Republican Majority at NLRB Brings Important Pro-Employer Decisions

The recent, temporary Republican majority at the NLRB brought several important changes to Board decisions issued during the Obama Administration. In early December Republican appointees of President Trump briefly held a majority of the seats on the Board. This status continued until December 16 when Board Chairman Miscimarra’s resignation took effect. However, in the weeks leading up to Miscimarra’s resignation, the three Republican Board members penned pro-employer decisions that for the most part return to Board precedent in effect prior to 2009. On December 22, 2017, President Trump appointed Board Member Marvin E. Kaplan as Acting Board Chairman. The President is expected to nominate management labor attorney John Ring to fill the vacancy created by Miscimarra’s resignation. But before Miscimarra exited, the Republican-majority issued several decisions that rolled back prior Board precedent and set the stage for more pro-employer decisions. A few examples are as follows.

On December 14, the Board issued two decisions, Boeing Co. and Hy-Brand Industrial Contractors, that address facially neutral workplace rules and the joint employer standard.  In Boeing, the Board revisited the 13-year old Lutheran Heritage standard which held that an employer that maintains a facially neutral workplace rule commits an unfair labor practice if an employee would reasonably construe the rule as prohibiting Section 7 activity. In Boeing, the company issued a workplace rule that prohibited cameras at work. The Board held that the Lutheran Heritage standard, under which the anti-camera rule was unlawful, failed to consider legitimate justifications for the polices, rules, and handbook provisions challenged. The Board found it particularly problematic that prior decisions applying the Lutheran Heritage standard found unlawful employer directives that employees “work harmoniously” and conduct themselves in a “positive and professional manner.”  In Boeing the Board announced it will now apply a two-pronged test that considers (i) the nature and extent of the rule’s potential impact on employee Section 7 rights and (ii) the employer’s legitimate justifications for the rule.

Also on December 14 the Board overruled the joint employer standard announced in its 2015 Browning-Ferris decision, which decreed that “even when two entities have never exercised joint control over essential terms and conditions of employment, and even when any joint control is not ‘direct and immediate,’ the two entities will still be joint employers based on the mere existence of ‘reserved’ joint control, or based on indirect control or control that is ‘limited and routine.’” In Hy-Brand Industrial Contractors, the Board held that a finding of joint employer status now requires proof that putative joint employers have actually exercised control over essential employment terms, and that the control is direct and immediate, not limited or routine.

On December 15, Miscimarra’s last day on the job, the NLRB issued two more pro-employer decisions — Raytheon Network Centric Systems and PCC Structurals, Inc.  In Raytheon, the Board revisited the Supreme Court’s 1962 decision in NLRB v. Katz and the case law applying Katz. The Court in Katz held that Section 8(a)(5) of the Act prohibits employers from making a change in mandatory bargaining subjects unless the employer gives the union advance notice and an opportunity to bargain over the proposed change. Later NLRB case law held that an employer may lawfully take unilateral action so long as it “does not alter the status quo.”  Raytheon provided an opportunity for the Board to clarify what constitutes a “change” from the “status quo” and to revisit the Board’s 2016 holding in E.I. du Pont de Nemours which re-defined what constitutes a “change” requiring notice to the union and bargaining prior to implementation. In DuPont the Board ruled that even if an employer continued to do precisely what it did for decades pursuant to a CBA, and even if the CBA permitted the employer’s past actions, once the CBA expires, taking the same action constitutes a “change.” Furthermore, if the employer’s action involved discretion and the employer took discretionary action, under DuPont this exercise of discretion was a “change.” In Raytheon the Board overruled DuPont as fundamentally flawed. The Board concluded that “an employer’s past practice constitutes a term and condition of employment that permits the employer to take actions unilaterally that do not materially vary in kind or degree from what has been customary in the past.” In Raytheon the Board held that since the employer routinely changed its employees’ benefits, premiums, deductibles, and copayments for health insurance in the past, Raytheon did not violate the Act when it made similar changes after the CBA expired. The Board held that its decision applied retroactively, but also cautioned this its holding had no effect on a union’s right to demand bargaining over mandatory bargaining issues.

On December 15 the Board returned to the prior standard for determining when a proposed unit is appropriate for collective bargaining. PCC Structurals Inc. The Board overruled its 2011 decision in Specialty Healthcare & Rehabilitation Center of Mobile and returned to its prior “community of interests” standard. The Board criticized the Specialty Healthcare standard for transferring too much responsibility from the Board to the organizing parties and deferring to the petitioned-for unit in all but a few narrow, highly unusual circumstances. In reverting to the community of interests standard, the Board stated, “It is the Board’s responsibility to determine unit appropriateness based on a careful examination of the community of interests of employees both within and outside the proposed unit.” Accordingly, employers will have greater participation in the determination of an appropriate unit for a union election. Conversely, union organizers are expected to have less success in gerrymandering the unit to conform to the employee groups they are targeting.

More pro-management changes are expected once the fifth Board member is confirmed. For example, the Board may revisit its blocking charge policy, which delays a union decertification election when a union files an unfair labor practice charge and essentially keeps the employees in the union until the election occurs, regardless of the charge’s merits.

For more information about how the changes at the NLRB affect unionization efforts at your company or your company’s implementation of work rules, policies or procedures, please contact one of the partners in the firm’s Labor Law Practice Group — James J. McGovern III, Esq., at jmcgovern@nullgenovaburns.com, Patrick W. McGovern, Esq., at pmcgovern@nullgenovaburns.com, Douglas E. Solomon, Esq. at dsolomon@nullgenovaburns.com, or John R. Vreeland, Esq., at jvreeland@nullgenovaburns.com  — or call us at 973-533-0777.

Meet Trump’s Pick for the U.S. Department of Labor – CEO Andrew Puzder

President-elect Donald Trump tapped Andrew Puzder to lead the U.S. Department of Labor (“USDOL”) in his administration, an appointment that could have important implications for employers in terms of the USDOL’s recent hardline enforcement policies on joint employer relationships and independent contractor status. It also may signal how vigorously the USDOL will defend certain regulatory changes made under the current administration, such as the revised Persuader Rules (which significantly hinder an employer’s ability to use law firms during a union organizing campaign) and the amendment to the Fair Labor Standard Act’s “White Collar” exemptions (which more than doubles the minimum salary an employee must be paid in order to qualify for an overtime exemption). Both of these regulatory changes were blocked by federal courts last month and remain unenforceable unless the USDOL successfully appeals the federal courts’ injunctions.

Mr. Puzder has been CEO of CKE, which owns fast food chains Hardee’s and Carl’s Jr., since September 2000. CKE has 75,000 employees in the U.S. and nearly 100,000 worldwide. Mr. Puzder was an outspoken critic of the Labor Department under the Obama administration. He wrote multiple Wall Street Journal op-eds against any increase in the minimum wage or changes in overtime rules. Mr. Puzder has advocated for employers to consider automation in the face of rising employee costs.  Concerning automation, Mr. Puzder commented, “[machines are] always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case.” Mr. Puzder has written about how overregulation from Obamacare has held back the restaurant industry and has made the case for less regulation in the labor market.  In 2010, Mr. Puzder released a book with professor David Newton entitled “Job Creation: How it Really Works and Why Government Doesn’t Understand It.” Leading up to the 2012 election, Mr. Puzder was an economic advisor and spokesman for the Romney Campaign for President. This election cycle, Mr. Puzder was an advisor and fundraiser for the Trump campaign.

If you have any questions or would like to discuss how the change in the administration could affect your business, please contact John Vreeland, Esq., Chair of the firm’s Wage and Hour Compliance Group, at (973) 535-7118 or jvreeland@nullgenovaburns.com, or Aaron C. Carter, Esq. at (973) 646-3275 or acarter@nullgenovaburns.com.

Third Circuit Deals Blow to Jersey City Ordinance Requiring PLAs on Privately Funded Projects in Exchange for Tax Abatements

Jersey City’s Municipal Code offers real estate developers generous tax exemptions that are designed to spur the City’s economic growth, but the tax incentives have strings attached. Specifically, to receive a tax exemption, even on a privately funded project, the developer must agree to use the City-approved project labor agreement (“PLA”), which is a pre-hire agreement that favors unionized contractors and subcontractors. On September 12, 2016, the Third Circuit Court of Appeals reinstated claims against Jersey City that its tax exemption ordinance mandating PLAs is preempted by the National Labor Relations Act and the Employee Retirement Income Security Act, and violates the dormant Commerce Clause of the U.S. Constitution. Now the case returns to the District Court for a determination whether Jersey City’s PLA requirement is unlawful. The Court was careful to explain that its ruling has nothing to do with public construction projects, and is limited to the City’s attempted regulation of privately funded projects. Associated Builders and Contractors v. City of Jersey City, No. 15-3166 (3rd Cir. Sept. 12, 2016).

By imposing the PLA requirement on privately funded projects that sought tax abatements, the Third Circuit found that Jersey City “require[d] that an employer negotiate with a labor union and that all employees be represented by that labor union as part of the negotiations— even if the developers, contractors, and subcontractors do not ordinarily employ unionized labor and the employees are not union members.” In addition, the City’s standard PLA requires that employers and unions agree not to strike or lock-out during construction, and agree to sponsor or participate in apprenticeship programs.

The Court of Appeals found that the three laws allegedly violated by Jersey City’s ordinance — the NLRA, ERISA and the Commerce Clause — “share the same threshold requirement before their constraints are triggered: that the allegedly unlawful act by the state or local government be regulatory in nature,” as opposed to action by a market participant. The Court determined that Jersey City is not a market participant because the City “is not selling or providing any goods or services with respect to Tax Abated Projects, nor acting as an investor, owner, or financier with respect to those projects.” Invoking Supreme Court precedent, the Court rejected the City’s claim that offering tax abatements gives the City a proprietary interest in the project. The Court found that the City acted instead as a market regulator and since the ordinance strips employers and employees of the economic weapons of strikes and lockouts, and relates to employee benefit plans, the City’s ordinance may indeed be preempted by the NLRA and by ERISA. Finally, by enacting “regulatory measures designed to benefit in-state economic interests by burdening out of state competitors,” the ordinance arguably violates the dormant Commerce Clause.

Absent a request for rehearing or a petition for rehearing en banc, this case will return to the District Court for a determination whether the PLA requirements in the City’s tax exemption ordinance are enforceable. The larger questions are whether PLAs now in place on privately funded projects in Jersey City will remain in effect and, if not, whether this affects developers’ tax exemptions. Also an open question is whether the Third Circuit’s decision affects similar tax exemption ordinances in other municipalities that impose PLA requirements. Questions relating to this important decision and the path forward for developers in Jersey City and elsewhere in the state may be directed to any partner in our firm’s Labor Law Practice Group – James McGovern III, Patrick McGovern, Douglas Solomon, and John Vreeland.

$15 Minimum Wage Bill Heads to Governor Christie’s Desk

In a close 21-18 vote the New Jersey State Senate passed bill S15, the $15 Minimum Wage Bill. The bill will now head to Governor Christie’s desk after its previous stamp of approval from the New Jersey State Assembly.  The vote proceeded along party lines with the 18 Republican legislators raising objections to the increased costs on businesses and the 21 Democratic legislators fighting to provide a living wage.

Governor Christie has not commented on whether he will veto the bill but it is highly unlikely he accepts the $15 wage increase. State Democratic leaders have promised to submit the $15 minimum wage to the voters in a constitutional referendum if Governor Christie vetoes the bill.

$15 minimum wage bills have already been signed into law in New York and California.  Massachusetts, Vermont and Connecticut are currently considering similar bills. In addition to the $15 minimum wage there are potential costs for insurance and payroll taxes.  Employers should continue to stay informed on the movement of this legislation with an eye on implementation in early 2018.

For more information regarding the potential impacts of Bill S15, or regarding any other wage and hour issues, please contact John R. Vreeland, Esq. Director of the Firm’s Wage & Hour Compliance Practice Group, at 973-535-7118 or jvreeland@nullgenovaburns.com, or Aaron C. Carter, Esq. at 973-646-3275 or acarter@nullgenovaburns.com.

New Jersey Senate Budget and Appropriations Committee Passes $15 Minimum Wage

Following in the footsteps of the New Jersey State Assembly, the New Jersey Senate Budget and Appropriations Committee moved forward on legislation (S15) increasing the New Jersey State minimum wage to $15 by 2021. The legislation made it out of the Senate Committee in a close 7-6 vote with one Democrat crossing the aisle. The legislation will now head to the full Senate for a vote.

The proposed bill would immediately increase the state minimum wage to $10.10 on January 1, 2017. The minimum wage would then increase year by year by about $1.25 an hour until 2021.  After 2021, any wage increase would be tied to changes in the consumer price index (CPI).

If the full Senate passes the bill, Governor Christie is all but guaranteed to veto it.  In 2013, Gov. Christie vetoed a bill that would have raised the minimum wage from $7.25 to $8.50. The Democratic-controlled legislature then put the wage increase to voters at the ballot box.  The voters passed the constitutional referendum codifying the wage increase.

Employers should expect similar procedural steps and a 2017 vote on the constitutional referendum if the full senate approves the $15 minimum wage bill. The imposition of the wage would then not take effect until 2018.

For more information regarding the potential impacts of Bill A15, or regarding any other wage and hour issues, please contact John R. Vreeland, Esq. Director of the Firm’s Wage & Hour Compliance Practice Group, at 973-535-7118 or jvreeland@nullgenovaburns.com, or Aaron C. Carter, Esq. at 973-646-3275 or acarter@nullgenovaburns.com.

New Jersey Assembly Picks Up Fight For $15 Minimum Wage

The fight for a $15 minimum wage is gaining steam in the New Jersey Legislature. On May 26, 2016, the New Jersey Assembly passed Bill A15, which would raise the minimum wage to $15 an hour by 2021. Currently, the New Jersey State minimum wage is $8.38 per hour.

The $15 minimum wage would not get there all at once. Under the recently passed bill, the minimum wage first would increase to $10.10 per hour on January 1, 2017.  Then, between 2018 and 2021, the minimum wage would increase by the greater of $1.25 an hour or $1.00 an hour plus the CPI each year. An identical version of the Assembly’s bill has already passed the New Jersey Senate’s Labor Committee (Bill S15). If the full Senate passes the bill it will head to the Governor’s desk where it most likely will be vetoed.

But the Governor’s veto may not be the end of the bill. The Legislature is proposing that in the event of a Governor veto, the bill be put to a constitutional referendum for the voters to decide during the New Jersey General Election on November 7, 2017. This would not be the first time the Legislature managed to get around a veto to increase the minimum wage. The minimum wage was previously raised by constitutional referendum in 2013 when voters amended the State’s Constitution to increase the minimum wage to $8.25 per hour despite a Governor Christie veto.

While the proposed $15 minimum wage may seem a long way away, employers should start thinking now about how this would affect their business. Many employers are still struggling from the more than 15% increase in the minimum wage over the last two years. An increase to just $10.10 in 2018 (which is when the increase would take effect if the bill is vetoed but then approved through referendum) would reflect another 20% increase, or an almost 40% increase since 2013.  Such increased labor costs may be more than some employers can or are willing to absorb. For instance, Wendy’s recently stated it would replace some workers with automated machines in response to significant increases in minimum wage.

For more information regarding the potential impacts of Bill A15, or regarding any other wage and hour issues, please contact John R. Vreeland, Esq. Director of the Firm’s Wage & Hour Compliance Practice Group, at 973-535-7118 or jvreeland@nullgenovaburns.com, or Aaron C. Carter, Esq. at 973-646-3275 or acarter@nullgenovaburns.com.