NLRB Acts Swiftly to Overturn Multiple Pro-Labor Decisions From Obama Era

by Parker Poe Adams & Bernstein LLP
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Parker Poe Adams & Bernstein LLP

It did not take long for the National Labor Relations Board to act on the advice of its new general counsel and upset multiple precedents put in place by the prior majority Democratic board. In a series of 3-2 decisions, the new NLRB majority threw out cases that have vexed employers, while signaling its intent to make other sweeping changes that would restore interpretations of the National Labor Relations Act to the Bush era. If upheld, these decisions will have significant impacts on unionized and non-unionized employers.

Joint Employer Standard

On December 14, the NLRB overturned its 2015 Browning-Ferris decision, which found two companies to be joint employers liable for each other’s labor practices if one company reserves the right to exercise control over the other. In Hy-Brand Industrial Contractors, the new 3-2 majority concluded that Browning-Ferris decision was in error, and that the joint employment standard only applies where one company directly exercises control over another in a manner that is not limited and routine.

This decision should end the NLRB’s attempts, for example, to hold a franchisor liable for labor law violations by its franchisee absent evidence that the franchisor controls those practices. The franchisor’s reservation of rights in the franchise agreement alone will not be enough to trigger joint employer liability. Interestingly, even under the revised standard, the board majority concluded that the employer in Hy-Brand did exercise the required control to be deemed a joint employer.

Employee Handbook Policies

In its December 14 decision in The Boeing Company, a 3-2 board majority overruled its 2004 Lutheran Heritage Village-Livonia opinion that set the legal standard for determining when an employment policy results in violation of an employee’s right to engage in concerted activity. Under the prior rule, the policy violated the National Labor Relations Act even if it did not specifically prohibit concerted activity, was not adopted in response to exercise of employee rights, and had never been used to prevent such activity. As long as the policy could be reasonably construed by employees to deter concerted activity, the NLRB deemed it illegal.

This decision was used by unions and aggrieved employees to challenge a wide range of standard handbook policies, ranging from at-will employment statements to social media and confidential information requirements. In its new decision, the NLRB discarded this legal standard in favor of one that looks at the business justifications for the rule balanced against the likelihood that the rule will actually interfere with concerted activity rights. In the Boeing case, the board found that the company’s no-recording rule and standards of civility policy passed this legal test.

This ruling should have major implications for employers, placing a stop to the routine practice of unions and employees filing unfair labor practice claims with regard to standard and neutral employment policies. Unless the policy targets employee organizing or collective activity rights, the possibility that it could be construed as applying to such activities will not be enough to declare the policy illegal.

Unilateral Changes Based on Past Practices

Until last year, unionized employers had generally been free to make unilateral changes in policies and practices without triggering a collective bargaining requirement, if such changes were similar to established past practices. In its 2016 E.I. Du Pont de Nemours decision, the NLRB changed this long-standing rule, requiring bargaining for any changes that affect the terms and conditions of employment. On December 15 in another 3-2 decision, the NLRB in Raytheon Network Centric Systems overturned Du Pont, concluding that the standard management rights clause in all collective bargaining agreements gives the employer the right to make unilateral changes based on consistent past practices.

In this case, the board concluded that routine changes to employee group health insurance coverage from year to year did not require bargaining with the union. The union was not entitled to advance notice of the changes or to bargain over their implementation.

Other Takeaways

In addition to these three decisions, the NLRB overturned prior cases involving bargaining unit and related determinations. The board also issued a request for information (RFI) soliciting public input over its controversial 2014 “quickie” union election rules. These regulations substantially decreased the amount of time employers have to respond to unionization attempts and limited legal avenues for pre-election challenges. The RFI clearly signals the NLRB’s intent to revisit these regulations.

In the past, federal courts have been hesitant to reverse the NLRB’s reading of its own laws. Therefore, appeals of these decisions may not prove successful. It is very likely that the board is not finished with its efforts to roll back Obama-era labor protections. As previously reported in EmployNews, a memorandum issued by the new NLRB General Counsel Peter Robb listed a series of such positions he recommends for reconsideration by the new board majority. If successful, these efforts would return the NLRB to its pre-2009 limited role, especially with regard to non-unionized employers.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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