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Monthly Archives: August 2014

Private employer’s use of comp time in lieu of overtime unlawful

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Employees of a private housing development were granted summary judgment on their claim that their employer unlawfully provided compensatory time off in lieu of overtime wages. However, a federal district court in New York denied their motion for summary judgment with respect to their claim that the employer failed to incorporate a nighttime wage differential in their base pay when calculating overtime wages. In a related action, the employees were granted certification of a Rule 23 class action for three subclasses alleging that the employer violated the minimum wage and overtime provisions of the New York Labor Law (NYLL) (Ramirez v Riverbay Corp, August 1, 2014, Koeltl, J). Hourly employees of a housing development alleged that their employer violated the overtime provisions of the FLSA and NYLL. Specifically, they alleged the employer unlawfully provided compensatory time off in lieu of overtime wages and failed to incorporate a nighttime wage differential in their base pay in calculating overtime wages. Additionally, the employees alleged that the employer’s policies were used to impermissibly reduce their compensation by undercounting the hours they worked. It was alleged that the employer would round down on-the-clock time when an employee was more than three minutes late, and that they were asked to perform off-the-clock work before or after their shifts were scheduled to begin. The employees were employed in various positions, including peace officer, bookkeeper, secretary, dispatcher, customer service representative, among others. A number of the employees were union members whose employment was governed by the terms of various collective bargaining agreements. Employer status. As an initial matter, the court addressed a motion to dismiss by a corporate officer and individual defendant who asserted that the employees failed to adequately allege that he was an “employer” under the FLSA and NYLL, individually liable for the alleged violations. The Second Circuit has established a four-factor test to determine the “economic reality” of an employment relationship: “whether the alleged employer (1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.” The officer served as the director of finance and head of the employer’s payroll department. According to the employees, he had the power to control the employer’s wage policies, employee work schedules, and employees’ rate of pay,” and that he “plays a leading role in developing and modifying payroll practices and policies for RiverBay and its employees.” The court found these allegations sufficient to establish that the officer controlled the employer’s actual operations in a manner that related to the employees’ employment. Importantly, the officer’s involvement in the implementation of one of the allegedly unlawful timekeeping systems, and in the approval of compensatory time linked his control of the employer’s operations directly to the circumstances that gave rise to the employees’ various claims. Thus, the court concluded that he satisfied the definition of “employer” under the FLSA for purposes of individual liability, and denied his motion to dismiss. LMRA preemption. Next, the court had no difficulty in disposing of the employer’s contention that the employees’ comp time and nighttime differential claims were preempted under Sec. 301 of the LMRA. Section 301 preempts state-law claims that require interpretation of an underlying CBA. Similarly, it precludes claims under the FLSA that involve interpretation of a CBA. However, the employees nighttime differential claims were not precluded by Sec. 301 because they invoked statutory rights that were independent of the rights conferred on the parties by the CBAs. Although it was undisputed that the shift differential was called for in the CBA, the employees did not allege that the CBAs were breached. Rather, they asserted that the shift differential triggered their right to additional overtime compensation under the FLSA and NYLL. The employer’s assertion that the employee’s comp time claims were not preempted by Sec. 301 failed for substantially the same reasons. Comp time claims. Three of the four employees were granted their motion for summary judgment with respect to liability for their comp time claims. The employer did not dispute that it had a policy of paying comp time in lieu of cash for certain overtime hours, nor did it dispute that it is unlawful to pay comp time in lieu of cash to a private-sector employee for time worked in excess of 40 hours in a given week. Instead, it argued that the record did not support an inference that any of the employees received comp time in weeks in which they worked more than 40 hours. Section 207(o) of the FLSA permits states and their political subdivisions under certain circumstances to compensate their employees for time worked in excess of 40 hours in a given week by paying them compensatory time at a rate of one and one half hours for every hour worked. By contrast, the substitution of comp time for cash wages by private-sector employers is not expressly authorized, and courts have generally concluded that it is therefore not permitted. Here, two of the employees submitted weekly pay records indicating that they were provided comp time for hours in excess of 40 in at least one workweek. Thus, the court concluded that no other reasonable inference could be drawn but that they were provided comp time in lieu of cash overtime for time worked in excess of 40 hours in a given week. Such time constituted uncompensated overtime under the law, so that these employees were entitled to summary judgment as to liability on their comp time claims. “Cash out” payments. The court rejected the employer’s claim that the two employees were “cashed out” at the end of their tenure with it for all the comp-time hours that they accrued and that these “cash out” payments should cancel its liability for any uncompensated overtime hours. The employer’s reliance on cases applying the “banked method” for computing damages was misplaced, explained the court. The availability to the employer of an offset for cashed-out overtime hours was a question of remedy, not liability. Here, the employer’s cross-motion for summary judgment concerned liability. Moreover, the employer’s “cash out” payments would not apply to an employee who remained employed by the employer. With respect to a third employee, payroll records showed only the aggregate comp time she accrued. As a result, there was no direct support in the record for her assertion that “[w]hen [she] worked in excess of forty hours in a week, [she] received compensatory time off in lieu of overtime pay from Defendants.” Thus, there was a genuine issue of fact as to whether this comp time was accrued in weeks in which the employee worked in excess of 40 hours. Accordingly, the employee’s motion for summary judgment on her comp time claim was denied. Nighttime differential. Both parties were denied their cross-motions for summary judgment with respect to the nighttime wage differential. When calculating an employee’s “regular rate” of pay, an employer must generally include “all remuneration for employment,” subject to certain exceptions. An employee’s regular rate of pay includes shift differentials. Here, the employer did not dispute that the failure to include nighttime differential pay in an employee’s “regular rate” of pay for overtime purposes violates state and federal law. Instead, it argued that there was nothing in the employees’ submissions to establish that they earned nighttime differential pay in the weeks in which they worked more than 40 hours. The court found the employer’s argument meritless. With respect to one employee, none of the payroll records showed that she received a nighttime pay differential during any week within the FLSA limitations period in which she worked 40 hours. Thus, the principal basis for awarding summary judgment would be her own conclusory affirmation that she satisfied the legal standard. Records showed that she earned a substantial amount of nighttime differential pay; however, given the absence of weekly pay records supporting her claim that she received such differential during at least one week within the limitations period, summary judgment was not appropriate on her FLSA claim. NYLL claim. By contrast, with respect to her nighttime differential claim under the NYLL, the employee was situated identically to the four other named plaintiffs and their uncontested affirmation showed that she worked more than 40 hours and received nighttime differential pay in at least one week within the six-year limitations period under the NYLL. Standing alone, this would be a proper basis for summary judgment in the employee’s favor with respect to liability on her NYLL claim.
By Ronald Miller, J.D.

Kellogg ordered to end lockout over its bid to use more “casual” workers

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Cereal maker Kellogg has been enjoined from forcing an impasse in bargaining over nonmandatory bargaining issues and locking out employees at its Memphis plant. In this instance, a federal district court in Tennessee granted an NLRB regional director’s request for an injunction and determined that it was just and proper to end the lockout and prohibit Kellogg from forcing impasse over terms in the parties’ master agreement. Moreover, it concluded that the posting and monitoring requirements would help ensure that the Board’s remedial powers were not undermined by a failure to adhere to the requirements of the order (McKinney v Kellogg Co, July 30, 2014, Mays, S, Jr). Kellogg and the Bakery Workers union are parties to a master labor agreement covering four Kellogg plants, effective until October 2015. An additional supplemental agreement applying only to Kellogg’s Memphis plant expired in October 2013. When the parties failed to agree on a new supplemental agreement before the existing agreement expired, Kellogg locked out the employees. In bargaining on the supplemental agreement, Kellogg told the union that the Memphis plant needed to cut costs significantly to remain competitive within the company’s manufacturing network. To curb costs, Kellogg wanted to change the “concept” of “casual employees” and greatly expand their role at the Memphis plant. Casual employees. The master agreement provided that casual employees must make $6.00 an hour less than regular employees, but it did not define the scope of their employment or provide for benefits. The supplemental agreement provided that casual employees were employed “to provide regular employees with relief from extended work schedules.” There was no provision altering casual employees’ pay or providing them benefits. Among other restrictions, casual employees were limited to 30 percent of the total number of regular employees. Kellogg proposed that there be no cap on casuals and no limits on their work within the Memphis plant. The “only distinction going forward between a regular and a casual employee” would be their wages and benefits. The union balked at Kellogg’s proposed concept for casuals, and the parties were unable to make progress thereafter. Kellogg conceded that under its proposal, a regular employee could be laid off for business reasons and brought back as a casual employee. Subsequently, Kellogg provided the union with its “last/best offer,” informing the union that it would lock out the employees if the union did not agree within a week. Kellogg’s offer was consistent with its demand for changes in the restrictions on casual employees. According to the regional director, Kellogg’s last/best offer would alter the master agreement. Historically, the parties bargained for changes to wages and benefits for new hires as part of the master agreement. After the union rejected Kellogg’s last/best offer, the employer made good on its threat and locked out the employees, causing them to lose their pay and insurance benefits. The regional director requested a temporary injunction under Sec. 10(j) pending the NLRB’s resolution of the underlying unfair labor practice proceedings. Bargaining to impasse. The parties agreed that forcing impasse over terms settled in the master agreement would violate the Act; however, they disagreed about whether Kellogg’s proposals for a new supplemental agreement would alter the master agreement. Here, Kellogg argued that because the master agreement did not define a casual employee, it was free to negotiate changes to the casual employee program without violating the master agreement. However, the regional director argued that Kellogg’s insistence on changes to the terms of casual employment would alter the terms of employment of new regular employees, a modification of the master agreement. Parties are not required to bargain over nonmandatory subjects. “A party who insists upon a nonmandatory subject to impasse or as a precondition to bargaining violates Section 8(a)(5) of the Act.” Imposing a lockout over nonmandatory terms is unlawfully coercive and “discriminate[s] against the employees for their participation in protected collective bargaining activity.” Good-faith bargaining. Here, the court concluded that there was reasonable cause to believe that Kellogg engaged in unfair labor practices. The regional director’s legal theory was that Kellogg’s proposed terms on casual employees were contrary to and would modify terms in the master agreement. Thus, Kellogg’s terms would be an unlawful basis on which to force impasse and impose a lockout. Significant evidence supported the regional director’s theory. The master agreement governed the wages of new regular employees and set their pay schedule, and the totality of Kellogg’s proposal would have resulted in changes to those wage rates. Kellogg’s proposal would have made casuals the same as regulars except for casuals’ pay and benefits, and would have removed any limit on the company’s ability to hire them. Under Kellogg’s proposal, it could lay off regular employees and bring them back as casuals. Moreover, it would never have to hire another regular employee. Thus, Kellogg effectively demanded changes to the wage rates of new or rehired regular employees. Because those rates were set in the master agreement, good-faith bargaining did not allow the employer to use creative semantics to force midterm changes in the wages of new and rehired regular employees in violation of the master agreement. The wage rates of new regular employees were not mandatory terms of bargaining, and Kellogg forced impasse and locked out its employees because of the union’s failure to negotiate and agree to Kellogg’s proposed modifications of those wage rates. Thus, there was a reasonable cause to believe that Kellogg had engaged in unfair labor practices. Just and proper element. The court next turned to the “just and proper” standard for issuing injunctive relief under Sec. 10(j). The court had to determine whether it was in the public interest to grant the injunction, so as to effectuate the policies of the NLRA or to fulfill the remedial function of the Board. An injunction is just and proper when it preserves the remedial power of the Board by returning the parties to the status that existed “before the charged unfair labor practices took place[.]” Here, the regional director requested an order directing Kellogg to cease: refusing to bargain in good faith by insisting to impasse on nonmandatory bargaining proposals; locking out bargaining unit employees; threatening to lock out the bargaining unit employees so as to frustrate its employees’ bargaining rights; and interfering with its employees’ Sec. 7 rights. Observing that the lockout had been ongoing for nine months and deprived employees of their pay and health insurance, and that the administrative process may continue for some time to come, the court concluded that to allow the lockout to continue would place significant hardship on employees. That would undermine the remedial powers of the Board. On the other hand, an injunction ends the lockout and compels Kellogg to negotiate in good faith, and would return the parties to their status prior to the lockout. As a result, the court determined that it was just and proper to grant the regional director’s requested relief.
By Ronald Miller, J.D.

EEOC gets what it wants in Dollar General background check suit discovery dispute

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Granting the EEOC’s motion to compel pre-2008 background screening data and information regarding Dollar General’s business necessity for its criminal background screenings, a federal district court in Illinois found that since the EEOC was alleging a disparate impact on applicants beginning in 2004, pre-2008 data was not just relevant, it was necessary. Nor did it give credence to Dollar General’s argument that the EEOC had to first provide evidence of a disparate impact before the employer was required to provide information related to an affirmative defense it had consistently indicated it would assert. And the court wouldn’t bite at Dollar General’s claim that the EEOC had failed to engage in a good faith effort to resolve the discovery dispute, instead questioning Dollar General’s good faith (EEOC v Dolgencorp, LLC dba Dollar General, July 29, 2014, Wood, A).

Discovery dispute. EEOC challenged Dollar General’s hiring practices, alleging that, since at least 2004, the retailer’s practice of conducting criminal background checks on potential employees has had a disparate impact on African-American applicants. Dollar General objected to providing any information from prior to 2008 and also refused to provide information regarding Dollar General’s business necessity for performing criminal background checks on job applicants, claiming the EEOC first needed to provide evidence of disparate impact before it would have to provide such discovery on its affirmative defense. The parties squabbled, Dollar General requested a Local Rule 37.2 conference to further discuss the issues, and although they had a telephone conference, no agreement was reached.

Whose good faith? As is often the case, Dollar General’s first approach was to complain that the EEOC had failed to engage in a good faith effort to resolve the discovery dispute in violation of local rules. It said it had “tried to reach agreement” by offering to produce the post-2008 data, and it was “willing to negotiate further if the EEOC found a specific reason why the post-2008 data was insufficient ….” This time, however, the court wasn’t having it. Instead, the court said it did not see Dollar General’s offer as a good faith attempt: “In essence, Dollar General offered to produce the same post-2008 data that it had already agreed to provide in its initial responses to EEOC’s discovery requests.” Accordingly, the court would consider EEOC’s motion to compel.

Pre-2008. EEOC sought to compel Dollar General to produce conditional hire and background screen data for the period 2004 to 2008. There was no doubt that the pre-2008 data were relevant: The complaint alleged a disparate impact from Dollar General’s criminal background checks from 2004 to the present. More importantly, pre-2008 data were necessary for the EEOC to establish its affirmative case, because in disparate impact cases, a plaintiff “must offer statistical evidence of a kind and degree sufficient to show that the practice in question has caused the exclusion of applicants for jobs or promotions because of their membership in a protected group.” Dollar General’s argument that pre-2008 information was “unnecessary,” because the EEOC could use later data from which to extrapolate what it needed for the pre-2008 period, was simply not supported by the law, said the court.

Burden and expense. Although agreeing that Dollar General’s asserted costs to produce pre-2008 data — 160 man-hours and $16,000 — were significant, the court did not find them disproportionate under Rule 26(b)(2)(iii ) in light of the importance of the information to the resolution of the case. Pointing out that, as alleged in the EEOC’s complaint, Dollar General’s criminal background checks affected thousands of job seekers going back to 2004, the court remarked that “regardless of which party prevails, the case could serve the important purpose of clarifying the legality of an employment practice” that has affected many.

Business necessity. As for the EEOC’s request for information relating to Dollar General’s asserted business necessity for its criminal background checks, the employer claimed that at this stage of the litigation, the EEOC was not entitled to this information because the asserted business necessity is an affirmative defense. Finding this argument “untenable,” the court emphasized that discovery rules explicitly allow parties to obtain discovery that is “relevant to any party’s claim or defense.” Because Dollar General consistently indicated that it would assert a business necessity defense, the EEOC was entitled to discovery regarding that defense.

First show me the evidence. Dollar General also maintained that the EEOC must first provide evidence of disparate impact before it was entitled to discovery on business necessity issues, to which the EEOC countered that no plaintiff is required to prevail on a portion of its prima facie case before being permitted to obtain discovery related to its case in chief. And the court agreed, finding Dollar General’s approach “contrary to one of the most fundamental premises of discovery” — which places the burden on the objecting party to show why a particular discovery request was improper.” Thus, the court would not require the EEOC to assume the burden of proof at the discovery phase in order to take discovery regarding Dollar General’s affirmative defense.

Cost-shifting. Finally, the court was unwilling to shift the cost of Dollar General’s production to the EEOC, which would go against the general presumption that responding parties must bear the expense of complying with discovery requests. While cost-shifting for production of electronically stored information may be appropriate when the data is inaccessible, Dollar General did not argue that the requested information was inaccessible, and the court ordered that it bear its own cost of producing the discovery.
By Joy P. Waltemath, J.D.

NLRB signs off on private settlement resolving bargaining dispute, despite GC’s reluctance

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Sanctioning a private settlement agreement, the NLRB allowed a union to withdraw unfair labor practice charges contending that an employer refused to provide the union with information related to a grievance and to changes to employee health benefits. Despite the General Counsel’s reluctance to sanction the non-Board settlement and the law judge’s denial of their joint motion, the Board cited its longstanding policy of “encouraging the peaceful, nonlitigious resolution of labor disputes,” approved the private agreement, and dismissed the complaint. Member Hirozawa was part of the three-member panel, having denied a motion for recusal brought by the employer’s counsel (McKenzie-Willamette Regional Medical Center Associates, LLC, July 29, 2014). Sec. 8(a)(5) allegations. The union alleged that the employer delayed turning over relevant information that it had requested in connection with a grievance; the employer also refused to furnish information about changes to employees’ health insurance benefits. Two months after the Sec. 8(a)(5) charges went to a Board hearing, the parties filed a joint motion asking the law judge to approve withdrawal of the charges and dismiss the complaint because they had privately settled their dispute. Settlement. In exchange for the union’s withdrawal of charges, the employer agreed to respond to future information requests from the union in a “timely fashion.” It also vowed not to propose any changes to employees’ current health benefits until the parties began negotiations for a successor contract, or to implement any such changes until it reached an agreement with the union (or an impasse). The agreement did not, however, require the employer to turn over the previously requested health benefits information, or to post any remedial notice about its alleged Sec. 8(a)(5) violations. GC objections. The General Counsel opposed the motion, arguing that approval was unwarranted at this late stage of the litigation. He was also troubled by the absence of a Board-approved remedy or an enforcement mechanism in the agreement itself. A law judge denied the motion, finding that the non-Board settlement did not meet the requirements of Independent Stave Co. However, the Board disagreed, and dismissed the complaint. While the General Counsel’s opposition to a proposed settlement “is an important consideration weighing against approval,” and the settlement certainly came late in the litigation process (and thus offered no meaningful conservation of agency resources), countervailing factors outweighed these concerns. Factors favored settlement. The union had not opposed the employer’s request to approve the settlement, and there were no individual discriminates bound by its terms. Nor were there any allegations of fraud, coercion, or duress in reaching the settlement and — contrary to the General Counsel’s assertion—no record evidence that the employer had a history of violating the Act or had ever breached previous settlement agreements. Also, contrary to the law judge and the General Counsel, the Board found the settlement itself was reasonable. The union’s request for health benefits information had been made in response to the employer’s apparent intent to make such changes; the employer’s commitment not to do so “appears to be of substantial value to the Union and would appear to obviate the Union’s immediate need for that information.” Also, the employer affirmatively agreed to timely respond to future requests. And, although the settlement didn’t offer everything that a Board order might have provided (i.e, a cease and desist order and a required notice posting), the lack of a full remedy did not warrant rejecting the settlement here, the Board said. “It is well established that approval of settlements under Independent Stave does not require that the remedies provided by the settlement be coextensive with the remedies that the Board would provide if the General Counsel were to prevail on all of the complaint allegations.” Lack of remedial notice. The absence of a remedial notice was a tough issue, the Board noted, acknowledging that “[a]s a general matter, we do not endorse the settlement of alleged unfair labor practices without a notice to employees of the alleged violations and the actions taken to settle them.” But in this case, there were no alleged violations that resulted in employee discipline or discharges, or involving threats or coercion; the alleged violations had a limited impact on individual employees. As such, the Board saw no need to reject the settlement for lack of a notice-posting requirement. No enforcement mechanism. Finally, while the settlement lacked an express enforcement mechanism, neither did it purport to waive the union’s access to the Board. The union was free to file an unfair labor practice charge over any subsequent unreasonable delays or outright refusals to provide requested relevant information, the Board observed. Moreover, the agreement could be revoked — and the underlying proceedings resumed — upon future noncompliance, or in the face of new unfair labor practices. “With these safeguards in place, the lack of a separate enforcement mechanism does not preclude us from approving this particular settlement.” Recusal motion denied. Member Hirozawa rejected a recusal motion brought by counsel for the employer based on previous “acrimonious” litigation between the attorney and the Communications Workers of America (CWA), whom Hirozawa represented (and had filed counterclaims against counsel on the CWA’s behalf). Hirozawa rejected the contention that his role in that earlier case — some 17 years ago — would cause a reasonable person to question his impartiality here. Nor would a reasonable person conclude that his participation in the case would violate ethical guidelines.
By Lisa Milam-Perez, J.D.

Union’s hardball tactics in hotel dispute crossed the line into secondary boycott

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A union’s strategy of targeting organizations that had made arrangements to reserve large blocks of rooms or spaces with a hotel in the hopes that they would cancel their plans may have crossed the line into unlawful secondary boycott activity, ruled the Seventh Circuit. While a number of the incidents complained of by the hotel were insufficient to support allegations that the union coerced neutral targets or that it used coercion with the intent of forcing the neutral entities not to do business with the hotel, the appeals court found that in three instances, the union engaged in conduct that crossed the line from intent to persuade, to simply interfering with the businesses of the neutrals (520 South Michigan Avenue Associates, Ltd dba The Congress Plaza Hotel & Convention Center v UNITE Here Local 1, July 29, 2014, Tinder, J). Hotel strike. UNITE was engaged in a long-running strike with the Congress Hotel dating back to 2003. In 2008, the union escalated the strike by pursuing a more aggressive strategy. Specifically, the union began targeting organizations that had made arrangements to reserve large blocks of rooms or space at the hotel in the hopes that they would cancel their plans. The union would send delegations to the offices of potential hotel patrons and express the union’s disapproval of their plans to use the hotel. According to the hotel, instead of just using persuasion, the union coerced hotel customers into cancelling their agreements. Claiming that this conduct crossed the line into unlawful secondary labor activity, the hotel filed suit, seeking damages. The district court granted the union’s motion for summary judgment, reasoning its conduct was not coercive and that barring it would raise important free speech concerns. The hotel appealed. Finding that certain of the union’s actions were coercive, the Seventh Circuit reversed. Secondary targets. The hotel alleged that the union engaged in unfair labor practices by targeting secondary targets with the object of forcing them to cease doing business with the hotel. The central question, therefore, was whether the union’s conduct in this case was coercive, as in the sense of a boycott or picket, or persuasive, as in the case of handbilling outside of an establishment. Courts have observed that a defining characteristic of picketing is that it creates a physical barrier between a business and potential customers, thereby “keeping employees away from work or keeping customers away from the employer’s business.” By contrast, peaceable activity that does not create a barrier between customers and the business is typically permitted. The conduct alleged in this case was not satisfactorily described as either picketing or handbilling. On the one hand, the delegates often took written materials with them, including handbills and leaflets. Then again, some of the conduct the described by the hotel was similar to picketing. Moreover, the Seventh Circuit observed, many of the union’s activities were disturbingly similar to trespass and harassment. Trespass and harassment. The court first examined whether trespassing and harassment could count as coercive behavior under federal labor law. A union is permitted some initial entry onto private property so it may convey its views to the decision-makers of a secondary organization. But, even in the context of primary picketing, at some point the trespass becomes unprotected. The Supreme Court has made clear that federal labor law “does not require that [an] employer permit the use of its facilities for organization when other means are readily available.” The same is true of harassment, which relies on the interfering manner of communication, not its content, to accomplish its aims. Here, the union was alleged to have continued contacting targets even after they had made clear that they were not willing to receive delegations. Some of these contacts were physical invasions of private property. Moreover, allegedly frequent and repetitive phone calls and the threats to disrupt events also supported an inference that the union did not intend to persuade but to force neutrals to take sides in its dispute with the hotel. Harassment, if severe enough, could rise to the level of coercive behavior under Sec. 8(b) of the NLRA. As a consequence, the Seventh Circuit concluded that a union may be liable under Sec. 8(b)(4)(ii)(B) for unlawfully coercing a secondary to cease doing business with the struck employer if the union’s conduct amounts to harassment or involves repeated trespass, or both. While trespass and harassment of a secondary organization do not create a symbolic barrier between a business and its customers in the way a picket line does, such conduct may nevertheless significantly disrupt a business and pose a substantial threat to an organization’s finances. Another important point is that the conduct alleged by the hotel was generally targeted at employees, not customers passing by, as in handbilling. Here, the appeals court determined that the union’s decision to repeatedly target secondary employees indicated an intention not to persuade, but simply to interfere. Because the conduct here was concededly directed at secondary actors, it may potentially fall under the ambit of Sec. 8(b) if it is substantially similar to picketing and sufficiently coercive. Free speech concerns. The Supreme Court has cautioned the courts to be careful not to label expressive union conduct as coercive if such an interpretation could interfere or limit free speech. In this instance, it was undisputed that the union delegations all attempted to communicate a message on a topic of public concern. According to the hotel, some of the union’s conduct went too far, and rendered its activities unprotected and illegal. Agreeing, the Seventh Circuit concluded that prohibiting some of the union’s conduct under the federal labor laws would pose no greater obstacle to free speech than that posed by ordinary trespass and harassment laws. Even aside from the ban on secondary picketing, the appeal court found that some of the union’s alleged conduct, such as trespass and harassment, was not protected speech. The union’s harassing conduct could also not reasonably be deemed protected under the First Amendment. Important First Amendment interests were not threatened in this case because the hotel’s complaint was narrowly tailored to address the union’s conduct without reference to the content of its message. Another reason why some of the union’s alleged harassment merited less First Amendment protection was because the union transmitted its messages to an unwilling, captive audience. Finally, the Seventh Circuit concluded that Servette gave the union ample breathing room to express its views by permitting delegates to approach and talk to decision-makers of neutral businesses, even if they are initially uninvited. But once that decision-maker says that she is not interested, and that the union delegates are no longer welcome, the union’s free speech interests start to wane, and the property and privacy rights of the neutral target become dispositive. Thus, if the hotel could provide evidence permitting a reasonable inference that the union essentially committed trespass or harassed secondary organizations, or threatened to do the same, and thereby coerced them to cease their business with the hotel, summary judgment for the union was inappropriate in this case. Crossing the line. With respect to a number of incidents complained of by the hotel, the appeals court concluded that there was no evidence in the record that the union did anything other than attempt to peacefully persuade the neutrals. However, the court reversed summary judgment with respect to the union’s behavior toward three neutrals. In those instances, the hotel demonstrated that the union coerced the neutrals into abandoning their business with it by trespassing in offices and businesses, threatening to disrupt the neutrals’ businesses, and stalking a neutral. Such conduct crossed the line between communication intended to persuade, and was simply intended to interfere with the inner workings of three neutral entities. Accordingly, the Seventh Circuit reversed the district court’s decision in part, remanding for a trial on whether the union’s actions were coercive and, if so, whether and to what extent the hotel was damaged by this coercive conduct.
By Ronald Miller, J.D.