Sixth Circuit: “Reasonable Time for Negotiations” or “It’s Déjà Vu All Over Again.”

This week, the Sixth Circuit affirmed an August 2008 bargaining order by the NLRB involving the voluntary recognition of a union by a small plumbing company in May 2000, two decertification petitions submitted by the employees in March 2002 and May 2003 and two sets of negotiations, the last of which ended in May 2003 and none of which resulted in an initial bargaining agreement. Town & Country Plumbing & Heating, Inc. v. National Labor Relations Board, Nos. 08-2242/2384 (6th Cir. 11/9/09). By the time the employer decided to fight in June 2003, the dispute sat at the NLRB for five years when it was finally resolved against the employer by the NLRB on stipulated facts. In short, the NLRB found that the employer had failed to recognize the union for the required six month period in compliance with the parties’ settlement agreement because the NLRB does not recognize the “modern” business practice of correspondence or telephones and, instead required the parties to meet face-to-face before the clock started ticking on the six-month period.

The union began an organizational campaign in early 2000, which culminated in unfair labor practices being filed against the employer. When the General Counsel issued a complaint, the employer instead decided to informally settle the complaint by voluntarily recognizing the union in May 2000 and providing back pay to twelve employees. The employer and union then negotiated in good faith for almost two years without ever reaching an initial bargaining agreement. In March 2002, the employees filed a decertification petition and the employer withdrew recognition from union on March 14, 2002. The union again filed ULP charges, the General Counsel again issued a complaint and the employer again agreed to settle the complaint by voluntarily recognizing the union and negotiating in good faith in October 2002.

Unfortunately for the employer, this settlement agreement contained a clause that it did not become effective until approved by the NLRB – which did not happen until February 3, 2003 and it was not judicially approved by a Court until September 2003. Notwithstanding this, the employer immediately attempted to negotiate with the union, submitted proposals and responded to information requests by the union. The parties agreed in writing to a limited wage increase for five employees on October 30, 2002. However, for a variety of reasons, the union refused to meet face-to-face with the employer until January 16, 2003. The parties then met two more times, but exchanged information and proposals several times over the next five months and came close to reaching an initial agreement.

As in 2002, the employee again submitted a decertification petition to the employer and, as in 2002, the employer withdrew recognition from the Union on June 27, 2003 – almost eight months after they began negotiating in writing in October 2002, but only five months after the Board approved the formal settlement agreement on February 3, 2003 and 5.5 months after they met face-to-face for their first bargaining meeting on January 16, 2003. Again, the union filed a ULP and, again, the General Counsel issued a complaint. However, this time, the employer decided to fight. The parties waived a hearing before an ALJ and instead issued stipulated facts directly to the NLRB, which did not rule on the dispute until August 2008 – more than eight years after the employer first recognized the union for the first time.

The NLRB decided that it was in the interest of industrial peace to require the employer to negotiate with the union for at least six months before honoring any decertification petition submitted by the employees. The NLRB was not influenced in any way by the 22 months when the employer had already bargained with the union without reaching a bargaining agreement in 2000-2002. The NLRB’s prior decision in Lee Lumber requires a presumptive six-month bargaining period following an adjudicated unfair labor practice during which a union has an irrebuttable presumption of majority status after re-recognition. In this case, the employer argued that the six-month period began in October 2002 when the parties exchanged and agreed upon proposals, information, and limited wage increases, but the union argued that the six month period did not begin until February 3 when the settlement agreement was approved by the Board. The NLRB ultimately split the baby and decided that the six months did not begin until the parties first met face-to-face on January 16, 2003. Accordingly, six months had not passed when the employer withdrew recognition on June 27, 2003 after receiving its second decertification petition in two years.

The Court affirmed the Board’s decision as reasonable and not unduly prejudicial of the employees’ rights to be free of an ineffective union since the employer was only required to recognize the union for another six months before it could, once again, entertain a third decertification petition and withdraw recognition from the union for a third time in this never-ending story . . . ..

Insomniacs can read the full decision at http://www.ca6.uscourts.gov/opinions.pdf/09a0729n-06.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Appeals Court Reduces Non-Compete Period for Long-Time Tax Preparer Employee.

Last month, the Lucas County Court of Appeals reversed in part a summary judgment entered by the trial court in favor of a former employee and cut in half the non-compete period in the non-compete agreement. Murray v. Accounting Ctr. & Tax Servs., Inc., 2008-Ohio-5289 (10/10/08).

The plaintiff was forced by her employer to sign a non-compete agreement in 1999 in order to receive her paycheck that day. The agreement provided that she would not accept fees from any client of the employer for two years from the date her employment was terminated. In addition, the agreement provided that the agreement could be transferred to any successor employer upon merger or sale of the firm. In 2004, the firm was sold to the defendant employer, the non-compete agreement was assigned to the new company and the plaintiff continued working for the new company. In November 2006, the defendant employer presented her with a new Confidentiality and Non-Compete Agreement and asked her to sign it along with an agreement changing her compensation structure from hourly wages to commissions. When she refused to work on a commission basis, she was fired in January 2007. She continued to provide services to clients of the defendant employer and filed a declaratory judgment action testing the validity of the non-compete agreement which she signed in 1999. The trial court ruled that the agreement was unenforceable and ruled in favor of the plaintiff.

On appeal, the appeals court found that the 1999 non-compete agreement was properly assigned to the defendant employer over objections that no notice of the assignment was provided to the plaintiff employee.

The court did not address whether the 1999 agreement was supported by sufficient consideration – in that the undisputed evidence showed that the plaintiff was required to sign it in order to receive her current paycheck – which was to compensate her for services already rendered. The employer could not have legally withheld her wages if she had refused to sign the 1999 non-compete agreement without violating the FLSA or Ohio’s wage payment and collection law. On the other hand, the court may have considered her future employment to constitute valid consideration – but it does not address that obvious point at all.

Instead, the court focused on the reasonableness of the terms of the 1999 non-compete. "A covenant restraining an employee from competing with his former employer upon termination of employment is reasonable if the restraint is no greater than is required for the protection of the employer, does not impose undue hardship on the employee, and is not injurious to the public." The court then decided that the agreement was onerous in restricting the livelihood of a 16-year employee who supported herself by preparing tax returns for her employer and for herself. However, in balancing the interests of the employer in protecting its client base, the court narrowed the non-compete from two years to one year. The court also delayed the running of the one-year period to 60 days from the date of the court’s order. The court did not address the issue of liquidated damages presented in the 1999 agreement even though the plaintiff had admitted that she had provided services to clients of the defendant-employer.

Insomniacs can read the full decision at http://www.sconet.state.oh.us/rod/docs/pdf/6/2008/2008-ohio-5289.pdf.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.