For employers, 2017 brought some long awaited relief and hope that return to normalcy in labor law is on the way. Admittedly, the wait for employers turned out to be a little longer than expected. The National Labor Relations Board operated through most of 2017 without with a full complement. It was not until September of 2017, when President Trump’s second nominee was sworn into office, that the Board was fully constituted. At that time, the Board was operating with a Republican majority for the first time in more than eight years.
It did not take long for the Trump Board to begin to dismantle the decidedly pro-union platform built by the Obama Board, but the Board only operated at full strength for a few short months. The term of Chairman Miscimarra, a Republican, expired in December, and he has not yet been replaced. Although for some the Board could not act fast enough, the Board did make some important, pro-employer decisions at the end of 2017. In addition, it appears that there are many more employer-friendly decisions to come.
The Board was certainly busy throughout 2017. In fiscal year 2016-2017 the Board issued 266 decisions, of which 158 involved unfair labor practice charges and 108 involved representational issues. The Board reported that over $73 million was collected on behalf of employees as back pay or reimbursement for fees, etc. Also, over 1700 employees were offered reinstatement. These numbers demonstrate that employees, union and non-union alike, are aware of and exercising their rights under the National Labor Relations Act at historically high levels.
There were some important developments that resulted from Board and Administrative Law Judge (ALJ) decisions. The new General Counsel acted quickly to announce that a new sheriff is in town. The announcements from the General Counsel and the actions of the Board late in the year were decidedly employer friendly. In addition, the announcements indicate that there is more good news on the way. We summarize key labor law developments from 2017 below.
Board Announces Intent to Study and Potentially Rescind Quickie Election Rules
In December, the Board published a Request for Information related to the “Quickie” or “Ambush” election rules issued and adopted by the Obama Board in 2014. The rules, which significantly shorten the period of time between the filing of a petition for election and the actual election date, were clearly intended to aid the union organizing effort. The Trump Board is now seeking public input regarding the rules, and specifically, the Board is looking for input on the following questions:
Should the Quickie Election Rules remain unchanged?
Should the Quickie Election Rules be modified, and if so, how?
Should the Quickie Election Rules be rescinded?
If the Quickie Election Rules should be rescinded, which rules should be used?
Most employers who have had a “Quickie” election hope the Rules will be rescinded. If that is the case, then there is a good chance that the Board will return to the election rules that were in place prior to 2014. However, there is also a chance that new rules could be developed and implemented. There is certainly hope on the part of non-union employers looking to remain union-free that new rules will help them combat union organizing efforts.
Certainly, unions do not need any more help winning elections. In fiscal year 2015-2016, unions won nearly 73 percent of contested elections. In 2017, the union win rate remained high at about 69 percent.
Only time will tell what changes, if any, will be made, but there is reason to believe that the Quickie Election Rules will go away.
The DOL Abandons Attempt to Expand Persuader Reporting Rules
Last year, we reported that the United States Department of Labor attempted to expand the scope of the Labor-Management Reporting and Disclosure Act. The revised “persuader reporting rules” would have required employers to report information related to the attorney client relationship and other confidential information, any time advice or services were offered during a union organizing campaign. There were serious concerns that the new rules would have required employers to potentially waive the attorney client privilege. As a result, the rules were challenged, and ultimately blocked by a federal judge.
In 2017, the Trump DOL announced that it will no longer seek to implement the revised rules. In fact, in June, the DOL announced a Notice of Proposed Rulemaking that would rescind the expanded reporting requirements. Therefore, it appears that the regulations that would have expanded the persuader reporting requirements will not be implemented. Accordingly, attorney client relationships will remain exempt from the reporting requirements.
OSHA Leaves Unions Out in the Cold
In 2013, the United States Occupational Safety and Health Administration issued an interpretation letter that forced non-union workplaces to allow unions to participate during OSHA inspections. Under this guidance, employees of non-union shops were permitted to invite third-party representatives (i.e. unions) to participate in OSHA “walkaround inspections” of their employers’ businesses.
Employers fought the “guidance” in court, arguing that OSHA overstepped its authority and had entered into the realm of labor relations. The practical effect of the 2013 guidance, they argued, was that OSHA inspections would turn into union organizing campaigns. After years of litigation, the case was finally on track for trial.
Then, on April 25, 2017, OSHA announced that it was abandoning the Obama-era policy. The 2013 interpretation letter was formally withdrawn and OSHA indicated that it would revise its Field Operations Manual to reflect its reversion to the pre-2013 standards. Following this employer-friendly move, non-union workforces no longer have the right to invite unions to participate in OSHA walkaround inspections.
The Board’s New General Counsel Set the Tone Early
On November 8, 2017, Peter B. Robb was appointed as the Board’s General Counsel, replacing Richard Griffin, whose term had expired. Griffin, you may recall, had served as the spearhead for many of the Board’s more controversial (and pro-union) initiatives. Robb acted quickly to set a new tone.
On December 1, 2017, the new Board General Counsel issued a memorandum to field offices announcing that it was “great to be back” (Robb had previously worked for the Board) and making clear that he intended to undo many of the precedent toppling decisions made by the Obama Board. The Memorandum, GC 18-02, directed field offices to submit certain issues to the Division of Advice for further guidance. This requirement essentially freezes regional offices from moving new cases forward on these key topics.
Included in the list of cases requiring further review are those that involve where the underlying legal precedent was overruled in the past eight years and involve one or more dissents. In other words, most of the Obama Board’s most controversial cases. The General Counsel also directed the field offices to submit cases where the Board may consider an alternative legal analysis, and cited a number of examples. Among the examples were cases dealing with the definition of “concerted activity” under Section 7 of the Act, including cases where only one employee had an immediate stake in the outcome. In addition, the General Counsel cited cases where the employees did not lose the protection of the Act despite vulgar language and highly inappropriate conduct. In addition, the General Counsel called out cases involving typical employer handbook rules such as rules prohibiting disrespectful conduct, use of trademarks and logos, no camera/recording rules and confidentiality rules. The General Counsel also called out cases where an alternative analysis may be appropriate, including cases involving the presumptive right to use the employer’s email system and many others. The General Counsel has signaled that the more recent decisions on these issues, and many others, are ripe for reversal.
The Memorandum was a welcome sign that the Board was returning to normalcy. Many of the issues/cases called out by the General Counsel for possible review/reversal were problematic for employers. As you know, we have been reporting for the past several years that employers and standard employer policies and procedures have been under assault by the Board. That assault appears to be over for now, and the new General Counsel has begun the process of correcting the injustice.
A Summary of the Board’s Significant Decisions
As noted, most of the employer friendly decisions issued by the Board were released in rapid succession just prior to the expiration of the term of Board Chairman Miscimarra. The decisions, summarized below, reversed some of the more controversial, and problematic, decisions of the Obama Board.
Board Adopts New Standard to Determine if Employer Policies Lawful
In The Boeing Company, 365 NLRB No. 154 (2017), the Board, in a 3 to 2 split decision, overturned the prior standard used to determine whether facially-neutral workplace rules and policies are unlawful under the Act. Under the old standard, the Board could find that an employer violated the Act simply by maintaining a policy that could be “reasonably construed” by an employee to prohibit the exercise of rights protected by the Act. This was the case even if the employer never applied the rule or policy to restrict employee rights. What the Board put in that “reasonably construed” category did not seem reasonable to many, many employers. Under the Obama Board, it was clear that this analysis was being used to invalidate many standard employer policies.
In announcing the new standard, in The Boeing Company, the Board was highly critical of the Obama Board’s use and abuse of the prior standard, known as the Lutheran Heritage standard. The Board stated a desire to provide greater clarity and criticized the prior Board for invalidating “common sense rules and requirements” under the Lutheran Heritage standard. Not only is there more clarity, there is balance. Rather than considering only how the facially-neutral policy, rule or handbook provision could be “reasonably construed” the Board will consider two things:
The nature and extent of the potential impact on employee rights protected by the Act; and
The employer’s legitimate justifications associated with the rule
The Board also categorized the rules as follows:
Category 1. Lawful rules, where the rule does not expressly prohibit or interfere with rights protected by the Act or the potential adverse impact on protected rights is outweighed by the employer’s justifications for the rule. Examples offered by the Board in this category are “no-cameras” in the workplace rules and the civility rules.
Category 2. Rules which require individualized scrutiny to determine whether any adverse impact on rights protected by the Act is outweighed by the employer’s legitimate justifications.
Category 3. Unlawful rules that prohibit protected conduct and the impact on those employee rights is not outweighed by employer justification. For example, policies prohibiting employees from discussing wages and benefits.
The new standard is good news for union and non-union employers alike. It appears that the Board will be focusing less on policing innocuous handbook policies, and that is a positive turn for employers who were having trouble just keeping up with all of the changes required by the Board.
Board Abandons Expansive Joint Employer Test
Two years ago, we reported on the Board’s groundbreaking joint employer decision in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (2015), which significantly expanded potential liability for employers. In that case, the Board concluded that a group of temporary staffing agency workers were statutory employees of both the staffing agency and the recycling facility to which they were assigned. We predicted that the Browning-Ferris decision would significantly increase the likelihood that there could be a joint employer finding in a number of common scenarios, and unfortunately in Retro Environmental, Inc., 364 NLRB No. 70 (2016), the Board proved us right. The consequence of a joint employer finding, of course, is that both employers can be held liable for violations under the Act and both could be required to negotiate with any union representing the workers.
In December of 2017, the Trump Board reversed Browning-Ferris. In Hy-Brand Industrial Contractors, 365 NLRB 156 (2017), the Board abandoned the Browning-Ferris standard and returned to the prior joint employer test. The Board declared that joint-employer status requires proof that the putative joint employer has actually exercised joint control over essential employment terms, rather than merely having reserved the right to exercise control. The Board noted that the exercise of control must be direct and immediate, not indirect and not simply “reserved.” In reversing Browning-Ferris, the Board returned to the prior test for determining joint employer status, and reinstated decades of case law. The return to the prior standard should provide certainty to many employers who utilize temporary and contract labor in fairly common scenarios.
Board Abandons Micro-Unit Standard
The Trump Board issued employers another key win late in 2017. The Board reversed the Obama Board’s Specialty Healthcare, 357 NLRB No. 83 (2011) decision, which basically provided that the appropriate unit for bargaining was the unit identified by the union! That decision allowed unions to form so-called “micro-units” and essentially required the Board to rubber stamp the union’s definition of the appropriate bargaining unit for purposes of a union election and bargaining. This approach exposed employers to an increased risk of organizing campaigns, and the possibility of having to negotiate with several different unions at a single facility.
On December 15, 2017, in PCC Structurals, Inc., 365 NLRB No. 160 (2017), the Board abandoned the Specialty Healthcare standard and returned to its prior framework for determining the scope of a bargaining unit. The Board reinstated the traditional community of interest standard to determine whether a bargaining unit should include additional employees/positions. The community of interest standard examines a number of factors to determine the appropriate scope of a bargaining unit, as set forth in the Board’s decision in United Operations, Inc., 338 NLRB 123 (2002).
Board Returns to Prior Test for Evaluating Changes following Expiration of CBA
Also on December 15, 2017, the Board reversed another Obama-era decision, E.I. DuPont de Nemours, Louisville Works, 364 NLRB No. 113 (2016), which itself had overturned 50 years of precedent. In DuPont, the Obama Board dramatically expanded the definition of “change” for purposes of determining whether an employer made an unlawful unilateral change to the terms and conditions of employment following the expiration of a collective bargaining agreement (CBA).
Under DuPont, an employer was found to have engaged in an unfair labor practice charge for simply continuing to do what it had done many times previously—for years or even decades. In Raytheon Network Centric Systems, 365 NLRB No. 161 (2017), the Trump Board reversed DuPont, and announced the return to the prior standard for determining whether an employer is authorized to make changes to the terms and conditions of employment after the expiration of a collective bargaining agreement. The Board concluded that an employer may rely on a past practice to make certain changes to the terms and conditions of employment, even following the expiration of a collective bargaining agreement.
Board Concludes Vulgar Tirade Not Protected by the Act
In Brooke Glen Behavioral Hospital, 365 NLRB No. 79 (2017), the Board reminded us all that there are limits to the protections of the Act. Many of us had lost sight of that fact over the last eight years as the Obama Board used tortured interpretations of the Act to protect vulgar, racist, hostile and intimidating comments on the part of employees and union officials. The Board’s decision in Brooke Glen was a welcome reminder that not all employee misconduct is shielded by the Act.
In that case, the hospital employer discharged a registered nurse who served on the union’s bargaining team. During a particularly heated negotiation session, which was attended by the employee, the employer walked out. Several days later, the employer was providing a tour of the hospital to a group of individuals from an affiliated facility. As the group approached the employee, she began to question why the visitors were present and began to insult the group.
After the tour ended, the employee approached the group in the parking lot. There, she shouted vulgarities directed at her supervisor, who was also with the group. The employee was discharged, and she challenged her termination before the Board. The employee argued that she was engaged in concerted protected activity when she yelled at and insulted the group and her supervisor.
A Board ALJ concluded that the employee was not engaged in protected activity at the time of her profanity filled tirade. The ALJ found that there was no connection to the tour and the prior negotiation session, which had broken down. The Board agreed and affirmed the finding of the ALJ that the nurse’s conduct was not protected by the Act.
ALJ Decision to Watch
ALJ Concludes No Recording Policy Unlawful
In AT&T Mobility, LLC, 05-CA-178637 (2017), a Board ALJ held that a policy prohibiting surreptitious recording in the workplace violated the Act. The rule prohibited recording telephone or other conversations with coworkers, unless the recording was approved in advance by the legal department and the recording was consistent with business needs.
The company argued that the rule was necessary to protect customer and employee privacy. The ALJ found that employee rights to engage in protected activity under the Act outweighed the company’s interests in protecting privacy. The ALJ pointed to recent pronouncements of the Board, which concluded that audio and video recording activities in the workplace are protected activities under the Act.
It will be interesting to see if this decision withstands Board scrutiny, because the new General Counsel seems to have targeted the Board’s prior position on no recording policies for possible challenge and reversal.
Board Decisions on Appeal
As in past years, efforts in 2017 to overturn the Board’s decisions on appeal have been hit or miss. In some cases, even controversial decisions have been upheld. In 2018, we expect that the United States Supreme Court will enter the fray and address one of the Board’s most controversial positions.
Board’s Ban on Employer “No Recording” Policy Upheld
In Whole Foods Market Group, Inc. v. Nat’l Labor Relations Bd., __F.3d ___ (2nd Cir. 2017), the Second Circuit Court of Appeals affirmed the Board’s holding that Whole Foods Market’s ban on audio and video recording in the workplace violated the Act. The Board had held that, under the Act, employees are permitted to use audio and video recording to engage in concerted activities for their mutual aid and protection. The Board did find that the employer’s interests had to be weighed against these important employee rights. In weighing the competing interests, the Obama Board found that the employees’ rights prevailed.
The Second Circuit issued a summary decision affirming the Board’s holding. The Court found that the Board’s holding was reasonable, and that it was reasonable to conclude that employees could construe the workplace prohibition on recording to prohibit activities protected by the Act.
Eighth Circuit Eats the Board’s Lunch over Sick Days
In MikLin Enters., Inc. v. Nat’l Labor Relations Bd., 861 F.3d 812 (8th Cir. 2017), the Eighth Circuit Court of Appeals reversed the Board’s ruling that employees of a Jimmy John’s sandwich shop had the right to hang posters at work challenging the restaurant’s sick leave policy. The posters, which were highly detrimental to the employer’s business, challenged a policy that required employees to find a replacement worker to cover their shift in order to call off sick.
In the midst of a union organizing campaign, several employees attacked the sick leave policy. They hung signs in the restaurant indicating that the employer’s sick leave policy posed a health risk to workers and customers alike. Some posters stated that employees were not allowed to call in sick, while others implied that the policy led to food contamination. Management removed the signs and fired several workers who had coordinated the attack. Other employees were issued written warnings for supporting the poster campaign.
The Board concluded that the company violated Section 8(a)(1) of the Act by infringing on the employees’ rights to engage in protected concerted activity. The Board also concluded that Jimmy John’s violated Section 8(a)(3) of the Act because it discriminated against employees for engaging in concerted activities. In analyzing the issue, the Board reasoned that the Act protected the employees’ poster campaign because it occurred in the context of an ongoing labor dispute and because the posters were not “so disloyal, reckless, or maliciously untrue as to lose the Act’s protections.”
The Eight Circuit disagreed and overturned the Board for several reasons. First, the Court pointed out that even though the employees hung their posters in the midst of an ongoing labor dispute, those communications could still lose protection under the Act. Next, the Eighth Circuit held that the posters were designed to harm Jimmy John’s business, because they specifically targeted the safety of the company’s sandwiches. This harm, the Court explained, was likely to continue long after the labor dispute ended. Finally, posters claiming that employees could not call in sick and that sandwiches were regularly contaminated by ill workers were found to be “so materially false and misleading” as to lose the Act’s protections.
Employers in the Eighth Circuit Face a Liability Catch-22
In Cooper Tire & Rubber Co. v. Nat’l Labor Relations Bd., 866 F.3d 885 (8th Cir. 2017), the Eighth Circuit found that an employer violated the Act by firing an employee who used racial slurs. When contract negotiations failed between the employer and the union, the employer locked out union employees. The employees picketed during the lockout, while the company hired replacement workers. From the picket line, one employee shouted various racially-charged statements at African-American replacement workers. There was no evidence that the replacement workers heard the epithets and the offending employee made no other threatening gestures or actions during the incident.
After the labor dispute ended, the company began recalling locked out employees. It did not, however, recall the employee who shouted racial slurs. Instead, he was terminated for his conduct. The union grieved the termination and an arbitrator found that the discharge was supported by just cause. The case did not end there.
The union then took the matter to the Board. An ALJ determined that the employer violated the Act by firing the employee for his conduct on the picket line. The Board upheld the ALJ’s decision and ordered the employee reinstated with back pay. The employer appealed to the Eighth Circuit.
On review, the Eighth Circuit upheld the Board’s ruling. The Court held that Section 7 of the Act gives locked out employees the right to picket, and Section 8(a) prohibits employers from interfering with, restraining, coercing, or discriminating against employees for exercising that right. Explaining further, the Court determined that the employee’s comments were “a package of verbal barbs thrown out during a picket line exchange,” and since they were not accompanied by actual or implied threats of violence, they were protected by the Act.
Although the employer argued that anti-discrimination laws compelled the employee’s termination, the Eighth Circuit was not persuaded. Instead, the Court cited several cases wherein courts held that similar racial epithets did not create a hostile working environment under Title VII of the Civil Rights Act. Furthermore, the Court added that Title VII did not require the employee’s discharge; the company could have taken less extreme disciplinary action to remedy his conduct.
Supreme Court to Decide if Board’s Class Arbitration Ban Lawful
We reported last year that the Supreme Court of the United States is set to determine whether the Act prohibits employers from entering into employment agreements that require employees to waive the right to pursue class or collective actions. The Board initially adopted this position in D.R. Horton, 357 NLRB No. 184 (2012). In reaching that decision, the Board held that the Act trumps the provisions of the Federal Arbitration Act, which allows for the waiver of class and collective action proceedings in favor of arbitration proceedings. The Board’s position has been quite controversial, and created a split among the Circuit Courts of Appeal.
SCOTUS, which heard oral argument in October of 2017, now appears ready to settle the Circuit split.
In 2017, the Trump Board began to reverse some of the hallmark decisions of the Obama Board, and signaled an intention to overturn many more. All of this was good news for employers. The Obama Board had expanded, and in our opinion contorted the language of the Act, to protect employee conduct and actions that were just plain reprehensible. The Obama Board also read the Act in such a way as to render countless seemingly innocuous employer policies (such as those encouraging courtesy) unlawful. In 2017, the Board abandoned its pro-employee and pro-union position, and the pendulum has swung back.
It will take some time for the Trump Board to turn back eight years of pro-employee decisions, but the Board has begun the process. In addition, the Board appears eager to continue to its efforts. We will keep you updated throughout the year on our blog: www.palaborandemploymentblog.com