Casino Enterprise Management

As casino owners know, operating “the house” is expensive. Casinos are faced with enormous costs, including building new facilities, buying the latest gaming equipment and adding restaurants, shows and other expensive entertainment. But more than any other cost, the biggest expenditure that a casino makes on a daily basis is its workforce. Running a casino requires hiring hundreds, sometimes thousands, of employees. To attract the best workforce, casinos must pay competitive wages and benefits. The legal requirements associated with employing hundreds or thousands of people also impose a significant cost. Employing a large workforce triggers compliance with a cacophony of labor and employment laws, including the National Labor Relations Act (NLRA). More than other laws, the NLRA can impact a casino’s workforce on a systemic basis.

Take, for instance, a non-union casino suddenly faced with an organizing drive. The casino is now dealing with a daunting issue that can impact the company’s employees—and bottom line—for years.

As a result, casino operators must be aware of NLRA changes. The National Labor Relations Board, the federal agency that administers the NLRA, recently decided several cases and issued new administrative rules, all of which impact casinos because they so clearly “tilt the balance” in favor of labor unions. For non-union casinos, it is now easier than ever for a labor union to begin the unionization process. For unionized casinos, the NLRB has changed long-standing rules on collective bargaining and strikes, both of which provide unions more leverage. While these developments are concerning, employers who are attentive to the law and have enlightened approaches with their employees can continue to operate with flexibility and efficiency.

NLRB Changes Threaten Non-Union Status
Most non-union casino operators would prefer to stay that way. Most importantly, unionization inhibits the employer’s ability to deal directly with its workers. Whereas a non-union company can easily have employees switch shifts or locations or adjust pay and benefits to market realities, a unionized company frequently must first consult with a labor union to make such adjustments. Some unions understand the business issues and work with you; others do not. Recent changes from the NLRB make it easier for a labor union to come into a non-union casino and organize its employees.

Faster Union Elections
One factor tilting the balance in favor of union organizing is the NLRB’s new emphasis on expediting union elections. In an NLRB election, a union first must obtain signatures from 30 percent of the employees it seeks to represent. The union then submits a petition to the NLRB.

Traditionally, about six weeks after the petition is filed, the board conducts a secret ballot election. If a majority of those who vote cast their ballot in favor of unionization, the labor union will represent all employees in the classifications eligible to vote. The full six-week time period is critical to allow information sharing between the employer and employees. Often times, employees only hear one side of the story. The six-week period gives casinos the chance to present a balanced view. Further, legal issues concerning proper voting units and voter eligibility can be resolved before the election.

The net effect of the new rules is a shortening of the election period to four to five weeks. Losing as much as two weeks to communicate will severely hurt a casino’s ability to present both sides of the story. The chances of union victories in NLRB elections have increased as a result. The rules also curtail the ability to appeal rulings to the board before an election, possibly leaving unresolved questions and ambiguities concerning voter eligibility at the time of the vote.

Bargaining Unit Determination
That’s not the only bad news. A critical issue in any union election is the bargaining unit determination. A “bargaining unit” is the group of employees that will vote on unionization. Traditionally, unions prefer smaller groups of employees (they’re easier to organize), whereas management prefers a larger cross-section of the workforce to have a voice in the unionization question. In determining the bargaining unit, the NLRB used a “community of interest” test, which examined a variety of factors, including whether the workers were engaged in the same type of work, interacted with other workers, or received similar pay and benefits. The board also looked at other groups of employees not in the proposed bargaining unit and considered whether the proposed employees have a community of interest that was “separate and distinct” from excluded employees. In short, the board acknowledged the NLRA’s statutory admonition in § 9 (c) (5) that bargaining units should not be carved out based on the extent of the union’s organizing success.

Consistent with this approach, in a victory for casinos last year, the NLRB in the Wheeling Island Gaming Inc. decision found that a proposed bargaining unit of only poker room dealers was not an appropriate bargaining unit. The board held that the dealers did not share a “community of interest” that was “separate and distinct” from “craps, roulette and blackjack dealers.”

But less than a month later, the board backpedaled. In the Specialty Healthcare decision, the board announced a new rule that gives labor unions more discretion to seek an election in a small group. Now for an employer to challenge the union-preferred unit, the employer must establish that employees share an “overwhelming community of interest”—a higher standard. A dissent from board member Brian Hayes argued that the Wheeling Island decision was effectively overruled.

The bottom line for non-union casinos: Be prepared for labor unions to try to organize very small groups of your employees based upon where the union has found initial organizing success. And once the petition is filed, you will have a shortened time frame to communicate with employees, and no recourse for appeal to the board before an election.

Increased Right to Handbill
Wheeling Island was not the only major casino case involving non-union employers that the board decided last year. Another case examined the right of unions to handbill on casino property.

One way that unions try to spread their gospel is through handbilling. Oftentimes the handbills contain misleading or outright false information about working conditions. In the New York New York Hotel & Casino decision, the NLRB expanded the right of employees in organizing drives to handbill. In that case, the Vegas casino employed a non-union contractor to staff its food court. Employees trying to organize the contractor set up shop on casino property outside the food court and near the casino’s main entrances to handbill customers. The casino contended that the employees had no right to do so—after all, the dispute was between the contractor and its employees, not casino employees. The casino was a neutral bystander and argued that it should not be required to allow this conduct on its private property. Yet, the NLRB found that the contractor’s employees had a right to handbill on the casino property—even when the casino was not the employer.

The lesson: If your casino hires non-union contractors to provide services, you could still be required to allow handbilling on your property to your customers, even if your casino has nothing to do with the underlying labor dispute.

Unionized Casinos: Changes in the Game
Not all of the recent changes are limited to non-union casinos. Two significant changes for union casinos occurred regarding collective bargaining and strikes.

In collective bargaining, if an employer asserts that it cannot afford to pay certain wages, the union has the right to seek company information. In essence, the union can say “prove it!” Rather than “plead poverty” and be forced to open the books, some employers would assert that the union proposals put the company at a “competitive disadvantage.” Traditionally, the “competitive disadvantage” assertion did not trigger an obligation to furnish financial data. But in May, the NLRB General Counsel released an advice memo finding that the “competitive disadvantage” argument no longer precludes an information request for documentation to support the employer’s position. If you are in collective bargaining this year, you cannot rely on the “competitive disadvantage” shield to protect you from being required to produce information to support your position.

The NLRB General Counsel also staked out a new position on where striking workers can be located during a labor disruption. Historically, employers could locate strikers off of the business’ private and onto public property, which lessens the disruptive impact of the picketing. However, in a recent case, the General Counsel adopted a new policy that allows strikers to locate themselves directly on or very close to company property.

Next Steps
To be sure, the NLRB changes can negatively impact union and non-union casinos. But all hope is not lost and casinos can still stay ahead of the curve. For unionized casinos, making necessary strategic adjustments in light of these new cases and advice memos can help you avoid costly unfair labor practice charges down the road.

For non-union casinos, we recommend implementing the following “Top Ten Steps” now to avoid union problems later:

1. Give your employees a real “voice.” Communicate with employees and seek their input. Regular, two-way communication is key.
2. Update your employee handbooks and solicitation rules.
3. Invest in your best union-free asset: your supervisors. Train front-line supervisors on union issues and make sure they can effectively—and legally—respond.
4. Consider talking to employees about unions before organizers show up.
5. Have an emergency “union organizing” plan in place. Labor organizers use “union authorization cards” to obtain signatures for the election petition. Make sure employees are aware of what they are signing.
6. Evaluate hiring procedures to lawfully avoid “salts,” i.e., union organizers who are applying for jobs with the hopes of getting hired and starting the unionization process.
7. Examine supervisor job descriptions. Supervisors are excluded from bargaining units. Ensure that job descriptions make clear which employees are supervisors.
8. Prepare a strategy for your “appropriate bargaining unit” argument.
9. Keep wages and benefits competitive with union contracts.
10. Get “buy in” from top management to make union avoidance a priority (which means spending some money now on steps 1-9 above).

The casino industry was hit hard by the recession, and the economics of gaming remain volatile. No casino wants to face even greater economic headwinds because of poor HR decisions. Being aware of important changes in labor law and committing resources now to have a labor strategy in place will have positive long-term economic effects. That’s one bet the house should be willing to make.


J. Michael McGuire is a partner at Baltimore-based Shawe Rosenthal. McGuire is 33-year veteran of management-side labor and employment law. His expertise includes representing management before the National Labor Relations Board in representation and unfair labor practice cases, negotiating collective bargaining agreements, and arbitrating labor and employment disputes on behalf of management. He can be reached at can be reached at jmm[at]shawe.com.

Bryan M. O’Keefe is an associate at Shawe Rosenthal. He represents management in labor and employment law. Prior to law school, O’Keefe was a labor and employment researcher and consultant in Washington, D.C., for several prominent think tanks, trade associations, public relations firms and employer organizations. He can be reached at okeefe[at]shawe.com.