National Labor Relations Board Reverses Three Obama-Era Policies
In the fall of 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 in December of 2017.
Joint Employer Standard
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. 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.
The Browning Ferris case made it much easier for two employers to be deemed joint employers. Under the Hy-Brand decision, the standard is higher. Under Hy-Brand, the NLRB can only find two entities to be joint employers if: (1) both employers have exercised joint control over employment terms and conditions, rather than having reserved the right to control such terms and conditions; (2) the control is direct, not indirect; and (3) the control is not limited and routine.
Employee Handbook and Workplace Policies
Under the Obama administration, the NLRB issued a series of decisions finding that workplace policies violate the National Labor Relations Act (“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 “reasonably construed” 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: (1) the nature and extent of the potential impact on NLRA rights; and (2) legitimate justifications associated with the rule. The NLRB also established rules categories 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.
- 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 on terms and conditions of employment, prior to implementation.
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 Raytheon did not violate the NLRA by failing to give its union advance notice and the opportunity to bargain before making the change.
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.