The NLRB Goes Back to the Future

It did not come as a shock to many when the National Labor Relations Board (NLRB) took advantage of its narrow window with a Republican-majority in late 2017 and overturned many controversial Obama-era NLRB rulings.

As a result, the NLRB began the dismantling of what some had categorized as over-reaching and activist decisions aimed at restricting employers and bolstering employee rights. And with the recent nomination of management-side attorney John Ring to fill an open seat on the board, we can expect the NLRB to continue to overturn policies and decisions criticized by the business community during the Obama administration.

Among the recent NLRB rulings, the Hy-Brand Industrial Contractors Ltd. and the Boeing Co. decisions sent the most shockwaves across workplaces. Jackson Lewis labor and employment law principal Howard M. Bloom provides valuable insight on what these rulings mean for HR.

Review Your Workplace Rules and Policies

In a decision that brought welcome news to employers, the NLRB issued a new test for evaluating whether a workplace rule or policy is lawful under the National Labor Relations Act.

In Boeing, Co., the NLRB overruled the previous test which would have found a rule unlawful if it could be reasonably understood by employees to prohibit their NLRA rights and replaced it with a balancing test that takes both the employees’ rights under the NLRA and the employer’s justification for implementing the rule into account.

Under the new test, the NLRB will now evaluate (1) “the nature and extent of the potential impact on NLRA rights,” and (2) “legitimate justifications associated with the rule.”

This new test aids employers since the NLRB will now consider an employer’s justification for implementing a certain rule, policy or handbook provision. In doing so, the NLRB will determine whether any adverse impact on NLRA-protected conduct is outweighed by the employer’s legitimate reason for the rule.

The Boeing test will apply to any standard, rule or policy that affects employees in the workplace, especially those relating to discipline and termination. But before employers start celebrating too much, Howard Bloom sounds this cautionary note, “HR needs to know that the case dealt with maintenance of rules and not application of them. It is still unlawful to apply a lawful rule discriminatorily — for example, against a union supporter only.”

Also, it seems that the NLRB’s analysis of a rule will depend on the nature/industry of the employer. For example, in Boeing, the employer’s no-camera rule was found lawful because the business reason for protecting property and national security interests outweighed any potential infringement on its employee’s rights.

In light of this new balancing test, Bloom advises HR to conduct a thorough review of its workplace rules and policies with labor and employment counsel to ensure they address specific organizational needs effectively.

Beware of Exercising Control of “Shared” Employees

In another notable shift, the NLRB overruled the controversial Browning-Ferris decision and reinstated the traditional joint employer test. The Browning-Ferris case had dealt a harsh blow to employers, because as Bloom explains, “Joint employer status could be found under Browning-Ferris in any number of ways – if the potential joint employer had direct control or indirect control, or even a reserved right to control (of the subcontractor’s or franchisee’s employees), regardless of whether that right was ever exercised.”

In Hy-Brand Industrial Contractors, the NLRB held that it would again find liability as a joint employer based on the actual conduct of the employer rather than evaluating its “potential” to exercise such control. Essentially, the NLRB will now require proof that

  • The alleged joint employer exercised shared or joint control over essential terms and conditions of employment;
  • The control is “immediate and direct;” and
  • The control is not “limited and routine.”

Bloom says, “[t]he Hy-Brand test is a much easier standard to analyze for HR because it eliminates the “indirect” and “reserved” control parts of the Browning-Ferris joint employer test. Now, joint employer status will be found only where two or more entities actually share or codetermine, for example, hiring, firing, discipline, supervision, and direction, and where the kind or degree of ‘control’ is direct and immediate, and not limited or routine in nature.”

The NLRB’s Hy-Brand decision is good  news for franchisors, such as McDonald’s, which the NLRB had argued was the joint employer of franchise employees across the country. In stating that its Hy-Brand ruling  applies to all current and pending cases, the NLRB’s cases against franchisors (as well as staffing and contracting agencies) may now be on shaky ground as the NLRB needs to determine whether to pursue litigation under the narrower joint employer standard.

HR can be instrumental in helping its organization avoid joint employer status, Bloom suggests, by conducting an audit to determine whether HR “is sharing or co-determining hiring, firing, discipline, supervision and direction and directly and immediately controlling a subcontractor’s employees.” He recommends eliminating that control where appropriate or necessary to avoid liability.

Significantly, Bloom notes that the Hy-Brand decision did not change the joint employer standards of the Equal Employment Opportunity Commission, the Department of Labor and other agencies so HR should still be careful to comply with parameters of those respective tests.

 

 

 

 

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