Type: Law Bulletins
Date: 01/15/2019

Making the NLRB Great Again (Part 3)

Since President Trump’s election, we have been tracking possible changes in direction under a National Labor Relations Board (NLRB or Board) controlled by Republican appointees. This article will report on developments in 2018 and address other changes that could be coming in the future. 

The People

At the beginning of 2018, the NLRB was split 2-2 between Democrats and Republicans with one vacancy to fill. In mid-April, the President appointed another Republican to the five-member NLRB creating a 3-2 Republican majority. In late August, Democrat Mark Gaston Pearce left the NLRB after his term expired. In a move opposed by many in the business community due to Mr. Pearce’s pro-union rulings, the President nominated Mr. Pearce for another term. The Senate did not take any action on this nomination. With a new Congress now in place, the President will have to make another nomination to fill this vacancy.

As a result, Republicans have a 3-1 majority on the NLRB with one Democratic vacancy to fill. It is unclear whether the President will again nominate Mr. Pearce to fill this vacancy. Regardless of what happens with this vacancy, there will be three Republican members on the NLRB until at least late August 2020.

Significant Developments

Although Republicans controlled the NLRB since mid-April, 2018 was a disappointing year from the perspective of employers. The Trump Board accomplished little and was bogged down by ethical challenges based on two Republican NLRB members’ prior association with large law firms representing employers.

1. Joint Employer Standard

In Browning-Ferris Indus. of Cal., 362 NLRB No. 186 (2015), the Obama Board adopted a new and controversial standard for determining joint employer status. Under this standard, an employer would be a joint employer even if it does not exercise any actual control over the employees of the other employer.

In Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (Dec. 14, 2017), the Trump Board overruled Browning-Ferris and returned to the prior joint employer standard requiring the exercise of actual and direct control instead of potential control to find joint employer status. This was not a surprising development.

After Hy-Brand, the train jumped the rails. An NLRB ethics official determined that one of the Republican NLRB members should not have participated in the Hy-Brand case because his former law firm represented one of the parties in Browning-Ferris (not a party in Hy-Brand itself).1 Because Hy-Brand was a 3-2 decision along party lines, the recusal would have made a difference in the outcome as it takes three votes to overrule an NLRB decision. In response, the NLRB vacated its Hy-Brand decision, which resulted in the Browning-Ferris standard being reinstated.

After this debacle, the Republican majority decided to address the joint employer issue through rulemaking and proposed a rule that would overrule Browning-Ferris and restore the previous requirement of actual and direct control. On the one hand, rulemaking is harder to overturn and should avoid the supposed ethical issues raised by Hy-Brand. On the other hand, rulemaking takes a long time. The NLRB is accepting comments on its proposed rule until late January 2019. After that, the NLRB will have to review thousands and thousands of comments before finalizing the rule. This process could take more than a year.

There is yet another wrinkle. One of the employers involved in Browning-Ferris appealed the NLRB’s decision to the D.C. Circuit and challenged the Browning-Ferris standard. This appeal had been in abeyance while the NLRB decided how to handle Hy-Brand. After Hy-Brand was vacated, the NLRB asked the D.C. Circuit to issue a decision. On Dec. 28, 2018, the D.C. Circuit found that Browning-Ferris properly considered indirect and unexercised control. This decision could create problems for any joint employer rule that tried to restore the previous requirement of actual control that is direct and immediate. Litigation challenging any rule ultimately issued by the Trump Board is a virtual certainty.            

In sum, the joint employer issue is a mess and is likely to remain so for the foreseeable future.

2. Quickie Elections

In 2015, the Obama Board implemented new “Quickie Election Rules” which significantly altered how union elections are processed. The new rules were disadvantageous for employers.

Employers expecting the Trump Board to reverse these new rules have been disappointed so far. Although in December 2017 the NLRB asked for comments about whether these rules should be retained, changed or rescinded, the NLRB has taken no action. The NLRB chairman has indicated there may be some changes made on an issue by issue basis (as opposed to the wholesale repeal of the new rules). If so, the NLRB would need to start issuing new rules as soon as possible if they are to go into effect before the 2020 elections.

3. Employer E-mail Systems

On Aug. 1, 2018, the NLRB asked for briefing on whether Purple Communications, Inc., 361 NLRB 1050 (2014), should be overruled. In that case, the Obama Board found that employees had a statutory right to use their employers’ e-mail systems to engage in union activity on non-working time. The Trump Board is expected to overrule Purple Communications based on an employer’s right to control its own electronic equipment.

However, overruling Purple Communications will have little practical impact. Employers will still be unable to discriminate against employee use of e-mail for union activity as long as employers permit employees to use e-mail for comparable non-work purposes.

What’s Next?

The Republican NLRB members have continued to indicate a willingness to change the longstanding “blocking charge” rule which lets unions block elections by filing an unfair labor practice charge before the vote occurs. The current “blocking charge” rule makes it relatively easy for an incumbent union to delay a decertification election. However, the “blocking charge” rule currently remains in effect.

As we have previously discussed, we expect the Trump Board to overrule other Obama Board decisions such as: 

  1. Total Sec. Mgmt. Ill. 1, LLC, 364 NLRB No. 106 (2016) (usually prevents employers from disciplining employees in the absence of a union contract without bargaining to impasse).
  2. American Baptist Home of the West, d/b/a/ Piedmont Gardens, 364 NLRB No. 13 (2016) (makes it risky for employers to use permanent replacements during economic strikes by finding that an intent to discourage future strikes is sufficient to violate the law).
  3. Babcock & Wilcox Construction Co., 361 NLRB 1127 (2014) (makes it much harder to obtain deferral to arbitration). In 2018, the Republican General Counsel indicated that he disagrees with Babcock, so we expect he will look for a case to take to the NLRB to try to overrule that decision.

2018 was largely a lost year from the perspective of employers hoping for favorable developments from the NLRB. We will alert you to future developments.

1 The Board is currently reviewing its ethics and recusal procedures.

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