Category: Labor Law

April 12, 2023

NLRB Continues to Process More Union Election Requests

In an April 7, 2023, press release, the National Labor Relations Board announced a slight increase in union election petitions for the first six months of its 2023 fiscal year. Digging deeper, however, the latest data may suggest more of an uptick in unionization than even the NLRB acknowledges. After stripping away the unprecedented number of Starbucks elections sought last year, the number of union election requests from October 2022 through March 2023 reveals a potentially much broader trend.

NLRB Press Releases

The NLRB’s recent press release focused more on unfair labor practice charge filings, which were up 16% during the first half of the current fiscal year. Unlike last year’s corresponding release, the reference to union election petitions was much more subdued. October – March FY ’23 saw 1,200 total representation cases filed, compared to 1,174 during the same period last year. That’s only a 2% increase.

In the first half of FY ’22, the NLRB reported a shocking 57% increase in representation case filings. As we discussed at the time, that statistic was skewed by two key factors: Starbucks and COVID-19. The NLRB’s numbers also aggregate all representation cases, not just those seeking to form a union in the first instance. Most notably, “representation cases” also include filings seeking to remove a union from a workplace. Such “decertification” filings were up 35% in the first half of FY ’22 compared to the corresponding months in FY ’21. (These “RD” cases are back down 13% in FY ’23.)

In some senses, it’s fair to say the NLRB oversold the increase in representation cases a year ago. Yes, it was dealing with more cases than in the previous year. But, Starbucks aside, that didn’t reflect an overall greater propensity to organize. Nonetheless, we may now be experiencing that reality.

Union Election Requests – RC Petitions

Overall, the National Labor Relations Board received 1,012 “RC” petitions seeking union representation between October 2022 and March 2023. That’s a 3.5% increase over the 977 petitions from the same period last year.

But, when you simply remove the Starbucks cases, the magnitude of the increase rises to 18%. The 941 non-Starbucks cases so far in FY ’23 exceed the total (840) for the first six months of FY ’20, which ended just as COVID-19 started to shut down the U.S. By contrast, the 798 non-Starbucks cases for the same period last year (FY ’22) did not. In other words, non-Starbucks RC cases in Oct.-Mar. FY ’22 were down 5% compared to the last corresponding pre-COVID period, but the Oct.-Mar. FY ’23 filings were up 12%.

Starbucks RC Petitions

With 354 union election petitions involving Starbucks in FY ’22, it’s no surprise RC filings for the coffee retailer are down in the first half of FY ’23. There are fewer stores left to unionize. And the rare few that voted against the union are not yet susceptible to a new petition due to the NLRB’s “election bar” rule. Nonetheless, there still were 71 union election requests filed involving Starbucks between October 2022 and March 2023.

The following graph shows the total number of RC petitions filed in the first half of the corresponding NLRB fiscal years since FY 2018.

State-Specific Data

Looking at the data more locally, on a state-by-state basis, we see a few trends that may be instructive despite the relatively smaller sample sizes. As usual, California and New York have experienced the most union election requests in the first half of FY ’23. New Jersey and Pennsylvania have experienced a notable decline, while filings are up in Alabama, D.C., Massachusetts, North Carolina, Oregon, and Texas.

For this analysis, we’re excluding RC filings at Starbucks stores. As part of a nationwide employer-specific movement, we assume they’re less instructive of the general union activity in a particular geographic region. All statistics below are for the first half of the fiscal year (October through March) mentioned.

Alabama

Alabama sees very little union activity compared to most states. But the 8 union representation petitions filed so far in FY ’23 are double what the state usually sees in the first half of a fiscal year. There were 4 such filings in both 2020 and 2022, though there were also 8 in 2019.

California

RC filings in California have increased 43% from FY ’22 to FY ’23 and 54% compared to FY ’20.

D.C.

Though not a state, D.C. does have its own NLRB case data, and the numbers are up. Note the following first six months RC petition filing numbers for the respective fiscal years:

2023: 32
2022: 20
2021: 15
2020: 17
2019: 11
2018: 19

That’s a 60% increase from last year, which had been the high point in recent history.

Georgia

Though still modest overall, the level of union election petitions in Georgia has reached a new recent high as well:

2023: 14
2022: 8
2021: 2
2020: 7
2019: 6
2018: 8

Illinois

Illinois is among the more unionized states, but the FY ’23 numbers are higher than usual. The 71 RC petitions this year represents a 27% increase over 56 such cases in FY ’22 and a 13% increase over FY ’20.

Massachusetts

Another relatively union-prevalent state, Massachusetts has likewise experienced a recent increase in unionization activity. Its 44 union election requests in FY ’23 are a 175% increase compared to last year and up nearly 70% from its pre-COVID average.

New Jersey

Along with Pennsylvania, New Jersey is one of the few states that have seen fewer RC petitions in FY ’23. As shown below, these filings are down 15% versus last year and 58% compared to FY ’20. As with New York, we see a significant, and potentially lingering, COVID impact:

2023: 22
2022: 26
2021: 19
2020: 52
2019: 47
2018: 48

New York

New York’s FY ’23 filings are up 12% over last year, but still trail their pre-COVID FY ’20 level:

2023: 106
2022: 95
2021: 84
2020: 133
2019: 86
2018: 100

North Carolina

North Carolina slots in with Alabama and Georgia as southern states with traditionally low levels of union organizing activity. But it too has seen more RC cases filed in FY ’23:

2023: 12
2022: 4
2021: 5
2020: 9
2019: 4
2018: 4

Oregon

It may not be surprising that Oregon seems to be an increasingly pro-labor environment:

2023: 38
2022: 30
2021: 16
2020: 23
2019: 18
2018: 18

Pennsylvania

Pennsylvania shares a border and other potentially relevant conditions with New Jersey. Union election petitions are down similarly in both states. Here’s the Pennsylvania data:

2023: 40
2022: 57
2021: 49
2020: 59
2019: 51
2018: 29

Texas

Given its geographic size and growing (and already large) population, it may be particularly interesting to see that more than twice as many union election petitions (34) have been filed in the first half of FY ’23 compared to the previous year (16). That’s also a nearly 50% increase over pre-COVID levels:

2023: 34
2022: 16
2021: 15
2020: 23
2019: 21
2018: 25

Union Representation Election Results

Historically, unions win about 70% of the representation elections held. So far, they’ve won 78% of the 427 elections decided on petitions filed in FY ’23. Of course, that means nearly 700 of those cases have not yet resulted in an election being decided. Nearly 200 (~20%) have been withdrawn or dismissed. Almost 400 more cases are still pending.

With most representation cases filed in the first half of FY ’22 resolved, unions have won 75% of the elections completed, as they have in the aggregate for all elections in cases filed since the beginning of FY ’22 to date. The union has won a much higher percentage (83%) in Starbucks elections. But the non-Starbucks rate of 73% is still relatively high. And the Starbucks-adjusted union win rate for FY ’23 remains 78%.

It’s possible that the remaining open cases will shift the union win percentage down, But it’s also possible that unions are becoming increasingly successful in representation elections. Coupled with the growing number of election petitions filed, an increased union win rate warrants employers’ attention.

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March 30, 2023

NLRB Deems Many Severance Agreements Unlawful

A February 21, 2023, decision by the National Labor Relations Board found it unlawful for employers to include some routine provisions in severance agreements. NLRB General Counsel Jennifer Abruzzo issued a memorandum dated March 22, 2023, elaborating on her broad interpretation of the ruling. Consequently, employers may now face federal labor law claims if they even offer a severance agreement to an employee that includes previously common restrictions.

McClaren Macomb Decision

In McClaren Macomb, 372 NLRB No. 58, the NLRB found that a hospital committed an unfair labor practice in violation of the National Labor Relations Act merely by offering a severance agreement to 11 permanently furloughed employees. The NLRB deemed the proposed agreements unlawful because they contained these non-disclosure and non-disparagement provisions:

“Confidentiality Agreement. The Employee acknowledges that the terms of this Agreement are confidential and agrees not to disclose them to any third person, other than spouse, or as necessary to professional advisors for the purposes of obtaining legal counsel or tax advice, or unless legally compelled to do so by a court or administrative agency of competent jurisdiction.”
“Non-Disclosure. At all times hereafter, the Employee promises and agrees not to disclose information, knowledge or materials of a confidential, privileged, or proprietary nature of which the Employee has or had knowledge of, or involvement with, by reason of the Employee’s employment. At all times, hereafter, the Employee agrees not to make statements to Employer’s employees or to the general public which could disparage or harm the image of Employer, its parent and affiliated entities and their officers, directors, employees, agents and representatives.

The severance agreement also identified penalties if the employee violated those provisions, including paying the employer’s attorneys fees.

The Board held that these provisions unlawfully interfere with employees’ exercise of rights protected by Section 7 of the NLRA. Section 7 rights include protection for employees engaging in concerted activity for their mutual aid and protection. The NLRB emphasized that just offering the agreement was unlawful even though the employees didn’t sign it and thus didn’t become bound by its terms.

General Counsel Memorandum 23-05

General Counsel Abruzzo has already established through earlier actions and memorandums that she has extremely pro-labor views of the NLRA. She demonstrated these sentiments again through this memorandum elaborating on the Board’s McClaren Macomb decision. Though not formally binding, the GC’s memo establishes her prosecutorial viewpoint and puts employers on notice that she will challenge a broad array of severance agreement provisions.

Here are summarized versions GC Abruzzo’s answers to the following questions:

Are severance agreements now banned?

No, as long as they’re limited to a release of the signing employee’s employment claims arising before the date of the agreement. But once seemingly any of the various other common components of severance agreements are added, her view shifts.

Do the circumstances surrounding the severance offer matter?

Probably not, as “an employer can have no legitimate interest in maintaining a facially unlawful provision in a severance agreement.”

What if the employee doesn’t sign the agreement?

As the Board held, it doesn’t matter. “[T]he proffer itself inherently coerces employees by conditioning severance benefits on the waiver of statutory rights such as the right to engage in future protected concerted activities and the right to file or assist in the investigation and prosecution of charges with the Board.”

What about severance agreements offered to supervisors?

Even these may be unlawful. Typically, the NLRA doesn’t protect “supervisors,” as defined by the law. However, the GC still has a (highly dubious) theory of how offering a severance agreement with prohibited language to a supervisor nonetheless constitutes an unfair labor practice.

How does this affect severance agreements before the February 2023 McClaren Macomb decision?

They could also be challenged. The GC even suggests she could prosecute back beyond the standard 6-month NLRA statute of limitations where the severance agreement provisions have ongoing effect. She notes that the NLRB has “settled cases involving severance agreements which had unlawfully broad terms that chilled the exercise of Section 7 rights by requiring the employer to notify its former employees that the overbroad provisions in their severance agreements no longer applied.” But she does not guarantee that would be the extent of the potential penalties.

Would the entire severance agreement be null and void due to just one overbroad provision?

It depends. The GC suggests the NLRB “generally make[s] decisions based solely on the unlawful provisions and would seek to have those voided out as opposed to the entire agreement, regardless of whether there is a severability clause or not”. She further offers that “while it may not cure a technical violation of an unlawful proffer, employers should consider remedying such violations now by contacting employees subject to severance agreements with overly broad provisions and advising them that the provisions are null and void and that they will not seek to enforce the agreements or pursue any penalties, monetary or otherwise, for breaches of those unlawful provisions.”

Why does the NLRA protect former employees in this situation?

Good question. Because the Board said so. But the GC adds, “In addition, former employees can play an important role in providing evidence to the NLRB and otherwise sharing information about the working conditions they experienced, in a way that constitutes both mutual aid and protection.”

Can the NLRB come between private contracting parties?

Yes, though the General Counsel doesn’t really answer that. Instead, she shifts the focus to the Board’s role “to address the inequality of bargaining power between employees, who do not possess full freedom of association or actual liberty of contract, and their employers . . . .”

What if employees request broad confidentiality or non-disparagement clauses?

They can ask, but the employer can’t provide it. Per the GC, “In that unlikely scenario, I would reiterate that the Board protects public rights that cannot be waived in a manner that prevents future exercise of those rights regardless of who initially raised the issue.” She also notes that unions could not waive these rights on behalf of employees.

What about other forms of employer-employee communications?

Pre-employment agreements or offer letters could be unlawful on the same theories as severance agreements.

Could any confidentiality provision in a severance agreement be lawful?

Yes, but not really. “Confidentiality clauses that are narrowly-tailored to restrict the dissemination of proprietary or trade secret information for a period of time based on legitimate business justifications may be considered lawful.” Such restrictions were likely already in place before the severance agreement, which may only be restating them for clarification/reiteration. The typical purpose of a confidentiality agreement in a severance agreement, especially if used to settle a pending claim, is to prevent public dissemination of information related to the employee’s potential claims against the employer. Any such restrictions would now likely violate McClaren Macomb.

Could any non-disparagement provision in a severance agreement be lawful?

Yes, but not really. “[A] narrowly-tailored, justified, non-disparagement provision that is limited to employee statements about the employer that meet the definition of defamation as being maliciously untrue, such that they are made with knowledge of their falsity or with reckless disregard for their truth or falsity, may be found lawful.” That is a non-defamation provision, not a non-disparagement provision. And state laws already protect against defamation, so there’s probably not much to be gained by putting such a clause in a severance agreement–especially at risk that the GC will somehow still find it’s overbroad.

Would a savings clause or disclaimer save overbroad provisions in a severance agreement?

Probably not. The General Counsel might be somewhat persuaded by a very extensive recitation of all possible rights protected by the NLRA and clear language that no such rights are being limited. However, there’s no guarantee that will help, and it’s unlikely many employers would be interested in taking that approach.

Does the GC view any other common severance agreement provisions as problematic?

Yes, of course. In particular, she points to non-compete clauses; no solicitation clauses; no-poaching clauses; broad liability releases and covenants not to sue; and cooperation requirements. There’s hope some of these might be acceptable in some situations, but employers proceed at their own risk.

Employer Response

What does all of this mean? Private companies in the U.S. have reason to fear that the NLRB will object to the severance agreements they’ve regularly used in the past. The same legal issues likely apply to settlement agreements used to resolve pending lawsuits and administrative proceedings.

If you use severance agreements with your separating employees, you should review them and reconsider your approach given these new pronouncements. However, that doesn’t necessarily mean every employer should adopt new agreements that don’t include confidentiality, non-disparagement, and other potentially challengeable provisions. NLRB rulings are not final, and there may be court challenges to the theories applied in McClaren Macomb and by the General Counsel. But it is critical to carefully weigh the risks and rewards of various approaches with the assistance of experienced labor counsel.

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February 7, 2023

January 2023 NLRB Union Election Filings

In January 2023, NLRB union election filings continued their recent climb. But you must look beyond the raw numbers to see this reality. As has been the case for the past year, union organizing at Starbucks stores still complicates the analysis.

January 2023 Union Election Petitions

Overall, the National Labor Relations Board received 150 “RC” petitions seeking union representation in January 2023. While that is much lower than the 169 filed last January, the decrease is all attributable to the maturation of the Starbucks unionization campaign.

In January 2022, there were 35 petitions seeking elections involving Starbucks stores. This year that number has declined to only 7–an unsurprising result, given the volume of stores that already had elections last year.

Setting aside the Starbucks petitions, the 143 other union elections sought this January represent a 6% increase over the 134 non-Starbucks election petitions in January 2022.

With or without the Starbucks cases, the January 2023 RC filings nearly match the 149 petitions from January 2020 and significantly exceed the 114 January filings in both 2018 and 2019, as shown in the graph below.

FY 2023 to Date

The NLRB’s current fiscal year began on October 1, 2022. In the first four months of FY ’23, there were 582 union election petitions filed that didn’t involve Starbucks–a 13.5% increase from the same “post-COVID” period in FY ’22 and a nearly 5% increase from the same pre-COVID period in FY ’20.

California and Texas Lead the Way

Most U.S. states see very few NLRB union election petitions filed in a single month. California and New York–large, relatively labor-friendly states–typically account for among the most RC petitions, as they did in January 2023. But it’s more notable that Texas continues to experience an upward trend in union elections.

California

With 15 non-Starbucks RC filings, California saw a 36% year-over-year increase from 11 petitions in January 2022. But 15 is well below the 23 January California RC petitions in 2020 and only back to the January average between 2018-2019.

Texas

Despite being the second-largest U.S. state by both land and population, Texas usually only sees a few RC petitions each month. Lately, that seems to be changing. Even excluding Starbucks, eight union election petitions were filed in Texas in January 2023. By comparison, only one RC petition was filed in the state in both January 2021 and January 2022, and 5 each in the month in 2019 and 2020.

With small sample sizes, it’s hard to reach dramatic conclusions about a potential trend toward increased union organizing in Texas. However, we can go back a little further for similar results. Between October and December 2022 (the first quarter of the NLRB’s 2023 fiscal year), 17 union election petitions (not involving Starbucks) were filed in Texas. Thus, there have been 25 such filings in the current NLRB fiscal year. During the same period in the previous fiscal years, there were only eight (FY ’22), nine (FY ’21), and 14 (FY ’20) union representation cases in Texas.

Georgia

Another southern state with an upward trend, Georgia had three non-Starbucks RC filings in January 2023. It had four total union election petitions filed in the previous five Januarys combined. There have now been 10 cases in Georgia this fiscal year, nearly as many as the 11 total union elections sought in Georgia between October and January over the previous three years.

Other Notable Gainers

Starbucks-adjusted January RC filings are also meaningfully up in:

D.C.: 6 in 2023 vs. 3 in 2022 and 6 total from 2018-2021
Illinois: 14 in 2023 vs. 11 in 2022 and no more than 9 between 2018-2021
Massachusetts: 6 in 2023 vs. 3 or 4 in each of the previous five years
Nevada: 7 in 2023 vs. 4 in 2022 and no more than 5 since 2018
North Carolina: 3 in 2023 vs. 3 total from 2018-2022
Washington: 9 in 2023 vs. 5 in 2022 and no more than 6 since 2018

Notably Down: New York & New Jersey

New York dropped from 16 to 12 January union election petitions compared to last year, matching the state’s five-year January low set in COVID-afflicted 2021.

New Jersey is another heavily unionized state that experienced a decrease in union election petitions in January 2023. Only five RC petitions were filed in the Garden State that month versus nine in both January 2022 and January 2020. (Like New York, New Jersey also experienced a large dropoff in such filings in January 2021 (only 1 case), presumably related to COVID-19 effects.)

FY 2023 Union Representation Election Results

Unions typically win about 70% of the representation elections held. Many petitions filed in Q1 FY 2023, including all of those filed in January, have not yet resulted in elections. Among those that have, unions have won about 76% of the time. Unions only won 71% of the elections held in cases filed in Q1 FY 2022. However, it may be too early to conclude that unions are winning elections more often since the data are incomplete.

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