The Republican-controlled National Labor Relations Board moved quickly last week to overturn a host of Obama-era panel decisions. The board adopted a more narrow definition of “joint employer,” took steps to undo sped-up union elections and voided wide-reaching changes to employee-handbook policies.
“What is striking is the rapidity with which these major decisions overruling precedent, some involving reversal of precedent and others that reconsider the rulemaking, for major deliberative matters,” said Wilma Liebman, a former Democratic NLRB member who once served as chairwoman. “They clearly came to the board knowing what they wanted to do.”
What happened last week and why was it important?
The NLRB’s decision in 2015 in the case Browning-Ferris Industries v. NLRB was one of the most divisive of the Obama-era labor board. The ruling widened the definition of who is considered an employer when it comes to labor violations, collective bargaining and other benefits. Companies did not like Browning-Ferris, a ruling that essentially put chains and big companies on the hook for franchises and contractors.
The business community said it went too far. Workers’ rights groups said it ensured protections for contractors and employees who often fell through the cracks.The labor board, in a decision issued Thursday night, will move forward with a new standard that defines an employer as one with “direct” control rather “indirect,” rolling back the 2015 decision. McDonald’s Corp. has a big case pending for an administrative law judge surrounding the question of indirect control, and it remains to be seen what will now happen with that case, for example, given the new directive.
The other decision that came down Thursday night may be even more wide-reaching because it affects employee handbook rules. The case before the board focused on a “no camera policy” but the decision extended to a range of workplace policies. This included overturning the no camera rule and rules that said it was unlawful to prohibit certain speech.
Both of these decisions followed a request for information to study a regulation that made it possible to hold union elections in as little as two weeks, something pro-business groups called the “ambush election” rule and workers’ rights groups said created a more transparent and efficient process.
Why was there a flurry of activity?
It was all about a looming departure on the board. William Emanuel of Littler Mendelson and Marvin Kaplan, an Occupational Safety and Health Administration lawyer, joined current chair Philip Miscimarra to make up the Republican majority in the Trump administration. Democratic members Lauren McFerran and Mark Gaston Pearce are holdovers from the Obama-era.
Miscimarra is stepping down from his position this week and Trump will nominate a new member. Peter Robb, the NLRB’s new general counsel, this month telegraphed his intention to overturn a wide range of Obama-era decisions in a memo he sent to the regional directors.
What about the pending joint employer court case in the D.C. Circuit?
The U.S. Court of Appeals for the District of Columbia Circuit is weighing a decision in the Browning-Ferris case itself. The company challenged the NLRB’s “joint-employment” ruling in the federal appeals court. The parties in that case will, of course, have to abide by the court’s decision, whenever it comes.
But no matter how the court rules, the labor board itself will operate under the new joint-employment standard the agency set out Thursday.
“The court could say, this is just a political football. We will look at the merits and the court can do what the courts do,” said Michael Lotito, a Littler Mendelson attorney. “But the labor board doesn’t have to listen to the courts.”
Lotito said the labor board only will directly follow a mandate from the U.S. Supreme Court. If Browning-Ferris wins in the D.C. Circuit, the union could file an appeal. Compliance issues could arise if the D.C. Circuit upholds the Obama-era, wider definition of joint-employment—a standard the board itself now has overturned.
“Conflicting sides would give us a headache. But we will have headaches anyway,” said Steven Suflas, managing partner of the Denver office of Ballard Spahr. “As the NLRB has been more and more politicized, we are in a situation where we are advising our clients not only on what the substantive law is today but also to get on a magic eight ball if there is a change in the political makeup.”
The 2015 decision also inspired legislation, the Save Local Business Act, which attempts to write into law the definition of direct control constituting an employment relationship. That measure passed the House. Lotito said businesses want the certainty that this legislation could provide.
Charles Cohen, a former NLRB board member and Morgan, Lewis & Bockius senior counsel, offered a cautionary note to employers.
“Employers still need to be cognizant that joint employer relationships can and will be found based on demonstrated control over employees terms and conditions,” Cohen said. “So that employers would be well advised to make sure that joint employer relationships are not found based on routine business operations.”
NLRB Democrats are stepping up criticism.
Pearce and McFerran have issued strong commentary on the rapid pace of upending the rulemaking and decisions made by the previous board. Both Democratic members dissented in each move the board made this week. Pearce called the employee handbook decision “no more than seat-of-the-pants” rulemaking because the board chose to make a “sweeping standard that goes beyond the issues presented in the case.” He said it was, “essentially a how-to manual for employers intent on stifling protected concerted activity.”