United States: NLRB Chairman Pearce And GC Griffin Face Grilling By Senate Appropriations Committee

Last Updated: May 15 2015
Article by Michael J. Lotito

During a May 14 Senate Appropriations Subcommittee hearing to discuss the National Labor Relations Board's FY 2016 budget, NLRB Chairman Mark Pearce and General Counsel (GC) Richard Griffin indicated the Board has no plans to deviate from the pro-organized labor tack they have been pursuing for quite some time.

Subcommittee Chairman Roy Blunt (R-MO) set the general tone of the hearing in his opening remarks by noting that under President Obama's administration, NLRB funding has increased over 8%, and the agency is requesting a budget increase that includes funds to create 30 new positions, while the overall caseload has remained the same or declined. Meanwhile, according to Blunt, the Board is ignoring precedent and pushing an activist agenda that includes a new joint-employer standard, the new ambush election rule and policies that promote so-called "micro" bargaining units.

The proposed overhaul of the joint employer test through the General Counsel's recent activity and the pending Board decision in Browning-Ferris was the focus of most of the questioning over the course of the hearing. As recently discussed, the Board is poised to adopt a much looser standard for determining whether a business is considered a joint employer with another entity for liability purposes under the National Labor Relations Act. Specifically, GC Griffin has been advocating a return to the "traditional" theory of joint employment, which is that an entity is considered a joint employer if it "has the potential" to control such terms and conditions of employment, or if "industrial realities" otherwise makes it an essential party to meaningful collective bargaining. For the past 30 years, the relevant inquiry for finding joint employment is whether an entity exerts a significant and direct degree of control over another business's employees and their essential terms and conditions of employment.

Chairman Blunt asked if the new test for determining joint employment would create confusion in the franchisee community, which is well-acquainted with the current standard. GC Griffin deferred to his previous hearing answers on the topic and offered to send the Chairman transcripts, but ultimately said that in light of changes to the work environment, citing examples such as "computer programs that allow franchisors to maintain real time information," a reversion to the pre-1984 standard was necessary.

When Blunt asked why the Board changed its mind on the standard in the '80s, Griffin said that he was not exactly sure why, as the Board at the time did not request briefs or explicitly give a reason for doing so. Blunt pointed out that the Board was taking similar liberties here by changing a policy without notice and comment, and that the Board had in effect submitted an amicus brief to itself through its GC when suggesting that it re-adopt the old standard.

Senator James Lankford (R-OK) expressed similar opinions on the joint employer test, pointing out that using a standard that includes the phrase "potential control" leaves open much to interpretation. He also twice noted that it did not make sense for the Board to revert to a 30-year-old model when the purported reason for changing the standard was that the landscape had changed so much over the last 30 years, to which neither Griffin nor Pearce had a response. Lankford also questioned whether any economic studies had been done on the impact of the rule, to which Griffin demurred by saying that the Board was statutorily prohibited from doing so. Lankford went on to say that the new test will create an artificial barrier between franchisors and potential franchisees, with the former being more leery of giving licenses to franchisees for fear of increased liability.

Griffin maintained that the Board has no intention of overturning case precedent under the old standard, which provides that if a franchisor is simply maintaining brand integrity there will be no finding of joint employment. However, as Senator Lankford pointed out, that is hard to square with the notion of "potential control" being considered as a factor. Additionally, under repeated questioning, Griffin maintained that every case is "fact specific."

However, the new joint employer test was certainly not the only Board doctrine under scrutiny at the hearing. Senator Richard Shelby (R-AL) questioned the practice of abusing blocking charges by labor organizations to drag out elections. Griffin gave no clear answer on how the Board planned on dealing with this practice, nor did Pearce satisfactorily explain to Chairman Blunt the hairsplitting involved in a Board decision in which a small subset of department store workers were held to constitute an appropriate bargaining unit.

Senator Lamar Alexander (R-TN) expressed particular concern over the Board's recent solicitation of briefs in a Florida case regarding whether a union can collect a fee from non-union members to file a grievance. He pointed to established NLRB and Supreme Court precedent holding that unions are prohibited from preventing non-union employees from filing grievances, and questioned how the Board could call into question 40 years of established law. Pearce repeatedly said that the legal question was merely about whether the union should first collect a fee, and did not address the issue of what would happen if the non-union employee declined to first pay the fee to the union. Senator Alexander claimed this was an attack on right-to-work states.

Lastly, when asked directly about when the Browning-Ferris decision would come out, Pearce admitted that he had no idea or timeframe in mind. He also declined to give an average timeframe for deciding a case, but said that Browning-Ferris would be decided "as expeditiously as possible."

More information on this hearing, as well as links to the panelists' testimony, can be found here.

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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