New Labor Board Goes Nuclear

Nuclear? Exaggeration? No!  In one week, the NLRB brought fairness to parts of the nation’s labor policy.  The week of December 11, 2017 was historic.   The NLRB and its new Republican-majority released four landmark decisions, and began rolling back one of the most unfair rules in the history of the National Labor Relations Board.  A momentous week!

JOINT-EMPLOYER STANDARD – A Blow to the Big Labor attack on franchised businesses

The most sweeping change of the week saw the Board restore the standard that a business must have “immediate and direct” control over a worker to be a joint employer.  In Hy-Brand Industrial Contractors, Ltd., the Board overturned Browning-Ferris, an Obama-era ruling that could only be described as judicial activism.

Browning-Ferris threatened the foundations of the American economy including franchising, subcontracting, and independent contractors, and the ruling changed more than thirty years of precedent.  It held that a business need have only indirect control of a worker, and not even exercise that control, to be considered a joint-employer, and the legal implications were indeed dire.  General contractors were liable for the unfair labor practices of subcontractors, and even worse they could even pick up the union obligations of subcontractors.  Corporations like McDonald’s, based in Chicago, were now responsible for the employment actions of individual franchisees from Anywhere, USA.  Parent corporations were responsible for the labor violations of franchisees who likely had never met or had any contact with any corporate officer concerning labor relations.  The entire franchise model was under attack.

Hy-Brand Industrial Contractors, Ltd. held that an alleged joint-employer must exercise joint control over essential employment terms, and merely having reserved the right to exercise control would not be sufficient to find joint-employer status.  The control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not be found from control that is ‘limited and routine.’”  Sanity restored, and franchisers and general contractors everywhere breathed a collective sigh of relief.

EMPLOYEE HANDBOOKS

The week also saw the Board’s new three-member Republican majority establish a new standard for evaluating employer rules, policies, and handbook provisions under the National Labor Relations Act (“Act”).

In Boeing Co. The Board no longer will focus solely on whether employees would “reasonably construe” a rule to restrict rights under the Act to determine if the rule is unlawful.  The Board will now evaluate: (i) the nature and extent of the potential impact on rights under the Act; and (ii) legitimate business justifications for the rule.  When legitimate business justifications outweigh a rule’s potential impact on protected rights, it will be found lawful.  The majority delineated three categories for future rules cases.  Based on the results of the new balancing test rules will be categorized as: (i) lawful; (ii) unlawful; or (iii) subject to individualized scrutiny on a case-by-case basis.

MICRO – UNITS – The tactic employed by Big Labor may soon be relegated to the past.

In 2011, the NLRB gave struggling labor unions a huge boost in its Specialty Healthcare decision which authorized so-called “micro” bargaining units.  The threat posed by these micro units to employee free choice and the ability of businesses to operate their business free of coercion and influence became reality.  The Chamber of Commerce released a report just this summer detailing the reasons how the decision has been bad for workers and bad for business.

While not as flashy and headline-grabbing as the joint-employer and handbook decisions, the decision in PCC Structurals, Inc. may prove to be even more important than both!  Specialty Healthcare reversed over a half-century of precedent that required a union to garner the support of a majority of workers to organize a facility.  The damage to worker free choice speaks for itself.  No need to get a majority, just find an arbitrary way to carve up the workforce into a micro unit and the union has attained its goal.

The Chamber article articulated the harm to businesses perfectly:

“By isolating a small number of workers in a small bargaining unit, it is far easier for unions to win an election.  This cherry-picking of smaller groups of employees could lead to increased numbers of fractured bargaining units, disrupting business operations and undermining stable labor relations as multiple units make competing demands for wages, benefits and work rules.”

PAST PRACTICE – The Secret Weapon of Big Labor

The final of the major cases of the momentous week that was Chairman Miscimarra’s swan song took on the Board’s decision from 2016 in E.I Dupont.  That decision obligated employers to bargain over changes in working conditions that are a mere continuation of past practices.

The DuPont rule meant that even when the employer’s change in employment terms is wholly consistent with past practice, the employer still must give the union notice and the opportunity to bargain.

In Raytheon Network, the NLRB rejected its prior decision in DuPont.  DuPont dramatically altered what constituted a “change” in employment terms requiring notice to the union and the opportunity to bargain.  Raytheon Network overruled that decision and held that “an employer’s past practice constitutes a term and condition of employment that permits the employer to take actions unilaterally that do not materially vary in kind or degree from what has been customary in the past.”

Also of note this week was the agency’s announcement that it was seeking public comment on the Representation Eelction Rules.  The widely criticized change in the election rules by the Obama Board, known as the “Ambush Election Rule” severely shortened the time frame from petition to election.  The scales tipped toward unions after the ambush rule’s implementation.  Employers were allowed as few as 10 -14 days to respond to often false and exaggerated union claims before an election.

These truly momentous decisions signal a return to equitable treatment at a government agency that had become increasingly biased against businesses and against employee free choice.