(a)(5) by unlawfully
refusing to recognize and bargain in good faith with the United Food and
Commercial Workers (Fred Meyer Stores,
Inc, 355 NLRB No 30, May 7, 2010 [released May 10, 2010). A group of
department store employees elected the UFCW as their exclusive representative
in a 2009 election, following an earlier proceeding in which the Regional
Director ordered an election. Shortly thereafter, the union submitted several
requests to the employer for bargaining sessions; the employer refused both,
saying it would not bargain unconditionally with the union. The Regional
Director certified the union on December 8, 2009. The employer contested the
certification’s validity, arguing the two-member NLRB panel in place at the
time lacked statutory authority to deny the employer’s request for review of
the election certification (an issue currently pending before the US Supreme
Court). The Board tersely dismissed this argument, noting the employer failed
to present any new evidence, and refused to consider the validity argument as
it had not been raised in the representation proceedings.
The employer
asserted it had bargained in good faith with the union even though it was not
obligated to do so. The Board, however, found the employer “effectively
admitted” that it had refused to bargain. The “bargaining” on the employer’s
part consisted of: rejecting a union proposal; proposing to hold a union
information request in abeyance; and proposing to delay bargaining until the
contract expired or the Board’s statutory authority was resolved by the Supreme
Court. Further, the employer continued to insist that it was not legally
obligated to bargain with the union. “In these circumstances,” wrote the Board
in a footnote, “it is clear that the Respondent’s purported bargaining, which
is largely premised on a future event, is conditional. Contrary to the
Respondent, such conduct does not constitute bargaining in good faith.” Since
there was no question the employer had refused to bargain, the Board found it
violated the Act and ordered it to bargain with the union.
No issue-preclusion where public interest at
stake and government not party to prior litigation
An Eleventh
Circuit decision holding that a union steward waived his duty of fair
representation claim did not have an issue-preclusive effect on a suit brought
by the NLRB’s general counsel, a three member panel of the NLRB ruled, finding
that the union and the employer had both violated the NLRA ( Roadway Express and Amadeo Bianchi,
355 NLRB No 23, May 21, 2010).
The steward had
helped a coworker, who was injured on the job, fill out an injury report; the
coworker had, previously, told the union’s business agent about the injury, and
the agent had mistakenly informed him that he should fill out a lost-time
claim, as it was too late to file an injury report. The steward, while
completing the injury form, 10 days after the injury, inadvertently used the
date of the injury as the date the injury form was completed, thereby creating
the impression that the men might be trying to conceal something. Both men
were, subsequently, terminated for fraud, which they grieved. Even though there
existed animosity between the business agent and the union steward, the
business agent represented both men at their individual hearings. Prior to the
hearing, the agent suggested that the coworker testify that he was not injured
on the job, and told the grievance committee that the coworker had not been
injured on the job; the committee, without explaining the reasons, ordered his
reinstatement to his job. The following day, at his hearing, the steward
repeatedly testified that he had told the coworker to file an injury report
because the man had indicated he was injured on the job; the agent, in
representing the steward, did not contradict his testimony, but indicated that
the coworker had told him otherwise. During the hearing, committee members made
clear to the steward that they did not believe his testimony and, at the
hearing’s end asked him whether he had been properly represented by the union
to which he responded in the affirmative. The committee denied the grievance,
upholding the termination, and the steward filed a hybrid action against the
union and the employer, in which he was victorious at trial, but lost on appeal
when the Eleventh Circuit ruled that, because he failed to protest his
representation, the steward had waived his claim of bad faith representation.
Following the decision, the NLRB’s general counsel issued unfair labor practice
charges against the employer and the union; an administrative law judge found
that the Eleventh Circuit’s decision did not have an issue-preclusive effect
that would estop the general counsel, which assesses issues on a public
interest basis, from issuing a charge, but ruled that the union had not
violated its duty.
The NLRB affirmed
the ALJ’s decision regarding the issue-preclusion, citing the general rule that
the federal government is not precluded from litigating an issue by prior
private litigation to which it was not a party, but found that the union had
violated its duty of fair representation through the business agent’s
representation of the two grievances. The NLRB acts to vindicate the public
interest by removing “obstructions to interstate commerce” and any positive
outcome for the steward, held the NLRB, would be ancillary to work “undertaken
in the public interest.” Moreover, because the court did not rule on the
merits, but instead found that the steward waived his claim, allowing that
decision to have issue-preclusive effect would “impair the Board’s
jurisdiction…to prevent unfair labor practices.” The panel then analyzed the
fair representation claim and found that the business agent’s representation of
the steward, and his coworker, violated the duty of fair representation
because, in providing testimony that the coworker was injured off-site, the
agent completely undercut the steward’s only defense. The agent’s conduct, the
panel found, “was intended to persuade the Committee that [the steward] was
culpable” and stemmed from the agent’s personal dislike of the steward and the
agent’s desire to cover up his own mistake in telling the coworker that it was
too late to submit an injury form; had the agent’s attempt to convince the
coworker to testify that he had been injured outside of work been successful,
it would have also doomed the steward’s defense. Because the grievance
committee had based its decision on incorrect testimony and evidence, the panel
decline to defer to it and, because the employer terminated the steward for
fulfilling his duties, the panel found that it, too, had violated the Act.
Employee constructively discharged after
improper interrogation and reduction in hours
A union steward
employee was constructively discharged when his employer reduced his work hours
because of his union activities and improperly interrogated about his union
sympathies, ruled the NLRB (Scheid Elec,
355 NLRB No 27, April 30, 2010). The employee was brought into a meeting with
the compnay’s owner and asked if he would stay with the company if it went
nonunion. The employee replied that “he could not remain employed by the
[employer] if it went nonunion. [The owner] replied that he would hate to lose”
him. Shortly thereafter, the employee’s work hours started to decline and his
company truck and credit card were taken away. He was later provided a layoff
slip “indicating that he was let go due to a reduction in force.” Applying the
factors delineated from the ruling in Rossmore House, the NLRB
determined that the meeting with the owner in his office most certainly
indicated a “coercive interrogation,” and the question posed by the owner
“coercively conveyed the message that the [employer] was prepared to withdraw
recognition from the Union, thereby pressuring [the employee] to reveal whether
he would support [the owner] in this unlawful scheme,” all in violation of
Section 8(a)(1). As such, the NLRB Order required, among other things, that the
employer cease and desist its constructive discharge of the employee, post a
notice of its violations, fully restore the employee to his position, and make
him whole.
Strike was not over unfair labor practice,
no right to return for striking workers
An employer did
not violate the NLRA when it refused to reinstate formerly striking workers
upon an unconditional offer to return to work because the stoppage was not an
unfair labor practice (ULP) strike, a three-member panel of the NLRB has ruled
( Executive Mgmt Serv, Inc, 355
NLRB No. 33, May 11, 2010). There was no evidence that the workers were aware
of the employer’s one ULP that took place prior to the strike, or of the ULP
that occurred while they were striking. Thus, the Board reasoned, the workers
were not motivated by that ULP to strike. In both instances, the employee who
witnessed the alleged ULP did not tell anyone about it. The panel adopted a law
judge’s finding, albeit under a different rationale, that the employer did not
violate Section 8(a)(3) of the Act. The Board also adopted the law judge’s
finding that a project manager and supervisor did not unlawfully prohibit
employees from wearing prounion buttons, based on the law judge’s credibility
determination as to the veracity of the complaining employees. Lastly, the
panel also agreed with the ALJ that there was no causal nexus between a
supervisor’s warning to an employee not to complain to a security guard about the
employer’s cleaning supplies and the employees’ subsequent decision to strike.
Therefore, the Board dismissed the complaint.
Racetrack’s conversion to casino-dominated
business placed it within NLRB jurisdiction
A racetrack that
added a casino, which eventually dominated the business, is under the
jurisdiction of the NLRB, not the New York State Employment Relations Board,
ruled a three-member panel of the NLRB in a rare advisory opinion ( Yonkers Racing Corp, 355 NLRB
No 35, May 24, 2010). Following a representation petition at the racetrack, the
NYSERB petitioned the NLRB to issue an advisory opinion on whether it would
decline jurisdiction over the racetrack, and the NLRB adopted the NYSERB’s
findings of fact in giving its answer. The racetrack added a casino in 2005,
increasing its revenues from $28 million to $179 million, increasing its staff
from 205 to 1300, and doubling its hours of operation. Based on these facts,
the NLRB found that the casino side of the business dominated it to such an
extent that “… the operation is primarily a casino operation with a racetrack
attached.” As such, the NLRB’s policy of declining jurisdiction over racetracks
no longer applied, and the Board stated that it would not decline jurisdiction
over the business.
State appeals court holds Governor
Christie’s executive order restricting labor union contributions to political
campaigns is unconstitutional
Executive Order No
7, issued in January by New Jersey Governor Chris Christie in an attempt to
extend to labor unions certain “pay-to-play” restrictions on political campaign
contributions set forth in previous executive orders, was declared
unconstitutional today by a state appeals court (Communication Workers of America
v Christie, May 7, 2010, per curiam).
Six labor unions
brought this action alleging that EO 7 infringed upon principles of separation
of powers in violation of article III, paragraph 1 of the New Jersey
Constitution by amending and repealing existing statutes without legislative
acquiescence. EO 7 modified the definition of “business entity” in the pay-to-play
provisions, which are focused upon restricting the actual or perceived impact
of political campaign contributions upon government procurement decisions, to
include any labor union that entered into contracts with
The concept of
“pay-to-play” has been described as “the political practice of rewarding
campaign contributors with no-bid government contracts.” The appeals court
declared that both the executive and legislative branches of state government
have recognized a “strong governmental interest in limiting political campaign
contributions by businesses that contract with the state.”
Executive orders,
when issued within their appropriate constitutional scope, are an accepted tool
of gubernatorial action, noted the court. While the main objective of the
separation of powers doctrine is to prevent the concentration of unchecked
power in one branch of government, it is not an absolute division but a
cooperative accommodation. However, deviation from the doctrine will not be
tolerated if it impairs the essential integrity of one of the branches
of government. Thus, one branch of government may not unilaterally exercise
authority that has been reserved for another branch. Absent an emergency, an
executive order must be based upon the furtherance of a legislative act or a
constitutional mandate, and is invalid if it usurps legislative authority by
acting contrary to the express or implied will of the legislature.
Under article I,
paragraph 19 of the New Jersey Constitution, public employees have the right to
organize and present their grievances and proposals through representatives
of their own choosing, and the parameters of negotiations are set by the
New Jersey Employer-Employee Relations Act (EERA). Applying EO 7, it was
conceivable that a certified union chosen by a majority of employees might be
declared ineligible to represent employees because of wrongdoing, and no
present statute addresses the process for the ouster of a union except the
decertification procedures administered by the Public Employment Relations
Commission. While EO 7 does not refer to collective bargaining agreements, the
governor confirmed that it was intended to include CBAs within its scope,
thereby treating union contracts as another form of “contract” subject to the
“pay-to-play” laws. Because EO7, if applied to collective bargaining
agreements, could not mesh with existing laws governing public employee
relations, paragraph one of EO 7 violated principles of separation of powers,
and so was invalid to the extent that it was intended to cover labor unions and
collective bargaining agreements.
Pilots’ union did not breach duty of fair
representation to older pilots in airline’s termination and replacement of
defined benefit plan
Claims by US
Airways pilots approaching the age of 60 that their union, the Air Line Pilots
Association (ALPA), breached its duty of fair representation were properly
dismissed by a federal district court (Vaughn v Air Line Pilots Ass’n,
May 14, 2010, Pooler, J). Under the terms of a collective bargaining agreement,
US Airways maintained a defined benefit plan for pilots that guaranteed a
certain level of pension benefits upon retirement. ERISA requires defined
benefit plans to have sufficient funding to pay 80 percent of promised benefits
at all times. If the plan’s funding dropped below 80 percent, the airline was
required to make up the difference. When the airline experienced serious
financial difficulties following the September 11, 2001, terrorist attacks, the
plan funding dropped to 64 percent. After the airline’s financial health
deteriorated further, it filed for bankruptcy. As a consequence, the airline
sought concessions from the union, which included modification of the plan.
Eventually, the
defined benefit plan was terminated—without a vote of the union membership, as
promised by the union—and a follow-up defined benefit plan was put into place,
again without a vote. Under the new plan, US Airways was required to make
contributions at different rates for each pilot to achieve a target benefit
upon retirement, so that greater contributions were provided for pilots
approaching the mandatory retirement age of 60. As the airline’s financial
problems mounted, the new plan was replaced by a second plan in which the
airline was required to contribute 10 percent of each pilot’s salary.
Subsequently, older pilots filed suit, alleging the union breached its duty of
fair representation by failing to conduct an audit of the defined benefit
plan—a right explicitly set forth in the collective bargaining agreement, contrary
to the union’s erroneous assertion to members that it could not force the
airlines to disclose the benefit plan’s financial condition.
To prove a union
has breached its duty of fair representation, members must prove the union’s
actions or inactions were either arbitrary, discriminatory, or in bad faith,
and they must demonstrate a causal connection between the union’s wrongdoing
and their injuries. Here, however, the Second Circuit concluded that pilots’
allegations supported at best a finding that the union acted negligently.
Allegations that the union acted in bad faith in agreeing to terminate the plan
so that it could reap lucrative fees for managing the follow-up plan were also
rejected; collecting management fees in exchange for services legally rendered
was not evidence of an illegal motive, and the pilots had not alleged an
illegal kickback scheme here. Moreover, the pilots did not allege a causal
connection between the union’s failure to conduct an audit and the termination
of the benefit plan, where a later audit merely confirmed the airlines’
numbers. Nor did the pilots plausibly allege that the union’s bad faith had
affected the outcome of negotiations over the benefit plan. Although the union
failed to hold a promised vote on the termination of the defined benefit plan,
the pilots did not establish a causal connection between this broken promise
and their injuries, nor did they allege that rejecting the agreement would have
resulted in a plan more generous to older pilots.
Finally, the court
rejected the pilots’ claim that the union discriminated against them by
agreeing to plans that impacted older pilots more harshly than younger pilots.
Rather, the fact that the older pilots might receive fewer benefits than
younger pilots was “the result of basic economics, specifically the time value
of money, and is not related to the older pilots’ age,” concluded the court.
Unions need not treat their members identically as long as their actions relate
to legitimate union objectives. Since US Airways could not successfully
reorganize and emerge from bankruptcy without decreasing its pension
obligations, it was inevitable that negotiations would affect some pilots more
harshly than others.
In a summary order issued
separately, the appeals court also affirmed dismissal of the plaintiffs’ RICO
claims against the union. The pilots alleged ALPA conspired with the airline to
exact hundreds of millions of dollars in concessions from the pilots, thereby
decimating the pilots’ pensions, so that the union could earn management fees
under the newly imposed benefit plan. The pilots did not provide a sufficient
basis upon which the court could draw the requisite strong inference of
fraudulent intent, as called for to make out a RICO claim, since the complaint
did not allege the potential management fees “were of such proportion to the
amounts frittered away so as to make it plausible that ALPA would engage in the
alleged scheme.” Moreover, the court noted, ALPA is permitted by law to receive
such fees for a service.
WAGES HOURS – FMLA
WHD issues final rule revising and
clarifying child labor regulations
The Department of
Labor’s Wage and Hour Division has issued a final rule revising
its child labor regulations "to incorporate statutory
amendments to the Fair Labor Standards Act and to update and clarify the
regulations that establish protections for youth employed in nonagricultural
occupations". In addition, these revisions will incorporate the
2008 Amendments to section 16(e) of the FLSA that “substantially increased the
maximum permissible civil money penalty an employer may be assessed for child
labor violations that cause the death or serious injury of a young worker.”
Many of the revisions being made by this final rule will result in the
redesignation of several sections and subsections of the regulations. The final
rule will be published in the May 20 edition of the Federal Register and
take effect 60 days thereafter. Read more
Federal courts render split decisions on
whether to stay litigation pending closely-watched California
Federal courts
have issued split decisions in recent weeks on whether to stay proceedings in
litigation currently in their courts pending the outcome of California Supreme
Court rulings on closely watched wage-hour cases on its docket. As reported
earlier this week, on May 15, the federal court in the Eastern District of
California granted
In Keshishzadeh v Arthur J.
Gallagher Serv Co, however, the Southern District of California court
on May 12 declined to stay an overtime suit filed by insurance claims
adjusters, a dispute in which California’s administrative exemption is at
issue, pending a high court ruling in Harris v Superior Court,
a case that is expected to be critical to the “contours” of the exemption. The
federal court declined to stay the litigation primarily because the supreme
court had already agreed to review Harris before the case at hand was ever
filed—the defendants here simply waited too long to request a stay.
The issue in Keshishzadeh
is whether the claims adjusters exercise independent discretion and judgment so
that they qualify as administrative employees under the California Labor Code.
In Harris, the issue, as framed by the appellant, is whether the
exemption is limited to a few employees who work at the level of “policy or
general operations,” or whether it includes employees whose work affects
policy or whose responsibility it is to carry it out, which has been the
established standard for 50 years. The outcome of the Harris case is
“highly relevant,” the district court noted, adding that it “has all the
appearances of a very important case that will speak not only to the specific
issues involved in this case, but also to the broader spirit of the overtime
requirements and various exemptions under
Harris has been pending since November 28,
2007, when the California Supreme Court granted cert. This case was filed on
January 28, 2009; discovery has gone forward, the plaintiffs’ evidence is now
fresh, and the case is ready to litigate. Moreover, the plaintiffs argue they
would be prejudiced by a delay, and there are employees still working under the
employer’s allegedly harmful overtime policy. Should the time come to decide
damages, when they must account for the overtime hours they worked, they will
have to “look even farther into the past to account for the overtime hours they
worked.” The plaintiffs made a “feeble attempt” to minimize the importance of Harris,
distinguishing it because they are not employed by an insurance company, but
the district court found Harris to be on all fours with this case and it
made no difference that the plaintiffs worked for a third-party administrator.
The employer
contended that since Harris “holds the key to the core legal issue” in
the case, there was no sense in going on without it. However, to be granted its
motion for a stay, it needed to show “a clear case of hardship or inequity in
being required to go forward,” and the employer did not do so. While the
district court “appreciates the importance of Harris to a clear
adjudication of the legal issues in this case,” it could not “get over the fact
that the California Supreme Court agreed to review Harris before this case was
even filed. Defendants’ request for a stay simply comes too late.”
California
California Labor
Commissioner Angela Bradstreet is suing a
Baltimore
The city of
The living wage
agreement would affect private retailers in
The measure would
allow for a credit of up to $2 per hour to be included in the living wage rate
when benefits are provided, such as health care; retirement security;
disability, death and life insurance; child care; legal services; public
transportation; parking at locations not owned by the major retailer; or
education and training at accredited institutions. Payments required by
federal, state, or city law or that are deducted from an employees’ wages or
otherwise reimbursed by the employee are not eligible for the benefit credit.
Moreover, the credit may not reduce wages to below the federal or state minimum
wage, whichever is higher. The legislation would not apply to federal, state,
or political subdivisions. Nor would it apply to volunteers for nonprofit
organizations; employees earning over $50,000, excluding overtime, in a bona
fide executive, professional, or supervisory capacity; persons employed by a
member of their immediate family; workers paid on a commission-only basis; or
domestics working in a home, but only to the extent these workers are exempt
under the federal FLSA, as amended.
LEADING CASE NEWS
Reversing district court, appeals court
rules employee presented sufficient evidence for FMLA interference, retaliation
claims to reach trier of fact
A long-term county
employee presented enough evidence for her case to reach a jury on allegations
that her employer interfered with her right to reinstatement under the FMLA and
retaliated against her for taking FMLA leave ( Goelzer v Sheboygan County, Wis,
May 12, 2010, Williams, J). The employee was terminated just two weeks before
she was scheduled to begin a two-month FMLA leave. The employer contended that
it simply decided to hire another person with a larger skill set and that the
county administrator had merely exercised newly acquired authority to hire an
assistant of his own choosing. However, during the preceding four years, the
employee had taken a significant amount of authorized FMLA leave to deal with
personal and family health issues.
The only issue at
hand in her interference claim was whether the employer fired the employee to
prevent her from exercising her right to reinstatement to her position. The
appeals court noted that an employee is not entitled to return to her former
position if she would have been fired regardless of whether she took leave. In
performance evaluations, the employee’s supervisor explicitly contrasted her
use of FMLA leave with her past “excellent” attendance, noted her use of sick
leave and told the employee that she did not receive a higher merit increase
because she missed too much time, observed the court. Thus, in light of such
comments, and the timing of the employee’s termination, the Seventh Circuit
ruled a reasonable jury might conclude that the employee lost her job because
she exercised her right to FMLA leave.
With respect to
the FMLA retaliation claim, the Seventh Circuit again determined there was
enough evidence for a jury to find the employee was fired because she utilized
FMLA leave. The supervisor communicated the termination after he knew the
employee planned to be out for two months on FMLA leave, and the employee had
used significant amounts of leave in preceding years. On these facts, a jury
could find a causal connection between her use of FMLA leave and her discharge.
Consequently, the appeals court reversed the district court’s grant of summary
judgment to the employer on her FMLA interference and retaliation claims.
Chicago
Following the
dismissal of their collective action for overtime pay, the named plaintiffs in
a suit by paramedics against the City of
On appeal, the
named plaintiffs argued that their case was different from Jonites
because they were similarly situated with regard to individual subclaims but
seemed “heterogeneous” only because there were several different combinations
of those subclaims. Agreeing, the appeals court, concluded the district court
may have mistakenly read Jonites to forbid adopting a subclaim approach
merely because the variety of those subclaims rendered the class
“heterogenous.” In any event, the appeals court noted, when a collective action
is decertified it reverts to one or more individual claims; thus the district
court erred when it dismissed the claims of the named plaintiffs in favor of
arbitration. Similarly, the district court mistakenly compared the efficiency
of proceeding through subclaims only to the perceived efficiency of
arbitration. Instead, the trial court must consider whether either proceeding
individually or arbitration is more or less efficient than a collective action
composed of various subclaims. Thus, the district court erred when it dismissed
the plaintiffs’ claims in favor of arbitration without considering whether it
was more efficient to resolve individual claims.
Hourly “per diem” pay was part of regular
rate; pay scheme to evade overtime liability was willful FLSA violation
An employer could
not circumvent its overtime pay obligations by calling the substantial part of
an employee’s hourly rate “per diem” pay and excluding that pay from the
regular rate when calculating overtime, the Fifth Circuit held, soundly
rejecting the employer’s insistence that that it had not engaged in a
“deliberate scheme to evade FLSA’s overtime requirements.” ( Gagnon v United Technisource Inc,
May 27, 2010, Garza, E). The employee was a skilled, experienced craftsman,
having prepped and painted the exterior and interior of aircrafts for many
years. He signed a contract to perform this work for $5.50 an hour — an hourly
rate not even “remotely close” to the standard pay for aircraft painters in the
area — and $20.00 per hour for overtime. The contract also, however, provided
for a “per diem” of $12.50 for each hour worked, up to forty hours per week, or
$500. After a year, the employee was given a $1 dollar per hour “raise in pay.”
The raise was factored into his per diem rate instead of his hourly pay rate,
however, even though there was no evidence in the record that the increase in
the per diem rate was based on any “reasonably approximated increase” in the
employee’s expenses.
The employee
eventually filed suit alleging, among other claims, that the employer’s pay
scheme violated the FLSA. The employer filed counterclaims for breach of
contract and fraud; the employee had committed fraud, it argued, by failing to
notify the company when he relocated from a city 280 miles away to a home just
nine miles away from the work site, while continuing to receive the per diem
pay. The district court held the per diem allowance was part of the employee’s
regular rate of pay; it declined to consider the employer’s counterclaims. The
court ordered the employer to recalculate the employee’s pay rate and determine
the amount due. In response, the employer calculated his pay but excluded the
per diem that it alleged he had improperly received since his relocation in
October 2005; the employer also requested that the court offset the backpay due
by more than $8,100 for the per diem paid out since that date. The court
rejected the request as contrary to its underlying opinion.
The employer
appealed the lower court’s finding that it violated the FLSA. The Act only
requires that employees be paid overtime at a rate of time and a half, it
argued, while it had paid overtime at more than three times the employee’s base
pay. It further claimed its per diem was a reasonable approximation of the
employee’s reimburseable expenses — not a “ploy to avoid paying” overtime. The
appeals court disagreed. The “regular rate” as defined by the FLSA is “all
remuneration” for employment. “The ‘regular rate’ is not an arbitrary label —
it is an actual fact.” Artificially designating part of that pay as “per diem,”
particularly where, as here, the amount of per diem varied by the number of
hours worked, does not justify excluding this pay from the regular rate.
“We are
suspicious,” the appeals court wrote, of the employer’s insistence that it had
not engaged in a scheme to avoid paying out overtime. The court found it hard
to believe a skilled craftsman would accept a $5.50 pay rate given that the
prevailing rate for such workers was about three times the minimum wage rate.
It was “similarly troubled” that the combined “straight time” and “per diem”
rates just about matched that prevailing rate. Adding to its suspicion was the
fact that the pay raise had been applied to the alleged per diem instead of the
hourly pay. “Finally, we can conceive of no reason why a legitimate per diem would
vary by the hour and be capped at the forty-hour mark, which
not-so-coincidentally corresponds to the point at which regular wages stop and
the overtime rate applies.”
Turning to the
employer’s counterclaims that the employee had fraudulently continued to accept
the per diem and failed to notify the employer of his relocation, the appeals
court noted that the employer’s assertions of fraud and breach of contract were
essentially “eviscerated” by the court’s conclusion that the per diem rate was
part of the employee’s regular rate. Nonetheless, it declined to rule on the
claims, finding the lower court had properly held they could not be brought as
counterclaims in an FLSA action.
Further, it
rejected the employer’s contention that its liability should be offset by the
amount of damages it incurred from the employee’s breach. The employer’s
argument amounted to a reiteration of its failed counterclaim, the appeals
court noted. Moreover, on the merits of this assertion, the court reasoned
that, since the per diem was part of the regular rate, and not reimbursement
for work-related expenses, it did not matter where the employee lived;
therefore, the employer had not paid out any additional sums that would warrant
an offset of its liability. Finally, the appeals court affirmed the lower
court’s conclusion that the violation was willful and, as such, liquidated
damages were proper.
State employment laws and regulations, wages-hours/labor relations,
May update
Law providing for military leaves of
absence is amended to grant leave for members of the National Disaster Medical
System and for members of the civilian auxiliary of the United States Air Force
known as the Civil Air Patrol. This law provides that employees of both private
and public employers are entitled to a military leave of absence on all days
that they are engaged in field or coast defense or other training or on other
service ordered under the National Defense Act, or of the federal laws
governing the United States reserves, without loss of pay, time, efficiency
rating, annual vacation, or sick leave. Leaves of absence under this law are
limited to leave with pay for up to 168 working hours per calendar year and, in
addition to that, paid leave for no more than 168 hours at any one time when
called by the Governor to duty in active service of the state. Section
31-2-13, as last amended by Act 259 (S.B. 128) (National Disaster Medical
System), L. 2010, effective June 1, 2010, and by Act 535 (S.B. 91) (Civil Air
Patrol), L. 2010, effective July 1, 2010.
Law
providing for military leaves of absence, reemployment rights and benefit
protections for members of the national guard when ordered to state or federal
active duty or to attend camps, maneuvers, formations, or armory drills, is
amended to extend such leave, reemployment rights and benefit protections to
members of the United States Armed Forces Reserves. Penalty provisions are
amended to make a violation a Class 1 misdemeanor (changed from Class 3
misdemeanor) and to provide that the county attorney is authorized to prosecute
violations in superior court. Section
26-168 is amended by Ch. 73 (H.B. 2539), L. 2010, effective July 29, 2010.
AZ ¶3-58,002.
Law
relating to leaves of absence for public officers and employees for certain
federal training is amended to provide that, in addition, officers and
employees of Arizona or any agency or political subdivision of the state, a
county, city or town, may be granted a leave of absence from their duties
without any loss of time, pay or efficiency rating on all days during which
such employees are employed on training duty by the National Disaster Medical
System under the United States Department of Health and Human Services. In
addition, new law is added to provide that, in a declared state of emergency,
certain state officers and employees ordered into federal or state active
military service as a member of the national guard or reserves may be eligible
for additional leaves of absence until released from active duty; Such
employees would be entitled to continue to receive the officer’s or employee’s
salary or compensation, less the amount of pay and allowances for military
activities while on active duty. Section
38-610 is amended and Section
38-610.02 is added by Ch. 196 (H.B. 2540), L. 2010, effective July 29,
2010. AZ ¶3-58,007 and ¶3-58,008a.
New law is
enacted to require employers to provide each employee who is a veteran with
holiday time off for Veterans Day, November 11, if the employee would otherwise
be required to work on that day. Section
91A.5A is added by H.F. 2197, L. 2010, effective July 1, 2010. IA
¶16-44,403.
An exception to maximum hour and overtime requirements that
applies to certain emergency medical services workers is amended to provide
that an employer would not be in violation of the law with respect to the
employment of an employee engaged in the public or private delivery of
emergency medical services as “an attendant,” as defined by Section 65-6112, as
amended, when such employee is paid at not less than 1 ˝ times the employee’s
regular rate at which the employee is employed: (1) in any work period of 28
consecutive days in which the employee works for tours of duty which in the
aggregate exceed 258 hours; or (2) in the case of any such employee to whom a
work period of at least seven but less than 28 days applies, in any such work
period in which such employee works for tours of duty which in the aggregate
exceed a number of hours which bears the same ratio to the number of
consecutive days in such work period as 258 hours bears to 28 days.
“Attendant,” as defined by Section 65-6112, refers to a first responder,
an emergency medical responder, emergency medical technician, emergency medical
technician-intermediate, emergency medical technician-defibrillator, emergency
medical technician-intermediate/defibrillator, advanced emergency medical
technician, mobile intensive care technician or certified paramedic. Section
44-1204, as amended by S.B. 262, L. 2009, enacted April 19, 2010, and
effective and in force from and after January 15, 2011, and publication in the
state statute book. KS ¶17-44,002.
The state
minimum wage law is amended to provide that a person incarcerated for a
criminal offense is exempt from coverage, unless the prisoner is: (a) employed
by a private employer; (b) participating in a work release program; (c)
sentenced to imprisonment with intensive supervision; (d) employed in a program
established under certification issued by the United States Department of
Justice; (e) employed while in a supervised community confinement
program; or (f) employed while in a community confinement monitoring
program. 26 MRSA Section
663 is amended by Public Law Chapter 529 (H. 1212), L. 2010, effective July
12, 2010. ME ¶20-41,003.
Child labor
in
dispensaries.
to December
23, 2009. ME ¶20-45,006.
Law relating to predetermination of independent contractor
and construction subcontractor status is amended to provide that a person may
apply to the Workers’ Compensation Board for a predetermination that the person
performs construction work in a manner that would not make the person an
employee of a hiring agent. The predetermination issued by the board pursuant
to this subsection is valid for one year and creates a rebuttable presumption
that the determination is correct in any later claim for benefits 39-A MRSA, Section
105 is amended by P.L. Ch. 569 (H. 1299; L.D. 1815), L. 2010,
effective March 30, 2010. ME ¶20-48,002.
Law governing misclassification of construction workers as independent
contractors, rather than employees, is amended to give the Executive Director
of the Workers' Compensation Board the authority to issue a stop-work
order if a hiring agent or construction subcontractor has knowingly
misrepresented one or more employees as independent contractors, knowingly
failed to provide a workers' comp insurance policy or knowingly provided false,
incomplete or misleading information concerning employees. 39-A MRSA, Section
105-A is amended by P.L. Ch. 649 (H. 1102; L.D. 1565), L. 2010, enacted
April 13, 2010, and effective July 12, 2010. ME ¶20-48,003.
The
Maryland Wage Payment and Collection Law is amended to clarify that the
definition of “wage” includes overtime wages. Section
3-501, amended by Ch. 99 (S.B. 694) and Ch. 100 (H.B. 214), Laws 2010,
enacted April 13, 2010, and effective October 1, 2010. MD ¶21-46,001.
The Maryland Wage Payment and Collection law is amended to
provide administrative procedure for handling complaints filed the Commissioner
of Labor and Industry for failure to pay wages that do not exceed $3,000 and to
authorize the Commissioner to order employers to pay wages plus interest,
at the rate of five percent per year accruing from the date wages are owed,
under certain circumstances. A new Section
3-507.1 is added and existing law currently under Section 3-507.1 is
renumbered as Section
3-507.2, by Ch. 150 (H.B. 404), L. 2010, enacted April 13, 2010, and
effective October 1, 2010. MD ¶21-46,007a and ¶21-46,007b.
Minnesota employees who are eligible to vote in an election
have the right to be absent from work for the time necessary to appear at the
employee's polling place, cast a ballot, and return to work on the day of that
election, without penalty or deduction from salary or wages because of the
absence. Section
204C.04, as last amended by Ch. 201 (H.F. 3108), L. 2010, enacted April 1,
2010, and effective April 2, 2010. MN ¶24-60,001.
The Nebraska Wage Payment and Collection Act is amended
regarding payroll information that must be furnished by an employer to an
employee to provide that within 10 days of an employee’s written request, the
employer must furnish to the employee an itemized statement, in either print or
electronic format, listing wages earned and deductions made from the
employee’s wages for each pay period earnings and deductions were made. An
employer who fails to furnish an itemized statement as requested will be
guilty of an infraction and subject to a fine (as specified under Section
29-436).
Sections 48-1230,
48-1231
and 48-1232
are amended by Legislative Bill 884, L. 2010, enacted April 12, 2010, and
effective July 15, 2010. NE ¶28-46,003, ¶28-46,004 and ¶28-46,005.
The Employee Classification Act is enacted in
The Volunteer Emergency Responders Job Protection Act is amended to include
as covered under the Act volunteer members of the Nebraska Wing of the Civil
Air Patrol. This Act protects volunteers who are
absent from or late to work because of a response to an emergency as a member
of a volunteer emergency responder. Such volunteers are protected from
termination or other disciplinary action because of such activities. This law
applies to employees of employers having 10 or more employees. Section
35-1402, as amended by L.B. 934, L. 2010, enacted April 12, 2010, and
effective July 15, 2010. NE ¶28-58,203.
Law requiring employers to give employees notice
of a shut down is repealed. This law provided that if an employer required an
employee to give the employer notice before quitting, then that employer must
in turn give notice to employees of an impending shut down or quit by posting
notice at least two weeks in advance (or the length of time expected for employees
to give notice to the employer) in every room of its building.
Section 41-1-40 is repealed by Act 137 (S.B. 929), L. 2010, effective March
31, 2010. SC ¶42-52,001.
Employer posting requirements are amended.
This law is amended to require that employers must keep posted in a conspicuous place a printed
notice stating the provisions of the law relative to the employment of adult
persons and children and the regulation of hours and working conditions. A provision
that required notice to be posted in a room where five or more people are
employed is removed. The Director of the Department of Labor, Licensing and
Regulation or his designee shall furnish the printed form of the notice upon
request. Section
41-1-10 is amended by Act 137 (S.B. 929), L. 2010, effective March 31,
2010. SC ¶42-63,001.
In addition to payment by check or cash, employers in
Virginia Labor Relations
New law is enacted to require that all agencies of the Commonwealth are to
enroll in the E-Verify Program by December 1, 2012, and are to use the Program
for each newly hired employee who is to perform work within the Commonwealth. Section
40.1-11.2 is added by Ch. 633 (H.B. 737), L. 2010, enacted April 11, 2010,
and effective July 1, 2010. [Editorial Note: This
statute is to be placed under topic “Employment Verification” at a later date].
VA ¶48-63,032a.