The D.C. Circuit Vacates NLRB Ruling on Driver Status in FedEx Case

In early March 2017, the D.C. Circuit in FedEx Home Delivery v. NLRB, 2017 U.S. App. LEXIS 3826 (D.C. Cir. 2017) vacated a National Labor Relations Board (“NLRB” or “the Board”) ruling that Connecticut FedEx drivers constitute employees under the National Labor Relations Act (“NLRA”). The D.C. court said that the case was indistinguishable from a 2009 case before the panel involving a group of Massachusetts drivers.

In 2007, single-route FedEx drivers based in Hartford, CT elected Teamsters Local 671 (“Union”) to represent them which lead to FedEx filing subsequent objections to the NLRB. While the appeal was pending, the D.C. Circuit decided FedEx Home Delivery v. NLRB (FedEx I), 563 F.3d 492 (D.C. Cir. 2009), finding that FedEx drivers based out of the company’s Wilmington, MA terminal constituted independent contractors under the NLRA. In its holding, the court vacated the NLRB’s order to engage with the union and denied the Board’s cross-motion for enforcement. The court held that the NLRB was bound to apply the common-law ten factor agency test as set forth in the Restatement (Second of Agency), but explained that rather than a control inquiry, that the emphasis of these factors should be on  “entrepreneurial opportunity” for gain or for loss as it relates to the determination of a worker’s status.  FedEx identified three specific entrepreneurial opportunities available to the drivers: (1) drivers’ ability to hire other drivers; (2) drivers’ ability to sell routes; and (3) drivers’ ability to operate multiple routes.  Persuaded by these arguments, the court held that the FedEx drivers were independent contractors.

In 2014, the NLRB issued a revised decision in FedEx Home Delivery, 361 N.L.R.B. No. 55 (Sept. 30, 2014) which found that the facts pertaining to the Hartford drivers and those discussed in FedEx I were “virtually identical.” Still, however, the NLRB declined to adopt the D.C. Circuit’s 2009 interpretation of the NLRA because it disagreed with the court’s emphasis on “entrepreneurial opportunity” as the key factor in determining a worker’s status. Specifically, it said that the Board should give weight to actual, not merely theoretical, entrepreneurial opportunity, and it should evaluate the constraints imposed by a company on the individual’s ability to pursue that opportunity. Moreover, it noted that FedEx unilaterally drafts, promulgates, and changes the terms of its agreements with drivers, a feature that weighs “heavily in favor of employee status” along with the Board’s view that the drivers lacked independence and were disallowed the initiative and decision-making authority normally associated with an independent contractor   The Board also found that FedEx engaged in unfair labor practices affecting commerce under the NLRA by refusing to recognize and bargain with the union.

In the present case, FedEx argued that the question had already been argued before the D.C. Circuit in FedEx I and involved the same parties, thus the same result should follow. The court agreed and denied the Board’s cross-application for enforcement, granted FedEx’s petitions for review, and vacated the Board’s orders. The D.C. Circuit noted that in FedEx I, the Board considered all common-law factors and was still persuaded that the drivers were independent contractors. The court also noted that the U.S. Supreme Court previously held that that the question whether a worker is an “employee” or “independent contractor” under the NLRA is a question of “pure” common-law agency principles that a court can review and does not require special administrative expertise.

The takeaway for employers is that in determining whether workers are employees or independent contractors, employers must remember that despite significant overlap, there are in fact different tests as related to the NLRA, federal taxes, the Fair Labor Standards Act, state wage and hour law, ERISA, the Affordable Care Act, and various other circumstances.  While the D.C. Circuit has for the moment clarified (or rather reinforced) its view as to the proper test under the NLRA, employers should always focus on where their greatest liability is and attempt to cater to the relevant test as much as possible.

For questions about independent contractors or trucking and logistics, please contact John Vreeland, Esq., Chair of the Transportation, Trucking & Logistics Group and a Partner in the Labor Law Practice Group at jvreeland@nullgenovaburns.com or (973) 535-7118, or, Harris S. Freier, Esq., a Partner in the Firm’s Employment Law and Appellate Practice Groups, at hfreier@nullgenovaburns.com or (973) 533-0777. Please also sign-up our free Labor & Employment Blog at www.labor-law-blog.com to keep up-to-date on the latest news and legal developments effecting your workforce.

NLRB General Counsel Seeks to Prohibit Employers from Unilateral Withdrawal of Union Recognition

The National Labor Relations Board’s General Counsel recently released Memorandum GC 16-03 (May 9, 2016), proposing to make it more difficult for an employer to withdraw recognition of an incumbent union. This memorandum directs the Board’s regional offices to treat an employer’s withdrawal of union recognition without a Board-supervised election as a violation of the National Labor Relations Act (“the Act”). Under the new rule proposed by the memorandum, an election would be required even if the employer possesses objective evidence that a union has lost majority support. This is a departure from the standard previously established by the Board in the seminal case of Levitz Furniture Company of the Pacific, Inc., 333 NLRB 717 (2001).

The Board rejected a similar proposal by the General Counsel fifteen years ago in Levitz. Before Levitz, an employer could unilaterally withdraw recognition of an incumbent union based on a good faith belief concerning the union’s loss of majority support. The Board in Levitz continued to allow unilateral withdrawal of union recognition, but required objective evidence of the union’s loss of majority support before withdrawal could occur. However, the Board left open the possibility of revisiting the issue if its revised standard did not prove effective for the purposes of the Act.

The General Counsel now wishes to revisit the issue, stating that the Levitz standard has proven problematic. The General Counsel proposes that the Levitz standard has failed to promote stable bargaining relationships and negatively impacts employees’ ability to make decisions regarding union representation. Under Levitz, an employer’s basis for unilateral withdrawal of union recognition could still be challenged by a union through filing an unfair labor practice charge with the Board.  The General Counsel proposes that such charges have resulted in years of unnecessary litigation. The General Counsel further proposes that the new requirement of Board-supervised elections will benefit employers, employees, and unions alike by mandating a fair and efficient mechanism to determine whether an incumbent union actually retains majority support.

The General Counsel’s new proposal seeks to eliminate unilateral withdrawals of union recognition so that an employer can only withdraw recognition following a Board-supervised “RM” or “RD” election. An RM election follows a petition made by the employer to the Board. Such a petition can be made if the employer has a good faith doubt about the incumbent union’s majority support. An RD election follows a petition made by  employees to the Board. The employer cannot solicit or substantively assist employees in creating or signing such a petition. Any involvement by the employer involving more than ministerial assistance will automatically taint the petition and render it and any resulting election invalid. The majority of employees who vote in either type of election must vote against the union in order for an employer to withdrawal recognition.

Regardless of whether the General Counsel’s new proposal is adopted by the Board, employers should proceed with caution. Even before the issuance of this memorandum, the Board was skeptical of unilateral withdrawals of union recognition, and it has been difficult to establish the type of evidence necessary for withdrawal to be successful. As a result, it has been a safer practice to request a Board-supervised election. With the issuance of this memorandum, regional offices will now treat unilateral withdrawals of union recognition as violations of the Act. Even if the Board were to ultimately reject the General Counsel’s proposal, it would only be after lengthy and costly litigation on the issue.  Moving forward, employers should seek experienced counsel before making decisions in this regard.

For more information, please contact James J. McGovern, III, Chair of the Labor Law and Alcohol & Regulated Products Law Practice Groups, Genova Burns LLC, at jmcgovern@nullgenovaburns.com.

NLRB Sets the Example for Sound Social Media Policies

The National Labor Relations Board (“NLRB”) recently issued its Third Report on social media cases. In doing so, it emphasized the importance of clarifying permissible and prohibited conduct through the use of examples. By using examples in this context, employers can avoid situations where an employee can reasonably interpret the social media policy as restricting Section 7 rights under the National Labor Relations Act (“NLRA”) which protects protected concerted activity when employees communicate with one another to discuss the terms and conditions of their employment. Moreover, providing examples can prevent a social media policy from being found to be overbroad.

In its review of social media cases, the NLRB Third Report cites many instances where policies were found to violate the NLRA because they did not include clarifying examples. For instance, a policy that instructed employees to not release confidential information regarding guests, team members or the company was impermissible because there was no limiting language or context to assure employees that Section 7 rights were not restricted. In addition, a policy instructing employees to ensure that posts were accurate and not misleading was overbroad because it could be interpreted to prohibit employee discussions about working conditions and did not provide examples of the prohibited conduct.

However, the NLRB Third Report pinpoints a few instances where policies that were otherwise overbroad were nevertheless found to be lawful due to the inclusion of clarifying examples. A policy prohibiting harassment, bullying, discrimination, and retaliation between co-workers in the workplace and online (even if it was after work hours) was found to be permissible because a list of prohibited conduct was provided, and included only plainly egregious activity. Finally, the NLRB found that Wal-Mart’s social media policy was valid in its entirety, and attached the entire policy to the report as an “example” of how “examples” can be used effectively to prevent a social media policy from being overbroad or interpreted as infringing upon Section 7 rights under the NLRA.

If you need assistance regarding an existing social media policy or with developing a new social media policy, please contact Joseph M. Hannon, Esq., jhannon@nullgenovaburns.com or Brett M. Pugach, Esq., bpugach@nullgenovaburns.com, in the Labor Law Practice Group.

NLRB Posting Requirement Tied Up in Court and Delayed to April 30, 2012

Multiple court challenges continue to delay the effective date of the National Labor Relations Board rule approved in August 2011 requiring an employer to post a notice informing employees of their rights under the National Labor Relations Act. The requirement initially was to take effect in November 2011 but was delayed to January 2012 and further delayed to April 30, 2012. The latest postponement was requested by Judge Amy Berman of the United States District Court for the District of Columbia in connection with a lawsuit filed by the National Association of Manufacturers and other employer advocate groups.

The posting requirement requires private-sector employers specifically to post a notice informing employees of their rights to join a union, bargain collectively through union representatives for a contract with their employer, and discuss wages and benefits with co-workers or a union. The employer community argues in the court challenges that the Board’s jurisdiction is limited to cases where unions are trying to organize employees or an employer has been charged with an unfair labor practice. The suits also argue that the NLRB exceeded its statutory authority by making failure to post the notice an unfair labor practice, with no basis in the NLRA for doing so.

In January 2012 plaintiffs in the District of Columbia suit argued that the NLRB lost its authority to implement and enforce the challenged rule when the term of Board member Becker expired and President Obama made three recess appointments to bring the Board up to its full complement of five members. Plaintiffs argue that the President’s three recess appointments were unconstitutional and claim that as a result, there are only two lawfully appointed Board members, which prevents the NLRB from implementing the rule. With the outcome of the litigation challenging the NLRB posting rule still hard to predict, employers should continue to monitor the status of the rule and be prepared to comply by April 30, 2012 if the Board prevails in the litigation.

If you have any questions about this imminent posting requirement, feel free to contact Patrick McGovern, Esq. or John Vreeland, Esq. in our Labor Law Group.