January 2016
Volume X • Issue 1
The Labor Relations Advisor continues to present matters that we hope are of interest to our members with
union-represented employees or an interest in following developments in Labor Relations. This issue contains information on some recent interesting cases and other Labor matters.
If you would like more information on these or any other topics, the Labor Relations staff at MSEC are ready
to assist. Take advantage of our experience as part of your membership!
Declaring Impasse During Labor Contract Negotiations: A Short Primer
It is a well-known principle that the NLRA requires an employer to bargain in good faith with a union that represents its employees. Good faith bargaining means that each party comes to the negotiations table with a good-faith intent to reach
an agreement. It not-infrequently happens however that, despite good faith bargaining, the parties, for one reason or another, cannot reach an agreement. What can happen then?
Frequently, it may appear during negotiations that the parties have ceased making progress. One or both of the parties
may believe that the other side is being unreasonable. In other cases, one or the other party may be sticking to an issue
which it believes is indispensable to its interests. It may be tempting during these phases of negotiations to declare that the
parties are at “impasse.”
The term “impasse,” however, is a term of art under the NLRA and, in many cases, an elusive term of art at that. The NLRB
has defined bargaining impasse as the situation where “good-faith negotiations have exhausted the prospects of concluding an agreement, and there is no realistic possibility that continuation of discussion at that time would be fruitful.”
Grosvenor Resort, 336 NLRB 613, 615 (2001)(subsequent history omitted). It is “the point in time of negotiations when the parties are warranted in assuming that further bargaining would be futile. In a nutshell, both parties must believe that they are
at the end of their rope.
The concept of impasse is important because when further bargaining becomes futile, when the parties have met the end
of their bargaining rope, the employer is free to declare an impasse and then unilaterally implement changes in existing
terms and conditions of employment so long as the employer’s pre-impasse proposal encompasses the changes. This can
be a highly-attractive option for a bargaining-weary employer that wants the best deal it can get without extensive bargaining or further concessions on its part.
But reaching impasse and unilaterally implementing an employer’s last, best and final offer many times is more easily said
than done. The Board does not lightly infer the existence of an impasse, and the burden of proving it rests on the party
(usually the employer) asserting it. Naperville Ready Mix, Inc., 329 NLRB 174, 183 (1999)(subsequent history omitted). The
existence of impasse is a factual determination that depends on a variety of factors, including the contemporaneous understanding of the parties as to the state of negotiations, the good faith of the parties, the importance of the disputed issues, the parties' bargaining history, and the length of their negotiations.
What makes declaring an impasse a risky proposition is that it can be difficult to determine when an impasse actually exists.
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In Carey Salt Co., 358 NLRB No. 124 (2012), after numerous bargaining sessions the company presented the union its last,
best and final offer. Although the union rejected the company’s last, best and final offer, it also told the company it had
some issues it wished to discuss with the company and that a mediator was enroute to negotiations. The company, however, insisted it was at impasse and unilaterally implemented its last, best and final offer.
The union filed a failure to bargain in good faith unfair labor practice charge alleging bad faith bargaining. Regarding the
company’s declaration of impasse and unilateral implementation, the Board disagreed with the company’s decision. According to the Board, even if the parties were at impasse when the company tendered its last, best and final offer, that
impasse was broken when the union stated its desire to discuss other issues and brought a mediator in to assist with negotiations. In short, the union’s conduct indicated to the Board that further bargaining would not have been futile.
The lesson here is clear: Declaring an impasse during negotiations can be a valid bargaining tactic. Danger always lurks,
however, because any indication on the union’s part that it desires further discussions can mean that no impasse exists.
Under these circumstances, unilateral implementation can lead to a failure on the company’s part to engage in good
faith bargaining.
Small Illinois Village Enacts Right to Work Law
The village of Lincolnshire, Illinois is trying an innovative approach to labor relations. The community of approximately
7,300 recently approved an ordinance that establishes itself as a right to work municipality. Right to Work laws prohibit
parties from inserting language in collective bargaining agreements that require partial or full dues payment as a condition of employment. The National Labor Relations Act, as amended, permits states to adopt Right to Work laws, and
states like Michigan and Indiana have done so in the past few years. However, it is unclear whether municipalities may
also adopt such laws, and the Illinois AFL-CIO has stated that they will be challenging the ordinance in court.
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The ordinance states in relevant part that Lincolnshire wants to “promote and
encourage direct labor commerce by giving employees the freedom to
choose employment without restraint or coercion regarding the payment of
mandatory dues, fees, or other payment to a labor organization as a condition of that employment.” To that end, it prohibits the deduction of any
“dues, fees, assessments, or other charges” to a labor organization unless an
employee signs a written authorization card. It further bars coercion and intimidation designed to compel such payment.
Negotiation for
The village was inspired to take this action by Illinois’ governor, Bruce Rauner
(R), who has encouraged localities to establish “right to work zones” as part of
his “turnaround agenda” for the state. The Illinois Attorney General, Lisa Madigan (D), issued a legal opinion last spring stating that Section 8 of the NLRA
pre-empts the regulation of union-security agreement (i.e. their regulation is
reserved to the federal government) except for the ability of states and territories to establish Right to Work laws. The NLRA does not explicitly permit political subdivisions such as municipalities to establish Right to Work laws.
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However, the Liberty Justice Center, a Chicago based non-profit focused on
protecting “economic liberty, private property rights, free speech, and other
fundamental rights in Illinois,” believes that home rule authority permits Lincolnshire to establish its own Right to Work zone. An attorney for the Center
stated that home rule powers allow the village to “do anything state government can do unless state law specifically prohibits [it].” Since no state law
specifically prohibits villages from passing Right to Work laws, the Center believes the ordinance is legal.
Needless to say, this ordinance will very likely be the subject of litigation going
forward.
The LR Advisor | January 2016 | MSEC.org
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Arbitrator’s Decision Overturned In Moral Turpitude Case
On December 29, 2015, the New Hampshire Supreme Court held in Univ. Sys. Of N.H. Bd. Of Trs. v. Dorfsman, (Univ. Sys.
of N.H. Bd. of Trs. v. Dorfsman, 2015 BL 422120, N.H., No. 2015-0187, 12/23/15) that the University of New Hampshire rightly
fired one of its professors for moral turpitude after he altered the student evaluations of another University lecturer. In
issuing this decision, the Court reversed an arbitrator’s decision to overturn the professor’s termination.
The collective bargaining agreement between the University and the union provided that an employee could be
“terminated immediately” for acts of “moral turpitude.” The arbitrator acknowledged that the professor’s act constituted “moral turpitude,” but nevertheless held that there were other mitigating circumstances that should have prevented his termination. As such, the arbitrator remanded the case back to the parties to negotiate a more appropriate
level of discipline.
The New Hampshire Supreme Court disagreed, and explained that since the arbitrator acknowledged that the professor’s act constituted moral turpitude, he was unable to impart “his own notions of industrial justice over those established by the contract.” Furthermore, the court added that the fact that the parties did not include a written allowance for mitigating circumstances meant precisely that they did not intend to include one. By making such an assertion, the Arbitrator was simply “ignoring the plain language of the contract.”
The key takeaway for employers here is that there are legal remedies for them to pursue if they believe that an arbitrator has exceeded the scope of his or her authority to interpret a contract. Additionally, employers should be reminded
that if they want particular language in a collective bargaining agreement, they should negotiate diligently with the
union to ensure that such language is included – otherwise a court may determine that the language was intentionally
left out of the contract.
DOL’s Final Rule On “Persuader Activities” To be Published Soon
The Department of Labor has set a target date of March 2016 for the publication of its final rule amending the
“Persuader Rule” under the Labor-Management Reporting Disclosure Act of 1959 (LMRDA). On December 7, 2015,
the DOL sent its final rule to the Office of Management and Budget for review.
The proposed rule, if it becomes final, will have significant legal and monetary ramifications.
Currently, the LMRDA requires employers to report to the DOL when they hire a consultant to persuade employees
regarding their rights under the NLRA. Penalties for violations of the LMRDA include a fine of $10,000.00 and one year
of imprisonment.
Historically, however, the LMRDA has contained an “Advice Exception.” The Advice Exception has consistently been
interpreted to exclude attorneys who assist employers with union organizing drives, as long as the attorney refrains
from having direct contact with employees and the employer retains the discretion to accept or reject its attorney’s
advice.
All indications are that the DOL’s final rule will significantly cut back the Exception Rule. As a result, employers who
engage attorneys to assist in organizing campaigns may have to file with the government public reports disclosing all
of the labor work the attorney performed, even if it is not is considered persuader activity.
Challenges to the new rule are expected. In particular, the American Bar Association, the Association of Corporate
Counsel, and many labor attorneys believe the new rule would violate the rules of professional conduct and the
common law rules protecting privileged attorney-client communications. Although it is too soon to tell, we can expect that the lawfulness of the new rule will be litigated in the federal courts.
The LR Advisor | January 2016 | MSEC.org
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Company Not Required to Disclose Informer’s Identity to Union
On December 3, 2015, an NLRB Administrative Law Judge held in Mich. Bell Tel. Co., (Mich. Bell Tel. Co., 2015 BL 397032,
NLRB ALJ, No. 7-CA-150005, 12/3/15) that Michigan Bell Telephone Co. was not required to provide the union with the
name of an employee who tipped off the company that employees were planning to stop work and protest the company’s mandatory overtime policy.
Under the company’s collective bargaining agreement with the union, it was permitted to require that its Premises
Technicians – those who install internet, phone, and data services at the homes and businesses of AT&T customers –
remain in the field until after they were cleared by their supervisors, and that there was no more work to perform on
their shift.
In January 2015, several Premises Technicians returned to the company garage after their shift, but before they were
cleared to return. The company reminded them of their obligation to remain in the field until they were cleared by
their supervisors. Most returned to the field, while others refused. The Company formally disciplined four of these such
employees for disregarding their instructions to keep working.
A day later, several employees at a union meeting suggested that employees stage a work stoppage in protest of the
mandatory overtime policy. One of those union employees notified the company about this potential work stoppage.
He did not request that his name be kept confidential.
The union filed a grievance on behalf of the four employees that were disciplined. As part of its investigation, the union requested the name of the informer. The company refused the request, on the basis of confidentiality and relevance.
The ALJ denied the Company’s confidentiality argument – because the informer never actually requested confidentiality – but it did rule in favor of the company based on relevancy grounds:
“Generally, the Board regards that any information request regarding bargaining unit employees is presumptively relevant, Curtis Wright Corp., Wright Aeronautical Div. 145 NLRB 152, 156-7 (1963). However, by relevant, the Board means
that the information is relevant to the Union’s duties as the unit employees’ collective bargaining representative. In this
case, the record establishes that the identity of the informant, what he or she said to management and the dissemination of the information is irrelevant to these duties. The presumption of relevance is a rebuttable presumption, Armstrong World Industries, Inc., 254 NLRB 1239, 1245 (1981). The record in this case rebuts that presumption.”
As such, the ALJ approved of the company’s refusal to provide the union with the informant’s identity.
New NLRB Election Rules Have Resulted in Quicker Elections
As has been discussed in previous LR Advisors, the National Labor Relations Board promulgated new ‘quickie’ or
‘ambush’ election rules that went into effect in April of 2015. The rules substantially shorten timelines involved in representation elections, require the employer to provide more personal contact information of employees to the union, and grant substantial discretion to the NLRB to consider or reject consideration of employer concerns. Most observers predicted that the new regulations would result in a substantial shortening of the time between when a union
files a petition for an election and when the election takes place. Almost one year after the regulations went into
effect, data is emerging that outlines the extent to which they have impacted union election timelines.
In a recently released report titled “Election Speed and the NLRB: How Unions Fare in the Representation Process,”
researchers reviewed available data from the first four months that the rules were in effect and compared said data
to the same time frame from 2014. What they found is unsurprising: the median length of an election for the time
period examined before the new rules was thirty eight days. After the rules went into effect, that number plummeted to twenty four days, a full two weeks shorter than before.
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The report also found that unions won 259 of 362 elections held in May, June, July, and August of 2015, compared to
228 of 331 elections held during those same months in 2014. This data shows two things: First, that there has been a
measurable increase in the volume of elections after the regulations went into effect. Second that the union’s winning
percentage in representation elections has increased from approximately sixty-nine percent to seventy-two percent.
Most available data indicates that short election time frames benefit union campaigns because employees are more
likely to vote based on emotion, and that the longer the election goes on the more likely they are to take the employer’s message to heart.
Employers should consider whether they are prepared to respond to a campaign for the representation of a new bargaining unit at their place of business. With the length of an average election decreasing by two weeks, companies
must be ready to respond to petitions immediately when they are filed. MSEC suggests that its members work to train
supervisors on recognizing warning signs of union activity, review and enforce non-solicitation policies, and perform
regular market reviews of employee benefits and wages to gauge vulnerability to union campaigns. MSEC Labor Relations attorneys are available to help with these and other union matters.
Average 2.9 Wage Hike in First Year of 2016 Contracts
Data compiled by Bloomberg BNA through Jan. 11, 2016, for all settlements showed that the average first-year wage
increase was 2.9 percent, compared with 2.7 percent reported in the comparable period of 2015.
The median first-year wage increase for settlements reported to date in 2016 was 2.5 percent, compared with 2 percent in 2015, and the weighted average was 3.4 percent, compared with 5.3 percent.
When construction and state and local government contracts were excluded, the all-settlements average increase
was 3.3 percent, compared with 4.1 percent in 2015; the median was 2.8 percent, the same as reported a year ago;
and the weighted average was 3.5 percent, compared with 5.9 percent. Manufacturing agreements showed an
average increase of 1.7 percent, compared with 2.1 percent in 2015, and a median of 1.7 percent, compared with
2.2 percent.
The nonmanufacturing (excluding construction) average increase was 3.4 percent, compared with 5 percent, and
the median was 3.1 percent, compared with 2.8 percent in 2015. Sufficient data were unavailable to provide a yearto-date construction average or median increase. State and local government agreements provided an average
increase of 2.5 percent, compared with 1.7 percent in 2015, and a median of 2.3 percent, compared with 2 percent.
When lump sum payments are factored into wage calculations, the all-settlements average first-year increase to
date in 2016 was 2.9 percent, compared with 3.2 percent reported in 2015..
The MSEC Labor Relations Department
Phone 303.303.5310 | Fax 303.894.6738
E-mail [email protected]
Chad D. Orvis
Ryan Sarni (Manager)
Dennis Baarlaer
Dave Strousberg
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