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Unions must now consider timing of union financed lawsuits after change in NLRB stance

August 30th, 2011  |  Ron Miller

It’s not unusual for groups like the National Right to Work Foundation to finance employee suits aimed at vindicating employee rights. In fact, such litigation has led to significant changes such as union dues objection rights — Beck rights. However, in a recent announcement, the NLRB held that a union engages in objectionable election conduct by filing a lawsuit on behalf of unit employees under federal or state wage and hour laws or similar employment law claims during the “critical period” between the date of the filing of a representation petition and the date of the election (Stericycle, Inc, 357 NLRB No 61, August 23, 2011).

Background. In September 2008, the Teamsters began an organizing campaign among a unit of the employer’s route drivers and dispatchers. During the organizing campaign, some drivers complained that they were not being paid for meal and rest periods and overtime work. The union introduced the employees to its outside counsel, and 16 employees signed an attorney-client representation agreement to address their concerns through litigation, with the union paying litigation expenses. On November 14, 2008, the union filed an election petition. On November 19, the attorneys filed an action against the employer for failure to pay wages to the drivers in accordance to federal and state law. After the union won the election, the employer filed objections asserting that the union impermissibly influenced the outcome of the election by filing and funding the lawsuit during the critical period prior to the election. A law judge overruled the objections, finding the union’s conduct was not objectionable under Novotel New York.

Protected activity. It is well settled that efforts by a union to educate its members about their employment rights and to initiate and fund litigation on behalf of its members enjoys both statutory and constitutional protection, the Board noted. These protections exist even while unions assist workers to obtain legal redress for employees who are not union members and when the union does not represent the employees in collective bargaining. Thus, the Board majority affirmed that union assistance to nonmember employees in the form of education about their rights, referral to competent counsel, and funding of legal action is protected under NLRA Sec. 7.

However, it is often only when a union is in the process of organizing and learns about employees’ working conditions that it is likely in a position to assist employees to vindicate their rights. The timing of such assistance raises a question because employers and unions are generally prohibited from granting benefits to employees during the critical period prior to a representation election. The Board has long found that the grant of a variety of benefits by employers and unions during the critical period impermissibly influences voter free choice and the outcome of an election. The funding of legal services by the union here related to the chief workplace concern expressed by employees that compelled them to consider unionization. The Board in Novotel found such benefits to be meaningfully distinguishable from a typical grant of extraneous inducements during the critical period that impermissibly influence employees’ votes.

New rule. However, the Board’s stance has been viewed by the courts, in Freund Baking v NLRB and Nestle Ice Cream v NLRB, as incompatible with the general prohibition against the conferral of benefits during the critical period. Thus, the Board concluded that the time had come to clarify this area of the law. Under the new rule, a union that files a wage and hour lawsuit on behalf of unit employees during the critical pre-election period engages in objectionable conduct because it could be viewed by employees as a gratuitous grant of benefits, even though it is related to the workplace concerns that led to them considering unionization.

NLRB Chairmen Wilma Liebman, in dissent, felt that the majority’s decision essentially caved in to pressure from the federal Courts of Appeal that have consistently rejected the Board’s approach to union-sponsored lawsuits. However, there was a ray of hope for unions according to NLRB Member Hayes, who joined the majority in overruling Novotel New York, but he disagreed with the new approach. Hayes argued that the majority’s decision essentially set out a road map for how unions can provide gratuitous benefits in the form of legal services to voting employees without running afoul of the NLRA. Moreover, the Board reiterated that the pursuit of legal redress prior to the filing of an election petition, after the election has taken place and during the critical period by parties other than a union seeking to represent employees in collective bargaining, was not objectionable.