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Court Finds NLRB Denied Contractor Association Due Process in Striking Down Applicant and Employee Referral Programs

Thu, 07/18/2013 - 12:18

The U.S. Court of Appeals for the Fifth Circuit (LA, MS, TX) has refused to enforce a National Labor Relations Board (NLRB) order finding that the Houston chapter of the Independent Electrical Contractors (IEC) was operating an applicant referral service unlawfully.  As reported in a , the IEC offered a centralized employee applicant referral system to its member contractors.  The system operated much like a union hiring hall but without union involvement.  IEC advertised for electricians, accepted and handled employee applications, and then provided them to member firms looking to hire.  IEC also offered members a “shared man” program.  This service enabled members in need of additional electricians to “borrow” employees from other members with less work for up to 60 days.  As part of the COMET campaign conducted in the 1990’s, “salts” working for the International Brotherhood of Electrical Workers (IBEW) filed over 200 applications through the IEC referral service.  None of the salts was hired.  After the IBEW filed unfair labor practice charges, the NLRB general counsel issued complaints alleging that IEC’s programs discriminated against the hiring of union members and salts in violation of Sec. 8(a)(3) of the National Labor Relations Act (NLRA).  An administrative law judge agreed.  However, when the Board reviewed the decision, it chose not to adopt the administrative law judge’s 8(a)(3) findings.  Instead, the Board found that the referral system violated NLRA Sec. 8(a)(1) because it tended to interfere with the NLRA rights of union members and salts, including their right to seek employment on equal terms with other applicants.  The court found that the Board committed a fatal error in changing its liability theory on appeal.  The Board denied IEC due process of law and misapplied its own precedents by applying a novel theory “against which the accused party had no notice or opportunity to defend,” the court held.  This rendered the Board’s findings of a violation unenforceable.  Because the court rested its decision on procedural grounds and did not address the merits of the Board’s 8(a)(1) conclusions, 51���� chapters and others operating or considering programs similar to the IEC programs at issue here should continue to proceed with caution and to seek the advice of qualified labor counsel.  , Case No. 10-60822 (5th Cir., 6/17/2013).