United States: House Subcommittee Discusses Pending National Labor Relations Board Issues

The U.S. Supreme Court is just days away from releasing its recess appointment opinion in Noel Canning, which will determine whether the National Labor Relations Board will have to revisit and re-decide thousands of decisions. The validity of President Obama's recess appointments to the NLRB, however, is not the only labor-related issue employers are watching. During a June 24 hearing before the House Subcommittee on Health, Employment, Labor, and Pensions, Chairman Phil Roe (R-TN) explained that the Board has solicited input on two issues "that could significantly affect the future of labor-management relations. These include whether employees have a right to use work email accounts for union organizing and the proper standard for determining joint employer status." 

The two cases that were the focus of the hearing are Browning-Ferris and Purple Communications. The question raised in Browning-Ferris is whether the Board should adhere to its existing joint-employer standard or adopt a new standard. In the request for input on the Purple Communications case, the NLRB General Counsel has asked whether the Board should overrule precedent established in a prior Board decision (Register Guard) and adopt a rule permitting employees who are allowed to use their employer's email for work to also use it for union organizing activity. Under Register Guard, the Board found that absent evidence of discrimination, employees have no statutory right to use employer equipment for Section 7 activity.  

In his opening statement, Chairman Roe claimed the potential changes to these long-established standards "threaten to further stack the deck" in favor of unions at an employer's expense.  

With respect to a possible deviation from the current joint-employer standard, a franchisor testified that a new standard could threaten the franchisor-franchisee relationship. The witness emphasized that "franchisors and their franchise are simply not joint employers." The franchisor-franchisee relationship "is built on a division of roles and responsibilities," the panelist explained, emphasizing that franchisees independently run their businesses. Franchisors set standards to protect their trademark and maintain product consistency, but franchisees are in charge of hiring, firing, and managing other aspects of the workplace.  A change in policy, therefore, "would force franchisors to exert control over workplace decisions," and "threaten the viability of this successful franchise model" by making franchisors "liable for their franchisees' employment practices despite the fact that franchisors have no control over such practices."  He also said a change in policy would "unnecessarily require systemic changes" in the franchisor-franchisee model. 

Addressing the possibility of the Board overturning Register Guard, several panelists testified that there is "no compelling reason" for the Board to deviate from established policy.  The issue is one of an employer's property rights, they said, not of employee communication.  As one witness testified: 

employers who invest their money in the purchase and maintenance of equipment and materials for the furtherance of their enterprise should be able to control the manner in which they are used. Other longstanding principles of labor law protect employees' rights to engage in communication, solicitation and distribution in furtherance of union organizing or other Section 7 activity, so long as their activity does not interfere with operations or other legitimate employer interests. The question in Purple is to what extent an employer must provide and pay for the means of employee communication and organizing activity. 

Employers should not be compelled to open their networks "to additional burdens on efficiency, external threats, and potential legal exposure occasioned by non-business use." 

More appropriate avenues for such significant policy changes are notice-and-comment rulemaking or legislation, according to the testimony.    

Finally, panelists and lawmakers discussed what could happen if the Supreme Court affirms in whole or in part the lower court's decision in Noel Canning. According to one witness, about 4,000 cases could be voided and have to be re-addressed by the Board and its General Counsel. This number is in addition to the 383 currently pending decisions, the witness stated.  Moreover, upholding Noel Canning would mean that all actions by the NLRB regional directors could be invalidated as well, and all General Counsel enforcement actions would have to be set aside. This would create an "overwhelming litigation burden on the Board and its General Counsel." The witness stated that following the Supreme Court's decision in New Process Steel, in which the Court held the Board needs at least three sitting members to have a valid quorum, it took the agency more than three years to address about 100 cases.  Therefore, the Board should focus first on its case backlog before seeking input on established precedent, the witnesses urged.  For example, the Board has not yet issued a final decision in the Roundy's case, which has been pending for more than seven years.  

A complete list of panelists and links to their testimony can be found here.

For more information on the implications of the Supreme Court's imminent Noel Canning decision and other pending Board actions, you are invited to attend a complimentary webinar hosted by Littler's Workplace Policy Institute® on July 1, 2014. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Michael J. Lotito
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