Tag Archives: National Labor Relations Board

Restaurant Industry

NLRB puts thousands of small businesses, franchises at risk

Need convincing that the National Labor Relations Board is an agency in desperate need of a management change?

The NLRB, which ostensibly is charged with protecting workers’ rights and remedying unfair labor practices, has morphed into an arm of organized labor.

Consider the board’s hit parade of the last few years: There was the case against Boeing over the company’s decision to locate a new factory in right-to-work South Carolina; the Obama administration’s abuse of recess appointments to name a union sympathizer to the agency’s general counsel post; its obsession with card check, which would end workers’ right to a secret ballot in union elections; calling on employers to post notices about employees’ rights to join a union; and the pursuit of so-called snap elections, a way of ambushing employers with union elections before they can communicate their side of the argument to employees.

But now there’s another dubious distinction to add to the list, and the NLRB’s latest adventure has the potential to completely upend decades of the franchise restaurant business model.

In a late July determination, the NLRB found that McDonald’s Corp. could be treated as a joint employer with its franchisees in labor disputes. In other words, to the labor board, there is no daylight between the corporate parent and the franchisee operating his or her own restaurant.

The finding is not only potentially devastating to the restaurant industry, but to other businesses that rely on the franchisor-franchisee relationship, which affects many small businesses. It could also affect businesses that use subcontractors or temp agencies.

Organized labor, which has long sought to unionize the fast-food industry, but that has seen its influence in the private sector on the wane, hopes the NLRB decision opens the door to union organizing in these restaurants. If there’s no difference between McDonald’s corporate and the franchisee at your neighborhood outlet the thinking goes, then unions might have new leverage to negotiate over organizing and higher minimum wages because they can pressure one corporate entity rather than hundreds of small businesses.

This is bigger than a minor administrative filing by an obscure agency within the federal government. Thousands of jobs are a stake here. More regulations and mandates inflicted on small businesses make hiring more expensive and investment more elusive. Entrepreneurs who take the risk to open a new restaurant, whether an established franchised brand or an exciting new concept, face plenty of obstacles without the government throwing up new barriers to entry. If these small businesses can’t get off the ground, they can’t hire, which will only hobble the economy, not help it.

The decision will be appealed and could even end up before the Supreme Court. This is far from over.
What is unlikely to cease, unfortunately, is this administration’s seemingly endless desire to insert itself into the employer-employee relationship. In its apparent desire to help workers, the government is doing far more harm than good for the individuals it claims to protect.

Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry. Steve Chucri is the president and CEO of the Arizona Restaurant Association and supervisor for Maricopa County District 2.

Legal

Controversial NLRB Posting Rule Declared Invalid

On May 7, 2013, the U.S. Court of Appeals for the District of Columbia Circuit struck down the final rule issued by the National Labor Relations Board (“NLRB”) on August 30, 2011, which would have required that all employers subject to the NLRB’s jurisdiction post a prescribed notice to employees and also place the notice on their intranets or web pages if they use such tools to communicate with their employees. The notice, which was created by the NLRB, informs employees of their right to join or create a union, bargain collectively, strike and picket, and engage in certain other conduct. The notice also identifies certain actions which, if taken by employers or unions, would be unlawful. We advised in alerts we issued on October 4, 2011, and again on April 17, 2012, that employers should wait to learn the outcome of litigation challenging the NLRB’s rule before posting the required notice.

The NLRB’s rule provides that an employer’s failure to post will be an unfair labor practice, will suspend the running of the six-month deadline to file any unfair labor practice charge against the employer, and may be evidence of the employer’s unlawful motive in NLRB cases challenging other conduct by the employer.

Relying upon Section 8(c) of the National Labor Relations Act (“NLRA”), a provision enshrining the free speech rights of employers provided that speech does not contain threats or promises of benefits, the court reasoned that freedom of speech not only protects the expression or dissemination of opinions and views, but also prohibits the government from telling people what they must say. The court concluded that the NLRB’s rule is invalid because it violates Section 8(c).

The court also concluded that the rule is invalid because the NLRB lacked authority to extend the six-month limitation period for the filing of unfair labor practices, which Congress had placed in the NLRA. The case name is National Assn of Manufacturers v. NLRB.

The NLRB may now seek to have this case heard by the U.S. Supreme Court, which is not obligated to take the case. While all employers are now free of the NLRB’s posting requirement unless and until the Supreme Court reverses this decision, government contractors and subcontractors remain obligated to post a very similar notice if they work under a contract of $100,000 or more that contains a posting requirement pursuant to executive order.
Jon Pettibone is managing partner at Quarles & Brady. He can be reached at (602) 230-5572 or jon.pettibone@quarles.com.

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NLRB Issues First ‘Facebook Firing’ Decision

National Labor Relations Board Issues First ‘Facebook Firing’ Decision

The National Labor Relations Board (NLRB) is on a roll. Just a few weeks after issuing its first decision finding that a company’s social media policy violated the National Labor Relations Act (NLRA) (see alert at left or here), the NLRB yesterday released its first decision addressing the legality of an employment discharge over an employee’s social media postings.

In Karl Knauz Motors, decided on September 28 and released on October 1, the NLRB adopted the findings of an administrative law judge (ALJ) that a car dealership lawfully discharged one of its salesmen because of certain Facebook postings regarding an accident at an affiliated dealership. The NLRB concluded that those postings were not protected by the NLRA. In commenting on photos he took of a Land Rover that was driven into a pond by a customer’s son, the salesman wrote: “This is your car: This is your car on drugs.”  The salesman continued: “This is what happens when a sales Person sitting in the front passenger seat…allows a 13 year old boy to get behind the wheel of a 6000 lb. truck built and designed to pretty much drive over anything.” In response, the employer fired the salesman because his actions damaged the reputation of the company and the individuals involved, and because the salesman showed no remorse for his actions.

While the car dealership maintained, and the ALJ agreed, that these postings were the sole reason for discharge, these were not the only Facebook postings that the salesman made around the same time as the postings described above. Another set of postings involved photos and comments about the dealership serving hot dogs, chips and bottled water at a sales event announcing a new BMW model. Among other things, the salesman wrote: “The small 8 oz bags of chips, and the $2.00 cookie plate from Sam’s Club, and the semi fresh apples and oranges were a nice touch…but to top it all off…the Hot Dog Cart. Where our clients could attain a over cooked wiener and a stale bun.”  The ALJ found that these postings were protected, concerted activities because customers could have been disappointed by the food options at the event and this could have impacted the salesman’s compensation. In its decision, the NLRB did not decide whether the “hot dog” postings constituted protected concerted activity under the NLRA.

In addition to the NLRB’s conclusion regarding the legality of the car salesman’s discharge, the NLRB also concluded that a “courtesy” rule in the car dealership’s employee handbook was overly broad and could be construed by employees as prohibiting NLRA-protected conduct. The handbook language at issue provided:

(b) Courtesy: Courtesy is the responsibility of every employee. Every employee is expected to be courteous, polite and friendly to our customers, vendors and suppliers, as well as to their fellow employees. No one should be disrespectful or use profanity or any other language which injures the image or reputation of the Dealership.

The NLRB found the second section of the rule—regarding not being “disrespectful” or damaging the dealership’s image or reputation—violated the NLRA because the rule “proscribes not a manner of speaking, but the content of employee speech—content that would damage the [dealership’s] reputation.”  The NLRB ultimately ordered the dealership to remove the courtesy rule from its employee handbook and give employees inserts or new handbooks. The NLRB did not address other policy language that was at issue before the ALJ.

What This Means for Employers

The Karl Knauz Motors decision is the first in what will likely be many more decisions by the NLRB as the NLRB’s regional offices continue to issue complaints over so-called “Facebook firings” (other cases are currently pending before the NLRB). The decision is also consistent with the NLRB’s increased focus on social media postings and policies, as reflected in the many cases detailed in three reports issued by the NLRB’s Acting General Counsel since August 2011.

Before disciplining or discharging a union or non-union employee over a social media posting, employers should consider whether the posting constitutes protected concerted activity under the NLRA and consult with legal counsel. In addition, social media policies should be narrowly written to ensure they do not run afoul of the NLRA. Such policies should make clear that employees may engage in protected concerted activity without penalty. Again, counsel should be consulted when drafting or revising a social media policy.