Labor and Employment Law Cocktail

NLRB Postpones Notice-Posting Requirement By Timothy M. McConville, Esq.

The National Labor Relations Board (“NLRB”) has issued a final rule requiring most private-sector employers to notify employees of their rights under the National Labor Relations Act by posting a notice.  The rule originally required posting by November 14, 2011, but on October 5, 2011, the NLRB delayed the deadline for posting until January 31, 2012.  Under the proposed rule, a failure to post the required notice will be an unfair labor practice and also may result in the Board extending the six-month statute of limitations for filing a charge involving other unfair labor practice allegations against the employer.

The NLRB’s final notice-posting rule also requires that the notice be in a foreign language if 20% or more of the employees speak the foreign language and do not speak English.  In addition, the Board’s rule provides that a knowing and willful violation of the notice-posting requirement may be evidence of unlawful motive on the part of the employer in other unfair labor practice cases against the employer.  The NLRB has advised employers that they may post their own notices regarding labor relations issues and employee rights next to the NLRB’s required notice. 

As the NLRB proceeds with its aggressive rulemaking activity, including proposed “quickie election” rules, employers will need to reevaluate strategies for maintaining a union-free environment.  Specifically, employers should consider proactive measures to prepare for a higher risk of organizing, including regular supervisor training and labor relations and communication to employees regarding how a union in the workplace can affect them.  Effective communications with employees on labor relations can be accomplished through meetings with employees, letters and flyers, and the employer’s own notice postings, all of which should be considered by employers.

 

Virginia Supreme Court Ruling Signals Shift in Non-Compete Law By Timothy M. McConville, Esq.

Acknowledging that the language of a non-compete provision was identical to a non-compete provision which it upheld in 1989, the Virginia Supreme Court nevertheless held last Friday that the same non-compete provision is now unenforceable.  The Court’s ruling in Home Paramount Pest Control Companies, Inc. v. Shaffer marks a significant shift in the law in Virginia relating to the enforceability of restrictive covenants against unfair competition.

The law governing the enforceability of non-competes has clearly been evolving in recent years in Virginia, but the Court’s decision in the Home Paramount case signals the change in the law more than any other case.  As a result, employers that use restrictive covenants in employment agreements should have their covenants reviewed to ensure that they will be enforceable going forward.

The case arose after Justin Shaffer resigned his employment from Home Paramount in July 2009 and thereafter became employed by a competitor.  Home Paramount sued both Shaffer and his new employer alleging, among other things, breach of contract by Shaffer and tortious interference with contract by the competitor.  After an evidentiary hearing, the Fairfax County Circuit Court dismissed the counts based on the restrictive covenant.  Home Paramount appealed to the Virginia Supreme Court.

In surveying the law since it upheld the pest control company’s restrictive covenant in a prior case in 1989, the Court found that it has consistently assessed the function element of restrictive covenants by determining whether the prohibited activity is of the same type as that actually engaged in by the former employer.  The Court observed that valid provisions prohibit an employee from engaging in activities that actually or potentially compete with the employee’s former employer.  The Court held that when a former employer seeks to prohibit its former employee from working for its competitors in any capacity, however, it must prove a legitimate business interest for doing so.  Home Paramount’s non-compete provision provided that for two years, a former employee could not “engage directly or indirectly or concern himself/herself in any manner whatsoever” in conducting broadly identified activities of a pest control business in the areas in which the employee worked. 

Non-Compete was Functionally Overbroad

 The Court held that the expansive functional scope of the non-compete provision rendered it unenforceable:  “On its face, it prohibits Shaffer from working for [Home Paramount’s competitor] or any other business in the pest control industry in any capacity.  It bars him from engaging even indirectly, or concerning himself in any manner whatsoever, in the pest control business, even as a passive stockholder of a publicly traded international conglomerate with a pest control subsidiary.”  The Court also held that “[b]ecause Home Paramount did not confine the function element of the Provision to those activities it actually engaged in, it bore the burden of proving a legitimate business interest in prohibiting Shaffer from engaging in all reasonably conceivable activities while employed by a competitor.”

 The majority opinion of the Court noted that while the law requires the weighing of the function element of a restrictive covenant together with its geographic scope and duration elements, the clear overbreadth of the function element in the Home Paramount agreement could not be saved by narrow tailoring of the geographic scope and duration.

One justice dissented from the majority opinion, emphasizing that the majority was effectively penalizing Home Paramount for its justified reliance upon the prior precedent in ordering its affairs after prevailing in the prior case.  In dissent, Justice Elizabeth McClanahan opined that the doctrine of stare decisis which requires courts to adhere to controlling precedent, required the Court to uphold the restrictive covenant as it did in 1989.  The dissent agreed with an earlier comment by Justice A. Christian Compton that overruling the Supreme Court’s decision “tends to bring adjudications of the Tribunal ‘into the same class as a restricted railroad ticket, good for this day and train only.’”

 

NLRB Aggressive in Election Aid to Big Labor By Timothy M. McConville, Esq.

With private-sector union membership rates at historic lows in 2010, organized labor is looking to agencies in the federal government to improve the union organizing environment.  The National Labor Relations Board, for its part, is complying.

The National Labor Relations Board (“NLRB” or the “Board”) has issued a proposed amendment to its rules governing the filing and processing of petitions relating to the representation of employees for purposes of collective bargaining.  If implemented, the proposed rule would dramatically shorten the time between the filing of a certification petition and the conduct of an NLRB secret ballot election. 

In the years 2002-2010, more than 90% of representation elections were conducted within 56 days of the filing of a petition.  During the same time, the median time between petition and election was 37-38 days.  In the context of federal government responsiveness, a 37-day turnaround is relatively quick.  Not so, according to organized labor and the three NLRB members who endorsed the rule changes, which would result in elections within 10 to 21 days from the filing of a petition.

One Board member, Brian E. Hayes, dissented from the Board’s proposal, citing the proposal’s destructive effect on employers’ and employees’ ability to communicate among themselves regarding the prospect of a union in the workplace.  “Make no mistake, the principal purpose for this radical manipulation of our election process is to minimize, or rather, to effectively eviscerate an employer’s legitimate opportunity to express its views about collection bargaining,” Hayes stated in his dissent.

The NLRB proposal, also known as the “quickie election” proposal, would eliminate pre-election evidentiary hearings and requests for review and defer decision on virtually all issues relating to appropriateness of units and voter eligibility now decided at the pre-election stage.  The amendments would also expand the personal information relating to employees which employers are required to disclose to unions in voter eligibility lists known as “Excelsior lists.”  Specifically, the proposed amendments would require that both telephone numbers and email addresses, if available, be included along with employees’ names and addresses.  In addition, the NLRB would require that the employer disclose the employee’s work location, shift, and classification.

The effect of the proposal would be significant.  In union organizing drives, organizers often conduct their activities underground and employers have no hint of organizing activity until the union files its petition at the NLRB.  Under the NLRB’s current process, the median campaign time of 37-38 days is a relatively short period which generally helps unions.  The NLRB’s election statistics show that, under current rules, unions won 60% of certification elections in the decade 2001-2010.  By shortening the time between petition and election to 10-21 days, the NLRB proposal will certainly increase organized labor’s win rate.

The NLRB’s rulemaking signals the Board’s most aggressive use ever of regulatory power to accomplish objectives advocated by organized labor, and human resource professionals should be prepared to see more union organizing activity.  The old adage that an ounce of prevention is better than a pound of cure will become more and more relevant.  Accordingly, employers should consider proactive measures to prepare for a higher risk of organizing, including regular supervisor training in labor relations and communication to employees regarding how a union in the workplace can affect them.  Effective communications with employees on labor relations can be accomplished through meetings with employees, letters and flyers, and the employer’s own notice postings, all of which should be considered by employers.