Employees of Shopping Malls' Maintenance Contractor May Handbill on Malls' Property to Organize Union: NLRB | Practical Law

Employees of Shopping Malls' Maintenance Contractor May Handbill on Malls' Property to Organize Union: NLRB | Practical Law

On December 30, 2011, the National Labor Relations Board (NLRB) in Simon DeBartolo Group held that an owner of multiple shopping malls unlawfully prevented employees of its maintenance contractor from distributing union organizational handbills at several of its shopping malls. The contractor's employees effectively had the same rights to handbill on mall property as the mall owner's employees because they "regularly" worked at the malls and the property owner failed to prove that the handbilling "significantly interfered" with its or its tenants' use of the shopping mall.

Employees of Shopping Malls' Maintenance Contractor May Handbill on Malls' Property to Organize Union: NLRB

by PLC Labor & Employment
Published on 06 Jan 2012 • USA (National/Federal)
On December 30, 2011, the National Labor Relations Board (NLRB) in Simon DeBartolo Group held that an owner of multiple shopping malls unlawfully prevented employees of its maintenance contractor from distributing union organizational handbills at several of its shopping malls. The contractor's employees effectively had the same rights to handbill on mall property as the mall owner's employees because they "regularly" worked at the malls and the property owner failed to prove that the handbilling "significantly interfered" with its or its tenants' use of the shopping mall.

Key Litigated Issues

On December 30, 2011, the NLRB issued its decision in Simon DeBartolo Group. The key litigated issue was whether, under the NLRB's New York New York Hotel & Casino test, an owner of shopping malls unlawfully prohibited employees of its maintenance contractor from handbilling in support of union organizing at two of its properties where:
  • There was no evidence showing:
    • specifically how much time the contractor's employees worked at the malls or whether they worked at the malls exclusively; and
    • whether the malls' owner had any means of controlling the contractor's employees.
  • The intended audience of the handbilling was not the "relevant subset" of the property owner's customers who would consider patronizing the contractor's services and could persuade the contractor to bargain with the union.

Background

In New York New York Hotel & Casino the NLRB held that a casino unlawfully prohibited employees of a tenant restaurant from engaging in organizational handbilling on the casino's premises. The decision outlined factors to be used in similar cases involving the rights of contractor's employees to engage in Section 7 activity on another employer's private property. In particular, the NLRB majority (Member Hayes, dissenting) reasoned that:
  • The contractor's workers were "employees" covered by the NLRA, even if they were not the employees of the casino owner.
  • As NLRA-covered employees, they had Section 7 rights, which they attempted to exercise by handbilling on the casino's property, adjacent to where they regularly (and exclusively) worked.
  • Because the contractor's employees worked at the restaurants that were inside the casino and hotel complex, they ought to be treated like offsite employees of the casino, who under NLRB precedent, could gain access to casino property outside of working areas for Section 7 activity, unless the casino established that it had business justifications for excluding them.
  • The right to organize, including through handbilling, is a central Section 7 right.
  • The intended audience for the contractor's employees' handbilling at the entrances to the restaurants, albeit on the casino's property outside of their employer's leasehold, favored allowing handbilling. In particular, the handbilling there would reach:
    • fellow employees to sign union authorization cards; and
    • the "relevant subset" of the casino's customers who would consider patronizing their employer's restaurants and could persuade the employer to bargain with the union that the employees want to represent them.
  • Federal labor law policy should trump property rights when determining their rights of access, even though the contractor's employees were trespassing under state law.
  • A property owner generally can limit the contractor's employees' access to the same degree as it could its own employees by imposing in its lease or contractor agreement those limits. In particular, the NLRB rejected the casino's argument that it lacked control over the contractor's employees to do anything other than eject them from the premises and found that the casino had sufficient non-employment based means to protect its property and otherwise control the contractor's employees because:
    • its contract with the restaurant contractor required the contractor to ensure its employees followed safety, care and cleanliness and behavior rules set by the casino; and
    • the contractor's employee handbook set policies mirroring those of the casino and expressly stated that some requirements were imposed because the contractor's tenancy in the casino.
  • Without specific evidence of interference with the casino's operations, it could not prohibit use of its property for Section 7 activity by the contractor's employees any more than it than it could for its own employees.
In Simon DeBartolo Group, off-duty employees of Control Building Services (Control), a maintenance contractor for shopping malls owned by Simon DeBartolo Group (SDG), distributed leaflets outside the entrance to several shopping malls. The parties stipulated that the employees "regularly worked" at the malls well before there was any legal significance attributed to those terms in New York New York Hotel & Casino, and there was no evidence about how often they worked at the malls or whether they reported to another home base for Control.
The leaflets addressed the employees' desire to organize with a local union and alleged Control had violated federal labor laws. SDG asked the Control employees to:
  • Stop distributing the leaflets.
  • Leave the property.
After repeated requests, representatives of SDG notified the police.
The union that was seeking to organize the Control employees filed charges with the NLRB. After multiple proceedings before two NLRB administrative law judges (ALJ) from 2000 to 2006, an ALJ held that SDG violated the NLRA. SDG appealed the decision to the five-member panel (Board) in charge of the NLRB's judicial functions.

Outcome

In a two to one decision (Member Hayes, dissenting), the Board loosely applied New York New York Hotel & Casino and held that SDG violated the NLRA by prohibiting organizational handbilling by the Control employees on its premises.
The Board majority:
  • Rejected SDG's arguments that:
    • as property owner of the shopping malls, it had legitimate business reasons to control activities that would interfere with the rights of its tenants and customers at the malls; and
    • the handbilling interfered with the enjoyment of mall customers, who rather than complain would simply shop elsewhere.
  • Held that the Control employees:
    • were engaged in activity that would be protected for SDG's own employees; and
    • had the same access rights for that activity as SDG's own employees because SDG failed to show the handbilling caused "a heightened risk of disruption or interference" to SDG and SDG's tenants' use of the properties.
In dissent, Member Hayes reiterated the criticisms of the New York New York Hotel & Casino test and endorsement of an alternative test from his dissenting opinion in that case. In particular, he noted that New York New York Hotel & Casino and this decision:
  • Allowed contractor employees' rights to trump the property owners' rights, without any balancing required by the Supreme Court's decisions in Lechmere Inc. v. NLRB, NLRB v. Babcock & Wilcox Co., and Hudgens v. NLRB.
  • Did not consider the availability of an alternate means of communication without trespassing on a third-party's property.
  • Ignored previous decisions which rejected giving broad access rights to contractor employees and emphasized employee status as crucial to defining the scope of Section 7 rights.
Member Hayes contended that the Board should have adopted an access test that would:
  • Balance the property interest of the property owner with the Section 7 rights of contractor employees rather than presume access rights unless the property owner presented evidence of disruption for customers.
  • Consider whether there was a reasonable alternative means of communicating the organizing message.
Member Hayes also asserted that the Board improperly ignored two New York New York Hotel & Casino factors. In particular:
  • The intended audience for the handbilling were members of the public, none of whom would be considering purchasing Control's maintenance services.
  • There was no evidence that SDG had control over the actions of Control's employees, Control maintained company policies requiring its employees to follow mall property rules or that SDG had any rules that could be applied to Control's employees.
In addition, in New York New York Hotel & Casino, the Board majority relied on the facts that the contractor's employees worked regularly and exclusively at the restaurants within the casino. In this case, the Board majority expressly eliminated exclusivity of the work location as a standard, disregarding the requirement from earlier Board precedent that the contractor's employees work exclusively at the site owned by another entity before being protected to engage in any Section 7 activity on that property. Member Hayes challenged this loose standard, highlighting that there was no evidence about how often Control employees actually worked at the malls or whether they reported to a Control home base, where handbilling would be more appropriate and not intrude on third party's property.

Practical Implications

This case illustrates that the Board majority:
  • Will not likely give any weight to evidence supporting the New York New York Hotel & Casino "control" factor unless it weighs in favor of nonemployee access. The Board majority presumes an employer has the ability through its contractual relationship with the contractor to control contractor's employees, short of ejecting them from the premises.
  • Will not likely consider the "intended audience" factor unless it would favor nonemployee access.
  • Will likely require testimony and documentary evidence about how contractor's employees handbilling activity on their property interfered with use of their property, including by:
    • coercing or intimidating customers, vendors, or suppliers;
    • blocking customer, vendor, or supplier ingress or egress;
    • reducing of sales or reduced "foot traffic."
In light of this decision, property owners should:
  • Avoid stipulating that handbilling contractor's employees "regularly work" on their premises.
  • Prepare to furnish evidence that they lack control over contractor's employees to avoid a presumption that they do.
  • 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.
  • Prepare action plans for property managers to respond to an inevitable increase in handbilling organizational activity by nonemployees working on their property.

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