Category Archives: Court Decisions & Legislation

SUPREME COURT LIMITS USE OF CLASS ACTION ARBITRATIONS

By:  Alan M. Levy

On April 24, 2019 the United States Supreme Court held that an employee cannot expand an individual claim to a class action arbitration unless both parties have explicitly agreed to that process.  Arbitration is created by contract; the parties must agree to waive their statutory right to have a court determine whether their employment contract or other relationship terms were breached.

In recent years the courts have held that an employee who is not subject to a union contract can be required to arbitrate a personal dispute pursuant to an employment contract, acceptance of a company rule, or other form of agreement instead of taking their claim to a court or to an agency such as the EEOC.  At the same time, some employee claims have been presented on a class-wide basis, the complainant arguing that a significant number of fellow employees all had the same issue, such as the method for calculating overtime or obtaining a promotion.  These complainants often argued that individual arbitrations were not economically viable for employees, and that the same remedy should apply to all similarly situated employees.  What had been described as a speedy, inexpensive dispute-resolution process through arbitration for individuals could become a full-scale class action lawsuit if the single employee could expand the potential remedy this way.

In Lamps Plus, Inc. v. Varela, the United States Supreme Court held 5-4 that claims by individual employees could not be expanded into class arbitrations unless the arbitration agreement (typically in the person’s employment contract) specifically provided that the larger process was permissible.  The Court found that the shift from individual to class arbitration was such a “fundamental change” that it “sacrifices the principal advantage of arbitration” and “greatly increases risks to defendants.”

The employee had argued that the parties’ agreement to arbitrate was ambiguous and any choice of process possible under that ambiguity should be interpreted against its author – the party that had drafted the (employment) agreement requiring arbitration to the exclusion of court or agency actions.  Chief Justice Roberts stated for the majority that “Arbitration is strictly a matter of consent,” and an affirmative agreement to both the subject-matter and the procedure for arbitration is necessary to require use of that process.  A class arbitration is fundamentally different from the individualized form envisioned in the Federal Arbitration Act; class arbitration “sacrifices the principal advantage of arbitration—its informality—and makes the process slower, more costly, and more likely to generate procedural morass than final judgment.”  Use of this process requires an affirmative “contractual basis for concluding that the party agreed to do so,” and silence or ambiguity in the language of the underlying agreement to arbitrate cannot be taken as that affirmative consent to this expanded process.

This decision reiterates the contractual basis and limits of arbitration.  Waiving the right to court or agency decision-making and accepting the determination of a private arbitrator require the affirmative consent of a clear contract to do so.

Should you have any questions about the elements of a binding arbitration agreement, its implementation, and its scope, please contact one of the attorneys here at Lindner & Marsack, S.C.

EMPLOYEE NOT ENTITLED TO FURTHER WORKER’S COMPENSATION BENEFITS BECAUSE HER DISABILITY-CAUSING SURGERY WAS NOT RELATED TO A COMPENSABLE WORK INJURY

By:      Daniel M. Pedriana and Claudia R. Harke

On August 28, 2018, District I of the Wisconsin Court of Appeals held that the Plaintiff was not entitled to further worker’s compensation benefits because her disability-causing surgery was not related to a compensable work injury.

In Theresa Payton-Myrick v. LIRC, Theresa Payton-Myrick was diagnosed with arthritic changes and degenerative disc disease in her spine. Payton-Myrick was employed as an administrative assistant at the University of Wisconsin-Milwaukee. On July 21, 2009, she fell out of her desk chair and sustained several muscle strains. She subsequently received opinions from several doctors, one of whom recommended a spinal fusion surgery.

Despite conflicting medical opinions, Payton-Myrick underwent surgery, which resulted in multiple procedures and left her “arguably disabled.” Payton-Myrick applied for worker’s compensation benefits. The UW System denied her benefits, which caused Payton-Myrick to file a worker’s compensation claim.

An administrative law judge concluded that Payton-Myrick had “suffered a work-related injury that aggravated Payton-Myrick’s back condition beyond its normal progression” and that “the treatment, including surgery, was necessary and reasonable.”

The Labor and Industry Review Commission (“LIRC”) reversed the ALJ and found that Payton-Myrick’s muscle strains were from a compensable work injury, however, the work injury had healed and did not aggravate her pre-existing condition enough to necessitate surgery. LIRC also made several factual findings including that Payton-Myrick’s disability causing surgeries treated her pre-existing condition, not her compensable work injury.

The Court of Appeals upheld LIRC’s denial of further benefits based on a holding from the Wisconsin Supreme Court in Flug v. LIRC. In Flug, the Supreme Court ruled that Wis. Stat. § 102.42(1m), which states that if an employee who has sustained a compensable injury undertakes treatment in good faith that is medically acceptable, but unnecessary, the employer shall pay for all disability incurred as a result, only applies if the unnecessary, but acceptable surgery is to address the workplace injury.

Since LIRC made a factual finding that Payton-Myrick’s two spinal surgeries were focused on her pre-existing disc problems, not the workplace injury, the Court of Appeals upheld LIRC’s denial of further benefits.

This Decision does not drastically change the law surrounding whether an employee is entitled to further worker’s compensation benefits, however, it reinforces that Wis. Stat. § 102.42(1m) only applies if the unnecessary-but-acceptable surgery was done to address the workplace injury. However, it will be important to have treating and independent doctors specifically note the reason for an employee undergoing an unnecessary-but-acceptable surgery, as that will determine whether they are owed additional benefits.

The time to appeal this decision has passed and the decision remains unpublished.

If you have questions about this decision, please contact Daniel M. Pedriana by email at dpedriana@lindner-marsack.com or Claudia R. Harke by email at charke@lindner-marsack.com or any other attorney with whom you have been working with at Lindner & Marsack, S.C.

SUPREME COURT UPHOLDS USE OF CLASS ACTION WAIVERS

By:  Jenna K. Leslie

Yesterday, the Supreme Court of the United States issued a significant victory for employers when ruling that class and collective action waivers in employment arbitration agreements are fully enforceable under the Federal Arbitration Act (FAA) and do not violate an employee’s rights under the National Labor Relations Act (NLRA).

In Epic Systems Corp. v. Lewis (a companion case to National Labor Relations Board v. Murphy Oil USA and Ernst & Young LLP v. Morris), the high court issued a 5-4 decision upholding the validity of class action waivers in arbitration agreements.  Justice Neil Gorsuch, writing the majority opinion, explained that the FAA unequivocally requires federal courts to enforce arbitration agreements according to their terms, and nothing in the NLRA, which was enacted after the FAA, was intended to negate that requirement.  The opinion specifically found that Section 7 of the NLRA focuses on an employee’s right to organize and bargain collectively, but it does not create a right to pursue class or collective action lawsuits.

Writing for the dissent, Justice Ruth Bader Ginsburg called the majority opinion “egregiously wrong” and argued that the NLRA was intended to equalize the power imbalance in most employment relationships by allowing employees to band together through collective action to improve the terms and conditions of their employment.  The majority opinion rejected this notion, concluding that there is nothing in the NLRA that suggests a clear intention to displace the provisions of the FAA.

In recent years, employees have effectively used class and collective action procedures to bring massive wage and hour claims in both state and federal court.  This decision will curb those lawsuits and allow employers to rely on the enforceability of class and collective action waivers and arbitration provisions within their employment agreements.  Class and collective action waivers are useful tools used to preserve confidentiality, resolve claims more quickly, and limit potential exposure to collective action lawsuits.

This decision is said to affect at least 25 million existing employment agreements.  Employers should review their employment arbitration agreements carefully to determine which agreements are affected by this decision.  Employers should also consider whether it makes sense to implement such agreements prospectively, as the decision paves the way for employers to include class and collective action waivers in future employment agreements.

If you have questions about this material, please contact Jenna K. Leslie or  any other attorney you have been working with at Lindner & Marsack, S.C.

We look forward to seeing many of you tomorrow at our 2018 Annual Compliance/Best Practices seminar held at the Sheraton Hotel in Brookfield, Wisconsin.

Employers Who Utilize Temporary Or Loaned Employees Are Now Potentially Liable For Third Party Claims Brought By An Injured Employee

By:  Daniel Pedriana, Joseph Birdsall and Claudia Harke

On January 9, 2018, District III of the Wisconsin Court of Appeals decided that Wis. Stat. § 102.29(6)(b)1 allows an injured temporary employee to choose between filing a worker’s compensation claim and suing the temporary employer for tort damages.

In Rivera v. West Bend Mutual, Carlos Rivera and two other individuals died in a single-vehicle accident. Rivera was survived by five children, two of whom were minors at the time of his death. At the time of the accident, Rivera was a passenger in a vehicle owned by Alpine and insured by West Bend. Rivera was employed by Alex Drywall, which, in turn, had provided him to perform work for Alpine. Alpine paid Alex Drywall for Rivera’s services and Alex Drywall paid Rivera for his work.

In February 2016, Rivera’s two minor children and the special administrator of Rivera’s estate commenced a wrongful death lawsuit against Alpine and West Bend. The Estate had not filed a claim for worker’s compensation under the Act. A Milwaukee County Circuit court judge granted summary judgment for Alpine and West Bend, concluding that because Rivera was an employee of a temporary help agency (Alex Drywall), the Estate was prohibited from bringing a tort action against Alpine.

On appeal, the Wisconsin Court of Appeals reversed the circuit court, ruling that the exclusive remedy provision of the Worker’s Compensation Act does not bar a temporary employee from bringing tort claims against a third party.  The Court found that Alex Drywall was Rivera’s employer, and therefore, the exclusive remedy provision prohibited the Estate from bringing a tort claim against Alex Drywall, but it did not prohibit the Estate from pursuing tort claims against Alpine and West Bend, which the Court found to be third parties in this case.

The Court concluded that Wis. Stat. § 102.29(6)(b)1 only bars tort claims from temporary employees who make claims for worker’s compensation. In this case, it was undisputed that the Estate had not made a worker’s compensation claim. As a result, the Estate was not barred from pursuing tort claims against Alpine and West Bend—the temporary employer and its insurer.  The Estate was still barred from suing Rivera’s primary employer, Alex Drywall, which the Court treated as a temporary help agency in this case.

The Rivera decision is significant because it exposes certain Wisconsin employers to tort liability that they were previously sheltered from. Under the Decision, if a temporary employee is injured, the temporary employee may pursue tort claims against the employer that they are placed with or they may file a worker’s compensation claim against their primary employer—the temporary employment agency.

Employers who compensate temporary employment agencies for the services of employees primarily employed by the temporary help agencies should be concerned about tort liability in the event of an injury. Even if other employers do not advertise themselves as temporary help agencies, they may fit the definition of temporary help agency under the statute like Alex Drywall did in the Rivera decision. Furthermore, the Rivera decision indicates that loaned employees under Wis. Stat. §102.29(7) produce the same tort liability as temporary employees who are primarily employed by a temporary help agency.

This decision is currently unpublished, but was recommended for publication by the Third District of the Wisconsin Court of Appeals. The parties have 30 days to file a petition for review to the Wisconsin Supreme Court. This 30 day period will expire on February 8, 2018. As of January 24, 2018, no petition has been filed.

If you have questions about this material, please contact Daniel M. Pedriana (dpedriana@lindner-marsack.com), Claudia R. Harke (charke@lindner-marsack.com), or Joseph D. Birdsall (jbirdsall@lindner-marsack.com) or any other Lindner & Marsack, S.C. attorney.

 

Wisconsin Supreme Court Declares that Non-Solicitation of Employee Provisions are Governed by the Same Wisconsin Statute that Addresses Non-Compete Provisions

By Oyvind Wistrom

The Wisconsin Supreme Court issued a landmark decision on Friday in the case of The Manitowoc Company, Inc. v. John Lanning, 2018 WI 6.  The case represented the Court’s first opportunity to determine whether a Non-Solicitation of Employee (NSE) provision in a contract between an employer and an employee is governed by the same statute, Wis. Stat. § 103.465, that governs the enforceability of non-compete restrictive covenants.  The majority of the Court concluded that NSE provisions are indeed governed by Wis. Stat. § 103.465, and then proceeded to find the NSE at issue overbroad and unenforceable because it restricted Lanning’s ability to engage in ordinary competition attendant to the free market.

The case involved the interpretation of a NSE provision signed by Lanning while he was previously employed by The Manitowoc Company, which prohibited him, for a period of two years following the termination of his employment, from soliciting, inducing or encouraging any employee of The Manitowoc Company to terminate his/her employment with The Manitowoc Company or to accept employment with a competitor, supplier or customer of The Manitowoc Company.  After separating from The Manitowoc Company, Lanning accepted employment with SANY, a competitor of The Manitowoc Company’s crane division.  It was alleged that he subsequently engaged in recruitment efforts in which he encouraged employees of The Manitowoc Company to accept employment with SANY.

The Circuit Court initially ruled in favor of The Manitowoc Company and awarded damages related to the alleged breach.  The Wisconsin Court of Appeals reversed and ruled in favor of Lanning, finding the NSE provision unenforceable under Wis. Stat. § 103.465 because it was broader than reasonably necessary to protect a legitimate business interest of The Manitowoc Company.  Specifically, the NSE was overbroad because it restricted Lanning from encouraging as many as 13,000 employees of The Manitowoc Company, many of whom worked in a different division of the company and with whom Lanning had no contact, to terminate their employment with The Manitowoc Company.

The majority of the Justices on the Wisconsin Supreme Court agreed and affirmed the decision of the Court of Appeals.  In so doing, the Court first concluded that Wis. Stat. § 103.465 governed the enforceability of NSE provisions.  The Court thus clarified that in order for a NSE provision to be enforceable under Wisconsin law, it must be (1) reasonably necessary for the protection of the employer; (2) provide a reasonable time period; (3) provide a reasonable territorial limit; (4) not be harsh or oppressive as to the employee; and (5) not be contrary to public policy.  The lead opinion of the Court concluded that the NSE at issue was not reasonably necessary to protect a legitimate interest of The Manitowoc Company.  In particular, as the restriction was worded, it prevented Lanning from encouraging any Manitowoc Company employee, no matter the employee’s job or location, to terminate his or her employment with Manitowoc for any reason, or soliciting any Manitowoc Company employee to take any position with any competitor, supplier or customer of The Manitowoc Company.  Without a specified territory or class of employees, the provision restricted Lanning’s conduct with respect to all employees of The Manitowoc Company everywhere.  The restriction was simply too broad for the Court to enforce.

The primary lesson to be learned from this case is that in order for a Non-Solicitation of Employee provision to be enforceable under Wisconsin law, the provision must be narrowly tailored to protect a legitimate business interest.  An employer does not have a protectable interest in restricting competition of the type that an ordinary stranger can provide.  For instance, while The Manitowoc Company’s NSE was extremely broad, a NSE that, for example, only prevents the recruitment or poaching of key employees with whom a former employee had contact for a specified period of time, may still be enforceable under Wisconsin law.  Even such a restriction must still be drafted in such a way as to ensure it satisfies all five statutory requirements outlined above.  Employers who utilize NSE provisions should review these provisions carefully with legal counsel to ensure they are compliant and enforceable under Wisconsin law.

For further information, or assistance in drafting or reviewing your restrictive covenants, please contact Attorney Oyvind Wistrom at (414) 273-3910 or via email at owistrom@lindner-marsack.com.  Mr. Wistrom was lead counsel in The Manitowoc Company case and successfully argued the case before the Wisconsin Supreme Court.

WISCONSIN SUPREME COURT DEFINES “SUBSTANTIAL FAULT” STANDARD FOR UNEMPLOYMENT INSURANCE AND WORKER’S COMPENSATION MATTERS

By:  Daniel Finerty

On May 4, 2017, the Wisconsin Supreme Court released a long–awaited decision in Lela Operton vs. LIRC, 2017 WI 46, the first Supreme Court interpretation of Wisconsin’s “substantial fault” standard. Operton held that, as a matter of law, the employee’s eight accidental or careless cash-handling errors over the course of 80,000 cash-handling transactions during 21 months of employment were inadvertent and, therefore, met an exemption to the “substantial fault” standard. The substantial fault standard is used in unemployment insurance and worker’s compensation disputes.

Background

Operton worked for Walgreens in Madison until March 24, 2014, when she was terminated for the last of 8 separate errors when she failed to check identification during a customer’s $399.27 credit card purchase in violation of Walgreen’s policy. Because the credit card was later determined to have been stolen, Walgreens was out the $399.27. This error Operton made was not unlike the others she made during her 21 months of employment:

  • In October 2012, Operton received a verbal warning after she accepted a Women, Infants, and Children (WIC) check for $8.67 when the check should have been for $5.78, a mistake which costs Walgreens $2.89.
  • In February 2013, Operton received a written warning for two errors. First, she accepted a WIC check for $14.46, but did not get the customer’s signature on the check. In March 2013, she gave a $16.73 check back to a customer. Walgreens suffered losses of $14.46 and $16.73 as a result of these errors because it was unable to process these two checks.
  • A few months later, Operton took a WIC check for $27.63 before the date on which it was valid. Walgreens was unable to process the check, and Operton received a final written warning.
  • On January 1, 2014, Operton returned a WIC check for $84.95 back to a customer that the customer had tried to use to make a purchase, resulting in a loss of $84.95. Walgreens gave Operton the first of two final written warnings.
  • On January 29, 2014, Operton received the second final written warning (any additional cash-handling errors would lead to her termination) and served a two-day suspension after she accepted a check for $6.17 even though it was written for $6.00, thereby causing another loss. In addition, a customer attempted to pay for $9.26 worth of items but left the store without completing the debit transaction, which caused a second monetary loss that day of $9.26.

After hearing, an Appeal Tribunal found that Operton was disqualified from receiving unemployment insurance benefits because she was terminated for substantial fault, a finding the Labor and Industry Review Commission (Commission) affirmed, the Court of Appeals reversed the Commission’s finding. The Supreme Court accepted review.

Supreme Court Decision

The Supreme Court agreed with the Court of Appeals that the Commission had not provided a reasonable construction to support its conclusion that Operton was disqualified for “substantial fault,” defined by Wis. Stat. §108.04(5g) as:

For purposes of this paragraph, “substantial fault” includes those acts or omissions of an employee over which the employee exercised reasonable control and which violate reasonable requirements of the employee’s employer but does not include any of the following:

  1. One or more minor infractions of rules unless an infraction is repeated after the employer warns the employee about the infraction.
  2. One or more inadvertent errors made by the employee.
  3. Any failure of the employee to perform work because of insufficient skill, ability, or equipment.

While the Court conceded substantial fault existed because Operton exercised reasonable control over the cash handling transactions at issue and that Walgreens reasonably required her to handle such transactions, it ultimately found that the case turned on the Commission’s failure to examine the question of whether Operton’s errors constituted “one or more inadvertent errors,” which were exempt from the definition of substantial fault under (2.) above.

Examining that question, the Court found that Operton’s errors were not so egregious to warrant a conclusion that she behaved recklessly or intentionally but, instead, that her errors were inadvertent. While there was no testimony by Operton cited in support of its conclusion, the Court cited the length of her employment, the 80,000 transactions she processed, the period of time between errors and the fact that Operton was not making the same errors (even though they were similar in nature) in concluding the errors were inadvertent and, thus, outside of the definition of substantial fault. As further support for its conclusion, the Court cited the Commission’s finding that Operton had not been terminated for misconduct i.e., that there was no evidence Operton willfully disregarded her employer’s interests nor was she so careless or negligent as to be guilty of misconduct. Ultimately, the Court held that Operton’s 8 accidental or careless errors were, as a matter of law, “inadvertent errors” because the employee made these errors during a 21-month period during which she processed 80,000 cash-handling transactions and, therefore, substantial fault did not exists to deny benefits.

Analysis

The Court’s analysis to reach this result is rather interesting, especially considering its impact going forward. First, as a result of the Court’s numerical analysis, one must wonder at what level do employee errors cease being inadvertent and whether the answer to this question will have to remain for the next substantial fault dispute on which the Supreme Court grants review.

Second, the Court indication that an employer has the burden to establish substantial fault, while perhaps accurate, failed to allocate the burden of proof as to the substantial fault exceptions. In doing so, the Court’s opinion suggests that employers are responsible for proving a negative i.e., that the employee’s errors were not inadvertent. While proving this negative may be challenging, employers would be wise to gather statements and other evidence to show that an employee’s errors were not an accidental oversight or the result of carelessness will be critical going forward.

Third, with regard to the specific exception at Wis. Stat. §108.04(5g)(a)2, the Court held that, while discipline following errors may be dispositive in the application of Wis. Stat. §108.04(5g)(a)1 (“one or more minor infractions of rules [are not substantial fault] unless an infraction is repeated after the employer warns the employee about the infraction), an employer’s warning is not dispositive of whether the error was inadvertent. As such, while a prior warning may be relevant to this question, an employee who is warned about an inadvertent error is not necessarily terminated for substantial fault even if the employee subsequently makes another error, even the exact same error, for which s/he is terminated. As such, prior discipline will not carry the day on the “inadvertence” exception and employers must be prepared to address suggestions that an employee acted inadvertently by, again, showing any errors were not an accident or as a result of carelessness.

Conclusion

Operton shows that greater care may be required prior to hearing in order to determine whether any of the substantial fault exceptions may apply and what evidence can be presented to counter their application. It is likely that, going forward, Administrative Law Judges will question all parties about inadvertence, intent and related issues and employee-side counsel will be prepared to show inadvertence and highlight any facts which show a lack of any intent. Employers must be prepared to meet this evidence during an Appeal Tribunal hearing with preparation, testimony and documentary evidence.

If you have questions about Operton or unemployment insurance disputes or hearings, please contact Daniel Finerty or your Lindner & Marsack attorney at 414-273-3910.

Title VII Now Covers Discrimination Based on Sexual Orientation

By:  Kristofor L. Hanson

The Seventh Circuit Court of Appeals has determined that Title VII of the Civil Rights Act bars discrimination on the basis of sexual orientation.  On April 4, 2017, the Chicago-based court, which presides over federal matters in the states of Wisconsin, Illinois and Indiana, became the first federal court of appeals to determine that the protections of Title VII extend to sexual orientation.

The case, Hively v. Ivy Tech Community College of Indiana, No. 15-1720 (7th Cir. Apr. 4, 2017), was brought by Kimberly Hively, a lesbian and a part-time adjunct instructor at Ivy Tech, a public institution in Indiana with thirty campuses statewide. She alleged that the college refused to hire her for six full-time positions she sought over five years and then refused to renew her part-time contract because of her sexual orientation.

In its decision, the court held that consideration of sexual orientation centers on the issue of gender and sexual stereotypes, meaning that an employer who takes an adverse action against a homosexual employee is taking an action based upon that employee’s gender or sex, which are covered by Title VII, and the employee’s failure to conform to a particular gender stereotype.  Hively argued, and the court agreed, that had Hively been a man married to, dating, or cohabitating with a woman, Ivy Tech would not have taken the actions it did.  The court stated that while this decision may appear to write into the law the term sexual orientation, it actually does no such thing as the law already protects an individual from discrimination on the basis of sex, which cannot be separated from sexual orientation.

This decision, issued following oral argument before the full panel of Seventh Circuit judges, overruled the Circuit’s previous decision in the same case and the lower court’s decision which granted Ivy Tech’s motion to dismiss, both of which held that Title VII did not cover sexual orientation.  This decision means that Hively now has the opportunity to litigate her claims in the district court.  Whether she ultimately will prevail is to be determined, but now, in the Seventh Circuit at least, it is clear that she has a viable claim to litigate under federal law.

Twenty-two states have laws that bar discrimination based on sexual orientation, including Wisconsin, Illinois and Minnesota.  Employers in these states, therefore, have already been prohibited from discriminating against employees on the basis of sexual orientation.  The Seventh Circuit’s extension of federal protection to sexual orientation creates additional means for employees claiming such discrimination to seek remedies before the Equal Employment Opportunity Commission and in federal court.  In federal court, compensatory (i.e. emotional distress) and punitive damages may be available to plaintiffs where before state agencies such damages are generally unavailable.  Therefore, if this decision changes anything for those in states already prohibiting discrimination, it potentially increases the risk for employers who run afoul of the law.

Even though many employers have known that sexual orientation is a protected class in their states, this decision serves as a reminder that employers should make sure their handbooks, policies, and employee and supervisor training include reference to this protected class.

TEXAS COURT ISSUES NATIONWIDE INJUNCTION, BARRING THE DEPARTMENT OF LABOR’S PERSUADER RULE

By: Thomas W. Mackenzie

Yesterday (November 16, 2016), the U.S. District Court for the Northern District of Texas issued a permanent injunction barring enforcement of the U.S. Department of Labor’s “Persuader Advice Exemption Rule.”  As we have reported in previous E-Alerts, this rule would have required employers and their attorneys to report expenditures incurred in resisting union organizing efforts.  Historically, reporting was only required when a law firm engaged in active persuader activity such as giving a speech to the employer’s employees in a union organizing drive.  Under the new rules, an attorney would be required to report if he or she engaged in speech writing, letter drafting or supervisor training. The rule was unquestionably designed to discourage law firms from representing employers in union organizing campaigns.

In arguing that the law was unlawful, the plaintiffs claimed, in part, that the reporting requirements invaded the attorney-client privilege.  The Texas judge issued a preliminary injunction on June 27, 2016.  The injunction was made permanent by the decision issued yesterday.  The decision will unquestionably be appealed.  However, it is unlikely that a decision at the appellate level will be issued before President Elect Trump takes office and a new Secretary of Labor is appointed.

The new requirement was challenged in multiple court cases by business groups and, in a case currently pending in Minnesota, by the Worklaw Network, an association of management-side labor and employment law firms of which Lindner & Marsack is the Wisconsin representative.

Although it is impossible these days to predict anything with certainty, the so-called “Persuader Rule” would appear to be in critical condition and unlikely to be enforced in the foreseeable future, if ever.

NLRB Expands Appropriate Bargaining Unit to Include Temporary Workers

In a 3-1 decision issued this week, the National Labor Relations Board (“Board”) reversed current precedent that prohibited the inclusion of temporary employees along with permanent, or “solely employed,” employees in a bargaining unit absent employer consent, as it returned to the previous standard under M.B. Sturgis, Inc., 331 NLRB 1298 (2000), where no such consent was required.

In its July 11, 2016 decision, Miller & Anderson, Inc. and Tradesmen International and Sheet Metal Workers International Association, Local Union No. 19, AFL-CIO, the Board expressly overruled the 2004 decision of Oakwood Care Center, 343 NLRB 659 (2004), which had held that the National Labor Relations Act (“NLRA”) did not authorize the Board to direct elections in units encompassing employees of more than one employer, i.e. a company’s employees and other employees placed at the company via a staffing agency.  The Oakwood Board further held that combining such employees would lead to significant conflicts among the various employers and among groups of employees.

With the Miller & Anderson decision, the Board reversed course again, holding that the terms “employer” and “employer unit,” as used within Section 9(b) of the NLRA, were sufficiently broad to encompass temporary employees performing work for another employer.  The Board also reasoned that the Sturgis standard better effectuated the purposes of the NLRA.

Going forward, the Board will apply the traditional “community of interest” factors when determining if a bargaining unit is appropriate.  The Board will determine whether the temporary employees and solely employed employees have the same or substantially similar interests as to wages, hours or other working conditions.

While the Board described its decision as a return to Sturgis, the landscape has changed since 2004, when Sturgis was last the standard.  Last year, the Board issued the highly contentious Browning-Ferris decision, which overruled two other long-standing joint-employer decisions.

Under Browning-Ferris, the Board greatly expanded the joint-employment standard by abandoning the requirement that an employer exercise “direct and immediate” control over an employee’s terms and conditions of employment and instead including relationships where an employer merely exercised “indirect” control or even where an employer has simply reserved the authority to exercise control.   Thus, between 2000 and 2004, when Sturgis was the standard, the law was much clearer as to when a joint-employer relationship existed.  Now those waters are far murkier, and employers will have to navigate them to make best judgments as to whether a joint-employer relationship exists and, if so, whether a group of temporary employees and solely employed employees have sufficient interests in common in order to create an appropriate bargaining unit.

Employers and other amici cautioned that a return to Sturgis would create confusion and hinder meaningful bargaining.  We will see whether those concerns bear out.

WISCONSIN RIGHT TO WORK LAW REINSTATED

District 3 of the Wisconsin Court of Appeals issued a decision yesterday, May 24, reinstating Wisconsin’s right to work law pending appeal of a Dane County Circuit Court Judge’s decision finding the law to be unconstitutional.  The Court of Appeals held that the Circuit Court erred in not granting a stay pending the appeal of the decision.

The decision means that unions and employers are again unquestionably prohibited from entering into agreements requiring union membership as a condition of employment.  Wisconsin was the 25th state to enact a so-called right to work statute.  Under the law, as contracts expire, are extended or are amended after March 11, 2015, the parties are precluded from maintaining or agreeing to contract language requiring employees to be members of a union.

It is anticipated the case will find its way to the Wisconsin Supreme Court.  Given that Court’s 5 to 2 conservative majority, we expect the law will ultimately be upheld.