DC Circuit Upholds NLRB's Rule Protecting Union Handbilling on Private Property by Contractor's Employees

Practical Law Legal Update 7-519-0218 (Approx. 5 pages)

DC Circuit Upholds NLRB's Rule Protecting Union Handbilling on Private Property by Contractor's Employees

by PLC Labor & Employment

Key Litigated Issues

On April 17, 2012, the US Court of Appeals for the DC Circuit issued its decision in New York New York, LLC v. NLRB. The key litigated issues were whether:

The NLRB adequately explained its rationale for:
- holding that employees of a contractor have NLRA rights to handbill on private property at the site where they work; and
- evaluating those employees against a property owner's competing right to control how its property is used.
The factual record supported the NLRB's conclusions that New York New York committed an unfair labor practice by barring its contractor's employees from handbilling in walkways of its casino.

Background

New York-New York Hotel and Casino contracts with Ark, which operates restaurants on its premises. Off-duty Ark employees who worked at the restaurants passed out union-related handbills to customers on New York-New York’s property. The handbills asked customers to urge Ark management to sign a union contract. Eventually, New York-New York asked the handbilling Ark employees to leave. When they refused, New York-New York called the police, which cited most of the handbillers for trespassing.

The Union filed unfair labor practice charges with the NLRB, stating that New York-New York violated Section 7 of the NLRA. In its first decision, the NLRB found that:

New York-New York had committed an unfair labor practice by ejecting the handbillers from the property.
A property owner generally may not bar employees of an on-site contractor from distributing union-related handbills on the property.

Under then current NLRB and Supreme Court precedent, a property owner:

May not prevent its employees from distributing union-related handbills on the property in non-working areas during non-working time.
May prevent non-employees from distributing union-related handbills on the property in all areas at all times.

The Supreme Court held in Lechmere, Inc. v. NLRB, that the scope of a worker's Section 7 rights depends on whether he is an employee or a non-employee (502 U.S. 527 (1992)). However, there is no Supreme Court precedent on the question of whether:

The term employee extends to the relationship between an employer (New York-New York) and the employees of a contractor working on its property (Ark employees).
Ark employees have rights equivalent to those held by the property owner's employees, that is to organize in non-work areas during non-work time without disrupting the property owner's business.

On appeal, the DC Circuit:

Concluded that the NLRB had not adequately explained its reasoning.
Remanded the case to the NLRB, emphasizing that this issue was under the NLRB's discretion under the NLRA.
Listed a series of questions to guide the NLRB's exercise of its discretion on remand.

On remand, the Board re-examined the issue, set a new standard for contractor employee access and held that:

A property owner generally may not bar employees of an on-site contractor from distributing union-related handbills on the property.
New York-New York committed an unfair labor practice.

New York-New York petitioned for review and the Board cross-applied for enforcement of its order.

Outcome

The DC District Court, in a 3-0 opinion, denied New York-New York's petition for review and granted the NLRB's cross-application for enforcement of its order. The court:

Held that:
- it is bound by its prior panel decision which determined that the NLRB had discretion to measure and resolve conflicts between contractor employee's rights under the NLRA and property owner's competing rights to control how their property is used; and
- it must reject New York-New York's attempt to challenge whether the NLRB should have discretion to resolve those issues.
Rejected New York-New York's arguments, concluding that:
- there was no basis for claiming that handbilling here was less protected because it was aimed at customers instead of fellow employees, because precedent has never distinguished rights to solicit or distribute based on the target audience;
- the handbilling in walkways of common areas was in non-working areas where it could not be banned, because under NLRB precedent only hotel rooms and gaming floors in casinos were working areas; and
- there was insufficient evidence to show that the handbilling on wide walkways interfered with pedestrian traffic or created a safety hazard.

Practical Implications

Although the NLRB characterizes its new standard as a balancing test, it is not. The standard presumes an employee, even an employee of another employer, has rights under the NLRA to handbill on private property unless the employer proves either:

The handbilling causes significant interference.
The property owner has a business justification for prohibiting the handbilling.

This standard is the inverse of Lechmere, which supported property rights unless non-employee union supporters seeking access showed there was no alternative way of reaching employees with their union message.

Employers should:

Prepare to demonstrate how handbilling has interfered with their enjoyment of their property rather than raising general claims that the handbilling was harmful to business.
Review contractor agreements regarding the right to control activities of contractor's employees and enforce them with reason.
Prepare to furnish evidence that they lack control over contractor's employees to avoid a presumption that they do.
Prepare action plans for property managers to respond to an inevitable increase in handbilling organizational activity by non-employees working on their property.

DC Circuit Upholds NLRB's Rule Protecting Union Handbilling on Private Property by Contractor's Employees | Practical Law