Winston & Strawn: Labor News October 2012

Labor & Employment Practice at Winston & Strawn

Select events and news from the world of organized labor for September 2012

Organizing
Strikes & Labor Disputes
Major Contract Settlements & Negotiations
Administrative, Court & Other Decisions
Legislation & Politics
Crime, Corruption & Other Misdeeds
Upcoming Events
Recent Publications

Organizing

Employees at the Astoria Car Wash & Hi-Tek 10 Minute Lube in New York City voted 21-5 to join the Retail, Wholesale, and Department Store Union. Six months before the vote, the union launched a concerted campaign to organize car washes as part of a city-wide attempt to improve working conditions for the employees, partnering with two advocacy groups.
Workers at a Coca-Cola bottling plant in North Texas voted “no union” by a margin of 215 to 191, rejecting a bid by the Teamsters. The election is the second time the union had attempted to organize the production workers at the plant in two years.
The Culinary Union, affiliated with UNITE HERE, is attempting to organize 6,000 servers, housekeepers, bartenders, porters, kitchen staff, and maintenance workers at Station Casinos in Las Vegas. The organizing campaign began in February 2010, but it is unclear whether or when a representation vote will be set.

[top]

Strikes & Labor Disputes

American Airlines pilots voted to authorize an immediate strike after a bankruptcy judge allowed the airline to cancel the current collective bargaining agreement (see below). American Airlines noted that the pilots are not legally allowed to strike and indicated that it plans to implement changes from their final contract offer and term sheet, although it does not plan to furlough any pilots.
Non-union workers at a Wal-Mart warehouse in Jurupa Valley, Calif. went on strike to protest alleged unsafe working conditions. The employees are not directly employed by Wal-Mart, but are employed by Warestaff LLC, staffing agent and NFI Industries, which owns and operates the warehouse.
Non-union workers employed by Roadlink Workforce Solutions LLC, a Wal-Mart subcontractor at a Wal-Mart warehouse in Elwood, Ill. struck allegedly to protest asserted unsafe working conditions, lack of access to drinking water, wage and hour violations, lack of training, retaliation, and discrimination against women.
“Man bites dog:” Members of the International Union of Painters and Allied Trades picketed the building site of the United Food and Commercial Workers (“UFCW”) Credit Union in Pennsylvania, protesting the use of non-union labor to perform construction work.

[top]

Major Contract Settlements & Negotiations

The United Steelworkers voted, 4-1, to approve a new three-year contract with U.S. Steel Corp. one day after the previous contract expired. Approximately 16,000 workers at locations in Ohio, Michigan, Illinois, Indiana, Pennsylvania, Minnesota, and Alabama, would be covered by the new contract. Under the terms, wages would increase 2 percent on Sept. 1, 2013 and 2.5 percent in 2015, for a total of 4.5 percent over three years, with a $2,000 signing bonus. Retiree health care contributions will increase, but pension multipliers and employer contributions to the pension are unchanged.
The UFCW ratified a three-year contract with Kroger, covering 12,000 employees of the supermarket chain in Kentucky and Indiana. The contract provides for hourly wage increases from 50 cents to $2.00, depending on the employee’s job classification, seniority, and the volume of business at the store where the employee works. The contract also provides for a small increase in employee premiums for continued health care coverage and an increased employer contribution for the pension plan.
The United Steelworkers settled a new three-year agreement with ArcelorMittal USA after 10 weeks of negotiations. The agreement was reached seven days after the expiration of the previous contract, and provides for wage increases for employees and continuation of premium-free health care, though details are under wraps pending ratification. ArcelorMittal will also make capital investments in plants and improve worker training programs. The contract also limits the type of work which can be performed by outside contractors. The contract covers 14,000 workers at 14 locations across the country.
The Association of Flight Attendants — Communications Workers of America (“CWA”) ratified a concessionary deal with American Eagle. Eighty-seven percent of the voters approved the agreement, covering approximately 1,750 workers. The contract includes future wage increases, preserves work rules and does not include pay cuts and pay freezes. The pay raises of 1.5 percent are set for the third, fourth, and fifth years of the eight-year agreement. Additionally, the contract calls for an increase in vacation pay in the fourth year and an increase in longevity pay in the fifth year. American Eagle did manage to negotiate a decrease in the per diem rate for non-overnight work travel, as well as removing uniform cleaning allowances and reducing paid vacation by one week in 2013, 2014, and 2015.
The National Nurses United affiliate National Nurses Organizing Committee-Texas ratified first contracts with four hospitals in Texas owned by HCA. The three-year contracts cover 1,500 registered nurses, and provide for a wage increase of 2.25 percent in the first year, 2 percent in the second year, and 2.25 percent in the third year. The contracts also provide for a policy to establish nurse staffing levels based on acuity, which would be enforced be staffing committees comprised of registered nurses and hospital management. The National Nurses United and its affiliates represent nurses at 19 hospitals owed by HCA.
UFCW Locals 5, 8, and 648 approved a contract with Save Mart Supermarkets, covering 11,000 employees. The contract consists of a retail food agreement, set for renegotiation in October 2013, and a stabilization agreement that expires after two years. The stabilization agreement guarantees full-time employees at least eight hours per shift and part-time employees at least four hours per shift. Employees will also be allowed more flexibility in their work schedules and wages will increase from under $9.00 per hour to $10.40 per hour. The contract also reduces premiums for night work and suspends four holidays traditionally awarded to employees. Changes to health care benefits will be determined once larger negotiations between Raley’s Supermarkets, Safeway Inc., and the union conclude. The stabilization contract provides for retiree health care benefits, but calls for an increased contribution from the retiree.
The Chicago Teachers Union and the Chicago Public Schools (“CPS”) reached agreement on a proposed contract, ending a weeklong strike by the 26,000 teachers in the union. The proposal included a 17.6 percent increase in wages over the term of the agreement, including a 2 percent increase each year for four years. CPS agreed to eliminate its right to deny wage increases during a fiscal crisis. The contract includes a new short-term disability program that includes paid maternity leave, continued coverage of most of employees’ pension contributions, and a freeze on employee health care contributions. The agreement provides for a new evaluation system that will be designed by other teachers and will allow for teachers to be laid off based on performance, rather than only on seniority. Finally, the contract calls for 180 school days and 190 working days for teachers.
A four-year agreement was reached by the Communication Workers of America (“CWA”) and AT&T Mobility, covering 42,000 employees across the country. The contract provides a two-tier health care benefits structure, under which employees hired after Dec. 31, 2012, will contribute higher monthly premiums than those hired before the cut-off date. Health care reimbursement accounts would also be available for the earlier-hired employees.
The general executive board of the International Alliance of Theatrical Stage Employees (“IATSE”) ratified a contract with the Alliance of Motion Picture and Television Producers, which represents studios, networks and producers. The contract covers 8,000 members across the country, except in New York and Los Angeles, and will run until July 31, 2015. The 50,000 IATSE members working in Los Angeles and New York are covered under a similar contract that was approved in July. Both agreements provide for 2 percent wage increases annually and increased employer health plan contributions.
The Canadian Auto Workers reached four-year agreements with Ford Motor Co. of Canada Ltd., General Motors of Canada Ltd., and Chrysler Canada Inc., covering approximately 18,000 workers. All three contracts will expire in Sept. 2016, and do not provide for any increase in wage rates. The contracts set a lump sum cost of living payment instead of a percentage-based payment and provide for lump sum quality and productivity bonuses when ratified. Additionally, the agreements increase the time new employees must wait before earning full hourly wages to 10 years. The agreements also maintain the defined benefit pension plan system for active employees and do not provide for a two-tier wage system for union employees, originally demanded by the employers. Additionally, the contract with GM mandates that GM may only hire temporary employees during product launches.
The CWA and the International Brotherhood of Electrical Workers (“IBEW”) came to an agreement with Verizon Communications, Inc. on four-year contracts that would cover 40,500 employees in Connecticut, Massachusetts, New Jersey, New York, Rhode Island, Maryland, Virginia, and Washington, D.C. The contracts would provide for a 2.25 percent wage increase after ratification, another 2.75 percent increase in August 2013 and a final increase of 3 percent in August 2014. The contracts provide for continued comprehensive health care, with employee contributions. Current employees would maintain coverage under the defined benefit pension plan, while new hires would be covered under a 401(k) retirement program.
A five-year contract with Constellium Rolled Products was ratified by members of the United Steelworkers Local 5668, ending a seven-week strike by 700 workers at the employer’s aluminum plant in Ravenswood, W.Va. The contract provides for wage increases of 2.5 percent each year, as well as a $7,500 ratification bonus. The contract also calls for the implementation of a health care plan covering 95 percent of the eligible charges of employees and their families, beginning in 2013. Similarly, the company would pay 95 percent of health care premiums, a decrease from the current program under which the company covered 100 percent of insurance premiums.
The International Longshoremen’s Association and the United States Maritime Alliance agreed to continue their collective bargaining agreement until December 29. The parties had been bargaining since March in an attempt to renew the contract, which covers 15,000 dockworkers on the East Coast and Gulf Coast. Federal mediators were brought in to assist in the negotiations, as a work stoppage would likely have interrupted the influx of goods during the holiday season.
Members of the Service Employees International Union-United Healthcare Workers-West approved a three-year contract with El Camino Hospital. The contract expires June 30, 2015, and provides for a 3 percent wage increase retroactive to July and a 1 percent increase in 2013 and in January and July 2014. The contract also reinstates health benefits with no employee contribution and a 403(b) retirement plan with contribution match, as well as a cap on accrual of paid time off.
The National Football League and the NFL Referees Association reached an eight-year agreement covering 121 referees. The agreement ended a lock-out of the referees that lasted three months. The agreement included an average wage increase to $205,000 by 2019, up from $149,000. Current referees will maintain their defined benefit plan until 2016, after which they will receive retirement benefits through a defined contribution plan. New hires will be covered under the defined contribution plan.
The UFCW and Piggly Wiggly Midwest reached a new collective bargaining agreement, ending a three-dispute. As part of the agreement, the parties will withdraw litigation currently before the National Labor Relations Board (“NLRB” or the “Board”) and in federal court. The agreement covers 500 workers at six grocery stores in Wisconsin. The terms of the agreement were not published, although Piggly Wiggly agreed to pay $570,000 in back wages as part of the settlement.
A comparison of contract settlements for 2012 revealed that the average first-year wage increase was 1.7 percent, up from 1.3 percent for the same time period in 2011. The median increase in 2012 was 2 percent, up from 1 percent in 2011. Wage increases in settlements excluding construction and state and local government agreements averaged 2.3 percent, up from 1.7 percent in 2011. The median increase for these settlements was 2.3 percent, compared to 1.8 percent in 2011. The wage increase for manufacturing contracts was 2.2 percent, compared to 1.9 percent in 2011, with median increases of 2.5 percent in 2012 and 2 percent in 2011. Nonmanufacturing wages, excluding construction, increased 2.3 percent, jumping from 1.6 percent in 2011, with a median increase of 2.2 percent, compared with 1.7 percent in 2011. Wages in construction agreements went up 2.2 percent, compared with 2 percent in 2011, with a median increase of 2.3 percent, up from 1.8 percent in 2011. Contracts in state and local government had an average of 1.1 percent increase in wages in 2011, with a median of 1 percent, compared with a 1 percent average increase in 2011 and a median of 0.8 percent.

[top]

Administrative, Court & Other Decisions

The NLRB issued its first decision regarding social media policies, striking down Costco Wholesale’s policy prohibiting employees from posting statements that damage the reputation of the company or any person. The National Labor Relations Act (“NLRB”) found that the policy could apply to activities protected under Section 7 of the NLRA and that employees would reasonably believe that the policy prohibited protected activities. The NLRB also noted that there was no language associated with the policy that limited its application to non-protected activities. Costco Wholesale Corp. [See our briefing on Costco here.]
An NLRB Adminstrative Law Judge (“ALJ”) held that EchoStar Corp.’s social media policy, prohibiting employees from posting disparaging comments about the employer, violated the NLRA by chilling employees’ right to engage in concerted action. The judge found that the policy was not made lawful by reading it within the context of the larger handbook, nor with the addition of a clause stating that the policy should be interpreted as lawful if a conflict with a law arose. Echostar, Inc.
A U.S. bankruptcy judge ruled that American Airlines, Inc. and its parent company AMR Corp. may reject collective bargaining agreements with its pilots, flight attendants, and transportation workers. After filing for bankruptcy last year, American asked the bankruptcy court for permission to abrogate its collective bargaining agreements with the Allied Pilots Association, Association of Professional Flight Attendants, and Transport Workers Union of America. The judge held that American may impose its proposed terms and work rules on pilots while it negotiates a new collective bargaining agreement with the union, and may enter into new agreements with the flight attendants and transport workers, providing for an approximate $195 million in reduced costs in the flight attendants contract and $171 million in cut costs in the transport workers contract. In re AMR Corp. et al.
The Michigan Supreme Court affirmed an appeals court finding that voters should decide whether a constitutional amendment guaranteeing workers the right to organize and collectively bargain should be added to the state constitution. The amendment would also prohibit the state legislature from limiting the collective bargaining rights of employees. Opponents of the initiative argued that the proposed amendment would radically change the constitution and that the initiative did not include enough information for voters to make an educated decision. The court found that the amendment would not change any existing constitutional provisions because the legislature would retain power, although that power would be curtailed. Protect Our Jobs v. Board of State Canvassers.
The U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s injunction against a Honolulu hotel for alleged unfair labor practices, the latest ruling in a case that has been pending for years. In 2005, the International Longshore and Warehouse Union Local 142 was certified as the bargaining representative for the hotel’s employees after the NLRB found that the hotel had engaged in objectionable conduct in two separate proceedings. Multiple unfair labor practices complaints against the hotel were subsequently filed and the NLRB issued a consolidated complaint in 2008. A district court granted a preliminary injunction in 2010, ordering the hotel to stop all alleged illegal conduct and recognize and bargain with the union. The injunction was later upheld by the Ninth Circuit in July 2011. Separately, the NLRB affirmed an administrative law judge’s decision finding that the hotel had violated the NLRA, and ordered that the hotel recognize the union and bargain for an initial contract, rescind the unilateral changes, and offer reinstatement. After these two decisions, the hotel allegedly engaged in more unfair labor practices, and a new complaint was issued by the NLRB general counsel. The second complaint included allegations that the hotel terminated an active union supporter for violating policies, even though the hotel had no written or established policy regarding the issue, and that the hotel made unilateral changes to an access policy and refused to provide the union with requested information. In upholding the injunction, the Ninth Circuit found that the NLRB regional director had shown he was likely to succeed in showing that the hotel engaged in unfair labor practices and that the union and employees could suffer irreparable harm if the injunction had not been granted. Frankl v. HTH Corp.
The District Court for the District of Arizona dismissed a lawsuit brought by the NLRB alleging that federal labor law preempted an amendment to the state constitution that guaranteed employees the right to vote by secret ballot for union representation. The amendment was approved by Arizona voters in 2010 and was similar to other amendments approved in the same year in South Carolina, South Dakota, and Utah. NLRB Acting General Counsel Lafe Solomon stated that the NLRA preempted the amendments, because the NLRA provides two ways to choose union representatives — through secret ballot elections or voluntary recognition. The district court found that the state courts had not interpreted the amendment yet and the NLRB’s argument was speculative until the amendment was applied. NLRB v. Arizona.
The NLRB certified the United Mine Workers of America union was certified as the bargaining agent for miners at Peabody Energy’s Willow Lake Mine in Illinois. The 440 employees had voted 219-206 for union representation in 2011, but the employer filed objections to the election, alleging that the union engaged in intimidation, threats, coercion, and fraudulent conduct. The union filed unfair labor practice charges, alleging that the company had made threatening statements and fired an active union supporter. An ALJ found that the employer’s objections were without merit, but that the employer violated the NLRA by terminating the union supporter one day after it filed its objections to the election. Additionally, the employer violated the NLRA when supervisors told employees that the mine would be closed if the employees voted for the union. The District Court for the Southern District of Illinois granted a preliminary injunction preventing the employer from threatening union supporters and ordering the fired employee reinstated. In certifying the union, the NLRB denied the union’s exception to the ALJ’s denial of a bargaining order, finding that the preliminary injunction and the certification of the union were adequate remedies. Big Ridge, Inc.
A Los Angeles Superior Court denied the Asian Pacific American Labor Alliance and the UFCW Local 770’s bid to temporarily stop work on a Wal-Mart store in the Chinatown area of Los Angeles. The court noted that a trial on the issues is set to begin in November 2012, but refused to grant a stay or temporary restraining order prohibiting construction until the trial. Wal-Mart obtained a permit for the store one day before the city council voted to restrict major retail chains from opening large stores within the Chinatown area, and construction has been proceeding on the project since June. Asian Pacific American Labor Alliance et al v. City of Los Angeles and Wal-Mart Stores, Inc.
A Wisconsin County Circuit Court judge struck down as unconstitutional much of Wisconsin Act 10, which restricted public employees’ collective bargaining rights. The judge found that the law infringed on the employees’ rights of free speech, freedom of association, and equal protection based solely on their participation in a union. The judge also found that the law violated the “Home Rule Amendment” to the state constitution by prohibiting the city of Milwaukee from paying employee contributions to the city’s employee retirement system. Madison Teachers Inc. v. Walker.
The Fifth Circuit held that employees do not waive their right to bring discrimination suits under federal and state legislation unless their collective bargaining agreement contains a “clear and unmistakable waiver.” The court found that an employee’s collective bargaining agreement did not waive her right to sue in court because the agreement did not specifically identify the statutes it purported to cover, although it did include a clause mandating arbitration of disputes. The court found that union employees have contract claims in addition to statutory claims for discriminatory conduct and that either the collective bargaining agreement or the arbitration provision must specifically refer to statutory claims in order for those claims to be waived. Ibarra v. United Parcel Service.
The Eleventh Circuit held that the NLRB does not have the authority to modify the orders of a federal court of appeals. In a long-running dispute, the NLRB had ordered a construction company to reinstate workers who struck and to bargain with the workers’ union. The Eleventh Circuit entered an injunction enforcing the Board’s order. An ALJ later recommended that the construction company be required to bargain with the union for 16 hours a week, and the NLRB adopted the recommendation. The company refused, and the NLRB petitioned the Eleventh Circuit again to enforce its order. However, the Eleventh Circuit found that the NLRB did not have the authority to modify the appellate court’s initial order, which did not include a time requirement for bargaining. NLRB v. Gimrock Construction, Inc.
The NLRB found that Fresenius USA Manufacturing, Inc., which makes dialysis products, violated the NLRA when it suspended and then terminated an employee for writing pro-union statements that included vulgar and offensive terms. The statements were written on a union newsletter left in a break room before a decertification vote. The employee denied writing the statements, but later admitted to writing them in a phone call that he believed was with his union representative but was actually with a company vice president. The NLRB’s decision reversed an ALJ’s finding that the statements were so offensive that they caused the employee to lose the protection of the NLRA. The NLRB held that the employer should have known that the statements were not intended to harass other employees but were protected because they pertained to the upcoming decertification vote. The NLRB ordered the employer to reinstate the employee and cease and desist from further union discrimination. Fresenius USA Manufacturing Inc. and International Brotherhood of Teamsters, Local 445.
The Seventh Circuit held that the Carpenters and Joiners of America and the Chicago Regional Council of Carpenters did not violate the Labor-Management Relations Act by picketing to protest the use of non-union labor on a construction site. The judge affirmed the trial court and found that the picketing would not violate the law or constitute tortious conduct unless the union’s objective was to threaten or coerce a secondary employer, one doing business with the picketed employer. The judge found that picketing was directed against the primary employer, the general contractor at the site, and there was no evidence that the union’s activities were directed against secondary employer Carpet Service International Inc., which used non-union labor. Carpet Serv. Int’l Inc v. Chicago Reg’l Council of Carpenters.

[top]

Legislation & Politics

Workers’ Voice, the AFL-CIO’s Super PAC, initiated a web-based tool entitled “RePurpose” that allows individuals to earn points by volunteering for certain activities like phone banking and canvassing. The points can then be redeemed to direct a political activity, such as advertisements, in support of a labor-approved candidate, chosen by the volunteer. The Super PAC has another tool called “Friends and Neighbors” which allows individuals to phone bank their friends and acquaintances for candidates, use social media platforms to contact registered voters and send direct mail.
Rep. John Kline, R-Minn, the chairman of the House Committee on Education and the Workforce, asked Attorney General Eric Holder to initiate a Department of Justice investigation into allegations that the NLRB’s acting General Counsel, Lafe Solomon, improperly took part in a case involving Wal-Mart Stores Inc. while holding stock in the company. The NLRB Inspector General, David P. Berry, issued a report finding that Solomon violated ethics rules when he took part in the case. At the time, Solomon owned stock in Wal-Mart that was worth more than $18,000. Despite finding the ethics violation, the report concluded that there was no evidence that Solomon acted for his own financial gain.
The Office of Inspector General of the Department of Labor (“OIG”) issued a report critical of the effectiveness of audits performed by the Labor Department’s Office of Labor Management Standards. The audits determine whether unions are complying with the Labor-Management Reporting and Disclosure Act (“LMRDA”). The OIG found that the audits focused on potential criminal violations but failed to identify other non-criminal violations, such as failure to file or maintain records that violate the LMRDA. Additionally, the OIG found that the audits could not identify the most egregious union violators of the LMRDA and could not ensure that the unions corrected any violations. The Office of Labor Management Standards responded, disagreeing that the measure of compliance should include non-criminal violations, and stating that it was not cost effective to determine whether unions have corrected their recordkeeping violations.

[top]

Crime, Corruption & Other Misdeeds

Former officers of the UFCW Local 348-S in New York City were sentenced after being found guilty of racketeering, extortion, money laundering conspiracy, and witness tampering, stemming from their receipt of more than $2.5 million in illegal payments and stolen funds from the union. Anthony Fazio Sr., the former president of the local, was sentenced to 12 years and seven months in prison and must pay a $1.5 million fine. John Fazio Jr., the former vice president, was sentenced to 11 years and three months and a $1.5 million fine, while Anthony Fazio Jr., former president, was sentenced to five years and a fine of $100,000. Additionally, the defendants must pay $2.5 million in restitution and forfeiture.
Four former officers of the Teamsters local in Boston were indicted on 30 counts of extortion, racketeering, mail fraud, unlawfully holding union office, and theft of government money, among other charges, in the U.S. District Court for the District of Massachusetts. Prosecutors alleged that John Perry and his co-conspirators threatened to disrupt businesses such as hotels, event planners, and catering companies before scheduled events unless the businesses agreed to hire the officials and their friends. One of the events the officials allegedly threatened to disrupt was a Democratic Party fundraiser by Massachusetts Governor Deval Patrick, featuring a speech by President Obama. Penalties for the counts can range from five to 20 years on each count, as well as fines of up to $250,000.
The former president of the Metal Polishers Union Local 8A-28A was indicted and arrested on charges of money laundering, mail and wire fraud, and tax evasion, among other charges. Prosecutors alleged that Hector Lopez took more than $740,000 in kickbacks that were embezzled from the local’s welfare fund by the fund’s third party administrator, as well as taking kickbacks in exchange for concealing illegal conduct and fixing a contract bidding process.
The Federal Election Commission fined a Wisconsin firefighters’ union $58,000 as part of a settlement reached after the Commission alleged the union reimbursed union officers for contributions made to the union’s political action committee in violation of campaign finance laws. From 2002 to 2010, the Professional Fire Fighters of Wisconsin union reimbursed contributions made by union officers totaling over $18,000 from the union’s general treasury. The union attempted to hide the reimbursements by classifying them as payments to attend a legislative conference, but the purported conference did not exist.

[top]

Upcoming Events

October 16, 2012
Melbinger to Discuss Navigating the Dodd-Frank Act at NAREIT Conference
Speaking Engagement
October 25, 2012
Winston & Strawn Hosts 2012 Employment Law Update in Los Angeles
Seminar
October 31 - November 3, 2012
Winston & Strawn to Sponsor ABA’s 6th Annual Labor and Employment Law Conference
Sponsorship
November 15, 2012
Year–End Action Items for Benefits and Compensation
eLunch

[top]

Recent Publications

NLRB Upholds Termination Based on Facebook Posting
Briefing
NLRB Issues First Decision on Social Media Policies
Briefing

Attorney Advertising Materials

These materials have been prepared by Winston & Strawn LLP for informational purposes only and are not legal advice. Receipt of this information does not create an attorney-client relationship. No reproduction or redistribution without written permission of Winston & Strawn LLP.

Along with this briefing, a library of all the Winston & Strawn LLP briefings published to date can be accessed by visiting the Publications Library section of Winston & Strawn’s Web site (www.winston.com).

WINSTON & STRAWN CONTACTS