NLRB challenges at-will employment language in handbooks
Few stances have riled employers this summer more than the National Labor Relations Board’s (NLRB) position that employee handbooks with language about at-will employment may violate the National Labor Relations Act (NLRA). This position, which Kent Jones, an attorney with Nixon Peabody in San Francisco, characterized in an interview with SHRM Online as “a terrible stretch,” applies to all employers — unionized or not.
The NLRB floated this theory in a pair of cases earlier this year at the Phoenix regional office.
In a complaint mailed to Hyatt Hotels Feb. 29, 2012, regional director Cornele Overstreet faulted the company for having an “overly broad and discriminatory acknowledgment form in its employee handbooks” in violation of employees’ NLRA right to organize.
The offending language stated, “I understand my employment is ‘at will.’ This means I am free to separate my employment at any time, for any reason, and Hyatt has these same rights. Nothing in this handbook is intended to change my at-will employment status. I acknowledge that no oral or written statements or representations regarding my employment can alter my at-will employment status, except for a written statement signed by me and either Hyatt’s executive vice-president/chief operating officer or Hyatt’s president.”
In a settlement reached before a hearing in May, Hyatt agreed to rescind and revise the at-will provision, according to David Ritter, an attorney with Neal, Gerber & Eisenberg in Chicago, who represents employers in labor relations matters.
In the other case, an administrative law judge for the NLRB in Phoenix concluded in February 2012 that similar handbook language violated the NLRA (American Red Cross Arizona and Lois Hampton, 28-CA-23443 (Feb. 1, 2012). After this decision, the case was settled and Red Cross did not pursue an appeal, said David Woodard and Laura Russell, management attorneys for Poyner Spruill in Raleigh, N.C.
The cases received little attention until NLRB Acting General Counsel Lafe Solomon stated at the Connecticut Bar Association’s annual meeting June 11, 2012, that at-will handbook provisions prohibiting any change in the terms and conditions of employment except in a written document with a company executive violate the NLRA’s Section 7 right to participate in union-organizing activities, said Renée Jackson, an attorney with Nixon Peabody, in an Aug. 8, 2012, interview. Since then, the NLRB’s controversial stance has been subjected to a firestorm of employer criticism.
“This language has been around in most employee handbooks for the better part of 30 years. Only within the last year has it been construed to affect Section 7 rights,” Jones said.
In the late 1970s and early 1980s, cases surfaced in which employees claimed that their bosses’ off-hand remarks changed their at-will status to a job for life. That type of claim was enough to get to a jury, so employers started adding language to their handbooks saying that employees’ at-will status could be altered only by a written document with specified company executives.
If the NLRB’s position ever reaches a court, Jones doubts that it would be upheld, unless it were before a more liberal appeals court such as the 9th U.S. Circuit Court of Appeals. Nevertheless, he said that if the NLRB pursues this stance beyond the Phoenix region “it’s a time bomb.”
More relevant agency
The NLRB’s argument is based on the assumption that if employees unionize they can alter the terms and conditions of employment, Ritter explained.
Last year and this year, the NLRB has sought “ways to be more relevant, reaching out to a nontraditional base,” he said. “It’s wading into areas that only involve nonunion employees,” such as with its controversial report on social media policies, which has challenged common policy language.
It’s not time to panic over this stance though, he noted, emphasizing that it’s surfaced in complaints “in just one regional division at the NLRB.”
So Ritter wouldn’t recommend that employers strike handbook at-will language clarifying that the terms and conditions of employment may not be verbally altered. The risk of harm in not having this language is “greater than the risk the NLRB will file an unfair labor practice charge,” he concluded.
But employers might consider adding a savings clause, “stating that the at-will disclaimer does not, and is not intended to, interfere with, limit or relinquish an employee’s right to join with others to work toward altering the terms or conditions of his/her employment, including at-will status,” Woodard and Russell said.
“Based on Mr. Solomon’s public statements on this issue, as well as the position taken by the NLRB in the two cases discussed above, it appears likely that the NLRB will continue to look for opportunities to assert that at-will disclaimers interfere with or chill the right of employees to engage in protected concerted activity in violation of the NLRA,” they remarked.
“Of course, as a business decision, some employers may not choose to do this,” added Scott Silverman, an attorney with Akerman in Tampa, Fla. “Such a statement would amount to a notification to employees of these rights, and employers may decide to wait and see how the NLRB’s efforts play out in the courts.”
Allen Smith, J.D., is manager, workplace law content, for SHRM.
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Age affects online shopping, survey says
The buying habits — and spending power — of younger shoppers is stating to come into focus among small kitchen appliance manufacturers and houseware suppliers. Those born in the 1980s, known as Millennials or Gen Y, are outfitting college living spaces or starting a family. Wherever they are in the continuum, the 18-to-34-year-olds accounted for 22% of small appliance sales in the 12 months ended May 2012, according to research by the NPD.
This age group also accounted for one-third of dollars spent on housewares purchases in the 12 months ended May 2012, gaining five share points and growing 30% in dollar sales over last year. Housewares purchases made by 18-to-34-year-olds were made in-store (65% of dollars), while online purchases accounted for 6% of sales, according to the NPD study. Their consumer data show that as age increases, so does online shopping for housewares products.
The younger age groups accounted for 7% of the dollars spent on their kitchen electrics, although this number increases to 10% for those in the 25-to-34 age segment.
Despite the bad economy, the burden of student debt, and a shrinking job pool, Millennials are more optimistic than any other age group right now, according to “The Economy Tracker,” The NPD Group’s resource for monitoring consumers’ perceptions of the U.S. economic environment.
U.S. antidumping law and home improvement products
Disputes over dumping — selling products in the U.S. market at prices below the cost of production or for less than what the products are sold in the home market — are a major thorn in the side of companies wanting to do business internationally. The United States enacted the antidumping law to protect U.S. manufacturing companies from “unfair” imports, but the real impact of the law is to bankrupt legitimate U.S. companies and destroy U.S. jobs.
Antidumping actions have spread to cover imported home-building material products, especially from China, ranging from wood flooring, steel nails, steel sinks and solar cells to ironing tables, kitchen shelving, wooden bedroom furniture (WBF), lock washers, steel pipes/fittings and hand tools, just to name a few.
People may argue that the antidumping law is protecting U.S. industries from unfairly dumped imports. To win an antidumping case, a U.S. industry — which can be a single company — needs to convince the U.S. Commerce Department that foreign exporters are dumping, and the U.S. International Trade Commission (ITC) that the practice has injured the U.S. industry.
But the Commerce Department finds dumping in 95% of cases. With 30 years of work in this area since 1980, first in the government and later in private practice, I can count on one hand the number of times the Commerce Department has made a no-dumping determination and stopped the case. The Commerce Department has defined dumping in such a way that any U.S. company that imports a product — especially from China — is considered to be dumping. Since antidumping cases against China represent more than 90% of U.S. cases, it is important to understand that pursuant to the Commerce Department’s methodology, almost all Chinese companies are considered to be dumping with no evidence they are doing so. Although more than 100 Chinese companies may be exporting the subject products to the United States during a period of investigation, the Commerce Department will examine individually only two or three “mandatory” respondents, which get their own dumping rates. Only those two to three companies can prove that they are not dumping. The Commerce Department presumes that all other Chinese companies are dumping and gives them a dumping rate.
The real damage of an antidumping action, however, is not to foreign/Chinese companies, but to U.S. companies — importers, distributors and downstream producers. Chinese companies do not pay antidumping duties. U.S. import companies by law are liable for antidumping duties, and the importers can be retroactively liable if those antidumping duties go up in subsequent review investigations, which they often do.
Moreover, the Chinese company, never mind the U.S. importer, simply cannot know whether it is dumping because the Commerce Department does not use Chinese company’s actual prices and costs to determine dumping. The Commerce Department, in fact, treats China worse than Iran and considers China to be a nonmarket economy country (NME). As an NME, instead of using Chinese prices/costs to determine dumping, the Commerce Department constructs a cost of production from consumption factors in China times prices/values in a third surrogate country. Thus, in the Solar Cells antidumping case, the big issue is whether to use prices in India or Thailand to construct a Chinese cost of production. This is truly Alice in Wonderland.
Because of this NME methodology, it is impossible for a Chinese company to know whether it is dumping, not to mention U.S. importers. In contrast to the rest of the world, however, where antidumping duties are prospective, in the United States, importers are retroactively liable for antidumping duties. When an importer imports under an antidumping order, it does not post the duty, but the cash deposit. The actual antidumping duty is calculated in a future review investigation. If the duty goes up, the U.S. importer is retroactively liable for the difference between the cash deposit plus interest.
Antidumping duties go up in review investigations all the time. In the Wooden Bedroom Furniture case, for example, many U.S. importers were forced into bankruptcy because of high antidumping rates. In one case for Star Furniture, for example, the rate went from 16% in the initial investigation to 216% in the first review investigation, creating an estimated $200 million in liability for U.S. importers.
Companies may think, however, that antidumping cases soon go away. In fact, antidumping orders can stay in place for five to 30 years.
More importantly, antidumping cases do not help U.S. companies injured by imports. Importers simply go to another country, such as Vietnam. As ITC Commissioner Pearson stated in the December 2010 ITC Sunset determination in WBF from China case, “In this particular investigation, additional costs and distortions have been added by the use of the administrative review and settlement process, with little evidence that these distortions have yielded any benefits to the industry overall, the U.S. consumer or the U.S. taxpayer.”
At the same time, estimates are that U.S. furniture importers have paid more than $500 million in retroactive antidumping duties because of this case. In the Ironing Tables case, another U.S. importer went bankrupt because it imported ironing tables from a company with a 0% cash deposit rate only to see the rate go to 157% in a review investigation, creating millions of dollars in liability for the U.S. company.
Antidumping cases have become the international approved form of protectionism adopted by countries all over the world. Instead of protecting domestic industries, however, all these cases do is injure U.S. importers, destroy jobs and cause prices to rise.
About the author:
William E. Perry is an international trade law partner at Dorsey & Whitney. From 1980 to 1987, Perry was an attorney in the antidumping area at the ITC and the Commerce Department. Since leaving government, he has won more than 40 antidumping cases and is presently representing U.S. import companies in the wood flooring, steel sinks, solar cells and ironing tables antidumping cases.
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