Wake Forest Law Review
23Mar

Not Your Typical Student Union: National Labor Relations Board Withdraws Pending Rule that Would Have Blocked Student Assistants from Unionizing

Categories: Current Issues Blog
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By: Andrew Abreu

The National Labor Relations Board (“NLRB”) recently announced it will withdraw a near-final rule that was intended to prevent student assistants[1] from forming unions at private universities.[2]  In announcing its withdrawal of the rule, the NLRB stated it decided to “withdraw this rulemaking proceeding based on its judgment respecting the most effective allocation of the Board’s limited resources at this time.”[3]  While this withdrawal tracks the Biden Administration’s position that federal policy should foster labor organization, the withdrawal came as somewhat of a surprise as the Republican Party holds a majority of the NLRB’s seats.[4] In particular, the withdrawal of the rule is in contrast to the majority’s general philosophy of narrowing the scope of federal labor law.[5]

The NLRB has reversed course on the question of whether student assistants qualify for protection under the National Labor Relations Act (“NLRA”) multiple times since 2000.[6]  The crux of this issue is whether student assistants can be deemed to be statutory employees within the meaning of the NLRA.[7]  The NLRA itself defines the term “employee” broadly, stating that it shall be inclusive of “any employee” subject to certain exceptions, none of which are applicable to student assistants.[8]

Despite this broad statutory definition, opponents of extending NLRA coverage to student assistants argue that the NLRA was meant to solely cover relationships that are economic in nature.[9]  With an eye towards this concept, opponents argue that while the relationship between student assistants and their respective universities is somewhat economic in nature, it is properly categorized as being a primarily educational one.[10]  From this, opponents argue that the student assistant relationship falls outside the scope of NLRA coverage as the NLRA solely covers economic relationships.[11]

This was the approach articulated by the NLRB in its notice of proposed rulemaking when it initially announced the now-withdrawn rule in 2019.[12]  In particular, within this proposal, the NLRB stated that it was seeking to enact a regulation that established that “students who perform any services for compensation . . . at a private college or university in connection with their studies are not ‘employees’ within the meaning of Section 2(3) of the [National Labor Relations] Act.”[13]  Moreover, the NLRB supported this rule on the ground that the NLRA sought to give the NLRB jurisdiction solely over economic relationships.[14]  As the NLRB determined that student workers had a relationship with their respective universities that was primarily educational in nature, the NLRB concluded that this relationship fell outside of the scope of the NLRA.[15]  However, by withdrawing the near-final rule, the NLRB appears to have rejected this approach in favor of the contrasting, broad approach found in its standing Columbia University decision.[16]

In Columbia University, the NLRB ruled that student assistants are deemed to be statutory employees within the meaning of the NLRA.[17]  This case itself overturned Brown University, an earlier NLRB decision that followed the alternative, narrow approach expressed above.[18]  In overturning Brown University, the NLRB noted that Brown University was flawed in the fact that it improperly framed the issue of statutory coverage on the idea that the economic relationship between the employer and employee must be the primary one.[19]  Rather, in Columbia University, the NLRB noted that the proper framing of statutory coverage was in terms of the mere existence of an economic relationship between the employer and the employee, not whether that relationship itself was the primary one between the two parties.[20]  Moreover, the NLRB defined an economic relationship as one where there is the “payment of compensation, in conjunction with the employer’s control [over the employee’s work].”  

Applying this concept in its Columbia University decision, the NLRB concluded that while student assistants and their universities have an educational relationship, they also have an economic one as well.[21]  Specifically, the NLRB noted that student assistants received compensation in exchange for providing services to the university, the receipt of which was contingent upon the student assistants providing acceptable performance.[22]  Moreover, student assistants were subject to corrective counseling or removal upon their failure to properly execute their duties.[23]  Through this application, the NLRB was able to come to the conclusion that student assistants had an economic relationship with their university, thus allowing them to fall within NLRA coverage.[24]

Ultimately the withdrawal of this proposed rule and the continuation of the Columbia University standard will benefit student assistants who are seeking to unionize at private universities.  Unionizing efforts by student assistants were chilled during President Donald Trump’s tenure as students refrained from seeking the NLRB’s help due to their fear of becoming the test case whereby the NLRB would overrule Columbia University.[25]  However, with the withdrawal of the proposed rule and a Republican majority that will likely end in August of this year, student assistants will likely soon have the go-ahead to engage in organizing efforts.[26]

[1] Inclusive within the term “student assistants” are any students who “perform any services for compensation, including, but not limited to, teaching or research . . . in connection with their studies.”  Jurisdiction – Nonemployee Status of University and College Students Working in Connection With Their Studies, 84 Fed. Reg. 49,691 (Sept. 23, 2019).

[2] Jurisdiction – Nonemployee Status of University and College Students Working in Connection With Their Studies, 86 Fed. Reg. 14,297 (Mar. 15, 2021).

[3] Id.

[4] Braden Campbell, NLRB Withdraws Pending Rule Blocking Grad Student Unions, Law360 (Mar. 12, 2021, 9:24 AM), https://www.law360.com/articles/1364213.

[5] Id.

[6] Compare Brown Univ., 342 N.L.R.B. 483 (2004) (holding that student assistants are not afforded NLRA coverage) with Trs. of Columbia Univ., 364 N.L.R.B. No. 90 (2016) (overturning Brown University and holding that student assistants are covered by the NLRA).  

[7] Trs. of Columbia Univ., 364 N.L.R.B No. 90, 1 (2016).

[8] 29 U.S.C. § 152(3) (2018).

[9] Brown Univ., 342 N.L.R.B. 483, 488 (2004).

[10] Id.

[11] Id. at 489–90.

[12] Jurisdiction – Nonemployee Status of University and College Students Working in Connection With Their Studies, 84 Fed. Reg. 49,691 (Sept. 23, 2019).

[13] Id.

[14] Id.

[15] Id.

[16] Trs. of Columbia Univ., 364 N.L.R.B No. 90 (2016).

[17] Id. at 1.

[18] Id.

[19] Id. at 5–6.

[20] Id. at 2.

[21] Id. at 6.

[22] Id. at 15.

[23] Id.

[24] Id. at 2.

[25] Campbell, supra note 4.

[26] Id.

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11Mar

Fourth Circuit Holds that Union’s Conduct did not Affect Plaintiffs Ability to Exhaust Contractual Remedies Under Collective Bargaining Agreement

Categories: 4th Cir. Blog Civil Cases
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By Whitney Pakalka

On March 10, 2016, the Fourth Circuit issued its published opinion in the civil case, Groves v. Communication Workers of America. Plaintiffs, employees who were terminated by AT&T based on what were later discovered to be flawed reports, filed suit against AT&T and their union under Section 301 of the Labor Management Relations Act. The district court granted the Union’s motion for summary judgment, holding that Plaintiffs had not shown that the Union’s conduct prevented Plaintiffs from exhausting their contractual claims against AT&T under the collective bargaining agreement. The Fourth Circuit affirmed, holding that a hybrid § 301 suit cannot be used to challenge union conduct that, although obstructive, did not contribute to an employee’s failure to exhaust her contractual remedies for the employer’s conduct.

Plaintiffs’ Termination and the Union’s Handling of a Subsequent Settlement Offer

Rebecca Groves and Jonathan Hadden, Plaintiffs, were hired as retail sales consultants for AT&T in Anderson, South Carolina in December 2008. Both Plaintiffs joined the union, Communications Workers of America (“CWA”) and Local 3702 (collectively the “Union”). The Union entered into a collective bargaining agreement with AT&T, under which a formal grievance for an employee’s wrongful discharge or discipline must be submitted by the Union to AT&T in writing within forty-five days of the action complained of. Failure to follow the prescribed grievance procedure results in waiver of the formal grievance by the employee and the Union.

Groves and Hadden were fired in May and June 2012, respectively, but neither of them contacted the Union or filed a grievance. In August 2012, Steve Frost, executive director of labor relations at AT&T, contacted CWA’s administrative director, Betty Witte, to explain that AT&T discovered that reports that led to the termination of sixteen employees, including Plaintiffs, were flawed. Frost asked Witte to contact the terminated employees and offer a settlement of either $2,500 and reinstatement, or $5,000 without reinstatement. Witte then contacted Gerald Souder, a staff representative for CWA, who contacted Les Powell, president of Local 3702, asking him to contact Plaintiffs. Although Local 3702 had Plaintiffs’ contact information on file, Plaintiffs were not contacted because they had not filed grievances or contacted the Union.

Groves and Hadden later learned of the settlement offers, and contacted Souder, who informed them that only the $5,000 offer without reinstatement remained available and they could not file a grievance because the forty-five day limit in the collective bargaining agreement had passed. Plaintiffs filed suit against AT&T and the Union in the District Court for the District of South Carolina, alleging that AT&T breached the collective bargaining agreement between itself and the Union, and that the Union breached its duty of fair representation by failing to inform Plaintiffs of the settlement offers. Plaintiffs and AT&T reached a settlement, and Plaintiffs were reinstated to their former positions in March 2013. The district court granted the Union’s motion for summary judgment, finding that Plaintiffs had not established the threshold requirement for a § 301 action, which requires that the Union’s breach of duty prevent Plaintiffs from exhausting their claims under the collective bargaining agreement

Actions Under Section 301 of the Labor Management Relations Act 

Section 301 of the Labor Management Relations Act allows “[s]uits for violation of contracts between an employer and a labor organization,” but usually requires that an employee first exhaust contractual remedies in that agreement. However in a “hybrid § 301” action, an employee may file suit without exhausting all contractual remedies by showing that the union breached its duty of fair representation and that her employer violated the collective bargaining agreement. Thompson v. Aluminum Co. of Am., 276 F.3d 651, 656 (4th Cir. 2002). A union breaches its duty of fair representation if its actions are arbitrary, discriminatory, or in bad faith. Air Line Pilots Ass’n, Int’l v. O’Neill, 499 U.S. 65, 67 (1991).

Hybrid § 301 actions exist in order to avoid “unacceptable injustice” that would occur if an employee had to exhaust all contractual remedies even when the union representing her in the grievance procedure acted in such a way as to breach its duty of fair representation. The Supreme Court has held that the hybrid § 301 action is appropriate when an employee cannot exhaust contractual remedies because “the union has sole power under the contract to invoke . . . the grievance procedure” and the employee “has been prevented from exhausting his contractual remedies by the union’s wrongful refusal to process the grievance.” Vaca v. Sipes, 386 U.S. 171, 185 (1967).

Fourth Circuit Holds that a Union’s Breach of Duty Must Inhibit Employee’s Ability to Exhaust Contractual Remedies

The Fourth Circuit reasoned that requiring a causal nexus between a union’s breach of its duty of fair representation and the plaintiff’s failure to exhaust her contractual remedies was consistent with other circuits and the Supreme Court’s articulation of the hybrid § 301 claim’s purpose. The court reasoned that it was “a safeguard for wronged employees whose unions fail to assert [their] rights,” and that to allow a hybrid § 301 claim where the union did not impact the employee’s ability to pursue contractual remedies would convert it into “a tool to bypass the normal exhaustion rule . . . any time employees also have some unrelated claim against their union.”

The Court noted that Plaintiffs did not allege that the Union’s conduct had prevented them from filing a grievance under the collective bargaining agreement, and that because they did not file a grievance with the Union, the Union did not know they were terminated until after the contractual period for filing a grievance had passed. Although the Fourth Circuit described the Union’s conduct as “irresponsible at best, and certainly prevented Plaintiffs’ from accepting AT&T’s original reinstatement offer,” the court found that Plaintiffs had waived their right to grieve and were thus not entitled to that offer. The court found that because the Union’s conduct “had nothing to do with their failure to vindicate their rights through the contractually designated procedure,” allowing Plaintiffs to bypass the usual requirements of § 301 would be inappropriate, and accordingly affirmed the district court’s grant of summary judgment.

The Fourth Circuit did not foreclose the possibility that an employee could bring a hybrid § 301 claim without first attempting to file a grievance, noting that where an employee’s failure to invoke the grievance process was caused by the union’s breach of duty, a hybrid § 301 claim “might well be viable.” Additionally, the court noted that its holding did not leave Plaintiffs without a remedy, because they could have brought a stand-along claim against the Union for breach of its duty of fair representation.

Fourth Circuit Affirmed the Grant of Summary Judgment in Favor of the Union

The Court found that Plaintiffs’ failure to file a grievance was not caused by the Union’s failure to contact them about a settlement offer made by AT&T after the company discovered that it had terminated Plaintiffs based on flawed reports. Accordingly, the Fourth Circuit affirmed the grant of summary judgment in favor of Defendant-Union because any breach of the Union’s duty of fair representation did not contribute to Plaintiffs’ failure to exhaust their contractual remedies under the collective bargaining agreement.

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16Oct

Plumbers Forced to Pay in Withdrawal Liability Case

Categories: 4th Cir. Blog
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By Kayleigh Butterfield

On June 29, 2015, the Fourth Circuit issued a published decision in the civil case Trustees of the Plumbers & Pipefitters National Pension Fund v. Plumbing Services, Inc. The case involved the Plumbers and Pipefitters National Pension Fund (“Fund”) and its suit against Plumbing Services, Inc. (“PSI”) and PSI’s successor company (collectively “Defendants”) for failing to pay withdrawal liability pursuant to 29 U.S.C. § 1381. The Fourth Circuit affirmed the district court’s grant of summary judgment in favor of the Fund.

PSI’s Agreement to Contribute

On April 8, 1998, the sole shareholder of PSI, Kenneth Julian, agreed in writing that PSI would make contributions to the Fund “as provided for by the [labor] Agreements now existing and hereafter.” Pursuant to this agreement, PSI began making contributions to the Fund in 1998 and continued to do so until 2011. On March 10, 2011, Julian—writing again on behalf of PSI—stated that PSI wanted to “abolish its working relationship with” the union that maintained the Fund. PSI’s successor, PSI Mechanical, filed articles of incorporation shortly before PSI went out of business in the summer of 2011. Julian remained the shareholder of PSI Mechanical.

Over a year after the March 10 letter, the Fund notified Julian that PSI had incurred withdrawal liability of $188,685 because the company was continuing the type of work that previously obligated it to contribute. PSI refused to pay and instead formally objected and sought review of the withdrawal liability. The Fund ultimately rejected PSI’s objections and demanded payment. Defendants did not pay, and failed to demand arbitration.

Statutory Framework

The issue of withdrawal liability stems from Congress’s enactment of the Employment Retirement Income Security Act (“ERISA”), which was meant to promote and stabilize employee benefit plans in private industries. In 1980, Congress expanded that goal by passing the Multiemployer Pension Plan Amendments Act (“MPPAA”), which established withdrawal liability for building and construction employers who (1) cease to have an obligation to contribute and (2) continue to perform the same type of work for which contributions were previously required in the jurisdiction of the collective bargaining agreement.

If an employer objects to an imposition of withdrawal liability, the plan sponsor must review the matter and notify the employer of the outcome and basis for its decision. If the employer still disagrees with the response, it must demand arbitration within 60 days after the sponsor’s notification, or 120 days after the employer’s initial request for review. Without a demand for arbitration, the employer is considered to have waived review of the withdrawal liability determination.

No Issue with Jurisdiction, Venue, or Merit Findings

The Fourth Circuit first addressed Defendants’ motions to dismiss for lack of personal jurisdiction and to transfer venue. The standard of review for jurisdiction is de novo, while the Court reviews venue transfer under abuse of discretion. The Court quickly disposed of the personal jurisdiction issue, noting that ERISA is a nationwide program that allows for a nationwide service of process. Thus, Defendants argument that it lacked “minimum contacts” with the chosen jurisdiction was moot. The Court went on to examine the four factors considered for a venue transfer, and found that (1) the weight accorded to plaintiff’s choice of venue was strong; (2) witness convenience and access was irrelevant given the lack of witness testimony needed for this case; (3) Defendant’s were not substantially inconvenienced; and (4) the interest of justice favored keeping the original venue.

Next, the Fourth Circuit addressed Defendant’s argument that the district court lacked subject matter jurisdiction because the action for withdrawal liability should have been brought under the National Labor Relations Act as opposed to ERISA. The Court explained that because Section 1145 of ERISA explicitly requires contractually obligated employers to contribute to a retirement fund in accordance with the operative collective bargaining agreement, it creates a federal right of action for collecting delinquent contributions as well as overdue withdrawal liability. Thus, the district court had subject matter jurisdiction over the Fund’s claim.

Finally, the Fourth Circuit reviewed de novo the district court’s grant of summary judgment on the merits. The Court noted that the Fund met its initial burden of providing sufficient evidence for its motion by providing an affidavit, correspondence, admissions from PSI, and a number of other documents. The Defendants failed to then provide evidence showing that there was a genuine issue for trial. Defendants did not dispute that they never demanded arbitration. Rather, they argued that PSI was not an employer subject to the arbitration requirement because Julian’s letter was not sufficient to bind PSI to future contributions.

The Fourth Circuit disagreed, stating that the text of Julian’s letter of assent clearly bound PSI to successor agreements under federal law. The Court noted that PSI’s conduct—decision to sign the letter, and contributing to the Fund for 13 years prior to withdrawing—also supported its obligations to contribute. Further, because PSI’s successor had the same shareholder and performed the same type of work, it was considered the same employer under ERISA. The Fourth Circuit concluded that Defendants were therefore one employer subject to the arbitration requirement, and, since they failed to demand arbitration, summary judgment in favor of the Fund should be upheld.

Affirmed

For the foregoing reasons, the Fourth Circuit affirmed the district court’s grant of summary judgment for the Fund.

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