In August, the National Labor Relations Board issued a notice of proposed rulemaking to address three rather limited situations involving employee representation issues. These proposed rules follow 70-plus years of experimentation with a hodgepodge of ad hoc one-off decisions, dramatic changes and frequent reversals in the process of enabling employees to exercise their rights under the National Labor Relations Act.

The controversy surrounding the proposed notice primarily stems from organized labors' efforts to undo the reforms to federal labor law embodied in the Taft-Hartley Act of 1947. A key aspect of Taft-Hartley was the amendment of Section 7 of the act to grant employees the right to refrain from forming, joining or assisting labor organizations. The NLRB is currently soliciting comments as to the proposed rules. Comments can be submitted via email by logging onto regulations.gov or by mail.

The proposed rules are limited to three discrete areas, which suggest additional proposed rules will be forthcoming. The three areas that are addressed and the proposed rules are discussed below.

The Proposed Blocking Charge Rule

Section 7 of the act grants employees the right to "form, join, or assist" labor organizations or to refrain from doing so. On the one hand, Section 8(a)(5) of the act makes it unlawful for an employer to refuse to recognize and bargain with the bargaining representative selected by the majority of its employees. Conversely, under Section 8(a)(2) it is illegal for an employer to recognize and bargain with a union that does not have majority support.

While there are several methods for determining majority support, the preferred method is a secret ballet election conducted by the NLRB. When its election processes are invoked by employees, a union or an employer, the NLRB attempts to ensure employees vote in an environment free from coercion or intimidation, so-called laboratory conditions.

The NLRB's historical practice was to put an election on hold if any party filed a charge alleging illegal conduct by another party. This practice, referred to as the blocking charge rule, resulted in long delays, and on occasion, the improper dismissal of employee petitions.1 A study of election petitions filed in 2008 found the blocking charge rule resulted in elections taking on average 139 days to conclude, compared to an average of 38 days in unblocked elections.2

The NLRB regional directors are free to unblock the election if they conclude the unfair labor practice has not eroded union support.3 It was the rare case that the charge was unblocked. Under the best of circumstances, employees were usually unable to vote in a timely manner.

Employer frustration resulted in resort to an NLRB-endorsed manner of self-help, namely a private election conducted under the guidelines in Struksnes Construction Company.4 Ironically, the activities of private parties outside the NLRB's normal process (voluntary recognition) prompted the NLRB to respond when it initially adopted the notice period rule (discussed below).

The proposed blocking charge rule (a revision to the existing regulation found at 29 CFR Section 103.20) adopts a vote-and-impound procedure. Thus, the proposed rule is much like the widely adopted and generally accepted procedure followed when the NLRB grants a request for review of a regional director's decision.

Under this long-standing procedure, when a request for review is granted, the NLRB proceeds to conduct the election and then impounds the ballots.5 As drafted, the proposed blocking charge rule also requires the NLRB to determine whether the unfair labor practice affected the outcome of the election.

If the NLRB determines the unfair labor practice did not affect voters, then the impounded ballots are to be opened and counted. Thus, employees will be able to vote promptly, although the outcome of the voting may not be disclosed for some time.

The Proposed Notice Period Rule

As the union participation rate in the workforce dropped, unions turned to top-down organizing to arrest the decline. In top-down organizing, the union demanded corporate management remain neutral on the subject of union representation and that it voluntarily recognize the union, upon demand.

When the act was originally adopted in 1935, company unions, also referred to as house unions, were fairly common. These unions were created and often run by corporate officials. To stamp out sham unions, Section 8(a)(2) of the act prohibits an employer from assisting or recognizing a union that does not enjoy majority support. Several years ago, the NLRB had an eye-opening experience with voluntary recognition when it caught a supposedly neutral arbitrator certifying that a union had majority support when in fact it did not; in effect, a sham certification.

The NLRB then adopted a notice period rule in Dana Corp.,6 a decision applicable only when an employer voluntarily recognizes a union. The rule was subsequently abandoned, again by decision.7 Thus, at present, a union that is voluntarily recognized cannot be voted out by employees for at least six months after it is recognized.

Even then, the right to a secret ballet election is subject to the whims of the blocking charge rule discussed above. Employees are also subject to a form of NLRB-imposed economic coercion during this entire process, as, generally speaking, employers cannot provide wage increases to employees once recognition occurs.8

The NLRB's proposed rule9 requires an employer to post a notice in the workplace advising employees that voluntary recognition has occurred. The notice also advises employees of their right to file a petition with the NLRB for a secret ballot election, and provides the employees 45 days to do so. The NLRB's normal election processes are then followed as in any other election petition matter.

The Proposed Conversion Evidence Requirement

In 1959, Congress amended the act by inserting a new section, Section 8(f), to create an exception to the prohibition against the voluntary recognition of a union absent proof of majority support. This exception was limited to employers in the construction industry.

The 1959 amendment permitted employers in the construction industry to voluntarily recognize the appropriate craft union and sign a collective bargaining agreement (referred to as a Section 8(f) agreement) without proof of majority support. The exigencies of the construction industry made this amendment a necessity.

The need for a quick resolution of representation issues was also fostered by the fixed-price bidding typical in the construction industry, making certainty of wage rates essential. The short-term nature of many projects contributed to making a union organizing campaign and NLRB-conducted election virtually impossible to complete before the project ended, and the practice of staffing projects with employees referred by union-sponsored hiring halls made sham unions unlikely. Following the amendment, employers could lawfully sign prehire agreements.

In recognition of the fact a prehire agreement was signed without regard to employee sentiment, the amendment provided a prehire agreement did not block an NLRB election. This right to an election stood in marked contrast to the typical Section 9(a) agreement, which barred an election for its term not to exceed three years.

The NLRB by decision then allowed a construction industry employer the freedom to terminate prehire agreements, unless the agreement was converted into a Section 9(a) agreement. By contrast, agreements that are Section 9(a) agreements can be terminated only if the union loses its majority support.

Not surprisingly, after the NLRB defined the method and timing of terminating Section 8(f) agreements, unions began inserting language in their agreements, stating the parties agreed the employer had received proof of majority status. Experienced practitioners were fully aware that in point of fact, there had been no proof of majority. The validity of the contract language was rarely challenged as the NLRB did not permit challenges to union status after six months had passed.

The proposed rule closes this opportunity for fraud. Henceforth, "contract language standing alone will not be sufficient to prove the showing of majority support."10 Consequently, unions must provide employers with proof of majority support and be able to produce that support years later if challenged.

On balance, this should only be a minor inconvenience, since unions maintain dues history and pension contribution history in paper form for 40 or so years. The advent of digital storage should ameliorate any administrative challenges.

Conclusion

It appears that employees will have to await the outcome of the rulemaking process before elections held in close proximity to the filing of a petition can be anticipated. In the short term, it is anticipated there will be increased pressure for voluntary recognition of a union.

Unions will be in a race to obtain majority status among employees before the proposed notice period rule takes effect. In the construction industry, employers should expect that unions will begin accumulating proof of majority support and meeting with employers without awaiting adoption of the rule-proposed conversion evidence requirement.

It is highly likely unions will oppose the new rules, in essence, pitting themselves against their current or future members. The few groups that represent employees are likely to support the proposed rules, while urging the NLRB to make the process easier for them to navigate. Employers should consider whether to submit comments based on their experience with the current rules or with the proposed rules during the period they were in effect.

 

This article was first published on Law360.

1 See, e.g., Cablevision Systems Corp. ,367 NLRB No. 59 (2018) (blocking charge contributed to more than three-year delay).
2 Samuel Estreicher, Improving the Administration of the National Labor Relations Act Without Statutory Change, 5 FIU L.Rev. 361, 369 tbl.2 (2010).
3 National Labor Relations Board Casehandling Manual, Part 2, Section 11731.3.
4 165 N.L.R.B. 1062 (1967).
5 Lewis and Clark Coll. , 300 N.L.R.B. 155 (1990) (after granting the employer’s request for review, the scheduled election was conducted and ballets were impounded pending the Board’s review); Nightingale Oil Co. v. NLRB , 905 F.2d 528, 534 (1st Cir. 1990) (upholding the Board's application of the vote-and-impound procedure in certifying the union).
6 351 N.L.R.B. 434 (2007).
7 See Lamons Gasket Co. , 357 N.L.R.B. 739, 739 (2011).
8 Pembrook Mgmt. , 296 N.L.R.B. 1226, 1228 (1989).
9 29 CFR Section 103.21
10 29 CFR Section 103.21(b).
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