By G. Phillip Shuler

The month of March will go down as very important in the development of the law regarding the application of employer hiring policies in the context of paid union organizers (i.e. salting). Three courts of appeals decisions and one NLRB decision addressed the question of whether employer policies or conduct resulted in discrimination against paid union organizers.

In one case, Contractors' Labor Pool v. NLRB (D.C. Cir. March 28, 2001), the court, reversing the NLRB, upheld an employer's policy not to hire applicants whose previous rates of pay were 30 percent above or below the employers' starting wage rate.

Based upon a worker retention study it conducted, Contractors Labor Pool (CLP), a labor supplier, concluded that applicants who previously earned substantially higher wages would soon become disaffected with their jobs and quit. After completing the study, CLP saw its retention rate increase from 57.6 percent to 63.9 percent.

The court concluded, as did the NLRB, that CLP's 30 percent rule was not motivated by antiunion animus and that CLP had pursued the legitimate business objective of improving its employee retention. The court also found that the NLRB cannot conclude that CLP's motive was benign and then hold that it unlawfully discriminates against union applicants. CLP treated union and nonunion applicants the same under its 30 percent rule and evidence was lacking that, in all markets, union rates were 30 percent higher than CLP rates. In the absence of such proof, the court refused to address the NLRB's holding that CLP's policy was inherently destructive of union rights given the board's finding that the policy was not motivated by antiunion animus.

In an analogous case published April 7, Walton & Company Inc., 334 NLRB No. 101 (July 25, 2001), the board itself held that an employer did not violate the act when it maintained a policy of not hiring applicants who had a history of receiving wages higher than those the employer paid its employees and when it refused to hire four applicants based on the policy.

The board declined to find that the employer's policy was inherently destructive of union rights since the Administrative Law Judge had found that the evidence did not permit a finding as to the severity of impact resulting from the policy.

In the Second Court of Appeals decision, Int'l Union of Operating Engineers v. NLRB, (7th Cir., March 28), the court upheld an NLRB finding that an employer's policy of giving hiring preference to former employees and referrals from existing employees was lawful under the act even where there was evidence of antiunion animus. Under the employer's policy, referral applicants could apply at any time without an appointment but nonreferrals could only apply when the company was hiring and then only on Mondays.

The court agreed with the board's finding that the employer would not have hired any of the union applicants under its nondiscriminatory, preferential hiring policy notwithstanding its antiunion animus. The court rejected the union's argument that the employer's preference for applicants referred by an EEO service provider pursuant to a conciliation agreement with U.S. Department of Labor was discriminatory since such preference system predated the union's salting campaign.

The employer's changing of its hiring practices to make it more difficult for union applicants was evidence of antiunion animus but was insufficient to overcome the employer's evidence that it would not have hired the union applicants under its nondiscriminatory hiring policy under which it had hired no walk-in candidates whether or not they were union members.

In the CLP case discussed above, the court upheld the board's ruling that CLP unlawfully discriminated against two union salts, including the local union president, who had been hired by CLP. The court affirmed the NLRB's finding that CLP had not proven that the two union salts had engaged in a "disabling conflict" by talking about the benefits of unionization and passing out union literature.

The Court noted that in Casino Ready Mix Inc. v. NLRB, (D.C. Cir. March 14), it had recognized that employees who engage in conduct inimical to the employer's legitimate business interests may be unprotected. The court here concluded that CLP had not terminated the salts because of their alleged disabling conflicts (an effort to generate litigation costs or drive CLP out of business) and hence could not rely on the defense to defeat the discrimination claims.

In Casino Ready Mix, supra, the court also rejected the employer's "disabling conflict" defense based on evidence that union organizers (salts) applied for jobs with other employers after applying at Casino Ready Mix, engaged in short economic strikes while working for the employer, and encouraged workers to leave the employer's employ to work for a union contractor (stripping).

The court recognized that some activities may result in a disabling conflict and be unprotected.

Examples of these activities are seeking work from their employer while engaged in an economic strike against their employer or if the purported organizational activity is a subterfuge used to further purposes unrelated to organizing, undertaken in bad faith, designed to result in sabotage or designed to drive the employer out of the area or out of business.

The court found the employer's evidence, which itself was protected activity, was insufficient to establish a disabling conflict.

Editor's Note: G. Phillip Shuler is a partner in the New Orleans office of Chaffe, McCall, Phillips, Toler & Sarpy.