It might appear that in some years, the National Labor Relations Board (the Board) issues a series of decisions just as the year comes to a close, but it is not because the Board wants to give out holiday presents (or, from the employer’s perspective for the past several years, multiple lumps of coal). Rather, the year-end eruption of decisions comes about as the Board rushes to complete its work before one of the Board member’s term expires. This year was no different, as Chairman Miscimarra’s term ended on December 16. This time, employers have every reason to celebrate the gifts they received.
Within the last few days, the NLRB has overruled or indicated its intent to reverse several significant Obama Board decisions, including:
- the controversial “joint employer” standards;
- the creation of “micro units”;
- the controversial 2014 “quickie election” rules;
- the basis for the Board reaching out to strike down common employer policies, such as rules requiring civility in the workplace;
- the degradation of the “dynamic status quo”; and
- the standard for reviewing settlement agreements.
When coupled with the advice from the new General Counsel indicating areas of emphasis under the new administration, it is apparent that even more changes are in the offing.
Joint Employer Standards
Employers (including joint employers) occupy a special place in labor law – they are covered by the NLRA and all of the obligations it imposes. For decades, a joint employer was one who exercised control over the terms and conditions of employees at both employers. But in 2015, the Obama Board dramatically expanded that standard in Browning Ferris to require only mere possession of such control, not actual exercise of it. That broad test threatened companies in various circumstances, like contractor-subcontractor, franchisor-franchisee, predecessor-successor, and parent-subsidiary, with the specter of being an “employer” and liable for the burdens that come with it.
The Trump Board’s decision in Hy-Brand Industrial Contractors & Brandt Construction Co., 365 NLRB No. 156, overturns Browning Ferris and returns the joint-employer test to the historical standard. Now, “a finding of joint-employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’” The Board declared this standard to be “understandable and rooted in the real world.” Applying that standard to the case before it, the Board found a joint-employer relationship where a single officer at one company hired and fired employees at both companies, and employees at both companies had the same benefit plans and policies.
To avoid the prospect that a Democratic-controlled NLRB may one day simply overturn Hy-Brand and return to the Browning Ferris standard, the Republican-controlled Congress is moving legislation to amend the NLRA and enshrine the Hy-Brand standard. HR 3441, the “Save Local Businesses Act,” provides that a person may be considered a joint employer only if such person directly, actually, and immediately, and not in a limited and routine manner, exercises significant control over the essential terms and conditions of employment. That bill passed the House of Representatives and is awaiting action in the Senate. We expect it to become law in 2018.
In PCC Structurals, Inc., the Board overruled its controversial Specialty Healthcare decision that had made it much easier for unions to organize workplaces by allowing for organization of so-called “micro units.”
Unions historically sought to organize large bargaining units consisting of, for example, all the production employees at a given facility. The argument was that all such employees shared a “community of interest” based on common working conditions and should therefore be grouped into a single bargaining unit. However, it often proved difficult for unions to organize a facility-wide unit given the need to obtain showing-of-interest cards from 30 percent of the employees.
The Board addressed this “problem” by endorsing union efforts to organize “micro units.” Micro units consist of a much smaller number of employees, typically the employees in one particular department. Under Specialty Healthcare, the union had the initial burden to show that the employees in the micro unit shared a basic community of interest. Once the union satisfied this burden, it was up to the employer to demonstrate that a larger unit was necessary because the employees in the micro unit and the larger proposed unit had an “overwhelming” community of interest, i.e., that their working conditions were virtually identical.
This was an all-but-impossible burden for the employer to satisfy. Specialty Healthcare was much criticized by employers because the “overwhelming” community-of-interest standard meant that a petitioning union’s preference to organize a small subset of the employer’s work force would control in almost all circumstances.
The Board overruled Specialty Healthcare in PCC Structurals. Going forward, when a union petitions to represent a micro unit and the employer counters that a larger unit is necessary, the Board will decide the question based on the basic community-of-interest standard. Employees will only qualify as a micro unit if their terms and conditions of employment are sufficiently distinct from the larger group’s to warrant separate treatment.
PCC Structurals will have a profound effect on union organizing campaigns. Practically, it is far easier for a union to obtain authorization cards from 3 of 10 employees in a particular department than from 30 of 100 employees in an entire facility. In addition, a union is more likely to succeed in a vote that involves the employees in a small bargaining unit than it is in a larger unit where the employees’ interests diverge. The reversal of Specialty Healthcare represents an important victory for any employer responding to an organizing campaign.
Possible Change to Election Procedures?
The Board also moved to revise the Obama-era “quickie” election rules that dramatically reduced an employer’s time to respond to a union election petition. The Board has issued a Request for Information and has asked for input on whether it should retain, revise, or rescind the quickie election rules.
The Trump Board is expected to make substantial changes to the quickie rule, which reduced an employer’s time to respond to an election petition by about two full weeks – from about 38 days to about 23 days between the petition and the election. The truncated period favored unions, who have typically been organizing employees for weeks or months (with often less than factual information). Conversely, employers are often caught unaware by the petition and must scramble to educate workers about the benefits of remaining non-union before they vote.
Employers that have dealt with an election petition know that 23 days is not sufficient to adequately educate workers and prepare legal challenges. And anyone who has dealt with the government – an ocean-liner, not a speed boat – may have wondered, why the haste with the quickie rule? Skeptics thought the union-friendly Obama Board sought to help unions win more elections. Data indicated win rates remained about the same after the quickie rules, but employers should be relieved that the Trump Board may give them more time to breathe after seeing an election petition.
Unlike the other monumental changes discussed in this post, this reversal requires a rulemaking, so it will take some time before it is finalized. Employers are invited to comment until February 12, 2018.
Workplace Rules Standards
The fourth major decision handed down by the Board last week was The Boeing Company, 365 NLRB No. 154, which addressed an issue with perhaps the most wide-ranging impacts of its decisions thus far. As observers of Board developments have noticed, in recent years the Board has taken a particularly stringent review of employer policies that could possibly be read to have an impact on any protected concerted activity – “Section 7” activities. This arose from an older decision, Lutheran Heritage Village-Livonia, which concluded that the mere maintenance of an employer policy could be unlawful, regardless of how it was applied, if employees would reasonably construe the language as barring Section 7 activity. On the basis of the Lutheran Heritage standard, the Board has struck down employer policies that could theoretically be construed as impacting Section 7 activity, regardless of the employer’s justification for the rule.
In Boeing, the Board noted that the application of this analysis was virtually arbitrary: in one case, a rule barring “abusive or threatening language” was lawful, while in another case a rule barring “loud, abusive or foul language” was unlawful. The Board has thus adopted a new standard: the Board will expressly balance the nature and extent of the potential impact on rights protected by the Act, with the legitimate justifications offered by the employer.
Given the Board’s activism in this area in recent years, it will be some time before the full impact of Boeing is realized. In Boeing itself, the Board applied its new standard to approve of a ban on workplace photography (considering the proprietary and secret information maintained in Boeing’s manufacturing plants). Additionally, the Board expressly addressed, and overruled, some of the Board cases issued in recent years that have purported to bar policies requiring workplace “civility” or “harmonious working relationships.” Plainly, further cases will address other workplace rules that the Board has attacked in recent years.
The Dynamic Status Quo
It is a long-established tenet of labor law that unionized employers cannot legally make unilateral changes in terms and conditions of employment without giving the union notice and an opportunity to bargain over any such changes. Nonetheless, for many years employers enjoyed the ability to make unilateral changes without notice or bargaining if they were part of a consistent past practice. That is, until one year ago when the Obama Board overruled that longstanding precedent and held that the employer must still give the union notice and an opportunity to bargain even if the change is wholly consistent with past practice.
In Raytheon Network Centric Systems, the NLRB Board went back to its previous law, holding that “an employer’s past practice constitutes a term and condition of employment that permits the employer to take actions unilaterally that do not materially vary in kind or degree from what has been customary in the past” and regardless of whether the parties’ collective bargaining agreement is in effect or expired. Accordingly, employers can again continue with their past practices of making changes to the terms of employment, provided those changes are consistent with past practice. This often comes up for unionized employers in the context of annual bonuses or making annual changes to health insurance plans affecting bargaining unit employees. The reinstated flexibility provided to employers is welcome.
The Board has the statutory authority to review and approve settlements of unfair labor practice charges. For nearly 30 years, the Board evaluated whether to approve a settlement based on a “reasonableness” standard. The reasonableness standard allowed the Board to consider a number of different factors, including the views of the charging party and the Board’s General Counsel (the office that prosecutes unfair labor practice charges), the nature of the alleged violations, the relief offered, and the charged party’s history of violating the Act.
In a 2016 decision, United States Postal Service, the Board retreated from the reasonableness standard for a particular type of Board settlement called a “consent settlement,” which occurs when an Administrative Law Judge approves a settlement over the objections of the General Counsel and the party that filed the unfair labor practice charge. Rather than look to whether the agreement was reasonable, the Board indicated that it would instead ask whether the proposed consent settlement “includes all the relief that the aggrieved party would receive under the Board’s established remedial practices were the case successfully litigated by the General Counsel to conclusion before the Board.” In other words, under United States Postal Service the Board would only approve a consent settlement if it offered the same relief a party would achieve it if litigated its case and won.
No longer. In University of Pittsburgh Medical Center, last week the Board overruled United States Postal Service and returned to the former “reasonableness” standard for all types of Board settlement agreements, including consent settlements. The Board’s decision to re-adopt the reasonableness standard will be important to employers who find themselves trying to settle unfair labor practice charges with a recalcitrant union or General Counsel on the other side.
General Counsel Action: Things to Watch For
On December 1, 2017, the new General Counsel appointed by President Trump issued a foreshadowing memo in which he ordered the Board’s staff around the country to seek advice from his office on cases that could involve any of a number of contentious decisions issued by the Obama Board that overruled prior precedent or contained dissenting opinions – a slew of decisions that had frustrated the employer community. The order freezes those decisions, takes authority away from Regional Directors, and makes it less likely that the NLRB will enforce those Obama-era decisions in new cases. In addition to some of the issues addressed by the Board last week and discussed above, this could involve some of the most controversial decisions of the past eight years, including those involving:
- The right to use employer email systems to engage in Section 7 activities
- Work stoppages
- Off-duty employee access to property
- Conflicts between the NLRA and other statutory requirements
- Weingarten rights
- The disparate treatment of represented employees during contract negotiations
- Establishment of the duty to bargain before the imposition of discretionary discipline, where the parties have not executed an initial labor agreement
- The duty to provide witness statements to union
- Dues checkoff
- Remedies for statutory violations
The memo also rescinded several of the former General Counsel’s memoranda, including those concerning employer handbook rules, the statutory rights of university faculty and students in the unfair labor practice context, the test for determining whether an incumbent union has lost majority support, the inclusion of front pay in NLRB settlements, the standard for deferral of NLRB charges to arbitration, and intermittent and partial strikes.
The NLRB’s flurry of action has dramatically changed the labor landscape for employers. We will keep you posted on any further developments in 2018.