Everything and the Kitchen Sink: The NLRB’s Labor-Friendly New Year’s Resolutions

Contrary to the expression’s limitations, the National Labor Relations Board (“the Board”) set the tone for 2023 with some major decisions that will essentially provide employees with not only the kitchen sink, but the walls and the foundation too. The Board fundamentally altered the landscape when it comes to collective bargaining, property interests, damages in unfair labor practice (“ULP”) matters, and even college sports. As discussed in more detail below, employers should gear up for another rough year when it comes to labor matters.

Compensation for All “Foreseeable” Harms

In its December 13, 2022, decision in Thryv, the Board drastically expanded the remedies available to employees in ULP matters. As a result, employers found to have committed a ULP may be required to “compensate affected employees for all direct or foreseeable pecuniary harms.” Thryv, Inc., 372 NLRB No. 22 (2022). In discussing the potential harms resulting from an unlawful discharge, the Board cited hardships including credit card debt (including applicable interest and late fees), medical debt, penalties for early withdrawals from retirement accounts, loss of a vehicle or home due to nonpayment, increased transportation costs, and childcare costs. Although the available remedies under the Decision are yet to be explored, the majority is of the opinion that “all losses indirectly caused by a [ULP] are compensable . . . regardless of how many steps removed the losses are from the [ULP] in the chain of causation, so long as the losses are deemed foreseeable.” Id. (Members Kaplan and Ring, concurring in part and dissenting in part) (internal citations omitted). Because the decision leaves the new standard unclear as to how far down the rabbit hole of causality the Board will go, employers should carefully approach personnel decisions, especially when it comes to terminations and reductions in force.

Return of the Micro Unit

Immediately following the Board’s Decision in Thryv, in American Steel Construction, Inc. [1], the Board returned to the standard it established in its 2011 decision in Specialty Healthcare & Rehabilitation Center of Mobile [2], in which it overruled 20 years of precedent and established the “overwhelming community of interest” standard. Under this standard, when an employer challenges unit composition based upon the exclusion of additional employees, it must demonstrate that the excluded employees share an overwhelming community of interest. The initial test—that had been reestablished in 2017 in PCC Structurals, Inc. [3]— had placed the burden of demonstrating the sufficiency of a bargaining unit upon the petitioners and therefore the union. This test was refined into the more colloquially known The Boeing Co. three-part test. The Boeing Co., 368 NLRB No. 67 (2019). The Board’s return to the short-lived Specialty Healthcare test shifts the balance of favor squarely upon the petitioners as employers will now face heightened—or “insurmountable,” in the words of the Dissent—standards in challenging proposed bargaining units as exclusionary, as unions are likely to seek more refined bargaining units. The result, as discussed in the Dissent [4], will likely be an increase in the number of successful petitions for these micro units.

Reduction in Owner’s Property Rights

In continuing its weeklong frenzy, the Board issued a Decision in Bexar County II [5], aiming to dramatically weaken the rights of property owners when it comes to the exclusion of their contractor’s off-duty employees. In Bexar County II, the Board majority ruled that off-duty employees who regularly work at a location may not lawfully be excluded from that location even when their employer does not own the property. This holds true even when there is no direct connection between the property owner and the employees so long as the contractor’s employees seek to engage in Section 7 activity and do not significantly interfere with the use of the property. The Board also stated that the contractor’s employees may only be removed from the property if the owner has a legitimate reason to do so. Furthermore, and of significant concern for employers, the Board suggests that “property owners are often able to direct the contractor’s managers and supervisors to take action to protect their operational and property interests . . . .” However, exercising that authority, or even possessing such authority, may lead to other issues for employers as discussed in the following section. As a result of the Bexar County II decision, employers should carefully assess independent contractor agreements moving forward so that the responsibility and authority for handling disruptions and improper conduct of the contractors’ employees are placed solely upon the contractors themselves.

The Joint Employer Standard

Back in September 2022, the NLRB promulgated a notice of proposed rulemaking which specifically addresses the joint employer rule as it pertains to matters before the NLRB. The joint employer rule, for those yet to encounter it, is utilized by the Board to determine whether a secondary entity can be considered an employee’s employer under the Nation Labor Relations Act even if the entity does not employ the individual in the typical sense. Under the previous Rule which took effect in 2020, an entity was only deemed a joint employer if it exercised substantial direct and immediate control over the individual, which was defined as “regular or continuous consequential effect on an essential term or condition of employment of another employer’s employees.” Joint Employer Status Under the National Labor Relations Act, 85 FR 11184, 11203­­–11205; 11236 (Feb. 26, 2020). The Rule also stated that control is not substantial if it is “only exercised on a sporadic, isolated, or de minimis basis.” Id. at 11236. For clarity, the current Rule identified those items which would be considered essential terms and conditions of employment: wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction.” Id. at 11186, 11205, and 11235-1123.

The Proposed Rule eliminates this clarity in favor of a non-exhaustive list of items that may be considered terms and conditions of employment including, but not limited to, wages, benefits, and other compensation; hours of work and scheduling; hiring and discharge; discipline; workplace health and safety; supervision; assignment; and work rules and directions governing the manner, means, or methods of work performance. In addition to drastically altering—and leaving open to varying interpretations—the scope of conditions of employment, the Proposed Rule also permits a finding of a joint employer relationship in situations where an entity has a right to control these conditions even when such right has never been exercised.

Athlete-Employees

Lastly, in a decision that may end up causing more harm than good, the NLRB regional office in Los Angeles recently determined that a ULP filed over the classification of college athletes as student-athletes rather than employees has merit. [6] The ULP was filed by the National College Players Association, which had previously mounted a failed unionization of the Northwestern University football team. Utilizing a new approach, the NCPA has filed a ULP asserting that the University of Southern California’s classification of its football and men’s and women’s basketball teams players as student-athletes effectively denies them rights they should have as employees. While the matter is currently in its infancy, the NCPA appears to have the backing of the Board and follows the trend set by the Supreme Court’s Decision in National Collegiate Athletic Association v. Alston which resulted in significant reforms to college athletics. 141 S.Ct. 2141 (2021).

While the last quarter of 2022 was a whirlwind time at the NLRB, employers should not expect any reprieve in 2023. There are several prospective cases and proposed rules which will be coming to fruition in 2023 and employers should stay up to date and informed of happenings at the NLRB so that they can make informed decisions during this labor-friendly time.

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[1] 372 NLRB No. 23 (2022).

[2] 357 NLRB No. 934 (2011).

[3] 365 NLRB No. 160 (2017).

[4] American Steel Construction, Inc., 372 NLRB No. 23 (“The Act requires the Board to determine an appropriate unit for the purpose of collective bargaining—not, as our colleagues appear to believe, for the purpose of making it easier for unions to win elections.”)

[5] 372 NLRB No. 28 (2022).

[6] Ultimately, all decision-making as to the merit of ULPs touching on major issues is done by the General Counsel’s Office, which released a memo in September of 2021, discussing its prosecutorial position on the matter. See Memorandum GC 21-08 (Sept. 29, 2021).