NLRB Issues Two Important Decisions for Employers

NLRB axes Lutheran Heritage Standard

In a 3-2 decision, the NLRB overruled its prior decision regarding how it analyzes whether a facially neutral workplace rule, policy or employee handbook provision interferes with the exercise of rights protected by the National Labor Relations Act (“NLRA”). The Board’s prior standard was unmanageable for employers because the Board would invalidate any policy, rule or handbook provision that could be “reasonably construed” by an employee to prohibit the exercise of NLRA rights even if the rule did not explicitly prohibit protected activities, was not adopted in response to such activities, and was not applied to restrict such activities.  Thus, employers were required to surmise how employees might perceive and interpret the rule, policy or handbook provision.  As the Board noted, the old standard “has been exceptionally difficult to apply, which has created enormous challenges for the Board and courts and immense uncertainty and litigation for employees, unions and employers.”

Replacing this unmanageable standard, the Board announced that it would instead “evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.” Thus, employers can now offer business justifications for rules that may have previously been deemed unlawful because employees could perceive them as prohibiting protected activities. 

The Board also announced that, prospectively, three categories of rules will be delineated to provide greater clarity and certainty to employees, employers, and unions.

  • Category 1 will include rules that the Board designates as lawful to maintain, either because (i) the rule, when reasonably interpreted, does not prohibit or interfere with the exercise of NLRA rights; or (ii) the potential adverse impact on protected rights is outweighed by justifications associated with the rule.  Examples of Category 1 rules are no-camera requirements and rules requiring employees to abide by basic standards of civility.  Thus, the Board overruled past cases in which the Board held that employers violated the NLRA by maintaining rules requiring employees to foster “harmonious interactions and relationships” or to maintain basic standards of civility in the workplace.
  • Category 2 will include rules that require individualized review as to whether the rule would prohibit or interfere with NLRA rights, and if so, whether any adverse impact on NLRA-protected conduct is outweighed by legitimate justifications.
  • Category 3 will include rules that the Board designates as unlawful to maintain because they prohibit or limit NLRA-protected conduct, and the adverse impact on NLRA rights is not outweighed by justifications associated with the rule.  An example is a rule that prohibits employees from discussing wages or benefits with one another.

NLRB overturns Browning-Ferris

In Hy-Brand Industrial Contractors, Ltd., 365 NLRB 156 (2017), the National Labor Relations Board, in a 3-2 decision, overturned the previous joint-employer standard articulated in Browning-Ferris Industries, Inc., which very broadly defined joint-employers.  Under the Browning-Ferris standard, “indirect control, even a power reserved by contract but never exercised, would be considered and could suffice, standing alone, to find joint-employer status.”  This standard created potential liability for multiple employers working together through staffing and other contractual relationships for each others’ employees.

The Board’s decision in Hy-Brand Industrial Contractors, Ltd. restored the standard used before Browning-Ferris.  The pre-Browning-Ferris standard holds that: proof of indirect control or  contractually-reserved control that has never been exercised will not be adequate to establish a joint-employer relationship.  Now, to be deemed a joint-employer, a business must have a direct and immediate control over the employees in question. After announcing the decision to return to the pre-Browning-Ferris standard, the Board noted its “return to a standard that has served labor law and collective bargaining well, a standard that is understandable and rooted in real world.  It recognizes joint employer status in circumstances that make sense and foster stable bargaining relationships.”

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