NLRB Changes Course in Dramatic Fashion Killing Several Key Pro-Union Rulings
Last week we witnessed the newly congealed NLRB undo several of its positions which the federal agency had taken during the Obama presidency. As further evidence of the Board's unabashed willingness to flip and flop from one position to the other depending on the political party in office, the new Board has already added to this rich history of vacillation by:
- Reverting back to the historic joint-employer test used for decades until the NLRB expanded it to require non-union employers to bargain with unions.
- Overturning the standard of review used by the NLRB to determine whether an employee handbook unlawfully prohibits or threatens employees from exercising their rights under the National Labor Relations Act (NLRA).
- Reversing the Obama NLRB's micro-unit standard to again make it more difficult for unions to organize small numbers of employees.
It's a welcome bit of news for employers, particularly those with unions, to see the NLRB move away from its unmistakable pro-union positions that it has taken for the past many years. While there are still many rules and changes made during the Obama presidency that favored unions and gave them advantages in organizing employees, last week was a good step toward creating a more even playing field in labor relations.
The following is a synopsis of each of the three important decisions from last week that indicate the shift toward a more favorable employer NLRB.
Hy-Brand Industries - the new-again joint employer test.
How did we get to the point where we need a federal agency to confirm the obvious rule that employers who do not control the terms and conditions of unionized workers are not technically their employer? Employers with employees who have formed a bargaining unit under the NLRA to be represented for collective bargaining purposes are required to negotiate with the employees' representative - i.e. the union. For decades determining the identity of the "employer" was not that difficult. Rightly so, the NLRB would look to see which company had direct and immediate control over the terms and conditions of the employees in the bargaining unit. Normally that is not too difficult to figure out, but for many industrial, shipping, construction and other industries where you have multiple businesses working on a single project in coordination with one another it can be convoluted. And for many years the NLRB would examine the reality of the situation to make the determination as to the identity of the employer required to bargain with the union. If there were multiple employers with direct and immediate control over the same collective bargaining unit of employees, then those employers would jointly be required to bargain with the union.
Along came the 2015 NLRB's decision in Browning-Ferris, which upended decades of precedent. The Board in Browning-Ferris reimagined the joint employer standard weakening it to include any business which had "indirect control" or possessed a "reserved" right to exercise control over the bargaining unit employees' terms and conditions of work. The practical result being that general contractors, businesses hiring staffing agencies, and businesses that work in coordination with other businesses on projects could foreseeably be considered an employer of union-represented employees and, therefore, required to bargain with a union even though the business never hired, doesn't pay and likely never contemplated being an employer to this unionized group.
Fast-forwarding to the Board's decision in Hy-Brand, the NLRB reversed the Browning-Ferris expansion of joint employment and reverted back to a less expansive understanding, reinstating the rule that to be considered a joint employer for purposes of collective bargaining obligations the company must have direct and immediate control over the employees' terms and conditions of employment. The result should be that now (again) employers can work alongside, coordinate, indirectly supervise, and even hire as sub-contractors unionized employees with diminished fear that such ties will pull them into a joint-employment relationship with the employees' more obvious employer.
The Boeing Co. - fear for your wording in employee handbook policies less.
There was a time when non-union employers had little care or worry that their employee policies would be considered to have violated the NLRA - the federal law that mostly governs the interaction between employers and collective bargaining agents (i.e. unions). Then, in 2004, the NLRB started regularly finding that non-union employee handbooks violated the the NLRA. But how were these non-union employers violating federal labor law? The NLRB found that policies which employees could "reasonably construe" as threatening or prohibiting them from engaging in concerted activity (i.e. forming a union) and exercising their rights under the NLRA were illegal.
As a result of the NLRB's change in position in 2004 in Lutheran Heritage, attentive employers began reissuing social media policies, reviewing language in their handbooks, rewording at-will employment language, changing rules that prohibit the discussion of wages among employees, and removing other related prohibitions which could be could be reasonably understood as discouraging employees from forming a union and exercising generally their rights under federal law.
Throwing aside the Lutheran Heritage opinion, the NLRB adopted a new framework for reviewing employer policies/handbooks. For the time being, the NLRB will consider the "nature and extent" of the policy and its "potential impact" on employees' rights under the NLRA and whether the employer has legitimate justification for the wording of the policy. This is a much more employer-favorable standard than the "reasonably construe" rule.
The expected result of this shift is that employers should fear less from NLRA overreach and minute review of innocuous verbiage in employee policies. This is not to say that employers can say whatever they want without repercussion of violating the NLRA. It is an indication, however, that the NLRB will look to the circumstances of the policy and whether it did or reasonably could impact employees' exercise of rights under the NLRA.
PCC Structurals - goodbye easy-to-get micro units.
Lastly, unions have historically tried to organize smaller groups of employees because it is more manageable to do so and once the union is inserted into an organization it is easier to organize the non-union employees. When unions push for a vote the NLRB needs to certify the bargaining unit of employees. Who should be in the bargaining unit is not always clear and employers regularly push for a larger unit to water-down the pro-union support that might exist in a core group of employees. Many elections are won or lost on the NLRB's decision as to who should be part of the vote for the union.
For this reason the Board's 2011 decision in Specialty Healthcare was a great victory for unions. In Specialty Healthcare the NLRB found that that an employer contesting a union's petition to certify them as the collective bargaining representative and the proposed bargaining unit it would represent needed to prove that the workers excluded from the union's proposal shared an "overwhelming community of interest" with the workers included in the proposal. This is a high standard of proof, the result of which was that since 2011 unions have been much more successful in organizing small, "micro", bargaining units of employees.
For the foreseeable future the NLRB has reverted back to the historic standard used before 2011. That is, the Board will once again consider whether the proposed group of employees shared a community of interest with the excluded group of employees that was "sufficiently distinct." Moving forward, if the community of interest between the two groups is not sufficiently distinct then the NLRB will favor a larger group.
The expected result will be that unions will have a much more difficult time organizing micro groups of employees than it had during the salad days of the Obama-era NLRB. Once again employers should be able to more effectively counter-organize by fighting the union's proposed bargaining unit.