NLRB reverses course on joint employers and employee handbooks

Whether it’s investigations, interpretations or lawsuits, actions taken by the National Labor Relations Board significantly impact employers and how they run their businesses. Decisions made by the Labor Board can apply to both unionized and non-unionized employers. Because other employment regulatory agencies like the Department of Labor and the Equal Employment Opportunity Commission have, on occasion, followed suit, Labor Board actions can sometimes have a ripple effect on a variety of employment law areas.

With the new administration, the composition of the Labor Board has switched to a Republican majority, and the newly appointed general counsel is widely regarded as having a more pro-employer viewpoint. Two decisions reached last week concerning joint employment status and employee handbooks dramatically alter the rules that had previously applied to businesses. These Labor Board actions should alert employers that more changes are to come.

Joint employers

A finding that two organizations are “joint employers” for a workforce can have serious ramifications. Joint employer status means that two employers can be held jointly liable for employment law violations alleged by a group of employees or a governmental agency. It also means that two employers are jointly obligated to comply with employment law requirements for the “shared” workforce. Claims of joint employer status are most frequently raised in the context of franchise operations and businesses that use temporary agencies or subcontractors.

Browning-Ferris owned and operated a recycling facility in California. Part of the facility was operated by personnel from Leadpoint Business Services, a staffing agency. In a 2015 decision, the prior Labor Board ruled that Browning-Ferris and  Leadpoint were joint employers for the staffing agency’s personnel assigned to the recycling facility because Browning-Ferris had “indirect control” or the ability to exert indirect control over Leadpoint’s staff. The 2015 Browning-Ferris ruling meant more businesses ran the risk of being treated by the Labor Board as a joint employer of their franchisee’s, staffing agency’s or subcontractor’s workforce.

Last week, the new Labor Board set aside the 2015 Browning-Ferris decision. Hy-Brand Industrial Contractors and Brandt Construction were two construction companies owned by the same individuals and working on some of the same construction projects. Seven employees claimed they were unlawfully discharged for going on strike to protest wages and working conditions. The fired employees claimed the two construction companies were joint employers and/or a single employer for purposes of their unlawful discharge claims. The Labor Board used the Hy-Brand case as an opportunity to narrow the circumstances where two employers would be treated as joint or a single employer. Contrary to Browning-Ferris, the new Labor Board held that control of employees must be “direct and immediate” in order for joint employment to exist, and that “limited and routine” control is not sufficient to create a joint employment relationship.

Employee handbooks

Section 7 of the National Labor Relations Act protects employees’ rights to engage in concerted action, which can include discussing workplace conditions. The prior Labor Board had challenged a number of common employee handbook policies, taking the position that some facially neutral provisions nevertheless unlawfully deterred workers from exercising their Section 7 rights. Examples of employee handbook policies the prior Labor Board contended were improper included policies that prohibited employees from criticizing their employer on social media and policies that prevented employees from using recording or photographic devices in the workplace.

In last week’s decision involving Boeing’s “no-camera rule,” the new Labor Board ratcheted back its view of when an employer’s policy crossed the line and violated  the law. Under the new standard, if a policy does not explicitly restrict protected rights, was not adopted in response to protected activity, and has not been applied to restrict protected activity, a policy is not automatically unlawful. Instead, the potential impact of a policy will be balanced against the employer’s legitimate business interest in maintaining a challenged policy.

More to come

It’s safe to say these two recent Labor Board rulings signal a sea change in the agency’s approach to employment laws. In the coming months, employers should expect changes for the following issues:

  • A repeal of the “quickie” union election rules
  • Curtailing employees’ rights to use their employer’s email system as part of union elections
  • Greater freedom for employers to take action against disrespectful employees or employees who use obscene, vulgar or inappropriate behavior when exercising protected rights.

As always, we will monitor these developments and keep employers advised.