Client Bulletin #607
Philip A. Miscimarra was nominated to the National Labor Relations Board by President Obama in April 2013. Mr. Miscimarra was quickly confirmed by the Senate and began his term in August 2013. Previously a management-side labor and employment lawyer, he served as the sole Republican on the Board for much of his term and regularly dissented from majority decisions by his Democratic colleagues.
In January, President Trump named Mr. Miscimarra Acting Chairman of the NLRB, replacing Obama appointee Mark Gaston Pearce, a Democrat who remains a member on the Board. The third Board member currently serving is Lauren McFerran, also an Obama appointee and a Democrat. Two seats on the five-seat Board are vacant, meaning that Democrats are still in the majority. However, the days are numbered for that Democratic majority: President Trump has the opportunity to nominate Republicans to fill the two vacancies, which will give the Republicans majority control. The Republican Board will be poised to reverse some decisions on important issues of interpretation of the National Labor Relations Act. In a press release, Chairman Miscimarra said, “I remain committed to the task that Congress has assigned to the Board, which is to foster stability and to apply the National Labor Relations Act in an even-handed manner that serves the interest of employees, employers and unions throughout the country.”
Once the Board has a Republican majority, there are several areas of Board law where we may see reversals or modifications of decisional law. Under the Democratic-controlled Board, many observers would concede that the balance has tilted in favor of organized labor. A Republican majority is expected to be less hostile to employers, and we expect to see a more even-handed approach in interpretation and application of the NLRA. Below, we discuss five major areas of Board law where now-Chairman Miscimarra has written dissents that are potentially ripe for reversal or modification.
Areas Ripe for Reversal or Modification
More latitude for employee handbooks and employer policies
It is no secret that the NLRB has cracked down on employee handbook rules and employer policies in recent years, forcing employers to walk a tightrope to attempt to ensure that the policies would not be interpreted as interfering with employees’ Section 7 rights under the NLRA. Recent NLRB panels have found that employers may not maintain broad rules that require employees to treat other employees and management with respect, demonstrate loyalty, or maintain a positive work environment by communicating in a manner that is conducive to effective working relationships. Additionally, under current rules, employers are not allowed to maintain broad rules that prohibit offensive communications or arguments between coworkers.
These prohibitions stem from the current Board’s application of a “reasonably construe test.” Under that test, any handbook rule or employer policy that can reasonably be construed to limit employees’ Section 7 right to engage in protected concerted activity for the purpose of collective bargaining or other mutual aid or protection, is unlawful interference that violates Section 8(a)(1) of the NLRA. This is so even if the rule or policy does not explicitly restrict activities protected by Section 7, was not adopted in response to Section 7 activity, and had never been applied to restrict Section 7 activity. The test has significantly limited employers’ ability to draft handbook rules and other policies to manage their working environments.
In one dissent, Chairman Miscimarra wrote that it was time to completely abandon the “reasonably construe test,” stating that the Board has a “duty to strike the proper balance between . . . asserted business justifications and the invasion of employee rights in light of the Act and its policy.” (Quoting U.S. Supreme Court decision in NLRB v. Great Dane Trailers, Inc. Emphasis is in Supreme Court decision.) Under a Republican-majority Board led by Chairman Miscimarra, the NLRB may elect to adopt the test proposed by him – a test in which the Board would evaluate and balance “(i) the potential adverse impact of the rule on NLRA-protected activity, and (ii) the legitimate justifications an employer may have for maintaining the rule.” (Emphasis in original.) Presumably, with such a test in place, employers could once again strive to maintain a harmonious work environment through handbook rules and other policies that are conducive to employee work environments and productivity.
Direct liability of employers with only remote or potential control
In recent years, the Board under the Obama Administration took an expansive approach to finding joint employment. Under the new Browning-Ferris standard, “employer” status may be found by the Board to exist for an entity that may indirectly – or even potentially – control employees, without any evidence of actual or direct control. Given the countless types of business structures and relationships, many employers are rightly concerned that the Browning-Ferris standard will subject them to “employer” obligations and potential liability with respect to employees with whom they have no contact, and over whom they have no control.
Chairman Miscimarra dissented in Browning-Ferris, arguing that the new standard “rewrites the decades-old test for determining who the ‘employer’ is,” and would consequently “subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential joint liability for unfair labor practices and breaches of collective- bargaining agreements.” He outlined how the Board’s majority departed from congressional intent. He noted that if Congress wanted relationships, such as third-party intermediaries, to be included in the statutory definition of “employer,” it could have easily said so. Instead, even though such complex business relationships existed when the Act was written, Congress intentionally imposed liability only on those employers who exercised a sufficient degree of direct control over employees under a common-law agency theory. Chairman Miscimarra believes that the Browning-Ferris standard impermissibly alters the law, and that the Board should never have departed from the common-law agency theory to determine whether an employer-employee relationship exists. With a Republican Board, the Browning-Ferris joint employer standard may be overturned, and employers may enjoy a return to the standard that had provided more predictability and stability in determining joint employer status.
“The right to change policies” means the right to change policies
A third battle in the NLRB arena involves the effect of management-rights provisions in collective bargaining agreements. For example, in Graymont PA, a management rights provision gave the employer the right to unilaterally “adopt and enforce rules and regulations and policies and procedures.” However, when the employer changed some work rules, and attendance and progressive discipline policies, a panel of the Board found that the employer did not have the right to change those policies because they were not specifically mentioned in the management rights provision. Thus, the panel majority found, there was no “clear and unmistakable” waiver of the employer’s obligation to bargain with the union before making the changes. In a strongly-worded dissent, Chairman Miscimarra commented that “no reasonable person reading this language could conclude that [the employer’s] right of unilateral action extended to rules, regulations, policies and procedures concerning some matters but not others.” He noted that a management rights provision can be general, yet simultaneously “clear and unmistakable.”
It seems likely that employers soon may no longer have to, in the Acting Chairman’s words, “spell out every detail of life in an industrial establishment” in order to retain the right to make policy changes authorized by a management rights provision. Instead, general waiver language which “clearly and unmistakably” provides that the employer has the right to change policies and procedures is likely to suffice.
Another area in which the current Board majority has pushed to tilt the playing field to unions’ advantage is in the classification of workers as “employees,” who are within the protection of the NLRA, as opposed to “supervisors,” who are outside the law’s protection. One recent case illustrates how that Board majority will selectively evaluate evidence to reach the results it wants. In that case, Chi LakeWood Health, employees’ job descriptions explicitly stated that they were responsible for supervising other employees. Nevertheless, the Board discounted that evidence and concluded that the employees in question did not, in fact, possess supervisory authority and thus did not have “supervisor” status. That decision benefits organized labor in multiple ways. First, with fewer employees qualifying as “supervisors,” unions have a relatively larger target area for expanding bargaining units to increase representation, membership numbers, dues revenue, bargaining power, and political influence. Employers are then left with more employees who can be organized and fewer supervisors at the “grass roots level” to distribute their message during union organizing efforts.
In a dissent, Chairman Miscimarra outlined the following considerations that he would take into account when determining whether workers were “supervisors” or “employees”: “(i) the nature of the employer’s operations; (ii) the work performed by undisputed statutory employees; and (iii) whether it is plausible to conclude that all supervisory authority is vested in persons other than those whose supervisory status is in dispute.” Using this framework in the future, we would expect for mid-level supervisors in traditional settings to be excluded from the definition of “employee” – an outcome with both legal and practical benefits for employers facing union campaigns. Employers can hope for a clearer standard for determining “supervisor” status that will take into account individual business structures and the realities in workplace settings.
Class action waivers in arbitration agreements
A fifth area where we can expect change under a Republican-majority Board led by Chairman Miscimarra is on the issue of whether class action waivers by employees in arbitration agreements are valid and lawful. Currently, the Board follows the rule of D.R. Horton and its progeny, in which the Board determined that such agreements are invalid and unlawful. Some U.S. Courts of Appeal agree with the Board, and others disagree. The U.S. Court of Appeals for the Fifth Circuit disagreed with the Board in D.R. Horton and refused to enforce the Board’s order in that case.
Chairman Miscimarra’s view on the issue is clear. In a dissent in Murphy Oil, he vehemently opposed the D.R. Horton approach as an overreach of NLRB power, stating, “In today’s decision, my colleagues treat our statute as the protector of ‘class’ action procedures under all laws, everywhere.” Under this broad holding, the waiver of class actions would include non-NLRA claims adjudicated by courts and agencies other than the NLRB. According to Chairman Miscimarra, the Board’s interpretation is unreasonable because there is no indication that Congress vested the NLRB with the power to trump all other federal statutes and prohibit class waivers for claims unrelated to the NLRA. He argued that the filing of a “class action” complaint by a single employee does not inherently involve protected concerted activity. Additionally, there is no legislative history of any intent by Congress to regulate the procedure by which employees can or cannot bring either NLRA or non-NLRA claims. By enforcing its D.R. Horton rule, the Acting Chairman argued that the Board was effectively exercising jurisdiction over non-NLRA cases that may be adjudicated in a court or by another government agency. The Board, he argued, thus is engaging in “haphazard, redundant and self-contradictory enforcement efforts regarding non-NLRA laws that, substantively and procedurally, are enforced by courts and agencies other than the NLRB.” Finally, he stressed that under Section 9(a), employees have a right “at any time” to adjust “grievances” on an “individual” basis. This guarantee – that employees have the inherent power to adjust their own grievances – necessarily includes the right to refrain from exercising the collective rights in Section 7.
With a new sheriff and two soon-to-be new deputies in town, we expect that there will be changes and reversals of NLRB decisions in the near future. We also anticipate that the Board will begin to apply the NLRA more even-handedly, and in a fashion that serves the interest of employees, employers, and unions, making the NLRB neutral territory for all involved.
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