Stacking the Deck: NLRB General Counsel Seeks Union-Friendly Labor Law Reform in Card Check Recognition Procedure

In what can only be viewed as tilting the odds in favor of organized labor, National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo recently filed a brief with the five-member, Democratic-controlled Board in a case pending on appeal – Cemex Construction Materials Pacific, LLC – to request the reinstatement of the Joy Silk doctrine.

As previously discussed here, this policy – which was rejected by the NLRB more than 50 years ago – would make it unnecessary, with limited exceptions, for a union to win an NLRB-conducted election in order to represent a group of employees. Instead, the union would simply need to obtain authorization cards from a majority of workers (i.e., 50% plus one) to gain recognition.

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NLRB General Counsel Seeks to Outlaw Employer Use of Captive Audience Meetings

On April 7, 2022, National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo issued what may be her most pro-union directive to date – and that’s saying something.

In GC Memorandum 22-04, Abruzzo announced her intention to seek a ban on employer mandatory meetings during union organizing campaigns, commonly referred to as “captive audience meetings.” According to Abruzzo, captive audience meetings are coercive, in and of themselves, because they “inherently involve an unlawful threat” to employees if they exercise their allegedly “protected” right under the National Labor Relations Act (NLRA) “not to listen” to their employer’s message.

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The Times Are A-Changing for Employer Handbooks … Soon

As we previously reported, the National Labor Relations Board (the Board) invited public comment in January on whether it should overrule its current standard for determining the lawfulness of employee handbook policies and work rules. That standard – which applies in both union and nonunion workplaces – was adopted by the Board during the Trump administration in Boeing Co., 365 NLRB No. 154 (2017). In general, the Boeing standard balances a challenged rule’s impact on employee rights against the employer’s legitimate justifications for adopting the rule. Once this balancing analysis is complete, the Board places a challenged rule into one of three categories: (1) those that are always lawful to maintain, (2) those that are always unlawful to maintain and (3) those that must be analyzed on a case-by-case basis.

The due date for submitting briefs to the Board on this hotly contested issue expired last week, on March 7. As expected, current NLRB General Counsel Jennifer Abruzzo filed a brief urging the Board to reject the Boeing standard and to return to the prior, Obama-era test for evaluating work rules and employment policies. That standard, referred to as the “Lutheran Heritage” standard after the name of the case in which it was adopted, gave little consideration to an employer’s justification for adopting a facially neutral rule or policy. Instead, the Board focused on whether the rule might be “reasonably construed” by employees to restrict their right to engage in activity protected under the National Labor Relations Act (NLRA). If so, challenged rules and policies typically were held to be unlawful.

Application of the Lutheran Heritage standard resulted in a number of surprising decisions that ignored the practical and real-life circumstances of a workplace. For example, in Hills & Dales General Hospital, 360 NLRB 611 (2014), the Board held that a rule requiring employees to represent the employer “in a positive and professional manner at every opportunity” was overly broad and unlawfully ambiguous. In T-Mobile USA, Inc., 363 NLRB No. 171 (2016), the Board found that an employer violated the NLRA by maintaining a policy that required employees “to maintain a positive work environment by communicating in a manner that is conducive to effective working relationships.” In The Roomstore, 357 NLRB 1690 (2011), the Board found that a rule prohibiting “[a]ny type of negative energy or attitudes” violated the NLRA. Applying the Lutheran Heritage standard, the Board found in each of these cases that employees might reasonably construe the challenged work rule to apply to activity protected under the NLRA, with little regard for the employer’s motives for maintaining such policies.

As troubling as these decisions are, a return to the Lutheran Heritage standard under the current Board may be even worse for employers. As noted above, the Lutheran Heritage standard focused on whether employees might “reasonably construe” a challenged rule to restrict their right to engage in protected activity under the NLRA. If General Counsel Abruzzo has her way, the boundaries of what constitutes NLRA-protected activity will be greatly expanded in the next few years to encompass political advocacy, social justice and a wide array of other such issues. The expansion of NLRA protections to issues that have historically been viewed as unrelated to the workplace would render the Lutheran Heritage standard even more unpredictable.Takeaway: While the Board is not projected to issue its revised work-rule test for several months, union and nonunion employers alike should begin preparing for an unfavorable change in the law by reviewing their current work rules and handbooks.

Staying the Course … for Now

National Labor Relations Board Confirms Presumption that Single-Store Units Are Appropriate

The National Labor Relations Board (Board) recently confirmed that single-store bargaining units are presumed to be appropriate. Starbucks Corp., 371 N.L.R.B. No. 71 (Feb. 23, 2022). The union involved in the case petitioned to represent a unit of Starbucks employees who worked at a single location in Mesa, Arizona. Starbucks, however, argued that the unit instead should include all 14 stores in the region on the basis that nearly 55 percent of the employees at the store had worked at one or more other locations during the prior 2 1/2 years. The company further argued that the various store managers had little autonomy in managing their employees, and that the employees were instead subject to companywide policies and automated management tools.

Rejecting these arguments, the Board held that the petitioned-for single-store unit was appropriate. With respect to employee interchange, the Board noted that the employer’s evidence only reflected how many employees had worked at other stores, and not how often they had done so. Moreover, the union introduced evidence that less than 2 percent of the shifts at the store in question were worked by employees from other locations, demonstrating that interchange among locations was rare. Finally, regarding the issue of store manager autonomy, the Board held that the managers were responsible for enforcing company policies and that the employer’s evidence consisted largely of conclusory statements rather than specific examples.

Normally, such a decision involving application of settled principles regarding the appropriateness of single-location bargaining units would not be newsworthy. However, as we’ve previously noted, the Board is currently considering whether (or, more likely how) to revamp the rules for determining unit appropriateness. Does the Starbucks decision suggest that the Board is having second thoughts, or that it has decided not to change the law? 

Well, we were apparently absent on the day they taught mind reading in law school. But it still seems likely that the Board will substantially revisit unit appropriateness principles in the near future, regardless of the Starbucks opinion. In short, the Board didn’t need to change unit appropriateness principles in the Starbucks case in order to give the union what it wanted. In all likelihood, the Board decided on that basis that the case was not the proper vehicle for changing the law. 

So, as for most things with the Board these days, stay tuned.

TAKEAWAY: While the Board opted not to change the law on unit appropriateness in the Starbucks case, it will likely do so in the near future.

Sentence First, Verdict Later!

NLRB Orders Employer To Grant Undetermined Wage Increase

These days, the National Labor Relations Board (NLRB or Board) just gets curiouser and curiouser.

In one of its latest adventures on the other side of the looking glass, the Board held that a hospitality employer violated the law by failing to provide a wage increase to employees who had recently unionized. The employer and the union had started negotiations on an initial labor agreement but had not agreed on an economic package. In the meantime, the employer granted wage increases to nonunion employees, but not to the employees whose wages were subject to negotiation with the union. While it may seem obvious (at least to those who didn’t write the Board’s majority decision), it’s a little weird to grant increases to employees when those increases are in the process of, you know, being negotiated. Just saying. Continue Reading

The NLRB Signals It Is Time To Review Employee Handbooks – Again

“I’ll be back,” as famously stated by Arnold Schwarzenegger in “The Terminator,” likely applies to the National Labor Relations Board’s (NLRB) prior, less-employer-friendly test for examining workplace policies and procedures. Earlier this month, the NLRB invited public briefing on whether it should adopt a new legal standard when evaluating the lawfulness of employer rules.

In 2017, the Trump NLRB overruled the prior test for analyzing work rules under federal labor law and established a new balancing-of-interests framework. Boeing Co., 365 NLRB No. 154 (2017). Under the current Boeing standard and cases applying it, employers could have faith that the board would find common rules, policies and procedures lawful. Continue Reading

Another One Bites the Dust? NLRB Request for Briefing on Independent Contractor Standard Suggests Another Trump-Era Decision Is About To Be Overruled

Weeks after inviting public briefing on a potential change in the standard for determining the appropriateness of proposed bargaining units (discussed here), the National Labor Relations Board (NLRB) has again invited briefing in a pending case involving the standard for determining whether workers are properly classified as independent contractors under the National Labor Relations Act.

The current test was adopted by the NLRB under the Trump administration and is focused largely on whether the workers in question have sufficient “entrepreneurial opportunity” to increase their earnings (by performing more work for the same company or for other companies simultaneously, subcontracting work to others, hiring their own employees, etc.) and/or risk of loss. Prior to the Trump-era test, the NLRB under the Obama administration downplayed the significance of entrepreneurial opportunity/risk in favor of a multitude of other factors, including the extent to which the company controls the hours and earnings of the workers in question, the degree to which the work performed is related to the company’s primary business, the level of skill involved, the level of supervision, etc. The wide array of factors taken into consideration under the Obama-era standard generally made it much harder for companies to anticipate the outcome of potential legal challenges to independent contractor status, resulting in much higher risk.

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The First Domino to Fall? NLRB Solicits Public Input on Test for Determining Appropriate Bargaining Units

In a somewhat ominous sign of things to come, the National Labor Relations Board (NLRB or the Board) has invited briefing on whether to change the test for determining whether a union has proposed an appropriate employee voting group (i.e., a “voting unit”) in petitioning for an NLRB representation election.

The current standard that applies in such cases was adopted during the Trump administration. To be clear, the chances of the NLRB’s newly constituted Democratic majority retaining the Trump-era test fall somewhere between the probability of the sun rising in the west and the likelihood of the Cleveland Browns winning the Super Bowl this season (or ever) — which is to say, zero.

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Money, Money, Money Is Not Always Funny or Sunny – Just Take a Look at the NLRB’s Substantial Increases in Monetary Remedies and Job Reinstatements

On Nov. 5, 2021, the iconic Swedish band ABBA released its first album of new material in 40 years, and, amazingly, it is their highest-charting album ever on the Billboard 200. (If for some reason you are not familiar with ABBA – and we are not really sure how that could possibly be – check out the album “ABBA Gold: Greatest Hits”). Indeed, it seems as if the National Labor Relations Board (NLRB or Board) was channeling ABBA’s hit “Money, Money, Money” when it issued a news release earlier this month boasting about “a dramatic increase” in monetary remedies and job reinstatements in fiscal year 2021. The Board announced that it recovered nearly $57 million (most of which was in back pay) and obtained job reinstatement offers for 6,307 individuals in FY 2021. To provide context for the Board’s “Dancing Queen”-esque jubilation over these numbers, this surge represents about a 44 percent increase in monies recovered and close to a 550 percent increase in job reinstatement offers from FY 2020. “Mamma Mia,” indeed!

This massive spike in remedies and reinstatements, however, should not be a surprise “Waterloo” for employers, given the clear and pronounced pro-labor stance of the NLRB’s general counsel, Jennifer Abruzzo. Since her Senate confirmation in July 2021, Abruzzo has not been shy about her “Winner Takes It All” intention to overturn business-friendly Board precedent (as we previously blogged about here) and to expand the remedies that the NLRB seeks in unfair labor practice (ULP) proceedings. Indeed, in September, Abruzzo released a memo to all regional offices directing them to “Take A Chance” on seeking further and extensive remedies, such as consequential damages, in ULP cases. Around the same time, she separately issued another memo in which she ordered the regions to seek comparably expansive remedies in settlement agreements. What should cause employers to send an “S.O.S.” over the FY 2021 data is the fact that the Board reached these numbers before Abruzzo and the new Democratic majority of the NLRB even had served a full fiscal year. (Okay, we’re out of ABBA song titles.)

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Spoiler Alert: The NLRB Is Poised to Dramatically Rework Its Joint Employer Standard

When I was a kid, it was a thrill (and, yes, it still is today) to watch all the movie trailers before the main feature. Unfortunately, some of those trailers actually spoiled the movie they were previewing (thinking of you, Kingsman: The Golden Circle). Well, the National Labor Relations Board (NLRB or the Board) has likely spoiled the ending to its looming review of the current joint employer standard that applies under the National Labor Relations Act (NLRA).

On Nov. 5, NLRB Chairperson Lauren McFerran notified several members of Congress that the Board’s two newest members (Gwynne Wilcox and David Prouty) will participate in the Board’s ongoing consideration of its joint employer standard. Why is that newsworthy? Because the Service Employees International Union (SEIU) — one of the largest labor unions in the United States — is currently suing the NLRB in federal district court to overturn the current standard, and Wilcox and Prouty were both previously employed by two prominent SEIU locals. Prouty is a prior general counsel of SEIU Local 32BJ and Wilcox formerly served as associate general counsel for SEIU’s United Healthcare Workers East chapter. Both were vocal in opposing the current joint employer standard. While NLRB members are required to have a “neutral” stance on matters, there’s little mystery as to where Wilcox and Prouty will land on this issue.

This obvious conflict of interest prompted several members of Congress to write to Chairperson McFerran about potential ethical concerns with Wilcox’s and Prouty’s participation in consideration of the NLRA joint employer standard. Chairperson McFerran, however, responded that Wilcox and Prouty “have each determined that their participation in the Board’s decision-making regarding this matter is appropriate.” Well, that’s comforting.

No need for popcorn here — the ending is spoiled, especially for employers.

Takeaways:

  • Employers should review whether workers deemed “independent contractors” are properly classified as such.
  • Employers that utilize temporary or contract workers should review their agreements with vendors, staffing agencies and other similar companies to ensure managers are not exerting direct or indirect control over the terms and conditions of those workers’ employment.
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