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UAW LOSES UNION VOTE AT VOLKSWAGEN - AGAIN

In a nationally-watched union election at Volkswagen in Chattanooga, Tennessee, which concluded on June 14, 2019, the UAW lost another secret ballot union election by a vote of 838-776, a margin of 62 votes.  The last plant-wide election was held in 2014, which the union lost by 86 votes. 

The history of the situation in Chattanooga is very interesting.  First, the UAW has been unable to organize foreign-owned auto plants in the South, including previous losses at Nissan plants in Mississippi and Tennessee.  Following its loss at Volkswagen at Chattanooga in 2014, the union successfully organized a smaller voting unit at Volkswagen, comprised of just maintenance employees.  However, the election results were contested and the union never negotiated a collective bargaining agreement.  Ironically, the election win among the maintenance employees proved problematic for the union, as it delayed its plant-wide election this year because the smaller maintenance unit still existed.  The union thus abandoned that smaller unit and the election proceeded plant-wide in Chattanooga.

During the current campaign, Volkswagen stated that it was neutral, and it should be noted that Chattanooga is the only Volkswagen production facility in the world not represented by a union.  Nevertheless, there was widespread public advertising and campaigning among the community with television and radio ads being purchased by the UAW, the Center for VW Facts, a pro-union advocacy group, and an anti-union group known as Southern Momentum.

Although Volkswagen itself was publicly neutral, Tennessee Gov. Bill Lee (R) told workers during a visit to Volkswagen that they were fortunate to be in a state "that has the work environment that we have."  At the time of the last plant-wide vote back in 2014, allegedly Sen. Bob Corker (R) said the company assured him that the facility would be awarded more work if workers voted not to unionize.  In other words, there was publicity by politicians in Tennessee seeing a lack of unions as a selling point for attracting business.  Tennessee is a state that is only approximately 6% unionized. 

These reports indicate that the message got out in Chattanooga that workers are better off without a union charging dues and perhaps making the plant less competitive.  The union was reportedly also hurt by federal corruption charges against prominent union officials.  Of course, the UAW blamed its defeat on national labor laws making it "impossible" for unions to organize [even though the NLRB election rules were drawn by union lawyers to promote union organization].

UBER BECOMES TEXT BOOK EXAMPLE OF INDIVIDUAL ARBITRATION ISSUES

Funny things happen when a company institutes an initial public offering (IPO), as Uber did during 2019.  One of those things is that such companies often attempt to settle ongoing litigation, to make their IPO more attractive to investors.  Uber did just that this year in connection with its independent contractor business model, and in the process becomes a "poster child" for individual arbitration along with its gig economy. 

Uber might be the largest employer in the world, if it were an "employer."  Instead, its business model is to use independent contractor drivers, and it reportedly has some 3.9 million drivers globally.  Such a situation resulted in many lawsuits claiming that the legal relationship was one of employment rather than independent contractor.  In addition to its independent contractor business model, Uber also instituted a business model of requiring drivers to sign individual arbitration agreements in which class and collective actions are prohibited and all disputes with Uber had to be taken to individual arbitration. 

Uber's business plan as to litigation thus prevented drivers from banding together in class actions in court, where there was a danger of each case possibly resulting in a ruling that might destroy the company's independent contractor business model.  Arbitration, in contrast, does not set any legal precedent even if the rulings are adverse to the company.

In spite of the apparent benefits of arbitration to both companies and workers, history indicates that very few workers engage in individual arbitrations.  However, organized groups of plaintiff's lawyers and workers brought a multitude of court actions against Uber, although Uber basically won almost all of these court actions by getting the cases dismissed in favor of individual arbitration, plaintiff's lawyers engaged in a new tactic to counter Uber's strategy.   Literally thousands of individual arbitration demands were filed against Uber.  As arbitrator's fees and expenses in each case would be at least $10,000, and based on the number of Uber drivers at issue, it meant that resolving all the individual arbitration proceedings would cost at least $600 million, without including legal fees and any actual awards for drivers who won.

The institution of these strategies by the drivers resulted in somewhat of a stalemate.  Lawsuits were brought by lawyers for more than 12,000 drivers who had filed arbitration demands arguing that the company had refused to pay the filing fees to get the arbitration process going.  Uber countered that the drivers had not paid their required share, $400 each, to get the arbitrations going.  The number of drivers filing individual arbitration demands was more than 60,000. 

In this impasse in litigation issues, something had to give.  In a regulatory filing on May 9, 2019, Uber indicated that a "large majority" of the 60,000 drivers filing arbitration claims over employment misclassifications, agreed to a settlement.  The filings indicated that thousands of other drivers in two lawsuits in California and Massachusetts against the company also agree to dismiss their claims, agreeing to a settlement in exchange for multi-million dollar settlements.  The filings indicated that Uber will pay between $146 and $170 million, including attorney's fees, to settle these claims.  Uber will apparently retain its business model of considering its drivers independent contractors rather than employees.

In a related development, the U.S. Supreme Court ruled on April 24, 2019, that a court should not allow class actions in arbitration unless the arbitration agreement clearly authorizes that type of proceeding.  Lamps Plus, Inc. v. Varela, 2019 BL 145112.  The ruling, with a 5-4 majority, suggested that arbitration offers "lower cost, greater efficiency and speed" over lawsuits in court, and that class arbitration lacks those benefits.  Thus, the Court interpreted the Federal Arbitration Act as requiring more than ambiguity to ensure that the parties actually agree to arbitrate on a class-wide basis.

Editor's Note: Most experts believe that virtually all employers should evaluate the pros and cons of using individual employment arbitration agreements for their employees.  There are many advantages to such procedures, and also variations such as jury trial waivers, and the like.  However, it is not a "one size fits all" issue.

DOL IS STARTING TO MOVE AHEAD ON REGULATORY REFORM

The U.S. Department of Labor (DOL) has been moving much more slowly than the NLRB in regulatory reform.  Possible explanations include long delays in approving political appointments to the DOL, the cautious nature of Labor Secretary Acosta, and a controversy over Acosta's involvement in a decade-old plea deal while he was a federal prosecutor in Florida.  It has been widely reported that White House Acting Chief of Staff Mick Mulvaney, who is the principal architect of the Administration's deregulatory agenda, has directly involved himself in DOL decisions so as to increase the deregulatory process.

At the top of the list are the new salary tests for overtime pay coverage; a proposal to clarify when employers can exclude worker benefits from the "regular rate" used in setting the overtime pay level for work beyond 40 hours; and the narrowing of the joint employment definition.  Other priorities include more regulatory moves such as implementing the Trump 2017 Executive Order to improve the federal apprenticeship system and moving along completion of regulations designed to expand small-business health and retirement plans.  Future plans include proposals to give employers more flexibility in how to compensate workers; modification of the Family and Medical Leave Act; revisions to how unions are audited; and more quality control of the federal-state unemployment insurance system.

NLRB ANNOUNCES AGGRESSIVE AGENDA POSITIVE CHANGE

The National Labor Relations Board (NLRB), through its Republican majority and aggressive General Counsel, Peter Robb, has publicized various positive changes, many of which add clarity or more even-handed decision-making to the NLRB.  On May 22, 2019, the announcement indicates that the Board will consider rule-making in the following areas: 

  • A joint-employer standard.
  • The Board's current representation - case procedures (the so-called "quickie" election rule).
  • The Board's current standards for blocking charges, voluntary recognition, and the formation of Section 9(a) bargaining relationships in the construction industry.
  • The standard for determining whether students who perform services at private colleges are employees.
  • Standards for access to an employer's private property.

It should be noted that rule-making is rare at the NLRB, but it offers certain advantages including the fact that rules once established are harder to reverse in a future administration.  The quickie election rule during the Obama Administration is an example of recent rule-making.

It is not just in rule-making that the NLRB is having a major impact.  The NLRB General Counsel, Peter Robb, has the ultimate authority of the position to be taken by the Board in litigation and whether to issue a complaint that would start the litigation process over an issue.  The Obama-era NLRB overturned some 92 NLRB precedents, and the current General Counsel is anxious to reverse many of those rulings as well as set forth new favorable precedents.  Some of the areas the General Counsel would like to address and change Obama-era precedent include changing union's power during contract negotiations, assessing employer arbitration agreements, the NLRB's standards for deferring to arbitration, issues pertaining to the discussion of workplace investigations, and those relating to unions' displaying the inflatable cartoon balloon known as "Scabby the Rat" at labor demonstrations.   The General Counsel's office has advocated for changes to Board law to remove employers' obligation to deduct dues after a collective bargaining agreement expires; allow workers to revoke their dues authorizations when there is no contract in effect; and permit employers to stop making pension contributions when their collective bargaining agreement expires and pension fund documents indicate that payment should stop.  Important new labor precedents have already been set overturning Obama-era rulings on workplace rules, employment classification, and micro-units.

DOL FINDS GIG WORKERS TO BE INDEPENDENT CONTRACTORS

In an opinion letter issued by the U.S. Department of Labor (DOL) on April 29, 2019, DOL finds that workers getting jobs through smart phone apps and websites such as Angie's List are independent contractors and not employees of those platforms.  The opinion indicates that such service providers are not working for the virtual marketplace, but working for consumers through the marketplace.  Gig companies like Uber and even traditional employers outside of the gig economy can use this opinion letter as a potential defense when they have relationships with independent contractors or others they do not treat as employees. 

It should be noted that this opinion letter is not a law or regulation, and only covers how the current administration will interpret the law.  This letter makes changes from the Obama-era DOL, which considered most gig workers to be employees. 

The opinion letter states that it is based on long-standing Supreme Court precedent, utilizing a six-factor test.  Factors include permanency of the worker's relationship to the gig company, the amount of skill or judgment required for the worker's services, control the company exercises over service providers, and how much the service providers' work is tied to the primary purpose of the company.  In discussing the control issue, the letter indicates that the company did not set a work quota, a firm schedule, or dictate how to perform the selected services, as service providers had the ability to set their own schedule.  They could also take jobs through competitor platforms.  The letter also indicated that the work a service provider performs is not integrated into the company's business, because once a client and a service provider are connected, the company's operation is effectively terminated. 

The determination of employee versus independent contractor status is critical, as independent contractors do not have employment rights, benefits or tax withholdings.  The business models of many companies are based on the independent contractor concept.  Nevertheless, plaintiffs may continue to challenge a company's business model dependent on using independent contractors, and many states, like California, have rules more rigid than that of federal laws.


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