N.J. Supreme Court Rejects Defense of Federal Labor Law Preemption of CEPA Claim in Underlying Unpaid Wage Action

On August 16, 2016 the N.J. Supreme Court held, in a 6-0 opinion, that neither the federal Labor Management Relations Act nor the National Labor Relations Act preempts a claim under the Conscientious Employee Protection Act (CEPA) by a private sector employee who is covered by a collective bargaining agreement.  Puglia v. Elk Pipeline, Inc. (Case No. A-38-14).

Elk Pipeline employed Mr. Puglia, a union member, on a construction project in Camden. The project was subject to N.J. prevailing wage law and apparently as a cost savings measure, Elk reduced severely the wages of several laborers on the project, claiming that the employees were re-classified as apprentices.  Puglia complained to his supervisor and to Elk’s project manager that with the wage reduction, he was not being paid correct prevailing wages. An unhelpful fact for Elk was that its project manager commented to the project engineer that “the owner wanted to [f**k] with [Puglia] and wants to get rid of him.” In fact, no more than 11 months after Puglia first complained to Elk about his wages, Elk laid Puglia off, ahead of two less senior employees who were not laid off. Elk explained that the two less senior employees had relevant certifications that Puglia lacked. Puglia’s CEPA claim alleged that, by complaining internally about Elk’s failure to pay him proper prevailing wages, he engaged in protected whistleblowing activity, for which he lost his job. Elk moved for summary judgment, arguing that Puglia’s CEPA claim was preempted by federal labor law.

The trial court concluded that Puglia’s CEPA claim was preempted, by both the Labor Management Relations Act (LMRA), and based on Garmon preemption, a U.S. Supreme Court-based doctrine that holds that state-law claims that involve conduct arguably subject to Section 7 or Section 8 of the NLRA are preempted. The Appellate Division affirmed, holding that Puglia’s claim was preempted by the LMRA, and by the NLRA under Garmon. The Appellate Division reasoned that the issues of Puglia’s contract seniority and Elk’s assertion that the Camden project was winding down required evaluation of the terms of Elk’s labor agreement.

The Supreme Court reversed and held that Puglia’s CEPA claim was not preempted by federal labor law. The issue the Court teed up for analysis and foreshadowed the Court’s conclusion was “whether complaints about violations of that minimum labor standard [of prevailing wages], and the concomitant State interest in curbing retaliation for such complaints, invoke preemption concerns.”  The Court analyzed Puglia’s CEPA complaint to determine whether it required an interpretation of the CBA and found that it did not. “Whether Puglia performed a whistleblowing activity in reporting the alleged failure by Elk to abide by Prevailing Wage Act requirements, and whether Elk retaliated against Puglia for doing so are factual questions, untied to any interpretation of the CBA.” The Court dismissed Elk’s best argument — that Puglia’s complaint depended on interpreting the labor agreement — and strained to find no contract issue. “It is far from clear that Puglia claimed a violation of the CBA in [his complaint]. He was making a factual allegation: He was more senior than other employees who were not let go. … That Puglia mentioned seniority in his deposition does not alter the substance of his claim. Nor does it inject a question of CBA interpretation into the factual questions at the heart of a CEPA claim. … Having a claim under the CBA does not void state-law remedies that are independent of the CBA. The employer’s attorney cannot change that by the course of his questioning at a deposition.” Despite Puglia’s claim that he was laid off out of seniority order, the Court still determined that it was “unclear” that he was claiming a contract violation. The Court gave no weight to Elk’s argument that the labor contract permitted Elk to lay Puglia off ahead of more junior employees and therefore Puglia’s layoff was dictated by the labor contract, and not retaliatory. Turning to Garmon preemption, the Court agreed with Elk “that Puglia’s conduct was at least arguably protected under Section 7” of the NLRA.  However, the Court determined it could not find that “Puglia’s CEPA claim is identical to the claim that he could have, but did not, present to the Board.” The Court explained, “[W]e believe that when the State’s interests in enforcing CEPA in a factual setting like this one — whistleblowing activity arising out of a prevailing wage dispute — are balanced against any potential interference with the federal labor scheme, the State’s interests win out. New Jersey’s interest in enforcing CEPA runs deep.” The Court concluded with this syllogism: “If an employee can allege a violation of those state minimum labor standards without being preempted by federal law, then it follows that allegations of retaliatory discharge based on whistleblower conduct in response to a violation of those standards should not be preempted.”

This decision indicates that rarely if ever will this Court find that a CEPA claim based on an alleged violation of N.J. wage laws is preempted by federal labor law, no matter how many labor contract issues are pled or implicated. A major concern for N.J. businesses flowing from this decision is the proliferation of claims and litigation, since this holding confirms that union-represented employees like Mr. Puglia can prosecute claims of retaliatory discharge and get three bites at the apple — in the contractual grievance-arbitration procedure, before the NLRB, and in state court under CEPA.

Questions relating to this important decision may be directed to any partner in our firm’s Labor Law Practice Group. Our Group’s attorney roster can be accessed at http://www.genovaburns.com/attorney-search-results.

 

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.

Appeals Court Nixes President’s Recess Appointments to NLRB Raising Question Whether Any NLRB Decisions Since 2011 Are Enforceable

In a 3-0 decision on January 25, the D.C. Circuit Court of Appeals held that a Board decision issued on February 8, 2012 was invalid because the Board failed to consist of a quorum of three validly appointed members. In February 2012 the Board had five members – Pearce and Hayes, who the Court found were validly appointed and confirmed by the Senate, and Block, Flynn and Griffin, who were appointed by President Obama in January 2012 as “recess” appointments. The Court held that the three recess appointments were constitutionally invalid, the Board lacked a quorum, and therefore the Board’s decision under review was invalid and unenforceable. Canning v. NLRB, No. 12-1115 (U.S. Ct. App. D.C.Cir. 2013).

The key underpinning to this holding was the status of the U.S. Senate’s operations during the 2011 holiday season when the President made the contested appointments. The Court found that the Senate’s actions of passing an extension of the payroll tax on December 23, 2011 and then convening the second session of the 112th Congress on January 3, 2012, taken together dictated the conclusion that the Senate was not in recess on January 4, 2012 when the President made the recess appointments. The Court held that a valid recess appointment is limited to an intersession appointment – that is, an appointment between sessions of Congress. The NLRB conceded that the appointments were not made during an intersession recess and accordingly, the Court vacated the Board’s underlying decision.

The Administration is sure to appeal the Court’s decision. Board Chairman Pearce has stated that he disagrees with the Court’s decision, the Board will continue to issue decisions, and anyway the decision is limited to one Board decision and order. In fact, the number of Board decisions whose validity is now in question is 219, since the Board failed to have a quorum of three Senate-confirmed members throughout 2012. The Board presently consists of three members, since Member Flynn resigned in 2012 and Member Hayes’ term expired last month. Two of the three current Board Members are recess appointees.

For more information on the practical implications of the Court’s decision and strategy recommendations in view of the Board’s precarious situation, please contact Patrick McGovern, Esq., pmcgovern@nullgenovaburns.com in the Labor Law Practice Group.

NLRB Amended Election Rules Take Effect Today after Senate Refuses to Block Rules

Last week a Republican-backed resolution to prevent the NLRB from implementing its new election rules was defeated in a U.S. Senate vote, by a margin of 45 to 54, largely along party lines. Sixty votes were needed to bring the resolution to the Senate floor. In December the NLRB issued a final rule that will dramatically expedite union elections. The final rule can be found at www.federalregister.gov/articles/2011/12/22/2011-32642/representation-case-procedures.

As a result, the Board’s amended election rules take effect today, April 30, and will limit the scope of pre-election hearings to determining whether a question concerning union representation exists within the meaning of the NLRA. The NLRB’s final rules do not mandate elections within 7 days of a petition, unlike the initial version of the rules, but the final version allows the time for elections to be 20-25 days after the petition is filed, a 50% reduction in the time that management has to communicate a lawful election campaign message to its employees. Other issues that would also traditionally be resolved before an election, including the eligibility of individual employees to vote, will be resolved only in post-election review proceedings.

With efforts in Congress to reverse the Board’s action now over, the remaining challenge to the election rules is in the courts. The U.S. Chamber of Commerce has challenged the election rules in federal district court in Chamber of Commerce v. NLRB. Motions for summary judgment are pending before the court. Oral argument has not yet been scheduled.

If you have any questions about the Board’s amended rules or require assistance with a representation petition, contact James J. McGovern, III, Esq.Patrick McGovern, Esq., Douglas E. Solomon, Esq. or John Vreeland, Esq. in our Labor Law Practice Group.

 

NLRB Delays Posting Requirement Indefinitely

Within hours after the D.C. Circuit Court of Appeals decision enjoining enforcement of the NLRB’s Posting Rule, and citing “the strong interest in the uniform implementation and administration of agency rules,” the NLRB’s Chairman instructed NLRB regional offices not to implement the Posting Rule pending resolution of the issues before the courts. Board Chairman Mark Pearce also confirmed that the Board will appeal last week’s decision by the Federal District Court in South Carolina that the NLRB lacked authority to promulgate the Posting Rule.

In view of these developments, the earliest date that the Board would require employers to post the Board’s notice would be late September 2012, which assumes the Court of Appeals issues a decision immediately after it hears oral argument. We will continue to monitor further developments, so be sure to check this site regularly for updates.

If you have any questions about the NLRB posting requirement, contact Patrick McGovern, Esq. or John Vreeland, Esq. in our Labor Law Practice Group.

Court of Appeals Blocks NLRB Posting Rule

In another setback to the NLRB’s rule-making agenda, today the U.S. Court of Appeals for the District of Columbia blocked the NLRB Posting Rule from taking effect, just 13 days prior to the Rule’s revised effective date of April 30.  The Court of Appeals granted the National Association of Manufacturers’ emergency motion for an injunction pending appeal and issued an expedited briefing schedule with oral argument scheduled for September 2012.  National Association of Manufacturers v. NLRB, D.C. Cir., No. 11-cv-01629, 4/17/12.

In its order, the Court noted specifically that the Board earlier postponed the Rule’s effective date to allow the District Court time to consider the legal merits before the Rule took effect and concluded that the Board’s prior postponement undercuts the Board’s position that the Rule should take effect pending the Court of Appeals’ consideration of the issues. Citing last week’s decision by the U.S. District Court in South Carolina, the Court of Appeals reasoned that the growing uncertainty as to the Rule’s enforceability further supports temporarily preserving the status quo while the Court considers the legal issues.

As of this writing, the NLRB has not yet indicated its position on the Court’s temporary injunction.  We will continue to monitor further developments including whether the NLRB formally postpones the Rule’s effective date.

If you have any questions about the posting requirement, contact Patrick McGovern, Esq. or John Vreeland, Esq. in our Labor Law Practice Group.

South Carolina Federal District Court Judge Finds NLRB’s Posting Rule Unlawful

The challenges to the NLRB Posting Rule have taken another turn after the U.S. District Court in South Carolina held last week that the Rule is unlawful. Judge David Norton’s April 13, 2012 decision determined that the NLRB lacked authority to enact the Notice Posting Rule it promulgated in 2011 and therefore the rule is unlawful. Chamber of Commerce v. NLRB, U.S.D.C. D.S.C., No. 11-cv-02516, 4/13/12.

The basis of Judge Norton’s decision is that the National Labor Relations Act places the Board in a reactive, not a proactive, role vis–vis employers covered by the Act. Judge Norton stated, “Congress did not intend to impose a notice-posting obligation on employers, nor did it explicitly or implicitly delegate authority to the Board to regulate employers in this manner.”

This Court’s decision clearly conflicts with the recent D.C. District Court decision upholding the notice-posting provisions of the Rule, but striking for the most part the enforcement provisions of the Rule. The Chamber of Commerce has asked the Court to suspend indefinitely the Posting Rule until the legal uncertainties surrounding the Rule are resolved. Despite the legal uncertainty, employers should prepare to post the NLRB notice of employee rights by April 30, 2012. We will continue to monitor related developments on this blog site.

If you have any questions about the Posting Rule, contact Patrick McGovern, Esq. or John Vreeland, Esq. in our Labor Law Practice Group.

Challenge of NLRB Posting Rule Continues

Despite the District Court’s partial upholding of the NLRB Posting Rule, there is further uncertainty regarding the rule after the National Association of Manufacturers filed an appeal and emergency motion for an injunction seeking to enjoin the rule from going into effect on April 30, 2012. As we have previously reported, the District Court’s March 2, 2012 decision upheld the basic posting requirement but rejected the rule’s unfair labor practice and equitable tolling provisions as unenforceable.

Following the District Court’s decision, the National Association of Manufacturers almost immediately filed a motion for an injunction pending appeal that was denied by the District Court on March 7, 2012. The National Association of Manufacturers then filed a notice of appeal with the Court of Appeals on March 8, 2012 and an emergency motion for injunctive relief on March 12, 2012 seeking to stop the rule from going into effect. In its appeal, the National Association of Manufacturers argues that the District Court’s decision is inconsistent as the Court held that the rule’s unfair labor practice and equitable tolling provisions are unenforceable but left open the possibility for the Board to find that a failure to post would constitute an unfair labor practice on an individual basis.

The Court of Appeals has not yet ruled on the National Association of Manufacturers’ emergency motion. Employers should prepare to post the NLRB notice of employee rights (which can be downloaded at www.nlrb.gov/poster by April 30, 2012). We will continue to monitor the outcome of the litigation.

If you have any questions about the posting requirement, contact Patrick McGovern, Esq. or John Vreeland, Esq. in our Labor Law Practice Group.

NLRB Posting Rule Upheld in Part, Stricken in Part

The uncertainty regarding the new NLRB rule that an employer must post a notice informing employees of their rights under the National Labor Relations Act has been somewhat resolved by a lower court decision upholding the basic posting requirement but striking the rule’s unfair labor practice and equitable tolling provisions as unenforceable. The Court’s March 2 decision allows a portion of the rule to take effect on April 30, 2012 but leaves open important questions as to the rule’s enforcement. (Nat’l Ass’n of Mfrs. v. NLRB, D.D.C., No. 11-cv-1629, 3/2/12).

In upholding the NLRB rule’s core posting requirement, the Court found that promulgation of this portion of the rule was not arbitrary and capricious. Regarding the unfair labor practice provision, however, the Court held that the NLRB lacked authority to treat a failure to post as an unfair labor practice in all cases. On the other hand, the Court agreed that the Board could find that a failure to post amounts to an unfair labor practice in a specific case, but this requires a factual finding that the failure to post interfered with an employee’s exercise of rights under the Act. Similarly, the Court held that the rule’s equitable tolling provision, which would have extended the six-month limitations period, exceeded the NLRB’s statutory authority but that equitable tolling may be applied on a case by case basis.

Employers should prepare to post the NLRB notice of employee rights (which can be downloaded at www.nlrb.gov/poster) by April 30, 2012. While the court’s ruling holds that the rule’s uniform enforcement provisions are unenforceable, still even this court agreed that a failure to post the notice can form the basis for an unfair labor practice charge or equitable tolling of the limitations period in certain cases and we expect the Board to seek these remedies. We also expect to see appeals from the court’s ruling.

If you have any questions about the posting requirement, contact Patrick McGovern, Esq. or John Vreeland, Esq. in our 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.