The Senate has confirmed Peter B. Robb as the next General Counsel of the National Labor Relations Board (“NLRB” or “Board”).  Mr. Robb, a management side labor lawyer perhaps best known for his representation of the FAA during the 1981 air traffic controllers’ strike, will succeed Richard Griffith, Jr., who was appointed to his four year term by President Barrack Obama in 2013.

Although Mr. Griffin’s term concluded on October 31st, and the Senate sent Mr. Robb’s confirmation to the President for his signature, to date President Trump has not signed off, with the result that since November 1st, Deputy General Counsel Jennifer Abruzzo has been serving as Acting General Counsel.

The Board’s General Counsel “is independent from the Board and is responsible for the investigation and prosecution of unfair labor practice cases and for the general supervision of the NLRB field offices in the processing of cases.” In fact, the General Counsel plays a key role in shaping policy by guiding the Board’s Regional Directors in terms of determining priorities for enforcement and shaping the legal arguments and theories that the attorneys in the Regional Offices will argue before the agencies Administrative Law Judges and the Board itself in unfair labor practice cases.  Notably, the General Counsel has the final and unreviewable decision making authority in investigations and in deciding whether a charge will be dismissed or a complaint will issue. Mr. Griffin was known as an advocate of a broad reading of the National Labor Relations Act (the “Act”) and for aggressively applying the Act’s protections to employees in non-union businesses.

It is widely expected that once Mr. Robb takes the helm in the General Counsel’s Office that he will pursue an unwinding of many of the expansive actions of his predecessor in areas such as joint-employer, social media, deferral to arbitration and enforcement of class action waivers and mandatory arbitration of disputes between unrepresented employees and their employers.

The House of Representatives recently passed the Save Local Business Act (H.R. 3441), which marks an important step in the campaign to reverse the Board’s controversial loosening in Browning Ferris Industries of the long standing tests for determining whether two businesses are joint employers expansion and share bargaining obligations and liability for each other’s actions.  The measure seeks to protect businesses with staffing, franchise and other contractual relationships from liability and union bargaining obligations for another business’ workers unless one business exercises direct control over the employees of the other.

Browning Ferris Expanded Liability for Franchises and Contractors

As we have previously reported, the Board fashioned a new joint employer standard in its 2015 Browning Ferris decision, which expanded joint employer status to any entity that merely possesses, but does not actually exercise, direct or indirect control over the working conditions of another business’ employees.   Browning Ferris jettisoned decades of Board precedent, which formerly required putative joint employers to not only possess the means to control terms and conditions of employment, but to also exercise that control in some meaningful way.  This decision widely impacted franchises as well as businesses that utilize contractors or retain personnel employed by staffing or temporary employment agencies.  If found a joint employer, the business can be required to bargain with any union representing its contractors employees and found liable for any unfair labor practices it or the contractor commits.

Citing a statistic that more than 2.87 million workers are now employed through temporary employment agencies, the Board and labor unions hailed the decision as a critical refinement that better reflects the economic realities of the modern workplace given the rise of nontraditional employment arrangements and complex franchise and contractual relationships  in which two or more independent businesses often arguably co-determine working conditions.  Opponents, however, say the revised standard hurts small businesses and creates liability for employers who, in reality, have absolutely no actual influence over the other employer’s employees’ working conditions.  In just the short time since Browning-Ferris, some of these fears have ostensibly materialized as the Board has sanctioned mixed bargaining units comprised of “solely employed workers” and “jointly employed workers,” and now requires separate businesses to bargain jointly over working conditions even though one or more of the businesses may have no actual influence or control over the working conditions of the other business’ employees.

Next Steps For The Save Local Business Act

Although Browning-Ferris is currently on appeal before the United States Court of Appeals for the District of Columbia, the Save Local Business Act represents an attempt to forge a path forward by amending the Act itself to clarify who may be considered a joint employer.   The bill passed the House with a vote of 242-181, with eight Democrats voting in favor of the measure.  Republicans have been touting the bill as a bipartisan success, but the measure may have a difficult road ahead in the Senate.  A similar bill died in the Senate last year after it failed to garner enough support from Democrats.  There is a good chance that the Save Local Business Act will meet a similar fate if it fails to secure bipartisan support in the Senate, which it is not likely to receive.  That is because although Republicans would have the votes to pass the Act, if it reached the floor for a vote, they do not at this time have the 60 votes they would need to overcome an effort to filibuster by Senate Democrats.

As we have previously reported, Unions currently face a serious existential threat as the unionized workforce in America continuously declines and the looming threat of a National Right to Work law steadily grows.  Recognizing that when employees have a choice, they are losing the battle for the hearts and minds, Unions have not taken these deleterious developments lying down and have deployed numerous countermeasures designed to increase their dues paying membership, including unprecedented forays into previously untouched industries and membership pools.  These efforts extend beyond “employees” as unions now are also targeting independent contractors, with one of the most notable being the robust ridesharing industry made popular by apps like Uber and Lyft.

Uber and Lyft have become synonymous with affordable, on-demand transportation throughout the world.  Their innovative business model has reinvigorated the for-hire transportation market –historically dominated by powerful unions and restrictive legislation – with some much needed competition.  These apps have created an inexpensive and efficient alternative in on-demand transportation while giving entrepreneurial drivers an opportunity to earn extra income on their own schedule and their own terms.  This could all change, though, if unions successfully infiltrate the rideshare market:  drivers could lose the flexibility they enjoy, consumers could see a sharp rise in costs and the rideshare market could lose its competitive ability to dynamically adjust to consumer demands.

A Federal District Court Rejects The U.S. Chamber of Commerce’s Motion For Injunction Relief Pending Appeal Of the Court’s Finding That Seattle’s Ordinance Is Not Preempted By The National Labor Relations Act. 

Rideshare drivers utilizing apps like Uber and Lyft are independent contractors and, therefore, are expressly excluded from the collective bargaining rights granted by the National Labor Relations Act (“Act”).  In December 2015, Seattle passed Ordinance 124968, which conferred collective bargaining rights on rideshare drivers.  The U.S. Chamber of Commerce subsequently filed an action in the U.S. District Court of Washington, Western District, claiming, among other things, that the Ordinance was preempted by the Act.  On April 7, 2017, the District Court temporarily enjoyed enforcement of the Ordinance pending the outcome of the litigation.

However, on August 1, 2017, the District Court lifted the injunction after it granted Seattle’s motion to dismiss, finding that the Act’s independent contractor exclusion did not preempt state law. The Court likened the independent contractor exclusion to other exclusions in the Act, such as the agricultural laborer and domestic service worker exclusions, which have long been held not to preempt state law.

In doing so, the District Court rejected the Chamber’s attempt to analogize the independent contractor exclusion to the Act’s supervisor exclusion, which decidedly preempts state law.  Citing to the legislative history of the supervisor exclusion, the District Court reasoned that Congress deemed the unionization of supervisors “a threat to the very purposes of the Act as well as the interests of both labor and management,” and these destructive consequences “would arise regardless of whether supervisors unionized under NLRA or under state law.”  By contrast, the District Court concluded, Congress did not identify unionization of independent contractors “as a threat to the free flow of goods, nor is there any indication that allowing them to participate in the collective action would threaten the independence of labor organizations or the rights of management.”

As further support for its holding, the District Court cited Section 14(a) of the Act, which allows supervisors to organize, but precludes the Board from compelling employers to recognize such unions.  No similar provision exists for independent contractors, agricultural laborers, or domestic workers, so the Court concluded the Act treated these groups alike.

Interestingly, the District Court did not engage in a deep analysis of Congress’ purpose for excluding independent contractors or whether, like the supervisor exclusion, those reasons justified preemption of state law, let alone did it examine whether the Act’s purpose in regulating the free flow of commerce constituted preemption.  It merely concluded that the justifications behind the independent contractor exclusion were different than those driving the supervisor exclusion and, because there was no express exemption specifically applicable to independent contractors like there was for supervisors, independent contractors were intended to be treated “more like the other excluded groups who have long been the subject of state regulation.”

On August 24, 2017, the Chamber filed a motion for injunction relief pending appeal of the District Court’s Order.  The same federal judge that granted Seattle’s motion to dismiss denied the Chamber’s motion for preliminary injunction, thereby permitting the Union to commence its organizing drive of Uber and Lyft drivers.

Ninth Circuit Temporarily Grants The Chambers’ Emergency Motion For Injunction Relief While It Considers The Merits Of The Motion

On August 29, 2017, the Chamber filed an emergency motion for injunctive relief with the Ninth Circuit Court of Appeal.  The Ninth Circuit temporarily granted the motion while the Court considered the merits of the motion.  Seattle filed its opposition to the Motion on September 5, 2017, and the Chamber’s filed its reply September 7, 2017.  Importantly, this truly could only be a temporary reprieve for rideshare companies as the Ninth Circuit Provided no indication one way or the other as to its leaning on the merits.

The Fate Of Unionization of Rideshare Drivers

Ninth Circuit’s ruling effectively stayed the Union’s right to begin its efforts to unionize Uber and Lyft drivers, but this reprieve may only be temporary.  If the Ninth Circuit denies the emergency motion, it will clear the way for Teamsters, Local 117 to begin its organizing drive while the Chamber appeals the dismissal of its lawsuit to block the Ordinance.  However, even if the Court denies injunctive relief and Teamsters successfully organizes the drivers, the Ninth Circuit could still decide the Act preempts Seattle’s unprecedented ordinance and reverse the Union’s gain.  If Ninth Circuit sides with Seattle, though, and permits the Ordinance to stand, this scenario will likely be repeated in other cities across the nation as Unions, with the aid of the members of city councils and legislatures they funded and elected, desperately seek to reverse the long running trend of declining membership by targeting new industries.  And if this occurs, the rideshare industry will likely be dramatically transformed in fundamental ways – ways that may destroy the flexibility and affordability that made this industry so popular in the first place.

In what may be a harbinger of good things to come, the NLRB recently reversed an Administrative Law Judge’s (“ALJ”) finding that Macy’s, Inc.’s confidentiality policies unlawfully interfered with employees’ Section 7 rights.  Unlike many employer policy decisions issued by the Board in recent years, this case does not break new ground or saddle employers with new, unrealistic onuses.  It merely reinforces well-established rules regarding the use of sensitive customer information obtained from an employer’s records and actually reaffirms the right of employers to protect “information their employer lawfully may conceal.”

What is refreshing about this case, though, is what the Board, in a two-to-one decision by Chairman Miscimarra and Member McFerran, with Member Pearce dissenting, did not do.  Namely, it did not attach an excessively broad interpretation to rules that, while theoretically susceptible to such a construction, were clearly not intended to have such an overreaching effect.  In an era of Board decisions that have ostensibly transformed the Lutheran Heritage “reasonably construe” standard into a micromanagement weapon wielded against employers to invalidate commonplace personnel policies based on uber speculative constructions untethered to industrial realities, this case may mark the apex of this aggressive push and the beginning of a more rational Board jurisprudence.  The decision returned focus on the original intent of Lutheran Heritage.  That is, rules will only be held to per se violate employees’ rights under the Act if they explicitly restrict Section 7 rights and just because a rule could be interpreted that way does not mean it’s reasonable.

The Board reaffirmed that where a rule does not explicitly restrict Section 7 rights, it will only be found to violate the Act if it can be shown that “(1) employees would reasonably construe the language [of the rule] to prohibit Section 7 activity; (2) the rule was promulgated in response to union activity, or (3) the rule has been applied to restrict the exercise of Section 7 rights.”

Board Finds That Employees Have No Right to Use Customer Data Acquired from Employer’s Records

At issue in this case were three rules confidentiality rules. One restricted the use of “Confidential Information,” which was defined to include “social security numbers or credit card numbers – in short, any information, which if known outside the Company could harm the Company or its business partners, customers or employees or allow someone to benefit from having this information before it is publicly known.”  The other two prohibited the disclosure of “personal data,” including customers’ “names, home and office contact information, social security numbers, drivers’ license number, account numbers and other similar data.”

The ALJ found that these rules unlawfully restricted employees’ Section 7 right to communicate with customers about their work-related concerns. The Board reversed the ALJ on the grounds that the rules only prohibited employees’ use or disclosure of sensitive data (i.e., customers’ social security and/or credit card numbers) or information obtained from the employer’s own confidential records. While the Board reaffirmed the proposition that “employees indisputably have a Section 7 right to concertedly appeal to their employer’s customers for their support in a labor dispute,” the Board held that this right did not usurp their employer’s right to protect and prevent the disclosure of “information their employer lawfully may conceal.” Neither of the Board’s justifications is particularly controversial – the Board has long recognized that employees have no right to use sensitive data or information drawn from the employer’s confidential records.

What is also notable, though, is that the majority rejected the much broader construction advocated by Member Pearce in his dissent, which would have expanded the scope of these rules beyond their apparent lawful parameters, because such a construction, while possible, was not reasonable.

Board Rejects Unreasonable Construction That Parses Out Certain Language from Entire Policy

First, the dissent argued that, as defined, “Confidential Information” would encompass customer contact information because such data could certainly benefit outside entities and/or its disclosure could harm the Company.  The Board majority rejected this contention on contextual grounds because the language attacked by the dissent was preceded by an exemplary list of sensitive personal and proprietary data.  These contextual elucidations, the majority reasoned, effectively precluded employees from reasonably interpreting the prohibition as embracing benign customer data such as names and addresses.  The majority emphasized that just because a rule may be susceptible to a particular construction does not make that construction reasonable.

Board Rejects Speculative Scenario Not Grounded In Evidence

Second, Member Pearce’s dissent argued that an employer cannot restrict the use of customer information maintained in files the employer designates as “confidential” because this information is likely available to all employees in the normal course of their employment duties.  The majority rejected this on two grounds.  First, they pointed out that the Act does not protect employees’ use of information drawn from an employer’s records merely because employees have access to it as part of their duties.  Second, “there is…no evidence in this case that the Respondent’s customer contact information was available to ‘all employees’ as the dissent contends, much less that it was used by them in the course of their normal employment duties…Our colleague’s unsupported speculation as to the Respondent’s ‘likely’ practices cannot substitute for evidence not in the record.”

In recent years, employers have reeled from the Board’s frequent unwillingness to acknowledge the reasonable and obvious intent of ordinary workplace rules and to instead concoct speculative scenarios out of whole cloth to justify finding such policies violative of the Act.  Chairman Miscimarra has long argued that this increasingly frequent approach contradicts the true intent of the Lutheran Heritage “reasonably construe” standard and has imposed impossible burdens on employers trying to craft lawful policies that protect their legitimate business interests.  Chairman Miscimarra has continuously advocated for the Board to repeal and replace the Lutheran Heritage standard because this standard is inherently susceptible to widely varying application and does little to promote the certainty and predictability employers need when promulgating workplace policies.  While the majority in Macy’s did not adopt Chairman Miscimarra’s proposed replacement, Member McFerran did agree to reject the ALJ’s interpretation of the rules and policies in question based on the constrained parsing and overreach that dominated the Obama Board’s application of the “reasonably construe”  standard.

With newly sworn in Member Marvin Kaplan and likely soon to be confirmed William Emanual, in September Chairman Miscimarra will have the first Republican majority of the Decade. However, with Chairman Miscimarra’s announced intention not to seek a second term, he will only have a couple of months in which to lead a newly construed Board in its move to the new standards and tests he has been advocating.

In Midwest Division-MMC, LLC, d/b/a/ Menorah Medical Center v. NLRB, the D.C. Circuit rejected the Board’s unprecedented application of Weingarten rights to voluntary meetings, by reversing the Board’s Decision that would have extended the right of employees to have union representation at meetings at which the employees’ attendance is not compelled.

Kansas state law requires hospitals to establish an internal mechanism to monitor the standard of care provided by nursing professionals.  Pursuant to this law, Menorah Medical Center (“Menorah” or “Hospital”) established a Nursing Peer Review Committee (“Committee”) to investigate alleged violations of the prevailing standard of care.  If substantiated, the Committee reports the violation to the state licensing agency, but the Committee itself does not impose discipline.  If a violation is reported, the state, not the employer, may suspend or revoke a nurse’s license.

In May 2012, two nurses received letters alleging that they had engaged in unprofessional conduct. The letters advised that the nurses could address the Committee at a hearing “if you choose,” but also gave the nurses the option to submit a written statement in lieu of a personal appearance.  Both nurses requested union representation at the Committee hearing, but the Hospital denied their requests.  Their union subsequently filed an unfair labor practice charge alleging that the Hospital violated the National Labor Relations Act (“Act”) by denying the nurses’ requests for union representation at the hearing.

The D.C. Circuit Court Finds There Is No Right to Union Representation at Voluntary Meetings

The Board found that the Hospital’s denial violated the Act because employees have a right to union representation under Weingarten in “interviews where there is a reasonable belief that the employee will be disciplined,” regardless of whether the employees’ attendance is compulsory or voluntary.  This was an overt expansion of employees’ Weingarten rights which only apply to a unionized employee’s right to representation at a mandatory meeting an employer requires them to answer potentially incriminating questions which may result in disciplinary action by the employer.

The D.C. Circuit Court, however, unanimously reversed the Board’s decision. The Circuit Court, quoting the Supreme Court’s Weingarten decision, held that an employee’s Weingarten rights are infringed only when an employer compels an employee’s attendance at an interview that might reasonably be expected to lead to discipline and denies his or her request for union representation.  Specifically, the Supreme Court in Weingarten delineated the limited representation right as:

…the employee’s individual right to engage in concerted activity by seeking the assistance of his statutory representative if the employer denies the employee’s request and compels the employee to appear unassisted at an interview which may put his job security in jeopardy.

Here, the Hospital’s letters to the nurses clearly conveyed their attendance at the hearing was voluntary and even allowed them to submit a written statement as an alternative to attending.  Accordingly, the right to union representation under Weingarten was not triggered.

The Court also rejected the Board’s finding that, after denying a request for union representation in these circumstances, the employer must discontinue the interview unless the employee voluntarily agrees to continue after the employer explains to the employee that he or she has a choice to continue the interview without a representative present or not have the interview at all.  The Court explained that the letters sent to the nurses made it clear that their attendance was voluntary, and Weingarten “contains no suggestion that the NLRA requires an employer to renew advice to an employee that her attendance at a hearing is optional.”  The Court distinguished the precedent relied upon by the Board on the ground that all the cases involved compulsory attendance at interviews.

The Concurrence Suggests Weingarten Rights Do Not Apply Outside Interviews Conducted by Employers

Notably, in a concurring opinion, Circuit Judge Kavanaugh emphasized that the majority’s opinion assumes arguendo that Weingarten rights could apply to peer review committees without deciding this threshold question.  Judge Kavanaugh explained that, were the Court to decide this threshold question, he would hold Weingarten rights do not apply in peer review committee interviews.  Rather, Weingarten rights exist “to redress the perceived imbalance of economic power between labor and management,” and therefore apply primarily in the context of disciplinary investigations conducted by the employer.  When the interview is conducted by a state-mandated peer review committee that is not part of the employer’s disciplinary process, Weingarten rights do not apply.

The DC Circuit Court, in its August 11th decision in Rhino Northwest, LLC v NLRB has found that the NLRB’s 2011 Specialty Healthcare decision revisiting the Board’s standards for determining whether a bargaining unit a union seeks to represent is appropriate, where the employer claims in excludes other classifications of employees who share a community of interest with the petitioned for employees, is supported by the National Labor Relations Act and that the “overwhelming community of interest” standard that the Board adopted in that case is entitled to deference and should be followed.

The Specialty Healthcare Holding

The NLRB’s 2011 Specialty Healthcare decision is frequently referred to as the “micro-unit” case. In Specialty Healthcare, the Board held that for an employer to establish that a unit is not appropriate and must include other classifications, the employer must prove the petitioned for unit is “truly inappropriate” and that the additional classifications the employer contends must be included in the unit share “an overwhelming community of interest” with the petitioned for classifications.   Many saw this as a contradiction to the long standing proposition that the extent of organizing or support could not be the basis for finding a group of employees to be an appropriate unit and a results driven decision by the Obama Board, intended to allow unions to gain footholds within employers’ workforces by achieving bargaining rights for small pockets of workers.

The Facts in Rhino Rigging

In Rhino, which is a concert equipment setup company, a local of IATSE, a union representing stagehands and theatrical professions, petitioned for an election in a group of “riggers” employed by the company at a location in Washington State. The employer argued that a unit of just riggers, employees who use motors to hoist and position overhead equipment at concerts and theatrical events, was not an appropriate unit, and that the “overwhelming community of interest” standard adopted by the Board in Specialty Healthcare was inconsistent with the National Labor Relations Act (NLRA or Act”) and that in any case, that the riggers shared an overwhelming community of interest with the other classifications they worked with– camera, lighting, and forklift workers – and that a unit composed only of riggers was “truly inappropriate.” The Regional Director disagreed and directed an election in the rigger unit, the union won the election, and Rhino refused to bargain, in order to test the certification and, ultimately have its arguments considered by the D.C. Circuit.

The DC Circuit’s Rhino Rigging Decision

In short, the DC Circuit rejected all of Rhino Riggings’ arguments, finding that “Because a legitimate basis exists for excluding non-riggers from the bargaining unit,” it would sustain the Board’s order, in which it held that the company was obligated to bargain with the union for the unit of riggers.

As the Court pointed out, under the Board’s unit determination case law, “two considerations determine the prima facie appropriateness of a proposed unit.”

First, the employees must be “readily identifiable as a group” based on factors such as “job classifications, departments, functions work locations [or] skills. Second, the petitioned-for employees must share a “community of interest.” The Board “weigh[s] all relevant factors on a case-by-case basis” to determine whether a set of employees are sufficiently alike to constitute an appropriate bargaining unit.

Noting that there can in many circumstances be more than one appropriate bargaining unit, the Court reaffirmed that a unit need not be the most appropriate unit, and that under the Board’s overwhelming community of interest standard, for an employer to successfully challenge a petition seeking a unit it considers “underinclusive,” it must demonstrated that the proposed unit is “truly inappropriate” because the excluded employees share an overwhelming community of interest under the standard adopted in Specialty Healthcare.

The Court rejected Rhino’s argument that the “overwhelming community of interest” standard “runs afoul of the Act,” and its contention that even under that standard, the riggers shared an overwhelming community of interest with the other classifications.

What Happens Next?

With the DC Circuit’s decision, a total of eight Circuit Courts have rejected claims that the Board exceeded its authority in Specialty Healthcare and that the standards adopted in it are not supported by the Act.

For employers that were holding out hope that the DC Circuit was going to turn the tide on Specialty Healthcare and reject or redefine the “overwhelming community of interest” standard, the Rhino decision is a setback. It is certainly possible that a Court in another circuit which has not yet passed on Specialty Healthcare could still find that the test is not supported by the Act.

That said, at this point, the most likely way that change will come will be from the Board itself, once a Republican majority is in place, which should be this year. On May 10, NLRB Chairman Miscimarra issued a dissent in Cristal USA, Inc., in which he explicitly articulated his belief that “Specialty Healthcare was wrongly decided.” He went on to note that the unit in certified in Cristal was one he did not believe was an appropriate unit, and that this was concerning to him because it “promotes instability by creating a fractured or fragmented unit.”

As the Board moves to a new Republican majority, there is every reason to believe that the holdings in Specialty Healthcare will be reexamined from the point of view articulated in the Chairman’s dissent in Cristal and other cases.

When: Thursday, September 14, 2017 8:00 a.m. – 4:30 p.m.

Where: New York Hilton Midtown, 1335 Avenue of the Americas, New York, NY 10019

Epstein Becker Green’s Annual Workforce Management Briefing will focus on the latest developments in labor and employment law, including:

  • Immigration
  • Global Executive Compensation
  • Artificial Intelligence
  • Internal Cyber Threats
  • Pay Equity
  • People Analytics in Hiring
  • Gig Economy
  • Wage and Hour
  • Paid and Unpaid Leave
  • Trade Secret Misappropriation
  • Ethics

We will start the day with two morning Plenary Sessions. The first session is kicked off with Philip A. Miscimarra, Chairman of the National Labor Relations Board (NLRB).

We are thrilled to welcome back speakers from the U.S. Chamber of Commerce. Marc Freedman and Katie Mahoney will speak on the latest policy developments in Washington, D.C., that impact employers nationwide during the second plenary session.

Morning and afternoon breakout workshop sessions are being led by attorneys at Epstein Becker Green – including some contributors to this blog! Commissioner of the Equal Employment Opportunity Commission, Chai R. Feldblum, will be making remarks in the afternoon before attendees break into their afternoon workshops. We are also looking forward to hearing from our keynote speaker, Bret Baier, Chief Political Anchor of FOX News Channel and Anchor of Special Report with Bret Baier.

View the full briefing agenda and workshop descriptions here.

Visit the briefing website for more information and to register, and contact Sylwia Faszczewska or Elizabeth Gannon with questions. Seating is limited.

On Wednesday, the U.S. Senate confirmed Marvin Kaplan, a former Occupational Safety and Health Review Commission lawyer, to fill one of the two open seats on the National Labor Relations Board, moving the agency a step closer to a Republican majority. Kaplan was confirmed on a 50-48 party-line vote by the GOP-controlled Senate.

The Senate has yet to schedule a vote for President Trump’s second nominee for the Board, William Emanuel, a long time management-side labor and employment lawyer. The Senate is expected to vote for cloture on Emanuel’s nomination after the August recess. The cloture vote kicks off a 30-hour period of debate. A final confirmation vote will then be scheduled.

The delay in moving forward on Emanuel’s nomination is the result of several Democrats stalling by raising partisan concerns that Emanuel’s history as a management-side lawyer somehow creates a conflict of interest, notwithstanding their prior support of Board nominees who have had lifelong careers as attorneys for unions, and indeed in numerous other instances, attorneys who represented employers. For example, current Member Mark Gaston Peace was longtime union lawyer and the current NLRB General Counsel Richard Griffin, Jr. was the General Counsel of the International Union of the Operating Engineers and a member of the board of directors of the AFL-CIO Lawyers Coordinating Committee.

Emanuel is expected to be confirmed in September despite the delays.

As discussed in our earlier advisory, if the nomination of Emanuel is confirmed by the Senate, which seems likely as of now, the NLRB will not only have its first Republican majority in nine years, it will return to full strength at five members. As cases come before the Board for its consideration, the NLRB will likely reconsider many of the decisions of the Democratic majority Obama Board. However, as we have noted, NLRB General Counsel is expected to serve out his four year term and remain in that critical post, in which he decides in many respects, which issues are litigated and presented to the Board, through November 3, 2017.

As we noted in our earlier blog, the Board is likely to consider a number of significant legal issues once the final vacancy is filled, including the NLRB’s standards for determining whether joint employer relationships exist, the standards for evaluating whether handbooks and work rules unlawfully interfere with employees’ rights under the National Labor Relations Act (“NLRA”), the Board’s standards for determining what are appropriate units for collective bargaining including a review of the so-called “mircro-units” approved by the Obama Board, the status graduate students and research assistants as employees under the NLRA with the right to collective bargaining, and a host of other decisions from the past eight years that more expansively interpreted the NLRA.

Since the National Labor Relations Board’s (“NLRB” or the “Board”) 2015 decision in Browning-Ferris Industries, 362 NLRB No. 186, in which it adopted a new, far less stringent test for determining joint-employer status under the National Labor Relations Act (“NLRA”),  employers have been left wondering whether they may be held to be a joint employer of temporary or contract workers that they retain through staffing and temporary agencies.

These concerns have been echoed by employers in other contexts as other agencies, such as the United States Department of Labor (“DOL”) and the Equal Employment Opportunity have taken similar positions, seeking to expand the concept of joint employer with respect to statutes and regulations they enforce. Notably, both the DOL and the EEOC filed amicus briefs in support of the NLRB’s position with the D.C. Circuit Court of Appeals, which is considering whether the NLRB exceeded its statutory authority in Browning-Ferris.

While the loosened standards for determining joint employment remain under consideration by the courts, members of Congress are now seeking to use the power of the purse strings to force the NLRB to discontinue its use of the relaxed standards it adopted in Browning-FerrisLegislation considered yesterday by House Republicans would do away with this expansion of joint employer liability and provide much needed clarity for employers on this issue.

What is the NLRB’s Browning-Ferris Standard for Finding Joint-Employer Status?

The Browning-Ferris decision expanded the definition of joint-employer to hold that if an employer, referred to as the primary employer, merely possesses, but does not exercise, the right or ability to directly or indirectly codetermine the terms and condition of employment of the employees of another employer, referred to as the secondary employer, the primary employer will be held to be the joint-employer of the secondary employer’s employees.

This holding impacts a wide range of workers, such as employees of business arrangements including the use of contractors, retention of personnel through staffing agencies and temporary employment services, and, if the “primary employer is a franchisor, personnel employed by the franchisor’s franchisees. As the Board pointed out when it decided Browning-Ferris, in its view “the current economic landscape,” which includes some 2.87 million people employed by temporary agencies, warrants a “refined” standard for assessing joint-employer status. As the majority put it: “If the current joint-employer standard is narrower than statutorily necessary, and if joint-employment arrangements are increasing, the risk is increased that the Board is failing what the Supreme Court has described as the Board’s ‘responsibility to adapt the Act to the changing patterns of industrial life.’”

While the National Labor Relations Board’s ruling in Browning-Ferris is now before the United States Court of Appeals for the District of Columbia Circuit, where the court has been asked to find that the NLRB’s test is not supported by the terms of the NLRA or the common law definition of employer, which is an element of the Browning-Ferris standard itself, recent activity from House Republicans may result in legislative action establishing a new, far narrower standard for determining joint-employer status.

Congress Seeks to Use the Appropriation Process to Force the Board to Discard Browning-Ferris’s Indirect Control Standard

House Republicans have introduced new language in a draft spending bill – that among other things, would set the NLRB’s appropriation for 2018 – to direct the Board to set aside what many in the business community find to be one of the most objectionable parts of Browning-Ferris.

The House Education and Workforce Committee held a hearing on Wednesday, July 12, 2017 to discuss the barriers to job and business growth created by the “indirect control” standard of joint employer liability. Small business owners and other employer representatives testified that the joint employer standard threatens their ability to expand, and encouraged the committee to introduce legislation that would define employees as those workers that the employer has direct or actual control over.

On Thursday, July 13, 2017, the House Appropriations Committee on Labor, Health and Human Services, and Education voted along strict party lines to approve a markup of their draft spending bill for FY 2018, which would prohibit the NLRB from using the “indirect control” standard in making joint employer determinations and would require the Board to revert to the “direct control” standard. The Appropriations Committee describes the legislation in its press release and on its website as including

two policy provisions to stop the NLRB’s harmful anti-business regulations. The provisions include: A provision that prohibits the NLRB from applying its revised “joint-employer” standard in new cases and proceedings; A provision that prevents the NLRB from exercising jurisdiction over Tribal governments.

This provision, along with the Committee’s proposal to reduce the NLRB’s budget by $25 million (from $274 million to $249 million) will face strong opposition from the Democratic minority, organized labor, unions, and employee lobbying groups. Of course at this point it is not at all clear whether in fact there will actually be a budget for the new fiscal year or, instead, Congress will again adopt a continuing resolution to keep the government running.

What Should Employers Do Now?

Employers and their representatives should of course continue to pay close attention to the budget process and other legislative action, while waiting for Congress to take action on the President’s nominees to the two vacant seats on the NLRB.   There is every reason to believe, assuming Willian Emanuel and Marvin Kaplan are confirmed and take their seats on the Board, that they, like Chairman Philip Miscimarra, who wrote a vigorous dissent in Browning-Ferris, will share the Chairman’s belief that the standard adopted in that case was incorrect and should be set aside. At this time, however, it would be nothing more than speculation to predict when the new Board majority will have an actual case before it in which these issues are present.

In the meantime, employers are advised to review the full range of their operations and personnel decisions, including their use of contingent and temporary personnel supplied by staffing and similar agencies to assess their vulnerability to such action and to determine what steps they make take to better position themselves for the challenges that are surely coming.

Equally critical, employers should carefully evaluate their relationships with suppliers, licensees, and others with which they do business to ensure that their relationships, and the agreements, both written and verbal, governing those relationships do not create additional and avoidable risks.

This post was written with assistance from Sean Winker, a 2017 Summer Associate at Epstein Becker Green.

On Tuesday night, the President announced the nomination of William Emanuel, a long time management-side labor employment lawyer, to fill the last remaining vacancy on the five-member National Labor Relations Board.

As we noted in our earlier blog, last week the President announced the nomination of Marvin Kaplan, who currently serves as counsel at the Occupational Safety and Health Commission, to fill the other vacancy on the NLRB.

If the nominations of Messrs. Emanuel and Kaplan are confirmed by the Senate, which seems likely as of now, the NLRB will not only have its first Republican majority in nine years, it will return to a full strength at five members. As cases come before the Board for its consideration, the NLRB will likely reconsider many of the decisions of the Democratic majority Obama Board.  However, as we have noted, Richard F. Griffin, Jr., who was appointed as the Board’s General Counsel, is expected to serve out his four year term and remain in that critical post, in which he decides in many respects, which issues are litigated and presented to the Board, through November 3, 2017.

The nominations of Messrs. Emanuel and Kaplan will now go before the Senate Committee on Health, Education, Labor & Pensions, where they are expected to be advanced.

As discussed in our earlier advisory, the Board is likely to consider a number of significant legal issues once the vacancies are filled, including the NLRB’s test for determining whether joint employer relationships exist, the standards for evaluating whether handbooks and work rules interfere with employees’ rights under the National Labor Relations Act (“NLRA”), appropriate units for collective bargaining, the question of whether graduate students and research assistants are employees under the NLRA with the right to collective bargaining, and a host of other decisions from the past eight years that more expansively interpreted the NLRA.