Seismic Changes Announced at the National Labor Relations Board (NLRB)

Saturday marked the last day of Philip Miscimarra’s tenure as chairman of the NLRB. While the Board was fully constituted with five members, it managed to release a passel of decisions of major importance to manufacturers. Highlighted below are the key rulings, each garnering a slim 3-2 majority and culminating long-fought struggles on fundamental questions. In the months ahead, manufacturers will better understand and comply with labor laws on a variety of topics: (1) how broadly an employee bargaining unit should be defined, (2) how much of a connection should one employer have with employees of another in order to be considered a joint employer, (3) whether workplace policies interfere with the labor rights of employees, and (4) whether annual changes in health plan costs and benefits are mandatory subjects of collective bargaining.

Micro-Bargaining Units

The NLRB’s decision in the Specialty Healthcare case in 2011 overturned 70 years of labor law regarding the standard for an appropriate size of a collective-bargaining unit. That decision has now been overruled. In PCC Structurals, Inc., the Board reinstated the traditional community-of-interest standard, throwing out a standard that allowed as few as two people to form a “micro-union” in one facility or location.

The old standard, now reversed, made it harder for a manufacturer to manage operations effectively, enabling one micro-union to shut down production and/or operations at any given time. It also made it easier for union organizers to organize, since fewer people would need to vote on any particular union.

The National Association of Manufacturers (NAM) expressed our opposition to the old standard in at least 11 amicus briefs over the past six years. We also helped lead efforts on Capitol Hill to overturn the opinion through legislation. Finally, the Board has voted to return the law to a more even-handed and rational approach that recognizes the need for bargaining units to be properly defined.

Joint Employer

The NLRB provided a substantial victory for manufacturers on December 14 by overturning the Browning-Ferris Industries case and returning the joint-employer standard back to its original definition. It stated that to be classified a “joint employer,” jointly liable for labor violations, a business must have a direct and immediate connection to the employees in question. Browning-Ferris had said that a business could be classified a joint employer even if its relationship to the employees in question were indirect.

“We find that the Browning-Ferris standard is a distortion of common law as interpreted by the board and the courts, it is contrary to the [National Labor Relations] Act, it is ill-advised as a matter of policy, and its application would prevent the board from discharging one of its primary responsibilities under the Act, which is to foster stability in labor-management relations,” the majority wrote in its decision.

The NAM filed amicus briefs in the original Browning-Ferris case at the NLRB, as well as in the appeal now pending in the D.C. Circuit. In addition, the Supreme Court will decide in January whether to review the DirecTV case involving the joint-employer standard. We have also recently filed amicus briefs in two other cases involving this issue.

Handbook Policies

In another 3-2 victory, the Board ruled in The Boeing Company case that the company’s no-camera rule at the workplace did not interfere with employee organizing, collective bargaining or other labor rights. The NAM’s Manufacturers’ Center for Legal Action filed an amicus brief in this case calling for this result. The ruling established a new test for determining whether a facially neutral policy, rule or handbook provision potentially interferes with the exercise of employee rights under the National Labor Relations Act (NLRA). It rejected a previous ruling that would have determined the legality of the workplace rule by considering whether employees would “reasonably construe the language to prohibit” protected activity. Instead, it delineated three categories of employment policies, rules and handbook provisions and how to analyze them for legality. For facially neutral workplace policies, the Board will evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the policies. This action promises to provide far greater clarity and certainty to employees, employers and unions and to eliminate conflicting and arbitrary decisions in the future.

Health Care Benefit Changes

Also on December 15, the NLRB released its decision in Raytheon Network Centric Systems. It ruled that a company may modify employee health care costs and benefits annually without that being considered a “change” that would trigger an obligation to bargain with the union representing affected employees. The Board overruled its prior decision in the DuPont case and found that a company has the right to take the same actions it has taken in the past, even though a collective bargaining agreement has expired, without negotiating with the union. The new ruling is grounded on the “long-understood, commonsense understanding of what constitutes a ‘change’ . . . .”

The close votes on all of these cases signals a continuing difference of opinion among political appointees and management and labor over how to structure shop floors to allow U.S. manufacturing employees to achieve the best workplace terms and conditions of employment while also producing high-quality products that can profitably compete around the world. We are hopeful that these latest decisions will clarify the rules and facilitate cooperation and progress toward the shared goals of everyone who makes things in America.

Quentin Riegel

Quentin Riegel

Vice President and Deputy General Counsel at National Association of Manufacturers
Quentin Riegel is the vice president and deputy general counsel for the National Association of Manufacturers (NAM). As part of the Manufacturers' Center for Legal Action, Mr. Riegel works to strengthen the NAM's ability to promote manufacturing policy objectives through litigation. He also serves as general counsel for the Council on Competitiveness, a group of CEOs, university presidents and labor leaders working to ensure America's competitiveness. Mr. Riegel has been in the General Counsel's office since 1980.
Quentin Riegel

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