NEWSLETTER

The National Labor Relations Board (NLRB) recently issued four decisions that are good news for both unionized and union-free employers. This Alert addresses the holding in Toering Electric Co., Cases 7-CA-37768, 7-CA-39093, and 7-CA-39205 (Sep. 29, 2007), a 3-2 decision critical of the union practice of submitting batch applications by union “salts” uninterested in actually working for the targeted employer. Recognizing that these applications are frequently submitted for the sole purpose of generating meritless unfair labor practice charges, the Board held that such individuals are not protected by the NLRA’s prohibition on discrimination. “In our view submitting applications with no intention of seeking work but rather to generate meritless unfair labor practice charges is not protected activity.”

In Toering, the Board held that the NLRA’s protection against discrimination based on union considerations only applies to an applicant for employment who is “genuinely interested in seeking to establish an employment relationship with the employer.” Additionally, the Board held that the General Counsel bears the burden of proving that the person allegedly subjected to a discriminatory refusal to hire meets this requirement.

This case arose when the national president of the International Brotherhood of Electrical Workers (IBEW) announced the union’s salting campaign targeting nonunion employers. The union president urged local unions to join him in “driving the non-union element out of business.” With this goal in mind, the International Union issued a training manual that urged local unions to put economic pressure on the targeted company by filing unfair labor practice charges at every opportunity. The Board found that the purpose of these charges was to require the targeted employer to incur the substantial expense of defending itself in legal proceedings and to disrupt the targeted employer’s work force and production by declaring a series of unfair labor practice strikes.

A local union subsequently targeted Toering Electric by having union “salts” submit applications for employment. The company’s alleged refusal to hire union-affiliated applicants led to several unfair labor practice charges. In an effort to settle these claims, the company offered jobs to six members of the local union, but all six failed to show up for work. Other local union members received back-pay awards in settlement of their ULP charges against the company.

Two years later, a union organizer again targeted Toering by submitting numerous resumes of union members in response to the company’s blind help wanted newspaper advertisements. Of the resumes submitted by the union organizer, five contained no work history dates, five were stale and one was the resume of a union member who had refused an earlier job offer from Toering in settlement of a ULP charge.

Toering did not hire any of the individuals whose resumes were submitted by the union organizer. Subsequently, the General Counsel filed ULP charges based on this refusal to hire. The NLRB administrative law judge (ALJ) found that Toering violated Sections 8(a)(3) and (a)(1) by refusing to hire the union salts. However, the Board reversed the ALJ’s determination.

The Board noted that the U.S. Supreme Court has held that Section 8(a)(3)’s prohibition on discrimination extends to applicants for employment. See Phelps Dodge Corp. v. NLRB. Although neither Section 8(a)(3) nor the Supreme Court’s decision in Phelps Dodge limit the provision’s antidiscrimination protection to employees, “subsequent precedent makes clear that Section 8(a)(3) bars job discrimination only against individuals who meet the statutory definition of ‘employee’ in Section 2(3).”

Only Applicants Genuinely Interested in Employment are Protected

The Board then held that “an applicant for employment entitled to protection as a Section 2(3) employee is someone genuinely interested in seeking to establish an employment relationship with the employer.” The Board noted that its holding in Toering is consistent with statutory policy, Supreme Court precedent, and Board practice. “It is also necessary to allay reasonable concerns that the Board's processes can be too easily used for the private, partisan purpose of inflicting substantial economic injury on targeted nonunion employers rather than for the public, statutory purpose of preventing unfair labor practices that disrupt the flow of commerce.”

Further, the Board held:

there is a meaningful distinction between direct economic warfare between parties to labor disputes and the subversion of the Board's processes by one party for the objective of inflicting economic injury on the other. The Board does not serve its intended statutory role as neutral arbiter of disputes if it must litigate hiring discrimination charges filed on behalf of disingenuous applicants who intend no service and loyalty to a common enterprise with a targeted employer. Instead, the Board becomes an involuntary foil for destructive partisan purposes. The Congressional goal of industrial peace through the “friendly adjustment of industrial disputes” is not furthered by extending the Act's protections against hiring discrimination to such applicants.

General Counsel Bears the Burden of Showing the Applicant’s Genuine Interest in Employment

The Board stated that it is specifically seeking to discourage cases where unfair labor practice allegations of hiring discrimination are filed for the objective of inflicting economic injury on the targeted company. Accordingly, the Board abandoned its implicit presumption that anyone who applies for a job is protected as a Section 2(3) employee.

Instead, the Board now imposes on the General Counsel the burden of proving the applicant's genuine job interest. There are two components to this requirement: (1) an application for employment; and (2) the application reflected a genuine interest in becoming employed by the employer.

As to the first component, the General Counsel must introduce evidence that the individual applied for employment with the employer or that someone authorized by that individual did so on his or her behalf.

Once the General Counsel has shown that the alleged discriminatee applied for employment, the employer may contest the genuineness of the application through evidence such as that the individual:

• refused similar employment with the respondent employer in the recent past;
• incorporated belligerent or offensive comments on his or her application;
• engaged in disruptive, insulting, or antagonistic behavior during the application process; or
• engaged in other conduct inconsistent with a genuine interest in employment.

Similarly, evidence that the application is stale or incomplete may, depending on the circumstances, indicate that the applicant does not genuinely seek to establish an employment relationship with the employer.

If the employer presents such evidence, the General Counsel must then prove by a preponderance of the evidence that the individual in question was genuinely interested in seeking to establish an employment relationship with the employer. Thus, the ultimate burden of proof as to the Section 2(3) status of the alleged discriminatee-applicant rests with the General Counsel.

Because the General Counsel now bears the burden of proving that an applicant was genuinely interested in employment with the targeted company, an employer's motivation for making an alleged discriminatory hiring decision does not become relevant until the General Counsel satisfies his burden of proof on the applicant's statutory employee status.

Employers’ Bottom Line:

The Board’s decision in this case is good news for employers. However, it illustrates the importance of ensuring that application and hiring procedures are designed to ascertain the applicant’s genuine interest in the position.

If you have any questions regarding this decision or need assistance in reviewing or redesigning your application forms or hiring procedures to ensure they are directed at ascertaining the applicant’s genuine interest in the position, please contact the Ford & Harrison attorney with whom you usually work.

Overruling a prior decision, the NLRB has held that an employer can show that it hired permanent replacements for economic strikers even though the replacements are considered to be at-will employees under state law. See Jones Plastic & Engineering Co. Case 26-CA-20861 (Sep. 27, 2007). The decision in Jones overrules the Board’s prior holding in Target Rock Corp., 324 NLRB 373, 374 (1997), enfd. 172 F.3d 921 (D.C. Cir. 1998), in which the Board held that proof of at-will employment “obviously” did not support the employer’s position that its striker replacements were permanent.

Under the NLRA, an economic striker who unconditionally offers to return to work is entitled to immediate reinstatement, unless the employer can show a legitimate and substantial business justification for refusing to reinstate the former striker. One such justification is that the employer has hired a permanent replacement for the striker so that the employer can continue its business operations during a strike.

Thus, when the strike is over, the employer is not required to discharge employees it hired as permanent replacements for economic strikers if it assured those replacements that their employment would be permanent. This is an affirmative defense, and the employer has the burden of proving that it hired permanent replacements. To meet this burden, the employer must show that it had a mutual understanding with the replacements that their employment would be permanent.

In this case, a number of bargaining unit employees engaged in an economic strike when the union and the employer were unable to reach an initial collective bargaining agreement. Shortly after the strike started, the employer began hiring replacement workers. All of the replacement workers completed the employer’s standard application form, which contained an employment at-will disclaimer. The employees also received a copy of the employer’s handbook, which stated: “Employment at-will is our Company policy. The Company may terminate employment for any reason.”

Additionally, the replacement workers who were hired in the place of specific strikers signed a form after they were hired that stated they were being hired as permanent replacement workers. The form also identified the specific striking employee the replacement worker replaced. Further, the form stated that the employee understood that he or she could be terminated at any time with or without cause and could be terminated as a result of a strike settlement agreement or by order of the NLRB. Additional employees who were hired as replacements for other replacement employees signed similar forms, but these forms did not contain a specific striking employee’s name.

Approximately two weeks after the strike began, the employer sent a letter to each striking employee stating that it had begun to hire permanent replacement employees and that the striker risked being permanently replaced if he or she failed to report for work immediately. Over two months later, the union made an unconditional offer to return to work on behalf of all the striking employees. The employer informed the union that it had a full complement of permanent replacement employees and that the returning strikers would be placed on a preferential recall list.

Subsequently, the union filed an unfair labor practice charge, the parties waived a hearing by an administrative law judge and the Board accepted the case. The Board held that the facts of the case showed that the employer established a mutual understanding with the replacement workers that they were permanent employees:

• it issued forms to the employees stating that they were permanent replacements and, in some cases, identified the striking worker they replaced;
• it told the striking workers it had begun to hire permanent replacements and that they risked being permanently replaced if they did not return to work; and
• the employer’s human resources manager told one replacement that he was a permanent employee.

“Standing alone, this evidence clearly would be sufficient to establish that the [employer] hired permanent replacements.”

Finding the decision in Target Rock to be based on a misreading of controlling law and inconsistent with the basic scheme of the NLRA, the Board rejected the suggestion that an at-will employment disclaimer detracts from a finding of permanent replacement status. The Board noted that Target Rock has been read to preclude at-will employment for permanent replacements. However, this view would require permanent replacements to be offered tenure rights superior to those enjoyed by the strikers, which would disadvantage the strikers (who remain at-will employees) and violate the Act's fundamental principles.

Accordingly, the Board overruled Target Rock to the extent it suggests that at-will employment is inconsistent with an otherwise valid showing of permanent replacement status. The Board found that the employer in this case established a mutual understanding with its replacement employees that they were permanent employees and that its at-will disclaimers did not detract from this showing. Thus, the employer did not violate the NLRA by refusing to reinstate the economic strikers.

Employers’ Bottom Line:

This decision is good news for employers because it clarifies that at-will employment under state law does not conflict with an employer’s affirmative defense that it has hired permanent replacements for economic strikers. It is important to note, however, that the employer must still present facts supporting a mutual understanding between it and the replacements that they are permanent replacement workers.

If you have any questions regarding this decision or any other labor related issue, please contact the Ford & Harrison attorney with whom you usually work.

In response to a U.S. Supreme Court order remanding the case for consideration by the Board, a 3-2 Board majority has held that the filing and maintenance of a reasonably based lawsuit does not violate the NLRA, regardless of the motive for bringing it. See BE&K Construction Co., Cases 32-CA-9474, 32-CA-9475, and 32-CA-12531-1-8 (Sep. 29, 2007). In this case, BE&K Construction sued a group of unions, claiming, among other things, that the unions violated the antitrust laws by engaging in efforts to delay a construction project that had been awarded to BE&K (which is a union-free employer). The lawsuit was ultimately unsuccessful. After the lawsuit was dismissed, the Board found that BE&K violated Section 8(a)(1) of the Act by filing the lawsuit.

The U.S. Supreme Court invalidated the standard applied by the Board in determining that BE&K violated the Act. In doing so, the Court held that whether reasonably based but unsuccessful lawsuits fall outside the First Amendment’s protection presents a difficult constitutional issue. Rather than resolve this difficult issue, the Court adopted a limiting construction of Section 8(a)(1) so as to avoid the First Amendment issue. Thus, the Court found that there was nothing in the statutory text indicating that Section 8(a)(1) must be read to reach all reasonably based but unsuccessful suits filed with a retaliatory purpose and declined to read Section 8(a)(1) as doing so. The Court then held that the Board’s standard, which covered all such suits, is invalid. The Court remanded the case to the Board for a decision consistent with its reasoning.

On remand the Board held that the filing and maintenance of a reasonably based lawsuit does not violate the Act, regardless of whether the lawsuit is ongoing or is completed, and regardless of the motive for initiating the lawsuit.

The Board held that concerns regarding the potential chilling of the fundamental First Amendment right to petition the government exist whether the Board burdens a lawsuit in its initial phase or after its conclusion. “In sum, we see no logical basis for finding that an ongoing, reasonably-based lawsuit is protected by the First Amendment right to petition, but that the same lawsuit, once completed, loses that protection solely because the plaintiff failed to ultimately prevail. Nothing in the Constitution restricts the right to petition to winning litigants.”

In determining whether a lawsuit is reasonably based, the Board applied the test articulated by the Supreme Court in the antitrust context: a lawsuit lacks a reasonable basis if “no reasonable litigant could realistically expect success on the merits.” Applying this standard to the facts of this case, the Board held that the lawsuit was reasonably based.

Employers’ Bottom Line:

This decision is good news for employers who may seek to exercise their constitutional right to petition the government by filing reasonably based lawsuits in response to certain union activity. Nevertheless, any such lawsuit should be carefully considered in conjunction with experienced labor counsel to ensure that it meets the Board’s new standard. If you have any questions regarding the impact of this decision or any other labor related issue, please contact the Ford & Harrison attorney with whom you usually work.

In an effort to “provide greater protection for employees’ statutory right of free choice and to give proper effect to the court- and Board-recognized statutory preference for resolving questions concerning representation through a Board secret-ballot election,” the Board recently modified the recognition-bar and contract-bar doctrines in card-check and neutrality agreement situations. See Dana Corp., Cases 6-RD-1518, 6-RD-1519, and 8-RD-1976 (Sep. 29, 2007).

In Dana Corp., the Board stated that it will not impose an election bar after a card-based recognition unless: (1) employees in the bargaining unit receive notice of the recognition and of their right, within 45 days of the notice, to file a decertification petition or to support the filing of a petition by a rival union; and (2) 45 days pass from the date of notice without the filing of a valid petition. Additionally, the Board held that if a valid petition supported by 30 percent or more of the unit employees is filed within 45 days of the notice, the petition will be processed. The requisite showing of interest in support of a petition may include employee signatures obtained before as well as after the recognition. This new standard applies regardless of whether a card-check and/or neutrality agreement preceded the union’s recognition.

The Board also modified the contract-bar doctrine to provide that a collective bargaining agreement executed on or after the date of voluntary recognition will not bar a decertification or rival union petition unless notice of recognition has been given and 45 days have passed without a valid petition being filed.

If both conditions are satisfied, the recognized union’s majority status will be irrebuttably presumed for a reasonable period of time to enable the parties to engage in negotiations for a first collective-bargaining agreement. Under the contract-bar doctrine, any agreement reached during this 45-day window period will further bar an electoral challenge for up to three years of the contract term, once the window period elapses without the filing of a decertification or rival union petition.

These changes to the recognition-bar and contract-bar doctrines in the card-based recognition setting apply only to voluntary recognition agreements that occur after the date of this decision (Sept. 29. 2007).

In explaining its rationale for modifying the recognition-bar doctrine in card-check situations, the Board noted that although Section 9 of the NLRA permits the exercise of employee free choice concerning union representation through the voluntary recognition process, this does not require that Board policy in recognition case proceedings treat majority card showings the same as the choice expressed in Board elections. “On the contrary, both the Board and courts have long recognized that the freedom of choice guaranteed employees by Section 7 is better realized by a secret election than a card check.” The Board then stated that administration of the NLRA should reflect the preference for Board elections over voluntary recognition by encouraging initial resort to Board elections to resolve representation questions.

The Board determined that the current recognition-bar policy does not reflect this preference and fails to give adequate weight to the “substantial differences between Board elections and union-card solicitations as reliable indicators of employee free choice on union representation.”

The Board acknowledged that there is a reasonable rationale for imposing an immediate bar in circumstances involving a certification, a Board bargaining order, and a settlement agreement containing a promise to bargain. “However, the rationale is far less persuasive where there is only voluntary recognition. Accordingly, we find it appropriate to alter the bar in the latter situation.”

The Board also held that the employer/and or the union must promptly notify the Regional Office of the Board, in writing, of the grant of voluntary recognition. The Board will then send an official NLRB notice to be posted in conspicuous places at the workplace throughout the 45-day period alerting employees to the recognition and using uniform language.

If you have any questions regarding this decision or any other labor related issue, please contact the Ford & Harrison attorney with whom you usually work.