With the issuance of four recent decisions overruling key Obama-era National Labor Relations Board precedent and announcing a review of the NLRB’s 2015 election regulations, the NLRB has begun the process of charting a new course in federal labor law.
For a nearly three-month period leading up to the expiration of Chairman Philip Miscimarra’s term on December 16, 2017, the National Labor Relations Board (NLRB or Board) operated with a Republican majority for the first time in almost 10 years. The result was last week’s issuance of four landmark decisions, each of which overturned a number of significant Obama-era labor policies. The Board also signaled its intent to reexamine the expedited election rules that went into effect in April 2015 and dramatically altered the Board’s election procedures in favor of faster union elections.
As many expected, these decisions and actions seemingly represent the first step in what could amount to a large-scale reversal of Obama-era NLRB legacy.
During the Obama administration, the NLRB was extremely aggressive in challenging “facially neutral” employer policies, handbooks, and other rules based on the theory that such rules can interfere with employee rights under Section 7 of the National Labor Relations Act (NLRA or Act). In The Boeing Co., the Board overruled its 2004 decision in Lutheran Heritage, which held that an employer violates the Act by maintaining facially neutral policies that could be “reasonably construed” by an employee to prohibit the exercise of rights protected by the NLRA. The Obama NLRB had broadly defined the “reasonably construe” prong in Lutheran Heritage to invalidate a host of ordinary workplace policies, including workplace civility standards and policies governing workplace recordings.
The Board changed this standard in Boeing and adopted a balancing test that will evaluate two factors in rules cases going forward: “(i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.” This balancing test will, among other things, take into account the type of NLRA protected activity potentially being implicated, different industries and work settings, and the circumstances that gave rise to a particular rule. Although not explicitly stated, the Board appears to be moving toward a more common sense standard in this area. The Board also cited general civility standards as a type of rule that generally will be lawful going forward. The Board found that the “no camera” rule at issue in Boeing was lawful under the circumstances.
In a monumental decision on the issue of joint employer status, the Board in Hy-Brand Industrial Contractors, Ltd. overruled its 2015 decision in Browning-Ferris Industries. Joint employer status could be found under Browning-Ferris based on indirect or potential control over terms or conditions of employment, regardless of whether that control was actually exercised by the putative joint employer. Hy-Brand reinstated the pre–Browning Ferris standard, which holds that an employer is considered to be a joint employer if it exercises “direct and immediate control” over the terms and conditions of employment for a group of employees.
Notably, the Board in Hy-Brand found a joint employer relationship existed under the “direct and immediate control” standard. This serves as an important reminder that franchisor–franchisee, employer–staffing agency, and employer–third party contractor relationships continue to be subject to challenge even under the Hy-Brand standard.
One of the most significant Obama-era decisions in the area of union representation elections was the 2011 decision in Specialty Healthcare & Rehabilitation Center of Mobile. It expanded the ability of unions to organize small or fragmented groups of employees—so-called “micro units”—through the NLRB election process. Specifically, if the union’s petitioned-for unit was deemed appropriate by the Board, the burden shifted to the employer to demonstrate that the employees excluded from the unit “share[d] an overwhelming community of interest” with the employees in the petitioned-for unit, such that there was no legitimate basis upon which to exclude those employees.
The Board in PCC Structurals, Inc. reversed Specialty Healthcare and revived the traditional “community of interest” standard for determining whether a petitioned-for unit in representation cases constitutes an appropriate bargaining unit. In doing so, the Board explained that “there are sound policy reasons for returning to the traditional community-of-interest standard that the Board has applied throughout most of its history.” This is a significant development for employers concerned about unions targeting narrow groups of employees in order to maximize their chances of winning elections.
In Raytheon Network Centric Systems, the Board held that when an employer, during collective bargaining, takes unilateral actions that are “not materially different from what it has done in the past, no ‘change’ has occurred and the employer’s unilateral actions are no longer violations of Section 8(a)(5) of the Act.” In so holding, the Board overruled E.I. du Pont de Nemours, where in 2016 the NLRB had imposed a bargaining obligation over “changes” occurring after contract expiration—even if the employer could show a past practice of making similar or identical changes without bargaining in prior years or decades.  The Raytheon decision marks a return to the standard in effect prior to E.I. du Pont, which privileges unilateral action by employers—even after a contract has expired—as long as the action is consistent with past unilateral changes the employer has implemented for the unionized employees at issue. Such changes include, for example, altering benefits during an annual open enrollment process.
The Board on December 14 published a notice in the Federal Register requesting information about its current representation and election procedures, signaling a possible reform of and/or retreat from the procedures that went into effect in April 2015. Accordingly, the Board is now requesting information on the following three questions:
Responses must be submitted on or before February 12, 2018.
With the reversal of significant Obama NLRB decisions, employers can begin revisiting business decisions they may have made during the Obama administration. This includes decisions in the areas of workplace rules, potential joint employer relationships, the definition of bargaining units that are subject to union organizing, and the continuation of certain practices during collective bargaining. While Chairman Miscimarra’s term has expired, the Board will continue to operate with the four remaining members—two Republican appointees and two Democratic appointees—who are expected to deadlock on any controversial issues. This means that there likely will not be any further precedent-changing decisions until a fifth Board member is nominated by the president and confirmed by the Senate.
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If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
Harry I. Johnson, III
Joseph C. Ragaglia
 365 NLRB No. 154, slip op. at 1 (Dec. 14, 2017).
 365 NLRB No. 156, slip op. at 1 (Dec. 15, 2017).
 362 NLRB No. 186, slip op. at 1 (Aug. 27, 2015).
 357 NLRB No. 83 (2011), enfd. sub. nom. Kindred Nursing Centers East LLC v. NLRB, 727 F.3d 552 (6th Cir. 2013).
 365 NLRB No. 160, slip op. at 1 (Dec. 15, 2017).
 365 NLRB No. 161, slip op. at 1 (Dec. 15, 2017).
 364 NLRB No. 113, slip op. at 1 (Aug. 26, 2016).