New NLRB Overturns Four Controversial Obama-Era Board Rulings

By:  Julia Turner Baumhart

The newly constituted NLRB has acted quickly to demonstrate its agreement with recently appointed NLRB General Counsel Peter Robb, reversing last week at least four controversial decisions by the Obama-era Board.  The first reversal – and the one most anticipated by employers –was the Board’s return to the pre-Browning-Ferris standard for determining joint employer status.

In 2015, the NLRB, in Browning-Ferris, abruptly changed the definition of “employer” that had originated in common law and in decades old statutory labor law.  Prior to Browning-Ferris, a finding of joint employer status required that one of two employer entities working together had actually exercised joint control over essential employment terms of the other employer’s employees.  A mere potential right to exercise such control would not suffice to create joint employer status.  What the Browning-Ferris Board did in 2015 was to stand this widely held and long accepted “actual control” requirement on its head, holding that joint employer status is found: even when two essential entities have never exercised joint control over essential terms and conditions of employment, and even when any joint control is not “direct and immediate” . . . based on the mere existence of “reserved” joint control, or based on indirect control that is “limited and routine.”

In a decision dated December 14, 2017, the new Board majority overruled the controversial “potential” or “reserved” control standard for joint employment, holding the prior Board exceeded its statutory authority, overlooked the role of Congress, and defied the certainty and predictability that is essential to the stability needed to sustain bargaining relationships.  Simply put, “the Browning-Ferris joint employer standard constituted ‘an approach infected with circularity and unable to produce predictable results.'”  See HyBrand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017), overruling Browning-Ferris.

In restoring the actual control test, the new Board majority emphasized in HyBrand the test’s practical understanding of contractual relationships in today’s economy.  After all, various forms of outsourcing, subcontracting, casual labor, and other forms of contingent workforces have been an established fact for a century or longer.  Recognizing this long-standing reality, the new Board held:

An employer receiving contracted labor services will of necessity exercise sufficient control over the operations of the contractor at its facility so that it will be in a position to take action to prevent disruption of its own operations or to see that it is obtaining the services contracted for.

It does not follow that the reservation of such control sufficiently justifies finding that the employer is the joint employer of its contractor’s employees.

Concurrent with overturning Browning-Ferris, the Board majority overruled the Lutheran Heritage “reasonably construe” standard for finding handbook policies or work rules in violation of the NLRA if employees could reasonably construe the policy language as prohibiting some form of concerted activity.  Application of the Lutheran Heritage test in this sweeping fashion, the Board held on December 14 in Boeing Company, 365 NLRB No. 154 (2017), “has invalidated a large number of common-sense rules and requirements that most people would reasonably expect every employer to maintain.”  For example, when Congress passed the NLRA in 1935, it could not have envisioned an employer “violat[ing] federal law whenever employees were advised to ‘work harmoniously’ or conduct themselves in a ‘positive and professional manner.'”  Yet that was the precise holding by the 2016 Obama-era Board in a case involving William Beaumont Hospital.

“No longer”, said the current Board in Boeing. Such rulings cannot be made outside the context of the employer’s justification for the rule.  And applying Boeing’s justification for its “no camera” rule – protecting national security and its own sensitive and often classified operations from espionage by competitors, foreign governments and supporters of international terrorism – the Board held the justification outweighed any limited adverse impact on concerted activity.

Following on the heels of these two major reversals came two more:

  • Raytheon Network Centric Systems, 365 NLRB No. 161 (Dec. 15, 2017), overturning Dupont, 364 NLRB No. 113 (2016), to hold an employer does not make a change to employment terms – thereby invoking the need to bargain – where the employer’s modifications are simply a continuation of its prior practice of making similar annual modifications; and
  • PCC Structurals, Inc., 365 NLRB No. 160 (Dec. 15, 2017), overruling Specialty Healthcare, 357 NLRB No. 934 (2011) and reinstating the traditional “community of interest” standard for determining what constitutes an appropriate bargaining unit where the employer advocates a broader universe of employees than that proposed by the union.

Whether the new Board majority will continue its aggressive pursuit of overruling the prior Board’s more controversial decisions is not known.  But its initial rapid barrage of reversals shows it is off to a formidable start.

This e-blast was written by Julia Turner Baumhart, who is a member of the Detroit SHRM Legal Affairs Committee.  Ms. Baumhart is a partner in the labor and employment firm of Kienbaum Opperwall Hardy & Pelton, P.L.C. in Birmingham, Michigan and can be contacted at jbaumhart@kohp.com or (248) 645-0000. 

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article.  December 2017.