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The New Administration: A Big Win for Private Clubs

The result of the November 2016 elections brings a close to the Obama years. For the first time since the 109th Congress (2005-2006), there will be a Republican President and Republican majorities in both houses of Congress.

Obama Administration’s Negative Impact on Clubs

During the Obama years, many efforts to pass legislation affecting the workplace stalled. Among those efforts was the Employee Free Choice Act, which would have removed legal hurdles to the union organizing process, as well as ramping up remedies where employers were accused of unfair labor practices. Because legislation did not survive, the Obama Administration looked to other means to change the playing field of federal workplace rules.

Administrative regulations and Executive Orders became the tools of reform. Highly publicized regulations on a variety of issues took center stage in attempts to change the rules. The following are some of the workplace issues that directly affect private clubs and the status of the regulation or rule.

National Labor Relations Board (NLRB)

Union Elections. NLRB has instituted regulations to speed up the union election process while minimizing the opportunity for litigation over elections and bargaining units. Those regulations took effect in April 2015 and have sped up the union organizing process substantially. Elections requested by labor unions to organize a workforce used to be held in a period not to exceed 42 days. Now, elections are held in a period not to exceed 30 days, with many occurring in closer to 20 days and some in as few as 10 days from the date of an election petition. With minimal opportunity to litigate true issues, and minimal opportunity to inform employees of their rights in having or not having union representation, the ability to make an informed choice has arguably been compromised. These so-called “ambush election” rules remain in effect.

Micro Unions. NLRB has made decisions on a variety of issues including the scrapping of decades of precedent, such as with the Specialty Healthcare decision, which gives unions a right to organize a smaller subset of employees at a club rather than the whole workforce, despite the organizational structure and interaction in an employer’s business. These rulings, on a case-by-case basis, largely remain intact.

Joint Employer Status. NLRB has expanded joint employer concepts in case rulings involving Browning-Ferris and Miller & Anderson, which extend shared liabilities to multiple businesses as well as allow unions to jointly organize employees of multiple employers into a single unit, forcing multiple employers to the bargaining table. In other words, if you have business relationships, including staffing companies, that you do not intend to work with on a permanent basis, a unionization effort and joint employer finding may bind everyone involved and prevent changes to terms which have not been first bargained with the union representing employees.

Notice of RightsNLRB has proposed a rule to require employers across the United States to post a Notice of Rights. NLRB’s proposed Notice was approved by the Agency for posting, over objection of many employers and employer groups, because it failed to completely or neutrally identify the rights of employees under federal labor law. The Notice posting requirement was struck down in federal court.

Department of Labor (DOL)

Overtime Exemption Rule. DOL’s new overtime rule sought to increase the minimum threshold salary for exemption from overtime pay, potentially expanding the right to overtime pay for many workers, without modifying the duties test also required for an exemption under federal wage and hour law. A federal court recently, temporarily, struck down the regulations, but the Department of Labor has filed an appeal.

Persuader Rule. DOL has put in place regulations on reporting of activities and funds expended on attorneys as “persuaders” when employers seek advice on labor-management relations issues. These regulations sought deep intrusion into confidential attorney-client communications and work-product protections to force reporting of employers who sought counsel from labor attorneys merely to comply with labor law. Despite intrusive demands and vague instructions, employers and attorneys faced severe penalties for failing to file the required reports to the Department of Labor. The regulations were struck down by a federal court and are the subject of a permanent nationwide injunction.

Equal Employment Opportunity Commission (EEOC)

Wage Reporting RuleThe EEOC has instituted rules requiring expanded employer reporting of employee and staffing information on EEO-1 forms. Such expanded requirements await employers in 2018 and will no doubt trigger public scrutiny. This should be expected to include deep dives by potential plaintiffs and their attorneys into what will be readily available data that might be used to support claims of pay discrimination based upon classifications protected by federal employment law. Truly private clubs are exempt from this requirement, but clubs must be certain they are indeed truly private before forgoing this filing mandate.

Occupational Safety and Health Administration (OSHA)

OSHA Union Access to Workplaces. In April 2013 interpretation letter OSHA issued an interpretation letter allowing unions workplace access for safety inspections. Despite federal labor law allowing unions workplace access only under limited circumstances, including where they represent a unit of employees, the OSHA guidance should be expected to prompt labor unions to insist that they have rights to trespass into a variety of workplaces in order to monitor safety issues.

Independent Contractor (IC) Classification

Misclassification of Employees. Guidance and rulings of agencies including the NLRB, the DOL, and the Internal Revenue Service expand and hold an increasing number of employers accountable for misclassification of employees as independent contractors. The independent contractor issue is critical in many industries given the relationships and structure of business arrangements and the potential need to make wholesale changes to comply with new interpretations of the law. This issue is significant in the club industry with caddies, golf pros, masseuses and others. The potential risks include liability for wages, overtime, health insurance, retirement benefits, workers’ compensation and unfair labor practices enforceable through the National Labor Relations Board, where individuals who the NLRB considers to be misclassified employees may gain the rights of employees under federal labor law, which include rights to form, join and organize labor unions.

This point is so important that separate note is warranted that the NLRB has authorized prosecution of employers who, in NLRB’s view, have misclassified employees as independent contractors based solely on the nomenclature and designation of independent contractor status. In NLRB’s view, such status itself is a stripping of federally protected rights.

As federal standards increased, some states and municipalities raised the bar, with heightened state and local standards for minimum wages, benefits, sick leave, leaves of absence and repercussions for alleged “wage theft” and misclassification of employees as independent contractors.

The Business-Friendly Trump Administration

With a Republican administration on the forefront, employers anticipate a more business-friendly political climate. In terms of workplace law at the federal level, it is likely that clubs, businesses and trade associations will seek changes in rules considered unfriendly to business. Following are some of the potential areas for focus and reform.

Pro-Business NLRB

Rescind Current Rules and Regulations. Some of the Obama-era regulations considered harmful to business and jobs will likely be rescinded.

Pro-business Appointments. At the NLRB, clubs should expect appointments based upon historical practice. In that regard, we may expect to see a new Chair of the Board, who is expected to be a Republican appointed by President Trump. Two additional Republican Board members will be expected, to fill current vacancies. A Republican attorney will likely be appointed to the General Counsel position. Changes may follow in day-to-day operations at NLRB as well as in the direction taken in interpretation and enforcement of federal labor law.

Union Election Reform. The changes to union election rules may be a target for reform. Allowing a process in which employers’ position on who is a supervisor, who is eligible to vote, and allowing litigation over disputed issues, should be expected to return. Allowing employers and employees a reasonable time in which to learn about what union representation means, without a threatening or coercive message, is consistent with decades of NLRB law and court decisions as well as Constitutional free speech requirements.

Appointment of Regional Directors. These will be made to ensure local offices are accountable to Washington, D.C. and the policy directives of the new administration.

Other Potential Positive NLRB Impacts

Changes to policy will likely flow from new Board members and a new General Counsel on a variety of issues affecting clubs and other employers across the country. Such policy and issues may include the following:

Adjustment of Position on Remedial Measures. NLRB has remedial authority, which focuses on restoring status quo with no fines or penalties. In the Obama administration, NLRB has focused on expanding remedies against employers with less effort finding remedies where unions violate the law. NLRB may be asked to reassess its direction in this area and to pursue a more balanced enforcement, holding unions as well as employers accountable to meaningful make-whole remedies. This is especially vital where union activity interferes with the ability of employees to pursue gainful employment or otherwise defames or interferes with employers’ business relationships.

Pursuit of Section 10(j) and 10(l) Injunctive Relief. NLRB has the authority to sue employers and unions in federal court for injunctions where legal remedies through the standard NLRB process are viewed as inadequate. NLRB’s efforts to seek injunctions against employers have been aggressive and sometimes based on reasoning employers have considered highly flawed. Meanwhile, NLRB efforts to bring union misconduct to a halt have been rare, with the vast majority of charges against unions being closed for lack of merit, and truly disruptive and damaging behavior going unchecked. NLRB will likely be called upon to reassess its priorities in bringing litigation for injunctive relief.

Reversal of Case Precedent. The Obama NLRB has reversed many significant NLRB rulings. Over the years, NLRB has proven to move with political currents. It is expected that clubs and other employers will call upon NLRB to return to case precedent preceding the Obama Administration in a variety of areas, where there have been changes, unless a more favorable rule should be considered.

Joint Employer Standards. The NLRB may wish to reverse Browning-Ferris and Miller & Anderson rulings in order to return to earlier standards, in place for many years, and to emphasize the need for the consent of the employers involved to share liabilities and/or a bargaining relationship with a labor union.

Expansion of Protected Concerted Activity Protections. The Obama NLRB gave tremendous leeway to employees in communication and workplace-related activity. While promoting awareness of worker rights in an increasingly non-union working environment, the NLRB’s positions at times seemed inclined to invite workplace confrontation rather than a workplace where management, employees and (where unionized) a labor union could harmoniously work together in a lawful and respectful manner.

Critical Analysis of Employee Handbook Provisions. NLRB took scrutiny of employers’ workplace policies to a new level, while offering little or no clarity on solutions. Striking down many clubs’ and other employers’ workplace policies for alleged interference with the rights of employees to discuss wages, hours, working conditions and engage in mutual aid and protection, the case rulings and internal guidance memoranda from NLRB provided little clarity. At the same time, management’s ability to set expectations and clarify the roles of management and employees has been clouded. The next NLRB will likely be called upon to revisit rulings that have choked management’s authority to set workplace standards and have clouded employees’ understanding of what one expects in the workplace.

Email and Computer Use Policies. Reversing case precedent, NLRB opened up workplace email to use for any purpose with the Purple Communications ruling. Giving employers only a narrow basis to limit company computer and email use for non-company reasons, NLRB has provided employees across the country a right to use employer-supplied email addresses for personal reasons including union organizing and discussion of wages, hours and working conditions. It is expected that NLRB will be called upon to revisit and clarify this rule to prevent interference with the business of clubs and employers nationwide.

Social Media Use and Policies. It is true that social media has increasingly become a vehicle for communication about many subjects, including the workplace. The quick and casual manner in which information is shared has sometimes, unfortunately, prompted unrefined remarks about numerous subjects. Employees who have criticized employers, supervisors, working conditions, etc., have received broad protection by NLRB in their speech and against retaliation in discipline or discharge by employers. Clubs and other employers should expect NLRB to be called upon to revisit these guidelines.

At-Will Employment Policies. NLRB took issue during the Obama Administration with phrasing of at will employment policy language, although state law regulates such issues. If an NLRB Regional Office takes issue with such language in the Trump Administration, it is expected that the new NLRB appointees will review and limit NLRB’s intrusion upon issues of state law.

Civility and Insubordination Policies. The current NLRB has encouraged conflict in the workplace by allowing employees’ profanity-laced tirades against supervisors and defiant conduct. NLRB has declared policy language requiring employees to work harmoniously with each other to be unlawful. In a club environment, such precedent invites potentially damaging conduct into the workplace under the guise of federal law protection. The new NLRB appointees will likely be called upon to revisit such rulings in order to restore respect and civility between employers and employees.

Off-Duty Access Policies. Employees who stay on premises after their scheduled hours raise risks of generating wage and hour liability for their employer merely by their presence and interaction with other employees. There are safety related concerns in the event of an incident or injury. There is also the potential nuisance of union organizing activity by off-duty employees. NLRB has sought to extend protections to employees who stay on or enter premises while off-duty. This precedent will likely see requests for review.

Workplace Investigations. There is a significant body of law dealing with workplace investigations, some of which is unique to each state. Employers faced with crises, including workplace harassment investigations, need speed, accuracy, and confidentiality in which to complete a thorough and neutral investigation. In the interest of protecting federal law rights to discuss wages, hours, and working conditions, NLRB has injected itself into the issue, interfering with employers’ rights to demand confidentiality in investigations and in instructing employees during the course of reviewing workplace issues under investigation. It is expected that the NLRB will be called upon to revisit its rulings.

Arbitration Agreements. Although the U.S. Supreme Court has given broad blessing to arbitration agreements in unionized and non-union settings, the NLRB has taken issue with employers’ arbitration agreements in the non-union setting. NLRB rulings, such as in the D.R. Horton and Murphy Oil cases, suggest that NLRB can invalidate arbitration agreements where employees agree not to bring class or collective actions. The NLRB has ignored state and federal courts that have enforced the same and similar agreements, instead initiating unfair labor practice prosecutions and seeking to hold employers liable for employees’ fees and costs related to the arbitration agreements. The new NLRB will likely be asked to revisit these rulings, as U.S. Supreme Court litigation is likely the only recourse to address the mounting conflicts between the NLRB and the courts.

Remedies for Undocumented Employees. Although the U.S. Supreme Court’s Hoffman Plastics ruling years ago confirmed that employees not legally eligible to work in the United States may not be entitled to remedies for unfair labor practices, the NLRB has fought against application of the Hoffman Plastics standard. Guidance during the Obama Administration sought to prevent employers from raising the Hoffman Plastics defense. The new NLRB will likely be called upon to give greater respect to the U.S. Supreme Court’s directives.

Bargaining Duties. Employers have been held to bargaining duties with incumbent unions, even where a majority of employees voices opposition to union representation. The ability of an employer to withdraw recognition is under current policy challenge. The new NLRB will likely be called upon to reassess current policy.

Electronic Showing of Interest. While unions have historically organized, asking employees to sign hard-copy authorization cards in order to demonstrate 30 percent support to file an election petition, the current NLRB has embraced technology to help unions. Although there is little security in electronic signatures for these purposes, NLRB now allows unions to seek employee “signatures” online for purposes of developing the threshold 30 percent showing of interest. Without guarantees of authenticity and uncoerced “signature,” this guidance may warrant reexamination.

Unlawful Union Activity. The new NLRB will likely be called upon to revisit the Obama NLRB’s lack of interest in conduct disruptive to employers, including picketing, use of stationary banners and use of inflatable devices such as rats, all designed to generate negative public attention and pressure to advance unions’ interests against employers.

A Positive Outlook for Clubs

What federal agencies themselves do not address may be addressed on review of agency actions in federal courts. Many courts have vacancies and await appointment of judges. It is expected that judicial appointments and confirmation proceedings will also see significant attention in the new administration.

What is not addressed by agencies or the court system, may be addressed by Congress in the federal budget process. In essence, if Congress and the president do not approve of the work being done by an agency, they may oppose having to pay for it.

Clubs and other employers expect a fresh look at workplace rules in the new administration. The voices of clubs, businesses and trade associations may receive more attention. Those who speak out and advocate change should remember it is important not only to identify issues and to advocate for change, but to take all appropriate action to comply with the current legal standards. As an advocate for these changes, NCA expects supporters of the current standards to vocally express opposition in the wake of hotly contested elections and to resist what they might claim are steps backward. However, NCA is prepared to explain the wide-ranging impact of proposed change and where everyone affected can benefit. Clubs and businesses are advised to stay tuned and to monitor developments at their clubs as expected changes emerge.

Thomas Lenz, Esq., is a partner at Atkinson, Andelson, Loya, Ruud & Romo where he heads the firm’s traditional labor practice, working with employers in all major industries across California and the West. He is an NCA director and serves on the Government Relations Committee. He can be reached at [email protected] or 626-583-8600. Jonathan Judge, Esq., is a partner at the firm.