NLRB Gives Employers Several Reasons to Be Jolly This Holiday Season

December 2017 has been one for the labor law community to remember. We have seen a wintry flurry of actions by the newly-constituted National Labor Relations Board (NLRB), which has begun a much anticipated releveling of the playing field between Big Labor and Corporate America in the aftermath of profound pro-union actions under the prior administration.

On the heels of an instructive and potentially predictive memorandum issued by the Board’s new General Counsel, the NLRB raised questions about the 2014 “quickie” election rule and issued a number of decisions setting forth more neutral standards for analyzing significant legal issues under the National Labor Relations Act (NLRA), including:

• an administrative law judge’s ability to accept a charged party’s proposed settlement terms;
• when multiple employers should be deemed “joint employers” under the NLRA;
• an employer’s ability to take unilateral action consistent with its past practices;
• the legality of workplace rules that do not expressly prohibit concerted activities protected by the NLRA; and
• appropriate collective bargaining units.

New NLRB General Counsel’s First Memorandum

On December 1, 2017, the NLRB’s new General Counsel, Peter B. Robb, issued a memorandum leaving little doubt that he has a very different view of the NLRA than his predecessor on several key issues. In the memorandum, the General Counsel—who is responsible for investigating and prosecuting unfair labor practice cases and supervising the regional offices in their processing of cases—directed the regional offices to seek advice from his office in cases involving “significant legal issues.” He identified significant legal issues as including “cases over the last eight years that overruled precedent and involved one or more dissents, cases involving issues that the Board has not decided, and any other cases that the Region believes will be of importance to the General Counsel.”

The memorandum then identified a number of specific issues about which the General Counsel directed the regional offices to seek advice from his office, including:

• whether employees have a presumptive right to use employers’ email systems to engage in protected concerted activities (citing to the NLRB’s controversial decision in Purple Commc’ns, Inc., 361 NLRB No. 126 (2014), which answered this question in the affirmative);
• whether employers can lawfully implement rules against audio and/or visual recordings in the workplace (citing to the Board’s controversial decisions in Rio-All Suites Hotel & Casino, 362 NLRB No. 190 (2015) and Whole Foods Market, Inc., 363 NLRB No. 87 (2015), which deemed such rules unlawful); and
• whether employers can lawfully direct employees to keep workplace investigations confidential (citing to NLRB’s controversial decision in Banner Estrella Med. Ctr., 362 NLRB No. 137 (2015), which answered this question in the negative).

The General Counsel noted that decisions from his office would be based on existing law, but that it may want to offer alternative analyses for deciding these issues in cases that have not yet been fully briefed before the NLRB.

The memorandum also immediately rescinded a number of pro-union memoranda issued by the prior General Counsel, including memoranda: attacking innocuous workplace policies (GC Memo 15-04: Report of the General Counsel Concerning Employer Rules); making it more difficult for employers to cease recognition of unions  employees do not want (GC Memo 16-03: Seeking Board Reconsideration of the Levitz Framework); and expanding the scope of the NLRA to individuals historically excluded from coverage, like college football players (GC Memo 17-01: General Counsel’s Report on the Statutory Rights of University Faculty and Students in the Unfair Labor Practice Context).

“New” Standard for Examining Proposed Settlement Terms

Ten days after the new NLRB General Counsel issued his first memorandum, on December 11, 2017, the Board overruled U.S. Postal Serv., 364 NLRB No. 116 (2016) in UPMC, 365 NLRB No. 153 (2017) and reinstated its prior standard for determining when administrative law judges can approve a charged party’s proposed settlement terms. In Postal Serv., the NLRB decided that administrative law judges could not accept a charged party’s proposed settlement terms if the terms did not remedy all allegations in the case absent the approval of the Board’s General Counsel and the charging party. In UPMC, the NLRB held that administrative law judges can accept a charged party’s proposed settlement terms despite objections by the General Counsel and charging party if the terms are “reasonable” in light of the circumstances. Factors to consider in determining the reasonableness of the proposed settlement terms include: whether the parties or alleged discriminatees have agreed to be bound by the General Counsel’s settlement position; the nature of the allegations, risks inherent in litigation, and stage of the litigation; whether there is any coercion, duress, or fraud impacting the settlement; and whether the charged party has a history of violating the NLRA or breached previous settlement agreements.

Request for Information about “Quickie” Election Rule

Three days after the UPMC decision, on December 14, the Board published a request for information (“RFI”) concerning the 2014 quickie election rule. The RFI posed three questions, asking whether the rule should be retained, modified, or rescinded. The RFI is welcomed by the business community as the quickie election rule has posed major problems for both employers and employees. For example, the rule places heavy administrative and regulatory burdens on employers, restrains employers’ abilities to communicate with their employees, and interferes with employees’ abilities to cast informed ballots in union elections.

Reinstatement of Joint Employer Standard

Also on December 14, in Hy-Brand Indus. Contractors, Ltd., 365 NLRB No. 156 (2017), the Board overruled Browning-Ferris Industries of California, Inc. d/b/a BFI Newby Island Recyclery, 362 NLRB No. 186 (2015) and reinstated its prior standard for determining when multiple employers can be jointly liable under the NLRA. In Browning-Ferris, the NLRB decided that two or more entities could be joint employers if one of the entities merely reserves the right to indirectly control essential employment conditions and terms of another entity’s employees. In Hy-Brand, the Board returned to the decades-old standard that requires an entity to actually exercise direct and immediate control over essential employment conditions and terms of another entity’s employees in a manner that is not limited and routine for it to be held a joint employer.

New Standard for Evaluating Workplace Rules

The same day, December 14, the NLRB overruled Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004) in The Boeing Co., 365 NLRB No. 154 (2017) and established a new standard for evaluating workplace rules that do not expressly prohibit concerted activities protected by the NLRA. In Lutheran Heritage, the Board decided that facially-neutral workplace rules should be deemed unlawful if employees would “reasonably construe” the rules as interfering with their rights to engage in protected concerted activities protected by the NLRA. In Boeing, the NLRB tossed aside the amorphous “reasonably construe” standard and announced that it will explore (1) the nature and extent of the potential impact of facially-neutral workplace rules on NLRA rights, and (2) legitimate justifications associated with the rules. For clarity, the Board then identified three categories of rules.

• Category 1 includes rules the NLRB designates as lawful because (a) the rule, when reasonably interpreted, does not interfere with employees’ rights under the NLRA, or (b) the potential adverse impact on protected rights is outweighed by justifications associated with the rule. The Board identified rules requiring employees to behave civilly and rules prohibiting employees from using cameras in the workplace as falling into Category 1.
• Category 2 includes rules that warrant individualized scrutiny to determine whether they interfere with employees’ rights under the NLRA and, if so, whether legitimate justifications associated with the rules outweigh that interference.
• Category 3 includes rules that are unlawful because they interfere with employees’ rights under the NLRA and legitimate justifications for the rules do not outweigh that interference. The NLRB identified rules that prohibit employees from discussing benefits and pay as falling into Category 3.

New Standard for Deciding Whether Employer Has Duty to Bargain over Changes that are Consistent with Its Past Practice

A day after the decisions in Boeing and Hy-Brand, December 15, the NLRB in Raytheon Network Centric Sys., 365 NLRB No. 161 (2017) overruled E.I. Du Pont de Nemours, Louisville Works, 346 NLRB No. 113 (2016) and clarified that an employer does not have an affirmative duty to bargain over employment actions that are consistent with its past practice. In DuPont, the Board decided that an employment action consistent with past practice is a “change” and an employer has to provide a union with notice and an opportunity to bargain before implementing such action if the past practice was created under a management rights clause in an expired collective bargaining agreement or the action involves employer discretion. In Raytheon, the NLRB held that an employment action is not a change if it is similar in degree and kind with a past practice even if it involves some employer discretion. The Board further explained that this is the case regardless of whether a collective bargaining agreement is in place when the past practice was created and regardless of whether a collective bargaining agreement existed when the employer takes action.

Reinstatement of Traditional Community of Interest Standard for Determining an Appropriate Bargaining Unit

Also on December 15, in PCC Structurals, Inc., 365 NLRB No. 160 (2017), the NLRB overruled Specialty Healthcare & Rehabilitation Ctr. of Mobile, 357 NLRB 934 (2011) and reinstated the traditional community of interest standard for determining an appropriate collective bargaining unit. In deciding whether employees share a community of interest the Board examines a number of factors including job classifications, job functions, departmental lines, interaction among employees, work locations, applicable employment policies, required training and skills, pay, benefits, and hours. In Specialty Healthcare, the Board decided that an employer only could add employees to a readily identifiable group of employees that a union seeks to represent in the rare case where the employer could demonstrate that the additional employees shared an “overwhelming” community of interest with the employees in the unit proposed by the union with little, if any, concern for other employees. The practical consequence of the decision in Specialty Healthcare was that unions could effectively cherry-pick groups of pro-union employees to vote in elections. The reinstated standard in PCC Structurals examines whether the employees that an employer seeks to include in the unit are sufficiently distinct to justify their exclusion.

In light of the NLRB’s decision in PCC Structurals, the Office of the General Counsel issued an operations memorandum on December 22 directing the regional offices to follow certain practices in current and future representation cases. As to current representation cases, the memo explained that regional directors have discretion to revisit unit determinations unless the cases are presently before the Board on a request for review (or the employees comprise a conforming unit in an acute care hospital). The memo further explained that, under existing election rules, the decision in PCC Structurals constitutes “unusual circumstances” pursuant to which regional directors can approve a party’s request to withdraw from an election agreement and “extraordinary circumstances” pursuant to which regional directors can reopen the record after the close of a pre-election hearing or after the issuance of a decision and direction of election. As to future cases, the memo noted that regional directors have substantial discretion to decide issues that inevitably will arise in light of the decision in PCC Structurals, including whether to postpone the deadline for submitting a position statement, whether to postpone a pre-election hearing, and when to set the election date, which employers should keep in mind if they need additional time under the quickie election rule.

What’s Next?

Although December has been a busy month at the Board, there still are a host of controversial decisions issued by the NLRB under the prior administration that remain ripe for examination. For example, in a recent order issued in President and Fellows of Harvard College, NLRB Case No. 01-RC-186442, one of the new Board Members, William J. Emanuel noted that “Board precedent on the status of students” as statutory employees under the NLRA “warrants reconsideration.”

This said, there may be a slowdown at the NLRB because, on December 16, the term of Board Chairman, Philip A. Miscimarra, expired. Accordingly, the NLRB is now comprised of just four Board Members, which means the NLRB likely will be deadlocked two-to-two on controversial issues—such as whether students are statutory employees—at least until President Trump appoints a fifth Member, either with the advice and consent of the Senate or during a Senate recess. For now, the President has appointed Marvin E. Kaplan, who was the first Board Member he appointed, as Acting Chairman in light of Miscimarra’s departure. And, we may soon see another memo from the new General Counsel identifying initiatives that he would like to implement.

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Employers with questions about the ongoing changes at the National Labor Relations Board should contact an attorney in the Gibbons Employment & Labor Law Department.