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Dec 15, 2017

On 3-2 votes, the NLRB Republican majority today overturned two precedent setting cases. One involved the standard it adopted just two years ago to determine joint employer status. The second set aside a 13 year-old standard governing whether facially neutral workplace rules and policies interfered with protected worker rights.

Reinstates Old Joint Employer Standard

The first case involved two construction firms with a common ownership and the firing of 7 striking workers. While the board upheld the administrative law judge’s determination that the two companies were joint employers and jointly liable for illegally dismissing the workers, the three-member majority overruled the standard for determining joint liability that was set in Browning-Ferris Industries.

Until Browning, joint liability of two or more employers could only be found if they shared or jointly determined matters governing the terms and conditions of employment and — this is the important part — actually exercised the right to control the work of the employees. And the exercise of that control had to be direct, immediate, and not limited and routine.

The Browning standard eliminated the requirement that an employer actually exercised that control; it merely had to have a contractual right to exercise it, a right most employers who use staffing firms have. In addition, the Browning decision said direct control was no longer required; indirect control such as setting work hours would be sufficient.

In the latest decision — Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co. — the board reverted to the previous joint employer standard. In a press release the NLRB said from now on joint employer status will only be found “if there is proof that one entity has exercised control over essential employment terms of another entity’s employees (rather than merely having reserved the right to exercise control) and has done so directly and immediately (rather than indirectly) in a manner that is not limited and routine.”

Facially Neutral Work Rules

In second case against Boeing over a no-camera rule, the board threw out the 13 year-old test for determining if a workplace rule that appears neutral actually violates the National Labor Relations Act. In setting the new standard, the majority wrote:

“The Board will no longer find unlawful the mere maintenance of facially neutral employment policies, work rules and handbook provisions based on a single inquiry, which made legality turn on whether an employee ‘would reasonably construe’ a rule to prohibit some type of potential Section 7 activity that might (or might not) occur in the future.”

Since the Lutheran Heritage Village-Livonia NLRB decision in 2004, the standard for deciding a violation was whether employer policies that didn’t expressly prohibit protected activities, were not adopted in response to such activities, and were not applied to restrict such activities could be ‘reasonably construed’ by an employee to prohibit their exercise of NLRA rights.

The board majority said the “reasonably construed” test — Lutheran Village prong one (there are two additional prongs to the overall test) — was difficult to apply consistently, failed to to consider any legitimate reasons for a rule, and provided no clear guidance for employers as to what rules and policies and handbook provisions were acceptable.

The majority opinion noted:

“These problems have been exacerbated by the zeal that has characterized the Board’s application of the Lutheran Heritage “reasonably construe” test. Over the past decade and one-half, the Board has invalidated a large number of common-sense rules and requirements that most people would reasonably expect every employer to maintain.”

In the specific case that resulted in overturning Lutheran Heritage, an administrative judge using the “reasonably construe” test, found a Boeing policy prohibiting photography on its property without authorization to be a violation of the NLRA. The board overturned that part of the decision.

From now on, said the majority, “when evaluating a facially neutral policy, rule or handbook provision that, when reasonably interpreted, would potentially interfere with the exercise of NLRA rights, the Board will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.”

Three categories of rules were delineated by the board:

  1. Category 1 – “Rules that the Board designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule.”
  2. Category 2 – “Rules that warrant individualized scrutiny in each case as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.”
  3. Category 3 – “Rules that the Board will designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule.”

In both cases, the two Democrats on the board, Mark Gaston Pearce and Lauren McFerran, dissented.

In the joint employer case, they said the Browning-Ferris test was “was firmly grounded in the common law.” And they observed that the majority had failed to show how it negatively impacted business.

They wrote separate dissents in the Boeing case.

In her lengthy dissent, McFerran called the majority’s new rule “ill-considered judgment” and said they followed and “arbitrary and capricious process.”

“The majority establishes a new standard that is worse, not better, than the old standard, burdening the Board and the public with more uncertainty and even less clarity.”

Pearce was even more pointed in his Boeing dissent, “Although characterized by the majority as a balancing test, its new standard is essentially a how-to manual for employers intent on stifling protected concerted activity before it begins.

“Overly protective of employer interests and under protective of employee rights, the majority’s standard gives employers the green light to maintain rules that chill employees in the exercise of rights guaranteed by the National Labor Relations Act.”