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NLRB Reverses Rulings on Joint Employer Standard and Workplace Policies


NLRB Reverses Rulings on Joint Employer Standard and Workplace Policies

December 19, 2017

In two separate decisions last week, the National Labor Relations Board (NLRB) reversed recent rulings regarding the joint employer standard and workplace policies.

In 2015 in Browning-Ferris Industries, 362 NLRB No. 186, the board held that indirect control over employees, or the ability to control employees (even if not exercised) could form the basis of joint liability. In a 3-2 decision, the board has returned to the pre-Browning-Ferris standard for determining joint employer status, which is a “direct and immediate” control standard. Accordingly, proof of indirect control, contractually reserved control that has never been exercised, or control that is limited and routine will not be sufficient to establish a joint employer relationship.

In July, lawmakers introduced the “Save Local Business Act,” which would set a narrower joint employer standard from that in Browning-Ferris Industries. The bill, which was largely in response to the 2015 Browning-Ferris Industries decision, would amend the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA) to provide that a joint employer relationship is only established where a business exercises “significant control” over essential working conditions. Even though Browning-Ferris Industries has now been overturned, the bill, which already passed in the House in November, may still be pushed forward in order to define more permanently the joint employer relationship and outline how it might apply under both statutes.

In another 3-2 decision, the board also overruled Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), which articulated the board’s previous standard governing whether facially neutral workplace rules, policies, and employee handbook provisions unlawfully interfered with rights protected under the NLRA. Under the prior standard, if a facially neutral workplace rule could be “reasonably construed” by an employee to prohibit the exercise of NLRA rights, it was invalid. The “reasonably construe” test resulted in the invalidation of many facially neutral handbook rules. In last week’s decision, the Board established a new test when evaluating a facially neutral policy, rule, or handbook provision that under reasonable interpretation could interfere with the exercise of NLRA rights. In such cases, the board will evaluate:

  1.  The nature and extent of the potential impact on NLRA rights; and,
  2. The legitimate justifications associated with the rule.

The board also announced its intention to delineate three categories of workplace rules to provide greater clarity and certainty to employers, employees, and unions.

  • Category 1 will include rules that the board designates as lawful to maintain, either because a rule, when reasonably interpreted, a) does not prohibit or interfere with the exercise of NLRA rights, or b) carries justifications that outweigh the potential adverse impact on protected rights. The board held that a work rule that prohibited employees from using camera-enabled devices to capture video in the workplace without a valid business need and an approved camera permit was a legal policy and an example of a Category 1 rule. The board further noted that the “harmonious interactions and relationships” rule and other rules that require employees to abide by basic standards of civility are also Category 1 rules, thus overruling previous decisions.
  • Category 2 will include rules that warrant individualized scrutiny. In each case, the board will consider whether the rule in question, when reasonably interpreted, would prohibit or limit NLRA-protected conduct, and whether any associated justifications outweigh any adverse impact on NLRA rights.
  • Category 3 will include rules that the board would designate as unlawful to maintain because they would prohibit or limit NLRA-protected conduct, without justifications sufficient to outweigh that adverse impact on NLRA rights. The board noted that an example of a Category 3 rule is a rule that would prohibit employees from discussing wages or benefits with each other.

In the wake of these NLRB rulings, employers are well-advised to evaluate the nature of their relationships with other businesses to determine if they are likely to be deemed joined employers, as well as to review their employee handbooks with counsel to determine whether to implement any revisions or changes.

Read the full content of the NLRB’s decisions and related press releases:

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