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NLRB: Unlawful to terminate unionized subcontract to bring work in-house to nonunion employees

By Ronald Miller, J.D.

CNN unlawfully replaced a unionized subcontractor in its Washington, D.C., and New York City bureaus with an in-house nonunion workforce out of antiunion animus, ruled a divided three-member panel of the NLRB. The Board agreed with an administrative law judge’s findings that CNN and Team Video Services (TVS) were joint employers and that CNN violated the NLRA by: (1) terminating the subcontracts with TVS out of antiunion animus and thereby causing the discharge of TVS employees; (2) failing to bargain with the union about the decision to terminate the subcontracts and the effects of that decision; (3) making coercive statements; (4) implementing a hiring plan designed to limit the number of discharged TVS employees it hired to staff its in-house operations in order to avoid a successorship bargaining obligation; and (5) as a successor, failing to recognize and bargain with the union and unilaterally changing employees’ terms and conditions of employment. Member Miscimarra filed a separate opinion dissenting in part (CNN America, Inc, September 15, 2014).

From the start of its operations, CNN decided that the operation of its electronic equipment at its DC and NYC bureaus would be performed by outside contractors. Over the years it awarded technical support contracts, known as Electronic News Gathering Service Agreements (ENGAs), to a series of companies. Employees at both the DC and NYC bureaus voted to unionize. Ultimately, TVS contracted with CNN to manage the DC and NYC bureaus under ENGAs that contained similar provisions.

Joint employer status. With respect to joint employer status, the NLRB will find that two separate entities are joint employers of a single workforce if the evidence shows that they “share or codetermine those matters governing the essential terms and conditions of employment.” Here, the Board determined that three of the factors outlined in its Laerco Transportation decision — hiring, supervision, and direction — as well as other factors on which it has relied to find a joint-employer relationship supported the ALJ’s finding that CNN and TVS were joint employers.

Through the extensive requirements CNN placed on TVS through the ENGAs, its decisive role in TVS’ collective-bargaining negotiations and its direct role in the assignment, direction, and supervision of the TVS employees, CNN exerted significant control over the essential terms and conditions of employment of the TVS employees. In addition, CNN was properly named as a joint employer here as it “played a direct and key role in [the] events alleged as unfair labor practices.”

Hiring and work hours. The ENGA provisions gave CNN considerable authority over hiring and work hours, and it exercised that authority. The ENGAs also gave CNN substantial control over the number of technicians hired by granting CNN “the right to require changes in TVS staffing levels and to negotiate with TVS to adjust the number of technicians” retained. TVS had to obtain CNN’s approval to hire additional technicians to cover for those who were absent due to sick or vacation leave. CNN also controlled the number of regular, part-time, and overtime hours of unit employees.

CNN wielded substantial control over TVS’ assignments of work to employees. At both bureaus, CNN maintained an assignment desk that CNN and TVS assignment personnel shared. In daily discussions, CNN decided the news stories to be covered and the TVS workforce required for those stories. With respect to technicians, CNN personnel often assigned the TVS employees their new assignments. At CNN’s various satellite studios, where no TVS supervisors were present, CNN producers gave TVS technicians their daily assignments. Similarly, CNN’s direction of the engineering technicians was also common.

Through its involvement in the collective bargaining negotiations between TVS and the union, CNN both possessed and exercised meaningful control over the wage rates of TVS employees. Additional factors included that CNN solicited TVS to bid on the ENGAs, CNN provided TVS technicians with email accounts on its system, CNN provided virtually all of the equipment that TVS employees used to perform their jobs, and TVS employees performed work that was at the core of CNN’s business and worked exclusively for CNN. Thus, CNN exercised significant control over the essential terms and conditions of the TVS technicians.

Contract termination. In mid-September 2003, CNN informed TVS that it was terminating the ENGAs at both DC and NYC bureaus and bringing the technical work in-house. Employees were advised that CNN would not be taking the union to its new location and would only hire 50 percent of bargaining unit employees in order to get rid of the union. Thereafter, CNN used a multistep “behavior interviewing” process to hire over 200 technicians for the bureaus. CNN used an elaborate Excel spreadsheet system to continuously track every applicant for every job category. While CNN hired only a portion of the former TVS employees who applied for the new positions, it hired all nonbargaining unit employees who applied for DC and NYC positions. CNN did not hire any of the most active union members, despite praising them as some of TVS’ most skilled technicians.

Having found that CNN and TVS were joint employers of the union-represented TVS technicians, the NLRB found that CNN violated Sec. 8(a)(5) by canceling the ENGA with TVS to avoid its obligation under the CBA, failing to bargain with the unions over the termination of the ENGAs and the effects thereof, and by making unilateral changes in the terms and conditions of employment when it operated with a new workforce. Further, the Board found that the General Counsel correctly argued that the ALJ had made all the necessary factual findings and conducted the proper 8(a)(3) legal analysis to establish that the decision to terminate the ENGA and discharge the TVS technicians was part of an unlawfully motivated plan to avoid the union and the obligations under the CBA, but failed to find the 8(a)(3) violation.

CNN as successor. The ALJ also determined that CNN was a successor employer. The test for determining successorship is (1) whether a majority of the new employer’s workforce in an appropriate unit is former employees of the predecessor employer; and (2) whether the new employer conducts essentially the same business as the predecessor employer. Continuity in the workforce is established if the predecessor employed a majority of the successor’s employees. In assembling its workforce, a successor “may not refuse to hire the predecessor’s employees solely because they were represented by a union or to avoid having to recognize the union.” If an employer is found to have discriminated in hiring, the Board assumes that, but for the unlawful discrimination, the successor would have hired the predecessor employees in their unit positions.

CNN was a successor employer because, on the day following the termination of the ENGAs, it continued the same business operations with employees who performed the same work, at the same locations, and using the same equipment as the TVS technicians. Accordingly, continuity of the business enterprise and the workforce was established. As a successor, CNN was obligated to recognize and bargain with the union. By failing to do so and implementing unilateral changes in terms and conditions of employment, CNN violated Sec. 8(a)(5).

Anti-union animus. Moreover, the Board found evidence of animus in this case was overwhelming, as was the evidence that CNN’s explanation for its conduct was pretextual. Here, the majority found that the ALJ correctly reasoned that CNN’s hiring managers inconsistent application of their ostensibly objective guidelines of “behavioral interviewing” evinced discriminatory motivation. As a result, CNN’s decision to terminate its arrangement with TVS and its staffing program were all part of a plan to replace a functioning union workforce with a nonunion workforce. The majority also concluded that CNN’s reasons for failing to hire the TVS technicians were all pretextual, and therefore it failed to establish that would not have hired the technicians absent union animus.

Partial dissent. Member Miscimarra argued that the majority failed to adequately address the complex business model set up by CNN in finding that it was a joint employer. As a result of this erroneous joint-employer finding, the majority erroneously evaluated CNN’s obligations under Sec. 8(a)(5) and (3). Unlike the majority, Miscimarra would not have found that CNN had a Sec. 8(a)(5) duty to notify the union and bargain over its decision to terminate the TVS contracting relationship. Similarly, the dissent argued that the record failed to prove CNN violated Sec. 8(a)(3) based on its decision to terminate the TVS relationship and bring that technical work in-house.