2018 Outlook on Federal Labor Laws
While President Donald Trump is not known for a deliberate approach, the long-anticipated shifts in labor law and policy is starting to take shape in an efficient and measured form. The National Labor Relations Board (“NLRB” or the “Board”) closed out 2017 with several key decisions overturning significant pro-unions policies. These decisions came on the heels of newly minted NLRB General Counsel Peter Robb’s “Mandatory Submissions to Advice” Memo (the “Memo”) directing regional offices to defer to the General Counsel on certain hot-button labor enforcement actions – a clear signal that many more Obama-era policies will be challenged and likely reversed.
It took little time for both the NLRB and the NLRB’s GC under the Trump administration to get started – contrasting the difficulties the Obama Administration faced in confirming appointees to the NLRB. But, the Trump administration’s unusual patience in ensuring that its pieces were in place has paid off. Now that the ball is rolling, we can expect to continue to take forceful and efficient action in the administration’s second year.
Let’s take a look at what to expect for 2018:
John Ring – The Next (Likely) NLRB Tiebreaker Former NRLB Chairman Philip Miscimarra’s term ended on December 16, 2017 with a bang. With a full majority of Republican NLRB appointees, Chairman Miscimarra, on his last days, pushed through profound reversals of various Board policies (discussed below) that haunted the business community. Promptly replacing Miscimarra to hold a majority will be critical to implementing changes to federal labor law and policy. On January 12, 2018, management attorney John Ring was officially nominated to replace Miscimarra. A Senate Committee hearing and vote is expected to occur on February 14, 2018.
Once cleared through Committee, a final Senate vote is likely to follow within weeks to allow Ring to pick up where Miscimarra left off. Based on recent events, many expect that most Obama-era NLRB decisions will be reversed by the end of 2018. Further, the NLRB will be expected to vote on eliminating the “quickie election” rule, which significantly limited the time employers had to defend against union election campaigns. The next Obama appointed Board member’s term will expire in August 2018, positioning a 4-1 Republican-appointed majority before any Senate elections. At that point, the question will be whether the NLRB will look to set bold new policy or be content with reversing Obama-era policies to traditional standards.
Peter Robb’s Enforcement Regime in Full Swing
On December 1, 2017, then-newly confirmed NLRB General Counsel Peter Robb issued the Memo which identified over a dozen recent NLRB decisions as targets for such policy scrutiny, as well as rescinded many other internal enforcement policy memos. Within weeks of issuance, three major Obama-era NLRB decisions were reversed. The Memo initially appeared to be an aspirational wish list of sorts. Now, it can be viewed as the playbook for the imminent unwinding of Obama-era policies.
Robb’s vision, however, does not appear limited to policy challenges on the highest levels. Recent news reports revealed that Robb is also looking to shake-up the grass-roots organizational structure of the NLRB’s enforcement units by adding new layers of management to oversee each regional office. The directors of the regional offices have been viewed (fairly or not) as hostile to business. Regional directors wielded substantial discretionary power at the grassroots level to implement or enforce policy. Under the rumored restructuring, regional directors will lose such discretion to issue complaints and dismiss unfair labor practice charges, or how to manage union representation cases. Those determinations would be made by those closer to the General Counsel’s office than on the local level.
If an actual proposal for restructuring is announced, it will likely require public “notice and comment,” as well as approval from the NLRB members. If approved, this restructuring will certainly expedite implementation of any new labor policies or administrative priorities at the grassroots levels. Even if no proposal is made, Peter Robb’s message to enforcement staff is clear – implementation of Robb’s agenda and new NLRB decisions should be swift. We can expect most, if not all, of the subject areas in the Memo to be addressed and reversed by the end of 2018. If restructuring occurs sooner rather than later, implementing new Board law on the ground level will be instantaneous.
Trump’s NLRB Holiday Gifts On the last two days of Chairman Miscimarra’s term on the NLRB, the Board issued a flurry decisions that vacated some of the most controversial labor policies that defined the Obama-era NLRB. The first two decisions overturned the Browning-Ferris standard for joint employer status and the Lutheran Heritage Village test for employee handbook language. Another decision reversed an Obama-era NLRB decision that enabled unions to organize through “micro-units.” We briefly examine these three decisions below.
Browning-Ferris is (Directly or Indirectly) No More No Obama-era NLRB decision received as much (reviled) attention as 2015’s Browning-Ferris decision. Prior to Browning-Ferris, the standard for finding “joint employer” status between two separate entities required proof of actual exercise of joint control over essential employment terms, and such control must be “direct and immediate” and not “limited and routine.” Browning-Ferris lowered that standard by imposing liability and requiring bargaining when a business merely possessed potential and indirect control over certain employees of another entity. This standard (if sustained) would have upended, on a massive scale, traditional arms-length business relationships including contractor-subcontractor, franchisor-franchisee, creditor-debtor and parent-subsidiary – all of which traditionally shielded against joint employer liability.
In 2018, businesses can breathe a huge sigh of relief as the NLRB’s 3-2 decision in HyBrand returned the joint employer status back pre-Browning-Ferris standards. The crux of the NLRB’s decision is that the term “employer” should have a fixed meaning by law, and the NLRB’s assertion of authority to define the term “employer,” as it did in Browning-Ferris, is fundamentally unfair, arbitrary and rife for chaos. Due to the extremeness of Browning-Ferris, many businesses were unable to adopt and implement the “joint employer” standard on a wholesale basis. Nonetheless, Hybrand is immediate relief for specific businesses that were directly implicated by Browning-Ferris such as franchisors, third-party staffing companies, and subcontractors. Overall, businesses in general have less cause for the anxiety to define or understand employment liability and risks in other arms-length transactions.
Font Selection for Handbooks are No Longer Unfair Labor Practices (Kidding, not Really) Ok – bad joke, there is no plausible scenario where font selection for an employee handbook would amount to a violation of the NLRA. But, the rapid increase of unfair labor practice charges for the contents of an employee handbook have drastically risen to levels that employers felt unamused. Until the NLRB’s December 3-2 decision in The Boeing Company, work rules (including those in handbooks) would violate the NLRA if employees would “reasonably construe” such rules to prohibit union and other protected concerted activities. That previous rule, which was formalized in Lutheran Heritage Village in 2004, became prolific during the Obama-era with the rise of social media and other personal device technology. The singular focus on the employee’s perception made it difficult for employers to address critical business issues such as trade secret protection and prevention of workplace harassment without running afoul of Lutheran Heritage Village.
The Boeing Company decision eliminated that singular focus on how an employee would “reasonably construe” a workplace rule and now requires balance between the impact on Section 7 rights from the employee’s perspective with the employer’s legitimate justification based upon the facts and circumstances of each case. For most employers, they have already taken this approach by opting to risk an unfair labor practice charge in favor of a greater benefit of preserving critical business rules such as protection of trade secrets. Now, employers can focus on balancing Section 7 rights in setting workplace rules rather than assume every legitimate business choice is a default legal risk.
Micro-Units Are No More
The union organizing theory behind “micro-units” is that once a union has a foot in the door, no matter how small, union support is easier to spread. This strategy inherently requires proactively excluding other employees from voting in early stages despite significant overlap with the union proposed bargaining unit – specifically, employees who oppose union presence. “Micro-units” became a reality through the Obama-era Board decision Specialty Healthcare. Under Specialty Healthcare, an employer could only expand the composition of a proposed bargaining unit if the employer demonstrated an “overwhelming community of interest” between the union’s proposed unit and other employees. In short, employees could be included into the proposed unit only if they were virtually identical to the employees in the unit.
The NLRB’s 3-2 decision in PCC Structurals reversed Specialty Healthcare and reinstated the standard for bargaining unit determinations to the traditional “community of interest” standard. Obviously, this lessens the burdens to expand the proposed the unit by affording excluded employees the right to vote since employees need not “completely overlap” to be afforded a right to vote. Rather, other employees may be included when their working conditions sufficiently overlap with the proposed unit employees. In essence, unions lost their ability to game elections and now must focus on organizing the totality of the workplace. Employers, on the other hand, gain the ability to bargain with unions on a more holistic basis, as opposed to fractured sub-groups.
Thus far, the Trump-era NLRB has been singularly focused on reversing Obama-era rules and policy. It has not yet shown signs of going farther by pursuing any novel or extreme policies. Rather, this manifestation of the NLRB appears to be traditionalist and valuing stability of historical board policies. Most of the Obama-era policies were geared towards finding novel ways to reverse the downward trend of union membership. However, those Board decisions and rules have not been in place long enough to invoke a true cultural shift in labor management. Without an imminent Democrat president or legislative majority, the return to traditional labor laws will remain in-tact for the foreseeable future.
Any new challenges to labor laws will likely stem from state and municipal efforts to enact legislation to circumvent any limitations set by the NLRB. Those laws are likely to face challenges in the Court largely on preemption grounds. The range of opportunities for state and local legislatures will, however, be severely limited and exotic.
For any strategy discussions regarding the above, Mark Konkel of Kelley Drye & Warren LLP is available to provide assistance assisting you with your labor strategy and disputes.