Tag: NLRB

A Holiday Surprise: New York Governor Vetoes the Proposed Non-Compete Ban

On December 22, New York State Governor Kathy Hochul provided New York State employers with a welcome holiday surprise by announcing her veto to the proposed ban on non-compete agreements. As noted in our prior client alert concerning the New York legislatures’ 2023 passage of its non-compete ban bill, S3100, its restriction was expansive and would have provided a broad ban on non-compete agreements.

The bill sat on Governor Hochul’s desk awaiting her signature for several months, keeping New York State employers in a state of uncertainty. Earlier this month, Governor Hochul publicly commented that she would consider a bill which struck the right balance to protect low and middle-income workers, while she recognized that higher income workers have more negotiating power and are in industries that are an important part of New York’s economy.

In recent weeks, many anticipated that a compromise may be reached behind the scenes. While it is clear that a compromise has not yet been reached with regard to this specific bill, the Governor has stated that she is open to legislation banning agreements that limit workers’ mobility.

We will continue to monitor the situation. Given the debate concerning New York’s law in this area, as well as an evolving patchwork of state legislation nationally and a growing movement to restrict such agreements at the federal level (such as proposed by the Federal Trade Commission and the National Labor Relations Board), we recommend that employers take proactive steps now. Employers should consider evaluating their existing confidential information protections exclusive of restrictive covenants; specifically, their policies, confidentiality agreements, employee handbooks, and employee training in light of the evolving current law, and take action to update those protections.

© Copyright 2023 Sills Cummis & Gross P.C.
For more news on Noncompete Laws, visit the NLR Labor & Employment section.

What Are the Top 3 Labor Law Developments of 2023 (So Far)?

It’s hard to believe the end of 2023 is upon us. This year is one for the history books on the labor law and labor relations fronts. In a year packed with significant legal landscape changes and high-profile labor disputes, it’s worth a quick recap of what are – in my view – the top 3 developments.

1. NLRB Revamps the Union Organizing Process

At the top of my list are changes the National Labor Relations Board (NLRB) made to the union organizing process. The board did several things in this regard. First, the NLRB reinstated the Obama-era “ambush” election rules that accelerate the union election timetable. Specifically, these rules truncate the amount of time between an election petition being filed and a vote being held (i.e., shorten the amount of time a company has to campaign).

Second, the agency issued arguably one of its most groundbreaking decisions in decades in Cemex. In that case, the NLRB altered the framework for how unions can and will be recognized and significantly loosened the standard for Draconian bargaining orders in some cases. Bottom line: The legal landscape, relatively speaking, makes it exponentially easier for workers to vote in unions now.

2. UAW Strikes at the Big 3

Labor relations issues haven’t been top headlines in recent decades. That changed this year. The ongoing nationwide union push at Starbucks over the last two years has garnered much attention, along with some other high-profile union pushes and disputes. But the United Auto Workers’ (UAW) coordinated strike efforts at Detroit’s “Big Three” automakers truly was remarkable in terms of the national attention it garnered. For the first time, the UAW struck General Motors, Ford, and Stellantis (aka Chrysler) at once.

The UAW took a creative approach: it targeted specific plants for work stoppages while leaving others operational. This approach had two primary benefits to the union: 1) it allowed it to slow the cash burn on their strike pay bank (estimated to be north of $800 million at one point) and 2) it allowed the union to keep the companies guessing as to which plants the UAW may bring offline next – creating operational inefficiencies and uncertainty. Ultimately, this strategy resulted in deals with each of the Big 3, and most view the UAW as having come out on top in these negotiations.

3. NLRB Starts to Scrutinize Non-competes

On May 30, the NLRB’s top lawyer, Jennifer Abruzzo, turned heads when she issued a memo signaling that her office was taking the view that non-compete agreements, in some circumstances, violate the National Labor Relations Act (NLRA). This development was somewhat surprising to some given that the NLRA was passed nearly 100 years ago and was not cited previously as a basis to invalidate standard restrictive covenants found in countless employment agreements around the country.

Abruzzo further announced the NLRB will be coordinating enforcement and a potential crackdown on non-competes with the other agencies, including the Federal Trade Commission – which this year also signaled an emphasis on these agreements – and the Department of Justice.

Given there’s a month left to go before the end of 2023, there may be other significant developments to come, but, for now, these are my top three. Happy Holidays!

© 2023 BARNES & THORNBURG LLP
For more news on 2023 Labor Law Updates, visit the NLR Labor & Employment section.

Competition for Control of College-Athletes Enters New Playing Field

November 7, 2023, may become a monumental day in the history of the National Collegiate Athletic Association (NCAA). It is the first day of a potentially groundbreaking hearing. Region 21 of the National Labor Relations Board will be hearing a case brought by members of the football, men’s basketball, and women’s basketball teams against the University of Southern California (USC), the PAC-12, and the NCAA. The crux of their argument is that the three major entities should be considered “joint employers” who have systematically misclassified the players as “student-athletes” rather than as employees.

The implications of this Board hearing could have far-reaching implications across the country. The NLRB General Counsel Jennifer Abruzzo has already signaled that, in her opinion, certain players at colleges and universities should qualify as employees of their institutions. If the administrative law judge were to agree with Abruzzo’s opinion, the impact on the national landscape of collegiate athletics would be immediate.

If these players are found to be employees, each player would be entitled to the benefits of traditionally employed individuals, such as compensation, overtime, social security, worker’s compensation, health and safety protections, protections against discrimination and harassment, and a statutory right to unionize and collectively bargain for a share of collegiate sport revenues.

While being found to be employees would be looked at as a major win for the impacted players, such a determination would cause complicated issues for colleges and universities across the country. These issues include compliance with Title IX of the Education Amendments of 1972 and the Immigration Nationality Act, among others. Further, having some teams but not others qualify likely will create a two-tier system throughout the country. This divide would be even further enhanced if the Board finds certain players, but not others, qualify as employees.

Testimony will not be heard until the week of December 18, at the earliest. Higher education institutions, players, and fans alike will be monitoring this hearing as it progresses.

Jackson Lewis P.C. © 2023
For more news on Student Athletes as Employees, visit the NLR Entertainment, Art & Sports section.

NLRB Issues Memo on Non-competes Violating NLRA

On May 30, 2023, Jennifer Abruzzo, the general counsel for the National Labor Relations Board (NLRB), issued a memorandum declaring that non-compete agreements for non-supervisory employees violates the National Labor Relations Act. The memo explains that having a non-compete chills employees’ Section 7 rights when it comes to demanding better wages. The ­theory goes that employees cannot threaten to resign for better conditions because they have nowhere to go. Non-compete agreements also prohibit employees from seeking better working conditions with competitors and/or soliciting coworkers to leave with them for a local competitor.

Experts have yet to weigh in, but ultimately this issue will be decided by the federal courts. As an employer, if you employ any non-supervisory employees that are subject to a non-compete agreement, an unfair labor practice charge could be filed, and it appears the NLRB would lean towards invalidating the agreement, though all evidence would have to be taken into consideration.

© 2023 Jones Walker LLP

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NLRB Issues Complaint for Athlete Misclassification against NCAA, Pac-12, and USC

On May 18, 2023, the National Labor Relations Board’s (the Board) regional director in Region 31 issued a complaint against the National Collegiate Athletic Association (NCAA), the Pac-12 Conference, and the University of Southern California (USC), alleging they violated the National Labor Relations Act (the Act) by misclassifying college football and basketball players as “non-employee student-athletes.” The original charge was issued back in February 2022 and alleged all three entities were in violation of the Act as “joint employers” of these athletes.

While this issue is not necessarily new to higher education, the Board’s decision to issue a complaint—and issue that complaint against all three entities—is new ground, as it departs from a 2015 precedent and paves the way for student-athletes to unionize at potentially both private and now public institutions. Under the Act, the Board has authority over private-sector workers, while state labor boards have jurisdiction over employees at state institutions. However, because the students at issue in Thursday’s complaint would be considered employees of the private NCAA and Pac-12 as well as USC, all three entities would be subject to potential liability as “joint employers.” What this means for public institutions is that there is a real and likely potential that the “joint employer” doctrine will allow for an end run around the Act’s coverage exemption for public-sector entities. As such, all student-athletes could potentially seek to collectively bargain at the NCAA level.

Finding merit to the charge and issuing this complaint is a logical result of General Counsel (GC) Memorandum GC 21-08 issued by the Board’s GC Jennifer Abruzzo in late September 2021. At that time, we issued an alert detailing the GC’s desire to expand the definition of “employee” in order to bring scholarship collegiate athletes under the Act. In February 2022, we issued another alert detailing how USC was likely to be the test case for that endeavor.

Alleging the violation of Section 7 of the Act, Thursday’s complaint arises from charges filed by the National College Players Association, a nonprofit advocacy association founded by former UCLA football player Ramogi Huma. The charge and complaint asserted that USC, the Pac-12, and NCAA misclassified student-athletes in order to deny them their rights under the Act, including the right to speak about compensation and working conditions. In addition to the alleged misclassification issue, the complaint alleges that USC illegally obstructed athletes’ organizing by “maintaining unlawful rules and policies in its handbook, including restricting communications with third parties, in the media, etc.”

Colleges and universities may be tempted to minimize this issue by thinking that the shift to seeing student-athletes as employees would affect them only in the event their athletes attempt to form a union. That is not the case. While a Board determination that student-athletes are employees could lead to a renewed effort by college athletes to organize, the GC has already cautioned (and made good on that warning) that the Board will seek to issue unfair labor practice charges against colleges and universities that misclassify student-athletes as “non-employees” or engage in other violations of the Act. For example, the GC has previously made clear that protections afforded by the Act apply to concerted activity such as expressions of support for social justice issues and other advocacy. As such, higher education institutions would be wise to tread lightly into these waters when they arise, because where employee status exists, concerted efforts of those employees to speak their minds or speak out on certain issues will be viewed as protected under the Act.

The hearing on the Board’s complaint is set for November 7, 2023.

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NLRB Determines Confidentiality and Non-Disparagement Provisions to be Unlawful in Severance Agreements

The National Labor Relations Board (the NLRB or the Board) issued a decision earlier this week that purports to ban confidentiality and non-disparagement provisions from most employee severance agreements.

In McLaren Macomb, the Board scrutinized severance agreements an employer gave to 11 employees who had recently been laid off. The confidentiality provision stated that the terms of the severance agreement were confidential and must not be disclosed to anyone with few exceptions (e.g., the employees’ spouses). The non-disparagement provision barred the employees from making statements to anyone that could disparage or harm the image of the employer or its officers, directors, employees, etc. These provisions are obviously common in severance agreements.

Among other things, the Board determined that both provisions unlawfully prevented the former employees from speaking out about working conditions and compensation (including the severance) offered by the employer and assisting with NLRB and other government investigations. Historically, the NLRB has gone back and forth on whether such provisions are lawful. However, the position taken this week is the NLRB’s most aggressive position to date. Specifically, the Board determined that the mere inclusion of such provisions in a severance agreement is unlawful because they have a deterrent and chilling effect on worker’s rights, even if the employee does not sign the agreement or the employer does not enforce the provisions against an employee who breaches confidentiality or disparages the company after signing.

It is important to note that this decision has some limitations:

  • First, it does not apply to “supervisors” (as defined by the NLRA) or to independent contractors. Who is a “supervisor” under the NLRA involves several factors, including whether the employee has the authority to hire, fire, discipline, or direct the work of another employee. Therefore, it is clear that executives and upper-level management are not covered by this ruling, and, depending on the circumstances, middle and even lower level managers may not be covered either.
  • Second, some have questioned whether a smartly worded disclaimer may permit employers to include limited confidentiality and limited non-disparagement provisions in severance agreements given to rank-and-file employees. For instance, in the past, employers often included a broad statement that the severance agreement is not intended to and in fact does not infringe upon any rights the employee may have under the NLRA. Unfortunately, the Board did not specifically address this issue, but, given the aggressive position taken in the Board’s decision this week, there is definitely some risk of liability even with such disclaimers. That determination should be made based on the employer’s risk-tolerance, along with the circumstances of the individual severance agreement, and is best determined by speaking with legal counsel.

The NLRB General Counsel is expected to release additional guidance on this issue in the coming months. Until that happens, employers should seriously consider this decision when drafting severance agreements.

© 2007-2023 Hill Ward Henderson, All Rights Reserved
For more Labor Law news, click here to visit the National Law Review.

The NLRB Curtails the Scope of Nondisparagement and Confidentiality Provisions in Severance Agreements

On Tuesday, February 21, 2023, the National Labor Relations Board (“NLRB” or “Board”) issued McLaren Macomb, a decision that curtails the permissible scope of confidentiality agreements and non-disclosure provisions in severance agreements. See McLaren Macomb, 372 NLRB No. 58 (2023). Analyzing the broad provisions in the agreements at issue in this case, the Board held that simply offering employees severance agreements that require employees to broadly waive their rights under Section 7 of the National Labor Relations Act (“NLRA” or “the Act”) was unlawful. The Board held:

Where an agreement unlawfully conditions receipt of severance benefits on the forfeiture of statutory rights, the mere proffer of the agreement itself violates the Act, because it has a reasonable tendency to interfere with or restrain the prospective exercise of Section 7 rights, both by the separating employee and those who remain. Whether the employee accepts the agreement is immaterial.

The Board’s decision is part of a broader trend by courts and administrative agencies applying heightened scrutiny to contractual provisions that limit employees’ rights. The decision also provides a crucial reminder to union and nonunion workers alike of the relevance of federal labor law in providing legal protections for most private-sector workers.

Case Background

The case arose when Michigan hospital operator McLaren Macomb permanently furloughed eleven employees, all bargaining unit members of Local 40 RN Staff Council, Office of Professional Employees International Union (OPEIU), AFL-CIO, because it had terminated outpatient services during the COVID-19 pandemic in June 2020. After McLaren Macomb furloughed these employees, it presented them with a “Severance Agreement, Waiver and Release” that offered severance amounts to the employees if they signed the agreement. All eleven employees signed.

The agreements provided broad language regarding confidentiality and nondisparagement. The confidentiality provision stated, “The Employee acknowledges that the terms of this Agreement are confidential and agrees not to disclose them to any third person, other than spouse, or as necessary to professional advisors for the purposes of obtaining legal counsel or tax advice, or unless legally compelled to do so by a court or administrative agency of competent jurisdiction.” (emphasis added). The non-disclosure provision provided, in relevant part, “At all times hereafter, the Employee agrees not to make statements to Employer’s employees or to the general public which could disparage or harm the image of Employer…” The employees faced substantial financial penalties if they violated the provisions. The Employer conditioned the payment of severance on Employees’ entering into this agreement.

The NLRB’s Decision

In McLaren Macomb, the Board held that simply offering employees severance agreements that contain these broad confidentiality and nondisparagement provisions violates the NLRA.

The NLRA provides broad protections of employees’ rights to engage in collective action. Section 7 of the NLRA vests employees with a number of rights, including the right “to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” Section 8(a)(1) of the Act makes it an unfair labor practice (ULP) for an employer to “interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 7.” As the Supreme Court, federal courts, and the NLRB have repeatedly held and reaffirmed, Section 7 provides broad rights for employees and former employees—union and nonunion alike—to engage in collective action, including discussing terms and conditions of employment and workplace issues with coworkers, a union, and the Board. As the Supreme Court has stated in elaborating on the broad construction of Section 7, “labor’s cause often is advanced on fronts other than collective bargaining and grievance settlement within the immediate employment context.” Eastex, Inc. v. N.L.R.B., 437 U.S. 556, 565 (1978).

Applying these foundational principles to the severance agreements at hand, the Board reversed Trump-era NLRB precedent and concluded that the employer’s proffer of these broad nondisparagement and confidentiality provisions contravened the employees’ exercise of Section 7 rights, which is an unfair labor practice under Section 8(a)(1). Notably, the Board held that an employer’s merely offering such broad provisions violates the Act—it does not matter whether the employee signs the agreement or not.

The Board determined that the nondisparagement provision substantially interfered with employees’ Section 7 rights on its face. That provision prohibits the furloughed employee from making any “statements to [the] Employer’s employees or the general public which could disparage or harm the image of [the] Employer.” Analyzing this language, the Board reasoned that the provision would encompass employee conduct or critiques of the employer regarding any labor issue, dispute, or term and condition of employment. Accordingly, this proscription sweeps far too broadly—it prohibits employees from exercising their right to publicize labor disputes, a right which is protected by the Act. Moreover, the nondisparagement provision chills employees from exercising Section 7 rights, including efforts to assist fellow employees, cooperate with the Board’s investigation and litigation of unfair labor practices, and raise or assist in making workplace complaints to coworkers, their union, the Board, the media, or “almost anyone else.” As the Board underscored, “Public statements by employees about the workplace are central to the exercise of employee rights under the Act.”

The Board then concluded that the confidentiality provision also interfered with employees’ Section 7 rights in at least two ways. First, the Board explained that because the confidentiality provision prohibits the employee from disclosing the terms of the agreement “to any third person,” the agreement would reasonably tend to coerce the employee not to file a ULP charge with the Board or assist in a Board investigation. (emphasis added). Second, the same language would also prohibit the furloughed employee from discussing the terms of the agreement with former coworkers in similar situations, which would frustrate the mutual support between employees at the heart of the Act. As the Board summarized, “A severance agreement is unlawful if it precludes an employee from assisting coworkers with workplace issues concerning their employer, and from communicating with others, including a union, and the Board, about his employment.”

Takeaways for Employment Lawyers and Plaintiffs

First, while one might assume that labor law is exclusively the province of unions, their members, and their lawyers, McLaren Macomb demonstrates the relevance of the NLRA for employees regardless of union status. Although the workers in this case were unionized, the Section 7 rights at the heart of the NLRA apply to most private-sector employees, including nonunion employees. Indeed, because nonunion workers often have fewer workplace protections than their unionized counterparts, Section 7’s protections are critically important for nonunion employees. Employees who are asked to sign confidentiality and nondisparagement provisions and their attorneys should be aware that broad restrictions on employees’ concerted activity may be illegal.

Second, this decision is part of a broader effort to protect workers from being muzzled by their employers. For instance, the recent federal Speak Out Act establishes that predispute nondisclosure clauses and nondisparagement clauses—often included in employment contracts—are unenforceable in disputes involving sexual assault or sexual harassment. These recent developments in the law should be on the radar of workers and their attorneys who are navigating employer’s contracts, policies, handbooks, and proposed severance agreements.

Article By Kyle Bigley of Katz Banks Kumin LLP

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Beltway Buzz, January 20, 2023

Union Membership Decreases. The percentage of workers who are union members dropped to 10.1 percent in 2022 from 10.3 percent in 2021, according to data released this week by the U.S. Bureau of Labor Statistics (BLS). In the private sector, the unionization rate fell to 6 percent last year from 6.1 percent in 2021. According to BLS:

The 2022 unionization rate (10.1 percent) is the lowest on record. In 1983, the first year where comparable union data are available, the union membership rate was 20.1 percent and there were 17.7 million union workers.

Thus, despite some splashy headlines and a few high-profile examples, the great majority of employees continue to reject unionization. Expect labor unions and their allies in Washington, D.C., to spin these numbers as a reason to double down on efforts to tilt the labor policy field in favor of labor unions.

D.C. Circuit Issues Ruling on NLRB 2019 Election Regs. This week, the U.S. Court of Appeals for the District of Columbia Circuit issued a decision relating to five specific provisions of the National Labor Relations Board’s (NLRB) 2019 changes to its regulations governing union elections. In a May 2020 decision, the U.S. District Court for the District of Columbia (in an opinion by then-judge Ketanji Brown Jackson) invalidated the five provisions as contrary to the Administrative Procedure Act because the NLRB did not seek public comment on the changes. (The Board argued that the changes were procedural, not substantive, in nature and that public comment was not necessary.) In this week’s decision, the D.C. Circuit agreed that the district court was correct in invalidating three provisions: “the rules regarding the eligible employee-voters list, the timeline for certification of election results, and election-observer eligibility.” However, the D.C. Circuit ruled that the two remaining provisions—regarding pre-election litigation of voter eligibility and the timing of the date of an election—are “‘internal house-keeping’ rules” that are exempt from notice and comment requirements.

House Republicans Seek Information From Federal Agencies. Representative Virginia Foxx (R-NC) is wasting no time exercising her authority as chair of the House Committee on Education and the Workforce. Late last week, Foxx resent to federal labor agencies a series of previous information requests that were answered while Republicans were in the House minority in 2021 and 2022. The requests include the following:

  • Letters to Secretary of Labor Martin Walsh regarding, among other issues, his involvement in various high-profile labor disputes; documents and communications relating to the development and implementation of the Occupational Safety and Health Administration’s (OSHA) 2021 vaccine-or-test emergency temporary standard; and information surrounding the February 2022 report offered by the Task Force on Worker Organizing and Empowerment, such as attendance lists, meeting minutes, rejected policy proposals, involvement of outside organizations.
  • A letter to National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo regarding her April 2022 memorandum relating to employer speech. Specifically, the letter asks for information about the possible involvement of outside organizations, other agencies, and the White House, in the drafting of the memo.
  • A letter to NLRB Chair Lauren McFerran inquiring about potential conflicts of interest that Member Gwynne Wilcox and Member David Prouty may have regarding the Board’s joint employer policy.

The Buzz suspects that these letters are just the first examples of what will be at least two years of aggressive agency oversight by the committee.

DHS Announces Deferred Action for Workers Involved in Labor Investigations. Late last week, the U.S. Department of Homeland Security (DHS) announced a new streamlined and expedited process for undocumented workers seeking deferred action as a result of their cooperation in investigations into potential violations of labor laws. The new policy further implements provisions of DHS’s October 2021 memorandum, “Worksite Enforcement: The Strategy to Protect the American Labor Market, the Conditions of the American Worksite, and the Dignity of the Individual.” According to the announcement, DHS will “provid[e] new guidance to labor agencies regarding processes to seek deferred action for certain workers” and will create a “single intake point for deferred action requests from noncitizen workers.” As such, “[t]he centralized intake process will allow DHS to efficiently review these time-sensitive requests, provide additional security to eligible workers on a case-by-case basis, and more robustly support the mission of labor agencies.”

OFCCP Proposes Changes to Complaint Intake Process. This week, the Office of Federal Contract Compliance Programs (OFCCP) proposed changes to its complaint intake process. OFCCP is proposing to add a preliminary step to evaluate the timeliness of allegations, whether it has jurisdiction over a matter, and how the matter should proceed. If OFCCP determines that an investigation is warranted, it will direct the complainant to fill out a more detailed form. According to the proposal, this two-step procedure “will improve the efficiency of [OFCCP’s] complaint intake process.” Comments are due by March 20, 2023.

Days of Hayes. President Rutherford Birchard Hayes passed away this week (January 17) in 1893. Hayes, the nineteenth president, was a former congressman and three-time governor of Ohio before he ran for president in 1876. His election against Democrat Samuel Tilden, the governor of New York, was mired in controversy and allegations of voter intimidation, resulting in disputed Electoral College votes. This led to the creation of an electoral commission, which eventually swung the Electoral College votes to Hayes by a margin of 185–184. The process earned Hayes the nickname “Rutherfraud” from Democrats. While Hayes hasn’t been the subject of popular movies or Broadway shows, he was a very interesting president:

  • Although twelve presidents who served before him were lawyers, Hayes was the first president to graduate from law school.
  • At almost forty years old, with no previous military experience, Hayes volunteered to fight for the Union during the Civil War. He was wounded several times, and served in the same infantry unit as fellow future president, William McKinley.
  • In 1879, Hayes signed the “Lockwood Bill,” which permitted women to practice law in federal court.
  • Hayes was the first president to make a trip to the West Coast and the first president to have both a telephone and a typewriter in the White House.

Hayes is responsible for the first Easter Egg Roll on the White House lawn, a tradition that will celebrate its 145th anniversary in just a few weeks.

Article By James J. Plunkett of Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

For more labor and employment legal news, click here to visit the National Law Review.

© 2023, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

NLRB Unleashes New Damages Against Labor Law Violators

On Tuesday, December 13, 2022 to the National Labor Relations Board (NLRB”) issued a decision that that could have profound effect on employers in all industries, regardless if they have a union. In Thrryv, Inc., the NLRB ruled in a 3 to 2 decision that employers who have been found to have violated the National Labor Relations Act (“NLRA”) can be assessed “consequential damages.” in addition to the more traditional remedies of back pay and reinstatement.   If this case is upheld following a likely appeal, it will rock the employer community in the automotive industry and elsewhere.

The case arises from a unionized marketing company that decided to have a layoff. In the course of negotiating with the company over the layoff, the union representing the employees made various requests for information from the company. The company never provided the requested data. The NLRB determined the company violated the NLRA by refusing to respond to the union’s request for information. The NLRB further found the company violated the act by implementing the layoff without engaging in collective bargaining with the union.

Normally, the NLRB would remedy a violation of this nature by ordering the company to engage in “make whole relief” for the affected workers. Typically, that would involve reinstatement and back pay for the period of time they were wrongfully laid-off. However, in this case, the NLRB boldly went where it has never gone before and ordered the company to compensate the employees for “all direct or foreseeable pecuniary harms suffered as a result of the unfair labor practice.” The NLRB went on to say this would be the new normal to remedy employer violations of the NLRA. Determining the full extent of direct or foreseeable pecuniary harms will invariably require additional hearings in which the parties present evidence. Under this new standard, the type of damages potentially available to affected workers could include such things as out-of-pocket, medical expenses, credit card debt, and any other cause the light off employees incurred while trying to make ends meet.

The two Republican members of the NLRB, Marvin Kaplan, and John Ring filed a dissenting opinion.  The dissent believes that the new remedy laid-out in the majority decision is too broad.  They contend this new standard could subject employers to almost limitless, speculative damages.  The dissenting opinion also notes that this new form of damages goes further than those available under Title VII of the Civil Rights Act of 1964.  They question how the NLRB could award such damages without specific statutory authority from Congress.

This case will almost certainly be appealed and it behooves all the employer community to closely follow its track and if the NLRB uses other cases to continue to try to implement these new form of damages.

Article By Mark J. Neuberger of Foley & Lardner LLP

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© 2022 Foley & Lardner LLP

Following the Recent Regulatory Trends, NLRB General Counsel Seeks to Limit Employers’ Use of Artificial Intelligence in the Workplace

On October 31, 2022, the General Counsel of the National Labor Relations Board (“NLRB” or “Board”) released Memorandum GC 23-02 urging the Board to interpret existing Board law to adopt a new legal framework to find electronic monitoring and automated or algorithmic management practices illegal if such monitoring or management practices interfere with protected activities under Section 7 of the National Labor Relations Act (“Act”).  The Board’s General Counsel stated in the Memorandum that “[c]lose, constant surveillance and management through electronic means threaten employees’ basic ability to exercise their rights,” and urged the Board to find that an employer violates the Act where the employer’s electronic monitoring and management practices, when viewed as a whole, would tend to “interfere with or prevent a reasonable employee from engaging in activity protected by the Act.”  Given that position, it appears that the General Counsel believes that nearly all electronic monitoring and automated or algorithmic management practices violate the Act.

Under the General Counsel’s proposed framework, an employer can avoid a violation of the Act if it can demonstrate that its business needs require the electronic monitoring and management practices and the practices “outweigh” employees’ Section 7 rights.  Not only must the employer be able to make this showing, it must also demonstrate that it provided the employees advance notice of the technology used, the reason for its use, and how it uses the information obtained.  An employer is relieved of this obligation, according to the General Counsel, only if it can show “special circumstances” justifying “covert use” of the technology.

In GC 23-02, the General Counsel signaled to NLRB Regions that they should scrutinize a broad range of “automated management” and “algorithmic management” technologies, defined as “a diverse set of technological tools and techniques to remotely manage workforces, relying on data collection and surveillance of workers to enable automated or semi-automated decision-making.”  Technologies subject to this scrutiny include those used during working time, such as wearable devices, security cameras, and radio-frequency identification badges that record workers’ conversations and track the movements of employees, GPS tracking devices and cameras that keep track of the productivity and location of employees who are out on the road, and computer software that takes screenshots, webcam photos, or audio recordings.  Also subject to scrutiny are technologies employers may use to track employees while they are off duty, such as employer-issued phones and wearable devices, and applications installed on employees’ personal devices.  Finally, the General Counsel noted that an employer that uses such technologies to hire employees, such as online cognitive assessments and reviews of social media, “pry into job applicants’ private lives.”  Thus, these pre-hire practices may also violate of the Act.  Technologies such as resume readers and other automated selection tools used during hiring and promotion may also be subject to GC 23-02.

GC 23-02 follows the wave of recent federal guidance from the White House, the Equal Employment Opportunity Commission, and local laws that attempt to define, regulate, and monitor the use of artificial intelligence in decision-making capacities.  Like these regulations and guidance, GC 23-02 raises more questions than it answers.  For example, GC 23-02 does not identify the standards for determining whether business needs “outweigh” employees’ Section 7 rights, or what constitutes “special circumstances” that an employer must show to avoid scrutiny under the Act.

While GC 23-02 sets forth the General Counsel’s proposal and thus is not legally binding, it does signal that there will likely be disputes in the future over artificial intelligence in the employment context.

Article By Steven M. Swirsky, Adam S. Forman, Nathaniel M. Glasser, Neresa A. De Biasi, and Ridhi D. Madia of Epstein Becker & Green, P.C.

For more labor law legal news, click here to visit the National Law Review.

©2022 Epstein Becker & Green, P.C. All rights reserved.