As predicted by HR Legalist earlier this year, the new Republican-majority National Labor Relations Board (NLRB) has begun to reverse key labor rulings established during the Obama administration. On December 14, 2017, the Board’s decision in Hy-Brand Industrial Contractors overturned the 2015 Browning-Ferris ruling regarding joint employment. The next day, the Board’s decision in PCC Structurals, Inc. overturned the 2011 Specialty Healthcare ruling regarding the appropriate unit for collective bargaining. Both decisions wipe away the more employee-friendly standards set forth in Browning-Ferris and Specialty Healthcare and restore the law that existed prior to those decisions.
The Hy-Brand Ruling
As previously covered by HR Legalist, the NLRB’s decision in Browning-Ferris Industries of California, Inc., 362 NLRB No. 186 (Aug. 27, 2015), expanded the test for determining which employers are “joint employers” subject to the National Labor Relations Act (NLRA). Browning-Ferris was part of a larger trend, given the modern-day “gig economy” to deem more companies employers (as opposed to independent contractors) and making them potentially liable under various labor and employment laws. Under Browning-Ferris, joint employment could be based solely on a company’s potential to exercise control over the terms and conditions of employment (known as “reserved control”), even if it never actually exercised that authority.
In last week’s Hy-Brand decision, the NLRB’s three-member Republican majority devoted over 30 pages to the various problems with the Browning-Ferris test, including many concerns previously raised by employers. The majority then restored the prior rule, which requires a showing that (1) the alleged joint employer actually exercised control over essential terms of employment (rather than simply having the right to exercise control); (2) that the control was direct and immediate (rather than indirect); and (3) that the control was not “limited and routine.”
The demise of Browning-Ferris is a welcome development for the employer community, particularly those companies that utilize temporary employment agencies or operate under a franchise model. However, employers still need to be sensitive to joint employment issues. In Hy-Brand, the Board concluded that even under the prior standard, the two companies in question were still joint employers because, among other things: (1) the corporate secretary for both employers was directly involved in decisions to terminate the employees in question; (2) employees of both companies participated in the same benefits plans; and (3) employees of both companies participated in common training sessions and meetings about common policies.
The PCC Structurals Ruling
The NLRB’s prior decision in Specialty Healthcare and Rehabilitation Center of Mobile, 357 NLRB 934 (Aug. 26, 2011) was part of an NLRB trend towards accepting multiple smaller bargaining units within a single workplace (also known as “micro-units”). Specialty Healthcare established a two-part standard for determining the appropriate size of a group of employees for collective bargaining (the “bargaining unit”). Under Specialty Healthcare, the NLRB can accept a bargaining unit identified by a union petition if its employees are readily identifiable as a group (i.e. have the same job classifications, department, work location, skills, etc.) and share a “community of interest” under a long-standing multi-factor test. Employers wishing to add more employees to a bargaining unit must then demonstrate that the additional employees share an “overwhelming community of interest” with the employees in the proposed unit.
In PCC Structurals, the Board rejected the Specialty Healthcare standard as overly deferential to the union’s choice of bargaining unit, and placing a “next-to-impossible burden” on employers. The Board then restored the traditional community-of-interest test, in which the NLRB must determine whether the employees in the bargaining unit share a community of interest “sufficiently distinct” from employees excluded from that unit. Employers will no longer be required to prove that employees excluded from the bargaining unit share an “overwhelming” community of interest. PCC Structurals is a welcome change for employers because it will make it easier to add employees to a bargaining unit, which in some cases can make the difference between a successful and unsuccessful union election.
What Lies Ahead?
These two decisions, released by the NLRB in rapid succession, indicate that the Board will continue to act aggressively to roll back Obama-era Board rulings. While it is too soon to tell for sure what the Board will do next, employee-friendly precedents remain in the areas of union elections, social media, workplace recording, and internal employer investigations. One ruling that could be ripe for reversal is the NLRB’s 2014 decision in Purple Communications, which allowed employees to use employer-provided e-mail to communicate about union organizing. Stay tuned to HR Legalist to see how the reconstituted NLRB continues to change labor law, and how those changes will impact employers.
Michael S. Pepperman is Chairman and a partner in Obermayer’s Labor Relations and Employment Law Department practicing in the area of employment and labor litigation. He can be reached at 215.665.3032 or firstname.lastname@example.org
Ivo Becica focuses his practice on advising employers on how to reduce litigation risk and resolve employee issues, and on defending employers in litigation if necessary. He can be reached at 215-667-6335 or email@example.com