A Shifting Landscape in Our Nation’s Labor Law 2017 Went Out With a Bang

By: Jonathan Landesman

In my 20 years representing contractors – union and nonunion alike – I feel the pain that many have felt, especially in recent years, over decisions that have been handed down by the National Labor Relations Board (“NLRB”). Before we go any further, let’s take a moment to review the functions of the NLRB. For those familiar, skip ahead. For those unfamiliar, the
NLRB enforces federal labor law, and specifically the National Labor Relations Act of 1935 (“NLRA”). The adjudicative arm of the NLRB is the Board. It is comprised of five (5) members (each a political appointee) who sit in Washington D.C. and decide issues ranging from “unfair labor practice” charges to union election cases. There are other administrative layers of the NLRB, but we’ll leave that for another day. A common misconception that I often encounter in my practice is that the NLRA applies only to union contractors. If I’m a merit-shop contractor, who cares what five (5) politically appointed bureaucrats do every day? Right? Wrong. Section 7 of the NLRA protects the rights of employees in both union and non-union environments to engage in protected concerted activities for the purposes of collective bargaining. What does that mean? Basically, employees have a right to “band together” and challenge the terms and conditions of their workplace, such as wages, hours, and benefits. An employer who interferes with its employees’ Section 7 rights may find itself subject to an unfair labor practice charge and a knock on the door from their “friendly” NLRB investigator.

The scope of Section 7 and the other provisions of the NLRA are interpreted by the Board. The Board’s members are appointed by the President of the United States. A Democrat in office generally translates to appointees more favorable to unions. A Republican in office generally means the opposite, that is, appointees with a greater inclination toward employers and the business community. As we know, the political climate has changed over the last year with the election of President Donald Trump. With that change, employers have begun to see significant changes in the Board’s interpretation and enforcement of the NLRA. The week of December 11, 2017 was one of the most significant weeks in recent years. The Board overturned four (4) key rulings handed down over the previous ten (10) years that were widely viewed as favorable to labor unions and a thorn in the side of employers. Here is a snapshot of the activity that we saw:

Browning-Ferris Joint-Employer Standard

In a 3-2 decision, the Board overruled Browning-Ferris Industries, 362 NLRB No. 186 (2015), which relaxed the standards for when an entity may be deemed a joint employer under the National Labor Relations Act (“NLRA”). Under the Browning-Ferris standard, one entity could be held jointly liable for another entity’s violations of the NLRA if there was proof the entity had indirect control over the entity’s employees or a contractually reserved right of control even if the entity never actually exercised that control. With its recent decision in Hy-Brand Industrial Contractors, 365 NLRB No. 156 (December 14, 2017), the Board announced a return to the pre-Browning Ferris standard. Moving forward, an entity may be found jointly liable for another entity’s violations of the NLRA if there is proof the entity actually exercised control over essential employment terms over another entity’s employees and
did so directly and immediately in a manner that is not limited and routine.

Employer Rules, Policies, and Handbook Provisions:

In another 3-2 decision, the NLRB overruled its prior decision in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), which held that employers could be found liable under the NLRA by maintaining workplace policies that were facially neutral but could be “reasonably construed” by an employee to prohibit the exercise of NLRA rights. The Board articulated a new test in The Boeing Company, 365 NLRB No. 154 (December 14, 2017). Now, the legality of a facially neutral workplace rule, policy, or handbook provision will be evaluated by the Board through two lenses: (1) the nature and extent of the potential impact on an employee’s NLRA rights; and (2) the employer’s legitimate justification associated with the rule.

Employers’ Duty to Bargain with Unions:

In another 3-2 decision (noticing a trend?), the NLRB restored its 50-year old precedent that limited an employer’s ability to unilaterally make certain changes to terms and conditions in the workplace. In Raytheon Network Centric Systems, 365 NLRB No. 161 (December 15, 2017), the Board reversed its prior ruling that an employer must bargain with the union before implementing changes to employment conditions, even if the change was consistent with the employer’s past practice of making similar changes. Now, an employer may change terms and conditions of employment if its doing so is consistent with a past practice of making similar changes. In Raytheon, the issue involved the employer’s modification to its union employees’ health care benefits, which the Board held could be made without bargaining with the union because the employer had a past practice of making similar unilateral changes every year from 2001 through 2012.

Micro-Unit Organizing:

In another 3-2 decision (Yes. 3-2), the Board reversed its 2011 ruling in Specialty Healthcare, 357 NLRB 934 (2011), which allowed “micro-units” of workers to unionize by placing a burden on employers to show that the workers included in a bargaining unit share an “overwhelming” community of interest with the union’s proposed organizing group. The Board reversed that rule with its decision in PCC Structurals, Inc., 365 NLRB No. 160 (December 15, 2017) and announced a return to its standard pre-Specialty Healthcare: the Board will consider whether the petitioned-for workers belong to an organizing unit with the excluded workers by evaluating whether those workers share a community of interest “sufficiently distinct” from excluded employees to warrant their own unit. The bottom line: this decision will make it easier for employers to expand a union’s proposed organizing unit.

So what does it all mean for contractors? In some instances, these decisions carry significant weight. For example, the reversal of the Board’s Browning-Ferris decision significantly limits the potential for a contractor’s liability for a violation of the NLRA that is alleged against a subcontractor. A reversal of Lutheran Heritage means less scrutiny and probing from the NLRB into your employee handbook. Gone are the days (at least for the next few years) where the NLRB will hold an employer liable for its implementation of an otherwise facially neutral handbook policy based upon a “reasonable construction” of the policy by an employee. The next few years should bring even more change from the NLRB and the Department of Labor who, for its part, has recently rescinded various Obama-era policies on joint-employer status and other important wage and hour issues. Here’s to a prosperous 2018!