Winston & Strawn LLP: Labor News July 2008

In This Issue

Despite objections by Foxwoods Resort Casino, the National Labor Relations Board certified the United Auto Workers as the exclusive bargaining representative of the casino's 2,629 dealers. Foxwoods, located on an Indian reservation in Mashantucket, Conn., challenged the NLRB's jurisdiction and charged that the union unfairly affected the representation election by providing English only ballots and harassing and intimidating employees. The NLRB upheld its jurisdiction, and did not find any objectionable conduct attributable to the union. (Foxwoods Resort Casino, 352 N.L.R.B. No. 92).

The Postdoctoral Researchers Organize/United Auto Workers union filed a petition for certification to represent the University of California's 5,000 postdoctoral researchers. Prior to filing, the union collected more than 3,000 signed authorization cards. Another UAW affiliate, UAW Local 2865, currently represents approximately 12,000 teaching assistants, tutors, and other academic student employees in the U.C. System.

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A California state court issued an injunction July 11 stopping the American Federation of State, County, and Municipal Employees Local 3299 from instituting a five-day strike against the University of California. The strike, announced days earlier, would have affected approximately 8,500 service employees in the U.C. System. After the strike was announced, the state Public Employment Relations Board issued a complaint alleging that the union had failed to bargain in good faith. A key sticking point between the two parties is the new minimum hourly rate for service employees. According to the University, it has offered a minimum hourly rate increase from $10.28 to $11.50 and $12.00 in some locations. The union has called for $15.00 per hour.

Members of the Communications Workers of America and the International Brotherhood of Electrical Workers voted overwhelmingly in favor of authorizing union negotiators to call a strike against Verizon Communications if no agreement is reached by the time the existing contract expires at midnight August 2. The parties have been negotiating since May 27 for new agreements covering about 65,000 employees on the east coast. Although the parties failed to reach an agreement by the midnight deadline on August 2, the unions did not strike and negotiations continue.

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United Steelworkers President Leo Gerard promised aggressive bargaining and a serious fight if negotiators for steel and oil companies do not meet union demands. Contracts covering 35,000 to 40,000 steelworkers expire September 1, 2008.

Utility Workers of America Local 1-2 ratified a four-year collective bargaining agreement with Consolidated Edison Co. of New York on July 29, covering 9,000 employees. Following a three day cooling off period imposed by the Governor of New York, the parties reached a tentative agreement on July 2 and averted a threatened strike. As part of the settlement, Con Edison dropped a proposal to swap its defined benefit pension for a cash balance plan, and hourly wages will increase 14.5 percent over the term. Employees will contribute more for health care coverage, prescription drug co-payments, and office visit co-payments. Employees' prescription drug deductibles and annual medical deductibles will also increase significantly over term.

The International Brotherhood of Teamsters locals endorsed a tentative three-year National Master Automobile Transporters Agreement. The agreement maintains current rates of pay, but freezes wages for the first two years, followed by an increase of 40 cents per hour in the third year. The contract also provides tiered, but initially lower wage rates for employees hired after June 19, 2008. A newly hired driver or mechanic with a commercial driver’s license would receive 85 percent of current wage rates the first year, 90 percent the second year, 95 percent the third year, and 100 percent thereafter. Non-CDL qualified employees would receive 70 percent of current wage rates the first year, 75 percent the second, 80 percent the third, and 100 percent thereafter. The contract also calls for an increase of $109 per week in employer contributions to heath, welfare, and pensions over the agreement’s term. The contract will cover some 9,500 employees.

United Food and Commercial Workers Local 1995 ratified a four-year labor agreement with Kroger Co. The agreement covers nearly 9,000 employees working in 90 stores in Tennessee, Kentucky, and Alabama. Over term full-time employees will receive a general wage increase of $1.40 per hour, and part-time employees will receive a general wage increase of $1.15 per hour.

The UFCW ratified four-year contracts covering 5,500 employees at Washington, D.C. and Baltimore area Shoppers Food & Pharmacy. Over term part-time and full-time employees will earn a base wage increase of $1.50 per hour, service clerks will receive a $1.10 per hour increase and courtesy clerks will receive an additional $0.70 per hour. The contracts institute premium health care contributions for newly hired employees of $5 per week for individuals, $10 per week for couples, and $15 per week for families, but maintain fully-subsidized health care for current employees. The contracts also increase contributions to pension funds, but provide for a reduced rate for newly hired employees.

The American Federation of Television and Radio Artists (AFTRA) ratified a new three-year prime-time television agreement with major Hollywood studios and networks. The agreement increases the minimum wage for union members working in prime-time television by 3.5 percent this year, another 3 percent in 2009, and another 3.5 percent in 2010. AFTRA ratified the agreement despite intense opposition from the Screen Actor's Guild (SAG). AFTRA and SAG previously negotiated labor contracts together, but after a bitter dispute over jurisdictional issues, they split.

Members of SEIU Healthcare 1199NW ratified separate three-year contracts with Swedish Medical Center in Seattle on July 12. The contracts cover 4,000 registered nurses, service and maintenance workers, and technical workers. Under the contracts, Swedish may not institute cyclical layoffs to manage its finances and may not contract work out of the facility, except for limited reasons. Technical and service workers receive a 1 percent wage increase July 1, followed by a wage increase of 3 percent July 1, 2009, 1 percent January 1, 2010, and 3 percent July 1, 2010. Registered nurses will also receive a staggered 4 percent wage increase each year. A portion of the wage increase will be diverted to training, tuition assistance, and other education support programs. All three contracts also increase the on-call pay for registered nurses by $1.75 per hour over the agreement’s term.

The International Association of Machinists granted preliminary approval to their negotiators to institute a strike against Boeing Co., if contract negotiations fall apart. Members left the Boeing plant without pay to attend the meeting and vote. The parties are scheduled to start round-the-clock bargaining August 22, 2008 The current labor agreement expires September 4, 2008.

Construction Labor Research Council data released July 1 showed that collectively bargained wage and benefit increases for construction contracts to date in 2008 have averaged 4.9 percent in the first year, compared with a 4.7 percent increase in 2007, 5 percent in the second year, compared with 4.7 percent for the same period last year, and 4.6 percent in the third year, compared with 4.3 percent last year.

United Healthcare Workers-West, an affiliate of the Service Employees International Union, ratified a new two-year contract with Atlanta-based Mariner/Sava Health Care covering more than 1,000 employees in 10 Northern California nursing homes.

Collective bargaining data compiled by BNA through July 28 for all settlements showed the average first-year wage increase was 3.6 percent, the same increase as that reported in the comparable period of 2007. The median first-year increase for settlements reported to date in 2008 was 3.3 percent, compared with 3.1 percent in 2007, and the weighted average was 3.4 percent, compared with 2.8 percent.

Teamsters Local 710 and UPS settled a five year agreement covering 6,000 drivers and warehouse workers in the Chicago area on July 29. UPS also reached a tentative five year agreement with Local 705, which represents approximately 11,000 UPS employees. Locals 705 and 710 are the only Teamsters locals operating outside of a UPS national agreement which was ratified last November, covering approximately 240,000 UPS employees.

The Pacific Maritime Association and the International Longshore and Warehouse Union tentatively agreed to a six year contract covering 25,000 dockworkers at 29 different ports. On August 18, the union will present the tentative agreement to approximately 100 ILWU port delegates, who will decide whether to put the tentative agreement up for ratification.

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The NLRB issued revised guidelines regarding political advocacy on July 22. The guidelines state that political advocacy without "a direct nexus between the specific issue that is the subject of the advocacy and a specifically identified employment concern of the participating employees" is not protected under Section 7 of the National Labor Relations Act. Additionally, qualifying political advocacy must be executed with legally sanctioned means or it can lose the protection of the NLRA. Further, an employer may discharge or discipline an employee who leaves work without permission, or participates in intermittent strikes or work stoppages in support of a political dispute or other cause over which the employer has no control.

The U.S. Court of Appeals for the Fifth Circuit affirmed a lower court's ruling that an arbitration provision in a neutrality/card check agreement between UNITE HERE, the International Brotherhood of Teamsters, the International Union of Operating Engineers, and Grand Casino-Gulfport, a Mississippi casino operator that no longer exists, did not apply to Gulfside Casino Partnership, a different casino operator that purchased the assets of Grand Casino-Gulfport. The Court then found that the neutrality/card check agreement applied only to Grand Casino-Gulfport's active casino operations. Because it ceased operations, there were no rights or obligations under the contract to assign, therefore, it did not apply to Gulfside Casnio Partnership. (Gulfside Casino P'ship v. Miss. Riverboat Council, No 07-60807).

The U.S. Court of Appeals for the Fourth Circuit enforced the NLRB's Gissel order that required Evergreen America Corp. to bargain with International Longshoreman's Association Local 1964, despite the fact that the union lost an NLRB among Evergreen employees. The Court affirmed the NLRB's finding that Evergreen unfairly influenced the election when it gave every employee in the bargaining unit a wage increase and promoted 20 individuals on the same day two weeks before the vote. (Evergreen Am. Corp. v. NLRB, No. 06-2105).

The NLRB reversed an administrative law judge's decision and found that the confidentiality provision in the employment contracts of a temporary employment agency, NLS Group, could be reasonably interpreted as prohibiting employees from discussing the terms of employment with co-workers and union representatives, and was, therefore, unlawful. (Northeastern Land Servs. Ltd., 352 N.L.R.B. No. 89).

The NLRB ruled that Wal-Mart Stores Inc. violated federal labor law at its Kingman, Ariz., store when it threatened to freeze discretionary raises during collective bargaining negotiations because it had a past practice of granting them. The NLRB, however, reversed an administrative law judge's ruling and held that management's observation of public union activity, especially on company premises, without behavior out of the ordinary did not violate the NLRA. (Wal-Mart Stores Inc., 352 N.L.R.B. No. 103).

The U.S. Court of Appeals for the Second Circuit reversed an NLRB ruling and held that a mall operator did not violate the NLRA by prohibiting the Empire State Council of Carpenters from distributing literature promoting union membership and criticizing a mall tenant's use of nonunion carpenters to the public. Because no other employer or competing union was allowed to distribute literature to the public, the court ruled that the mall operator did not discriminate against the Carpenters in preventing it from doing so. (Salmon Run Shopping Ctr. LLC v. NLRB, No. 06-4961).

A lawsuit filed by the Service Employees International Union against 10 officers of its local United Healthcare Workers – West was dismissed by a federal judge for lack of subject matter jurisdiction and failure to state a claim. The SEIU charged that the defendant officers diverted millions in union dues to an external fund that they controlled. (Service Employees Int'l Union v. Rosselli, C.D. Cal. No. 08-cv-02777).

Denying an NLRB Regional Director's request for a preliminary injunction under Section 10(j) of the NLRA, a federal district judge found that even if manufacturer Narricot Industries LP had violated federal labor law when it withdrew recognition of the Carpenters and Joiners of America Local No. 2316, an injunction under Section 10 of the NLRA was not proper because there was a substantial employee-led effort to remove the union. (Timmins v. Narricot Indus. LP, E.D. Va., No. 2:08cv189).

The National Mediation Board plans to revise the procedural manual used to review an organization's application to represent employees in collective bargaining, decide on representation elections, and conduct an election. Among other things, proposed revisions include a new section on carriers' obligations when submitting lists of potential eligible voters, and requiring those challenging representation determinations and elections to provide substantial evidence of wrongdoing. The Board will accept written comments from airlines, railroads, labor organizations, and other interested parties through August 15.

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AFL-CIO Secretary-Treasurer Richard Trumka encouraged union members to vote for Sen. Barack Obama and move past potential racial bias. He lauded Sen. Obama, and criticized the "anti-worker" policies of Sen. John McCain. To sway blue-collar workers, Trumka said Sen. Obama needs to directly address the issues that concern them the most.

In support of Sen. Obama, the Service Employees' International Union plans to involve 100,000 of its almost 2 million members in voter registration and outreach projects throughout important and closely contested states.

Members of the national Union Veterans Council, launched by the AFL-CIO, will educate other union members on Sen. McCain's allegedly "poor record" on those issues important to veterans. The AFL-CIO also launched a television advertisement campaign pressing the same message. The AFL-CIO endorsed Sen. Obama last month, and has plans to mobilize more than 13 million union voters in 24 crucial states in favor of the Obama campaign.

Delegates of the National Association of Letter Carriers, which represents more than 300,000 active and retired city letter carriers, voted to endorse Sen. Obama for president. The union previously endorsed Sen. Hillary Clinton.

Members of the Service Employees International Union and other unions demonstrated at several firms around the world, including the corporate offices of Kohlberg Kravis Roberts & Co. The actions protested executive compensation issues. SEIU supports legislation that will require managers of private equity, hedge funds, and venture capitalist firms to pay ordinary income tax rates on carried interest, as opposed to lower capital gains tax rates.

An amendment that would bar local governments from deducting union dues from employee paychecks was qualified for the November ballot by the Colorado Secretary of State. Several other workplace-related initiatives have been qualified for the ballot: one initiative would end many government affirmative action programs; another bars union shop language from prospective collective bargaining agreements; and a third expands criminal liability for corporations.

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Betty Wing, former secretary-treasurer of United Steelworkers Local 1077, pled guilty to embezzlement charges related to theft of union funds.

Bill Dugan, longtime president of Operating Engineers Local 150, retired amid a federal criminal investigation into whether he misused union resources. Dugan has not been indicted and denies any wrongdoing.

In letters to the Labor and Justice Departments, the National Right to Work Legal Defense Foundation charged that the international convention of the Service Employees International Union violates, or will violate, federal law. Last month, SEIU's constitution was amended to require every local that does not meet its annual contribution obligation to the union's political action committee to contribute an amount in local union funds equal to the difference plus half. The letters claimed that this amendment forced employees to financially support candidates favored by union officials, in violation of the Federal Election Campaign Act. SEIU’s Secretary Treasurer called the allegations meritless.

Stemming from several criminal prosecutions, the International Union of Operating Engineers Local 14 entered into a civil racketeering consent decree to implement measures aimed at eliminating the influence of organized crime. In addition to amending its bylaws, Local 14 will have two court appointed anti-corruption officers whose task will be to identify, investigate, and address the corrupting forces of organized crime. Officers and members are enjoined from corruption, and subject to discipline if they participate in it.

The United Steelworkers and United Kingdom-based Unite the Union signed an agreement to create "Workers Uniting," the first transatlantic union. Workers Uniting will have more than 3 million active and retired members and will represent workers in every sector of the global economy, with the vast majority in manufacturing, mining, transportation, and services. Though the founding unions will operate independently, they will collaborate through the structure of Workers Uniting to address global issues.

Board Member Read Van de Water succeeded Harry R. Hoglander as chairman of the National Mediation Board.

In a report released on July 16, the Hudson Institute found the largest collectively bargained pension funds under-funded and at-risk. Using 2005 data, the report concluded that less than 20 percent of union pension plans were fully funded and less than 37 percent of nonunion plans were fully funded. The report's critics note that the Hudson Institute used a rejected method of measuring liabilities, the current-liabilities method, rather than the actuary's best estimate method. The measure of liabilities greatly affects the analysis. The report also discussed the impact of a broadened definition of fiduciary duty that requires a duty to responsibly invest in communities and the environment. More than before, public pension funds are focused on socially responsible investing. The effects of these efforts are not yet known.

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