Companies Urged to Rethink Employee Policies in Light of NLRB Chaos

A Supreme Court decision last month tossed out hundreds of previously settled cases by the National Labor Relations Board. Now, as the government agency scrambles with its do-over, companies across the nation may be forced to share in its pain, potentially having to undergo the arduous process of revisiting their employment policies and creating new ones under a cloud of uncertainty.

The troublesome vacuum in labor law results from a June 26 opinion issued by the Supreme Court in the matter of NLRB v. Noel Canning. The nation’s highest court determined that recess appointments by the Obama Administration to the board were improper, invalidating hundreds of the board’s decisions.  

The decision means companies with past labor issues, or brewing concerns may have to review hiring and firing procedures and ramp up manager training, especially when it focuses on dealing with unions and union organizers. Policies made with recent NLRB rulings in mind may no longer be on the mark. Even internal policies for e-mail and Internet use may need to be reviewed, revised, and reconsidered in the near future. “If you have not had your handbook policies reviewed in the last six months to a year, you really need to do it now, because tweaks and changes need to be made due to board decisions,” Philip Rosen, leader of the law firm Jackson Lewis’ Labor practice group, says.

At the very least employers will need to follow how the NLRB works through re-settling the backlog of now invalidated cases, since a new ruling may throw some companies’ employment policies in conflict with those decisions. A formal tally of the exact number of cases overturned by the ruling has yet to emerge, and estimates vary greatly—from 600 on the low end to more than 1,700 on the high end.   

This has happened before, albeit on a more limited scale. The NLRB operated for a period of time between 2008 and 2009 with only two board members, due to an impasse between President Obama and the Senate over nominations. In 2010, the Supreme Court ruled in the case New Process Steel v. NLRB that the two-member board lacked a quorum and had no standing, invalidating approximately 600 decisions, but most made their way back before the board and promptly reinstated.

“We think the process is going to be the same,” Rosen says. “The board will now have to review every one of the older decisions and decide whether to affirm or reject them.”

Cohen expects that the NLRB will begin by reaching out to all parties involved in cases affected by the Supreme Court decision, asking if they want the matter reconsidered. A subsequent review will go through the normal assignment process for the board members, the same as any other new case. In most instances, they will be delegated to a three-person panel.

“Just because an employer lost before the old board, that would not stop the new board from considering it and perhaps coming out a different way,” Cohen says. He cautions, however, that “if one were to start this process by saying they have new evidence and want to have witnesses, the board would probably put restrictions around that.” The challenge for the board, Cohen says, is managing this process fairly and effectively. “You can’t make everything a priority,” he says. “If you do, nothing will get through.”

Companies may also challenge 108 pending appellate cases in 12 federal circuit courts that are related to NLRB decisions involving the recess appointments and decisions by regional directors appointed by invalid board members, Cohen adds.

Through a Different Lens

Current board members have shown themselves to be detail-oriented and open to compromise, an admirable trait, perhaps, but one that may slow the review before them. “This current board has a desire to at least try to find some common ground,” Kevin Hyde, a partner and employment lawyer with the law firm Foley & Lardner, says. He expects the current, formally confirmed board may prioritize cases, and decide on them, very differently than their predecessors.

“This board is going to do a more searching examination,” Lotito says. “They dig into cases. This board has been very good about asking for amicus briefs, especially in very controversial cases. I wouldn’t be at all surprised if this board takes a step back and is very careful in the way it goes about things.”

Already, the NLRB is prioritizing cases it wants to revisit. Just one day after the Supreme Court decision, it listed 50 past decisions that are now in abeyance and may be freshly reviewed.  Amid these ongoing reviews, the board will also need to prioritize and slot in new matters.

We think the process is going to be the same. The board will now have to review every one of the older decisions and decide whether to affirm or reject them.
Michael Lotito, Co-Chair, Littler Mendelson's Workplace Policy Institute

A clue as to what types of cases, past and present, could jump to the head of the line comes from a December memo issued by NLRB General Counsel Richard Griffin, himself a one-time recess appointee to the board. Issues he flagged, ahead of the Noel Canning decision, include: the use of company e-mail for union organizing; the right of non-union employees to have representation at disciplinary hearings; union access to an employer’s financial information during bargaining; and employment contracts with mandatory arbitration agreements built in.

Another priority of the NLRB in recent months has been protected concerted activity under Section 7 of the National Labor Relations Act, which refers to workplace activities that employees are allowed to engage in without fear of retaliation by the company.  Where employers have not worded policies appropriately, or administered policies appropriately, the NLRB is finding more violations in violation of the NLRA, Rosen says. “I believe that will continue.”

Other decisions expected to be resurrected: that unions must receive employee witness statements during a disciplinary investigation; overturning a longstanding precedent that written statements provided by employees during an investigation can be kept confidential; overturning mandatory arbitration policies for employees; overturning a 50-year precedent and ruling that employers must continue to deduct union dues from paychecks after a collective bargaining agreement has expired; and that employers cannot demand confidentiality from workers during internal investigations of employee complaints.

Lotito expects joint employer issues to be a priority. In May, the NLRB put out a call for amicus briefs in a fight between Browning-Ferris Industries of California and the Teamsters. That review is to determine whether the board should adopt new standards for determining joint-employer status, altering 30 years of settled precedent.

Those new standards would be used to determine when legally separate entities should be treated as a joint employer when they both control employee hiring, firing, and supervision. “It plays to union organizing because they don’t want to organize little tiny businesses, they want to organize the largest combined industry that they can,” he says. Other hot-button issues, he says, will be determining what a reasonable access rule is going to be for unions on private property and expediting the union election process.

Big Decisions, Big Uncertainties

THE SURPREMES ON UNION DUES

The Noel Canning decision wasn’t the only opinion issued by the Supreme Court in the final days of its current session that may affect how companies approach unions and labor issues. Below, CW’s Joe Mont explores the issue further:
With a 5-4 decision in the case of Harris v. Quinn, the court’s conservative majority prevailed with its rejection of the notion that public-sector employees can be required to pay union dues if they do not belong to one. The case revolved around home state-funded healthcare workers in Illinois who argued that paying dues when they had no desire to join the union (despite benefitting from contract negotiations and grievance representation if needed) was a violation against First Amendment protections against compelled speech.
Although the case involved public-sector employees, Mark Neuberger, a lawyer with law firm Foley & Lardner and a member of its Labor & Employment practice, says that all companies should be aware of the case.
“What should have every union officer grabbing for a bottle of antacids, is thought process revealed by the majority of the justices in its decision,” he says. “They view compulsory union membership as a restraint of free speech.  That is a marked changed from the more liberal Warren court of the 60s and 70s.”
“Unions in both the private and public sector are getting boxed out,” Neuberger says, predicting similar lawsuits in the future.
—Joe Mont

Labor experts are closely watching several important cases, ruled on by the invalidated board, to see if they are reaffirmed or scuttled. In a case involving Costco, for example, the past board decided that the company’s social media policy violated the NLRA because its prohibition on online statements that “damage the company, defame any individual, or damage any person’s reputation” could chill union organizing.

In a similar case, Hispanics United of Buffalo, the board ruled that an employer had no right to fire five employees for Facebook comments directed at a coworker critical of his job performance. In a third case involving Supply Technologies, the NLRB said that mandatory arbitration for employee grievances was unlawful because it failed to specifically exempt the option of an NLRB complaint.

Hyde offers a list of questions companies should ask themselves in the face of the Supreme Court ruling: “Do I need to immediately change my policies? Have I already baked those policies into my operations and learned to live with it, or am I going to change the policy and just see what the NLRB does? I wouldn’t just rush to judgment and think it is free reign to do whatever you want because rules were invalidated. It may prove to be a short-term situation.”

“Labor practitioners are telling clients that if you have not had your handbook policies reviewed in the last six months to a year, you really need to do it now because tweaks and changes will need to be made due to board decisions,” Rosen says.

“The uncertainty is going to continue,” Lotito warns. “The watchword is ‘watch,’ because this is not going to be settled anytime soon.”