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Unions laboring today with arbitration, litigation

“Concern for mankind … must always form the chief interest of … the organization of labor.” —Albert Einstein (1931)

Labor unions are facing a torrent of troubles these days as Minnesotans join the rest of the nation in celebrating the 122nd Labor Day and marking the de facto end of the all-too-short summer. But there also are rays of sunshine peeking through the beclouded state of management-labor relations. It doesn’t take an Einstein to recognize the problems that organized labor faces these days.

The recent decision by the National Labor Relations Board (NLRB) not to recognize labor unions for football players at Northwestern University is the latest manifestation of the problems faced by the American labor movement. Northwestern University and College Athletes Players Association,No. 13-RC-121359 (Aug. 17, 2015). The sacking of the union at Northwestern reflects that the scoreboard has tilted markedly against unions and workers, although not as badly in this state as elsewhere. The hurdles faced by unions and their members are illustrated in a pair of appellate rulings involving grievance arbitrations, one of the core functions of unions by the federal and state appellate courts in Minnesota. It is further exemplified in recent and prospective rulings of the U.S. Supreme Court that threaten to dilute the already-declining strength of labor unions and their impact in the workplace.

Those arbitration and court decisions are some of the obstacles that unions are laboring under today.

The well-documented diminution in union membership and corresponding clout of unions has been attributable to a number of features, including decline of manufacturing and other heavy industries; growth of technology and in-home or off premises work; the changing nature and complexion of the workforce; some heavy-handed government laws and regulations; and blunders by organized labor, among other factors.

Rolls reduced

These developments contribute to the stark reduction in the rolls of labor union memberships, which reached a height of about one-third of the non-agricultural salaried work force in the post-World War II era. But unions have experienced an incredible shrinking base, with current membership around the country, hovering at about 10 percent of the workforce, down by almost 25 percent in the last decade alone. In addition to the steep decline in membership, the composition of union membership has changed, now consisting of only about 7 percent of employees in private enterprise, and the balance public sector workers. This represents a large shift from the halcyon days for organized labor from the 1940s through the 1960s, when the bulk of union members worked in the private business world.

The membership rolls have not reflected such a problematic or precipitous decline in Minnesota, but the diminution is pronounced. Minnesota has the 13th largest organized sector in the country, about 14 percent of the workforce, comprising some 380,000 workers. This figure has remained relatively steady in the past couple of years, although a slight reduction since 2008. In comparison, in neighboring Wisconsin, where public sector unions continue to experience ongoing political strife, organized labor comprises about 12 percent of the workforce, a dramatic 20 percent drop in the last two years alone.

Arbitration appeals

These cross-currents are reflected in the two arbitration decisions this summer by the 8th Circuit Court of Appeals and its Minnesota counterpart, which reached rival results in two appeals of arbitral rulings.

A labor union, composed of Minnesota law enforcement personnel, failed in its attempt to challenge an arbitration award denying two grievances by a police officer in Blaine challenging a written reprimand suspension from work in I2015 Minn. App. LEXIS 787 (Minn. App. Aug. 10, 2015) (unpublished). The case involved a detective who worked an overtime shift while she was assigned for an on-call position without arranging coverage for her on-call duty, which constituted a violation of the department’s policies. She was issued a written reprimand, which prompted her to file a grievance in claiming that she had coverage and advised the department that she was switching with another officer. The department suspended her for allegedly making false statements in her grievance, which resulted in a 32-hour suspension.

The reprimand and suspension were consolidated for arbitration, which resulted in a determination by the arbitrator sustaining the disciplinary action on grounds that the department had “just cause” for the reprimand and suspension.

The union’s effort to overturn the arbitrator’s decision was denied by the Anoka County District Court and the appellate court affirmed, noting that arbitration is a “proceeding favored in the law.” The union’s argument that the arbitrator’s award violated the “public policy” exception to confirmation of the arbitration decision was rejected. The arbitral award “did not explicitly conflict” with the policy under the Public Employee Labor Relations Act (PELRA), Minn. Stat. § 179A.01, et seq., which the union contended fosters a public policy in favor of pursuing grievances, and the statute does not “prohibit discipline based upon statements in a grievance.”

There was no “well-defined and dominant public policy” infringed by the arbitral decision, it must be upheld. Therefore, there was no “basis to apply the public policy exception in this case.”

But a labor union fared better two weeks earlier before the 8th Circuit in SPC Advanced Solutions v. Communication Workers of America, District 6,2015 U.S. App. LEXIS 13046 (8th Cir. July 28, 2015). The union had in convincing an arbitrator to order a pay increase for certain employees of the company who performed functions of higher paid employees without being compensated accordingly, known as working “out of grade.” The company’s contention that the arbitration should be overturned because it failed to follow precedent established in some prior grievance arbitration proceedings between the parties under the same collective bargaining agreement was rejected by an 8th Circuit panel, which included District Court Judge Patrick Schiltz of Minnesota, sitting by designation, who joined in the decision written by Judge Levanski Smith, which was agreed to by Judge Kermit Bye.

Granting an “extraordinary level of deference” to the arbitral decision, the panel found that it did not fall within the limited circumstances of which it may be overturned on grounds that it “manifest disregard for the law” or “fails to draw its essence” from the collective bargaining agreement or “manifest disregard for the law.” Neither of those standards is applicable in this case.

The arbitral award was proper based upon the arbitrator’s interpretation of the terminology stemming from prior arbitration awards. The interpretation he used to find that the employees were entitled to higher pay relied upon previous arbitration decisions, on the same issue. The arbitrator’s decision to “follow certain arbitration awards” while rejecting those advanced by the company “does not authorize [the court] to vacate [the] award.” Because the arbitrator’s decision “drew its essence” from the collective bargaining agreement, it should not be set aside. Nor was there any indication that the arbitrator clearly disregarded the law in interpreting the terms of the collective bargaining agreement, granting higher pay for certain employees.

The arbitrator’s decision to retain jurisdiction during implementation of his “make whole” award also was proper. The arbitrator was entitled to oversee the case until the amount of the award is eventually determined, which constitutes the “very procedure and remedy the Company the Union bargained for … when they negotiated an arbitration clause” in the collective bargaining agreement.

Aside from arbitration, a union suffered another setback when the 8th Circuit refused to enforce a directive from the NLRB ordering reinstatement of a union member who was discharged for participating in a strike in Nichols Aluminum v. NRLB,2015 U.S. App. LEXIS 14173 (8th Cir. Aug. 13, 2015). A divided panel, with one concurrence and one dissent, held that the board did not establish that the company’s “discriminatory animus” was a “substantial or motivating factor” in a decision to fire an employee. A dissent by Judge Diana Murphy of Minnesota lamented that the court was substituting its own judgment for the board’s expertise and that the company’s reason for firing the employee because of his participation in a strike was “supported by substantial evidence.”

Union unfriendly

The arbitration decisions, both favorable and unfavorable, tell only part of the story of the difficulties faced by unions these days. The U.S. Supreme Court during the last decade under Chief Justice John Roberts has been relatively unfriendly to unions in a variety of cases.

During its recently concluded 2014-15 term, the high court reversed a lower court ruling allowing retirees to receive post-retirement health care insurance that had been negotiated for them by their union before their retirement in M&G Polymers USA, LLC v. Tackett, 135 S.Ct. 926 (2015). The Court, in a decision written by Justice Clarence Thomas, overturned that ruling and sent the case back for new proceedings because the labor union was “silent” as to the continuity of such benefits for health care benefits for retirees after the agreement ended. Because the contract did not address “the duration of retiree’s benefits, a court may not infer that the parties intended those benefits to vest for life.”

That defeat followed a pair of setbacks for the union movement during the prior term. In one case last year, it disallowed President Barack Obama to exercise his constitutional authority to fill vacancies on the NLRB, the agency that oversees management, which had been held up for years by Republicans in Congress. InNLRB v. Canning, 134 S.Ct. 2550 (2014), the Court held that the president’s authority to fill vacancies under Article II § 2, Cl. 3 of the Constitution, did not extend to appointments while the Senate said it was in session, even though no business was conducted because the “Senate is in session when it says it is.” Unless there is a 10-day, or more, lapse in Senate business, recess appointments cannot be made without concurrence of that body.

But a more stunning, and perhaps foreboding, ruling was the decision in 2014 allowing home health care workers in Illinois to refuse to pay union dues, even though the union represents them in collective bargaining with the state, which pays their wages. In Harris v. Quinn, 134 S.Ct. 2618 (2014), the court reasoned that according the workers to pay dues infringes their First Amendment Right to freedom and expression of association, as quasi-public sector employees. The specter of that rationale being extended throughout the public sector, is hovering over the union movement as the high court this term, which begins on the traditional first Monday in October, is scheduled to hear another case challenging the “agency shop” law in California, one of 28 in the country, including Minnesota, that requires certain public sector employees to belong to unions and pay union dues.

In Friedrichs v. California Teacher Association,No.14-915, the justices will decide whether public sector workers can be required to belong to, and pay for, unions to represent their interests, a challenge to the precedent established in 1977 by the high court in Abood v. Detroit Board of Education, 431U.S. 209 (1977), which allows union members to opt out of paying only the portion of union dues that goes toward political or ideological purposes, a so-called “fair share” arrangement. In a case this term, the court is presented with the opportunity by the challengers to dismantle the entire “fair share” doctrine and allow objectors to refuse to pay any dues at all, a ruling which could, if adopted by the high court, seriously cripple public sector unions and, perhaps, could be extended to the private sector, as well.

D.C. developments

But unions see a glimmer of hope in a pair of developments last month in Washington, D.C., which were applauded by employee advocates and unions while decried by management representatives.

In Browning Ferris Industries of California,362 NLRB, No. 186 (Aug. 27, 2015), the NLRB ruled that businesses were deemed a “joint employer” with companies from which they hired temporary workers, a decision that may give a boost to employees and unions, especially in the host food industry, if the “joint” employee concept is applied to franchises, as the board may do in pending proceedings involving McDonald’s facilities around the country.

The D.C. Circuit Court also handed employees and unions a victory in Home Care Assn. v. Weil, No. 15-548 (Aug. 21, 2015), holding that the Department of Labor previously extended minimum wage and overtime pay requirements under the Fair Labor Standards Act to some 2 million health care aides, similar to the ones involved in the Harriscase, including several thousand in Minnesota.

Minnesota matters

The outlook is not so ominous for unions in Minnesota. The relatively steady base of union membership encourages greater stability.

There is not as many unfavorable court rulings here, nor any draconian legislation impairing the existence of unions or impeding their growth, as in Wisconsin and a few other Midwestern states.

But these matters could come to fruition in Minnesota, too, depending upon business, economic, and political developments in the years ahead. For the time being, Labor Day marks not only the unofficial conclusion of summer, but another cross roads for the organized labor movement in this country and Minnesota as well.

*Originally published in Minnesota Lawyer.