NLRB Reverses Two Important Obama-Era Decisions

NLRB Reverses Two Important Obama-Era Decisions

NLRA, NLRB
December 15, 2017

On Thursday, the National Labor Relations Board continued its roll-back of Obama-era initiatives when it issued two landmark decisions just days before Chairman Miscimarra’s term expires on December 16. The first decision, Boeing, established a new standard for evaluating whether facially neutral workplace policies violate the National Labor Relations Act. The second decision, Hy-Brand, overruled the Browning-Ferris standard governing joint-employer liability. Both decisions come as welcome news to employers.

Standard Governing Workplace Policies

In The Boeing Company, the Board established a new standard for evaluating workplace policies by upholding the employer’s “No-Camera Policy,” which prevented employees from taking pictures or videos without a legitimate business need. The 3-2 decision overruled the Lutheran Heritage Village-Livonia standard in place since 2004. The Lutheran Heritage standard—commonly referred to as the “reasonably construe” standard—allowed the Board to conclude that a policy violated the NLRA even if the policy did not prohibit protected activities and was not applied or adopted in a manner that impaired protected activities, provided that an employee could “reasonably construe” the policy to interfere with protected rights under the NLRA. Under the newly established test in Boeing, the Board will evaluate a facially neutral workplace policy that could potentially interfere with employee NLRA rights using two factors. First, the Board will consider the type and scope of the potential impact on employee rights, and second, any legitimate employer justifications for the policy. The Board further created three categories into which such rules can fall. The first category contains rules that the Board will decide are lawful, either because the rule does not interfere with NLRA rights, or because the justification outweighs the risk of prejudicing protected NLRA rights. The no-camera policy at issue in Boeing fell within this first category, as well as common employer “civility” rules that are intended to maintain basic standards of good behavior. The second category contains those rules that warrant case-by-case scrutiny to balance whether the potential interference with protected rights outweighs the legitimate justification. The third category consists of those rules that adversely impact NLRA rights in a way that no reasonable justification can overcome such interference that the Board designates them as unlawful. An example would be a rule that prohibits employees from discussing wages or benefits with one another.

This ruling is a departure from the analysis which has been in place for over a decade and which employers have struggled to apply to their workplace policies. As stated in its press release, the Board is hopeful that the three categories delineated in this decision will provide much needed guidance and certainty to employers.

Joint-Employer Standard

The second—and arguably even more impactful—decision, Hy-Brand Industrial Contractors, Ltd. and Brandt Construction Co., resurrects the pre-Browning Ferris standard that governed joint-employer liability. Prior to the 2015 Browning-Ferris decision, the Board had long-held that two more entities could be joint employers only if they each exercised direct and immediate control over the employees. In Browning-Ferris, the Obama Board did an about-face and held that joint-employer liability could be imposed where an entity had indirect or potential control over employees of another entity.

In Hy-Brand, the Board called the Browning-Ferris standard a “distortion of common law” given that two entities could be joint employers “even when two entities have never exercised joint control over essential terms and conditions of employment, and even when any joint control is not ‘direct and immediate,’ the two entities will still be joint employers based on the mere existence of ‘reserved’ joint control, or based on indirect control or control that is ‘limited and routine.’” In contrast, and as described by the Board in its press release announcing the Hy-Brand decision, two or more entities will now be deemed joint employers if there is proof that one entity has actually exercised control over essential employment terms (rather than merely reserving the right to do so) and has done so directly and immediately (rather than indirectly) in a manner that is not limited and routine.

Even though the Board in Hy-Brand announced—or, at least, reinstated—a far different standard than the one used by the administrative law judge in the case, it ultimately adopted the judge’s finding that the two entities in Hy-Brand were joint employers.

The Board’s decision to revert back to the pre-Browning-Ferris standard was not entirely unanticipated, although the gusto with which the Board did so on Thursday was certainly a bonus for employers.