Employers should take note of the following developments in labor law.  The National Labor Relations Board vacated a key joint-employer decision and the United States Supreme Court is considering two cases which will impact labor law and union organizing.

Oops! Board Member’s Private Practice History Leads to Return of Obama-Era Joint-Employer Standard

In a previous post, we reported that the Board overturned the Obama-era Browning-Ferris decision and restored the employer-friendly “direct and immediate” control test for establishing joint-employer status when it issued the ­Hy-Brand decision.  On February 26, 2018, however, the Board vacated that decision.

The Board vacated it because current Board Member William Emmanuel’s former law firm represented the employer in Browning-Ferris when the case was before the Board and before his appointment.  Critics of the Hy-Brand decision argued it was improper because Emmanuel’s former firm participated in a decision he voted to overturn once he was appointed.  The NLRB’s Inspector General sent the Board Members a memorandum which concluded that Emanuel should not have participated in the Hy-Brand decision and recommended that the Board consult with agency ethics officials to determine whether it should vacate the decision.  The Board decided to vacate it.

This means that the Browning-Ferris “indirect control” standard has been resurrected, at least for now.  The Board must now consider the joint employer standard in a new case where there are no conflicts of interest.

We also reported that the “Save Local Business Act” is pending before Congress.  This Act would establish the “direct control” standard for the National Labor Relations Act and Fair Labor Standards Act.  The Board’s decision to vacate the Hy-Brand decision may lead to action on this bill.  We will keep you updated on any developments.

U.S. Supreme Court Considers Mandatory Arbitration and Agency Fees

The Supreme Court is currently considering two cases that will have a large impact on labor arbitrations and union organizing.

The first is titled National Labor Relations Board v. Murphy Oil.  This is a trio of cases which consider whether class and collective action waiver provisions are lawful in arbitration agreements.  The Board’s position is that requiring employees to give up their right to arbitrate class or collective action claims is a violation of the employees’ rights to engage in concerted activity.  The Supreme Court heard argument on this case on October 2, 2017, and a decision will likely be released soon.

This decision will provide insight on the current Supreme Court’s views on arbitration, employees and the National Labor Relations Act.

The second is Janus v. American Federation of State, County and Municipal Employees.  In this case, the Supreme Court is considering whether the requirement that public-sector employees be required to pay union dues as a condition of employment regardless of union membership is constitutional.  Currently, public-sector employees are required to pay union dues and these funds are used for, among other things, union organizing and campaigning.  The Supreme Court will be deciding whether this requirement violates the public-sector employees’ First Amendment rights because many of the employees are not union members or union supporters but are required to contribute to union funding.

This case will provide insight to the current Court’s views on unions and union organizing.  The case was heard on February 27, 2018.  We will keep you updated on the result.

Last week, the NLRB held its promise and issued a series of decisions just before Chairman Philip Miscimarra’s term ended on Saturday, December 16.  As expected, the Republican-led NLRB overturned four decisions of the Obama-era.  However, the Board issued an employee-friendly decision, holding an employer violated the NLRA by firing two employees for soliciting union support.

Down Goes the Joint-Employer Standard

In a case titled Hy-Brand Contractors Ltd., the Republican-majority NLRB overturned the Obama-era joint employer standard that was enunciated in Browning-Ferris. In Browning-Ferris the NLRB held that companies were joint-employers even when one company only exercised “indirect control” or had the ability to exert such control over the terms and conditions of employment.  Current NLRB Chairman Philip Miscimarra strongly dissented from this decision.

In Hy-Brand, the Republican-majority NLRB, led by Chairman Miscimarra, returned to the previous standard which requires that companies exercise “direct and immediate control” over the terms and conditions of employment.  In its decision, the majority described the new standard as “understandable and rooted in the real world” and as recognizing joint-employer status in “circumstances that make sense and would foster stable bargaining relationships.”

NLRB Loosens Employee Handbook Standards

The NLRB also overturned the standard for determining whether employee handbook policies violated the National Labor Relations Act (“NLRA”).  The previous standard was that a policy violated the NLRA if employees could “reasonably construe” it to bar them from exercising their rights under the Act.  The Obama-era NLRB used this standard in recent years to invalidate numerous employer policies, including policies prohibiting employees from criticizing employers on social media or recording workplace conversations.

The current NLRB will now consider the nature and extent of a policy’s impact on an employee’s rights under the NLRA and the employer’s legitimate justifications for the policy.  This test balances the employee’s rights with the employer’s legitimate justifications, rather than relying on the employee’s subjective understanding.

The NLRB also announced that it will classify policies in the following categories:

  1. Policies that are legal in all cases because they cannot be reasonably interpreted to interfere with employee’s rights or because any interference is outweighed by business interests; and
  2. Policies that are legal in some cases depending on their application; and
  3. Policies that are always illegal because they interfere with employee’s rights in a way that cannot be outweighed by business interests.

NLRB Restores the “Sufficiently Distinct” Micro-Unit Standard

In a case titled PCC Structurals, Inc., the NLRB overturned the Obama-era decision which allowed so-called “micro-units”, or small bargaining units.  The Obama-era NLRB issued the Specialty Healthcare decision which established the “overwhelming community of interest” standard.  Under this decision, the NLRB presumed a union’s petitioned-for bargaining unit was appropriate as long as it consisted of a clearly identifiable group of employees.  Employers that believed additional employees should be included in the unit were required to show there was an “overwhelming community of interest” between the additional employees and those in the bargained-for unit.  This allowed unions to seek small units as a strategy to increase their success in organizational campaigns.

The NLRB returned to its traditional approach and will consider whether the employees in the proposed bargaining unit share a community of interest that is “sufficiently distinct” enough from the proposed additional employees to warrant a separate unit.

A Win for Employers Looking to Make Unilateral Changes

The NLRB also overturned the controversial Obama-era E.I. du Pont de Nemours decision.  In the du Pont decision, the Obama-era NLRB held that the changes the employer made to the employee benefit plan after the expiration of the collective bargaining agreement were unlawful unilateral changes.  This decision was a departure from the 50-year-old precedent that allowed employers to make changes to work rules without bargaining after a collective bargaining agreement expired if the employer had a history of making those changes.  The current decision restores this precedent, and employers will have the ability to make changes to work rules as long as they have a consistent practice of doing so.

NLRB Issues An Employee-Friendly Decision

In a case involving parties from Connecticut, the NLRB issued a decision in favor of employees’ rights to organize.  The NLRB held that Waterbury-based Bozzuto’s Inc. violated the NLRA by disciplining and terminating two employees who encouraged others to support a union campaign.  In addition, the NLRB determined that an executive level employee unlawfully interrogated an employee by asking what was going on with the union.  The NLRB ordered Bozzuto’s to reinstate the employee to his former position and pay back wages.

Takeaways

Based on these decisions, the NLRB seems poised to reverse Obama-era decisions that were seen by many employers as too harsh or impractical.  This certainly is welcome news for employers.  These decisions likely will be challenged in the courts, but should help employers faced with NLRB charges at the local level.