15 December 2017

An Early Holiday Gift for Employers: The NLRB Overrules Two Controversial Standards

Yesterday, the National Labor Relations Board (NLRB) overruled two controversial standards that had previously troubled many employers.  First, the NLRB reversed its often-criticized standard for evaluating employers’ handbooks and work rules.  The NLRB has replaced the old standard with a common-sense approach to evaluating handbooks and rules that looks at how employers are actually using their rules and why they have created them to decide whether they are lawful.  This means that commonplace work rules that employers create to foster and manage an engaged and diverse workforce, like those rules requiring employees to be respectful or courteous to each other, are no longer under attack unless they are actually misused by an employer.  Second, the NLRB reversed its controversial joint employer standard and returned to a more concise rule for when entities will be treated as joint employers.

A New Standard for Reviewing Employers’ Handbooks and Work Rules

Many employers have struggled with determining when the rules and policies that they create to foster a positive work environment and comply with other laws would still be considered unlawful by the NLRB.  That struggle has now been significantly reduced in most cases because the NLRB overruled its much-criticized standard for evaluating when an employer’s handbooks, rules, and policies violate federal labor law.

Under the NLRB’s prior standard, the Board would find an employer’s workplace rule unlawful anytime that an employee might “reasonably construe” the rule as prohibiting him or her from exercising their rights protected by the National Labor Relations Act.  This meant that a work rule or policy could be unlawful, even if the rule did not actually prohibit employees from exercising their legal rights and even if the rule had never been used to prevent an employee from exercising those rights.  This prior standard also often ignored or discounted an employers’ legitimate reasons for maintaining important workplace policies and led to many controversial decisions.  For example, the NLRB previously found standard rules requiring employees to be “courteous” or “respectful” to each other or their supervisor or to respect each other’s privacy violated federal labor law simply because a hypothetical employee might possibly construe such a rule as preventing union activity.

The NLRB’s new standard is a return to an approach where the NLRB will look at a rule’s impact on the workforce and the employer’s reason for maintaining this rule.  This will allow employers to maintain sound HR rules and policies without fear that they will violate federal labor law when doing so.  Now, when a rule is challenged, the employer can show that it has not impacted any employee in exercising their protected rights and that it has legitimate business reasons for maintaining the rule.  In creating this standard, the NLRB has signaled it will focus on ferreting out rules or policies that are unlawful on their face or that are neutral but are being used improperly to stifle employee rights.

A Return to the Traditional “Joint Employer” Standard

In 2015, the NLRB discarded its long-term standard for determining joint liability. Under this standard, an entity would be considered a joint employer for purposes of legal liability when it simply had the right to exercise control over employees’ terms and conditions of employment.  This held true regardless of whether the employer actually exercised that right, or even if the employer had only indirect, limited, and routine control over a group of employees’ employment.  This meant businesses could be found liable for committing unfair labor practices even though, practically speaking, they had no involvement in committing a violation of federal labor law.

Yesterday, however, the NLRB ended this prior significant expansion of joint liability and returned to the Board’s traditional standard.  Now, the NLRB will find a company liable as a joint employer of another company’s employees if it has actually exercised control over those employees’ essential terms of employment or if it could exercise “direct and immediate” control over those terms.

If you have any questions about how these new standards will impact your organization, please contact us or any of Miller Johnson’s labor and employment attorneys.