April 18, 2012, Republished by <i>Law360</I>, May 30, 2012

Dangers of Improper Labeling: Seventh Circuit Upholds NLRB Ruling Finding “Supervisor” to Be an “Employee”

Holland & Knight Alert
Howard Sokol

Employers rely a lot on labels and titles when classifying employees. But the U.S. Court of Appeals for the Seventh Circuit recently reminded employers that it’s what the employee actually does that matters, and not what the employee is called or how he or she is officially listed in company records.

In Rochelle Waste Disposal, LLC v. NLRB (7th Cir. No. 10-3212, March 8, 2012), the Seventh Circuit ruled that despite his title, a “landfill supervisor” was not a supervisor within the meaning of the National Labor Relations Act (NLRA, or the “Act”) because he did not actually exercise supervisory authority over any other person at the company. As a result, the employee was protected by the Act and his termination by Rochelle Waste eight days before a union representation election was found to be an unlawful discharge in retaliation for his union organizing activities.

Firing in Rochelle Waste Found to Constitute Retaliation for Union Organizing

NLRA Definition

As a general matter, “supervisors” as defined under the Act are not entitled to unionize or exercise other rights under the Act. A “supervisor” is an employee who has

authority, in the interest of the employer, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibly to direct them, or to adjust their grievances, or effectively to recommend such action, if in connection with the foregoing the exercise of such authority is not of a merely routine or clerical nature, but requires the use of independent judgment.

An individual has the authority “responsibly to direct” other employees if he or she is accountable for the performance of those other employees such that he or she will be subject to adverse consequences if the other employees do not perform their tasks properly. Under the Act, in a contested matter, an employer has the burden of proving that an employee is a supervisor.

Landfill Supervisor’s Employment with Rochelle Waste

Jeff Jarvis worked for Rochelle Waste as a “landfill supervisor” for three years. He reported directly to a co-owner of Rochelle Waste and was one of only two employees of the company who possessed the special Illinois certification necessary to direct landfill operations and supervise employees. But although he occasionally commented upon and paid attention to the work of others, Mr. Jarvis did not correct, nor was he ever held accountable for, the actions or work of any of Rochelle Waste’s other employees. Rather, he commented on the performance of others only to the extent that their work affected his ability to carry out his own regular job duties, which included servicing equipment, hauling dirt, grinding waste and seeding slopes. Also, although the co-owner of Rochelle Waste complained to Mr. Jarvis on the poor performance of others, Mr. Jarvis was not held accountable for their performance.

Union Election Followed By NLRB Filings

In August 2006, Mr. Jarvis and two other employees signed union authorization cards seeking representation at the company by the International Union of Operating Engineers, Local 150. The union filed a representation petition seeking an election and Rochelle Waste sought a hearing before the NLRB, challenging the proposed bargaining unit, i.e., Rochelle Waste’s heavy equipment and scale operators. The company argued that Mr. Jarvis could not be included in the bargaining unit because he was a supervisor. Ultimately, the NLRB Regional Director found that Mr. Jarvis was not a supervisor within the meaning of the Act, included him in the bargaining unit of five employees and scheduled an election for February 1, 2007.

In January 2007, Rochelle Waste had five permanent employees, including Mr. Jarvis. Eight days before the scheduled election, the company informed him that he was being terminated as part of a reduction in force. Mr. Jarvis nonetheless voted in the February 1 election, which resulted in a 3-2 vote in favor of unionization. His vote was determinative. A hearing combined Rochelle Waste’s challenge to Mr. Jarvis’s ballot, asserting that he was not an employee, with the union’s challenge that the company unlawfully fired Mr. Jarvis in retaliation for his union activities. The hearing resulted with an administrative law judge determining, later affirmed by the NLRB, that Mr. Jarvis was not a supervisor and that his termination violated the Act.

Seventh Circuit Upholds NLRB Ruling

Rochelle Waste asked the Seventh Circuit to overturn the Board’s rulings, including its finding that Mr. Jarvis was not a supervisor. The Seventh Circuit, however, agreed with the Board that Mr. Jarvis did not have “responsibility to direct” any of Rochelle Waste’s employees. The court stated that an individual has responsibility to “direct” others when such person is charged with taking actions to “correct” the actions and work of others and, in doing so, is ultimately responsible for the work of others.

No Corrective Action

The court agreed that Mr. Jarvis did not have the authority to correct the work of others. The few examples where he instructed employees regarding their work were not sufficient indicia of supervisory status because his actions did not have “force behind it or place [even] some ‘small burden on the employee. ‘ “ In addition, the court emphasized that Mr. Jarvis did not take corrective action when one of the owners told him of performance issues with a number of employees, further showing he did not have supervisory authority.

No Accountability

Mr. Jarvis was never subject to “adverse consequences” because of the work of others allegedly under his supervision, and the court agreed that he was not held accountable for them. A few verbal reprimands from the co-owner were insufficient to show accountability, because Mr. Jarvis never actually suffered any detriment. The court rejected the employer’s argument that the mere risk of adverse consequences was sufficient, stating that “[w]here a lower level employee performs inadequately, and the purported supervisor is in fact not held accountable, it highly supports a finding that the purported supervisor is not actually at risk of suffering adverse consequences.”

The court also rejected the argument that Mr. Jarvis’s Illinois solid waste site operator’s certificate permitting him to supervise others showed he was accountable for the poor work performance of others. An employee’s status as a supervisor under the Act, the court explained, involves a separate inquiry, and “ ‘paper accountability,’ “— accountability in name or job description only — is by itself insufficient to establish supervisory authority, the court said. Specifically, it noted that there was no evidence that the license was a condition of Mr. Jarvis’s employment or that “holding the license actually correlated to accountability under the [Act].”

Evidence of Retaliation

Having agreed with the Board that Mr. Jarvis was not a supervisor but rather an employee under the Act, the court further agreed that substantial evidence supported the conclusion that he was fired “in retaliation for his union organizing activities. . . . . [and that] . . . antiunion animus was a substantial or motivating factor” in Rochelle Waste’s decision.

The facts showed that Rochelle Waste knew that Mr. Jarvis was involved in efforts to organize the union, protected activity under the Act, for many months before he was fired. Both the NLRB and the Board found Rochelle Waste’s claim to have multiple legitimate business reasons for firing Mr. Jarvis at the time it did to be conflicting and not credible. The knowledge of Mr. Jarvis’s union activity, plus the inability to demonstrate a credible reason for his discharge, allowed a finding that he was unlawfully terminated for his union activities.

A Cautionary Tale

This case should serve as a stark warning to employers, particularly small businesses, that intend to strategically rely on certain of its employees, those it calls or considers to be supervisors, in opposing unionization or in defending against unfair labor practice charges.

The lesson here — one that Rochelle Waste learned too late — is that an employer must not rely on a label or job title but must instead examine the employee’s actual duties and day-to-day activities in order to ensure that the employee is a supervisor under the Act. To be a supervisor, the employee must have and actually use the authority to responsibly and meaningfully direct those employees under his or her charge. Those employees an employer contends are supervisors within the meaning of the Act must also take corrective action with regard to deficient work of others, with themselves at risk for adverse consequences for the substandard work of others.

This article was also published in the May 30, 2012 edition of Law360 (Expert Analysis). View the Law360 article. (Subscription required).

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