Supreme Court Ambushes Employers on Agency Rulemaking

By Jon Hyman

Mar. 10, 2015

Yesterday, the U.S. Supreme Court unanimously held that the Department of Labor’s Wage and Hour Division had the authority to alter its prior interpretation of the Fair Labor Standards Act’s administrative exemption and exclude mortgage-loan officers from its coverage. The decision—Perez v. Mortgage Bankers Assn. [pdf]—is an interesting read if you are into administrative law, agency rulemaking, and the difference between “legislative rules,” which an agency only can issue through formal notice-and-comment rulemaking, and “interpretative rules,” which do not carry the force and effect of law and which an agency can adopt on a whim.

The Supreme Court could have used the opportunity presented by Perez v. Mortgage Bankers Assn. to rein in federal agencies that are emboldened with power. It did not take that bait, even though Justice Scalia, who concurred in the result, had some harsh words for federal agencies that legislate instead of regulate:

Because the agency (not Congress) drafts the substantive rules that are the object of those interpretations, giving them deference allows the agency to control the extent of its notice-and-comment-free domain. To expand this domain, the agency need only write substantive rules more broadly and vaguely, leaving plenty of gaps to be filled in later, using interpretive rules unchecked by notice and comment.

This issue is of critical importance, considering the NLRB’s “ambush election” rules, which take effect on April 14. These rules will:

  • Require that most union representation elections be held 10 – 21 days after a petition has been filed, robbing employers of the opportunity to deliver their message to employees.
  • Defer disputes over voter eligibility until after the election.
  • Expedite pre-election hearings.
  • Mandate that employers provide more expensive employee contact information.

If federal courts must show broad deference to administrative rulemaking, as Perez v. Mortgage Bankers Assn. suggests, employers do not stand much of a chance to block these “ambush election” rules, even as lawsuits are filed and legislation pushed.

If these ambush rules are a fait accompli, what can employers do to minimize the risk of being on the losing end of a union organizing campaign? I advocate the TEAM approach to union avoidance.

          Train supervisors
          Educate employees
          Affirm the open door
          Modernize policies

1. Train Supervisors. If a union is organizing, supervisors are likely to be the first people to know. They will also be the people that rank-and-file employees will come to with questions or concerns. Thus, supervisors need to know how to report, monitor, and legally respond to union activity.

2. Educate Employees. Employees should not be told that the company is anti-union, but why it is anti-union – competitive wages and benefits; positive communication between management and employees; history of peaceful employee/management relations; management’s openness to listen to employees and handle their concerns without an intermediary; and an unwillingness to permit a third-party to tell the company and employees how to do their jobs.

3. Affirm the open door. Management should routinely round its employees to learn what is happening and what they are thinking. Management should walk the floor on a daily basis. It should also hold regular meetings with employees, whether in small sessions with HR or large town hall-style meeting.

4. Modernize Policies. In an ideal world, employee handbooks and other corporate policies should be reviewed and updated annually. I’ve yet to come across a company that does so this frequently. The threat of the EFCA is a perfect excuse to take a good, hard look at current policies. Do you have a written statement on unionization? An open door policy? An issue resolution procedure? Peer review? An employee bulletin board? An electronic communications policy? Most importantly, do you have a no solicitation policy? It is the single most important policy to help fight labor unions.

Because employers will no longer have the opportunity to run an meaningful campaign after a union files its representation petition, it is essential that employers address these issues proactively before a union talks to even one of your employees.

To learn how to deploy this critical strategy in your workplace, contact one of Meyers Roman’s labor and employment attorneys.

Jon Hyman is a partner in the Employment & Labor practice at Wickens Herzer Panza. Contact Hyman at

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