Tag: unions

NLRB Jurisdiction

NLRB Jurisdiction: Are We Covered?

The National Labor Relations Board (NLRB) is an independent federal agency that enforces the National Labor Relations Act (NLRA). The purpose of the Act is “to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy”. The NLRB has broad jurisdiction over private sector employers, employees, and labor organizations. NLRB jurisdiction includes most non-government employers with sufficient activity in interstate commerce.

NLRB Employers and Employees

Employer

The NLRB’s definition of “employer” includes private employers and anyone acting directly or indirectly as an agent of an employer. It does not include the United States, government corporations, federal reserve banks, or those subject to the Railway Labor Act.

Employee

The NLRB’s definition of “employee” includes any employee of a covered employer, including any person whose work has been discontinued in connection with a labor dispute or unfair labor practice. It does not, however, include agricultural laborers, domestic service workers, independent contractors, or supervisors.

Jurisdictional Thresholds Vary by Industry

Despite the broad statutory definitions, the NLRB does not exercise jurisdiction over all private employers and employees. Instead, it considers whether a business performs sufficient volume to warrant coverage by the federal agency. The NLRB applies different coverage standards depending on the nature of the business.

Retailers

Retailers fall under NLRB jurisdiction if their gross annual volume of business is at least $500,000. For shopping centers and office buildings, the threshold is $100,000.

Non-retailers

The NLRB exercises jurisdiction over most non-retailers if their annual inflow or outflow or goods or services is at least $50,000 in gross annual volume. The inflows or outflows can be direct or indirect.

Transportation Industry

Businesses in the transportation industry must produce $50,000 in annual volume to be included in the NLRB’s jurisdiction.

Legal Organizations

Law firms and legal service organizations fall under the jurisdiction of the NLRB if their gross annual volume of business is at least $250,000.

Cultural and Educational Centers

The NLRB exercises jurisdiction over art museums, symphony orchestras, private colleges, private universities, and other private schools if their gross annual volume of business totals at least $1,000,000.

Health Care

Nursing homes and visiting nursing associations fall under the NLRB’s jurisdiction if their gross annual volume of business is at least $50,000.

For hospitals, medical offices, social service organizations, and child care centers gross annual volume of business must be at least $250,000.

Native American Tribes

The NLRB has jurisdiction over commercial enterprises owned by Native American tribes, regardless of whether they are located on a reservation. However, the NLRB does not exercise jurisdiction over enterprises that perform traditional tribal or government functions.

Federal Contractors

Companies with federal government contracts fall under the NLRB’s jurisdiction.

Contentious Gray Areas

NLRB jurisdiction is not always straightforward. There are areas where the Board has wavered on whether it has or should exercise jurisdiction. For example:

  • Graduate students: In an August 2016 decision, the NLRB held that graduate students in private universities are employees and therefore can unionize under the NLRA. However, the NLRB has gone back and forth on whether graduate students are employees.
  • College athletes: On August 17, 2015, the NLRB unanimously agreed not to exercise jurisdiction to determine whether Northwestern football players are university employees under the NLRA. The Board members feared that a ruling these athletes employees would be problematic for the college sports industry.
  • Charter schools: In 2016, the NLRB held it has jurisdiction over New York and Pennsylvania charter schools because the schools are not political subdivisions of their states and therefore not exempt from the NLRA. However, in March of 2018, the NLRB declined to exercise jurisdiction over a Texas charter school because the NLRB found the school’s leadership was “responsible to state officials.”
  • Religious institutions: NLRB jurisdiction depends on whether the nature of the work is religious. For example, a religious school usually would not fall under NLRB jurisdiction, but a religious health care institution typically would.

Why NLRB Jurisdiction Matters

Employers should know whether their organization falls under NLRB jurisdiction. If it does, employers will be subject to certain restrictions and obligations under the NLRA. These include, but go beyond, not interfering with employees’ ability to engage in union activity. For more on how the NLRA can affect non-union workplaces, read New Rules for Employee Handbooks.

Employment Law Checkup

Quick Employment Law Checkup

If you have employees, you’re subject to an array of laws governing the workplace. Going from zero to even just one employee is a huge step. After that, the more employees you have, the more laws apply. And more employees and laws bring along increased risks of noncompliance. To tackle these issues, companies would ideally hire robust human resources departments and employment lawyers. But, that’s not practical for every business in every situation. So, in case you need somewhere to start, you can use this to conduct your own basic employment law checkup.

1. Are you paying workers enough?

I mean legally. Presumably, you’re paying them enough to work for you. And whether you pay enough to retain employees is another subject altogether. But I’m talking about minimum wage and overtime here.

With just one employee in the U.S., virtually all employers become subject to minimum wage and overtime laws. What laws apply to you and your employees? Are employees exempt from overtime? The exemptions are trickier than many understand, so double check this.

2. Are you paying payroll taxes?

For most employers, this is a no-brainer. Taxes are a way of life. But some employers try to avoid these obligations by either paying employees “under the table” or treating them as independent contractors. The first practice is simply illegal. The latter is more complicated.

Genuine independent contractors are responsible for their own taxes (and don’t have to receive minimum wage or overtime). But you can’t just avoid dealing with legal requirements by calling someone an independent contractor. The exact requirements vary, but generally, if a person is working only or primarily for you, they are probably your employee. Especially if they are performing tasks in line with your primary business. For example, a graphic designer “hired” for a one-off project creating a new company logo may be an independent contractor. But a graphic design company hiring the same person to create designs periodically for its customers looks more like an employment relationship.

3. Do you have an anti-harassment policy?

Various state and federal laws prohibit employment discrimination for all but the smallest employers. Even if you’re not subject to these laws, you can’t afford to tolerate workplace harassment. As a starting point, you should have a written anti-harassment policy that advises employees of prohibited behavior and provides a mechanism to report violations. Again, this is a bare minimum. So, after you institute or update your policy, consider providing training to employees. And, of course, take all complaints seriously and investigate promptly.

4. What do your personnel files look like?

If legal issues arise, the employee’s personnel file will come under scrutiny, so don’t be careless. Whether physical or electronic, you should have separate files for each employee. These should contain the “new hire” paperwork such as offer letters, I-9s, and tax withholding forms. They also include employee benefit documents, such as for insurance and retirement plans, if applicable. They would also include any formal disciplinary records. And if you receive medical information about an employee, that must go in a separate file.

5. How do you handle employee medical issues?

If you do have medical information, you’ve probably had to deal with employee medical issues. These can touch on a surprising number of employment laws. I regularly advise clients about single employee medical situations that potentially implicate 6-7 laws. For example, you may have to make reasonable accommodations to an employee with a disability. This might include time off, even if you don’t have a sick leave policy.

6. Will your employees go union?

Most employees have the right to join unions. As an employer, it’s not your choice. But that doesn’t mean your fate is sealed. Getting the above issues right, treating employees well, and listening to them will often keep unions out. But if your employees do unionize, then you’ll be playing by a new set of rules. You’ll have to negotiate with the union over many issues. You will enter the world of potential grievances and arbitrations. And employees will likely receive “just cause” job protection. Make sure you understand how this world works before you find yourself in it. (There are geographic and industry-based factors affecting the likelihood that your workforce will unionize, but it’s at least a possibility in nearly every company.)

Beyond this Employment Law Checkup

I’m only providing this quick employment law checkup as a starting point. I want employers to get these issues right. But that’s not always an easy task. Plus, there are many more employment laws beyond the subjects addressed here. The laws are complex. Often there are extensive regulations. Minor nuances can entirely change an employer’s responsibilities.

 

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Workforce Downsizing Selection Procedures

Workforce Downsizing Selection Procedures

Even if it will only affect a small part of the business, many companies face workforce downsizing at some point. The “why” is usually obvious. But it’s often more difficult to decide how to make these cuts. Here, I’ll suggest a general approach to selecting who will stay and who will go in consideration of possible legal constraints.

For more on this topic, check out my free webinar: Conducting Your Next Reduction in Force.

What’s the Motivation?

Money makes the world go ’round, and it’s usually what prompts companies to downsize their workforces. But finances aren’t the only reason organizations reduce their headcount.

Here are a few other reasons why a business may downsize:

  • Transition to New Operating Method
  • Automation of Functions
  • Elimination of Redundancies
  • Reallocation of Talent

Whatever the reason, make sure everyone involved in organizing the reduction in force understands it before they choose individual positions and employees. The company should document the rationale up-front. Then move on to evaluating how best to achieve the desired business outcome.

Don’t Identify People First

To best prevent and defend against claims by affected employees, companies should leave the identification of specific employees to the end of the selection process. The earlier specific employees are identified, the more likely they are to perceive the decision as being personal. Thus, the more likely they may believe the decision was discriminatory or in violation of their personal rights.

Sure, if the whole purpose is to outsource all engineering functions, and your company has two engineers, it will be obvious early on who will lose their jobs. But at least make sure there is a valid, documented reason for eliminating the internal engineering function. (Think about the scenario where your two engineers are in their 60s and are longtime employees. Be prepared to prove that their age isn’t the reason for the company’s decision!)

Especially where the goal is to reduce overall labor costs, most companies should start from the premise that all facets of the workforce are in play. Some will quickly narrow in on particular departments or job functions. But again, the rationale for those decisions should be documented as you move down the path toward the selection of individual employees.

Determine the Workforce Goal

Through the reduction analysis, the company should ultimately determine what it wants its workforce to look like after the downsizing is complete. This still doesn’t mean who the specific employees are. Instead, the focus is on functions, tasks, skills, etc.

For example, a company that initially has 125 employees may decide that it would operate best with about 100 employees. It then determines that all “front office” functions are still necessary–say, 25 employees. Of the other 75 post-reduction positions, 50 may be in production and 25 in sales/customer service. If there are currently 65 production employees and 35 sales/customer service employees, then the company must eliminate 15 production positions and 10 sales/customer service roles.

Next, the company must decide how to choose the 15 production and 10 sales/customer service employees to let go.

The company has options to get to the desired workforce size. It could gradually downsize by attrition when people leave. Or it could offer an incentive for employees to voluntarily resign. But here we’ll assume the company wants to reduce the workforce all at once through involuntary terminations–what many would call a layoff.

Picking the People

This component of workforce downsizing often becomes the most personal. It also creates the greatest risks of claims by affected employees. So, it’s important for the company to make these decisions without considering protected individual characteristics.

As discussed, ideally managers shouldn’t sit around the room and just throw out names of whom they want to see leave. Instead, the company should determine a structured selection process and apply it consistently.

Selection procedures may end up being objective or relatively subjective.

One straightforward objective selection criteria is length of service. If the company in the above example wanted to, it could just retain the 50 production and 25 sales/customer service employees who have been with the company the longest. The biggest downside to seniority-based workforce downsizing is that it doesn’t account for employees’ relative job performance and skillsets.

Subjective selection criteria, such as most performance evaluations, increase the risk of manager bias, if unintentional. Supervisors may naturally recognize people like them (based on age, race, sex, etc.) as being higher performers. Thus, it may be better to have multiple managers evaluate each individual and arrive at some quantifiable measure. Then the company would rank all the employees and keep the top ones.

No selection method is perfect. But it is important to establish the selection procedure before applying it to particular employees. Applying one method and then starting over after it doesn’t result in the “right” people being chosen adds risks to the equation. A company should specifically document why it changed course, assuming it has a legitimate non-discriminatory business reason to do so.

Additional Factors and Hurdles to Workforce Downsizing

The above analysis assumes employers have full discretion to determine which employees to let go in a workforce downsizing program. However, that might not always be the case.

If there is a union involved, the collective bargaining agreement may dictate how a reduction in force will occur. For example, unions often bargain for layoff based on inverse seniority. The union contract might also provide for severance pay that could affect the size of the reduction that the company pursues. Or it could even result in the company avoiding reductions in the unionized workforce altogether.

Some companies also have contracts with individual employees. These might either guarantee employment for a certain amount of time or, again, require severance pay.

Finally, even a carefully prepared employee selection process could produce arguably discriminatory results. If a disproportionate number of the employees losing their job share the same protected characteristic (e.g, race, sex), then the employees might have a claim for disparate impact employment discrimination. That type of claim can be viable even if the company had no intent to discriminate. When workforce downsizing involves a large enough pool of employees, employers can conduct statistical analyses to evaluate latent bias in their selection process. Skewed results may be one good reason to rework the selection procedure and start again.

For more on workforce downsizing, check out my free webinar on Conducting Your Next Reduction in Force.