Labor Relations & Wages Hours Update
December 2012
Hot Topics in LABOR LAW REPORTS:
Regional office restructuring approved by Board, to take effect December 10
The NLRB has approved the formal restructuring of several regional offices, the agency announced on Tuesday, December 4. The restructuring will change the status of four regional offices to subregional offices and will reassign some subregional and resident offices to new regional offices. The number of NLRB regional offices will be reduced from 32 to 28, while the total number of field offices will be unchanged at 51.
The Board says its restructuring will establish a more rational field structure and adjust the agency’s presence to case-filing developments that have occurred over the years by more evenly distributing case intake among regions. The development of the NLRB’s electronic case management system (NxGen) has greatly facilitated the agency’s ability to proceed with these restructuring plans, according to the Board. All of the resulting regions “will be of a size and internal management structure that will optimize efficiency and economy,” the Board notes, “while preserving high quality investigations and litigation and resulting in an [a]gency that is best able to fulfill its mission in the future.”
The specific regional office changes are as follows:
· The Winston-Salem, NC office (Region 11) will become a subregion of the Atlanta regional office (Region 10). The Nashville, TN resident office, now part of Region 26, will report to Atlanta.
· The Memphis, TN office (Region 26) will become a subregion of the New Orleans regional office (Region 15). The Little Rock, AR resident office will also report to New Orleans.
· The Overland Park, KS office (Region 17) will become a subregion of the St. Louis regional office (Region 14).
· The Hartford, CT office (Region 34) will become a subregion of the Boston, MA regional office (Region 1).
The Peoria, IL subregional office will report to Indianapolis, IN (Region 25).
Board announces new subregional office heads
NLRB Chairman Mark Gaston Pearce and Acting General Counsel Lafe Solomon have announced the appointment of three new officers-in-charge of the Board’s recently announced new subregions. John Cotter has been named the officer-in-charge of the agency's newly-designated subregional office in Hartford, Connecticut (Subregion 34) where he will assist Jonathan Kreisberg, Director of the NLRB’s Region 1 in Boston, in enforcing the NLRA in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. Cotter began his NLRB career as a field examiner in the St. Louis Regional office and then transferred to the Hartford Regional Office in 1986. He was promoted to Supervisory Compliance Officer in 1992, Assistant to the Regional Director in 1997, and Deputy Regional Director in 2009.
The Board also announced that Jane North will be the officer-in-charge of the subregional office in Winston-Salem, North Carolina (Subregion 11) where she will assist Claude Harrell, Director of the NLRB’s Region 10 in Atlanta, in enforcing the NLRA in Georgia, North Carolina, and South Carolina, and in certain counties in Alabama, Kentucky, Tennessee, Virginia, and West Virginia. North began her NLRB career as a field attorney in the Winston-Salem office in 1988. She was promoted to Supervisory Field Attorney in 2000; Deputy Regional Attorney in 2002; Regional Attorney in 2009; and Deputy Regional Director in 2009.
Lastly, the Board announced that Naomi L. Stuart will be the officer-in-charge of the subregional office in Overland Park, Kansas (Subregion 17) where she will assist Daniel Hubbel, Director of the NLRB’s Region 14 in St. Louis, in enforcing the NLRA in Kansas and Oklahoma, and in certain counties in Missouri, Iowa, and Nebraska. Stuart began her NLRB career as an attorney in the Kansas City Regional Office. She was promoted to Supervisory Attorney in 2004, Deputy Regional Attorney in 2005, Regional Attorney in 2007, and Deputy Regional Director in 2007.
DC Circuit hears arguments on constitutionality of NLRB recess appointments
The Circuit Court of Appeals for the District of Columbia heard arguments yesterday on the constitutionality of three appointments made to the NLRB by President Barack Obama using his recess appointments. Reuters has reported that businesses and Senate Republicans argued that the president exceeded his authority by filling the vacancies while the Senate was out of town but potentially available to act on them.
On January 4, Obama appointed three members to the NLRB using his recess appointment powers, despite the fact that the Senate was in pro forma session. At the time, he argued that the Senate was not able to advise or consent to the nominations, as most Senators were home for the 2011 holidays.
According to the article, an attorney for the petitioners, Noel Francisco, argued that the Senate could have convened and that it is the Senate’s prerogative to determine when it is in session.
At the time, the Republican-controlled House had prevented the Senate from going into recess in order to block Obama from making the recess appointments.
Beth Brinkmann, who argued the case for the administration, said that ruling against the president would create a power “vacuum” during such period, noting that the Senate did not have a full complement of senators.
High Court agrees to hear arbitration case
The U.S. Supreme Court granted certiorari to Sutter v Oxford Health Plans, LLC (Dkt No 12-135) to answer the question: “Whether an arbitrator acts within his powers under the Federal Arbitration Act (as the Second and Third Circuits have held) or exceeds those powers (as the Fifth Circuit has held) by determining that parties affirmatively ‘agreed to authorize class arbitration,’ Stolt-Nielsen, 130 S.Ct. at 1776, based solely on their use of broad contractual language precluding litigation and requiring arbitration of any dispute arising under their contract.”
The Third Circuit ruled that an arbitrator did not exceed his powers by construing a broad arbitration agreement between a physician and a health care network to authorize class arbitration. The appeals court rejected the network’s contention that the Supreme Court’s decision in Stolt-Nielsen S.A. v AnimalFeeds International Corprequired it to vacate an award authorizing class arbitration.
In Stolt-Nielsen, the Supreme Court held that arbitrators may not infer the parties’ consent to class arbitration procedures solely from the fact of their agreement to arbitrate. The network contended that Stolt-Nielsen controlled, and compelled the conclusion that the arbitrator’s interpretation of the clause exceeded his powers. However, the Third Circuit rejected the network’s attempt to cast this case in the mold of Stolt-Nielsen. The Supreme Court did not establish a bright-line rule that class arbitration is allowed only under an arbitration agreement that incants “class arbitration” or otherwise expressly provides for aggregate procedures, the appeals court reasoned.
According to the network, because the arbitrator found the parties’ arbitration clause was silent on the issue of class arbitration, he imposed his own rule in derogation of Stolt-Nielsen based on his own conceptions of public policy. Although the arbitration clause did not refer to class arbitration, it was not “silent” in the way the agreement in Stolt-Nielsen was “silent.” Despite the parties’ dispute over whether or not they intended to authorize class arbitration, the arbitrator was not constrained to conclude that the parties did not intend to authorize class arbitration. Rather, the arbitrator’s decision to order class arbitration was within his authority so long as it stood on a contractual basis—and the network had conceded as much.
The petition for certiorari was filed on July 27, 2012. The petition was granted on December 7, 2012.
Labor department’s office of inspector general issues semiannual report to Congress
The DOL’s Office of Inspector General (OIG) has issued its Semiannual Report to Congress, detailing its major achievements over the six-month period ending September 30, 2012. The report also makes several legislative recommendations by the OIG, which conducts audits and evaluations in order to review the efficiency and utility of the Labor Department’s programs and operations. According to the report, during the most recent six-month period, it issued 357 indictments, secured 230 convictions, and obtained $141.5 million in monetary recovery.
The report also suggests that roughly $297 million in DOL funds could be more efficiently used. One recommendation focuses on the Occupational Safety and Health Administration (OSHA), which the OIG found may not be properly allocating its resources. The report criticized OSHA’s site-specific inspection targeting program, which the OIG said failed to inspect many high-risk workplaces.
In addition, the report found that the Labor Department’s Employee Benefit Security Administration’s (EBSA) has not been as effective as it could have been in protecting employee pension plans. The OIG found that EBSA failed to examine “millions in pension assets held in otherwise regulated entities” because it conducts audits of very limited scope.
The report recommended giving the DOL the authority to access state Unemployment Insurance and Social Security Administration wage records and employment information from the National Directory of New Hires in order to reduce overpayments in employee benefit programs. In addition, the report calls for the amendment of pension protection laws to increase EBSA’s authority to correct substandard benefit plan audits and to ensure that auditors with poor records do not perform additional plan audits. The report also calls for legislation repealing ERISA’s limited-scope audit exemption to allow independent public accountants who audit pension plans to render an opinion on the plans’ financial statements in accordance with professional auditing standards. In addition, the report recommends requiring that ERISA violations be directly reported to the DOL.
White House announces nominations to NMB
On Saturday, December 15, President Barack Obama announced two new nominations to the National Mediation Board (NMB.) Linda A. Puchala and Nicholas Christopher Geale and have been named as members of the NMB.
Puchala currently serves as a member, a position she has held since 2009. Puchala served as Chairman of the National Mediation Board from July 2011 to June 2012 and before that served as a Senior Mediator and Associate Director of Alternative Dispute Resolution Before her time at the NMB, Puchala served as the Staff Director of the Michigan State Employees Association from 1990 to 1999. From 1970 to 1986, she held various roles with the Association of Flight Attendants, including International President, Master Executive Council President, Local Council President, and Member of the Negotiating Committee.
Geale is the Director of Oversight and Investigations on the Senate Committee on Health, Education, Labor and Pensions for Ranking Member Michael B. Enzi, a position he has held since 2011. Geale served as Counsel to the Committee from 2009 to 2011. Previously, he worked at the Department of Labor as Counselor to the Deputy Secretary from 2007 to 2009 and as Attorney/Advisor to the Solicitor from 2006 to 2007. Geale was an Assistant General Counsel with the Washington Metropolitan Area Transit Authority from 2004 to 2006, and an Associate at Thelen Reid & Priest LLP from 2000 to 2004.
Government oversight and reform committee issues report blasting NLRB as “rogue agency”
Last week, the House Committee on Oversight and Government Reform released a staff report sharply critical of the decisions, rulemaking, and actions of the NLRB during the presidency of Barack Obama. The report, “President Obama’s Pro-Union Board: The NLRB’s Metamorphosis from Independent Regulator to Dysfunctional Union Advocate,” argues that the agency has a distinctly pro-union bias. The committee, headed by Representative Darrell Issa (R-Cal.) has been a fierce critic of the agency, and the most recent report certainly continues that trend, accusing the Board of overreaching in its regulatory actions and decision-making. It also contends that the 2012 recess appointments of members Sharon Block and Richard Griffin and former member Terence F. Flynn were not constitutional.
According to the report, the Board’s regulatory actions have far exceeded its authority under the NLRA. The reports notes that the notice posting rule, which would require employers to post a notice of their employees’ rights under the NLRA, has been found invalid by a federal district court. The report further notes that the Board’s reforms to its representation election procedures were also struck down, although that decision was largely based on the voting that led to the implementation of those reforms, not the reforms themselves. The agency has appealed both of these decisions.
In addition, the report attacks the Board’s decisions, especially the controversial Specialty Healthcare ruling, which allowed for the establishment of so-called micro-unions. The report alleged that the ruling “threatens to upset the delicate balance between the interests of employers and unions as practiced for 20 years.”
The report in and of itself may not be particularly noteworthy, but the underlying tension is. With the expiration of Member Hayes term and the possibility that federal courts may find that the recess appointments of Block and Griffin were unconstitutional, the Board once again faces the prospect of falling below the three-member quorum required under New Process Steel. If the antagonism displayed in the report is any indication, Congressional Republicans can be expected to do everything in their power to block future appointments to the Board. By the end of 2013, regardless of the litigation of the recess appointment issue, the Board will need new members to avoid falling below that threshold. If it does not, it will be unable to issue rulings or conduct rulemaking.
Hayes term expires; Board down to three members
On December 16, 2012, the term of National Labor Relations Board Member Brian Hayes expired, leaving the five-member Board with only three members, all Democrats. Chairman Mark Pearce and Members Sharon Block and Richard Griffin remain on the Board, although Block and Griffin are recess appointees, and the constitutionality of those appointments is currently being litigated in the federal appellate courts.
The expiration of Hayes’ term has assumed an added significance in the wake of the U.S. Supreme Court ruling in New Process Steel v NLRB, which held that the Board may only issue opinions and regulations when it has three members. Following that decision, hundreds of NLRB decisions were invalidated and sent back to the Board for reconsideration. Senate Republicans have made it clear that they are not interested in confirming new appointees to the Board, which has been the target of ire from Congressional Republicans for most of President Barack Obama’s time in office.