Finance News & Insights

New pro-employer NLRB gives Finance an early Christmas present

If CFOs had any doubts the GOP-controlled National Labor Relations Board (NLRB) would take a more employer-friendly stance on workplace issues, recent rulings should put those fears to rest. 

At the tail end of the year, the NLRB handed down four decisions that show the agency’s looking to chip away at Obama-era union protections and create a more employer-friendly climate for businesses.

Two of those rulings — on the definition of joint employer and neutral workplace rules and handbook policies — should be widely embraced by the Finance community. (Note: The National Law Review offers an excellent breakdown of all four rulings).

Here’s a summary of those two rulings:

1. A return to the old standard

According to the NLRB’s recent joint employer ruling, two entities must “directly and immediately exercise control over the essential employment terms of another entity’s employees” to be considered joint employers. Indirect control, or the contractual right to control another company’s employees even if it isn’t actually used, isn’t enough to establish joint-employer status. In addition, limited and routine control won’t satisfy the joint-employer standard.

This is a return to NLRB’s more lenient precedent on joint employers that had been in place for 30 years before a 2015 NLRB ruling created the “Browning-Ferris” precedent. Under Browning-Ferris, the NLRB essentially expanded the definition of joint employer by stating that employers didn’t have to actually exercise control over another company’s employees to meet the joint employer standard. Instead, employers only had to have a contractual right to exercise control over each others’ workers. In other words, it didn’t matter if the employer actually exercised control as long as the control option was on the table.

Cite: Hy-Band Industrial Contractors, 365 NLRB No. 156 (2017)

2. Business interests now considered

In another positive ruling for employers, the NLRB also created a new standard for evaluating neutral workplace rules and employee handbook policies, a standard that overruled the current “Lutheran Heritage” standard.

Under the new standard, the NLRB will decide whether a “seemingly neutral employer rule or handbook policy” violates the National Labor Relations Act (NLRA) by considering:

  • the nature and extent of the potential impact on NLRA rights, and
  • legitimate justifications associated with the rule.

Under the previous standard, a neutral workplace rule or handbook policy could still violate the NLRA if employees could “reasonably construe” the rule as preventing them from exercising their Section 7 rights.

For additional employer guidance, the NLRB also announced the three categories that an employer rule or policy can fall under — lawful, unlawful or something that warrants individualized scrutiny.

Why the new standard is a win for employers: The NLRB will now consider an employer’s business interests against potential interference of employee rights instead of focusing solely on employee rights — the process under the Lutheran Heritage Standard.

Cite: The Boeing Company, 365 No. 154 (2017)

Note: This story was initially published on our sister website, HR Morning.

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