The issue arises because of key cases decided in January and May 2013 by two separate United States Courts of Appeals in which the courts ruled that four of President Obama’s appointments to the NLRB were invalid. In Noel Canning v. NLRB, the Court of Appeals for the District of Columbia Circuit found
that President Obama’s appointments of Sharon Block, Terence F. Flynn, and Richard F. Griffin to be members of the NLRB were constitutionally invalid.  The court held that, because the invalid appointments deprived the Board of a quorum, and therefore any authority to decide the case, the Board’s decision that Noel Canning, the employer, violated the National Labor Relations Act (NLRA) by refusing to execute a collective bargaining agreement must be vacated.

The impact of Noel Canning and similar cases could be far-reaching.  The same questionable quorum existed when the Board ruled in many other cases.  For example, Block and Griffin participated in recent Board decisions finding non-union employers in violation of the NLRA as a result of discharges of employees who complained about their employers through Facebook and other social media.

The court’s decision was a victory for Noel Canning, to be sure, and in its wake, the NLRB responded with a tone of defiance.  NLRB Chairman Mark Gaston Pearce declared that the Board “disagrees” with the court and that “we will continue to perform our statutory duties and issue decisions” despite the D.C. Circuit’s holding that the Board lacked a quorum to do so.

The Board may have to reconsider its defiance, however, because in May 2013 another United States Court of Appeals ruled invalid yet another Obama NLRB appointee. Specifically, the Third Circuit in NLRB v. New Vista Nursing and Rehabilitation invalidated President Obama’s appointment of union lawyer Craig Becker in March 2010.  Because Becker participated in the three-member NLRB panel that ruled in New Vista’s case, the court vacated the Board order finding that New Vista refused to bargain with the Service Employees International Union (SEIU). The case involved an indirect challenge to a Board determination that New Vista’s licensed practical nurses, whom the SEIU unionized, were not supervisors under the NLRA.

Until he was succeeded by Block, Becker participated in a wide range of other Board actions, including amendment of NLRB certification election procedures to limit the time employers and employees have to communicate among themselves during election campaigns.  The rule changes are now being challenged in court. 

Becker was also essential to the NLRB’s approval in 2011 of a requirement that all NLRA-covered employers post notices in the workplace.  The D.C. Circuit in National Ass’n of Manufacturers (NAM) v. NLRB, however, also struck down that rule in May 2013 just days before the Third Circuit’s ruling in New Vista.  In doing so, the court went out of its way to take another shot at President Obama’s use of the recess appointment power, stating that it assumed, without deciding, that “Becker’s appointment was constitutionally invalid.” 

These issues present serious constitutional questions as well as more immediate implications for employers and employees trying to compete in a very competitive and regulated world. Unfortunately, the short term will likely have more, not less, uncertainty as the courts continue to rule on the validity of the president’s NLRB appointments and their rulings relating to employees’ social media activities, the NLRB’s notice-posting requirement, the NLRB election process and the host of other initiatives favorable to organized labor now working through the system. 

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Timothy M. McConville leads the labor and employment group at the law firm of Odin, Feldman & Pittleman, P.C. in Fairfax, Virginia. Mr. McConville may be reached at 703-218-2119 or timothy.mcconville@ofplaw.com.  Follow him at laborandemploymentlawcocktail.com.

While the court’s ruling continued a string of litigation defeats for the NLRB on the notice-posting rule, the court made a point on another issue that could be of greater interest to parties with cases decided by the NLRB in recent years:  the Court specifically signaled that President Obama’s attempted recess appointment to the NLRB of Craig Becker on March 27, 2010, was constitutionally invalid.  In doing so, the court stated that its conclusion on this point was based on the assumption, without deciding the point, that its recent ruling in Noel Canning v. NLRB, 705 F.3d 490 (D.C. Cir. 2013), applied to Becker’s appointment to the Board.

In Noel Canning, the D.C. Circuit held that President Obama’s attempted recess appointments of Sharon Block, Terence F. Flynn, and Richard F. Griffin on January 4, 2012, were constitutionally invalid because they were not made during an intersession recess of the Senate to fill a vacancy that arose during the same intersession recess.  In this week’s ruling, the D.C. Circuit raised the Noel Canning issue entirely on its own, without any argument by the parties on the point, stating, “To the extent that Noel Canning applies—we assume, without deciding, that it does—Becker’s appointment was constitutionally invalid.” 

This application of Noel Canning increases the prospect that the reach of Noel Canning may extend well beyond that particular case or even other cases decided during the period in which the Board’s claim to a quorum depended on the validity of the appointments of Block, Flynn, and Griffin.  Now, with the court’s specific admonition in NAM v. NLRB regarding Becker, the prospect of Noel Canning’s application to an additional range of cases, and specifically to cases decided while Becker was purportedly on the Board, is very real. 

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Section 40.1-80.1 of the Virginia Code provides that “[N]o child shall be employed or permitted to work for more than five hours continuously without an interval of at least thirty minutes for a lunch period, and no period of less than thirty minutes shall be deemed to interrupt a continuous period of work.”  The Code Section does not specifically define the term “child.”

Regulations adopted by the Virginia Department of Labor & Industry (“Virginia DOL”), however, provide more specificity, which can be helpful in providing more certainty to non-agricultural employers looking to understand whether the statutory break requirements are applied to employees who are over the age of 16. 

Specifically, with respect to non-agricultural employees, the regulations provide:  “No minor under 16 years of age shall be employed or permitted to work for more than five hours continuously without an interval of at least 30 minutes for a lunch period, and no period of less than 30 minutes shall be deemed to interrupt a continuous period of work.”  The statute’s use of the term “child” and the regulation’s use of “no minor under 16 years of age” create some degree of inconsistency between the statute and the regulation, but because the Virginia DOL governs its enforcement activities in accordance with the more specific regulations, non-agricultural employers can reasonably follow the regulation and not apply the break requirement to its employees who are 16-18 years of age. 

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The statute provides that an employer shall not, unless an exemption described in the law applies, be required to release, communicate, or distribute to a third party any current or former employee's personal identifying information.  As used in the statute, "personal identifying information" means any of the following items of information about a current or former employee: home telephone number, mobile telephone number, email address, shift times, or work schedule.

The statute exempts the release, communication, or distribution of personal identifying information that is:

1. Required pursuant to any applicable provision of federal law that preempts the provisions of this section or of state law that requires an employer to release, communicate, or distribute personal identifying information;

2. Ordered by a court of competent jurisdiction;

3. Required pursuant to a warrant issued by a judicial officer; or

4. Required by a subpoena issued in a pending civil or criminal case, or by discovery in a civil case.

The new statute could be used to protect some employers from some demands for employees' personal information, including demands made by unions in organizing campaigns and pursuant to so-called "neutrality agreements" between unions and employers.

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Technology now allows workers to send and respond to emails, write and create documents, and perform other work nearly anywhere at any time.  As a result, one can be working while on the bleachers at a child’s Little League game, in a doctor’s office waiting room, or even in the bedroom, to the dismay of many spouses.  If the employee engaging in such activities is not exempt from the FLSA’s overtime requirements, all that extra work can create big issues.

The FLSA entitles covered, non-exempt workers to overtime premium pay at the rate of one and one-half the employee’s regular rate for all hours worked in excess of 40 hours in a work week.  “Hours worked” includes time in which an employee is “suffered or permitted to work.”  Courts in some cases have held that a non-exempt employee performing work outside normal work hours and off-premises is entitled to compensation, including overtime compensation under the FLSA.  Courts have imposed overtime liability because the employer knew or should have known that the work was occurring even without specific authorization by a supervisor.

Many FLSA cases include overtime claims based on off-the-clock work, including checking emails.  The risk of such claims is even greater because employers may not be counting such work as compensable even while they know or should know it occurs.  In 2011, Citrix Systems, a provider of virtual computing solutions, surveyed over 1,100 companies around the world and found that 92% of them were aware that some of their workers were using non-company-issued computing devices for work-related purposes.

Citrix has projected the use of such devices to increase, driven by the prospect of significant gains in productivity.  A YouGov survey of 700 small- and medium-sized businesses in the United Kingdom, France and Germany last year found that 33% of companies saw productivity gains of 10% or more resulting from the use of personal communication devices. 

With the prospect of greater productivity driving employees’ increased use of these devices, employers will experience hidden costs of compliance and increased exposure to liability for not properly tracking, and paying for, hours worked.  To reduce the risk of liability for off-the-clock work, many employers are implementing restrictions on non-exempt employees.  In a survey of 155 human resource professionals in November 2011, the HR Policy Association found that: 35.6% of those surveyed had imposed restrictions on overtime work; 55.6% restricted the use of personal digital assistants; 44.4% restricted flexible working hours; and 32.2% limited telecommuting.

Other measures to reduce risk include avoiding altogether the provision of smartphones to non-exempt employees and also configuring email systems in order to prevent remote access to email.  Some employers, of course, may find that such measures are not feasible or that productivity losses caused by them are too great.  These employers instead may pursue compliance by proper tracking of work time when the work involves the use of smartphones outside of work hours.

Ultimately, the nature of a particular employer’s response to the requirements of the FLSA depends on the objectives of the employer and the realities in the particular workplace.  Employers, however, need to understand that technology changes can have a dramatic effect on FLSA compliance, and if they ignore the issue, they may regret not keeping up with the times.

What does this mean for employers?

Employers are no longer obligated to comply with the posting requirement on April 30, 2012.  The Court is scheduled to hear the case in the fall, which means that employers can wait until that time to find out whether the rule will go into effect at all. 

However, the Court’s injunction does not affect covered federal contractors and subcontractors who are obligated, pursuant to Executive Order 13496, to post the Department of Labor’s notice of employees’ rights to unionize and engage in other protected activity.

Please check back for any updates.

See NLRB Postpones Notice-Posting Requirement for more details about the notice posting requirement.

The resolution adopted by the Board contained six amendments to Board procedures, all of which are aimed at limiting the time employers and employees have to communicate among themselves regarding the prospect of a union in the workplace.  The amendments would give NLRB hearing officers authority to limit evidence and issues presented in pre-election hearings and also to decide whether to deny parties the opportunity to file briefs.  The amendments also would eliminate the right to seek Board review of pre-election rulings and allow an election to proceed despite the existence of significant issues relating to appropriateness of units and voter eligibility.  In addition, the proposed amendments would narrow opportunities for appeal of issues relating to the election process.

The proposal approved by the Board excluded other significant changes to Board procedures which had been included in a proposed rule issued by the Board on June 22, 2011.  Among the proposed amendments excluded from the resolution adopted by the Board on November 30 are provisions for electronic filing of petitions, a requirement that hearings be set for seven days after service of the notice of hearing, a requirement of the statement of position filing, inclusion of email addresses and phone numbers in the voter list, and a change of the period for filing the voter list from seven to two work days.

As further explained in another blog post, the effect of the NLRB’s proposal would be significant.  By shortening the time between petition and election, the Board’s proposal would reduce the time employers and employees have to communicate among themselves regarding union issues, which would lead to an increase in organized labor’s election win rate.  As a result, employers should consider proactive measures to prepare for a higher risk of organizing, including regular supervisor training in labor relations and communications to employees regarding how a union in a workplace can affect them.  Effective communications with employees on labor relations can be accomplished through meetings with employees, letters and flyers, and the employer’s own notice postings, all of which should be considered by employers. 

The new rule, which is being implemented by a newly created FAR Subpart 3.11 and a related contract clause, requires contractors working under “covered contracts” to identify and prevent personal conflicts of interest of their covered employees, and prohibit covered employees who have access to non-public information by reason of performance on a government contract from using that information for personal gain.  A “covered contract” is one that exceeds $150,000 and involves performance of acquisition functions closely associated with inherently governmental functions for, or on behalf of, a federal agency.

The definition of “acquisition function closely associated with inherently governmental functions” is very broad.  It includes “supporting or providing advice or recommendations with regard to:”

-        acquisition planning,

-        developing statements of work,

-        developing solicitation evaluation criteria,

-        evaluating proposals,

-        awarding contracts,

-        administering contracts,

-        terminating contracts, and

-        determining the allowability of costs, among other functions.

 In order to comply with the new FAR clause, contractors will be required to establish internal procedures to screen employees for potential personal conflicts of interest by requiring each affected employee to disclose interests that may be implicated by the employee’s work.  This includes financial interests of the employee and his or her close family members and other members of his or her household.  In addition, the covered employee will be required to update his or her disclosure statement whenever circumstances change in a way that may create a new personal conflict of interest. 

All covered employees will also be required to sign a non-disclosure agreement to prohibit disclosure of non-public information learned through performance on a government contract.  The new rule does not prescribe any particular forms of disclosure statement or non-disclosure agreement that must be used to satisfy the rule. 

In addition to developing a new compliance program for the contractor employee personal conflict of interest avoidance program, the regulation also mandates contractor self-reporting and also that prime contractors flow the requirement down to subcontractors.            

Strangely, while the new clause, as prescribed in FAR Subpart 3.11, must be included in all solicitations and contracts for “covered contracts,” FAR Part 12 expressly exempts commercial item acquisition from the statute that is the basis for the new rule (the FAR definition of “commercial item” includes commercial services).  Contractors bidding on otherwise “covered contracts” that are solicited pursuant to FAR Part 12 should read the solicitation carefully to determine whether the new requirement is improperly included in the solicitation.      

The new rule applies to all contracts, delivery orders, or task orders issued after the effective date of December 2, 2011.

The NLRB’s final notice-posting rule also requires that the notice be in a foreign language if 20% or more of the employees speak the foreign language and do not speak English.  In addition, the Board’s rule provides that a knowing and willful violation of the notice-posting requirement may be evidence of unlawful motive on the part of the employer in other unfair labor practice cases against the employer.  The NLRB has advised employers that they may post their own notices regarding labor relations issues and employee rights next to the NLRB’s required notice. 

As the NLRB proceeds with its aggressive rulemaking activity, including proposed “quickie election” rules, employers will need to reevaluate strategies for maintaining a union-free environment.  Specifically, employers should consider proactive measures to prepare for a higher risk of organizing, including regular supervisor training and labor relations and communication to employees regarding how a union in the workplace can affect them.  Effective communications with employees on labor relations can be accomplished through meetings with employees, letters and flyers, and the employer’s own notice postings, all of which should be considered by employers.