NLRB’s Rollback Initiative
In a flurry of activity that experts say should make employers rest a little easier, the National Labor Relations Board recently turned in a quartet of rulings — all 3-2 decisions – that countered rulings made during the Obama era.
Naturally, while the rulings will likely please employers and their legal counsel, workers’ rights advocates have a different view.
With NLRB Chair Philip Miscimarra’s term expiring at midnight on Saturday, Dec. 16, the Board issued several rulings on what constitutes joint employer status, employee handbook and workplace rules, union “micro-unit” bargaining considerations and changes to benefits as they relate to collective-bargaining agreements.
Of the four NRLB rulings, overturning Browning-Ferris is the one making the biggest splash, as the Board chose a “sensible return to a long-established precedent,” according to Michael Lotito, a San Francisco-based partner at Littler and co-chair of firm’s Workplace Policy Institute. “Returning to the direct-control standard helps employers establish boundaries.”
Lotito is referring to the NLRB standard that governed joint-employer liability prior to the Board’s ruling when it was controlled by Obama administration appointees. Before the Browning-Ferris decision in 2014, he says, a company would call and ask how to structure a joint-employer contract and he could offer a high level of certainty in giving advice. But that changed with the 2014 ruling, he says.
“The ‘indirect or potential’ control aspect of ruling meant we were no longer lawyers, but soothsayers,” he says. “Now, we can go back to offer a high degree of confidence. This is not to say it’s bad to have a joint-employer situation; it could make complete business sense. But now there is certainty where little existed before the Board acted.”
Lisa Vickery, an associate with Fisher Phillips in Portland, Ore., says the NLRB decision signals to employers the Board’s interest in shifting away from its pro-union stance of the Obama years by creating a more equitable balance for employers.
“The board is saying by overruling Browning-Ferris that it’s taking away the uncertainty for employers,” she says. “The pre-Browning-Ferris standard was the actual exercise of control. So, employers are able to now contract with staffing agencies or franchisees in a way that they don’t have to fear any ‘perceived’ joint-employer relationship.”
The expansion under Browning-Ferris in 2014 added employer concerns about how to treat some of the “new economy” situations that employers face with contingent workers, she adds.
“We’re not dealing with the same traditional employee/employer relationship that we tend to think of in the purely hypothetical terms,” she said.
According to Zachary Fasman, a partner in the labor and employment law department at Proskauer in New York, the decision requires proof that the alleged joint-employer entities have actually exercised joint control over essential employment terms, rather than merely having “reserved” the right to exercise control. Also, he says, the control must be “direct and immediate” (rather than “indirect”), and joint-employer status will not result from control that is “limited and routine.”
“This standard aligns with common law, would best foster stability in labor-management relations, and is consistent with holdings of state and federal courts,” he says. “The reversal is certainly not unexpected. Browning-Ferris was one of the most controversial and in my view, mistaken, rulings by the board in many, many years.”
Fasman’s advice to employers, even with the recent NLRB ruling, is to make sure you know who the employer really is if you’re engaging a contractor or any other party.
“If you are the entity who’s contracting for the work and don’t want to be deemed a joint employer, don’t retain control,” he said. “The direct and immediate control standard … will now be based on actual fact.”
In short, he added, be very careful in how your contracts are worded when it comes to potential joint employer relationships.
In the other three 3-2 rulings, the Board reversed a 2004 Board ruling and established a new test when evaluating a facially neutral (which does not discriminate against a particular group) policy, rule or employee-handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of National Labor Relations Act rights. Now, the Board will evaluate two things: the nature and extent of the potential impact on NLRA rights, and legitimate justifications associated with the rule. Experts contend that employers can more easily maintain workplace rules that serve legitimate employer interests, even if they might bump into NLRA Section 7 employee rights.
It also overturned an Obama-era Board decision that allowed unions to organize “micro-units” of employees. Here, the Board reinstated a traditional community-of-interest standard for determining whether unions have included all necessary employees on a petition for union representation. According to legal experts, the Board’s ruling means employers no longer will be forced to bargain with several small units of employees in one workplace, which, in essence, interfered with all employees from exercising their rights to vote for union representation.
Its final ruling overturned a 2016 decision that found certain obligations are required before implementing a unilateral “change” in employment-related issues. The NLRB held that actions “do not constitute a change if they are similar in kind and degree with an established past practice consisting of comparable unilateral actions.” Here, the Board concluded that the employer’s changes to employee healthcare benefits in 2013 were a continuation of Raytheon’s (the company in the case before the NLRB) past practice involving similar changes made at the same time every year for 11 years. As a result, the NLRB found the company did not violate the NLRA by failing to give its union advance notice and the opportunity for bargaining before making the 2013 changes.
With those four decisions coming within a short period of time, the NLRB will likely hold off on more rulings for at least a few months as the Trump administration names a new Board member, who then will be subject to Senate approval. But no doubt employers can expect more of the same once that happens, experts say.
“These decisions signal the Board’s willingness to shift back and really think about the business necessities that employers face,” says Vickery.