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Board’s revised framework defining when employers can exclude contractor employees from their property is arbitrary

By Kathleen Kapusta, J.D.

Finding that the NLRB’s new framework, announced in Bexar County Performing Arts Center Foundation, for defining when a property owner can prohibit an onsite contractor’s employees from accessing the property to engage in labor organizing activity was arbitrary, the D.C. Circuit remanded to the Board for reconsideration. On remand, said the court, while the Board may decide whether to proceed with a version of the test it announced or to develop a new test altogether, the implementation of its approach would presumably be subject to judicial review. Judge Henderson filed a separate concurring opinion (Local 23, American Federation of Musicians v. NLRB, August 31, 2021, Srinivasan, S.).

The San Antonio Symphony leases performance space from the Tobin Center for Performing Arts, a facility owned and operated by Bexar Performing Arts Center Foundation. The Symphony uses the Tobin Center’s performance venues pursuant to an agreement that entitles it to 22 performance weeks at the Tobin Center each year. The Symphony musicians, who are guaranteed by the terms of their collective bargaining agreement, 30 paid weeks in an annual season, also spend eight weeks performing at other venues.

Recorded music. During the 2016-2017 season, the musicians faced a work shortage due to financial difficulties. As a result, they reduced their paid performance weeks to 37. In addition, the Ballet San Antonio, which also performed at the Tobin Center, decided to use recorded music rather than live Symphony music at some of its shows.

Attempted leafletting. To raise awareness and exert pressure on the Ballet to employ Symphony musicians in the future, the musicians’ union decided to engage in leafletting at some of the Ballet’s performances. When they gathered in the plaza and began handing out leaflets, the Tobin Center staff told them could not leaflet there and suggested they move to a public sidewalk across the street. The union members complied and the same sequence of events occurred at three Ballet performances.

ALJ finding. The union subsequently filed unfair labor practice charges against Bexar and an administrative law judge applied the Board’s then-governing framework set out in New York New York, LLC, which held that a property owner may exclude a contractor’s employees “who are regularly employed on the property” and who seek to engage in Section 7 organizational activity “only where the owner is able to demonstrate that their activity significantly interferes with his use of the property or where exclusion is justified by another legitimate business reason.” Pursuant to this standard, the ALJ found that the Symphony musicians worked regularly at the Tobin Center and that the Center had not shown significant interference with its use of the property or an alternative reason for exclusion. Thus, the ALJ held, Bexar violated NLRA Section 8(a)(1) in preventing the musicians from distributing flyers on Tobin Center property.

New standard. Reversing, a divided NLRB, in Bexar, overruled New York and announced a new standard that broadened the circumstances in which a property owner can prohibit an onsite contractor’s employees from accessing the property for labor organizing activity: A property owner may exclude from its property off-duty contractor employees seeking access to the property to engage in Section 7 activity unless (i) those employees work both regularly and exclusively on the property and (ii) the property owner fails to show that they have one or more reasonable nontrespassory alternative means to communicate their message.

Applying that standard, the Board found the musicians did not work regularly or exclusively at the Tobin Center and even assuming otherwise, they had alternative nontrespassory means to reach the public including the sidewalk across the street and traditional and social media. The union then petitioned for review of the Board’s order.

First step. On appeal, the D.C. Circuit first noted that the Board’s new test operates in two steps, both of which the union challenged as conceived and applied. The first step calls for assessing whether the contractor employees work “regularly” and “exclusively” on the property. If not, observed the court, they are treated as equivalent to nonemployee organizers and thus generally lack access rights.

Regularly. In Bexar, the Board stated that it “will consider contractor employees to work ‘regularly’ on the owner’s property only if the contractor regularly conducts business or performs services there.” In finding that this standard was not met, the Board relied on the Symphony’s 39-week seasonal schedule and the 22 weeks within that season it performed at the Tobin Center. It reasoned that for half the season, the Symphony was not present at the Tobin Center. Thus, it concluded, the musicians did not work regularly at the Center.

But the essential measure of regularity under this approach was the frequency of the work, which the court found could not be squared with comments the Board made in Bexar when, for example, it noted that “a contractor employee who stocks vending machines once a week at the property owner’s facility works ‘regularly’ on the property.” “Defining regularity by way of frequency—as the Board did in applying the test here—renders the Board’s decision internally inconsistent, and, as a result, arbitrary,” said the court.

Board’s briefing. Although the Board attempted to reconceptualize the regularity inquiry in its briefing on appeal, the court noted that it could not uphold an agency decision based on a post hoc justification.

Exclusively. Turning to the Board’s requirement that a contractor’s employees also work exclusively on the property, the court noted that the Board found the musicians did not work exclusively at the Tobin Center because they also performed at other venues for eight weeks of their annual season. But this, the court observed, looks only at a contractor employee’s work for a particular contractor. As a result, if a contractor employee works only a fraction of her workweek with a particular contractor but all of that work occurs on the property owner’s site, the employee satisfies the Board’s test. On the other hand, if the employee works virtually her entire workweek at the property owner’s property, yet occasionally works at a different site for the same contractor, the employee fails the Board’s test, the court explained, finding the implementation of this condition arbitrary as well.

Second step. In turning to the second step of the Board’s test, the court first noted that the test grants the property owner the right to exclude contractor employees if either of the two steps is unsatisfied. While the Board found the first step was unsatisfied and could have ended the inquiry there, it assumed arguendo that the musicians worked regularly and exclusively at the center and went on to find that the Tobin Center also prevailed under the second part of the test. It’s application of this step, said the court, was also arbitrary.

The second step, the court observed, is satisfied if “the property owner fails to show . . . one or more reasonable nontrespassory alternative means.” Further, the property owner bears the burden to show the existence of reasonable alternative means. Indeed, in Bexar, the Board emphasized “that where contractor employees work regularly and exclusively on the owner’s property and thus have potentially greater rights of trespassory access than nonemployee strangers, we place the burden on the property owner to show that the alternative means of communication is reasonable.”

No follow through. But the problem, said the court, was that the Board did not follow through and apply any burden shift in its decision. Specifically, while the Board observed that the musicians could have used newspapers, radio, television, and social media to convey their message, the Tobin Center bore no burden to prove this. This alternative was never mentioned by the Center at any point in the proceedings, said the court, and thus the union never had an occasion to respond with a competing assessment or contrary evidence. “To the contrary, the Board entirely relieved the Tobin Center of any burden whatsoever.”

As to the Board’s determination that the musicians could have leafletted across the street from the Center, it simply deemed the requisite showing to have been made, said the court, and did not require the Center to carry its burden to make the showing. And again, the union “had no opportunity to make an argument or develop the record as to whether the Tobin Center could prove that the distribution of leaflets across the street genuinely amounted to a reasonable alternative means.” Finding the Board’s application of its test to be arbitrary, the court remanded to the Board for further proceedings.

Concurrence. In a concurring opinion, Judge Henderson agreed that the Board misapplied its new framework to the dispute here. She contended, however, that the framework was neither arbitrary or capricious per se. “Here, had the Board adequately explained and applied the ‘exclusivity’ and ‘alternative means’ prongs of its new framework, I believe we would have been obliged to affirm its decision.”