NLRB Overturns Three Obama-Era Decisions on Labor-Management Relations

December 19, 2017

In the closing days of outgoing Chairman Phil Miscimarra’s term, the National Labor Relations Board issued three major decisions reversing field on significant issues of labor-management relations and requested public comment on the continued viability of the 2014 rule changes expediting union representation elections. Employers should review all of these developments and assess their impact on their labor relations strategies as we enter the new year.

NLRB Restores “Community of Interest” Standard for Unit Determination

On Dec. 15, 2017, the NLRB announced in PCC Structurals Inc. that it would expressly overrule its 2011 decision in Specialty Healthcare & Rehabilitation Center of Mobile and “reinstate the traditional community of interest standard” for determining whether a bargaining unit proposed by a union constitutes an appropriate unit for collective bargaining.

For decades prior to 2011, the NLRB made these unit determinations by analyzing a number of factors to determine whether the employees in a petitioned-for unit shared a sufficient “community of interest” to make their representation in a single bargaining unit reasonable and effective. The factors the NLRB generally considered in unit determinations included:

whether the employees are organized into a separate department; have distinct skills and training; have distinct job functions and perform distinct work, including inquiry into the amount and type of job overlap between classifications; are functionally integrated with the Employer’s other employees; have frequent contact with other employees; interchange with other employees; have distinct terms and conditions of employment; and are separately supervised.

In Specialty Healthcare, the NLRB had replaced these factors and created a presumption that favored the unit description submitted by the union absent an “overwhelming community of interest” with other excluded employees. The NLRB subsequently applied the Specialty Healthcare standard to allow “micro-unit organizing” — cherry-picking the smallest possible voting groups by unions — in a variety of industrial settings, including private aviation services, beverage manufacturing, telecommunications, wine production, military equipment manufacturing and retail sales. A return to the traditional standards should prevent the balkanization and proliferation of multiple small bargaining units within a single employer’s operation.

NLRB Restores Its Longstanding Joint Employment Rule

One day earlier, in Hy-Brand Industrial Contractors Ltd., the NLRB overruled its 2015 Browning-Ferris decision on joint employer status and returned to the joint employer standard the NLRB applied for decades prior to that decision.

For at least 30 years prior to 2015, the NLRB found a joint employer relationship if two or more separate entities “share[d] or codetermine[d] the essential terms and conditions of employment” of a group of employees. Under this standard, the NLRB appropriately required “a showing that [each] employer meaningfully affects matters relating to the employment relationship such as hiring, firing, discipline, supervision, and direction” and analyzed both “form” (i.e., the contractual relationship between the putative joint employers) and “substance” (i.e., the actual practice of the putative joint employers). As provided by common law, the “essential element” of joint employer status required “a putative joint employer’s control over employment matters [to be] direct and immediate.”

That now is the applicable standard again. As the NLRB stated in Hy-Brand:

Thus, 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.”

As a result, companies that employ a variety of business models potentially targeted by Browning-Ferris — franchises; third-party labor providers; subcontractors; vendors; contingent, “temp” or “gig economy” operations, etc. — may rely upon a clearer, more objective standard in determining whether they might have some responsibility for each other’s conduct or shared bargaining obligations.

NLRB Gives Greater Consideration and Deference to Employer’s Justification of Facially Neutral Work Rules, Even If They May Impact Union Activity

Also on Dec. 14, 2017, the NLRB discarded the Lutheran Heritage Village-Livonia standard for determining whether facially neutral work rules might violate the National Labor Relations Act if “employees would reasonably construe the language to prohibit Section 7 activity.” Management advocates had accused the NLRB of abusing this standard, ignoring context and justifications unrelated to union activity, to outlaw historically common work rules:

Convinced that the NLRA was never intended to prohibit such “common-sense work rules and requirements that most people would reasonably expect every employer to maintain,” in The Boeing Co., the NLRB announced a new standard:

In cases in which one or more facially neutral policies, rules, or handbook provisions are at issue that, when reasonably interpreted, would potentially interfere with Section 7 rights, the Board will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the requirement(s). Again, we emphasize that the Board will conduct this evaluation, consistent with the Board’s “duty to strike the proper balance between … asserted business justifications and the invasion of employee rights in light of the Act and its policy.”

Going forward, employers should ensure that policy statements and work rules remain facially neutral and that they assure employees they do not interfere with their Section 7 rights. Moreover, in drafting policy language, employers should still attempt to narrowly tailor prohibitions to well-defined legitimate employer interests. Finally, they should follow the NLRB’s application of this new standard to varying facts and circumstances to try to discern the emerging patterns, as the NLRB indicates in the Boeing decision that it will categorize its future decisions in an effort to provide greater guidance.

NLRB Seeks Public Input on Expedited Union Election Rules

The NLRB has signaled a potential change to its controversial expedited election rules. In December 2014, it announced a final rule, effective April 2015, effecting a sweeping overhaul of its longstanding representation election procedures. The 2014 rule provides for electronic filing of election petitions and other documents; requires the employer to provide employee names and information to the petitioning union immediately; requires the employer to declare all legal positions within days of the petition filing, under threat of waiver; virtually eliminates preliminary litigation of issues relevant to the election; and requires the employer to turn over extensive employee contact information (personal telephone numbers, cell numbers, email addresses, etc.) to the union. These changes had the effect of cutting in half the time for employers to communicate information and for employees to consider their votes leading up to a union representation election.

On Dec. 14, 2017, the NLRB published a request for information in the Federal Register, seeking public comment on these general questions:

1. Should the 2014 Election Rule be retained without change?

2. Should the 2014 Election Rule be retained with modifications? If so, what should be modified?

3. Should the 2014 Election Rule be rescinded? If so, should the Board revert to the Representation Election Regulations that were in effect prior to the 2014 Election Rule’s adoption, or should the Board make changes to the prior Representation Election Regulations? If the Board should make changes to the prior Representation Election Regulations, what should be changed?

Comments are due to the NLRB by Feb. 12, 2018. These questions may be a prelude to a revision of the 2014 Election Rule, which also has drawn criticism from the business community as giving unions an unfair advantage in representation elections.

This flurry of activity from the NLRB suggests that it is poised to overturn many of the changes to federal labor law made during the Obama administration. It is unclear at this point whether these recent actions represent the end result of those efforts or only the beginning. For the time being, employers should monitor NLRB decisions carefully for other developments that may affect labor relations and union organizing activity.

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