Publication Source: The Nassau Lawyer
Each time there is a change of administration from one political party to another, you can rest assured that, there will be significant policy shifts. We know the biggest changes focus on the economy, foreign policy, health care, and immigration. But the National Labor Relations Board (NLRB) is a place where changes may initially go unnoticed but can have a profound effect. You may ask, “why should that concern me? I don’t represent unions or employers that have a unionized workforce.” This article addresses why attorneys should have some working knowledge of the NLRB and the changes that are probably in store.
The Constitution of The Board and Its Jurisdiction
The NLRB has five members and primarily acts as a quasi-judicial body in deciding cases on the basis of formal records from underlying administrative proceedings. They are appointed by the President for a five-year term, with Senate consent, with the term of one member expiring each year. The NLRB enforces the rights of employees to act together to try to improve their pay and working conditions and monitors union elections to ensure that they are fair to both sides. At present, four out of the five members were nominated by Trump and one member is an Obama holdover.
The NLRB has two primary functions. First, it addresses unfair labor practices (ULP’s) identified in Section 8 of the National Labor Relations Act (the Act).[i] Also, and more recognizable, is the NLRB’s jurisdiction over union elections.[ii]
Where a ULP is in the process of litigation before an administrative law judge (ALJ), the NLRB is authorized to seek temporary injunctions against employers and unions in federal district courts. There are a number of additional areas that fall under the NLRB’s jurisdiction, such as interference with organization campaigns, threats, coercion or interrogations, surveillance of protected activities, the improper granting of benefits, and unlawful employee discipline including disciplinary charges in connection with the employees engaging in “concerted action.”[iii] This is where the jurisdiction of the NLRB can extend to a non-union shop.
“Concerted action” occurs when two or more employees take action for their mutual aid or protection regarding terms and conditions of employment. In fact, a single employee may also engage in protected activity if he or she is acting on the authority of other employees, bringing group complaints to the employer’s attention, trying to induce group action, or seeking to prepare for group action. In 2014 the NLRB held that where, in a discussion about his wages, an employee cursed his manager repeatedly and shoved his chair at his manager, such activity was “concerted activity” and the conduct was not so “menacing, physically aggressive or belligerent” as to warrant the loss of protection under the Act.[iv] However, the current trend appears to be narrowing what constitutes concerted activity.[v]
Stare Decisis and the Board
Why are there such wide swings from one side of the spectrum to another in connection with NLRB decisions? Congress delegated to the NLRB Board the authority to make rules to fill in gaps within the Act. The U.S. Supreme Court has held that this authority can be exercised either through formal rulemaking procedures or, if the NLRB prefers, by the common law method of rulemaking through adjudication.[vi] Generally, the NLRB engages in rulemaking through adjudication. Under this scheme, the common law doctrine of stare decisis does not strictly apply. Some say that this promotes flexibility and change. Others point out that stability is always in doubt when one administration changes to another and clearly has different views on the management-labor relationship.
In 1975, the Supreme Court affirmed the ability of the NLRB to abruptly change precedent stating that the Board can reconsider past decisions “in light of significant developments in industrial life believed by the NLRB to have warranted a reappraisal of the question” and that a court should defer to the Board’s “special competence” in the area of labor relations.[vii] The NLRB’s freedom to decide cases within the Act’s parameters has meant that the NLRB has reversed precedent, sometimes in very rapid succession. The primary question is: does the NLRB stray from its fundamental principles or not?
Ch-Ch-Changes . . .
Out of the gate, several important rulings by the Obama era NLRB are on the chopping block. One of those is the 2015 NLRB final rule that shortened the time frame between the filing of an election petition and the date on which an election is conducted, reducing it to as little as 14 days.[viii] The rule also compelled employers to provide employees’ contact information to union organizers, including personal cell phone numbers, e-mail addresses, and work schedules, without any opportunity for workers who do not want their personal data released to opt out. The NLRB has decided to review what employers have derogatively called the “ambush” election rule. On December 12, 2017, the NLRB issued a Request for Information on whether the rule should be rescinded or what specific provisions should be repealed. The comment period ended on April 18, 2018. Now, the lengthy rulemaking process begins.
Next, a trend developed under the Obama Administration whereby the NLRB fervently opposed employers’ efforts to restrict employees from using class actions to vindicate their rights. Toward that end, in 2014 the NLRB held that the employer had violated § 8(A)(1) of the Act requiring its employees to agree to resolve all employment-related disputes through individual arbitration. In the Epic Systems case, three actions were consolidated to address whether employer-employee agreements that contain class action and collective action waivers and stipulate that the employment disputes be resolved by individual arbitration violate the Act.[ix] The Supreme Court held that such agreements do not violate the Act and the agreements must be enforced as written pursuant to the Federal Arbitration Act, overruling the NLRB. While the Supreme Court resolved this issue, there is little question that had the NLRB addressed this during the present Administration, there most assuredly would have been a different outcome well before the courts became involved.
Another area where change is coming involves employees’ use of e-mail and corporate communications. In 2014, the Board decided that the use of company e-mail for organizing purposes by employees constituted concerted activity.[x] The employers argued that such a policy would lower workplace productivity, compromise digital security and ignore all other ways workers can communicate. At present, the NLRB is considering revising its e-mail rule in a separate case which involves workplace rules at the Caesar’s Resorts casino in Las Vegas. All briefing and public comments have been filed and a decision will be forthcoming.[xi] However, in its brief to the General Counsel’s office, the NLRB argued for the return to its pre-2014 rule that workers have no statutory right to use company e-mail for unionization purposes provided the e-mail restrictions on e-mail use are non-discriminatory.[xii]
An even bigger change may be coming regarding the joint employer concept which has been subject to significant evolution. In the Browning Ferris case, the NLRB considered whether it should adopt a different standard for what constitutes a joint employer in the context of a subcontracting case other than situations where the employer meaningfully affects matters related to employment relationships such as hiring, firing, discipline, supervision and direction.[xiii] As of 1984, the NLRB required “direct and immediate” control of a putative employer over employment matters.[xiv] On August 27, 2015, by a three to two margin (not unusual for the Board), the NLRB issued a decision citing “the diversity of the workplace arrangement in today’s economy has significantly expanded.”
The NLRB stated it would file the common law agency test whereby the Board may find that two or more entities are joint employers of a single workforce if they are employers within the meaning of the common law, and if they share or co-determine those matters governing the essential terms and conditions of employment. The NLRB noted that it would no longer require a joint employer to not only to possess the authority to control employees’ terms and conditions of employment but also must exercise that authority and do so immediately and not in a “limited and routine manner,” thus overturning two prior Board decisions in two earlier cases.[xv]
This brings us to September 2018, when the NLRB proposed to change the joint employer test, yet again. Under a proposed rule, an employer may be found to be 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 and has done so in a manner that is not limited and routine.[xvi] Indirect influence and contractual reservations of authority would no longer suffice to establish a joint employer relationship.
Then there is the McDonald’s case. On December 19, 2015 the NLRB’s General Counsel commenced litigation against McDonalds USA and its franchises claiming that it violated the rights of employees who work in McDonald’s restaurants around the country by, among other things, “making statements and taking actions against them for engaging in activities aimed at improving their wages and working conditions including participating in nationwide fast food and worker protests about the terms and conditions of their employment,” also known as the fight for $15 per hour. Thereafter, this was the subject of litigation that was ongoing until very recently when the parties seemed to have settled their dispute. Settlement agreements were entered into subject to a review by the NLRB, which resulted in the ALJ’s rejection of the settlement agreements.
While the proceeding’s primary focus was to accuse McDonald’s USA of ULP’s, the end result could have been that McDonald’s USA was found to be a joint employer with its franchisees, which could have led to allowing a certification election by the individual employees of franchisees against McDonald’s USA. Indeed, in his opening statement of the hearing in March of 2016, the NLRB’s General Counsel argued that McDonald’s use of business consultants who monitor staffing and business practices and conduct periodic reviews of the implementation of those practices to exert control over its franchises indicated, essentially, a joint employer status. It pointed to McDonald’s operating manual and pointed to sale and scheduling systems concluding that the franchisees’ control over the terms and conditions of their workers’ employment was limited.
In opposition, McDonald’s argued that it was essentially doing its due diligence as a franchisor. It further stated that it did not tell the company business owners whom to hire or when to schedule its employees. Rather, McDonald’s USA counsel maintained that McDonald’s USA exerts a level of control that any franchisor would expect to maintain a uniform customer experience across the franchisees adding that “all franchisors if they are successful, do precisely the same thing.” The parties proposed settlement was rebuffed by an ALJ and the McDonald’s respondents are now seeking to enforce the agreements stating that the ALJ engaged in an abuse of discretion. Whether the settlement comes to fruition or not, it is unlikely that the continued push to demonstrate franchisees and franchisors are joint employers will continue.
In sum, significant changes at the NLRB, in terms of its decisions and rulemaking, have been standard fare over the last twenty years. The pendulum has a tendency to swing wildly, which should not be surprising, considering the polarized positions of one Administration or the next. However, this situation is not optimal for workers or employers as uncertainty abounds and planning each one’s next steps for the future becomes ever more unpredictable. Only time will tell if balance will be restored.
[i] 29 U.S.C. § 158.
[ii] 29 U.S.C. § 159.
[iii] Dish Network, LLC v. National Labor Relations Board, 725 Fed.Appx. 682 (10th Cir. 2018).
[iv] Plaza Auto Center, Inc., 360 NLRB 972 (2014).
[v] Preferred Building Services, Inc. and Rafael Ortiz d/b/a Ortiz Janitorial Services, Joint Employers, 20-CA-149353 (2018), 2018 WL 5734450.
[vi] Auciello Ironworks Inc. v. NLRB, 517 U.S.781 (1996).
[vii] NLRB v. Weingarten, 420 U.S. 251 (1975).
[viii] See Representation — Case Procedures, 79 Fed. Reg. 74308-10 (Dec. 15, 2014).
[ix] Epic Systems Corp. v. Lewis, 138 S.Ct. 1612 (2018) was a consolidated proceeding including review of the Court’s decision in Lewis v. Epic Systems, 823 F.3d 1147 (7th Cir. 2016), Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir. 2016), and the Murphy Oil U.S.A., Inc. v. NLRB, 808 F.3d 1013 (5th Cir. 2015).
[x] Purple Communications, Inc. 361 NLRB 1050 (2014).
[xi] Caesars Entertainment Corp. d/b/a Rio All-Suites Hotel & Casino, Board Case No. 28-CA-060841.
[xii] Amicus Brief, Counsel for General Counsel/Region (9/06/18) (Here the NLRB reversed course and now opposes the position it had taken in support of Purple Communications).
[xiii] Browning-Ferris Industries of California, Inc. and FRRII, LLC d/b/a Leadpoint Business Services and Local 350, International Brotherhood of Teamsters, Case 32-RC-109684 overruled by Seven Seas Union Square LLC and Key Foods Cooperative, 2018 WL 818125 (2018).
[xiv] Laerco Transportation, 269 NLRB 324 (1984); TLI, Inc. 271 NLRB 798 (1984).
[xv] Browning Ferris, 2018 WL 818125.