The National Labor Relations Board has not been shy about making news with controversial decisions during 2014. Holding franchisors liable for unfair labor practices allegedly committed by franchisees and finding violations of the National Labor Relations Act in routine contract and policy language are, perhaps, a harbinger of key decisions to come. Here are some major subjects on which employers should expect NLRB action in the coming new year, if not sooner.
“Quickie Election” Rule
After an unsuccessful attempt in 2011, the Board again, at the beginning of 2014, proposed major changes to its representation case rules (“quickie election” rule). Although the notice-and-comment period ended in April 2014, the Board still has not acted on the proposed rule. There has been widespread speculation that the final rule will be issued before the end of 2014. However, recent developments suggest a final version rule may not be forthcoming until 2015. (For more on this, see Substantial Doubt Cast on Imminence of ‘Quickie Election’ Rule.) The quickie election rule would have a dramatic impact on union organizing and we will keep a close watch on this issue in the coming year.
In Browning-Ferris Industries (Case 32-RC-109684), the Board could change the “test” for determining whether two entities are joint employers, and therefore, among other things, liable for the unlawful acts of each other under the NLRA. One obvious concern is that franchisors, which provide trademarks and franchise systems, but typically have little involvement in the day-to-day management of a franchisee, will become liable for unfair labor practices that are beyond their control. Because the franchise business model is designed in part as a buffer against risk and liability, if the NLRB decides that franchisors are jointly liable with their franchisees, franchisors may have to rethink their business strategy and rely on company-owned locations, rather than franchisees, for greater certainty and control. As one witness declared during a September 9, 2014, Congressional hearing, “Such a rule change could completely upend the franchise model and have devastating consequences for franchising as an economic force in the United States …. [I]ndividual entrepreneurs would be deprived of the opportunity to own their own business, franchisors would be denied the opportunity to expand their business, and millions of jobs will be lost.”
We anticipate that in 2015, the NLRB General Counsel will continue to press for Board findings of joint employer status in cases that present that issue. . We will be watching closely given the potentially far-reaching effects of expanded joint employer liability.
Scholarship Student-Athletes as Employees
Student-athletes across the nation have been pushing for “employee” status under a variety of laws. In addition to a recent class action filed against universities for alleged violations of the Fair Labor Standards Act (for more on this, see our Collegiate and Professional Sports Law blog), student-athletes at Northwestern University persuaded the Regional Director of NLRB Region 13, based in Chicago, that undergraduate members of the football team receiving grant-in-aid scholarships were “employees” under of the Act. Some of the Northwestern football players are seeking to have the newly formed College Athletes Players Association represent them, and the Regional Director directed an election.
Northwestern University filed a Request for Review (an appeal) of the decision with the Board. The Board is reviewing the case and, recognizing its possible impact, accepted amicus briefs.
If the NLRB upholds the determination that Northwestern’s student-athletes receiving grant-in-aid scholarships are “employees,” it would create significant new representation rights for student-athletes at private universities and could raise issues under other labor laws.
Use of Employer Communications Systems for Protected Concerted Activity
In 2007, the Board in Register Guard, 351 NLRB 1110 (2007), held that an employer could forbid employees from using company electronic communication systems (including email) for non-business purposes. The Board stated, “[E]mployees have no statutory right to use the[ir] employer’s email system for Section 7 purposes.” The decision was controversial at the time, and the current Board, now controlled by members aligned with a different, union-friendly political party, decided this year to review the issue in the Purple Communications, Inc., 21-CA-095151.
When the Board released an opinion on September 29, 2014, however, it held the issue of employee use of company electronic communications for further consideration. Employers should watch for the second Purple Communicationsdecision. If the Board overturns or limits the Register Guard electronic communications use rule to force employers to allow at least some employee use of employer email, it will make employees’ ability to engage in union and protected concerted activity at work much easier. It also may result in an increase in employee “down-time” when they should be working.
Arbitration Agreements with Class or Collective Action Limitations
In D.R. Horton, 357 NLRB No. 184 (Jan. 3, 2012), the Board found a violation of the Act when an employer required employees to sign arbitration agreements prohibiting class or collective action lawsuits absolutely, because, in the Board’s view, such lawsuits are a form of protected concerted activity under the NLRA. That decision has been roundly criticized by employers and has been rejected by several Circuit Courts of Appeals. The NLRB nevertheless reaffirmed D.R. Horton in its recent Murphy Oil USA, Inc., 361 NLRB No. 72 (Oct. 28, 2014), again holding that class-action lawsuits are protected under the Act and agreements prohibiting them unlawful. In the coming year, we may see which of these conflicting views will prevail.
Handbooks and Policies
In its bid to make the NLRA more relevant, the NLRB has been policing aggressively employee handbooks and other policies that it believes “chill” employee rights under the Act. A bevy of decisions from Administrative Law Judges and the Board have called into question seemingly innocuous policies, such as those requiring “courteous” communications between employees or forbidding “insubordination” generally. In addition, restrictions on sharing a company’s confidential information have been declared unlawfully overbroad because terms and conditions of employment could be considered “confidential.” A prohibition against using intellectual property without authorization also was found to be overbroad because it could prohibit, for example, picketers from placing a company’s logo on their signs. We anticipate that ALJs and the Board will continue to interpret the Act broadly to declare seemingly acceptable handbook and policy language unlawful. Employers should watch carefully for these decisions so their policies can be adjusted accordingly.
The Board also has been broadening its reach into social media. It recently held, for example, that clicking the “Like” button on Facebook was protected concerted activity. On the other hand, it has found unprotected a profanity-laced rant against an employer by two employees who advocated multiple insubordinate acts. Because of the pervasive use of social media, we anticipate many more rulings in 2015 about whether employee activity on social media is protected. They may have a significant impact on social media policies and actions an employer may take against employees for these activities.