NLRB Update:  NLRB’s Busy Summer Results in Significant Changes for Employers

Labor & Employment

The National Labor Relations Board’s (NLRB) Republican majority had a busy summer with a four-month run of precedent-setting decisions that have reshaped the labor law landscape in ways favoring employers, after the previous Obama Board moved the needle towards workers and unions. The following is a summary of those decisions on topics such as employers’ property rights and their ability to restrict access by non-employees engaging in organizing or protest activities, worker misclassification as independent contractors, disputes over bargaining unit scope, and unilateral contract changes. More changes from the NLRB are expected in the months to come as the Republican majority looks further to reshape federal labor law.  

→ Employers’ Property Rights and Restricting Access by Non-Employees 

Employers Can Kick Out Union Organizers in Cafeterias Open to the Public – UPMC, 368 NLRB No. 2 (June 14, 2019).

Public spaces in hospitals, restaurants, casinos and hotels are often targeted by union representatives to solicit membership or organize on employers’ property because they have spaces that are open to the public. On June 14, 2019, the NLRB issued its first of three rulings addressing an employer’s ability to restrict access to its property by non-employees when it held that employers can ban non-employee union representatives from organizing in areas of their property open to the public. In that case, the Board held that a Pennsylvania hospital did not violate the National Labor Relations Act (NLRA) when it kicked non-employee union organizers out of its public cafeteria, where they were grabbing lunch and talking union organizational campaign strategy with a group of at least six hospital employees, finding that the hospital had a practice of removing non-employees who engaged in promotional activities, including solicitation and distribution, in or near the cafeteria. According to the decision, union flyers and pins were displayed on the table where they were sitting, and an off-duty employee was also handing out some of the union’s flyers to others in the cafeteria. 

This decision overruled a 38-year-old labor law doctrine known as the “public space exception,” which blocked employers from kicking non-employee union organizers out of on-site public cafeterias or restaurants, even those engaging in promotional or organizational activities, as long as the organizers were not being “disruptive.” The Board majority said that this public space exception infringes on employers’ property rights and concluded that as long as an employer does not treat union representatives any differently than it treats other non-employees, businesses should be able to decide for themselves what activities, like solicitation or handing out flyers, they will allow on their property by people they do not employ. The Board majority said, “Accordingly, we find that an employer does not have a duty to allow the use of its facility by nonemployees for promotional or organizational activity. The fact that a cafeteria located on the employer’s private property is open to the public does not mean that an employer must allow any nonemployee access for any purpose.” As a result of this decision, an employer is permitted to prohibit non-employee union organizers access to public spaces at its facility for the purpose of soliciting employees or distributing literature so long as it applies the practice in a nondiscriminatory manner by prohibiting other nonemployees from engaging in “similar activity in similar relevant circumstances,” even when the organizers’ activities are not actually disruptive. 

Employers Can Kick Out Off-Duty Workers for On-Site Contractors – Bexar County Performing Arts Center Foundation, 3668 NLRB 46 (Aug. 23, 2019).

Two months later, on August 23, the NLRB further limited the right of non-employees to access private property to engage in union activities. This case, however, involved a different category of non-employees: off-duty employees for an on-site contractor who were not employees of the property owner or non-employee union organizers, but nor were they utter strangers to the owner’s property. The Board held that employers can bar off-duty contractor workers from leafletting and protesting on their private property, overturning two 2011 Obama-era decisions that said employers can bar off-duty workers for on-site contractors, who worked “regularly,” but not exclusively, on the employers’ property, from handing out leaflets on their property only when letting them stay would “significantly interfere with” the employer’s use of the property, or when excluding the workers is justified by another “legitimate business reason.”

Specifically, the Board held that the Bexar County Performing Arts Center Foundation did not violate the NLRA when it blocked musicians of the San Antonio Symphony from leafleting outside the entrance of its concert hall during a performance by a ballet company, protesting the ballet company’s use of recorded music inside the concert hall and urging the public to demand live music, and made them move their protest elsewhere. The musicians were not the Foundation’s employees but worked for a contractor and used the Foundation’s concert hall for performances and rehearsals 22 weeks per year. The Board majority said that the 2011 decisions unfairly restrict employers’ rights to control their property, including their “right to exclude,” and concluded that off-duty contractor workers should only be allowed to access a given property to protest when they “regularly and exclusively” work on the property and do not have a “reasonable nontrespassory alternative” for communicating their message with their target audience, such as leafleting on nearby public property or getting their message out through social media or the press. This decision is likely to have a significant impact on where off-duty workers, who work on property owned by someone other than their employer, can protest and leaflet.   

Employers Can Oust Non-Employee Union Organizers from Parking Lot – Kroger Mid-Atlantic, 368 NLRB No. 64 (Sept. 6, 2019).

On September 6, the NLRB held that Kroger supermarket did not violate the NLRA when management had police officers expel from a shared shopping center parking lot non-employee union representatives, one of whom was collecting customers’ signatures for a petition protesting the transfer of union employees to another store location. 

In this case, an NLRB judge earlier ruled that since the grocery store managers had previously allowed other parties, including charity organizations, to solicit donations and distribute information outside the store’s entrance, Kroger enforced its unofficial policy in a way that illegally discriminated against the union. In doing so, the NLRB judge relied on a 1999 decision called Sandusky Mall Co., which required employers to grant access to non-employee union representatives if the employer also allowed “substantial civic, charitable, and promotional activities” by other non-employees. That is, if an employer lets groups like the Salvation Army ask for donations or the Girl Scouts to sell cookies by its entrance, it must also let unions encourage a boycott there. 

However, the Board majority disagreed and overruled Sandusky Mall, stating that the decision and various follow-on cases “improperly stretched the concept of discrimination well beyond its accepted meaning in a manner that finds no support in Supreme Court precedent or the policies of the Act.” Instead, the Board said that it was returning to a pre-Sandusky standard that discrimination against a union means unequal treatment by employers of non-employee activities that are “similar in nature,” and that, for example, employers can bar non-employees from accessing its property for activities related to union organizing if it also bans “comparable organizational activities by groups other than unions,” such as membership drives by fraternal societies and religious organizations. Under that legal framework, the Board determined that an employer can also bar from its property any non-employees who want to engage in protests, picketing or boycotts against the employer on the employer’s property, while still allowing a wide range of non-protest activities by non-employees on its premises, such as soliciting donations for charitable organizations or civic groups. 

→ Withdrawing Recognition from Unions Gets Easier – Johnson Controls, Inc., 368 NLRB No. 20 (July 3, 2019).

In a July 3 decision involving Johnson Control Inc., the NLRB updated its legal test for the so-called “anticipatory withdrawal” doctrine, making it easier for employers to stop recognizing a union that an employer believes has lost workers’ support. Under that doctrine, employers can tell their workers’ union in the months before a collective bargaining agreement expires that it will withdraw recognition once the contract expires if, without improper influence or assistance from management, the employer has evidence from workers that at least half of the bargaining unit no longer wishes to be represented by their union. But if the union can respond to the employer’s anticipatory withdrawal with evidence showing that it had reacquired majority support in the interim between anticipatory and actual withdrawal, the employer violates the NLRA by withdrawing recognition when the contract expired, regardless of whether the employer knew that the union had reacquired majority status. 

In this case, weeks before the expiration of the CBA, Johnson Controls announced that it would withdraw recognition of a union and cancelled planned negotiating sessions after workers gave it a petition showing slightly more than half of the workplace wanted the union out. Thereafter, six of the workers who petitioned to remove the union later recanted and signed authorizations cards collected by the union. Prior to this decision, the Board analyzed the legality of the employer’s withdrawal using the so-called “last in time rule,” which takes workers’ most recent statement as their intent. But in its July 3 decision, the Board majority said that the “last in time” rule “has proven unworkable” and fails to protect employees’ free choice, instead concluding that unions must petition for new union elections if hit with an anticipatory withdrawal. The Board majority said, “Today, we adopt a new framework that is fairer, promotes greater labor relations stability, and better protects Section 7 rights by creating a new opportunity to determine employees’ wishes concerning representation through the preferred means of a secret ballot, Board-conducted election.”   

Specifically, the new process adopted by the Board allows an employer to announce its anticipatory withdrawal and also to suspend bargaining for a successor contract if it gets evidence up to 90 days before a CBA expires that the union no longer has a majority support from the bargaining unit. Then, the union has 45 days from the date of the anticipatory withdrawal to reestablish majority status by filing a petition with the Board for a new union election, during which election workers can cast their ballots privately, “free from the risk of coercion by any party.” While this decision is not expected to come into play often, it does reflect a broader pattern of the Republican Board looking to make it easier to decertify or withdraw recognition from unions.  

→ Employers Can Impose/Update Class and Collective Action Waivers After Being Sued – Cordua Restaurants Inc., 368 NLRB No. 43 (Aug. 14, 2019).

On August 14, the NLRB issued its first decision interpreting the U.S. Supreme Court’s 2018 Epic Systems v. Lewis decision, which blessed employers’ use of mandatory arbitration agreements with class and collective action waivers, requiring that employment disputes be resolved through individualized arbitration. This case presented two issues of first impression regarding mandatory arbitration agreements following Epic Systems: (1) whether the NLRA prohibits employers from promulgating or updating such agreements in response to worker lawsuits and employees opting in to a collective action, and (2) whether the NLRA prohibits employers from warning employees that their failure to sign the agreements will result in them being fired. In response to both issues, the Board found that the Act contains no such proscriptions.     

This case centers on hospitality group Cordua Restaurants’ response to a hybrid class and collective action filed by a group of seven employees, which suit was later joined by various other workers, alleging the company violated federal and state wage and hour laws. Prior to that suit, Cordua had an arbitration agreement that barred workers from filing or partaking in a class or collective action against it. Nine months after the suit was filed, Cordua told workers they had to sign a new arbitration agreement that added a provision barring employees from opting in to a collective action. 

The Board held that Cordua’s move to implement the updated arbitration agreement was legal in light of Epic Systems, even though it came in response to employees’ activity of opting in to an ongoing FLSA collective action that is arguably protected under Section 7 of the NLRA. The Board majority said that the effect of the revised agreement requiring employees not to opt in to a collective action “was simply to require employees to resolve their employment-related claims through individual arbitration rather than through collective actions. As we have explained, this requirement does not restrict the exercise of Section 7 rights under Epic Systems.” Also, since the Board found that the updated arbitration agreement was legally implemented, the Board also held that Cordua did not violate the NLRA when its assistant manager made statements to workers, who expressed concerns about signing the revised agreement, that they would be removed from the work schedule if they did not sign it. Because Epic Systems permits an employer to condition employment on employees entering into an arbitration agreement that contains a class or collective action waiver, the Board found that such statements did not unlawfully threaten employees with reprisals, but rather, “his statements amounted to an explanation of the lawful consequences of failing to sign the agreement and an expression of the view that it would be preferable not to be removed from the schedule.” Thus, while employers may still violate the NLRA if, for example, they terminate employees for talking about compensation with co-workers and filing a wage and hour suit, the Board held that employers do not violate the NLRA by requiring employees to sign an arbitration agreement containing a class or collective action waiver as a condition of employment, even one implemented after and in response to a lawsuit, and also by warning employees that they could be fired if they do not. 

→ Worker Misclassification Is Not a Per Se Violation of the NLRA – Velox Express Inc., 368 NLRB No. 61 (2019).

On August 29, the NLRB held that medical device transportation/logistics company Velox Express did not violate the NLRA’s ban on “interfering with, coercing, or restraining” employees who exercise their organizing rights by misclassifying certain of its drivers as independent contractors instead of employees. Unlike employees, independent contractors do not have rights or protection under the NLRA to form unions or engage in other concerted activities. 

While the Board’s three-member Republican majority affirmed an agency judge’s ruling that the company misclassified employees as independent contractors, the Board disagreed with the judge’s finding that the company violated the NLRA by doing so. Instead, the Board found that misclassification itself is not a violation because it does not “inherently threaten” workers with firing or other discipline or reprisal if they organize or act together, nor does it promise benefits to the worker for refraining from engaging in such activity. The legal theory advanced by unions was premised on the idea that because independent contractors, unlike employees, cannot unionize, the very act of misclassification, regardless of the employer’s intent, effectively tells employees that they have no rights under the NLRA when, in fact, they do, and any attempt to exercise such rights would be futile. But more often, misclassification is a simple error, and the Board ruling reflects its decision not to penalize employers who make honest, albeit mistaken, classification decisions on a complicated legal question posed under various federal, state and local workplace laws, many of which use very different legal standards. The Board majority said, “In and of itself, an employer’s communication of its position that its workers are independent contractors simply does not carry either implication” that the workers will be subject to termination or other adverse action for exercising their NLRA rights or that it would be futile for workers to engage in union or other protected activities. The Board continued, “Employees may well disagree with their employer, take the position that they are employees, and engage in union or other protected concerted activities.  If the employer responds with threats, promise, interrogations, and so forth, then it will have violated Section 8(a)(1) [of the NLRA], but not before.” 

The Board’s decision likely means that employers will not face NLRB-initiated litigation solely for misclassifying employees as contractors absent some separate evidence of coercion, threat, retaliation, or promise of benefits by the employer in response to union organizing or other concerted activities or some evidence of (re)classifying workers as independent contractors in order to avoid or defuse union activities. The Board’s decision also may effectively remove the NLRB from future legal battles purely about misclassification, one of the frontline legal issues in workplace law. 

→ Reaffirming a Tighter Test on “Micro Units” – Boeing, 368 NLRB No. 67 (Sept. 9, 2019).

On September 9, the NLRB issued a ruling, reversing an agency judge’s decision to let a subset of about 180 flight-readiness technicians and technician inspectors within Boeing’s South Carolina 787 production line form a union separately from more than 2,000 of their colleagues, whom Boeing said should have been included in the vote. In doing so, the Board clarified its test for assessing the appropriateness for unionizing proposed “micro units” of employees within a larger workforce. This decision removed a labor foothold in the largely non-union South, where the International Association of Mechinists has long sought to organize workers. The union previously lost an election to represent the full group of about 2,800 production and maintenance workers by a 2,087-731 vote before pivoting to represent just the flight-readiness technicians and inspectors, who voted 104-65 to join IAM.

Boeing argued that, in approving and ordering an election for the smaller unit, the Atlanta regional office misapplied a December 2017 decision known as PCC Structurals, which overturned an Obama-era decision known as Specialty Healthcare and which made it easier for employers to beat unions’ efforts to organize micro units. The Board in PCC Structurals held that a subset of workers can form their own union only when they have a “community of interest” and their interests and bargaining concerns are “sufficiently distinct” from those of co-workers excluded from the proposed micro unit, thus shifting the burden off of employers to show an “overwhelming community of interest” in the larger group under Specialty Healthcare

In siding with Boeing, the Board reaffirmed the PCC Structurals standard and adopted a three-part test for analyzing disputes over bargaining unit scope under PCC Structurals going forward. The Board’s three-part test calls for agency officials to (1) examine the shared interests of the workers in the proposed micro unit and determine whether the proposed unit shares an internal community of interest; (2) comparatively analyze and weigh the shared interests of those within the proposed micro unit with the shared and distinct interests of those excluded from that unit; and (3) consider and apply any Board guidelines or decisions on appropriate units of workers specific to the employer’s industry, such as public utilities, defense contracting, and retail establishments. The Board found that the micro unit of technicians and inspectors was improperly recognized because: (1) workers in the two classifications belonged to separate departments with separate supervision and had distinct job functions with no interchange between the two positions and, therefore, did not share a community of interest with each other; and (2) even if they did, any shared interests of the proposed micro unit were not sufficiently distinct from the interests of the other workers excluded from the unit who worked alongside them on the same 787 assembly line to produce a single product and who would have the same interests in the context of collective bargaining as the petitioned-for micro unit.

→ New Test for Unilateral Contract Changes – M.V. Transportation, Inc., 368 NLRB No. 66 (Sept. 10, 2019).

On September 10, the NLRB issued a ruling that adopted the “contract coverage” standard to replace its previous “clear and unmistakable waiver” standard for determining when a collective bargaining agreement allows an employer to take unilateral action, making it easier for employers to show that their CBAs allow them to unilaterally change union workers’ job terms and conditions without first negotiating with their union.  

The NLRA requires employers to bargain with workers’ unions before making changes to certain “mandatory subjects,” such as wages, hours, and benefits, unless unions agree in their CBAs to waive their rights to bargain over those subjects. For some 70 years since the 1940s, when unions and employers disagreed over whether they agreed to allow unilateral changes on a subject, the Board used the “clear and unmistakable waiver” standard, which would permit employers to make unilateral changes only if the contract clearly and specifically showed the union waived its right to bargain over that particular issue. 

In this decision, the Board majority abandoned the “clear and unmistakable waiver” standard and adopted a new “contract coverage” standard, saying that Board officials should examine the plain language of the contract to determine whether the employer’s actions fall “within the compass or scope” of contract language giving the employer the right to act unilaterally without negotiating first. Notably, the Board gave the example of a contract that broadly grants an employer the management right to “implement new rules and policies and to revise existing ones.” Under the “contract coverage” standard, an employer with this broad language would not violate the NLRA by making unilateral changes to its various rules, including rules on attendance, safety, or discipline, even when those rules are not specifically listed in the contract. This move to the “contract coverage” standard is likely to boost employers’ ability to rely on their contract’s broader language granting management the right to take unilateral action, which was not always enough for the employer to prevail under the previous “clear and unmistakable waiver” standard, and allow them to more easily take the unilateral actions that they bargained for at the bargaining table, without as much fear that the NLRB will find their actions violate the Act. 

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