Last Friday – the day the Star Wars movie Episode VIII hit theaters and the last working day of National Labor Relations Board Chairman Philip A. Miscimarra’s term – the Board continued its efforts to undo some of the most controversial and problematic decisions rendered by the Obama Board before the Republicans temporarily lose their majority. As we previously reported, recent days have seen a stream of significant decisions and other actions from the National Labor Relations Board. Most notably, the Board discarded the much criticized indirect control test for determining joint-employer status adopted in Browning Ferris joint employer test and returned to its traditional joint employer standard; it established a new, more reasonable standard under which the legality of employer policies and handbooks will be assessed which, unlike the former test, actually gives weight to an employer’s legitimate interests in promulgating the rule; and it opened public comment on the expedited election rules and procedures, the first critical step to amending those rules.
Notably, these and the other decisions discussed in this article involve issues which the Board’s new General Counsel identified as being among those subject to mandatory submission to the Division of Advice, i.e, “Cases that involve issues over the last eight years that overruled precedent and involved one or more dissents.”
The Board continued its own reconsideration of cases in which the Obama Board had overruled precedent, often over the dissent of Chairman Miscimarra, on Friday with two more significant decisions: PCC Structurals, which overturned the “overwhelming community of interest” test that the Board has adopted in Specialty Healthcare, which has been seen as leading to the proliferation of “micro bargaining units,” and Raytheon Network, which reinstated employers’ right to unilaterally implement changes when there is not a collective bargaining agreement in effect, where such changes are consistent with established past practice. As discussed below, collectively these decisions are beginning to restore balance to labor relations after nearly a decade of pro-union decisions that discarded long standing Board precedents.
PCC Structurals Restores the Traditional Community-of-Interest Standard – Overturns Specialty Healthcare’s “Overwhelming Community of Interest” Test
In 2011, the Board in Specialty Healthcare materially changed the test that it would use to assess how it will address the scope of a unit for a representation election and collective bargaining when a union petitioned for an election in a bargaining unit that the employer argued was too narrowly drawn because it improperly excluded similarly situated employees who shared a community of interest with the petitioned-for workers. Rather than evaluating whether it was a “sufficiently distinct” community of interest between the petitioned-for unit and excluded employees, as long-standing precedent required, in Specialty Healthcare, the Board held that a petitioned-for unit would be deemed appropriate unless, as the PCC Structurals decision points out, the employer proved “the next-to impossible burden . . . that ‘employees inside and outside [the] proposed unit share an overwhelming community of interest’ . . . .” Under the Specialty Healthcare standard, employers contesting a union’s petitioned-for unit had the herculean burden of showing that other employees’ interests “overlap almost completely” with the union’s desired group.
As the majority in PCC Structurals pointed out, Specialty Healthcare afforded “extraordinary deference” to the union’s petitioned-for unit and led to the rise of fractured “micro-bargaining” units that defy well-established industry rules. For example, under Specialty Healthcare, the Board has approved units limited to individual sales departments within a department store, “notwithstanding the Board’s longstanding rule that favors storewide units within the retail industry,” and units of prepress employees that exclude press employees in contravention of “the Board’s ‘traditional’ rule that press and prepress employees should ordinarily be included in the same ‘lithographic unit.’” In PCC Structurals, the Board observed these results ignored the substantial interests of excluded employees and interfered with their rights under the Act.
To rectify these problematic results and better effectuate the Act’s goal of assuring “employees their fullest freedom in exercising their rights under the Act,” the Board in PCC Structurals overturned Specialty Healthcare and returned to the standard that governed the assessment of petitioned-for units for nearly all of the Act’s history prior to Specialty Healthcare. Under the reinstated standard, the Board will evaluate whether the excluded employees also share a community of interest with the petitioned-for unit and, if so, will include them in the unit.
Specifically, as it had for decades prior to Specialty Healthcare, the Board will return to the traditional community-of-interest multi-factor test which examines:
whether the employees are organized into separate department; have district skills and training; have distinct job functions and perform distinct work, including inquiry into the amount and type of job overlap between job classifications; are functionally integrated with the Employer’s other employees; have frequent contact with other employees; interchange with other employees; have distinct terms and conditions of employment and are separately supervised.
As the majority observed, in ensuring the Board examines the interests of all employees (both included and excluded), it “corrects the imbalance created by Specialty Healthcare…”
Raytheon Network Reinstates Employers’ Right To Implement Unilateral Changes Pursuant to Past Practice After the Collective Bargaining Agreement Expires
In 2016, the Board majority in E.I. Du Pont De Nemours held that, after a collective bargaining agreement expires, unilateral changes implemented by an employer pursuant to established past practice were unlawful if the change involved managerial discretion. Then-member Miscimarra vigorously dissented, arguing that the majority’s decision created an untenable definition of “change” that defies common sense and encompasses any action that involves the slightest managerial discretion, despite being materially indistinguishable in kind or degree from the employer’s customary past actions.
In Raytheon Network, the Board reversed E.I. Du Pont and adopted Chairman Miscimarra’s reasoning in his Du Pont dissent. The Board majority noted that, under Du Pont, an employer would be found to have made an unlawful unilateral change in violation of Section 8(a)(5) of the Act, even though the employer merely “continues to do precisely what it had done many times previously – for years or even decades…” The majority held this “fundamentally flawed” position “is inconsistent with Section 8(a)(5), it distorts the long-understood, commonsense understanding of what constitutes a change, and it contradicts well-established Board and court precedent.” The Board also pointed out that the Du Pont extreme view of “change” was contrary to the guidance of the Supreme Court in NLRB v. Katz, on which the Board’s pre-Du Pont decisions were based. The Board concluded that continuing adherence to the Du Pont change standard could not be reconciled with the Board’s responsibility to foster stable bargaining relationships. Accordingly, the majority overruled Du Pont and reinstated the rule that an employer may lawfully take unilateral actions “that do not materially vary in kind or degree from what has been customary in the past,” even though such actions may involve some managerial discretion.
With Miscimarra’s Exit, Dismantling The Obama Board’s Legacy Will Likely Stall
The Obama Board frequently broke with longstanding precedent and ushered in new rules that arguably favored labor unions while disregarding the legitimate business concerns of employers. These decisions were often met with vigorous dissents warning that such decisions would cause unpredictable, unfair, and unsustainable results in labor-management relations. The most prominent and vocal of these dissenters was Chairman Miscimarra. Since attaining a Republican majority, the Board has implemented many of the rules and principles articulated in Miscimarra’s dissents, overturning some of the most controversial decisions rendered by the Obama Board and this past week’s decisions have certainly helped cement Chairman Miscimarra’s legacy of pragmatic adherence to the traditional principles of the Act. However, with the expiration of Chairman Miscimarra’s term on December 16, 2017, the Board returns to 2 Republicans and 2 Obama-era holdover Democrats. While various names have circulated as possible candidates for the now vacant seat, as of yet the President has not yet sent a name to Congress, nor has he indicated who he plans to nominate. Thus, at least for now, the recent progress in reexamining and moving away from the Obama Board’s legacy remains on hold, at least at the Board level. However, given the General Counsel’s recent announcement of issues targeted for submission to the Division of Advice, including all “Cases that involve issues over the last eight years that overruled precedent and involved one or more dissents,” there is every reason to believe that once a new majority is in place, the Board will, as the Jedi say, seek to bring balance to the Act.