National Labor Relations Board Reverses Course on Significant Issues for Employers

The Republican majority on the National Labor Relations Board (the Board) is acting quickly to overturn cases before the impending departure of Chairman Philip Miscimarra. This week, the Board reversed its position on two major labor law issues and signaled that it will soon upend a third Obama-era policy. Specifically:

• In a December 14th decision, the Board abandoned the 2015 Browning-Ferris test for determining joint employer liability and returned to its decades-old standard for making such determinations. Under the Browning-Ferris test, the Board looked at both a company’s indirect and reserved control over workers to determine whether two or more companies constitute a joint employer. In the decision this week, the Board returned the focus to whether one entity exercises control over essential employment terms of another company’s employees and has done so directly and immediately in a way that is not limited and routine. Simply having reserved and/or indirect control will no longer create a joint employer relationship. This decision is significant for clients who use staffing companies, who are franchisors, and who use contractors.
• Also on December 14th, the Board overruled its Lutheran Heritage doctrine, under which work rules and handbook provisions were unlawful if employees could reasonably construe the language to prohibit them from engaging in protected, concerted activity. Instead of the “reasonably construe” standard, which left the interpretation to the Board, the new standard will consider (i) the nature and extent of the potential impact on protected rights and (ii) legitimate justifications associated with the handbook language. This new standard should make it easier for employers to defend against claims that work rules and handbook provisions are unlawful.
• The Board’s union election rules may be next on the chopping block. On December 12th, the Board requested public comment on its 2014 election rules, which permit much quicker union representation elections and otherwise favored union organizing activity. It is anticipated that the Board will curtail or eliminate the 2014 rules.

The Board’s decisions will have a significant impact on labor law proceedings. For more analysis of these decisions, please contact one of Honigman’s Labor and Employment attorneys.