The NLRB Brightens the Season with Multiple Employer-Friendly Decisions Before the New Year

By Kristofor L. Hanson - Lindner & Marsack, S.C.

December 18, 2017

As has been anticipated since the change in presidential administrations earlier this year, the National Labor Relations Board, with a Republican majority, issued a slew of impactful and employer-friendly decisions in recent days. (The Republican majority on the Board was in place until December 16, 2017, when Chairman Philip Miscimarra’s term ended. The Board now has two Republican appointees and two Democrat appointees until President Trump appoints a new member who must receive the approval of the United States Senate.)  These decisions, altering standards for workplace policies, joint employers, the duty to bargain, and bargaining unit makeup will come as a pleasant Christmas present to employers this year.

Interpreting Neutral Workplace Policies

On December 14, 2017, in The Boeing Company, 365 NLRB No. 154, the Board discarded its test for determining whether an otherwise facially neutral workplace policy violates the National Labor Relations Act because an employee “would reasonably construe” the policy to prohibit some form of protected Section 7 activity presently or at some point in the future. Section 7 rights give employees protection for engaging in concerted activity, such as joining a union and discussing or complaining about the terms and conditions of their employment, among others. At issue in the case was Boeing’s no-camera rule, which prohibited the use of “camera-enabled devices” such as cell phones on its property. Boeing stated that it instituted this rule because of its security concerns, as Boeing is a “target for espionage by competitors, foreign governments, and supporters of international terrorism, and [it] faces a realistic threat of terrorist attack.”

In finding this rule lawful, the Board sharply criticized the “reasonably construed” test stating that it has been difficult to apply, failed to consider any legitimate reasons for the work rule, failed to allow for considerations of the type of industry and work settings involved, and provided no clear guidance for employers to determine what rules and policies were lawful.

Therefore, the Board decided a new test was appropriate and held that to determine whether a facially neutral work rule interferes or potentially interferes with Section 7 rights the Board will look at “(i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.”

This test provides employers with the ability to defend work rules that may limit employees’ abilities to exercise their Section 7 rights by establishing legitimate business justifications for their rules. In addition to enunciating the new standard, the Board also created three categories of rules designed to aid in the evaluation of the legality of the policies. Those categories are:

Category 1: Rules that are lawful either because (a) when reasonably interpreted, they do not prohibit or interfere with the exercise of NLRA rights; or (b) the potential adverse impact on protected rights is outweighed by justifications associated with the rules. The Board found the Boeing no-camera rule to be such a justified rule and also determined that rules requiring employees to abide by basic standards of civility are similarly justified. In doing this, the Board overruled past decisions in which employers were found to have violated the Act by maintaining rules requiring employees to foster “harmonious interactions and relationships” or to maintain basic standards of civility in the workplace.

Category 2: 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 NLRA-protected conduct is outweighed by legitimate justifications.

Category 3: Rules that the Board will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule. An example would be a rule that prohibits employees from discussing wages or benefits with one another.

The Board stated that going forward, its decisions concerning work rules will place work rules into one of these three categories. Doing this will offer employers a fair amount of guidance, but employers must continue to carefully assess each proposed rule and policy to determine whether the business justifications for the rule are legitimate and outweigh any limitations the rule might place on employees’ rights under the Act.

Return to Previous Joint Employer Standard

In August 2015, in its Browning-Ferris decision, the Board altered long-standing precedent concerning joint employer status, holding that employers are joint employers if: (1) they are both employers within the meaning of the common law; and (2) they share or codetermine matters governing the essential terms and conditions of employment. The central question under this standard was whether an employer exercised control over terms and conditions of employment directly or indirectly, or had reserved the right to do so.

On December 14, 2017, the Board reversed course on this standard and returned to the standard that had been in place prior to Browning-Ferris. In Hy-Brand Industrial Contractors, 365 NLRB No. 156, the Board stated that it was reverting to the “direct and immediate control” standard, which had been in place for decades prior to the Browning-Ferris decision.

Under the direct and immediate control standard employers are considered joint when there is “proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), 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 limits joint employer status to only those employers who have significant and direct control over the terms and conditions of employment and actually exercise that control. It removes from consideration control that is reserved, but not applied, by the employer.

Unilateral Implementation of Work Rule Changes without Bargaining

On December 15, 2017, in Raytheon Network Centric Systems, 365 NLRB No. 161, the Board restored 50-year old precedent that allows an employer to implement changes to work rules without bargaining with a union if the employer has a past practice of taking similar actions.

This decision overturns a 2016 Board ruling that required employers to bargain with unions over changes workplace rules, even where employers had made similar changes in the past. In Raytheon, the Board criticized the previous ruling as distorting common sense understanding of what constitutes and change in employment conditions and ignoring long-standing precedent concerning the impact of past practice on the labor-management relationship.

The case involved Raytheon’s unilateral adjustment of employees’ healthcare benefits. The lower judge found that the adjustment was unlawful as it needed to be bargained. However, the Board, overturning the decision, held that Raytheon was well within its rights to modify the employees’ healthcare benefits because it had done so annually each of the previous eleven years.

The Board stated that employer actions do not constitute a change if they are similar in kind and degree with an established past practice consisting of comparable unilateral actions. The Board held this applies regardless of whether (1) a collective bargaining agreement was in effect when the past practice was created, or (2) no CBA existed when the disputed actions were taken.

Accordingly, the Board found that Raytheon’s change to the healthcare benefits of its employees was consistent with its past practice and did not require Raytheon to notify the employees of the proposed change and provide them with an opportunity to bargain before making the change.

Micro Bargaining Units are a Thing of the Past

In another December 15, 2017 decision, the Board overturned a 2011 ruling that allowed what were termed “micro units” to petition for a union election. The case, PCC Structurals, Inc., 365 NLRB No. 160, overturned what is known as the Specialty Healthcare standard that required employers to establish that other employees who the employer believed should be included in a bargaining unit had an “overwhelming community of interest” with the petitioning unit.

In this decision, the Board returns to the traditional community of interest standard that it has applied “throughout nearly all of its history.” This standard allows for the Board to evaluate the interests of all employees – both those within and those outside the petitioned-for unit – without having to determine whether their community of interest is “overwhelming.” Rather, the traditional test requires the Board to assess multiple factors to determine the appropriate unit, such as: 

whether the employees are organized into a separate department,; have distinct skills and training; have distinct job functions and perform distinct work, including inquiry into the amount and type of job overlap between classifications; are functionally integrated with the Employer’s other employees; have frequent contact with other employees; interchange with other employees; have distinct terms and conditions of employment; and are separately supervised.

The Board found that the “overwhelming community of interest” standard was akin to gerrymandering and resulted in arbitrary and fractured units. It stated the traditional community of interest standard takes into consideration those groups of employees who have “substantial” shared interests to be taken into consideration when determining appropriate unit size.

PCC Structurals involved an employer’s challenge of a Regional Director’s decision and direction for election of a petitioned-for unit of 100 welders. The employer contended that the smallest appropriate unit actually consisted of more than 2500 employees. The Board did not decide whether the unit sought by the employer was appropriate, but directed the Regional Director to reevaluate the unit based upon the standard enunciated in the case.

This decision eliminates the burden that had been placed on employers to establish an “overwhelming” community of interest among employees in order to enlarge a bargaining unit. As the Board stated, that burden was nearly impossible for employers to achieve. Employers now will be better able to expand bargaining units, which should allow employers to better combat union organizing efforts.

The decisions cited here can be found at  https://www.nlrb.gov/cases-decisions/board-decisions.