NLRB Expected to Flip Under President Trump: What This Means for Employers

By Robin Shea, Partner

Most employers were delighted when “lone dissenter” Philip Miscimarra was named Chairman of the National Labor Relations Board by President Trump. Chairman Miscimarra was frequently a voice of reason on Board decisions that often gave short shrift to the legitimate needs of employers.

Then, almost as quickly, employers were disappointed to hear Chairman Miscimarra announce that he would not be seeking reappointment to the Board when his term expires on December 16, 2017. (The Chairman said that he was leaving because he had three children going to college, which seems to mean that private practice will be more “tuition-friendly” than government work.)

There is no word on who will be nominated to take Chairman Miscimarra’s place, but based on the Board nominations the President has made so far, the outlook is encouraging for employers, their counsel, and for Human Resources professionals.

When President Trump took office, the five-member Board had only three members: Mark Gaston Pearce, a Democrat who was NLRB Chairman under President Obama, Lauren McFerran, also a Democrat, and now-Chairman Miscimarra, the lone Republican.

This summer, the President nominated two Republicans to fill the vacant slots on the Board: William Emanuel, a shareholder in the Los Angeles Office of the management-side law firm Littler Mendelsohn, and Marvin Kaplan, counsel to a Commissioner on the Occupational Safety and Health Review Commission.

Mr. Kaplan’s appointment was confirmed by the Senate in August, giving the NLRB an equal number of Democrats and Republicans. The Senate has yet to vote on Mr. Emanuel, but he is expected to be confirmed. If and when Mr. Emanuel is confirmed, the Board will have a Republican majority – at least, until Chairman Miscimarra leaves.

Meanwhile, Richard Griffin, current General Counsel for the NLRB, will be leaving in November 2017 when his term expires. According to news reports, President Trump’s nominee will be Peter Robb, a management-side labor attorney with the firm of Downs Rachlin Martin, PLLC, in Vermont. Before going into private practice, Mr. Robb was a staff attorney with the NLRB, and he also served as counsel to Robert P. Hunter, a Republican Board member who served during the Reagan Administration.

In short, although Chairman Miscimarra’s announced departure may be a “blip in the flip,” in the not-too-distant future, employers can look forward to a Board that will be predominantly Republican and more even-handed than the Board has been under Obama Administration. Here are some of the specific areas where employers can expect change.

More latitude for employee handbooks and employer policies

It is no secret that the NLRB has cracked down on employee handbook rules and employer policies in recent years, forcing employers to walk a tightrope to attempt to ensure that the policies would not be interpreted as interfering with employees’ Section 7 rights under the NLRA. Recent NLRB panels have found that employers may not maintain broad rules that require employees to treat other employees and management with respect, demonstrate loyalty, or maintain a positive work environment by communicating in a manner that is conducive to effective working relationships. Additionally, under current rules, employers are not allowed to maintain broad rules that prohibit offensive communications or arguments between co-workers.

These prohibitions stem from the Obama Board’s application of a “reasonably construe test.” Under that test, any handbook rule or employer policy that can reasonably be construed to limit employees’ Section 7 right to engage in protected concerted activity for the purpose of collective bargaining or other mutual aid or protection, is unlawful interference that violates Section 8(a)(1) of the NLRA. This is so even if the rule or policy does not explicitly restrict activities protected by Section 7, was not adopted in response to Section 7 activity, and had never been applied to restrict Section 7 activity. The test has significantly limited employers’ ability to draft handbook rules and other policies to manage their working environments.

Based on a dissent by Chairman Miscimarra in the case of William Beamont Hospital, we would expect a Republican-majority Board to evaluate and balance “(i) the potential adverse impact of the rule on NLRA-protected activity, and (ii) the legitimate justifications an employer may have for maintaining the rule.” (Emphasis in original.)

Presumably, with such a test in place, employers could once again strive to maintain a harmonious work environment through handbook rules and other policies that are conducive to employee work environments and productivity.

Direct liability of employers with only remote or potential control

In recent years, the Board under the Obama Administration took an expansive approach to finding joint employment. Under the new Browning-Ferris standard, “employer” status may be found to exist for an entity that may indirectly – or even potentially – control employees, without any evidence of actual or direct control. Given the countless types of business structures and relationships, many employers are rightly concerned that the Browning-Ferris standard will subject them to “employer” obligations and potential liability with respect to employees with whom they have no contact, and over whom they have no control.

Chairman Miscimarra dissented in Browning-Ferris. With a Republican Board, the Browning-Ferris joint employer standard may be overturned.

The right to change policies” means the right to change policies

A third battle in the NLRB arena involves the effect of management-rights provisions in collective bargaining agreements. For example, in Graymont PA, a management rights provision gave the employer the right to unilaterally “adopt and enforce rules and regulations and policies and procedures.” However, when the employer changed some work rules, and attendance and progressive discipline policies, a panel of the Board found that the employer did not have the right to change those policies because they were not specifically mentioned in the management rights provision. Thus, the panel majority found, there was no “clear and unmistakable” waiver of the employer’s obligation to bargain with the union before making the changes.

In a strongly-worded dissent, Chairman Miscimarra commented that “no reasonable person reading this language could conclude that [the employer’s] right of unilateral action extended to rules, regulations, policies and procedures concerning some matters but not others.” He noted that a management rights provision can be general, yet simultaneously “clear and unmistakable.”

It seems likely that employers soon may no longer have to, in Chairman Miscimarra’s words, “spell out every detail of life in an industrial establishment” in order to retain the right to make policy changes authorized by a management rights provision. Instead, general waiver language that “clearly and unmistakably” provides that the employer has the right to change policies and procedures is likely to suffice.

Supervisors

Another area in which the Board under President Obama has pushed to tilt the playing field to unions’ advantage is in the classification of workers as “employees,” who are within the protection of the NLRA, as opposed to “supervisors,” who are outside the law’s protection.

In Chi LakeWood Health, employees’ job descriptions explicitly stated that they were responsible for supervising other employees. Nevertheless, the Board discounted that evidence and concluded that the employees in question did not, in fact, possess supervisory authority and thus did not have “supervisor” status.

In a dissent, Chairman Miscimarra outlined the following considerations that he would take into account when determining whether workers were “supervisors” or “employees”:  “(i) the nature of the employer’s operations; (ii) the work performed by undisputed statutory employees; and (iii) whether it is plausible to conclude that all supervisory authority is vested in persons other than those whose supervisory status is in dispute.” Using this framework in the future, we would expect for mid-level supervisors in traditional settings to be excluded from the definition of “employee” – an outcome with both legal and practical benefits for employers facing union campaigns.

Class action waivers in arbitration agreements

A fifth area where employers can expect change is on the issue of whether class action waivers by employees in arbitration agreements are valid and lawful. The Obama Board followed the rule of D.R. Horton and its progeny, finding that such agreements are invalid and unlawful. Some U.S. Courts of Appeal agree with the Board, and others disagree. The U.S. Supreme Court has granted certiorari in three cases to decide whether the Board rule in D.R. Horton is correct.

Chairman Miscimarra’s view on the issue is clear. In a dissent in Murphy Oil (one of the cases before the Supreme Court), he vehemently opposed the D.R. Horton approach as an overreach of NLRB power, stating, “In today’s decision, my colleagues treat our statute as the protector of ‘class’ action procedures under all laws, everywhere.”

Conclusion

Once the President gets a Republican majority on the Board, we expect that there will be changes and reversals of NLRB decisions in a number of areas. We also anticipate that the Board will begin to apply the NLRA more even-handedly, and in a fashion that serves the interest of employees, employers, and unions, making the NLRB more-neutral territory for all involved.

 

Robin Shea, Partner Constangy, Brooks, Smith & Prophete, LLP RShea@constangy.com www.constangy.com