Cintas’ most recent challenge to union corporate campaign falls short

I suppose Cintas Corp figured it was worth a shot, but a novel defense strategy attempted by the uniform and laundry giant in the face of unfair labor practice charges ultimately proved unsuccessful. Earlier this week, the Eighth Circuit enforced an NLRB order finding Cintas committed several violations of the National Labor Relations Act. The appeals court, like the Board below, rejected Cintas’ contention that, essentially, it was entitled to interfere and/or retaliate against employees who engaged in prounion activities because UNITE HERE has been waging an aggressive corporate campaign against the company.

The NLRB General Counsel filed a complaint against Cintas, alleging a series of garden-variety unfair labor practice charges. In a hearing before an administrative law judge, Cintas conceded its antiunion animus. It asserted in its defense, however, that UNITE HERE was carrying out an unlawful nationwide corporate campaign against the company and that the unfair labor practice charges were filed for illegitimate purposes related to this campaign; thus, any employee activity in support of the union is not protected under the Act. The union’s corporate campaign was unprotected activity, Cintas reasoned, because it involved “coercive and disloyal tactics” that were intended to force the employer into a neutrality and card-check agreement.

However, the ALJ excluded as irrelevant the evidence Cintas sought to introduce regarding the union’s corporate campaign. Whether individual employee activity was protected was to be determined based on the employees’ own conduct and motives, the ALJ reasoned, not on unrelated corporate campaign activity by the national union. To have imputed the union’s conduct to individual employees without proof of specific knowledge “would have perverted common law principles of agency and run contrary to the purposes of the Act,” he wrote. The two-member NLRB adopted this position, and held the ALJ did not abuse his discretion by refusing to admit the evidence about the corporate campaign.

The Eighth Circuit affirmed and enforced the Board’s order. As the appeals court wrote, “We have been unable to find a reported case in which an employer has sought to use a union’s national campaign as a defense to unfair labor practice charges involving individual employee activity, and Cintas has not cited any.”

“The proper venue for Cintas to raise its allegations about the national campaign by UNITE HERE would be through unfair labor charges against the union itself,” the appeals court added.

An ongoing counterattack. The defense posture before the NLRB was not Cintas’ first challenge to UNITE HERE’s ongoing corporate campaign, launched in 2003 as part of an aggressive nationwide effort to organize Cintas workers. The company has responded with a litigation counter-offensive against the hotel, restaurant and textile workers union. Perhaps no employer has fought back so forcefully against organized labor’s corporate campaign strategy. Cintas’ efforts thus far have met with varied success.

“For the last five years, UNITE HERE and other labor organizations have carried on a campaign of negative, untrue and unlawful attacks against Cintas in an effort to extort concessions from the company,” Cintas alleged in a 2008 press release announcing the filing of a lawsuit in the Southern District of New York. (The 2008 suit consolidated an ongoing defamation suit filed by the company in an Ohio state court in 2004.) Cintas alleged violations of the federal and state Racketeer Influenced and Corrupt Organizations (RICO) statutes, claiming the unions engaged in extortion, interference with existing and prospective business relationships and deliberate attacks in order to artificially depress the value of Cintas stock, among other unlawful conduct. The state suit also alleged UNITE HERE violated Cintas’ trademark rights, including “improper use of Cintas’ trade name and trademark in various websites designed to further the unions’ extortion and reputation-destruction campaign.” (The union had created a Web site, "cintasexposed.org," featuring negative information about the uniform company, with a link to the union's Web site and a disclaimer stating its origins and purposes.)

A district court dismissed the RICO complaints. The union’s efforts to secure a neutrality agreement did not rise to the level of criminal extortion, the court found, noting that “courts have held uniformly that such an agreement provides benefits to both an employer and a union.” Further, “Cintas does not have a right to operate free from any criticism, organized or otherwise,” the court wrote. The court dismissed the trademark claims as well; given the content of the Web site and its obvious disdain for Cintas, it was unlikely that customers would be confused about the relationship between the parties. In an unpublished ruling issued last week, the Second Circuit affirmed dismissal.

DPPA claim succeeds. While Cintas was not technically a party to the litigation, a lawsuit brought by Cintas workers, filed by the law firm that represents Cintas in labor matters, and publicly hailed by the company, managed to strike a blow against UNITE HERE—and to thwart a key tactic used by labor unions to communicate with workers in their organizing campaigns.

During its organizing drive, UNITE HERE employed a tactic known as “tagging” in an effort to locate employees’ names and home addresses so the union could approach the workers outside the workplace. The union copied the license plate numbers of vehicles in Cintas’ employee parking lots and then used the numbers to obtain names and addresses of their registered owners from databases containing state motor vehicle records. A group of Cintas employees filed a class action suit, alleging the union violated the federal Drivers Privacy Protection Act (DPPA), which forbids “knowingly disclos[ing] or otherwise mak[ing] available to any person or entity: personal information... about any individual obtained by the department [of motor vehicles] in connection with a motor vehicle record.” 18 U.S.C. § 2721(a).

A district court held the union violated the federal privacy statute, granting summary judgment to the plaintiffs and awarding $5 million in damages to Cintas employees. The Third Circuit gloat.

Not just Cintas. Other employers have filed suits against labor unions alleging corporate campaign tactics have violated the law. Sutter Health, a Northern California hospital corporation, successfully sued UNITE HERE in 2006 when a jury found the union defamed the hospitals during an organizing drive. The union was ordered to pay over $17 million in damages. And Smithfield Foods is the plaintiff in ongoing litigation against the UFCW and other union defendants in a federal district court in Virginia. The company alleges RICO and state law claims, contending the defendants’ corporate campaigns damaged Smithfield’s corporate reputation and that it lost profits and stock value as a result. The defendants sought to dismiss the RICO action, claiming the extensive list of corporate campaign-related conduct alleged by the company in its complaint was merely coercive activity and not extortion. The lawsuit survived the motion to dismiss, however, and the litigation is ongoing.

No doubt the litigation counter-offensives represent an ongoing challenge for unions. On the other hand, they are a grudging nod by employers to organized labor’s success in organizing workers through such nontraditional means.

High Court to decide if SWAT officer will get Fourth Amendment slap across the mouth

On the surface, the question seems simple and pragmatic: Does a Special Weapons and Tactics (SWAT) officer have a reasonable expectation of privacy in text messages sent from his work-issued pager – a pager used to make SWAT call-outs? Never mind the fact that SWAT officers, during the execution of their law enforcement duties, must always be mindful of the Fourth Amendment rights of ordinary citizens, and thus, would likely have a better than average understanding of Fourth Amendment law and privacy rights. It would seem that the SWAT officer in Quon v Arch Wireless Operating Co, Inc (9thCir, 91 EPD ¶43,233) could not have been anything but unreasonable in believing that the personal, and sometimes sexually explicit, text messages he sent from his work pager would be shielded from review by his employer.

As anyone prosecuting or defending criminal cases knows, police communications concerning criminal activity are generally discoverable – and are often subpoenaed by defense attorneys to determine whether Fourth Amendment rights have been violated. Further, under public disclosure laws, such as the California Records Act, records related to the conduct of public business may be subject to disclosure. Add to that potential media requests for police communications in high profile cases – the kind that involve SWAT teams – and disclosure of SWAT-related communications would seem predictable.

But the Ninth Circuit held that the City of Ontario, California violated the Fourth Amendment and state constitutional privacy rights of the SWAT officer, as well as the officers he texted, when, as part of a text message overage audit, it read transcripts of the messages the officer sent on his work-issued pager.

Anything but simple. As illustrated by the sharply divided Ninth Circuit’s order denying panel rehearing and rehearing en banc, the legal issues and the interpretation of the facts in this case are anything but clear. For starters, the concurring order, written by Judge Wardlaw (who also authored the Ninth Circuit opinion), insists that the appeals court did not, in determining the reasonableness of the scope of the police department’s search in auditing the records, impose a “less intrusive means” test. Judge Ikuta, authoring the dissent, urges with equal force, that the panel, albeit without acknowledgement, did in fact apply such a test in its analysis – contrary to Supreme Court precedent. (Assuming the dissent is correct, the Ninth Circuit created a circuit split as to whether the “less intrusive means” analysis should be applied in determining the reasonableness of government activity under the Fourth Amendment.)

The concurrence and dissent also differ in their characterizations of the police department’s policies and practices related to privacy and auditing of the pagers. However, there clearly was no written policy specifically directed to the privacy of text messages transmitted by the pagers.

Certiorari granted. Today, the High Court granted the City of Ontario, California’s petition for certiorari (City of Ontario v Quon, USSCt, Dkt No 08-1332). The questions presented to the Court are:

1. Whether a SWAT team member has a reasonable expectation of privacy in text messages transmitted on his SWAT pager, where the police department has an official no-privacy policy but a non-policymaking lieutenant announced an informal policy of allowing some personal use of the pagers.

2. Whether the Ninth Circuit contravened this Court’s Fourth Amendment precedents and created a circuit conflict by analyzing whether the police department could have used “less intrusive methods” of reviewing text messages transmitted by a SWAT team member on his SWAT pager.

3. Whether individuals who send text messages to a SWAT team member’s SWAT pager have a reasonable expectation that their messages will be free from review by the recipient’s government employer.

Implications for private employers? Of course, these Fourth Amendment issues arise in the context of government employment. But private employers and employees may have a stake in the outcome, too. With employees using internet forums to make sometimes disparaging comments about employers, and their frequent use of company equipment to visit favorite websites and communicate with personal acquaintances, employers will increasingly monitor such use. It seems likely that the police department’s privacy policy, or lack of a policy specifically directed to the pagers, will play a significant role in the Supreme Court’s analysis. To that extent, the outcome will be at the very least, instructive, and perhaps even, will point the way for employers seeking to avoid liability for violating employee privacy interests.

Regulatory agenda & corresponding webchat provide indications of OFCCP's enforcement focus

OFCCP Director Patrica Shiu's December 8, 2009 webchat on the agency's Fall 2009 regulatory agenda provided some indications on how the Obama Administration plans to enforce the EEO and affirmative action obligations of government contractors. In her webchat, Shiu said that the OFCCP "will vigorously enforce" the three laws under its jurisdiction - Executive Order 11246, Section 503 of the Rehabiltation Act and VEVRAA - "and will do so through both systemic and individual cases." She stated that the OFCCP "will not be exclusively focusing on systemic discrimination as we have in the past few years."

Update to construction contractor requirements. In its regulatory agenda, the OFCCP stated that it plans to issue a Notice of Proposed Rulemaking (NPRM) in January 2011 to revise the regulations in 41 CFR Part 60-4 implementing the affirmative action requirements of Executive Order 11246 that are applicable to federal and federally assisted construction contractors. In her webchat, Shui noted that the OFCCP's affirmative action regulations and goals applicable to construction contractors "were last updated about thirty years ago." "We know much has changed in the construction industry and workforce since that time," she continued. "As part of the rulemaking process, OFCCP will be reviewing barriers to equal opportunity in the construction industry including employment opportunities for women and minorities. OFCCP will also be considering how construction contractors may best ensure equal opportunities for all job applicants and employees."

VERAA and Section 503 requirements. According to the regulatory agenda, the OFCCP will publish an Advance Notice of Proposed Rulemaking (ANPRM) in December 2010 to revise the regulations in 41 CFR Parts 60-741 that implement the nondiscrimination and affirmative action provisions of Section 503 of the Rehabilitation Act of 1973, as amended. In particular, the ANPRM would strengthen affirmative action requirements by requiring federal contractors and subcontractors to conduct more substantive analyses and fully monitor their recruitment and placement efforts on behalf of individuals with disabilities. In December 2010, the OFCCP plans to issue an NPRM that would revise the regulations in 41 CFR Parts 60-250 and 60-300, implementing the nondiscrimination and affirmative action provisions of VEVRAA. The NPRM would amend the regulations to strengthen the affirmative action requirements by requiring that federal contractors and subcontractors to conduct more substantive analyses of recruitment and placement actions taken under VEVRAA and would require the use of numerical targets to measure the effectiveness of affirmative action efforts.

Regarding the forthcoming proposals to amend the Section 503 and VEVRAA regulations, Shiu commented that the "OFCCP will seek input from stakeholders on the type of statistical or other analyses that might be used by contractors to better monitor their employment practices with respect to applicants and employees with disabilities and protected veterans." The OFCCP will also "be researching existing data on the availability of qualified individuals with disabilities and protected veterans."

The regulatory agenda and corresponding webchat show that the OFCCP will continue with, and build upon, the increased focus on EEO and affirmative action requirements in regard to individuals with disabilities and veterans that started during the Bush Administration. Moreover, the long-neglected construction contractor regulations will be getting some much needed updating. Considering the significant regulatory changes being considered by the OFCCP, stakeholders should not miss their chance to comment on these proposals once they are published. Indeed, during her webchat, Director Shiu explicity encouraged comments on the upcoming proposals. Stakeholders will have an opportunity to hear further discussions regarding these upcoming proposals during three webinars (one for each new proposal) to be hosted by the OFCCP in January 2010. In addition, OFCCP officials will be hosting town hall meetings across the country in February and March. The specific dates and times for these events will be posted on the OFCCP website.

States extend anti-discrimination protections to include sexual orientation and gender identity

Thanks to recent news reports featuring Chaz Bono talking about going through gender reassignment, issues of sexual orientation and gender identity have a more public face and some hope that means more attention. While federal anti-discrimination protections have not been expanded to include sexual orientation and gender identity, despite repeated attempts, states have continued to take on the issue.

In the past year, several states have extended anti-discrimination protections for sexual orientation, gender identity, and/or transgender status. Colorado, for example, has adopted rules to eliminate discrimination on the basis of sexual orientation, including transgender status, in employment as well as other areas. Also, employers may prescribe standards of dress or grooming that serve a reasonable business or institutional purpose, provided that individuals are not required to dress or groom in a manner inconsistent with that individual’s gender identity. Those rules became effective November 30, 2009.

Other laws regarding sexual orientation/gender identity issues passed this year include legislation in California requiring the state Department of Public Health to develop a training program for nurses, nurse assistants and physicians (working in skilled nursing facilities or congregate living health facilities) that focuses on preventing and eliminating discrimination based on sexual orientation and gender identity. Connecticut enacted a law that implemented the guarantee of equal protection under the constitution of the state for same-sex couples and the decision of the Connecticut Supreme Court, Kerrigan v Commissioner of Public Health, ConnSCt, released October 10, 2008. In addition, the law repealed a provision in its sexual orientation law specifying the construction of statute.

Delaware enacted a law prohibiting discrimination based on sexual orientation in areas including employment, public works contracting and public accommodations. Under the law, “sexual orientation” is defined exclusively to mean heterosexuality, homosexuality, or bisexuality. Religious employers are exempt, except where the duties of employment or employment opportunity pertain solely to activities of the organization that generate unrelated business taxable income subject to taxation under the Internal Revenue Code. Also in Delaware, Governor Jack Markell issued an executive order extending anti-discrimination safeguards for state employees and applicants for state jobs to all military veterans and to protect against discrimination based on gender identity or expression.

Other states, such as Michigan, have legislation working through the state legislature that would extend state anti-discrimination protections for sexual orientation, gender identity and/or transgender status. H.B. 4192 would amend the state’s civil rights act to provide anti-discrimination protections for sexual orientation, gender identity or expression. State Representative Rebekah Warren, primary sponsor of H.B. 4192, says the bill is not about special rights or special interests but about protecting "citizens and their families from being fired from a job or being denied housing because of who they are or who they love." According to a statement on her website, Warren also sees this as a way of making Michigan more competitive in the global economy. "This policy not only protects Michigan families, but also works to reverse brain drain and attract businesses worldwide without spending a dime. We simply can't afford not to do it."

Millions of laid-off workers lose health coverage as federal COBRA subsidies expire

On December 1, many of the millions of laid-off workers and dependents who received federal subsidies to help pay for health care coverage lost those subsidies and likely joined the ranks of the uninsured, according to the consumer health organization Families USA. The subsidies -- which were started last March by the American Recovery and Reinvestment Act (ARRA) but were made available for only nine months -- have enabled millions of laid-off workers and dependents to afford so-called "COBRA" premiums needed to continue health coverage from their previous employer.

Under the ARRA, the federal subsidies pay 65 percent of the cost of COBRA premiums. Nationwide, the federal subsidies for COBRA family coverage average $722 per month. Without subsidies, the report finds, nationwide COBRA premiums for family health coverage will cost laid-off workers, on average, $1,111 per month -- 83.4 percent of the average ($1,333) monthly Unemployment Insurance (UI) checks they receive. For the first recipients, who began receiving subsidies in March, the subsidies will expire on November 30. For those who started receiving subsidies after March, the expiration will be nine months after their start-up date.

"When workers lose their jobs, they often lose their health coverage as well," said Ron Pollack, executive director of families USA. "For millions of laid-off workers and their families, the federal COBRA subsidies have been a health-coverage lifeline. It is essential, therefore, that new jobs legislation extends those subsidies."

Pollack noted that pending health reform legislation would provide a permanent source of help to laid-off workers. The health reform bills pending in Congress would enable laid-off workers and their families to obtain health coverage through a newly created marketplace, called an "exchange," and families with low incomes would receive tax-credit subsidies to help pay the premiums.

According to the Families USA report, average monthly family COBRA premiums vary quite significantly from one state to another --ranging from $979 in Idaho and $989 in Iowa to $1,232 in Minnesota.

The report also indicates that average monthly UI checks vary substantially from one state to another. The two states with the lowest average UI benefits are Mississippi ($839) and Alabama ($903), and the two states with highest benefits are Washington ($1,826) and Hawaii ($1,808).

In nine states, the average family COBRA premium exceeds the average UI benefit. In Mississippi, for example, the average monthly unsubsidized family COBRA premium is 22.4 percent higher than the average monthly UI check: The average family COBRA premium in the state is $1,027, while the average monthly UI check is $839.

The eight other states in which the average family COBRA premium exceeds the average UI check are: Alabama ($1,005 vs. $903); Alaska ($1,209 vs. $1,032); Arizona ($1,111 vs. $941); Delaware ($1,209 vs. $1,125); Florida ($1,147 vs. $1,010); Louisiana ($1,013 vs. $968); South Carolina ($1,090 vs. $1,061); and Tennessee ($1,112 vs. $975).

"Extending the federal COBRA subsidy is a critical, immediate measure to protect recently laid-off workers and their families," said Pollack. "For the future peace of mind of working families, however, it is important to pass health care reform so that nobody has health coverage taken away when he or she switches jobs."

Any extension of the COBRA subsidy program will also likely make the subsidies available to newly unemployed individuals. Under the current program, people who lose their jobs after December 31, 2009, will not qualify for the subsidy.

The Congressional Budget Office and Joint Tax Committee estimated that approximately 7 million adults and dependent children would receive the COBRA subsidy in 2009. The Treasury Department is compiling data about how many workers received the subsidy, but a count of the people benefiting from the subsidy is not yet available.

That was the week that was (in employment news)

While the jury is still out on whether we can finally see a light at the end of the jobs-creation tunnel, some of the employment news out this past week wasn’t all bad, for a nice change of pace (how’s that for damning with faint praise?).

Impact of stimulus. The week began with the Congressional Budget Office’s stimulus report card, “Estimated Impact of the American Recovery and Reinvestment Act (ARRA) on Employment and Economic Output as of September 2009.” The CBO reported that between 600,000 and 1.6 million people were employed in the third quarter of 2009 who otherwise would not have been. While this number is in line with original government estimates, an important point to keep in mind is that only $100 billion of the $787 billion stimulus package has actually been spent by the federal government so far. And, the CBO noted, another $90 billion of stimulus will be coming in the form of tax reductions.

"Estimating the law's overall effects on employment requires a more comprehensive analysis than the recipients' reports provide," the CBO said. "Therefore, looking at the actual amounts spent so far (where identifiable) and estimates of the other effects of ARRA on spending and revenues, CBO has estimated the law's impact on employment and economic output using evidence about how previous similar policies have affected the economy and various mathematical models that represent the workings of the economy. On that basis, CBO estimates that in the third quarter of calendar year 2009, an additional 600,000 to 1.6 million people were employed in the United States."

Jobs summit initiative. Next up was Thursday’s jobs summit at the White House, where more than 100 CEOs, academics, small business and union leaders and local officials participated in a half-day brainstorming session with administration officials. President Obama, who indicated that some of the ideas generated could be put to work almost immediately, while others will become part of legislation for Congress to consider, emphasized the need to quickly move forward “on an aggressive agenda for energy efficiency and weatherization." Other suggestions to come from the session included tax incentives for job creation, improving the credit markets, and the use of community colleges as employee training centers.

In light of the fact that jobs creation will certainly be the key issue in 2010’s midterm Congressional elections, President Obama today continued the theme as he launched a month-long “White House to Main Street” tour in Allentown, Pennsylvania, to be followed by next Tuesday’s invitation-only speech at the Brookings Institution.

Jobless rate: good news/bad news. Tentative feelings of relief greeted today’s announcement by the Labor Department that the unemployment rate fell to 10 percent from a 26-1/2 year high of 10.2 percent in October, as nonfarm employers cut “only” 11,000 jobs. In addition, the government revised job losses for September and October, which showed that 159,000 fewer jobs were lost than previously reported. November's data was the strongest since December 2007, when jobs increased by 120,000.

Reuters reported that improvement in the labor market last month was broad based, with four sectors, including the government, adding jobs. Manufacturing payrolls fell 41,000 after dropping 51,000 in October. The construction sector shed 27,000 jobs, while the service-providing sector added 58,000 workers. Professional and business services added 86,000, while education and health services increased payrolls by 40,000. Temporary help employment rose by 52,400.

Although government data strongly suggested that the labor market may be close to turning the corner, not everyone was immediately willing to don their rose-colored glasses. As Economic Policy Institute (EPI) Director Larry Mishel noted in Tula Connell’s AFL-CIO Now Blog, he would not interpret this decline as the beginning of an ongoing reversal in the unemployment rate. In fact, he said, the jobs situation likely will worsen for up to the next 12 months. One reason: “There is a backlog of people who dropped out of labor force who will come back in—up to 3 million jobless workers. And when they start looking for jobs again unemployment will rise.”

EPI economist Heidi Shierholz acknowledged that layoffs are still high but have gone way down from where they were. “The hiring of temporary workers has increased for the past three months, which is an indicator that employers are testing the waters to increase staff. But hours need to rise before a recovery for jobless workers is really in sight—and so far, the number of hours worked remains flat, hovering at 33 hours per week since summer—the shortest on modern record,” she said.

So, are we really starting to see some improvement on Main Street? Sure, the economic experts and pundits all have their opinions—but one thing’s for certain: it’s way past time for both the government and private sectors to come up with solutions for putting people back to work in decent-paying jobs. And it isn’t just an election that’s hanging in the balance.

Made by union members, funded by union dollars

In the current economic crisis, labor unions are looking for any possible way to shield their members from the worst that the downturn has to offer. In what has to be one of the more imaginative solutions to this near-universal problem, the AFL-CIO is thinking about financing the building of a skyscraper, one that its members will be hired to build.

In 2007, Chicago developers broke ground on a twisty skyscraper, the Spire, designed by the renowned architect Santiago Calatrava. At 2000 feet, it would not only be the largest building in the City of Big Shoulders, it would also be one the largest in the world. Open only for residences, the least expensive of which would cost a cool $750,000, the project was a symbol of an earlier, more economically optimistic time. However, since the groundbreaking, the global economic crisis has drained funds and there's been no work on the site for over a year.

Where passing cars see a large hole, the AFL-CIO saw an opportunity. "We're trying to get monies invested to get the project going, to get the spire project going," said Thomas Villanova, head of the local Building and Construction Trades Council in a recent interview with Chicago Public Radio. According to Villanova, under the proposed deal, union members would do all the work on the Spire. How much work would that amount to? Try seven-and-a-half million work hours.

It makes sense for the union. Villanova said that some locals have up to 30 percent unemployment. Members are losing their benefits, their homes, their families, because of the prolonged slump in housing construction. That grim reality makes the reported $170 million dollar investment a potentially wise move. Villanova predicts that the Spire is going to require five years of construction, resulting in the creation of thousands of jobs.

Garrett Kelleher and his firm, Shelbourne Development Group Inc., the developer for the top-bracket residential tower met recently with union leaders as talks. He hopes to borrow $170 million from AFL-CIO pension investment trusts. While the sides failed to reach an agreement in their most recent meeting, talks will continue.

Kelleher and Spire representatives have been visiting local union halls over the past few weeks in an attempt to convince union leaders to invest in the building, according to the Chicago Tribune. (http://www.chicagotribune.com/business/chi-mon-spire-1130-nov30,0,1953419.story.)

It remains to be seen whether the developer's financial troubles will prevent the deal, but if it goes through, it would provide a much-welcome boon to the union's beleaguered members.