NLRB Trumps Five Obama Board Precedents

 

Speaker 1:                           Welcome to the Federalist Society's Practice Group Podcast. The following podcast hosted by the Federalist Society's Labor and Employment Law Practice Group was recorded on Thursday, January 18th, 2018, during a live tele forum conference call held exclusively for Federalist Society members.

Dean Reuter:                     Welcome to the Practice Group's tele forum conference call as today we discuss the five major updates at the National Labor Relations Board. I'm Dean Reuter, Vice President, general counsel, and Director of Practice Groups here at the Federalist Society. Please note that all expressions of opinion are those of the expert on today's call. Also, this call is being recorded for use as a podcast in the future and will likely be transcribed. We're very pleased to welcome an expert today who's going to give us some opening remarks. G- sort of giving us background on these five recent updates, uh, recent developments. Uh, he is a repeat guest on tele forum John Raudabaugh, who's a staff attorney at the National Right to Work Foundation. He's a former member of the National Labor Relations Board we'll be discussing today. He's also the Reed Larson professor of labor law at the Ave Maria School of Law in Naples, Florida where he's coming to us today. Um, with that, Professor Raudabaugh. The floor is your.

John Raudabaugh:           Well, thank you very much. I will, uh, thank you for this opportunity. We'll be reviewing five major, uh, case decisions issued i- during the week of December 11, 2017. The last week of former NLRB Chairman Miscimarra's chairmanship of the Board. Number one. Uh, UMPC Presbyterian Hospital issued on December 11, the Board in a three to two party line vote overruled an Obama Board decision. US Postal Service issued in 2016 returning to prior precedent of a 1987 decision an independent stay permitting administrative law judges to accept a respondent's proposed settlement terms over the objection of the general counsel and charging party provided the proposed terms are deemed reasonable. The 2016 Obama Board majority had rejected independent stay because it was formulated to evaluate non-Board settlement agreements between a respondent and a charging party to which the general counsel was not a party and objected to by the general counsel and charging party for failing to provide a full remedy.

                                                By returning to independent stay, administrative law judge's decisions shall again have the authority ... I'm sorry. Administrative law judges shall again have the authority to accept settlements over the general counsel's or party's objections. Considering whether the parties to the dispute and the employees affected have agreed to the settlement, whether the settlement was the product of a grievance arbitration mechanism, and whether the agreement was entered to, entered into voluntarily by the parties without fraud or coercion. As the Board noted, encouraging the party's mutually agreeable settlement without litigation is in the public interest and acknowledges the risks of litigation, significant delay in conclusion, and expenditure of Board resources.

                                                As an aside, it's interesting to note (laughs) that the same issues presented in US Postal Service by former General Counsel Griffin were raised by former General Counsel Collier, a Republican, by unanimously, but unanimously rejected by the five member Board an, an independent stay. The dissenters argued that by not finding single employer status, the employers offer to serve as a guarantor of any remedies was not an effective remedy and frustrates the general counsel's ability to litigate respondent status as a single employer.

                                                The next case issued on December 14, involving the Boeing Company, the Republican Board majority overruled Lutheran Heritage Village-Livonia of 2004, rejecting the Lutheran heritage standard for evaluating facially neutral employer work rules, policies, and employee handbook provisions. Under that standard, the Board found unlawful rules that do not explicitly prohib- prohibit protected activities, were not adopted in response to such activities, and were not applied to restrict such activities. If the rules as quote "reasonably construed" end of quote, in my favor it would reasonably tend to chill employees in the exercise of their Section 7 rights to form, join, or assist labor organizations, to bargain collectively, to engage in other concerted activities for mutual aid or protection, or to refrain from any such activities.

                                                Under the Board's new test for evaluating whether a facially neutral policy rule or handbook provision would when reasonably interpreted, potentially interfere with the exercise of Section 7 rights, will now consider, one, the nature and extent of the potential impact on National Labor Relations Act rights, and, two, the employers legit- legitimate justifications for the rule. Going forward, challenge rules will now be evaluated and categorized to provide greater clarity and certainty to employees, employers, and labor organizations. Category one will be rules designated as lawful because of the rule when quote "reasonably interpreted" does not prohibit or interfere with the exercise of statutory rights or any potential adverse impact is outweighed by justifications for the rule.

                                                Category one would include rules that when reasonably interpreted would have no tendency to interfere with Section 7 rights and rules that although they had a reasonable tendency to interfere with such rights, the Board has determined that the risk of such interference is outweighed by the employer's justifications. Category two will include rules warranting individualized scrutiny in s- each case. And category three will be rules designated as unlawful because they prohibit or limit protected conduct and such adverse impact is not outweighed by justifications associated with the rule. Finally, under the new approach, even if a rule is deemed lawful, the Board will examine whether the rule is applied to discipline employees who engaged in protected activity, in which case the discipline may be found to violate the act.

                                                In dissent, member Pierce notes that the Lutheran Heritage standard now rejected had been upheld by every court reviewing the matter. The DC Circuit, 1st, 2nd, 5th, and 11th. And an agreement with m- with member McFerran criticized the Board majority for not notifying the pub- public and soliciting views regarding a reversal of precedent. To which the majority and th- this was a common dissent, uh, during that week of not, uh, giving public notice and inviting public view. And, uh, in many of the cases, the majority responded essentially, "Well, you didn't do that either in some of the major decisions during the Obama era."

                                                Well, our next case is very, very notable. Hy-Brand Industrial Contractors, Ltd. This involves the Board's controversial 2015 decision and Browning-Ferris Industries adjusting, uh, uh, addressing joint employer liability and it was overruled in this Hy-Brand decision on December 14. In their majority opinion, they reasoned that first the Browning-Ferris test exceeded the Board's statutory authority by leveraging theories of economic realities and statutory purpose far beyond common law limits of direct and immediate control over another employer's employees essential terms and conditions of employment. Also, number two, the Browning-Ferris majority rationale relied in part on the notion that the modern economy presents conditions radically different from early years when labor negotiations were unaffected by the direct employer's commercial dealings. Which in the majority opinion in the current Hy-Brand case they rejected given the existence of third party business relationships having existed for centuries.

                                                The third reason. Courts afford the Board deference merely as to drawing factual distinctions when applying the common law agency standard, but not as a grant of authority to modify the agency standard itself. According to the Hy-Brand majority, the evidence of indirect control or contractually reserved authority is prohibitive only to the extent that it supplements evidence of direct control. The fourth rationale. Browning-Ferris replaced a longstanding test providing certainty and predictability with a vague and ill defined standard imposing bargaining obligations on multiple entities based on never exercised and direct control over which a Board later decides is an essential (laughs) element, uh, in the employment term threatening to cause substantial instability in bargaining relationships, impose substantial burdens, expense, and liability for innumerable parties. And a fifth reason, the Browning-Ferris's majority's goal of correcting a perceived inequality of bargaining leverage resulting from complex bargaining and business relationships involving entities not participating in collective bargaining could only be fixed by a clear congressional command.

                                                As they said dragging third parties into collective bargaining wherever there is some interdependence is much more likely to thwart labor peace than advance it. As the Supreme Court has made clear, the Board is not vested with general authority to shape national economic policy by balancing competing interests of different business enterprises. Browning-Ferris is viewed by the majority as fostering substantial bargaining instability by requiring the non-consensual presence of too many entities with diverse and conflicting interests on the so-called employer side of the table. The Hy-Brand majority returns case law to prior precedent requiring proof that putative joint employer entities have exercised joint control over essential employment terms rather than merely quote "reserving the right to do so and control must be direct and immediate, not indirect and will not result from control that is merely limited and routine."

                                                The dissent notes that quote "the predictability the majority achieves here is a one sided assurance to employers by retaining a nominal distance from the supervision of workers they can exert control and still avoid statutory bargaining obligations." Well, on the day following the Hy-Brand decision, the NLO, the NLRB petitioned the DC Circuit Court of Appeals to remand the pending BFI case, which had been argued before the court in March. On December 22, the circuit court granted the motion and remanded the case. The union filed a motion for reconsideration on January 4, 2018, arguing the Hy-Brand decision was defective. Relatedly, on November 7, 2017, the House of Representatives passed H.R.3442, Save Local Business Act, amending the National Labor Relations Act Section 2.2 and the Fair Labor Standards Act Section 3d to provide a clear definition of joint employment.

                                                To read, "A person may be considered a joint employer in relation to an employee only if such person directly, actually, and immediately, and not in a limited and routine manner exercises significant c- control over essentials, terms, and conditions of employment such as hiring employees, discharging employees, determining individual employee rates of pay and benefits, day to day supervision of employees, assigning individual work schedules, positions, and tasks, or administering employee discipline." I think notably as well this decision, uh, will result in fewer joint employer findings and, uh, I think the impact of the previous Board, uh, majority decision under the Obama administration in Miller and Andersen that will be reduced where they were arguing and found that joint employed, uh, employee units combined was solely employed employs, uh, user employer, uh, could be found without the consent of the user employer. So I think this, uh, protects employees significantly.

                                                The next case, one that has been wished for I'm sure by some parties for a long time was PCC Structural, Inc. Uh, this ended the six year run of Specialty Healthcare and re- Rehabilitation Center of Mobile where they found micro units and this was brought to an end, uh, by the, uh, new Board majority. They reinstated the traditional community of interest standard for determining appropriate bargaining units in representation cases. You may recall Specialty Healthcare permitted a union petition among a group of employees sharing a community of interest under traditional standards considering whether the employees are organized into a separate department, have distinct skills and training, have distinct job functions, and perform distinct work, are functionally integrated with other employees, have frequent contact with other employees, interchange with other employees, have distinct terms and conditions of employment, and are separately supervised.

                                                But where the employer contended that the unit must include additional employees excluded from the union's petition for a unit, Specialty Healthcare had required the employer to prove that the excluded employees that is wishing were included share an overwhelming community of interest with the petition floor unit such that there is no legitimate basis upon which to exclude certain employees from the requested unit. This burden was discarded in PCC Structural by the new Board majority. The employer argued that the Board had effectively abdicated its duty to determine an appropriate unit on a case by case basis as required by Section 9b of the statute. That Specialty Healthcare gave controlling weight to the extent of union organizing and unit determinations contrary to the Act Section 8 ... Uh, I'm sorry, Section 9c5. That the result of Specialty Healthcare is a proliferation of fractured bargaining units ignoring the shared interests of both the petition for and excluded employees, and that it failed to adequately consider the Section 7 rights of excluded employees.

                                                The Board majority also reinstated Park Manor Care Center, the 1991 decision, which was standard for determining appropriate bargaining units in non-acute care healthcare facilities. In response, the dissent noted that eight circuits, the DC, 2nd, 3rd, 4th, 5th, 6th, 7th, and 8th, had upheld Specialty Healthcare and that in the majority's view quote "the statutory right of employees to seek union representation as self-defined group is contingent on the p- imputed desires of employees outside the unit who have expect- who have expressed no view on representation at all with the employer serving as their self-appointed proxy." The majority responded stating that the required assessment of whether the sought after employees' interests are sufficiently distinct from those of employees excluded from the pet- petition for a group, provide some assurance that extensive organizing will not be determinative as is prohibited by 9c5. It ensures that bargaining units will not be arbitrary, irrational, or fractured. That is composed of a gerrymandered grouping of employees whose interests are insufficiently distinct from those of other employees to constitute that grouping the separate appropriate unit. And it ensures that Section 7 rights of excluded employees whose share is, is substantial but less than overwhelming community of interest with the sought after group are taken into consideration.

                                                On December 14, one day prior to the issuance of PCC Structural, the Board published in the Federal Register a request for information inviting public input as to whether the Board's 2014 election rule, frequently referred to as the quickie election rule, should be modified or rescinded. And responses are due no later than February 12 of this year. One week following the Board's PCC Structural decision, the General Counsel's Division of Operations Management issued memorandum OM18-O5, regional directors now have discretion to entertain requests to revisit a un- a unit determination and approve a request to withdraw from an election agreement considering the extraordinary circumstances brought on by the Board's modification of extant law. Of related importance, and of December 20, 2017, unpublished decision, ADT Security Services Chairman Kaplan and member Emmanuel each noted their interest in revisiting the Board's blocking charge policy to generally protect against dismissing an employee's de-certification petition uncontested and unproven unfair labor practice allegations.

                                                Our next case Raytheon Network Centric Systems. When a change is not an unlawful unilateral change was restored by the b- Board majority in Raytheon decided December 15, overruling the DuPont case of 2016, which is currently under review before the DC Circuit. Following expiration of the collective bargaining agreement, the employer in that case unilaterally modified employee medical benefits and related costs consistent with past practice. The DuPont majority had held that taking the same actions as done for years and over purs- and/or pursuant to a management rights clause nonetheless constituted a change requiring advance notice to the union an opportunity to bargain if the now expired collective bargaining agreement permitted past, such past actions. DuPont had also required notice and bargaining in any case in the absence of a current collective agreement where the employer's actions involve discretion.

                                                Well, the Raytheon majority rejected DuPont as destable- destabilizing bargaining relationships and ignoring the dynamic status quo. A regular and consistent past pattern of change under NLRB v. Katz decided by the Supreme Court in 1962. Raytheon holds that regardless of the circumstances under which a past practice developed, that is whether or not the past practice developed under a collective bargaining agreement containing a management rights clause authorizing unilateral employer action. An employer's past practice constitutes a term and condition of employment that permits the employer to take actions unilaterally that do not materially vary in kind or degree from what has been customary in the past. The majority also emphasized that its decision has no effect on an employer's duty to bargain upon request over any and all mandatory bargaining subjects unless an exception to that duty applies. Member Kaplan, now chairman, noted that the Raytheon plan contained a reservation of rights clause independent of management rights provision allowing the employer to modify unit employee's costs and/or benefits, which would be, which would survive until the parties negotiated a new contract.

                                                The dissent contends that the employer's discretionary unilateral changes to its healthcare benefit plans do not constitute a past practice under Katz as they were not based on any cog- cognizable fix criteria as to timing and criteria establishing a past practice. That, that it sent notes that the Supreme Court stated in Katz when changes are made with a large measure of discretion, there is no way for a union to know whether or not there has been a substantial departure from past practice.

                                                Now I'd like to just, uh, mention, uh, the importance of the new General Counsel Rahm's memorandum 18-02 of December 1, 2017, where he issues, uh, this memorandum identifying 15 topics subject to possible alternative analysis inviting present- presentation to the Board, uh, and submission to advice. One, concerted activity for mutual aid and protection involving only one employee. Two, employer handbook rules previously found unlawful. Three, a review of the previous, uh, Board majority's purple communications providing employees a presumptive right to use employer email systems to engage in Section 7 activity. Four, finding work stoppages protected in a variety of contexts. Notably, uh, in retail sales, um, and that quiet flex manufacturing company case issued in 2005. Next, off duty employee access to property. Number six, conflicts with other statutory requirements. For example, racist comments and social media posts.

                                                Seventh item, a review of Weingarten expanding range of permissible conduct by union representatives, in Weingarten interviews, and in the drug testing context. Eight, disparate treatment of represented employees during contract negotiations. Nine, the joint employer issue as it applies in other fact patterns. 10, successorship based on the hiring of predecessor employees required by a local statute. Number 11, unilateral changes consistent with past practice. 12, a review of the 2016 total security case establishing a duty to bargain before imposing discretionary discipline where the parties have not executed an initial collective bargaining agreement. Number 13, duty to provide witness statements to union. 14, dues checkoff obligations surviving exploration of the collective bargaining agreement. And number 15, remedies involving search for work and interim employment expenses recoverable, regardless of whether the discriminant he had interim earnings under King Soopers.

                                                The general counsel's memo also rescinded seven prior memorandums issued by the, the previous general counsels and advice memoranda. Notably 1701, finding statutory rights of university, faculty, and graduate students and the unfair labor practice context overruling 1603, seeking Board con- reconsideration of the Levitt's framework. Employer withdrawal of recognition based on objective evidence of loss of majority support. Taking back and overruling 1504, uh, requiring reporting of the general counsel concern- concerning employer rules. 1302, inclusion upfront pay and Board settlements. 1201, a guideline on Collier deferral and arbitration. 1104, regarding default language. And operations management 1702, providing a model brief regarding intermittent and partial strikes.

                                                So, uh, we have, uh, a significant amount of activity that occurred in the last calendar week of the former, uh, Republican majority at the NLRB and the outgoing General, uh, Chairman, uh, Phil Miscimarra. So with that, I will turn it back and thank you very much.

Dean Reuter:                     Well, thank you. Let's go right to the floor for questions. In a moment we'll all hear an announcement that will say the floor vote is on. After you hear that announcement if you have a question, push the star button and then the pound button on your telephone.

                                                So once again if you have a question for Professor Raudabaugh, push the star button and then the pound button on your telephone. I don't won't see any questions yet so our, our lines are wide open. Push the star button, then the pound button. While we're waiting to see, um, uh, uh, who else might weigh in here, uh, Professor, let me ask you, um, whether or not it's common or how common it is, uh, for the Board to solicit or allow public notice in decisions like these. There was a call you mentioned, I guess in one of the dissents that th- some of these cases deserved going through public notice. And [inaudible 00:27:39] a bit of an odd animal in the sense that it's not passing regulations. It's sort of regulating through decision making. So I wonder if you could, could address that.

John Raudabaugh:           Well, that, uh, you're exactly correct. And, uh, I think historically in the past, uh, I mean literally in the past, (laughs) uh, there was more of a custom and practice of inviting, uh, uh, and notifying the public of significant decisions pending and inviting briefing. Uh, as you noted, rulemaking has been rarely conducted. But in public, uh, in, in, in, in pending Board, uh, cases on major possible reversals of significant precedent there would be an invitation. And in fact, uh, going back even to my term in the early '90s, uh, on significant situations like that, we would even schedule oral argument before the Board. That, uh, practice has, has, uh, not been used in many years. And, uh, I think the comments of the former Board chairman, um, and, uh, his Democratic colleague currently on the Board in, uh, objecting rather loudly in these, uh, last few, uh, five member decisions, uh, contradicted themselves because there were, there were significant decisions during the Obama period where they had not notified the public or invited briefing.

Dean Reuter:                     Uh, yeah, that's interesting to me. Once again, if you're in the audience if you have a question push the star button then the pound button on your telephone. You, you mentioned that these, these decisions, these latest five decisions that we're talking about today, um, overruled some earlier decisions and I'm just curious, you don't have to go case by case. But, uh, just curious if, if those decisions that were being overruled, um, if in the process of, of those decisions being made there was the public notice, public comment. One of them you mentioned I think was, uh, from 2016, so it sounds like, uh, if this was a distant practice that didn't happen. But one of them you mentioned was 2004. Um, so were the cases they were overruling, uh, subject to the, the public notice and public comment, uh-

John Raudabaugh:           No, not ... Uh, I don't believe so. Uh, the ... There was an interesting, uh, publication, uh, by the US Chamber last year where they analyzed, I think it was by Ogletree Deakins, where they did a significant study on looking at the significant overruling of years and years of precedent, uh, by the Obama Board. I think we're at the stage where, uh, it, it, I think it refl- well, I personally think it reflects, uh, badly to overturn significant precedent, uh, without inviting public notice and, and informing the public indirectly that, you know, this issue is up for reconsideration. But, again, uh, the NLRB is an independent agency and, uh, those things in some way ...

Dean Reuter:                     Were these decisions a, a surprise to anyone or were they anticipated? And if they, if they were anticipated, I m- could people just write letters to the editor or, uh, otherwise informally comment on the anticipated decisions? Or is that not quite good enough?

John Raudabaugh:           Well, I, I think that, uh, these decisions were highly anticipated simply because they reflect, uh, decisions by the Obama Board that really upset conditions. Years and years of precedent and, uh, uh, challenged and I think infringed on, most importantly in my view, employee rights, uh, to make informed decisions and be free to choose whether or not they wish to be represented by a third party. Uh, and I th- I think that, uh, I think, I think what currently happened was simply that the outgoing five member Board Chairman Mr. Miscimarra once he left, it reduced the Board down to a two-two split. And, uh, until the current nominee is confirmed by the Senate, uh, you know, there's no way to, uh, really overturn significant precedent because the custom at the Board is to require a full five member Board to do so. So I think these were very anticipated. Why? Because what the Republican Board did during that week of December 11 was overturn decisions by the Obama Board that had overturned years of precedent. So-

Dean Reuter:                     Right.

John Raudabaugh:           I, these were highly, highly debated, highly anticipated. I, I don't think people were surprised.

Dean Reuter:                     Interesting. Um, that sort of in my mind at least undermines the idea that you have to have public comment if, if these were highly anticipated, people could have found their way I suppose. But we do have a question, uh, from the, uh, from the audience now. So, uh, let's take our first question of the day. And, by the way, if you'd like to join the queue push the star button and then the pound button on your telephone. Go right ahead caller.

Jerry Hunter:                      Yes, um, um, this is, uh, Jerry Hunter from St. Louis. Uh, m- former member and Professor Raudabaugh, I think you did an excellent job on the summary. My question to you is, do you think, uh, the case pending in the DC Circuit even though the union is opposing the general counsel request, that the case be remanded to the Board, do you have any concerns that the DC Circuit will deny the, the, uh, NLRB general counsel's request to remand the case? And in situations where there are other cases, um, pending in circuits where the, the Board has reversed, um, many cases, do you think the NLRB general counsel will also move, uh, file motions with both circuits asking that those cases be remanded to the Board for, for further consideration?

John Raudabaugh:           Well, first of all, Jerry, it's wonderful to hear your voice. (laughs) Glad, glad we're talking.

Jerry Hunter:                      Yeah.

John Raudabaugh:           Uh, miss those days.

Jerry Hunter:                      Yeah.

John Raudabaugh:           Um, I think that, uh, uh, I, I, I think that first of all the, uh, going to your last question, I think the general counsel will similarly, uh, notify any other, uh, circuit courts where similar cases involving that issue are pending. Uh, that will take the same approach. Uh, I also, I, I, I'm not good at predicting. Uh, I, I'm not certain why the DC Circuit wouldn't, uh, agree to ignore the most recent filing by the union and, uh, stick with its prior decision to remand the case given the new decision. So I would, I would like to think that the challenge to that question is over.

Jerry Hunter:                      Well I hope, and I hope, and I hope you're right, and, uh, you are correct that on the ... Obviously, uh, I'm, I'm sure all the listeners will know you're correct that the many decisions issued by the, uh, the Pierce Board in the previous term and under Obama, they were not all ... The, the, those Boards did not give notice and permit briefing in, in all the cases. In some cases they did permit briefing, but they did not do that in, in any number of cases where they overrule longstanding precedent.

John Raudabaugh:           Right.

Dean Reuter:                     Let me make a final call for questions. We've got some time left. If you have a question push the star button then the pound button on your telephone. Now's the time.

                                                Okay. I think we've had our final question, Professor Raudabaugh. Let me give you a, a minute or two to wrap up if you have a final thought you want to express.

John Raudabaugh:           Well, as I, uh, have mentioned to my students in labor law class, uh, I love the inscription on the ar- National Archives building, "What is past is prologue." (laughing) Uh, the Board unfortunately, uh, in my opinion has, uh, developed over time what has been derogatorily referred to as flip flopping. Uh, one could have some humor in suggesting is it the National Labor Resuscitation Board or is it the National Labor Repression Board or are we going to return to what is fair and balanced neutral, the National Labor Relations Board? I think, uh, we've had now decades of the flip flopping and, uh, perhaps someday Congress will reconsider, uh, how we should possibly, um, handle, uh, labor related issues in, uh, judging now from 80 ... What? 80, 80, 83 years of, uh, experience under a 1935 act. I think it's time to bring more, uh, stability to Board decisions and not have it so correlated with, uh, the party pol- the party and the majority of the, of the five member Board and/or the general counsel's office. But, again, I want to s- thank you, Dean, for this opportunity and wish everyone well.

Dean Reuter:                     Well, thank you, Professor Raudabaugh. On, on, on my own behalf but also on behalf of the Federalist Society and on behalf of our callers. I want to thank our callers as well for dialing in and, uh, for participating. A reminder to check the Federalist Society's website, monitor your emails for notices about upcoming scheduled tele forum conference calls. I know we've got at least one or two tomorrow. Uh, so do check in. Uh, but until that next call, we are adjourned. Thank you very much everyone.

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