On June 1, 2023, the United States Supreme Court held that a company could sue a union over intentional damage caused during a labor dispute. In Glacier Northwest v. International Brotherhood of Teamsters Loc. Union No. 174, a concrete company, Glacier Northwest, alleged that the Union intentionally destroyed company property during a strike. Specifically, Glacier claimed that the Union called for a work stoppage while concrete was being mixed, resulting in the hardening of the concrete, which not only ruined the concrete batch but also damaged company trucks. Seeking to hold the Union responsible, Glacier sued the Union in state court. The Union argued that because this was a labor dispute matter, the National Labor Relations Act (NLRA) preempted any state court claims.

The Washington state court agreed with the Union, and that decision was upheld by the Washington Supreme Court, which reasoned that “the NLRA preempts [the company’s] tort claims related to the loss of its concrete product because that loss was incidental to a strike arguably protected by federal law [the NLRA].” Following the Washington Supreme Court’s decision, the United States Supreme Court decided to hear the case. In an 8-1 decision, the Supreme Court sided with Glacier, holding that because the Union “took affirmative steps to endanger Glacier’s property … the NLRA does not arguably protect its conduct.” The Supreme Court recognized that the NLRA protects the right to strike; however, it also noted that the National Labor Relations Board “has long taken the position – which the parties accept – that the NLRA does not shield those who fail to take ‘reasonable precautions’ to protect their employer’s property from foreseeable, aggravated, and imminent danger due to the sudden cessation of work.”

In light of this limitation on the right to strike, the Supreme Court held that the Union did not meet its burden in asserting that the NLRA preempted the matter. Writing for the majority, Justice Amy Coney Barrett noted that, based on the allegations, “the Union executed the strike in a manner designed to compromise the safety of Glacier’s trucks and destroy its concrete. Such conduct is not ‘arguably protected’ by the NLRA; on the contrary, it goes well beyond the NLRA’s protections.” Accordingly, the Supreme Court reversed the judgment of the Washington Supreme Court and remanded the case for further proceedings.

Justice Jackson authored the lone dissenting opinion in the case. In her dissent, Justice Jackson cautioned that the majority’s decision would confuse lower courts as to how preemption applies and that this decision “risks erosion of the right to strike.” Justice Jackson also noted that the Supreme Court should have suspended its adjudication on this case because a complaint against the company is pending before the NLRB.

The upshot of the Supreme Court’s decision is that unions may be exposed to lawsuits based on work stoppages that damage company property. Although unions were previously capable of being sued in state court for violent or threatening conduct, the Supreme Court’s decision here goes a step further in finding that a union can be sued in state court if it is alleged that the Union enacted a work stoppage in an attempt to damage company property intentionally. Moving forward, employers should be aware of their right to sue a union when a work stoppage intentionally damages company property.

If you have any questions about the Glacier decision or how it impacts a company’s right to sue, please contact a member of the McNees Labor & Employment Group.

It’s no secret that non-compete agreements have recently come under greater scrutiny by the federal government.  In July 2021, President Joe Biden signed an Executive Order on “Promoting Competition in the American Economy” that, among other things, directed the Federal Trade Commission (“FTC”) to consider curtailing the use of non-compete agreements.  Then, in January of this year, the FTC responded to the Executive Order by proposing a broad and sweeping rule that would prohibit employers across the country from entering into non-compete agreements with their workforce.  Now, Jennifer Abruzzo, the General Counsel of the National Labor Relations Board, has joined this growing chorus, stating that non-compete agreements violate the National Labor Relations Act (“NLRA” or “Act”), except in limited circumstances.

On May 30, 2023, the General Counsel issued GC Memorandum 23-08 in which she argued that non-compete agreements are overbroad, and may violate the NLRA, “when the provisions could reasonably be construed by employees to deny them the ability to quit or change jobs by cutting off their access to other employment opportunities that they are qualified for based on their experience, aptitudes, and preferences as to type and location of work.”  She reasoned that this denial of access to employment opportunities purportedly chills protected activity under Section 7 because: (1) employees know they will have greater difficulty finding another job if they are discharged for exercising their rights to organize and act together to improve working conditions; (2) their bargaining power during strikes, lockouts, and other labor disputes is undermined; and (3) as former employees of an employer, they are unlikely to “reunite” at a local competitor and encourage each other to exercise statutory rights to improve working conditions at their new employer.

Moreover, the General Counsel argued that non-compete agreements chill employees from engaging in five specific types of protected activity:

  • They chill employees from concertedly threatening to resign to demand better working conditions.
  • They chill employees from carrying out concerted threats to resign or otherwise concertedly resigning to secure improved working conditions.
  • They chill employees from concertedly seeking or accepting employment with a local competitor to obtain better working conditions.
  • They chill employees from soliciting their co-workers to go work for a local competitor as part of a broader course of protected concerted activity.
  • They chill employees from seeking employment, at least in part, to specifically engage in protected activity (e.g., union organizing) with other workers at an employer’s workplace.

In the General Counsel’s view, the “proffer, maintenance, and enforcement” of non-compete agreements that would reasonably tend to chill employees from engaging in these activities would violate the Act unless they are “narrowly tailored to special circumstances justifying the infringement on employee rights.”  The General Counsel did not explain what she believes might constitute “special circumstances,” although she provided examples of what likely would not: avoiding competition from former employees, retaining employees, and protecting special investments in employee training.  Those activities, according to the General Counsel, would not justify the use of a non-compete agreement.

The General Counsel also acknowledged that employers have a legitimate business interest in protecting proprietary or trade secret information, but noted that such interests can be protected by narrowly tailored “workplace agreements.”  She also allowed that some non-compete agreements might not violate the Act if they don’t restrict employment relationships, such as if they restrict ownership interests in a competing business or independent contractor relationships, or under “special circumstances” (again, undefined) that justify a narrowly-tailored non-compete.

Importantly, the General Counsel’s memorandum is not binding, and thus does not change existing law or render all non-compete agreements unlawful.  Furthermore, while the NLRA protects “employees” (union and non-union), it does not protect “supervisors” who are excluded from Section 7’s protections.  As such, non-compete agreements with supervisors or managers should not be affected by her memorandum.  That said, the General Counsel is looking for a case to bring to the Board, and in that regard, directed the Regional Offices to submit to the Division of Advice cases involving non-compete agreements that are “arguably unlawful” under her analysis.

Whether the General Counsel’s position ultimately carries the day remains to be seen.  Although the current employee-friendly Board may be sympathetic to her position, the federal courts of appeals – which review Board decisions – may not.  We anticipate that there will be legal challenges by employers to an adverse Board decision.  Moreover, her memo sets up a clash with states, which have traditionally regulated non-compete agreements.  For example, under Pennsylvania law, employers have legitimate business interests in their investments in specialized employee training and trade secrets or confidential information that may be protected by non-compete agreements.  See, e.g., WellSpan Health v. Bayliss, 869 A.2d 990, 996 (Pa. Super. Ct. 2005).

We will be monitoring the NLRB and will provide updates on any action by the Board with respect to non-compete agreements.  If you have any questions about the General Counsel’s memorandum or other issues involving non-compete agreements, please contact any member of our Labor and Employment Practice Group.

McNees’ Benefits Group will be issuing a “Did you know?” series throughout the year providing short compliance reminders.

Did you know that qualified retirement plans may now allow a participant with a terminal illness to receive distributions from their retirement accounts without incurring the usual 10% penalty? The employer will need to amend the retirement plan to allow for such distributions.

For more information regarding compliance for your benefit plans, contact any member of the McNees Labor and Employment Group.

Now more than ever, it seems that employees are willing to express themselves.  While open communication with and among employees is usually a good thing, sometimes an employer’s rules are broken in the process.  A worker might call her supervisor a nasty name while complaining about her production team’s overtime assignments.  An employee could use profanity to describe working conditions in a social media post in which he also asks his co-workers to join a labor union. A striking employee may threaten a company executive while picketing.

In such cases, an employer is likely to consider disciplining employees for breaking its rules while otherwise engaged in activity protected by the National Labor Relations Act. Nearly three years ago, the NLRB announced that it would apply the same test when determining whether disciplinary action is lawful, regardless of the context in which the employee’s misconduct occurred.  In General Motors, LLC, the Board held that in order to prove that disciplinary action violates the Act, an employee was required to show that:

  1. the employee engaged in Section 7 protected activity;
  2. the employer knew of that activity; AND
  3. there is a causal connection between the discipline and the Section 7 activity.

If an employee met this initial burden, an employer could still avoid liability by proving that it would have taken the same action in the absence of protected activity.  Our discussion of General Motors, LLC can be found here.  Many employers welcomed this universal test, as it standardized the law regardless of the context in which the employee’s misconduct happened.  But, alas, the General Motors standard is no more.

On May 1, the Board issued its ruling in Lion Elastomers LLC II. There it overruled General Motors in favor of applying setting-specific tests to evaluate the propriety of employee discipline.  Now, the setting of an employee’s misconduct once again determines the standard by which disciplinary action will be judged.  The setting-specific tests are as follows:

First, when discipline arises out of an employee’s conduct toward management in the workplace, the Board will apply the test originally established in Atlantic Steel.  That test considers the following four factors:

  1. the place of the interaction between employee and management;
  2. the subject matter of the discussion;
  3. the nature of the employee’s outburst; AND
  4. whether the outburst was, in any way, provoked by an employer’s unfair labor practice.

Next, when discipline arises out of an employee’s misconduct on social media or while interacting with a co-worker in the workplace, the Board will apply its “totality of the circumstances” test without regard to any particular factor.  This test was originally enunciated in Pier Sixty, LLC.

Finally, when discipline arises out of an employee’s misconduct on the picket line, the Board will again consider the Clear Pine Mouldings standard.  Under that test, the Board examines the totality of the circumstances to assess whether non-striking employees reasonably would have been coerced or intimidated by the misconduct.  If so, discipline is proper.

As the current NLRB continues to unwind many of the employer-friendly rules established by the previous Board, employers must now remember that context matters when disciplining employees for conduct that occurs during otherwise protected activity.  One size no longer fits all.

McNees’ Benefits Group will be issuing a “Did you know?” series throughout the year providing short compliance reminders.

Did you know that group health plans are required to submit a gag clause prohibition compliance attestation to the Departments of Labor, Health and Human Services, and Treasury prior to December 31, 2023?  The annual attestation provides that the group health plan has not, since December 27, 2020, entered into and will not enter into a contract with a health care provider, third-party administrator, or other service provider offering access to a network of providers that would directly or indirectly restrict the group health plan from disclosing the quality and cost of services and certain other information.

For more information regarding compliance for your benefit plans, contact any member of the McNees Labor and Employment Group.

We have posted about employer use of Artificial Intelligence, AI, and the emerging legal issues associated with such tools, and no doubt, AI is going to continue to be a hot topic.  The growth of AI tools and their usage across industries has been explosive.

Recently, we attended a Webinar on Chat GPT and learned more about the awesome power of this technology.  We walked away very impressed, and even a little scared of its capabilities.  One key takeaway: while Chat GPT may be a good way to start a project, at this point, employers should be sure to use REAL intelligence to review and finalize any work product.  Legal issues are just starting to surface and the field is dynamic.

Still, we wanted to give it a shot.  So we asked Chat GPT to help us with a first draft of a blog post.  We asked it, please help me with a blog post for Human Resources professionals about Chat GPT.  Here is what it came up with (with some careful editing from us):

With the rise of artificial intelligence, HR professionals are now presented with new tools to streamline their work processes and make more informed decisions. One such tool is Chat GPT, a large language model developed by OpenAI based on the GPT-3.5 architecture. In this blog post, we will explore how Chat GPT can be used by HR professionals to improve their work processes.

What is Chat GPT?

Chat GPT is a large language model that uses deep learning techniques to generate human-like responses to text prompts. The model is based on the GPT-3.5 architecture, which allows it to generate responses that are both accurate and contextually relevant. Chat GPT can be used in a variety of applications, including chatbots, customer service, and even HR.

How can HR professionals use Chat GPT?

HR professionals can use Chat GPT in a variety of ways to streamline their work processes and improve their decision-making. Here are just a few examples:

       1.  Recruitment

Chat GPT can be used to automate the recruitment process by answering candidates’ questions about the job requirements, company culture, and application process. This can free up HR professionals to focus on other tasks while ensuring that candidates receive timely and accurate information.

       2.  Onboarding

Chat GPT can also be used to automate the onboarding process by answering new hires’ questions about company policies, benefits, and procedures. This can help new hires feel more comfortable and confident in their new role, while also reducing the workload for HR professionals.

       3.  Performance management

Chat GPT can be used to gather feedback from employees about their performance and provide personalized recommendations for improvement. This can help HR professionals identify areas where employees need additional support and create more effective performance improvement plans.

       4.  Employee engagement

Chat GPT can also be used to engage with employees and provide them with personalized support. For example, Chat GPT can be used to answer questions about company benefits, provide training resources, and even schedule appointments with HR professionals.

       5.  Compliance

Chat GPT can also be used to ensure compliance with company policies and legal regulations. For example, Chat GPT can be used to answer employees’ questions about policies, provide information about mandatory training requirements, and even alert HR professionals to potential compliance violations.

Our Conclusion

There is no doubt that OpenAI, and Chat GPT specifically, is a powerful tool.  OpenAI is going to change the world and the world of work.  There is also no doubt that the lightning-fast changes happening in this space will continue for the foreseeable future.

Certainly, employers need to be aware of the power of these tools, how they may be useful to the organization, and where there are risks.  In a future article, we will discuss what employers should be doing to educate and guide employees as these tools become more widely used.

McNees’ Benefits Group will be issuing a “Did you know?” series throughout the year providing short compliance reminders.

Did you know that an employer must issue an updated summary plan description (“SPD”) at least every five (5) years that contains all recent amendments? If there were no amendments to the SPD, then the SPD must be reissued every 10 years.

For more information regarding compliance for your benefit plans, contact any member of the McNees Labor and Employment Group.

On January 10, 2023, Lancaster County Court of Common Pleas Judge Jeffrey Wright addressed the question that has been plaguing employers since the passage of the PA Medical Marijuana Act (the “Act”) – what constitutes being “under the influence” for purposes of the Act’s safety exception?  As a reminder, when the Act was passed, the legislature included a broad safety exception within Sections 510(3) & (4) of the Act, which provides:

A patient may be prohibited by an employer from performing any task which the employer deems life-threatening, to either the employee or any of the employees of the employer, while under the influence of medical marijuana.

A patient may be prohibited by an employer from performing any duty which could result in a public health or safety risk while under the influence of medical marijuana.

However, ‘under the influence’ was not defined for purposes of these provisions.

What is “under the influence?”

In the Lancaster County case of Clark v. J.R.K. Enterprises, Inc., the plaintiff was a roadside flagger who utilized medical marijuana outside of work to treat anxiety.  After several of his co-workers were sent for random drug tests, he admitted to his employer that he used marijuana nightly and, if tested, would test positive because he always had marijuana in his system.  The employer considered flagging to be a safety sensitive job and determined that plaintiff could not perform the flagging job unless he agreed to stop using medical marijuana.  Challenging this decision, the plaintiff filed suit, alleging discrimination in violation of the Act.

The employer moved for dismissal, arguing that plaintiff’s own admission that he “always had marijuana in his system” meant that he would be consistently under the influence and thus should not be performing safety sensitive duties.  Initially, Judge Wright denied the motion, holding that there was a factual dispute regarding the definition of ‘under the influence,’ which experts could address at trial.  However, following the decisions in Commonwealth v. Dabney (Pa. Super. 2022) and Commonwealth v. Haney (Pa. Super. 2022), Judge Wright reconsidered and dismissed the suit.

Dabney and Haney are both DUI cases in which, after being pulled over, the driver acknowledged medical marijuana use, the police officer had probable cause to require a drug test and the driver subsequently tested positive for marijuana.  In both cases, the drivers argued that they should not be charged with DUI, because their marijuana use was legal.  The courts disagreed.  In Dabney, the court held that the Act does not exempt a driver with a medical marijuana card from the prohibition against driving with any amount of marijuana or marijuana metabolites in the driver’s system.  Further, the court listed all of the actions permitted by the Act: growing, processing, manufacturing, acquiring, transporting, selling, dispensing, distributing, possessing and consuming marijuana.  It then noted what is not specifically permitted in the Act: “driving with a controlled substance in one’s blood.”  Likewise in Haney, the court upheld Pennsylvania’s zero tolerance DUI law for marijuana metabolites and noted that “driving after using medical marijuana, a Schedule I controlled substance, is not included in the lawful use of medical marijuana under the Act.”

Applying the rationale of Dabney and Haney to the Clark case, Judge Wright agreed with the employer’s argument that it would be absurd to criminally prosecute a driver for having marijuana in their blood, while at the same time allowing Clark to direct and control traffic on roadways with marijuana in his blood.  Because “the lawful use of medical marijuana does not include driving after using medical marijuana,” Judge Wright concluded that the “lawful use of medical marijuana cannot, likewise, include dressing in safety gear, entering the roadway, and directing drivers through precarious construction zones after using medical marijuana.”  Further discussing the issue, Judge Wright concluded that the General Assembly purposefully failed to include a definition of “under the influence” in the catch-all safety exception to the Act, whereas elsewhere in the Act, the term “under the influence” was linked to specific levels of THC in blood serum.  Based on this conclusion, the Judge reasoned that “the General Assembly’s clear choice to omit a specific nanogram level that employers may allow or prohibit relieves employers of a practically impossible-to-execute duty,” and that “to construe ‘under the influence’ to mean anything other than having any amount of marijuana in a Patient-Employee’s system would be altogether untenable.”

What does this mean for employers?

So, what is the takeaway from the Clark decision?  First, it is important to keep in mind that the decision of one Court of Common Pleas Judge is not necessarily binding on any other judge in the Commonwealth.  Accordingly, a judge in another county or on a higher court would be free to disagree with Judge Wright and reach a different conclusion.  However, Judge Wright’s rationale is based upon the holding of two recent Superior Court cases, which are binding on all judges in the county courts.  Accordingly, employers who wish to uphold a zero-tolerance policy for employees performing clearly safety-sensitive jobs (jobs that could be life threatening and jobs that could result in public health or safety risks) now have a very strong argument for doing so.  This is especially true when the employee either actually tests positive, despite only off duty use, or admits that they will test positive.

If you have questions regarding which jobs are safety sensitive and whether a zero-tolerance policy makes sense for your business, please reach out to Denise Elliott or another member of the McNees Labor and Employment Group.

After the pandemic began to ease, and labor availability was the lowest in recent history, many employees found themselves working more and more to fill the gaps in the workforce.  That led to the trend popularized a year ago called “quiet quitting.”  Under its tamest definition, quiet quitting was/is a practice where employees only did their own job duties – not the duties of multiple employees. Now, quiet quitting has morphed into a new trend: “bare minimum Mondays.”

Bare minimum Mondays is not just employees limiting their work to the duties of their specific job.  It goes further than that.  It is the idea that within the employee’s specific duties, the employee does the absolute minimum – at least on Mondays.  This trend demonstrates either a misunderstanding of the general direction of our economy, a naivete of how the world works, or a symptom of the employee’s disassociated self – where the employee has failed to connect his/her work of today with his/her employment prospects of tomorrow.

A year ago, when quiet quitting was a thing, employees had leverage (more than they had in a very long time, if not ever).  Every aspect of their work was needed, even if that was limited to their individual duties (and even if it was mediocre).  So, employers treaded lightly, simply to retain the workforce they had.  Now, employers’ financial outlooks are in a much more uncertain place.  Some employers are still in the same position they were a year ago, needing all the labor they can get.  Other employers are at the other end of the spectrum, looking to shed labor.  Still others are teetering between one and the other.

McNees has assisted clients with several reductions in force in the last three months.  We expect that trend to continue, if not accelerate.  When identifying the criteria to use to select employees for layoff, we have noticed a common theme across clients.  The predominant criterion has not been seniority.  It has not been employees with the highest wages.  It has not been a subjective consideration of which employees are liked and which are disliked.  The predominant criterion has been productivity.

Employees who work for employers that are contemplating cost-saving measures might want to read the room.  By following the “bare minimum Monday” trend, an employee just might be self-selecting themselves for a future reduction in force.  Unlike the quiet quitters of last year – who, if terminated, could find new employment almost instantaneously (probably at a higher wage) – those laid off now or in the future will be getting dumped into a very different job market.  This is not to suggest that an employee should be doing the work of multiple employees.  It is only to suggest that an employee doing the bare minimum of his/her own job could ultimately be an act of self-sabotage.

McNees’ Benefits Group will be issuing a “Did you know?” series throughout the year providing short compliance reminders.  This is the first in the series.

Did you know that if you withhold premium payments pre-tax from employee wages, you must have a cafeteria plan (also called 125 plan)?  If you do not have a cafeteria plan, then your employees owe taxes on the premiums withheld.

For more information regarding cafeteria plans, contact any member of the McNees Labor and Employment Group.