What the NLRB Shakeups Mean for HR

Author: Melissa Gonzalez Boyce, XpertHR Legal Editor

The National Labor Relations Board (NLRB) spent the last days of 2017 sending shockwaves across every workplace. Holding a majority on the NLRB for the first time in 10 years, Republicans took advantage of a narrow window - between the appointment of two new Republican members in the fall and the departure of Republican Chairman Philip A. Miscimarra on December 16 - to overturn many controversial Obama-era rulings. In doing so, the NLRB made huge strides in restoring prior, employer-friendly standards and undoing much of the previous board's rulings that many believed were over-reaching and bordering on activism.

Below are some of the key decisions recently issued by the NLRB and how they affect the workplace.

1. Back to the Traditional Joint Employer Test

The NLRB made a significant splash when it overturned the controversial Browning-Ferris ruling and reinstated its prior, narrower joint employer test. In Hy-Brand Industrial Contractors, Ltd., the NLRB reversed Browning-Ferris' expanded joint employer test that was based on the alleged joint employer having the potential to control employees and their terms and conditions of employment (e.g., hiring, disciplining firing), either directly or indirectly. Under this broadened view, the employer could have been deemed a joint employer if it merely reserved the right to control yet did not actually exercise the authority.

In returning to the traditional joint employer test in Hy-Brand, the NLRB will now again find joint employer liability based upon the actual conduct of the employer rather than the fact that it had the potential to exercise such control. In other words, the NLRB requires 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."

The NLRB's decision in Hy-Brand is encouraging 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 ruling in Hy-Brand is retroactive, meaning that it applies to all current and pending cases, the NLRB's cases against franchisors (as well as staffing and contracting agencies) are now on shaky ground as the NLRB needs to determine whether to pursue litigation and its charges under the traditional, narrower joint employer standard.

To avoid liability as a joint employer, a business should ensure that it does not control the terms and conditions of the workers in question. For example, it should not exercise direct or actual control over the hiring, firing, disciplining or directing of workers. The fact that it may reserve the right to weigh in on the disciplining of a worker in an agreement would not support a finding of joint employment under the current test.

2. New Test for Workplace Rules and Policies

In another move that affects virtually all employers, the NLRB instituted a new balancing test for evaluating whether a workplace rule or policy is lawful under the National Labor Relations Act (NLRA). In Boeing Co., the NLRB stated that when a facially neutral rule, policy or handbook provision, when "reasonably interpreted" would potentially interfere with employees' rights to organize a union or bargain collectively under Section 7 of the NLRA, two factors must be considered:

  • The nature and extent of the potential impact on NLRA rights; and
  • Legitimate [employer] justifications associated with the requirement(s).

This new test is a stark departure from the prior Lutheran Heights test, which found a rule or policy to be unlawful if it could be "reasonably construed" by the employee to prohibit his or her exercise of NLRA rights. Now, the NLRB will instead consider business need when the lawfulness of a neutral workplace rule or policy is questioned. Specifically, the NLRB's duty will be to "strike a balance between … asserted business justifications and the invasion of employee rights in light of the Act and its policy." In applying this new test, the NLRB in Boeing Co. found Boeing's no-camera rule to be lawful because the employer's business justification to protect propriety and national security interests outweighed any potential infringement on its employees' NLRA rights.

3. Micro-Units Struck Down

The NLRB also recently overruled Specialty Healthcare, which had allowed unions to organize a minority share of the workforce ("micro-units") in instances in which a majority of the employees might not have wanted to unionize. The Specialty Healthcare decision was troubling for employers, as it required an employer that challenged the appropriateness of the petitioned-for unit or the exclusion of employees from that unit to prove that those employees shared an "overwhelming" community of interest with those in the petitioned-for unit. This was usually an impossible standard to meet.

The so-called micro-units were struck down in PCC Structural, Inc. In this case, the NLRB reinstated the traditional "community of interest" standard for determining whether a proposed bargaining unit constitutes an appropriate unit when the employer contends that the petitioned-for unit must include additional employees. This standard allows the NLRB to evaluate the interests of all employees - both within and outside the petitioned-for unit- to determine whether they have shared interests, e.g., similar wages, benefits, working conditions, skills and supervision.

With the return to the traditional standard, employers now have an increased ability to combat micro-units. In addition, under this standard, the NLRB may require a union to include more employees in the petitioned-for unit as well as require an increased number of votes to win union recognition on the workplace. In other words, this standard makes it more difficult for unions to pick smaller groups of workers in an effort to disenfranchise other employees who would not vote for union representation.

4. Ability to Make Unilateral Changes Expanded

In Raytheon Network Centric Systems, the NLRB again returned to a prior standard and held that an employer may make a unilateral change to the status quo made pursuant to past practice without giving the union prior notice or the opportunity to bargain, regardless of whether the parties' collective bargaining agreement is in effect or expired. In doing so, the NLRB overturned the 2016 Dupont case, which had limited an employer's ability to make unilateral changes in a union environment.

As a practical matter, an employer will not violate the NLRA if it relies on past practice to make a unilateral change in the terms of employment once an agreement has expired. However, when the employer makes a change consistent with past practice, a union still has the right to request bargaining regarding all mandatory subjects of bargaining.

5. Standard for Settlement Terms Clarified

The NLRB in UPMC and its subsidiary, UPMC Presbyterian Shadyside, returned to applying the reasonableness standard to evaluate all types of voluntary settlement agreements, including in instances where the proposed settlement terms are opposed by the charging party and/or the General Counsel. Specifically, the NLRB noted that the test it will now again apply is the reasonableness of the proposed settlement under the circumstances. Whether all - or even any - parties consent to the agreement is merely one among several relevant factors it will consider in determining whether the settlement is indeed reasonable and should be accepted. The NLRB's stance in this case overturns its prior standard that required the voluntary settlement terms to be a "full remedy" of all the alleged violations.