[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
WHAT SHOULD WORKERS AND EMPLOYERS
EXPECT NEXT FROM THE NATIONAL
LABOR RELATIONS BOARD?
=======================================================================
HEARING
before the
SUBCOMMITTEE ON HEALTH,
EMPLOYMENT, LABOR, AND PENSIONS
COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. House of Representatives
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD IN WASHINGTON, DC, JUNE 24, 2014
__________
Serial No. 113-60
__________
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COMMITTEE ON EDUCATION AND THE WORKFORCE
JOHN KLINE, Minnesota, Chairman
Thomas E. Petri, Wisconsin George Miller, California,
Howard P. ``Buck'' McKeon, Senior Democratic Member
California Robert C. ``Bobby'' Scott,
Joe Wilson, South Carolina Virginia
Virginia Foxx, North Carolina Ruben Hinojosa, Texas
Tom Price, Georgia Carolyn McCarthy, New York
Kenny Marchant, Texas John F. Tierney, Massachusetts
Duncan Hunter, California Rush Holt, New Jersey
David P. Roe, Tennessee Susan A. Davis, California
Glenn Thompson, Pennsylvania Raul M. Grijalva, Arizona
Tim Walberg, Michigan Timothy H. Bishop, New York
Matt Salmon, Arizona David Loebsack, Iowa
Brett Guthrie, Kentucky Joe Courtney, Connecticut
Scott DesJarlais, Tennessee Marcia L. Fudge, Ohio
Todd Rokita, Indiana Jared Polis, Colorado
Larry Bucshon, Indiana Gregorio Kilili Camacho Sablan,
Lou Barletta, Pennsylvania Northern Mariana Islands
Joseph J. Heck, Nevada Frederica S. Wilson, Florida
Mike Kelly, Pennsylvania Suzanne Bonamici, Oregon
Susan W. Brooks, Indiana Mark Pocan, Wisconsin
Richard Hudson, North Carolina Mark Takano, California
Luke Messer, Indiana
Bradley Byrne, Alabama
Juliane Sullivan, Staff Director
Megan O'Reilly, Minority Staff Director
------
SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR, AND PENSIONS
DAVID P. ROE, Tennessee, Chairman
Joe Wilson, South Carolina John F. Tierney, Massachusetts,
Tom Price, Georgia Ranking Member
Kenny Marchant, Texas Rush Holt, New Jersey
Matt Salmon, Arizona Mark Pocan, Wisconsin
Brett Guthrie, Kentucky Robert C. ``Bobby'' Scott,
Scott DesJarlais, Tennessee Virginia
Larry Bucshon, Indiana Ruben Hinojosa, Texas
Lou Barletta, Pennsylvania David Loebsack, Iowa
Joseph J. Heck, Nevada Joe Courtney, Connecticut
Mike Kelly, Pennsylvania Jared Polis, Colorado
Susan W. Brooks, Indiana Gregorio Kilili Camacho Sablan,
Luke Messer, Indiana Northern Mariana Islands
Bradley Byrne, Alabama Frederica S. Wilson, Florida
Suzanne Bonamici, Oregon
(II)
C O N T E N T S
----------
Page
Hearing held on June 24, 2014.................................... 1
Statement of Members:
Roe, Hon. David P., Chairman, Subcommittee on Health,
Employment, Labor, and Pensions............................ 1
Prepared statement of.................................... 3
Tierney, Hon. John F., a Representative in Congress from the
State of Massachusetts..................................... 4
Prepared statement of.................................... 6
Statement of Witnesses:
Borden, Seth, H., Partner, McKenna Long & Aldridge LLP, New
York, New York,............................................ 22
Prepared statement of.................................... 24
Coppess, James, Associate General Counsel, AFL-CIO,
Washington, DC............................................. 35
Prepared statement of.................................... 37
King, G. Roger, of Counsel, Jones Day, Columbus, Ohio........ 48
Prepared statement of.................................... 50
Puzder, Andrew, F., CEO, CKE Restaurants, Carpinteria,
California................................................. 7
Prepared statement of.................................... 10
Additional Submissions:
Mr. Tierney:
Prepared statement of United Steelworkers................ 92
Letter dated October 23, 2011, from Employee Organizing
Committee of Speciality Healthcare & Rehabilitation
Center, Mobile, Alabama................................ 97
(III)
WHAT SHOULD WORKERS AND EMPLOYERS EXPECT NEXT
FROM THE NATIONAL LABOR RELATIONS BOARD?
----------
Tuesday, June 24, 2014
House of Representatives,
Subcommittee on Health, Employment, Labor, &
Pensions, Committee on Education and the
Workforce,
Washington, D.C.
----------
The subcommittee met, pursuant to call, at 10:07 a.m., in
Room 2175, Rayburn House Office Building, Hon. Phil Roe
[chairman of the subcommittee] presiding.
Present: Representatives Roe, Wilson, Guthrie, Bucshon,
Kelly, Brooks, Messer, Byrne, Tierney, Holt, Pocan, Scott,
Courtney, and Bonamici.
Also present: Chairman Kline.
Staff present: Janelle Belland, Coalitions and Members
Services Coordinator; Ed Gilroy, Director of Workforce Policy;
Benjamin Hoog, Senior Legislative Assistant; Marvin Kaplan,
Workforce Policy Counsel; Nancy Locke, Chief Clerk; James
Martin, Professional Staff Member; Zachary McHenry, Senior
Staff Assistant; Daniel Murner, Press Assistant; Brian Newell,
Communications Director; Krisann Pearce, General Counsel;
Alissa Strawcutter, Deputy Clerk; Juliane Sullivan, Staff
Director; Tylease Alli, Minority Clerk/Intern and Fellow
Coordinator; Melissa Greenberg, Minority Labor Policy
Associate; Eunice Ikene, Minority Labor Policy Associate; Brian
Kennedy, Minority General Counsel; Julia Krahe, Minority
Communications Director; Leticia Mederos, Minority Director of
Labor Policy; Richard Miller, Minority Senior Labor Policy
Advisor; Megan O'Reilly, Minority Staff Director; Amy Peake,
Minority Labor Policy Advisor; Michael Zola, Minority Deputy
Staff Director; and Mark Zuckerman, Minority Senior Economic
Advisor.
Chairman Roe. A quorum being present, the Subcommittee on
Health, Employment, Labor, and Pensions will come to order.
Good morning. I would like to welcome our guests and thank
our witnesses for joining us. We appreciate the time you have
taken out of your busy schedules to participate in today's
hearing.
Four years ago, the Obama Administration promised the start
of a ``recovery summer." The American people were told at the
time the nation was about to enter a period of strong growth
and job creation. We know four years later that simply wasn't
the case. Instead of a robust recovery, the nation continued to
struggle with a jobs crisis that is hurting working families to
this day.
It has taken five years to simply regain the jobs lost as a
result of the recent recession, making it the slowest recovery
in our nation's history. On our current path, it will take four
more years before we close what is known as the jobs gap, the
number of jobs destroyed by the recession plus the number of
jobs that we simply need to keep pace with population growth.
Four years after the so-called ``recovery summer," roughly 10
million Americans are still searching for work, including more
than three million Americans who have been out of a job six
months or longer.
When the focus should be on developing bipartisan solutions
that will help put people back to work, the Obama
Administration has spent most of its time promoting a partisan
agenda at the behest of powerful special interests. That has
certainly been the case with the National Labor Relations
Board.
In response to a steady decline in its membership, unions
have increasingly relied on federal agencies to tilt the
balance of power in their favor. The NLRB is at the center of
this effort, promoting a culture of union favoritism that makes
it virtually impossible for employers and workers to resist
union pressure.
Under President Obama's watch, the board has restricted
access to the secret ballot, advanced an ambush election rule
that will stifle employer free speech and cripple worker free
choice, and begun to bless micro-unions that will tie employers
up in union red tape while undermining employee freedom in the
workplace. The NLRB even went so far as to try and dictate
where a private employer could and could not create jobs. And I
could go on and on.
Additionally, there are cases before the board right now
that threaten to further stack the deck in favor of the
administration's union allies. For example, the board has
requested feedback on how to determine joint-employer status
under the National Labor Relations Act, a standard that has
been in place for 30 years to determine when two employers
share immediate and direct control over essential terms and
conditions of employment, such as hiring, firing, discipline,
and supervision. This isn't a new concept, so the board's
recent solicitation is highly suspect and strongly suggests it
is eager to abandon existing policies in favor of a new
standard more favorable to union interests.
The board may also be looking for ways to give union
organizers greater access to employer property, most notably
employers' e-mail systems. The board has always instructed
employers that any policy limiting the use of work e-mail must
be enforced in a nondiscriminatory way, which means employers
cannot treat unions any differently than any other non-
charitable organizations. This provides employers a clear
standard to follow and union organizers a level playing field
to work on. It is likely the current board majority will seek
to impose a fundamentally different approach, one that would
give union organizers practically unfettered access to the
employers' e-mail systems.
On their own, these may seem like relatively minor issues.
However, they are part of a larger pattern that is generating a
lot of uncertainty, confusion, and anxiety in workplaces across
this country. Every member of this committee supports the right
of workers to freely choose whether or not to join a union. It
is ultimately a decision that rests with each and every
individual worker. Federal policymakers don't have the
authority to make that choice for them.
Today's hearing is a part of the committee's continued
oversight of the NLRB, but more importantly, a part of our
commitment to defend the rights of workers and employers.
I look forward to learning more from our witnesses in our
discussion later this morning. Before I conclude, I would like
to take a moment to recognize the new senior Democratic member
of the subcommittee, Representative John Tierney. I know he is
passionate and a tireless advocate for working families.
And John and I have taken the time to get to know each
other. I know that a lot of times you don't see this, but we
have taken the opportunity to get to know each other. I have
been in his office on an informal basis recently. He was very
gracious. And even though we may not see eye-to-eye on a number
of issues, I am confident we will find ways to disagree without
being disagreeable.
And congratulations on your appointment, Congressman
Tierney. And with that, I recognize you for your opening
statement.
[The statement of Chairman Roe follows:]
Prepared Statement of Hon. Phil Roe, Chairman, Subcommittee on Health,
Employment, Labor, and Pensions
Good morning. I'd like to welcome our guests and thank our
witnesses for joining us. We appreciate the time you've taken out of
your busy schedules to participate in today's hearing.
Four years ago, the Obama administration promised the start of
``recovery summer.'' The American people were told at the time the
nation was about to enter a period of strong growth and job creation.
We know four years later that simply wasn't the case. Instead of a
robust recovery, the nation continued to struggle with a jobs crisis
that is hurting working families to this day.
It has taken five years to simply regain the jobs lost as a result
of the recent recession - making this the slowest recovery in our
nation's history. On the current path, it will take four more years
before we close what's known as the jobs gap, the number of jobs
destroyed by the recession plus the number of jobs we need to simply
keep pace with population growth. Four years after the so-called
``recovery summer'' and roughly 10 million Americans are still
searching for work, including more than 3 million Americans who have
been out of a job for six months or longer.
When the focus should be on developing bipartisan solutions that
will help put people back to work, the Obama administration has spent
most of its time promoting a partisan agenda at the behest of powerful
special interests. That has certainly been the case with the National
Labor Relations Board.
In response to a steady decline in its membership, union bosses
have increasingly relied on federal agencies to tilt the balance of
power in their favor. The NLRB is at the center of this effort,
promoting a culture of union favoritism that makes it virtually
impossible for employers and workers to resist union pressure.
Under President Obama's watch, the board has restricted access to
the secret ballot, advanced an ambush election rule that will stifle
employer free speech and cripple worker free choice, and begun to bless
micro unions that will tie employers up in union red tape while
undermining employee freedom in the workplace. The NLRB even went so
far as to try and dictate where a private employer could and could not
create jobs. I could go on and on.
Additionally, there are cases before the board right now that
threaten to further stack the deck in favor of the administration's
union allies. For example, the board has requested feedback on how to
determine joint-employer status under the National Labor Relations Act.
A standard has been in place for 30 years to determine when two
employers share immediate and direct control over essential terms and
conditions of employment, such as hiring, firing, discipline, and
supervision. This isn't a new concept, so the board's recent
solicitation is highly suspect and strongly suggests it's eager to
abandon existing policies in favor of a new standard more favorable to
union interests.
The board may also be looking for ways to give union organizers
greater access to employer property, most notably employers' email
systems. The board has always instructed employers that any policy
limiting the use of work email must be enforced in a non-discriminatory
way, which means employers cannot treat unions any differently than
other non-charitable organizations. This provides employers a clear
standard to follow and union organizers a level playing field to work
on. It's likely the current board majority will seek to impose a
fundamentally different approach, one that would give union organizers
practically unfettered access to employers' email systems.
On their own these may seem like relatively minor issues. However,
they are part of a larger pattern that is generating a lot of
uncertainty, confusion, and anxiety in workplaces across the country.
Every member of this committee supports the right of workers to freely
choose whether or not to join a union. It is ultimately a decision that
rests with each and every individual worker; federal policymakers don't
have the authority to make that choice for them. Today's hearing is
part of the committee's continued oversight of the NLRB, but more
importantly, part of our commitment to defending the rights of workers
and employers.
I look forward to learning more from our witnesses and our
discussion later this morning. Before I conclude, I'd like to take a
moment to recognize the new senior Democrat member of the subcommittee,
Representative John Tierney. I know he is passionate and tireless
advocate for working families. Even though we may not see eye to eye on
a number of issues, I am confident we will find ways to disagree
without being disagreeable. Congratulations on your appointment,
Congressman Tierney. With that, I will now recognize Mr. Tierney for
his opening remarks.
______
Mr. Tierney. Thank you, Chairman Roe. And, yes, this I
think will be a good exercise in comity as we try to work
through these problems in a way that reflects civility and
deals with the issues themselves.
This is the first hearing that has occurred since I was
elected to serve as ranking member. And so I want to begin my
official statement by thanking Ranking Member Miller, the full
committee, and my Democratic colleagues for entrusting me with
this capacity to serve.
You know, I have had the privilege of being on this
subcommittee for a number of years, and I do it because the
jurisdiction is so important, I think, to the issues that
really impact the lives of workers, employers, retirees,
middle-class families everywhere, and the things that really
matter, the things they talk about around the kitchen table,
ensuring that all Americans get a decent job that pays a fair
wage, access to affordable, quality health care, retire with
dignity, and perhaps a little change in their pocket. They are
squarely in the subcommittee's jurisdiction, and that is what
makes it so interesting and worth serving on.
They are also priorities which I have fought for my career
in Congress, and so I am honored to serve as ranking member and
ready to take up the challenge. And I do want to thank you,
Chairman Roe, for the courtesies that you and your staff have
extended to my staff and to me. To date, we have been dealing a
lot with the multi-employer pension crisis. I look forward to
working on that rather complex issue as we go forward.
Now, with respect to today's hearing, in the past 3-1/2
years, the committee has held at least 16 hearings or markups
on the National Labor Relations Board, and today we are doing
it again.
Now, it is my understanding that witnesses will discuss two
cases. One is the Browning-Ferris case, where the board has
asked for input on whether to update and modernize the joint
employer standard. It is believed that the current standard may
not reflect the reality of today's workplaces, so the board
apparently has asked for the opinion of others so that they can
consider that and determine whether or not it needs to be
updated and modernized.
The second case, Purple Communications, deals with the
right of employees to use e-mail to communicate regarding
organizing, bargaining, or forming a union.
In neither of these cases did the board yet come to a
decision on whether or not to change the standards as they are
currently interpreted. In fact, in one of the witnesses'
testimony, today it says, ``all indications are that workers
and employees should expect that--is that the NLRB will decide
these cases by carefully, applying established legal principles
to the particular facts of each case, and that in so doing the
board will attempt to provide legal guidance to workers and
employers who encounter similar situations in the future.''
Now, that is exactly what the board is charged with doing.
The statute sets it up that way. So assuming that no one
associated with this hearing would want to be perceived as
attempting to chill the board members from actually doing their
job or attempt to influence a decision that is under
consideration, one has to wonder why we are having this hearing
at all. It is a bit premature and, certainly, I think sort of
tries to jump the gun in terms of what the NLRB itself may do
in terms of coming to a decision on those issues.
I look forward to the testimony. I trust we are going to be
informed and led by the facts and not spend time undermining
the efforts or the integrity of the board or mischaracterizing
its decisions or maligning board members. That wouldn't be
fair, nor would it be productive.
I want to quote the witness again who says, ``There is no
reason to think whatsoever that workers and employers would
expect anything from the NLRB in deciding these cases other
than a thoughtful, considered application of established
principles to the particular facts of the case.''
At the 16 hearings and markups, the subject of the NLRB has
been covered pretty extensively, and I think that we ought
perhaps wait until the board takes its action, gets all of the
input that it wants, and with due deliberation decides.
You know, there have been 9.4 million private-sector jobs
that have been created since the recession, when we were losing
800,000 jobs a month. Yet we don't continue to create as much
jobs--or as many jobs as we should because we failed to pass a
robust transportation bill, which would create hundreds of
thousands of jobs. We failed to deal with an anemic research-
and-development aspect, which would create jobs. We are missing
the opportunity to pass an energy policy that would expedite
not only the creation of more jobs, but a policy that would
move us away from the reliance on fossil fuels and some
dangerous positions in the world.
So I would think that any decision clarifying the law on
what is being done in the labor relations field would be best
left to the board that is charged with that. In the meantime,
we have got a number of things that we could be doing. You
know, we certainly have plenty of work to be done on
modernizing all of these issues, and I would ask that we go
through this hearing, we, say, keep it away, and let the board
encourage the practice and procedure of collective bargaining
and protect the exercise of workers of the full freedom of
their association in the way the statute requires.
Thank you, Mr. Chairman.
[The statement of Mr. Tierney follows:]
Prepared Statement of Hon. John F. Tierney, a Representative in
Congress from the State of Massachusetts
Thank you, Chairman Roe.
This is the first hearing that's occurred since I was elected to
serve as Ranking Member of this Subcommittee - so, before beginning my
official statement, I want to first thank Ranking Member Miller and my
Democratic Committee colleagues for the support and confidence they've
placed in me to serve in this capacity.
I have had the privilege of serving on this Subcommittee for many
years, and I do so because its jurisdiction is so important and impacts
the lives of so many workers, employers, retirees, and middle-class
families.
I believe the things that really matter - ensuring all Americans
can get a decent job that pays a fair wage, access affordable, quality
healthcare, and retire with dignity and a little change in their pocket
- are squarely in this Subcommittee's jurisdiction.
They're also priorities which I've fought for my entire career in
Congress, so I'm honored to now serve as Ranking Member of this
Subcommittee and ready to take up this new challenge.
Finally, I also want to thank Chairman Roe for the courtesy that he
and his staff have extended me and mine to date - particularly on the
multi-employer pensions crisis. I look forward to working with him on
that complex issue and others in the weeks and months ahead. Thank you,
Dr. Roe.
Now with respect to today's hearing, in the past three and a half
years, the Committee has held at least 16 hearings or mark-ups on the
National Labor Relations Board, and today, we unfortunately are at it
again.
It's my understanding that witnesses will discuss two cases:
In the Browning-Ferris case, the Board has asked for input on
whether to update and modernize the ``joint-employer standard.'' It is
believed that the current standard does not reflect the reality of
today's workplaces. The second case, Purple Communications deals with
the right of employees to use email to communicate regarding
organizing, bargaining, or forming a union.
The Board has not come yet to a decision to change either of these
standards. It is simply asking for comments.
In fact, according to one of the witness's testimony - and I am
quoting here - ``All indications are that what workers and employers
should expect is that NLRB will decide these cases by carefully
applying established legal principles to the particular facts of each
case and that, in so doing, the Board will attempt to provide legal
guidance to workers and employers who encounter similar situations in
the future.''
Assuming that no one associated with the hearing would want to be
perceived as attempting to ``chill'' NLRB Members from engaging in
their job or attempt to influence a decision under consideration, one
must wonder about the timing of this hearing and question its purpose.
I look forward to hearing the testimony and trust we will be
informed and led by the facts and not spend time undermining the
efforts or integrity of the Board, mischaracterizing its decisions, or
maligning Board Members. That's not fair or productive.
Again, to quote one of the witness's testimony, ``there is no
reason to think whatsoever that workers and employers should expect
anything from the NLRB in deciding these cases other than a thoughtful,
considered application of established principles to the particular
facts of each case.''
Mr. Chairman, after 16+ hearings and mark-ups, I think the subject
of the NLRB has been covered.
In the few months we have remaining this session, I hope this
Subcommittee, the full Committee, and this Congress will turn its
attention to what many of us would consider incredibly urgent
priorities of the American people - raising the minimum wage, extending
unemployment insurance for the millions who need it, stopping
employment discrimination based on sexual discrimination, ensuring pay
fairness for women, and providing relief for the tens of millions of
students and parents with student loan debt.
Again, I thank the Chair and yield back my time.
______
Chairman Roe. I thank the gentleman for yielding.
Pursuant to committee rule 7(c), all members will be
permitted to submit written statements to be included in the
permanent hearing record. Without objection, the hearing record
will remain open for 14 days to allow such statements and other
extraneous material referenced during the hearing to be
submitted for the official hearing record.
Now it is my pleasure to introduce our distinguished panel
of witnesses. First, Mr. Andrew Puzder is the chief executive
officer for CKE Restaurant Holdings in California. Welcome.
Mr. Seth Borden is a partner of McKenna Long and Aldridge
in New York, and Mr. Borden has represented management and
labor in employment matters since 1998. Welcome, Mr. Borden.
Mr. James Coppess is the associate general counsel for the
AFL-CIO in Washington, D.C., and welcome, Mr. Coppess.
And Mr. Roger King is counsel at the Jones Day law firm in
Columbus, Ohio, and he represents management in matters arising
under the National Labor Relations Act. And welcome again, Mr.
King, to our committee.
Before I recognize you to provide your testimony, let me
briefly explain our lighting system. You have got five minutes
to present your testimony. When you began, the light in front
of you will turn green. When one minute is left, the light will
turn yellow. And when your time is expired, the light will turn
red. At that point, I will ask you to wrap up your remarks as
best as you are able to, and after everyone has testified, each
member will have five minutes to ask questions. And I will
probably be a little more diligent with the members.
And now I would like to now begin the testimony. Mr.
Puzder, if you would open.
STATEMENT OF MR. ANDREW F. PUZDER, CEO, CKE RESTAURANTS,
CARPINTERIA, CALIFORNIA
Mr. Puzder. Chairman Roe, Ranking Member Tierney, and
members of the subcommittee, thank you for inviting me to
testify on an issue of importance not only to our company, but
to our nation's entire franchise community: the NLRB
potentially adopting a new joint employer standard that would
consider franchisors employers of their franchisee's employees.
Such a standard would threaten the very successful franchisor-
franchisee relationship that has been generating jobs and
economic growth for decades.
I can't see the logic of the labor laws requiring or even
permitting this. As I will explain, franchisors and their
franchisees simply are not joint employers.
My name is Andrew F. Puzder. I am CEO of CKE Restaurant
Holdings, Inc., and it is an honor to be here. CKE owns and
franchises nearly 3,500 restaurants in 42 states and 31 foreign
countries under the Carl's Jr. and Hardee's brands. We employ
over 22,000 Americans, and our 226 franchisees additionally
employ about 50,000 Americans.
We and our franchisees also spend hundreds of millions of
dollars on capital projects, services, and supplies that create
thousands of additional jobs and generate broader economic
growth. And franchising's overall economic impact is greater
still. As I cited in my written testimony, as of 2012, there
were nearly 750,000 franchise establishments in the United
States, employing about 8.1 million people with economic output
of $769 billion, or roughly 3.4 percent of our nation's gross
domestic product.
And that is not all. One report estimated that in 2005,
franchising's economic impact was to add 21 million jobs and
$660.9 billion in payroll. That is 15.3 percent of all private-
sector jobs and 12.5 percent of all private-sector payrolls.
And franchising's impact has only grown in the nine years since
that report.
The franchisor-franchisee relationship is built on a
division of roles and responsibilities. The franchisor owns and
licenses the brand, and the franchisee owns and operates one or
more locations as a licensee. Businessmen and women from
diverse financial and cultural backgrounds invest their time
and money in franchisee businesses because the model works.
Franchisors are contractually empowered to protect their
brands, but those contractual provisions are limited.
At CKE, we set standards that our franchisees need to meet
to protect the integrity of our brands and ensure consistency
throughout our system, but our franchisees run their
businesses. With respect to employees, the franchisee
independently choose the people they hire, the wages and
benefits they pay, the training such employees undergo, the
specific labor practices they utilize, the method by which
those employees are monitored and evaluated, and the
circumstances under which they are promoted, disciplined, or
fired. As franchisors, we're not involved in those decisions.
As with most franchisors, CKE receives a one-time-per-
restaurant fee, generally about 25,000, and a royalty,
generally 4 percent of sales, to compensate us for the services
we provide, for the use of our trademarks, and for protecting
the value of those trademarks. CKE does not receive a share of
the franchisee's profits.
Franchisors such as CKE benefit from a percentage of each
restaurant's top-line sales. Franchisees, on the other hand,
benefit from their restaurant's bottom-line profits. Because
they directly benefit from an efficient and well-managed staff,
the franchisees assume the risks associated with having and
managing employees.
Making franchisors liable for their franchisees' employment
decisions would force franchisors to exert control over such
employment decisions. For example, franchisors would need to
review hiring and compensation decisions. Franchisors would
need to be present in the franchised restaurants more
frequently to monitor the workplace, to dictate or even
administer employee training, and to increase restaurant
staffing, as the franchisor deemed necessary.
Suddenly, franchisees would find themselves unable to
independently run their businesses or to control their labor
costs, a key controllable expense. The franchisors' royalties
are contractual as part of a franchise agreement that generally
has a 20-year term and was never intended to compensate for the
cost of managing a franchisee's employees. To impose such risks
and the associated costs on franchisors beyond their
contractual obligations while depriving franchisees of the
ability to control their labor costs would seriously threaten
the viability of this very successful franchise business model.
In closing, extending the joint employer standard to
franchising would not further any purpose of the labor laws.
Rather, it would unnecessarily require systemic changes in the
franchisor-franchisee relationship, impairing the viability of
this very successful business model that has created so many
jobs and so much economic growth. Thank you.
And I am happy to take questions.
[The statement of Mr. Puzder follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Roe. Thank you.
Mr. Borden, you are recognized.
STATEMENT OF MR. SETH H. BORDEN, PARTNER, MCKENNA LONG &
ALDRIDGE LLP, NEW YORK, NEW YORK
Mr. Borden. Thank you.
Good morning, Chairman Roe, Ranking Member Tierney--
congratulations--and distinguished members of the subcommittee,
it is a great honor and privilege to appear before this
subcommittee as a witness. My name is Seth Borden, and I am a
partner in the New York office of the law firm McKenna Long and
Aldridge.
My testimony today should not be construed as legal advice
as to any specific facts or circumstances. And I am not
appearing today on behalf of any clients. My testimony is based
on my own personal views and does not necessarily reflect those
of McKenna Long or any of my individual colleagues there.
I have been practicing traditional labor and employment law
for 16 years. During that time, I have represented employers of
all types and sizes in a variety of industries throughout the
United States and Puerto Rico before the National Labor
Relations Board.
In 2010, I authored a chapter regarding new technologies
and traditional labor law in the Thompson publication ``Think
Before You Click: Strategies for Managing Social Media in the
Workplace,'' the first treatise of its kind. And since 2008, my
team and I have maintained the Labor Relations Today blog,
which I am proud to say has received numerous accolades and has
been archived by the United States Library of Congress. A copy
of my firm bio is provided with the written version of my
testimony.
Mr. Chairman, I ask that the entirety of my written
testimony, and the attachments thereto, be entered into the
record of this hearing.
My testimony this morning is presented within the context
of this subcommittee's examination of a number of pending
National Labor Relations Board cases where the board appears
poised to reverse longstanding precedents. Most specifically,
my testimony focuses on the Purple Communications case now
before the board.
The board has solicited amicus briefs in this case with an
eye toward overruling longstanding board law and creating a new
employee right to utilize employer equipment for union
organizing and other Section 7 purposes. The board should
decline to do so. There is simply no compelling reason for the
board to depart from decades of precedent, most recently
outlined in its 2007 Register Guard decision, which provides
that absent evidence of discrimination, employees have no
statutory right to use the employer's equipment for Section 7
activity.
First, this is an issue of employer property rights, not
employee communication. Employers who invest their money in the
purchase and maintenance of equipment and materials for the
furtherance of their enterprise should be able to control the
manner in which that equipment is used.
Other longstanding principles of labor law protect the
employees' rights to engage in communication, solicitation, and
distribution of literature in furtherance of union organizing
and other Section 7 activity, so long as that activity does not
interfere with operations or other legitimate employer
interests. The question in Purple is to what extent must an
employer provide and pay for the means of employee
communication and organizing.
Second, the general counsel's assertion that e-mail is the
modern day virtual water cooler is entirely misplaced. Employer
computer networks and e-mail are not the 21st century water
cooler; they are the 21st century production floor. The board
has long protected legitimate employer interests, most
significantly the means of production, without which there
would be no employees.
Insofar as employees have at their disposal a wide and
growing range of alternative means of communication with each
other, an employer should not be compelled to open its network
to additional burdens on efficiency, external threats, and
potential legal exposure occasioned by non-business use.
Third, for decades the National Labor Relations Board has
agreed that Section 7 provides employees with no such right to
use employer equipment. This has been consistently true with
respect to each new technological development or increasingly
common type of workplace medium: bulletin boards, public
address systems, telephones, televisions, VCRs, photocopiers,
and most recently, e-mail systems.
Over the course of several decades, these examples have
changed, but the concept and the law has remained the same.
There simply is no statutory right for employees to use them.
If the board wishes now to create one, it would seem that the
more measured and deliberative administrative rulemaking
process or even statutory amendment by the legislature are far
more appropriate avenues.
Thank you, again, Mr. Chairman, and I will be happy to take
any questions the subcommittee might have regarding my
testimony.
[The statement of Mr. Borden follows:]
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Chairman Roe. Thank you very much.
Mr. Coppess, you are recognized for five minutes.
STATEMENT OF MR. JAMES COPPESS, ASSOCIATE GENERAL COUNSEL, AFL-
CIO, WASHINGTON, D.C.
Mr. Coppess. Okay. Thank you. Chairman Roe, Ranking Member
Tierney, members of the subcommittee, the hearing today is
focused on two cases in which the NLRB has called for amicus
briefs, Purple Communications and Browning-Ferris Industries.
It is not uncommon for the board to seek broader input from the
general public when it sets about deciding particular cases.
This is because the NLRB has chosen to elaborate the law under
the NLRA by deciding particular cases, rather than engaging in
rulemaking.
And, if it weren't for such notices calling for amicus
briefs from the public, there is basically no way to tell what
particular issues are coming before the board. Too many cases
come up. You would have to follow all of the particulars of the
underlying decisions.
One category of case in which this often happens is when
reviewing courts have called upon the board to further explain
what it is doing and some particular respect of interpreting
the NLRA. Purple Communications is an instance of that case.
The Seventh Circuit has a very long time ago now taken the
board to task in its Guardian Industries case for its use of
the word discrimination in deciding workplace communications
cases. The Seventh Circuit suggested in that case that perhaps
the board is using the term in a particular NLRA sense, which
is, in fact, the case, and in the Register-Guard case, the
board attempted to address the Seventh Circuit's concerns. That
was the case involving e-mail communications at the workplace.
Unfortunately, the board's attempt on Register-Guard
failed. Its ruling that one application of the employer
prohibition there did not constitute discrimination was
overturned by the D.C. Circuit, and that leaves employers and
workers with basically no guidance on what sort of employee
communications in the workplace will be protected.
I should emphasize that what we are talking about here is
employee communication in the workplace and not union
communication in the workplace. We are not talking about
outsiders coming in. We are talking about people who are
talking to each other at work being allowed to do so in the way
they normally do.
And I should say that we fully agree with Mr. Borden's
point that where employers allow people to use e-mail, their
work e-mail addresses, to communicate on matters that aren't
strictly business related, the employer has no grounds for
objecting to the employees communicating about Section 7
protected activities. I fully expect that what the board will
do in that case is answer the concerns of the Seventh Circuit
and the D.C. Circuit and explain what sort of employee
communications may be prohibited and what sorts may not with
respect to e-mail.
The Browning-Ferris Industries case represents another
category of case in which the board will often call for amicus
briefs from the public. Where it perceives the workplace
practices have developed in a way that are not perhaps
adequately addressed by the board's current application of the
law, it--the Browning-Ferris case--is a textbook example of
something we see increasingly frequently, where employers will
subcontract out basically the employment function. Employees
will be brought in to run the operation, essentially at the
employer's--the ultimate employer, the owner of the
facility's--direction, but they will be formally employed by a
third party, and that makes it very hard to bargain because the
third party that formally employs the workers doesn't
ultimately control many of their terms of employment.
All that is at issue in Browning-Ferris, I should add--or I
should emphasize--is the duty to bargain and only insofar as
both entities control terms and conditions of employment, there
is absolutely no risk to the franchise arrangement, and in
cases where the franchisor doesn't control the terms of
employment, they won't even have a duty to bargain over that
much, because there is nothing for them to bargain over.
We think that these cases will be decided as they have been
in the past when the board calls for broad input on the
particular facts of the case, that the board will be applying
long-established legal principles under the NLRA, and that in
so doing it will clarify the application of those principles.
I thank you for listening to my testimony and look forward
to questions.
[The statement of Mr. Coppess follows:]
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Chairman Roe. Thank you very much.
Mr. King, you are recognized for five minutes.
STATEMENT OF MR. G. ROGER KING, OF COUNSEL, JONES DAY,
COLUMBUS, OHIO
Mr. King. Thank you, Mr. Chairman, Ranking Member Tierney,
again, my congratulations, also, members of the subcommittee.
My name is Roger King. I am of counsel with the Jones Day law
firm, also the senior labor employment counsel for the Human
Resource Policy Association.
I want to talk about not only Purple Communications and the
Browning-Ferris case, but the agenda of this National Labor
Relations Board and its ever-present changing policy
orientation, I submit to you that the board should consider,
first, as its priority to address the pending cases it has
before it.
Based on checking with the NLRB Office of Executive
Secretary yesterday, there are 383 cases pending decision of
the board today. One of those cases has been pending for 2,582
days. Mr. Chairman, that is over seven years. That is the
Roundy's case.
Before launching into what many of us at least from the
employer community would submit is a very potentially
unfriendly agenda, perhaps the board should address its present
case backlog and get that order of business addressed.
Second, as the committee is well aware, the Supreme Court
has pending before it the case of Noel Canning. I happen to be
one of the counsel on behalf of the company in that case. Based
on our research, depending on what the court does--and it is
very difficult, of course, ever to predict what the Supreme
Court may do--but if the Supreme Court affirms in whole or in
part the District of Columbia Circuit Court decision in Noel
Canning, approximately 4,000 cases will be found to be void and
will have to be addressed in some manner or another by the
board and its general counsel. That is a substantial amount of
business, particularly given the backlog that I just mentioned.
Now, I want to comment about the suggestion of chilling the
board. That is not the intent of my testimony. I have a very
high regard for each and every one of the members of the
National Labor Relations Board, a high regard for their
integrity, and they are excellent practitioners of labor law. I
know them personally. I also have very high regard for Richard
Griffin, the general counsel of the board.
That is not the question. The question is the policy
orientation. And no matter how well intentioned the board
members may be, at least the Democrat board members that are
pursuing this agenda and its general counsel, it is a policy
disagreement. It is an order of priority disagreement. They
should, as I mentioned, reprioritize their business and address
at least initially the cases they have before them.
Now, I want to talk specifically about some of the
initiatives just in the last few months this board has pursued.
In spring of 2014, the board is again engaged in rulemaking to
change the basic election procedure environment that has been
in place for well over 30-plus years. There is no factual or
legal predicate to do so, but yet that is being actively
pursued again, I might add, after the board was initially
stopped through judicial challenges with respect to that area.
With respect to deferral of unfair labor practice charges
in the arbitration arena, the board is again looking at that
area without any factual or legal need to do so. It may be
overturning over 59 years of precedent by that initiative. With
respect to the issue of who is and who is not a managerial
employee in a college or university setting, the board may be
overturning years of precedent there, over 34 years of
precedent in the Yeshiva case.
With respect to Purple Communications, excellent testimony
on that point, we have had seven years of stability of the law
under Register-Guard. We have no need to go back and review
that. With respect to the joint employer doctrine, we just
cannot understand--at least from an employer perspective--why
that issue is even being raised by the general counsel. If the
board pursues a change in the law there, we overturn 30 years
of precedent.
With respect to Northwestern University and college
football players, why the board is even in that area I think is
a substantial legitimate policy question. But, if the board
pursues to find those students--and we believe they are
students--or those individuals to be employees, they will
overturn at least 10 years of law going back to the Brown
University case.
So when you start to do the math, Mr. Chairman, we are
looking in a very few short months that this board would be
overturning well over 100 years of precedent. That doesn't even
count the issue with respect to board procedure on elections.
With respect to Noel Canning, of course, no one can predict
how the court may decide. But we have 10 regional directors on
this most recent recess appointee board that is being
challenged where we believe are improperly approved. We have
over 700, up to 1,000 cases that may come back just from that
board, from 2012 to 2013. And we submit at least the board
ought to wait until the Supreme Court makes a decision to
determine what impact, if any, the Noel Canning case may have
on its agenda.
In summary, Mr. Chairman and Ranking Member Tierney, there
is a policy issue here. The board has business to do. It should
go about that business. If it pursues its current agenda,
including its general counsel, we submit it is setting a
precedent, a very poor policy precedent for future boards. Are
we going to get a continual swing in the pendulum back and
forth in board law, after more hearings, more judicial briefs,
more court challenges, lack of predictability in the law? That
is not what this country needs.
Thank you very much. I will be happy to answer questions.
[The statement of Mr. King follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Roe. Thank you, Mr. King.
Mr. Tierney, you are recognized for five minutes.
Mr. Tierney. Thank you. First of all, I thank all the
witnesses for their testimony. It was useful and helpful on
that.
Mr. Puzder, I want to ask you a question. I mean, you would
agree with me that the board hasn't decided the two cases that
we are talking about here today. Is that right?
Mr. Puzder. Yes, sir.
Mr. Tierney. Okay. So, again, you could hear yourself well,
right?
Mr. Puzder. I turned it off so I wouldn't hear myself
during their--
Mr. Tierney. So, you know, I am a little familiar with
franchisor-franchisee relationships. You can help me out if I
go astray here. But the question would be whether or not the
franchisor has control or the ability to control or co-
determine terms and conditions of employment.
Now, generally--and a lot of the franchises that I think
people are familiar with--the franchisor has its own operation,
you know, staff people, everything, and the franchisor has its
own people working for it, whatever it is doing. And so in that
situation, do franchisors generally hire people for the
franchisee? Or does the franchisee?
Mr. Puzder. The franchisee hires their own employees
completely.
Mr. Tierney. Same with firing?
Mr. Puzder. Yes.
Mr. Tierney. Same with disciplining them?
Mr. Puzder. Yes.
Mr. Tierney. Same with supervising them?
Mr. Puzder. Yes.
Mr. Tierney. And giving them direction?
Mr. Puzder. Absolutely.
Mr. Tierney. So there is no occasion--or generally no
occasion--where the franchisors are directly or immediately
doing any of those things.
Mr. Puzder. Correct.
Mr. Tierney. Okay. So what--I mean, you don't claim some
foresight or whatever what this board is going to do once it
gets all the input and deliberates on this case, do you?
Mr. Puzder. No, there is industry concern that the board
may not completely understand the franchising model, so I think
I was invited to testify to clarify that model.
Mr. Tierney. So you have five lawyers that Mr. King says--
or five people that Mr. King says are very, very knowledgeable
in the law, but your organization doesn't think they know about
franchises?
Mr. Puzder. No, I am sorry, we do know about franchising
very well.
Mr. Tierney. No, no, you don't think they know about
franchising, the board. You are concerned that they won't be
able to grasp the heavy issue of franchisor-franchisee
relationships?
Mr. Puzder. No, I am sure they could grasp it. I think the
idea is to make sure that the evidence or the testimony or the
facts are before them, and I believe that is why I was invited
to testify. Obviously, I didn't invite myself, but I believe
that is why I was invited.
Mr. Tierney. You are invited to tell us what you would like
the board to hear?
Mr. Puzder. Yes.
Mr. Tierney. Interesting. So have you shared this with the
board? Are you going to file an amicus brief or--
Mr. Puzder. We would be happy to do so. I believe the
associations that we're involved with will file amicus briefs
and will be helpful in that respect.
Mr. Tierney. Okay. Yes, I mean, I am just a little baffled
to what we pretend to do at this hearing. I think that your
position should be heard by the board. I suspect that they will
and that they are quite confident and capable of taking it
under consideration and giving it whatever weight that they
think it should have on that part.
So I appreciate your concern. You know, I just--I don't
know that it is going to be problem for you. As I look at it,
with--as I say, the sum knowledge that I have of franchisor-
franchisee, you know, it looks like you may be, you know
foisting your shadows there a little bit on that, until you
know what the board is doing or have some inclination of them
going in the wrong direction.
Mr. Puzder. Well, it is good to hear that, and it was good
to hear from Mr. Coppess that we had no risk, so that was--just
coming to the hearing, that made it worthwhile.
Mr. Tierney. The risk that you have is that the board may
disagree with you, and then that is the risk that Mr. King
takes. I mean, he has very clearly said he believes in policy
and, you know, the board may disagree with you. There are
occasions when past boards have disagreed with policies that
other people sought with and Mr. King wasn't in here
complaining then. He was in there thinking boy, they are
geniuses and they are really going in the right track.
So, I mean, I just don't know, you know, that this is the
appropriate forum to listen to how a board may make a decision
in the future after it gets input from amicus and other sources
on that. I mean, we are always going to have some distinctions
or disagreements on the way that they interpret the law or its
application on that. And I think that all of you have stated
the considerations out there pretty well. I just haven't heard
any evidence that indicates to me that there is any reason to
believe that this board won't be fair-minded and won't try to
do the best that it can do under its abilities to make a
decision that it believes is correct and reflective of the law
on that.
So I hear, you know, Mr. King's concern about the--a number
of cases that are pending on that. And I think that the Noel
Canning case may seriously impact that, in which case we are
all going to be concerned about that. But I don't think that
necessarily warrants the board abdicating its responsibility to
make a determination of how it properly applies the law in
Browning-Ferris or in the Purple case on that basis.
So I think that is going to be it. And other than that, I
suspect that listening to all you gentlemen has been
interesting. I suspect the board will hear the same thing, and
I trust that they will do their job. Thank you.
Chairman Roe. Thank the gentleman for yielding.
Now, Mr. Wilson, you are recognized.
Mr. Wilson. Thank you, Mr. Chairman. Thank you so much.
This title, ``What To Expect Next from the National Labor
Relations Board,'' has real meaning to the people of my home
state of South Carolina, because I think that we are the prime
example of abuse by the NLRB, which has made every effort to
destroy jobs and destroy opportunity for the people in my
state.
Three years ago, Boeing had completed a 1.1 million square
foot building. There were 1,000 people employed. And out of the
blue, the NLRB dictated it could not produce 787 jetliners. I
mean, incredible. Think of this.
This was clearly due to the influence of the unions. They
had placed $400 million into the President's campaign, and a
response was to block the ability of Boeing to operate in our
state. South Carolina is a right-to-work state. Workers have
the right to freely choose whether to be part of a union or
not. And they have chosen not to be part of a union.
South Carolina has fought back. I am very grateful that
with the leadership of Governor Nikki Haley and the attorney
general, Alan Wilson, that we fought back. Lawsuits were filed.
It is very significant. We have the youngest attorney general
and the youngest governor in the state of South Carolina. I am
also proud we also have the first female governor in 340 years.
They fought back.
Our delegation fought with them, and I am very grateful for
the leadership of now Senator Tim Scott, Senator Lindsey
Graham, myself, the very famous Trey Gowdy. Everyone fought
back, and we were successful.
Now there are 7,000 jobs at the Boeing facility in
Charleston. It is very important to me, because the suppliers
are across the state. The Zeus Corporation of Orangeburg and
Akin produced the tubing. The cables are produced by Prysmian
of Lexington. Thermal Engineering of Columbia provides painting
experts. AGY of Akin produces interiors. Bose in Blythewood
produces the communications. Over and over again, thousands of
jobs across our state, despite the NLRB.
Now, today I want to thank all of you for being here,
particularly Mr. Puzder. I am a Hardee's biscuit 'n' gravy
customer.
Mr. Puzder. All right.
[Laughter.]
Mr. Wilson. And I want to thank you for the--and, hey, I
love going by. The people working there, it just warms my heart
to see people so enthusiastic, so positive, with good jobs.
Does the franchisee or the franchisor hire, fire, discipline,
supervise, and direct employees at a franchise store.
Mr. Puzder. We do not.
Mr. Wilson. Wow. And what standards does the franchisor
set? Why does the franchisor set any standards?
Mr. Puzder. We set standards that basically relate to
protecting the trademark so that it is not abused, which
protects also the franchisees who pay a fee to use that
treatment, and for consistency. You want consistency in the
food. You go to Hardee's, you want a biscuit to be a biscuit in
every Hardee's you go to. Just like McDonald's or Burger King,
you want a Whopper to be a Whopper no matter what store you are
in.
But beyond consistency and protecting the trademark, the
matters relating to employee discipline or hiring policies are
all in the hands of the franchisees.
Mr. Wilson. Well, you do a great job.
Mr. Puzder. Thank you very much.
Mr. Wilson. And, Mr. King, in the event the Supreme Court
holds that the January 2012; recess appointments to the NLRB
are unconstitutional, what will come of the thousands of
decisions issued by the board?
Mr. King. Excellent question. Up to 4,000 could come back.
That is just over the last 20 years of board decisions. They
would be void. The board would have to consider them anew. We
also have, Congressman Wilson, appointments to regional
director positions throughout the country by allegedly quorum-
less boards. All the activities, actions, or decisions of those
regional directors may be void. And we would also have
delegations of authority from quorum-less boards, at least
allegedly, to the general counsel of the board, enforcement
actions that may be set aside. So the potential would be an
overwhelming litigation burden and reprocessing of case burden
on the board and its general counsel.
Mr. Wilson. And could the cases all be determined en banc?
Or could it--would the--would citizens have an individual right
to represent their case?
Mr. King. Congressman, each and every case would have to be
reconsidered. I know of no legal precedent that would permit
the board to en banc, if you will, ratify or consider on whole
all of the cases. They have their own individual facts,
applicable law, and we do have some precedent, after the
Supreme Court handed down its decision, a new process, still
there about 100 cases of a potential 500 that had to be
reconsidered, because the board had only operated with two
members. The Supreme Court said, no, you had to have three.
So when those cases came back, it took the board over 3-1/2
years--and this is in my testimony--to process just that
backlog of 100 cases. So if you look at 4,000 cases, we have no
idea how long it would take for the board to process them.
Mr. Wilson. Thank you very much.
Chairman Roe. I think the gentleman failed to mention that
the attorney general in South Carolina is his son.
[Laughter.]
Mr. Pocan, you are recognized for five minutes.
Mr. Pocan. Thank you, Mr. Chairman. And thank you to our
witnesses.
I am relatively new to the committee and brand-new to the
subcommittee. So I guess maybe I am a little surprised that
this is our 16th time that this committee has been addressing
the NLRB, when I thought, you know, perhaps when I get on the
committee we would be talking about things like raising the
minimum wage, making sure we had pay equity, dealing with other
workplace protections, issues like ENDA, and then making sure
that, I guess, NLRB was actually improving access for workers,
because I know things like minimum wage in my district, I have
59,000 people who would actually benefit from raising the
minimum wage to $10.10. I think the gentleman who just spoke
from South Carolina has about 50,000 people in his district
that would benefit if we were doing that.
But I understand this is before us, so let me try to talk
about this and from my background. I have been a small-business
owner for 27 years, as of last month. I also have a union shop,
so I kind of straddle both worlds, a union shop by choice, but
a specialty printing business.
And one of the things I have seen a real trend in is
specifically that employers are starting to use these outside
entities, these third-party employers to hire workers, which
seems to be getting around the law, right? It seems to make it
harder for people to be able to organize in some of these
situations, and I think what we saw with the Browning-Ferris
Industries case specifically is exactly the problem that is
happening more and more and why if the NLRB is going to try to
address something, they might want to specifically look at
this.
So, Mr. Coppess, I guess I have a couple questions to start
with you. Specifically about--you know, if a parent employer
doesn't determine the pay for an employee, how could that
parent company effectively determine the conditions of
employment for a subcontractor's employee, with this third-
party relationship?
Mr. Coppess. You mean the entity owner, Browning-Ferris?
Mr. Pocan. Yes.
Mr. Coppess. Well, --if they exercise sufficient control
over the terms and conditions of the direct employer, they
would--in Browning-Ferris, they just dictated what wages, for
instance, that wages couldn't come over a certain level. They
controlled the speed of the line. They controlled the position
of the employees on the line. They controlled what equipment
they were using. All of those things are important conditions
of employment that the direct employer wouldn't be able to
bargain over.
The joint employer bargaining obligation is just simply
limited--to the overall employer bargaining over what it
controls. They both have to come to the table or, in fact, they
don't both have to come to the table. The employer that owns
the facility could authorize the direct employer to reach
agreement on those matters and they would then just be jointly
bound by that. But it is only the matters they control that
they are required to bargain over.
Mr. Pocan. Right. So if we broadened the joint employer
standard, if the NLRB did, how would that help workers engage
in a more meaningful bargaining process?
Mr. Coppess. Well, it is basically impossible to engage in
effective bargaining if someone who is not at the table
controls the terms. That is why going into a car dealer shop
and bargaining with the direct salesman and he goes back to the
manager, you don't--you don't really start bargaining until the
manager is at the table.
Mr. Pocan. That is a visual memory of that.
Mr. Coppess. Unfortunately, for me, too.
Mr. Pocan. Yes, thank you. If I can, Mr.--is it Puzder or
Puzder? I am sorry.
Mr. Puzder. Puzder.
Mr. Pocan. Puzder. Since you are here--and I happen to
agree with you. I don't think--I looked at a franchise when I
first opened the business, decided it wasn't the best route for
me personally, but I don't see--I would be surprised if the
NLRB went to the extent that you are talking about.
However, since you are here, can I just ask you, what is
the average pay for a Hardee's employee, a new employee coming
in to start?
Mr. Puzder. I don't know what Hardee's is. I think it is in
my brief the average restaurant level employee makes about $9
an hour. I think it is $8.96, if I recall.
Mr. Pocan. Okay. But you don't actually--the Hardee's--
Mr. Puzder. I wouldn't break--I can't break Hardee's out
from Carl's. I don't know it. I mean, I know--I mean, we run
Carl's and Hardee's as one brand with two names. For us, it is
really just one company.
Mr. Pocan. Got you. And do you know--and, again, I am not
sure if this is in the brief, but, if you can separate it
either together or separate, how many of the Hardee's and
Carl's Jr.'s employees use food stamps or Medicaid?
Mr. Puzder. I don't know that. I know that of the 22,000
employees we have over the age of 21, so taking out 16-to 19-
year-old college and high school students, about 5 percent of
our employees make minimum wage. And, you know, obviously, a
high percentage of those are part-time. So I don't know how
many get food stamps. I don't know how we would know that.
Mr. Pocan. And I appreciate that. I just think, as we talk
about this issue, you know, you just mentioned 22,000 people
who potentially would also benefit from the minimum wage
increasing to $10.10, as well as the taxpayers in the
jurisdictions that currently are subsidizing many of those
folks--
Mr. Puzder. They would benefit if the price of everything
didn't go up. But, of course, as soon as you raise the minimum
wage, everybody who has minimum wage employees--plus, there is
sort of a tide lifts all boats impact. Higher--
Mr. Pocan. You will get additional business, yes. Okay.
Mr. Puzder. So your labor costs go up, and when labor costs
go up, you either automate or you increase your prices to cover
the labor cost increase, which, of course, is why we are
talking about increasing the minimum wage when we just
increased it 5 years ago, because you--you know, you will
always increase your costs to cover increased expenses, whether
it is food costs, occupancy costs, or labor.
Mr. Pocan. I think a lot of people would say--
Chairman Roe. Gentleman's time is expired.
Mr. Kelly, you are recognized for five minutes.
Mr. Kelly. Thank the Chairman.
Being an automobile dealer, I don't share the same feelings
you have about going to negotiate a price.
[Laughter.]
And I would look at the effect on the general economy when
our automobile business is running the right way. It affects
everybody, including the people who build them. So I don't want
to get too far out of whack here about who controls what, but I
am very interested in what we are looking at right now today,
and we are talking about an NLRB that continues to get involved
in things.
And if we are trying to get this country back on its feet
again, if we are really trying to get our economy back up and
moving, if we are trying to take advantage of all the assets we
have, then you have got to sit back and wonder, so why is this
group looking--and, Mr. King, you made reference--how many
years of precedent are we looking at now? How many--are we
going to go back and look at how many?
Mr. King. Just in the last few months, Congressman, this
board is proposing in its general counsel to consider changing
over 100 years--maybe up to 130 years of precedent in addition
to changing over 30 or 40 years of established procedure and
protocol on how the board runs elections without any
justification at least that I can determine or others can
determine.
Mr. Kelly. Yes, well, we have that--not just with the NLRB,
but with a lot of other things that we are looking at are
changing here very rapidly. Let me ask you this. There is a
cost involved in both time and money to go back and do this.
Can you peg it at all as to what that would be?
Mr. King. I don't have a way of calculating it, per se, but
the board, like every federal agency, Congressman, comes to
this body and asks for resources. If these resources are being
diverted to these policy efforts and not, as I mentioned, to
addressing their current case load, which is approximately 383,
one wonders about the priority of the board.
In the Browning-Ferris case that has been discussed here,
why is this case even being considered? We went back and looked
at the facts, Congressman. The subcontractor here, LeadPoint,
has its own human resources department, employs no less than 17
supervisors and lead men to oversee the work at the site,
Browning-Ferris site, maintains its own payroll, was
responsible solely for hiring, discipline and discharge, and
has separate business entity locations at other Browning-Ferris
operations.
Why is this case even being considered? Back to your
resource question. We don't know.
Mr. Kelly. Okay, but my question is also going to be--so
all of these decisions, they are going to be reviewed again. My
assumption is going to be, somebody is going to have to engage
counsel, legal counsel. And so monies that they would have
spent on other things, right now--when you talk, again--I am
going back to the economy. We are trying to get people back to
work. We are using very valuable revenue and assets that we
have to go back and look at things that have already been
established and, as you say, for 100 years and in some cases
now we are going to go back on 40 years.
And my question is, so why now? What is the purpose in
doing this? If we are really trying to help the economy to
recover, why would we put this weight on their back? And I am
talking about employers right now.
The other thing that is happening--and I think--because of
what you do in your business, I have got to tell you, General
Motors does not tell me how to hire people, how to fire people,
what our policies are, nothing. Now, neither does Hyundai, nor
Kia, okay? I am an independent businessman. I rise and fall
each month on the efforts of our total collective group and how
they perform in the marketplace in a highly competitive
marketplace.
So it is really important that we can kind of run our
business without having--being run into the ground by a
continuous government regulations that keep us from doing what
we do. We sell cars and trucks. We service cars and trucks. But
when you have to stop to go through these exercises in
futility, that takes your eye off the ball.
In your business, especially--and I have got to tell you,
being an employer for many, many years, you know the greatest
relationship we have is between the people that work with us
every day to serve our customer base and management. I have
been to weddings and funerals and baptisms and--you name it, I
have been there. There is a great relationship.
But that relationship is now being destroyed and picked
apart by a government that continues to pit employer against
employee, owner and operator against associate and puts one
group as these are bad people who are taking advantage of you.
Nothing could be further from the truth. We have destroyed the
regular work week, and we continue to put a heavy burden on
people who actually are trying to rebuild the economy.
In your business, it has got to be overwhelming what you go
through with employees and you bring it--by the way, these are
not permanent jobs. These are starting-level jobs. I have so
many friends that started off in McDonalds or a Burger King or
a Hardee's and now they are managing them or have their own
stores, so let's not be confused about what these jobs are. It
allows people to grow.
The numbers that you talked about in the turnover, if you
could, because I don't believe--something we get caught up in
this living wage. I believe it is a starting wage that allows
you to build your own life.
Mr. Puzder. Well, for me, I started out at minimum wage,
which I think at the time was like $1.25 an hour scooping ice
cream at a Baskin-Robbins. It never occurred to me that would
be a job for which I should have a living wage or support a
family of four, nor is it a job that would engender somebody
supporting a family of four.
So we do have starting-level positions in our company. If
you--our turnover at the restaurants, by the way, is about 100
percent a year. I mean, people come in and out. We support them
getting educations. We encourage them to get an education. We
help them through the process. We actually have tuition
reimbursement while we reimburse employees that have been with
our company over a year, up to $10,000 worth of tuition and
books.
So we encourage people to move on in life. And then there
are people in the restaurants who stay and enter the management
stream, become general managers, district managers, regional
managers. The guys who run Hardee's and the guy who runs Carl's
Jr. started out as minimum wage employees working behind the
counter and now are running businesses that do many tens of
millions, if not hundreds of millions of--in EBITDA a year.
So it is--they are entry-level jobs. They are the way that
you can get on the ladder. And I think the CBO came out
recently and said that 500--
Chairman Roe. Would you wrap up your testimony, Mr. Puzder?
We are over time.
Mr. Puzder. --wouldn't be created.
Mr. Kelly. Well, thanks for relating the American history
and American story. This is impossible any place else in the
world and sometimes we forget it.
Chairman Roe. The gentleman's time is expired.
Mr. Kelly. Thank you, sir.
Chairman Roe. Mr. Scott, you are recognized.
Mr. Scott. Thank you, Mr. Chairman.
Mr. Chairman, the gentleman from Pennsylvania in his
district has, as I understand it, 62,000 of his hard-working
constituents--67,000 of my constituents would receive a pay
raise if we increased the minimum wage to $10.10 per hour. That
is in addition to the tens of thousands of others who would
benefit from the rising all tides effect where they are close
to the minimum wage now, would get a raise in addition to that.
Mr. King, you mentioned the problem with the recess
appointments. There are two questions involved in that case,
one, whether they were intra-session appointments and--I guess
the fundamental question, was the Senate in recess at all? If
they decide that they are intra-session appointments, --if that
part of the case is sustained, it is my understanding that 329
intra-session appointments have been made since 1991 and
President Obama's 29 is the lowest since Ronald Reagan--would
all of those decisions way back then have to be reviewed on all
the different agencies in the NLRB?
Mr. King. Potentially, Congressman Scott, yes. You are
correct. There are actually three questions pending before the
court, and the third one you alluded to is the pro forma
session question. But depending on how the court rules, if it
affirms in whole or in part the D.C. Circuit Court of Appeals
opinion, certainly the appointments that you mentioned would be
called into question by both Democrat and Republican
presidents. You are correct.
Mr. Scott. And that would go back to 1981?
Mr. King. At least, if not further.
Mr. Scott. Mr. Coppess, in the question of the e-mails, is
there any question whether or not the employer has the right to
restrict the use of e-mails? If they restrict e-mail use only
to official business connected concerns, no personal use for
any reason, is that--does an employer have the right to do
that?
Mr. Coppess. Yes, they have a right under the NLRA to do
that. The problem comes, as everybody who has ever used a work
e-mail knows, that it is practically impossible to do that. And
any employer that were to actually try to do it would so annoy
the employees that it would be at a great cost.
When the board last considered this issue in Register-
Guard, there was interesting testimony from a witness who had
been studying e-mail in general. And what he remarked on was
that in the early days of workplace e-mail, employers often
adopted rules that said no personal use. And they quickly
discovered those rules could never be enforced, so they--by the
time of the Register-Guard hearing, this witness said over 90
percent of employers formally permitted non-business use of e-
mail, and, of course, that has been all of our experience, that
personal use is, in fact, permitted.
Mr. Scott. So once they allow personal use, can they
legally then excise out NLRA-related communications?
Mr. Coppess. No, I think all of us agree on that. Mr.
Borden's testimony is to that effect. That is my understanding
of the law. They can't engage in content-based restrictions on
NLRA-protected employee communications.
Mr. King. Pardon for interruption, I want to go on record,
I do not agree with that last statement.
Mr. Coppess. Okay. I mean--
Mr. King. I have a considerable high regard for Mr.
Coppess. He is an excellent lawyer. But on that point, we do
not agree.
Mr. Coppess. I am sorry. I didn't mean to speak for Mr.
King. I didn't realize it was at all controversial.
Mr. Scott. Mr. Coppess, can you talk a little bit more
about what the complication is when--we talked about the
outside agencies supplying employers in a franchise situation.
Is it different in situations that are not franchise
situations?
Mr. Coppess. Well, the operation at issue in Browning-
Ferris is that the opposite removed from the franchise
situation we have had described to, as there the employer--the
jobs at issue in that case are very simple jobs. People stand
along the line at assigned spaces, Browning-Ferris assigns them
the spaces. They are fed trash along a conveyor belt that is
run by Browning-Ferris, the speed of which is controlled by
Browning-Ferris, and they sort trash.
Everything in the plant is controlled by Browning-Ferris.
Certainly, the subcontractor has line supervisors telling
people, yes, you continue to stand there, continue to sort the
trash as it comes to you, but there is no much also to the job
other than what they--the enterprise owner controls. So it is
at the opposite remove from what we are hearing about the
franchise situation.
And I would like to add that it is a really good example of
why the board calls for amicus briefs. So here they are
deciding a case that has nothing to do with franchises. And the
franchise operations will have the opportunity to come in and
say this may look like an easy case, but here are some things
you ought to keep in mind so when you speak, you maybe don't
get into trouble you don't want to get into. You know, telling
them about it is the thing to do. They are deciding the case,
and they have asked to hear.
Mr. King. On that point, Mr. Coppess--
Chairman Roe. I think the gentleman's time has expired.
Mr. Byrne, you are recognized for five minutes.
Mr. Byrne. Thank you, Mr. Chairman.
And, gentlemen, appreciate your being here today. I took
labor law 35 years ago this year and spent the vast majority of
my career representing people before the board and handling a
lot of issues like this. I appreciate the level of
professionalism I am hearing coming from the witnesses today.
I have got to agree with Mr. King. Maybe it is my age and
having dealt with this for a long time, but we have got decades
of precedent that are literally being overturned or at least
being considered to be overturned by this labor board. And I
think it is extremely appropriate that this committee take this
up at this point in time both because of our policymaking
function, Mr. Chairman, but also I think Mr. King raised a very
important point, and that is the role that the Congress plays
in appropriating money to federal agencies that spend money on
doing things when they need to be taking care of business where
they have a backlog.
And if you have ever had a backlog for a client with the
National Labor Relations Board, it is hard to explain to your
client why that board can't get to their case, and it would be
particularly so if they are trying to launch out in new policy
areas, which brings me to Mr. Borden's testimony.
When I first started, Mr. Borden, the big thing was
bulletin boards. We didn't have e-mails. And I remember telling
client after client after client, don't let your employees use
the bulletin board to advertise for a yard sale or their kids'
Little League game or anything like that. And so we said that
for years.
Then with these newfangled things called e-mails came
along, and I may have read your treatise when I told my clients
to do this, don't let your employees use the e-mail system at
the office for anything other than business matters. And I am
probably like thousands of labor lawyers that told their
employer clients that.
And now to find that the labor board is considering making
e-mails opened up for employees to use to make advocacy one way
or the other on unionization really surprises me, and this
idea, Mr. Coppess, that these employees are doing this on their
own is ridiculous. They are being directed by the labor unions
that they are in concert with. Yes, sir, they are. It is a
concerted effort.
And what we would have in that circumstance is this very
difficult situation within the workplace, where it interferes
with workplace communications about the things that have to
happen at the work. I think it is very troubling for the
productivity for the American economy.
But I do have a question. I was listening to Mr. Coppess's
statement. You said there is no reason whatsoever that workers
and employers should expect anything from the NLRB in deciding
these cases other than a thoughtful, considered application of
established principles, established principles to the
particular facts of each case.
Mr. King, admittedly, this is mostly a new board. However,
is this statement considered--consistent with what we have seen
from the Obama Administration's NLRB? Was this true in the
specialty health care case?
Mr. King. No, sir, it was not. In all due respect to the
board members and its general counsel, we have not seen from an
employer perspective a fair and even-handed approach to the
facts and the law that it applies to the facts. Back to your
point, the precedent that I am talking about, over 100 years of
precedent, that was established by both Democrat and Republican
boards. This should not be a partisan issue.
Specialty Healthcare case overturned on its head the way
the board goes about determining who is appropriate to vote in
an election. We have a regional director of the board applying
Specialty Healthcare in the Bergdorf Goodman case where the
regional director found that women shoe department employees on
noncontiguous floors of that department store constituted an
appropriate voting unit.
If you take the average retail department store and apply
that, quote--``reasoning,'' which is highly suspect, I would
submit, you could have 30 or 40 different bargaining units in
that store alone. I mean, what is next, the men's bowtie
department?
Mr. Byrne. Well, whether it is pro-management or pro-
employee, they are not following established principles. I
mean, we have all practices--we win or lose with the principles
we have had. We have had an equilibrium before the board,
practitioners have and parties have had, for decades. And the
point is that they are not following established principles.
They have decided to go off and create new principles. And that
undermines the equilibrium we have had for years. Isn't that
the case, Mr. King?
Mr. King. That is certainly my position. And back to your
colleague's question about interfering in the workplace, this
board in over 100 decisions has gotten into the issue of
employer policy statements, employer handbooks, the minutiae,
every paragraph, every sentence, even punctuation marks, now
are under scrutiny because they may somehow chill employees'
rights. Is that a good use of the board's resources? I submit
not.
Chairman Roe. Gentleman's time is expired.
Ms. Bonamici, you are recognized for five minutes.
Ms. Bonamici. Thank you very much, Mr. Chairman. And thank
you to the witnesses for testifying today. Like Mr. Pocan from
Wisconsin, I am also fairly new to this subcommittee, and when
I joined, I was pretty enthusiastic about having the
opportunity to discuss workers' rights.
I certainly know from watching what has happened over
history how important the labor movement has been in getting
the rights to organize and collectively bargain for
generations. It is really unfortunate that we spend a lot of
time here talking about what looks like attempts to minimize
the importance of the NLRB. I am concerned about that.
Yesterday, I had the opportunity to attend the White House
Summit on Working Families, which was a great opportunity to
listen to not only working people from across the country, but
also business owners who share their stories about how family-
friendly policies actually help with attracting and retaining
good workers. That was a great discussion. I wish that is the
discussion we were having today.
Some of the things that we talked about at the summit--
equal pay for equal work, raising the minimum wage--are areas
where--I know the labor movement has long been a leader in
those areas.
I am from a state where the voters in Oregon years ago
raised the minimum wage by initiatives. And it is linked to the
CPI, so it automatically adjusts. It is one of the higher
minimum wages in the country. It has actually been good for
Oregon. I have about 43,000 constituents in my district who
could actually benefit from raising the minimum wage to $10.10
an hour under the Fair Minimum Wage Act. And I know now there
are many businesses talking about doing this because--to have a
national standard would be great for the country and also for
the states that have lower minimum wages.
I know the gentleman from Alabama who just spoke. I also
took labor law in law school many years ago. I am not going to
say how many. You have about 54,000 people in your district who
would benefit from raising the minimum wage.
Interestingly, I did not, like you, go into practicing
labor law. When I was in private practice, before I discovered
that my kids were more fun than lawyers, I had a practice in
franchise law and I represented franchisees. So it has been an
interesting discussion listening to Mr. Puzder.
And I certainly see, as Mr. Pocan did, the distinction
between subcontracted employees and employees of franchisees.
Big distinction there. But I appreciate the comment that was
made about this is why the court asks for briefing.
So I wanted to ask, Mr. Coppess, in your testimony, you
talk about how the NLRB will decide these two cases--and we are
really predicting what the court might do and talking about
that--by carefully applying established legal principles to the
particular facts of each case. And in doing so, the board will
attempt to provide legal guidance to workers and employers who
encounter similar situations in the future. And I appreciate
that statement.
And when I came in, I couldn't listen to your testimony
because I was in a markup in another committee, but I did read
your testimony. And I heard Mr. King talking about his
contemplation about what might happen with regard to the Noel
Canning opinion, if the Supreme Court does uphold the D.C.
Circuit. Mr. Coppess, what is your thought on that? What is
going to happen if the Supreme Court does uphold the D.C.
Circuit? What do you see happening logistically?
Mr. Coppess. Well, we know actually with a fair degree of
certainty what will happen for the NLRB, because they have been
through it before. The ruling for the NLRB will simply be
whatever actions the board took within the period covered were
taken without a quorum. That was the precise issue in New
Process Steel.
The issue for the rest of the government is mammoth. I
mean, it could eliminate the recess appointment authority as a
practical matter, it could invalidate decisions of other
agencies made by other appointees who aren't used to it the way
the board is, so there could be far-reaching ramifications of
that decision, but not for the NLRB. The NLRB has been through
it before, has practice, unfortunately. It can grind out the
cases again.
But that part of it we know what is going to happen,
because we have been through it once before.
Ms. Bonamici. Right. Well, I know we are all eagerly
waiting for that opinion. And the Supreme Court did not--and I
think it is common sense--that it is a different world now than
it was at the framing of the Constitution. And we fly back and
forth from the West Coast on a regular basis. And, you know,
people used to take a stage coach and come in, be in D.C. for
months at a time.
So it is a different world, but we are waiting to see what
is going to happen. I am very concerned about the decisions
that were decided during that period of time. And, of course,
as you mentioned, Mr. Coppess, what happens in other areas of
the government.
So with that, Mr. Chairman, I yield back the balance of my
time.
Chairman Roe. I thank the gentlelady for yielding.
Dr. Bucshon, you are recognized.
Mr. Bucshon. Thank you, Mr. Chairman. I would also like to
point out interestingly that the CBO estimated 500,000 people
would lose their job in America if we immediately raised the
minimum wage to $10.10 an hour. I would be interested in the
calculation in all of our districts how many people would lose
their job if the minimum wage was raised.
This is for Mr. Borden. Mr. Coppess states in his testimony
that the NLRB's last attempt in Register-Guard to address
whether employees have the right to use employer e-mail for
Section 7 activities ``failed.'' According to Mr. Coppess,
employers and workers are uncertain of when e-mail
communications on the NLRA protected topics are protected and
when they are not.
Mr. Borden, is this accurate?
Mr. Borden. I don't think so. I think it would be more
accurate, with all due respect to Mr. Coppess, to say that the
NLRB failed to give the AFL-CIO the decision it wanted in that
case. I think the standard that was set forth in the Register-
Guard decision was extremely straightforward and consistent
with decades' worth of precedent. And that is simply that
employers may promulgate and enforce a blanket ban on non-
business-use of e-mail.
Absent discrimination, there is simply no employee right to
use employer equipment for Section 7 purposes. I would submit
that the issue that is currently before the board does not
exactly have the same level of consensus that my friend here
has suggested today. It is clear from the board's solicitation
of amicus briefs that they are considering overturning that
very clear and straightforward standard and creating a
substantive right for employees to use employer equipment for
Section 7 purposes.
Many employers across the country may choose not to enforce
such a blanket ban on non-business use of their equipment. I
have no quarrel with that. But I see no reason for those who
have chosen to invest in this equipment and to dedicate it
exclusively to business purposes, no matter how hard that may
be to enforce, to force them to make it available otherwise. I
think the thing that creates uncertainty for employers is when
the agency tasked with interpretation and enforcement of a
statute so drastically departs from precedent like this every
four, six, or eight years.
Mr. Bucshon. I mean, I would just also like to point out,
my dad was a United Mine Worker for 35 years, so I understand
that perspective. I mean, would you--I am just guessing--I
mean, maybe the reason why unions want access to their business
e-mails is because at many businesses people aren't really
interested in what they have to say, and so they are having
problems getting access to personal e-mail information. And
this is a way of co-opting and passing on information to people
that may or may not be interested in what they are trying to
promote.
I mean, I don't think you necessarily need to comment on
that, but that would be, I think, maybe something that could
be.
In Register-Guard--also for you--in Register-Guard, the
dissenting Democrat board member stated, if an employer has
given employees access to e-mail for regular routine use in
their work, he would find that banning all work-related
solicitations is presumptively unlawful, absent special
circumstances.
Is this standard applied anywhere else?
Mr. Borden. I am unaware of any agency, court, or authority
that requires employers to make employer equipment available to
employees for non-business use. I don't--I am sure that--
consistent with what we discussed earlier, there may be
employers that choose to allow employees to do so. But I am
unaware of, you know, a law or a principle that would require,
for example, a freight delivery company to allow drivers to
drive their trucks around on the weekend or to go to the store,
or what have you. I am just unaware of any.
Mr. Bucshon. Thank you very much. I yield back, Mr.
Chairman.
Chairman Roe. Thank the gentleman for yielding.
Dr. Holt, you are recognized for five minutes.
Mr. Holt. I thank the chair.
Let me begin by asking the gentleman who just spoke if he
knows that 66,000 of his hardworking constituents and 43,000 of
mine would receive a pay raise--
Mr. Bucshon. Would the gentleman yield?
Mr. Holt. --if--if the--I am asking you a question, so in a
moment I will yield--would receive a pay raise if the gentleman
supported raising the minimum wage to $10.10 an hour under the
Fair Minimum Wage Act.
Mr. Bucshon. Will the gentleman yield for a second?
Mr. Holt. I would yield for an answer.
Mr. Bucshon. I would be interested to know how many people
in my district would lose their job if the minimum wage was
raised to $10.10 an hour. I yield back.
Mr. Holt. I would suggest that the gentleman talk with
economists from Pennsylvania and Indiana and New Jersey and
other universities that have said over and over again that job
loss--net job loss--is not a major effect of increases in the
minimum wage.
Mr. Coppess, a couple of questions. First of all, just to
continue the discussion that was--well, it was the one-sided
discussion with Mr. King that you did not get a good chance to
answer. In how many cases has the current board actually
overturned precedent, as Mr. King was suggesting has been
happening a lot?
Mr. Coppess. I haven't kept a tabulation. I can't on the
top of my head think of any. I would talk about the Specialty
Healthcare case in particular being--that has been brought up.
What happened in Specialty Healthcare was the board had used a
variety of formulations to describe what an employer would have
to show in order to broaden a petition for a bargaining unit in
an election case.
And the formulation the board chose to use as they thought
being a particularly clear statement of the law was a
formulation suggested by Judge Douglas Ginsburg of the D.C.
Circuit, who was famous as a nominee to the Supreme Court by
President Reagan. He is hardly a left-wing activist.
The Specialty Healthcare case itself was challenged in the
Sixth Circuit, and the Chamber of Commerce--I believe Mr.
King's firm maybe represented them--filed an amicus brief. The
Sixth Circuit unanimously upheld the board's decision in that
case. The same issue was raised in the Fourth Circuit in a case
that I argued for the machinists. Once again, the Chamber filed
an amicus brief on the merits in that case. The Fourth Circuit
said the board was right. They went on to do a recess
appointment thing that has kept the case suspended.
But that particularly notorious example of overturning the
law is a perfect example of them just clarifying the law and
applying established standards and deciding cases.
Mr. Holt. Thank you. You know, I find it interesting that
we are even holding this hearing today. You know, I am always
happy to speak about the NLRA. We sit here under the gaze and
the portrait of Chair Mary Norton, who oversaw the Labor
Committee when that was passed, which I think is a landmark in
world history of setting up employer and employee rights and
protections and collective bargaining and the associated
legislation establishing wages, a floor on wages, and a limit
on working hours.
I wish we were having a hearing about how we could
strengthen and expand these protections, which I really think,
as I said, have been a landmark in world history that make for
a better economy, really, beneficial to everyone. This is not
just about employee rights. This is about having a more
efficient and, not incidentally, humane economy.
Mr. Coppess, another question. I am wondering whether there
is a--kind of a red herring or an argument without content
about--employers that have equipment, such as e-mail, that is
dedicated exclusively to work-related use. First of all, I am
wondering how common that is with respect to e-mail and,
secondly, I am wondering whether anybody here or elsewhere has
been talking about diverting these things that are--that are,
in fact, existing for dedicated exclusively for worker use to
labor organizing.
Mr. Coppess. No. I mean, I can't emphasize strongly enough
that what we are talking about here is application to e-mail of
exactly the line of bulletin board cases that Congressman Byrne
was talking about. And the problem arose in the first instance,
because the Seventh Circuit in Guardian Industries reacted to
what all we labor lawyers understood to be the law, was that
don't tell those employees that they can put up sales notices
on your bulletin board or picnic notices or anything like that,
because the law will be, if you let them do that, they can put
up union notices.
And the Seventh Circuit in Guardian Industries said, well,
why is that? Maybe you are using the word discrimination in a
way we don't understand. Maybe you need to explain the
particular NLRA meaning of it, which is the case. They use the
word discrimination in a particular way that traces its way
back to Republic Aviation, and that is what you have at issue
in the e-mail cases.
If an employer in--
Chairman Roe. Mr. Coppess, could you wrap up? Because the
time is expired.
Mr. Coppess. Yes. Actually, it was the subject of a lot of
questions, so I will try and do it real fast. But if the
employer restricts the use of e-mail to nothing but business
use, they can do that. They do, in fact, do that, but if, in
some fantasy world, someone did do that, it would not be
illegal.
Mr. Holt. And it is basically a null set.
Chairman Roe. Gentleman's time has expired.
I will now finish the questioning. Mr. King, I know that
you mentioned--and this case should be the--the Noel Canning
case should come up within a week or two, I think, the ruling.
And it is a huge ruling. And I completely agree with you. How
long, if you have a client that now has 380 cases in front--and
you mentioned one client that thousands of days, years, to get
to conclusion, that uncertainty creates a real problem for
business out there going forward, expanding and growing their
business.
I completely agree with you. What we expect of the NLRB is
that, look, they should be a fair arbiter. Just like when you
play in an athletic game, you know what the rules are, both
teams know what the rules are, what the rules have been for 30
years. And my question to you is, how long would it take? And
then, secondly, if the NLRB is not looking to change all these,
why are they requesting amicus briefs to come before that, if
they don't--if it is established policy, why are you fooling
around with it?
Mr. King. I wish I could answer your last question. I don't
know what the intent is. I can only react to what the agenda
is. One has to question whether this accelerated agenda is
perhaps being pursued because we are in an election year
environment and that the agenda will be pursued aggressively
before November and/or that one of the members of the board's
term expires in December this year.
But back to predictability. Mr. Coppess and I do agree
amicus briefs make sense, but there have been significant cases
overturned. And they are attached to my testimony, one of
which, WKYC-TV, overturned 50 years of precedent, Democrat and
Republican boards repeatedly, with respect to dues checkoff. So
it would not be accurate to say that precedent has not been
overturned. It has been overturned consistently.
Your initial question, Mr. Chairman, if it took the NLRB
over three years in New Process Steel, where we only had 100
cases coming back, and we have at least on a 20-year look
back--and we have done extensive research on this--4,000 cases,
you can start to do the math.
Now, there is also a very important distinguishing
characteristic that Mr. Coppess did not share with us, is that
the New Process Steel cases, the 100 that came back, were by
unanimous decision of a two-member board. They did not overturn
precedent. They had no controversy associated whatsoever.
We are talking about an inventory of cases here, Mr.
Chairman, in part that are highly controversial--they are
attached to my testimony--that will take a period of time. So
back to your initial question and conclusion. We have at least
one case, the Roundy's case, that has been pending before this
board for 2,582 days, over seven years. We have 383 cases that
are pending for a long period of time. Why isn't that the first
priority of this board?
Chairman Roe. And I would argue there are businesses out
there that are yearning for a decision. Mr. Borden, I want to
ask you. And I think this is hugely important, the new media
and the way we communicate now. It has completely changed. Just
ask the post office if new media hadn't changed their business
model.
In Register-Guard, the NLRB held that employees have no
statutory right to use employer e-mail systems for Section 7.
What are Section 7 activities?
Mr. Borden. Section 7 of the National Labor Relations Act
is essentially the heart of the act. It is what allows
employees the right to form, join or explore union
representation, to bargain through representatives of their
choosing, to act in other concerted ways for their mutual aid
and protection, as well as the right of employees to refrain
from participating in all of those activities.
And that is essentially what the board dissent in Register-
Guard wanted to use as the foundation for this right of
employees to use an employer's e-mail system no matter what the
employer's perspective on restriction of that system would be.
If the issue were truly as simple as it has been presented
today by Mr. Coppess, it may even be more troubling, because
there would be absolutely no reason for the board to solicit
amicus briefs in this issue. They would just be relying on the
Register-Guard decision.
Chairman Roe. One just very quickly, because my time is
getting close to it. I have an office, 125,000 square foot
office building, that we contract out to get cleaned. I might
not like the cleaning in one section. This is a contractor that
I have a relationship with. And I say, look, this is not
getting done over here. It is the same person cleaning it. If
they get fired, am I now responsible for that person? Did I
have control over what happened? Because that is what I think
that I am hearing you say, is they are trying to do with this
ruling.
Mr. Puzder. I would hope that is not the case--I would hope
that wouldn't be the case. And I think a key determinant would
be, when you had a problem, you went to the contractor, you
didn't got the contractor's employees.
Chairman Roe. That is correct.
Mr. Puzder. And it is the same thing, if we have a problem
with a franchisee, we go to the franchisee, not the
franchisee's employee. So I would hope that situation would
never be covered, even if there is a rule change.
Chairman Roe. Well, I have to gavel myself. My time has
expired.
Mr. Tierney, closing remarks?
Mr. Tierney. Well, fine, I was going to do this in closing
remarks. I was going to ask for five more minutes to do that,
but, look, I just know that we have been making a comparison
here today that if we could change the committee's function off
of trying to usurp a decision by the board that hasn't been
made yet, we could talk about raising the minimum wage, which
in your district, Mr. Chairman, would be 67,000 people getting
a boost, in my district, 41,000, and that would be a good
discussion for us to have. You could tell us why that shouldn't
be. We could explain why it would be important.
But I want to talk a little bit about why the National
Labor Relations Board is involved in reviewing cases at all.
One of my colleagues said, why are they even reviewing it? Our
witness, Mr. Coppess, did note that in the preamble to the
National Labor Relations Act, it observed that the inequality
of bargaining power between employees who do not possess full
freedom of association or actual liberty of contract and
employers who organize in the corporate or other forms of
ownership association depress wage rates and the purchasing
power of wage earners in industry. So that is a concern on
that.
And I think when we have even people like the International
Monetary Fund and others decrying the inequity and inequality
that is now in our economy and saying this is not good for
democracy, this creates instability, this tampers down
mobility, that we know we have a problem in that regard.
Economists of all persuasions are telling us and speak to the
fact that the reasons that we have growing inequality, one of
the major reasons is a decrease in organized labor membership
and the lack of employee bargaining power, and that has caused
wage stagnation. When wages are stagnant for one group of
people, they tend to take away the incentive for employers to
keep pace and have their pay system be more robust.
So one of the things that the preamble to the National
Labor Relations Board cites as what would be a solution to
that--and is also in our witnesses' testimony--is that they
would encourage the practice and procedure of collective
bargaining and protect the exercise by workers of the full
freedom of association, of self-organization, and designation
of representatives of their own choosing for the purpose of
negotiating the terms and conditions of their employment.
And that is the whole idea. This Act is set here so that
people can negotiate the terms of their employment and their
conditions. If an employee can't get to the table, the person
who is actually setting those terms and conditions, that right
is defeated. The National Labor Relations Board has an
obligation, I would think, to take a look into why would that
be?
If you have an employer who is making--who is saying to you
at the table, well, I don't really make that decision, I am
just a subcontracted third party and I have hired you, but it
is really the guy that contracted to me that is making the
decisions, but he is not at the table, it defeats that whole
purpose of the National Labor Relations Board, which is to make
sure that people can negotiate the terms and conditions of
their contract. I think that is what the board in at least one
case is going to try to get at. What would be the standard that
we set to enable people to make that decision?
So there is a purpose for the National Labor Relations
Board. There is a purpose as to why they review these cases,
and that is to make sure that employees have the full benefit
of what the law intended, their ability to negotiate with the
persons making the decisions on the terms and conditions of
their employment.
In that sense, I think it is important for the board to
take in all the information it can possibly take in and make a
consideration of how that purpose of the statute is best
accomplished. And I hope the board will do that. I suspect they
would. I have seen--I heard nothing today that would lead me to
believe that they won't.
And again, I think that I wish that we had a hearing on
some of the other things that are pressing about equal pay for
equal work, about raising the minimum wage, about conditions in
the workplace and so on, on that, but I hope, Mr. Chairman, we
will get to those things sooner, rather than later, and I thank
you for the opportunity to close.
Chairman Roe. Thank you very much. And I appreciate very
much, the panel has been excellent as usual. And I think this--
we did have every reason to bring up the issues with the NLRB
with this hearing today. And let me go over just why I believe
that.
Mr. Wilson mentioned at the beginning that the NLRB
basically tried in South Carolina, in Charleston, South
Carolina--I have been to that plant down there--to close a
plant that had 1,000 people working, South Carolinians working,
making good money and supporting their families, along with all
the other thousands of jobs that went along with that. That was
beyond me. Not a single person in Everett, Washington, lost
their job. Not anybody did. As a matter of fact, we are adding
jobs with the Dreamliner that they are currently building.
Great company, Boeing, and they were able to go to a right-to-
work state and expand their business there and to make money
for Americans and to expand opportunity.
We have also seen this ambush election, where the average
election median time is 35, 37, 38 days for an election. It is
not a long time at all. Both employees and employers need time.
I could not in my business in one week get a labor lawyer like
you up to speed with my needs, and these elections could occur
in as little as 10 days. That is activist, folks, when you do
that.
And I can tell you, a lot of things that are done quickly
like that are done poorly. They need to be thought-out, well-
thought-out. And the micro unions, I don't know how in the
world you would run a retail business with five, six, eight,
10, 12, 15 unions in that business with different bargaining
units that you would have to go to. That is activist, and that
is why we should be here today hearing this.
I think free speech, the secret ballot protection, I can't
think of anything in America more precious than a secret
ballot, being able to vote for who you want to. And I say this
as a joke. It is not. The secret ballot--my wife claims she
votes for me. I don't know that she does, because it is a
secret ballot. She claims she does.
That is why it is important to have that protection for
that employee, for every person in this country is elected--Mr.
Tierney was elected like that. The President and the United
States, the president of the unions are elected like that. We
should protect that right.
I put on a uniform. I left this country 41 years ago to
serve near the demilitarized zone in Korea for people to have
that right. I think also that--and there is income inequality.
I agree with you completely on that. I think the problem is the
skills gap in this country. We traveled around--we had CODEL--a
couple of weeks ago. And you look at--and Southeast Asia.
I look in my own district where I live, there is one county
we have, and it is not a large county, with 1,000 jobs open
today. One is in a manufacturing plant that has 50 jobs open
today, and they don't have the skills to line up. And so we
have to--and that is what this particular committee is very, I
think, committed to, is closing that skills gap so we have
workers that match up with the high-tech jobs of today. So that
is an issue, I think.
And Mr. Puzder, I don't know how many or what percent of
the people in this country have entered the workforce through a
Hardee's, a McDonald's, or any of the other number of
franchisees. It is a huge percentage, I have read it. And these
people that go on to be CEOs of companies and--you mentioned
the--look, I want everybody to make more money. I think that is
a good thing. I agree with that. But you can't just pay more
people. You have to have somebody who earns that money.
And if you want to make these things affordable for the
people that go in, that buy it, and I think that one other
thing we can do in this single most important thing, I think,
in America today that affects the people around the kitchen
table, where I live, is the price of energy. When the price of
energy goes up, everybody goes up. I mean, it is--and when
someone is on a fixed-income--and I live in an area of
Tennessee that is a very low-income--our median income is not
as high as it is in America. And when you see the price of a
gallon of gasoline go to $4.00 or 4.50 a gallon, when you are
on a fixed-income like my mother is and like a lot of elderly
people are, it affects the food they buy, everything they
purchase.
So the thing we can do is get a coherent energy policy in
America that makes sense, that lowers energy, makes us energy
independent, and will make us free of the Middle East. I think
you can do more for the American people by doing that and their
jobs than anything I can think of right now.
And I would like to work with Mr. Tierney and the other
side to do just that. And we could start by approving the
Keystone pipeline. I think that would help immediately. We
could reduce our consumption of Middle Eastern oil by almost
half by doing that one step.
I think it has been a great hearing. And, Mr. Tierney,
welcome to the committee, a great addition to the committee. I
appreciate your being here.
With no further business, this hearing is adjourned.
[Additional Submissions by Mr. Tierney follow:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[Whereupon, at 11:43 a.m., the subcommittee was adjourned.]