Category: NLRB

NLRB Jurisdiction

NLRB Jurisdiction: Are We Covered?

The National Labor Relations Board (NLRB) is an independent federal agency that enforces the National Labor Relations Act (NLRA). The purpose of the Act is “to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy”. The NLRB has broad jurisdiction over private sector employers, employees, and labor organizations. NLRB jurisdiction includes most non-government employers with sufficient activity in interstate commerce.

NLRB Employers and Employees

Employer

The NLRB’s definition of “employer” includes private employers and anyone acting directly or indirectly as an agent of an employer. It does not include the United States, government corporations, federal reserve banks, or those subject to the Railway Labor Act.

Employee

The NLRB’s definition of “employee” includes any employee of a covered employer, including any person whose work has been discontinued in connection with a labor dispute or unfair labor practice. It does not, however, include agricultural laborers, domestic service workers, independent contractors, or supervisors.

Jurisdictional Thresholds Vary by Industry

Despite the broad statutory definitions, the NLRB does not exercise jurisdiction over all private employers and employees. Instead, it considers whether a business performs sufficient volume to warrant coverage by the federal agency. The NLRB applies different coverage standards depending on the nature of the business.

Retailers

Retailers fall under NLRB jurisdiction if their gross annual volume of business is at least $500,000. For shopping centers and office buildings, the threshold is $100,000.

Non-retailers

The NLRB exercises jurisdiction over most non-retailers if their annual inflow or outflow or goods or services is at least $50,000 in gross annual volume. The inflows or outflows can be direct or indirect.

Transportation Industry

Businesses in the transportation industry must produce $50,000 in annual volume to be included in the NLRB’s jurisdiction.

Legal Organizations

Law firms and legal service organizations fall under the jurisdiction of the NLRB if their gross annual volume of business is at least $250,000.

Cultural and Educational Centers

The NLRB exercises jurisdiction over art museums, symphony orchestras, private colleges, private universities, and other private schools if their gross annual volume of business totals at least $1,000,000.

Health Care

Nursing homes and visiting nursing associations fall under the NLRB’s jurisdiction if their gross annual volume of business is at least $50,000.

For hospitals, medical offices, social service organizations, and child care centers gross annual volume of business must be at least $250,000.

Native American Tribes

The NLRB has jurisdiction over commercial enterprises owned by Native American tribes, regardless of whether they are located on a reservation. However, the NLRB does not exercise jurisdiction over enterprises that perform traditional tribal or government functions.

Federal Contractors

Companies with federal government contracts fall under the NLRB’s jurisdiction.

Contentious Gray Areas

NLRB jurisdiction is not always straightforward. There are areas where the Board has wavered on whether it has or should exercise jurisdiction. For example:

  • Graduate students: In an August 2016 decision, the NLRB held that graduate students in private universities are employees and therefore can unionize under the NLRA. However, the NLRB has gone back and forth on whether graduate students are employees.
  • College athletes: On August 17, 2015, the NLRB unanimously agreed not to exercise jurisdiction to determine whether Northwestern football players are university employees under the NLRA. The Board members feared that a ruling these athletes employees would be problematic for the college sports industry.
  • Charter schools: In 2016, the NLRB held it has jurisdiction over New York and Pennsylvania charter schools because the schools are not political subdivisions of their states and therefore not exempt from the NLRA. However, in March of 2018, the NLRB declined to exercise jurisdiction over a Texas charter school because the NLRB found the school’s leadership was “responsible to state officials.”
  • Religious institutions: NLRB jurisdiction depends on whether the nature of the work is religious. For example, a religious school usually would not fall under NLRB jurisdiction, but a religious health care institution typically would.

Why NLRB Jurisdiction Matters

Employers should know whether their organization falls under NLRB jurisdiction. If it does, employers will be subject to certain restrictions and obligations under the NLRA. These include, but go beyond, not interfering with employees’ ability to engage in union activity. For more on how the NLRA can affect non-union workplaces, read New Rules for Employee Handbooks.

Employee Handbooks NLRB Guidance Rules

New Rules for Employee Handbooks

On June 6, 2018, the General Counsel of the National Labor Relations Board issued a guidance memorandum regarding employee handbooks and other work rules. The memo applies a December 2017 NLRB case decision that permitted employers greater flexibility in drafting meaningful workplace policies.

If challenged under the National Labor Relations Act, rules will now fall into one of three categories: lawful rules, unlawful rules, and rules requiring further scrutiny. Many more rules will be deemed lawful than under the previous analysis.

1. Rules that are Generally Lawful to Maintain

The guidance memorandum identifies nine subcategories of rules that will usually not violate the National Labor Relations Act (NLRA). These rules are acceptable “either because the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of rights guaranteed by the Act, or because the potential adverse impact on protected rights is outweighed by the business justifications associated with the rule.”

Civility Rules

Under the Obama Administration, the NLRB routinely found that this type of rule was unlawful. Now they will usually be acceptable because they “are consistent with basic standards of harmony and civility.”

Examples of generally lawful civility rules include:

  • “Behavior that is rude, condescending or otherwise socially unacceptable is prohibited.”
  • “Disparaging the company’s employees is prohibited.”
  • “Employees may not post any statements, photographs, video or audio that reasonably could be viewed as disparaging to employees.”

No-Photography Rules and No-Recording Rules

The NLRB recently allowed a rule prohibiting the use of camera-enabled devices to take images or video at work. The guidance memo suggests that similar rules regarding audio recording should likewise be lawful.

However, the memo cautions that “a ban on mere possession of cell phones at work may be unlawful where the employees’ main method of communication during the work day is by cell phone.”

Rules Against Insubordination, Non-cooperation, or On-the-job Conduct that Adversely Affects Operations

The guidance memorandum acknowledges that nearly all employee handbooks contain these rules. It provides these specific examples:

  • “Being uncooperative with supervisors or otherwise engaging in conduct that does not support the Employer’s goals and objectives is prohibited.”
  • “Insubordination to a manager or lack of cooperation with fellow employees or guests is prohibited.”

Rules of this nature will generally be acceptable.

Disruptive Behavior Rules

The guidance memorandum references rules prohibiting:

  • “Boisterous and other disruptive conduct.”
  • “Creating a disturbance on Company premises or creating discord with clients or fellow employees.”

In 2016, the NLRB found the first rule above unlawful because employees could read it to prohibit lawful activity such as protests and picketing. However, the current Board will likely allow these rules. The guidance memo offers that “even if employees would read such rules as applying to strikes and walkouts (as opposed to only unprotected conduct), employees would not generally refrain from such activity merely because a rule bans disruptive conduct.”

Rules Protecting Confidential, Proprietary, and Customer Information or Documents

Confidentiality rules in employee handbooks can be problematic if they limit discussion of wage information or working conditions. But the guidance memorandum clarifies that other rules “banning the discussion of confidential, proprietary, or customer information” are now generally acceptable. “Employees do not have a right under the Act to disclose employee information obtained from unauthorized access/use of confidential records, or to remove records from the employer’s premises.”

Rules against Defamation or Misrepresentation

As recently as 2017, the NLRB held that a rule prohibiting employees from “misrepresenting the company’s products or services or its employees” was unlawful. The new guidance memorandum suggests that rule is now acceptable, recognizing that “[t]he vast majority of conduct covered by these rules is unprotected.”

Rules against Using Employer Logos or Intellectual Property

In the past, the NLRB objected to these rules:

  • “Employees are forbidden from using the Company’s logos for any reason.”
  • “Do not use any Company logo, trademark, or graphic without prior written approval.”

Now, employers may include similar rules in their employee handbooks. The current NLRB General Counsel accepts that these rules are unlikely to deter employees from “fair use of a logo on a picket sign,” which would likely be allowed under federal copyright and labor laws.

Rules Requiring Authorization to Speak for Company

As long as the rule only addresses who may speak on behalf of the company, it will generally be lawful.

Rules Banning Disloyalty, Nepotism, or Self-Enrichment

The NLRB has historically allowed rules of this nature. Examples include:

  • “Employees may not engage in conduct that is disloyal, competitive, or damaging to the company such as illegal acts in restraining of trade or employment with another employer.”
  • “Employees are banned from activities or investments that compete with the Company, interferes with one’s judgment concerning the Company’s best interests, or exploits one’s position with the Company for personal gain.”

2. Rules Warranting Individualized Scrutiny

The NLRB recognizes a gray area for rules that are not obviously lawful or unlawful on their face. Whether an employer may maintain such rules in their employee handbooks or policies manuals will depend on context.

The guidance memo advises that:

[S]uch rules should be viewed as they would by employees who interpret work rules as they apply to the everydayness of their job. Other contextual factors include the placement of the rules among other rules, the kinds of examples provided, and the type and character of the workplace.

These rules will also draw greater scrutiny if employees have actually refrained from lawful activity because of them.

Here are some rules that may fall into this category:

  • Broad conflict-of-interest rules
  • Confidentiality rules encompassing “employer business” or “employee information”
  • Rules regarding disparagement or criticism of the employer
  • Restrictions on use of the employer’s name
  • Rules restricting speaking to the media or third parties
  • Bans on off-duty conduct that might harm the employer
  • Rules against making false or inaccurate statements

3. Rules that are Unlawful to Maintain

Finally, some rules will still readily violate the NLRA. The following will most likely get employers in trouble.

Confidentiality Rules Specifically Regarding Wages, Benefits, or Working Conditions

The ability to interact with other employees over core terms of employment is a fundamental right under federal labor law. The guidance memorandum offers that “[t]here are no legitimate interests in banning employees from discussing wages or working conditions that are sufficient to overcome Section 7 [of the NLRA] rights.”

Rules Against Joining Outside Organizations or Voting on Matters Concerning Employer

Similarly, the NLRA plainly gives employees the right to join unions. So, employers cannot directly purport to curtail that right through a workplace rule.

Revising Employee Handbooks

This NLRB guidance and the recent case decision give employers greater leeway in drafting their workplace policies. Accordingly, businesses may take this opportunity to review their employee handbooks and consider revisions. But, employers who previously revised policies to comply with earlier, more-stringent NLRB rulings could choose to retain the less-restrictive policies.

Joint Employer NLRB Rulemaking

NLRB Suggests Joint Employer Rules

On May 9, 2018, the National Labor Relations Board announced that is considering rulemaking on the subject of joint employer status. The joint employer standard has received much attention in recent year. The Board’s Republican majority tried to change the standard for this important analysis through a December 2017 case decision. However, the NLRB later withdrew that decision upon allegations that one of the Republican members had a conflict of interest. Shifting to rulemaking to change the joint employer standard may overcome the conflict issue.

Current Joint Employer Analysis

In 2015, a 3-2 Democratic majority Board decided a case involving whether Browning-Ferris Industries of California (BFI) was a joint employer with a company that supplied workers onsite at BFI. The NLRB departed from precedent and applied an “indirect control” standard that considerably expanded the situations where two entities would be joint employers under the National Labor Relations Act. The broad test only requires that the entities “share or codetermine those matters governing the essential terms and conditions of employment.” This is evaluated by asking whether each entity “possesses sufficient control over employees’ essential terms and conditions of employment to permit meaningful collective bargaining.”

Before this case, the NLRB applied a “direct” and “substantial” control standard.

The primary difference was the shift from requiring actual exercise of control over workers to mere potential of control.

Initial Attempt to Return to Previous Standard

When President Trump took office, he named Philip Miscimarra the Chairman of the NLRB. Miscimarra was on the Board when the NLRB decided the Browning-Ferris case. He and the other Republican member at the time issued a vigorous dissent to the Democratic majority’s decision. Just before Miscimarra’s term expired in December 2017, he and a new Republican majority issued several prominent decisions reversing Obama-era NLRB precedent. This included an attempted reversal of the joint employer standard.

In a December 14, 2017, 3-2 Board decision, the NLRB announced it was returning to the earlier test. The restored test focused on which business(es) have “direct and immediate” control over terms and conditions of employment. It dismissed analysis of “indirect” factors that the Democrat majority introduced in 2015.

However, on February 26, 2018, the NLRB vacated the December 14, 2017 decision, reverting to the “indirect control” standard. Marvin Kaplan, whom Trump had appointed Chair upon Miscimarra’s departure, joined the two Democratic members in that decision. The other Republican member, Bill Emanuel, was not allowed to participate in the decision. The NLRB Inspector General’s Office had opined that Emanuel had a conflict of interest. His previous law firm had represented a party in the Browning-Ferris case, which the December 14, 2017 decision effectively overturned.

The alleged conflict may prevent Emanuel from deciding any case involving a change in the joint employer standard.

Shift to Rulemaking

The NLRB recently regained full strength with the Senate confirmation of Republican attorney John Ring as the fifth member. President Trump promptly replaced Kaplan with Ring in the Chairman seat. Ring, like Emanuel, may also face conflict challenges given the extensive client-base of his former firm.

Likely because the Republican majority would face repeated conflict claims in attempting to overturn Browning-Ferris through adjudication of an actual case, Chairman Ring has shifted to administrative rulemaking as the vehicle to change the joint employer standard. The NLRB has seldom relied on rulemaking to establish policy. So, this attempt to do so will itself likely face legal challenges.

Nonetheless, Chairman Ring offers a compelling argument for the rulemaking approach:

“Whether one business is the joint employer of another business’s employees is one of the most critical issues in labor law today,” says NLRB Chairman John F. Ring. “The current uncertainty over the standard to be applied in determining joint-employer status under the Act undermines employers’ willingness to create jobs and expand business opportunities. In my view, notice-and-comment rulemaking offers the best vehicle to fully consider all views on what the standard ought to be.”

His Democratic colleagues unsurprisingly disagree. The NLRB’s press release on the matter specifically noted that “The inclusion of the proposal in the regulatory agenda does not reflect the participation of Board Members Pearce and McFerran.”

The press release explained that the next step would be the issuance of a Notice of Proposed Rulemaking. Although it added that “[a]ny proposed rule would require approval by a majority of the five-member Board,” that statement notably recognizes that the opposition of Members Pearce and McFerran will not be enough to overcome the expected consensus of the three Republican members.

Expected Outcome of Joint Employer Rulemaking

Chairman Ring even took to Twitter to make his views known: “The joint-employer standard is one of the most critical issues in labor law today—affecting millions of Americans in nearly every sector of the economy. Uncertainty over the standard undermines job creation & economic expansion. The new majority intends to get the job done.”

There’s no mystery of what that job is. It’s finding joint employers status only where multiple entities have “direct and immediate” control over workers.

And, although administrative rulemaking takes some time, Ring wants to do this quickly: “The Board majority will work to issue a proposed rule ASAP, and we will consider the views of all interested parties.”

Member Pearce, who was the NLRB Chair when it decided Browning-Ferris, also tweeted on this subject. Among his pointed comments: “Board majority “considering rulemaking” but @NLRBChairman says “Board majority…work[ing] to issue proposed rule ASAP” — certainly sounds like another objective is already set. .”

 

Make sure you stay up-to-date on this developing issue. Sign up now for my monthly email newsletter!