National Labor Relations Board v. Town & Country Electric, Inc.

PETITIONER:National Labor Relations Board
RESPONDENT:Town & Country Electric, Inc., et al.
LOCATION:10th Judicial Circuit Court – Jefferson

DOCKET NO.: 94-947
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Eighth Circuit

CITATION: 516 US 85 (1995)
ARGUED: Oct 10, 1995
DECIDED: Nov 28, 1995

ADVOCATES:
James K. Pease, Jr. – on behalf of the Respondent
Lawrence G. Wallace – on behalf of the Petitioner

Facts of the case

Town & County Electric, Inc., a non-union company, sought to fill several positions for a construction job in Minnesota. Town & Country received applications from union staff, but refused to interview any of the applicants except one, who was eventually hired and fired soon thereafter. These individuals applied with the intention to organize Town & Country and were to remain on Union payroll during their time of employment. The union, the International Brotherhood of Electrical Workers, filed a complaint with the National Labor Relations Board claiming that Town & Country had refused to interview and retain the workers because of their union affiliation, a violation of the National Labor Relations Act. The Board held that the 11 individuals met the definition of employees under the Act and rejected Town & Country’s claims that the individuals had been refused for other reasons.

The U.S. Court of Appeals for the Eighth Circuit reversed on the ground that the term “employee” does not include those individuals who remain on Union payroll during their time of employment with another company.

Question

Does a worker qualify as an “employee” under the National Labor Relations Act if, while he is working, he is simultaneously paid by a union to help the union organize a company?

William H. Rehnquist:

We’ll hear argument next in Number 94-947, National Labor Relations Board v. Town & Country Electric.

Mr. Wallace, you may proceed.

Lawrence G. Wallace:

Mr. Chief Justice, and may it please the Court:

For almost 30 years, the National Labor Relations Board consistently and repeatedly has held that a person who applies for or holds a job with an employer that he intends to try to organize, and who will be compensated by a union for his organizational activity, is an employee within the meaning of section 2(3) of the National Labor Relations Act.

That section is set forth on page 2 of our brief, and was last interpreted and applied by this Court in its 1984 decision in Sure-Tan Incorporated against the NLRB, and we are content to use the words of this Court in Sure-Tan in describing this provision, and I’m quoting now from page 891 of Volume 467 U.S., the breadth of section 2(3)’s definition is striking.

the act squarely implies to “any employee”.

The only limitations are specific exemptions for agricultural laborers, domestic workers, individuals employed by their spouses or parents, individuals employed as independent contractors or supervisors, and individuals employed by a person who is not an employer under the National Labor Relations Act.

The Court then concluded that undocumented aliens are not among the few groups of workers expressly exempted by Congress, and they therefore plainly come within the broad statutory definition.

William H. Rehnquist:

Is it your position, Mr. Wallace, that if a person does not come within any of those exemptions and is “hired” he is therefore an employee?

Lawrence G. Wallace:

Well, that is the conclusion that the Court reached, and it is our–

William H. Rehnquist:

I asked what your position–

Lawrence G. Wallace:

–Our position is that he is therefore an employee unless there are reasons, in interpreting the National Labor Relations Act, why an implied exemption should be found, a question for the board to address initially, and the only example in which this Court found an implied exemption was the case of NLRB v. Bell Aerospace which involved managerial employees, and the Court in reliance upon the legislative history of the Taft-Hartley Act and its overruling of this Court’s decision in the Packard case by adding to this list of exemptions supervisors has… that Congress had relied on the notion that managerial employees would be excluded sort of a fortiori from supervisors, and that the board had always, while not holding them not to be employees, had always placed them in separate bargaining units from other employees.

William H. Rehnquist:

–What about an employee who fills out a job application, is hired, and yet his only purpose is to get into the plant so that he can blow it up?

He’s a terrorist.

Is that person an employee for purposes of the National Labor Relations Act?

Lawrence G. Wallace:

If he applied for a job that he was seeking where he would be working for wages under the supervision of the employers–

William H. Rehnquist:

Yes.

Lawrence G. Wallace:

–he would be within the statutory definition of employee.

What the board has–

William H. Rehnquist:

So he… that person is an employee.

Lawrence G. Wallace:

–That doesn’t mean that he has to be hired.

William H. Rehnquist:

Well, suppose he… the company, not knowing this, goes ahead and hires him.

Lawrence G. Wallace:

Then he’s subject to all of the company’s work rules and duties of loyalty.

Of course if the company hires him, he’s even more so an employee.

The Court resolved in the 1941 decision in Phelps Dodge that applicants are within the statutory coverage because section 8(a)(3)–

William H. Rehnquist:

But isn’t that a–

Lawrence G. Wallace:

–protects applicants from discrimination in hiring.

William H. Rehnquist:

–Isn’t that Exhibit A, what I’m talking about, of inconsistent loyalties?

I mean, the person is simply going on the payroll in order to get into the factory.

He’ll perform the work for a day, but then he intends to blow the place up that night.

Lawrence G. Wallace:

This is… of course it would be a breach of duty, whether it would be because he wanted to do it of his own volition or whether because of loyalty to some other group.

It would be a breach of duty.

What the board… the board has pointed the way to the proper analysis of these issues in the companion case of this very case.

There were two cases decided together, this case and Sunland Construction Company, which is cited in all of the briefs, and there the board held, after writing an opinion identical to the opinion in this one until the last few paragraphs… reaching the conclusion that applications of this kind are employees within the meaning of the act, the board held that nonetheless it would not be a violation, an unjustified discrimination under 8(a)(1) or 8(a)(3) for an employer to refuse to hire a paid union organizer in the discrete context of an ongoing strike situation in which the paid union organizer would have a duty to support the work stoppage in an attempt to coerce the employer, a legitimate attempt under the law to coerce the employer to accede to the union’s demands.

And the employer would have an equally legitimate right to want to hire replacement workers who might be nonunion members, might be outside the bargaining unit, might be outside strike-breakers–

Ruth Bader Ginsburg:

Mr. Wallace, why–

Lawrence G. Wallace:

–of other kinds to try–

Ruth Bader Ginsburg:

–Mr. Wallace–

Lawrence G. Wallace:

–to carry on their operations.

Ruth Bader Ginsburg:

–why wouldn’t the same reasoning that you’ve just explained to us for the strike exception apply to the person who is under an agreement with the union to walk out when the union blows the whistle?

Why isn’t there that same inconsistency?

Lawrence G. Wallace:

Because while that is a rule of the voluntary organization, section 7 of the act protects the right of workers to have voluntary organizations, including their right to make reasonable rules of conduct for their members, but you’re talking about a future contingency, and when the time comes, under this Court’s decision in Pattern Makers and the rationale of this decision, each individual can decide for himself whether he will in fact adhere to the union rule–

Ruth Bader Ginsburg:

But that’s different, Mr. Wallace.

Different… the worker can decide for himself.

The worker who is under an agreement that the worker will walk when told to by a third party… let’s say the third party were not the union, but a competitor.

The applicant has an agreement with the competitor that he will, if he gets this job he’ll stay on it till the competitor says, walk out.

Can such a person qualify as an employee when, going in, he has that agreement with a competitor?

Lawrence G. Wallace:

–He would definitely qualify as an employee, although the rationale of Sunland might apply.

This is not an uncommon hypothetical.

There can be employees who have been suspended from their job who have an agreement with the employer that they will return when recalled and retain their seniority and retain their advanced pay scale status, so they have an economic incentive to return to this competing employer.

In the meantime, they’ve been laid off, they need a job, they go to another competitor, and take the job.

They’re… of course they’re an employee.

They’re covered by the Fair Labor Standards Act.

The employer must withhold taxes for them.

Ruth Bader Ginsburg:

But one can be an employee for one purpose and not the other, isn’t that–

Lawrence G. Wallace:

It’s possible, but they are an employee–

Ruth Bader Ginsburg:

–For example, let’s take these employees, and there’s an election.

They go in, and they try to organize.

There are a number of workers who are in favor of the union.

There’s an election.

Ruth Bader Ginsburg:

Can the paid organizer… does a paid organizer count as an employee for that purpose?

Lawrence G. Wallace:

–He’s an employee, but that doesn’t mean that he’s entitled to vote.

That is a question about which employees have a community of interest with a purpose–

Ruth Bader Ginsburg:

What is the provision in the statute that entitles someone to vote in a union election?

Lawrence G. Wallace:

–I don’t recall.

It’s not directly before us, but it’s–

Ruth Bader Ginsburg:

If it uses the word employee, someone might not be an employee for that purpose, although would be an employee for another purpose.

Well, isn’t the answer–

Lawrence G. Wallace:

–Well, the board has always held–

–he may not be in the bargaining unit?

Lawrence G. Wallace:

–these people are employees.

They just… they don’t have a community of interest with other employees in the bargaining unit.

That has always been the inquiry about whether someone can vote in a particular election, whether he is a member of the bargaining unit because of the community of interest standards–

Ruth Bader Ginsburg:

Tell me–

Lawrence G. Wallace:

–that the board looks to.

Ruth Bader Ginsburg:

–what you’re saying about someone who has an inconsistent obligation, whether that coincides with the approach that Judge Williams took in the Willmar case, or is it different?

Lawrence G. Wallace:

Well, I think the board’s approach and the approach that Judge Williams took on behalf of the D.C. Circuit in the Willmar case are substantially identical.

There may be some differences in articulation, but in Willmar, the D.C. Circuit said that yes, these are employees, and we leave for another day whether the employer would be justified in treating them differently under 8(a)(1) or 8(a)(3), in other words in not hiring them.

It was shortly thereafter that the board decided Town & Country and Sunland, and it reached opposite conclusions on the question left for another day, depending on whether there was an ongoing strike or not, because the board did not regard it as an irreconcilable conflict of interest under the National Labor Relations Act for an employee to have a loyalty to his union and to the voluntary right of self-organization and to the employer.

That’s what the–

Ruth Bader Ginsburg:

Mr. Wallace, did the board rule expressly on the provision of the salting resolution that the employee would walk when told to by the union?

I wasn’t aware that the board had ruled specifically on that, as distinguished from being paid by the union.

Lawrence G. Wallace:

–The focus before the board was on the compensation question.

It was the court of appeals that relied more strongly and responded, and their amici are relying more strongly on the salting resolution itself.

So the board did not address a contention specifically based on the salting resolution, but it did discuss the question of control, which is what that argument is based on, and pointed out that any paid union organizer, as the board calls anyone getting any form of compensation from the union with a duty to organize, would still be subject to the employer’s direction and control, to his work rules, to the obligations to perform his duties in an acceptable manner for the employer and, indeed, what the board found is that someone in this situation has an added incentive not to perform in a substandard manner or to do any act that would warrant discharge, because that would defeat his opportunity to be on the premises and to engage in his organizing campaign during off-work hours.

So far from finding any conflicting duties… because after all he’s subject to the same rules of no solicitation during work time or in work areas.

It’s done at lunch break or after work is over.

You don’t really have acts simultaneously being performed–

Sandra Day O’Connor:

Mr. Wallace–

Lawrence G. Wallace:

–in the classic sense for two different masters under the Restatement.

Sandra Day O’Connor:

–Mr. Wallace, can an employer legitimately adopt a hiring policy to the effect that we will not hire anyone who moonlights for another employer, or who has another job, including a job for the union, it’s just our policy not to hire people who do have, or may have a second job?

Lawrence G. Wallace:

So long as it’s a neutral policy that is not directed at antiunion animus.

It could be in a particular factual setting a pretext for the denial of rights under the act.

Sandra Day O’Connor:

Yes, but if… presumably there could be such an employer policy, and it could include even employment by the union, as in this context.

Lawrence G. Wallace:

Absolutely.

Any neutral across-the-board policy requiring a commitment to work for a certain duration of time, asking whether there are obligations to any third party that might interfere with future duties in any way, certainly asking whether there was an obligation to anyone–

Antonin Scalia:

Would you say this… this would be answered no, that last question.

You say that that question, put to a union organizer, would be answered no, whether there’s any conflicting obligation to someone else that would interfere with duties in any way.

Lawrence G. Wallace:

–Well, I–

Antonin Scalia:

You say the union organizer can stand up and say no.

Lawrence G. Wallace:

–Well, that depends on what the neutral policy of the employer is.

If the employer says that they want everyone to swear that they have no obligation to–

Antonin Scalia:

Well, no, I’m just talking about the question that you put.

You said that the employer may ask applicants whether he has any commitment to a third party that would interfere with duties in any way, and as I understand your presentation to us, you think that the union organizer can answer that question honestly, no.

Lawrence G. Wallace:

–That is true in the context of this case, where you have employment at will, where either the employer or the employee has a right to leave at any time.

That’s the only possible–

Antonin Scalia:

Now, what if it were a term contract.

I mean… but that… would people who are… sure.

You… suppose it’s a term contract for 3 years, and he has the same arrangement with the union that he’ll quit when the union tells him to.

Lawrence G. Wallace:

–The employer could definitely ask whether there are any conflicting obligations that would result in premature departure and failure to observe the term.

Antonin Scalia:

But suppose he doesn’t ask?

Would that, the existence of that conflict not be a sufficient reason for dismissal?

That’s not this case–

Lawrence G. Wallace:

That’s not this case–

Antonin Scalia:

–I understand, but–

Lawrence G. Wallace:

–and I can’t really precommit the board to it.

This is not an employer who asked for any term–

Antonin Scalia:

–Okay.

–on behalf of these people.

Do you acknowledge that would be different, though, because there his obligation to the union might indeed require him to break a duty, a commitment to the employer.

Antonin Scalia:

Mr. Wallace, it would be different in terms of whether the employer has a right to discharge him, but would it be different with respect to the question of whether he was nevertheless an employee during the period of the service.

Lawrence G. Wallace:

–Precisely what I was about to say.

He would still be an employee as an applicant for the job, but it would raise the Sunland question.

The Sunland contention that this was justified discrimination was never raised before the board in this case, and it would have been hard to raise it in this case because at the time the adverse action was taken, the employer here did not know of the salting resolution, did not know of the union compensation.

Anthony M. Kennedy:

I’m not sure, Mr. Wallace, that I fully understand your example, or your statement, or your concession that an employer with a neutral purpose, let’s say, can ask, do you have any conflicting obligations to any other employer or organization?

Now, suppose the answer to that is yes, I’m a member of the union, and I’ll strike if they tell me to do that.

I suppose he’s mandatorily entitled to employment.

Lawrence G. Wallace:

That is not a conflicting obligation, because the union–

Anthony M. Kennedy:

Well, suppose an employer interprets it that way.

It isn’t because of the labor laws, the National Labor Relations Act.

Lawrence G. Wallace:

–That is correct, and–

Anthony M. Kennedy:

So I think you have to amend your statement to say that if the reason for an affirmative answer to the question, do you have a conflicting obligation, is a primary loyalty to the union that that is a supervening reason that entitles the employee to be hired, I should think.

Lawrence G. Wallace:

–That is a question for the board, and it reached the opposite conclusion in Sunland Construction, which is the only case in which it has reached the opposite conclusion in the discrete context of an ongoing strike.

Anthony M. Kennedy:

Oh, that would be an ongoing strike.

Lawrence G. Wallace:

Yes.

Yes, so–

Anthony M. Kennedy:

Surely you don’t mean that union membership, which imposes certain duties which can be enforced, I take it, by a cause of action for damages, et cetera, is grounds for nonemployment?

Lawrence G. Wallace:

–I would not anticipate that the board would readily expand Sunland Construction.

Anthony M. Kennedy:

Well, I would not anticipate the board could do that consistently with the National Labor Relations Act.

Lawrence G. Wallace:

Well, of course, that question would be subject to judicial review if the board attempted to do it.

What I’m trying to point out is that that is the proper analytical approach to questions of whether refusal to hire a particular person would be justified, but instead, this case has been litigated on a theory that these people are sort of outlaws ab initio, they’re not even employees within the meaning of the act, even though the employer did not know of the salting resolution or the compensation at the time it took the adverse action.

This is a way to get around the McKennon v. National Banner analysis for after-acquired knowledge.

You just say, well, they’re outlaws ab initio, now that we know this knowledge, and of course the knowledge itself has to be something disqualifying in order for the after-acquired knowledge to affect the remedy under McKennon v. National Banner, which the board said is not the case here anyway.

Stephen G. Breyer:

In deciding the definition of employee, should we defer to the board?

That is, I know Hearst did defer, and then in United Insurance, it said Congress amended the statute, but it amended the statute only in respect to an independent contractor, and the particular aspect of the employee definition here doesn’t involve that, and United Insurance talks about that, and so I was wondering, do you think maybe we should… maybe that deference notion is still alive, and I don’t know why it wouldn’t be in respect to other aspects of the definition.

Lawrence G. Wallace:

We argue that deference is appropriate here, as the Court stated quite explicitly in Sure-Tan.

We are dealing here with a situation in which both the board and the court of appeals looked toward various provisions of the Restatement of Agency to say what common law principles would shed light here.

The difference between them was not so much about what the common law principles are.

It was a difference about how those principles should be applied to a question of labor management relations in the context of the National Labor Relations Act.

Stephen G. Breyer:

Yes, but that’s exactly what’s bothering me.

Stephen G. Breyer:

I don’t want to say, if it’s not right, that the Restatement automatically governs in these nonindependent contractor-related areas.

If the board were to choose to go beyond it, I mean, a holding of this court that they couldn’t might be a problem, and that’s why I asked the question.

Lawrence G. Wallace:

Well, the common law of agency really does not answer the question of how do you apply these principles in the context of a labor management question under the National Labor Relations Act with its section 7 rights and its rights under section 8.

That is a question that implicates the board’s expertise.

There wasn’t a dispute about what are those principles.

They were both getting them out of the Restatement of Agency.

Ruth Bader Ginsburg:

Mr. Wallace, I thought your first argument, though, was that this statute has a plain meaning that everything that isn’t excluded is included.

If that’s the case, then you don’t have any question of deference, right?

Lawrence G. Wallace:

Well, I did point out one implied exception that the Court found in the Bell Aerospace case, and what I was about to say at that point in my argument was that the Court’s opinion in Sure-Tan, after saying that the undocumented aliens fall within the plain meaning, then went on to analyze whether the board’s interpretation that they should therefore be covered was consistent with the purposes of the act and entitled to deference, and agreed, after some discussion, that it was consistent with the purposes of the act.

Ruth Bader Ginsburg:

Is it Chevron deference, or some other kind of deference?

Lawrence G. Wallace:

Well, we like to think of it as equivalent to Chevron deference.

It is–

Ruth Bader Ginsburg:

But what is equivalent… you seem to be not wanting to put the Chevron label on it.

Lawrence G. Wallace:

–I’m very happy with what the Court said in Sure-Tan.

The task of defining the term employee… and I’m looking at page 891 of that opinion… is one that

“has been assigned primarily to the agency created by Congress to administer the act. “

and the Court went on to say, and I’m quoting from the Court’s opinion,

“the board’s construction of that term is entitled to considerable deference and we will uphold any interpretation that is reasonably defensible. “

William H. Rehnquist:

Did Sure-Tan come down before or after Chevron?

Lawrence G. Wallace:

That was before Chevron.

William H. Rehnquist:

Well, do you think Chevron has changed that principle at all?

Lawrence G. Wallace:

Well, only in it’s emphasis–

And if so, in what direction?

Lawrence G. Wallace:

–on the step 1 analysis that a statute may definitively answer the question on its face, which if that applies here would apply in our favor.

If I may reserve the balance of my time–

William H. Rehnquist:

Very well, Mr. Wallace.

Mr. Pease, we’ll hear from you.

James K. Pease, Jr.:

Mr. Chief Justice, and may it please the Court:

This case involves a question of whether the board, instead of protecting the freedom of employees to choose to be unionized or not to be unionized, departed from its role as impartial referee in the contest or conflict between employers and unions for the votes of employees, and interpreted section 2(3) of the act to give protected status to… of employee to union agents whose job was to be the arms, the eyes, the ears, and the voice of the union on the employer’s crew, and who were prohibited by contract from exercising–

Antonin Scalia:

Why is that inconsistent with the duty of the employer?

Antonin Scalia:

I mean, I thought that the whole theory of the National Labor Relations Act is that you can be a good employee and a loyal union member at the same time.

James K. Pease, Jr.:

–That’s correct.

Antonin Scalia:

I can understand if you have a duty to two employers with respect to the same act, you have a problem, but his duty to the employer related to one act, his duty to the union related to other acts, namely, his off-duty time in which he would be hire… be recruiting people to the union.

What’s bad about that?

James K. Pease, Jr.:

Your Honor, the… in the first place, the conduct was not limited to off duty.

Secondly–

Antonin Scalia:

Well, wait.

Doesn’t it have to be, under the Labor Relations Act?

I mean, you can fire them for that, can’t you?

Can he–

James K. Pease, Jr.:

–No.

Antonin Scalia:

–use his–

James K. Pease, Jr.:

In the first place, that distinction is only material if that person is an employee within the meaning of the act.

If a supervisor does it at any time, that person can be fired.

If someone is not… does not have the status of employee–

Antonin Scalia:

–Right.

James K. Pease, Jr.:

–they are not entitled to the protection of the act at any–

Antonin Scalia:

I understand.

I understand that.

Okay.

Well, go on.

James K. Pease, Jr.:

–The–

Ruth Bader Ginsburg:

Are you saying, then, if the identical arrangement were made between someone who was already hired by the employer, somebody who’s on the job, then becomes a paid organizer for the union in addition, that that person at that point would lose employee status?

James K. Pease, Jr.:

–I believe it would be a question of whether or not that person had agreed to subject themselves to the control of the union just like–

Ruth Bader Ginsburg:

Same thing… same thing, except it’s someone who is already on the payroll.

James K. Pease, Jr.:

–Yes, ma’am.

Ruth Bader Ginsburg:

In every other respect it’s the same.

James K. Pease, Jr.:

Yes, Your Honor.

I believe that the… it’s very similar to the issue of a worker who accepts the responsibilities of a foreman.

The question then becomes, have they taken on a different status, and it depends upon whether the control… whether the… this person who had been working as an employee agreed to change their job, to take as their primary function–

Ruth Bader Ginsburg:

Let’s not talk in the abstract.

The worker is doing the job, becomes a convert to the union, takes money from the union to organize during lunch time and work breaks, and that’s it, compensated for attempting to organize the shop.

Is that person no longer an employee?

James K. Pease, Jr.:

–I would submit that if that person had subjected themselves to the control of the union and had similar… had obligations similar to those that were imposed by the salting resolution in this case that would give the union primary control over what the person did–

Ruth Bader Ginsburg:

Let’s take the salting resolution out of it, and just have the compensation for organizing the shop, using… within the rules of shop using free time and lunch breaks.

James K. Pease, Jr.:

–I think that would be very much like the conflict of interest that a lawyer would have if they were trying to suspend their representation of one client to represent the opponent for a meeting or for a hearing.

I don’t–

Sandra Day O’Connor:

Well, you’re basically saying that even under those circumstances, the person could no longer be an employee within the meaning of the act.

I mean, that’s what it sounds like in your response.

James K. Pease, Jr.:

–If they accepted the… submitted–

Sandra Day O’Connor:

Well, what about a striking worker who accepts union… follows the union order to strike, accepts benefits from the union, and so forth, not an employee under your theory.

James K. Pease, Jr.:

–I disagree, Your Honor.

I believe that because that person was… had withdrawn his services from the employer, that there’s nothing… there is not a conflicting obligation on the employee.

Sandra Day O’Connor:

Well, how about the rank and file employee who is a union member, and who has already agreed in advance by being a union member that if the union requires him to strike, he will, and furthermore, if the union provides benefits during a strike, he’ll take them.

James K. Pease, Jr.:

I don’t… I believe that that’s an entirely different situation.

I don’t think that has anything to do with the type of situation that we have in here, where you have someone who is to be working for the union while working for the… actually on the job for the employer.

David H. Souter:

Well, in any case, I take it your answer, earlier answer that it’s the failure to limit his activities to off-duty time, I take it you withdraw that answer.

That hasn’t anything to do with your position–

James K. Pease, Jr.:

Your Honor, I didn’t mean–

David H. Souter:

–because… well, if I understood… I thought your answered Justice Ginsburg by saying, what if the employee comes… is already hired, the union says, we’ll pay you money to organize during the lunch breaks and the off time.

I understood you to say that that, in fact, would remove the person from employee status.

James K. Pease, Jr.:

–That’s correct.

David H. Souter:

Okay.

So there’s nothing about off-time or on-time which is essential to your position.

Your position is, no matter when he exercises these responsibilities to the union, the fact that he has them precludes his employee status.

James K. Pease, Jr.:

As long as that agency relationship and control exists, yes.

David H. Souter:

Right, so it’s got nothing to do, then, with on-time or off-time.

James K. Pease, Jr.:

Correct.

Antonin Scalia:

Why is that so?

All those shop stewards who have obligations to the union, do they remain employees, or not?

James K. Pease, Jr.:

If they are acting within the consensual relationship of the collective bargaining relationship, that’s–

Antonin Scalia:

But they’re doing work for the union, aren’t they?

James K. Pease, Jr.:

–That’s true, but that is normally covered by the collective bargaining relationship.

I believe there’s a Sixth Circuit case in Bechtel that said that where, in fact, the union controlled the steward, that it was a violation of 302 for the employer–

Antonin Scalia:

It seems to me that the theory of the act is that there’s no inherent incompatibility between obligations to the union and obligation to the employer, and I don’t know how to make the act work without adopting that–

James K. Pease, Jr.:

–I think that the distinction is based on, going back to the definition of employee.

The statute starts, the foundation of it is the word employee.

The circular definition incorporates the concept of the employment relationship, the agency relationship, and I believe that’s the distinction that Congress is making, is where there is this agency relationship that’s inconsistent–

Antonin Scalia:

–Why is it inconsistent?

I mean, that’s the problem.

It’s not inconsistent as to the work he’s doing for the employer.

James K. Pease, Jr.:

–It is, because–

Antonin Scalia:

If the union’s telling him to sabotage, you know, the machinery he’s working on, yes, that’s inconsistent, but the union’s not directing his work as to what he’s doing for the employer.

James K. Pease, Jr.:

–In the first instance, Your Honor, I believe that the motivation of the employee differs from the motivation of this… these union agents.

Union agents have no concern whatsoever about whether or not the employer likes them, or whether they’re doing good work for that employer, because they’re not dependent upon that employer’s compensation.

William H. Rehnquist:

Well, so all employees of General Motors are really concerned whether the employer likes them or not?

James K. Pease, Jr.:

No, Your Honor.

William H. Rehnquist:

That’s not an ordinary attribute of industrial employment, is it, is concern that the employer like you?

James K. Pease, Jr.:

No.

I… I don’t mean to say that.

What I was… meant to say was that the employee is amenable to discipline because they want to keep their job, and they’re concerned about getting a reference in the future, so they’re concerned about what the employer thinks about them, and they are amenable to–

Antonin Scalia:

But you could say that about anybody who has a second job, whether it’s with the union or not.

Indeed, you could say it about people who are independently wealthy and are working at GM just for the fun of it.

That doesn’t make them nonemployees, does it?

James K. Pease, Jr.:

–But I think that because you’re having them focus on simultaneously doing and serving conflicting interests, I think it’s that simultaneous conflict–

Ruth Bader Ginsburg:

But why is it necessarily–

–And that’s true even if they work full-time and perform all the duties the employers want them to perform, and earn their money.

James K. Pease, Jr.:

–Yes, sir.

John Paul Stevens:

Even if the employer never… it’s true if the employer doesn’t know about it, too?

James K. Pease, Jr.:

Yes.

John Paul Stevens:

If the guy never was an employee.

He worked there 5 years, he got paid every day, and build all the things he was supposed to build, he never was an employee because he had this secret loyalty to some other person.

James K. Pease, Jr.:

He never had been employed under the National Labor Relations Act because of that conflict, and that also points out the fact that he could very well–

John Paul Stevens:

Is it essential to your position that the conflict be with the union, or… say it was a competitor.

James K. Pease, Jr.:

–It’s the same conflict.

John Paul Stevens:

And what if he promised his wife he’d quit as soon as she told him to.

[Laughter]

It’s a dangerous job.

It could happen.

he’s a pilot.

James K. Pease, Jr.:

I don’t have a good answer for that, Your Honor.

[Laughter]

John Paul Stevens:

It seems to me it would be the same.

He’s not an employee.

Wouldn’t it be a rather bad organizer… if the organizer came there and didn’t do a good job, isn’t there… matching your incentive, I don’t care because I’m being paid by somebody else, in fact, isn’t there a harmony of these interests, because in order to organize, the union person has got to keep that job, and if he gives cause to be discharged, he’s not going to be a very effective organizer?

James K. Pease, Jr.:

I would submit that frequently it is the purpose of the union to have the organizer fired, so that they can file unfair labor practices, because if they can get the National Labor Relations Board to find that the employer is a violator and that there is substantial monetary damages, they can much more effectively and much more quickly get what their goal is, which is a labor agreement, than they can if they go through the democratic processes of the act.

David H. Souter:

They’re not going to do that very effectively if he is plausibly fired for bad work.

James K. Pease, Jr.:

Well… well, that may be true, that’s what happened in this case.

David H. Souter:

They want him to do good work but be obnoxious, isn’t that–

[Laughter]

I mean, isn’t that the way it works?

James K. Pease, Jr.:

I don’t think so.

David H. Souter:

No?

James K. Pease, Jr.:

I think that in this case there was substantial evidence that he did work poorly.

The administrative law judge discredited that–

Ruth Bader Ginsburg:

And that would have been cause for discharge–

James K. Pease, Jr.:

–Well–

Ruth Bader Ginsburg:

–and that’s a question of fact.

James K. Pease, Jr.:

–And the… the NLRB ruled against the employer, as they generally would in this sort of a case where there’s an overt organizer, because they would say that the employer is discriminating on the basis of known union activity.

Sandra Day O’Connor:

Well, Mr. Pease, presumably the employer could make a broad policy in hiring people that the employer won’t hire anyone who has a second job.

James K. Pease, Jr.:

That’s true, Your Honor, but–

Sandra Day O’Connor:

This employer didn’t have that rule.

James K. Pease, Jr.:

–That’s correct.

That is, in this day of limited skilled and technical people, that’s a very difficult policy to maintain, because there are many people who have no conflict of interest who would work, and be willing to work, and would perform a valuable service to the employer, and the employer is unable to utilize them if they have this broad, sweeping rule.

There’s also the problem of temporary employment agencies that frequently provide employees, or people to work, supplement the crews.

You’d be precluded from using them.

Anthony M. Kennedy:

I’d like to clear up just one small point.

Did I understand you to say that there is no such thing as a shop steward unless there’s a collective bargaining agreement?

James K. Pease, Jr.:

No, Your Honor, I didn’t.

Ruth Bader Ginsburg:

Suppose you had somebody who was a zealous union person, didn’t take a penny because he was just so devoted to the union, doesn’t want to take anything from the union treasury, doing the same thing that this person did, undertakes the job, said union, I’m going to use all my free time to proselytize for you, does that person lose employee status?

James K. Pease, Jr.:

No, Your Honor, I don’t believe so.

I think Congress made that distinction by incorporating the law of agency into the definition of employee.

That zealot, as I understand your fact situation, would not be acting as an agent of another party, and therefore would not be outside the definition of employee.

David H. Souter:

Why can’t you be an unpaid agent?

James K. Pease, Jr.:

You could be.

David H. Souter:

Well, then the answer to Justice Ginsburg’s question would be different, wouldn’t it?

James K. Pease, Jr.:

But I think there has to be the–

David H. Souter:

This is a zealot.

If the unpaid zealot doesn’t–

–Okay, it has to be a zealot with a contract, right?

[Laughter]

James K. Pease, Jr.:

–It has to be a contract.

Antonin Scalia:

Even if the contract is a peppercorn or nothing at all… a zealot with a contract.

James K. Pease, Jr.:

I believe–

Antonin Scalia:

Then you’d change your answer.

James K. Pease, Jr.:

–Yes.

Antonin Scalia:

Okay.

Are you going to stand on that?

James K. Pease, Jr.:

Yes.

Antonin Scalia:

Okay.

Antonin Scalia:

You better be careful.

[Laughter]

James K. Pease, Jr.:

I believe that the… under the Darden case, that this Court has held that when Congress uses a circular definition of employee, they intend to incorporate the law of agency into that definition, and I think that’s what they did in this case.

Antonin Scalia:

What do you find in the law of agency that contradicts… I mean, the Restatement?

I have the Restatement here somewhere.

I don’t find it inconsistent.

It says, a person may be the servant of two masters not joint employers at one time as to one act, if the service to one does not involve abandonment of the service to the other.

James K. Pease, Jr.:

That’s correct.

Antonin Scalia:

And you say here the one does involve… but you leave out the fact that it says, as to one act.

You can easily be the servant of two masters as to different acts.

James K. Pease, Jr.:

I believe that the concept there, though, is if that is a pervasive… if it is a general control that is being exercised by the union–

Antonin Scalia:

So long as it’s not a control over the act that he’s doing from the employer, for the employer… what control does the union exercise over the act that he is doing for the employer?

James K. Pease, Jr.:

–Okay, there are several areas of control.

First of all… and these, I think, illustrate the conflict.

One has already been mentioned… leaving.

It’s a critical time.

The salt must leave, the zealous union organizer at least may be amenable to a plea by the employer to stay, at least during the critical time, so they don’t get a bad reputation and have–

Antonin Scalia:

He has no obligation to the employer to stay.

I mean, if it were a term contract, yes.

Then he’d have a duty to the employer.

But all… by definition, the person who’s in an at-will contract has no duty to the employer to stay.

James K. Pease, Jr.:

–That’s correct, but they’re exercising their free will in making the change.

Here, it’s an order from the union.

I think that’s the basic distinction that Congress is making by their use of the circular definition.

Antonin Scalia:

So long as it’s not an order from the union that causes him to violate a duty to the employer, I don’t see how that changes his employee status.

James K. Pease, Jr.:

I don’t… I believe that it’s because it’s contrary to the interests of the employer.

It’s to the interests of the employer to have that employee continue to work during a concrete pour, or some other critical stage of the work.

If this is just a voluntary union organizer, that person may be amenable to persuasion from the employer about how critical that work is.

If it’s an agent of the union, they have no choice.

They have to leave immediately, and I believe that’s… I think that’s the distinction.

James K. Pease, Jr.:

The board argues that the statute includes the entire class of workers.

I don’t believe that’s the case.

I think that the board routinely makes distinctions between employees and nonemployees in enforcing, or interpreting this Court’s decision in Lechmere, and I think the Hearst case, referred to by the board, holds that Congress didn’t intend to have a sweeping inclusion of a class of employees, and I think that the Sunland exceptions that was discussed earlier is really insupportable.

I don’t think that there’s a valid distinction between what the union agent can do in a nonstrike setting as compared to what they would do in a strike setting.

I think that the analysis is the same, and I think that that illustrates the invalidity of the board’s position in this case, and indeed–

John Paul Stevens:

Would you tell me about the Sunland case?

Did the Sunland case hold that the people involved were not employees, or that it was not an unfair labor practice to discriminate against–

James K. Pease, Jr.:

–It was that the employer had no duty, they did not specifically say that they were not employees, but I believe that the analysis is the same analysis that I’m urging.

It’s essentially an agency relationship.

John Paul Stevens:

–Let me also clarify one thing in my own mind.

In this case, there was one person who actually went to work for the employer, and there are seven or eight who never got hired, as I remember it.

You don’t draw a distinction between those two.

You don’t challenge the Phelps Dodge case, in other words.

James K. Pease, Jr.:

No, I… the Phelps Dodge case, I think that if they would have been a bona fide employee as–

John Paul Stevens:

If they’d been hired.

James K. Pease, Jr.:

–If they were employed, they would be bona fide applicants.

If they’re not… they wouldn’t be, then they wouldn’t be bona fide.

John Paul Stevens:

So it’s the same rule as to both groups.

James K. Pease, Jr.:

Yes.

John Paul Stevens:

Yes.

James K. Pease, Jr.:

Yes, Your Honor.

Antonin Scalia:

But it is the Government’s position that you not only… well, you cannot refuse to hire these salts.

Isn’t that the Government’s position?

James K. Pease, Jr.:

Yes, Your Honor.

Antonin Scalia:

That going in you shouldn’t… you can’t turn down the other seven just because you know that they’re union salts.

James K. Pease, Jr.:

That is my understanding of their position.

Ruth Bader Ginsburg:

Well, what is your position on whether any deference is owed to the NLRB in defining a term used in the NLRA?

In this case, the term is employee.

James K. Pease, Jr.:

I believe that the board is due deference when their interpretation is reasonable and consistent with the policies of the act.

I do not believe that it’s reasonable for the board to exclude the definition… from the definition of employee the law of agency.

James K. Pease, Jr.:

I believe if you read the definition of the law of agency, the Congress intended to retain the core of the employment relationship as the basis for protection under the act, and I think that the analysis that they have used in effect would even exclude the managerial employee, and I don’t see that as being–

Ruth Bader Ginsburg:

But you said that employee is not self-defining.

Have you said that?

The word, employee.

James K. Pease, Jr.:

–I believe that by including a circular definition, they did intend to include the law of agency into the definition of employee, and I–

Ruth Bader Ginsburg:

Is there room for… any room for interpretation, or does the word employee have a plain meaning?

James K. Pease, Jr.:

–I do believe there is room for interpretation, and I believe that Congress did intend to expand on the law… on the law of agency by adding the language that it’s not limited to an employee of any particular employer, because I think they wanted to include employees in several different… with several different employers in an industry.

Ruth Bader Ginsburg:

So your position is, there’s room for interpretation, but this particular interpretation is unreasonable.

James K. Pease, Jr.:

That’s correct, and I believe… one of the reasons that I think it is is that when Congress went on to explain in the definition of employee, they said that it included individuals who were out of work, or whose work ceased because of a current labor dispute, or an unfair labor practice, and who had not obtained regular and substantially equivalent employment, which implies that there are other situations which would not be included, and it seems to me that what it does is, it shows that they were trying to take… retain the core.

Plus I believe that I think that the board’s decision in this case is inconsistent with the policies of the act.

I believe that the act says that the purpose… its purpose is to protect the right to organize, and the board at page 8 of its brief says that they interpret it as, that it’s to promote organization, and I would submit that what the board is doing in that situation is it is saying that there is a preferred choice, and that they are going to go out and support that, and to give the status of employee to a person who’s contractually prohibited from exercising the rights of an employee under section 7 of the act, and I think that that’s inconsistent with the 1947 amendments to the act that said that employees had the right to refrain from any of those activities.

I think that that set up two equally acceptable choices, and the board was supposed to be an impartial referee, and I believe in this case, they have moved from that position, and for that reason I don’t think that they have due deference.

William H. Rehnquist:

How again do you think the board is partial here, as opposed to being neutral between organizing and nonorganizing?

James K. Pease, Jr.:

Well, I think that what they’re doing is, they’re giving their stamp of approval in requiring the employer to put the union on the employer’s crew.

This person is an agent of the union, and they’re requiring to put him on the crew, which could mean that if he’s not detected, he could pack the unit, or they could… the union in effect is buying votes, or the employees are deceived into believing that this is someone who is sincerely expressing their own personal convictions and in fact they’re doing it for pay, or this person may even engage in–

William H. Rehnquist:

What if some person who seeks employment wants to try to decertify the union?

He’s not a member of the union.

He’s just trying to decertify it, if the board applied the same standard to them as they do to the salted organizer, they would be impartial, would they not?

Granted there may not be too many of the former species.

[Laughter]

James K. Pease, Jr.:

–Well, I think the issue would only come up if this person was acting on behalf of some third party and there was an agency relationship–

John Paul Stevens:

A rival union, perhaps.

James K. Pease, Jr.:

–I’m sorry?

John Paul Stevens:

A rival union, perhaps.

James K. Pease, Jr.:

That’s true, very possible, and that is a point I would like to make.

This is something that doesn’t just apply, or the holding in this case will not just apply in the construction industry, if I’m understanding the board’s position.

This could apply in all industries, and it could apply in a situation where the fact… the employer was already unionized by one union and it could be another union that’s coming in to try to take it away.

I think that the point that has been made… it’s made in Willmar, and it’s a point that I would like to address.

I touched on it earlier.

I believe that the board is assuming that the union agents are entitled to the protection of the act, and that their analysis begins with the premise that these people are employees and entitled to the protection of the act, and then the question becomes, have they done something to lose that protection?

James K. Pease, Jr.:

I would submit to you that it is inappropriate to assume that they are employees and to make this status determination as we make it in other instances of supervisors, independent contractors, make that independent of the presumptions of protected activity, independent of the motive of the employer for engaging in activity that raises the question.

It’s a status question, and therefore we would submit that it’s inappropriate.

Oh, just one more comment.

I think that the control that the union exercised over the union agent in this case is illustrated by the supernatural persistence he displayed in soliciting Town & Country employees in the face of repeated rejection.

These employees were so upset by the pressure that the union agent was putting on them that they were on the verge of quitting, and this is another way that the union can be effective without going the high road, because they can focus on those employees who are opposed to unionization and in effect force them off the work force, which means either that they will be replaced by someone who might be more favorable, or that they may make it impossible for the employer to perform, and that nonunion employer is off the job.

William H. Rehnquist:

That requires a thoroughly obnoxious organizer, I guess–

[Laughter]

–who is apt not to have much success, I would think, in organizing for the union.

James K. Pease, Jr.:

But the problem is, Your Honor, that frequently the objective is not to organize in the classical sense.

I think that is another fallacy.

It is not appropriate to assume that the objective may be to organize.

The objective may be, as suggested by Joel Harmatz in the Sunland case, to inflict economic pain, so that they can get leverage on the employer to force them to sign a contract or keep them out of the area, and that unfortunately is what we find frequently happens throughout the case.

I do want to emphasize that I believe the Sunland case, the board’s analysis in that case is insupportable, and I believe that using a similar analysis, an analysis that we espouse, that the law of agency should be used to interpret the status of people and determine whether they’re entitled to the protection of the employees, and that the board should abandon this position and should return to a position of impartiality that was intended by Congress.

Thank you.

William H. Rehnquist:

Thank you, Mr. Pease.

Mr. Wallace, you have 4 minutes remaining.

Lawrence G. Wallace:

Thank you.

Antonin Scalia:

Mr. Wallace, before you even start, I have… the one thing that sticks in my craw a little bit about this case is not the necessity of treating this person as an employee, that’s fine, but the inability not only not to fire the person knowing that he’s on the union payroll, but even the inability to refuse to hire the person knowing that he’s on the union payroll.

Why must they be the same question?

Is there any way that I can agree with you on the employee question but not necessarily believe that the salt has to be hired if the employer knows going in that this person who wants to be his employee is on the union payroll?

Lawrence G. Wallace:

Well–

Antonin Scalia:

What would make it unlawful to refuse to hire him, or to fire him, for that matter?

Lawrence G. Wallace:

–8(a)(1) and 8(a)(3) protect against coercion or intimidation in the exercise of the rights–

Antonin Scalia:

–the rights guaranteed in section 157.

Lawrence G. Wallace:

–Right.

Right.

Antonin Scalia:

Does that include the right to be employed by a labor union?

Lawrence G. Wallace:

Well, it includes the right to participate in the union and to comply with its voluntary rules, so–

Antonin Scalia:

He has no problem with that.

Lawrence G. Wallace:

–long as the member wants to do that.

Antonin Scalia:

He has no problem with all that.

The employer says, you know, I have no problem with all that.

I just don’t want you to be on the union payroll.

Lawrence G. Wallace:

Organizational activity is an important part of a union’s functions.

Antonin Scalia:

I have no problem with that.

I just don’t want you to be on the union payroll.

Lawrence G. Wallace:

Well, that is–

Antonin Scalia:

You want to conduct organizational activity, you know, God bless you, but I do not want a worker who is on the union payroll.

Lawrence G. Wallace:

–That–

Antonin Scalia:

It seems to me a perfectly reasonable position for an employer to take.

Lawrence G. Wallace:

–It may be a reasonable position, but it is a position that interferes with the union’s ability to conduct its protected activities.

In any event, that question wasn’t even put to the board by the respondent in this case.

Antonin Scalia:

That’s a separate question, though, from whether he’s an employee.

Lawrence G. Wallace:

That’s correct–

Antonin Scalia:

Once he’s hired.

Lawrence G. Wallace:

–it is a separate question, as the Sunland decision illustrates, but the board made its views on that question quite clear in this case.

I do want to mention that there is one paragraph in the board’s opinion, and this is not the ALJ’s opinion, it’s the board’s own opinion on page 37a of the appendix to our petition, that responds very succinctly to the contentions made by the respondent and its amici which were made before the board that paid union organizers will engage in activities to the detriment of work assigned by the employer or will embark on acts inimical to the employer’s legitimate interests, and the board said, we do not agree, and then there are several more sentences that specifically reflect the judgment of the board in response to this, and the complete lack of evidentiary support for the speculations in this case.

And one is left with the question in this case that first occurred to me when the case came to our office, if a journeyman electrician working under the direction and control and according to the work rules and on the payroll of an employer covered by the act is not an employee, what in the world is he?

He’s not in domestic service or an independent contractor or supervisor.

William H. Rehnquist:

Thank you, Mr. Wallace.

The case is submitted.

The honorable court is now adjourned until tomorrow at ten o’clock.