Finally, after over a decade of litigation, the National Labor Relations Board (NLRB) issued its decision in New York New York LLC, 356 NLRB No. 119 (March 25, 2011) on remand from the District of Columbia Circuit Court of Appeals. Based on the Board’s precedent-setting ruling, we could have waited a little longer.
In a 3-1 decision (with Member Brian Hayes dissenting), the Board majority found that a Las Vegas hotel and casino violated federal labor law by prohibiting off-duty employees of a subcontractor restaurant inside the casino from distributing handbills on the hotel and casino’s property. The Board’s decision on remand is critical for all hospitality employers, which should consider supporting New York New York (NYNY) in its appeal to the federal courts.
Ark Las Vegas Restaurant Corporation (Ark) contracted to provide food service to guests and customers of NYNY in sit-down restaurants, a food court, as well as through banquet catering and room service. Ark employed approximately 900 people and operated seven days per week, 24 hours per day within the hotel. Ark had leasehold agreements with NYNY, but the restaurants’ employees were not employees of the hotel and casino and the private property was that of NYNY.
In 1997, Ark employees working on NYNY’s premises initiated a union organizing campaign. Thereafter, on three occasions in 1997 and 1998, the off-duty employees of Ark sought public support for their organizing efforts by distributing handbills throughout the NYNY hotel and casino. The handbills requested that customers tell Ark’s managers that Ark should “recognize and negotiate a fair contract with its workers.” The handbills were distributed to customers in front of two Ark-operated restaurant entrances inside the casino and as well at the casino’s main entrance.
NYNY prohibited Ark’s off-duty employees from distributing handbills on NYNY’s private property. After requesting the Ark employees to leave voluntarily, NYNY had them removed by the Las Vegas police. The Culinary Workers Union then filed unfair labor practice charges against NYNY and in 2001 the Board ruled that NYNY violated Section 8(a)(1) of the National Labor Relations Act by prohibiting employees of its subcontractor, Ark, from handbilling on NYNY’s property. The Board found that because the handbillers were employees of a contractor who worked regularly and exclusively on NYNY’s property, they enjoyed the right to distribute literature to NYNY customers in non-work areas during nonworking time, subject only to NYNY’s need to maintain production and discipline. Republic Aviation Corp. v. NLRB, 324 U.S. 793 (1945).
Thereafter, the D.C. Circuit considered the case on the Board’s motion for enforcement, and concluded that the Board’s decision had failed to consider the implications of the U.S. Supreme Court’s opinion in Lechmere (reaffirming the holding of Babcock & Wilcox that nonemployee union organizers are entitled to distribute literature on an employer’s private property only when they have no reasonable, non-trespassory means to communicate their message). Lechmere, Inc. v. NLRB, 502 U.S. 527 (1992); NLRB v. Babcock & Wilcox Co., 351 U.S. 105 (1956). The D.C. Circuit explained that the Supreme Court held in Lechmere that “the scope of § 7 rights depends on one’s status as an employee or nonemployee.” New York New York Hotel & Casino v. NLRB, 313 F.3d at 588. The court instructed the Board on remand to consider this and other issues.
The Board’s Majority Decision: Labor Rights vs. Property Rights
The Board majority’s subsequent precedent-setting decision is likely to have far-reaching implications for hospitality employers as well as other employers with on-site contractors. The decision sets a new legal standard where off-duty employees of an on-site contractor seek access to the premises of the property owner to distribute handbills in support of their organizing efforts.
On remand, the Board majority reaffirmed its prior findings and again ruled that NYNY violated Section 8(a)(1) by excluding the handbilling Ark employees from its property because NYNY did not demonstrate that the handbilling “significantly interfered with its use of the property or that exclusion was justified by some other legitimate business reason, such as the need to maintain operations or discipline.”
Responding to the court’s instructions on remand, the Board considered the broader legal and policy questions raised by the factual pattern, “which encompasses two circumstances that pull in opposite directions: the Ark employees were not employees of NYNY, but they were regularly employed on NYNY’s property by its contractor.”
In future cases, the Board majority held, a property owner may be able to justify the imposition of “reasonable, non-discriminatory, narrowly-tailored restrictions on the access of contractors’ employees, greater than those lawfully imposed on its own employees.”
The Board majority adopted an access standard that it claims reflects the specific status of such workers as statutorily protected “employees” exercising their own rights under the National Labor Relations Act, but not as employees of the property owner. The majority asserts that it struck “an accommodation between the contractor employees’ rights under Federal labor law and the property owner’s state-law property rights and legitimate managerial interests.”
According to Member Hayes’ dissent, the majority “appl[ies] a test that artificially equates the Section 7 rights of a contractor’s employees with those of the property owner’s employees, pays only lip service to the owner’s property interests, and gives no consideration to the critical factor of alternative means of communication.”
In so doing, the dissent asserts, the majority failed to adhere to the U.S. Supreme Court’s long-established mandate that in weighing an employee’s Section 7 rights against a property owner’s private property rights “[a]ccommodation between the two must be obtained with as little destruction of one as is consistent with the maintenance of the other.” NLRB v. Babcock & Wilcox Co., 351 U.S. 105, 112 (1956).
The dissent concludes: “In sum, the [m]ajority’s purported balancing test affords as much, if not more, protection to the efforts of Ark employees to engage in union organizational activity on the Respondent’s premises as the Respondent’s own employees would have.”
Significance for Hospitality Employers
As predicted in Member Hayes’ dissent: “The inevitable result of the [m]ajority’s analysis represents no real accommodation of competing interests. There will be no case-by-case balancing. The contractor employees’ rights to engage in organizational activity will trump the property owner’s rights every time, subject only to the suggested possibility that in some future case a property owner may be able to justify the imposition of ‘reasonable, non-discriminatory, narrowly- tailored restrictions on the access of contractors’ employees, greater than those lawfully imposed on its own employees.’”
Therefore, the significance of this decision is that hospitality employers everywhere will be less able to protect their private property interests from labor disputes of other employers. Unions will seek to use the decision to promote handbilling and other organizational activities involving a property owner’s on-site contractors throughout shopping malls, casinos, hotels, restaurants, office buildings, and wherever the union will find easy access to customers, clients, and others who might be sensitive to the union’s message. It will involve not only the employees of restaurant service contractors such as Ark, but also janitorial, construction, and repair services, as well as shops throughout the host employer’s property. And while the Board appears to create a hope or “possibility” that it will recognize “reasonable, non-discriminatory, narrowly-tailored restrictions on the access of contractors’ off-duty employees,” do not hold your breath waiting, at least not for the current Board.
As we go to press, there are two very significant rulemaking proposals pending from the NLRB (“R-Case Procedures” which provide rule changes for “quickie” union representation elections) and the U.S. Department of Labor (“Labor-Management Reporting and Disclosure Act: Interpretation of ‘Advice’ Exemption” which would virtually eliminate the exemption and require increased employer disclosures). The comment period expires on August 22, 2011 for both rules.