NLRB Concludes 2017 by Overturning Two Pro-employee Decisions

Dec 18, 2017

Late last week the National Labor Relations Board (“Board”) overturned the standard for weighing the legality of employee handbook policies, and the controversial Obama-era joint employer test. Both decisions – which were split 3-2 along party lines – have been broadly characterized as wins for employers.

The Lutheran Heritage Employee Handbook Standard

The Board, in handing down its ruling in a case involving the Boeing Co., overturned the 2004 Lutheran Heritage standard for evaluating the legality of an employer’s handbook policies. The prior standard deemed a policy illegal if employees could “reasonably construe” it to bar them from exercising their Section 7 rights under the National Labor Relations Act (“NLRA”).

Section 7 grants employees “the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection” (i.e., collectively bargain for, or otherwise discuss or take action in support of the terms and conditions of their employment). Conversely, employers – in both unionized and non-unionized private sector workplaces – must not “interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Section 7” of the NLRB.

The new standard involves the consideration of the “nature and extent” of a challenged rule’s “potential impact on [employees’] NLRA rights” and the “legitimate justifications associated with the rule.” The decision also lays out three categories by which the Board will classify rules:

Category 1: Rules that cannot be reasonably interpreted to interfere with NLRA-protected conduct or any inference of interference is outweighed by business interests will be legal in all cases. Examples of Category 1 rules are rules requiring “harmonious interactions and relationships,” and other rules requiring employees to abide by basic standards of civility.

Category 2: Rules will be legal depending on whether they are found to prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications. The NLRB stated it will focus on the application of the rule for this determination.

Category 3: Rules that limit or prohibit NLRA-protected conduct in a way not outweighed by business interests will be illegal in all cases. An example of a Category 3 rule would be a rule that prohibits employees from discussing wages or benefits with one another.

The rule at issue in Boeing Co. restricted workers’ use of camera-enabled devices such as cellphones on company property. The Board found that the NLRB judge, who previously found the rule to be unlawful, “gave no weight to Boeing’s security needs for the rule,” demonstrating that the employer’s “legitimate justifications” will now be considered and given weight by the Board.

The Boeing Co. decision opens the door for employers to review and revise their current handbooks and other work rules, which were most likely designed to comply with now-overturned Board precedent, which was aggressively pursued during the Obama administration.

Browning-Ferris Joint Employer Test

In a separate decision, the Board returned to prior precedent and did away with the broad and controversial joint employer test handed down in the Browning-Ferris decision. Under Browning-Ferris, a company and its contractors or franchisees could be deemed a single joint employer based on the mere existence of “reserved joint control,” or “indirect control,” even if the “two entities have never exercised joint control over essential terms and conditions of employment.”

The Board ruled that the appropriate standard is whether the supposed joint employer’s control over employment matters is “direct and immediate.” As such, a potential joint employer’s liability and collective bargaining obligations are significantly reduced by the Board’s return to the prior standard.

Looking to 2018

The beginning of a new year is always a good time to examine existing policies and roll out new ones and, in light of the Board’s recent decisions, employers now have greater flexibility to implement policies that safeguard their interests. Employers should embrace this opportunity to revisit handbook provisions and restructure agreements with contractors that were formed in an effort to comply with now radically altered precedent.

If you would like assistance in examining handbooks or other work rules, or evaluating joint employment arrangements, please feel free to contact Katie Basch, Amanda Smith, or any other KWW attorney.