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Inside This Issue
1. Court Rules Limited Liability Company (“LLC”) Sole Member Personally Liable
2. Termination Notice of CBAs Must be Precise
3. NLRB General Counsel Issues Memo on Unlawful Electronic Surveillance and Automated Management Practices
4. Illinois Appellate Court Rules that the City of Chicago (“City) did not violate National Labor Relations Act (“NLRA”)
by Permitting Companies to Install Cell Devices on Traffic Signals
5. NLRB Modifies Standard Governing Off-Duty Workplace Access for Employees of Contractors
Court Rules Limited Liability Company (“LLC”) Sole Member Personally Liable
U.S. District Judge Kendall for the Northern District of Illinois held a sole member of an LLC is personally liable for 2 million dollars the company owes a customer for protective equipment.
The District Judge reasoned that defendant’s manager is the sole member and exercises sole control over bank account and also found that the defendant does not have sufficient capital to pay its bills, to continue operations and it did not issue stock or pay dividends.
The District Judge found that the LLC was a mere facade for the defendant, and it would be a clear injustice to allow the owner of the LLC off the hook for personal liability.
Termination Notice of CBAs Must be Precise
On December 22, 2022 the United States Court of Appeals for the 7th Circuit in Central States v. Transervice Logistics, Inc. held the purported termination letters did not actually terminate the CBAs.
The union president sent letters to employers which stated:
"Your present contract with General Drivers, Warehousemen, and Helpers, Local Union No. 89, expires as noted above.
It is our desire to meet with you at an early date for the purpose of negotiating a new contract.
We trust the forthcoming negotiations will result in an agreement that will be fair and just too [sic] all parties involved and that a better spirit of harmony and cooperation will be derived there from [sic]."
No letter used the word “terminate” or any synonym. The employers stopped making contributions to the pension funds and the pension funds sued on the alleged delinquencies. The question presented to the district court was, did the November 6, 2018, union letters terminate the CBAs? The CBA had a so-called evergreen clause which states as follows:
"This Agreement shall be effective as of February 1, 2013 and shall expire January 31, 2019;
provided, however, that if neither party gives the other party written notice sixty (60) days
prior to the said expiration date of such parties [sic] intention to terminate this Agreement,
said Agreement shall continue for another year and from year to year thereafter,
subject to sixty (60) days’ notice of termination prior to any succeeding termination date."
The 7th Circuit reversed the district court stating that strict compliance with evergreen clauses’ is essential. The 7th Circuit concluded that the November 6th negotiation letters did not express any intent to terminate the existing CBAs. Reference to expiration dates alone do not terminate the CBAs since the evergreen clause is merely the first date on which the CBAs could terminate with timely notice. To conflate “expiration” with “termination” in the context of these evergreen clauses would be to ignore their purpose of the clause.
The 7th Circuit concluded that the evergreen clauses in the CBAs expressing a desire to re-negotiate is not equivalent to desire to terminate.
Any employer desiring to terminate a CBA must use precise termination language which was not achieved in this case.
NLRB General Counsel Issues Memo on Unlawful Electronic Surveillance and Automated Management Practices
In an October 31, 2022 memo, National Labor Relations Board (“NLRB”) General Counsel Abruzzo announced her intention to protect employees, to the greatest extent possible, from intrusive or abusive electronic monitoring and automated management practices through vigorously enforcing current law and by urging the NLRB to apply settled labor-law principles in a new framework.
The memo describes various technologies that are increasingly being used to closely monitor and manage employees. Some employers record workers’ conversations and track their movements using wearable devices, cameras, radio-frequency identification badges and GPS tracking devices. And other employers monitor employees’ computers with keyloggers and software that takes screenshots, webcam photos, or audio recordings throughout the day. Employers may use this data to manage employee productivity, including disciplining employees who fall short of quotas, penalizing employees for taking leave and providing individualized directives throughout the workday.
The General Counsel stated, “It concerns me that employers could use these technologies to interfere with the exercise of Section 7 rights under the National Labor Relations Act by significantly impairing or negating employees’ ability to engage in protected activity and to keep that activity confidential from their employer.”
The General Counsel will urge the NLRB to adopt a new framework for protecting employees from employers’ abuse of technology by holding that an employer has presumptively violated the NLRA where an employer’s surveillance and management practices, viewed as a whole, would tend to interfere with or prevent a reasonable employee from engaging in activity protected by the NLRA. If the employer’s business need outweighs employees’ Section 7 rights, unless the employer demonstrates that special circumstances require covert use of the technologies, the General Counsel would support the employer.
The memo also notes that the General Counsel is committed to an interagency approach to these issues, as numerous agencies across the federal government are working to prevent employers from violating federal law using electronic surveillance and algorithmic management technologies. The General Counsel recently signed agreements with the Federal Trade Commission, the Department of Justice, and the Department of Labor which will facilitate information sharing and coordinated enforcement on these issues.
Illinois Appellate Court Rules that the City of Chicago (“City) did not violate National Labor Relations Act (“NLRA”) by Permitting Companies to Install Cell Devices on Traffic Signals
Through permitting, the City allowed companies to install devices on traffic poles even though the City and International Brotherhood of Electrical Workers (“IBEW”) were signatory to CBAs which prohibited the City from contracting or permitting construction on any work covered under the CBAs unless the entity become signatory to area wide CBAs with union.
The CBAs provided for arbitration and the arbitrator issued a cease-and-desist order stopping permits to entities that use non-union workers.
The question presented did the arbitrator violate federal labor law in resolving the question. The trial court ruled that the City did not regulate federal labor law by requiring a contractor to sign an area wide CBA which is not limited to a specific job. The Appellate Court concluded the City did not regulate labor in any manner preempted by the NLRA.
Then, the Appellate Court reversed the Circuit Court’s order vacating the arbitration award.
NLRB Modifies Standard Governing Off-Duty Workplace Access for Employees of Contractors
On December 16, 2022, the NLRB issued a decision in Bexar County II, restoring the rights of workers employed by a contractor to engage in protected concerted activity in their (workplace Section 7 rights).
The decision overturns Bexar County I, (2019) which was sent back to the NLRB for reconsideration by the D.C. Circuit Court of Appeals and makes clear that a property owner may only exclude the employees of its contractors from engaging in protected activity on the worksite if such activity would significantly interfere with the use of the property, or where exclusion is justified by another legitimate business reason. Bexar County II reestablishes the standard originally articulated by the NLRB in New York New York Hotel & Casino (2011).
The NLRB reasoned that the Bexar County I standard undermined contractor employees’ right to engage in protected concerted activity under Section 7 of the NLRA without rational justification. Returning to the New York New York standard properly accommodates contractor employees’ rights under federal law with the property owner’s legitimate interests and avoids creating incentives for employers to structure work relationships to avoid direct hiring.
“For contractor employees, the right to exercise their Section 7 rights at their workplace – where they interact with their coworkers and are most impacted by their employer’s decisions—is critical to making the protections of the Act a reality,” said Chairman McFerran. “Today’s decision ensures that contract employees’ rights are protected and respected in a manner appropriate to the nature of their employment.”
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