The New NLRB Takes Major Swings at "Obama Board" Initiatives

Last week was anything but dull at the National Labor Relations Board. The Board only recently shifted from having a Democratic majority under President Obama to a Republican majority under President Trump, and a new General Counsel has just been appointed. Further, the Chair appointed by President Trump, Philip Miscimarra, left the Board this past Saturday. Chairman Miscimarra—who was a Republican member of the Obama Board—was a major dissenter with respect to many initiatives of the Obama Board, initiatives which not only caused considerable consternation among those in the business community, but also reversed legal doctrines that had been in place for decades. Based on what happened last week, it appears that the sun, the moon and the stars are aligned to have many of those developments neutralized and have the law return to its prior and long-established norm.

"Quickie Elections" May Be On Life Support

For instance, in 2014 the Obama Board altered the way union election petitions are processed through what are commonly known as the “quickie election” rules. Under these rules, union elections typically take place within 21 days of the filing of union petitions, instead of 42 days per the former practices. In addition, and unlike under the former practices, the new rules require elections are to be held while many legal issues remain unresolved.

On December 12, the Board started the formal process for developing new regulations, presumably with the thought that “quickie election” rules are flawed and should be replaced. Consequently, the Board issued a Request for Information, asking the public:

1. Should the 2014 Election Rule be retained without change?
   
   
2. Should the 2014 Election Rule be retained with modifications? If so, what should be modified?
   
   
3. Should the 2014 Election Rule be rescinded? If so, should the Board revert to the Representation Election Regulations that were in effect prior to the 2014 Election Rule’s adoption, or should the Board make changes to the prior Representation Election Regulations? If the Board should make changes to the prior Representation Election Regulations, what should be changed?

Interested parties have until February 12, 2018, to submit comments on these questions to the NLRB.

The New Board Clarifies the State of Confusion Underlying Employee Handbooks

Two days later, on December 14, the Board in The Boeing Company clarified standards for determining whether handbook rules are legal or illegal under the National Labor Relations Act. Over the past few years, there have been dozens of decisions and other guidance issued which have confused employers—including non-union employers—with inconsistent outcomes. The confusion came from a standard that policies are contrary to the Act if they could be “reasonably construed” by an employee to prohibit the employee from exercising rights provided under the Act, most notably, the right to engage in concerted activities.

In The Boeing Company, the Board replaced the “reasonably construe” standard with two tests for evaluating facially neutral policies that are challenged: (i) what is the nature and extent of the potential impact on those rights; and (ii) what are the legitimate justifications for the rule. The Board set aside the “reasonably construe” standard, stating that it “prevents the Board from giving meaningful consideration to the real-world ‘complexities’ associated with many employment policies, work rules and handbook provisions,” and that the former standard “produced rampant confusion for employers, employees and unions.”

Following Boeing, employment rules will fall within three categories:

• Category One will include rules that are (i) held lawful because the rule, when reasonably interpreted, does not interfere with the exercise of NLRA rights, or (ii) the potential impact on those rights is outweighed by the justifications for the rule. Examples of such rules are those restricting the use cameras and requiring basic civility in the workplace.
• Category Two will include rules “that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on the NLRA-protected conduct is outweighed by legitimate justifications.”
• Category Three will include rules which unduly interfere with NLRA-protected rights, such as rules prohibiting employee from discussing wages or benefits with one another.

Applying these tests, the Board concluded that Boeing’s “no camera” rule prohibiting employees from taking pictures without a valid business need and a camera permit did not violate the law. Under the now-defunct “reasonably construe” standards, the opposite outcome would have resulted. Under this new test, many rules will likely survive legal scrutiny because of their reasonableness under the circumstances and the fact that—when reasonably interpreted—employees will not perceive them as proscribing basic legally-protected activities.

The New Board Overrules the Former Board's Browning Ferris/Joint Employer Tests

One of the prior Board’s most troubling rulings for employers was its 2015 holding in Browning-Ferris, which established a new test for what constitutes a joint-employer under the NLRA. Under long-held prior law, an entity was only deemed a joint employer under the NLRA, and thereby subject to bargaining and other obligations, if it had directly and immediately exercised control over essential employment terms of the other entity’s employees. In Browning-Ferris, the Board held that to establish a joint employment relationship, mere indirect or potential control would be enough.

In another December 14 decision, Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Company, the Board reversed the Browning-Ferris doctrine and reinstated its prior standard for finding joint employment, concluding: “We find that the Browning-Ferris standard is a distortion of common law as interpreted by the Board and the courts, is contrary to the Act, it is ill-advised as a matter of policy, and its application would prevent the Board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations.” While so holding, the Board still found that the entities in Hy-Brand were joint employers, and thereby jointly liable for unlawful discharges of seven striking employees.

Are These Developments Signs of a New Trend?

Likely. A number of the prior Board’s decisions and policies were unprecedented and, according to most in the business community, upset the balance and stability of the law in the workplace. The Board’s actions taken this week suggest its inclination to restore the rules to the pre-Obama era.

What Should Employers Do Now?

In three major areas—union organizing elections, employee handbooks, and joint employment—the Board may cause employers to breathe a sigh of relief. Employers should review any recent changes that were made to their handbooks based on advice under prior Board precedent that eliminated what they believed to be fair and valid rules but could be “reasonably construed” to prevent the exercise of rights under the Act. If employers believe that eliminating these rules has negatively impacted efficiency or civility in their workplaces, they may consider reinstating these rules. Employers in relationships with other entities, such as franchisor/franchisee relationships, service providers, staffing agency relationships, employee leasing or professional employer organizations, or employers who have shied away from potentially effective and valuable partnerships because of Browning-Ferris, may wish to reconsider their strategies in light of the new standards.

As always, it is advisable that any substantive changes to policies be made only after reviewing them with experienced and trusted labor and employment counsel. For more information or to discuss any questions, feel free to call Rob Boonin (rboonin@dykema.com), Abad Lopez (alopez@dykema.com), Jack Schaedel (jschaedel@dykema.com), or your relationship contact at Dykema.