Category: NLRB

NLRB New Joint Employer Standard

NLRB Finalizes New Joint Employer Standard

On February 26, 2020, the National Labor Relations Board (NLRB) published its final rule on a new joint employer standard. The new rule will take effect beginning April 27, 2020. NLRB Chair John Ring proclaimed, “This final rule gives our joint-employer standard the clarity, stability, and predictability that is essential to any successful labor-management relationship and vital to our national economy.”

Joint Employer Implications

The question of joint employment status under the National Labor Relations Act affects employee rights and employer obligations for private sector companies. Employers found to be joint employers:

  • must bargain with a union that represents any jointly employed workers,
  • face potential liability for unfair labor practices that the other employer committed, and
  • could be subject to union picketing or other economic pressure.

New NLRB Joint Employer Standard

Under the new standard, the NLRB will only find joint employment where a business possesses and exercises substantial direct and immediate control over one or more essential terms and conditions of employment of another employer’s employees.

The rule further defines the operative terms of the new standard.

“Essential terms and conditions of employment” means “wages, benefits, hours of work, hiring, discharge, discipline, supervision and direction.”

“Substantial direct and immediate control” means “regular or continuous consequential effects”. The rule clarifies that any direct control that is “sporadic, isolated, or de minimis” will not be enough to warrant a finding of joint employment.

The rule contains additional analysis regarding “direct and immediate control” for each of the eight “essential terms and conditions of employment”. For example, “An entity exercises direct and immediate control over wages if it actually determines the wage rates, salary or other rate of pay that is paid to another employer’s individual employees or job classifications.”

History of the NLRB’s Joint Employer Doctrine

Browning-Ferris

The NLRB had relied on a similar employer-friendly joint employment standard for decades until 2015. Then, in a case involving Browning-Ferris Industries of California, a pro-labor NLRB took a more expansive view of the joint employer relationship. In Browning-Ferris, the Board found two businesses to be joint employers where they both met the common law definition of employer and shared or codetermined matters governing the essential terms and conditions of employment. Under Browning-Ferris, an entity could become a joint employer even without actually exercising control over another employer’s employees. It was sufficient that the entity reserved the right to exercise control over the terms and conditions of employment of another employer’s employee.

The International Franchise Association and the U.S. Chamber of Commerce conducted a study on the financial impact of the Browning-Ferris decision on the American economy. They reported that the Browning-Ferris joint employer standard cost the U.S. economy $33.3 billion per year, considering lost jobs, stunting of job growth, and a significant increase in litigation involving franchise businesses.

Hy-Brand

On December 14, 2017, the NLRB issued a unanimous decision in a case involving Hy-Brand Industrial Contractors, Ltd. that overruled the Browning-Ferris joint employer test. The Hy-Brand decision reverted to the pre-Browning-Ferris joint employer standard. However, the NLRB vacated its decision in Hy-Brand after ethics concerns arose regarding Board Member Bill Emanuel’s participation in the case. Member Emanuel had worked for the Littler Mendelson firm when it represented a party that had been involved in the Browning-Ferris case that Hy-Brand reversed. Emanuel explained that he had not known of his firm’s past involvement in that previous case.

Response to the New Joint Employer Rule

Worker Advocate groups and unions strongly opposed the new joint employer standard. They argue that it hurts low-wage, African American, and Hispanic employees and incentivizes businesses that mistreat workers to continuing doing so. Given the strong opposition, legal challenges to the rule are likely.

However, other groups emphasize that the new rule will allow businesses to contract with third parties for the supply of temporary employees with confidence that they will not be responsible for the other employer’s employment violations. This should provide an overall boost to the economy.

Sean P. Redmond, Executive Director of Labor Policy for the U.S. Chamber of Commerce, commented, “the new rule restoring common sense is cause for celebration, to be sure.”

Why Rulemaking?

As in Browning-Ferris and Hy-Brand, the NLRB has historically interpreted the National Labor Relations Act by adjudicating actual controversies between parties. The NLRB took the rulemaking approach here in an attempt to lock the joint employer rule in place and make it less vulnerable to future changes without warning.

The proposed joint employer rule appeared in the Federal Register on September 13, 2018. The NLRB received and considered approximately 29,000 comments from employee rights advocates and businesses.

What This Means for Companies with “Shared” Workforces

The new rule should come as a big relief for franchisors. But it still leaves a gray area in other contexts.

If your company participates in potential joint employer arrangements either through the supply of labor or as the recipient of the services of another employer’s employees, you should review the relevant contractual terms in light of the NLRB’s new standard. You should also reevaluate the policies and procedures governing your company’s relationship with other employer’s employees. Give particular attention to the “essential terms and conditions of employment”: wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.

Generally, placement and temporary employment agencies should make the employment decisions in these areas. This will help to reduce joint employer claims against both parties, allocating the legal responsibility as usually intended—with the agency taking the role of employer and easing its client’s concerns of joint employer liability.

While this rule is good news for employers, it is critical to watch out for future developments. Beyond the anticipated legal attacks to the rule, a change in NLRB composition could again result in a policy reversal.

To stay up-to-date on important labor law topics affecting your business, sign up for our email newsletter and follow us on LinkedIn.

2020 NLRB

NLRB 2020 (Webinar Recap)

On January 22, 2020, I presented a complimentary webinar called “NLRB 2020: Updates for All Private Sector Employers”. For those who couldn’t attend the live webinar, we’re happy to make it available for you to watch at your convenience.

In the webinar, we discuss:

  • Employee Policies
  • Email Use
  • Investigatory Confidentiality
  • Representation Election Rule Changes
  • Union Issues

The National Labor Relations Board has a significant impact on private companies throughout the United States. The NLRB not only oversees union elections and management-labor relations, but also enforces employee rights to engage in concerted activities for their mutual aid and protection. Recently, the Board has taken many steps to reverse pro-labor rulings under the prior administration in Washington. We summarize many of those in this webinar.

Don’t have time to watch the whole webinar right now? Click here to download the slides from the webinar.

Why You Should Watch “NLRB 2020”

Whether you currently have unionized employees or not, recent NLRB actions could affect your company. Fortunately, it’s mostly good news for employers.

After several years of restrictive enforcement of the National Labor Relations Act, the NLRB is now reiterating private companies’ rights to run their business. While employees still enjoy many protections, employers have more leeway in several areas that would have been problematic before.

If you are concerned about potential organizing activity, be sure to learn about the new NLRB election rules. These will favor employers compared to the current rules. But the procedures don’t change until April 2020, leaving open the possibility that unions will hurry to pursue organizing campaigns and elections before then.

Plus, if you already have unionized employees, there are also updates that affect you more directly. Recent NLRB decisions restore earlier longstanding views on deferral to arbitration awards, dues checkoff, and union insignias.

We also comment on the current composition of the NLRB Board and how it could change, along with what that could mean for employers.

Don’t Miss Our Future Webinars!

Click here to sign up for the Horton Law email newsletter to be among the first to know when registration is open for upcoming programs!

And follow us on LinkedIn for even more frequent updates on important employment law issues.

Union Election Procedures

Union Election Procedures to Change in 2020

In December 2019, the National Labor Relations Board finalized a rule to modify its union election procedures. This action will slow down the election process, giving companies more time to respond to election petitions. It ends a five-year reign of so-called “quickie elections.”

The new procedures will be in place beginning April 16, 2020.

2014 “Quickie-Election” Rules

The NLRB substantially changed its election procedures in 2014. Under the Obama Administration, the Democrat-led NLRB revised the rules to expedite elections. Those changes were primarily intended to reduce companies’ opportunity to respond to union organizing efforts. In other words, making it easier for employees to unionize.

In addition to condensing the timeline, the 2014 rules created a new disclosure requirement for employers. They required companies to provide extensive information about their workforce and response to the election petition in writing often in one week.

More Balanced Approach

As of April 16, 2020, the rules will change again to give employers more time to respond. The now Republican-led Board has not, however, completely reverted to the pre-2014 union election procedures.

There are many nuances to these procedures. Here are just some of the most impactful changes:

More Time Before Pre-Election Hearing

The 2014 rules provided for a pre-election hearing as soon as 8 days after the union filed an election petition.

The new rules delays hearing to the 14th business day. As before, the NLRB Regional office can postpone the hearing for good cause.

Statement of Positions Remains

Employers understandably did not appreciate the new requirement of preparing and submitting a Statement of Position after receiving an election petition. However, the NLRB has decided to keep that requirement in place. But they are making a couple of compromises in this area.

First, employers will now have 8 business days to file the Statement of Position. Under the 2014 rules, they often only had 7 calendar days, with a hearing to follow the next day.

Second, unions must now also file a written Statement of Position. The union has until 3 days before the hearing to do so.

Expanded Scope of Pre-Election Hearings

The 2014 union election procedures limited the subject matter of pre-election hearings to relatively few subjects. Fundamentally, they were limited to determining whether a question of representation exists. This required an appropriate bargaining unit to be identified, but did not allow employers to litigate individual voter eligibility or inclusion in the bargaining unit before the election. If the parties did not mutually agree on those issues, the NLRB would decide them after the election, if necessary, depending on the results.

Under the new rules, voter eligibility and unit inclusion issues usually will be part of the pre-election hearing process. This includes litigation over supervisory status. That question can be significant, as supervisors are not eligible to join a unionized bargaining unit. Moreover, employers can rely on supervisors as part of their election preparations. Thus, it is valuable to know who does and doesn’t qualify in that capacity under the National Labor Relations Act before the election takes place.

The new rules will also bring back the right for parties to call witnesses at the pre-election hearings. The 2014 rules limited the ways parties could present evidence at this stage.

Post-Hearing Briefs

With a focus on quick elections, the 2014 rules eliminated written post-hearing briefs by the parties. They would just be something else taking time to prepare, read, and respond to, after all!

The new union election procedures will allow the parties to summarize their positions in writing after the pre-election hearing. They have 5 business days after the hearing to submit briefs. The hearing officer can allow up to 10 additional days.

Scheduling the Election

Before the 2014 rule changes, union elections usually occurred 25-30 days after the direction of an election. That means, once the parties resolved all preliminary matters, either mutually or by hearing decision, the election would take place about 4 weeks later.

The 2014 union election procedures, moved that timeline up considerably. They required a Regional Director to “schedule the election for the earliest date practicable . . . .” That resulted in reducing the time between petition and election from 38 days to 23 days. The NLRB shows these statistics here.

The rules effective April 16, 2020, will return closer to the pre-2014 timeline. They provide that regional directors “normally will not schedule an election before the 20th business day after the date of the direction of election.”

More Time for Voter Lists

Once an election is scheduled, the employer must give the union a list of all eligible voters with contact information. Under the 2014 rules, companies only had 2 days to do so following the direction of an election. Now they will have 5 days.

Good and Bad News for Employers

Most companies should welcome these changes to the NLRB’s union election procedures. If nothing else, it gives you more time to respond if you do receive an election petition. And most employers will welcome the time to review their options in hopes of staying union-free.

But, there is a potential short-term downside to the rule changes. Significantly, they don’t take effect until April 16, 2020. Before then, the 2014 union-friendly rules remain in effect. This may result in unions rushing to begin election proceedings under the “quickie election” rules.

Companies that have any concern of a potential union organizing effort should evaluate the heightened possibility of an election petition in the first quarter of 2020. It is always better to be proactive if you want to keep a union out. This primarily means doing the right thing by your employees. But it also includes knowing the relevant procedures, legal parameters, and other logistical best practices. If you have any concerns in this area, you should consult with an experienced labor attorney sooner rather than later.

 

For more on what the NLRB has been up to, check out our upcoming webinar: NLRB 2020: Updates for All Private Sector Employers