Labor Board Considers Joint Employer Standard Rulemaking

The National Labor Relations Board has begun the process to consider rulemaking to establish a standard for determining joint employer status under the National Labor Relations Act, according to the Board’s filing in the Unified Agenda of Federal Regulatory and Deregulatory Actions.

The current standard is set forth in Browning-Ferris Industries, 362 NLRB No. 186 (2015). In that case, the NLRB announced a union-friendly joint employer test under which the Board will find two entities are joint employers where one exercises direct or indirect control over the other’s employees, or where one entity has reserved rights of control over the other’s employees, even if unexercised. The Browning-Ferris standard was reinstated when the NLRB vacated its decision in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017) on February 26, 2018.

Hy-Brand, which overruled Browning-Ferris and reinstated the former joint employer standard requiring a finding of direct control, was vacated after the Board’s Inspector General released a report stating that Member William Emanuel should have recused himself from participating in the decision. Emanuel’s law firm represented one of the joint employers involved in the Browning-Ferris decision.

Since Hy-Brand was already overruled once, conventional wisdom is the Board, once again, will reverse Browning-Ferris when the opportunity arises. However, to reverse Browning-Ferris,all three Republican Board members (Emanuel, Marvin Kaplan, and Chairman John Ring) likely would need to participate in the decision to form a 3-2 majority. (A 2-2 vote would result in the Browning-Ferris standard remaining in place.)

It appears that the rulemaking proposal, which was prepared at the request of Chairman Ring, is an effort to avoid any future conflict problems and the inability of Senate Republicans to get legislation to overturn Browning-Ferris passed. (Legislation to overturn Browning-Ferris has been filed in Congress, but Senate Republicans have struggled to get the Democratic votes necessary to pass it.) Now, the 3-2 Republican-majority Board is seeking an alternate route around these roadblocks.    Next, a Notice of Proposed Rulemaking will be issued, affording the opportunity for public comment. A majority of the five-member Board will need to approve the proposed rule.

Supreme Court Rules Class Action Waivers in Employment Arbitration Agreements Valid

Class action waivers in employment arbitration agreements do not violate federal law, the U.S. Supreme Court has ruled in a much-anticipated decision in three critical cases. Epic Systems Corp. v. Lewis, No. 16-285; Ernst & Young LLP et al. v. Morris et al., No. 16-300; National Labor Relations Board v. Murphy Oil USA, Inc., et al., No. 16-307 (May 21, 2018).

The Supreme Court’s decision resolves the circuit split on whether class or collective action waivers contained in employment arbitration agreements violate the National Labor Relations Act (NLRA). They do not, the Court ruled in a 5-4 decision. Justice Neil Gorsuch wrote for the majority of the Court. Justice Ruth Bader Ginsburg dissented, describing the majority holding as “egregiously wrong.”  For more on this historic ruling, click here.

NLRB Failed to Support Conclusion that Employee’s Disparaging Comments Were Protected, Not Disloyal

The U.S. Court of Appeals for the District of Columbia Circuit has refused to enforce the NLRB’s order finding that an employee’s discharge violated the National Labor Relations Act because the Board did not satisfy the Supreme Court’s two-prong Jefferson Standard test for determining whether an employee’s disparaging statements to third parties about his employer are protected. Oncor Electric Delivery Co. v. NLRB, No. 16-1278 (D.C. Cir. Apr. 13, 2018). The Court remanded the case to the NLRB for a re-examination and a thorough explanation of its decision.

The Supreme Court in Jefferson Standard, 346 U.S. 464 (1953), which later was followed by the NLRB and other court cases, ruled that employee public attacks on the quality of the employer’s products, services, or operations are protected by the NLRA when they are made in furtherance of a union’s position in a labor dispute. The public comments must (1) indicate that they are being made as part of a labor dispute and (2) not be extremely disloyal, reckless, or maliciously untrue.

In this case, the employee, who also served on his union’s negotiating committee, repaired and serviced “smart meters” at residential and commercial sites of utility users. The union and the employer had a history of disagreement over the increased use of the smart meters, primarily because this would reduce the need for employees to read meters, and therefore eliminate some union-represented jobs.

The union and the employer were deadlocked in collective bargaining negotiations, particularly over the length of a new agreement. The employee gave the employer an ultimatum: agree to the union’s demands, or he would voluntarily appear before a state senate committee hearing on whether smart meters had harmful effects on public health. The employer did not agree.

In his brief testimony before the committee, the employee identified himself as a union member and said he was personally handling an increasing number of work orders where the smart meters had burned up and burned the meter bases as well. He concluded that “these things are causing damage to people’s homes.” The employee did not reveal the ongoing contract dispute.

The employer reviewed the employee’s service call records, concluded that his testimony was false, and fired him. The NLRB administrative law judge and the Board ruled that the employee’s statements were protected and that his discharge violated the NLRA.

The Court explained that the first Jefferson Standard requirement is important so the audience can take this into account when assessing the employee’s credibility. The NLRB did not explain how this requirement was satisfied and the Court doubted whether the requirement could be satisfied under the record in the case. The Court also ruled the NLRB had to clearly take a position on which party has the burden of proof on the two requirements for NLRA protection — the General Counsel or the employer.

Public attacks on the quality of an employer’s products and services as leverage in labor disputes is a regular union tactic. Employers faced with this situation should carefully determine whether the employee referred to the labor dispute when uttering the disparaging remarks, as well as whether the remarks were disloyal, or recklessly or maliciously untrue. The NLRB historically has given employees the benefit of the doubt in such cases.



Jackson Lewis Responds to NLRB Request for Information on Election Rules

Jackson Lewis, which has represented management before the National Labor Relations Board for 60 years, has filed its comments suggesting several important changes to the NLRB’s far-reaching 2014 election rule amendments.  

In December 2017, the Board asked the public to submit comments on the efficacy of its 2014 election rule amendments, expressly asking if the rules should be retained, rescinded, or modified.  

In its comments, Jackson Lewis advocates that the Board take affirmative steps to protect the right of employees to make an informed choice in representation elections. An informed choice means employees casting their ballots with full knowledge of which of their coworkers would be included in the putative bargaining unit, and which individuals would be excluded as supervisors. Jackson Lewis advocates rule amendments that guarantee prompt examination and resolution of these issues before employees are asked to cast their ballots. Possession of this knowledge, pre-election, is likewise important to clarify employers’ legal obligations. An educated employee decision also needs an adequate opportunity to consider the benefits, risks, and obligations of union representation. Jackson Lewis also endorses simplification of the pre-election process by eliminating needless data collection and pointless notifications, and further avoiding unnecessary disclosure of personal employee information. 

In drafting the current rules, the Board did not focus on employees’ ability to make a knowing choice, but, rather, upon the speed with which the NLRB could conduct an election. Under the 2014 amendments, in most cases, the parties may be pressured to hold votes in a little over three weeks from the filing of an election request – about half the time of the Board’s previous goal. To accomplish this, the NLRB all but eliminated pre-election determinations of unit composition and voter eligibility, instead allowing the parties to challenge voters and to defer resolution of these legally significant issues until after the vote – and, often, never at all. The result is employee and employer confusion and uncertainty. Conflating celerity with choice helps neither the employees the National Labor Relations Act was intended to protect nor their employers. 

The 2014 amendments were the most significant change in election practice in the history of the Act – and the most controversial. Now, after the three-year experiment, the Board is commended for taking the unusual step of asking the public for its assessment. The Board, at this time, is not proposing a formal change to its rules, although its request is widely seen as a prelude to possible amendments.  

Jackson Lewis believes employee choice is essential to the democratic process Congress intended in enacting the NLRA. The Board has often acknowledged the importance.  

Jackson Lewis’ full response to the Board can be accessed at Share your thoughts on this with us.


Changes in Circumstances Counsel against NLRB Issuing Bargaining Order, Court Concludes

A bargaining order is an extreme form of relief and should not be issued without careful consideration of whether changed circumstances render such an order inappropriate, the U.S. Court of Appeals for the Second Circuit, in New York, has explained, remanding an unfair labor practice case to the Board. Novelis Corp. v. NLRB, 2018 U.S. App. LEXIS 6462; 201 L.R.R.M. 3523 (2d Cir. Mar. 15, 2018).

In Novelis, after a majority of employees had signed union recognition cards, and before the election, the company changed benefits to discourage employees from voting for the union, threatened employees with plant closure, and unlawfully demoted a union supporter. The company won the election conducted by the National Labor Relations Board. The union filed multiple unfair labor practice charges against the company, and the Administrative Law Judge found the company had committed an unfair labor practice. Two years after the election, the NLRB adopted the ALJ’s findings and issued a “bargaining order” requiring the company to bargain with the union despite the companies having won the election. The Board refused to consider the passage of time and changed circumstances since the election.

The Second Circuit upheld the Board’s finding on the unfair labor practice charges, but disagreed with the issuance of the bargaining order. The Court noted that “a bargaining order is a rare remedy warranted only when it is clearly established that traditional remedies cannot eliminate the effects of the employer’s past unfair labor practices.” Such a remedy is “appropriate only when traditional remedies, such as a secret ballot rerun of an election, do not suffice.” The Court further noted “the superiority of, and [its] preference for, secret ballot elections over bargaining orders.” Consequently, the Court said, the Board “carries a heavy burden to justify a bargaining order in lieu of a second election.”

The Second Circuit concluded the Board:

  • Ignored the fact that Novelis had taken meaningful steps to remedy the unfair labor practices.
  • Did not account for the passage of time, which casts doubt on the employees’ union support expressed years ago by authorization cards.
  • Failed to take into account significant employee turnover since the election.
  • Bargaining orders are not often issued by the NLRB, but when they are, their issuance must be justified. Although the employer here was able to avoid the issuance of a bargaining order, all of the factors on which the Court based its decision may not be present in other cases. Employers are permitted to aggressively communicate with their employees in the face of a union organizing campaign, but they should consult with experienced counsel to reduce the likelihood a bargaining order will be issued.

Ultimately, the Court concluded that there was no reason to believe a fair rerun election could not be held. 

Bargaining orders are not often issued by the NLRB, but when they are, their issuance must be justified. Although the employer here was able to avoid the issuance of a bargaining order, all of the factors on which the Court based its decision may not be present in other cases. Employers are permitted to aggressively communicate with their employees in the face of a union organizing campaign, but they should consult with experienced counsel to reduce the likelihood a bargaining order will be issued.


Ring Confirmed to Join NLRB

John Ring, a management labor attorney, has been confirmed by the U.S. Senate to a seat on the National Labor Relations Board, filling the NLRB’s only remaining vacancy.   Ring was confirmed by a 50-48 vote.  The Board now has a full complement of five members — three Republicans and two Democrats.  The Board is expected to overturn a number of union-friendly Obama-era decisions.

Charter Schools Covered by NLRA? Not in Texas

The U.S. has more than 6,000 charter schools. They are authorized in almost every state. While state laws vary, their purpose is the same: to permit alternatives to traditional public schools, unbound by local school districts or district-wide collective bargaining agreements that can stifle innovation.

These laws frame charters as public schools, subject to the usual educational goals and regulations. While publicly funded, each school is initiated by private individuals, rather than a public entity. Founders apply for a charter to an authorizing body (usually a government entity). If granted, the school is governed by a board of trustees comprised of private individuals. The state does not appoint trustees and has only attenuated power to remove them.

Most states provide collective bargaining rights for public employees. A few do not. However, Section 7 rights for protected concerted activity enjoyed by private sector employees under the National Labor Relations Act have not been applicable. By statute, a “state or a political subdivision” cannot be a covered “employer” under the Act. Thus, it was assumed that charters’ labor relations would be governed by whatever state labor law applied to public schools.

However, in 2012, the National Labor Relations Board returned to an old standard affirmed by the Supreme Court where an employer is deemed a “state or political subdivision” if it is (1) created directly by the state to be a department or administrative arm, or (2) administered by individuals who are responsible to public officials or to the general public.

Under this standard, if the school was not initiated by a government official or entity, its leadership is not appointed by the state, and its trustees are removable only by the state in unusual circumstances, the school is not exempt from the NLRA as a public entity. The Board and its regional offices consistently have held since 2012 that charters in Arizona, California, Connecticut, Illinois, Louisiana, Michigan, Minnesota, New York, Ohio, Oregon, Pennsylvania, Tennessee, and the District of Columbia are subject to the NLRA. Indeed, since 2012, there have been no cases in which the Board failed to find NLRA jurisdiction over a charter school.

Until now.

In LTTS Charter School, 366 NLRB No. 38 (Mar. 15, 2018), an individual employee filed an unfair labor practice charge against her charter school employer, alleging retaliation against the employee for engaging in protected concerted activity. Based on the growing body of Board cases, the regional director found NLRA jurisdiction and issued a complaint. After a trial, an NLRB administrative law judge found the Act did not confer jurisdiction over the school. The Board upheld the decision and dismissed the case.

Texas charter school law differs from other states’. Commonly, under certain circumstances, a state may remove members of school governing bodies; but Texas law permits the state to disband and reconstitute the membership – including appointing new members. This distinction was enough for the Board to find the school’s leadership was “responsible to public officials.”

Thus, Texas law, not the NLRA, governed the employment relationship, and Texas law does not recognize public employees’ rights to engage in concerted activity or to unionize.

LTTS applies only where this Texas law applies. Other states articulate government oversight differently. Charter schools (at least outside Texas) should note that NLRB jurisdiction remains the law in some states (and possibly in states in which the issue has yet to be tested). Schools interested in reviewing the potential for Board jurisdiction (or in considering a challenge to jurisdiction) should consult counsel.

John Ring Expected to be Confirmed to NLRB This Week

According to an April 9, 2018, press release by the office of United States Senator Lamar Alexander (R-Tenn.), John Ring, a management labor attorney, is expected to be confirmed by the Senate this week to serve as a member of the National Labor Relations Board.

Alexander said:

America’s workers will benefit from . . . [John] Ring at the National Labor Relations Board. Mr. Ring is a well-qualified nominee to serve on the labor board – he has represented management and worked for a labor union . . . .

Senate Majority Leader Mitch McConnell (R-Ky.) filed cloture on Ring on March 22 to end debate and vote on the nomination.

If Ring is confirmed, the NLRB will be at full strength for the first time since mid-December, when former Chairman Philip Miscimarra’s term expired. Ring’s confirmation would give Republicans a 3-to-2 majority on the NLRB, and set the stage for probable reversal of several Obama-era Board decisions.

Senate Vote on Labor Board Nominee Ring Scheduled

Floor consideration of the nomination of Republican John Ring to be a member of the National Labor Relations Board is scheduled to take place in the Senate on April 9.

Ring is expected to be confirmed by the Republican-majority Senate. If he is confirmed, the NLRB will have a 3-to-2 Republican majority. (For more on Ring, see our post, Labor Board Nominee Ring Approved By Senate Committee.)

Labor Board Nominee Ring Approved By Senate Committee

The Senate Health, Education, Labor and Pensions (HELP) Committee has confirmed Republican John Ring to the National Labor Relations Board by a 12-11 vote. The next step is a vote by the full Senate.

The Board is currently composed of two Democratic and two Republican appointees. If Ring is confirmed by the full Senate, the NLRB will have a 3-2 Republican majority until 2020.

Ring, a management-labor lawyer since 1998, would replace former NLRB Chairman Philip Miscimarra, whose term ended in December 2017.

Some of the HELP Committee’s questions to Ring were on potential conflicts of interest if he is confirmed. In response, Ring said that he “will not participate in any matter that comes before the Board” if his current firm (Morgan, Lewis & Bockius) “represents or represented, a party.”

While questions about potential conflicts of interest are standard in the confirmation process, an actual conflict noted by the Board’s Inspector General prompted the NLRB to reverse and vacate its latest joint employer decision. For details, see our post, NLRB Vacates Hy-Brand Joint Employer Decision Following Inspector General Report.

We will continue to monitor and report on important NLRB developments. Please contact us if you have questions.