United States: National Labor Relations Act and Minimum Wages Updates

The National Labor Relations Board ("the Board") recently added to the complexities associated with drafting an enforceable mandatory arbitration agreement. In its June 8, 2006, decision in U-Haul Co. of California, 347 NLRB No. 34 (2006), the Board held that an employer's mandatory arbitration policy violated the National Labor Relations Act ("NLRA") because it was drafted too broadly, failing to expressly exclude unfair labor practices charges.

In May 2003, U-Haul distributed to its workforce a mandatory arbitration policy providing that all disputes relating to or arising out of an employee's employment with U-Haul or the termination of that employment would be subject to mandatory arbitration. The arbitration policy specifically provided that it applied to:

. . .claims for wrongful termination of employment, breach of contract, fraud, employment discrimination, harassment or retaliation under the Americans With Disabilities Act, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964 and its amendments, the California Fair Employment and Housing Act or any other state or local anti-discrimination laws, tort claims, wage or overtime claims or other claims under the Labor Code, or any other legal or equitable claims and causes of action recognized by local, state or federal law or regulations.

Although nothing in the arbitration policy explicitly restricted employees from filing unfair labor practice charges with the NLRB, the Board found the breadth of the policy's language troubling. Specifically, the arbitration policy's reference to causes of action "recognized by . . . federal law or regulations," according to the Board, could reasonably be construed by employees to encompass, and require arbitration of, unfair labor practices charges. Because the arbitration policy could reasonably be read to preclude the filing of unfair labor practices with the Board, it was found to violate the NLRA.

The Board did not find persuasive U-Haul's argument that it had, contemporaneous with the adoption of the arbitration policy, distributed a memo to employees explaining that the policy was limited only to matters that might otherwise be adjudicated in a "court of law." The Board believed that the memo did little to clarify the breadth of the policy because even NLRB decisions, although administrative in nature, may be appealed to the United States Court of Appeals.

In invalidating U-Haul's policy, the Board was careful to note that it was not opining on the lawfulness of mandatory arbitration policies or agreements generally, but merely passing upon the specific language included in U-Haul's policy. Because U-Haul's arbitration policy was found to violate the NLRA, the company was ordered to: (1) cease and desist from requiring employees to execute the arbitration policy as written; (2) remove all signed arbitration policies from employee files and notify present and former employees of the unenforceability of the signed policy; and (3) post a remedial notice regarding the policy.

The Board's decision in this case has important ramifications for employers who require arbitration of workplace disputes. Employers should review their existing agreements with the assistance of counsel to ensure they comply with recent developments and are enforceable. In addition to other applicable requirements, any arbitration agreements should now explicitly exclude unfair labor practices charges employees may file with the NLRB.

The NLRA not only protects employees who complain about wages, hours or working conditions to their employer, but it also protects them if the complaints are made to third parties or the media, provided that the complaints: 1) are related to an ongoing labor dispute; and 2) are not "so disloyal, reckless, or maliciously untrue as to lose the Act's protection." In Endicott Interconnect Technologies, Inc. v. National Labor Relations Board, No. 05-1371 (D.C. Cir. July 14, 2006), the U.S. Court of Appeals for the District of Columbia appears to have narrowed the NLRA's safe harbor for employees, ruling that an employee's disparaging comments about his employer at a critical time for the company are not protected by federal labor law.

After acquiring a circuit board manufacturing facility in 2002, Endicott laid off approximately 200 employees in the acquired facility, including mid-level managers, engineers and support staff. Employee Richard White was quoted in a local newspaper as stating that the layoffs had left gaping holes in the business and that many highly skilled employees had been dismissed. White was warned by management that his comments had disparaged Endicott and was also warned that he would be discharged if he engaged in similar conduct in the future.

About two weeks later, White posted a message on a newspaper's Web site stating that Endicott was "being tanked by a group of people that have no good ability to manage it." White was discharged. The NLRB found that White's complaints and comments were part of a labor dispute about "employment conditions" resulting from the layoff and were, therefore, protected under the NLRA. It concluded that the comments had not been "so egregious" as to lose protection under Section 7 of the NLRA. The warning and the discharge were held to be unlawful and Endicott was ordered to reinstate White to his previous position and compensate him for the three years of salary and benefits lost since his discharge.

The unanimous decision of the appellate court, however, found that White's communications to the media constituted a "sharp, public, disparaging attack upon the quality of a company's product and its business policies" at a "critical time" for the company. The court concluded that the "disloyal, disparaging, and injurious" nature of White's statements "deprived him of the protection of that section, when read in the light and context of the purpose of the Act."

This decision affords employers greater latitude to discipline and terminate employees whose public statements attack the quality of a company's products or business policies.

Would you be worried if your nurse in a hospital setting wore a union button proclaiming "RNs Demand Safe Staffing"? Buttons with this message were distributed by the union representing 1,200 nurses and worn by on-duty nurses during the contract negotiations period with a Spokane, Washington, hospital. Acting after some nurse managers reported concern with the message presented to patients' families by the nurses' wearing such buttons, the hospital banned the wearing of the "Safe Staffing" button in all areas of the hospital campus open to patients or their families.

In a 2-1 decision, the NLRB determined that a reasonable person would construe the "Safe Staffing" button as a claim that the hospital's staffing levels were unsafe. The NLRB reiterated the long-held principle for healthcare facilities that restrictions on the wearing of union-related buttons by staff members are presumptively valid in immediate patient care areas, but are presumptively invalid outside such areas. A hospital or healthcare facility may rebut the presumption of invalidity by a showing of "special circumstances," i.e., that the restriction is necessary to avoid the disruption of healthcare operations or disturbance of patients.

Applying these principles, the NLRB found that the "RNs Demand Safe Staffing" button presented a message that would inherently disturb patients and send a clear message to patients that their care was in jeopardy. The NLRB found that the hospital took appropriate steps by banning the "Safe Staffing" button in hospital areas open to patients or their families, but not in all areas of the hospital. The hospital also continued its prior policy of not banning the wearing of other, more innocuous, union-related buttons in non-immediate patient care areas. The NLRB favorably considered the hospital's providing a written explanation of the reason for its ban of the "Safe Staffing" button in a memorandum distributed to the nurses. Thus, the NLRB concluded that the hospital's policy against wearing the "Safe Staffing" button was taken out of concern for its patients and their families and not out of an anti-union animus. The NLRB concluded that the hospital had rebutted the presumption of invalidity for bans on union-related buttons in non-immediate patient care areas and dismissed the union's unfair labor practices charge against the hospital.

Employers in the healthcare field should proceed cautiously when considering whether to ban union-related buttons or other clothing outside of immediate patient care areas. In affirming the "special circumstances" exception that allowed the hospital to ban the wearing of the union's button anywhere on the campus where patients or their families had access, the NLRB was persuaded that the hospital was acting for non-discriminatory reasons. The factors relied upon by the Board in reaching this determination — namely, the incendiary union message regarding patient safety, the employer's past history evidencing a lack of anti-union animus and the employer's provision of a written explanation to the union of the reasonable basis for its action — should be evaluated in any given situation before a healthcare employer bans union buttons in non-patient care areas.

Although U.S. Senate Democrats just blocked a bill that would have linked a minimum wage increase above the current $5.15 minimum with a permanent rollback of estate taxes, many states have minimum wages above the federal minimum and two have recently passed legislation to increase their minimum wages this summer.

Currently twenty states have minimum wage levels above $5.15 per hour. For example, New Jersey's minimum wage was raised to $6.15 an hour on October 1, 2005, and will increase to $7.15 on October 1, 2006. Delaware's minimum wage rate is currently $6.15 and will increase to $6.65 on January 1, 2007, followed by another $.50 increase to $7.15 on January 1, 2008. New York began a three-step process to increase its minimum wage on January 1, 2005, when the rate rose to $6.00 an hour. The minimum rate then increased to $6.75 on January 1, 2006. The rate will increase again, to $7.15 per hour, on January 1, 2007.

Governor Ed Rendell signed a bill on July 9, 2006, raising Pennsylvania's minimum wage from the federal standard of $5.15 per hour to $6.25 per hour on January 1, 2007, and to $7.15 an hour on July 1, 2007. The new law provides that employers with ten or fewer full-time employees will follow a delayed implementation schedule with an increase to $5.65 on January 1, 2007; $6.65 on July 1, 2007; and $7.15 on July 1, 2008. The law also provides that employers may pay a training wage of $5.15 an hour for 60 days to employees less than twenty years of age. The law makes it clear that other workers may not be displaced to allow hiring of training-wage workers.

In Massachusetts, where the minimum wage is currently $6.75 an hour, on July 31, 2006, the state legislature unanimously overrode Governor Mitt Romney's veto and enacted a bill providing for a two-part increase to the state's minimum wage over the next 17 months. The new law provides that effective January 1, 2007, the minimum wage will increase to $7.50 per hour and, effective January 1, 2008, it will rise to $8.00 per hour.

If you have any questions about this Alert or would like more information, please contact please contact Thomas G. Servodidio of our Employment Law Practice Group or the attorney in the firm with whom you are regularly in contact.

This article is for general information and does not include full legal analysis of the matters presented. It should not be construed or relied upon as legal advice or legal opinion on any specific facts or circumstances. The description of the results of any specific case or transaction contained herein does not mean or suggest that similar results can or could be obtained in any other matter. Each legal matter should be considered to be unique and subject to varying results. The invitation to contact the authors or attorneys in our firm is not a solicitation to provide professional services and should not be construed as a statement as to any availability to perform legal services in any jurisdiction in which such attorney is not permitted to practice.

Duane Morris LLP, among the 100 largest law firms in the United States, is a full-service firm of more than 600 lawyers. In addition to legal services, Duane Morris has independent affiliates employing approximately 100 professionals engaged in other disciplines. With offices in major markets, and as part of an international network of independent law firms, Duane Morris represents clients across the nation and around the world.