The following was written collectively by our Labor & Employment Department.

A. The “New” National Labor Relations Board Decisions and Memos

As of this past fall, following confirmation of Marvin Kaplan and William Emanuel as new members of the National Labor Relations Board (“NLRB”), that agency has obtained a 3-2 Republican majority for the first time in almost a decade. As expected, in the few short months thereafter, the Trump era NLRB has been on a path to reverse many of the decisions and actions taken by the Obama era NLRB. Here are the more significant NLRB decisions that fall in this category. Notably all were decided this past December.

1. NLRB Establishes New Standard Governing Workplace Policies

On December 14, 2017, in The Boeing Co., 365 NLRB No. 156, the NLRB overturned its standard for evaluating the legality of employee handbook policies. The standard that was overruled was established in Lutheran Heritage Village – Livonia, 343 NLRB 646 (2004). In Lutheran Heritage, the NLRB stated that a policy is illegal if employees could “reasonably construe” it to bar them from exercising their rights to engage in union or other concerted activities under the NLRA. In the Boeing case, the administrative law judge applied the Lutheran Heritage rule to Boeing’s workplace policy restricting workers’ use of camera-enabled devices and similar recording devices such as cellphones on company property violated the NLRA. Although Boeing’s “no-recording” policy would have violated the NLRA under Lutheran Heritage, the NLRB in Boeing stated that Lutheran Heritage’s “reasonably construe” standard entails a “single-minded consideration of NLRA-protected rights, without taking into account any legitimate justifications associated with policies, rules and handbook provisions.”

The NLRB rejected continued application of the Lutheran Heritage standard and held that when evaluating the legality of workplace rules, it will now consider the “nature and extent” of a challenged rule’s “potential impact on NLRA rights” and the “legitimate justifications associated with the rule.”

In an effort to provide employers, unions and employees with some guidance for how the new standard will be applied, the Boeing decision also set forth three categories of cases under which the NLRB will classify workplace rules that are being challenged: (1) rules that are legal in all cases because they cannot be reasonably interpreted to interfere with workers’ rights or because any interference is outweighed by business interests; (2) rules that are legal in some cases depending on their application; and (3) rules that are always illegal because they interfere with workers’ rights in a way not outweighed by business interests.

The Boeing case is being applied retroactively; hence, all cases currently pending before the NLRB that have not been finally determined are subject to the new standard announced in Boeing.

2. NLRB Overrules Browning-Ferris Industries and Reinstates Prior Joint-Employer Standard

On December 14, 2017, in Hy-Brand Industrial Contractors Ltd., 365 NLRB No. 156, the NLRB overturned the joint employer test that was established previously in Browning-Ferris Industries, 362 NLRB No. 186 (2015). Under the Browning-Ferris test, a company and its contractors or franchisees could be deemed a joint employer even if the company had not exerted overt, actual, “direct and immediate” control over workers’ terms and conditions—the company could be deemed a joint employer merely by exercising “indirect,” “limited and routine” control, or having the ability or reserved right to exercise such control. In Hy-Brand, the NLRB disavowed Browning-Ferris, and returned to the joint employer standard that the NLRB applied prior to Browning-Ferris. Under the pre-Browning-Ferris standard (and now the current standard), “[a] finding of joint-employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’”

3. NLRB Reverses Stance On Employers’ Duty to Bargain With Unions

On December 15, 2017, in Raytheon Network Centric Systems, 365 NLRB No. 161, the NLRB overturned a previous NLRB decision that precluded employers from effecting changes in workplace benefits and policies, even if those changes were merely a continuation of an established, routine practice. In the prior decision, E.I. du Pont de Nemours, 364 NLRB No. 113 (2016), the NLRB held that if the changes at issue were implemented under a management rights clause that was part of an expired collective bargaining agreement, or if company “discretion” was involved with making the change, then the employer must give notice to and bargain with the union before the changes could be effected.

The Raytheon case restores 50-year-old precedent that allows businesses to change policies without a union’s permission if they’ve taken similar actions before. That precedent included a 1962 case in which the Supreme Court indicated that wage increases that were “in line with [a] company’s long-standing practice of granting quarterly increases or semiannual merit reviews” were not really “changes” to employment terms and conditions but instead “were a mere continuance of the status quo.” NLRB v. Katz, 369 U.S. 736, 745-747 (1962).

The “change” at issue in Raytheon involved adjustments to employee health care benefits. Because those “changes” were in line with unilateral changes the employer made at the same time each year for more than a decade, the NLRB held that the employer did not have to bargain with the union over the change. However, the NLRB cautioned that this new rule does not remove the employer’s obligation to bargain with the union over the continuation of established practices if the union makes a demand to do so.

4. NLRB Eliminates “Overwhelming Community of Interest” Standard for Proposed Bargaining Unit

On December 15, 2017, in PCC Structurals Inc., 365 NLRB No. 160, the NLRB overturned its standard in Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB 934 (2011) (Specialty Healthcare), which had required employers to show that workers they want included in an NLRB election petition filed by a union share an “overwhelming” community of interest with the workers described in the petition.

In PCC Structurals, the union filed an election petition that covered only 102 employees out of an employer workforce that exceeded 2500 employees. The employer contended that the only appropriate bargaining unit in that case was a “wall to wall” unit consisting of all employees who were employed in the employer’s production and maintenance operations. Applying the Specialty Healthcare rule, the Regional Director found that the excluded employees did not share an “overwhelming community of interest” with those employees described in the union’s election petition; hence, the Regional Director approved the smaller bargaining unit described in the petition and denied the employer’s attempt to obtain an election in a larger unit.

The employer sought NLRB review of the Regional Director’s decision, which was granted. Reversing the Specialty Healthcare case, the NLRB held that employers should not be required to prove the excluded workers had an “overwhelming” community of interest with those included in the challenged unit; rather, the NLRB returned to its prior approach, which was to examine whether the excluded employees share a sufficient community of interest such as to warrant their inclusion in the unit. Under this less onerous standard, the NLRB will in each case determine:

“whether the employees are organized into a separate department; have distinct skills and training; have distinct job functions and perform distinct work, including inquiry into the amount and type of job overlap between classifications; are functionally integrated with the employer’s other employees; have frequent contact with and interchange with other employees; have distinct terms and conditions of employment; and are separately supervised.”

5. NLRB General Counsel Sets Forth Priorities in Memo

Peter Robb, who was newly appointed by President Trump to serve as General Counsel for the NLRB, also has indicated his intent to reverse many of the NLRB decisions that issued during the Obama administration. On December 1, 2017, the General Counsel issued Advice Memo 18-02, which sets forth the “Mandatory Submissions to Advice” – the kinds of cases Regional Directors must submit to the Division of Advice to obtain guidance before issuing a complaint. Many of the priorities in the Memo focus on the NLRB’s handbook-related changes, granting employee access to employer email systems, and confidentiality rules in investigations. The Memo also rescinds a number of prior Advice Memos, including GC 15-04, the prior GC’s comprehensive views on employee handbooks, which significantly expanded the number of work rules deemed unlawful. The Memo lists “Examples of Board decisions . . . where [the GC’s office] also might want to provide the Board with an alternative analysis.” The list includes cases involving: joint employment; the NLRB’s prior expansion of what constitutes protected concerted activity; common employer handbook rules including rules prohibiting “disrespectful” conduct and rules prohibiting recording; Purple Communications and an employee’s presumptive right to use their employer’s email system to engage in Section 7 activity; and Quietflex and cases finding work stoppages protected in contexts like retail sales floors.

6. NLRB Gives More Settlement Authority to Administrative Judges

In several cases involving the University of Pittsburgh Medical Center and its subsidiaries, the NLRB ruled that its ALJs can sign off on settlements that only resolve a portion of claims in a given labor suit even if the NLRB’s general counsel and the party bringing charges object. See UPMC, 365 NLRB No. 153 (December 11, 2017). The ruling reversed the NLRB’s United States Postal Service, 364 NLRB No. 116 (2016), holding that judges can only accept settlements where all parties agree, restoring ALJs’ ability to sign off on “reasonable” settlements even if some parties would prefer to continue litigating.

B. Earlier 2017 Decisions of the Obama-Era NLRB

1. NLRB Rules Casino Violated NLRA By Barring Former Employee From Socializing In Nightclub

In MEI-GSR Holdings, LLC dba Grand Sierra Resort & Casino, 365 NLRB No. 76 (May 16, 2017), the NLRB held that a casino operator violated Section 8(a)(1) of the NLRA by forbidding a former employee from “socializing” at one of its nightclubs after she filed a Fair Labor Standards Act class action lawsuit against the employer. The NLRB held that the employer’s exclusion of the former employee, in response to her participation in protected concerted activity, would reasonably tend to chill employees from exercising their Section 7 rights.

2. NLRB Finds Union Supporter’s Profanity-Laden Rant Unprotected by the Act

In Brooke Glen Behavioral Hospital, 365 NLRB No. 79 (May 15, 2017), the NLRB affirmed an ALJ’s decision that the termination of a union bargaining-committee representative for a profanity-laden rant did not violate the Act.

The employer was engaged in collective bargaining with a nurses’ union. The employee at issue was a registered nurse. The employer was conducting a tour of its hospital for managers and staff from an affiliated facility. When the tour group approached the registered nurse’s work area, she began screaming and demanding to know “who the visitors were and why they were there.” Receiving no response, the registered nurse “again asked what the visitors were doing at the hospital, asked one particular visitor how many orientations he needed, and pointed out, sarcastically, ‘here’s the hallway, here’s the window.’” At the conclusion of the tour, while the tour group was in the parking lot, the registered nurse again approached the group and, pointing at her supervisor, stated, “this one don’t do sh*t, she ain’t shi*t … I’m going to get you the f*ck out of here.” The employer terminated the registered nurse for her unprofessional conduct.

The ALJ held that the nurse’s termination was in no way related to her involvement with the parties’ collective bargaining sessions. It also rejected the argument that the nurse’s confrontations with the tour group constituted protected activity.

C. Federal Court Decisions Affirming Obama-Era NLRB Decisions

1. Second Circuit Upholds NLRB Decision Finding No Recording Policy Unlawful

In Whole Foods Mkt. Grp., Inc. v. NLRB, 2017 BL 183726, 2d Cir., 16-0002-ag, unpublished 6/1/17, the Second Circuit upheld an NLRB decision that Whole Foods illegally prohibited employees from electronically recording communications in the workplace. The Whole Foods policy prohibited employees from “record[ing] conversations with a tape recorder or other recording device (including a cell phone or any electronic device) unless prior approval is received from your store or facility leadership.” In 2015, the NLRB had found that Whole Food’s policy could potentially discourage employees from communicating about unions or engaging in concerted activities that are protected under the NLRA. Whole Food’s argument that prohibiting recording would foster “spontaneous and honest dialogue” fell on deaf ears with the NLRB. The Second Circuit agreed. Leaving open the possibility that a more narrow policy might have survived, the Second Circuit remarked the extremely broad policy adopted by Whole Foods prohibited all recordings without regard to their relationship to employee rights. This case is probably no longer good law in view of the Boeing Company case, supra.

2. Second Circuit Upholds Determination That Facebook Rant Was Protected

In National Labor Relations Board v. Pier Sixty, LLC, 2017 U.S. App. LEXIS 6974 (2d Cir. Apr. 21, 2017), the Second Circuit upheld a NLRB ruling that an employer violated the NLRA when it terminated an employee after the employee posted a profanity-laced rant directed to his supervisor on social media. Examining the specific factual background of the matter, the Second Circuit found that even though the employee’s Facebook post sat at the “outer-bounds of protected, union-related comments,” the Second Circuit agreed that the employee’s conduct was not so opprobrious or egregious as to lose the protection of the NLRA. Specifically, the employee was terminated two days prior to a previously scheduled union election. Leading up to those two days and the election, the employer had engaged in conduct that the Second Circuit determined was hostile to employees. For example, Pier Sixty had threatened to rescind benefits and/or fire employees who voted for unionization. It also had enforced a “no talk” rule on groups of employees who wanted to discuss the union. Based on this hostility, the Second Circuit found that “the [NLRB] could reasonably determine that [the employee’s] outburst was not an idiosyncratic reaction to a manager’s request but part of a tense debate over managerial mistreatment in the period before the representation election.”