National Labor Relations Board Reverses Three Obama-Era Policies

12/19/2017 / Phyllis Karasov

In September, 2017 Republicans comprised a majority of the seats on the National Labor Relations Board (NLRB). We are beginning to see the reversal of many decisions issued by the NLRB under the Obama administration. The following are three significant decisions issued last week.

Joint Employer Standard

In 2015, the board expanded the definition of a joint employer in the Browning-Ferris Industries of California decision (Browning Ferris). In Browning Ferris, two entities would be deemed joint employers if one entity reserved the right to exercise control over essential employment terms of another entity’s employees. On Dec. 14, in Hy-Brand Industrial Contractors Ltd. and Brandt Construction Co. (Hy-Brand), the NLRB reversed Browning Ferris.

Two employers, such as a staffing agency and the client, or a franchisor and franchisee, if deemed to be joint employers, can be obligated to liabilities under the National Labor Relations Act (NLRA), and subject to strikes, picketing and other economic activity from unions.

The Browning Ferris case made it much easier for two employers to be deemed joint employers. Under last week’s Hy-Brand decision, the standard is higher. Under Hy-Brand, the NLRB can find two entities to be joint employers if:

  • Both employers have exercised joint control over employment terms and conditions, rather than having reserved the right to control such terms and conditions.
  • The control is direct, not indirect.
  • The control is not limited and routine.

In November the U.S. House of Representatives passed legislation that if eventually enacted, would repeal the Browning Ferris decision. That legislation may still be pending because it would prevent another administration from returning to a more lenient standard, such as was enunciated in Browning Ferris.

Employee Handbook and Workplace Policies

Under the Obama administration, the NLRB issued a series of decisions finding that workplace policies violate the NLRA even if they do not explicitly prohibit protected activities. These decisions, based upon a 2004 NLRB decision, held that employers violated the NLRA by maintaining workplace policies that would be “reasonably construed” by an employee to prohibit the exercise of protected concerted activity, even if the rules do not expressly prohibit protected activities, were not adopted in response to these activities, and were not applied to restrict such activities.

On Dec. 14, the NLRB reversed the 2004 decision’s use of the “reasonably construe” standard. In The Boeing Company, the NLRB established a new test for evaluating employee handbook and other workplace policies. When evaluating a facially neutral policy, rule or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of NLRA rights, the board will evaluate two issues:

  • The nature and extent of the potential impact on NLRB rights.
  • Legitimate justifications associated with the rule.

The board also established three categories of rules to provide greater clarity:

  • Category 1 will include rules that the board designates as lawful to maintain, either because (a) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (b) the potential adverse impact on protected rights is outweighed by justifications associated with the rule. The NLRB gave as examples of Category 1 rules the “no-camera” requirement maintained by Boeing, and rules requiring employees to abide by basic standards of civility. This means the NLRB overruled past cases where the board held that employers violated the NLRA by maintaining rules requiring employees to foster harmonious interactions and relationships or to maintain basic standards of civility in the workplace.
  • Category 2 will include rules that justify individualized scrutiny to determine whether the rule would prohibit or interfere with NLRA rights and, if so, whether any adverse impact on NLRA protected conduct is outweighed by legitimate justifications.
  • Category 3 will include rules that the board will designate as unlawful because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule. An example would be a policy which prohibits employees from discussing their wages with other employees.

Duty to Bargain Over “Changes” That are Consistent With Past Practice

Last year, in E.I. du Pont de Nemours, the NLRB held that actions consistent with an established past practice constitute a change, and therefore require the employer to provide the union with notice and an opportunity to bargain prior to implementation, if the past practice was created under a management-rights clause in a collective bargaining agreement that has expired, or if the disputed actions involved employer discretion.

On Dec. 15, the NLRB overruled the E.I. du Pont de Nemours case. In Raytheon Network Centric Systems, the board decided that the employer’s changes to employee healthcare benefits in 2013 were a continuation of Raytheon’s past practice involving similar unilateral changes made the same time every year from 2001 to 2012. The board concluded that Raytheon did not violate the NLRA by failing to give its union advance notice and the opportunity for bargaining before making the 2013 change.

Future NLRB Decisions

Philip Miscimarra, a Republican board member, resigned from the board Dec. 16. The result is that the Republicans now have half of the NLRB’s seats rather than the majority. Until the Senate confirms a new Board member, the NLRB may issue fewer decisions. Once a fifth member is appointed, we can expect to see other reversals of Obama-era NLRB decisions.

 

This alert is provided as a service to our clients and firm associates. While the information provided in this publication is believed to be accurate, it is general in nature and should not be construed as legal advice.