NLRB Overrules Obama-Board Independent Contractor Precedent, Reinstates Common Law Test

The National Labor Relations Board has overruled FedEx Home Delivery, 361 NLRB 610 (2014). In that case, the Obama-Board decided that, in determining whether an individual is an independent contractor or an employee, “entrepreneurial opportunity represents merely ‘one aspect of a relevant factor that asks whether the evidence tends to show that the putative contractor is, in fact, rendering services as part of an independent business.’” In SuperShuttle DFW, Inc., 367 NLRB No. 75 (January 25, 2019) the Board decided that its FedEx Home Delivery decision had (incorrectly) considerably limited the significance “of entrepreneurial opportunity by creating a new factor (‘rendering services as part of an independent business’) and then making entrepreneurial opportunity merely ‘one aspect’ of that factor.” The Board decided “the FedEx Board impermissibly altered the common-law test and longstanding precedent, and to the extent the FedEx decision revised or altered the Board’s independent-contractor test,” it was overruled. The Board “return[ed] to the traditional common-law test that the Board applied prior to FedEx.

Board Chairman John Ring, and Members William Emanuel and Marvin Kaplan comprised the majority; member Lauren McFerran dissented.

Please watch this space for a more extensive analysis of the Court’s decision.







Report: Union Representation Numbers Remain Low

Once again, the percentage of private sector union-represented workers fell – to 6.4% in 2018, from 6.5% in 2017, according to the Bureau of Labor Statistics of the U.S. Department of Labor.

Highlights from the “Union Members – 2018” report include:

  • Men had a higher union representation rate than women (11.1% to 9.9%).
  • Black employees were more likely to be union members than Caucasian, Asian or Hispanic employees.
  • Older workers were unionized at a higher rate: 12.8% of workers ages 45 to 54 and 13.3% of those ages 55 to 64 were represented by unions.
  • While nonunion workers’ median weekly earnings were less than those of unionized employees ($860 per week versus $1051 per week), this comparison does “not control for many factors that can be important in explaining earnings differences,” such as “variations in the distributions of union members and nonunion employees by occupation, industry, age, firm size, or geographic region.” (For example, unionized employees tend to be older and younger employees tend to earn less.)
  • The higher median weekly earnings for unionized employees does not apply to all occupations, however; median weekly earnings for a number of professional and management occupations such as those in business and financial operations and computer and mathematical occupations were higher among non-union employees than for union employees.
  • Hawaii and New York had the highest union membership rates (23.1% and 22.3% respectively), while North Carolina and South Carolina had the lowest (2.7% each).
  • In the private sector, utilities (20.1%), transportation and warehousing (16.7%), and telecommunications (15.4%) were the industries with the highest unionization rates. Finance (1.3%), food services and drinking places (1.3%), and professional and technical services (1.5%) were among the lowest.
  • The highest unionization rates in 2018 were in protective service occupations (33.9%) and in education, training, and library occupations (33.8%). Unionization rates were lowest in farming, fishing, and forestry occupations (2.4%); sales and related occupations (3.3%); computer and mathematical occupations (3.7% ); and in food preparation and serving related occupations (3.9% ).
  • California (2.4 million) and New York (1.9 million) had the largest number of unionized employees.

The 2018 BLS data on the rate of union membership reflect nothing more than the status quo – a tiny fraction of American workers in the private sector, and a minority overall, have chosen to become members of a union. Nevertheless, both unionized and union-free employers should be aware of local, industry, occupation, and other union membership trends. If you have any questions, please feel free to contact Jackson Lewis.


Bargaining Unit Can Still Be ‘Micro’ under ‘Community of Interest’ Standard

After the NLRB adopted a new standard for determining bargaining-unit composition, many expected fewer micro-units would result. PCC Structurals, 365 NLRB No. 160 (2017) (PCC I). However, when the employer filed a request for review (appeal) of the Regional Director’s decision allowing, on remand, a “micro-unit” of its employees to vote on union representation under the new standard, the NLRB denied it. PCC Structurals, Inc., No. 19-RC-202188 (Nov. 28, 2018) (PCC II).

In PCC I, the Board had overruled its Specialty Healthcare (357 NLRB 934 [2011]) decision, reviving its prior, more employer-friendly standard for evaluating an employer’s claim that a petitioned-for bargaining unit should be expanded to include additional employees requested by the employer. In PCC I, the Board ruled that a party seeking to add employees to a “micro-unit” need only show the excluded employees share a “community of interest” with the petitioned-for employees, rather than the “overwhelming community of interest” required under Specialty Healthcare.

In PCC I, the Board remanded the case to the Regional Director for evaluation of the union’s proposed bargaining unit and the employer’s counterproposal under the new standard. The Regional Director determined that, even under the new standard (and the Board’s craft-unit case law), the union’s petitioned-for micro-unit (a group of the employer’s rework employees and welders – approximately 120 employees) was appropriate. (The company had taken the position that the unit should include all production and maintenance employees, which would mean 120 job classifications and 2,565 employees.) The Regional Director explained that “the petitioned-for Unit constitutes a craft unit of highly skilled welders and is appropriate for the purposes of collective bargaining in that the petitioned-for welders share a community of interest sufficiently distinct from excluded employees.” The analysis considered departmental organization, skills and training, job duties, functional integration, contact, interchange, terms and conditions of employment, and supervision. The Board concluded that these factors weigh in favor of finding the petitioned-for employees share “a community of interest sufficiently distinct from excluded employees.”



D.C. Circuit Court of Appeals Upholds NLRB’s Browning-Ferris Joint-Employer Test, Cautions Board on Rulemaking

In a long-awaited decision, the D.C. Circuit Court of Appeals has upheld the controversial joint-employer standard articulated by the National Labor Relations Board in its 2015 Browning-Ferris decision. Browning-Ferris Industries of Calif., Inc. v. NLRB, D.C. Cir., No. 16-1028, 12/28/18.

The Court held that the Board properly considered both the putative employer’s reserved right to control and its indirect control over the employees’ terms and conditions of employment as factors for determining whether businesses should be considered joint employers. The Court wrote, “The Board’s conclusion that it need not avert its eyes from indicia of indirect control—including control that is filtered through an intermediary—is consonant with established common law. And that is only question before this court.”

Although the Board properly considered indirect control as a factor, the Court noted that the Board had “failed to differentiate between those aspects of indirect control relevant to status as an employer, and those quotidian aspects of common-law third-party contract relationships.” In other words, the Board failed to articulate the scope of what it considers “indirect” control.  Consequently, the D.C. Circuit remanded the issue to the Board for further consideration.

Despite this decision, the Board’s proposed joint-employer rulemaking remains open for public comment until January 14, 2019. The impact of this decision on the Board’s rulemaking remains to be seen, but the Court cautioned that  “[t]he policy expertise that the Board brings to bear on applying the National Labor Relations Act to joint employers is bounded by the common-law’s definition of a joint employer. The Board’s rulemaking, in other words, must color within the common-law lines identified by the judiciary.”

Please watch this space for a more extensive analysis of the Court’s decision.

Labor Board Further Extends Deadline for Submitting Comments on Proposed Joint-Employer Rulemaking

The National Labor Relations Board has once again extended the deadline for submitting comments regarding its proposed rulemaking on the standard for determining joint-employer status under the National Labor Relations Act, this time to January 14, 2019. Replies to comments submitted during the initial comment period must be received by the Board on or before January 22, 2019.

This public-comment period is an important opportunity for companies to submit input and concerns and increase the possibility of a well-informed, comprehensive final rule that will provide clear guidance to and limit the risk of litigation for employers. Companies that use or provide temporary or supplemental staffing services are strongly encouraged to submit comments to the Board for consideration. Companies that regularly work with franchisors and franchisees or with subcontractors also may want to comment, as the proposed changes may affect them directly.

Jackson Lewis is available to assist organizations to submit comments.






Some Employers Will Have Workplace Rules Re-Evaluated By NLRB

The National Labor Relations Board is affording dozens of employers the chance to have cases involving the legality of their workplace rules re-evaluated under a 2017 Board decision. The Board decision overruled Obama-era Board precedent that hampered employers’ ability to maintain workplace conduct rules without running afoul of the National Labor Relations Act. The Board’s new initiative, first reported by Bloomberg Law, involves remanding numerous cases that held against employers for reconsideration by NLRB administrative law judges.

Workplace rules have been a contentious issue under federal labor law for years. In 2004, the NLRB issued its controversial decision in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), which set a tough standard to determine whether workplace rules, policies, and handbook provisions unlawfully interfere with rights of employees protected by the Act. In Lutheran Heritage, the Board held that a neutrally worded rule would violate the NLRA if employees may “reasonably construe” the rule to prohibit an employee’s exercise of his or her protected rights. Lutheran Heritage made it considerably harder for employers to maintain otherwise benign-sounding handbook provisions prohibiting rude or disruptive workplace behavior.

In 2017, after the composition of the Board shifted to a Republican majority, the NLRB issued Boeing Co., 365 NLRB 154 (2017). In Boeing, which overruled Lutheran Heritage, the Board held that determining whether an employer rule is unlawful involves a balancing test that measures the rule’s impact on employee rights against an employer’s legitimate business interests in maintaining the rule. The Board created a three-tiered rules classification system: “Category 1” rules are those the Board has specifically designated as lawful; “Category 2” rules are those that require individualized scrutiny to determine their legality; and “Category 3” rules are those specifically designated by the Board as unlawful.

On June 8, 2018, the NLRB’s General Counsel, Peter Robb, issued a memo providing specific examples of which rules would fall into each of these categories. For example, the General Counsel’s memo identified as a Category 1 rule one that prohibited “behavior that is rude, condescending or otherwise socially unacceptable.”

The Board’s latest action remands at least 40 workplace rules cases for a fresh look under Boeing. Any new decisions will strengthen Boeing as precedent. Moreover, the new decisions certainly will provide employers clear examples of what employee conduct they can and cannot prohibit or limit through workplace rules.

NLRB Regulatory Action on ‘Quickie Election’ Rule Put on Back Burner

Employers waiting for the National Labor Relations Board’s revisions to union election rules will have to wait a bit longer. According to the latest agency regulatory agenda, that is a “long-term” action item, a downgrade from its prior ranking. This is a possible indication that revisions to the rules have become a less important priority for the Board for the upcoming year than issuance of joint-employer rules. The Board announced its intent to consider revisiting the election rules in December 2017. See Labor Board Asks: Retain, Modify, or Rescind ‘Quickie Election’ Rules?

Among other significant changes, the Obama-era representation election rules, in effect since April 2015, significantly shortened the time between the date of the filing of a petition for an election with the NLRB to the date the election is held. The rules also require pre-election hearings generally to be held beginning on the eighth day after the filing of a representation petition and require employers to provide union representatives with more information on potential voters than in the past. The rules, often referred to as the “quickie” or “ambush” election rules, have been criticized since their inception as a hindrance to employers’ ability to respond to and educate employees about the impact of union organizing activity.

According to Law360, NLRB Chairman John Ring told attendees at the American Bar Association’s labor and employment conference in San Francisco that the Board will engage in rulemaking to change the rule, but will do so issue by issue, rather than taking on the entire rule at once. According to Ring, the Board will release the first in a series of proposed rules this winter, covering the NLRB’s blocking charge policy and voluntary recognition bar.

Meanwhile, the Board is moving forward with its proposed revisions to the standard for determining joint-employer liability under the National Labor Relations Act. See NLRB’s Proposed Rule Adopts Pre-Browning-Ferris Joint-Employer Standard. The window for public comment on the proposed rule closes on December 13, 2018.


Labor Board Sets New Deadline for Submitting Comments on Proposed Joint-Employer Rulemaking

The National Labor Relations Board has extended the deadline for submitting comments regarding its proposed rulemaking on the standard for determining joint-employer status under the National Labor Relations Act to December 13, 2018.

The proposed rule was originally published in the Federal Register on September 14, 2018, and comments were due by November 13, 2018. Replies to comments submitted during the initial comment period must be received by the Board on or before December 20, 2018.

Companies that use or provide temporary or supplemental staffing services are strongly encouraged to submit comments to the Board for consideration. Companies that regularly work with franchisors and franchisees or with subcontractors also may want to comment, as the proposed changes may affect them directly.

This public-comment period is an important opportunity for companies to submit input and concerns and increase the possibility of a well-informed, comprehensive final rule that will provide clear guidance to and limit the risk of litigation for employers.

If you have questions, would like to discuss the implications of this rulemaking in detail, or need assistance with the preparation or submission of comments on your behalf, please contact the Jackson Lewis labor lawyer with whom you regularly work.

Unions to Face Greater Scrutiny for Negligent Conduct to Their Members

National Labor Relations Board’s field office staff have been directed to prosecute a broader array of cases against unions that engage in negligent behavior toward their members, according to an internal memorandum obtained by Bloomberg BNA.

The Office of the General Counsel Memorandum expresses a marked contrast to the Board’s historical position with respect to cases addressing a union’s “duty of fair representation.” “General Counsel’s Instructions Regarding Section 8(b)(1)(A) Duty of Fair Representation Charges” Memorandum ICG 18-09 (Sept. 14, 2018).

A union owes its members an obligation to represent them in good faith and without discrimination. A union breaches the duty of fair representation when it engages in conduct that is arbitrary, discriminatory, or in bad faith. Vaca v. Sipes, 386 U.S. 171, 190 (1967). Where, for example, a member believes that a union has failed to adequately prosecute a grievance on the member’s behalf, the member may file a duty of fair representation charge against a union under Section 8(b)(1)(a) of the National Labor Relations Act.

Under existing Board law, a union can defend itself against such a charge by showing its behavior was “merely negligent.” As one example, a union may successfully argue that where the union lost or misplaced a grievance, the union’s conduct was merely negligent and did not constitute a violation of the duty of fair representation. Citing an “increasing number of cases” where unions have employed such a defense, the Memorandum toughens considerably the standards on unions. This is particularly true in two specific circumstances.

The first pertains to situations where a union loses track of, misplaces, or otherwise forgets about a member’s grievance. Under the Memorandum, the loss of a grievance will constitute gross negligence, unless the union can show that it had an established, reasonable tracking system in place for grievances, but the system failed “for an identifiable and clearly-enunciated reason.”

The second example pertains to situations where a union fails to communicate its decisions about a grievance or fails to respond to inquiries for information from a member on the status of a grievance or the member’s attempt to file one. The Memorandum states that such conduct (for example, where a union ignores emails or phone calls) is willful and arbitrary, unless the union can prove that it had a “reasonable excuse or meaningful explanation” for its lack of responsiveness.

While the Memorandum is not controlling law (ultimately, the five-member Board issues controlling interpretations of federal labor law), because the General Counsel’s office prosecutes cases filed with the NLRB, the Memorandum may cause a considerable uptick in cases filed against unions. This increase, in turn, could increase members’ awareness that the duty of fair representation owed to them cannot be taken lightly by their unions.

NLRA Preempts Municipality’s Right-to-Work Ordinance, Seventh Circuit Holds

While the National Labor Relations Act allows states to enact right-to-work laws, it does not authorize local municipalities to do so, the U.S. Court of Appeals for the Seventh Circuit, in Chicago, has held. I.U.O.E. Local 399 v. Village of Lincolnshire, No. 17-1300 & 17-1325 (7th Cir. Sept. 28, 2018).

This decision is contrary to the Sixth Circuit’s holding in United Automobile, Aerospace, and Agricultural Implement Workers of America Local 3047 v. Hardin County, Kentucky, 842 F.3d 407 (6th Cir. 2016). This creates a circuit split that the U.S. Supreme Court may be called on to resolve.

A “right-to-work” law generally prohibits employers and unions from enforcing or entering into union security provisions, which require employees to join the union or pay dues as a condition of employment. Section 14(b) of the NLRA authorizes states to pass right-to-work laws.

Illinois has not enacted a right-to-work law. In 2015, the Village of Lincolnshire in Illinois enacted a local ordinance with a right-to-work provision. Several unions challenged the ordinance in federal district court, arguing the NLRA preempted the ordinance. In 2017, the federal district court ruled the NLRA preempted the ordinance and the Village appealed.

Citing U.S. Supreme Court precedent, the Seventh Circuit determined that state and local laws banning union security provisions “clash” with Section 8 of the NLRA and would be preempted, unless they fall within the scope of Section 14(b). The Seventh Circuit rejected the argument that by allowing a state to enact right-to-work laws, Section 14(b) permits the state’s authority to be re-delegated to its political subdivisions.

“True, section 14(b) cedes some power back to the states, but it makes no sense to say that states can re-delegate that power …. [N]o one would be able to figure out what is legal and what is not,” wrote Chief Judge Diane Wood.

The Court reasoned that employers operating within multiple local jurisdictions with varying ordinances might be placed in the “impossible position” of having to risk an unfair labor practice charge for refusing to bargain over a union shop clause or civil and criminal penalties for violating the ordinance. The Seventh Circuit’s decision relied on the potential for “other administrative nightmares” based upon the sheer number of local jurisdictions in Illinois.

The Seventh Circuit also ruled that the NLRA preempted two other provisions of the Village’s ordinance, which restricted the use of union hiring halls and dues checkoff.

Until the Supreme Court settles the issue, municipalities in Illinois, Indiana, and Wisconsin (which are covered by the Seventh Circuit) are prohibited from passing right-to-work laws, while those in Kentucky, Michigan, Ohio, and Tennessee (which are covered by the Sixth Circuit) are free to adopt right-to-work laws.

We will report any further developments. Please contact a Jackson Lewis attorney if you have any questions.