New Joint-Employer Standard Properly Developed But Improperly Applied, Rules Federal Appeals Court

There have been many precedent changing decisions coming from the NLRB in the last few years. Few of these changes were more hotly contested, or farther reaching, than the Board’s decision in Browning-Ferris where it altered its longstanding joint employer test. The new joint-employer test made it much more likely for a joint-employer relationship to be found to exist. The decision was fairly rare (at least for the last few years) because it actually involved 5 members (voting 3-2), instead of the much more common three person panel (when the Board actually has three valid members, unlike the now infamous “two member” and “recess appointment” eras).

The Board in Browning-Ferris ruled that the principal employer’s “actual” control over the employees of the contractor was no longer necessary. Under long established common law principles of agency, joint-employer status could be found by indirect means, such as the existence of a contractual provision between the principal and contractor stating that the principal has control over the work of the contractor, even if such control is not exercised. Two years later, a newer NLRB promptly reversed Browning-Ferris in Hy-Brand Industrials, but then had to reverse its reversal due to allegations that one of the majority Board members should have recused himself. The NLRB then announced that it was going to engage in rule-making over this issue.

The original Browning-Ferris case was appealed after it issued. Given that the NLRB intended to change the rule, the agency initially requested that the case be dismissed. Ultimately, the NLRB asked the federal appeals court to rule on the case because the common law principles upon which the decision rested were purely a matter of law to which the Court owed the agency no deference.

The Court of Appeals accepted the case and recently issued a decision in Browning-Ferris Industries of California, Inc. v. NLRB, Cases 16-1063 and 16-1064 (D.C. Cir. December 28, 2018). The decision provides an excellent summary, both of the history of the joint-employer standard under the National Labor Relations Act, and also of the practical and legal issues related to finding of joint-employer status. The Court does a great job of articulating what can be a complicated issue in simple terms.

Board Not Entitled to Deference on Issue of Common Law Employer Status

As to whether the underlying Board decision was entitled to deference, the Court ruled that Board was not entitled to deference and that it could consider the issue as a purely legal one. The Court also noted that its decision was appropriate despite the fact the Board was engaged in rule-making over this issue stating, “we see no point in waiting for the Board to take the first bite of an apple that is outside its orchard.” That apple being an analysis of common law agency.

Board’s Joint-Employer Test Finds Support in Common Law Principles

The Court then concluded that the Board’s analysis in Browning-Ferris was a correct reflection of the law. The Court noted, the Board’s “conclusion that joint-employer status considers not only the control and employer actually exercises over workers, but also the employer’s reserved but unexercised right to control the workers and their essential terms and conditions of employment, finds extensive support in the common law of agency.”

Board Failed To Articulate Facts Supporting its Conclusion of Joint-Employer Status

Despite its approval of the standard developed by the Board, the Court refused to enforce the ruling and instead remanded the case to the Board. The Court explained that the Board had failed to properly apply the standard to the facts of the case:

The problem with the Board’s decision is not its recognition that indirect control (and certainly control exercised through an intermediary) can be a relevant consideration in the joint-employer analysis. It is the Board’s failure when applying that factor in this case to hew to the relevant common-law boundaries that prevent the Board from trenching on the common and routine decisions that employers make when hiring third-part contractors and defining the terms of those contracts.

The Court ruled that the Board’s decision “failed to differentiate between those aspects of indirect control relevant to status as an employer and those quotidian aspects of the common-law third-party contract relationships.” In other words, the Board provided no “blueprint” for what counts as indirect control in its decision. The Court held that the “[G]lobal oversight *** is fully compatible with the relationship between a company and an independent contractor. Wielding direct and indirect control over ‘essential terms and conditions’ of employees’ work lives is not.” The Court ruled that because it could not tell which facts the Board relied upon in making its decision, it could not enforce the decision.

Board Failed to Identify Terms and Conditions of Employment Subject to Bargaining.

The Court also found fault in the Board’s new test regarding bargaining and joint employers. The Board held that even if under common law principles joint-employer status would be found, the Board will also ask “whether the putative joint employer possesses sufficient control over employees’ essential terms and conditions of employment to permit meaningful collective bargaining.” To this end, the Board required bargaining “but only with respect to those terms and conditions over which it possesses sufficient control for bargaining to be meaningful.” The Court found that the Board “did not meaningfully apply” this portion of its test because it did not identify which terms and conditions were “essential” to make bargaining “meaningful.” The Court noted that if the Board were to find the employer and its contractor were joint-employers that it would explain which terms and conditions are meaningful to bargaining and “clarify what ‘meaningful collective bargaining’ entails” and how it works in this setting.

Rule-Making Probably Will Be Final Say (Until A Different Board Changes the Standard in the Future)

In sum: the Court found that the Board properly concluded that indirect control could be considered as part of a common law analysis but that the Board failed to articulate how the two employers at issue were joint-employers, and, if they were joint-employers, how bargaining could be conducted and over what terms and conditions of employment. This case probably has very little implication in the short term because the current Board is unlikely to further the Browning-Ferris standard. The Court’s decision does give some important context to the practical issues faced by contracting employers alleged to be joint-employers. We will have to wait and see how the Board addresses this case in the rule-making. The Board extended the period to file comments in the rule-making in response to the Court’s decision. Comments are now due on February 11, 2019.

Tags: Browning-Ferris, co-determine, court of appeals, indirect control, joint employer, joint employer status, NLRA, NLRB

NLRB Majority: Unqualified Notice to Picket Jobsite Where Neutrals Are Present Violates Act

By Mark Theodore on January 11, 2019 Posted in General Counsel, NLRA, NLRB, Uncategorized, Unfair Labor Practices

We recently saw interesting decisions from the NLRB including cases about the employer’s duty to provide information about tax cuts, the lawfulness of litigation holds, and the validity of decertification petitions.

At the end of December, a divided NLRB took on a case involving a union’s threat to picket a work location where multiple employers are present.

In IBEW Local 357 (Convention Technical Services), 367 NLRB No. 61 (December 27, 2018), the Board addressed the legality of threats made against neutral employers. These are secondary boycott cases implicating Section 8(b)(4) of the Act. A secondary boycott case involves a union with a dispute with one employer (the principal), seeking to target the principal and also broadly publicize the dispute to the public, landlords where the work is being performed, and other employers (secondary targets). The aim of these protests unquestionably is to enmesh as many other secondary targets as possible. Secondary activity is very common and is lawful in a variety of contexts. Anyone who has encountered a banner on the street which states “shame on x company” is viewing secondary activity. The company named in the banner may have nothing at all to do with the hiring of the targeted employer but is being publicly shamed in the hopes that it will exert pressure on the actual target to resolve the dispute. Another fairly common example of lawful secondary activity is the placement of a large, inflatable rat at the jobsite. These publications of a dispute generally have been deemed to be lawful because they do not contain coercive elements, such as picketing.

Secondary boycott activity can be unlawful if the picketing (or other activity with coercive elements) is aimed at neutral employees or companies. These cases usually involve picketing of a construction site.

What made this recent case notable is that the General Counsel and the Respondent union, although usually opponents in litigation, both sought the same result–to overturn Board precedent finding certain threats to picket to be unlawful in violation of Section 8(b)(4).

Background

The charging party is a contractor furnishing portable electrical services in the convention industry. A union targeted the contractor in a dispute over “area standards” (which, ostensibly, is a protest that the contractor does not pay wages and benefits in accordance with similar jobs in the area, usually union, but is widely regarded as code for “non-union”). The contractor was performing some work at the Las Vegas Convention Center. The union sent a letter to the area Trades Council seeking a “strike sanction” against the contractor for “any and all jobs because of not paying area standards.” The letter was copied to the Las Vegas Convention and Visitors Authority, the governmental agency managing the convention center where the work is located.

Charging party filed charges alleging that the union’s letter violated Section 8(b)(4)(B) of the Act because the threat to picket did not state that it would be limited to the charging party in accordance with the standards set forth in Sailors Union of the Pacific (Moore Dry Dock), 92 NLRB 547 (1950). Moore Dry Dock held that picking at a common situs (one where multiple employers are present) is presumptively lawful if:

“(a) the picketing is strictly limited to times when the situs of the dispute is located on the secondary employer’s premises.” So, no picketing when the target is not present, which helps explain why a banner, which is not inherently coercive, can be displayed any time.
“(b) at the time of the picketing the primary employer [the target] is engaged in its normal business at the situs.” That is, the target is performing the disputed work.
“(c) the picketing is limited to places reasonably close to the situs”; thus, if the worksite has a gate “reserved” for the target employer, then the picketing must be limited to the reserved gate; and
“(d) the picketing discloses clearly that the dispute is with the primary employer.” The picket signs must identify which company is being targeted. Again, contrast this with the banner, which can identify a company with a tenuous connection to the dispute and not mention the target at all.

The General Counsel and Respondent union sought reversal of Board case law holding that threats to picket multi-employer job sites violate the Act if they do not contain assurances that the picketing will be limited to the targeted employer. An example of the case law the parties sought to overturn was Sheet Metal Workers Local 15 (Brandon Regional Medical Center), 346 NLRB 199, 202 (2006), enf. denied 491 F.3 429 (D.C. Cir. 2007) where the Board held that the purpose of the Board’s requirement that a union give Moore Dry Dock assurances is to “assure the secondary employer that the picketing will be confined to the primary employer.”

The ALJ held that although both the D.C. and 9th Circuit courts of courts of appeal had criticized the Board’s rule, he was constrained by the existing precedent and issued a decision finding a violation of the law.

The ALJ’s Decision issued in 2014.

The General Counsel and Respondent appealed.

Divided Board Sticks With Rule

Chairman Ring and Member Kaplan upheld the violation, noting “[f]or over 50 years, the Board has held that if a union notifies neutral employers at a common situs that it intends to picket the primary employer, the union” has an affirmative obligation to qualify its threat by clearly stating its action will conform to the Moore Dry Dock standards. The Board majority concluded that “a union’s broadly worded and unqualified notice, sent to a neutral employer, that the union intends to picket the worksite the neutral shares with the primary employer is inherently coercive.” In this case, the union’s letter stated that the union would seek a strike sanction against “any and all jobs” without any attempt to narrow the scope of the protest.

The Board, anticipating further challenge to its rule on appeal, noted that it was not presuming that the union’s threat was to picket in an unlawful manner. The Board held that the following circumstances, taken together, violated Section 8(b)(4)(B): “the locale of the threatened picketing (a worksite shared by the primary employer and one or more neutral employers), the target of the picketing (one of the neutrals), and the threat’s unqualified and therefore ambiguous nature (leaving the neutral uncertain whether picketing at the common situs will be lawfully confined to the primary or will unlawfully enmesh the neutral)…” Indeed, the letter was copied to the manager of the convention center, the representatives of which might read the threat as an intent to engage in picketing designed to disrupt all of its operations not just the work engaged in by the charging party.

The Board emphasized that it was merely “prohibiting unions from issuing an unqualified threat to engage in common situs picketing” and that it did “not expect unions to necessarily cite Moore Dry Dock or use any specific legalese.” Rather, the union must make clear “in some manner that it will comply with legal limitations on common situs picketing so as to not entangle neutrals.”

Dissent Sees It Differently

Member McFerran dissented, noting that her colleagues missed an “opportunity to revise the Board’s Moore Dry Dock -assurances doctrine in response to the thoughtful criticisms brought by both the courts of appeals and the General Counsel.”

Takeaways

The Board has decided to continue its policy of holding an unrestricted threat to picket as unlawful. Most threats of a job action aimed at a contractor usually contain language limiting the nature of the coercive activity (such as picketing) to the target. Even if this case represented a big change to the law, which it most certainly does not, the requirement to issue a qualified as opposed to an unqualified threat to picket hardly seems onerous.

The real story in this case is its backstory. It does seem unusual that the General Counsel and the Respondent would be aligned on seeking the same outcome. One can imagine that the charging party wondering why, after filing an unfair labor practice charge, participating in an investigation of the charge, and having a complaint issue and proceed to litigation, have the NLRB side with the respondent.

Seeking to change existing precedent is fairly common and not confined to any particular ideology. The General Counsel in office in 2014 wanted to change this precedent due to the criticisms of various federal appeals courts. We have discussed how the current General Counsel has stated that one of his priorities is to seek out cases in litigation that can be used to change the law.

Just as the General Counsel has changed since 2014, so has the make-up of the Board. There is little doubt that the outcome of the case would have been different had the Board reached a decision on this case in the two plus years between the ALJ’s Decision in July 2014 and the change in administration.

Tags: common situs, Moore Dry Dock, NLRA, NLRB, picketing, secondary activity, Section 8(b)(4)(B), unqualified threats to picket

Decertification Petition Was Improperly Dismissed, NLRB Rules

By Mark Theodore on January 4, 2019 Posted in Decertification elections, NLRA, NLRB, Protected activity, Representation Elections, Section 8(a)(1), Section 8(a)(5), Uncategorized, Unfair Labor Practices

Recently, we explored how the NLRB’s rules for determining the timeliness of a representation can be confusing. Another area of complexity comes from whether a decertification petition will be processed in the face of unfair labor practice charges filed by the incumbent union. This implicates the Board’s “blocking policy,” which is a set of guidelines designed to address circumstances where allegations of unlawful acts by the employer have been made during the pendency of a representation petition. Under the NLRB’s rules, the Regional Director possesses a tremendous amount of discretion to determine whether a petition will proceed in the face of unproven allegations. It is not uncommon to see decertification petitions,- actions brought by an employee or employees seeking to end union representation,– blocked for years with little or no explanation due to the mere presence of unfair labor practice allegations.

Critics of the blocking policy have claimed that it is too easy for an opposing party to obstruct the processing of a petition, particularly a decertification petition, merely by filing charges.

On December 19, 2018, the Board issued a decision clarifying one aspect of how decertification petition should be treated,–that when the underlying unfair labor practice allegations disappear through settlement. In Cablevision Systems Corp., 36 7 NLRB No. 59 (December 19, 2018), the Board addressed a decertification petition filed in 2014.

Background

In 2012, the union was certified as the bargaining representative. Starting in 2013, the union filed two sets of charges alleging bad faith bargaining, discrimination and coercion in violation of Section 8(a)(5), (3) and (1) of the NLRA. The Regional Director found merit to the allegations and issued two complaints.

The complaints proceeded to hearing before two separate Administrative Law Judges. Before either ALJ issued a decision, an employee filed a decertification petition seeking to end the union’s representation. The employee managed to collect signatures sufficient to support the petition despite the union having unlawfully threatened to sue employees who distributed decertification petition (oddly, and despite the fairly transparent nature of the agency, neither the ALJ or the NLRB decision in the case against the union is published on the agency’s website; the NLRB provided WestLaw citations to each decision). The Regional Director administratively dismissed the petition, subject to reinstatement, pursuant to the Board’s blocking policy.

The two Administrative Law Judges eventually issued decision, each of which ultimately found the employer to have committed unfair labor practices. The employer appealed the matters to the Board.

Parties Settle, Regional Director Denies Request To Reinstate Petition

Before the Board issued a decision in either unfair labor practice case, the employer and the union agreed to settle the matters on a non-Board basis. The settlement included backpay to some employees and a three year collective bargaining agreement with an effective date of June 15, 2016. The settlement also included a non-admissions clause. The Board approved the settlement and the unfair labor practice charges were withdrawn.

The employee-Petitioner requested that the decertification petition be reinstated because the unfair labor practices had been resolved. The Regional Director denied this request solely on the basis that two administrative law judges had found violations of the Act which established a “causal connection” between the unfair labor practices and the erosion of employee support.

The employer requested review of this decision.

Three Member Board Majority Reinstates Decertification Petition

Three members of the NLRB (Ring, Kaplan and Emanuel) voted to reverse the Regional Director’s decision and ordered reinstatement of the decertification petition. The Board held that the allegations addressed in the Administrative Law Judge Decisions “were settled by agreement of the parties with no admission of wrongdoing by the Employer..” and therefore “furnish no basis for refusing to reinstate the petition.” This holding was based on the fact neither ALJ Decision was a “final decision” because they had not been acted upon by the Board. The ALJ decisions became a “nullity” upon withdrawal of the charges.

The Board held that denying the processing of a petition when there has been no final finding of a violation of the law would:

[C]ontravene due process to give determinative effect to these allegations, which the Employer merely agreed to settle, ‘nothing more and nothing less’. . . The implications for the decertification petition would be especially harsh: her petition would be dismissed based on findings that she will never have any opportunity to challenge in any forum. Accordingly, rather than ‘abdicat[ing]’ our duty to determine the validity of election petitions, as the dissent charges, we are safeguarding employees’ Section 7 rights by reinstating the decertification petition after allegations potentially tainting it have been settled.

The Board also noted that the Regional Director’s decision, if allowed to stand, would mean that the employee would have to wait until the expiration of the collective bargaining agreement before being able to file a timely petition.

Dissent Says Regional Director Acted Properly

Member McFerran issued a dissent arguing that the Regional Director correctly concluded the decertification petition was tainted by the employer’s unfair labor practices:

Contrary to the majority, the fact that the parties had settled the allegations against the Employer before final action by the Board does not compel a different result. To be sure, the settlement (absent an admission of wrongdoing) precludes any legal conclusion that the Employer violated the Act. But that is not the issue here. Rather, as recognized by the Regional Director, there remains the separate statutory question whether the Employer’s conduct tainted the decertification petition.

Takeaways

This case provides some clarification as to the appropriateness of dismissing a decertification petition after the resolution of unfair labor practice charges. In this case, the resolution involved the total withdrawal of charges, which had to be approved by the agency. While the agreement to settle the unfair labor practices is not set forth in the case, one can presume the agreement did not address the decertification petition. With the charges being withdrawn, and the employer not admitting to any wrongdoing, the Board found there was no legal basis to dismiss the petition. The case signals that this Board is going to look more closely at whether there exists a causal connection between any alleged unfair labor practices and employee sentiment with respect to continued union representation.

It is apparent from reading this case that the union and the employer were locked in a difficult struggle. What seems to be missing is any direct connection between the alleged unlawful acts and the employee efforts to decertify. Parties seeking to continue processing petitions in the face of unfair labor practice charges should ask the Region for the reasons why a petition is blocked or dismissed.

Of equal importance: this case illustrates the need for the Respondent in any unfair labor practice proceeding to insist on a non-admissions clause in any settlement, regardless of whether the settlement is taken through the Board’s procedures or not. Without a non-admissions clause provision, the case could have had a different outcome.

Tags: decertification petitions, erosion of support, interference, NLRA, NLRB, non-admissions clause, non-board settlement, taint

Employer’s Litigation Hold Not Unlawful, NLRB Division of Advice Concludes

By Mark Theodore on December 21, 2018 Posted in Employer policies, Handbook, NLRA, NLRB, Section 7, Section 8(a)(1), Uncategorized

Last year about this time, the NLRB changed the standard for reviewing handbook rules. The new standard takes into consideration the fact there are many other interests other than the NLRA at play in a workplace, and seems to have quieted the frenzied scrutiny of employer policies. Over the years, the heightened scrutiny of employer policies has resulted in some interesting results in cases, as seen here, here and here.

There have been few cases decided by the NLRB using the new standard, and this is likely due to the fact fewer such charges are being filed over these types of issues.

On December 17, 2018, the Board released a Division of Advice Memorandum from October 2018 which evaluated an employer’s directive that employees preserve all communications related to a wage and hour class action. In Uber Technologies, Inc., 19-CA-199000, Adv. Mem. (October 2, 2018), Advice addressed two allegations stemming from the employer’s defense of a lawsuit by one of its drivers.

The facts were simple. An employee filed a federal and state class action alleging compensation issues. The employer emailed several employees, including the plaintiff/employee, notifying them of the lawsuit and directing them not to comment on the lawsuit, and further, that if anyone contacted them about the lawsuit, they should contact the in-house attorney.

The employer also sent out an internal litigation hold and document preservation email, which informed employees they must “preserve and protect” any information they possessed related to the case, including:

All documents which contain communications pertaining to any allegation by Plaintiff that [employer] treated him unfairly in regards to his employment;
All communications with Plaintiff; and
All communications concerning Plaintiff.

Plaintiff filed a Section 8(a)(1) charge against the employer, alleging the two directives restrained and coerced him and other employees in violation of their Section 7 rights to discuss matters related to compensation.

Advice Concludes Directive Not To Comment on Lawsuit Was Unlawful

Advice concluded the employer’s directive to employees that they not comment about the lawsuit violated Section 8(a)(1) because it “prevents employees from discussing the lawsuit or the common grievance from which it sprang with one another, with the media or third parties.” Advice directed the Region to issue complaint on this allegation because the employees’ “right to communicate with one another and with third parties and the media about grievances and potential remedies to those grievances, including lawsuits, is a significant Section 7 interest.”

This is not a surprising conclusion given that workplace discussion is a core aspect of Section 7. Rules prohibiting discussion of compensation and other workplace issues also violate some state laws.

Litigation Hold Not Unlawful

Advice next analyzed the litigation hold and concluded it was not unlawful. First, Advice noted the litigation hold did not “explicitly address protected concerted activity” but instead addressed “all communications” and thus it was facially neutral.

Second, Advice stated that while employees would “reasonably understand the hold to include protected concerted activities” of the plaintiff/employee, the “rule does not require employees to produce the communications,” merely to preserve them.

Finally, Advice noted the employer had significant interests in issuing the litigation hold:

Like all parties to a lawsuit, it is legally compelled to preserve evidence. Adherence to this duty is key to avoiding liability for damages for spoliation of evidence. While we have found no cases specifically holding that an employer must produce the private communications of its employees, this area of law is far from settled and it is appropriate for the Employer to err on the side of caution in complying with its legal obligation to preserve all documents that may constitute evidence in the ongoing litigation. Moreover, broad litigation holds serve not just employers’ interest in avoiding penalization for spoliation of evidence, but also the interests of plaintiffs, intervenors, and the courts.

Because the broad litigation hold is “not focused on employee protected concerted activity” it was lawful.

Tags: comment, handbook, litigation hold, news media, NLRA, NLRB, policies, protected concerted activity, Section 7, Section 8(a)(1)

NLRB Issues Strategic Plan for Coming Years

By Mark Theodore on December 13, 2018 Posted in Bargaining units, NLRB, NLRB Election Rules, Specialty Healthcare, Uncategorized, Unfair Labor Practices

The NLRB recently made public its NLRB Strategic Plan FY 2019-FY2022 wherein it states it wants to reduce time to handle cases before it by 5% per year at each stage of the case processing. The Strategic Plan provides an excellent snapshot of NLRB operations (page 3) but not much can be read into, or from, this document, which is long on aspiration and short on detail. It was issued pursuant to GPRA Modernization Act of 2010 which makes it a requirement for all federal agencies to submit a strategic plan identifying, among other things, “general goals and objectives.”

The NLRB always has been driven by metrics. All one has to do is read the basic summary of data about the agency and its operations contained on page 3 to see that with a staff of only 1,327 (70% of whom are in the field), it handles 20,000 new cases per year, which can only be characterized as efficient (perhaps more than efficient).

For anyone curious as to what a 5% reduction in average time for case processing each year for the years encompassed by the Strategic Plan would look like, the targets are set forth in the Appendix of the plan starting on page 17.

The average timelines for the unfair labor practice case processing are interesting.:

First stage – Filing of charge to determination of merits (or lack thereof) – Current average is 106 days. Over the next few years this would be reduced to 85 days.
Second stage – Issuance of complaint to decision by ALJ – Current average is 242 days (the trial usually must be set within 100 days of issuance). This would be reduced to 194 days.
Third stage – Issuance of Board decision. Current average is 585 days (about 1.6 years). This would be reduced to 468 days.

Also interesting is the resolution of representation cases. Here there is less information. The agency aspires to seek an increase of a tenth of a percent in representation petitions resolved within 100 days of filing, from 85.8% to 85.9%, which may be reflective of the Board’s recent elimination of micro units and its desire to re-examine the election rules.

Tags: ambush election regulations, case processing, GPRA Modernization Act of 2010, micro units, NLRB, representation petitions, strategic plan, unfair labor practices

Union Not Entitled to Information About How Employer Spends Money From Tax Cut, NLRB General Counsel Rules

By Mark Theodore on December 11, 2018 Posted in Advice, Duty to furnish information, NLRA, NLRB, Section 8(a)(5), Uncategorized

In prior posts, we have discussed how information requests made in the context of a bargaining relationship can be vexing. The standard of the employer’s obligation to provide information can be a moving target, depending on the make-up of the NLRB. For example, for a brief period of time we saw how an employer could be found to have to have breached its duty to bargaining by merely failing to respond to a union’s information request, even though there was no duty to provide information.

The use of information requests can at certain times be used as a weapon. Recently, in Nexstar Media Group., Inc., Case No. 03-CA-220094, Adv. Mem. (October 15, 2018), a union’s request for information about the employer’s use of money it saved due to the recent corporate tax cuts became the subject of NLRB litigation.

Background – Employer Offers Bonus to Non-Union Employees Crediting Tax Savings

In late 2017, Congress passed the Tax Cuts and Jobs Act (“TCJA”), which among other things, reduced the corporate tax rate. In January 2018, the employer informed its unrepresented employees that “the new corporate tax rate will produce a financial benefit …and the Company wants to extend that benefit to our employees via a one-time bonus and an increase to the 401k match.” The employer’s announcement stated that it was not granting the bonus and increased benefit match to union-represented employees whose contracts were under negotiation.

Union Makes Broad Information Request

During the course of bargaining, the union made a written information request to the employer. The request stated the purpose was to prepare for bargaining and “to ensure the tax cut raises wages and stops the offshoring of jobs”. The request had ten separate paragraphs which sought a wide variety of information, including:

the estimated gains to the corporation and its subsidiaries and affiliates from the TCJA
the total compensation for executives for the year before and the current year after passage of the TCJA
The amount spent by the employer on lobbying or public relations campaigns in support of the TCJA
an accounting of the total amount of profits held overseas, the amount to be repatriated, and the total tax to be paid on that repatriation over each of the next five years

The employer refused to provide the information and the union filed charges.

Advice Recommends Dismissal

The charge was sent to the NLRB’s Division of Advice, likely because there are dozens of charges on file dealing with similar requests for information (and similar employer refusals) and the General Counsel wanted to act in a consistent manner.

Before getting to the merits of the issue, Advice set forth the general standard of law that when the requested information “concerns bargaining unit employees or their terms and conditions of employment” then it is generally considered to be relevant to bargaining and must be produced “unless the employer rebuts the presumption.”

In its request, the union stated there were two purposes in needed the information in order to conduct bargaining. The first was to ensure, through bargaining ,that the employer’s TCJA benefit went to increasing pay of the employees and to returning jobs to the United States. The second purpose was to aid the union in its bargaining about bonuses and 401k contributions. Advice concluded that “[n]either articulated purpose entitles the Union to the information it requested.”

Advice noted, the first purpose “created no duty because that purpose goes beyond the Union’s statutory role.” In other words, there was not a direct relationship between the federal tax act and the employees’ terms and conditions of employment. In this regard, Advice noted “the Union has failed to identify any provision in the TCJA obligating the Employer to spend its tax savings toward the Union’s preferred objectives or granting the Union a role in enforcing such a requirement.” Without some direct link to, obligation created by, the tax cut law, Advice noted that how an employer chose to spend any savings it garnered from the tax cut was akin to an entrepreneurial decision which is not a mandatory subject of bargaining.

As to the second purpose, Advice stated that the union failed to show how the information was “reasonably necessary” to engage in meaningful bargaining over bonuses and 401k matches. The union had contended in support of its charge that the employer made the information about the size of the tax benefit relevant because it announced that was granting benefits as a result of the TCJA. Advice brushed this claim aside, stating “the Union has failed to explain how the Employer’s announcement rendered the requested information reasonably necessary to frame or support any Union bargaining proposals.”

Takeaways

Ignoring an information request made by a union is risky but in cases like this, where there was no obvious connection between the stated purpose of the request, and bargaining unit employees made it easier. The fact the TCJA does not require the expenditure of any tax savings in a particular manner was fatal to establishing the relevancy of the union’s requested information. Still, one can imagine that this case could have resulted in the issuance of a complaint but for the fact it occurred during the make-up of a more employer friendly NLRB.

Tags: bargaining obligation, duty to provide information, mandatory subject of bargaining, NLRA, NLRB, presumption of relevance, section 8(a)(5), tax cut and jobs act

Employer’s Representation Petition Not Barred By Existence of Signed Contract, Divided NLRB Rules

By Mark Theodore on December 3, 2018 Posted in Collective Bargaining, Decertification elections, NLRA, NLRB, Representation Elections, Uncategorized

As we have noted at times, the human element in labor relations makes for interesting situations. One of the more interesting issues is the timeliness of representation petitions, which, despite the existence of clear rules, can still be disrupted by human action.

A union, an employee or an employer can all file a representation petition with the NLRB. The union’s petition is called an “RC” petition, the employee’s (when filing they usually are seeking to end union representation) an “RD” petition, and the employer’s petition is styled an “RM” petition.

In order to be valid, the representation petition must be filed during what is deemed to be an open period where a question concerning the representation of employees can be decided. The NLRA and NLRB case law contain bars to the filing of a petition,– essentially blackout periods,–during which the filing would not be timely and would result in the dismissal of the petition. One bar is the “election bar” which, according to Section 9(e)(2) of the NLRA prevents an election from being “conducted…in any bargaining unit or any subdivision within which, in the preceding twelve-month period, a valid election shall have been held.” Under the election bar, a newly organized union gets a year to negotiate a contract before its status can be challenged. If the union loses the election, the employer is spared the disruption of an election campaign for twelve months.

To make matters more confusing, there is a one-year certification rule, which bars the filing of a petition for one-year following the date of certification of a union, which usually occurs some days after the election.

Another bar is the “contract bar” which, generally, states that no petition may be filed during the existence of a valid collective bargaining agreement. The Board evaluates the existence of a contract in fairly practical terms. There must, for example, be an actual contract that can be ascertained from existing writings. It wouldn’t do to accept oral assertions in this regard; the issue is simply too important. The contract also must be signed by both parties. If a signed contract exists, then a number of other rules apply to the different parties. For instance, a valid contract may only bar an employee petition for a period of three years. The rules are different for employer petitions and a valid contract bars the employer from filing a petition for its entire term.

What happens if there is a signed, valid contract but the “effective dates” of the contract are set in the future? Would a representation petition filed after the signatures but before the effective dates be timely?

Recently, a divided NLRB (Ring, Kaplan and Emmanuel) voted that a petition filed before the effective dates of a collective bargaining agreement regardless of whether that agreement had been signed does not bar an RM petition.

In Silvan Industries, 367 NLRB No. 28 (October 26, 2018) the Board was confronted “with a sequence of events that apparently has never happened before, at least so far as published decisions disclose.”

Newly Organized Employer Bargains With Union For One Year

The employer operates a manufacturing facility and a union was successful in a representation election. The dates of events are important to the discussion of what happened next:

October 16, 2015 – the union was certified. A new election could not occur before one year from this date.
October 13, 2016 – the parties reach a tentative agreement. This date, falling a few days before the end of the year of certification is important. It is very common for parties to reach an agreement at or near the end of the first year of bargaining because the union knows that after the anniversary date it is vulnerable to a new election (or withdrawal of recognition by the employer).
October 15, 2016 – the employees ratify the agreement. The parties agree to meet on October 25, 2016 to execute the contract.
October 25, 2016 – an employee presents the employer with a petition in which employees expressed opposition to continued representation. The employer now had good faith, objective evidence that the union’s majority status was in doubt. Without the existence of the collective bargaining agreement, the employer would have been privileged to withdraw recognition.
- The employer files an RM petition.
- Shortly after filing an RM petition, the employer signed the collective bargaining agreement.

The collective bargaining agreement, unusually, had effective dates in the future- from November 7, 2016 to November 3, 2019.

Regional Director Dismisses Petition as Untimely, Employer Appeals

The Regional Director dismissed the RM petition without a hearing, finding that the employer was precluded from challenging the status of the union citing case law holding that an employer may not withdraw recognition once a valid collective bargaining agreement has been reached. Auciello Iron Works, 317 NLRB 364 (1995), enfd. 60 F.3d 24 (1st Cir. 1995), affd. 517 U.S. 781 (1996). In Auciello, the Board held that an employer was precluded from withdrawing recognition from the union upon acceptance of an offer by the union to form a collective bargaining agreement.

The employer appealed the dismissal of its petition to the NLRB.

Divided NLRB Reverses Regional Director, Holds Case Law Supports Timeliness of RM Petition

The Board majority noted first there were competing policy considerations at play in determining the timeliness of a representation petition. The first is to promote stability in collective bargaining by prohibiting the challenge to representation during a valid collective bargaining agreement. The Board noted that “[o]n the other hand, delay in resolving an otherwise-valid question concerning representation affects the Section 7 rights of employees who do not support continued union representation.” The Board noted that it had over the years developed several “requirements” that must be met before a collective bargaining agreement can bar an election, including, that it be in writing, signed and specify an effective date on its face.

Analyzing the question before it, the Board reviewed the case law and concluded “time and time again that the period during which a collective-bargaining agreement bars an election runs from the its effective date.” The Board noted that it often applies different standards to petitions filed by unions and employees to those filed by employers. For example, the Board recognized that under the case law the employer in this case could not have lawfully withdrawn recognition but held that standard did not apply to the case. The Board addressed Auciello, concluding that “the standard for determining whether an employer could lawfully withdraw recognition does not govern the case.” This is because the Board’s ruling in Levitz Furniture Co. of the Pacific, 333 NLRB 717, 723 (1996) which held that an employer may file an RM petition in circumstances where it could not lawfully withdraw recognition. The Board held that its “contract-bar doctrine does not warrant dismissal of the petition because no contract was in effect when the petition was filed.”

The Board did not see this case as far-reaching in that it had “never happened before” and that “it is destined to occupy a deservedly obscure nook in the Board’s representation caselaw.”

Dissent Sees Instability With Rule

Member McFerran dissented noting that the rules regarding bars to an election are different for employers because they hold a great deal of power in bargaining. McFerran noted that “were the Board to focus on the effective date of the contract (rather than the date of its formation) when applying the ‘contract bar’ doctrine in cases like this one, employers would have a strong incentive to seek delayed effective dates, a result just as contrary to the Act’s goal of encouraging collective-bargaining agreements (and their stabilizing effects) as a deliberate delay in reaching an agreement in the first place.”

McFerran knocked the Board majority even further:

Instead of engaging in a careful analysis of policy and precedent, the majority retreats into empty formalism: because the collective-bargaining agreement had not gone into effect, the contract-bar doctrine does not apply. But why this should be the case, the majority fails to explain in any persuasive way. Policy and precedent actually dictate a different result: ?When an employer enters into a collective-bargaining agreement with a union, even an agreement with a delayed effective date, it should not be permitted immediately to undermine the agreement, by challenging the union’s majority status.

Takeaways

This is truly an unusual situation. We are not told why the parties set the effective date of the agreement in the future. One can think of a few innocuous reasons why the dates were set in the future: the employer didn’t want to negotiate the next agreement until a period of time that was less busy for its operations, the parties agreed to align the effective dates with upcoming pay increases, etc. There is no indication that the employer knew about the employee’s efforts to shed the union, and requested the effective dates be pushed off. The union certainly didn’t complain about it either through this proceeding or by filing an unfair labor practice.

Member McFerran noted that the effective dates were only two weeks away from signing. But even a single day in representation bar situation can make a difference. That two week period is the difference between the employees getting a say in union representation now or three years from now. The desires of employees are often lost when the Board discusses the policy of stability in labor relations. Although not part of this case, the Board’s blocking policy, which allows the blocking of a decertification or representation petition based on the mere allegation that unfair labor practices have been committed, often frustrates any chance for an election for years.

Tags: bars to elections, collective bargaining agreement, contracts, decertification petitions, effective dates, NLRA, NLRB, representation petitions, RM petitions, Section 9(e)(2), timeliness

NLRB Finds Employer Effectively Repudiated Unlawful Handbook Rule…and RecusalGate Continues

By Mark Theodore on October 23, 2018 Posted in Employer policies, Handbook, NLRA, NLRB, Section 7, Section 8(a)(1), Solicitation, Uncategorized, Unfair Labor Practices

The Board issued an interesting decision discussing an employer’s successful efforts to repudiate unlawful conduct, which we’ll get to in a minute. In our last post, we discussed a simmering dispute over the circumstances which an NLRB member must recuse himself or herself. This issue, we’ll call it Recusalgate, has taken an interesting turn. In ADI Worldlink, LLC, 367 NLRB No. 10 (October 2, 2018), the Board, as it often does, delegated the matter to a three member panel. However, in a footnote, the Board noted that “Chairman Ring, who is recused, is a member of the panel but took no part in the consideration of this case on the merits.” Member Emanuel also recused himself but took no part in the case. This does beg an interesting question: if there are only four members on the NLRB at present time, and two have to recuse themselves, does the Board have a quorum to act? This won’t be the end of this discussion.

Back to labor law. In TBC Corporation and TBC Retail Group, Inc., 367 NLRB No. 18 (October 15, 2018), the Board (apparently without any recusals), issued a decision discussing the circumstances under which an employer that has violated the Act may successfully repudiate such conduct, effectively erasing the misdeed, as well as unfair labor practice liability.

Background

The employer operates a chain of automotive and tire retail stores. The employer, as part of its handbook, issued a no-solicitation rule that, among other things, prohibited employees from soliciting “in our buildings, on our property, during work hours, unless that solicitation is approved in advance by” human resources. This no-solicitation rule was overly broad, and therefore unlawful, because it prohibited solicitation on property “during work hours” which has been interpreted to include times which employees are not working, such as breaks and meal times. The rule also was overbroad because it prohibited solicitation on “property” which includes non-work areas such as break rooms and employee parking lots. Finally, the rule was unlawful because solicitation required prior approval of human resources.

The employer also maintained an arbitration clause, which required employees to waive the right to bring collective or class actions.

An employee filed a charge with the NLRB which alleged that the employer’s arbitration and no-solicitation policies were unlawful.

Employer Takes Steps to Repudiate Unlawful No-Solicitation Rule

Within a few weeks after the employee filed his unfair labor practice charge, and well before there was any official finding by the NLRB, the employer took steps to repudiate the no-solicitation rule. It did so by distributing and posting a notice to employees at all its stores in several states which said:

FEDERAL LAW GIVES YOU THE RIGHT TO:
Form, join, or assist a union:
Choose representatives to bargain with us on your behalf:
Act together with other employees for your benefit and protection: and
Choose not to engage in any of these protected activities.

WE WILL NOT do anything that interferes with these rights.
Specifically:
WE WILL NOT promulgate or maintain Written Work rules prohibiting you from:
1) Soliciting in our buildings, on our property, or during work hours. We will continue to have a work rule that prohibits you from soliciting during an employee’s working time or with another employee during that employee’s working time. “Working time” does not include such time as breaks, lunch, or rest periods, or before and after work.

WE HAVE rescinded and given no effect to the rules described above. WE HAVE posted the revised Written Work Rules in the Associate Handbook. Also, Human Resources Policy 406 contains a more detailed description of the Company’s no-solicitation and no-distribution policy, and remains in effect.

Human resources managers of the employer confirmed that the notices had been posted in each of the retail stores.

ALJ Finds Repudiation Ineffective

The ALJ found that the employer’s attempted repudiation was ineffective for two reasons. First, the Judge ruled that the employer “did not adequately explain the reasons” for replacing the unlawful rule with the new no-solicitation policy. Second, the ALJ ruled that the employer “continued engaging in unfair labor practices after the repudiation” by its maintenance of the arbitration policy.

Board Reverses Unfair Labor Practice Findings and Dismisses Complaint

The Board concluded there was no violation and dismissed the complaint. The Board first addressed the arbitration policy issue. Consistent with the Supreme Court’s recent decision holding that arbitration provisions that prohibit class or collective actions are not in conflict with the NLRA, the Board dismissed that allegation.

Turning to the repudiation, the Board noted that the law in this area is well established. Under the Board’s decision in Passavant Memorial Area Hospital, 237 NLRB 138 (1978), an employer may repudiate an unfair labor practice if it is “timely, unambiguous, specific in nature to the coercive conduct, and free from other proscribed illegal conduct.” Applying this standard, the Board concluded the repudiation had been effective because it was timely (done within a month after the filing of the charge), and because the employer “posted notices that were functionally equivalent to the notices posted by” Respondents pursuant to formal unfair labor practice proceedings. In other words, the employer’s notice essentially mirrored that of an official NLRB Notice to Employees by its reference of employee rights, and its specific highlight of what it would not do, and the actions it was taking (such as informing employees a new policy had been issued). The Board found that there was no requirement that an employer “explain why they are repudiating an unlawful act” which was one basis for the ALJ’s ruling.

The Board found that the repudiation did not occur in the context of other unfair labor practices because the only other allegation concerned the arbitration clause, which was lawful.

Takeaways

This is an interesting case because it demonstrates effective repudiation. The defense of repudiation has been tried many times in NLRB litigation only to fall short because it does not meet the specific criteria set forth in Passavant.

By copying the form and content of an NLRB Notice to Employees, the employer effectively did everything that would have resulted from a finding of an unfair labor practice charge. Indeed, arguably, the only difference between the employer’s notice and the official Board Notice is the letterhead. Many employers don’t like to post these kinds of notices, and some have even run afoul of the Act by posting their own explanation next to the official Board Notice, but this is a reminder that one can save the expense of litigation by clearly and effectively communicating that a rule (or act by the employer) is not condoned.

Tags: employer handbooks, mandatory arbitration agreements, NLRA, NLRB, no-solicitaiton policies, recusal, repudiation, Section 7, Section 8(a)(1), unfair labor practices

NLRB Majority Decides 50-50 Balls In Employer Favor

By Mark Theodore on October 15, 2018 Posted in NLRA, NLRB, Section 8(a)(1), Section 8(a)(5), Uncategorized, Unfair Labor Practices

The NLRB has been in a period of dormancy. When the make-up of the Board changed, a lot of people expected an onslaught of NLRB decisions reversing the reversals of precedent made by the agency in the last 8 years. Except for a couple of brief periods, most notably in December when then-Chairman Miscimarra departed, there has been less activity than many thought would occur. This is in part because there is uncertainty over when certain Board members (particularly Chairman Ring and Member Emanuel) have to recuse themselves from consideration of certain cases. This recusal issue has led to sometimes sharp exchanges between the Chairman and certain members of the U.S. Senate.

The Board has issued a few decisions recently. One case is worth discussing because it demonstrates how the view of certain allegations has changed with the new Board. Specifically, it shows how closer cases (the 50-50 balls), cases that could go either way, may fall more towards the employer. We have discussed how the current Board is likely to make changes in nuanced ways here.

In CPL (Linwood) LLC, 367 NLRB No. 14 (October 10, 2018), the Board was confronted with a hard fought election campaign where the employer was alleged, and ultimately found, to have committed numerous unfair labor practices in a prior decision. The Board, however, dismissed a few unfair labor practice findings after a review of the record and the complaint allegations.

General Counsel Failed to Carry Burden in Past Practice Allegation

The complaint alleged the employer violated Section 8(a)(5) by “refusing to process” an employee’s request for a schedule change. The employer had a procedure whereby an employee who wished to change work schedule could put in a written request to human resources. In December 2014, an employee submitted such a request to the Director of Human Resources. Sometime thereafter the union won the representation election and the parties entered into negotiations. When the employee followed up on the request to change her schedule, the Director told her that the employer could “not make changes” because of the negotiations with the union. This exchange formed the basis of the allegation. After a trial, the ALJ found a violation, finding simply that based on these facts the employer had refused to process the grievance in violation of the Act.

On appeal, a two member Board majority (Ring and Emanuel) reversed this finding. After citing the law on unilateral change of the status quo, the Board majority noted first that the “General Counsel bears the burden of establishing that the Respondent altered the status quo.” The Board concluded that the ALJ defined the status quo as a procedure under which employees were allowed to make written request but beyond that there was no proof. The Board found that the employee had made the written request for a schedule change as per the existing procedure. In reviewing the ALJ’s decision the Board concluded that the fact the Director did not “approve [the employee’s] request immediately does not establish a change in the status quo when there is no evidence that the Respondent had always approved such requests in the past.” Thus, the record did not show merely filing a request resulted in a schedule change, so there was no way to determine if the employer had actually altered a practice. In this regard, the Board highlighted that the employee had acknowledged during her testimony that it was possible her request conflicted with another employee’s request.

The Board also found that there was no evidence the employer actually refused to process the request, which was what was alleged in the complaint. Here, the Board noted the Director of Human Resources did not say that the employer “would not change [the employee’s] schedule” only that it could not do so because of negotiations. The Board majority held that a “reasonable person would understand the Respondent was delaying the processing of her request rather than refusing to process it.” The Board concluded this distinction was demonstrated by the fact the employee did not testify about how quickly the employer had processed requests in the past.

Employer’s Comment that it “Can’t Make Changes” Because of “Negotiations With the Union” Did Not Constitute an Independent Violation of Section 8(a)(1) of the Act

The ALJ found that the employer’s comment to the employee about the reason why the employer had yet to process the request for a schedule change violated the Act as a coercive statement.

The Board reversed this finding, holding that the statement was “in conformity with the Respondent’s statutory obligation to bargain with the Union over changes to employee schedules, which is a mandatory subject of bargaining.” The Board majority held that it was lawful for the employer to communicate this statutory obligation to the employee.

ALJ’s Finding That Employer Failed to Notify Union of Discharges Violated Due Process

Current law holds that in a first-time contract situation, an employer must bargain with the union over discipline and discharge when there exists employer discretion over the action. We have discussed this case, and its somewhat tortured history, here. That decision law, however, applied only prospectively, and the ALJ and the Board found that any allegation regarding such duty to bargain must be dismissed. The ALJ did find, however, that the employer violated the Act by failing to notify the union that it had discharged employees.

The employer appealed this finding on the ground that it was not pled in the complaint, nor was it fully and fairly litigated. The Board reversed, and dismissed the allegation noting (and it is worth quoting at length here for all practitioners who have witnessed the morphing of an NLRB case into something different than that alleged in the complaint):

The complaint does not allege that the Respondent violated the Act by failing to provide post-implementation notice of the discipline. Nor did the General Counsel seek to amend the complaint at the hearing to include this allegation. Further, throughout this proceeding, the General Counsel exclusively focused on Respondent’s failure to provide pre-implementation notice, and he did not contend in his posthearing brief to the judge that Respondent’s failure to provide post-implementation notice was also unlawful. Under these circumstances, we find that the Respondent did not have adequate notice that the judge would make findings of violations of the Act based on an unalleged failure to provide post-implementation notice.

Employer’s Statements that Union was “not a good union” and that “employees can get another union” Not Unlawful

The ALJ found that the employer violated Section 8(a)(1) when, in the course of a conversation about decertification, the employee was told that the union was “not a good union” and that “employees can get another union.” The basis for these findings was that the employer’s solicitation of an employee’s signature on a decertification petition, a statement which unquestionably was unlawful, occurred in the same conversation and therefore made the statements coercive. The ALJ concluded these statements were unlawful because they occurred “in an overall context of coercion,” because of the unlawful solicitation of the employee’s signature on the decertification petition.

The Board reversed these rulings. The Board scrutinized each part of the conversation, affirming some aspects were a violation of the law but reversing the findings on these statements. After quoting Section 8(c) (the employer free speech provision of the Act), the Board noted that the “not a good union statement” was just an expression of opinion unaccompanied by threats or promises to employees about decertification. In other words, there was no linkage between this opinion and the request that the employee sign the decertification petition.

As to the statement that employees “could get another union” the Board held this “conveyed only the truism that employees could select a different union shortly after the Union’s certification year expired.”

Takeaways

This case demonstrates a shift in how certain allegations are going to fall more the employer’s way in the coming months. Clearly, the employer in this case had violated the law in myriad ways. It would have been easy to see any of the allegations discussed here as additional violations. Instead, the Board showed a willingness to scrutinize the allegations in the complaint against the record. During this analysis the Board concluded some allegations had not been proven (violation of a past practice) or were contrary to the law (failure to notify the union of discharges). It is doubtful any of these dismissals altered the ultimate remedy of the case, but it does show a more careful analysis of the proof as it relates to the complaint and the applicable law.

The Board’s ruling on the past practice and due process rulings are notable because they show a greater willingness to hold the General Counsel accountable to what the General Counsel has pled in the complaint. In the case of the alleged alteration of the past practice, there was not enough evidence in the record to conclude that a practice actually had been changed. Thus, had a witness testified that requests for a change in schedule always received a response (rejecting or accepting) within a certain period of time, and that the employer did not so follow that timeline, then the outcome probably would have been different.

As to the allegation regarding the failure to notify the union of the discharges, the Board was not going to find a violation if the allegation had neither been pled or litigated at trial. It seems ridiculous, but this does happen in Board litigation.

Finally, the Board’s review of the employer statements shows a more literal application of the Act’s freedom of speech provision in Section 8(c) and an unwillingness to paint every statement made in a conversation as “unlawful” simply because of its proximity in a conversation to an unlawful statement.

Tags: allegation, Board Members, coercion, complaint, due process, duty to bargain unilateral change, evidence, freedom of speech, NLRA, NLRB, past practice, Section 8(a)(1), section 8(a)(5), Section 8(c), status quo

NLRB Announces Proposed Rule Changing Joint-Employer Standard

By Zach Fasman on September 14, 2018 Posted in Joint Employer, NLRA

The National Labor Relations Board announced that it will publish a Notice of Proposed Rulemaking today, September 14, regarding its joint-employer standard.

The proposed rule will state that an employer may be considered a joint-employer of another employer’s employees only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment in a manner that is not limited and routine. Indirect influence and contractual reservations of authority will no longer be sufficient to establish a joint-employer relationship. The new rule, if adopted, will restore Board law to the traditional standard for determining joint employer status under the NLRA.

This proposed rule would reverse the controversial Obama Board decision in Browning-Ferris, 362 NLRB No. 186 (2015), appeal pending. Under the Browning-Ferris standard, two or more employers would be considered joint employers if they share or codetermine matters governing the essential terms and conditions of employment. The inquiry focuses on whether the alleged joint employer had the potential to control aspects of the workplace, either directly or indirectly, regardless of whether the employer ever exercised that authority. This standard was heavily criticized and was the subject of legislative correction that passed the House but was never considered by the Senate.

The NLRB press release states that the proposed rule reflects the Trump Board’s “majority initial view” that the intent of the National Labor Relations Act is “best supported by a joint-employer doctrine that does not draw third parties, who have not played an active role in deciding wages, benefits, or other essential terms and conditions of employment, into a collective-bargaining relationship for another employer’s employees.”

The Board previously attempted to reverse the Browning-Ferris joint-employer standard in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (Dec. 14, 2017) (which we blogged about here). The Board reversed and vacated Hy-Brand in February, 2018 based upon Member William Emanuel’s participation in the decision. Prior to joining the Board, Member Emanuel was a partner at Littler Mendelson, which had represented one of the unsuccessful parties in Browning-Ferris.

The public may submit comments to the Board on the proposed rule for sixty days following its publication on September 14.

Tags: bargaining units, joint employer, NLRB