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Inside This Issue

1.    Construction Companies Must Assess Risks When Contracting For Labor Only Under New NLRB Decision

2.    NLRB Announces New Joint Employer Test

3.    Employee Benefits – Breach of Contract vs. Negligent Administration of Employee Benefits

4.    Representation Election Highlights NLRB Pro-Union Posture

5.    Grieving Parents Now Entitled to Leave Under Illinois Law

Construction Companies Must Assess Risks When Contracting For Labor Only Under New NLRB Decision

In Miller & Anderson, a case decided in July 2016, the National Labor Relations Board (“NLRB”) ruled that “bargaining units that combine employees who are solely employed by a user employer and employees who are jointly employed by that same user-employer and an employer supplying employees to the user employer constitute multi-employer units,” which are appropriate without the consent of either the user-employer or the supplying employer.

What does the decision mean as a practical matter?  For example, if Employer A uses a temporary construction service (Employer B) and a union wins an election as to Employer B, the employees of Employer A may be part of the bargaining unit.[1]  Thus if the union wins the election, the employees of  both Employers A and B may be subject to the election conducted by the NLRB for employees of Employer B.  This decision will routinely apply wherever temporary workers are used to supplement a regular workforce. 

Another concern that is common in the residential construction industry is for a builder-developer to contract for only labor and to purchase all the materials.  Under this decision the supplier of labor can have an election before the NLRB and, if the union wins the election, it may include builder-developer employees who have a community of interest.  How this would play out in practical terms is that if the builder-developer has jobsite employees who move cabinets and other materials, those employees would be subject to being included in the unit of the labor supplier.  Taking this decision to its extreme, even if the builder-developer had no employees, it could now have a bargaining relationship with the union.  This would be particularly true for the labor supplier of carpenters or laborers.[2] 

All contractors are encouraged to re-visit their existing practices and contracts to best minimize the risk associated with this decision.  Contractors are encouraged to read the next article which also has implications on this decision.


[1] Employers can challenge the appropriateness of the unit before an election by a unit clarification petition.
[2] Note that the Laborers Union in this area has taken the position that it will represent carpenter employees in the unit so long as the carpenter employees want to be represented by the Laborers.

NLRB Announces New Joint Employer Test

Joint employer status allows one employer to be found liable for the debts and obligations of another employer under the theory that they are a “joint employer.”   In the Browning-Ferris of California decision, the NLRB greatly expanded the definition of a joint employer.   The new standard only requires potential control of terms or conditions of employment even if that right is not exercised.  Direct and immediate control is no longer the standard for becoming a joint employer.

Contractors are encouraged to look at their contracting arrangements and consider removing any and all control over the operations of another contractor.   This is especially important in light of the Miller & Anderson decision in the prior article.  While there are no current cases that we could find that would extend these decisions to the Equal Opportunity and Wage and Hour laws, there will likely be a logical extension to these laws. 

Restructuring operations and business practices need to be considered in light of the NLRB’s continued assault on what was considered “black-letter” employer-employee law.

Employee Benefits – Breach of Contract vs. Negligent Administration of Employee Benefits

In a recent U.S. District Court case, at issue was the extent to which employee benefits liability coverage exists for the insured for negligent conduct in the administration of an employee benefits program.

The case involved a retired lawyer who alleged violation of the Illinois Wage Collection and Payment Act (“Wage Payment Act”) and Breach of Contract when his former law firm refused payment of $951,000 in accrued vacation time and sick time.

The law firm had claims made coverage from Hartford Casualty Insurance Co. for employee benefit liability based on negligent administration of benefits. Hartford denied the claim and filed a complaint for declaratory judgment, claiming a breach of contract claim is not a negligent act claim, thus barring benefit liability coverage. The district court agreed with Hartford and granted its motion for summary judgment.

The court explained that Hartford’s coverage was on a claims-made basis which provided that Hartford would pay damages for which the insured became liable because of an “employee benefits injury.” It covered the insured’s negligent administration of an employee benefits program which is not a contract claim.

The court found the claim for accrued vacation and sick time was a claim for breach of contract and not a claim for negligent act, and that the claim citing the Wage Payment Act sounds in contract and not negligence. The Court further noted that “[t]he policy provides coverage for negligent errors or omissions only, and does not provide coverage for breach of contract, even when that contract may involve an employee benefit program.”

At first glance, a breach of contract might seem to qualify as negligent administration of employee benefits. The recent holding illustrated the Court’s limited reading of contractual language in an insurance policy. It would be wise to consult with a lawyer if you have any questions regarding the scope of coverage under a company’s insurance policy.

Representation Election Highlights NLRB Pro-Union Posture

In early 2012, the Steelworkers Union sought to represent Intertape Polymer Corp.’s production and maintenance employees. The Board conducted a secret ballot election among Intertape employees and Intertape won by a wide margin of 142 to 97.

The Steelworkers claimed that Intertape interfered with the election by 1) surveilling employees’ union activities, and 2) on 3 occasions a month before the election, removing pro-union literature from the employee break room.

In 2014, a NLRB majority sustained the Steelworkers objections, overturned the election results and ordered a rerun election, ruling that Intertape interfered with the employees ability to exercise their free choice. The dissent noted “it is not possible to conclude that Intertape affected the lopsided outcome of this election by expediting the cleanup of a break room.”

Intertape appealed the Board’s decision to the 4th U.S. Circuit Court of Appeals in September, 2015. The appeals court found that Intertape’s confiscation of material from the break room was illegal, but refused to sustain the NLRB’s finding that any unlawful surveillance occurred. The court remanded the case to the Board to determine if a new election was still needed, based on the appellate court overruling one of the bases for ordering a new election. On remand, the Board again ruled for the Union and required a second election, and remanded the case to the regional director for further proceedings.

This case is another clear indication of the NLRB’s pro-union stance. When confronted with review by the NLRB, employers should bear in mind that the NLRB may not provide them a fair shake.

Grieving Parents Now Entitled to Leave Under Illinois Law

​An Illinois law that became effective July 29, 2016 requires employers with 50 or more employees to provide two weeks unpaid bereavement leave to attend a funeral of a child, making arrangements for a funeral or just grieving the death of a child.  “Child” is broadly defined as biological, adopted, foster child, stepchild, legal ward or child of a person standing in loco parentis.  Employers can request documentation.  

Employers should consider amending their leave policies that the bereavement leave should run concurrently with FMLA leave.  Since there are no regulations published, we cannot say with certainty if this would be permissible.  At this time, no poster is required. 

For a copy of the law, email or call us.

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Law Offices of Stanley E. Niew, P.C.