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Hobbs Straus lawyers assisted in the negotiation and completion of $35 million revolving credit note from a financial institution for a tribe and subsequent negotiation and completion of the re-financing of the revolving credit loan.

General Memorandum 16-067

General Memorandum 16-067
ALJ holds National Labor Relations Act Applies to Tribe in Employee Bonus Case

On October 11, 2016, an administrative law judge (ALJ) for the National Labor Relations Board (NLRB) ruled in favor of a union against a tribe involving a labor dispute. The dispute in Viejas Band of Kumeyaay Indians v. United Food and Commercial Workers Local 135, centered on the decision of the Viejas Band of Kumeyaay Indians (the Tribe), which operates the Viejas Casino, to award lower annual bonuses to casino workers who were members of the United Food and Commercial Workers Union (UFCW). The Tribe claimed that the decision to award a lower bonus to union members was intended to equalize salaries between union and non-union members, as the UFCW employees received a higher salary than their non-union coworkers. The union alleged that the payment of lower bonuses to union members (1) was an unfair labor practice because it discriminated against employees by discouraging union membership in violation of section 8(a)(3) of the National Labor Relations Act (NLRA), and (2) was reached without first bargaining under the union contract in violation of section 8(a)(5) of the NLRA.

The ALJ first concluded that the Tribe did not discriminate against union members simply because it chose to pay lower bonuses to them. The ALJ said that she could not find evidence that the Tribe was motivated by an anti-union purpose. The ALJ also concluded that the Tribe's conduct was not inherently destructive of its employees' interests. Thus, the Tribe did not violate section 8(a)(3) of the NLRA. The ALJ, however, did conclude that the annual bonuses are a subject covered under the collective bargaining agreement between the Tribe and the UFCW that required bargaining before any changes could be made. The ALJ ruled that the Tribe’s decision to award lower bonuses to union members was a unilateral change and thus in violation of the Tribe’s duty to bargain under section 8(a)(5) of the NLRA.

The ALJ rejected the Tribe's argument that it was not subject to the NLRA in the first place and affirmed the jurisdiction of the NLRB over Indian casino operations first set forth in the NLRB’s 2004 ruling in San Manuel Indian Bingo & Casino, 341 NLRB 1055 (2004), upheld by the U.S. Court of Appeals for the District of Columbia in San Manuel Indian Bingo & Casino v. NLRB, 475 F.3d 1306 (D.C. Cir. 2007). The ALJ wrote that after San Manuel "the Board has repeatedly asserted jurisdiction over Tribal-owned and operated casinos." She also called the Tribe’s casino "a commercial enterprise in interstate commerce that plays no direct role in ‘intermural matters’ such as tribal membership, inheritance rules and domestic relations." Finally, she rejected the Tribe's assertion that the NLRA should not apply because the Tribe has enacted its own Tribal Labor Relations Ordinance.

The ALJ ordered the Tribe to rescind its policy to award differing bonuses and to pay union members an amount equal to the difference in bonuses. The Tribe remains free to bargain with the UFCW for new bonus amounts that take into account any difference in base pay.

Please let us know if we may provide additional information regarding the National Labor Relations Act.

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Inquiries may be directed to:
Joe Webster (jwebster@hobbsstraus.com)
Starla Roels (sroels@hobbsstraus.com)
Chris Stearns (cstearns@hobbsstraus.com)

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