In Flurry of Activity, National Labor Relations Board Restores Pre-Obama Precedent

By:  Mark M. Trapp

Capitol Building

One of the most visible manifestations of the maxim that elections have consequences is illustrated by the regular oscillations in labor policy at the National Labor Relations Board (“Board”) that follow elections in which an opposing party takes control of the White House. After securing the first Republican-majority Board in a decade at the end of September, the Trump administration last week saw that majority quickly act to restore several pre-Obama precedents, setting a much more employer-friendly tone at the NLRB.

In four different cases issued on December 14 and 15, a 3-2 Republican majority reversed decisions issued by the Obama-era Board, each of which upset long-established policies that had survived prior Republican and Democrat administrations. The flurry of activity came on the last two working days of NLRB Chairman Philip A. Miscimarra’s term (which expired on Saturday), for the moment leaving the Board with a 2-2 deadlock between Republican and Democrat appointees. President Trump’s next nominee will again establish a 3-2 Republican majority, so these cases are presumably a preview of things to come.

On Friday, in PCC Structurals, Inc., 365 NLRB No. 160 (December 15, 2017), the majority reinstated the traditional community of interest standard that had prevailed for many decades before the Obama-era Board changed it in 2011. The 2011 decision in Specialty Healthcare gave much more leeway to unions to select the appropriate bargaining unit when attempting to organize an employer’s employees, as the employer challenging that selection had to prove that the excluded workers shared an overwhelming community of interest with the unit selected by the union.

Overruling the Specialty Healthcare decision, the majority returned to the prior rule, under which an employer bore no such burden. Instead, the Board will determine in each case whether the employees in a petitioned-for group share a community of interest sufficiently distinct from the interests of employees excluded from the petitioned-for group to warrant a finding that the proposed group constitutes a separate appropriate unit. While employers will certainly welcome this decision, as it will likely curtail the proliferation of so-called “micro units,” the decision merely restores a standard that prevailed for most of the Board’s history.

The same is true of the other decision issued on Friday, Raytheon Network Centric Systems, 365 NLRB No. 161 (December 15, 2017). In that case, the Board majority restored 50-year old precedent upset just last year by a decision from the Obama-era Board. In Raytheon Network, consistent with other Board cases dating back to 1964, the majority held that unilateral actions of an employer do not constitute an unlawful change in terms and conditions of employment if they are similar in kind and degree with an established past practice consisting of comparable actions. Accordingly, an employer has no obligation to bargain over such changes before implementation, even if they involve some degree of employer discretion. This most often arises in employer-provided healthcare benefits, which change year over year.

These two decisions followed a pair of decisions on Thursday of last week. In the first, The Boeing Company, 365 NLRB No. 154 (December 14, 2017), the Republican majority overruled a standard placing limits on employer policies which could be “reasonably construed” to limit workers’ rights protected by the National Labor Relations Act. In its place, the Board set forth a new standard. Now, when evaluating a facially neutral policy, rule or handbook provision that, when reasonably interpreted, might potentially interfere with the exercise of employees’ NLRA rights, the Board will evaluate two things: first, the nature and extent of the potential impact on those rights, and second, the employer’s legitimate justifications for the rule. Balancing these two factors should impact many employer policies, particularly those involving confidentiality, social media and non-disparagement provisions.

The second decision issued Thursday may have received the most attention, as it overturned an Obama-Board decision significantly broadening the standard under which a company can be held responsible as a so-called “joint employer,” an issue that often arises with the use of staffing firms. In Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (December 14, 2017), the majority overruled a 2015 Obama-era decision, and reinstated the prior standard in place over several decades. Under that restored standard, two or more entities will be deemed joint employers only upon proof that one entity has directly and immediately exercised control over the terms of employment of the other entity’s employees. The Board also clarified that proof of indirect control, contractually-reserved control that has never been exercised, or control that is limited and routine will not be sufficient to establish a joint-employer relationship.

The now overturned 2015 decision generated much controversy among employers, and prompted the Save Local Business Act, which passed the House in November. It is unclear whether this Act will make it through the Senate

Given that Chairman Miscimarra’s term has now ended, leaving the Board with a 2-2 deadlock, these four decisions may be the only fireworks from the Board for a little while. However, because President Trump will soon get another nominee of his choosing, and the recently-confirmed General Counsel for the Board has telegraphed his intention to overturn a wide range of Obama-era precedent, these decisions are likely a sign of further pro-employer decisions to come.

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