Major Developments for Union and Non-Union Employers – NLRB Announces New Standards For Employment Policies, Joint Employment, and Signals Change In Election Rules
The National Labor Relations Board (NLRB or Board) issued two groundbreaking decisions on December 14, which will give both union and non-union employers significantly more flexibility to manage their operations. Earlier this week, the Board also signaled that it will revise the “quickie” election rules implemented in 2015 in the near future. These developments will significantly benefit union and non-union employers.
When reviewing employment rules and policies, the Board will defer more to management interests
Perhaps more importantly, the Board significantly changed the standard it will apply when deciding whether employment rules and policies unlawfully restrict employees’ protected rights.
As background, the National Labor Relations Act grants employees several rights, including the right to act together to attempt to improve working conditions. The Act also prohibits employers from restricting employees from exercising these rights.
In recent years, the Board had extended this concept so far that it exceeded common sense and significantly impeded employers from protecting legitimate interests. Since 2004, when the Board has reviewed employment policies or work rules, it has asked whether an employee could “reasonably construe” that rule or policy to prohibit activities that the Act protects. This standard was very subjective, and the Board generally construed it in a very pro-union and pro-employee manner. This standard made it more difficult for employers to take important and legitimate steps, such as protecting proprietary information, requiring civil behavior in the workplace, and prohibiting conduct that could seriously harm the employer’s reputation.
On Thursday December 14, the Board issued a decision announcing a new standard that better recognizes the realities of the workplace and employers’ legitimate interests. Under this new standard, when the Board is reviewing a “facially neutral” rule or policy (i.e., one that does not expressly restrict protected activity), the Board effectively will apply a two-step analysis. First, as before, the Board will ask whether an employee could reasonably construe that policy to prohibit protected activities. However, if the policy does not pass muster under this first step, the Board now will take a second step, i.e., by asking whether the policy has legitimate justifications that outweigh its effect on employees’ protected rights.
In other words, even if an employee could reasonably construe a facially neutral policy to restrict protected activities, the policy will survive if the employer’s legitimate justifications outweigh any impact on the employee’s protected activities.
The Board also illustrated how it will apply this new standard, by upholding an employer’s no-camera rule. Even though this no-camera rule arguably could have restricted protected activities (such as by prohibiting employees from photographing workplace issues in order to raise group complaints), the Board found that the employer – Boeing – had legitimate justifications (including national security concerns) that outweighed the effect on employees’ protected rights.
This new standard will benefit almost every employer. Going forward, both union and non-union employers will have much more flexibility to issue a broad range of policies and work rules, including those prohibiting cameras in the workplace, protecting confidential information, prohibiting unprofessional or uncivil conduct, limiting social media use, and even clarifying that employment is at-will. Although the Board will not consider these policies lawful in every case, such policies are much less likely to violate the Act.
Employers should strongly consider reassessing their employee handbooks, work rules, and other policies to improve upon some of the difficult approaches that the Board’s prior standard required. At the same time, because the Board has shown that it will afford employers much greater deference going forward, employers should monitor how the Board addresses other employment policy matters in the future.
New joint employer standard will benefit franchisors/franchisees, employers who use staffing companies and contractors, and other employers who work closely with other entities’ employees
The Board also issued a decision on December 14 that revised its joint employer standard in a way that better reflects workplace realities. As background, in 2015, the Board had expanded the situations when one employer can be liable under the Act for actions affecting another entity’s employees. The Board had held that one entity would constitute a “joint employer” of another entity’s employees if the former entity simply had the right to control the latter entity’s employees, regardless of whether it actually did so. This significantly increased the likelihood that an entity could inadvertently become an employer for the purposes of the Act through a franchise relationship, by using a staffing company, by contracting out work, or through similar arrangements.
On Thursday, the Board rescinded this broad and unreasonable interpretation. Going forward, the Board will consider one entity to be a joint employer over another entity’s employees only if the former entity has actually exercised control over the latter’s employees in way that is direct and immediate, and not limited and routine. Under this new standard, even if one entity controls the parties’ relationship as a whole, or has the ability to control the other entity’s employees, that will not create a joint employer relationship, unless the former entity actually uses that control to directly and specifically affect employees’ terms of employment.
Although many expected this standard to change soon, this is a welcome development for employers. Under this new standard, when an employer does not create policies that govern another entity’s employees, instruct those employees how to work, make hiring or firing decisions for those employees, or similarly control their terms of employment, the Board should not deem that employer to have liability for those employees under the Act.
Board indicates it will revise the recent “quickie” election rules
In another significant development, earlier this week the Board signaled that it will revise the “quickie” or “ambush” election rules that were finalized in late 2014 (which the Firm wrote about here). The election rules had reduced the time between the date a union requested an election and the date of the election itself, which arguably impeded employers’ ability to defend themselves and lawfully inform employees about what unionization could mean. The rules also made it more difficult for employers to appeal Board decisions, and required employers to disclose additional personal information about employees to unions. Many believed the new rules would help unions win more elections (although it is questionable how much difference they have made so far).
The Board has requested public comments about whether to revise these rules, thus sending a strong signal that it will change the election rules again. Although the Board’s two Democrat-appointed members disagreed with this, it would be difficult for opponents to block most changes that the Board’s three Republican appointees support.
It will be some time before the Board announces any changes, and the Board will accept public comments until February 12, 2018. Ultimately, there is a good chance that the Board will revise the election rules, such as by giving employers more time to respond to election petitions and reducing the amount of employee personal information that employers must disclose early in the process. Anyone who wishes to submit a comment may do so by following the instructions at the NLRB’s website.