Employers Receive Three Big Gifts From NLRB

Kollman & Saucier
Kollman & Saucier

In the middle of this holiday season, the NLRB was in a gift-giving mood to employers, updating standards in several important areas of labor law.  In the 48 hours before the expiration of his term (and unconfirmed return to the North Pole), departing Chairman Philip Miscimarra issued three pivotal, 3-2 decisions that will substantially benefit employers going forward in three areas: (1) employee handbooks; (2) joint employment; and (3) bargaining unit size.

Employee Handbooks

First, in The Boeing Co., 365 NLRB No. 154 (Dec. 14, 2017), the Board overruled its previous standard governing the acceptability of employee handbook provisions and other employer policies for workplace conduct.  Since 2004, when the Bush NLRB decided Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), policies were held to violate Section 7 of the NLRA (governing the formation of unions, collective bargaining rights, and other protected concerted activity) if, among other things, “employees would reasonably construe the language to prohibit Section 7 activity[.]”

The majority found that this standard had become unworkable over the last 13 years, mostly because it made the perfect the enemy of the good, in that it failed to take sufficiently into account employers’ often industry- and situation-specific interests in enacting such policies.  As a result, the Board explicitly overruled Lutheran Heritage. 

Under the updated standard, employer policies in employee handbooks will no longer be facially invalidated merely because they could be “reasonably construed” as prohibiting or interfering with rights protected under the National Labor Relations Act (NLRA).  Instead, the Board’s test for evaluating a policy, rule, or handbook provision (“policy”) boils down to the following two-step inquiry:

  • Does the policy, when reasonably interpreted, potentially interfere with, e., prohibit or limit the exercise of NLRA rights? If so,
  • Does any potential adverse impact on employees’ protected rights outweigh the legitimate employer justifications associated with the policy?

If the answer to question #1 is “no,” then the policy will be upheld and the inquiry ends.  Thus, for example, rules requiring “harmonious interactions and relations” between employees, or other basic civility standards, are permissible.  On the other hand, if the answer to both questions is “yes,” then the policy is illegal.  For example, rules that prohibit employees from discussing wages or benefits with one another remain unlawful.  Furthermore, as the majority noted, even facially valid policies may be unlawful when applied to a particular situation (e.g. disciplining an employee who has discussed wages with another employee for violating an otherwise lawful “harmonious interactions and relations” policy).

Applying this standard to Boeing’s case, the Board upheld the company’s “no-camera rule” that permitted employees to possess and carry, but not use, camera phones or other similar devices in the workplace except where specifically needed to meet government contract requirements or similar exceptions requiring supervisor approval.  Observing that the policy could potentially interfere with NLRA rights (e.g. prohibiting employees from filming themselves protesting wages in the workplace), the majority nevertheless found that Boeing had several legitimate and industry-specific justifications for the rule, including maintaining protection for its government-classified work, prevention of leaking of proprietary company information and employees’ personally identifiable information, and even limiting the risk of potential terrorist attacks.

Joint Employment

Second, in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (Dec. 14, 2017), a three-member majority led by Chairman Miscimarra overruled the controversial decision from two years ago in Browning-Ferris, 362 NLRB No. 186 (2015), petition for review docketed, No. 16-1028 (D.C. Cir. filed Jan. 20, 2016).  Instead, the Board returned to the standards for joint employment that had governed from 1984-2015.

Under the Hy-Brand standard, two business entities that are technically separate and contract with one another but nevertheless “share or co-determine those matters governing the essential terms and conditions of employment” are considered joint employers.  This standard focuses on whether the alleged joint employer “meaningfully affects matters relating to the employment relationship such as hiring, firing, discipline, supervision, and direction.”  From the Board’s perspective, showing that the alleged joint employer exercised merely indirect control, or limited and routine control, over the other entity is no longer sufficient.

Following this decision, the Board has now asked the D.C. Circuit to remand the Browning-Ferris case to the agency so that it can be the first to apply its revised standard.

[UPDATED 2-27-18] On February 26, 2018, the Board issued an Order vacating its Hy-Brand decision because Member Emanuel should have recused himself from the case.  Consequently, Browning-Ferris is again the law of the land – at least for the time being.  It is widely anticipated that the Board will revisit and overrule its joint employment precedent when (not if) an appropriate case arises.

Bargaining Unit Size

Finally, in PCC Structurals, 365 NLRB No. 160 (Dec. 15, 2017), the Board confronted the issue of “micro-units,” i.e., groups of employees seeking to unionize that are smaller than the entire workforce.  On the heels of overruling 13-year-old and 2-year-old precedent, respectively, the Board overruled its 6-year-old precedent in Specialty HealthcareSee Specialty Healthcare & Rehab. Ctr. of Mobile, 357 NLRB No. 934 (2011), enf’d sub nom. Kindred Nursing Centers East, LLC v. NLRB, 727 F.3d 552 (6th Cir. 2013).

Under the Specialty Healthcare standard created by the Obama NLRB, the Board gave substantial deference to the would-be bargaining unit proposed by the union.  Once it confirmed that the employees to unionize shared a “community of interest” based on “job classifications, departments, functions, work locations, skills, or similar factors,” the Specialty Healthcare Board would consider that unit appropriate unless the employer could show an “overwhelming community of interest” with employees beyond the proposed unit.

The majority of the Board explained in PCC Structurals that this standard could not be rectified with the Labor Management Relations Act (Taft-Hartley Act) of 1947, which amended Section 9 of the NLRA to make explicit that, “[i]n determining whether a unit is appropriate . . . the extent to which the employees have organized shall not be controlling.”

Thus, the Board returned to a multi-factor “community of interest” test that requires the Board to evaluate whether the employees in the proposed bargaining unit:

  • 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);
  • have frequent contact with other employees;
  • interchange with other employees;
  • have distinct terms and conditions of employment; and
  • are separately supervised.

Though the full degree of the impact these three decisions have will become clearer in the coming year(s), the unifying trend among is that the Board is less willing to view the interests of employees and unions in enjoying the statutory protections of the NLRA in a vacuum.  Balancing those legitimate protections against the often legitimate business interests of employers injects a real dose of pragmatism into the current NLRB in a manner that will hopefully cause both labor and management to feel that their concerns are being heard.

Happy Holidays to you, our readers, and your loved ones!

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