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The NFL Lockout Case-We Explain the Issues

We thought our readers would be interested in an explanation of the legal issues involved in the NFL lockout. While the underlying disagreement is about money (no surprise), the injunction litigation concerns an unusual role reversal, in which the players union has disclaimed interest in continuing the bargaining relationship, while the owners want to preserve that relationship. The existence of a bargaining relationship is important because it determines whether the owners are exempt from anti-trust law in their dealings with the players.

Under federal labor law, when a collective bargaining agreement expires, both sides have the right to put economic pressure on the other side. Unions have the right to strike and employers have the corresponding right to lock-out. During the early years of the labor movement, courts issued injunctions against strikes on the grounds that they constituted conspiracies to restrain trade. To protect the right to strike, the Norris-LaGuardia Act, passed in 1932, provides that courts do not have jurisdiction to issue injunctions in cases involving or growing out of labor disputes, except in limited situations such as violence.

Unlike professional baseball, professional football is not exempt from federal anti-trust law. There is, however, a labor exemption from anti-trust law for employers engaged in multi-employer collective bargaining. That exemption makes it possible for the football owners to agree on a unified position concerning free agency and salaries. Absent the labor exemption, the NFL’s rules concerning free agency and salaries could be challenged as an illegal agreement among competitors to restrain trade.

In the current dispute, the owners exercised their right to terminate the collective bargaining agreement. They are seeking, in a new collective bargaining agreement, an increase in the owners’ share of the revenues. To put pressure on the players, upon expiration of the collective bargaining agreement, the owners locked out the players, meaning that they are not being paid and cannot practice with their teams. The players union, the NFL Players Association, responded by disclaiming its interest in continuing to represent the players in collective bargaining. It then filed an anti-trust lawsuit against the owners in federal court in Minneapolis. The players argue that after the disclaimer, the owners are no longer protected by the labor exemption from anti-trust laws. Accordingly, the restraints on free agency and the lockout are illegal, they argue. The owners responded that the disclaimer does not represent a genuine decision to abandon collective bargaining, but is a sham. The owners filed an unfair labor practice charge with the NLRB accusing the players of refusing to bargain in good faith.

As part of the lawsuit, the players moved for an injunction against the lockout. They argued that the lockout was an illegal restraint of trade, not protected by the labor exemption because of the disclaimer, which was causing the players irreparable harm. A federal district judge in Minneapolis agreed with the players and issued an injunction against the lockout. The NFL owners appealed and the Court of Appeals for the Eighth Circuit, which also sits in Minneapolis, quickly granted a stay preventing the injunction from going into effect, finding that the players’ claims were unlikely to prevail.

On June 3, 2011 the Court of Appeals will hear argument on the appeal from the injunction decision. The issues will include whether the Norris-LaGuardia Act deprived the district court of jurisdiction to issue an injunction against the lockout, whether the labor exemption from anti-trust law applies to the lockout and whether the court should have waited for a ruling by the NLRB on the owners’ unfair labor practice charge. The root factual dispute, underlying all the legal arguments, is whether the players’ disclaimer signifies a genuine abandonment of collective bargaining or is merely a tactical move in an ongoing labor dispute.

There is no telling when the Court of Appeals will rule. Presumably, if it believes the injunction should be reinstated, it will decide quickly. Undoubtedly, even if the judges do not say so, they will be thinking about how they can influence both sides to resolve their differences in time for the football season.

The NLRB Takes On Social Media

The National Labor Relations Board (NLRB) has been tackling the issue of when the use of social media constitutes “concerted activity” by employees and when that concerted activity is protected under the National Labor Relations Act (NLRA). In April 2011, an NLRB associate general counsel concluded that an employee’s sarcastic “tweets” were not protected concerted activity. In May 2011, the NLRB announced that it was suing two different employers for terminating employees based on their personal Facebook postings, which the NLRB deemed to be protected concerted activity.

Section 7 of the NLRA protects employees who engage in “concerted activity” regarding their “mutual aid and protection.” This has been interpreted to mean that an employee’s actions to raise and discuss concerns about the terms and conditions of employment or to seek to involve other employees in employment issues is protected by Section 7. Whether an employee’s actions constitute protected concerted activity, however, can sometimes be difficult to determine.

Inappropriate and Offensive Tweets Were Unprotected

A reporter with the Arizona Daily Star was terminated because of messages he had posted on Twitter. In early 2010, in reference to punning headlines, the reporter tweeted that some of his colleagues “are the most witty and creative people in the world. Or at least they think they are.” The reporter was told by his managers that he was prohibited from airing grievances or commenting about the Daily Star in any public forum. He continued tweeting about matters related to his beat as a public safety reporter, including a number of sarcastic tweets about city homicides. He was then instructed to refrain from tweeting about anything work related. The reporter also posted a tweet in which he mocked a local television station for a misspelling, stating “Stupid TV people.” A station producer who found the tweet unprofessional contacted the Daily Star. The reporter was suspended and then subsequently terminated for his tweeting activity, which the Daily Star believed to be drawing negative attention to the newspaper.

In an Advice Memorandum responding to the reporter’s NLRB charge that he was terminated in violation of the NLRA, the NLRB’s associate general counsel concluded that the reporter “was terminated for writing inappropriate and offensive Twitter postings that did not involve protected concerted activity” because such tweets were not related to the terms and conditions of his employment. The associate general counsel noted, however, that the employer made statements that could be interpreted to prohibit protected Section 7 activities. Specifically, the associate general counsel referenced the instructions to the reporter to refrain from airing his grievances or commenting about the paper in any public forum, and to stop tweeting about anything work-related. The associate general counsel noted that these statements, which occurred in the context of discipline of the reporter, were not general rules. Moreover, the associate general counsel noted that, “although the statements arguably constituted unlawful restrictions on the [reporter’s] own Section 7 activities, it would not effectuate the purposes and policies of the [NLRA] to issue a complaint where the statements were directed to a single employee who was lawfully discharged.”

Facebook Postings May Be Protected

The NLRB issued a press release on May 18, 2011, announcing that it had issued a complaint against a social services non-profit organization for terminating five employees based on their Facebook postings. The NLRB stated that, prior to a meeting with management to discuss working conditions, an employee posted to her Facebook page a coworker’s allegation that employees were not doing enough to help the organization’s clients. Other employees responded to the posting by defending their work performance and criticizing working conditions, including staffing and workload. The five employees participating in the Facebook discussion were then terminated, on the grounds that their postings harassed the employee referenced in the initial posting. The NLRB asserts that the Facebook discussion constitutes protected concerted activity because it involved the terms and conditions of employment, including staffing levels and job performance.

On May 24, 2011, the NLRB announced in another press release that it had issued a complaint against a car dealership for terminating a sales employee because of Facebook posts that were critical of the dealership. According to the NLRB, the employee and other sales co-workers were unhappy that only hotdogs and bottled water were being offered to customers at a dealership event introducing a new BMW model. The sales employees believed that their commissions could suffer as a result. The employee then posted photos and commentary on his Facebook account, to which other employees had access, that were critical of the food served at the event. The NLRB considers his subsequent termination to be a violation of Section 7, because his posting involved discussion among employees regarding the terms and conditions of employment, thereby constituting protected concerted activity.

Both of these cases will proceed to hearing unless they are settled, like the October 27, 2010 complaint that the NLRB issued against an ambulance service for terminating an employee who posted negative comments on her Facebook page about her supervisor and responded to further comments by her co-workers, as we discussed in our February E-Update. In its press release regarding the settlement, the NLRB stated that the employer had agreed to amend its overbroad social media policies to permit employees to discuss working conditions with co-workers. The employer also agreed not to discipline or discharge employees who engaged in such discussions.

Practical Impact

As we suggested in our February E-Update, employers should carefully draft social media policies so as to avoid an overly broad reach, which the NLRB is challenging. In addition, before taking disciplinary action against employees for social media activities, employers must consider the content of the employee’s commentary, and whether other employees are involved in any discussion. If the discussion is related to the workplace, it is likely to be considered to be protected by Section 7 by the NLRB.

TAKE NOTE

SEC Whistleblower Regulations. The Securities and Exchanges Commission has issued final rules implementing the employee whistleblower provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under the Dodd-Frank Act, individuals who report suspected violations of the securities laws to the SEC may be entitled to a portion of any amount recovered by the government (referred to as an “award” in the regulations). Employee whistleblowers also are afforded protection from retaliation by the employer that is the subject of the report. The final regulations, approved by the SEC on May 25, 2011 by a three to two vote, are applicable to all publicly-traded companies, define certain critical terms of the whistleblower program and outline the procedures for applying for awards, among other things. Significant provisions of the regulations are:

• To be protected from retaliation, whistleblowers must have a reasonable belief that the employer is engaging in a possible violation of federal securities laws and must make a report in compliance with the SEC’s procedures.
• In order to be eligible for an award, the whistleblower must (1) voluntarily provide the Commission (2) with original information (3) that leads to the successful enforcement by the Commission of a federal court or administrative action (4) in which the Commission obtains monetary sanctions totaling more than $1,000,000.
• The amount of the award, which can range from 10-30% of the recovery, depends on multiple factors. Of significance, the whistleblower does not need to utilize an employer’s internal compliance procedures in order to be eligible for an award. However, employees using the internal complaint mechanisms will receive an increased award. Also, engaging in fraud or misconduct, including the violations reported to the SEC, will not disqualify employees from an award, but will be a factor in determining the amount of the award.
• The regulations set forth specific procedures by which the whistleblower must provide information to the SEC and apply for an award, including a form for providing information to the SEC and a form for applying for an award (both of which can be completed online).

The regulations will become effective 60 days after they are published in the Federal Register.

DOL Timekeeping App. The Department of Labor has created an app to help employees independently track their hours of work. The app, which is available in English and Spanish, permits employees to track work hours, break times, and overtime for multiple employers, and calculate wages owed. Employees may also add comments to the data, view a summary of hours in daily, weekly and monthly format, and email the summary as an attachment. In addition, the app contains links to DOL webpages for further information. Currently available for the iPhone and iPod Touch, the DOL is considering accessibility by other smartphones (like the Blackberry or Android systems) and further updates to encompass other pay, such as tips, commissions, bonuses, deductions, shift and weekend differentials, holiday pay, and paid rest days. This app further demonstrates the DOL’s increasingly pro-employee bias, for as stated in its press release, “This new technology is significant because, instead of relying on their employer’s records, workers can now keep their own records.” The app is available on the DOL’s Wage and Hour Division website.

OSHA Survey. The federal Occupational Safety and Health Administration is conducting a survey of private sector employers in order to assist it in preparing future rules, compliance assistance and outreach activities. Beginning May 10, the Baseline Survey of Safety and Health Practices is being distributed to 19,000 companies of all sizes and industries. The survey contains questions about the company’s workplace safety and health management practices, including the existence of safety management systems, annual inspections, safety managers, and workplace hazards. Responses are voluntary and anonymous, and will not be used for enforcement purposes. For more information about the survey and to view a copy, click here.

OSHA Recordkeeping. The federal Occupational Safety and Health Administration has created a web-based tool to assist employers in understanding the requirements to report and record workplace injuries and illnesses. The OSHA Recordkeeping Advisor uses a series of questions to help employers determine whether an illness or injury is work-related, whether the illness or injury needs to be recorded, and which regulations apply to the recording of work-related illnesses or injuries.

OFCCP Review of EEO Laws. The Office of Federal Contract Compliance Programs has announced that, in conducting compliance evaluations of government contractors, it will review contractor compliance with laws enforced by other federal agencies, going back three years. This includes the DOL’s Wage Hour Division, the Occupational Safety and Health Administration, the Veterans' Employment & Training Service, and the EEOC. This action is part of the OFCCP’s Active Case Enforcement procedures, which became effective January 1, 2011 and which replaced the more limited Active Case Management procedures implemented by the Bush Administration.

ADA Confidentiality. An employee could bring a claim for breach of the confidentiality provisions of the Americans with Disabilities Act without first filing a charge with the Equal Employment Opportunity Commission, ruled a U.S. District Court in New York. In Mahran v. Benderson Devt. Co., the plaintiff alleged that his employer disclosed confidential details about his medical condition to co-workers without his permission. The employer sought to have the suit dismissed on the grounds that the plaintiff had not exhausted his administrative remedies by filing the requisite EEOC charge before bringing suit. The Court held that, where the breach of confidentiality was not related to a claim of employment discrimination, there was no requirement to file a charge. This case is a good reminder to employers that medical information about an employee must be kept confidential and only revealed to company personnel with a business need to know about it.

TOP TIP

Hiring Seasonal Employees

Many employers hire workers for the summer season. Frequently, these individuals are students on summer break. In hiring these seasonal workers, employers must be careful to comply with a plethora of federal and state laws, some of which are summarized below:

• Independent Contractors. Employers sometimes characterize these temporary workers as “independent contractors” (for whom employment taxes do not need to be paid) rather than employees. The federal and state governments, however, are cracking down on misclassification of employees as independent contractors. There are various tests with multiple factors to determine if a worker is an employee or independent contractor. In brief, however, if the worker is given a work schedule by the company, is directed or supervised in his/her work by company managers, is paid by the hour, and/or performs work that is within the company’s typical business, he or she is likely to be deemed an employee, not an independent contractor. This determination can be complicated, and you should consult with an attorney when characterizing a worker as an independent contractor to ensure that the designation is appropriate and that you have taken the appropriate steps to support the designation.

• OSHA. The Occupational Safety and Health Act requires employers to provide a safe working environment for employees. If employees work outdoors, they may be at risk for heat stress and illness. The Occupational Safety and Health Administration provides resources for employers on preventing heat illness and educating workers on this issue.

• Counting Employees. Because some employees are repeatedly hired on a temporary or seasonal basis, some employers leave them on the payroll even when they are not actively working. Doing so, however, can subject an employer to coverage under federal and state employment laws that are triggered by the number of employees on the payroll. Even inactive employees whose names are still on the payroll are generally counted towards coverage for purposes of laws such as, but not limited to, the Family and Medical Leave Act, Title VII, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and the Maryland Flexible Leave Act. Employers should ensure that seasonal employees are removed from the payroll at the end of the working season.

• Child Labor. If the employee is under the age of 18, the employer must be careful to comply with child labor laws, which are stricter than general labor laws. For example, in Maryland, minors between the ages of 14-17 must have a work permit and must be given (unpaid) work breaks of 30 minutes after 5 hours of work. In addition, minors between the ages of 14-15 are limited in how early they can start the workday (7:00 a.m.) or how late they can work (9:00 p.m.), and how many hours they can work each week (40 hours). Depending on age, they are also limited in the number of hours that they can work each day (8 hours for ages 14-15, 12 hours for ages 16-17).

• Student Interns/Trainees. Employers sometimes will have student interns or trainees during the summer. Interns/trainees are not considered employees and are not subject to the Fair Labor Standards Act, including its minimum wage, overtime, and child labor provisions. The determination as to whether the individual is actually an employee or an intern/trainee can be complicated, and various tests may apply. As discussed in our May 2010 E-Update, according to a DOL fact sheet, very strict and specific criteria must be satisfied in order to designate an individual as an intern or trainee. The U.S. Court of Appeals for the Sixth Circuit, however, in Solis v. Laurelbrook Sanitarium and School, rejected the DOL’s test and held that the proper approach is to determine which party derives the primary benefit from the relationship – the company or the student.