Today, the NLRB issued two landmark cases reversing precedent on the Board’s test for work rules and joint employment. In The Boeing Company, 365 NLRB No. 154, the Board reversed a 2004 decision that prior Boards used to find unlawful “a large number of common-sense work rules and requirements that most people would reasonably expect every employer to maintain.” In Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156, the Board overruled the Browning-Ferris joint-employment test and returned to requiring direct control over essential terms and conditions of employment before it will find joint employment status.

Boeing – Work Rules

In the 3-2 Boeing decision, the Republican majority overruled Lutheran-Heritage Village-Livonia, 343 NLRB No. 646 (2004), which held unlawful all facially neutral work rules that employees could “reasonably construe” to prohibit Section 7 activity.  The Board established a new test for evaluating work rules that requires the Board to “evaluate two things: (i) the nature and extent of the potential impact on NLRA rights, and (ii) legitimate justifications associated with the rule.”

The majority emphasized its “duty to strike the proper balance” between employee rights and legitimate business justifications and noted the problems with the Lutheran Heritage‌ standard, including that it gave no consideration to an employer’s legitimate business justifications and that it was “exceptionally difficult to apply.”  The majority also noted that its decision focused only on the maintenance of rules, not the application of those rules, setting aside situations where employers apply lawful policies in an unlawful way.

The majority applied the new test to find lawful Boeing’s no-camera policy lawful.  The policy prohibited employees from using cell phone cameras, webcams, and other photographic devices to take images or video without management’s permission.  The Board found that policy justified as an “integral component of Boeing’s security protocols,” which were necessary to comply with government rules for performing classified work, protect highly sensitive proprietary information, and “limit[] the risk of Boeing becoming a target of a terrorist attack.”

Significantly, the majority also expressly overruled cases holding “that it violates the Act to maintain rules requiring employers to foster ‘harmonious interactions and relationships’ or to maintain basic standards of civility in the workplace.”  (Footnote 15.)

When Democrats controlled the Board, Chairman Miscimarra frequently dissented from rulings applying Lutheran Heritage, and we anticipated that he would overrule it with a Republican majority.

Hy-Brand – Joint Employment

In another 3-2 decision, the Republican majority overruled the controversial Obama-Board decision in Browning Ferris Industries of California, Inc., 362 NLRB No. 186 (2015).  Browning-Ferris dramatically changed the joint employment test under the NLRA, making two entities joint employers if one entity “reserved” control over terms and conditions of another’s employees, even if that entity never exercised that control.  Critics railed the decision as making joint-employers between every entity’s vendors or independent contractors.  Indeed, the majority in Hy-Brand devoted 24 pages to describing all of the problems with the Browning-Ferris test, calling it a “vague and ill-defined standard.”

In returning to the common law standard that existed for more than 30 years before Browning-Ferris, the Board wrote: “a finding of joint-employer status shall once again require proof that putative joint employer entities have exercised joint control over essential employment terms (rather than merely having ‘reserved’ the right to exercise control), the control must be ‘direct and immediate’ (rather than indirect), and joint-employer status will not result from control that is ‘limited and routine.’”

Even under that standard, however, the Board found the two employers at issue in Hy-Brand qualified as joint employers because of the significant and substantial overlap between their operations, including that an officer at one company made hiring and firing decisions at both companies, employees of both companies participated in the same benefit plans, and the same policies applied to employees at both companies.

More Landmark Decisions Expected

We expect additional landmark decisions tomorrow, as Chairman Miscimarra’s turn ends Saturday, December 16.

Notably, today’s decisions knock two key issues off newly-appointed NLRB GC Peter Robb’s priority list, which he issued December 4.