New England Biz Law Update
The National Labor Relations Board should not have invalidated an employer’s policy granting non-union employees a hiring preference for non-union positions, the 1st U.S. Circuit Court of Appeals has found.
The employer argued that it instituted its hiring policy in order to “level the playing field” between union and non-union workers.
The NLRB determined, however, that the policy, HR 4.06, was invalid because it was not supported by a legitimate and substantial business justification.
“Because [the employer]’s chosen method was reasonably adapted to achieve its stated goal, the Board lacked the power to reject HR 4.06 simply because it is not identical to the union hiring policy or because [the employer] might have achieved its goal through alternative means that were more beneficial to its union employees,” Judge Paul J. Barbadoro wrote for the unanimous three-judge panel.
The 20-page decision is Southcoast Hospitals Group, Inc. v. National Labor Relations Board.
Joseph D. Whelan of Providence argued the appeal on behalf of the employer. The NLRB was represented on appeal by Barbara Sheehy of Washington, D.C.
Hiring policies
Southcoast Hospitals Group was created through a 1996 merger of St. Luke’s Hospital, Charlton Hospital and Tobey Hospital. Only employees at Tobey are represented by a union.
The union, 1199 Service Employees International Union United Health Care Workers, represents approximately 215 technical, clerical, service and maintenance employees out of a total of 550 employees at Tobey. St. Luke’s has approximately 2,700 non-union employees, while Charlton has approximately 2,100 non-union employees.
Under a collective bargaining agreement, union members enjoy a hiring preference when applying for union jobs at Tobey since at least the time of the merger. The CBA bars Southcoast from considering any non-union applicant for a union position unless all union applicants are unqualified for the position.
The employer developed its current policy for filling vacancies in non-union positions in 1999. Applications are screened and qualified applicants are placed into one of three groups by the company’s human resources department. Non-union, regular-status applicants are considered in the first round. If no one is selected from the first round, union applicants are considered together with temporary and per diem applicants in the second round. All other applicants are considered in the third round if no one is selected from the first two rounds.
David DeJesus, an HR official at Southcoast, asserted that the company adopted HR 4.06 as a “matter of equity.” From his perspective, if the union excluded non-union employees from the first round of consideration for union positions at Tobey, then “it should work the same way in the other direction.”
The union challenged the non-union hiring policy, contending that it discriminated against union members in violation of section 8(a)(3) and (1) of the National Labor Relations Act, 29 U.S.C. §158(a)(3), (1).
An administrative law judge issued a decision sustaining the charge in June 2013. A divided three-member panel of the board largely affirmed the ALJ’s ruling on Sept. 16, 2015.
The employer argued that it instituted its hiring policy in order to “level the playing field” between union and non-union workers.
Business justification
The NLRB defended its ruling solely by claiming that the employer failed to prove that HR 4.06 serves a legitimate and substantial business interest.
According to the employer, because a non-union employee cannot be considered for a union position at Tobey Hospital unless no qualified union member applies for the position, “it is only fair to grant nonunion employees a similar hiring preference when filling nonunion positions.”
The NLRB did not question Southcoast’s contention that HR 4.06 “treats nonunion workers more like union workers than would otherwise be the case.” Instead, it rejected the employer’s level-playing-field justification because it determined that the policy goes too far and instead “does the opposite of ‘level the playing field’” by disproportionately favoring non-union employees over their union counterparts.
The board based that determination on two subsidiary factual findings. First, it noted that the number of positions covered by HR 4.06 “pales in comparison” to the number of positions covered by the union hiring policy.
Second, the board found HR 4.06 to be unfair because it grants non-union workers a hiring preference for vacant jobs at two facilities whereas the union hiring preference covers only jobs at a single facility.
Though HR 4.06 covers more positions and more facilities than the union hiring policy, the 1st Circuit found it far from clear that the difference unfairly disadvantages union workers.
“Accordingly, a finding that HR 4.06 covers more positions than are covered by the union hiring policy cannot by itself justify the Board’s conclusion that the policy tilts the playing field too far in favor of nonunion workers,” Barbadoro said.
“In rejecting HR 4.06, the Board focused its analysis solely on the greater number of employees and facilities covered by the nonunion hiring preference without also considering aspects of the policy that continue to leave nonunion employees less well off than their union counterparts,” Barbadoro pointed out.
“Two minor differences between HR 4.06 and the union’s hiring policy that have little, if any, adverse effect on union members cannot serve as substantial evidence for a determination that HR 4.06 tilts the playing field too far in favor of nonunion employees when other unexamined differences between the policies continue to leave union members with a comparative advantage when they apply for vacant positions,” the judge said.
The NLRB argued on appeal that “[w]here an employer’s discriminatory action is not necessary to achieve its stated goal, it lacks a legitimate and substantial business justification.”
The board claimed that it was entitled to reject the employer’s level-playing-field justification because Southcoast could have achieved its stated goal through less restrictive means by limiting its non-union workers to only a single-facility hiring preference.
“We reject this argument because … nothing in the record supports the conclusion that nonunion workers are given greater or more opportunities than union workers,” Barbadoro stated.
“While the Board remains free to reject a proffered business justification on the ground that it is ‘illogical,’ … or that is not ‘reasonably adapted to the achievement of a legitimate end,’ … it may not invalidate an employment policy that accomplishes a legitimate goal in a nondiscriminatory manner merely because the Board might see other ways to do it,” Barbadoro wrote on behalf of the panel.
